LABOR REVIEW CASES (3rd BATCH)

Lingat vs. Coca-Cola Bottlers Philippines, Inc., 870 SCRA 541, G.R. No. 205688 July 4, 2018

Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; As a rule, the
determination of whether an employer-employee relationship exists between the parties involves
factual matters that are generally beyond the ambit of this Petition as only questions of law may be
raised in a petition for review on certiorari.—As a rule, the determination of whether an employer-
employee relationship exists between the parties involves factual matters that are generally beyond
the ambit of this Petition as only questions of law may be raised in a petition for review
on certiorari. However, this rule allows certain exceptions, which include an instance where the
factual findings of the courts or tribunals below are conflicting. Given the situation here where the
factual findings of the NLRC and the CA are divergent from those of the LA, the Court deems it
proper to reassess and review these findings in order to arrive at a just resolution of the issues on
hand.

Labor Law; Regular Employees; Words and Phrases; A regular employee is a) one that has been
engaged to perform tasks usually necessary or desirable in the employer’s usual business or trade —
without falling within the category of either a fixed or a project or a seasonal employee; or b) one
that has been engaged for at least one (1) year, whether his or her service is continuous or not, with
respect to such activity he or she is engaged, and the work of the employee remains while such
activity exists.—Pursuant to Article 295 of the Labor Code, as amended and renumbered, a regular
employee is a) one that has been engaged to perform tasks usually necessary or desirable in the
employer’s usual business or trade — without falling within the category of either a fixed or a
project or a seasonal employee; or b) one that has been engaged for at least one year, whether his
or her service is continuous or not, with respect to such activity he or she is engaged, and the work
of the employee remains while such activity exists.

Same; Same; To ascertain if one is a regular employee, it is primordial to determine the reasonable
connection between the activity he or she performs and its relation to the trade or business of the
supposed employer.—To ascertain if one is a regular employee, it is primordial to determine the
reasonable connection between the activity he or she performs and its relation to the trade or
business of the supposed employer. Relating petitioners’ tasks to the nature of the business of CCBPI
— which involved the manufacture, distribution, and sale of soft drinks and other beverages — it
cannot be denied that mixing and segregating as well as loading and bringing of CCBPI’s products to
its customers involved distribution and sale of these items. Simply put, petitioners’ duties were
reasonably connected to the very business of CCBPI. They were indispensable to such business
because without them the products of CCBPI would not reach its customers. Interestingly, in Coca-
Cola Bottlers Philippines, Inc. v. Agito, 579 SCRA 445 (2009), the Court held that respondents
salesmen therein were regular employees of CCBPI as their work constituted distribution and sale of
its products. The Court also stressed in Agito that the repeated rehiring of those salesmen bolstered
the indispensability of their work to the business of CCBPI.

Same; Same; Such repeated rehiring of petitioners, and the performance of the same tasks for Coca-
Cola Bottlers Philippines, Inc. (CCBPI) established the necessity and the indispensability of their
activities in its business.—Herein petitioners have worked for CCBPI since 1993 (Lingat) and 1996
(Altoveros) until the nonrenewal of their contracts in 2005. Aside from the fact that their work
involved the distribution and sale of the products of CCBPI, they remained to be working for CCBPI
despite having been transferred from one agency to another. Hence, such repeated rehiring of
petitioners, and the performance of the same tasks for CCBPI established the necessity and the
indispensability of their activities in its business. In addition, in Pacquing v. Coca-Cola Philippines,
Inc., 543 SCRA 344 (2008), the Court ruled that the sales route helpers of CCBPI were its regular
employees. In this case, petitioners had similarly undertook to bring CCBPI’s products to its
customers at their delivery points. In Pacquing, it was even stated that therein sales route helpers
“were part of a complement of three personnel comprised of a driver, a salesman and a regular
route helper, for every delivery truck.” As such, it would be absurd for the Court to hold those
helpers as regular employees of CCBPI without giving the same status to its plant driver, including its
segregator of soft drinks, whose work also had reasonable connection to CCBPI’s business of
distribution and sale of soft drinks and other beverage products.

Same; Labor-Only Contractors; Words and Phrases; A labor-only contractor is one who enters into an
agreement with the principal employer to act as the agent in the recruitment, supply, or placement
of workers for the latter.—A labor-only contractor is one who enters into an agreement with the
principal employer to act as the agent in the recruitment, supply, or placement of workers for the
latter. A labor-only contractor 1) does not have substantial capital or investment in tools, equipment,
work premises, among others, and the recruited employees perform tasks necessary to the main
business of the principal; or 2) does not exercise any right of control anent the performance of the
contractual employee. In such case, where a labor-only contracting exists, the principal shall be
deemed the employer of the contractual employee; and the principal and the labor-only contractor
shall be solidarily liable for any violation of the Labor Code. On the other hand, a legitimate job
contractor enters into an agreement with the employer for the supply of workers for the latter but
the “employer-employee relationship between the employer and the contractor’s employees [is]
only for a limited purpose, i.e., to ensure that the employees are paid their wages.”

Same; Labor Contractors; To determine whether a person or entity is indeed a legitimate labor
contractor, it is necessary to prove not only substantial capital or investment in tools, equipment,
work premises, among others, but also that the work of the employee is directly related to the work
that contractor is required to perform for the principal.—CCBPI is engaged in the manufacture,
distribution, and sale of its products; in turn, as plant driver and segregator/mixer of soft drinks,
petitioners were engaged to perform tasks relevant to the distribution and sale of CCBPI’s products,
which relate to the core business of CCBPI, not to the supposed warehousing service being rendered
by MDTC to CCBPI. Petitioners’ work were directly connected to the achievement of the purposes
for which CCBPI was incorporated. Certainly, they were regular employees of CCBPI. Moreover, we
disagree with the CA when it heavily relied on MDTC’s alleged substantial capital in order to
conclude that it was an independent labor contractor. To note, in Quintanar v. Coca-Cola Bottlers,
Philippines, Inc., 794 SCRA 654 (2016), the Court ruled that “the possession of substantial capital is
only one element.” To determine whether a person or entity is indeed a legitimate labor contractor,
it is necessary to prove not only substantial capital or investment in tools, equipment, work
premises, among others, but also that the work of the employee is directly related to the work that
contractor is required to perform for the principal. Evidently, the latter requirement is wanting in the
case at bench. Lingat vs. Coca-Cola Bottlers Philippines, Inc., 870 SCRA 541, G.R. No. 205688 July 4,
2018

Stradcom Corporation vs. Orpilla, 869 SCRA 250, G.R. No. 206800 July 2, 2018

Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; Generally, only errors of
law are revived in petitions for review for certiorari, since the Supreme Court (SC) is not a trier of
facts.—Generally, only errors of law are revived in petitions for review for certiorari, since this Court
is not a trier of facts. As such, the findings of facts and conclusion of the NLRC are generally accorded
not only great weight and respect but even clothed with finality and deemed binding on this Court as
long as they are supported by substantial evidence. However, if the factual findings of the LA and the
NLRC are conflicting, as in this case, the reviewing court may delve into the records and examine for
itself the questioned findings. The exception, rather than the general rule, applies in the present
case since the LA and the CA found facts supporting the conclusion that respondent was illegally
dismissed, while the NLRC’s factual findings contradicted the LA’s findings.

Labor Law; Termination of Employment; Loss of Trust and Confidence; Article 297(c) [formerly
Article 282] of the Labor Code provides that an employer may terminate the services of an employee
for fraud or willful breach of the trust reposed in him/her.—Among the just causes for termination is
the employer’s loss of trust and confidence in its employee. Article 297(c) [formerly Article 282] of
the Labor Code provides that an employer may terminate the services of an employee for fraud or
willful breach of the trust reposed in him/her. Article 297, provides: Article 297. TERMINATION BY
EMPLOYER.—An employer may terminate an employment for any of the following causes: (a)
Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work; (b) Gross and habitual neglect by the employee of his
duties;  (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative; (d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized
representative; and (e) Other causes analogous to the foregoing. x x x x In order for the said cause to
be properly invoked, however, certain requirements must be complied with, 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.

Same; Same; Dishonesty; Dismissal of a dishonest employee is to the best interest not only of the
management but also of labor.—The acts alleged to have caused the loss of trust and confidence of
the petitioners in the respondent was her mishandling of Stradcom’s 2002 Christmas party,
dishonesty in preparing the budget thereof, misrepresentation in her application for employment,
and using company personnel and resources for purposes not beneficial to the interest of Stradcom.
The evidence on record support Stradcom’s claims. There was substantial evidence to support that
respondent overpriced the food for the 2002 Christmas party. The overpricing was discovered by the
new committee which took over the preparations for the said party. It is undisputed that respondent
was the one who initially negotiated with G&W Catering Services. Respondent was also the one who
prepared the budget for the approval of the President, herein Chua. G&W billed Stradcom for food
at the rate of Two Hundred Pesos (P200) per head only, contrary to the Two Hundred Fifty (P250)
per head quoted by respondent, and the rental for chairs at Twenty-Eight Pesos (P28), in the
aggregate amount of Sixty-Three Thousand Eight Hundred Forty Pesos (P63,840) as evidenced by the
Affidavit of Sese, the proprietress of the G&W Catering Services. Clearly, the overpricing amounted
to dishonesty. Also, respondent’s overpricing of P250 per head for the Christmas party was
corroborated by Ms. Rowena Samson, Chua’s Secretary of the President and CEO and Mr. Saturnino
S. Galgana, Stradcom’s Purchasing Assistant, as evidenced by their affidavits dated March 18, 2003.
Furthermore, respondent was proven to have engaged in moonlighting activities and used company
personnel and resources for purposes not in line with the business interest of Stradcom. In fact,
respondent admitted that she actually took home some of the training materials owned by the
company without the latter’s prior clearance and without disclosed purpose. Such dishonesty on the
part of the respondent in carrying out her duties is prejudicial to the interest of Stradcom and
constitutes just cause to terminate her employment. Considering the foregoing, this Court agrees
with the findings of the NLRC that there was a just cause for the respondent’s dismissal. We
emphasize that dismissal of a dishonest employee is to the best interest not only of the
management but also of labor. Stradcom, as an employer in the exercise of self-protection, cannot
be compelled to continue employing an employee who is guilty of acts inimical to its interest.

Same; Same; Procedural Due Process; Two-Notice Rule; On the matter of procedural due process, it
is well-settled that the employer must furnish the employee with two (2) written notices before
termination of employment can be legally effected.—On the matter of procedural due process, it is
well-settled that the employer must furnish the employee with two written notices before
termination of employment can be legally effected. The first apprises the employee of the particular
acts or omissions for which dismissal is sought. The second informs the employee of the employer’s
decision to dismiss him.

Same; Same; Nominal Damages; The Supreme Court (SC) 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.—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. The two causes for a valid dismissal in the Labor Code are under Article 282,
due to just causes and Article 283, based on authorized causes.

Corporations; Separate Legal Personality; It is well-settled that a corporation has its own legal
personality separate and distinct from those of its stockholders, directors or officers.—It is well-
settled that a corporation has its own legal personality separate and distinct from those of its
stockholders, directors or officers. Absence of any evidence that a corporate officer and/or director
has exceeded their authority, or their acts are tainted with malice or bad faith, they cannot be held
personally liable for their official acts. Here, there was neither any proof that Chua acted without or
in excess of his authority nor was motivated by personal ill will towards respondent to be solidarily
liable with the company.

Labor Law; Termination of Employment; Illegal Dismissals; Backwages; Backwages may be granted
only when there is a finding that the dismissal is illegal.—With the sad reality that the respondent
was not illegally dismissed, she is not entitled to backwages. Backwages may be granted only when
there is a finding that the dismissal is illegal. Respondent’s monetary claims for backwages,
separation pay, moral and exemplary damages, as well as attorney’s fees must necessarily fail as a
consequence of Our finding that her dismissal was for a just cause and that the petitioners acted in
goodfaith when they terminated her services. Stradcom Corporation vs. Orpilla, 869 SCRA 250, G.R.
No. 206800 July 2, 2018

Arcilla vs. Zulisibs, Inc., 865 SCRA 337, G.R. No. 225125 June 6, 2018

Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; Given that the Supreme
Court (SC) is not a trier of facts, and the scope of its authority under Rule 45 of the Rules of Court is
confined only to errors of law and does not extend to questions of fact, which are for labor tribunals
to resolve, one of the recognized exceptions to the rule is when the factual findings and conclusion
of the labor tribunals are contradictory or inconsistent with those of the Court of Appeals (CA).—The
only issue to be resolved is the legality of the act of dismissal by reexamining the facts and evidence
on record. Given that this Court is not a trier of facts, and the scope of its authority under Rule 45 of
the Rules of Court is confined only to errors of law and does not extend to questions of fact, which
are for labor tribunals to resolve, one of the recognized exceptions to the rule is when the factual
findings and conclusion of the labor tribunals are contradictory or inconsistent with those of the
Court of Appeals. In this case, however, the factual findings and conclusion of the labor tribunals and
the Court of Appeals regarding Marlon’s dismissal are consistent and one. As to Maricel, the decision
in her favor was not appealed to us anymore. Thus, the decision of the Court of Appeals insofar as
Maricel is concerned is final and executory.

Labor Law; Termination of Employment; Serious Misconduct; Willful Disobedience; Fraud; Willful
Breach of Trust; There is sufficient basis to dismiss Marlon on the grounds of serious misconduct or
willful disobedience of the company’s lawful orders, and of fraud or willful breach of the trust
reposed in him by the company when he helped his brother-in-law open a salon along Daang Hari,
Alabang.—All told, there is sufficient basis to dismiss Marlon on the grounds of serious misconduct
or willful disobedience of the company’s lawful orders, and of fraud or willful breach of the trust
reposed in him by the company when he helped his brother-in-law open a salon along  Daang Hari,
Alabang. The Court of Appeals acted in accordance with the evidence on record and case law when it
affirmed and upheld the resolutions of the NLRC. Arcilla vs. Zulisibs, Inc., 865 SCRA 337, G.R. No.
225125 June 6, 2018

Malcaba vs. ProHealth Pharma Philippines, Inc., 864 SCRA 518, G.R. No. 209085 June 6, 2018

Labor Law; Appeals; Appeal Bonds; In labor cases, an appeal by an employer is perfected only by
filing a bond equivalent to the monetary award.—Appeal is not a matter of right. Courts and
tribunals have the discretion whether to give due course to an appeal or to dismiss it outright. The
perfection of an appeal is, thus, jurisdictional. Noncompliance with the manner in which to file an
appeal renders the judgment final and executory. In labor cases, an appeal by an employer is
perfected only by filing a bond equivalent to the monetary award.

Same; Same; Same; The purpose of requiring an appeal bond is “to guarantee the payment of valid
and legal claims against the employer.”—The purpose of requiring an appeal bond is “to guarantee
the payment of valid and legal claims against the employer.” It is a measure of financial security
granted to an illegally dismissed employee since the resolution of the employer’s appeal may take an
indeterminable amount of time. In particular: The requirement that the employer post a cash or
surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail
in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s
appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their
obligation to satisfy their employees’ just and lawful claims. Procedural rules require that the appeal
bond filed be “genuine.” An appeal bond determined by the National Labor Relations Commission to
be “irregular or not genuine” shall cause the immediate dismissal of the appeal.

Same; Labor Arbiters; National Labor Relations Commission; Jurisdiction; Under the Labor Code, the
Labor Arbiter (LA) exercises original and exclusive jurisdiction over termination disputes between an
employer and an employee while the National Labor Relations Commission (NLRC) exercises
exclusive appellate jurisdiction over these cases.—Under the Labor Code, the Labor Arbiter exercises
original and exclusive jurisdiction over termination disputes between an employer and an employee
while the National Labor Relations Commission exercises exclusive appellate jurisdiction over these
cases: Article 224. [217] Jurisdiction of the Labor Arbiters and the Commission.—(a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days after the submission of the case by the parties
for decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or nonagricultural: . . . (2) Termination disputes; . . . (b)
The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
The presumption under this provision is that the parties have an employer-employee relationship.
Otherwise, the case would be cognizable in different tribunals even if the action involves a
termination dispute.

Same; Corporations; Corporate Officers; Intra-Corporate Disputes; Under Section 25 of the

Corporation Code, the President of a corporation is considered a corporate officer. The dismissal of a
corporate officer is considered an intra-corporate dispute, not a labor dispute.—Under Section 25 of
the Corporation Code, the President of a corporation is considered a corporate officer. The dismissal
of a corporate officer is considered an intra-corporate dispute, not a labor dispute. Thus, in Tabang
v. National Labor Relations Commission, 266 SCRA 462 (1997): A corporate officer’s dismissal is
always a corporate act, or an intra-corporate controversy, and the nature is not altered by the
reason or wisdom with which the Board of Directors may have in taking such action. Also, an intra-
corporate controversy is one which arises between a stockholder and the corporation. There is no
distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds
of controversies between stockholders and corporations.

Corporations; Intra-Corporate Disputes; Regional Trial Courts; Jurisdiction; Corporate Officers;

Effective on August 8, 2000, upon the passage of Republic Act (RA) No. 8799, otherwise known as
The Securities Regulation Code, the Securities and Exchange Commission’s (SEC’s) jurisdiction over
all intra-corporate disputes was transferred to the Regional Trial Court (RTC), pursuant to Section 5.2
of RA No. 8799.—Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise
known as The Securities Regulation Code, the SEC’s jurisdiction over all intra-corporate disputes was
transferred to the RTC, pursuant to Section 5.2 of RA No. 8799, to wit: 5.2. The Commission’s
jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided,
that the Supreme Court in the exercise of its authority may designate the Regional Trial Court
branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes submitted for final resolution which should be
resolved within one (1) year from the enactment of this Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until
finally disposed.

Same; Same; Corporate Officers; The clear weight of jurisprudence clarifies that to be considered a
corporate officer, first, the office must be created by the charter of the corporation, and second, the
officer must be elected by the board of directors or by the stockholders.—The clear weight of
jurisprudence clarifies that to be considered a corporate officer, first, the office must be created by
the charter of the corporation, and second, the officer must be elected by the board of directors or
by the stockholders. Petitioner Malcaba was an incorporator of the corporation and a member of
the Board of Directors. Respondent corporation’s By-Laws creates the office of the President.

Labor Law; Termination of Employment; Loss of Trust and Confidence; Loss of trust and confidence is
a just cause to terminate either managerial employees or rank-and-file employees who regularly
handle large amounts of money or property in the regular exercise of their functions.—Article 294
[279] of the Labor Code provides that an employer may terminate the services of an employee only
upon just or authorized causes. Article 297 [282] enumerates the just causes for termination, among
which is “[f]raud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative[.]” Loss of trust and confidence is a just cause to terminate either
managerial employees or rank-and-file employees who regularly handle large amounts of money or
property in the regular exercise of their functions. For an act to be considered a loss of trust and
confidence, it must be first, work-related, and second, founded on clearly established facts: 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 breach of trust must likewise be willful, that is,
“it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from
an act done carelessly, thoughtlessly, heedlessly or inadvertently.”

Same; Management Prerogatives; While an employer is free to regulate all aspects of employment,
the exercise of management prerogatives must be in good faith and must not defeat or circumvent
the rights of its employees.—While an employer is free to regulate all aspects of employment, the
exercise of management prerogatives must be in good faith and must not defeat or circumvent the
rights of its employees. In industries that mainly rely on sales, employers are free to discipline errant
employees who deliberately fail to report for work during a crucial sales period. It would have been
reasonable for respondents to discipline petitioner Nepomuceno had he been a problematic
employee who unceremoniously refused to do his work. However, as found by the Labor Arbiter and
the National Labor Relations Commission, petitioner Nepomuceno turned over all of his pending
work to a reliever before he left for Malaysia. He was able to reach his sales quota and surpass his
sales target even before taking his vacation leave. Respondents did not suffer any financial damage
as a result of his absence. This was also petitioner Nepomuceno’s first infraction in his nine (9) years
of service with respondents. None of these circumstances constitutes a willful breach of trust on his
part. The penalty of dismissal, thus, was too severe for this kind of infraction.

Same; Termination of Employment; Illegal Dismissals; Reinstatement; Backwages; Separation Pay;

Strained Relations Doctrine; Considering that petitioner Nepomuceno’s dismissal was done without
just cause, he is entitled to reinstatement and full backwages. If reinstatement is not possible due to
strained relations between the parties, he shall be awarded separation pay at the rate of one (1)
month for every year of service.—Petitioner Nepomuceno received a memorandum on April 23,
2008, asking him to explain why no administrative investigation should be held against him. He
submitted an explanation on the same day and another explanation on May 2, 2008. On May 7,
2008, he was given his notice of termination, which had already taken effect two (2) days earlier, or
on May 5, 2008. It is true that “[t]he essence of due process is simply an opportunity to be heard.”
Petitioner Nepomuceno had two (2) opportunities within which to explain his actions. This would
have been sufficient to satisfy the requirement. The delay in handing him his notice of termination,
however, appears to have been an afterthought. While strictly not a violation of procedural due
process, respondents should have been more circumspect in complying with the due process
requirements under the law. Considering that petitioner Nepomuceno’s dismissal was done without
just cause, he is entitled to reinstatement and full backwages. If reinstatement is not possible due to
strained relations between the parties, he shall be awarded separation pay at the rate of one (1)
month for every year of service.

Same; Same; Willful Disobedience; For disobedience to be considered as just cause for termination,
two (2) requisites must concur: first, “the employee’s assailed conduct must have been wilful or
intentional,” and second, “the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he [or she] had been engaged to discharge.”—
For disobedience to be considered as just cause for termination, two (2) requisites must concur:
first, “the employee’s assailed conduct must have been wilful or intentional,” and second, “the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the
duties which he [or she] had been engaged to discharge.” For disobedience to be willful, it must be
“characterized by a wrongful and perverse mental attitude rendering the employee’s act
inconsistent with proper subordination.” The conduct complained of must also constitute “harmful
behavior against the business interest or person of his [or her] employer.” Thus, it is implied in every
case of willful disobedience that “the erring employee obtains undue advantage detrimental to the
business interest of the employer.” Petitioner Palit-Ang, as Finance Officer, was instructed by
respondent Del Castillo to give a cash advance of P3,000.00 to District Branch Manager Gamboa on
November 26, 2007. This order was reasonable, lawful, made known to petitioner Palit-Ang, and
pertains to her duties. What is left to be determined, therefore, is whether petitioner Palit-Ang
intentionally and willfully violated it as to amount to insubordination. When Gamboa went to collect
the money from petitioner Palit-Ang, he was told to return the next day as she was still busy. When
petitioner Palit-Ang found out that the money was to be used for a car tune-up, she suggested to
Gamboa to just get the money from his mobilization fund and that she just would reimburse it after.
The Court of Appeals found that these circumstances characterized petitioner Palit-Ang’s “arrogance
and hostility,” in failing to comply with respondent Del Castillo’s order, and thus, warranted her
dismissal.

Due Process; “The essence of due process is simply an opportunity to be heard,” not that the
employee must be accompanied by counsel at all times.—Petitioner Palit-Ang likewise assails the
failure of respondents to inform her of her right to counsel when she was being investigated for her
infraction. As previously discussed, “[t]he essence of due process is simply an opportunity to be
heard,” not that the employee must be accompanied by counsel at all times. A hearing was
conducted and she was furnished a notice of termination explaining the grounds for her dismissal.
She was not denied due process. Petitioner Palit-Ang, nonetheless, is considered to have been
illegally dismissed, her penalty not having been proportionate to the infraction committed. Thus, she
is entitled to reinstatement and full backwages. If reinstatement is not possible due to strained
relations between the parties, she shall be awarded separation pay at the rate of one (1) month for
every year of service. Malcaba vs. ProHealth Pharma Philippines, Inc., 864 SCRA 518, G.R. No.
209085 June 6, 2018

Tolentino vs. Philippine Airlines, Inc., 853 SCRA 49, G.R. No. 218984 January 24, 2018

Labor Law; Termination of Employment; Return-to-Work Order; Defiance of Return-to-Work Order;

An employee who knowingly defies a return-to-work order issued by the Secretary of Labor is
deemed to have committed an illegal act which is a just cause to dismiss the employee under Article
282 of the Labor Code.—An employee who knowingly defies a return-to-work order issued by the
Secretary of Labor is deemed to have committed an illegal act which is a just cause to dismiss the
employee under Article 282 of the Labor Code. In PAL, Inc. v. Acting Secretary of Labor, 280 SCRA
515 (1997), we held: A strike that is undertaken despite the issuance by the Secretary of Labor of an
assumption and/or certification is a prohibited activity and thus illegal. The union officers and
members, as a result, are deemed to have lost their employment status for having knowingly
participated in an illegal act. Stated differently, from the moment a worker defies a return-to-work
order, he is deemed to have abandoned his job. The loss of employment status results from the
striking employees’ own act — an act which is illegal, an act in violation of the law and in defiance of
authority.

Same; Reemployment; Reemployment, on the condition that the employee will be treated as a new
employee, is a valid exercise of the employer’s prerogative, as long as it is not done with anti-union
motivation.—Tolentino, who did not deny his participation in the strike and his failure to promptly
comply with the return-to-work order of the Secretary of Labor, could not claim any retirement
benefits because he did not retire — he simply lost his employment status. Retirement is the result
of a bilateral act of the parties, a voluntary agreement between the employer and the employee
whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former. It is clear, therefore, Tolentino had not retired from PAL — it was not a result of a voluntary
agreement. Tolentino lost his employment status because of his own actions. Admittedly, Tolentino
was hired again by PAL on 20 July 1998. This was after he reapplied with the company. He also
voluntarily completed the probationary period of six months. It was made clear to Tolentino, and he
certainly admitted, that he was rehired on the condition that his employment would be as a new
hire. Reemployment, on the condition that the employee will be treated as a new employee, is a
valid exercise of the employer’s prerogative, as long as it is not done with anti-union motivation.

Same; Retirement Plans; For purposes of the retirement plan, the computation of Tolentino’s length
of service to the company should be reckoned from the date he was rehired after his own voluntary
application as a new pilot.—For purposes of the retirement plan, the computation of Tolentino’s
length of service to the company should be reckoned from the date he was rehired after his own
voluntary application as a new pilot. His services from October 1971 to June 1998 cannot be tacked
to his new employment starting in July 1998 because the first employment had already been finally
terminated — not due to his voluntary resignation or retirement, but because of termination due to
just causes. Tolentino joined an illegal strike and defied the return-to-work order of the Secretary of
Labor. At this point, he had already lost his employment status with PAL.

Same; Retirement Benefits; Retirement benefits, especially those which are given before the
mandatory retirement age, are given as a form of reward for the services rendered by the employee
to the employer.—Retirement benefits, especially those which are given before the mandatory
retirement age, are given as a form of reward for the services rendered by the employee to the
employer. Thus, it would be contrary to the rationale of retirement benefits to reward an employee
who was terminated due to just cause, or who committed an act that was enough to merit his
dismissal.

Same; Same; Similar to the retirement benefits under the Philippine Airlines, Inc.-Airline Pilots
Association of the Philippines (PAL-ALPAP) Retirement Plan, it is clear that the pilot must have
retired first before he receives the full amount of the contribution or the equity of the retirement
fund.—Again, similar to the retirement benefits under the PAL-ALPAP Retirement Plan, it is clear that
the pilot must have retired first before he receives the full amount of the contribution or the equity
of the retirement fund. As earlier established, Tolentino never retired. When he was first separated
from work, it was not due to resignation or retirement — he simply lost his employment status as a
result of his participation in the illegal strike and failure to promptly comply with the return-to-work
order of the Secretary of Labor. When he resigned from work after subsequently being rehired by
PAL, it could not be said that he retired as he barely completed one year of service. Simply put, he
was not able to satisfy the retirement requirements. As Tolentino was not a retiring pilot, he was not
entitled to receive the return of equity in the retirement fund. Only pilots who are retiring — who
have satisfactorily met the requisites for retirement — are entitled to the full equity of the
contribution. Moreover, since the contribution to the fund was exclusively from PAL, with no
participation from the employees, Tolentino is not entitled to any amount from the PAL Pilots’
Retirement Benefit Plan. Tolentino vs. Philippine Airlines, Inc., 853 SCRA 49, G.R. No. 218984 January
24, 2018
Cacho vs. Balagtas , 855 SCRA 11, G.R. No. 202974 February 7, 2018

Mercantile Law; Corporations; Intra-Corporate Controversies; A two (2)-tier test must be employed
to determine whether an intra-corporate controversy exists in the present case, viz.: (a) the
relationship test, and (b) the nature of the controversy test.—At the onset, We agree with the
appellate court’s ruling that a two-tier test must be employed to determine whether an intra-
corporate controversy exists in the present case, viz.: (a) the relationship test, and (b) the nature of
the controversy test. This is consistent with the Court’s rulings in Reyes v. Regional Trial Court of
Makati, Branch 142, 561 SCRA 593 (2008), Speed Distributing Corporation v. Court of Appeals, 425
SCRA 691 (2004), and Real v. Sangu Philippines, Inc., 640 SCRA 67 (2011).

Same; Same; Same; Relationship Test; A dispute is considered an intra-corporate controversy under
the relationship test when the relationship between or among the disagreeing parties is any one of
the following: (a) between the corporation, partnership, or association and the public; (b) between
the corporation, partnership, or association and its stockholders, partners, members, or officers; (c)
between the corporation, partnership, or association and the State as far as its franchise, permit or
license to operate is concerned; and (d) among the stockholders, partners, or associates themselves.
—A dispute is considered an intra-corporate controversy under the relationship test when the
relationship between or among the disagreeing parties is any one of the following: (a) between the
corporation, partnership, or association and the public; (b) between the corporation, partnership, or
association and its stockholders, partners, members, or officers; (c) between the corporation,
partnership, or association and the State as far as its franchise, permit or license to operate is
concerned; and (d) among the stockholders, partners, or associates themselves.

Same; Same; Corporate Officers; One shall be considered a corporate officer only if two (2)
conditions are met, viz.: (1) the position occupied was created by charter/bylaws, and (2) the officer
was elected (or appointed) by the corporation’s board of directors to occupy said position.—In
Easycall Communications Phils., Inc. v. King, 478 SCRA 102 (2005), the Court ruled that a corporate
office is created by the charter of the corporation and the officer is elected thereto by the directors
or stockholders. In other words, one shall be considered a corporate officer only if two conditions
are met, viz.: (1) the position occupied was created by charter/bylaws, and (2) the officer was
elected (or appointed) by the corporation’s board of directors to occupy said position.

Same; Same; Corporate Office; The Supreme Court (SC) has ruled that if the position is other than
the corporate president, treasurer, or secretary, it must be expressly mentioned in the bylaws in
order to be considered as a corporate office.—The rule is that corporate officers are those officers of
a corporation who are given that character either by the Corporation Code or by the corporation’s
bylaws. Section 25 of the Corporation Code explicitly provides for the election of the corporation’s
president, treasurer, secretary, and such other officers as may be provided for in the bylaws. In
interpreting this provision, the Court has ruled that if the position is other than the corporate
president, treasurer, or secretary, it must be expressly mentioned in the bylaws in order to be
considered as a corporate office.

Same; Same; Corporate Officers; There must be documentary evidence to prove that the person
alleged to be a corporate officer was appointed by action or with approval of the board.—While a
corporate office is created by an express provision either in the Corporation Code or the Bylaws,
what makes one a corporate officer is his election or appointment thereto by the board of directors.
Thus, there must be documentary evidence to prove that the person alleged to be a corporate
officer was appointed by action or with approval of the board.

Same; Same; General Information Sheet; The General Information Sheet (GIS) neither governs nor
establishes whether or not a position is an ordinary or corporate office.—The GIS neither governs
nor establishes whether or not a position is an ordinary or corporate office. At best, if one is listed in
the GIS as an officer of a corporation, his/her position as indicated therein could only be deemed a
regular office, and not a corporate office as it is defined under the Corporation Code.

Same; Same; Intra-Corporate Controversies; Under the nature of the controversy test, the
disagreement must not only be rooted in the existence of an intra-corporate relationship, but must
as well pertain to the enforcement of the parties’ correlative rights and obligations under the
Corporation Code and the internal and intra-corporate regulatory rules of the corporation.—The
existence of an intra-corporate controversy does not wholly rely on the relationship of the parties.
The incidents of their relationship must also be considered. Thus, under the nature of the
controversy test, the disagreement must not only be rooted in the existence of an intra-corporate
relationship, but must as well pertain to the enforcement of the parties’ correlative rights and
obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the
corporation. If the relationship and its incidents are merely incidental to the controversy or if there
will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists.
Verily, in a long line of cases, the Court consistently ruled that a corporate officer’s dismissal is
always a corporate act, or an intra-corporate controversy which arises between a stockholder and a
corporation. However, a closer look at these cases will reveal that the intra-corporate nature of the
disputes therein did not hinge solely on the fact that the subject of the dismissal was a corporate
officer.

Same; Same; Same; Dismissal of Corporate Officers; To be considered an intra-corporate

controversy, the dismissal of a corporate officer must have something to do with the duties and
responsibilities attached to his/her corporate office or performed in his/her official capacity.—The
dismissals in these cases were all considered intra-corporate controversies not only because the
complainants were corporate officers, but also, and more importantly, because they were not
reelected to their respective corporate offices and, thus, terminated from the corporation. “The
matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of
deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a
person to a corporation, whether as officer or as agent or employee, is not determined by the nature
of the services performed, but by the incidents of the relationship as they actually exist.” In other
words, the dismissal must relate to any of the circumstances and incidents surrounding the parties’
intra-corporate relationship. To be considered an intra-corporate controversy, the dismissal of a
corporate officer must have something to do with the duties and responsibilities attached to his/her
corporate office or performed in his/her official capacity.

Remedial Law; Civil Procedure; Jurisdiction; Estoppel by Laches; The Supreme Court (SC) has already
held that the ruling in Tijam v. Sibonghanoy, 23 SCRA 29 (1968), remains only as an exception to the
general rule. Estoppel by laches will only bar a litigant from raising the issue of lack of jurisdiction in
exceptional cases similar to the factual milieu of Tijam v. Sibonghanoy.—Respondent Balagtas insists
that petitioners belatedly raised the issue of the Labor Arbiter’s lack of jurisdiction before the NLRC.
Relying on Tijam v. Sibonghanoy, 23 SCRA 29 (1968), she avers that petitioners, after actively
participating in the proceedings before the Labor Arbiter and obtaining an unfavorable judgment,
are barred by laches from attacking the latter’s jurisdiction. We disagree with respondent Balagtas.
The Court has already held that the ruling in Tijam v. Sibonghanoy remains only as an exception to
the general rule. Estoppel by laches will only bar a litigant from raising the issue of lack of jurisdiction
in exceptional cases similar to the factual milieu of Tijam v. Sibonghanoy. To recall, the Court in
Tijam v. Sibonghanoy ruled that the plea of lack of jurisdiction may no longer be raised for being
barred by laches because it was raised for the first time in a motion to dismiss filed almost 15 years
after the questioned ruling had been rendered. These exceptional circumstances are not present in
this case. Thus, the general rule must apply: that the issue of jurisdiction may be raised at any stage
of the proceedings, even on appeal, and is not lost by waiver or by estoppel. Cacho vs. Balagtas , 855
SCRA 11, G.R. No. 202974 February 7, 2018

Ellao vs. Batangas I Electric Cooperative, Inc. (BATELEC I), 871 SCRA 227, G.R. No. 209166 July 9, 2018

Corporate Officers; Illegal Dismissal; Intra-Cooperative Controversies; Regional Trial Courts;

Jurisdiction; Complaints for illegal dismissal filed by a cooperative officer constitute an intra-
cooperative controversy, jurisdiction over which belongs to the regional trial courts (RTCs).—
Complaints for illegal dismissal filed by a cooperative officer constitute an intra-cooperative
controversy, jurisdiction over which belongs to the regional trial courts. Ellao’s main resistance to
the regional trial court’s exercise of jurisdiction over his complaint for illegal dismissal rests on his
theory that BATELEC I, as a cooperative, is not a corporation registered with the SEC. Registration
with the SEC, however, is not the operative factor in determining whether or not the latter enjoys
jurisdiction over a certain dispute or controversy.

Cooperatives; Words and Phrases; A cooperative, as defined under Presidential Decree (PD) No. 269,
refers to a “corporation organized under Republic Act (RA) No. 6038 or [under PD No. 269] a
cooperative supplying or empowered to supply service which has heretofore been organized under
the Philippine Non-Agricultural Cooperative Act, whether covered under this Decree or not.”—To
lend proper context, it is well to recall that a cooperative, as defined under P.D. 269, refers to a
“corporation organized under Republic Act No. 6038 or [under P.D. 269] a cooperative supplying or
empowered to supply service which has heretofore been organized under the Philippine Non-
Agricultural Cooperative Act, whether covered under this Decree or not.” P.D. 269 further provides
that “[c]ooperative nonstock, nonprofit membership corporations may be organized, and electric
cooperative corporations heretofore formed or registered under the Philippine Non-Agricultural
Cooperative Act may as hereinafter provided be converted, under this Decree for the purpose of
supplying, and of promoting and encouraging the fullest use of, service on an area coverage basis at
the lowest cost consistent with sound economy and the prudent management of the business of
such corporations.” Likewise, by express provision of PD 269, an electric cooperative is hereby
vested with all powers necessary or convenient for the accomplishment of its corporate purpose.
Consistently, an electric cooperative is defined under Republic Act No. 9136 (R.A. 9136) as a
“distribution utility organized pursuant to [P.D. 269], as amended.

Same; Electric Cooperatives; Organization under Presidential Decree (PD) No. 269 sufficiently vests
upon electric cooperatives’ juridical personality enjoying corporate powers.—Organization under
P.D. 269 sufficiently vests upon electric cooperatives’ juridical personality enjoying corporate
powers. Registration with the SEC becomes relevant only when a nonstock, nonprofit electric
cooperative decides to convert into and register as a stock corporation. As such, and even without
choosing to convert and register as a stock corporation, electric cooperatives already enjoy powers
and corporate existence akin to a corporation.
Corporate Officers; Illegal Dismissals; By jurisprudence, termination disputes involving corporate
officers are treated differently from illegal dismissal cases lodged by ordinary employees.—By
jurisprudence, termination disputes involving corporate officers are treated differently from illegal
dismissal cases lodged by ordinary employees. Oft-cited is the case of Tabang v. NLRC, 266 SCRA 462
(1997), distinguishing between “officers” and “employees” as follows: x x x an “office” is created by
the charter of the corporation and the officer is elected by the directors or stockholders. On the
other hand, an “employee” usually occupies no office and generally is employed not by action of the
directors or stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee.

Remedial Law; Civil Procedure; Regional Trial Courts; Jurisdiction; Intra-Corporate Disputes; With the
advent of Republic Act (RA) No. 8799 or The Securities Regulation Code (SRC), the Securities
Exchange Commission’s (SEC’s) jurisdiction over all intra-corporate disputes was transferred to the
regional trial courts (RTCs).—As a rule, the illegal dismissal of an officer or other employee of a
private employer is properly cognizable by the labor arbiter pursuant to Article 217(a)2 of the Labor
Code, as amended. By way of exception, where the complaint for illegal dismissal involves a
corporate officer, the controversy falls under the jurisdiction of the SEC, because the controversy
arises out of intra-corporate or partnership relations between and among stockholders, members, or
associates, or between any or all of them and the corporation, partnership, or association of which
they are stockholders, members, or associates, respectively; and between such corporation,
partnership, or association and the State insofar as the controversy concerns their individual
franchise or right to exist as such entity; or because the controversy involves the election or
appointment of a director, trustee, officer, or manager of such corporation, partnership, or
association. With the advent of Republic Act No. 8799 (R.A. 8799) or The Securities Regulation Code,
the SEC’s jurisdiction over all intra-corporate disputes was transferred to the regional trial courts.
Since Ellao filed his Complaint for illegal dismissal on February 23, 2011, after the passage and
approval of R.A. 8799, his complaint may either fall under the jurisdiction of the labor arbiter or the
regional trial courts, depending on his position. If Ellao is determined to be a corporate officer then
jurisdiction over his complaint for illegal dismissal is to be treated as an intra-corporate dispute,
hence jurisdiction belongs to the regional trial courts.

Corporate Officers; Citing Guerrea v. Lezama, 103 Phil. 553 (1958), Matling held that the only officers
of a corporation were those given that character either by the Corporation Code or by the Bylaws so
much so that the rest of the corporate officers could be considered only as employees or
subordinate officials.—In Matling Industrial and Commercial Corporation, et al. v. Ricardo Coros, 633
SCRA 12 (2010), the Court held that in conformity with Section 25 of the Corporation Code, “a
position must be expressly mentioned in the Bylaws in order to be considered as a corporate office.
Thus, the creation of an office pursuant to or under a Bylaw enabling provision is not enough to
make a position a corporate office.” Citing Guerrea v. Lezama, et al., 103 Phil. 553 (1958), Matling
held that the only officers of a corporation were those given that character either by the Corporation
Code or by the Bylaws so much so that the rest of the corporate officers could be considered only as
employees or subordinate officials.

Electric Cooperatives; Illegal Dismissals; Intra-Cooperative Disputes; The functions of the office of the
General Manager, i.e., management of the Cooperative and to keep the Board fully informed of all
aspects of the operations and activities of the Cooperative are specifically laid down under Batangas
I Electric Cooperative, Inc.’s (BATELEC I’s) Bylaws itself. It is therefore beyond cavil that Ellao’s
position as General Manager is a cooperative office.—Evidently, the functions of the office of the
General Manager, i.e., management of the Cooperative and to keep the Board fully informed of all
aspects of the operations and activities of the Cooperative are specifically laid down under BATELEC
I’s Bylaws itself. It is therefore beyond cavil that Ellao’s position as General Manager is a cooperative
office. Accordingly, his complaint for illegal dismissal partakes of the nature of an intra-cooperative
controversy; it involves a dispute between a cooperative officer on one hand, and the Board of
Directors, on the other.