Labor Law Philippine Supreme Court Decisions

Philippine Supreme Court Decisions on Labor Law
Lexoterica 2009 – January 2014
February 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Probationary employment; acting appointment; resignation. The Supreme Court ruled that: (a)
the employment of the respondent as teacher was probationary in character, as she has not
completed the requisite three-year period of probationary employment for teachers: (b) the
respondent’s appointment as acting principal was merely temporary, or one that is good until
another appointment is made to take its place; as such, the appointment is revocable at will; and
(c) the resignation of the respondent is not valid, not only because there was no express
acceptance thereof by the employer, but because there is a cloud of doubt as to the
voluntariness of respondent’s resignation. According to the Supreme Court, resignation is
inconsistent with the filing of a complaint for illegal dismissal. To be valid, the resignation must
be unconditional, with the intent to operate as such; there must be a clear intention to relinquish
the position. In this case, respondent actively pursued her illegal dismissal case against
petitioner, such that she cannot be said to have voluntarily resigned from her job. Magis Young
Achievers’ Learning Center/Mrs. Violeta T. Carino Vs. Adelaida P. Manalo,G.R. No. 178835,
February 13, 2009.
Labor-only contracting. The law clearly establishes an employer-employee relationship

between the principal employer and the contractor’s employee upon a finding that the
contractor is engaged in “labor-only” contracting. Article 106 of the Labor Code categorically
states: “There is ‘labor-only’ contracting where the person supplying workers to an employee
does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises, among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of such employer.”
Thus, performing activities directly related to the principal business of the employer is only one
of the two indicators that “labor-only” contracting exists; the other is lack of substantial capital
or investment. Coca-Cola Bottlers Phils., Inc. Vs. Alan M. Agito Regolo S. Oca III, et al, G.R. No.
179546, February 13, 2009.
March 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Compensable illness. Cordero has substantially proved her claim to compensability. Under
Section 1(b), Rule III implementing P.D. No. 626, sickness or death is compensable if the cause
is included in the list of occupational diseases annexed to the Rules. If not so listed,
compensation may still be recovered if the illness is caused or precipitated by factors inherent in
the employee’s work and working conditions. Here, strict rules of evidence are not applicable
since the quantum of evidence required under P.D. No. 626 is merely substantial evidence,
which means “such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.” What the law requires is a reasonable work-connection and not a direct
causal relation. It is sufficient that the hypothesis on which the workmen’s claim is based is
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probable since probability, not certainty, is the touchstone.Government Service Insurance

System Vs. Maria Teresa S.A. Cordero/Employees Compensation Commission Vs. Maria Teresa
S.A. Cordero, G.R. No. 171378/G.R. No. 171388, March 17, 2009.
Constructive dismissal. Case law holds that constructive dismissal occurs when there is
cessation of work because continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.
Respondent’s sudden, arbitrary and unfounded adoption of the two-day work scheme which
greatly reduced petitioners’ salaries renders it liable for constructive dismissal. Fe la Rosa, et al.
Vs. Ambassador Hotel, G.R. No. 177059, March 13, 2009.
Declaration of illegality of strike. Article 264(e) of the Labor Code prohibits any person engaged
in picketing from obstructing the free ingress to and egress from the employer’s premises. Since
respondent was found in the July 17, 1998 decision of the NLRC to have prevented the free
entry into and exit of vehicles from petitioner’s compound, respondent’s officers and employees
clearly committed illegal acts in the course of the March 9, 1998 strike. The use of unlawful
means in the course of a strike renders such strike illegal. Therefore, pursuant to the principle of
conclusiveness of judgment, the March 9, 1998 strike was ipso facto illegal. The filing of a
petition to declare the strike illegal was thus unnecessary. Jackbilt Industries, Inc. Vs. Jackbilt
Employees Workers Union-Naflu-KMU, G.R. No. 171618-19, March 13, 2009.
Employment of registered nurse. Article 157 does not require the engagement of full-time nurses
as regular employees of a company. Under Article 157, Shangri-la, which employs more than
200 workers, is mandated to “furnish” its employees with the services of a full-time registered
nurse, a part-time physician and dentist, and an emergency clinic which means that it should
provide or make available such medical and allied services to its employees, not necessarily to
hire or employ a service provider. While it is true that the provision requires employers to
engage the services of medical practitioners in certain establishments depending on the number
of their employees, nothing is there in the law which says that medical practitioners so engaged
be actually hired as employees. The law only requires the employer “to retain”, not employ, a
part-time physician who needed to stay in the premises of the non-hazardous workplace for two
(2) hours. The phrase “services of a full-time registered nurse” should thus be taken to refer to
the kind of services that the nurse will render in the company’s premises and to its employees,
not the manner of his engagement. Jerome D. Escasinas, et al. Vs. Shangri-la’s Mactan Island
Resort, et al., G.R. No. 178827, March 4, 2009.
Part-time employment. For a private school teacher to acquire permanent status in employment,
the following requisites must concur: (1) the teacher is a full-time teacher; (2) the teacher must
have rendered three consecutive years of service; and (3) such service must have been
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satisfactory. The burden is on petitioners to prove their affirmative allegation that they are
permanent teaching personnel. However, there is not enough evidence on record to show that
their total working day is devoted to the school. There is no showing of what the regular work
schedule of a regular teacher in respondent school is. What is clear in the records is that Evelyn
and Alwyn spent two hours and four hours, respectively, but not the entire working day, at the
respondent school. They do not meet requirement “c” of Section 45 of the Manual. Hence, we
sustain the findings of the Court of Appeals that the petitioners are part-time teachers. Being
part-time teachers,they cannot acquire permanent status. Spouses Alwyn Ong Lim and Evelyn
Lukang Lim Vs. Legazpi Hope Christian School, et al., G.R. No. 172818, March 31, 2009.
April 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Backwages. The Court agrees with the NLRC’s conclusion that petitioner is not entitled to
backwages. He never bothered to redeem his driver’s license at the soonest possible time when
there was no showing that he was unlawfully prevented by respondent from doing so. Thus,
petitioner should not be paid for the time he was not working. The Court has held that where
the failure of employees to work was not due to the employer’s fault, the burden of economic
loss suffered by the employees should not be shifted to the employer. Each party must bear his
own loss. It would be unfair to allow petitioner to recover something he has not earned and
could not have earned, since he could not discharge his work as a driver without his driver’s
license. Respondent should be exempted from the burden of paying backwages. Bernardino V.
Navarro vs. P.V. Pajarillo Liner and NLRC, G.R. No. 164681, April 24, 2009.
Breach of trust. The documentary evidence of petitioner indubitably establishes that respondent
committed payroll padding, sold canepoints without the knowledge and consent of
management and misappropriated the proceeds thereof, and rented tractor to another farm and
misappropriated the rental payments therefor. These acts constitute willful breach by the
employee of the trust reposed in him by his employer – a ground for termination of
employment. Bacolod-Talisay Realty and Development Corp., et al. vs. Romeo Dela Cruz, G.R.
No. 179563, April 30, 2009.
CBA. Just like any other contract, a CBA is the law between the contracting parties and
compliance therewith in good faith is required by law. HFS Phlippines, Inc., Ruben T. Del
Rosario and IUM Ship Management vs. Ronaldo R. Pilar, G.R. No. 168716, April 16, 2009.
Due process. The Court of Appeals correctly held that petitioners did not comply with the
proper procedure in dismissing respondent. In other words, petitioners failed to afford
respondent due process by failing to comply with the twin notice requirement in dismissing
him, viz: (1) a first notice to apprise him of his fault, and (2) a second notice to him that his
employment is being terminated. The letter dated June 3, 1997 sent to respondent was a letter
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of suspension. It did not comply with the required first notice, the purpose of which is to
apprise the employee of the cause for termination and to give him rasonable opportunity to
explain his side. The confrontation before the barangay council did not constitute the first
notice – to give the employee ample opportunity to be heard with the assistance of counsel, if
he so desires. Hearings before thebarangay council do not afford the employee ample
opportunity to be represented by counsel if he so desires because Section 415 of the Local
Government Code mandates that “[i]n all katarungang pambarangay proceedings, the parties
must appear in person without the assistance of counsel or his representatives, except for minors
and incompetents who may be assisted by their next-of-kin who are not lawyers.” The
requirement of giving respondent the first notice not having been complied with, discussions of
whether the second notice was complied with is rendered unnecessary. Bacolod-Talisay Realty
and Development Corp., et al. vs. Romeo Dela Cruz, G.R. No. 179563, April 30, 2009.
Due process; lack of jurisdiction. The proceedings before the Labor Arbiter deprived David of
due process. MACLU and NAFLU filed their complaint against MAC on 12 August
1993. Arbiter Ortiguerra’s decision shows that MACLU, NAFLU, and MAC were the only
parties summoned to a conference for a possible settlement. Because of MAC’s failure to
appear, Arbiter Ortiguerra deemed the case submitted for resolution. David’s resignation from
MAC took effect on 15 October 1993. NAFLU and MACLU moved to implead Carag and David
for the first time only in their position paper dated 3 January 1994. David did not receive any
summons and had no knowledge of the decision against him. The records of the present case
fail to show any order from Arbiter Ortiguerra summoning David to attend the preliminary
conference. Despite this lack of summons, in her Decision dated 17 June 1994, Arbiter
Ortiguerra not only granted MACLU and NAFLU’s motion to implead Carag and David, she also
held Carag and David solidarily liable with MAC. Armando David vs.. National Federation of
Labor Union, et al, G.R. No. 148263 and 148271-72, April 21, 2009.
Hearing. The guiding principles in connection with the hearing requirement in dismissal cases
are:
(a) “ample opportunity to be heard” means any meaningful opportunity (verbal or written)
given to the employee to answer the charges against him and submit evidence in support of his
defense, whether in a hearing, conference or some other fair, just and reasonable way;
(b) a formal hearing or conference becomes mandatory only when requested by the employee
in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or
when similar circumstances justify it;
(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the
“hearing or conference” requirement in the implementing rules and regulations. Felix B. Perez,
et al. Vs. Philippine Telegraph and Telephone Company, G.R. No. 152048, April 7, 2009.
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Illegal dismissal; abandonment. Petitioner insists that there cannot be any illegal dismissal
because in the first place, there was no dismissal to speak of, as it was respondent who
abandoned his work, after finding out that he was being investigated for theft. It is a basic
principle that in the dismissal of employees, the burden of proof rests upon the employer to
show that the dismissal is for a just cause and failure to do so would necessarily mean that the
dismissal is not justified. Petitioner failed to discharge the burden of proof that complainant was
guilty of abandonment. It did not adduce any proof to show that petitioner clearly and
unequivocally intended to abandon his job. It has been repeatedly stressed that for
abandonment to be a valid cause for dismissal there must be a concurrence of intention to
abandon and some overt act from which it may be inferred that the employee had no more
interest to continue working in his job. An employee who forthwith takes steps to protest his
layoff cannot by any logic be said to have abandoned his work. Otherwise stated, one could
not possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal
dismissal. In the instant case, save for the allegation that respondent did not submit him to the
investigation and the latter’s failure to return to work as instructed in the 8 February 1999 letter,
petitioner was unable to present any evidence which tend to show respondent’s intent to
abandon his work. Neither is the Court convinced that the filing of the illegal dismissal case
was respondent’s way to avoid the charge of theft. On the contrary, the filing of the complaint a
few days after his alleged dismissal signified respondent’s desire to return to work, a factor
which further militates against petitioner’s theory of abandonment. Harbor View Restaurant vs.
Reynaldo Labro, G.R. No. 168273, April 30, 2009.
Illegal dismissal; burden of proof. Under the Labor Code, as amended, the requirements for the
lawful dismissal of an employee are two-fold, the substantive and the procedural. Not only must
the dismissal be for a valid or authorized cause, the rudimentary requirements of due process –
notice and hearing – must, likewise, be observed before an employee may be dismissed. One
does not suffice; without their concurrence, the termination would, in the eyes of the law, be
illegal.
As the employer, petitioner has the burden of proving that the dismissal of petitioner was for a
cause allowed under the law and that petitioner was afforded procedural due
process. Petitioner failed to discharge this burden. Indeed, it failed to show any valid or
authorized cause under the Labor Code which allowed it to terminate the services of individual
respondents. Neither did petitioner show that individual respondents were given ample
opportunity to contest the legality of their dismissal. No notice of such impending termination
was ever given to them. Individual respondents were definitely denied due process. Having
failed to establish compliance with the requirements on termination of employment under the
Labor Code, the dismissal of individual respondents was tainted with illegality. Iligan Cement
Corporation vs. Iliascor Employees and Workers Union-Southern Philippines Federation of Labor,
et al., G.R. No. 158956, April 24, 2009.
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Illegal dismissal; penalty. The worst that respondent committed was an inadvertent
infraction. For that, the extreme penalty of dismissal imposed on him by petitioners was grossly
disproportionate. Taking into account the managerial position he held and the prior warning
issued to him for failing to communicate with his superiors, the penalty commensurate to the
violation he committed should be suspension for three months. Gulf Air Jassim Hindri Abdullah,
et al. vs. NLRC, et al., G.R. No. 159687, April 24, 2009.
Intra-union dispute. Pending the final resolution of the intra-union dispute, respondent’s officers
remained duly authorized to conduct union affairs. De La Salle University, et al. vs. De La Salle
University Employees Association (DLSUEA-NAFTEU),G.R. No. 177283, April 7, 2009.
Labor only contracting. We are not convinced that Vedali is an independent contractor.
Petitioner failed to present any service contract with Vedali in the proceedings with the Labor
Arbiter. There is nothing on record that Vedali has a substantial capital or investment to actually
perform the service under its own account and responsibility. Petitioner is a mere labor-only
contractor because it only supplied workers to petitioner to work at its pier. In a labor-only
contract, there are three parties involved: (1) the “labor-only” contractor; (2) the employee who
is ostensibly under the employ of the “labor-only” contractor; and (3) the principal who is
deemed the real employer. Under this scheme, the “labor-only” contractor is the agent of the
principal. Iligan Cement Corporation vs. Iliascor Employees and Workers Union-Southern
Philippines Federation of Labor, et al., G.R. No. 158956, April 24, 2009.
Liability of corporate officers. Article 212(e) of the Labor Code, by itself, does not make a
corporate officer personally liable for the debts of the corporation because Section 31 of the
Corporation Code is still the governing law on personal liability of officers for the debts of the
corporation. There was no showing of David willingly and knowingly voting for or assenting to
patently unlawful acts of the corporation, or that David was guilty of gross negligence or bad
faith. Armando David vs. National Federation of Labor Union, et al, G.R. No. 148263 and
148271-72, April 21, 2009.
Loss of confidence. Loss of trust and confidence, as a valid ground for dismissal, must be based
on willful breach of the trust reposed in the employee by his employer. 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. Elsewise stated, it must
be based on substantial evidence and not on the employer’s whims or caprices or suspicions;
otherwise, the employee would eternally remain at the mercy of the employer. A condemnation
of dishonesty and disloyalty cannot arise from suspicion spawned by speculative
inferences. Adam B. Garcia vs. NLRC (Second Division) Legazpi Oil Company, Inc. Romeo F.
Mercado and Gus Zuluaga, G.R. No. 172854, April 16, 2009.
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Loss of Confidence. Without undermining the importance of a shipping order or request, the
respondents’ evidence is insufficient to clearly and convincingly establish the facts from which
the loss of confidence resulted. Other than their bare allegations and the fact that such
documents came into petitioners’ hands at some point, respondents should have provided
evidence of petitioners’ functions, the extent of their duties, the procedure in the handling and
approval of shipping requests and the fact that no personnel other than petitioners were
involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged
tampering of shipping documents. The alterations on the shipping documents could not
reasonably be attributed to petitioners because it was never proven that petitioners alone had
control of or access to these documents. Unless duly proved or sufficiently substantiated
otherwise, impartial tribunals should not rely only on the statement of the employer that it has
lost confidence in its employee. Felix B. Perez, et al. vs. Philippine Telegraph and Telephone
Company,G.R. No. 152048, April 7, 2009.
Prescription. Articles 1139 to 1155 of the Civil Code provide the general law on prescription of
actions. Under Article 1139, actions prescribe by the mere lapse of time prescribed by law.
That law may either be the Civil Code or special laws as specifically mandated by Article
1148. In labor cases, the special law on prescription is Article 291 of the Labor Code. The
Labor Code has no specific provision on when a monetary claim accrues. Thus, again the
general law on prescription applies – Article 1150 of the Civil Code. Juanaria A. Rivera vs.
United Laboratories, Inc., G.R. No. 155639, April 22, 2009.
Resignation. Resignation is defined as 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 and he has no other choice but to disassociate himself from his
employment. Respondent’s resignation can be gleaned from the unambiguous terms of his letter
to Captain Cristino. Respondent’s bare claim that he was forced to execute his resignation letter
deserves no merit. Bare allegations of threat or force do not constitute substantial evidence to
support a finding of forced resignation. That such claim was proferred a year later all the more
renders his contention bereft of merit. Virgen Shipping Corporation, et al. vs. Jesus B.
Barraquio, G.R. No. 178127, April 16, 2009.
Resignation. Petitioner voluntarily resigned. Her employer cannot be held liable for constructive
dismissal. Gloria Artiaga vs. Siliman University and Siliman University Medical Center, G.R. No.
178453, April 16, 2009.
Security of Tenure. Security of tenure in the career executive service, which presupposes a
permanent appointment, takes place upon passing the CES examinations administered by the
CES Board. It is that which entitles the examinee to conferment of CES eligibility and the
inclusion of his name in the roster of CES eligibles. Under the rules and regulations promulgated
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by the CES Board, conferment of the CES eligibility is done by the CES Board through a formal
board resolution after an evaluation has been done of the examinee’s performance in the four
stages of the CES eligibility examinations. Upon conferment of CES eligibility and compliance
with the other requirements prescribed by the Board, an incumbent of a CES position may
qualify for appointment to a CES rank. Appointment to a CES rank is made by the President
upon the Board’s recommendation. It is this process which completes the official’s membership
in the CES and confers on him security of tenure in the CES. Petitioner does not seem to have
gone through this definitive process.
At this juncture, what comes unmistakably clear is the fact that because petitioner lacked the
proper CES eligibility and therefore had not held the subject office in a permanent capacity,
there could not have been any violation of petitioner’s supposed right to security of tenure
inasmuch as he had never been in possession of the said right at least during his tenure as
Deputy Director for Hospital Support Services. Hence, no challenge may be offered against his
separation from office even if it be for no cause and at a moment’s notice. Not even his own
self-serving claim that he was competent to continue serving as Deputy Director may actually
and legally give even the slightest semblance of authority to his thesis that he should remain in
office. Be that as it may, it bears emphasis that, in any case, the mere fact that an employee is a
CES eligible does not automatically operate to vest security of tenure on the appointee inasmuch
as the security of tenure of employees in the career executive service, except first and second-
level employees, pertains only to rank and not to the office or position to which they may be
appointed. Jose Pepito M. Amores M.D. vs. Civil Service Commission, Board of Trustees of the
Lung Center of the Philippines as represented by Hon. Manuel M. Dayrit and Fernando A.
Melendres, M.D., G.R. No. 170093, April 29, 2009
SSS. The claim for funeral benefits under P.D. No. 626, as amended, which was filed after the
lapse of 10 years by the therein petitioner who had earlier filed a claim for death benefits,
had not prescribed. Soledad Muños Mesa vs. Social Security System, et al., G.R. No. 160467,
April 7, 2009.
Transfer. Jurisprudence recognizes the exercise of management prerogative to transfer or assign

employees from one office or area of operation to another, provided there is no demotion in
rank or diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. To determine the validity of the transfer of employees, the employer must show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount
to constructive dismissal.
We have long stated that the objection to the transfer being grounded solely upon the personal
inconvenience or hardship that will be caused to the employee by reason of the transfer is not a
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valid reason to disobey an order of transfer. Such being the case, petitioner cannot adamantly
refuse to abide by the order of transfer without exposing herself to the risk of being
dismissed. Hence, her dismissal was for just cause in accordance with Article 282(a) of the
Labor Code. Aileen G. Herida vs. F4C Pawnshop and Jewelry Store/Marcelino Florete, Jr., G.R.
No. 172601, April 16, 2009.
Unfair labor practice; burden of proof. Petitioner makes several allegations that UST committed
ULP. The onus probandi falls on the shoulders of petitioner to establish or substantiate such
claims by the requisite quantum of evidence. In labor cases as in other administrative
proceedings, substantial evidence or such relevant evidence as a reasonable mind might accept
as sufficient to support a conclusion is required. In the petition at bar, petitioner miserably failed
to adduce substantial evidence as basis for the grant of relief. UST Faculty Union vs. University
of Sto. Tomas, Rev. Fr. Rolando De la Rosa, Rev Fr. Rodelio Aligan, Domingo Legaspi, and
Merecedes Hinayon, G.R. No. 180892, April 7, 2009.
May 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Abandonment. It is well settled that abandonment as a just and valid ground for dismissal
requires the deliberate and unjustified refusal of the employee to return for work. Two elements
must be present, namely: (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. The second
element is more determinative of the intent and must be evinced by overt acts. Mere absence,
not being sufficient, the burden of proof rests upon the employer to show that the employee
clearly and deliberately intended to discontinue her employment without any intention of
returning. In Samarca v. Arc-Men Industries, Inc, the Supreme Court held that abandonment is a
matter of intention and cannot lightly be presumed from certain equivocal acts.
To constitute 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. However, an employee who takes steps to
protest her layoff cannot be said to have abandoned her work because a charge of abandonment
is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so
when it includes a prayer for reinstatement. When Eleonor filed the illegal dismissal complaint,
it totally negated petitioner’s theory of abandonment.
Also, to effectively dismiss an employee for abandonment, the employer must comply with the
due process requirement of sending notices to the employee. In Brahm Industries, Inc. vs. NLRC,
the Supreme Court ruled that this requirement is not a mere formality that may be dispensed
with at will. Its disregard is a matter of serious concern since it constitutes a safeguard of the
highest order in response to man’s innate sense of justice. Petitioner was not able to send the
necessary notice requirement to Eleonor. Petitioner’s belated claim that it was not able to send
the notice of infraction prior to the filing of the illegal dismissal case cannot simply
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unacceptable. Based on the foregoing, Eleonor did not abandon her work. South Davao
Development Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.
Appeal to DOLE Secretary; appeal bond. The purpose of an appeal bond is to ensure, during the
period of appeal, against any occurrence that would defeat or diminish recovery by the
aggrieved employees under the judgment if subsequently affirmed. The Deed of Assignment in
the instant case, like a cash or surety bond, serves the same purpose. First, the Deed of
Assignment constitutes not just a partial amount, but rather the entire award in the appealed
Order. Second, it is clear from the Deed of Assignment that the entire amount is under the full
control of the bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to
be withdrawn by the same office after it had issued a writ of execution. For all intents and
purposes, the Deed of Assignment in tandem with the Letter Agreement and Cash Voucher is as
good as cash. Third, the execution of the Deed of Assignment, the Letter Agreement and the
Cash Voucher were made in good faith, and constituted clear manifestation of petitioner’s
willingness to pay the judgment amount. People’s Broadcasting vs. The Secretary of the
Department of Labor and Employment, et al., G.R. No. 179652, May 8, 2009.
Appeal; private carrier. In this case, petitioner availed of the services of LBC, a private carrier, to
deliver its notice of appeal to the NLRC. Had petitioner sent its notice of appeal by registered
mail, the date of mailing would have been deemed the date of filing with the NLRC. But
petitioner, for reasons of its own, chose to send its notice of appeal through a private letter-
forwarding agency. Therefore, the date of actual receipt by the NLRC of the notice of appeal,
and not the date of delivery to LBC, is deemed to be the date of the filing of the notice of appeal.
Since the NLRC received petitioner’s notice of appeal on 26 February 2001, the appeal was
clearly filed out of time. Petitioner had thus lost its right to appeal from the decision of the Labor
Arbiter and the NLRC should have dismissed its notice of appeal.Charter Chemical and Coating
Corporation vs. Herbert Tan and Amalia Sonsing, G.R. No. 163891, May 21, 2009.
Compensable illness; definition. P.D. No. 626, as amended, defines compensable sickness as
“any illness definitely accepted as an occupational disease listed by the Commission, or any
illness caused by employment subject to proof by the employee that the risk of contracting the
same is increased by the working conditions.” Under Section 1 (b), Rule III, of the Amended
Rules on Employees’ Compensation, for the sickness and the resulting disability or death to be
compensable, the same must be an “occupational disease” included in the list provided (Annex
“A”), with the conditions set therein satisfied; otherwise, the claimant must show proof that the
risk of contracting it is increased by the working conditions. Otherwise stated, for sickness and
the resulting death of an employee to be compensable, the claimant must show either: (1) that it
is a result of an occupational disease listed under Annex “A” of the Amended Rules on
Employees’ Compensation with the conditions set therein satisfied; or (2) if not so listed, that the
risk of contracting the disease is increased by the working conditions.
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Here, the CA correctly considered Cardiopulmonary Arrest T/C Fatal Arrythmia in this case a
cardiovascular disease – a listed disease under Annex “A” of the Amended Rules on Employees’
Compensation. The Death Certificate of Judge Vicencio clearly indicates that the cause of his
death is Cardiopulmonary Arrest T/C Fatal Arrythmia. Whether, however, the same was a mere
complication of his lung cancer as contended by petitioner GSIS or related to an underlying
cardiovascular disease is not established by the records of this case and, thus, remains
uncertain. The Supreme Court held that Cardiopulmonary Arrest T/C Fatal Arrythmia, the cause
of death stated in Judge Vicencio’s Death Certificate, should be considered as a cardiovascular
disease – a listed disease under Annex “A” of the Amended Rules on Employees’
Compensation. Government Service Insurance System vs. Marian T. Vicencio, G.R. No. 176832,
May 21, 2009.
Compensable illness; evidence. The degree of proof required under P.D. No. 626 is merely
substantial evidence, or “such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion.” The Supreme Court hasrepeatedly held that to prove compensability,
the claimant must adequately show that the development of the disease is brought largely by the
conditions present in the nature of the job. What the law requires is a reasonable work-
connection and not a direct causal relation. It is enough that the hypothesis on which the
workmen’s claim is based is probable. Medical opinion to the contrary can be disregarded
especially where there is some basis in the facts for inferring a work-connection. Probability, not
certainty, is the touchstone. Government Service Insurance System (GSIS) vs. Teresita S. De
Guzman, G.R. No. 173049, May 21, 2009.
Due process. Respondent was given ample opportunity to explain and rebut the evidence
against him. A full adversarial hearing was not required. The essence of due process is simply
the opportunity to be heard. As applied in administrative proceedings, it is merely an
opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or
ruling complained of.
Petitioners complied with the twin-notice requirement. The notice dated October 17, 2000
served on respondent was the written notice specifying the charges against him. The subsequent
notice dated February 7, 2001 (notice of adjudication specifying therein the causes for
respondent’s termination and the decision to dismiss him) served as the written notice of
termination. In view of respondent’s valid dismissal due to serious misconduct and loss of trust
and confidence, respondent is not entitled to separation pay. Telecommunications Distributors
Specialist, Inc., et al. vs. Raymund Garriel, G.R. No. 174981, May 25, 2009.
Employer-employee relationship; evidence. It has long been established that in administrative

and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the
existence of employer-employee relationship. Substantial evidence, which is the quantum of
proof required in labor cases, is “that amount of relevant evidence which a reasonable mind
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might accept as adequate to justify a conclusion.” No particular form of evidence is required to

prove the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted. Hence, while no particular form of
evidence is required, a finding that such relationship exists must still rest on some substantial
evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its
qualitative aspects.
In the instant case, save for respondent’s self-serving allegations and self-defeating evidence,
there is no substantial basis to warrant the Regional Director’s finding that respondent is an
employee of petitioner. People’s Broadcasting vs. The Secretary of the Department of Labor and
Employment, et al., G.R. No. 179652, May 8, 2009.
Employer-employee relationship; existence. In order to determine the existence of an employer-

employee relationship, the Court has frequently applied the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee’s conduct, or the so called “control test,” which is considered
the most important element.
From the time they were hired by petitioner corporation up to the time that they were reassigned
to work under Gamo’s supervision, their status as petitioner corporation’s employees did not
cease. Likewise, payment of their wages was merely coursed through Gamo. As to the most
determinative test―the power of control, it is sufficient that the power to control the manner of
doing the work exists, it does not require the actual exercise of such power. In this case, it was
in the exercise of its power of control when petitioner corporation transferred the copra workers
from their previous assignments to work as copraceros. It was also in the exercise of the same
power that petitioner corporation put Gamo in charge of the copra workers although under a
different payment scheme. Thus, it is clear that an employer-employee relationship has existed
between petitioner corporation and respondents since the beginning and such relationship did
not cease despite their reassignments and the change of payment scheme. South Davao
Development Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.
Employer-employee relationship; power of DOLE to determine. The DOLE in the exercise of its
visitorial and enforcement power somehow has to make a determination of the existence of an
employer-employee relationship. Such prerogatival determination, however, cannot be
coextensive with the visitorial and enforcement power itself. Indeed, such determination is
merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor
standards provisions. The determination of the existence of employer-employee relationship is
still primarily lodged with the NLRC. This is the meaning of the clause “in cases where the
relationship of employer-employee still exists” in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must
be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there
ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor
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Code or of any labor law? The existence of an employer-employee relationship is a statutory

prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative
branch is entitled to impose.
The rationale underlying this limitation is to eliminate the prospect of competing conclusions of
the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which
is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative
official of the executive branch of the government. If the Secretary of Labor proceeds to exercise
his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office
confers jurisdiction on itself which it cannot otherwise acquire. People’s Broadcasting vs. The
Secretary of the Department of Labor and Employment, et al., G.R. No. 179652, May 8, 2009.
Independent contractor. There is permissible job contracting when a principal agrees to put out
or farm out with a contractor or a subcontractor the performance or completion of a specific job,
work or service within a definite or predetermined period, regardless of whether such job or
work service is to be performed within or outside the premises of the principal. To establish the
existence of an independent contractor, we apply the following conditions: first, 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 to the result thereof; and second, the contractor has substantial capital or investments in
the form of tools, equipment, machineries, work premises and other materials which are
necessary in the conduct of his business.
The Implementing Rules and Regulation of the Labor Code defines investment—as tools,
equipment, implements, machineries and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work, or service
contracted out. The investment must be sufficient to carry out the job at hand.
In the case at bar, Gamo and the copra workers did not exercise independent judgment in the
performance of their tasks. The tools used by Gamo and his copra workers like the karit, bolo,
pangbunot, panglugit and pangtapok are not sufficient to enable them to complete the job.
Reliance on these primitive tools is not enough. In fact, the accomplishment of their task
required more expensive machineries and equipment, like the trucks to haul the harvests and
the drying facility, which petitioner corporation owns. South Davao Development Company,
Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.
Loss of trust and confidence. Petitioner cites Article 282 of the Labor Code, specifically loss of
trust and confidence as the ground for validly dismissing respondent. Under the law, loss of
confidence must be based on “fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative.” In this regard, the Supreme Court has
ruled that ordinary breach does not suffice. A breach of trust is willful if it is done intentionally,
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knowingly and purposely, without any justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.
Here, respondent was investigated on and dismissed for misappropriation of company funds
through falsification of company documents, as shown in the termination letter. Records,
nevertheless, neither showed nor convinced us that there was misappropriation of funds that
benefited anybody which warranted the dismissal of respondent for the first offense. Respondent
admittedly committed padding of accounts and/or paper renewal, which respondent claims to
be a practice among salesmen and such claim was not disputed by petitioner. The paper
renewal committed by respondent may be considered as falsification, but we agree with the
Labor Arbiter and the CA that such paper renewal did not amount to misappropriation that
could justify outright dismissal for the first offense, as what petitioner did to respondent.
Otherwise, the company rules would not have separated these two offenses under Rule Nos. 15
and 16. Besides, we agree with the CA that although petitioner did in fact violate company Rule
No. 15 by falsifying company records and documents through paper renewal, such falsification
has to be qualified. San Miguel Corporation vs. NLRC, et al., G.R. No. 153983, May 26, 2009.
Serious misconduct. Respondent’s acts of forging subscribers’ signatures, attempting to cover up

his failure to secure their signatures on the coverage waivers, selling a personally owned mobile
phone to a company customer (a defective one at that) and attempting to connive with other
employees to cover up his illicit schemes were serious acts of dishonesty. Respondent’s acts
clearly constituted serious misconduct which is a ground for termination of employment by an
employer. Respondent’s acts were likewise grounds for loss of trust and confidence, another
valid cause for termination of employment. Only employees occupying positions of trust and
confidence or those who are routinely charged with the care and custody of the employer’s
money or property may be validly dismissed for this reason. Telecommunications Distributors
Specialist, Inc., et al. vs. Raymund Garriel, G.R. No. 174981, May 25, 2009.
June 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Diminution of benefits; company practice. To be considered a company practice, the giving of

the benefits should have been done over a long period of time, and must be shown to have been
consistent and deliberate. The test or rationale of this rule on long practice requires an
indubitable showing that the employer agreed to continue giving the benefits knowing fully well
that said employees are not covered by the law requiring payment thereof.
With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice which cannot be unilaterally withdrawn by the
employer, jurisprudence has not laid down any hard and fast rule. In the case of Davao Fruits
Corporation v. Associated Labor Unions, the company practice of including in the computation
of the 13th-month pay the maternity leave pay and cash equivalent of unused vacation and sick
leave lasted for six (6) years. In another case, Tiangco v. Leogardo, Jr., the employer carried on
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the practice of giving a fixed monthly emergency allowance from November 1976 to February
1980, or three (3) years and four (4) months. While in Sevilla Trading v. Semana, the employer
kept the practice of including non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of their 13th-month pay for at least two (2) years. In all these
cases, the Supreme Court held that the grant of these benefits has ripened into company practice
or policy which cannot be peremptorily withdrawn. The common denominator in these cases
appears to be the regularity and deliberateness of the grant of benefits over a significant period
of time. Metropolitan Bank and Trust Company vs. National Labor Relations Commission, Felipe
A. Patag and Bienvenido C. Flora, G.R. No. 152928, June 18, 2009.
Compensable illness. A government employee, who suffers complete and permanent loss of
sight in one eye, is entitled to income benefit from the GSIS beginning the first month of said
employee’s disability, but no longer than the maximum period of 25 months. Government
Service Insurance System vs. Jaime K. Ibarra, G.R. No. 172925, June 18, 2009.
Compensable illness. Although the Court commiserates with petitioner’s sufferings, the Court
cannot close its eyes to the need to ensure that the workmen’s trust fund is protected from
depletion due to claims for illnesses which may not be truly work-related. Rodolfo B. Arceño Vs.
Government Service Insurance System, G.R. No. 162374, June 18, 2009.
Downsizing. Retrenchment is the reduction of work personnel usually due to poor financial
returns, aimed to cut down costs for operation particularly on salaries and wages. Redundancy,
on the other hand, exists where the number of employees is in excess of what is reasonably
demanded by the actual requirements of the enterprise. Both are forms of downsizing and are
often resorted to by the employer during periods of business recession, industrial depression, or
seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of
materials, conversion of the plant for a new production program, or introduction of new
methods or more efficient machinery or automation. Retrenchment and redundancy are valid
management prerogatives, provided they are done in good faith and the employer faithfully
complies with the substantive and procedural requirements laid down by law and jurisprudence.
For a valid retrenchment, the following requisites must be complied with: (1) the retrenchment is
necessary to prevent losses and such losses are proven; (2) written notice to the employees and
to the DOLE at least one month prior to the intended date of retrenchment; and (3) payment of
separation pay equivalent to one-month pay or at least one-half month pay for every year of
service, whichever is higher.
In case of redundancy, the employer must prove that: (1) a written notice was served on both
the employees and the DOLE at least one month prior to the intended date of retrenchment; (2)
separation pay equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher, has been paid; (3) good faith in abolishing the redundant positions;
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and (4) adoption of fair and reasonable criteria in ascertaining which positions are to be
declared redundant and accordingly abolished.
It is the employer who bears the onus of proving compliance with
these requirements, retrenchment and redundancy being in the nature of affirmative defenses.
Otherwise, the dismissal is not justified. Hotel Enterprises of the Philippines, Inc., etc. vs.
Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant,
etc., G.R. No. 165756, June 5, 2009.
Employer-employee relationship. There existed no employer-employee relationship between the

parties. De Raedt is an independent contractor, who was engaged by SGV to render services
to SGV’s client TMI, and ultimately to DA on the CECAP project, regarding matters in the field
of her special knowledge and training for a specific period of time. Unlike an ordinary employee,
De Raedt received retainer fees and benefits such as housing and subsistence allowances and
medical insurance. De Raedt’s services could be terminated on the ground of end of contract
between the DA and TMI, and not on grounds under labor laws. Though the end of the contract
between the DA and TMI was not the ground for the withdrawal of De Raedt from the CECAP,
De Raedt was disengaged from the project upon the instruction of SGV’s client, TMI. Most
important of all, SGV did not exercise control over the means and methods by which
De Raedt performed her duties as Sociologist. SGV did impose rules on De Raedt, but these
were necessary to ensure SGV’s faithful compliance with the terms and conditions of the Sub-
Consultancy Agreement it entered into with TMI. Sycip, Gorres, Velayo, & Company vs. Carol
De Raedt, G.R. No. 161366, June 16, 2009.
Ground for dismissal; abandonment. The rule is that the burden of proof lies with the employer
to show that the dismissal was for a just cause. In the present case, the petitioner claims that
there was no illegal dismissal since the respondent abandoned his job. The petitioner points out
that it wrote the respondent various memoranda requiring him to explain why he incurred
absences without leave, and requiring him as well to report for work; the respondent, however,
never bothered to reply in writing.
In evaluating a charge of abandonment, the jurisprudential rule is that abandonment is a matter
of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment,
two elements must concur: (1) the failure to report for work or absence without valid or
justifiable reason, and (2) a clear intent,manifested through overt acts, to sever the employer-
employee relationship. The employer bears the burden of showing a deliberate and unjustified
refusal by the employee to resume his employment without any intention of returning. We agree
with the CA that the petitioner failed to prove the charge of abandonment. Pentagon Steel
Corporation vs. Court of Appeals, et al., G.R. No. 174141, June 26, 2009.
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Ground for dismissal; gross negligence. Respondent’s actions, at their worse, reveal his
negligence, but said negligence can hardly be deemed gross and habitual, as to constitute a just
ground for his dismissal under Article 282(b) of the Labor Code.
Gross negligence under Article 282 of the Labor Code connotes want of care in the performance
of one’s duties, while habitual neglect implies repeated failure to perform one’s duties for a
period of time, depending upon the circumstances. Gross negligence has been defined as the
want or absence of even slight care or diligence as to amount to a reckless disregard of the
safety of person or property. It evinces a thoughtless disregard of consequences without exerting
any effort to avoid them. To constitute a just cause for termination of employment, the neglect of
duties must not only be gross but habitual as well. The single or isolated act of negligence does
not constitute a just cause for the dismissal of the employee. AMA Computer College-East
Rizal, et al. vs. Allan Raymond R. Ignacio, G.R. No. 178520. June 23, 2009.
Ground for dismissal; gross negligence. Gross negligence is characterized by 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.
Mateo was undisputedly negligent when he left the motorcycle along Burke Street in Escolta,
Manila without locking it despite clear, specific instructions to do so. His argument that he
stayed inside the LBC office for only three to five minutes was of no moment. On the contrary, it
only proved that he did not exercise even the slightest degree of care during that very short time.
Mateo deliberately did not heed the employer’s very important precautionary measure to ensure
the safety of company property. Regardless of the reasons advanced, the exact evil sought to be
prevented by LBC (in repeatedly directing its customer associates to lock their motorcycles)
occurred, resulting in a substantial loss to LBC. LBC Express Metro Manila, Inc. and Lorenzo
A. Niño vs. James Mateo, G.R. No. 168215, June 9, 2009.
Ground for dismissal; lost of confidence. Recent decisions of this Court have distinguished the
treatment of managerial employees from that of the rank-and-file personnel,insofar as the
application of the doctrine of loss of trust and confidence is concerned. Thus, 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. But as regards a managerial employee,
the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required. It is sufficient that there is some basis for the
employer’s loss of trust and confidence, such as when 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. Nonetheless, the evidence must be substantial and must establish clearly
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and convincingly the facts on which the loss of confidence rests and not on the
employer’s arbitrariness, whims, and caprices or suspicion. Triumph International (PHILS.), Inc.,
vs. Ramon L. Apostol, et al., G.R. No. 164423, June 16, 2009.
Ground for dismissal; loss of confidence. To be a valid ground for dismissal, loss of trust and
confidence must be based on a willful breach of trust and founded on clearly established facts.
A 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. 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.
Further, the act complained of must be work-related and must show that the employee
concerned is unfit to continue working for the employer. Sarabia Optical and Vivian Sarabia-Orn
vs. Jeanet B. Camacho, G.R. No. 155502, June 18, 2009.
Ground for dismissal; loss of confidence. Nissan failed to prove that Tagulao and Serrano were
responsible for the loss of two rolls of tint. The records of the case show that there was a
discrepancy between the dates of pick up and delivery as alleged by Nissan and as alleged
by Tagulao and Serrano. Even Catudio, Nissan’s employee, stated that she changed the dates on
the delivery receipt of the two rolls of tint on the instruction of her boss.
Loss of trust and confidence, to be a valid ground for an employee’s dismissal, must be based on
a willful breach and founded on clearly established facts. The burden of proof of dismissal rests
entirely upon the employer. In the present case, Nissan illegally dismissed Tagulao and Serrano
because Nissan failed to prove that Tagulao and Serrano were terminated for a valid
cause. Tagulao and Serrano are thus entitled to reinstatement and to receive backwages. Nissan
North Edsa Balintawak, Quezon City vs. Angelito Serrano, Jr. and Edwin Tagulao, G.R. No.
162538, June 4, 2009
Ground for dismissal; loss of confidence. 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.
The second requisite of terminating an employee for loss of trust and confidence is that there
must be an act that would justify the loss of trust and confidence. To be a valid cause for
dismissal, the loss of confidence must be based on a willful breach of trust and founded on
clearly established facts.
We find that it was not established that respondent used her authority to influence her
subordinates to stage a “no work day”; and assuming that she performed this act as alleged by
petitioners, it does not satisfy the jurisprudential requirements for valid termination due to loss of
trust and confidence.
Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or
fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or
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deceitful. She did not use her authority as the Administration Manager
to misappropriate company property nor did she abuse the trust reposed in her by petitioners
with respect to her responsibility to implement company rules. The most that can be attributed
to respondent is that she influenced a single subordinate, without exerting any force or making
any threats, not to report to work. This does not constitute dishonest or deceitful conduct which
would justify the conclusion of loss of trust and confidence. M+W Zander Philippines, Inc. and
Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009.
Grounds for dismissal; serious misconduct. Under the circumstances, our conclusion can only
be for Salon’s dismissal for two counts of valid causes – i.e., for serious violation of TIP’s
Memorandum No. P-66, for unauthorized selling of examination papers, and for serious
misconduct, for falsifying Manalo’s grade and violating the grading rules under the Manual of
Regulations for Private Schools.Technological Institute of the Philippines Teachers and
Employees Organization and its member Magdalena T. Salon vs. the Honorable Court of
Appeals, et al., G.R. No. 158703, June 26, 2009.
Ground for dismissal; willful disobedience. Willful disobedience of the employer’s lawful orders,
as a just cause for dismissal of an employee, requires the concurrence of two (2) elements: (1)
the employee’s assailed conduct must have been willful, i.e., 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.
Gilles’ resignation from CBI and sudden departure from India was not approved by SKI. When
he asked the company’s permission to return to Manila, the management instructed him to stay
in India until a suitable replacement was found. He knew of the critical stage of the Project due
to the accelerated period of its completion. Thus, when he left the Project, despite the clear and
lawful instructions of the management for him to stay, his act constituted
willful disobedience and gross neglect of duty under Article 282 of the Labor Code.
Gilles’ departure from India, despite the instruction of SKI for him to stay, was impelled by the
financial difficulties he encountered thereat. The money given to him before he left for India was
already spent. Rickie Sarque, the Chief Accountant of SKI, admitted on the witness stand that
Gilles was paid his salaries for the 3 ½ months when he was already back in Manila. Added to
this were the problems he encountered due to the acceleration of the job completion period, the
obligations he had to meet at home for his aged mother at that time, now deceased, and the
relatives who needed his financial support. Clearly, Gilles had a valid reason to leave India.
SKI’s failure to pay Gilles’ salary on time was intolerable. For neglecting its duties as an
employer, SKI may, thus, be considered to have acted in bad faith. It may be deemed as utter
disregard by SKI of the welfare and well-being of its employee, especially at a time when he was
far away from home.
We, therefore, find that Gilles was constructively dismissed from
employment. Constructive dismissal exists when the employee involuntarily resigns due to the
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harsh, hostile, and unfavorable conditions set by the employer. It arises when there is
clear discrimination, insensibility, or disdain by an employer and this becomes unbearable to
the employee.
Invariably, the law recognizes and resolves such a situation in favor of the employees in order to
protect their rights from the coercive acts of the employer. Resignation contemplates a voluntary
act; thus, an employee who is forced to relinquish his position due to the employer’s unfair
or unreasonable treatment is deemed to have been illegally terminated or discharged. 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. Bienvenido C. Gilles vs. Court of
Appeals, Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009.
Illegal dismissal; attorney’s fees. aAtorney’s fees may be awarded only when the employee is
illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights
by reason of the unjustified acts of his employer. In the case at bar, respondent’s unjustified and
unwarranted dismissal prompted her to engage the professional services of a counsel and she is
thus entitled to an award of attorney’s fees. M+W Zander Philippines, Inc. and
Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009.
Illegal dismissal; moral damages. There is sufficient basis to award moral damages and
attorney’s fees to respondent. We have consistently ruled that in illegal dismissal cases, moral
damages are recoverable only where the dismissal of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals,
good customs or public policy. Such an award cannot be justified solely upon the premise that
the employer fired his employee without just cause or due process. Additional facts must be
pleaded and proven to warrant the grant of moral damages under the Civil Code, i.e., that the
act of dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy; and, of course, that
social humiliation, wounded feelings, grave anxiety, and similar injury resulted therefrom.
In previous cases where moral damages and attorney’s fees were awarded, the manner of
termination was done in a humiliating and insulting manner, such as in the case
of Balayan Colleges v. National Labor Relations Commission where the employer posted copies
of its letters of termination to the teachers inside the school campus and it also furnished copies
to the town mayor and Parish Priest of their community for the purpose of maligning the
teachers’ reputation. So also in the case of Chiang Kai Shek School v. Court of Appeals, this
Court awarded moral damages to a teacher who was flatly, and without warning or a formal
notice, told that she was dismissed.
In the case at bar, we see it fit to award moral damages to respondent because the manner in
which respondent was treated upon petitioners’ suspicion of her involvement in drafting and in
circulating the letter of appeal and the alleged staging of the “no work day” is contrary to good
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morals because it caused unnecessary humiliation to respondent. M+W Zander Philippines, Inc.
and Rolf Wiltschek vs.Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009.
Illegal dismissal; liability of corporate officer. The general manager of a corporation should not
be made personally answerable for the payment of an illegally dismissed employee’s monetary
claims arising from the dismissal unless he had acted maliciously or in bad faith in terminating
the services of the employee. The employer corporation has a separate and distinct personality
from its officers who merely act as its agents.
The exception noted is where the official “had acted maliciously or in bad faith,” in which event
he may be made personally liable for his own act. That exception is not applicable in the case at
bar, because it has not been proven that Wiltschek was impleaded in his capacity as General
Manager of petitioner corporation and there appears to be no evidence on record that he acted
maliciously or in bad faith in terminating the services of respondent. His act, therefore, was
within the scope of his authority and was a corporate act for which he should not be held
personally liable for. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad
M. Enriquez, G.R. No. 169173, June 5, 2009; see also Bienvenido C. Gilles vs. Court of Appeals,
Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009.
Illegal dismissal; procedural due process. Procedural due process in the dismissal of employees
requires notice and hearing. The employer must furnish the employee two written notices before
termination may be effected. The first notice apprises the employee of the particular acts or
omissions for which his dismissal is sought, while the second notice informs the employee of the
employer’s decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted. Herminigildo Inguillom, et al. vs. First Philippine Scales,
Inc., et al., G.R. No. 165407, June 5, 2009.
Illegal dismissal; reinstatement. The respondent’s illegal dismissal carries the legal consequence
defined under Article 279 of the Labor Code: the illegally dismissed employee is entitled
to reinstatement without loss of seniority rights and other privileges and to his full backwages,
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. The
imposition of this legal consequence is a matter of law that allows no discretion on the part of
the decision maker, except only to the extent recognized by the law itself as expressed
in jurisprudence. Pentagon Steel Corporation vs. Court of Appeals, et al., G.R. No.
174141, June 26, 2009.
Reinstatement; union shop steward. A shop steward leads to the conclusion that it is a position
within the union, and not within the company. A shop steward is appointed by the union in a
shop, department, or plant and serves as representative of the union, charged with negotiating
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and adjustment of grievances of employees with the supervisor of the employer. He is

the representative of the union members in a building or other workplace. Black’s Law
Dictionary defines a shop steward as a union official elected to represent members in a plant or
particular department. His duties include collection of dues, recruitment of new members and
initial negotiations for the settlement of grievances.
A judgment of reinstatement of the petitioner to the position of union Shop Steward would have
no practical legal effect since it cannot be enforced. Based on the requirements imposed by law
and the APCWU-ATI CBA, and in the nature of things, the subsequent separation of the
petitioner from employment with respondent ATI has made his reinstatement to union Shop
Steward incapable of being enforced. Teodoro S. Miranda, Jr. vs. Asian Terminals, Inc. and
Court of Appeals, G.R. No. 174316, June 23, 2009.
Resignation; separation pay. No provision in the Labor Code grants separation pay to voluntarily
resigning employees. Separation pay may be awarded only in cases when the termination of
employment is due to (a) installation of labor-saving devices, (b) redundancy, (c) retrenchment,
(d) closing or cessation of business operations, (e) disease of an employee and his continued
employment is prejudicial to himself or his co-employees, or (f) when an employee is illegally
dismissed but reinstatement is no longer feasible. In fact, the rule is that an employee who
voluntarily resigns from employment is not entitled to separation pay, except when it is
stipulated in the employment contract or collective bargaining agreement (CBA), or it is
sanctioned by established employer practice or policy.
Here, the primary consideration that impelled respondent to tender his resignation letter was the
assurance that he would be paid his separation pay. It is thus unlikely for someone to just leave
his employer for whom he has worked for twelve (12) years without any expectation of financial
assistance. Hence, the former employee is entitled to receive separation pay. “J” Marketing
Corporation, represented by its Branch Manager Elmundo Dador, G.R. No. 163924, June 18,
2009.
Strike; requisites for validity. The requisites for a valid strike are: (a) a notice of strike filed with
the DOLE 30 days before the intended date thereof or 15 days in case of ULP; (b) a strike vote
approved by a majority of the total union membership in the bargaining unit concerned
obtained by secret ballot in a meeting called for that purpose; and (c) a notice to the DOLE of
the results of the voting at least seven (7) days before the intended strike. The requirements are
mandatory and failure of a union to comply therewith renders the strike illegal. Hotel
Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National
Union of Workers in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009.
Union security. “Union security” is a generic term, which is applied to and comprehends
“closed shop,” “union shop,” “maintenance of membership” or any other form of agreement
which imposes upon employees the obligation to acquire or retain union membership as a
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condition affecting employment. There is union shop when all new regular employees are
required to join the union within a certain period as a condition for their continued employment.
There is maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted or transferred out
of the bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be
defined as an enterprise in which, by agreement between the employer and his employees or
their representatives, no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a
member in good standing of a union entirely comprised of or of which the employees in interest
are a part.
In terminating the employment of an employee by enforcing the Union Security Clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the union’s decision to expel the employee from the union
or company.Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al., G.R. No.
165407, June 5, 2009.
July 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Dismissal; loss of confidence. Loss of confidence applies only to cases involving employees who
occupy positions of trust and confidence, or to those situations where the employee is routinely
charged with the care and custody of the employer’s money or property. To be a valid ground
for an employee’s dismissal, loss of trust and confidence must be based on a willful breach. A
breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse.
In dismissing an employee on the ground of loss of confidence, it is sufficient that the employer
has a reasonable ground to believe, based on clearly established facts, that the employee is
responsible for the misconduct and the nature of his participation renders him unworthy of the
trust and confidence demanded by his position. If the employer has ample reason to distrust the
employee, the labor tribunal cannot justly deny the former the authority to dismiss the
latter. Renita Del Rosario, et al. vs.Makati Cinema Square Corporation, G.R. No. 170014. July 3,
2009.
Dismissal; loss of confidence. To be a valid ground for dismissal, loss of trust and confidence
must be based on a willful breach of trust and founded on clearly established facts. A 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. 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. Such ground of
dismissal has never been intended to afford an occasion for abuse because of its subjective
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nature. Davao Contractors Development Cooperative (DACODECO), represented by Chairman

of the Board Engr. L. Chavez vs. Marilyn A. Pasawa, G.R. No. 172174, July 9, 2009.
Dismissal; probationary employee. Under Article 281 of the Labor Code, a probationary
employee can be legally dismissed either: (1) for a just cause; or (2) when he fails to qualify as a
regular employee in accordance with the reasonable standards made known to him by the
employer at the start of the employment. Nonetheless, the power of the employer to terminate
the services of an employee on probation is not without limitations. First, this power must be
exercised in accordance with the specific requirements of the contract. Second, the
dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to
circumvent the contract or the law. Third, there must be no unlawful discrimination in the
dismissal. In termination cases, the burden of proving just or valid cause for dismissing an
employee rests on the employer.
Here, petitioner did not present proof that respondent was duly notified, at the time of her
employment, of the reasonable standards she needed to comply with for her continued
employment. Davao Contractors Development Cooperative (DACODECO), represented by
Chairman of the Board Engr. L. Chavez vs. Marilyn A. Pasawa, G.R. No. 172174, July 9, 2009.
Employee benefits; compensable illness. In any determination of compensability, the nature and
characteristics of the job are as important as raw medical findings and a claimant’s personal and
social history. This is a basic legal reality in workers’ compensation law.
What the law requires is a reasonable work connection and not direct causal relation.
Probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings.
For, in interpreting and carrying out the provisions of the Labor Code and its Implementing
Rules and Regulations, the primordial and paramount consideration is the employee’s welfare.
To safeguard the worker’s rights, any doubt on the proper interpretation and application must be
resolved in favor of labor. Government Service Insurance System vs. Salvador A. De
Castro, G.R. No. 185035, July 15, 2009.
Employee benefits; retirement. 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. Retirement is provided for
under Article 287 of the Labor Code, as amended by Republic Act No. 7641, or is determined
by an existing agreement between the employer and the employee.
In this case, respondent offered the Special Separation Incentive Program (SSIP) to overhaul the
bank structure and to allow it to effectively compete with local peer and foreign banks. SSIP was
not compulsory on employees. Employees who wished to avail of the SSIP were required to
accomplish a form for availment of separation benefits under the SSIP and to submit the
accomplished form to the Personnel Administration and Industrial Relations Division (PAIRD)
for approval.
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Petitioner voluntarily availed of the SSIP. Marcelino A. Magdadaro vs. Philippine National
Bank, G.R. No. 166198, July 17, 2009.
Employee benefits; salary increase. It is a familiar and fundamental doctrine in labor law that
the collective bargaining agreement (CBA) is the law between the parties and they are obliged to
comply with its provisions. If the terms of a contract, in this case the CBA, are clear and leave
no doubt upon the intention of the contracting parties, the literal meaning of their stipulations
shall control.
A reading of the above-quoted provision of the CBA shows that the parties agreed that 80% of
the TIP or at the least the amount of P1,500 is to be allocated for individual salary increases.
The CBA does not speak of any other benefits or increases which would be covered by the
employees’ share in the TIP, except salary increases. University of San Agustin, Inc.
vs. University of San Agustin Employees Union-FFW, G.R. No. 177594, July 23, 2009.
Employee benefits; seamen. The terms and conditions of a seafarer’s employment is governed by
the provisions of the contract he signs at the time he is hired. But unlike that of others, deemed
written in the seafarer’s contract is a set of standard provisions set and implemented by
the POEA, called the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels, which are considered to be the minimum
requirements acceptable to the government for the employment of Filipino seafarers on board
foreign ocean-going vessels. Thus, the issue of whether petitioner Nisda can legally demand and
claim disability benefits from respondents Sea Serve and ADAMS for an illness suffered is best
addressed by the provisions of his POEA-SEC, which incorporated the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels.
When petitioner Nisda was employed on 7 August 2001, it was the 2000 Amended Standard
Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going
Vessels (hereinafter referred to simply as Amended Standard Terms and Conditions for brevity)
that applied and were deemed written in or appended to his POEA-SEC. Carlos N. Nisda vs. Sea
Serve Maritime Agency, et al., G.R. No. 179177, July 23, 2009.
Employee benefits; service award. Respondent’s service award under Article 87 of the Saudi
Labor Law has already been paid. The severance pay received by respondent was his service
award. LWV Construction Corporation vs. Marcelo B. Dupo, G.R. No. 172342, July 13, 2009.
Employees; project employee. The principal test for determining whether a particular employee
is a project employee or a regular employee is whether the project employee was assigned to
carry out a specific project or undertaking, the duration and scope of which were specified at
the time the employee is engaged for the project. “Project” may refer to a particular job or
undertaking that is within the regular or usual business of the employer, but which is distinct
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and separate and identifiable as such from the undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times.
Here, the specific projects for which respondent was hired and the periods of employment were
specified in his employment contracts. The services he rendered, the duration and scope of each
employment are clear indications that respondent was hired as a project
employee. Alcatel Philippines, Inc. vs. Rene R. Relos, G.R. No. 164315, July 3, 2009.
Jurisdiction; Regional Director. Respondent contested the findings of the labor inspector during
and after the inspection and raised issues the resolution of which necessitated the examination
of evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional
Director was divested of jurisdiction and should have endorsed the case to the appropriate
Arbitration Branch of the NLRC. Considering, however, that an illegal dismissal case had been
filed by petitioners wherein the existence or absence of an employer-employee relationship was
also raised, the CA correctly ruled that such endorsement was no longer
necessary. Victor Meteoro, et al. vs. Creative Creatures, Inc., G.R. No. 171275. July 13, 2009
Labor claim; deed of release. 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. Furthermore,
there is a gross disparity between the amount actually received by petitioner as compared to the
amount owing him as initially computed by VA Calipay. The amount of the settlement is
indubitably unconscionable; hence, ineffective to bar petitioner from claiming the full measure
of his legal rights. In any event, the Supreme Court deemed it appropriate that the amount he
received as consideration for signing the quitclaim be deducted from his monetary
award. Rafael Rondina vs. Court of Appeals former special 19th Division, Unicraft Industries
International Corp., Inc. Robert Dino, Cristina Dino, Michael Lloyd Dino, Allan Dino
and Mylene June Dino, G.R. No. 172212, July 9, 2009.
Labor claim; liability of corporate officers. To hold a director personally liable for the debts of
the corporation, and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the
director must be established clearly and convincingly. Bad faith is never presumed. Bad faith
does not connote bad judgment or negligence. Bad faith imports a dishonest purpose. Bad faith
means breach of a known duty through some ill motive or interest. Bad faith partakes of the
nature of fraud. Rafael Rondina vs. Court of Appeals former special
19th Division, Unicraft Industries International Corp., Inc. Robert Dino, Cristina Dino, Michael
Lloyd Dino, Allan Dino and Mylene June Dino, G.R. No. 172212, July 9, 2009.
Strike; illegal strike. It is undisputed that the notice of strike was filed by the union without
attaching the counter-proposal of the company. This, according to petitioners and the labor
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arbiter, made the ensuing strike of respondents illegal because the notice of strike of the union
was defective.
The Implementing Rules use the words “as far as practicable.” In this case, attaching the
counter-proposal of the company to the notice of strike of the union was not practicable. It was
absurd to expect the union to produce the company’s counter-proposal which it did not have.
One cannot give what one does not have. Indeed, compliance with the requirement was
impossible because no counter-proposal existed at the time the union filed a notice of strike.
The law does not exact compliance with the impossible. Nemo tenetur ad impossibile.
Another error committed by the labor arbiter was his declaration that respondents, as union
officers, automatically severed their employment with the company due to the alleged illegal
strike. In the first place, there was no illegal strike. Moreover, it is hornbook doctrine that a mere
finding of the illegality of the strike should not be automatically followed by the wholesale
dismissal of the strikers from employment. Club Filipino, Inc. and Atty. Roberto F. De
Leon vs. Benjamin Bautista, et al., G.R. No. 168406, July 13, 2009.
Union; check-off. Article 222(b) of the Labor Code, as amended, prohibits the payment of
attorney’s fees only when it is effected through forced contributions from the employees from
their own funds as distinguished from union funds. Hence, the general rule is that attorney’s fees,
negotiation fees, and other similar charges may only be collected from union funds, not from the
amounts that pertain to individual union members. As an exception to the general rule, special
assessments or other extraordinary fees may be levied upon or checked off from any amount
due an employee for as long as there is proper authorization by the employee.
A check-off is a process or device whereby the employer, on agreement with the Union,
recognized as the proper bargaining representative, or on prior authorization from the
employees, deducts union dues or agency fees from the latter’s wages and remits them directly
to the Union. Its desirability in a labor organization is quite evident. The Union is assured
thereby of continuous funding. The system of check-off is primarily for the benefit of the Union
and, only indirectly, for the individual employees.
Here, the requisites for a valid levy and check-off of special assessments, laid down by Article
241(n) and (o), respectively, of the Labor Code, as amended, have not been complied with in
the case at bar. To recall, these requisites are: (1) an authorization by a written resolution of the
majority of all the union members at the general membership meeting duly called for the
purpose; (2) secretary’s record of the minutes of the meeting; and (3) individual written
authorization for check-off duly signed by the employee concerned. Eduardo J. Mariño, Jr. et al.
vs. Gil Y. Gamilla, et al., G.R. No. 149763, July 7, 2009.
August 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Benefits; backwages. The issue on the proper computation of Mutuc’s backwages has been
rendered moot by our decision that Mutuc was validly dismissed. Backwages is a relief given to
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an illegally dismissed employee. Since Mutuc’s dismissal is for an authorized cause, she is not
entitled to backwages. Lowe, Inc., et al. vs. Court of Appeals and Irma Mutuc, G.R. Nos.
164813 & G.R. No. 174590, August 14, 2009.
Benefits; service charge. Since Dusit Hotel is explicitly mandated by the Article 96 of the Labor
Code to pay its employees and management their respective shares in the service charges
collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial
compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees’
right to their shares in the service charges collected by Dusit Hotel is distinct and separate from
their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the
other. Philippine Hoteliers, Inc./Dusit Hotel Nikko-Manila vs. National Union of Workers in
Hotel, Restaurant, and Allied Industries (NUWHARAIN-APL-
IUF) Dusit Hotel Nikko Chapter, G.R. No. 181972, August 25, 2009.
Dismissal; illegal strike. A perusal of the Labor Arbiter’s Decision, which was affirmed
in toto by the NLRC, shows that on account of the staging of the illegal strike, individual
respondents were all deemed to have lost their employment, without distinction as to their
respective participation.
Of the participants in the illegal strike, whether they knowingly participated in the illegal strike
in the case of union officers or knowingly participated in the commission of violent acts during
the illegal strike in the case of union members, the records do not indicate. While respondent
Julius Vargas was identified to be a union officer, there is no indication if he knowingly
participated in the illegal strike. The Court not being a trier of facts, the remand of the case to
the NLRC is in order only for the purpose of determining the status in the Union of individual
respondents and their respective liability, if any. A. Soriano Aviation vs. Employees Association
of A. Soriano Aviation, et al., G.R. No. 166879, August 14, 2009.
Dismissal; misconduct. In its 14 February 2000 decision, PNB’s Administrative Adjudication

Panel found Maralit guilty of serious misconduct, gross violation of bank rules and regulations,
and conduct prejudicial to the best interest of the bank. Maralit violated bank policies which
resulted in the return of unfunded checks amounting to P54,950,000.
Accordingly, PNB dismissed Maralit from the service with forfeiture of her retirement benefits
effective at the close of business hours on 31 December 1998.
PNB may rightfully terminate Maralit’s services for a just cause, including serious misconduct.
Serious misconduct is improper conduct, a transgression of some established and definite rule of
action, a forbidden act, or a dereliction of duty. Having been dismissed for a just
cause, Maralit is not entitled to her retirement benefits. Ester B. Maralit vs. Philippine National
Bank, G.R. No. 163788, August 24, 2009.
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Dismissal; negligence. Gross negligence connotes want or absence of or failure to exercise even
slight care or diligence, or the total absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. To warrant removal from service, the
negligence should not merely be gross, but also habitual. A single or isolated act of negligence
does not constitute a just cause for the dismissal of the employee.
In JGB and Associates, Inc. v. National Labor Relations Commission, the Court further declared
that gross negligence connotes want of care in the performance of one’s duties. Habitual neglect
implies repeated failure to perform one’s duties for a period of time, depending upon the
circumstances. 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. Chona Estacio and
Leopoldo Manliclic vs. Pampanga I, Electric Cooperative, Inc. and Loliano E. Allas, G.R. No.
183196. August 19, 2009
Dismissal; negligence. Under Article 282 (b) of the Labor Code, negligence must be both gross
and habitual to justify the dismissal of an employee. Gross negligence is characterized by 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.
In the present case, petitioner, as respondent’s Accounting Manager, failed to discharge her
important duty of remitting SSS/PhilHealth contributions not once but quadruple times, resulting
in respondent’s incurring of penalties totaling P18,580.41, not to mention the
employees/members’ contributions being unupdated. Eden Llamas vs. Ocean Gateway Maritime
and Management, Inc., G.R. No. 179293, August 14, 2009.
Dismissal; redundancy. Redundancy exists when the service of an employee is in excess of what
is reasonably demanded by the actual requirements of the business. A redundant position is one
rendered superfluous by any number of factors, such as overhiring of workers, decreased
volume of business, dropping of a particular product line previously manufactured by the
company or phasing out of a service activity formerly undertaken by the enterprise.
For a valid implementation of a redundancy program, the employer must comply with the
following requisites: (1) written notice served on both the employee and the DOLE at least one
month prior to the intended date of termination; (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 position; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant. Lowe, Inc., et al. vs. Court of Appeals
and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.
Dismissal; redundancy. We agree with the Labor Arbiter that Lowe employed fair and
reasonable criteria in declaring Mutuc’s position redundant. Mutuc, who was hired only on 23
June 2000, did not deny that she was the most junior of all the executives of Lowe. Mutuc also
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did not present contrary evidence to disprove that she was the least efficient and least
competent among all the Creative Directors.
The determination of the continuing necessity of a particular officer or position in a business
corporation is a management prerogative, and the courts will not interfere unless arbitrary or
malicious action on the part of management is shown. It is also within the exclusive prerogative
of management to determine the qualification and fitness of an employee for hiring and firing,
promotion or reassignment. Indeed, an employer has no legal obligation to keep more
employees than are necessary for the operation of its business. Lowe, Inc., et al. vs. Court of
Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.
Dismissal; resignation. In termination cases, it is incumbent upon the employer to prove either
the non-existence or the validity of dismissal. Inasmuch as respondents alleged petitioner’s
resignation as the cause of his separation from work, respondents had the burden to prove the
same. The case of the employer must stand or fall on its own merits and not on the weakness of
the employee’s defense.
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one who has
no other choice but to dissociate oneself from employment. 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, in fact, he intended to sever his employment.
In this case, we find no overt act on the part of petitioner that he was ready to sever his
employment ties. Baltazar L. Payno vs. Orizon Trading Corp./ Orata Trading
and Flordeliza Legaspi, G.R. No. 175345, August 19, 2009.
Dismissal; transfer. ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary
to Aguanza’s assertions, a valid exercise of management prerogative. The transfer of employees
has been traditionally among the acts identified as a management prerogative subject only to
limitations found in law, collective bargaining agreement, and general principles of fair play and
justice. Even as the law is solicitous of the welfare of 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 purpose cannot be denied.
On the other hand, the transfer of an employee may constitute constructive dismissal “when
continued employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee.”
Aguanza’s continued employment was not impossible, unreasonable or unlikely; neither was
there a clear discrimination against him. Among the employees assigned to Bismark IV, it was
only Aguanza who did not report for work in Bataan. Aguanza’s assertion that he was not
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allowed to “time in” in Manila should be taken on its face: Aguanza reported for work in Manila,
where he wanted to work, and not in Bataan, where he was supposed to work. There was no
demotion in rank, as Aguanza would continue his work as Crane Operator. Furthermore,
despite Aguanza’s assertions, there was no diminution in pay. Gualberto Aguanza vs. Asian
Terminal, Inc., et al., G.R. No. 163505, August 14, 2009.
Jurisdiction; Secretary of Labor. In the case at bar, the Secretary of Labor correctly assumed
jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the
Labor Code. While petitioner Jethro appealed the inspection results and there is a need to
examine evidentiary matters to resolve the issues raised, the payrolls presented by it were
considered in the ordinary course of inspection. While the employment records of the
employees could not be expected to be found in Yakult’s premises in Calamba, as Jethro’s
offices are in Quezon City, the records show that Jethro was given ample opportunity to present
its payrolls and other pertinent documents during the hearings and to rectify the violations noted
during the ocular inspection. It, however, failed to do so, more particularly to submit competent
proof that it was giving its security guards the wages and benefits mandated by law.
Jethro’s failure to keep payrolls and daily time records in Yakult’s premises was not the only
labor standard violation found to have been committed by it; it likewise failed to register as a
service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier
stated, to pay the wages and benefits in accordance with the rates prescribed by law. Jethro
Intelligence & Security Corporation and Yakult, Inc. vs.. The Hon. Secretary of Labor and
Employment, et al., G.R. No. 172537, August 14, 2009.
Labor organization. Article 212(g) of the Labor Code defines a labor organization as “any union
or association of employees which exists in whole or in part for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of employment.”
Upon compliance with all the documentary requirements, the Regional Office or Bureau shall
issue in favor of the applicant labor organization a certificate indicating that it is included in the
roster of legitimate labor organizations. Any applicant labor organization shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration. Sta. Lucia East Commercial
Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No. 162355, August 14,
2009.
Labor organization; bargaining unit. A bargaining unit is a “group of employees of a given

employer, comprised of all or less than all of the entire body of employees, consistent with
equity to the employer, indicated to be the best suited to serve the reciprocal rights and duties of
the parties under the collective bargaining provisions of the law.” The fundamental factors in
determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees’ interest, such as substantial similarity of work
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and duties, or similarity of compensation and working conditions (Substantial Mutual Interests
Rule); (3) prior collective bargaining history; and (4) similarity of employment status. Sta. Lucia
East Commercial Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No.
162355, August 14, 2009.
Strike; illegal strike. It is hornbook principle that the exercise of the right of private sector
employees to strike is not absolute (see Section 3 of Article XIII of the Constitution).
Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where the
means employed are illegal. Thus, the employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which are injurious to the right to property renders
a strike illegal. And so is picketing or the obstruction to the free use of property or the
comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence,
and coercion as to constitute nuisance.
Here, the Union members’ repeated name-calling, harassment and threats of bodily harm
directed against company officers and non-striking employees and, more significantly, the
putting up of placards, banners and streamers with vulgar statements imputing criminal
negligence to the company, which put to doubt reliability of its operations, come within the
purview of illegal acts under Art. 264 of the Labor Code and jurisprudence. A. Soriano Aviation
vs. Employees Association of A. Soriano Aviation, et al., G.R. No. 166879, August 14, 2009.
September 2009 Philippine Supreme Court Decisions on Labor Law
Dismissal; abandonment. Abandonment is a form of neglect of duty, one of the just causes for
an employer to terminate an employee. It is a hornbook precept that in illegal dismissal cases,
the employer bears the burden of proof. For a valid termination of employment on the ground of
abandonment, Lucinario must prove, by substantial evidence, the concurrence of petitioner’s
failure to report for work for no valid reason and his categorical intention to discontinue
employment.
Lucinario, however, failed to establish any overt act on the part of petitioner to show his
intention to abandon employment. Petitioner, after being informed of his alleged shortages in
collections and despite his relegation to that of company custodian, still reported for work. He
later applied for a 4-day leave of absence. On his return, he discovered that his name was
erased from the logbook, was refused entry into the company premises, and learned that his
application for a 4-day leave was not approved. He thereupon exerted efforts to communicate
with Lucinario on the status of his employment, but to no avail. These circumstances do not
indicate abandonment.
That petitioner immediately filed the illegal dismissal complaint with prayer for reinstatement
should dissipate any doubts that he wanted to return to work.
What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might
have occurred in the sense that petitioner was not served with a notice of termination, but there
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was constructive dismissal, petitioner having been placed in a position where continued
employment was rendered impossible and unreasonable by the circumstances indicated
above. Odilon L. Martinez vs. B&B Fish Broker and/or Norberto M. Lucinario, G.R. No. 179985,
September 18, 2009.
Dismissal; burden of proof. While the employer bears the burden in illegal dismissal cases to
prove that the termination was for valid or authorized cause, the employee must first establish
by substantial evidence the fact of dismissal from service. This petitioner failed to discharge. He,
in fact, failed to refute respondent’s claim that it sent him a Violation Memorandum, which was
duly received by him on April 15, 2003, and a subsequent Memorandum via registered mail,
requiring him to explain his habitual tardiness on the therein indicated dates but that he failed to
comply therewith.
Constructive dismissal contemplates, among other things, quitting because continued
employment is rendered impossible, unreasonable or unlikely, or a demotion in rank or a
diminution of pay. It clearly exists when an act of clear discrimination, insensibility or disdain
by an employer becomes unbearable to the employee, leaving him with no option but
to forego his continued employment. Not any of these circumstances exists to call for a ruling
that petitioner was constructively dismissed. Romero Montederamos vs. Tri-Union International
Corporation, G.R. No. 1767000, September 4, 2009.
Dismissal; burden of proof. It is well-settled that in termination cases, the burden of proof rests
upon the employer to show that the dismissal was for a just and valid cause and failure to
discharge the same would mean that the dismissal is not justified and therefore illegal. Hence, in
arguing that Sabulao abandoned his work, it is incumbent upon the petitioners to prove: (1) that
the employee failed to report for work or had been absent without valid or justifiable reason;
and (2) that there must have been a clear intention to sever the employer-employee relationship
as manifested by some overt acts. Clearly, jurisprudence dictates that the burden of proof to
show that there was unjustified refusal to go back to work rests on the employer.
The NLRC, as affirmed by the Court of Appeals, correctly found that petitioners failed to
substantiate its claim that Sabulao abandoned his work. No evidence was presented to prove
that Sabulao clearly intended to sever the employer-employee relationship as manifested by
some overt acts. As regards petitioners’ allegation that Sabulao is a field personnel and therefore
not entitled to the money claims awarded by the NLRC, suffice it to state that the issue was
raised only before the Court of Appeals in contravention to the rule that questions not raised
before the tribunals a quo cannot be raised for the first time on appeal. As such, it deserves no
consideration by this Court. Tacloban Far East Marketing Corporation, et al. vs. The Court of
Appeals, et al., G.R. No. 182320, September 11, 2009.
Dismissal; due process. The essence of due process is simply an opportunity to be heard or, as
applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to
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seek a reconsideration of the action or ruling complained of. What the law prohibits is absolute
absence of the opportunity to be heard, hence, a party cannot feign denial of due process where
he had been afforded the opportunity to present his side. A formal or trial type hearing is not at
all times and in all instances essential to due process, the requirements of which are satisfied
where the parties are afforded fair and reasonable opportunity to explain their side of the
controversy.
In the present case, petitioners were, among other things, given several written invitations to
submit themselves to PLDT’s Investigation Unit to explain their side, but they failed to heed
them. A hearing, which petitioners attended along with their union MKP representatives, was
conducted on June 25, 2001 during which the principal witnesses to the incident were
presented. Petitioners were thus afforded the opportunity to confront those witnesses and
present evidence in their behalf, but they failed to do so. Rolando Placido and
Edgardo Caragay vs. National Labor Relations Commission and Philippine Long Distance
Telephone Company, Incorporated, G.R. No. 180888, September 18, 2009.
Dismissal; misconduct. By sleeping on the job and leaving his work area without prior
authorization, Tomada did not merely disregard company rules. Tomada, in effect, issued an
open invitation for others to violate those same company rules. Indeed, considering the
presence of trainees in the building and Tomada’s acts, Tomada failed to live up to his
company’s reasonable expectations. Tomada’s offenses cannot be excused upon a plea of being
a “first offense,” or have not resulted in prejudice to the company in any way. No employer may
rationally be expected to continue in employment a person whose lack of morals, respect and
loyalty to his employer, regard for his employer’s rules, and appreciation of the dignity and
responsibility of his office, has so plainly and completely been bared.
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 of judgment. The misconduct to be serious must be of 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. Thus, for misconduct or improper behavior to be a just cause for dismissal, (1)
it must be serious; (2) it must relate to the performance of the employee’s duties; and (3) it must
show that the employee has become unfit to continue working for the employer. Indeed, an
employer may not be compelled to continue to employ such person whose continuance in the
service would be patently inimical to his employer’s interest. Eduardo M. Tomada, Sr.
vs. RFM Corporation-Bakery Flour Division, et al., G.R. No. 163270, September 11, 2009.
Dismissal; redundancy. The separation of the petitioner by reason of redundancy was

supported by the evidence on record. She was separated from the service after the respondent’s
reorganization where her position as Administrator was declared redundant. She was served
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notice within the statutory period of thirty (30) days and so was the DOLE-NCR. The petitioner
was assured of all the benefits under the law.
The petitioner imputes bad faith and malice on the respondent in declaring her position as
Administrator redundant, but failed to present convincing proof that the respondent abused its
prerogative in terminating her employment or that it was motivated by ill-will in doing so. It was
a business decision arrived at in the face of financial losses being suffered by the company at the
time. Miriam B. Elleccion vda. De Lecciones vs. National Labor Relations
Commission, et al., G.R. No. 184735, September 17, 2009.
Dismissal; retrenchment. The burden of proving the validity of retrenchment is on the petitioner.
Evidence does not sufficiently establish that petitioner had incurred losses that would justify
retrenchment to prevent further losses. The Comparative Income Statement for the year 1996
and for the months of February to June 1997 which petitioner submitted did not conclusively
show that petitioner had suffered financial losses. In fact, records show that from January to July
1997, petitioner hired a total of 114 new employees assigned in the petitioner’s stores located in
the different places of the country. Emcor, Incorporated vs. Ma. Lourdes D. Sienes, G.R. No.
152101, September 8, 2009.
Dismissal; retrenchment. Retrenchment to avoid or minimize business losses is a justified

ground to dismiss employees under Article 283 of the Labor Code. The employer, however,
bears the burden to prove such ground with clear and satisfactory evidence, failing which the
dismissal on such ground is unjustified. Bio Quest Marketing Inc. and/or Jose L. Co vs. Edmund
Rey, G.R. No. 181503, September 18, 2009.
Employee benefits; retirement. It is settled that entitlement of employees to retirement benefits

must specifically be granted under existing laws, a collective bargaining agreement or
employment contract, or an established employer policy. No law or collective bargaining
agreement or other applicable contract, or an established company policy was existing during
respondents’ employment entitling them to the P200,000 lump-sum retirement pay. Petitioner
was not thus obliged to grant them such pay. Kimberly-Clark Philippines, Inc.
vs. Nora Dimayuga, et al. G.R. No. 177705, September 18, 2009.
Employee benefits; suicide. The general rule is that the employer is liable to pay the heirs of the
deceased seafarer for death benefits once it is established that he died during the effectivity of
his employment contract. However, the employer may be exempted from liability if he can
successfully prove that the seafarer’s death was caused by an injury directly attributable to his
deliberate or willful act. In sum, respondents’ entitlement to any death benefits depends on
whether the evidence of the petitioners suffices to prove that the deceased committed suicide;
the burden of proof rests on his employer. Great Southern Maritime Services Corp., et al.
vs. Leonila Surigao, et al., G.R. No. 183646, September 18, 2009.
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Employer-employee relationship; existence. The Contract between the Cooperative and DFI, far
from being a job contracting arrangement, is in essence a business partnership that partakes of
the nature of a joint venture. The rules on job contracting are, therefore, inapposite. The Court
may not alter the intention of the contracting parties as gleaned from their stipulations without
violating the autonomy of contracts principle under Article 1306 of the Civil Code which gives
the contracting parties the utmost liberality and freedom to establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law,
morals, good custom, public order or public policy.
Petitioners’ claim of employment relationship with the Cooperative’s herein co-respondents
must be assessed on the basis of four standards, viz: (a) the manner of their selection and
engagement; (b) the mode of payment of their wages; (c) the presence or absence of the power
of dismissal; and (d) the presence or absence of control over their conduct. Most determinative
among these factors is the so-called “control test.”
There is nothing in the records which indicates the presence of any of the foregoing elements of
an employer-employee relationship.
There being no employer-employee relationship between petitioners and the Cooperative’s co-
respondents, the latter are not solidarily liable with the Cooperative for petitioners’ illegal
dismissal and money claims. Oldarico S. Traveño, et al. vs. Bobongon Banana Growers Multi-
Purpose Cooperative, et al., G.R. No. 164205, September 3, 2009.
Resignation. Resignation as “the voluntary act of employees who are compelled by personal
reasons to disassociate themselves from their employment. It must be done with the intention of
relinquishing an office, accompanied by the act of abandonment.” In this case, the evidence on
record suggests that respondent did not voluntarily resign. The more logical conclusion, based
on the evidence, is that respondent was then being forced or pressured to resign, which is
tantamount to illegal dismissal. Casa Cebuana Incoporada, et al. vs. Ireneo P. Leuterio, G.R. No.
176040, September 4, 2009.
Retirement. The line between voluntary and involuntary retirement is thin but it is one which
this Court has drawn. Voluntary retirement cuts employment ties leaving no residual employer
liability; involuntary retirement amounts to a discharge, rendering the employer liable for
termination without cause. The employee’s intent is the focal point of analysis. In determining
such intent, the fairness of the process governing the retirement decision, the payment of
stipulated benefits, and the absence of badges of intimidation or coercion are relevant
parameters.
Nothing in the records offends any of these criteria. Arsenio F. Quevedo, et al.
vs. Benguet Electric Cooperative Incorporated, et al., G.R. No. 168927, September 11, 2009.
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Waiver; binding effect. Petitioners bound themselves, in individually signed contracts, to

“forever release, waive and quitclaim all causes of action or claims arising from or as a
consequence” of their early retirement. Petitioners concede that this blanket stipulation bars this
suit. However, they seek to avoid compliance by again pleading vitiated consent. Although
contracts executed in the context of employment are imbued with public interest, triggering
closer scrutiny, they remain contracts binding the parties to their terms.
To excuse petitioners from complying with the terms of their waivers, they must locate their case
within any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the
waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the terms
of the waiver are contrary to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law. The preceding discussion on
the voluntariness of petitioners’ retirement from service effectively removes these grounds
beyond petitioners’ argumentative reach. Accordingly, petitioners, by the terms of their waivers,
are barred from filing this suit. Arsenio F. Quevedo, et al. vs. Benguet Electric Cooperative
Incorporated, et al., G.R. No. 168927, September 11, 2009.
Waiver; binding effect. While quitclaims executed by employees are commonly frowned upon
as being contrary to public policy and are ineffective to bar claims for the full measure of their
legal rights, where the person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as being a valid and binding undertaking. In the case at bar,
Nora and Rosemarie are Accounting graduates. They have not alleged having been compelled
to sign the quitclaims, nor that the considerations thereof (P1,024,113.73 for Nora and
P682,721.24 for Rosemarie) are unconscionable. Kimberly-Clark Philippines, Inc.
vs. Nora Dimayuga, et al. G.R. No. 177705, September 18, 2009
Waiver; union members. Going now to the question of whether respondent’s members’
individual acceptance of the award and the resulting payments made by petitioner operate as a
ratification of the DOLE Secretary’s award which renders CA-G.R. SP No. 72965 moot, we find
that such do not operate as a ratification of the DOLE Secretary’s award; nor a waiver of their
right to receive further benefits, or what they may be entitled to under the law. The appellate
court correctly ruled that the respondent’s members were merely constrained to accept payment
at the time. Christmas was then just around the corner, and the union members were in no
position to resist the temptation to accept much-needed cash for use during the most auspicious
occasion of the year. Time and again, we have held that necessitous men are not, truly speaking,
free men; but to answer a present emergency, will submit to any terms that the crafty may
impose upon them.
Besides, as individual components of a union possessed of a distinct and separate corporate
personality, respondent’s members should realize that in joining the organization, they have
surrendered a portion of their individual freedom for the benefit of all the other members; they
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submit to the will of the majority of the members in order that they may derive the advantages to
be gained from the concerted action of all. Since the will of the members is personified by its
board of directors or trustees, the decisions it makes should accordingly bind them. Precisely, a
labor union exists in whole or in part for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment. What the individual employee may
not do alone, as for example obtain more favorable terms and conditions of work, the labor
organization, through persuasive and coercive power gained as a group, can accomplish
better. Univeristy of Santo Tomas vs.Samahang Manggagawa ng UST (SM-UST), G.R. No.
169940, September 18, 2009.
October 2009 Philippine Supreme Court Decisions on Labor Law
Dismissal; abandonment. To constitute abandonment, there must be a clear and deliberate

intent to discontinue one’s employment without any intention of returning. 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. 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.
In the instant case, petitioners failed to prove that it was Bolanos who refused to report for work
despite being asked to return to work. Petitioners merely presented the affidavits of the officers
of Henlin Panay narrating their version of the facts. These affidavits, however, are not only
insufficient but also undeserving of credit as they are self-serving. Petitioners failed to present
memoranda or show-cause letters served on Bolanos at her last known address requiring her to
report for work or to explain her absence, with a warning that her failure to report would be
construed as abandonment of work. Also, if indeed Bolanos abandoned her work, petitioners
should have served her a notice of termination as required by law. Petitioners’ failure to comply
with said requirement bolsters Bolanos’s claim that she did not abandon her work but was
dismissed.
Moreover, if Bolanos had indeed forsaken her job, she would not have bothered to file a
complaint for illegal dismissal. It is well settled that the filing by an employee of a complaint for
illegal dismissal is proof of her desire to return to work, thus negating the employer’s charge of
abandonment. Henlin Panay Company and/or Edwin Francisco/Angel Lazaro III vs. National
Labor Relations Commission and Nory A. Bolanos, G.R. No. 180718, October 23, 2009.
Dismissal; attorney’s fees. It is settled that in actions for recovery of wages or when the
employee is illegally dismissed in bad faith or where an employee was forced to litigate and
incur expenses to protect his rights and interests by reason of the unjustified acts of his employer,
he is entitled to an award of attorney’s fees. This award is justifiable under Article 111 of the
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Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article
2208 of the Civil Code.
Moreover, in cases for recovery of wages, the award of attorney’s fees is proper and there need
not be any showing that the employer acted maliciously or in bad faith when it withheld the
wages. There need only be a showing that the lawful wages were not paid accordingly. Baron
Republic Theatrical Major Cinema, et al. vs. Normita P. Peralta and Edilberto H. Aguilar, G.R.
No. 170525, October 2, 2009.
Dismissal; burden of proof. It is a basic principle that in illegal dismissal cases, the burden of
proof rests upon the employer to show that the dismissal of the employee is for a just cause and
failure to do so would necessarily mean that the dismissal is not justified. In addition, in claims
of abandonment by an employee, the settled rule is that the employer bears the burden of
showing a deliberate and unjustified refusal by the employee to resume his employment without
any intention of returning. Moreover, in evaluating a charge of abandonment, the jurisprudential
rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal
acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts,
to sever the employer-employee relationship.
In the present case, petitioner Pascual consistently denies that Aguilar was terminated from his
employment and that, instead, he abandoned his work and never returned after his request for
salary increase was rejected. However, denial, in this case, does not suffice; it should be
coupled with evidence to support it. In the instant case, the Court finds no error in the ruling of
the CA that petitioners failed to adduce evidence to prove abandonment and rebut Aguilar’s
claim of dismissal.
Contrary to petitioners’ asseveration that Aguilar is guilty of abandoning his job, the Court finds
no error in the finding of the Labor Arbiter, as affirmed by the CA, that there was no clear
intention on Aguilar’s part to sever the employer-employee relationship. Considering that
“intention” is a mental state, petitioners must show that respondent Aguilar’s overt acts point
unerringly to his intent not to work anymore. In this regard, petitioners failed. Baron Republic
Theatrical Major Cinema, et al. vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No. 170525,
October 2, 2009.
Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to
show that the dismissal is for a just and valid cause and failure to do so would necessarily mean
that the dismissal was illegal.
Following this principle, it is incumbent upon the respondents to prove by substantial evidence
that petitioner abandoned her job. For abandonment to exist, it must be shown that (1) the
employee has failed to report for work or must have been absent without valid or justifiable
reason; and (2) that there must have been a clear intention to sever the employer-employee
relationship as manifested by some overt acts.
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Respondents failed to discharge this burden. Mere absence of petitioner is not sufficient to
establish the allegation of abandonment. The prolonged absence of petitioner was not without
justifiable reason because it was established that her failure to report for work was due to the
injury she suffered in the course of her employment and with sufficient notice to respondents.
Petitioner also presented herself for work on the date stated in the medical certificate which
stated that she is fit to resume work.
Above all, the intention to sever the employer-employee relationship was not duly established
by respondents. The prior submission of a medical certificate that petitioner is fit to resume work
negates the claim of respondents that the former demanded for separation pay on account of her
failing health. Certainly, petitioner cannot demand for separation benefits on the ground of
illness while at the same time presenting a certification that she is fit to work. Respondents could
have denied petitioner’s demand at that instance and ordered her to return to work had it not
been their intention to sever petitioner from their employ. Hence, we find the allegation that
petitioner presented herself for work but was refused by respondents more credible. Concepcion
Faeldonia vs. Tong Yak Groceries, et al., G.R. No. 182499, October 2, 2009.
Dismissal; burden of proof. In an unlawful dismissal case, the employer has the burden of
proving the lawful cause sustaining the dismissal of the employee. The employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.
Apart from its self-serving allegations, Metro failed to prove that it sustained serious business
losses. To justify retrenchment, the employer must prove serious business losses, and not just
any kind or amount of loss. Metro should have produced its books of accounts, profit and loss
statements, and even its accountant to competently amplify its financial position. Metro
Construction, Inc. and Dr. John Lai vs. Rogelio Aman, G.R. No. 168324, October 12, 2009.
Dismissal; loss of confidence. Espadero’s position as a cashier is one that requires a high degree
of trust and confidence, and that her infraction reasonably taints such trust and confidence
reposed upon her by her employer.
A position of trust and confidence has been defined as one where a person is entrusted with
confidence on delicate matters, or with the custody, handling, or care and protection of the
employer’s property and/or funds. One such position is that of a cashier. A cashier is a highly
sensitive position which requires absolute trust and honesty on the part of the employee. It is for
this reason that the Court has sustained the dismissal of cashiers who have been found to have
breached the trust and confidence of their employers. In one case, the Court upheld the validity
of the dismissal of a school cashier despite her 19 years of service after evidence showed that
there was a discrepancy in the amount she was entrusted to deposit with a bank.
The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a
position of trust and confidence is guilty of a breach of trust, or that his employer has ample
reason to distrust him, the labor tribunal cannot justly deny the employer the authority to
dismiss such employee.
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In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an
employee occupying a job which requires utmost fidelity to her employers, she failed to report
to her immediate supervisor the tampering of her time card. Whether her failure was deliberate
or due to sheer negligence, and whether Espadero was or was not in cahoots with a co-worker,
the fact remains that the tampering was not promptly reported and could, very likely, not have
been known by petitioners, or, at least, could have been discovered at a much later period, if it
had not been reported by Espadero’s supervisor to the personnel manager. Petitioners, therefore,
cannot be blamed for losing their trust in Espadero. Eats-Cetera Food Services Outlet and/or
Serafin Remirez vs. Myrna B. Letran, et al., G.R. No. 179507, October 2, 2009.
Dismisssal; nominal damages. Where an employee was terminated for cause, but the employer
failed to comply with the notice requirement, the employee is entitled to the payment of
nominal damages pursuant to our ruling in Agabon v. National Labor Relations Commission and
Jaka Food Processing Corporation v. Pacot.
In Agabon, we found the dismissal of the employees therein to be valid and for a just cause,
since abandonment was duly established. However, we held the employer liable, because
procedural due process was not observed. We ordered the employer to pay, in lieu of
backwages, indemnity in the form of nominal damage. The Agabon ruling was qualified in Jaka
which declared the dismissal of the employees valid as it was due to an authorized cause under
Article 283 of the Labor Code, i.e., retrenchment, as it was proven that Jaka was suffering from
serious business losses at the time it terminated respondents’ employment. However, Jaka failed
to comply with the notice requirement under the same rule.
Nominal damages are adjudicated in order that a right of the plaintiff that has been violated or
invaded by the defendant may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. Considering the circumstances in this
case, we find no error committed by the CA in fixing the award of nominal damages in the
amount of P50,000.00 for each respondent as indemnity for the violation of the latter’s statutory
rights.
Petitioner’s reliance on Viernes v. National Labor Relations Commission to support its claim for
the reduction of the award of nominal damages is misplaced. The factual circumstances are
different. Viernes is an illegal dismissal case, since there was no authorized cause for the
dismissal of the employees; and the employer was ordered to pay backwages inclusive of
allowances and other benefits, computed from the time the compensation was withheld up to
the actual reinstatement. In addition, since the dismissal was done without due process, the
nominal damages awarded was only P2,590.00 equivalent to one-month salary of the employee.
In this case, the dismissal was valid, as it was due to an authorized cause, but without the
observance of procedural due process, and the only award given was nominal
damages. Celebes Japan Foods Corp. (etc.) vs. Susan Yermo, et al., G.R. No. 175855, October
2, 2009.
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Dismissal; serious misconduct. An employee who fails to account for and deliver the funds
entrusted to him is liable for misappropriating the same and is consequently guilty of serious
misconduct. Petitioner therefore validly dismissed respondent. Superlines Transportation
Company, Inc. vs. Eduardo Pinera, G.R. No. 188742, October 13, 2009.
Employee benefits; bereavement leave. Bereavement leave and other death benefits are
granted to an employee to give aid to, and if possible, lessen the grief of, the said employee and
his family who suffered the loss of a loved one. It cannot be said that the parents’ grief and sense
of loss arising from the death of their unborn child, who, in this case, had a gestational life of
38-39 weeks but died during delivery, is any less than that of parents whose child was born
alive but died subsequently.
Being for the benefit of the employee, CBA provisions on bereavement leave and other death
benefits should be interpreted liberally to give life to the intentions thereof. Time and again, the
Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or
provision affecting labor, such should be interpreted in favor of labor. In the same way, the CBA
and CBA provisions should be interpreted in favor of labor. Continental Steel Manufacturing
Corporation vs. Hon. Accredited Voluntary Arbitrator Allan S. Montano, et al., G.R. No. 182836,
October 13, 2009.
Employee benefits; partial disability benefits. This Court reiterates its order for petitioner to pay
respondent permanent partial disability benefits for the maximum period of twenty-five (25)
months, computed on the basis of Section 2 of Republic Act No. 8291. Government Service
Insurance System vs. Jaime Ibarra, G.R. No. 172925, October 30, 2009.
Employee benefits; retirement. The age of retirement is primarily determined by the existing
agreement or employment contract. In the absence of such agreement, the retirement age shall
be fixed by law. Under the aforecited law, the mandated compulsory retirement age is set at 65
years, while the minimum age for optional retirement is set at 60 years.
Under Paragraph B of the retirement plan, a shipboard employee, upon his written request, may
retire from service if he has reached the eligibility age of 60 years. In this case, the option to
retire lies with the employee.
Records show that respondent was only 41 years old when he applied for optional retirement,
which was 19 years short of the required eligibility age. Thus, he cannot claim optional
retirement benefits as a matter of right. Eastern Shipping Lines, Inc. vs. Ferrer D. Antonio, G.R.
No. 171587, October 13, 2009.
Employees; fixed term contracts. Respondent is a regular employee of SMC. Consequently, the
employment contract with a fixed period which SMC had respondent execute was meant only
to circumvent respondent’s right to security of tenure and is, therefore, invalid.
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While this Court recognizes the validity of fixed-term employment contracts, it has consistently
held that this is the exception rather than the general rule. Verily, a fixed-term contract is valid
only under certain circumstances. In the oft-cited case of Brent School, Inc. v. Zamora, this
Court made it clear that a contract of employment stipulating a fixed term, even if clear as
regards the existence of a period, is invalid if it can be shown that the same was executed with
the intention of circumventing an employee’s right to security of tenure, and should thus be
ignored. Moreover, in that same case, this Court issued a stern admonition that where from the
circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial
security by the employee, then it should be struck down as being contrary to law, morals, good
customs, public order and public policy.
Since respondent was already a regular employee months before the execution of the
Employment with a Fixed Period contract, its execution was merely a ploy on SMC’s part to
deprive respondent of his tenurial security. Hence, no valid fixed-term contract was executed.
The employment status of a person is defined and prescribed by law and not by what the parties
say it should be. Equally important to consider is that a contract of employment is impressed
with public interest such that labor contracts must yield to the common good. Provisions of
applicable statutes are deemed written into the contract, and the parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other. San Miguel Corporation vs. Eduardo L. Teodosio, G.R. No.
163033, October 2, 2009.
Employees; types of regular employees. There 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 activity in which they are employed.
Simply stated, 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. 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.
Based on the circumstances surrounding respondent’s employment by SMC, this Court is
convinced that he has attained the status of a regular employee long before he executed the
employment contract with a fixed period. Although respondent was initially hired by SMC as a
casual employee, respondent has attained the status of a regular employee. Respondent was
initially hired by SMC on September 5, 1991 until March 1992. He was rehired for the same
position in April 1992 which lasted for five to six months. After three weeks, he was again
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rehired as a forklift operator and he continued to work as such until August 1993. Thus, at the
time he signed the Employment with a Fixed Period contract, respondent had already been in
the employ of SMC for at least twenty-three (23) months.
The Labor Code provides that a casual employee can be considered as a regular employee if
said casual employee has rendered at least one year of service regardless of the fact that such
service may be continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and
Regulations of the Labor Code clearly defines the term “at least one year of service” to mean
service within 12 months, whether continuous or broken, reckoned from the date the employee
started working, including authorized absences and paid regular holidays, unless the working
days in the establishment, as a matter of practice or policy, or as provided in the employment
contract, is less than 12 months, in which case said period shall be considered one year. 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 of the employer. San Miguel Corporation vs. Eduardo L. Teodosio, G.R. No. 163033,
October 2, 2009.
Employees; regular employees. To reiterate, while respondent and SSCP no longer had any
legal relationship with the termination of the Agreement, petitioners remained at their post
securing the premises of respondent while receiving their salaries, allegedly from SSCP. Clearly,
such a situation makes no sense, and the denials proffered by respondent do not shed any light
to the situation. It is but reasonable to conclude that, with the behest and, presumably, directive
of respondent, petitioners continued with their services. Evidently, such are indicia of control
that respondent exercised over petitioners.
Such power of control has been explained as the “right to control not only the end to be
achieved but also the means to be used in reaching such end.” With the conclusion that
respondent directed petitioners to remain at their posts and continue with their duties, it is clear
that respondent exercised the power of control over them; thus, the existence of an employer-
employee relationship. Raul G. Locsin and Eddie B. Tomaquin vs. Philippine Long Distance
Telephone Company, G.R. No. 185251, October 2, 2009.Retrenchment; elements. In order for
a retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor
Code must concur or be present.
In the absence of one element, the retrenchment scheme becomes an irregular exercise of
management prerogative. The employer’s obligation to exhaust all other means to avoid further
losses without retrenching its employees is a component of the first element as enumerated
above. To impart operational meaning to the constitutional policy of providing full protection to
labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised
essentially as a measure of last resort, after less drastic means have been tried and found
wanting. Flight Attendants and Stewards Association of the Philippines (FASAP) vs. Philippine
Airlines, Inc., G.R. No. 178083, October 2, 2009.
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Union; registration. The charge that a labor organization committed fraud and
misrepresentation in securing its registration is a serious charge and deserves close scrutiny. It is
serious because once such charge is proved, the labor union acquires none of the rights
accorded to registered organizations. Consequently, charges of this nature should be clearly
established by evidence and the surrounding circumstances.
Here, the discrepancies in the number of union members or employees stated in the various
supporting documents that respondent PIGLAS union submitted to labor authorities can be
explained. While it appears in the minutes of the December 10, 2003 organizational meeting
that only 90 employees responded to the roll call at the beginning, it cannot be assumed that
such number could not grow to 128 as reflected on the signature sheet for attendance. The
meeting lasted 12 hours from 11:00 a.m. to 11:00 p.m. There is no evidence that the meeting
hall was locked up to exclude late attendees.
There is also nothing essentially mysterious or irregular about the fact that only 127 members
ratified the union’s constitution and by-laws when 128 signed the attendance sheet. It cannot be
assumed that all those who attended approved of the constitution and by-laws. Any member
had the right to hold out and refrain from ratifying those documents or to simply ignore the
process.
At any rate, the Labor Code and its implementing rules do not require that the number of
members appearing on the documents in question should completely dovetail. For as long as
the documents and signatures are shown to be genuine and regular and the constitution and by-
laws democratically ratified, the union is deemed to have complied with registration
requirements. The Heritage Hotel Manila (Owned and operated by Grand Plaza Hotel Corp.)
vs. Pinag-isang galing and lakas ng mga manggagawa sa Heritage Manila (Piglas-Heritage), G.R.
No. 177024, October 30, 2009.
November 2009 Philippine Supreme Court Decisions on Labor Law
Collective bargaining agreement; exclusive bargaining status. While the parties may agree to
extend the CBA’s original five-year term together with all other CBA provisions, any such
amendment or term in excess of five years will not carry with it a change in the union’s
exclusive collective bargaining status. By express provision of the above-quoted Article 253-A,
the exclusive bargaining status cannot go beyond five years and the representation status is a
legal matter not for the workplace parties to agree upon. In other words, despite an agreement
for a CBA with a life of more than five years, either as an original provision or by amendment,
the bargaining union’s exclusive bargaining status is effective only for five years and can be
challenged within sixty (60) days prior to the expiration of the CBA’s first five years.
In the present case, the CBA was originally signed for a period of five years, i.e., from February 1,
1998 to January 30, 2003, with a provision for the renegotiation of the CBA’s other provisions at
the end of the 3rd year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace
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parties sat down for renegotiation but instead of confining themselves to the economic and non-
economic CBA provisions, also extended the life of the CBA for another four months, i.e., from
the original expiry date on January 30, 2003 to May 30, 2003.
As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-
PTGWO’s exclusive bargaining representation status which remained effective only for five
years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date,
or starting December 2, 2002, SANAMA-SIGLO could properly file a petition for certification
election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA
and of FVCLU-PTGWO’s exclusive bargaining status, was seasonably filed.
We thus find no error in the appellate court’s ruling reinstating the DOLE order for the conduct
of a certification election. FVC Labor Union-Philippine Transport and General Workers
Organization (FVCLU-PTGWO) Vs. Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity
of Independet and General Labor Organization (SANAMA-FVC-SIGLO), G.R. No. 176249,
November 27, 2009.
Dismissal; attorney’s fees. In San Miguel Corporation v. Aballa, thr Court held that in actions for
recovery of wages or where an employee was forced to litigate and thus incur expenses to
protect his rights and interests, a maximum of 10% of the total monetary award by way of
attorney’s fees is justifiable under Article 111 of the Labor Code; Section 8, Rule VIII of Book III
of the Omnibus Rules Implementing the Labor Code; and paragraph 7, Article 2208 of the Civil
Code. The award of attorney’s fees is proper and there need not be any showing that the
employer acted maliciously or in bad faith when it withheld the wages. There need only be a
showing that the lawful wages were not paid accordingly. Philippine Long Distance Telephone
Company vs. Inocencio B. Berbano, Jr., G.R. No. 165199, November 27, 2009.
Dismissal; misconduct. Misconduct has been defined as 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 of judgment. Ordinary
misconduct would not justify the termination of services of the employee as the Labor Code is
explicit that the misconduct must be serious. To be serious, the misconduct must be of such
grave and aggravated character and not merely trivial and unimportant. Such misconduct,
however serious, must nevertheless be in connection with the employee’s work to constitute just
cause for his separation. As amplified by jurisprudence, misconduct, to be a just cause for
dismissal, 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. Moreover, in
National Labor Relations Commission v. Salgarino, this Court stressed that “[i]n order to
constitute serious misconduct which will warrant the dismissal of an employee under paragraph
(a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or
conduct must have been performed with wrongful intent.”
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We believe that the misconduct of respondent is not of serious nature as to warrant respondent’s
dismissal from service. The records of this case are bereft of any showing that the alleged
misconduct was performed by respondent with wrongful intent. On the contrary, respondent
readily admitted having installed the service features in his brother-in-law’s telephone line for
purposes of study and research which could have benefited petitioner. Philippine Long Distance
Telephone Company vs.Inocencio B. Berbano, Jr., G.R. No. 165199, November 27, 2009.
Dismissal; misconduct. Article 282(a) of the Labor Code states that the employer may terminate
an employment for serious misconduct. Drug use in the premises of the employer constitutes
serious misconduct. Noel B. Bagtas vs. Hon. Ruth C. Santos, etc. et al., G.R. No. 166682,
November 27, 2009.
Dismissal; notice. Dismissal from service of an employee is valid if the following requirements
are complied with: (a) substantive due process which requires that the ground for dismissal is
one of the just or authorized causes enumerated in the Labor Code, and (b) procedural due
process which requires that the employee be given an opportunity to be heard and defend
himself. The employee must be furnished two written notices — the first notice apprises the
employee of the particular act or omission for which his dismissal is sought, and the second
notice informs the employee of the employer’s decision to dismiss him. Philippine Long
Distance Telephone Company vs. Inocencio B. Berbano, Jr., G.R. No. 165199, November 27,
2009.
Dismissal; relief. An illegally dismissed employee is entitled to the twin reliefs of (a) either
reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages. These
reliefs are given to alleviate the economic damage suffered by the illegally dismissed
employee. Philippine Long Distance Telephone Company vs. Inocencio B. Berbano, Jr., G.R.
No. 165199, November 27, 2009.
Reinstatement; strained relations. Under the law and prevailing jurisprudence, an illegally
dismissed employee is entitled to reinstatement as a matter of right. However, 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, particularly where the illegally dismissed employee held a
managerial or key position in the company, it would be more prudent to order payment of
separation pay instead of reinstatement.
In order for the doctrine of strained relations to apply, it should be proved that the employee
concerned occupies a position where he enjoys the trust and confidence of his employer and
that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated
as to adversely affect the efficiency and productivity of the employee concerned.
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This Court is of the opinion that both the LA and the CA based their conclusions 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. However, both the LA and the CA failed to state the basis for their finding
that a strained relationship exists.
Based on the foregoing, this Court upholds the ruling of the NLRC finding the doctrine of
strained relations inapplicable to the factual circumstances of the case at bar. Reynaldo G.
Cabigting vs. San Miguel Foods, Inc., G.R. No. 167706, November 5, 2009.
December 2009 Philippine Supreme Court Decisions on Labor Law and Procedure
Labor Law
Attorney’s fees; actions for indemnity under employer liability laws. The claim for attorney’s
fees is granted following Article 2208 of the New Civil Code which allows its recovery in
actions for recovery of wages of laborers and actions for indemnity under the employer’s
liability laws. The same fees are also recoverable when the defendant’s act or omission has
compelled the plaintiff to incur expenses to protect his interest as in the present case following
the refusal by the employer to settle the employee’s claims. Pursuant to prevailing jurisprudence,
petitioner is entitled to attorney’s fees of ten percent (10%) of the monetary award. Leopoldo
Abante vs. KJGS Fleet Management Manila and/or Guy Domingo A. Macapayag, Kristian
Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.
Compensability of death; requirements. To be entitled to compensation, a claimant must show

that the sickness is either: (1) a result of an occupational disease listed under Annex “A” of the
Amended Rules on Employees’ Compensation under the conditions Annex “A” sets forth; or (2)
if not so listed, that the risk of contracting the disease is increased by the working conditions.
Based on Francisco’s death certificate, the immediate cause of his death was cardiac arrest; the
antecedent cause was acute massive hemorrhage, and the underlying cause was bleeding peptic
ulcer disease.
In determining the compensability of an illness, the worker’s employment need not be the sole
factor in the growth, development, or acceleration of a claimant’s illness to entitle him to the
benefits provided for. It is enough that his employment contributed, even if only in a small
degree, to the development of the disease.
P.D. 626 is a social legislation whose primordial purpose is to provide meaningful protection to
the working class against the hazards of disability, illness, and other contingencies resulting in
loss of income. In employee compensation, persons charged by law to carry out the
Constitution’s social justice objectives should adopt a liberal attitude in deciding compensability
claims and should not hesitate to grant compensability where a reasonable measure of work-
connection can be inferred. Only this kind of interpretation can give meaning and substance to
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the law’s compassionate spirit as expressed in Article 4 of the Labor Code – that all doubts in the
implementation and interpretation of the provisions of the Labor Code, including their
implementing rules and regulations, should be resolved in favor of labor. Government Service
Insurance System vs. Jean E. Raoet, G.R. No. 157038, December 23, 2009.
Compensable injury; requirement. Section 20(B) of the POEA Standard Employment Contract
provides for the liabilities of the employer only when the seafarer suffers from a work-related
injury or illness during the term of his employment.
Petitioner claims to have reported his illness to an officer once on board the vessel during the
course of his employment. The records are bereft, however, of any documentary proof that he
had indeed referred his illness to a nurse or doctor in order to avail of proper treatment. It thus
becomes apparent that he was repatriated to the Philippines, not on account of any illness or
injury, but in view of the completion of his contract.
But even assuming that petitioner was repatriated for medical reasons, he failed to submit
himself to the company-designated doctor in accordance with the post-employment medical
examination requirement under the above-quoted paragraph 3 of Section 20(B) of the POEA
Standard Employment Contract. Failure to comply with this requirement which is a sine qua
non bars the filing of a claim for disability benefits. Dionisio M. Musnit vs. Sea Star Shipping
Corporation and Sea Star Shipping Corporation, Ltd., G.R. No. 182623, December 4, 2009.
Compensable injury; loss of earning capacity. The Court has applied the Labor Code concept of
permanent total disability to Filipino seafarers in keeping with the avowed policy of the State to
give maximum aid and full protection to labor, it holding that the notion of disability is
intimately related to the worker’s capacity to earn, what is compensated being not his injury or
illness but his inability to work resulting in the impairment of his earning capacity, hence,
disability should be understood less on its medical significance but more on the loss of earning
capacity. Joelson O. Iloreta vs. Philippine Transmarine Carriers, Inc. and Norbulk Shipping U.K.
Ltd., G.R. No. 183908, December 4, 2009.
Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work
because continued employment has been rendered impossible, unreasonable, or unlikely, as
when there is a demotion in rank or diminution in pay or both or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee.
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. In fact, the employee who is
constructively dismissed might have been allowed to keep coming to work. Constructive
dismissal is therefore a dismissal in disguise. The law recognizes and resolves this situation in
favor of employees in order to protect their rights and interests from the coercive acts of the
employer.
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In the present case, the employer ceased verbally communicating with the employee and giving
him work assignment after suspecting that he had forged purchase receipts. In this situation, the
employee was forced to leave the employer’s compound with his family and to transfer to a
nearby place. The employee’s act of leaving his employer’s premises was in reality not his
choice but a situation created by the employer. CRC Agricultural Trading and Rolando B.
Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664,
December 23, 2009.
Dismissal; constructive dismissal. Constructive dismissal exists when an act of clear

discrimination, insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued employment.
In this case, the employee, while still employed with the company, was compelled to resign and
forced to go on leave. He was not allowed to participate in the activities of the company. His
salary was no longer remitted to him. His subordinates were directed not to report to him and
the company directed one of its district managers to take over his position and do his functions
without prior notice to him.
These discriminatory acts were calculated to make the employee feel that he is no longer
welcome nor needed in the company short of sending him an actual notice of termination. The
Court held that the employer constructively dismissed the employee from service. Ramon B.
Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.
Dismissal; corporate officer; jurisdiction. From the documents submitted by the company,
petitioner was a director and officer of Slimmers World. The charges of illegal suspension,
illegal dismissal, unpaid commissions, reinstatement and back wages imputed by petitioner
against the company fall squarely within the ambit of intra-corporate disputes. In a number of
cases, the Court has held that a corporate officer’s dismissal is always a corporate act, or an
intra-corporate controversy which arises between a stockholder and a corporation. The question
of remuneration involving a stockholder and officer, not a mere employee, is not a simple labor
problem but a matter that comes within the area of corporate affairs and management and is a
corporate controversy in contemplation of the Corporation Code.
It is a settled rule that jurisdiction over the subject matter is conferred by law. The determination
of the rights of a director and corporate officer dismissed from his employment as well as the
corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the
jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC
but the regular courts which have jurisdiction over the present case. Leslie Okol vs. Slimmers
World International, et al.,G.R. No. 160146, December 11, 2009.
Dismissal; due process; opportunity to be heard. Although the employee, during some parts of
the trial proceedings before the Labor Arbiter was not represented by a member of the bar, he
was given reasonable opportunity to be heard and submit evidence to support his arguments,
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through the medium of pleadings filed in the labor tribunals. He was also able to present his
version of the Magat incident during his direct examination conducted by his lawyer Atty.
Jannette Inez. Thus, he cannot claim that he was denied due process. Ramon B. Formantes vs.
Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.
Dismissal; just cause; separation pay. The liberality of the law can never be extended to the
unworthy and undeserving. In several instances, the policy of social justice has compelled this
Court to accord financial assistance in the form of separation pay to a legally terminated
employee. This liberality, however, is not without limitations. Thus, when the manner and
circumstances by which the employee committed the act constituting the ground for his
dismissal show his perversity or depravity, no sympathy or mercy of the law can be invoked.
We have examined the records which indeed show that the employee’s unauthorized absences
as well as tardiness are habitual despite having been penalized for past infractions. In Gustilo v.
Wyeth Philippines, Inc. [483 Phil. 69, 78 (2004)], we held that a series of irregularities when put
together may constitute serious misconduct. We also held that gross neglect of duty becomes
serious in character due to frequency of instances. Serious misconduct is said to be a
transgression of some established and definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and indicative of wrongful intent and not mere error of judgment.
Oddly, the employee never advanced any valid reason to justify his absences. The employee’s
intentional and willful violation of company rules shows his utter disregard of his work and his
employer’s interest. Indeed, there can be no good faith in intentionally and habitually incurring
inexcusable absences. Hence, he is not entitled to severance pay. Arsenio S. Quiambao vs.
Manila Electric Company, G.R. No. 171023, December 18, 2009.
Dismissal; just cause; sexual abuse. As a manager, the employee enjoyed the full trust and
confidence of the company and his subordinates. By committing sexual abuse against his
subordinate, he clearly demonstrated his lack of fitness to continue working as a managerial
employee and deserves the punishment of dismissal from the service. Ramon B. Formantes vs.
Duncan Pharmaceuticals, Phils., Inc.,G.R. No. 170661, December 4, 2009.
Dismissal; separation pay in lieu of reinstatement. Under Article 279 of the Labor Code, the
illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, 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. Thus, an illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. Where reinstatement is no longer viable as an option,
backwages 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.
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In the present case, reinstatement is no longer feasible because of the strained relations between
the employee and the employer. Time and again, the Court has recognized that strained
relations between the employer and employee is an exception to the rule requiring actual
reinstatement for illegally dismissed employees for the practical reason that the already existing
antagonism will only fester and deteriorate, and will only worsen with possible adverse effects
on the parties, if we shall compel reinstatement; thus, the use of a viable substitute that protects
the interests of both parties while ensuring that the law is respected.
The payment of separation pay is the better alternative as it liberates the employee from what
could be a highly hostile work environment, while releasing the employer from the grossly
unpalatable obligation of maintaining in their employ a worker they could no longer trust. CRC
Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and
Roberto Obias, G.R. No. 177664, December 23, 2009.
Dismissal; twin requirements. Well settled is the dictum that the twin requirements of notice and
hearing constitute the essential elements of due process in the dismissal of employees. It is a
cardinal rule in our jurisdiction that the employer must furnish the employee with two written
notices before the termination of employment can be affected: (a) the first apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (b) the second informs
the employee of the employer’s decision to dismiss him.
The barrage of letters sent to petitioner, starting from a letter dated April 22, 1994 until his
termination on May 19, 1994, was belatedly made and apparently done in an effort to show that
petitioner was accorded the notices required by law in dismissing an employee. As observed by
the Labor Arbiter in her decision, prior to those letters, the employee was already constructively
dismissed.
Since the dismissal, although for a valid cause, was done without due process of law, the
employer should indemnify the employee with nominal damages in the amount of
P30,000.00.Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661,
December 4, 2009.
Dismissal; two-notice requirement. To justify the dismissal of an employee for a just cause, the
employer must furnish the worker with two written notices. The first is the notice to apprise the
employee of the particular acts or omissions for which his dismissal is sought. This may be
loosely considered as the charge against the employee. The second is the notice informing the
employee of the employer’s decision to dismiss him. This decision, however, must come only
after the employee is given a reasonable period from receipt of the first notice within which to
answer the charge, and ample opportunity to be heard and defend himself with the assistance of
his representative, if he so desires. The requirement of notice is not a mere technicality, but a
requirement of due process to which every employee is entitled.
The employer clearly failed to comply with the two-notice requirement. Nothing in the records
shows that the company ever sent the employee a written notice informing him of the ground
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for which his dismissal was sought. It does not also appear that the company held a hearing
where the employee was given the opportunity to answer the charges of abandonment. Neither
did the company send a written notice to the employee informing him that his service had been
terminated and the reasons for the termination of his employment. Under these facts, the
respondent’s dismissal was illegal. CRC Agricultural Trading and Rolando B. Catindig vs.
National Labor Relations Commission and Roberto Obias, G.R. No. 177664, December 23,
2009.
Drug testing for employees; employer’s duty. It was Plantation Bay’s responsibility to ensure that
the drug tests would be properly administered, the results thereof being the bases in terminating
the employees’ services.
The employer failed to indubitably prove that the employees were guilty of drug use in
contravention of its drug-free workplace policy amounting to serious misconduct. The
employees are therefore deemed to have been illegally dismissed. Plantation Bay Resort & Spa
and Efren Belarmino vs. Romel S. Dubrico, et al., G.R. No. 182216, December 4, 2009.
Employee disability benefits. Permanent disability refers to the inability of a worker to perform
his job for more than 120 days, regardless of whether he loses the use of any part of his body.
What determines the employee’s entitlement to permanent disability benefits is his inability to
work for more than 120 days. In the case at bar, it was only on February 20, 2001 that the
Certificate of Fitness for Work was issued by Dr. Lim, more than 6 months from the time he was
initially evaluated by the doctor on July 24, 2000 and after he underwent operation on August
18, 2000.
It is gathered from the documents emanating from the Office of Dr. Lim that the employee was
seen by him from July 24, 2000 up to February 20, 2001 or a total of 13 times; and except for
the medical reports dated February 5, 2001 and February 20, 2001 (when the doctor finally
pronounced petitioner fit to work), Dr. Lim consistently recommended that the employee
continue his physical rehabilitation/therapy and revisit clinic on specific dates for re-evaluation,
thereby implying that the employee was not yet fit to work.
Given a seafarer’s entitlement to permanent disability benefits when he is unable to work for
more than 120 days, the failure of the company-designated physician to pronounce the
employee fit to work within the 120-day period entitles him to permanent total disability benefit
in the amount of US$60,000.00. Leopoldo Abante vs. KJGS Fleet Management Manila and/or
Guy Domingo A. Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430,
December 4, 2009
.
Existence of employer-employee relationship. The elements to determine the existence of an
employment relationship are: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the
employee’s conduct. The most important element is the employer’s control of the employee’s
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conduct, not only as to the result of the work to be done, but also as to the means and methods
to accomplish it. All the four elements are present in this case.
First, the company engaged the services of the worker in 1995. Second, the company paid the
worker a daily wage of P175.00, with allowances ranging from P140.00 to P200.00 per
day. The fact that the worker was paid under a “no work no pay” scheme, assuming this claim
to be true, is not significant. The “no work no pay” scheme is merely a method of computing
compensation, not a basis for determining the existence or absence of employer-employee
relationship. Third, the company’s power to dismiss the worker was inherent in the fact that it
engaged the services of the worker as a driver. Finally, a careful review of the record shows that
the worker performed his work as driver under the petitioners’ supervision and control. The
company determined how, where, and when the worker performed his task. They, in fact,
requested the worker to live inside their compound so he (the worker) could be readily available
when the company needed his services. Undoubtedly, the company exercised control over the
means and methods by which the worker accomplished his work as a driver. CRC Agricultural
Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto
Obias, G.R. No. 177664, December 23, 2009.
Labor-only contracting. The contract between the principal and the contractor is not the final
word on how the contracted workers relate to the principal and the purported contractor; the
relationships must be tested on the basis of how they actually operate.
The legitimate job contractor must have the capitalization and equipment to undertake the sale
and distribution of the manufacturer’s products, and must do it on its own using its own means
and selling methods.
Even before going into the realities of workplace operations, the Court of Appeals found that the
service contracts themselves provide ample leads into the relationship between the company,
on the one hand, and Peerless and Excellent, on the other. The Court of Appeals noted that both
the Peerless and the Excellent contracts show that their obligation was solely to provide the
company with “the services of contractual employees,” and nothing more. These contracted
services were for the handling and delivery of the company’s products and allied services.
Following D.O. 18-02 and the contracts that spoke purely of the supply of labor, the Court of
Appeals concluded that Peerless and Excellent were labor-only contractors unless they could
prove that they had the required capitalization and the right of control over their contracted
workers.
The contractors were not independently selling and distributing company products, using their
own equipment, means and methods of selling and distribution; they only supplied the
manpower that helped the company in the handing of products for sale and distribution. In the
context of D.O. 18-02, the contracting for sale and distribution as an independent and self-
contained operation is a legitimate contract, but the pure supply of manpower with the task of
assisting in sales and distribution controlled by a principal falls within prohibited labor-only
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contracting. Coca Cola Bottlers Philippines, Inc. vs. Ricky E. Dela Cruz, et al., G.R. No. 184977,
December 7, 2009.
Outsourcing. The employer was within its right in entering the forwarding agreements with the
forwarders as an exercise of its management prerogative. The employer’s declared objective for
the arrangement is to achieve greater economy and efficiency in its operations – a universally
accepted business objective and standard that the union has never questioned. In Meralco v.
Quisumbing,[G.R. No. 127598, January 27, 1999] the Court joined this universal recognition of
outsourcing as a legitimate activity when it held that a company can determine in its best
judgment whether it should contract out a part of its work for as long as the employer is
motivated by good faith; the contracting is not for purposes of circumventing the law; and does
not involve or be the result of malicious or arbitrary action. Temic Automotive Philippines, Inc.
vs. Temic Automotive Philippines, Inc. Employees Union-FFW, G.R. No. 186965, December 23,
2009.
Regulations; retroactivity of POEA Circular. Respecting the appellate court’s ruling that it is
POEA Memo Circular No. 55, series of 1996 which is applicable and not Memo Circular No. 9,
series of 2000, apropos is the ruling in Seagull Maritime Corporation v. Dee [G.R. No. 165156,
April 2, 2007] involving employment contract entered into in 1999, before the promulgation of
POEA Memo Circular No. 9, series of 2000 or the use of the new POEA Standard Employment
Contract, like that involved in the present case. In said case, the Court applied the 2000 Circular
in holding that while it is the company-designated physician who must declare that the seaman
suffered permanent disability during employment, it does not deprive the seafarer of his right to
seek a second opinion which can then be used by the labor tribunals in awarding disability
claims. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy Domingo A.
Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.
Termination; abandonment. Abandonment of work, or the deliberate and unjustified refusal of

an employee to resume his employment, is a just cause for employment termination under
paragraph (b) of Article 282 of the Labor Code, since it constitutes neglect of duty. The
jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed
from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to
report for work or absence without valid or justifiable reason, and (2) a clear intent, manifested
through overt acts, to sever the employer-employee relationship. The employer bears the burden
of showing a deliberate and unjustified refusal by the employee to resume his employment
without any intention of returning.
In the present case, the employer did not adduce any proof to show that the employee clearly
and unequivocally intended to abandon his job or to sever the employer-employee relationship.
Moreover, the filing of the complaint for illegal dismissal on June 22, 2004 strongly speaks
against the employer’s charge of abandonment; it is illogical for an employee to abandon his
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employment and, thereafter, file a complaint for illegal dismissal. CRC Agricultural Trading and
Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No.
177664, December 23, 2009.
Termination; reorganization. Absent explicit statutory authority, the Court cannot sustain the
grant of separation pay and retirement benefits from one single act of involuntary separation
from the service, lest there be duplication of purpose and depletion of government resources.
Within the context of government reorganization, separation pay and retirement benefits arising
from the same cause, are in consideration of the same services and granted for the same purpose.
Whether denominated as separation pay or retirement benefits, these financial benefits reward
government service and provide monetary assistance to employees involuntarily separated due
to bona fide reorganization. Efren M. Herrera, et al. vs. National Power Corporation, et al., G.R.
No. 166570, December 18, 2009.
Termination; reorganization. The grant of retirement benefits to the employees in addition to

the separation pay they have already received effectively amounts to additional compensation
for the same services. Unless specifically authorized by law, such additional compensation is
not allowed under Section 8, Article IX-B of the Constitution.
There is only one act of exit from the service and only one service to exit from. Employees who
chose separation from the service under the NPC’s restructuring plan never really exercised the
right to optionally retire; the earlier termination of their employment denied them the
opportunity to optionally retire. Consequently, no retirement pay ever accrued in their favor.
This means, in concrete terms, that the employees who opted to be separated from the service
under the NPC restructuring plan and who have received separation pay under RA 9136, cannot
also be considered to have separately exited from the same service through optional retirement
under CA 186, entitling them to separate retirement benefits under this law. RA 9136 provides
for separation benefits in the alternative and does not offer both.
Optional retirement clearly is a mere expectancy until availed of by those who are qualified to
exercise the option to retire. If not taken because the employee chose the separation package
under RA 9136, then optional retirement under CA 186 simply remained an expectancy that
never materialized and is now forever lost. To put it differently, given one and the same exit
from the one and the same service for which only one separation benefit is provided, there can
be no actual retirement under CA 186 after exit via the RA 9136 route has been taken; optional
retirement under CA 186 has then become the road not taken. Efren M. Herrera, et al. vs.
National Power Corporation, et al., Separate Concurring Opinion of J. Brion, G.R. No. 166570,
December 18, 2009.
Termination; retrenchment. Retrenchment is the termination of employment initiated by the

employer through no fault of and without prejudice to the employees, it is resorted to during
periods of business recession, industrial depression, or seasonal fluctuations or during lulls
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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. It is a management prerogative resorted to, to avoid or minimize business losses.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is
reasonably necessary and likely to prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, and real, or only if expected, are reasonably
imminent as perceived objectively and in good faith by the employer; (2) the employer serves
written notice both to the employee/s concerned and the Department of Labor and Employment
at least a month before the intended date of retrenchment; (3) the employer pays the retrenched
employee separation pay in an amount prescribed by the Code; (4) the employer exercises its
prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in
ascertaining who would be retrenched or retained.
The losses must be supported by sufficient and convincing evidence. The normal method of
discharging this burden of proof is the submission of financial statements duly audited by
independent external auditors. For failure of Asiakonstrukt to clearly and satisfactorily
substantiate its financial losses, the dismissal of the employee on account of retrenchment is
unjustified. Virgilio G. Anabe vs. Asian Construction (ASIAKONSTRUKT), et al., G.R. No.
183233, December 23, 2009.
Union; cancellation of union registration; grounds. For the purpose of de-certifying a union, it
must be shown that there was misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments thereto; the minutes of
ratification; or, in connection with the election of officers, the minutes of the election of officers,
the list of voters, or failure to submit these documents together with the list of the newly elected-
appointed officers and their postal addresses to the Bureau of Labor Relations.
The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not provide a valid reason to cancel the union’s certificate of
registration. The cancellation of a union’s registration doubtless has an impairing dimension on
the right of labor to self-organization. For fraud and misrepresentation to be grounds for
cancellation of union registration under the Labor Code, the nature of the fraud and
misrepresentation must be grave and compelling enough to vitiate the consent of a majority of
union members. Mariwasa Siam Ceramics, Inc. vs. The Secretary of the Department of Labor
and Employment, et al., G.R. No. 183317, December 21, 2009.
Union; membership requirement. While it is true that the withdrawal of support may be
considered as a resignation from the union, the fact remains that at the time of the union’s
application for registration, the affiants were members of the union and they comprised more
than the required 20% membership for purposes of registration as a labor union. Article 234 of
the Labor Code merely requires a 20% minimum membership during the application for union
registration. It does not mandate that a union must maintain the 20% minimum membership
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requirement all throughout its existence. Mariwasa Siam Ceramics, Inc. vs. The Secretary of the
Department of Labor and Employment, et al., G.R. No. 183317, December 21, 2009.
Labor Procedure
Appeal; appeal bond a jurisdictional requirement. The Court has always stressed that Article 223,
which prescribes the appeal bond requirement, is a rule of jurisdiction and not of procedure.
There is little leeway for condoning a liberal interpretation thereof, and certainly none premised
on the ground that its requirements are mere technicalities. It must be emphasized that there is
no inherent right to an appeal in a labor case, as it arises solely from grant of statute, namely,
the Labor Code.
For the same reason, the Court has repeatedly emphasized that the requirement for posting the
surety bond is not merely procedural but jurisdictional and cannot be trifled with. Non-
compliance with such legal requirements is fatal and has the effect of rendering the judgment
final and executory. Hilario S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626,
December 4, 2009.
Appeal; appeal bond reduction. It is daylight-clear from the foregoing that while the bond may
be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to
reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation
to the monetary award is posted by the appellant; otherwise, the filing of the motion to reduce
bond shall not stop the running of the period to perfect an appeal. The qualification effectively
requires that unless the NLRC grants the reduction of the cash bond within the 10-day
reglementary period, the employer is still expected to post the cash or surety bond securing the
full amount within the said 10-day period. Hilario S. Ramirez vs. Hon. Court of Appeals, et
al., G.R. No. 182626, December 4, 2009.
Appeal; issues raised first time on appeal; exceptions. While it is a well-settled rule, also
applicable in labor cases, that issues not raised in proceedings below cannot be raised for the
first time on appeal, there are exceptions thereto, among which are, for reasons of public policy
or interest.
The NLRC did not err in considering the issue of the veracity of the confirmatory tests even if the
same was raised only in the employee’s Motion for Reconsideration of the NLRC Decision, it
being crucial in determining the validity of the employee’s dismissal from service.
Technical rules of procedure are not strictly adhered to in labor cases. In the interest of
substantial justice, new or additional evidence may be introduced on appeal before the NLRC.
Such move is proper, provided due process is observed, as was the case here, by giving the
opposing party sufficient opportunity to meet and rebut the new or additional evidence
introduced.
The Constitution no less directs the State to afford full protection to labor. To achieve this goal,
technical rules of procedure shall be liberally construed in favor of the working class in
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accordance with the demands of substantial justice. Plantation Bay Resort & Spa and Efren
Belarmino vs. Romel S. Dubrico, et al., G.R. No. 182216, December 4, 2009.
Appeal; perfection. Under the Rules, appeals involving monetary awards are perfected only
upon compliance with the following mandatory requisites, namely: (1) payment of the appeal
fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety
bond.
The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the Labor Arbiter. The intention of the lawmakers to make
the bond a mandatory requisite for the perfection of an appeal by the employer is clearly
expressed in the provision that an appeal by the employer may be perfected “only upon the
posting of a cash or surety bond.” The word “only” in Articles 223 of the Labor Code makes it
unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the
employer to be the essential and exclusive means by which an employer’s appeal may be
perfected. The word “may” refers to the perfection of an appeal as optional on the part of the
defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The
meaning and the intention of the legislature in enacting a statute must be determined from the
language employed; and where there is no ambiguity in the words used, then there is no room
for construction.
Clearly, the filing of the bond is not only mandatory but also a jurisdictional requirement that
must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance with the
requirement renders the decision of the Labor Arbiter final and executory. This requirement is
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. Hilario S. Ramirez vs. Hon.
Court of Appeals, et al., G.R. No. 182626, December 4, 2009.
Illegal dismissal and rehabilitation proceedings. The term “claim,” as contemplated in Section 6
(c), refers to debts or demands of a pecuniary nature. It is the assertion of rights for the payment
of money. Here, petitioners have pecuniary claims—the payment of separation pay and moral
and exemplary damages.
In Rubberworld (Phils.), Inc. v. NLRC [365 Phil. 273 (1999)], we held that a labor claim is a
“claim” within the contemplation of PD 902-A, as amended. This is consistent with the Interim
Rules of Procedure on Corporate Rehabilitation which came out in 2000. Thus, labor claims are
included among the actions suspended upon the placing under rehabilitation of employer-
corporations.
The suspensive effect of the stay order is not time-bound. As we held in Rubberworld, it
continues to be in effect as long as reasonably necessary to accomplish its purpose. Gina M.
Tiangco and Salvacion Jenny Manego vs. Uniwide Sales Warehouse Club, Inc. and Jimmy
Gow, G.R. No. 168697, December 14, 2009.
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NCMB appeal. Rule 43 of the Rules of Court under which petitioners filed their petition before
the Court of Appeals applies to awards, judgments, final orders or resolutions of or authorized
by any quasi-judicial agency in the exercise of its quasi-judicial functions. Given NCMB’s
functions, it cannot be considered a quasi-judicial agency. Hence, its decisions or that of its
authorized officer cannot be appealed either through a petition for review under Rule 43 or
under Rule 65 of the Revised Rules of Court. Juanito Tabigue, et al. vs. International Copra
Export Corporation (INTERCO), G.R. No. 183335, December 23, 2009.
Strikes and lockouts; assumption and certification order; mandatory ands immediately executory.
Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the police power of
the State. The grant of plenary powers to the Secretary of Labor makes it incumbent upon him to
bring about soonest, a fair and just solution to the differences between theramiemployer and the
employees, so that the damage such labor dispute might cause upon the national interest may
be minimized as much as possible, if not totally averted, by avoiding stoppage of work or any
lag in the activities of the industry or the possibility of those contingencies that might cause
detriment to the national interest.
In order to effectively achieve such end, the assumption or certification order shall have the
effect of automatically enjoining the intended or impending strike or lockout. Moreover, if one
has already taken place, all striking workers shall immediately return to work, and the employer
shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout.
Assumption and certification orders are executory in character and are to be strictly complied
with by the parties, even during the pendency of any petition questioning their validity.
Regardless therefore of its motives, or of the validity of its claims, YSS Laboratories must readmit
all striking employees and give them back their respective jobs. Accepting back the workers in
this case is not a matter of option, but of obligation mandated by law for YSS Laboratories to
faithfully comply with. Its compulsory character is mandated, not to cater to a narrow segment
of society, or to favor labor at the expense of management, but to serve the greater interest of
society by maintaining the economic equilibrium.
Certainly, the determination of who among the strikers could be admitted back to work cannot
be made to depend upon the discretion of employer, lest the certification or assumption-of-
jurisdiction orders are stripped of their coercive power that is necessary for attaining their
laudable objective. The return-to-work order does not interfere with the management’s
prerogative, but merely regulates it when, in the exercise of such right, national interests will be
affected. The rights granted by the Constitution are not absolute. They are still subject to control
and limitation to ensure that they are not exercised arbitrarily. The interests of both the
employers and employees are intended to be protected and not one of them is given undue
preference. YSS Employees Union-Philippine Transport and General Organization vs. YSS
Laboratories, Inc., G.R. No. 155125, December 4, 2009.
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January 2010 Philippine Supreme Court Decisions on Labor Law and Procedure
Labor Law
CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit
and are therefore entitled to CBA benefits as a matter of law and contract. Under the terms of
the CBA, petitioners are members of the appropriate bargaining unit because they are regular
rank-and-file employees and do not belong to any of the excluded categories. Most importantly,
the labor arbiter’s decision of January 17, 2002 – affirmed all the way to the CA – ruled
against the company’s submission that they are independent contractors. Thus, as regular rank-
and-file employees, they fall within the CBA coverage. And, under the CBA’s express terms,
they are entitled to its benefits.
CBA coverage is not only a question of fact, but of law and contract. The factual issue is
whether the petitioners are regular rank-and-file employees of the company. The tribunals
below uniformly answered this question in the affirmative. From this factual finding flows legal
effects touching on the terms and conditions of the petitioners’ regular employment. Farley
Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.
Employee benefits; permanent disability benefits. In accordance with the avowed policy of the
State to give maximum aid and full protection to labor, the Court applied the Labor Code
concept of permanent total disability to Filipino seafarers. The Court held that the notion of
disability is intimately related to the worker’s capacity to earn. What is compensated is not the
employee’s injury or illness but his inability to work resulting in the impairment of his earning
capacity; hence, disability should be understood less on its medical significance but more on
the loss of earning capacity.
In the present case, petitioner was able to secure a “fit to work” certification from a doctor only
after more than five months from the time he was medically repatriated due to a finding that
his disability is considered permanent and total. Significantly, petitioner remained unemployed
even after he filed on February 26, 2002 his complaint to recover permanent total disability
compensation and despite the August 31, 2005 Decision of the NLRC which was affirmed by
the Court of Appeals, ordering respondents to “allow complainant to resume sea duty.”
That petitioner was not likely to fully recover from his disability is mirrored by the Labor
Arbiter’s finding that his illness would possibly recur once he resumes his sea duties. This could
very well be the reason why petitioner was not re-deployed by respondents. Petitioner’s
disability being then permanent and total, he is “entitled to 100% compensation, i.e.,
US$80,000 for officers,” as stipulated in par. 20.1.7 of the parties’ CBA. Rizaldy M. Quitoriano
vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management A/S, G.R. No.
179868, January 21, 2010.
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Labor Code; interpretation. Another basic principle is that expressed in Article 4 of the Labor
Code – that all doubts in the interpretation and implementation of the Labor Code should be
interpreted in favor of the workingman. This principle has been extended by jurisprudence to
cover doubts in the evidence presented by the employer and the employee. The petitioner has,
at very least, shown serious doubts about the merits of the company’s case, particularly in the
appreciation of the clinching evidence on which the NLRC and CA decisions were based. In
such contest of evidence, the Court applied Article 4 as basis to rule in favor of the
employee. In this case, the Court held that petitioner was constructively dismissed given the
hostile and discriminatory working environment he found himself in, particularly evidenced by
the escalating acts of unfairness against him that culminated in the appointment of another HRD
manager without any prior notice to him. Where no less than the company’s chief corporate
officer was against him, petitioner had no alternative but to resign from his employment.
The Court also gave significance to the fact that petitioner sought almost immediate official
recourse to contest his separation from service through a complaint for illegal dismissal, and
held that this is not the act of one who voluntarily resigned; his immediate filing of a complaint
characterizes him as one who deeply felt that he had been wronged. Manolo A. Peñaflor vs.
Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.
Labor Procedure
Appeal; illegal dismissal. In the present case, the company terminated the services of four
drivers who were declared by the labor arbiter to be regular employees of the company in an
initial complaint filed by said drivers for regularization. Pending the company’s appeal of the
labor arbiter’s decision, the company terminated the employment of said drivers on the ground
of redundancy, which action, the Court viewed as an implied admission of the regular
employment status of the drivers. The Court held that by implementing the dismissal action at
the time the labor arbiter’s ruling was under review, the company unilaterally negated the
effects of the labor arbiter’s ruling while at the same time appealing the same ruling to the
NLRC. This unilateral move is a direct affront to the NLRC’s authority and an abuse of the
appeal process. All these go to show that company acted with patent bad faith. Farley Fulache,
et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.
Appeal; questions of fact. The rule that a Rule 45 petition deals only with legal issues is not an
absolute rule; it admits of exceptions. In the labor law setting, the Court may look into factual
issues when there is a conflict in the factual findings of the labor arbiter, the NLRC, and the
CA as in the present case where the labor arbiter found facts supporting the conclusion that
there had been constructive dismissal, while the NLRC’s and the CA’s factual findings
contradicted the labor arbiter’s findings. The conflicting factual findings are not binding on the
Court. The Court held that it retains the authority to pass upon the evidence presented and draw
conclusions therefrom. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et
al., G.R. No. 177114, January 21, 2010.
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Appeal under Rule 45; questions of law vs. questions of fact. Petitioners in the present case do
not question the findings of facts in the assailed decisions. They question the misapplication of
the law and jurisprudence on the facts recognized by the decisions. For example, they question
as contrary to law their exclusion from the CBA after they were recognized as regular rank-and-
file employees of the company. They also question the basis in law for the dismissal of four
drivers and the legal propriety of the redundancy action taken against them.
The Court reiterated the established distinctions between questions of law and questions of
fact by quoting its rulings in New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and
Rafael Susan[G.R. No. 161818, August 20, 2008, 562 SCRA 503]: “A question of law exists
when the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call for an examination of the probative value of
the evidence presented, the truth or falsehood of the facts being admitted. A question of fact
exists when a doubt or difference arises as to the truth or falsehood of facts or when the query
invites calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as their relation to each
other and to the whole, and the probability of the situation.” Farley Fulache, et al. vs. ABS-CBN
Broadcasting Corporation, G.R. No. 183810, January 21, 2010.
Dismissal; burden of proof. It is a settled rule that in employee termination disputes, the
employer bears the burden of proving that the employee’s dismissal was for just and valid
cause. That petitioner did indeed file a letter of resignation does not help the company’s case as,
other than the fact of resignation, the company must still prove that the employee voluntarily
resigned. There can be no valid resignation where the act was made under compulsion or
under circumstances approximating compulsion, such as when an employee’s act of handing in
his resignation was a reaction to circumstances leaving him no alternative but to resign. In this
case, the Court held that petitioner had been constructively dismissed as his resignation was a
response to the unacceptable appointment of another person to a position he still occupied. In
sum, the evidence does not support the existence of voluntariness
in petitioner’s resignation. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation,
et al., G.R. No. 177114, January 21, 2010.
Labor Law
Agency; principle of apparent authority. There is ample evidence that the hospital held out to
the patient that the doctor was its agent. The two factors that determined apparent authority in
this case were: first, the hospital’s implied manifestation to the patient which led the latter to
conclude that the doctor was the hospital’s agent; and second, the patient’s reliance upon the
conduct of the hospital and the doctor, consistent with ordinary care and prudence.
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It is of record that the hospital required a “consent for hospital care” to be signed preparatory to
the surgery of the patient. The form reads: “Permission is hereby given to the medical, nursing
and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures
and to administer such medications and treatments as may be deemed necessary or advisable
by the physicians of this hospital for and during the confinement of xxx.”
By such statement, the hospital virtually reinforced the public impression that the doctor was a
physician of its hospital, rather than one independently practicing in it; that the medications and
treatments he prescribed were necessary and desirable; and that the hospital staff was prepared
to carry them out. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad
(substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus
Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes
Miguel Ampil vs. Natividad and Enrique Agana,G.R. Nos. 126297/G.R. No. 126467/G.R. No.
127590, February 2, 2010.
Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable

illness under the applicable standard contract for Filipino seafarers that binds the seafarer and
the vessel’s foreign owner, it was an error for the CA to treat such illness as “work-related” and,
therefore, compensable. The standard contract precisely did not consider gallstone as
compensable illness because the parties agreed, presumably based on medical science, that
such affliction is not caused by working on board ocean-going vessels.
Nor is there any evidence to prove that the nature of the seafarer’s work on board a ship
aggravated his illness. No one knows if he had gallstone at the time he boarded the vessel. By
the nature of this illness, it is highly probable that he already had it when he boarded his
assigned ship although it went undiagnosed because he had yet to experience its
symptoms. Bandila Shipping, Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100, February 22,
2010.
Compensable illness; work related. Melanoma is not listed as an occupational disease under
Annex “A” of the Rules on Employees Compensation. Hence, respondent has the burden of
proving, by substantial evidence, the causal relationship between her illness and her working
conditions.Substantial evidence means such relevant evidence as a reasonable mind might
accept to support a conclusion.
The Court in this case agreed with the petitioner and the ECC that respondent was not able to
positively prove that her ailment was caused by her employment and that the risk of contracting
the disease was increased by her working conditions. While the law requires only a reasonable
work-connection and not a direct causal relation, respondent still failed to show that her illness
was really brought about by the wound she sustained during the supervised gardening activity in
school. The CA accepted the allegation that the mole appeared right on the spot where
respondent sustained the injury without any further proof that the mole appeared because of the
injury. The CA further ruled that “the risk of acquiring the said ailment increased by the nature
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of [respondent’s] work in going to school and in returning to her residence during school days x
x x.” However, the CA failed to consider that in a tropical country like the Philippines,
exposure to sunlight is common. Unlike farmers, fishermen or lifeguards, it was not shown that
respondent had chronic long-term exposure to the sun considered necessary for the
development of melanoma. Thus, the Court did not find the risk of contracting the disease to
have been heightened by respondent’s exposure to sunlight in going to work and returning to
her residence. Government Service Insurance System vs. Rosalinda A. Bernadas, G.R. No.
164731, February 11, 2010
Dismissal; due process. The essence of due process is the opportunity to be heard; it is the
denial of this opportunity that constitutes violation of due process of law. The employee was
given the opportunity to be heard when a proper notice of investigation was sent to him,
although the notice did not reach him for reasons outside the employer’s control. The employee
was not also totally unheard on the matter as he was able to explain his side through the two (2)
explanation letters he submitted. These letters are clear indications that he intimately knew of
the matter for which he was being investigated. If he was denied due process at all, the denial
was with respect to the charges of extortion, tardiness and absenteeism, which are grounds
invoked separately from loss of trust and confidence. These grounds were not serious
considerations in the dismissal that followed, and therefore, were not considered by the Court as
material to the present case. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861,
February 2, 2010.
Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving
the lawful cause sustaining the dismissal of the employee. The employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause. The employee’s
behavior constituted just cause. However, the company cannot deny that it failed to observe
due process. The law requires that the employer must furnish the worker sought to be dismissed
with two written notices before termination of employment can be legally effected: (1) notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employer’s decision to
dismiss him. Violation of the employee’s right to statutory due process, even if the dismissal
was for a just cause, warrants the payment of indemnity in the form of nominal damages. This
indemnity is not intended to penalize the employer but to vindicate or recognize the employee’s
right to statutory due process, which was violated by the employer in the present case. Hilton
Heavy Equipment Corporation and Peter Lim vs. Ananias Dy, G.R. No. 164860, February 2,
2010.
Dismissal; due process. Failure to observe due process in the termination of employment for a
just cause does not invalidate the dismissal but makes the company liable for non-compliance
with the procedural requirements of due process. The violation of the employee’s right to
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statutory due process warrants the payment of nominal damages, the amount of which is
addressed to the sound discretion of the court, taking into account the relevant
circumstances. In the instant case, considering that the company already suffered financially
because of poor sales performance under the employee’s watch, it is proper to reduce the
amount of nominal damages awarded to petitioner to Thirty Thousand Pesos (P30,000.00). The
amount of nominal damages awarded is not intended to enrich the employee, but to deter
employers from future violations of the statutory due process rights of employees. Rolando P.
Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No. 179702,February 16,
2010
Dismissal; due process. In the dismissal of employees, it has been consistently held that the twin
requirements of notice and hearing are essential elements of due process. The employer must
furnish the worker with two written notices before termination of employment can be legally
effected: (1) a notice apprising the employee of the particular acts or omissions for which his
dismissal is sought, and (2) a subsequent notice informing the employee of the employer’s
decision to dismiss him. With regard to the requirement of a hearing, the essence of due
process lies simply in an opportunity to be heard, and not that an actual hearing should always
and indispensably be held.
Likewise, there is no requirement that the notices of dismissal themselves be couched in the
form and language of judicial or quasi-judicial decisions. What is required is for the employer
to conduct a formal investigation process, with notices duly served on the employees informing
them of the fact of investigation, and subsequently, if warranted, a separate notice of dismissal.
Through the formal investigatory process, the employee must be accorded the right to present
his or her side, which must be considered and weighed by the employer. The employee must
be sufficiently apprised of the nature of the charge, so as to be able to intelligently defend
himself or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor Relations
Commission, et al., G.R. No. 182299, February 22, 2010.
Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an
employer may terminate an employment due to gross and habitual neglect by the employee of
his duties. To sustain a termination of employment based on this provision of law, the
negligence must not only be gross but also habitual.
In the present case, the employer asserts that the employees failed to regularly undertake a
monthly physical inventory of the outlet’s merchandise. The Court was not persuaded as it
found that inventory preparation and reporting did not fall on the employees’ shoulders since
they were to “assist the [stock] clerk” only. Kulas Ideas & Creations, et al. vs. Juliet Alcoseba, et
al., G.R. No. 180123, February 18, 2010.
Dismissal; loss of trust and confidence. In Fungo v. Lourdes School of Mandaluyong, we restated
the guidelines for the application of loss of trust and confidence as a just cause for dismissal of
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an employee from the service, thus: “a) loss of confidence should not be simulated; b) it should
not be used as subterfuge for causes which are improper, illegal or unjustified; c) it may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary; and d) it must be
genuine, not a mere afterthought to justify earlier action taken in bad faith.” In the present case,
the employee, who was a warehouseman, held a position of trust and confidence and was given
access to and authority over company property with clear tasks and guidelines laid down very
early in his employment. Like any business entity, the company has every right to protect itself
from actual threats to the viability of its operations. The employee, caught red-handed in a
scheme to spirit off unpaid company sacks, not only violated his fiduciary duty as custodian of
company property resulting in the company’s loss of trust and confidence in him; he had also
become a threat to the viability of company operations. To rule that he should be reinstated
would be oppressive to the company. The law, in protecting the rights of the employee,
authorizes neither the oppression nor the self-destruction of the employer. Bibiana Farms and
Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010.
Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the
concurrence of the following: (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; (4) it must be genuine,
not a mere afterthought to justify an earlier action taken in bad faith; and (5) the employee
involved holds a position of trust and confidence. Loss of confidence, as a just cause for
termination of employment, is premised on the fact that the employee concerned holds a
position of responsibility, trust and confidence. He must be invested with confidence on delicate
matters, such as the custody, handling, care, and protection of the employer’s property and/or
funds. 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.
The subject employee in this case is a managerial employee holding a highly sensitive position.
Being the Head of the Marketing Group of the company, he was in charge, among others,
of the over-all production and sales performance of the company. Thus, as aptly pointed out by
the CA, his performance was practically the lifeblood of the corporation, because its earnings
depended on the sales of the marketing group, which he used to head. The position held by the
employee required the highest degree of trust and confidence of his employer in the former’s
exercise of managerial discretion insofar as the conduct of the latter’s business was
concerned. The employee’s inability to perform the functions of his office to the satisfaction of
his employer and the former’s poor judgment as marketing head caused the company huge
financial losses. If these were not timely addressed and corrected, the company could have
collapsed, to the detriment of its policy holders, stockholders, employees, and the public in
general. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No.
179702, February 16, 2010
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Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of
concealment and dishonesty marred the purchase of paper materials for the Women’s Journal’s
special project, with the employee playing the principal and most active role. There is no
question that the employee failed to make a reasonable canvass of the prices of the paper
materials required by a company’s special project, resulting in substantial losses to the
company. That a rush job was involved, is no excuse as canvassing could be done even in a
day’s time as shown by the audit department’s canvass. That the employee was responsible for
concealment and omissions also appears clear to us; he failed, under dubious circumstances, to
seasonably disclose to his employer material information with financial impact on the purchase
transaction.
Thus, the Court cannot but conclude that substantial evidence exists justifying the employee’s
dismissal for a just cause – loss of trust and confidence. For loss of trust and confidence to be a
ground for dismissal, the law requires only that there be at least some basis to justify the
dismissal.The fact that the employee had been with the company for 25 years cannot change the
conclusion that he had become a liability to the company whose interests he miserably failed to
protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No. 187120, February 16,
2010.
Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an
employee are two-fold, consisting of substantive and procedural aspects. Not only must the
dismissal be for a just or authorized cause; the basic requirements of procedural due process –
notice and hearing – must likewise be observed before an employee may be dismissed. The
burden of proof rests on the employer to show that the employee’s dismissal has met these due
process requirements. The case of the employer must stand or fall on its own merits and not on
the weakness of the employee’s defense. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No.
157861, February 2, 2010.
Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee
“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 addition to full backwages, the Court has also repeatedly ruled that in cases
where reinstatement is no longer feasible due to strained relations, then separation pay may be
awarded instead of reinstatement. In Mt. Carmel College v. Resuena, the Court reiterated that the
separation pay, as an alternative to reinstatement, should be equivalent to one (1) month salary
for every year of service.Sargasso Construction and Development Corporation vs. National Labor
Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9,
2010.
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Dismissal; serious misconduct. Misconduct has been defined as 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 of judgment. The
misconduct to be serious must be of such grave and aggravated character and not merely trivial
and unimportant. Such misconduct, however serious, must nevertheless be in connection with
the employee’s work to constitute just cause for his separation.
In the present case, the Court found substantial evidence to prove that a serious misconduct has
been committed to justify termination from employment. The Certified Public Accountant and
Corporate Finance Manager of the company submitted a report dated February 19, 2000 stating
that in spite of management’s memorandum, the keys to the office and filing cabinets were not
surrendered. It was likewise stated in the report that petitioner Wilfredo Baron pulled out some
records without allowing a representative from the internal audit team to inspect them. He
noticed Wilfredo Baron deleting some files from the computer, which could no longer be
retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner)
carrying some documents, including a Daily Collection Report. When asked to present the
documents for inspection, Junatas refused and tore the document.
In addition, the audit team discovered that MSI incurred an inventory shortage of One Million
Thirty Thousand Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It
found that Wilfredo Baron, the operations manager, in conspiracy with the other petitioners,
orchestrated massive irregularities and grand scale fraud, which could no longer be documented
because of theft of company documents and deletion of computer files. Unmistakably, the
unauthorized taking of company documents and files, failure to pay unremitted collections,
failure to surrender keys to the filing cabinets despite earlier instructions, concealment of
shortages, and failure to record inventory transactions pursuant to a fraudulent scheme are acts
of grave misconduct, which are sufficient causes for dismissal from employment. Wilfredo M.
Baron, et al. vs. National Labor Relations Commission, et al., G.R. No. 182299, February 22,
2010.
Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy
must be proved by clear, direct and convincing evidence. In Fernandez v. National Labor
Relations Commission,The Court expounded on the degree of evidence required to establish the
existence of a conspiracy in this wise: “While it is true that in conspiracy, direct proof is not
essential, it must however, be shown that it exists as clearly as the commission of the offense
itself. There must at least be adequate proof that the malefactors had come to an agreement
concerning the commission of a felony and decided to commit it. x x x For conspiracy to exist,
it is essential that there must be conscious design to commit an offense. Conspiracy is not the
product of negligence but of intentionality on the part of the cohorts.”
Verily, there was a dearth of evidence directly linking the employee to the commission of the
crime of theft, as his mere act of loading the dump truck with aggregates did not show that he
knew of the other person’s plan to deliver the load to a place other than the company’s
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construction site. The only conclusion, therefore, is that the company had illegally dismissed
the employee in the present case. Sargasso Construction and Development Corporation vs.
National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118,
February 9, 2010.
Employee; recovery of personal contributions. May a government employee, dismissed from the
service for cause, be allowed to recover the personal contributions he paid to the Government
Service Insurance System (GSIS)? The answer is yes.
Section 11(d) of Commonwealth Act No. 186, as amended, provides: “Upon dismissal for cause
or on voluntary separation, he shall be entitled only to his own premiums and voluntary
deposits, if any, plus interest of three per centum per annum, compounded monthly.” This
provision continues to govern cases of employees dismissed for cause and their claims for the
return of their personal contributions.
Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be
liberally construed in favor of the government employees. The money, subject of the employee’s
request, consists of personal contributions made by him, premiums paid in anticipation of
benefits expected upon retirement. The occurrence of a contingency, i.e., his dismissal from the
service prior to reaching retirement age, should not deprive him of the money that belongs to
him from the outset. To allow forfeiture of these personal contributions in favor of the GSIS
would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo, Branch Clerk of
Court, Regional Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167, February 9, 2010.
Employee expenses; in-service training. In the present case, Article XXI, Section 6 of the CBA
provides that “All expenses of security guards in securing /renewing their licenses shall be for
their personal account.” A reading of the provision would reveal that it encompasses all possible
expenses a security guard would pay or incur in order to secure or renew his license. In-service
training being a requirement for the renewal of a security guard’s license, expenses incurred
therefore are claimed to be for the security guard’s personal account. However, the 1994
Revised Rules and Regulations Implementing the Private Security Agency Law (Republic Act No.
5487) provides that it shall be the primary responsibility of the operators of private security
agency and company security forces to maintain and upgrade the standards of efficiency,
discipline, performance and competence of their personnel. It further provides that “[T]o
maintain and/or upgrade the standard of efficiency, discipline and competence of security
guards and detectives, company security force and private security agencies upon prior
authority shall conduct-in-service training … The cost of training shall be pro-rated among the
participating agencies/private companies.”
Since it is the primary responsibility of operators of company security forces to maintain and
upgrade the standards of efficiency, discipline, performance and competence of their personnel,
it follows that the expenses to be incurred therein shall be for the account of the company.
Further, the intent of the law to impose upon the employer the obligation to pay for the cost of
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its employees’ training is manifested in the aforementioned provision of law. While the law
mandates pro-rating of expenses because it would be impracticable and unfair to impose the
burden of expenses suffered by all participants on only one participating agency or company, if
there is no centralization, there can be no pro-rating, and therefore, the company that has its
own security forces must shoulder the entire cost for such training. If the intent of the law were
to impose upon individual employees the cost of training, the provision on the pro-rating of
expenses would not have found print in the law. Prior to the signing of the CBA, it was the
company providing for the in-service training of the guards. Thus, implicit from the company’s
actuations was its acknowledgment of its legally mandated responsibility to shoulder the
expenses for in-service training. PNCC Skyway Traffic Management and Security Division
Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC
Skyway Corporation), G.R. No. 171231, February 17, 2010
Employer-employee relationship; control test. This Court still employs the “control test” to
determine the existence of an employer-employee relationship between hospital and doctor.
In Calamba Medical Center, Inc. v. National Labor Relations Commission, et al., the Court held
that: “Under the “control test”, an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by which the
physician is to accomplish his task. x x x That petitioner exercised control over respondents
gains light from the undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, the doctor’s work is monitored through the hospital’s
nursing supervisors, charge nurses and orderlies. Without the approval or consent of the hospital
or its medical director, no operations can be undertaken in those areas. For the control test to
apply, it is not essential for the employer to actually supervise the performance by the employee
of his duties, it being enough that it has the right to wield the power.” Professional Services, Inc.
vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III,
Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana)
vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R.
Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.
Management prerogatives; contract of perpetual employment. The Court cannot countenance

the employee’s claim that a contract of perpetual employment was ever constituted. While the
Constitution recognizes the primacy of labor, it also recognizes the critical role of private
enterprise in nation-building and the prerogatives of management. A contract of perpetual
employment deprives management of its prerogative to decide whom to hire, fire and promote,
and renders inutile the basic precepts of labor relations. While management may validly waive
it prerogatives, such waiver should not be contrary to law, public order, public policy, morals or
good customs. An absolute and unqualified employment for life in the mold of petitioner’s
concept of perpetual employment is contrary to public policy and good customs, as it unjustly
forbids the employer from terminating the services of an employee despite the existence of a just
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or valid cause. It likewise compels the employer to retain an employee despite the attainment of
the statutory retirement age, even if the employee has became a “non-performing asset” or,
worse, a liability to the employer. Ronilo Sorreda vs. Cambridge Electronics Corporation, G.R.
No. 172927, February 11, 2010.
Suspension; leave without prior authority. While it is true that the union and its members have
been granted union leave privileges under the CBA, the grant cannot be considered separately
from the other provisions of the CBA, particularly the provision on management prerogatives
where the CBA reserved for the company the full and complete authority in managing and
running its business. The Court, in the present case, saw nothing in the language of the union
leave provision that removes from the company the right to prescribe reasonable rules and
regulations to govern the manner of availing of union leaves, particularly the prerogative to
require its prior approval. In fact, prior notice is expressly required under the CBA so that the
company can appropriately respond to the request for leave. In this sense, the rule requiring
prior approval only made express what is implied from the terms of the CBA.
Despite management’s disapproval of his requested leave, the employee still went on leave, in
open disregard of his superior’s orders. This rendered the employee open to the charge of
insubordination, separately from his absence without official leave. Malayan Employees
Association-FFW and Rodolfo Mangalino vs. Malayan Insurance Company, Inc., G.R. No.
181357, February 2, 2010.
Quitclaim; elements. It is true that the law looks with disfavor on quitclaims and releases by
employees who have been inveigled or pressured into signing them by unscrupulous employers
seeking to evade their legal responsibilities and frustrate just claims of employees. In certain
cases, however, the Court has given effect to quitclaims executed by employees if the employer
is able to prove the following requisites, to wit: (1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration
of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public
order, public policy, morals or good customs, or prejudicial to a third person with a right
recognized by law. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina
Ativo, et al., G.R. No. 188002, February 1, 2010.
Quitclaim; validity. In the case at bar, both the Labor Arbiter and the NLRC ruled that the
employees executed their quitclaims without any coercion from the company following their
voluntary resignation from the company. The contents of the quitclaim documents are simple,
clear and unequivocal. The records of the case are bereft of any substantial evidence to show
that the employees did not know that they were relinquishing their right short of what they had
expected to receive and contrary to what they have so declared. Put differently, at the time they
were signing their quitclaims, respondents honestly believed that the amounts received by them
were fair and reasonable settlements of the amounts, which they would have received had they
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refused to voluntarily resign from the said company. Goodrich Manufacturing Corporation & Mr.
Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.
Vacation leave; scheduling. Although the preferred vacation leave schedule of employees
should be given priority, they cannot demand, as a matter of right, for their request to be
automatically granted by the company. If the employees were given the exclusive right to
schedule their vacation leave then said right should have been incorporated in the CBA. In the
absence of such right and in view of the mandatory provision in the CBA giving the company
the right to schedule the vacation leave of its employees, the CBA prevails.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to
impose conditions on the entitlement to and commutation of the same, as the grant of vacation
leave is not a standard of law, but a prerogative of management. It is a mere concession or act of
grace of the employer and not a matter of right on the part of the employee. It is, therefore, well
within the power and authority of an employer to impose certain conditions, as it deems fit, on
the grant of vacation leaves, such as having the option to schedule the same. PNCC Skyway
Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by
its President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17,
2010
Labor Procedure
Appeal; question of fact. While as a rule, a petition for review on certiorari shall raise only
questions of law, we deem it appropriate to examine the facts in this review, given the
conflicting factual findings between the Labor Arbiter, on the one hand and, the NLRC and the
CA, on the other. The Labor Arbiter sustained Rivera’s dismissal with the finding that he
committed acts of dishonesty or fraud against his employer. The NLRC and the CA held that no
substantial evidence existed to support Rivera’s dismissal. Philippine Journalist, Inc. vs. Leozar
Dela Cruz y Balobal, G.R. No. 187120, February 16, 2010.
Execution of judgments; separation pay/backwages; computation. In concrete terms, the

question is whether a re-computation in the course of execution, of the labor arbiter’s original
computation of the awards made pegged as of the time the decision was rendered and
confirmed with modification by a final CA decision, is legally proper.
The Court held that under the terms of the decision under execution, no essential change is
made by a re-computation as this step is a necessary consequence that flows from the nature of
the illegality of dismissal declared in that decision. A re-computation (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 on until
full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the
consequences of illegal dismissal upon execution of the decision does not constitute an
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alteration or amendment of the final decision being implemented. The illegal dismissal ruling
stands; only the computation of the monetary consequences of this dismissal is affected and this
is not a violation of the principle of immutability of final judgments. Session Delights Ice Cream
and Fast Foods vs. The Hon. Court of Appeals (Sixth Division), Hon. National Labor Relations
Commission (Second Division) and Adonis Armenio M. Flora, G.R. No. 172149, February 8,
2010.
Jurisdiction; absence of employer-employee relationship. Jurisdiction over the subject matter of

a complaint is determined by the allegations of the complaint. In Pioneer Concrete Philippines,
Inc. v. Todaro, the Court reiterated that where no employer-employee relationship exists
between the parties, and the Labor Code or any labor statute or collective bargaining agreement
is not needed to resolve any issue raised by them, it is the Regional Trial Court which has
jurisdiction. Thus it has been consistently held that the determination of the existence of a
contract as well as the payment of damages is inherently civil in nature. A labor arbiter may
only take cognizance of a case and award damages where the claim for such damages arises out
of an employer-employee relationship.
In the present case, the employee, from the period May 8, 1999 to October 8, 1999, was clearly
a project employee of the company. There is, therefore, an employer-employee relationship.
Consequently, questions or disputes arising out of this relationship fell under the jurisdiction of
the labor arbiter. However, based on petitioner’s allegations in his position paper, his cause of
action was based on an alleged second contract of employment separate and distinct from his
project employment contract. While there existed an employer-employee relationship between
the parties while the project contract of employment existed, the present dispute is neither
rooted in the aforestated contract nor is it one inherently linked to it. Petitioner insists on a right
to be employed again in respondent company and seeks a determination of the existence of a
new and separate contract that established that right. As such, his case is within the jurisdiction,
not of the labor arbiter, but of the regular courts. The NLRC and the CA were therefore correct
in ruling that the labor arbiter erroneously took cognizance of the case. Ronilo Sorreda vs.
Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010.
Jurisdiction; void judgment. The company admits that it failed to appeal the January 29, 2003
Order within the period prescribed by law. It likewise admits that the case was already in the
execution process when it resorted to a belated appeal to the DOLE Secretary. The company
sought to excuse itself from the effects of the finality of the Order by arguing that it was allegedly
issued without jurisdiction. As such, it may be assailed at any time.
While it is true that orders issued without jurisdiction are considered null and void and, as a
general rule, may be assailed at any time, the fact of the matter is that, in this case, it was well
within the jurisdiction of Director Manalo to issue the Order. Under Article 128(b) of the Labor
Code, as amended by Republic Act (RA) No. 7730, the DOLE Secretary and her representatives,
the regional directors, have jurisdiction over labor standards violations based on findings made
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in the course of inspection of an employer’s premises. The said jurisdiction is not affected by
the amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations
found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the
visitorial and enforcement powers of the DOLE Secretary, are concerned. The last sentence of
Article 128(b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE
Secretary and her representatives, but such exception is neither an issue nor applicable
here. Tiger Construction and Development Corporation vs. Reynaldo, et al., G.R. No.
164141,February 26, 2010.
Labor Appeal; cash bond. Article 223 of the Labor Code provides that an appeal by the
employer to the NLRC from a judgment of a labor arbiter which involves a monetary award may
be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the NLRC, in an amount equivalent to the monetary award in the
judgment appealed from. “Cash,” means a sum of money; cash bail (the sense in which the
term “cash bond” is used) is a sum of money posted by a criminal defendant to ensure his
presence in court, used in place of a surety bond and real estate.
To comply with the appeal bond requirement, the company deposited the amount
of P71,909.77 with the United Coconut Planters Bank and surrendered to the NLRC the
passbook covering the deposit, along with a Deed of Assignment it executed assigning the
proceeds of the deposit in favor of the employee and authorizing the NLRC to release the same
in the event that the Labor Arbiter’s Decision becomes final and executory. Such Deed of
Assignment, as well as the passbook, is neither a cash bond nor a surety bond. The company’s
appeal to the NLRC was thus not duly perfected, thereby rendering the Labor Arbiter’s Decision
final and executory. Mindanao Times Corporation vs. Mitchel R. Confesor, G.R. No. 183417,
February 5, 2010.
Labor law
Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory
minimum 20% membership of rank-and-file employees in the employees’ union. Twenty
percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union
membership of at least 22 employees (112 x 205 = 22.4). When the EREU filed its application
for registration on December 19, 2005, there were clearly 30 union members. Thus, when the
certificate of registration was granted, there is no dispute that the Union complied with the
mandatory 20% membership requirement. Accordingly, the retraction of six union members
who later severed and withdrew their union membership cannot cause the cancellation of the
union’s registration.
Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the
application for union registration or even way back to the organizational meeting. Before their
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withdrawal, the six employees in question were bona fide union members. They never disputed
affixing their signatures beside their handwritten names during the organizational
meetings. While they alleged that they did not know what they were signing, their affidavits of
retraction were not re-affirmed during the hearings of the instant case rendering them of little, if
any, evidentiary value. In any case, even with the withdrawal of six union members, the union
would still be compliant with the mandatory membership requirement under Art. 234(c) since
the remaining 24 union members constitute more than the 20% membership requirement of 22
employees. Eagle Ridge Gold & Country Club vs. Court of Appeals, et al., G.R. No. 178989,
March 18, 2010.
Cessation of operations; financial assistance. Based on Article 283, in case of cessation of

operations, the employer is only required to pay his employees a separation pay of one month
pay or at least one-half month pay for every year of service, whichever is higher. That is all that
the law requires.
In the case at bar, petitioner paid respondents the following: (a) separation pay computed at
150% of their gross monthly pay per year of service; and (b) cash equivalent of earned and
accrued vacation and sick leaves. Clearly, petitioner had gone over and above the requirements
of the law. Despite this, however, the Labor Arbiter ordered petitioner to pay respondents an
additional amount, equivalent to one month’s salary, as a form of financial assistance.
The award of financial assistance is bereft of legal basis and serves to penalize petitioner who
had complied with the requirements of the law. The Court also point out that petitioner may, as
it has done, grant on a voluntary and ex gratia basis, any amount more than what is required by
the law, but to insist that more financial assistance be given is certainly something that the Court
cannot countenance. Moreover, any award of additional financial assistance to respondents
would put them at an advantage and in a better position than the rest of their co-employees who
similarly lost their employment because of petitioner’s decision to cease its
operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No.
165951, March 30, 2010.
Cost of living allowance. 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.
In the present case, the Court is not persuaded that the continued grant of COLA to the
uniformed personnel to the exclusion of other national government officials run afoul the equal
protection clause of the Constitution. The fundamental right of equal protection of the laws is
not absolute, but is subject to reasonable classification. If the groupings are characterized by
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substantial distinctions that make real differences, one class may be treated and regulated
differently from another. The classification must also be germane to the purpose of the law and
must apply to all those belonging to the same class.
The Court found valid reasons to treat the uniformed personnel differently from other national
government officials. Being in charge of the actual defense of the State and the maintenance of
internal peace and order, they are expected to be stationed virtually anywhere in the
country. They are likely to be assigned to a variety of low, moderate, and high-cost
areas. Since their basic pay does not vary based on location, the continued grant of COLA is
intended to help them offset the effects of living in higher cost areas. Victoria C. Gutierrez, et al.
vs. Department of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission
on Audit, et al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et
al./Kapisanan ng mga Manggagawa sa Bureau of Agricultural Statistic (KMB), et al. vs.
Department of Budget and Management, et al./National Housing Authority vs. Epifanio P.
Recana, et al./ Insurance Commission Officers and Employees, et al. vs. Department of Budget
and Management, et al./Fiber Industry Development Authority Employees Association
(FIDAEA),et al. vs. Department of Budget and Management, et al./Bureau of Animal Industry
Employees Association (BAIEA), et al. vs. Department of Budget and Management, et al./Re:
Request of Sandiganbayan for authority to use their savings to pay their Cola Differential from
July 1, 1989 to March 16, 1999, G.R. No. 153266/G.R. No. 159007/G.R. No. 159029/G.R. No.
170084/G.R. No. 172713/G.R. No. 173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-
4-02-SB. March 18, 2010.
Compensable illness. Jurisprudence provides that to establish compensability of a non-

occupational disease, reasonable proof of work-connection and not direct causal relation is
required. Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings.
In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and permanent
disability benefits in favor of Villamater, as it was sufficiently shown that his having contracted
colon cancer was, at the very least, aggravated by his working conditions, taking into
consideration his dietary provisions on board, his age, and his job as Chief Engineer, who was
primarily in charge of the technical and mechanical operations of the vessels to ensure voyage
safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et
al., G.R. No. 179169, March 3, 2010.
Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the
2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and
(2) the work-related injury or illness must have existed during the term of the seafarer’s
employment contract. In other words, to be entitled to compensation and benefits under this
provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered him
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permanently or partially disabled; it must also be shown that there is a causal connection
between the seafarer’s illness or injury and the work for which he had been contracted.
The 2000 POEA-SEC defines “work-related injury” as “injury(ies) resulting in disability or death
arising out of and in the course of employment” and “work-related illness” as “any sickness
resulting to disability or death as a result of an occupational disease listed under Section 32-A of
this contract with the conditions set therein satisfied.”
Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-
designated physician who is entrusted with the task of assessing the seaman’s disability.
While it is true that medical reports issued by the company-designated physicians do not bind
the courts, the Court’s examination of Dr. Ong-Salvador’s Initial Medical Report have led it to
agree with her findings. Dr. Ong-Salvador was able to sufficiently explain her basis in
concluding that the respondent’s illness was not work-related: she found the respondent not to
have been exposed to any carcinogenic fumes, or to any viral infection in his workplace. Her
findings were arrived at after the respondent was made to undergo a physical, neurological and
laboratory examination, taking into consideration his past medical history, family history, and
social history. In addition, the respondent was evaluated by a specialist, a surgeon and an
oncologist. The series of tests and evaluations show that Dr. Ong-Salvador’s findings were not
arrived at arbitrarily; neither were they biased in the company’s favor.
The respondent, on the other hand, did not adduce proof to show a reasonable connection
between his work as an assistant housekeeping manager and his lymphoma. There was no
showing how the demands and nature of his job vis-à-vis the ship’s working conditions
increased the risk of contracting lymphoma. The non-work relatedness of the respondent’s
illness is reinforced by the fact that under the Implementing Rules and Regulations of the Labor
Code (ECC Rules), lymphoma is considered occupational only when contracted by operating
room personnel due to exposure to anesthetics. The records do not show that the respondent’s
work as an assistant housekeeping manager exposed him to anesthetics.
Accordingly, the Court held that the respondent is not entitled to total and permanent disability
benefits on account of his failure to refute the company-designated physician’s findings that: (1)
his illness was not work-related; and (2) he was fit to resume sea duties. Magsaysay Maritime
Corporation and/or Cruise Ships Catering Services International N.V. vs. National Labor
Relations Commissions, et al., G.R. No. 186180, March 22, 2010.
Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving
that its conduct and action or the transfer of an employee are for valid and legitimate grounds
such as genuine business necessity. Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to show that such transfer is not unreasonable,
inconvenient, or prejudicial to the employee. Failure of the employer to overcome this burden
of proof taints the employee’s transfer as a constructive dismissal.
In the present case, the employer failed to discharge this burden. The combination of harsh
actions taken by the bank rendered the employment condition of the employee hostile and
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unbearable for the following reasons: First, there is no showing of any urgency or genuine
business necessity to transfer the employee to the Makati Head Office. The bank’s stated reason
that the employee had to undergo branch head training because of his gross inefficiency was not
supported by any proof that the employee had a record of gross inefficiency. Second, the
employee’s transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and
oppressive, since the respondent and his family are residents of Dumaguete City. Third, the
employer failed to present any valid reason why it had to require the employee to go to the
Makati Head Office to undergo branch head training when it could have just easily required the
latter to undertake the same training in the VISMIN area. Finally, there was nothing in the order
of transfer indicating the position which the employee would occupy after his training; thus, the
employee was effectively placed in a “floating” status. The bank’s contention that the employee
was assigned to a sensitive position in the DUHO Task Force is suspect when considered with
the fact that he was made to undergo branch head training which is totally different from a
position that entails reconciling book entries of all branches of the former. Reconciling book
entries is essentially an accounting task.
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 present case, the Court held that the hostile and unreasonable
working conditions of the bank justified the finding of the NLRC and the CA that the employee
was constructively dismissed. Philippine Veterans Bank vs. National Labor Relations
Commission, et al., G.R. No. 188882, March 30, 2010.
Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three working days from arrival for diagnosis and
treatment. Applying Section 20(B), paragraph (3) of the 2000 Amended Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels,
petitioner is required to undergo post-employment medical examination by a company-
designated physician within three working days from arrival, except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period
would suffice. In Maunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554
SCRA 446, 459] this Court explicitly declared that it is mandatory for a claimant to be examined
by a company-designated physician within three days from his repatriation. The unexplained
omission of this requirement will bar the filing of a claim for disability benefits. Alex C.
Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C. Maquilan, and/or MMS Co.
Ltd., G.R. No. 184722, March 15, 2010.
Dismissal; damages. Moral and exemplary damages are recoverable where the dismissal of an
employee was attended by bad faith or fraud or constituted an act oppressive to labor or was
done in a manner contrary to morals, good customs or public policy. With regard to the
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employees of Promm-Gem, there being no evidence of bad faith, fraud or any oppressive act on
the part of the latter, the Court found no support for the award of damages.
As for P&G, the records show that it dismissed its employees through SAPS in a manner
oppressive to labor. The sudden and peremptory barring of the employees from work, and from
admission to the work place, after just a one-day verbal notice, and for no valid cause, bellows
oppression and utter disregard of the right to due process of the concerned petitioners. Hence,
an award of moral damages is called for. Joeb Aliviado, et al. vs. Procter & Gamble Philippines,
Inc., et al., G.R. No. 160506, March 9, 2010.
Dismissal; fraud and serious misconduct. In this case, the Court found that Pastoril was as
actively involved as Escoto and Omela in the sale of the Toyota Town Ace that resulted in a loss
to the company. All three participated in making the company believe that Aquino bought the
Toyota Town Ace for P190,000.00 when in fact, Aquino paid P200,000.00 for the
vehicle. Thus, Pastoril acted in concert with Escoto and Omela in the transaction that defrauded
their employer in the amount of P10,000.00. Pastoril prepared and issued the deed of sale
indicating that the vehicle was sold for P190,000.00, although she knew that the buyer was
being charged P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to
the price difference and tried to silence Rodriguez (who got wind of the anomaly) by giving him
P1,000.00 and passing the P10,000.00 price difference off as the approved discount Aquino
asked for. The Court held that there was a conspiracy between and among the three employees,
where every participant had made significant contributory acts. White Diamond Trading
Corporation and/or Jerry Uy vs. National Labor Relations Commission, et al., G.R. No. 186019.
March 29, 2010.
Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for
termination of employment, is premised on the fact that the employee concerned holds a
position of responsibility or of trust and confidence. As such, he must be invested with
confidence on delicate matters, such as custody, handling or care and protection of the property
and assets of the employer. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and must show that the employee is unfit to continue to
work for the employer. In the instant case, the petitioners-employees of Promm-Gem have not
been shown to be occupying positions of responsibility or of trust and confidence. Neither is
there any evidence to show that they are unfit to continue to work as merchandisers for Promm-
Gem. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506,
March 9, 2010.
Dismissal; just cause; misconduct. Misconduct has been defined as improper or wrong
conduct; the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, unlawful in character implying wrongful intent and not mere error of
judgment. The misconduct to be serious must be of such grave and aggravated character and
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not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must
be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that
the employee has become unfit to continue working for the employer. In other words, in order
to constitute serious misconduct which will warrant the dismissal of an employee under
paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct
complained of has violated some established rules or policies. It is equally important and
required that the act or conduct must have been performed with wrongful intent. In the instant
case, petitioners-employees of Promm-Gem may have committed an error of judgment in
claiming to be employees of P&G, but it cannot be said that they were motivated by any
wrongful intent in doing so. As such, the Court found them guilty of simple misconduct only,
for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A
misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid
basis for dismissing an employee. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et
al., G.R. No. 160506, March 9, 2010.
Dismissal; just cause; union security clause. In terminating the employment of an employee by
enforcing the union security clause, the employer is required only to determine and prove that:
(1) the union security clause is applicable; (2) the union is requesting for the enforcement of the
union security provision in the CBA; and (3) there is sufficient evidence to support the decision
of the union to expel the employee from the union. These requisites constitute just cause for
terminating an employee based on the union security provision of the CBA.
It is the third requisite that appears to be lacking in this case. It is apparent from the identical
termination letters that GMC terminated Casio, et al., by relying upon the resolutions of the
union, which made no mention at all of the evidence supporting the decision of the union to
expel Casio, et al. from the union. GMC never alleged nor attempted to prove that the company
actually looked into the evidence of the union for expelling Casio, et al. and made a
determination on the sufficiency thereof. Without such a determination, GMC cannot claim that
it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a
determination of the sufficiency of evidence supporting the decision of the union constitutes
non-observance by GMC of procedural due process in the dismissal of employees. General
Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al.,G.R. No. 149552, March 10,
2010.
Dismissal pursuant to union security clause; separate notice and haring required. GMC illegally
dismissed Casio, et al. because not only did GMC fail to make a determination of the sufficiency
of evidence to support the union’s decision to expel Casio, et al., it also failed to accord the
expelled union members procedural due process, i.e., notice and hearing, prior to the
termination of their employment.
GMC, by its own admission, did not conduct a separate and independent investigation to
determine the sufficiency of the evidence supporting the union’s expulsion of Casio, et al. It
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simply acceded to the union’s demand. Consequently, GMC cannot insist that it has no liability
for the payment of backwages and damages to Casio, et al., and that the liability for such
payment should fall only upon the union officers and board members who expelled Casio, et
al. GMC completely missed the point that the expulsion of Casio, et al. by the union and the
termination of employment of the same employees by GMC, although related, are two separate
and distinct acts. Despite a closed shop provision in the CBA, law and jurisprudence impose
upon GMC the obligation to accord Casio, et al. substantive and procedural due process before
complying with the union’s demand to dismiss the expelled union members from service. The
failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et
al. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552,
March 10, 2010.
Employee benefit; bonus. By definition, a “bonus” is a gratuity or act of liberality of the giver. It
is something given in addition to what is ordinarily received by or strictly due the recipient. A
bonus is granted and paid to an employee for his industry and loyalty which contributed to the
success of the employer’s business and made possible the realization of profits. A bonus is also
granted by an enlightened employer to spur the employee to greater efforts for the success of the
business and realization of bigger profits.
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be
enforceable, it must have been promised by the employer and expressly agreed upon by the
parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature
of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas
bonus due to respondent Association has become more than just an act of generosity on the part
of the petitioner but a contractual obligation it has undertaken.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the
CBA. The rule is settled that any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of
non-diminution of benefits is founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full protection. Hence, absent any
proof that the employer’s consent was vitiated by fraud, mistake or duress, it is presumed that it
entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware
of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees
Association, G.R. No. 180866, March 2, 2010.
Employee; monetary award. The law and the rules are consistent in stating that the employment
permit must be acquired prior to employment. The Labor Code states: “Any alien seeking
admission to the Philippines for employment purposes and any domestic or foreign employer
who desires to engage an alien for employment in the Philippines shall obtain an employment
permit from the Department of Labor.” Section 4, Rule XIV, Book 1 of the Implementing Rules
and Regulations provides: “No alien seeking employment, whether as a resident or non-resident,
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may enter the Philippines without first securing an employment permit from the Ministry. If an
alien enters the country under a non-working visa and wishes to be employed thereafter, he may
only be allowed to be employed upon presentation of a duly approved employment permit.”
Galera worked in the Philippines without a proper work permit but now wants to claim
employee’s benefits under Philippine labor laws. She cannot come to this Court with unclean
hands. To grant Galera’s prayer is to sanction the violation of the Philippine labor laws
requiring aliens to secure work permits before their employment. WPP Marketing
Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing
Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.
Employee vs. corporate officer. Corporate officers are given such character either by the
Corporation Code or by the corporation’s by-laws. Under Section 25 of the Corporation Code,
the corporate officers are the president, secretary, treasurer and such other officers as may be
provided in the by-laws. Other officers are sometimes created by the charter or by-laws of a
corporation, or the board of directors may be empowered under the by-laws of a corporation to
create additional offices as may be necessary.
An examination of WPP’s by-laws resulted in a finding that Galera’s appointment as a corporate
officer (Vice-President with the operational title of Managing Director of Mindshare) during a
special meeting of WPP’s Board of Directors is an appointment to a non-existent corporate
office. WPP’s by-laws provided for only one Vice-President. At the time of Galera’s
appointment on 31 December 1999, WPP already had one Vice-President in the person of
Webster. Galera cannot be said to be a director of WPP also because all five directorship
positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its
Amended By-Laws to support its argument that Galera is a corporate officer. The Amended By-
Laws provided for more than one Vice-President and for two additional directors. Even though
WPP’s stockholders voted for the amendment on 31 May 2000, the SEC approved the
amendments only on 16 February 2001. Galera was dismissed on 14 December 2000. WPP,
Steedman, Webster, and Lansang did not present any evidence that Galera’s dismissal took
effect with the action of WPP’s Board of Directors.
Additionally, the following provisions in her employment contract are convincing indicators that
Galera was an employee and not a corporate officer: (1) it mandates where and how often she is
to perform her work; (2) the wages she receives are completely controlled by WPP; (3) she is
subject to the regular disciplinary procedures of WPP; (4) section 14 thereof clearly states that
she is a permanent employee — not a Vice-President or a member of the Board of Directors; (5)
the intellectual property rights created or discovered by petitioner during her employment shall
automatically belong to private respondent WPP [Under the Intellectual Property Code, this
condition prevails if the creator of the work subject to the laws of patent or copyright is an
employee of the one entitled to the patent or copyright]; and (6) the disciplinary procedure
states that her right of redress is through Mindshare’s Chief Executive Officer for the Asia-Pacific.
This last circumstance implies that she was not even under the disciplinary control of WPP’s
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Board of Directors, and therefore, she could not have been a WPP corporate officer as only the
WPP Board of Directors could appoint and terminate its own corporate officer. WPP Marketing
Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs. WPP Marketing
Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.
Illegal dismissal. Under Republic Act No. 6715, employees who are illegally dismissed are
entitled to full backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time their actual compensation was withheld from them up to
the time of their actual reinstatement but if reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal termination up to the finality of the decision.
The employees in this case are entitled to backwages and separation pay, considering that
reinstatement is no longer possible because the positions they previously occupied are no longer
existing. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No.
149552, March 10, 2010.
Illegal dismissal. WPP’s dismissal of Galera lacked both substantive and procedural due
process. Apart from Steedman’s letter dated 15 December 2000 to Galera, WPP failed to prove
any just or authorized cause for Galera’s dismissal. The law also requires that the employer must
furnish the worker sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs
the employee of the employer’s decision to dismiss him. Failure to comply with these
requirements taints the dismissal with illegality. WPP’s acts clearly show that Galera’s dismissal
did not comply with the two-notice rule. WPP Marketing Communications, Inc. et al. vs.
Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No.
169207/G.R. No. 169239, March 25, 2010.
Illegal dismissal; abandonment. Petitioner was, for five times, notified in writing by respondent
to resume teaching for the second semester of school year 2003-2004 following the service of
her suspension during the first semester. She was advised that a teaching load had already been
prepared for her. Respondent never replied to those notices. Petitioner’s justification for her
failure to respond to the notices was that her acceptance of the offer could be construed as a
waiver of her claims. The Court held that petitioner’s justification is not a valid excuse.
Petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her
desire to return to her job and negated any intention to sever the employer-employee
relationship. Petitioner forgets that her complaint for “illegal dismissal” which she filed on June
5, 2003 sprang, not from her dismissal on December 6, 2003 due to abandonment, but from her
suspension during the first semester of school year 2003-2004. While the filing of a complaint
with a prayer for reinstatement negates an intention to sever the employer-employee
relationship, the same contemplates an action taken subsequent to dismissal and not after an
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employee, by all indications, abandoned her job. Evangeline C. Cobarrubias vs. Saint Louis
University, Inc., G.R. No. 176717, March 17, 2010.
Illegal dismissal; monetary awards. Clearly, the law intends the award of backwages and similar
benefits to accumulate past the date of the Labor Arbiter’s decision until the dismissed employee
is actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has
consistently ruled that backwages shall be computed from the time of illegal dismissal until the
date the decision becomes final.
Separation pay, on the other hand, is equivalent to one month pay for every year of service, a
fraction of six months to be considered as one whole year. Here that would begin from January
31, 1994 when petitioner Belen began his service. Technically the computation of his
separation pay would end on the day he was dismissed on August 20, 1999 when he
supposedly ceased to render service and his wages ended. But, since Belen was entitled to
collect backwages until the judgment for illegal dismissal in his favor became final, here on
September 22, 2008, the computation of his separation pay should also end on that date.
Further, since the monetary awards remained unpaid even after it became final on September 22,
2008 because of issues raised respecting the correct computation of such awards, it is but fair
that respondent Javellana be required to pay 12% interest per annum on those awards from
September 22, 2008 until they are paid. The 12% interest is proper because the Court treats
monetary claims in labor cases the equivalent of a forbearance of credit. It matters not that the
amounts of the claims were still in question on September 22, 2008. What is decisive is that the
order to pay the monetary awards had long become final. Daniel P. Javellana, Jr. vs. Albino
Belen/Albino Belen Vs. Daniel P. Javellana, Jr. and Javellana Farms, Inc., G.R. No. 181913/G.R.
No. 182158, March 5, 2010.
Labor only contracting. Indeed, it is management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature. However, in order for such
outsourcing to be valid, it must be made to an independent contractor because the current labor
rules expressly prohibit labor-only contracting. There is labor-only contracting when the
contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work
or service for a principal, and any of the following elements are present: (i) 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 (ii) the contractor does not exercise the right to control over the performance of the
work of the contractual employee.
In the instant case, the financial statements of Promm-Gem show that it has authorized capital
stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as
of 1990. It also has long term assets worth P432,895.28 and current assets of
P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office
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space with a floor area of 870 square meters. It also had under its name three registered
vehicles, which were used for its promotional/merchandising business. Promm-Gem also has
other clients aside from P&G. Under the circumstances, we find that Promm-Gem has
substantial investment, which relates to the work to be performed. Under these circumstances,
Promm-Gem cannot be considered a labor-only contractor.
On the other hand, the Articles of Incorporation of SAPS show that it has a paid-in capital of
only P31,250.00. There is no other evidence to prove how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other
assets.
SAPS’ lack of substantial capital is highlighted by the records which show that its payroll for its
merchandisers alone for one month would already total P44,561.00. It had 6-month contracts
with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own
capital and investment. Its capital is not even sufficient for one month’s payroll. SAPS failed to
show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate
revenues to sustain its operations independently. Substantial capital refers to capitalization used
in the performance or completion of the job, work or service contracted out. In the present case,
SAPS has failed to show substantial capital.
Furthermore, the employees in this case performed merchandising and promotion of the
products of P&G, which are activities that the Court has considered directly related to the
manufacturing business of P&G. Considering that SAPS has no substantial capital or investment
and the workers it recruited are performing activities which are directly related to the principal
business of P&G, we find that SAPS is engaged in “labor-only contracting”. Joeb Aliviado, et al.
vs. Procter & Gamble Philippines, Inc., et al.,G.R. No. 160506, March 9, 2010.
Project employee. The test for distinguishing a “project employee” from a “regular employee” is
whether or not he has been assigned to carry out a “specific project or undertaking,” with the
duration and scope of his engagement specified at the time his service is contracted. Here, it is
not disputed that petitioner company contracted respondent Trinidad’s service by specific
projects with the duration of his work clearly set out in his employment contracts. He remained
a project employee regardless of the number of years and the various projects he worked for the
company.
Generally, length of service provides a fair yardstick for determining when an employee initially
hired on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization. But this standard will not be fair, if applied to the construction industry, simply
because construction firms cannot guarantee work and funding for its payrolls beyond the life of
each project. And getting projects is not a matter of course. Construction companies have no
control over the decisions and resources of project proponents or owners. There is no
construction company that does not wish it has such control but the reality, understood by
construction workers, is that work depended on decisions and developments over which
construction companies have no say.
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In this case, respondent Trinidad’s series of employments with petitioner company were co-
terminous with its projects. When its Boni Serrano-Katipunan Interchange Project was finished
in December 2004, Trinidad’s employment ended with it. He was not dismissed. His
employment contract simply ended with the project for which he had signed up. His
employment history belies the claim that he continuously worked for the company. Intervals or
gaps separated one contract from another. William Construction Corp. and/or Teresita Uy and
William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010.
Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries

and wages he received during the pendency of his appeal, notwithstanding the reversal by the
NLRC of the LA’s order of reinstatement. The pertinent law on the matter is not concerned with
the wisdom or propriety of the LA’s order of reinstatement, for if it was, then it should have
provided that the pendency of an appeal should stay its execution. After all, a decision cannot
be deemed irrefragable unless it attains finality. College of the Immaculate Concepcion vs.
National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No. 167563,
March 22, 2010.
Representation and Transportation Allowance; entitlement. Statutory law, as implemented by

administrative issuances and interpreted in decisions, has consistently treated RATA as distinct
from salary. Unlike salary, which is paid for services rendered, RATA belongs to a basket of
allowances to defray expenses deemed unavoidable in the discharge of office. Hence, RATA is
paid only to certain officials who, by the nature of their offices, incur representation and
transportation expenses.
At any rate, the denial of RATA must be grounded on relevant and specific provision of law. By
insisting that, as requisite for her receipt of RATA, respondent must discharge her office as
Bacnotan’s treasurer while on reassignment at the La Union treasurer’s office, the DBM
effectively punishes respondent for acceding to her reassignment. Surely, the law could not have
intended to place local government officials like respondent in the difficult position of having to
choose between disobeying a reassignment order or keeping an allowance. Department of
Budget and Management (DBM) vs. Olivia D. Leones, G.R. No. 169726, March 18, 2010.
Separation pay; termination for cause. Separation 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, such as serious
misconduct.
Jurisprudence has classified theft of company property as a serious misconduct and denied the
award of separation pay to the erring employee. In this case, the Court saw no reason why this
same rule should not be similarly applied in the case of Capor. She attempted to steal the
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property of her long-time employer. For committing such misconduct, she is definitely not
entitled to an award of separation pay.
Capor’s argument that despite the finding of theft, she should still be granted separation pay in
light of her long years of service with the Company did not persuade the Court. Indeed, length
of service and a previously clean employment record cannot simply erase the gravity of the
betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that can
simply be stacked against the employer. After all, an employer-employee relationship is
symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer
had treated his employee well, has accorded him fairness and adequate compensation as
determined by law, it is only fair to expect a long-time employee to return such fairness with at
least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is
more insulting and odious for a fair employer. While we sympathize with Capor’s plight, being
of retirement age and having served petitioners for 39 years, we cannot award any financial
assistance in her favor because it is not only against the law but also a retrogressive public
policy. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa (NLM) –
Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.
Termination of employment; conviction in criminal case. Conviction in a criminal case is not

necessary to find just cause for termination of employment. Criminal cases require proof
beyond reasonable doubt while labor disputes require only substantial evidence, which means
such relevant evidence as a reasonable mind might accept as adequate to justify a
conclusion. The evidence in this case was reviewed by the appellate court and two labor
tribunals endowed with expertise on the matter – the Labor Arbiter and the NLRC. They all
found substantial evidence to conclude that Capor had been validly dismissed for dishonesty or
serious misconduct. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng
Manggagawa (NLM) – Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016,
March 15, 2010.
Labor Procedure
Court; findings of fact (labor). A petition for review on certiorari under Rule 45 of the Rules of
Court should include only questions of law — questions of fact are not reviewable. A question
of law exists when the doubt centers on what the law is on a certain set of facts, while a
question of fact exists when the doubt centers on the truth or falsity of the alleged facts. There is
a question of law if the issue raised is capable of being resolved without need of reviewing the
probative value of the evidence. Once the issue invites a review of the evidence, the question is
one of fact.
Whether YEU committed fraud and misrepresentation in failing to remove Pineda’s signature
from the list of employees who supported YEU’s application for registration and whether YEU
conducted an election of its officers are questions of fact. They are not reviewable.
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Factual findings of the Court of Appeals are binding on the Court. Absent grave abuse of
discretion, the Court will not disturb the Court of Appeals’ factual findings. In Encarnacion v.
Court of Appeals (G.R. No. 101292, 8 June 1993), the Court held that, “unless there is a clearly
grave or whimsical abuse on its part, findings of fact of the appellate court will not be
disturbed. The Supreme Court will only exercise its power of review in known exceptions such
as gross misappreciation of evidence or a total void of evidence.” YTPI failed to show that the
Court of Appeals gravely abused its discretion. Yokohama Tire Philippines, Inc. vs. Yokohama
Employees Union, G.R. No. 163532, March 12, 2010.
Court; questions of fact (labor). The petition essentially raises questions of fact. While as a rule,
factual findings of the CA are binding on the Court, the Court exercised its discretionary review
authority to review the facts of this case in view of the conflict in the findings of facts of the
labor arbiter, on the one hand, and the NLRC and the CA, on the other. White Diamond Trading
Corporation and/or Jerry Uy vs. National LaborRelations Commission, et al., G.R. No. 186019.
March 29, 2010.
Indispensable party. Rule 3, Section 7 of the Rules of Court defines indispensable parties as
those who are parties in interest without whom there can be no final determination of an
action. They are those parties who possess such an interest in the controversy that a final decree
would necessarily affect their rights, so that the courts cannot proceed without their presence. A
party is indispensable if his interest in the subject matter of the suit and in the relief sought is
inextricably intertwined with the other parties’ interest.
Unquestionably, Villamater’s widow stands as an indispensable party to this complaint for
payment of permanent and total disability benefits, reimbursement of medical and
hospitalization expenses, moral and exemplary damages, and attorney’s fees. Leonis Navigation
Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169,
March 3, 2010.
Jurisdiction; estoppel. Petitioner is already estopped from belatedly raising the issue of lack of
jurisdiction since it has actively participated in the proceedings before the LA and NLRC. We
have consistently held that while jurisdiction may be assailed at any stage, a party’s active
participation in the proceedings before a court without jurisdiction will estop such party from
assailing such lack of it. It is an undesirable practice of a party participating in the proceedings
and submitting his case for decision and then accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction, when adverse. Philippine Veterans Bank vs. National Labor
Relations Commission, et al., G.R. No. 188882, March 30, 2010.
Jurisdiction; labor arbiter. Petitioners clearly and consistently questioned the legality of RGMI’s
adoption of the new salary scheme (i.e., piece-rate basis), asserting that such action, among
others, violated the existing CBA. Indeed, the controversy was not a simple case of illegal
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dismissal but a labor dispute involving the manner of ascertaining employees’ salaries, a matter
which was governed by the existing CBA.
With regard to the question of jurisdiction over the subject matter, Article 217(c) of the Labor
Code requires labor arbiters to refer cases involving the implementation of CBAs to the
grievance machinery provided therein and to voluntary arbitration. Moreover, Article 260 of the
Labor Code clarifies that such disputes must be referred first to the grievance machinery and, if
unresolved within seven days, they shall automatically be referred to voluntary arbitration.
Under this provision, voluntary arbitrators have original and exclusive jurisdiction over matters
which have not been resolved by the grievance machinery.
Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the labor arbiter
should have referred the matter to the grievance machinery provided in the CBA. Miguela
Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or Victoria Reyes, G.R. No.
174420, March 22, 2010.
Jurisdiction; labor case. Article 217 of the Labor Code provides that the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide cases involving termination
disputes. The NLRC shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters. Galera being an employee, the Labor Arbiter and the NLRC have jurisdiction over the
present case. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M.
Galera vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239,
March 25, 2010.
Jurisdiction; NLRC. The Labor Arbiter and the NLRC do not have jurisdiction over
LRTA. Petitioners themselves admitted in their complaint that LRTA “is a government agency
organized and existing pursuant to an original charter (Executive Order No. 603),” and that they
are employees of METRO.
Light Rail Transit Authority v. Venus, Jr. (G.R. Nos. 163782 & 163881, March 24, 2006), which
has a similar factual backdrop, holds that LRTA, being a government-owned or controlled
corporation created by an original charter, is beyond the reach of the Department of Labor and
Employment which has jurisdiction over workers in the private sector, “Employees of petitioner
METRO cannot be considered as employees of petitioner LRTA. The employees hired by
METRO are covered by the Labor Code and are under the jurisdiction of the Department of
Labor and Employment, whereas the employees of petitioner LRTA, a government-owned and
controlled corporation with original charter, are covered by civil service rules. Herein private
respondent workers cannot have the best of two worlds, e.g., be considered government
employees of petitioner LRTA, yet allowed to strike as private employees under our labor laws.”
In fine, the Labor Arbiter’s decision against LRTA was rendered without jurisdiction, hence, it is
void. Thus, it was improper for the appellate court to order the remand of the case to the NLRC,
and for it (NLRC) to give due course to LRTA’s appeal. Emmanuel S. Hugo, et al. vs. Light Rail
Transit Authority, G.R. No. 181866, March 18, 2010.
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NLRC; final decision. Petitioners received the June 15, 2004 resolution of the NLRC, denying
their motion for reconsideration, on June 16, 2004. They filed their petition for certiorari before
the CA on August 9, 2004, or 54 calendar days from the date of notice of the June 15, 2004
resolution. By reason of the finality of the June 15, 2004 NLRC resolution, the Labor Arbiter
issued on July 29, 2004 a Writ of Execution. Petitioners never moved for a reconsideration of
this Order regarding the voluntariness of their payment to Sonia, as well as the dismissal with
prejudice and the concomitant termination of the case.
However, petitioners argued that the finality of the case did not render the petition for certiorari
before the CA moot and academic. On this point, we agree with petitioners.
In the landmark case of St. Martin Funeral Home v. NLRC (G.R. No. 130866, September 16,
1998), we ruled that judicial review of decisions of the NLRC is sought via a petition for
certiorari under Rule 65 of the Rules of Court, and the petition should be filed before the CA,
following the strict observance of the hierarchy of courts. Under Rule 65, Section 4, petitioners
are allowed sixty (60) days from notice of the assailed order or resolution within which to file
the petition.
Simply put, the execution of the final and executory decision or resolution of the NLRC shall
proceed despite the pendency of a petition for certiorari, unless it is restrained by the proper
court. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et
al., G.R. No. 179169, March 3, 2010.
POEA; factual findings. As a general rule, factual findings of administrative and quasi-judicial
agencies specializing in their respective fields, especially when affirmed by the CA, must be
accorded high respect, if not finality. However, we are not bound to adhere to the general rule
if we find that the factual findings do not conform to the evidence on record or are not
supported by substantial evidence, as in the instant case.
The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete
evidence submitted by petitioner. We note that respondent did not deny the due execution of
the withdrawal form as well as the genuineness of his signature and thumb mark affixed
therein. On the contrary, he admitted signing the same. When he voluntarily signed the
document, respondent is bound by the terms stipulated therein. LNS International Manpower
Services vs. Armando Padua, Jr., G.R. No. 179792, March 5, 2010.
Labor Law
Dismissal; backwages. 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 and to his full backwages, inclusive of allowances, and to his other benefits
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or their monetary equivalent computed from the time his compensation was withheld from him
up to the time of his actual reinstatement.”
Thus, a number of cases holds that an illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. The two reliefs 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 the payment
of backwages.
Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu
of reinstatement is in order. Petitioner’s prayer for the award of backwages is meritorious, it,
and the award of separation pay not being mutually exclusive. Ferdinand
A. Pangilinan vs. Wellmade Manufacturing Corporation, G.R. No. 187005, April 7, 2010.
Dismissal; backwages. Reprimand being the appropriate imposable penalty for

respondent’s actuations from the very beginning, the Court finds that respondent was unfairly
denied from reporting for work and earning his keep, thus, entitling him to the payment
of backwages.
The Court is not unmindful of our previous pronouncements in similar cases involving
suspension or dismissal from service, wherein the penalty imposed was reduced, but the award
of backwages was denied.
Given the circumstances of the case, however, where the proper penalty should only be a
reprimand, the Court finds the aforementioned cases to be inapplicable herein. On this note, the
Court deems it proper to distinguish between the penalties of dismissal or suspension and
reprimand and their respective effects on the grant or award of backwages. When an employee
is dismissed or suspended it is but logical that since he is barred from reporting to work the
same negates his right to be paid backwages. He has no opportunity to work during the period
he was dismissed or suspended and, therefore, he has no salary to expect. However, the same
does not hold true for an employee who is reprimanded. A reprimand usually carries a warning
that a repetition of the same or similar act will be dealt with more severely. Under normal
circumstances, an employee who is reprimanded is never prevented from reporting to work. He
continues to work despite the warning. Thus, in the case at bar, since respondent’s penalty
should only be a reprimand, the Court deems it proper and equitable to affirm the Court of
Appeals’ (CA’s) award of backwages.
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In two instances, the Court granted the award of backwages during the period the employees
were prevented from reporting to work despite concluding that the employee concerned
violated reasonable office rules and regulations and imposing the penalty of reprimand.
In Jacinto v. Court of Appeals [G.R. No. 124540, November 14, 1997, 281 SCRA 657], the
Court awarded petitioner Jacinto backwages after finding that she was only culpable of violating
reasonable office rules and regulations for not having asked permission from school authorities
to leave the school premises and seek medical attention and for not filing an application for sick
leave for approval by the school authorities.
Also, in Bangalisan v. Court of Appeals [G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after
affirming the findings that one of the petitioners, Rodolfo Mariano, is only liable for his violation
of reasonable office rules and regulations for attending the wake and internment of his
grandmother without the benefit of an approved leave of absence and the imposition of the
penalty of reprimand, the Court still granted him backwages.
Consistent with the Court’s rulings in Bangalisan and Jacinto, the grant of backwages to
respondent is but proper. It is to be stressed that when imposing penalties, it must not only be
made within the parameters of the law, but it should also satisfy the basic tenets of equity,
justice, and fairplay. National Power Corporation vs. Alan Olandesca, G.R. No. 171434, April
23, 2010.
Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza [G.R. No.
141141, June 25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or
defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle;
lack of fairness and straightforwardness; disposition to defraud, deceive or betray.
It is not disputed that respondent took several materials and supplies from petitioner’s
warehouse without the approved WRS. However, this should not be construed as dishonesty on
the part of respondent that would warrant his dismissal from the service for the following
reasons: First, the withdrawals of the supplies were duly recorded in the
security guard’s logbook. If respondent intended to defraud petitioner, he could have easily
taken items from the warehouse without having them recorded as he was then the Supervising
Property Officer who had free access to the supplies. Second, right after withdrawing the items,
respondent replaced them on his own initiative, without anyone instructing him to do so. This
act negates his intent to defraud petitioner. Third, there is no clear showing that respondent
misappropriated or converted the items for his own personal use or benefit. Fourth, the Graft
Investigation Officer of the Office of the Ombudsman, in its Resolution dated February 5, 1999,
in OMB-1-98-2011, dismissed a complaint for qualified theft filed by Teodulo V. Largo, Section
Chief, Power Generation Group of petitioner against respondent as there was no competent and
sufficient evidence on record to show that there was intent to gain on the part of the respondent,
considering that the materials and supplies taken by him were used in fencing the watershed
and reservation area of petitioner company. Likewise, there was no basis to charge him
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for malversation of public property as there was no misappropriation of the supplies for his
personal use and that the same were for general purpose and not for any specific use.
Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not
exonerated from liability. It was an established company procedure that before materials can be
taken out from the warehouse, the issuance of a WRS is an indispensable requirement. In fact,
there was even a warning posted at the door of the property office that states:
“BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLINA NG WALANG APRUBADO
NG WRS.” Being the Supervising Property Officer, respondent knows fully well that taking
items from the warehouse without the required WRS is against the company rules and
regulations. It is the paramount duty of respondent to protect the properties in the warehouse
and to ensure that none shall be taken away without proper documentation.
The Machiavellian principle that “the end justifies the means” has no place in government
service, which thrives on the rule of law, consistency and stability. Respondent, by taking the
said properties without the approved WRS, violated reasonable office rules and regulations as
provided in Section 52 (C), (3), Rule IV of Civil Service Commission Memorandum Circular No.
19, series of 1999 (Uniform Rules on Administrative Cases in the Civil Service). Since this is
respondent’s first offense in his more than 16 years of service, the appropriate penalty to be
imposed against him is reprimand. National Power Corporation vs. Alan Olandesca, G.R. No.
171434, April 23, 2010.
Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of trust
and confidence, two requisites must concur: (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.
In the present case, respondent failed to justify its loss of trust and confidence
on Consolacion even as it imputed to him, via Notice of Formal Investigation of April 14, 2003,
non-compliance with (a) established non-written procedures and standards; (b) established
written procedures and standards, and (c) verbal orders and/or instructions. These alleged acts of
non-compliance are too general and can encompass just about any malfeasance. Nowhere in
the Notice was there a detailed narration of the facts and circumstances that would serve as
bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and
orders were. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.
Dismissal; management prerogative. Respondent’s right of management prerogative was

exercised in good faith. Respondent presented evidence of the low volume of sales and orders
for the production of industrial paper in 1999, which inevitably resulted to the company’s
decision to streamline its operations. This fact was corroborated by respondent’s VP-Tissue
Manufacturing Director and was not disputed by petitioner. Exercising its management
prerogative and sound business judgment, respondent decided to cut down on operational costs
by shutting down one of its paper mill. As held in International Harvester Macleod, Inc. v.
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Intermediate Appellate Court [233 Phil. 655,655-666 (1987)] the determination of the need to
phase out a particular department and consequent reduction of personnel and reorganization as
a labor and cost saving device is a recognized management prerogative which the courts will
not generally interfere with.
In this case, shutting down Paper Mill No. 4 was undoubtedly a business judgment arrived at in
the face of the low demand for the production of industrial paper at the time. Despite an
apparent reason to implement a retrenchment program as a cost-cutting measure, respondent,
did not dismiss the workers affected by the closure of Paper Mill No. 4 outright but gave them
an option to be transferred to posts of equal rank and pay. Retrenchment was given only as an
option in case the affected employee did not want to be transferred. The Court viewed this as an
indication of good faith on respondent’s part since it exhausted other possible measures before
retrenchment. Besides, the employer’s prerogative to bring down labor costs by retrenchment
must be exercised essentially as a measure of last resort, after less drastic means have been tried
and found wanting. Giving the workers an option to be transferred without any diminution in
rank and pay belie petitioner’s allegation that the streamlining scheme was implemented as a
ploy to ease out employees. Apparently, respondent implemented its streamlining or
reorganization plan in good faith, not in an arbitrary manner and without violating
the tenurial rights of its employees. Dannie M. Pantoja vs. SCA Hygiene Products
Corporation, G.R. No. 163554, April 23, 2010.
Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling
that Talam was validly dismissed on the ground of retrenchment. The Supreme Court came to
this conclusion based on the following considerations:
First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of
getting rid of employees. The decision was upon the recommendation of the company’s
external auditor. Second, the cost-cutting measure recommended involved reduction of TSFI’s
payroll expense account which, as the auditor found, makes up 41% of the company’s total
operating expenses. Third, Talam was dismissed due to a cause authorized by law –
retrenchment to prevent losses. At the time of Talam’s dismissal, TSFI’s financial condition, as
found by the external auditor, showed that it was not just expecting losses, it already suffered a
net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period
ending December 31, 2002. Fourth, TSFI resorted to other measures to abate its losses. It
claimed that during the crises period, it used as an office a small-room (a mere cubicle) with
only a two-person support staff in the persons of Grapilon and Hermle; it reduced the salaries of
its employees by as much as 30%. This submission by the company is substantiated by the
schedule of Operating Expenses for the year ended December 31, 2002 and September 30,
2002. A quick glance at the schedule readily shows a reduction of TSFI’s operating expenses
across the board. The schedule indicates a substantial decrease in operating expenses, from
P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of December 2002. Francis
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Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No.
175040, April 6, 2010.
Dismissal; serious misconduct. The findings of the CA and National Labor Relations
Commission (NLRC) establish the following: (1) Agad’s request for withdrawal of the 190
cylinders of LPG as stated in a Memorandum dated 12 February 1992 cannot be given credence
since the Memorandum pertains to the replacement of the scrap materials due to
Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders;
(2) Agad did not observe Caltex’s rules and regulations when he transferred the said cylinders
to Millanes’ compound without the RMRD form as required under Caltex’s Field Accounting
Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to
third parties in violation of company rules; (4) Agad failed to submit the periodic inventory
report of the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of
the sale of the LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders
still had monetary value which Agad cannot appropriate for himself without Caltex’s consent.
Considering these findings, it is clear that Agad committed a serious infraction amounting to
theft of company property. This act is akin to serious misconduct or willful disobedience by the
employee of the lawful orders of his employer in connection with his work, a just cause for
termination of employment recognized under Article 282(a) of the Labor Code.
Misconduct has been defined as a 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. To be serious, the misconduct must be of such grave and aggravated
character. Caltex (Philippines), Inc., et. al. vs. Hermie G. Abad, et. al., G.R. No. 163554, April
23, 2010.
Due Process; termination. The records belie Amular’s claim of denial of procedural due
process. He chose not to present his side at the administrative hearing. In fact, he avoided the
investigation into the charges against him by filing his illegal dismissal complaint ahead of the
scheduled investigation. These facts show that the employee was given the opportunity to be
heard and he cannot now come to the Court protesting that he was denied this opportunity. To
belabor a point the Court has repeatedly made in employee dismissal cases, the essence of due
process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes
violation of due process of law. Technol Eight Philippines Corporation vs. National Labor
Relations Commission, et al., G.R. No. 187605. April 13, 2010.
Employer employee relationship. The elements to determine the existence of an employment

relationship are: (1) selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the employer’s power to control the employee’s conduct. In
filing a complaint for illegal dismissal, it is incumbent upon Abueva to prove the relationship by
substantial evidence.
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In this regard, Abueva claims that he has worked with respondent hacienda for more than a year
already and that he was allowed to stay inside the hacienda. As such, he is a regular employee
entitled to monetary claims. However, petitioners have not presented competent proof that
respondents engaged the services of Abueva; that respondents paid his wages or that
respondents could dictate what his conduct should be while at work. In other words, Abueva’s
allegations did not establish that his relationship with respondents had the attributes of an
employer-employee relationship based on the four-fold test. Abueva was not able to discharge
the burden of proving the existence of an employer-employee relationship.
Moreover, Abueva was not able to refute respondents’ assertion that he hires other men to
perform weeding job in the hacienda and that he is not exclusively working for
respondents. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19,
2010.
Illegal dismissal. Contrary to the CA’s perception, the Court finds a work-connection
in Amular’s and Ducay’s assault on Mendoza. As the CA itself noted, the underlying reason
why Amular and Ducay confronted Mendoza was to question him about his report to De Leon –
Technol’s PCD assistant supervisor – regarding the duo’s questionable work behavior. The
motivation behind the confrontation was rooted on workplace dynamics as
Mendoza, Amular and Ducay interacted with one another in the performance of their duties.
Under these circumstances, Amular undoubtedly committed misconduct or exhibited improper
behavior that constituted a valid cause for his dismissal under the law and jurisprudential
standards. The circumstances of his misdeed rendered him unfit to continue working
for Technol. Thus, Amular was not illegally dismissed; he was dismissed for
cause. Technol Eight Philippines Corporation vs. National Labor Relations
Commission, et al., G.R. No. 187605. April 13, 2010.
Illegal Dismissal. If the school were to apply the probationary standards (as in fact it says it did
in the present case), these standards must not only be reasonable but must have also been
communicated to the teachers at the start of the probationary period, or at the very least, at the
start of the period of application of the said standards. These terms, in addition to those
expressly provided by the Labor Code, would serve as the just cause for the termination of the
probationary contract. As explained above, the details of this finding of just cause must be
communicated to the affected teachers as a matter of due process.
AMACC, by its submissions, admits that it did not renew the petitioners’ contracts because they
failed to pass the Performance Appraisal System for Teachers (PAST) and other requirements for
regularization that the school implements to maintain its high academic standards. The evidence
is unclear on the exact terms of the standards, although the school also admits that these were
standards under the Guidelines on the Implementation of AMACC Faculty Plantilla put in place
at the start of school year 2000-2001.
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While the Court can grant that the standards were duly communicated to the petitioners and
could be applied beginning the 1st trimester of the school year 2000-2001, glaring and very
basic gaps in the school’s evidence still exist. The exact terms of the standards were never
introduced as evidence; neither does the evidence show how these standards were applied to
the petitioners. Without these pieces of evidence (effectively, the finding of just cause for the
non-renewal of the petitioners’ contracts), the Court has nothing to consider and pass upon as
valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the
termination of employment of employees on probationary status) lacks the supporting finding of
just cause that the law requires and, hence, is illegal. Yolanda M. Mercado, et al.
vs. Ama Computer College, Parañaque City, G.R. No. 183572, April 13, 2010.
Illegal 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; however, it is
likewise incumbent upon the employees that they should first establish by competent evidence
the fact of their dismissal from employment. The one who alleges a fact has the burden of
proving it and the proof should be clear, positive and convincing. In this case, aside from mere
allegations, no evidence was proffered by the petitioners that they were dismissed from
employment. The records are bereft of any indication that petitioners were prevented from
returning to work or otherwise deprived of any work assignment by respondents.
In Abad v. Roselle Cinema [G.R. No. 141371, March 24, 2006, 485 SCRA 262, 272], the Court
ruled that the substantial evidence proffered by the employer that it had not terminated the
employee should not be ignored on the pretext that the employee would not have filed the
complaint for illegal dismissal if he had not really been dismissed. The Court held that
such non sequitur reasoning cannot take the place of the evidence of both the employer and the
employee. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19,
2010.
Illegal Dismissal. The Court views with approval the observation of the CA and the NLRC that
the employer cannot justify the defense of abandonment as it failed to prove that indeed the
employee had abandoned her work. It did not even bother to send a letter to her last known
address requiring her to report for work and explain her alleged continued absences.
The ratiocination of the NLRC on this score merits the Court’s imprimatur, viz: The law clearly
spells out the manner by which an unjustified refusal to return to work by an employee may be
established. Thus, respondent should have given complainant a notice with warning
concerning her alleged absences (Section 2, Rule XIV, Book V, Implementing Rules and
Regulations of the Labor Code). The notice requirement actually consists of two parts to be
separately served on the employee to wit: (1) notice to apprise the employee of his absences
with a warning concerning a possible severance of employment in the event of an unjustified
excuse therefor, and (2) subsequent notice of the decision to dismiss in the event of an
employee’s refusal to pay heed to such warning. Only after complying with those requirements
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can it be reasonably concluded that the employee actually abandoned his job. In the present
case, more than two (2) months had already lapsed since the employee allegedly started to
absent herself when she instituted her action for illegal dismissal. During the said period of time,
no action was taken by the company regarding the employee’s alleged absences, something
which is quite peculiar had her employment not been severed at all. Accordingly, the Court
found no merit in the company’s defense of abandonment in view of an utter lack of evidence to
support the same. Hence, the employee’s charge of illegal dismissal
stands uncontroverted. Diversified Security, Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15,
2010.
Preventive Suspension; Process. What the Rules require is that the employer act on the
suspended worker’s status of employment within the 30-day period by concluding the
investigation either by absolving him of the charges, or meting the corresponding penalty if
liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any
corresponding action on the part of the employer, the employer must reinstate the employee or
extend the period of suspension, provided the employee’s wages and benefits are paid in the
interim.
In the present case, petitioner company had until May 20, 2002 to act on Taroy’s case. It did by
terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not
violated even if the termination notice was received only on June 4, 2002, absent any showing
that the delayed service of the notice on Taroy was attributable to Genesis Transport. Genesis
Transport Service, Inc. et al. vs. Unyon ng Malayang Manggagawa ng Genesis
(UMMGT), et al., G.R. No. 182114, April 5, 2010.
Reinstatement. Given the period that has lapsed and the inevitable change of circumstances that
must have taken place in the interim in the academic world and at AMACC, which changes
inevitably affect current school operations, the Court holds that – in lieu of reinstatement – the
petitioners should be paid separation pay computed on a trimestral basis from the time of
separation from service up to the end of the complete trimester preceding the finality of this
Decision. The separation pay shall be in addition to the other awards, properly recomputed, that
the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer
College, Parañaque City, G.R. No. 183572, April 13, 2010.
Release, Waiver and Quitclaim. Talam was not an unlettered employee; he was an information
technology consultant and must have been fully aware of the consequences of what he was
entering into. The quitclaim was a voluntary act as there is no showing that he was coerced into
executing the instrument; he received a valuable consideration for his less than two years of
service with the company. Thus, from all indications, the release and quitclaim was a valid and
binding undertaking that should have been recognized by the labor authorities and the CA.
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While the law frowns upon releases and quitclaims executed by employees who are inveigled
or pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities, a legitimate waiver representing a voluntary settlement of a laborer’s claims
should be respected by the courts as the law between the parties. In the Court’s
view, Talam’s release and quitclaim fall into the category of legitimate waivers as defined by the
Court.
With Talam’s voluntary execution of the release and quitclaim, the Court found the filing of the
illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to
afford Talam procedural due process. The release and quitclaim, in the Court’s mind, erased
whatever infirmities there might have been in the notice of termination as Talam had already
voluntarily accepted his dismissal through the release and quitclaim. As such, the written notice
became academic; the notice, after all, is merely a protective measure put in place by law and
serves no useful purpose after protection has been assured. The Court thus finds no basis for the
conclusion that TSFI violated procedural due process and should pay nominal damages. Francis
Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No.
175040, April 6, 2010.
Resignation of Employee. While the letter states that Peñaflor’s resignation was irrevocable, it
does not necessarily signify that it was also voluntarily executed. Precisely because of the
attendant hostile and discriminatory working environment, Peñaflor decided to permanently
sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive
dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh,
hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination,
insensibility, or disdain by an employer exists and has become unbearable to the employee. The
gauge for constructive dismissal is whether a reasonable person in the employee’s position
would feel compelled to give up his employment under the prevailing circumstances. With the
appointment of Buenaobra to the position he then still occupied, Peñaflor felt that he was being
eased out and this perception made him decide to leave the company.
The fact of filing a resignation letter alone does not shift the burden of proving that the
employee’s dismissal was for a just and valid cause from the employer to the
employee. In Mora v. Avesco [G.R. No. 177414, November 14, 2008, 571 SCRA 226], the
Court ruled that should the employer interpose the defense of resignation, it is still incumbent
upon the employer to prove that the employee voluntarily resigned. Manolo A. Peñaflor vs.
Outdoor Clothing Manufacturing Corp., et al., G.R. No. 177114, April 13, 2010.
Labor Procedure
Certiorari; questions of law. TSFI asks the Court to dismiss the present petition on the ground
that it is procedurally defective as, allegedly, it raises only questions of fact, in contravention of
the requirement under Rule 45 of the Rules of Court that an appeal by certiorari shall raise only
questions of law. While the petition indeed poses factual issues – i.e., whether the company was
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suffering from substantial losses to justify a retrenchment measure, whether it observed fair and
reasonable standards in implementing a retrenchment, and whether Talam deserved to be
retrenched – the Court deems it proper to examine the facts itself in view of the conflicting
factual findings among the Labor Arbiter, the NLRC and the CA. Francis Ray Talam vs. National
Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.
Finding of facts. Findings of facts of quasi-judicial bodies like the NLRC, and affirmed by the CA
in due course, are conclusive on the Supreme Court, which is not a trier of facts.
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 respect, but finality when affirmed by the CA. Such findings deserve full respect and,
without justifiable reason, ought not to be altered, modified or reversed. Diversified Security, Inc.
vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010
Res Judicata. On the issue of refund of “underpayment,” petitioners aver that cases of similar
import involving also the respondent union have been decided with finality in their favor by
the NLRC, viz: UMMGT v. Genesis Transport Service, Inc. (NLRC RAB III Case No. 04-518-03)
and Reyes v. Genesis Transport Service, Inc. (NLRC CA No. 04862-04); and Santos v. Genesis
Transport Service, Inc. (NLRC CA No. 041869-04). Petitioners thus pray that the Court accord
respect to the rulings of the NLRC in the above-cited cases and apply the principle of res
judicata vis-à-vis the present case. The Supreme Court held, however that, absent proof that
the NLRC cases cited by petitioners have attained finality, the Court may not consider them to
constitute res judicata on petitioners’ claim for refund of the “underpayment” due. Genesis
Transport Service, Inc. et al. vs. Unyon ng Malayang Manggagawa ng Genesis
(UMMGT), et al., G.R. No. 182114, April 5, 2010
Labor law
Illegal dismissal; backwages. The basis for the payment of backwages is different from that for
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 backwages is usually the length of the employee’s
service while that for separation pay is the actual period when the employee was unlawfully
prevented from working.
As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines
[G.R. No. 178524, January 30, 2009] instructs that the award of separation pay is inconsistent
with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as
held in a catena of cases, an employee who is dismissed without just cause and without due
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process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof.
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. Golden Ace Builders
and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.
Illegal dismissal; doctrine of strained relations. Under the doctrine of strained relations, the
payment of separation pay is considered an acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it
releases the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust.
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.
In the present case, the Labor Arbiter found that actual animosity existed between petitioner
Azul and respondent as a result of the filing of the illegal dismissal case. Such finding,
especially when affirmed by the appellate court as in the case at bar, is binding upon the Court,
consistent with the prevailing rules that the Court will not try facts anew and that findings of
facts of quasi-judicial bodies are accorded great respect, even finality. Golden Ace Builders
and Arnold U. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.
Illegal dismissal; separation pay. 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.
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. Golden Ace Builders
and ArnoldU. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.
Labor procedure
Judgment; final and executory. The Labor Arbiter’s decision has long become final and
executory and it can no longer be reversed or modified. Nothing is more settled in law than
when a final judgment becomes executory, it thereby becomes immutable and unalterable. The
judgment may no longer be modified in any respect, even if the modification is meant to correct
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what is perceived to be an erroneous conclusion of law or fact, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the
land. The only recognized exception are the correction of clerical errors or the making of so-
called nunc pro tunc entries which cause no injury to any party, and, of course, where the
judgment is void.
Once a judgment becomes final and executory, the prevailing party should not be denied the
fruits of his victory by some subterfuge devised by the losing party. Final and executory
judgments can neither be amended nor altered except for correction of clerical errors, even if
the purpose is to correct erroneous conclusions of fact or of law. Trial and execution
proceedings constitute one whole action or suit such that a case in which execution has been
issued is regarded as still pending so that all proceedings in the execution are proceedings in the
suit.
It is no longer legally feasible to modify the final ruling in this case through the expediency of a
petition questioning the order of execution. Judgments of courts should attain finality at some
point lest there be no end in litigation. The final judgment in this case may no longer be
reviewed, or in any way modified directly or indirectly, by a higher court, not even by the
Supreme Court. The reason for this is that, litigation must end and terminate sometime and
somewhere, and it is essential to an effective and efficient administration of justice that, once a
judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts
must guard against any scheme calculated to bring about that result and must frown upon any
attempt to prolong controversies. Marmosy Trading, Inc. and Victor Morales vs. Court of Appeals,
et al., G.R. No. 170515, May 6, 2010.
Labor Law
Acceptance of Benefits, render moot claim under other policies. As in the case of Capili v.
National Labor Relations Commission [273 SCRA 576], a claim for benefit under the company’s
retirement plan becomes moot when the employee accepts retirement benefits on the basis of
Article 287 of the Labor Code. By Yuson’s acceptance of her retirement benefits through a
compromise agreement entered into with her employer, she is deemed to have opted to retire
under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No.
170369, June 16, 2010.
Approval for company’s early retirement program; management prerogative. Approval of

applications for the early retirement program (“ERP”) is within the employer’s management
prerogatives. The exercise of management prerogative is valid as long as it is not done in a
malicious, harsh, oppressive, vindictive, or wanton manner. In the present case, the Court sees
no bad faith on the part of the employer. The 21 August 2001 memorandum clearly states that
petitioner, on its discretion, was offering ERP to its employees. The memorandum also states
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that the reason for the ERP was to prevent further losses. Petitioner did not abuse its discretion
when it excluded respondent in the ERP because the latter is already about to retire. To allow
respondent to avail of the ERP would have been contrary to the purpose of the program. Korean
Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.
Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is

defined as a quitting because continued employment is rendered impossible, unreasonable or
unlikely, or when there is a demotion in rank or a diminution of pay. It exists when an act of
clear discrimination, insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued employment.
Here, there was no diminution of petitioner’s salary and other benefits. There was no evidence
that she was harassed or discriminated upon, or that respondents made it difficult for her to
continue with her other duties. Absent any evidence of bad faith, it is within the exercise of
respondents’ management prerogative to transfer some of petitioner’s duties, if, in their
judgment, this would be more beneficial to the corporation. Estrella Velasco vs. Transit
Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.
Constructive dismissal; off-detailing; resignation; notice requirement. The company evidently

placed petitioner on floating status after being relieved of her position. But, as the Court has
repeatedly ruled, such act of “off-detailing” does not amount to a dismissal so long as the
floating status does not continue beyond a reasonable time. In this case, the employee’s floating
status ran up to more than six months as of August 16, 2002. For this reason, the company may
be considered to have constructively dismissed the employee from work as of that date. Hence,
petitioner’s purported resignation on October 15, 2002 could not have been legally possible.
The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002,
asking her to explain her failure to report for work and informing her that the company would
treat such failure as lack of interest in her continued employment. But these notices cannot
possibly take the place of the notices required by law as they came more than six months after
the company placed her on floating status, at which time, the employee is already deemed to
have been constructively dismissed her from work. Elsa S. Mali-on v. Equitable General Services
Inc., G.R. No. 185269, June 29, 2010.
Death benefits; entitlement. In order to avail of death benefits, the death of the employee should
occur during the term of the employment contract. For emphasis, we reiterate that the death of
a seaman during the term of employment contract makes the employer liable to his heirs for
death benefits, but if the seaman dies after his contract of employment has expired, his
beneficiaries are not entitled to the death benefits. Southeastern Shipping, Southeastern Shipping
Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
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Death benefits; post-medical examination; inadvertence of employer. In the cases of

Philippines., Inc. v. Joaquin [437 SCRA 608] and Rivera v. Wallem Maritime Services, Inc.[474
SCRA 714], the Supreme Court stressed the importance of a post-employment medical
examination or its equivalent for the award of death benefits to seafarers and/or their
representatives in compliance with POEA Memorandum Circular No. 055-96 and Department
Order No. 33, Series of 1996, which provide that the seafarer must report to his employer for a
post-employment medical examination within three working days from the date of arrival,
otherwise, benefits under the POEA standard employment contract would be
nullified. However, in the present case, the absence of a post-employment medical
examination cannot be used to defeat respondent’s claim since the failure to subject the seafarer
to this requirement was not due to the seafarer’s fault but to the inadvertence or deliberate
refusal of petitioners. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No.
181112, June 29, 2010.
Dismissal; breach of trust; lack of loss not a defense. The acts of the employee revealed a mind
that was willing to disregard bank rules and regulations when other branch officers concurred.
Her defense that the bank suffered no loss is of no moment. The focal point is that she betrayed
the trust of the bank. Hence, the bank rightfully terminated the services of the employee for
willful breach of the trust that it reposed in her. Luzviminda A. Ang vs. Philippine National
Bank, G.R. No. 178762, June 16, 2010.
Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to
show that the dismissal of the employee is for just cause and failure to do so would mean that
the dismissal is not justified. This is in consonance with the guarantee of security of tenure in the
Constitution, and elaborated in the Labor Code. A dismissed employee is not required to prove
his innocence to the charges leveled against him by his employer. The determination of the
existence and sufficiency of a just cause must be exercised with fairness and in good faith and
after observing due process. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy
vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; exercised with compassion and understanding; doubts resolved in favor of employee.
While an employer has its own interest to protect, and pursuant thereto, it may terminate a
managerial employee for a just cause, such prerogative to dismiss or lay off an employee must
be exercised without abuse of discretion. Its implementation should be tempered with
compassion and understanding. The employer should bear in mind that, in the exercise of the
said prerogative, what is at stake is not only the employee’s position, but his very livelihood, his
very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence
presented by the employer and 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 justifiable cause. Thus, when the breach of trust or loss of confidence alleged is not borne by
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clearly established facts, as in this case, such dismissal on the cited grounds cannot be
allowed. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn
Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; gross neglect of duty; duty to family is no defense. Dr. Estampa’s defense is not
acceptable. A person’s duty to his family is not incompatible with his job-related commitment
to come to the rescue of victims of disasters. Disasters do not strike every day. Besides,
knowing that his job as senior medical health officer entailed the commitment to make a
measure of personal sacrifice, he had the choice to resign from it when he realized that he did
not have the will and the heart to respond. Dr. Edilberto Estampa, Jr. vs. Government of
Davao, G.R. No. 190681, June 21, 2010.
Dismissal; loss of confidence not entitled to separation pay. It is significant to stress that for there
to be a valid dismissal based on loss of trust and confidence, the breach of trust must be willful,
meaning it must be done intentionally, knowingly, and purposely, without justifiable
excuse. The basic premise for dismissal on the ground of loss of confidence is that the
employee concerned holds a position of trust and confidence. It is the breach of this trust that
results in the employer’s loss of confidence in the employee.
In the case of Aromin v. NLRC [553 SCRA 273], the assistant vice-president of BPI was validly
dismissed for loss of trust and confidence. The Court disallowed the payment of separation pay
on the ground that he was found guilty of willful betrayal of trust, a serious offense akin to
dishonesty. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor
Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801. June 18,
2010.
Dismissal; loss of trust and confidence; managerial employees. Loss of trust and confidence, as a
just cause for termination of employment, is premised on the fact that an employee concerned
holds a position where greater trust is placed by management and from whom greater fidelity to
duty is correspondingly expected. This includes managerial personnel entrusted with confidence
on delicate matters, such as the custody, handling, or care and protection of the employer’s
property. The betrayal of this trust is the essence of the offense for which an employee is
penalized.
It must be noted, however, that in a plethora of cases, the Supreme Court has distinguished the
treatment of managerial employees from that of rank-and-file personnel, insofar as the
application of the doctrine of loss of trust and confidence is concerned. Thus, 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. But as regards a managerial employee,
the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss
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of confidence, such as when 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.Lima Land,
Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G.R. No. 169523,
June 16, 2010.
Dismissal; mere negligence or carelessness not sufficient ground for loss of confidence.
Respondent’s negligence or carelessness in her duties, however, are not justifiable grounds for
petitioners’ loss of trust and confidence in her, especially in the absence of any malicious intent
or fraud on respondent’s part. Loss of trust and confidence stems from a breach of trust founded
on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not commit any
act which was dishonest or deceitful. She did not use her authority as the Finance and
Administration Manager to misappropriate company property nor did she abuse the trust
reposed in her by petitioners with respect to her responsibility to implement company rules. The
most that can be attributed to respondent is that she was remiss in the performance of her duties.
This, though, does not constitute dishonest or deceitful conduct which would justify the
conclusion of loss of trust and confidence. Lima Land, Inc., Leandro Javier, Sylvia Duque and
Premy Ann Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal for just cause, separation pay allowed in exceptional cases. While 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 separation pay, the Court has allowed in numerous cases the
grant of separation pay or some other financial assistance to an employee dismissed for just
causes on the basis of equity.
In the leading case of Philippine Long Distance Telephone Co. v. NLRC [164 SCRA 671] the
Court stated that 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. In granting separation pay to respondent, the NLRC and
Court of Appeals both adhered to this jurisprudential precept and cleared respondent of bad
faith. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor Relations
Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801, June 18, 2010.
Employee benefit; total disability construed. It has been held that disability is intimately related
to one’s earning capacity. It should be understood less on its medical significance but more on
the loss of earning capacity. Total disability does not mean absolute helplessness. In disability
compensation, it is not the injury, which is compensated, but rather the incapacity to work
resulting in the impairment of one’s earning capacity. Thus, permanent disability is the inability
of a worker to perform his job for more than 120 days, regardless of whether or not he loses the
use of any part of his body. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No.
186289, June 29, 2010.
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Employer-Employee Relationship; agents of insurance companies; exception to the Insular case;

Our ruling in the first Insular case [Insular Insurance v. NLRC, 179 SCRA 459] case did not
foreclose the possibility of an insurance agent becoming an employee of an insurance company;
if evidence exists showing that the company promulgated rules or regulations that effectively
controlled or restricted an insurance agent’s choice of methods or the methods themselves in
selling insurance, an employer-employee relationship would be present. The existence of an
employer-employee relationship is thus determined on a case-to-case basis depending on the
evidence on record. Gregorio V. Tongko v. The Manufacturers Life Insurance Co. (Phils) and
Renato A. Vergel De Dios, G.R. No. 167622, June 29, 2010.
Nature of employer; privatization; entitlement to benefits. Although the transformation of the

PNB from a government-owned corporation to a private one did not result in a break in its life
as juridical person, the same idea of continuity cannot be said of its employees. Section 27 of
Presidential Proclamation 50 provided for the automatic termination of employer-employee
relationship upon privatization of a government-owned and controlled corporation. Further,
such privatization cannot deprive the government employees involved of their accrued benefits
or compensation.
As for possible benefits accruing after privatization, the same should be deemed governed by
the Labor Code since the PNB that rehired the employee has become a private corporation.
Under the Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Section 7, the
employee’s separation from work for a just cause does not entitle her to termination
pay. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Nature of employer; privatization no defense; continuity of offense. The offense for which
petitioner was removed took place when the government still owned PNB and she was then a
government employee. But while PNB began as a government corporation, it did not mean that
its corporate being ceased and was subsequently reestablished when it was privatized. It
remained the same corporate entity before, during, and after the change over with no break in
its life as a corporation. Consequently, the offenses that were committed against the bank
before its privatization continued to be offenses against the bank after the
privatization. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Prescription of labor claims; overseas contract workers. The employment of seafarers, including
claims for death benefits, is governed by the contracts they sign every time they are hired or
rehired; and as long as the stipulations therein are not contrary to law, morals, public order or
public policy, they have the force of law between the parties.
In Cadalin v. POEA’s Administrator [238 SCRA 721, 764] we held that Article 291 of the Labor
Code covers all money claims from employer-employee relationship. “It is not limited to money
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claims recoverable under the Labor Code, but applies also to claims of overseas contract
workers”.
Article 291 of the Labor Code is the law governing prescription of money claims of seafarers, a
class of overseas contract workers. This law prevails over Section 28 of the Standard
Employment Contract for Seafarers, which provides for claims to be brought only within one
year from the date of the seafarer’s return to the point of hire. Thus, for the guidance of all,
Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive
period for the filing of money claims by seafarers, is hereby declared null and void. The
applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers
and more in accord with the State’s declared policy to afford full protection to labor, which
provides for a three-year prescriptive period. Southeastern Shipping, Southeastern Shipping
Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
Quitclaims; general rule; requirements for validity; instances when it was annulled. As a rule,
quitclaims, waivers, or releases are looked upon with disfavor and are largely ineffective to bar
claims for the measure of a worker’s legal rights. To be valid, a Deed of Release, Waiver and/or
Quitclaim must meet the following requirements: (1) that there was no fraud or deceit on the
part of any of the parties; (2) that the consideration for the quitclaim is credible and reasonable;
and (3) that the contract is not contrary to law, public order, public policy, morals or good
customs, or prejudicial to a third person with a right recognized by law.
Courts have stepped in to annul questionable transactions, especially where there is clear proof
that a waiver, for instance, was obtained from an unsuspecting or a gullible person; or where the
agreement or settlement was unconscionable on its face. A quitclaim is ineffective in barring
recovery of the full measure of a worker’s rights, and the acceptance of benefits therefrom does
not amount to estoppel. Moreover, a quitclaim in which the consideration is scandalously low
and inequitable cannot be an obstacle to the pursuit of a worker’s legitimate claim. Interorient
Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.
Retirement benefits; does not include allowances. Executive Order No. 756 temporary measure;
statutory construction. Section 6 of Executive Order No. 756 (“E.O. 756”), which provides for
the computation of retirement proceeds including allowances, does not provide for a permanent
retirement plan, as against the prohibition of Section 28, Subsection (b) of Commonwealth Act
No. 186 (“C.A. 186”), as amended. The E.O. 756 should be read adjunct to its mandate of
reorganizing the Philippine International Trading Corporation. The increased benefit under E.O.
756 was clearly meant as an incentive for employees who retire, resign or are separated from
service during or as a consequence of the reorganization. As a temporary measure, it cannot be
interpreted as an exception to the general prohibition against separate or supplementary
insurance and/or retirement or pension plans under C.A. 186, as amended.
In reconciling E.O. 756 with C.A.186, as amended, uppermost in the mind of the Court is the
fact that the best method of interpretation is that which makes laws consistent with other laws
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which are to be harmonized rather than having one considered repealed in favor of the
other. Philippine International Trading Corporation vs. Commission on Audit, G.R. No. 183517,
June 22, 2010.
Resignation; burden of proof. The rule in termination cases is that the employer bears the
burden of proving that he dismissed his employee for a just cause. And, when the employer
claims that the employee resigned from work, the burden is on the employer to prove that he
did so willingly. Whether that is the case would largely depend on the circumstances
surrounding such alleged resignation. Those circumstances must be consistent with the
employee’s intent to give up work. Elsa S. Mali-on v. Equitable General Services Inc., G.R. No.
185269, June 29, 2010.
Solidary liability of employers; proof of bad faith. Based on MAM Realty Development
Corporation v. NLRC[244 SCRA 797], for corporate officers to be held solidarily liable in labor
disputes there must be evidence of bad faith or malice. Querubin L. Alba and Rizalinda D. De
Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.
Labor Procedure
Judgment; amendment of final order; solidary liability. The Labor Arbiter cannot modify a final
and executory judgment, even if the modification is meant to correct erroneous conclusions of
fact and law, whether it be made by the court that rendered it or by the highest court in the land.
The only recognized exceptions are the corrections of clerical errors or the making of so-
called nunc pro tuncentries which cause no prejudice to any party and in cases where the
judgment is void. Said exceptions do not apply in the present case. Querubin L. Alba and
Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.
Judgment; law of the case; definition and application. “Law of the case” has been defined as the
opinion delivered on a former appeal—it is a term applied to an established rule that when an
appellate court passes on a question and remands the case to the lower court for further
proceedings, the question there settled becomes the law of the case upon subsequent
appeal. OSCI’s application of the law of the case principle to the instant case, as regards the
remand of the case to the Labor Arbiter for clarificatory hearings, is misplaced. The only matter
settled in the July 30, 1999 NLRC Decision, which can be regarded as law of the case, was the
undisputed fact that Bastol was suffering from a heart ailment. As it is, the issue on the degree of
disability of Bastol’s heart ailment and his entitlement to disability indemnity, as viewed by the
NLRC through said decision, has yet to be resolved. For this reason, the NLRC remanded the
case to Labor Arbiter Mayor, Jr. “for conduct of further appropriate proceedings and to terminate
the same with dispatch. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No.
186289, June 29, 2010.
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Judgment; res judicata; nature and applicability. The nature of res judicata, as now embodied in
Sec. 47, Rule 39 of the Rules of Court, has two concepts, which are (i) bar by former judgment
and (ii) conclusiveness of judgment. These concepts of the doctrine of res judicata are
applicable to second actions involving substantially the same parties, the same subject matter,
and cause or causes of action. In the instant case, there is no second action to speak of. Oriental
Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.
Procedure; certificate of non-forum shopping; pro-forma complaints. For the expeditious and
inexpensive filing of complaints by employees, the Regional Arbitration Branch (“RAB”) of the
NLRC provides pro-forma complaint forms. This is to facilitate the exercise and protection of
employees’ rights by the convenient assertion of their claims against employers untrammeled by
procedural rules and complexities. To comply with the certification against forum shopping
requirement, a simple question embodied in the Complaint form answerable by “yes” or “no”
suffices. Employee-complainants are not even required to have a counsel before they can file
their complaint. An officer of the RAB, duly authorized to administer oaths, is readily available
to facilitate the execution of the required subscription or jurat of the complaint. Oriental Ship
Management Co., Inc. vs. Romy B. Bastol,G.R. No. 186289, June 29, 2010.
Procedure; conduct of hearings; discretionary; exemptions. Although, the NLRC, while having
appellate jurisdiction over decisions and resolutions of the Labor Arbiter, may not dictate to the
latter how to conduct the labor case before it. Sec. 9 of Rule V of the then prevailing NLRC
Rules of Procedure, issued on December 10, 1999, provided for the nature of proceedings
before the Labor Arbiter as non-litigious in nature. Hence, the Labor Arbiter is given full
discretion to determine, motu proprio, on whether to conduct hearings or not.
Consequently, a hearing cannot be demanded by either party as a matter of right. The parties
are required to file their corresponding position papers and all the documentary evidence and
affidavits to prove their cause of action and defenses. The rationale behind this is to avoid delay
and curtail the pernicious practice of withholding of evidence.
The Court, however, has recognized specific instances of the impracticality for the Labor Arbiter
to follow the position paper method of disposing cases; thus, formal or clarificatory hearings
must be had in cases of termination of employment: such as, (i) when claims are not properly
ventilated for lack of proper determination whether complainant employee was a rank-and-file
or a managerial employee, (ii) that the Labor Arbiter cannot rely solely on the parties’ bare
allegations when the affidavits submitted presented conflicting factual issues, and (iii)
considering the dearth of evidence presented by complainants the Labor Arbiter should have set
the case for hearing. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289,
June 29, 2010.
Procedure; verification by counsel sufficient. The counsel’s verification in a Position Paper

substantially complies with the rule on verification. The second paragraph of Sec. 4, Rule 7 of
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the Rules of Court provides: “A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his personal knowledge or based
on authentic records.” On the other hand, the actual verification of counsel states: “That I am
the counsel of record for the complainant in the above-entitled case; that I caused the
preparation of the foregoing Position Paper; that I have read and understood the contents
thereof; and that I confirm that all the allegations therein contained are true and correct based
on recorded evidence.” Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No.
186289, June 29, 2010.
Procedure; late filing of position paper, and filing of prohibited pleading. The relaxation of rules
of technical procedure in the hearing of labor disputes shall not be applicable in case counsel
fails to file a position paper before the Labor Arbiter not just once but twice. His situation was
compounded when he filed a motion to recall order of dismissal, a prohibited pleading, albeit
gratuitously glossed over by the Labor Arbiter, which treated it as an appeal; and when he
belatedly paid the appeal fee.
Moreover, not having learned his lesson, petitioner’s counsel filed a motion for reconsideration
of the NLRC dismissal of his appeal, which is also prohibited, instead of interposing an appeal
before the Court of Appeals. Said motion for reconsideration not having tolled the running of the
reglementary period for the filing of a petition for certiorari under Rule 65, petitioner’s petition
before the appellate court was filed out of time – three months late. Luis M. Rivera vs. Parents-
Teachers Community Association and Easter Yase, G.R. No. 181532, June 29, 2010.
Procedure; late submission of documentary evidence allowed. The nature of the proceedings
before the Labor Arbiter is not only non-litigious and summary, but the Labor Arbiter is also
given great leeway to resolve the case; thus, he may “avail himself of all reasonable means to
ascertain the facts of the controversy.” The belated submission of additional documentary
evidence by respondent after the case was already submitted for decision did not make the
proceedings before the Labor Arbiter improper. The basic reason is that technical rules of
procedure are not binding in labor cases. Oriental Ship Management Co., Inc. vs. Romy B.
Bastol, G.R. No. 186289, June 29, 2010.
Procedure; quantum of evidence on appeal; substantial evidence. In administrative proceedings,

the quantum of proof required is substantial evidence, which is more than a mere scintilla of
evidence, but such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. The Court of Appeals may review the factual findings of the
NLRC and reverse its ruling if it finds that the decision of the NLRC lacks substantial
basis. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No.
171327, June 18, 2010.
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Labor Law
Assumption of jurisdiction by Secretary of Labor; authority to decide on legality of dismissals
arising from strike. The assumption of jurisdiction powers granted to the Labor Secretary under
Article 263(g) is not limited to the grounds cited in the notice of strike or lockout that may have
preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the
meanwhile may have taken place. As the term “assume jurisdiction” connotes, the intent of the
law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave
rise to or which arose out of the strike or lockout, including cases over which the labor arbiter
has exclusive jurisdiction.
In the present case, what the Labor Secretary refused to rule upon was the dismissal from
employment of employees who violated the return to work order and participated in illegal acts
during a strike. This was an issue that arose from the strike and was, in fact, submitted to the
Labor Secretary, through the union’s motion for the issuance of an order for immediate
reinstatement of the dismissed officers and the company’s opposition to the motion. The
dismissal issue was properly brought before the Labor Secretary and he was mistaken in ruling
that the matter is legally within the exclusive jurisdiction of the labor arbiter to decide. Bagong
Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of
Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng
Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.
Bargaining deadlock; award; findings of Secretary of Labor. Unless there is a clear showing of
grave abuse of discretion, the Court cannot, and will not, interfere with the expertise of the
Secretary of Labor. The award granted by the Labor Secretary in resolving the bargaining
deadlock, drawn as they were from a close examination of the submissions of the parties, do not
indicate any legal error, much less any grave abuse of discretion, and should not be
disturbed. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of
Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong
Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.
Dismissal of employees; just cause. Theft committed by an employee is a valid reason for his
dismissal by the employer. Although as a rule this Court leans over backwards to help workers
and employees continue with their employment or to mitigate the penalties imposed on them,
acts of dishonesty in the handling of company property, petitioner’s income in this case, are a
different matter. Maribago Bluewater Beach Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20,
2010.
Dismissal of employees; requirements. The validity of an employee’s dismissal from service

hinges on the satisfaction of the two substantive requirements for a lawful termination. These
are, first, whether the employee was accorded due process the basic components of which are
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the opportunity to be heard and to defend himself. This is the procedural aspect. And second,
whether the dismissal is for any of the causes provided in the Labor Code of the
Philippines. This constitutes the substantive aspect. Erector Advertising Sign Group, Inc. and
Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.
Dismissal of employees; procedural due process. Furnishing the employee with a suspension
order prior to his notice of termination does not satisfy the requirement of a first notice. It
implies that the employer has already decided, for the reasons stated therein, to suspend the
employee from work in the company, and the wording of the order in the present case gives no
indication that the employee is being given an opportunity to submit his defense or
explanation. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito
Cloma, G.R. No. 167218, July 2, 2010.
Dismissal of employees; procedural due process. In order to validly dismiss an employee, he

must be accorded both substantive and procedural due process by the employer. Procedural
due process requires that the employee be given a notice of the charge against him, an ample
opportunity to be heard, and a notice of termination. Even if the aforesaid procedure is
conducted after the filing of the illegal dismissal case, the legality of the dismissal, as to its
procedural aspect, will be upheld provided that the employer is able to show that compliance
with these requirements was not a mere afterthought. New Puerto Commercial and Richard Lim
vs. Rodel Lopez and Felix Gavan, G.R. No. 169999, July 26, 2010.
Employee benefits; 13th month pay; definition of basic salary. The term “basic salary” of an
employee for the purpose of computing the thirteenth-month pay was interpreted to include all
remuneration or earnings paid by the employer for services rendered, but does not include
allowances and monetary benefits which are not integrated as part of the regular or basic salary,
such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night
differential and holiday pay, and cost-of-living allowances. However, these salary-related
benefits should be included as part of the basic salary in the computation of the thirteenth-
month pay if, by individual or collective agreement, company practice or policy, the same are
treated as part of the basic salary of the employees. Central Azucarera De Tarlac vs. Central
Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010
Employee benefits; 13th month pay; company policy or practice. The practice of petitioner in
giving 13th-month pay based on the employees’ gross annual earnings which included the basic
monthly salary, premium pay for work on rest days and special holidays, night shift differential
pay and holiday pay continued for almost thirty (30) years and has ripened into a company
policy or practice which cannot be unilaterally withdrawn. The petitioner cannot claim that the
practice arose from an erroneous application of the law since no doubtful or difficult question of
law is involved in this case. The guidelines set by the law are not difficult to decipher. Central
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Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July
26, 2010
Employee benefits; death benefits. For the death of a seafarer to be compensable under the 1996
POEA Standard Employment Contract, the death must occur during the term of his contract of
employment. In this case, the seaman died 2 years after he was repatriated to the Philippines
due to medical reasons, hence the claimants are not entitled to receive death benefits under the
contract. The decedent’s heirs claimed that the death should be compensable since the nature of
his work as a seaman triggered the illnesses that eventually led to his death. However, the Court
noted that though the immediate cause of the seaman’s death was pneumonia, the underlying
cause of death was advanced HIV (AIDS). Since the claimants failed to prove that the decedent
acquired HIV during his 2-month employment aboard the respondents’ vessel, their claim for
death benefits was denied. Lydia Escarcha vs. Leonis Navigation Co., Inc., et al., G.R. No.
182740, July 5, 2010.
Employees; government agency. The Armed Forces of the Philippines Commissary and
Exchange Services (AFPCES) is a government agency performing proprietary functions. By clear
implication of law, all AFPCES personnel should therefore be classified as government
employees and any complaint for illegal dismissal involving such employees should be filed
with the CSC and not the NLRC. Such fact cannot be negated by the failure of AFPCES to follow
appropriate civil service rules in the hiring, appointment, discipline and dismissal of employees.
Neither can it be denied by the fact that AFPCES chose to enroll its employees in the SSS instead
of the GSIS. Such considerations cannot be used against the CSC to deprive it of its jurisdiction.
Hence, the Labor Arbiter’s decision in the illegal dismissal case filed by AFPCES employees is a
total nullity for having been rendered without jurisdiction. Magdalena Hidalgo, et al. vs.
Republic of the Philippines, G.R. No. 179793, July 5, 2010.
Employer-employee relationship; evidence. Any doubt arising from the evaluation of evidence
as between the employer and the employee must be resolved in favor of the latter. It is settled
jurisprudence that the burden of proving payment of monetary claims rests on the employer. It
was entirely within the company’s power to present personnel files, payrolls, remittances, and
other similar documents which would have proven payment of respondent’s money claims as
these documents should necessarily be in its possession; hence, failure to present such evidence
must be taken against it. Dansart Security Force & Allied Services Company and Danilo A. Sarte
vs. Ms. Jean O. Bagoy, G.R. No. 168495, July 2, 2010.
Government agencies; reorganization. A reorganization is valid provided it is done in good

faith. As a general rule, the test of good faith lies in whether the purpose of the reorganization is
for economy or to make the bureaucracy more efficient. Removal from office as a result of
reorganization must, thus, pass the test of good faith. A demotion in office is tantamount to
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removal if no cause is shown for it. Consequently, before a demotion may be effected pursuant
to a reorganization, the observance of the rules on bona fide abolition of public office is
essential. Virginia D. Bautista vs. Civil Service Commission and Dev’t. Bank of the
Philippines, G.R. No. 185215, July 22, 2010.
Government agencies; reorganization; personal liability of local official. The RTC of Cadiz
declared void a resolution that reorganized the city government and effectively purged the city
government of Cadiz of all employees who opposed the mayor politically or disagreed with him
in his policies. The RTC ordered the payment of moral damages to the workers, but it was not
clear if the payment was to be made by the city government or by Mayor Valera, in his personal
capacity. The Court held that Varela is personally liable to pay moral damages. Settled is the
principle that a public official may be liable in his personal capacity for whatever damage he
may have caused by his act done with malice and in bad faith or beyond the scope of his
authority or jurisdiction. In the complaint, the employees stated that, “due to the illegal acts of
the Defendant, Plaintiffs suffered mental torture and anguish, sleepless nights, wounded feelings,
besmirched reputation and social humiliation.” The State can never be the author of illegal acts.
The complaint merely identified Varela as the mayor of Cadiz City. It did not categorically state
that Varela was being sued in his official capacity. The identification and mention of Varela as
the mayor of Cadiz City did not automatically transform the action into one against Varela in his
official capacity. The allegations in the complaint determine the nature of the cause of
action.Eduardo Valera vs. Ma. Daisy Revalez, G.R. No. 171705, July 29, 2010.
Illegal dismissal; burden of proof; filing of complaint not sufficient to disprove abandonment. In
illegal dismissal cases, the employer bears the burden of proving that the termination was for a
valid or authorized cause. However, before the employer is asked to prove that the dismissal
was legal, the employee must first establish by substantial evidence the fact of his dismissal from
service. Logically, if there is no dismissal, then there can be no question as to its legality or
illegality.
Under normal circumstances, an employee’s act of filing an illegal dismissal complaint against
his employer is inconsistent with abandonment. However, the courts should not use that one act
to conclude that an employee was constructively dismissed when substantial evidence proves
otherwise. In this case, substantial evidence proves that Pulgar was not constructively dismissed,
and that he had abandoned his duties in order to avoid an investigation being conducted by his
employer. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227. July 5, 2010.
Illegal dismissal; misrepresentation of cause is an act of bad faith. The complainant, Rio Remo,
was dismissed from service on the ground of retrenchment. However, the records show that
Sentinel hired a replacement soon after Remo’s dismissal, proving that Sentinel’s financial
distress was not as serious as it claimed, and that retrenchment was not the real reason for
Remo’s dismissal. Sentinel concealed its true intention and committed misrepresentation when it
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claimed that Remo’s dismissal was due to serious financial losses. This act of misrepresentation
is an act of active bad faith that fatally tainted Remo’s dismissal and rendered it illegal. Sentinel
Integrated Services, Inc. vs. Rio Jose Remo, G.R. No. 188223, July 5, 2010.
Illegal dismissal; relief available to employee. An illegally dismissed employee is entitled to

reinstatement without loss of seniority rights and other privileges and to full backwages,
inclusive of allowances, and to her other benefits or their monetary equivalent, computed from
the time the compensation was withheld up to the time of actual reinstatement. Where
reinstatement is no longer feasible, separation pay equivalent to at least one month salary or one
month salary for every year of service, whichever is higher, a fraction of at least six months
being considered as one whole year, should be awarded to respondent. An award for moral and
exemplary damages cannot be justified unless the employer had acted in bad faith. The award
of moral and exemplary damages cannot be justified solely upon the premise that the employer
dismissed his employee without authorized cause and due process. Lambert Pawnbrokers and
Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Labor-only contracting. Despite the fact that the service contracts contain stipulations which are
earmarks of independent contractorship, they do not make it legally so. The language of a
contract is neither determinative nor conclusive of the relationship between the parties. The
parties cannot dictate, by a declaration in a contract, the character of the contractor’s business
as a labor-only contractor or a legitimate job contractor, which should be determined by the
criteria set by statute. Here, a closer look at AMPCO’s actual status and participation regarding
the employment of the complainants clearly belie the contents of the written service
contract. San Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.
Labor-only contracting; evidence. A Certificate of Registration as an Independent Contractor is

not conclusive evidence of such status. In distinguishing between permissible job contracting
and prohibited labor-only contracting, the totality of the facts and the surrounding
circumstances of the case are to be considered. San Miguel Corporation vs. Vicente Semillan, et
al., G.R. No. 164257, July 5, 2010.
Liability of officers for illegal dismissal. Corporate officers are only solidarily liable with the
corporation for the illegal termination of services of employees if they acted with malice or bad
faith. In Philippine American Life and General Insurance v. Gramaje, bad faith is defined as a
state of mind affirmatively operating with furtive design or with some motive of self-interest or ill
will or for ulterior purpose. It implies a conscious and intentional design to do a wrongful act
for a dishonest purpose or moral obliquity. The lack of authorized or just cause to terminate
one’s employment and the failure to observe due process do not ipso facto mean that the
corporate officer acted with malice or bad faith. There must be independent proof of malice or
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bad faith which is lacking in the present case. Lambert Pawnbrokers and Jewelry corporation
and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Preventive suspension. Preventive suspension is justified where the employee’s continued

employment poses a serious and imminent threat to the life or property of the employer or of the
employee’s co-workers. Without this kind of threat, preventive suspension is not proper. Jose P.
Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan
Victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010
Public employees; demotion. There is demotion when an employee is appointed to a position

that results in a diminution in duties, responsibilities, status or rank which may or may not
involve a reduction in salary. Where an employee is appointed to a position with the same
duties and responsibilities with a rank and salary higher than those he enjoyed in his previous
position, there is no demotion and the appointment is valid. Virginia D. Bautista vs. Civil Service
Commission and Devt. Bank of the Philippines, G.R. No. 185215, July 22, 2010.
Public employees; downgrading of employees. The summary reallocation of Go’s position to a

lower degree resulting in the corresponding downgrading of his salary infringed the policy of
non-diminution of pay which the Court recognized and applied in Philippine Ports Authority v.
Commission on Audit, as well as in the subsequent sister cases involving benefits of government
employees. Running through the gamut of these cases is the holding that the affected
government employees shall continue to receive benefits they were enjoying as incumbents
upon the effectivity of RA 6758. Relevant to the critical issue at hand is Sec. 15 (b) of PD 985
which, as amended by Sec. 13 (a) of RA 6758, pertinently reads: Sec. 13. Pay Reduction — If
an employee is moved from a higher to a lower class, he shall not suffer a reduction in salary:
Provided, That such movement is not the result of a disciplinary action or voluntary
demotion. Gonzalo S. Go, Jr. vs. CA and Office of the President, G.R. No. 172027. July 29,
2010
Redundancy; definition; requisites. Redundancy exists when the service capability of the
workforce is in excess of what is reasonably needed to meet the demands of the enterprise. A
redundant position is one rendered superfluous by any number of factors, such as over hiring of
workers, decreased volume of business, dropping of a particular product line previously
manufactured by the company, or phasing out of a service activity previously undertaken by the
business. Under these conditions, the employer has no legal obligation to keep in its payroll
more employees than are necessary for the operation of its business.
For a valid implementation of a redundancy program, the employer must comply with the
following requisites: (1) written notice served on both the employees and the DOLE at least one
month prior to the intended date of termination of employment; (2) payment of separation pay
equivalent to at least one month pay for every year of service; (3) good faith in abolishing the
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redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished. Lambert Pawnbrokers and Jewelry corporation
and Lambert Lim vs. Helen Binamira,G.R. No. 170464. July 12, 2010.
Retirement; retirement age. The retirement age is primarily determined by the existing
agreement or employment contract. Absent such an agreement, the retirement age under Article
287 of the Labor Code will apply. Amelia R. Obusan vs. Philippine National Bank, G.R. No.
181178, July 26, 2010.
Retirement; retirement plan. Retirement plans allowing employers to retire employees who have
not yet reached the compulsory retirement age of 65 years are not per se repugnant to the
constitutional guaranty of security of tenure. By its express language, the Labor Code permits
employers and employees to fix the applicable retirement age at 60 years or below, provided
that the employees’ retirement benefits under any CBA and other agreements shall not be less
than those provided by law.Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178,
July 26, 2010.
Retrenchment; definition; requisites. Retrenchment is the termination of employment initiated by

the employer through no fault of and without prejudice to the employees. It is resorted to
during periods of business recession, industrial depression, seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials, conversion of the plant to a new production
program, or automation. It is a management prerogative resorted to avoid or minimize business
losses.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is
reasonably necessary and likely to prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious and real, or only if expected, are reasonably
imminent as perceived objectively and in good faith by the employer; (2) the employer serves
written notice both to the employee/s concerned and the DOLE at least one month before the
intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in
an amount prescribed by law; (4) the employer exercises its prerogative to retrench in good
faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be
retrenched or retained. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs.
Helen Binamira, G.R. No. 170464. July 12, 2010
Retrenchment; decrease in income is not business loss. A sharp drop in income from P1million
to onlyP665,000.00 is not the kind of business losses contemplated by the Labor Code that
would justify a valid retrenchment. A mere decline in gross income cannot in any manner be
considered as serious business losses. It should be substantial, sustained and real. Lambert
Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464.
July 12, 2010.
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Separation pay; as equitable relief. Having determined that the imposition of preventive
suspension was proper and that the complainant was not illegally dismissed, the Court found no
basis to grant backwages. However, given the attendant circumstances of the case — that
complainant had been working with the company for a period of sixteen (16) years without any
previous derogatory record – the Court held that the ends of social and compassionate justice
would be served if the employee is given some equitable relief in the form of separation
pay. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency,
Inc. Juan victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26,
2010
LABOR PROCEDURE
Jurisdiction; intra-union disputes. Section 226 of the Labor Code clearly provides that the BLR
and the Regional Directors of DOLE have concurrent jurisdiction over inter-union and intra-
union disputes. Such disputes include the conduct or nullification of election of union and
workers’ association officers. There is, thus, no doubt as to the BLR’s jurisdiction over the instant
dispute involving member-unions of a federation arising from disagreement over the provisions
of the federation’s constitution and by-laws. Atty. Allan S. Montaño vs. Atty Ernesto C.
Verceles, G.R. No. 168583, July 26, 2010.
Labor tribunal; factual finding. As a rule, a petition for certiorari under Rule 65 is valid only
when the question involved is an error of jurisdiction, or when there is grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the court or tribunals exercising quasi-
judicial functions. Hence, courts exercising certiorari jurisdiction should refrain from reviewing
factual assessments of the respondent court or agency. Occasionally, however, they are
constrained to wade into factual matters when the evidence on record does not support those
factual findings; or when too much is concluded, inferred or deduced from the bare or
incomplete facts appearing on record. The CA rightfully reviewed the correctness of the labor
tribunals’ factual findings not only because of the foregoing inadequacies, but also because the
NLRC and the Labor Arbiter came up with conflicting findings. Lambert Pawnbrokers and
Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Money claims; effect of failure to include in prayer for relief. The rule is well-settled that points
of law, theories, issues and arguments not adequately brought to the attention of the trial court
need not be, and ordinarily will not be considered by a reviewing court as they cannot be raised
for the first time on appeal because this would be offensive to the basic rules of fair play, justice
and due process. Though there is nothing on record which would show that the amount of
P207,693 has been returned to PRRM, a perusal of the pleadings show that PRRM failed to
include the return of such amount in its prayer for relief. Hence, the Labor Arbiter cannot act on
the same. A prayer for a monetary award should have been raised at the earliest opportunity
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before the Labor Arbiter. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227.
July 5, 2010.
NLRC Rules of Procedure; certificate of non-forum shopping. The filing of a certificate of non-
forum shopping is mandatory in initiatory pleadings; non-compliance with the required
certification is fatal. The filing of the same is not waived by the other party’s failure to
immediately assert the defect, and neither is it cured by its belated submission on the ground
that the party was not in any way guilty of actual forum shopping. In cases where the Court
tolerated the deficiency, special circumstances or compelling reasons made the strict
application unjustified. In this case, however, the petitioners offered no valid justification for
their failure to comply with the Circular. Mandaue Galleon Trade, Inc., et al. vs. Bienvenido
Isidto, et al., G.R. No. 181051, July 5, 2010.
Rule 45; when review of facts allowed. As a rule, a petition for review under Rule 45 of the
Rules of Court must raise only questions of law. However, the rule has exceptions such as when
the findings of the Labor Arbiter, NLRC and Court of Appeals vary, as in this case. Maribago
Bluewater Beach Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20, 2010.
Labor Law
Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is
totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the
same is accompanied by a prayer for reinstatement. In the present case, however, petitioner
filed his complaint more than one year after his alleged termination from employment.
Moreover, petitioner did not ask for reinstatement in the complaint form, which he personally
filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position
Paper that was later prepared by his counsel. This is an indication that petitioner never had the
intention or desire to return to his job.Elpidio Calipay vs. National Labor Relations Commission,
et al., G.R. No. 166411, August 3, 2010.
Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by
substantial evidence that the dismissal is for just cause. If the employer fails to discharge the
burden of proof, the dismissal is deemed illegal. In the present case, BCPI failed to discharge its
burden when it failed to present any evidence of the alleged fistfight, aside from a single
statement, which was refuted by statements made by other witnesses and was found to be
incredible by both the Labor Arbiter and the NLRC. Alex Gurango vs. Best Chemicals and Plastic,
Inc., et al., G.R. No. 174593, August 25, 2010.
Dismissal; burden of proof. The law mandates that the burden of proving the validity of the
termination of employment rests with the employer. Failure to discharge this evidentiary burden
would necessarily mean that the dismissal was not justified and, therefore, illegal.
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Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal
justification for dismissing employees. In case of doubt, such cases should be resolved in favor
of labor, pursuant to the social justice policy of labor laws and the Constitution. Century
Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630,
August 8, 2010.
Dismissal; due process. In termination proceedings of employees, procedural due process
consists of the twin requirements of notice and hearing. The employer must furnish the
employee with two written notices before the termination of employment can be effected: (1)
the first apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the second informs the employee of the employer’s decision to dismiss him. The
requirement of a hearing is complied with as long as there was an opportunity to be heard, and
not necessarily that an actual hearing was conducted. Pharmacia and Upjohn, Inc., et al. vs.
Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.
Dismissal; due process. The Labor Code recognizes the right to due process of all workers,
without distinction as to the cause of their termination, even if the cause was their supposed
involvement in strike-related violence. In the present case, PHIMCO sent a letter to the affected
union members/officers, directing them to explain within 24 hours why they should not be
dismissed for the illegal acts they committed during the strike; three days later, the union
members/officers were informed of their dismissal from employment. We do not find this
company procedure to be sufficient compliance with due process. It does not appear from the
evidence that the union officers were specifically informed of the charges against them. Also,
the short interval of time between the first and second notice shows that a mere token
recognition of the due process requirements was made, indicating the company’s intent to
dismiss the union members involved, without any meaningful resort to the guarantees accorded
them by law. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et
al., G.R. No. 170830, August 11, 2010.
Dismissal; employee’s past infractions. A previous offense may be used as valid justification for
dismissal from work only if the past infractions are related to the subsequent offense upon which
the basis of termination is decreed. The respondent’s previous incidents of tardiness in reporting
for work were entirely separate and distinct from his latest alleged infraction of forgery. Hence,
the same could no longer be utilized as an added justification for his dismissal. Besides,
respondent had already been sanctioned for his prior infractions. To consider these offenses as
justification for his dismissal would be penalizing respondent twice for the same
offense. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R.
No. 171630, August 8, 2010.
Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainant’s
allegations are more credible and that she was dismissed from her employment because the
Feng Shui master found that complainant’s Chinese Zodiac Sign was a mismatch to that of
respondents. This is not a just and valid cause for an employee’s dismissal.
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In contrast, respondent’s pleadings and evidence suffer from several inconsistencies and the
affidavits presented by respondents only pertain to petty matters that are not sufficient to support
respondent’s alleged loss of trust and confidence. To be a valid cause for termination of
employment, the act or acts constituting breach of trust must have been done intentionally,
knowingly, and purposely; and they must be founded on clearly established facts. Wensha Spa
Center, inc. and/or Xu Zhi Jie ,vs. Loreta T. Yung,G.R. No. 185122, August 16, 2010.
Dismissal; gross negligence and loss of confidence. Gross negligence connotes “want of care in
the performance of one’s duties.” Petitioner’s failure on 3 separate occasions to require clients to
sign the requisite documents constituted gross negligence. Furthermore, it has been held that if
the employees are cashiers, managers, supervisors, salesmen or other personnel occupying
positions of responsibility, the employer’s loss of trust and confidence in said employees may
justify the termination of their employment. As the Bank’s Personal Banking Manager,
petitioner’s failure to comply with basic banking policies and procedures were inimical to the
interests of the bank, making his dismissal based on loss of confidence justified. Jesus E.
Dycoco, Jr.vs. Equitable PCI Bank (now Banco de Oro), Rene Bunaventura and Siles
Samalea, G.R. No. 188271, August 16, 2010.
Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in
terminating the services of employees who perform functions which by their nature require the
employers’ full trust and confidence and the mere existence of basis for believing that the
employee has breached the trust of the employer is sufficient. However, this does not mean that
the said basis may be arbitrary and unfounded. Loss of trust and confidence, to be a valid cause
for dismissal, 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. It must rest on
substantial grounds and not on the employer’s arbitrariness, whim, caprice or suspicion;
otherwise, the employee would eternally remain at the mercy of the employer. Century Canning
Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8,
2010.
Dismissal; probationary employment. Though the acts charged against de Castro took place
when he was still under probationary employment, the records show that de Castro was
dismissed on the ninth month of his employment with LBNI. By then, he was already a regular
employee by operation of law. As a regular employee, de Castro was entitled to security of
tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages,
and damages Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo Quigue, G.R.
No. 165153. August 25, 2010.
Dismissal; project employees; damages. Prior or advance notice of termination is not part of
procedural due process if the termination of a project employee is brought about by the
completion of the contract or phase thereof. This is because completion of the work or project
automatically terminates the employment, in which case, the employer is, under the law, only
obliged to render a report to the DOLE. Therefore, failing to give project employees advance
notice of their termination is not a violation of procedural due process and cannot be the basis
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for the payment of nominal damages. D.M. Consunji, Inc. vs. Antonio Gobres, et al., G.R. No.
169170, August 8, 2010.
Dismissal; separation pay and backwages. The awards of separation pay and backwages are not
mutually exclusive and both may be given to the respondent. 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. These are two separate and distinct remedies granted to the employee and the
inappropriateness or non-availability of one does not carry with it the inappropriateness or non-
availability of the other. Under the doctrine of strained relations, the payment of separation pay
has been considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. The grant of separation pay is a proper substitute only for
reinstatement; it cannot be an adequate substitute for both reinstatement and
backwages. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R.
Ramil, G.R. No. 171630, August 8, 2010.
Dismissal; serious misconduct. Misconduct is defined as “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.” For serious misconduct to justify
dismissal under the law, “(a) it must be serious, (b) must relate to the performance of the
employee’s duties; and (c) must show that the employee has become unfit to continue working
for the employer.”
It is noteworthy that prior to this incident, there had been several cases of theft and vandalism
involving both respondent company’s property and personal belongings of other employees. In
order to address this issue of losses, respondent company issued two memoranda implementing
an intensive inspection procedure and reminding all employees that those who will be caught
stealing and performing acts of vandalism will be dealt with in accordance with the company’s
Code of Conduct. Despite these reminders, complainant took the packing tape and was caught
during the routine inspection. All these circumstances point to the conclusion that it was not just
an error of judgment, but a deliberate act of theft of company property. Nagkakaisang Lakas ng
Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines
Corporation, G.R. No. 171115, August 9, 2010.
Dismissal; union security. In terminating the employment of an employee by enforcing the
union security clause, the employer needs to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting for the enforcement of the union security
provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to
expel the employee from the union. These requisites constitute just cause for terminating an
employee based on the union security provision of the CBA.
The petitioner failed to satisfy the third requirement since nothing in the records would show
that respondents failed to maintain their membership in good standing in the union. Significantly,
petitioner’s act of dismissing respondents stemmed from the latter’s act of signing an
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authorization letter to file a petition for certification election as they signed it outside the
freedom period. The mere signing of an authorization letter before the freedom period is not
sufficient ground to terminate the employment of respondents inasmuch as the petition itself was
actually filed during the freedom period. The court emphasizes anew that the employer is bound
to exercise caution in terminating the services of his employees especially so when it is made
upon the request of a labor union pursuant to the Collective Bargaining Agreement. Picop
Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R. No. 160828, August 9, 2010.
Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by
authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic
is an accredited drug testing center nor did it deny the complainant’s allegation that S.M. Lazo
Clinic was not accredited. Also, only a screening test was conducted to determine if the
complainant was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of
the screening test with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines failed
to indubitably prove that Nacague was guilty of using illegal drugs and failed to clearly show
that it had a valid and legal cause for terminating Nacague’s employment. When the alleged
valid cause for the termination of employment is not clearly proven, as in this case, the law
considers the matter a case of illegal dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc., G.R. No.
172589, August 8, 2010.
Dismissal; validity. The company did not adduce any evidence to prove that Siazar’s dismissal
had been for a just or authorized cause, as in fact it had been its consistent stand that it did not
terminate him and that he quit on his own. But given the findings of the Court that the company
had indeed dismissed Siazar and that such dismissal has remained unexplained, there can be no
other conclusion but that the dismissal was illegal. Agricultural and Industrial Supplies
Corporation, et al. vs. Jueber P. Siazar, et al., G.R. No. 177970, August 25, 2010.
Due process; decision rendered without due process. The violation of a party’s right to due
process raises a serious jurisdictional issue that cannot be glossed over or disregarded at will.
Where the denial of the fundamental right to due process is apparent, a decision rendered in
disregard of that right is void for lack of jurisdiction. This rule is equally true in quasi-judicial
and administrative proceedings, for the constitutional guarantee that no man shall be deprived
of life, liberty, or property without due process is unqualified by the type of proceedings
(whether judicial or administrative) where he stands to lose the same. Winston F. Garcia vs.
Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al.,G.R. No. 157383/G.R. No.
174137, August 10, 2010.
Employee; evaluation and promotion. The fact that employees were re-classified from Job Grade
Level 1 to Job Grade Level 2 as a result of a job evaluation program does not automatically
entail a promotion or grant them an increase in salary. Of primordial consideration is not the
nomenclature or title given to the employee, but the nature of his functions. What transpired in
this case was only a promotion in nomenclature. The employees continued to occupy the same
positions they were occupying prior to the job evaluation. Moreover, their job titles remained
the same and they were not given additional duties and responsibilities. SCA Hygiene Products
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Corporation Employees Association-FFW vs. SCA Hygiene Products Corporation, G.R. No.
182877, August 9, 2010.
Employee; security of tenure. A worker’s security of tenure is guaranteed by the Constitution and
the Labor Code. Under the security of tenure guarantee, a worker can only be terminated from
his employment for cause and after due process. For a valid termination by the employer: (1) the
dismissal must be for a valid cause as provided in Article 282, or for any of the authorized
causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be afforded an
opportunity to be heard and to defend himself. A just and valid cause for an employee’s
dismissal must be supported by substantial evidence, and before the employee can be dismissed,
he must be given proper notice of such cause/s and an adequate opportunity to be heard. In the
process, the employer bears the burden of proving that the dismissal of an employee was for a
valid cause. Its failure to discharge this burden renders the dismissal unjustified and, therefore,
illegal. Wensha Spa Center, Inc. and/or Xu Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August
16, 2010.
Employee benefit; time of death. The death should be deemed compensable under the ECC
since Henry was on his way back to Manila in order to be on time and be ready for work the
next day when his accidental death occurred. He should already be deemed en route to the
performance of his duty at the time of the accident. It should be noted that Henry’s superior
allowed him to travel to La Union to visit his ailing mother on the condition that that he return
the next day. Under these facts, Henry was in the course of complying with his superior’s order
when he met his fatal accident. To be sure, he was not in an actual firefighting or accident
situation when he died, but returning to work as instructed by his superior is no less equivalent
to compensable performance of duty under Section 1, Rule III of the ECC Rules. Government
Service Insurance System vs. Felicitas Zarate, as substituted by her heirs, namely Melanie Zarate,
et al., G.R. No. 170847, August 3, 2010.
Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order – which
would generally authorize the suspension of judicial proceedings – could not have affected the
Court’s action on the present case due to the petitioner’s failure to raise the pendency of the
rehabilitation proceedings in its memorandum to the Court. At any rate, a stay order simply
suspends all actions for claims against a corporation undergoing rehabilitation; it does not work
to oust a court of its jurisdiction over a case properly filed before it. Thus, the Court’s ruling on
the principal issue of the case stands. Nevertheless, with LBNI’s manifestation that it is still
undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the
termination of the rehabilitation proceedings. Carlos De Castro vs. Liberty Broadcasting Network,
Inc. and Edgardo Quigue, G.R. No. 165153. August 25, 2010.
Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a
contractor or subcontractor the performance or completion of a specific job, work or service
within a definite or predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal. The test is whether
the independent contractor has contracted to do the work according to his own methods and
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without being subject to the principal’s control except only as to the results, he has substantial
capital, and he has assured the contractual employees entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization, security of tenure, and
social and welfare benefits. Spic n’ Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084,
August 25, 2010.
Management prerogative; transfer of employees. Jurisprudence recognizes the exercise of
management prerogative to transfer or assign employees from one office or area of operation to
another, provided there is no demotion in rank or diminution of salary, benefits, and other
privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a
form of punishment or demotion without sufficient cause. To determine the validity of the
transfer of employees, the employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Should the employer fail to overcome
this burden of proof, the employee’s transfer shall be tantamount to constructive
dismissal. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724,
August 23, 2010.
Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger is
but a legal fiction intended as a tool to adjudicate rights and obligations between and among the
merged corporations and the persons that deal with them. Although in a merger it is as if there is
no change in the personality of the employer, there is in reality a change in the situation of the
employee. Once an FEBTC employee is absorbed, there are presumably changes in his
condition of employment even if his previous tenure and salary rate is recognized by BPI. It is
reasonable to assume that BPI would have different rules and regulations and company practices
than FEBTC and it is incumbent upon the former FEBTC employees to obey these new. Not the
least of these changes is the fact that prior to the merger FEBTC employees were employees of
an unorganized establishment and after the merger they became employees of a unionized
company that had an existing CBA with the certified union. Thus, although in a sense BPI is
continuing FEBTC’s employment of these absorbed employees, BPI’s employment of these
absorbed employees will not be under exactly the same terms and conditions as stated in the
latter’s employment contracts with FEBTC. Bank of the Philippine Islands vs. BPI Employees
Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.
Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained
relations, the payment of separation pay has been considered an acceptable alternative to
reinstatement when the latter option 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. Wensha Spa Center, Inc. and/or Xu
Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.
Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus
conductor was paid on commission basis, he falls within the coverage of R.A. 7641 and its
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implementing rules. Thus, his retirement pay should include the cash equivalent of 5-days SIL
and 1/12 of 13th month pay. The NLRC’s reliance on the case of R & E Transport, Inc. as a basis
for ruling that bus conductors are not covered by the law on SIL and 13th month pay is
erroneous since that involved a taxi driver who was paid according to the “boundary system.”
There is a difference between drivers paid under the “boundary system” and conductors who
are paid on commission basis. In practice, taxi drivers do not receive fixed wages and retain
only those sums in excess of the “boundary” or fee they pay to the owners or operators of the
vehicles. Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for
the day. Rodolfo J. Serrano vs. Severino Santos Transit and/or Severino Santos, G.R. No. 187698,
August 9, 2010.
Separation pay. In those instances where an employee has been validly dismissed for causes
other than serious misconduct or those reflecting on his moral character, separation pay may
still be granted after giving considerable weight to his long years of employment. In this case,
equity considerations dictate that respondent’s tenure be computed from 1978, the year when
respondent started working for Upjohn, and not only from 1996, when the merger of Pharmacia
and Upjohn took place. Pharmacia and Upjohn, Inc., et al. vs. Ricardo p. Albayda, Jr., G.R. No.
172724, August 23, 2010.
Strike; validity of strike. Despite the validity of the purpose of a strike and the union’s
compliance with the procedural requirements, a strike may still be held illegal where the means
employed are illegal. While the strike had not been marred by actual violence and patent
intimidation, the picketing that respondent PILA officers and members undertook as part of their
strike activities effectively blocked the free ingress to and egress from PHIMCO’s premises, thus
preventing non-striking employees and company vehicles from entering the PHIMCO
compound. In this manner, the picketers violated Article 264(e) of the Labor Code and tainted
the strike with illegality. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association
(PILA), et al., G.R. No. 170830, August 11, 2010.
Union; eligibility of confidential employees to join. Confidential employees are defined as those
who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and
effectuate management policies in the field of labor relations. The two criteria are cumulative,
and both must be met if an employee is to be considered a confidential employee – that is, the
confidential relationship must exist between the employee and his supervisor, and the
supervisor must handle the prescribed responsibilities relating to labor relations. In the present
case, there is no showing that the secretaries/clerks and checkers assisted or acted in a
confidential capacity to managerial employees and obtained confidential information relating to
labor relations policies. And even assuming that they had exposure to internal business
operations of the company, as respondent claims, this is not per seground for their exclusion in
the bargaining unit of the rank-and-file employees. Tunay na Pagkakaisa ng Manggagawa sa
Asia Brewery vs. Asia Brewery, Inc., G.R. No. 162025, August 3, 2010.
Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the
Labor Code, make a distinction between participating workers and union officers. The services
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of an ordinary striking worker cannot be terminated for mere participation in an illegal strike;
proof must be adduced showing that he or she committed illegal acts during the strike. The
services of a participating union officer, on the other hand, may be terminated, not only when
he actually commits an illegal act during a strike, but also if he knowingly participates in an
illegal strike. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et
al., G.R. No. 170830, August 11, 2010.
Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop
Clause in their CBA with management are subject to its terms. However, under law and
jurisprudence, the following kinds of employees are exempted from its coverage, namely, (1)
employees who at the time the union shop agreement takes effect are bona fide members of a
religious organization which prohibits its members from joining labor unions on religious
grounds; (2) employees already in the service and already members of a union other than the
majority at the time the union shop agreement took effect; (3) confidential employees who are
excluded from the rank and file bargaining unit; and (4) employees excluded from the union
shop by express terms of the agreement. In the absence of any of these recognized exceptions,
there is no basis to conclude that the terms and conditions of employment under a valid CBA in
force in the surviving corporation should not be made to apply to the absorbed employees. Bank
of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank, G.R. No. 164301, August 10, 2010.
Labor Procedure
CSC; rules for dismissal. The filing of formal charges against the respondents without complying
with the mandated preliminary investigation or at least giving the respondents the opportunity to
comment violated the latter’s right to due process. These rules on due process apply even in
cases where the complainant is the disciplining officer himself, as in this case. The fact that the
charges against the respondents are serious or that the evidence of their guilt is strong cannot
compensate for the procedural shortcut undertaken by petitioner. Winston F. Garcia vs. Mario I.
Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137,
August 10, 2010.
Labor case; due process; reevaluation. A reevaluation is a process by which a person or office
(in this case the DOLE secretary) revisits its own initial pronouncement and makes another
assessment of its findings. In simple terms, to reevaluate is to take another look at a previous
matter in issue. From a procedural standpoint, a reevaluation is a continuation of the original
case and not a new proceeding. The evidence, financial reports and other documents submitted
by the parties in the course of the original proceeding are to be visited and reviewed again. A
reevaluation does not necessitate the introduction of new materials for review nor does it require
a full hearing for new arguments. Hence, failure to order the presentation of new evidence in the
reevaluation of an Order is not a violation of due process. NASECO Guards Association – PEMA
vs. National Service Corporation, G.R. No. 165442, August 25, 2010.
Labor case; non-lawyer as representative. The respondents in this case were represented by a
non-lawyer who never showed any proof of his authority to represent the respondents. Petitioner
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argued that the respondents’ representative had no personality to appear before the Labor
Arbiter or the NLRC, and his representation for the respondents should produce no legal effect.
The Court affirmed the ruling of the CA that the cited technical infirmity cannot defeat the
respondents’ preferred right to security of tenure, without prejudice to whatever action may be
taken against the representative, if he had indeed been engaged in the unauthorized practice of
law. Spic n’ Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.
NLRC; factual findings. Findings of fact of the NLRC, affirming those of the LA, are entitled to
great weight and will not be disturbed if they are supported by substantial evidence. The CA had
overstepped its legal mandate by reversing the findings of fact of the LA and the NLRC as it
appears that both decisions were based on substantial evidence. There is no proof of
arbitrariness or abuse of discretion in the process by which each body arrived at its own
conclusions. Thus, the CA should have deferred to such specialized agencies that are
considered experts in matters within their jurisdictions.Pharmacia and Upjohn, Inc., et al. vs.
Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.
NLRC; review of decisions. The power of the Court of Appeals to review NLRC decisions via
Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral
Home v. National Labor Relations Commission. This Court held that the proper vehicle for such
review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this
action should be filed in the Court of Appeals in strict observance of the doctrine of the
hierarchy of courts. Moreover, it is already settled that under Sec. 9 of B.P. 129, as amended,
the Court of Appeals – pursuant to the exercise of its original jurisdiction over Petitions
for Certiorari – is specifically given the power to pass upon the evidence, if and when necessary,
to resolve factual issues. Picop Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R.
No. 160828, August 9, 2010.
Pleading verification. The lack of a verification in a pleading is only a formal defect, not a
jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring a
verification is simply to ensure that the allegations in the pleading are done in good faith, are
true and correct, and are not mere speculations. As previously explained in Torres v. Specialized
Packaging Development Corporation, where only two of the 25 real parties-in-interest signed
the verification, the verification by the two could be sufficient assurance that the allegations in
the petition were made in good faith, are true and correct, and are not speculative. Spic n’ Span
Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.
Procedural rules; strict application. Procedural rules setting the period for perfecting an appeal
or filing a petition for review are generally inviolable. It is doctrinally entrenched that an appeal
is not a constitutional right, but a mere statutory privilege. Hence, parties who seek to avail
themselves of such privilege must comply with the statutes or rules allowing it. Furthermore, the
perfection of an appeal in the manner and within the period permitted by law is not only
mandatory, but also jurisdictional. Failure to perfect the appeal renders the judgment of the
court final and executory. Just as a losing party has the privilege to file an appeal within the
prescribed period, so does the winner also have the correlative right to enjoy the finality of the
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decision. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411,
August 3, 2010.
Real party in interest; dismissed employee. It is clear that the petitioners failed to include the
name of the dismissed employee in the caption and body of its petition for certiorari and,
instead, only indicated the name of the labor union as the party acting on behalf of such
dismissed employee. Hence, the Court of Appeals rightly dismissed the petition for not having
been filed by an indispensable party in interest. (The Court still proceeded to discuss the
substantive issues and merits of the case despite affirming the dismissal of the case based on
procedural grounds.) Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and
Helen Valenzuela vs. Keihin Philippines Corporation, G.R. No. 171115, August 9, 2010.
Rule 45; review of factual findings. As a general rule, only questions of law may be raised in
petitions for certiorari under Rule 45 of the Rules of Court. However, there are recognized
exceptions to the rule. Among the exceptions are when the findings of fact are conflicting and
when the findings are conclusions without citation of specific evidence on which they are based.
In the present case, the findings of fact of the Court of Appeals conflict with the findings of fact
of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals that Gurango
engaged in a fistfight is a conclusion without citation of specific evidence on which it is
based. Alex Gurango vs. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25,
2010.
September 2010 Philippine Supreme Court Decisions on Labor Law and Procedure
Labor Law
Compensable illness. The CBA provision states: “If a seafarer/officer, due to no fault of his own,
suffers permanent disability as a result of an accident while serving on board or while traveling
to or from the vessel on Company’s business or due to marine peril, and as a result, his ability to
work is permanently reduced, totally or partially, the Company shall pay him a disability
compensation.” “Accident” has been defined as: A fortuitous circumstance, event, or happening,
an event happening without any human agency, or if happening wholly or partly through
human agency, an event which under the circumstances is unusual and unexpected by the
person to whom it happens. The Court holds that the snap on the back of respondent was not an
accident, but an injury sustained by respondent from carrying the heavy basketful of fire hydrant
caps. The injury cannot be said to be the result of an accident or fortuitous event. It resulted
from the performance of a duty. Although the disability of respondent was not caused by an
accident, his disability is still compensable under the CBA provision: “A seafarer/officer who is
disabled as a result of any injury, and who is assessed as less than 50% permanently disabled,
but permanently unfit for further service at sea in any capacity, shall also be entitled to a 100%
compensation.” NFD International Manning Agents, Inc./Barber Ship Management Ltd. vs.
Esmeraldo C. Illescas, G.R. No. 183054, September 29, 2010.
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Dismissal; due process. SPO2 Roaquin is entitled to reinstatement since he was dismissed from
the service without administrative due process. No one ever filed an administrative action
against him in connection with the crime of which he was charged in court. At any rate,
assuming that someone filed an administrative charge against Roaquin, still the law required the
PNP to give him notice of such charge and the right to answer the same. The PNP gave him no
chance to show why he should not be discharged nor does the record show that the PNP
investigated him or conducted a summary proceeding to determine his liability in connection
with the murder of which he was charged in court. While the PNP may have validly suspended
Roaquin from the service pending the adjudication of the criminal case against him, he is
entitled, after his acquittal, to reinstatement and payment of the salaries, allowances, and other
benefits withheld from him by reason of his discharge from the service.P/Chief Superintendent
Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. 159588, September 15,
2010.
Dismissal; misconduct. Misconduct is a transgression of some established and definite rule of
action, more particularly, unlawful behavior or gross negligence by a public officer. As
differentiated from simple misconduct, in grave misconduct the elements of corruption, clear
intent to violate the law or flagrant disregard of established rule, must be manifest. As Acting
Branch Cashier, petitioner was charged with responsibility of handling the bank’s daily
transactions which could run into large amounts. There is a tremendous difference between the
degree of responsibility, care, and trustworthiness expected of an ordinary employee in the
bureaucracy and that required of bank managers and other officials directly handling large sums
of money and properties. The evidence clearly shows that Echano took light of such
responsibility and his misconduct and dishonesty paved the way for the commission of fraud
against, and consequent damage to, the City Government of Manila. There is no doubt, based
on the evidence that Echano was guilty of grave misconduct. Salvador O. Echano, Jr. vs. Liberty
Toledo, G.R. No. 173930,September 15, 2010.
Dismissal; strike. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that
is unjustly done, that is, the employer dismisses the employee without observing due process,
either substantive or procedural. Substantive due process requires the attendance of any of the
just or authorized causes for terminating an employee as provided under Articles 278, 283 or
284 of the Labor Code; while procedural due process demands compliance with the twin-notice
requirement. In contrast, on the consequences of an illegal strike, Article 264(a) distinguishes
between a union officer and a union member participating in an illegal strike. A union officer
who knowingly participates in an illegal strike is deemed to have lost his employment status, but
a union member who is merely instigated or induced to participate in the illegal strike is more
benignly treated. The petitioners were terminated for joining a strike that was later declared to
be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the payment of
their separation pay, because they were mere rank-and-file workers whom the Union’s officers
had misled into joining the illegal strike. They were not unjustly dismissed from work. Danilo
Escario, et al vs. National Labor Relations Commission, G.R. No. 160302, September 27, 2010.
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Employee money claim; prescription. The Labor Code provides that money claims arising from
employer-employee relations shall be filed within 3 years from the time the cause of action
accrues; otherwise they shall be barred. In this case, it is undisputed that the complainant was
dismissed on January 1, 2000, and this was the time when the cause of action had accrued.
Since the present action was only filed on March 29, 2004, or exactly 4 years and 3 months
after his dismissal, the Labor Arbiter was correct in ruling that the action had already prescribed.
The fact that the complainant repeatedly followed up on his money claim with PLDT during the
years of 2001-2003 does not serve to toll the prescriptive period as provided under Art. 1155 of
the Civil Code since the complainant never made any written extrajudicial demand for his claim
nor did PLDT make any written acknowledgment of its obligation. Philippine Long Distance
Telephone Company (PLDT) vs. Roberto R. Pingol, G.R. No. 182622, September 8, 2010.
Employee money claim; prescription. In the case of Southeastern Shipping vs. Navarra Jr., the
Court held that “Section 28 of the Standard Employment Contract for Seafarers, insofar as it
limits the prescriptive period within which the seafarers may file their money claims, is hereby
declared null and void.” The applicable provision is Article 291 of the Labor Code, it being
more favorable to the seafarers and more in accord with the State’s declared policy to afford full
protection to labor. Therefore, the prescriptive period in the present case is three years from the
time the cause of action accrues and not the one-year period prescribed in the Standard
Employment Contract for Seafarers. Medline Management, Inc. and Grecomar Shipping Agency
vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.
Illegal dismissal. Petitioners are liable for constructive dismissal for placing respondents on shifts
of a few days per month and in eventually denying them workplace access, rendering
respondents’ employment impossible, unreasonable or unlikely, leaving them no choice but to
quit. The petitioners rested their case on the defense of respondents’ abandonment of work. For
this cause to prosper, petitioners should have proved (1) that the failure to report for work was
without justifiable reason, and (2) respondents’ intention to sever the employer-employee
relationship as shown by some overt acts. However, petitioners failed to rebut the respondents’
claim that they were denied entry to their work area and the respondents’ act of filing a case for
illegal dismissal belies the intention to abandon work. Pasig Cylinder Manufacturing Corp.
vs. Danilo Rollo, et al., G.R. No. 173631, September 8, 2010.
Lay off. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation
to the laid-off employees. Article 283 of the Labor Code applies to MMC. Said provision is
emphatic that an employee, who was dismissed due to cessation of business operation, is
entitled to the 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. It is jurisprudential that separation pay should
also be paid to employees even if the closure or cessation of operations is not due to losses. The
Court is not impressed with the claim that actual severe financial losses exempt MMC from
paying separation benefits to complainants. In the first place, MMC did not appeal the decision
of the Court of Appeals which affirmed the NLRC’s award of separation pay. In the second place,
the non-issuance of a permit forced MMC to permanently cease its business operations. Under
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Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal
from business operations is bona fide in character and not impelled by a motive to defeat or
circumvent the tenurial rights of employees, and as long as he pays his employees their
termination pay in the amount corresponding to their length of service.Manila Mining Corp.
Employees Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, September
29, 2010.
Non-diminution of benefits. Apex Mining Company, Inc. v. NLRC is instructive: “The prohibition
against elimination or diminution of benefits set out in Article 100 of the Labor Code is
specifically concerned with benefits already enjoyed at the time of the promulgation of the
Labor Code. Article 100 does not purport to apply to situations arising after the promulgation
date of the Labor Code.” Even assumingarguendo that Article 100 applies to the case at bar, the
same does not prohibit a union from offering and agreeing to reduce wages and benefits of the
employees. In Rivera v. Espiritu, this Court ruled that the right to free collective bargaining
includes the right to suspend it. Insular Hotel Employees Union-NFL vs. Waterfront Insular Hotel
Davao, G.R. No. 174040-41, September 22, 2010.
Reinstatement; entitlement to backwages. As a general rule, backwages are granted to indemnify
a dismissed employee for his loss of earnings during the whole period that he is out of his job.
Considering that an illegally dismissed employee is not deemed to have left his employment, he
is entitled to all the rights and privileges that accrue to him from the employment. That
backwages are not granted to employees participating in an illegal strike accords with the reality
that they do not render work for the employer during the period of the illegal strike. Under the
principle of a fair day’s wage for a fair day’s labor, the petitioners were not entitled to the wages
during the period of the strike (even if the strike might be legal), because they performed no
work during the strike. Thus, the Court deleted the award of backwages and held that the
striking workers were entitled only to reinstatement in Philippine Diamond Hotel and Resort, Inc.
(Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union. Danilo Escario, et al vs.
National Labor Relations Commission, G.R. No. 160302, September 27, 2010.
Reinstatement; separation pay. The absence from an order of reinstatement of an alternative
relief should the employer or a supervening event not within the control of the employee
prevent reinstatement negates the very purpose of the order. To safeguard the spirit of social
justice that the Court has advocated in favor of the working man, the right to reinstatement is to
be considered renounced or waived only when the employee unjustifiably or unreasonably
refuses to return to work upon being so ordered or after the employer has offered to reinstate
him. However, separation pay is made an alternative relief in lieu of reinstatement in certain
circumstances, like: (a) when reinstatement can no longer be effected in view of the passage of a
long period of time or because of the realities of the situation; (b) reinstatement is inimical to the
employer’s interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the
best interests of the parties involved; (e) the employer is prejudiced by the workers’ continued
employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained
relations between the employer and employee. Here, PINA manifested that the reinstatement of
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the petitioners would not be feasible because: (a) it would “inflict disruption and oppression
upon the employer”; (b) “petitioners [had] stayed away” for more than 15 years; (c) its machines
had depreciated and had been replaced with newer, better ones; and (d) it now sold goods
through independent distributors, thereby abolishing the positions related to sales and
distribution. Under the circumstances, the grant of separation pay in lieu of reinstatement of the
petitioners was proper. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No.
160302, September 27, 2010.
Retrenchment; notice requirement. Although there was authorized cause to dismiss respondent
from the service, we find that petitioner did not comply with the 30-day notice
requirement. Petitioner maintains that it substantially complied with the requirement of the law
in that it submitted two notices or reports with the DOLE. However, petitioner admitted that the
reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the
second notice, before the intended date of respondent’s dismissal. The purpose of the one
month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of
termination. Non-compliance with this rule violates the employee’s right to statutory due
process. Consequently, we affirm the NLRC’s award of indemnity to respondent for want of
sufficient due notice. Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No.
165923, September 29, 2010.
Retrenchment; validity. As an authorized cause for separation from service under Article 283 of
the Labor Code, retrenchment is a valid exercise of management prerogative subject to the strict
requirements set by jurisprudence: (1) The retrenchment is reasonably necessary and likely to
prevent business losses which, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are reasonably imminent as perceived objectively
and in good faith by the employer; (2) The employer served written notice both to the
employees and to the DOLE at least one month prior to the intended date of retrenchment;
(3) The employer pays the retrenched employees separation pay equivalent to one month pay or
at least ½ month pay for every year of service, whichever is higher; (4) The employer exercises
its prerogative to retrench employees in good faith for the advancement of its interest and not to
defeat or circumvent the employees’ right to security of tenure; and (5) The employer used fair
and reasonable criteria in ascertaining who would be dismissed and who would be retained
among the employees, such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers. Petitioner implemented its retrenchment program in good faith
because it undertook several measures in cutting down its costs: withdrawing privileges of its
executives and expatriates; limiting the grant of additional monetary benefits to managerial
employees and cutting down expenses; selling of company vehicles; and infusing fresh capital
into the company. Petitioner was able to prove that it incurred substantial business losses, it
offered to pay respondent his separation pay, the retrenchment scheme was arrived at in good
faith, and lastly, the criteria or standard used in selecting the employees to be retrenched was
work efficiency which passed the test of fairness and reasonableness. Shimizu Philippines
Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.
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Security of tenure. DECS Memorandum No. 10 provides that all incumbent teachers have until
September 19, 2000 to pass the Licensure Examination for Teachers (LET), otherwise they
cannot continue teaching in public or private schools unless they obtain a temporary permit to
teach as para-teachers. The complainants in this case were dismissed from the school on March
31, 2000 after they failed to pass the LET. The Supreme Court held that their dismissal was
illegal and premature. The law has provided a specific timeframe within which the teachers
could comply with the requirement of passing the LET hence, the school cannot deny them this
privilege, which the law has accorded to them, without violating their right to security of
tenure. St. Mary’s Academy of Dipolog City vs. Teresita Palacio, et al., G.R. No. 164913,
September 8, 2010.
Separation pay. While it is true that generally the grant of separation pay is not available to
employees who are validly dismissed, there are certain circumstances that warrant the grant of
some relief in favor of the terminated Union members based on equity. Bitter labor disputes,
especially strikes, always generate abhorrence that result in unpleasant
consequences. Considering this, the striking employees’ breach of restrictions imposed on their
concerted actions cannot be regarded as so inherently wicked that the employer can totally
disregard their long years of service prior to such breach. The records fail to disclose any past
infractions committed by the dismissed Union members. Taking these circumstances in
consideration, the Court regards the award of financial assistance to these Union members in
the form of one-half month salary for every year of service to the company up to the date of their
termination as equitable and reasonable. C. Alcantara & Sons, Inc. vs. Court of Appeals /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc.,
et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara &
Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Strike; termination of participants in illegal strike. Since the Union’s strike has been declared
illegal, the Union officers can be terminated from employment for their actions. This includes
the shop stewards who cannot be shielded from the coverage of Article 264 of the Labor Code
since the Union appointed them as such and placed them in positions of leadership and power
over the men in their work units. As regards the rank and file Union members, Article 264
provides that termination from employment is not warranted by the mere fact that a union
member has taken part in an illegal strike. It must be shown that such union member, clearly
identified, performed an illegal act or acts during the strike.The striking Union members
allegedly committed the following prohibited acts: a. They threatened, coerced, and intimidated
non-striking employees, officers, suppliers and customers; b. They obstructed the free ingress to
and egress from the company premises; and c. They resisted and defied the implementation of
the writ of preliminary injunction issued against the strikers. The mere fact that the criminal
complaints against them were subsequently dismissed does not extinguish their liability under
the Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and
photos presented to establish their identity and guilt during the hearing of the petition to declare
the strike illegal. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa
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Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang
Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No.
155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Strike; validity. A strike may be regarded as invalid although the labor union has complied with
the strict requirements for staging one as provided in Article 263 of the Labor Code when the
same is held contrary to an existing agreement, such as a no strike clause or conclusive
arbitration clause. Here, the CBA between the parties contained a “no strike, no lockout”
provision that enjoined both the Union and the Company from resorting to the use of economic
weapons available to them under the law and to instead take recourse to voluntary arbitration in
settling their disputes. No law or public policy prohibits the Union and the Company from
mutually waiving their respective right to strike and lockout, which are otherwise available to
them under the law, in favor of voluntary arbitration. C. Alcantara & Sons, Inc. vs. Court of
Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara &
Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C.
Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September
29, 2010.
Unfair labor practice. Unfair labor practice cannot be imputed to MMC since the call of MMC
for a suspension of the CBA negotiations cannot be equated to “refusal to bargain.” Article 252
of the Labor Code defines the phrase “duty to bargain collectively.” For a charge of unfair labor
practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or
fraud, or was oppressive to labor. The employer must have acted in a manner contrary to
morals, good customs, or public policy causing social humiliation, wounded feelings or grave
anxiety. It cannot be said that MMC deliberately avoided the negotiation. It merely sought a
suspension and even expressed its willingness to negotiate once the mining operations
resume. There was valid reliance on the suspension of mining operations for the suspension of
the CBA negotiation. The Union failed to prove bad faith. Manila Mining Corp. Employees
Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, September 29, 2010.
LABOR PROCEDURE
Appeal; questions of fact. An issue of fact exists when what is in question is the truth or falsity of
the alleged facts, whereas an issue of law exists when what is in question is what the law is on a
certain state of facts. The test, therefore, for determining whether an issue is one of law or of
fact, is whether the CA could adjudicate it without reviewing or evaluating the evidence, in
which case, it is an issue of law; otherwise, it is an issue of fact. Here the CA needed only to
review the records to determine what law should be applied. Such question does not call for an
examination of the probative value of the evidence of the parties. Since petitioners’ appeal
involves only questions of law, they erred in taking recourse to the CA by Notice of
Appeal. P/Chief Superintendent Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L.
Roaquin, G.R. No. 159588, September 15, 2010.
Appeal; timeliness. Under the Rules of Procedure of the NLRC, service of notices and
resolutions by registered mail is completed “upon receipt by the addressee or his agent.“ In this
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case, the receipt of the Labor Arbiter’s decision by the security guard manning the compound
where several businesses operated, including that of the petitioner, does not constitute receipt
by the agent of the addressee. It is clear that the security guard was not employed by the
petitioners. For remedial law purposes, the guard’s receipt of any processes intended for the
petitioners was receipt by a stranger, without legal significance to the petitioners. Hence, the 10-
day period for filing the appeal should be counted from the day after notice was forwarded to
the petitioner’s office. Pasig Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No.
173631, September 8, 2010.
Certiorari; NLRC. The power of the CA to review a decision of the NLRC in a petition
for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the
correctness of the NLRC’s evaluation of the evidence. However, under certain circumstances,
the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to
determine whether these findings are supported by the evidence presented and the conclusions
derived therefrom are accurately ascertained. It is within the jurisdiction of the CA to review the
findings of the NLRC. Consequently, the CA cannot be faulted in re-evaluating the NLRC’s
findings as it can affirm, modify or reverse the same if the evidence so warrants. Shimizu
Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.
Certiorari; regional director and BLR director. Relief in a special civil action for certiorari is
available only when the following essential requisites concur: (a) the petition must be directed
against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (b) the tribunal,
board, or officer must have acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (c) there is no appeal, nor any plain,
speedy and adequate remedy in the ordinary course of law. There is no concurrence of these
requisites in C.A.-G.R. SP No. 69889. Firstly, the petition for the plebiscite to amend PALEA’s
Constitution and By-Laws was merely incidental to the conduct of the general election pursuant
to the final and executory decision of the BLR. As such, the recourse open to PALEA was not to
file the petition for certiorari to assail such denial, but to first await the final election results.
Secondly, the Regional Director and the BLR Director were not exercising judicial or quasi-
judicial functions in issuing the order and the letter. Instead, they were performing the purely
ministerial act of enforcing the final and executory BLR resolution directing the conduct of the
general election. Philippine Airlines Employees Association (PALEA) vs. Hon. Hans Leo J.
Cacdac, G.R. No. 155097, September 27, 2010.
Failure to comply with condition precedent. The records show that the respondents failed to
comply with a condition precedent when they did not first bring their claim before the
Grievance Machinery as required under the employment contract. Despite this, the CA did not
err in dismissing the petitioners’ motion to dismiss because Section 4, Rule III of the NLRC Rules
of Procedure is clear that a motion to dismiss on the ground of failure to comply with a
condition precedent is a prohibited pleading. Medline Management, Inc. and Grecomar
Shipping Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15,
2010.
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Labor arbiter; jurisdiction. As heirs of the deceased seaman, the respondents can file a case
before the Labor Arbiter for payment of death benefits as provided under Section 28 of the
POEA Standard Employment Contract. It is clearly provided therein that the NLRC shall have
original and exclusive jurisdiction over any and all disputes or controversies arising out of or by
virtue of the seaman’s contract. Medline Management, Inc. and Grecomar Shipping Agency vs.
Gliceria Roslinda and Ariel Roslinda,G.R. No. 168715, September 15, 2010.
Mediation. Procedurally, the first step to submit a case for mediation is to file a notice of
preventive mediation with the NCMB. It is only after this step that a submission agreement may
be entered into by the parties. Section 3, Rule IV of the NCMB Manual of Procedure provides
who may file a notice of preventive mediation—only a certified or duly recognized bargaining
agent. Cullo admitted that the case was filed not by the Union but by individual members
thereof. Clearly, the NCMB had no jurisdiction to entertain the notice filed before it. Insular
Hotel Employees Union-NFL vs. Waterfront Insular Hotel Davao, G.R. No. 174040-41,
September 22, 2010.
NLRC; acquisition of jurisdiction. The NLRC acquires jurisdiction over parties in cases before it
either by summons served on them or by their voluntary appearance before its Labor
Arbiter. The Return of Service of Summons indicated that 74 out of the 81 impleaded Union
members were served with summons. But they refused either to accept the summons or to
acknowledge receipt of the same. Such refusal cannot frustrate the NLRC’s acquisition of
jurisdiction over them. Besides, the affected Union members voluntarily entered their
appearance in the case when they sought affirmative relief in the course of the proceedings like
an award of damages in their favor. C. Alcantara & Sons, Inc. vs. Court of Appeals /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc.,
et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara &
Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
October 2010 Philippine Supreme Court Decisions on Labor Law and Procedure
Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his
right foot is an injury which he suffered during the course of his employment. This is in
consonance with the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers On Board Ocean-Going Vessels of the Department of Labor and Employment.
Applying the said provisions of this standard contract, respondent is entitled to receive sickness
wages covering the maximum period of 120 days. Moreover, petitioners violated the contract
when it failed to provide continuous treatment for respondent in accordance with the
recommendation of their company physician. Because of this failure, respondent was forced to
seek immediate medical attention at his own expense. Thus, he is also entitled to
reimbursement of his medical expenses. Varorient Shipping Co., Inc., et al. vs. Gil Flores,G.R.
No. 161934, October 6, 2010
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Compensable illness. For an injury or illness to be duly compensated under the terms of the
Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC),
there must be a showing that the injury or illness and the ensuing disability occurred during the
effectivity of the employment contract. Moreover, all of these conditions must be satisfied — 1.)
The seafarer’s work must involve the risks described in the POEA-SEC; 2.) The disease was
contracted as a result of the seafarer’s exposure to the described risks; 3.) The disease was
contracted within a period of exposure and under such other factors necessary to contract
it; and 4.) There was no notorious negligence on the part of the seafarer. Specifically, with
respect to mental diseases, the POEA-SEC requires that it must be due to traumatic injury to the
head which did not occur in this case. In fact, respondent claimed that he became depressed
due to the frequent verbal abuse he received from his German superiors. However, he failed to
show concrete proof that, if indeed he was subjected to abuse, it directly resulted in his
depression. Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A.
Nazam, G.R. No. 190804. October 11, 2010.
Constructive dismissal; transfer. It is management prerogative to transfer or assign employees
from one office or area of operation to another. However, the employer must show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee, or that it does not
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden, the employee’s transfer shall be tantamount to
constructive dismissal. In the instant case, Del Villar’s demotion is readily apparent in his new
designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control Manager
from being Transportation Services Manager. The two posts are not of the same weight in terms
of duties and responsibilities. Moreover, while Del Villar’s transfer did not result in the reduction
of his salary, there was a diminution in his benefits because as a mere Staff Assistant, he could
no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which
he previously enjoyed as Transportation Services Manager. Thus, Del Villar was clearly
constructively dismissed. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No.
163091, October 6, 2010.
Dismissal; closure of business. Petitioner terminated the employment of respondents on the
ground of closure or cessation of operation of the establishment which is an authorized cause
for termination under Article 283 of the Labor Code. While it is true that a change of ownership
in a business concern is not proscribed by law, the sale or disposition must be motivated by
good faith as a condition for exemption from liability. In the instant case, however, there was, in
fact, no change of ownership. Petitioner did not present any documentary evidence to support
its claim that it sold the same to ALPS Transportation. On the contrary, it continuously operates
under the same name, franchises and routes and under the same circumstances as before the
alleged sale. Thus, no actual sale transpired and, as such, there is no closure or cessation of
business that can serve as an authorized cause for the dismissal of respondents. Peñafrancia
Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang, G.R. No.
178397, October 20, 2010.
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Dismissal; constructive dismissal. 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 employment. It also exists where
there is cessation of work because continued employment is rendered impossible, unreasonable
or unlikely, such as when an offer involves a demotion in rank and a diminution in pay. In the
present case, what made it impossible, unreasonable or unlikely for respondent to continue
working for SHS was the unlawful withholding of his salary. He then lost no time in submitting
his resignation letter and eventually filing a complaint for illegal dismissal just a few days after
his salary was withheld. These circumstances are inconsistent with voluntary resignation and
bolster the finding of constructive dismissal. SHS Perforated Materials, Inc., et al. vs. Manuel F.
Diaz, G.R. No. 185814, October 13, 2010.
Dismissal; corporate officer. It is not the nature of the services performed, but on the manner of
creation of the office that distinguishes corporate officers who may be ousted from office at will
and ordinary corporate employees who may only be terminated for just cause. Under Section
25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in order to
be considered as a corporate office. Thus, the creation of an office pursuant to a By-Law
provision giving a president the power to create an office does not qualify as a By-Law position.
In the present case, the position of Vice President for Finance and Administration which
respondent held was merely created by Matling’s President pursuant to the company’s By-
Laws. It is not a corporate office or By-Law position, and therefore, respondent was not a
corporate officer who could be ousted from office at will. Matling Industrial and Commercial
Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.
Dismissal; gross and habitual neglect. Under Article 282 (b) of the Labor Code, an employer
may terminate an employee for gross and habitual neglect of duties. Gross negligence connotes
want of care in the performance of one’s duties. Habitual neglect implies repeated failure to
perform one’s duties for a period of time, depending upon the circumstances. A single or
isolated act of negligence does not constitute a just cause for the dismissal of the
employee. Assuming arguendo that respondent was negligent, although the Court found
otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence
that cannot be categorized as habitual and, hence, not a just cause for his dismissal. St. Luke’s
Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Dismissal; loss of confidence. Loss of confidence as a just cause for termination of employment
is premised on the fact that the 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. However, 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. In the instant case, the Resolution of the PAL Board of Directors, underscored
respondent’s acts of mismanagement and gross incompetence which resulted in huge financial
losses for petitioner. As a general rule, employers are allowed wider latitude of discretion in
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terminating the employment of managerial personnel or those who, while not of similar rank,
perform functions which by their nature require the employer’s full trust and confidence. This
must be distinguished from the case of ordinary rank and file employees, whose termination on
the basis of these same grounds requires a higher proof of involvement in the events in
question. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M.
Quijano, G.R. No. 123294, October 20, 2010
Dismissal; probationary employee. Although respondent was a probationary employee, he is
nonetheless entitled to security of tenure. Section 3 (2) Article 13 of the Constitution guarantees
that right. In using the expression “all workers,” the Constitution puts no distinction between a
probationary and a permanent or regular employee. This means that probationary employees
cannot be dismissed except for cause or for failure to qualify as regular employees (i.e., to meet
the performance standards set by the company to be eligible for regular employment). SHS
Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Dismissal; requirement. In dismissing an employee, the employer must furnish him with two
written notices: the first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought, and the second is a subsequent notice, which informs the
employee of the employer’s decision to dismiss him. An administrative hearing must likewise be
held in order to give the employee a further opportunity to be heard. Petitioner hospital failed to
comply with the rule on twin notice and hearing as it merely required respondent to give his
written explanation and, thereafter, ordered his dismissal. St. Luke’s Medical Center, Inc. and
Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Dismissal; serious misconduct. Serious misconduct as a valid cause for the dismissal of an
employee is defined simply as improper or wrongful conduct. It is a 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 of judgment. To be serious, the misconduct
must be of such grave and aggravated character and not merely trivial or unimportant. Moreover,
it must be related to the performance of the employee’s duties such as would show him to be
unfit to continue working for the employer. On the other hand, moral turpitude has been
defined as “everything which is done contrary to justice, modesty, or good morals; an act of
baseness, vileness or depravity in the private and social duties which a man owes his fellowmen,
or to society in general, contrary to justice, honesty, modesty, or good morals. In the case at bar,
the transgressions imputed to private respondent have never been firmly established as
deliberate and willful acts. At the very most, they can only be characterized as unintentional,
albeit major, lapses in professional judgment. Philippine Airlines, Inc. vs. National Labor
Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.
Employer-employee relationship. That complainants were employees of SIP is clear from the fact
that SIP paid their salary. When complainants charged SIP of underpayment, SIP even
interposed the defense of free board and lodging given to complainants. Furthermore, the IDs
issued to complainants bear the signature of Alejandro C. Pablo, proprietor of SIP. Likewise, the
memoranda issued to complainants regarding their absences without leave were signed by
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Pablo. All these clearly show that SIP is the employer of complainants. Although GMPC
engaged the services of SIP to operate a canteen, SIP and its proprietors could not be considered
as labor-only contractors or mere agents of GMPC because they exercised the essential elements
of an employment relationship with the complainants such as hiring, payment of wages and the
power of control. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et
al., G.R. No. 192473, October 11, 2010.
Employer-employee relationship; test. The elements to determine the existence of an
employment 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’s conduct. The most important of these elements is the employer’s control of the
employee’s conduct, not only as to the result of the work to be done, but also as to the means
and methods to accomplish it. It should be remembered that the control test merely calls for the
existence of the right to control, and not necessarily the exercise thereof. Based on this four-fold
test, Manila Water emerges as the employer of respondent collectors. Respondent bill collectors
were individually hired by the contractor, but were under the direct control and supervision of
Manila Water. This control is manifested in the fact that respondent bill collectors reported daily
to the branch offices of Manila Water to remit their collections with the specified monthly
targets and comply with the collection reporting procedures prescribed by the latter.
Accordingly, respondent bill collectors are employees of petitioner Manila Water. Manila Water
Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Evidentiary doubts construed in favor of labor. Although it cannot be determined with certainty
whether respondent worked for the entire period from November 16 to November 30, 2005, the
consistent rule is that if doubt exists between the evidence presented by the employer and that
by the employee, the scales of justice must be tilted in favor of the latter in line with the policy
mandated by Articles 2 and 3 of the Labor Code to afford protection to labor and construe
doubts in favor of labor. In view of petitioners’ failure to satisfy their burden of proof,
respondent is presumed to have worked during the period in question and is, accordingly,
entitled to his salary. Therefore, the withholding of respondent’s salary by petitioners is contrary
to Article 116 of the Labor Code and, thus, unlawful. SHS Perforated Materials, Inc., et al. vs.
Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Illegal dismissal; full backwages and reinstatement. Under Republic Act No. 6715, employees
who are illegally dismissed are entitled to full backwages, inclusive of allowances and other
benefits or their monetary equivalent, computed from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. If reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the
finality of the decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No.
163091, October 6, 2010.
Illegal dismissal; 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 injuries
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such as mental anguish, besmirched reputation, wounded feelings, and social humiliation
occasioned by the employer’s unreasonable dismissal of the employee. The award of such
damages is based not on the Labor Code but on the Civil Code. These damages, however, are
not intended to enrich the illegally dismissed employee. Thus, the Court found it proper to
reduce the award of moral damages from P500,000 to P100,000.00 and exemplary
damages from P500,000 to P50,000.00. The reduced amounts are deemed sufficient to assuage
the sufferings experienced by Del Villar and to set an example for the public good. Coca Cola
Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.
Illegal dismissal; reinstatement and full backwages. Probationary employees who are unjustly
dismissed during the probationary period are entitled to reinstatement and payment of full
backwages and other benefits and privileges from the time they were dismissed up to their
actual reinstatement. Respondent is, thus, entitled to reinstatement without loss of seniority
rights and other privileges as well as to full backwages, inclusive of allowances and other
benefits or their monetary equivalent computed from the time his compensation was withheld
up to the time of actual reinstatement. SHS Perforated Materials, Inc., et al. vs. Manuel F.
Diaz, G.R. No. 185814, October 13, 2010.
Illegal dismissal; reinstatement and payment of backwages. Petitioners’ lack of just cause and
non-compliance with the procedural requisites in terminating respondent’s employment renders
them guilty of illegal dismissal. Consequently, under Article 279 of the Labor Code, as
amended, respondent is entitled to reinstatement to his former position without loss of seniority
rights and payment of backwages inclusive of allowances and other benefits, or their monetary
equivalent computed from the time the compensation was not paid up to the time of actual
reinstatement. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No.
152166, October 20, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. If reinstatement proves impracticable,
and hardly in the best interest of the parties, perhaps due to the lapse of time since the
employee’s dismissal, or if the employee decides not to be reinstated, respondent should be
awarded separation pay in lieu of reinstatement. In the present case, since reinstatement is no
longer feasible due to the long passage of time, petitioners are required to pay respondent his
separation pay equivalent to one (1) month’s pay for every year of service. Petitioners are thus
ordered to pay respondent his backwages and separation pay. The awards of separation pay
and backwages are not mutually exclusive and both may be given to respondent. St. Luke’s
Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Job contracting; conditions. Job contracting is permissible only 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 the business. “Substantial capital or investment”
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refers to capital stocks and subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries, and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work, or service
contracted out. The “right to control” refers to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end to be achieved,
but also the manner and means to be used in reaching that end.Manila Water Company, Inc. vs.
Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Jurisdiction; dismissal. Pursuant to Article 217 (a) 2 of the Labor Code, as amended, the illegal
dismissal of an officer or other employee of a private employer is properly cognizable by the
labor arbiter. However, where the complaint for illegal dismissal concerns a corporate officer,
the controversy is considered an intra-corporate dispute and falls under the jurisdiction of the
Securities and Exchange Commission (SEC). This jurisdiction of the SEC, however, was
transferred to the RTC, pursuant to RA No. 8799 which became effective on August 8, 2000.
Considering that the respondent’s complaint for illegal dismissal was commenced on August 10,
2000, the appropriate jurisdiction lie with the RTC should it turn out that the respondent was a
corporate, not a regular, officer of Matling. Matling Industrial and Commercial Corp., et al. vs.
Ricardo R. Coros, G.R. No. 157802, October 13, 2010.
Jurisdiction; labor dispute vs. intra-corporate dispute. Given Locsin’s status as a corporate officer,
the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the
termination of his relationship with Nissan. In a number of cases it has been held that a
corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy so that
the RTC should exercise jurisdiction. Locsin was undeniably Chairman and President, and was
elected to these positions by the Nissan board pursuant to its By-laws. As such, he was a
corporate officer, not an employee. Even as Executive Vice-President/Treasurer, Locsin already
acted as a corporate officer because the position of Executive Vice-President/Treasurer is
provided for in Nissan’s By-Laws. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis
Banson, G.R. No. 185567, October 20, 2010.
Labor-only contracting; elements. The Labor Code expressly prohibits “labor-only” contracting
which refers to an arrangement where the contractor or subcontractor merely recruits, supplies,
or places workers to perform a job, work, or service for a principal, and any of the following
elements are present: (i) 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 (ii) the contractor does not
exercise the right to control the performance of the work of the contractual employee. Using the
above criteria, it is clear that FCCSI is a labor-only contractor while the principal Manila Water
is the real employer. FCCSI does not have substantial capital or investment to qualify as an
independent contractor as shown by the fact that although it has an authorized capital stock of
P400,000.00, only P100,000.00 of which is actually paid-up. Also, it was Manila Water that
provided the equipment and service vehicles needed in the performance of the contracted
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service. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4,
2010.
Loss of confidence; distinction between managerial personnel and rank and employees . As a
general rule, employers are allowed wider latitude of discretion in terminating the employment
of managerial personnel or those who, while not of similar rank, perform functions which by
their nature require the employer’s full trust and confidence. This must be distinguished from
the case of ordinary rank and file employees, whose termination on the basis of these same
grounds requires a higher proof of involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice. Leandro M. Alcantara vs. The
Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Motion to dismiss; appeal. Petitioner Locsin’s submission that the NCLPI improperly elevated
the Labor Arbiter’s denial of the Motion to Dismiss to the CA is correct. A denial of a motion to
dismiss is an interlocutory order and hence, cannot be appealed until a final judgment on the
merits of the case is rendered. As a general rule, an aggrieved party’s proper recourse to the
denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss –
such as lack of jurisdiction in the present case – before the labor arbiter, and actively participate
in the proceedings. Thereafter, the labor arbiter’s decision can be appealed to the NLRC, not to
the CA. This NLRC rule is similar to the general rule observed in civil procedure. Under the
Rules of Court, the only other recourse of the aggrieved party is to file an appropriate special
civil action under Rule 65 but only when there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law. In the labor law setting, a plain, speedy and adequate
remedy in the form of the corrective power of the NLRC is still open to the aggrieved party when
a labor arbiter denies a motion to dismiss. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis
Banson, G.R. No. 185567, October 20, 2010.
Petition; failure to attach documents. Failure to attach all pleadings and documents, by itself, is
not a sufficient ground to dismiss a petition. The courts may liberally construe procedural rules
in order to meet and advance the cause of substantial justice. Procedural lapses will be
overlooked when they do not involve public policy, when they arose from an honest mistake or
unforeseen accident, and when they have not prejudiced the adverse party or deprived the court
of its authority. These conditions are present in the instant case. Furthermore, after petitioner’s
receipt of the Court of Appeals Resolution dismissing his petition for failure to attach documents,
he filed a Motion for Reconsideration along with the documents deemed by the Court of
Appeals as lacking in his original petition. Such subsequent submission should be deemed
substantial compliance as supported by jurisprudence. In these cases, the reasons behind the
failure of the petitioners to comply with the required attachments were no longer
scrutinized. Clearly, the Court of Appeals erred in dismissing petitioner’s special civil action for
certiorari despite subsequent substantial compliance with the rules on procedure. Leandro M.
Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20,
2010.
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Private recruitment agencies; solidary liability. Republic Act No. 8042 provides for the joint and
solidary liability of private recruitment agencies with their foreign principals in any and all
money claims against them. Such provision is automatically incorporated by law in the contract
for overseas employment and is a condition precedent for its approval. This is to afford the
OFWs immediate and sufficient payment of what is due them. Moreover, such obligation is not
coterminous with the agreement between the local agent and its foreign principal so that if
either or both of the parties decide to end the agreement, the responsibilities of such parties
towards the contracted employees under the agreement do not at all end, but the same extends
up to and until the expiration of the employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement. Thus, to allow petitioners to simply
invoke the immunity from suit of its foreign principal or to wait for the judicial determination of
the foreign principal’s liability before petitioner can be held liable renders the law on joint and
solidary liability inutile. ATCI Overseas Corporation, et al. vs. Ma. Josefa Echin, G.R. No.
178551. October 11, 2010
Redundancy. Redundancy is one of the authorized causes for the dismissal of an employee
under Article 283 of the Labor Code. Redundancy, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of the enterprise. Such
superfluity may be due to overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise. The determination of redundancy is an exercise of business judgment of the
employer the soundness of which is not subject to discretionary review of the Labor Arbiter and
the NLRC, provided there is no violation of law and no showing that it was prompted by an
arbitrary or malicious act. Thus, a company must not merely declare that it has become
overmanned, it must also produce adequate proof of such redundancy. Coca-Cola failed to
overcome this burden in the instant case. Instead, it offered proof of Del Villar’s poor
performance which is irrelevant in relation to the issue on redundancy. Coca Cola Bottlers
Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.
Reinstatement; doctrine of strained relations. Under the doctrine of strained relations, the
latter option is no longer desirable or viable. Payment liberates the employee from what could
be a highly oppressive work environment, and at the same time releases the employer from the
obligation of keeping in its employ a worker it no longer trusts. In the instant case, respondent’s
reinstatement is no longer feasible as antagonism has caused a severe strain in his working
relationship with petitioners. Therefore, a more equitable disposition would be an award of
separation pay equivalent to at least one month pay, in addition to his full backwages,
allowances and other benefits. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No.
185814, October 13, 2010.
Release and quitclaim; validity. Quitclaims executed by the employees are commonly frowned
upon as contrary to public policy. Thus, for quitclaims to be valid the following requisites must
be complied with: (a) that there was no fraud or deceit on the part of any of the parties; (b) that
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the consideration of the quitclaim is credible and reasonable; and (c) that the contract is not
contrary to law, public order, public policy, morals or good customs, or prejudicial to a third
person with a right recognized by law.Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No.
161934, October 6, 2010
Retirement; compulsory. Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the
age for compulsory retirement at 65 years, while the minimum age for optional retirement is set
at 60 years. An employer is, however, free to impose a retirement age earlier than the foregoing
mandates provided that the prerogative is exercised pursuant to a mutually instituted early
retirement plan. In the present case, not even an iota of voluntary acquiescence to UNIPROM’s
early retirement age option is attributable to petitioner. UNIPROM’s Employees’ Non-
Contributory Retirement Plan was unilaterally and compulsorily imposed on them. Petitioner
was forced to participate in the plan, and the only way she could have rejected the same was to
resign or lose her job. Such passive acquiescence on the part of employees cannot equate to
voluntary acceptance which must be explicit, voluntary, free, and uncompelled. Having
terminated petitioner merely on the basis of a provision in the retirement plan which was not
freely assented to by her, UNIPROM is guilty of illegal dismissal.Lourdes A. Cercado vs.
Uniprom, Inc., G.R. No. 188154. October 13, 2010.
Rule on appeal from denial of motion to dismiss; exception. As a general rule, a Labor Arbiter’s
denial of the Motion to Dismiss on the ground of lack of jurisdiction is appealable to the NLRC
and not to the CA by way of Rule 65. However, we take exception to this general rule in the
present case because a strict implementation of these rules would cause substantial injustice to
NCLPI. After all, the parties have sufficiently ventilated their positions on the disputed
employer-employee relationship and have, in fact, submitted the matter for the CA’s
consideration. Moreover, the CA correctly ruled that Locsin was a corporate officer, not an
employee and therefore jurisdiction lies with the RTC and not the Labor Arbiter. Arsenio Z.
Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.
Seaman as a contractual employee; disability claims. A seaman is a contractual and not a
regular employee. Thus, in claims of seamen for compensation and disability benefits, the Court
cannot just disregard the provisions of the POEA Standard Employment Contract (POEA SEC). In
order to claim disability benefits under the POEA SEC, it is the ‘company-designated’ physician
who must proclaim that the seaman suffered a permanent disability, due to either injury or
illness, during the term of the latter’s employment. In this case, the findings of respondents’
designated physician that petitioner has been suffering from brief psychotic disorder and that it
is not work-related must be respected. While it is true that labor contracts are impressed with
public interest and the provisions of the POEA SEC must be construed logically and liberally in
favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels, the
rule is that justice is, in every case, only for the deserving; it is to be dispensed with in the light
of established facts, the applicable law, and existing jurisprudence. Edgardo M. Panganiban vs.
Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18,
2010
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Separation pay; equity. In exceptional cases, this Court has granted separation pay to a legally
dismissed employee as an act of “social justice” or based on “equity.” In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the
moral character of the employee or would involve moral turpitude. There should be no
question that where it comes to such valid but not iniquitous causes as failure to comply with
work standards, the grant of separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the company. Philippine
Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294,
October 20, 2010.
Termination; loss of confidence. Loss of confidence as a just cause for termination of
employment applies when the employee concerned holds a position of trust and
confidence. However, 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. Petitioner, who, as Branch Manager of the respondent bank
undoubtedly held a position of trust and confidence, admitted that he personally processed the
two Certificates of Time Deposit (CTDs) at issue, despite his knowledge that they were
unfunded. By doing so, he exposed his employer to great risk. Moreover, by issuing those
CTDs, he was in effect certifying the existence of time deposits in his branch that were actually
fictitious. Thus, it can be said that his obvious laxity or negligence in the issuance of the said
CTDs was even tainted with dishonesty. Respondent bank was thus justified in terminating
petitioner’s employment on the ground of loss of trust and confidence. Leandro M. Alcantara vs.
The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Termination; procedural due process. Notice and hearing constitute the essential elements of
due process in the dismissal of employees. The employer must furnish the employee with two
written notices before termination of employment can be legally effected. With regard to the
requirement of a hearing, the essence of due process lies simply in an opportunity to be heard;
an actual trial-type hearing is not indispensable. In this case, respondent acted in accordance
with procedural due process when it gave petitioner considerable leeway with regard to the
submission of his written explanation by allowing multiple extensions of time to submit the
same and by furnishing him the documents used in respondent’s investigation. Even assuming
that petitioner was not fully heard during the employer’s investigation, it was his fault because of
his misguided insistence on having a trial-type hearing. Leandro M. Alcantara vs. The Philippine
Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Termination; solidary liability of corporate directors and officers. Corporate directors and
officers are only solidarily liable with the corporation for termination of employment of
corporate employees if such is effected with malice or in bad faith. Bad faith does not connote
bad judgment or negligence; it imports dishonest purpose or some moral obliquity and
conscious doing of wrong; it means breach of known duty through some motive or interest or ill
will; it partakes of the nature of fraud. To sustain such a finding, there should be evidence on
record that an officer or director acted maliciously or in bad faith in terminating the employee.
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In the instant case, petitioners withheld respondent’s salary in the sincere belief that respondent
did not work for the period in question. Thus, although they unlawfully withheld respondent’s
salary, it cannot be concluded that such was made in bad faith. Accordingly, corporate officers,
Hartmannshenn and Schumacher, cannot be held personally liable for the corporate obligations
of SHS. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13,
2010.
Wages; deduction by employer. The free board and lodging SIP furnished the employees cannot
operate as a set-off for the underpayment of their wages. It was held in Mabeza v. National
Labor Relations Commission that the employer cannot simply deduct from the employee’s
wages the value of the board and lodging without satisfying the following requirements: (1)
proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in
writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable
value of the facilities charged. It is clear from the records that SIP failed to comply with these
requirements. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et
al., G.R. No. 192473, October 11, 2010.
Wages, withholding. Management prerogative does not include the right to temporarily
withhold wages without the consent of the employee. Such an interpretation would be contrary
to Article 116 of the Labor Code, which provides that it shall be unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker or induce him to give
up any part of his wages by force, stealth, intimidation, threat or by any other means without the
worker’s consent. Withholding of wages is allowed only in the form of wage deductions under
the circumstances provided in Article 113 of the Labor Code such as: (a) In cases where the
worker is insured with his consent by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases
where the right of the worker or his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and (c) In cases where the employer
is authorized by law or regulations issued by the Secretary of Labor. In the present case, the
withholding of complainant’s wages does not fall under the exceptions provided in Article 113
and is thus unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814,
October 13, 2010.
Work-related illness; substantial evidence. Working conditions cannot be accepted to have
caused or at least increased the risk of contracting the disease – in this case, brief psychotic
disorder- in the absence of substantial evidence. The evidence must be real and substantial, and
not merely apparent. In sum, petitioner failed to establish by substantial evidence that his brief
psychotic disorder was caused by the nature of his work as oiler of the company-owned vessel.
In fact, he failed to elaborate on the nature of his job as oiler of respondent company. The Court,
therefore, has difficulty in finding any link between his position as oiler and his illness.
Petitioner points out that his “brief psychotic disorder” which was caused by a family problem is
work-related simply because had it been a land-based employment, petitioner would have
easily gone home and attended to the needs of his family. This is not the “work-related” instance
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contemplated by the provisions of the employment contract in order to be entitled to the

benefits. Otherwise, every seaman would automatically be entitled to compensation because
the nature of his work is not land-based. Edgardo M. Panganiban vs. Tara Trading Ship
Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010.
Writ of habeas data; labor disputes. Respondent questions her transfer and, through the
extraordinary remedy of habeas data, seeks the disclosure of the reasons behind it. However,
since her real objective is to be spared from complying with MERALCO’s Memorandum
directing her reassignment, respondent should instead lodge her complaint with the NLRC and
the Labor Arbiters which have jurisdiction over such concerns. The writ of habeas data is a
remedy available only to a person whose right to privacy in life, liberty or security is violated or
threatened by an unlawful act or omission of a public official or employee or of a private
individual or entity engaged in the gathering, collecting or storing of data or information
regarding the person, family, home and correspondence of the aggrieved party. Petitioners’
refusal to disclose the contents of reports which form the basis of respondent’s transfer does not
amount to a violation of her right to privacy. Manila Electric Company, Alexander S. Deyto and
Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. 184769, October 5, 2010.
November 2010 Philippine Supreme Court Decisions on Labor Law and Procedure
Appeal; determination of date of filing. Under Section 3, Rule 13 of the Rules of Court, where
the filing of pleadings, appearances, motions, notices, orders, judgments, and all other papers
with the court/tribunal is made by registered mail, the date of mailing, as shown by the post
office stamp on the envelope or the registry receipt, shall be considered as the date of filing.
Thus, the date of filing is determinable from two sources: from the post office stamp on the
envelope or from the registry receipt, either of which may suffice to prove the timeliness of the
filing of the pleadings. If the date stamped on one is earlier than the other, the former may be
accepted as the date of filing. In this case, to prove that it mailed the notice of appeal and
appeal memorandum on October 27, 1997, instead of October 28, 1997, as shown by the
stamped date on the envelope, petitioner presented Registry Receipt No. 34581 bearing the
earlier date. Government Service Insurance System vs. National Labor Relations Commission
(NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Appeal; filed out of time; exceptional cases. An appeal must be perfected within the statutory or
reglementary period. This is not only mandatory, but also jurisdictional. Failure to perfect the
appeal on time renders the assailed decision final and executory and deprives the appellate
court or body of the legal authority to alter the final judgment, much less entertain the appeal.
However, in exceptional cases, a belated appeal may be given due course if greater injustice
will be visited upon the party should the appeal be denied. This is to serve the greater principles
of substantial justice and equity. Technical rules are not binding in labor cases and are not to be
applied strictly if the result would be detrimental to the working man. In the instant case, even if
the appeal was filed one day late, the same should have been entertained by the NLRC.
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Government Service Insurance System vs. National Labor Relations Commission (NLRC),
Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Compensable illness; work-relatedness. Granting arguendo that petitioner’s illness was not pre-
existing, he still had to show that his illness not only occurred during the term of his contract but
also that it resulted from a work-related injury or illness, or at the very least aggravated by the
conditions of the work for which he was contracted for. Petitioner failed to discharge this
burden, however. That the exact and definite cause of petitioner’s illness is unknown cannot be
used to justify grant of disability benefits, absent proof that there is any reasonable connection
between work actually performed by petitioner and his illness. Jerry M. Francisco, vs. Bahia
Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No.
190545, November 22, 2010.
Dismissal; illegal strike; distinction between union officers and mere members. The liabilities of
individuals who participate in an illegal strike must be determined under Article 264 (a) of the
Labor Code which makes a distinction between union officers and mere members. The law
grants the employer the option of declaring a union officer who knowingly participated in an
illegal strike as having lost his employment. However, a worker merely participating in an illegal
strike may not be terminated from employment if he does not commit illegal acts during a strike.
Hence, with respect to respondents who are union officers, their termination by petitioners is
valid. Being fully aware that the proceedings before the Secretary of Labor were still pending as
in fact they filed a motion for reconsideration, they cannot invoke good faith as a defense. For
the rest of the individual respondents who are union members, they cannot be terminated for
mere participation in the illegal strike. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid
Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No.
159460 and G.R. No. 159461, November 15, 2010.
Dismissal; misconduct; substantial evidence. The general rule is that where the findings of the
administrative body are amply supported by substantial evidence, such findings are accorded
not only respect but also finality, and are binding on the Court. The standard of substantial
evidence is satisfied when there is reasonable ground to believe that a person is responsible for
the misconduct complained of, even if such evidence might not be overwhelming or even
preponderant. In the present case, the testimonies of the witnesses, the statements during the
preliminary investigation, and the findings of the PNP Crime Lab on its examination of the
signatures, amounted to substantial evidence that adequately supported the conclusion that
petitioner Nacu was guilty of the acts complained of. Nacu was rightfully found guilty of grave
misconduct, dishonesty, and conduct prejudicial to the best interest of the service, and
penalized with dismissal. Irene K. Nacu, Substituted By Benjamin M. Nacu, Ervin K. Nacu, and
Nejie N. De Sagun vs. Civil Service Commission and Philippine Economic Zone Authority,G.R.
No. 187752, November 23, 2010.
Employer-employee relationship. Generally, in a business establishment, IDs are issued to
identify the holder as a bona fide employee of the issuing entity. While petitioner Teng alleged
that it was the maestros who hired the respondent workers, it was his company that issued to the
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respondent workers IDs bearing their names as employees and Teng’s signature as the employer.
For the 13 years that the respondent workers worked for Teng, they received wages on a regular
basis, in addition to their shares in the fish caught. More importantly, the element of control –
which we have ruled in a number of cases to be a strong indicator of the existence of an
employer-employee relationship – is present in this case. Teng not only owned the tools and
equipment, he directed how the respondent workers were to perform their job as
checkers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.
Forum shopping; elements. By forum shopping, a party initiates two or more actions in separate
tribunals, grounded on the same cause, hoping that one or the other tribunal would favorably
dispose of the matter. The elements of forum shopping are: (1) identity of parties, or at least
such parties as would represent the same interest in both actions; (2) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (3) identity of the two
preceding particulars such that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action under consideration. In the
instant case, petitioner CABEU-NFL merely raised the fact of the pendency of two cases without
demonstrating any similarity in the causes of action between the said cases and the present
case. In the absence of such evidence to show that the issues involved in these cases are the
same, the Court cannot give credence to petitioner’s claim of forum shopping. Central
Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs.
Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No.
186605, November 17, 2010.
Illegal strike. Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken
despite the issuance by the Secretary of Labor of an assumption order and/or certification is
illegal. So is a declaration of a strike during the pendency of cases involving the same grounds
for the strike. In the present case, there is no dispute that when respondents conducted their
mass actions on April 3 to 6, 2000, the proceedings before the Secretary of Labor were still
pending as both parties filed motions for reconsideration of the March 24, 2000 Order. Clearly,
respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass
demonstration. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid
Bank Union and its Dismissed Officers and Members, et al.G.R. No. 159460 and G.R. No.
159461, November 15, 2010.
Illegal strike; proof of illegal acts. To justify termination of a union member who participated in
an illegal strike, there must be proof that he or she committed illegal acts during a strike.
Substantial evidence available under the attendant circumstances, which may justify the
imposition of the penalty of dismissal, may suffice. Petitioners have not adduced evidence on
such illegal acts committed by each of the individual respondents who are union members. The
dismissal of respondent-union members are therefore unjustified in the absence of a clear
showing that they committed specific illegal acts during the mass actions and concerted work
boycott. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank
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Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461,
November 15, 2010.
Illegal dismissal; backwages. The award of backwages is a legal consequence of a finding of
illegal dismissal. However, assuming that respondent-union members have indeed reported
back to work at the end of the concerted mass actions but were soon terminated by petitioners
who found their explanation unsatisfactory, they are not entitled to backwages in view of the
illegality of the said strike. Under the circumstances, respondents’ reinstatement without
backwages suffices for the appropriate relief. Solid Bank Corp. Ernesto U. Gamier, et al. and
Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R.
No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal dismissal; lack of substantive due process. The dismissal of an employee, which the
employer must validate, has a two-fold requirement: one is substantive, the other is procedural.
Not only must the dismissal be for a just or an authorized cause, as provided by law; the
rudimentary requirements of due process – the opportunity to be heard and to defend oneself –
must be observed as well. The employer has the burden of proving that the dismissal was for a
just cause; failure to show this, as in the present case, would necessarily mean that the dismissal
was unjustified and, therefore, illegal. The respondent worker’s allegation that Teng summarily
dismissed them on suspicion that they were not reporting to him the correct volume of the fish
caught in each fishing voyage was never denied by Teng. Unsubstantiated suspicion is not a just
cause to terminate one’s employment under Article 282 of the Labor Code. Albert Teng vs.
Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. Since reinstatement is no longer
possible given the lapse of considerable time from the occurrence of the strike, not to mention
the fact that Solidbank had long ceased its banking operations, the award of separation pay of
one (1) month salary for each year of service, in lieu of reinstatement, is in order. Solid Bank
Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its
Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15,
2010.
Illness; when deemed pre-existing and not compensable. Petitioner’s illness already existed
when he commenced his fourth contract of employment with respondents, hence, not
compensable. Given that the employment of a seafarer is governed by the contract he signs
every time he is rehired and his employment is terminated when his contract expires,
petitioner’s illness during his previous contract with respondents is deemed pre-existing during
his subsequent contract. That petitioner was subsequently rehired by respondents despite
knowledge of his seizure attacks does not make the latter a guarantor of his health. Jerry M.
Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise
Lines, Ltd., G.R. No. 190545, November 22, 2010.
Indirect employer; solidary liability. The fact that there is no actual and direct employer-
employee relationship between petitioner and respondents does not absolve the former from
liability for the latter’s monetary claims. When petitioner contracted DNL Security’s services,
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petitioner became an indirect employer of respondent security guards, pursuant to Article 107 of
the Labor Code. Thus, after the contractor DNL Security failed to pay respondents the correct
wages and other monetary benefits, petitioner, as principal, became jointly and severally liable,
as provided in Articles 106 and 109 of the Labor Code. It should be understood, though, that the
solidary liability of petitioner does not preclude the application of Article 1217 of the Civil Code
on the right of reimbursement from its co-debtor. Government Service Insurance System vs.
National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045,
November 17, 2010.
Indirect employer; solidary liability; coverage. Petitioner’s liability as indirect employer covers
the payment of respondents’ salary differential and 13th month pay during the time they worked
for petitioner. Petitioner’s liability, however, cannot extend to the payment of separation pay. An
order to pay separation pay is invested with a punitive character, such that an indirect employer
should not be made liable without a finding that it had conspired in the illegal dismissal of the
employees.Government Service Insurance System vs. National Labor Relations Commission
(NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Inefficiency of employee; condonation by employer. While it is acknowledged that petitioner
Gregorio’s service record shows that his performance as a security guard was below par,
respondent Gulf Pacific never issued any memo citing him for the alleged repeated errors,
inefficiency, and poor performance while on duty, and instead continued to assign him to
various posts. This amounts to condonation by Gulf Pacific of whatever infractions Gregorio
may have committed. Even assuming the reasons for relieving Gregorio of his position were
true, it was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws. Bebina
G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and
Angel Quizon, G.R. No. 182086, November 24, 2010.
Jurisdiction; Secretary of Labor. It is well-settled that the Secretary of Labor, in the exercise of
his power to assume jurisdiction over a labor dispute under Art. 263 (g) [11] of the Labor Code,
may resolve all issues involved in the controversy including the award of wage increases and
benefits. In the instant case, the fact that the award was higher than that which was purportedly
agreed upon in the MOA between management and the labor union is of no moment because
the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in
computing the wage increases. He could, as he did, consider the financial documents submitted
by respondent as well as the parties’ bargaining history and respondent’s financial outlook and
improvements as stated in its website. Cirtek Employees Labor Union-Federation of Free Workers
vs. Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.
Jurisdiction; divestment. It bears noting that the filing and submission of the MOA did not have
the effect of divesting the Secretary of his jurisdiction, or of automatically disposing the
controversy. Thus, neither should the provisions of the MOA restrict the Secretary’s leeway in
deciding the matters before him. Cirtek Employees Labor Union-Federation of Free Workers vs.
Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.
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Labor-only contracting. Section 5 of the DO No. 18-02, which implements Article 106 of the
Labor Code, provides that, ”… labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal, and any of the following elements are present: (i)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 (ii)The contractor does not exercise the right to control over the performance of the
work of the contractual employee. In the present case, Teng admitted that he solely provided the
capital and equipment, while the maestros supplied the workers. Also, the power of control over
the respondent workers was lodged not with the maestros but with Teng. Moreover, they
performed tasks that were necessary and desirable in Teng’s fishing business. Taken together,
these incidents confirm the existence of a labor-only contracting which is prohibited in our
jurisdiction. Accordingly, a finding that the maestros are labor-only contractors is equivalent to a
finding that an employer-employee relationship exists between Teng and the respondent
workers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010
Mootness; amicable settlement as final satisfaction of judgment award. The “conditional”
settlement of the judgment award insofar as it operates as a final satisfaction thereof renders the
case moot and academic. In the case at bar, the settlement grants the petitioner the luxury of
having other remedies available to it such as its petition for certiorari pending before the
appellate court, and an eventual appeal to the Court. On the other hand, respondent employee
could no longer pursue other claims, including interests that may accrue during the pendency of
the case. The Labor Arbiter and the appellate court may not thus be faulted for interpreting
petitioner’s “conditional settlement” to be tantamount to an amicable settlement of the case
resulting in the mootness of the petition for certiorari. Career Philippines Ship Management, Inc.,
vs. Geronimo Madjus, G.R. No. 186158, November 22, 2010.
Motion for reconsideration. As amended, Article 263 is now Article 262-A in which the word
“unappealable” from Article 263 has been deleted. Thus, although Art. 262-A makes the
voluntary arbitration award final and executory after ten calendar days from receipt of the copy
of the award or decision by the parties, the decision may still be reconsidered by the Voluntary
Arbitrator on the basis of a motion for reconsideration duly filed during that period. The
absence of a categorical language in Article 262-A does not preclude the filing of a motion for
reconsideration of the VA’s decision within the 10-day period. Therefore, petitioners’ allegation
that the VA’s decision had become final and executory by the time the respondent workers filed
an appeal with the CA fails. It is consequently ruled that the respondent workers seasonably
filed a motion for reconsideration of the VA’s judgment, and the VA erred in denying the
motion. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.
Off-detail or Floating status. Temporary “off-detail” or “floating status” is the period of time
when security guards are in between assignments or when they are made to wait after being
relieved from a previous post. It takes place when the security agency’s clients decide not to
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renew their contracts with the agency. It also happens in instances where contracts for security
services stipulate that the client may request the agency for the replacement of the guards
assigned to it, such that the replaced security guard may be placed on temporary “off-detail” if
there are no available posts under the agency’s existing contracts. It does not constitute a
dismissal, as the assignments primarily depend on the contracts entered into by the security
agencies with third parties, so long as such status does not continue beyond a reasonable time
period. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security
Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.
Off-detail or Floating status; when deemed constructive dismissal. When a “floating status” lasts
for more than six (6) months, the employee may be considered to have been constructively
dismissed. In the present case, of the three instances when petitioner Gregorio was temporarily
“off-detailed,” the last two already ripened into constructive dismissal. Although it could have
been difficult for respondent Gulf Pacific to post Gregorio given his age and his service record,
still the agency should not have allowed him to wait indefinitely for an assignment if its clients
were in truth less likely to accept him. If, indeed, Gregorio was undesirable as an employee,
Gulf Pacific could have dismissed him for cause. The unreasonable length of time that Gregorio
was not posted inevitably resulted in his being constructively dismissed from employment.
Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc.,
and Angel Quizon, G.R. No. 182086, November 24, 2010.
Parol evidence; application in labor cases. The appellate court’s brushing aside of the
“Paliwanag” and the minutes of the meeting because they were not verified and notarized, thus
violating, so the appellate court reasoned, the rules on parol evidence, does not lie. Like any
other rule on evidence, parol evidence should not be strictly applied in labor cases. Cirtek
Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc., G.R. No. 190515,
November 15, 2010.
Petition; service on counsel. Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of
Court, clearly provides that in a petition filed originally in the CA, the petitioner is required to
serve a copy of the petition on the adverse party before its filing. If the adverse party appears by
counsel, service shall be made on such counsel pursuant to Section 2, Rule 13. Thus, in the
instant case, petitioner CABEU-NFL’s insistence that service of the copy of the CA petition
should have been made to it, rather than to its counsel, is unavailing. Central Azucarera De Bais
Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De
Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17,
2010.
Reinstatement; when not granted. Petitioner Gregorio’s position paper did not pray for
reinstatement, but only sought payment of money claims. Likewise, the strained relations
between the parties make reinstatement impracticable. What is more, even during the time of
the LA’s decision, reinstatement was no longer legally feasible since Gregorio was past the age
qualification for a security guard license. Section 5[33] of R.A. 5487, enumerating the
qualifications for a security guard, provides that the person should not be less than 21 nor over
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50 years of age. And as previously mentioned, as early as June 13, 2002, Gregorio was no
longer in possession of a valid license. Thus, separation pay should be paid in lieu of
reinstatement. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific
Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.
Retirement laws; liberal construction. Retirement laws are liberally construed in favor of the
retiree because their objective is to provide for the retiree’s sustenance and, hopefully, even
comfort, when he no longer has the capability to earn a livelihood. The liberal approach aims to
achieve the humanitarian purposes of the law in order that efficiency, security, and well-being
of government employees may be enhanced. Indeed, retirement laws are administered in favor
of the persons intended to be benefited, and all doubts are resolved in their favor. In this case,
as adverted to above, respondent was able to establish that he has a clear legal right to the
reinstatement of his retirement benefits. Government Service Insurance System vs. Fernando P.
De Leon, G.R. No. 186560, November 17, 2010.
Retirement benefit; entitlement. Respondent’s disqualification from receiving retirement benefits
under R.A. No. 910 does not mean that he is disqualified from receiving any retirement benefit
under any other existing retirement law. Prior to R.A. No. 8291, retiring government employees
who were not entitled to the benefits under R.A. No. 910 had the option to retire under either of
two laws: Commonwealth Act No. 186, as amended, or P.D. No. 1146. In his Comment,
respondent implicitly indicated his preference to retire under P.D. No. 1146, since this law
provides for higher benefits. Because respondent had complied with the requirements under the
said law at the time of his retirement, a fact which GSIS does not dispute, he is entitled to
receive the benefits provided under the same law. Government Service Insurance System vs.
Fernando P. De Leon, G.R. No. 186560, November 17, 2010.
Strike; definition. Article 212 of the Labor Code, as amended, defines strike as any temporary
stoppage of work by the concerted action of employees as a result of an industrial or labor
dispute. A labor dispute includes any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment, regardless of whether or not the
disputants stand in the proximate relation of employers and employees. The term “strike” shall
also include slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant
equipment and facilities and similar activities. In the instant case, about 712 employees
absented themselves from work in a concerted fashion for three continuous days. Considering
that these mass actions stemmed from a bargaining deadlock and an order of assumption of
jurisdiction had already been issued by the Secretary of Labor to avert an impending strike, all
the elements of strike are evident in the Union-instigated mass actions. Solid Bank Corp. Ernesto
U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers
and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Unfair labor practice. For a charge of unfair labor practice to prosper, it must be shown that
respondent CAB’s suspension of negotiation with CABEU-NFL and its act of concluding a CBA
with CABELA, another union in the bargaining unit, were motivated by ill will, “bad faith, or
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fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or
public policy…” However, the facts show that CAB believed that CABEU-NFL was no longer the
representative of the workers. It just wanted to foster industrial peace by bowing to the wishes
of the overwhelming majority of its rank and file workers and by negotiating and concluding in
good faith a CBA with CABELA.” Such actions of CAB are nowhere tantamount to anti-unionism,
the evil sought to be punished in cases of unfair labor practices. Central Azucarera De Bais
Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De
Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17,
2010.
Unfair labor practice; burden of proof. Basic is the principle that good faith is presumed and he
who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of
CAB, CABEU-NFL has the burden to present substantial evidence to prove the allegation of
unfair labor practice. Apparently, CABEU-NFL refers only to the execution of the supposed CBA
between CAB and CABELA and the request to suspend the negotiations, to conclude that bad
faith attended CAB’s actions. The Court is of the view that CABEU-NFL, in simply relying on the
said circumstances, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith. Central Azucarera De Bais Employees Union-NFL, represented by its
President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President,
Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.
December 2010 Philippine Supreme Court Decisions on Labor Law and Procedure
Dismissal; due process; trial-type hearing is not essential. The essence of due process is an
opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain
one’s side. Records show that Aboc was duly notified through a letter asking him to explain why
his services should not be terminated. In fact, he replied to the same by submitting a written
explanation. He was likewise duly afforded ample opportunity to defend himself during a
conference conducted. Aboc’s contention that the conference he attended cannot substitute the
hearing mandated by the Labor Code is bereft of merit. A formal trial-type hearing is not at all
times and in all instances essential to due process. It is enough that the parties are given a fair
and reasonable opportunity to explain their respective sides of the controversy and to present
supporting evidence on which a fair decision can be based. Antonio A. Aboc vs. Metropolitan
Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R.
Nos. 170542-43 and G.R. No. 176460, December 13, 2010.
Dismissal; due process; trial-type hearing is not essential. In dismissal cases, the essence of due
process is a fair and reasonable opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one’s side. A formal or trial type hearing is not at all
times and in all instances essential. Neither is it necessary that the witnesses be cross-examined.
In the instant case, there was a proceeding where the respondent was apprised of the charges
against him as well as of his rights. Thereafter, he was notified of the formal charges against him
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and was required to explain in writing why he should not be dismissed for serious
misconduct. A formal hearing was conducted and subsequently, respondent received a Notice
of Termination informing him that after a careful evaluation, he was found liable as charged and
dismissed from the service due to gross misconduct. Clearly, respondent was afforded ample
opportunity to air his side and defend himself. Hence, there was due process. Philippine Long
Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.
Dismissal; due process. Respondent harps on the fact that his dismissal was preconceived
because there was already a decision to terminate him even before he was given the show cause
memorandum. Contrary to respondent’s allegations, he was given more than enough
opportunity to defend himself. The audit committee’s conclusion to dismiss respondent from
the service was merely recommendatory. It was not conclusive upon the petitioner
company. This is precisely the reason why the petitioner still conducted further
investigations. To reiterate, respondent was properly informed of the charges and had every
opportunity to rebut the accusations and present his version. Respondent was not denied due
process of law for he was adequately heard as the very essence of due process is the opportunity
to be heard. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A.
Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Dismissal; loss of confidence; guidelines for application. The Court has set the guidelines for the
application of the doctrine of loss of confidence as follows: (a) Loss of confidence should not be
simulated; (b) It should not be used as a subterfuge for causes which are improper, illegal or
unjustified; (c) It may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and (d) It must be genuine, not a mere afterthought to justify earlier action taken in bad
faith. In the case at bar, no mention was made regarding petitioner’s alleged loss of trust and
confidence in respondent. Neither was there any explanation nor discussion of the alleged
sensitive and delicate position of respondent requiring the utmost trust of petitioner. Because of
its subjective nature, the Court has been very scrutinizing in cases of dismissal based on loss of
trust and confidence. Thus, when the breach of trust or loss of confidence is not clearly
established by facts, as in the instant case, such dismissal on the ground of loss and confidence
cannot be countenanced. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R.
No. 149433, December 15, 2010.
Dismissal; serious misconduct; wrongful intent required. For misconduct or improper behavior
to be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of the
employee’s duties; and (c) must show that the employee has become unfit to continue working
for the employer. In the present case, the alleged infractions of respondent could hardly be
considered serious misconduct. In order to constitute serious misconduct which will warrant
the dismissal of an employee, it is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or
conduct must have been done with wrongful intent. Such is, however, lacking in the instant
case. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December
15, 2010.
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Dismissal; substantial evidence. The quantum of proof required in determining the legality of an
employee’s dismissal is only substantial evidence. In a similar case, the Court held that the
standard of substantial evidence is met where the employer, as in this case, has reasonable
ground to believe that the employee is responsible for the misconduct and his participation in
such misconduct makes him unworthy of the trust and confidence demanded by his position. In
the present case, petitioner has sufficiently established that respondent solicited, collected and
received the P1,500.00 down payment illegally from the spouses Mueda. Taken together, the
petitioner has discharged its burden of establishing the serious misconduct committed by
respondent. Such misconduct makes him unworthy of the trust and confidence demanded by
his position. Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No.
189366, December 8, 2010.
Dismissal; substantial evidence. The burden of proof rests on the employer to show that the
dismissal was for a just cause or authorized cause. Dismissal due to serious misconduct and loss
of trust and confidence must be supported by substantial evidence which 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. In the present case,
evidence clearly shows that the acts of Aboc in helping organize the credit unions and in the
operations thereof constituted serious misconduct or breach of trust and confidence. His
participation in the credit unions is highly irregular and clearly in conflict with Metrobank’s
business. Aboc claimed that he was only an “unwilling participant” doing a ministerial job. The
investigation, however, showed otherwise. Antonio A. Aboc vs. Metropolitan Bank And Trust
Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-
43 and G.R. No. 176460, December 13, 2010.
Dismissal; two-notice rule. The requirements of procedural due process were complied with
when petitioner sent a memo to respondent informing him of the specific charges and giving
him opportunity to air his side. Subsequently, in a letter, respondent was informed that on the
basis of the results of the investigation conducted, his written explanation, the written
explanation of other employees as well as the audit report, the management has decided to
terminate him. The two-notice requirement, which includes a written notice of the cause of
dismissal to afford the employee ample opportunity to be heard and defend himself, and written
notice of the decision to terminate him which states the reasons therefor, was thus complied
with. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos.
163293 & 163297, December 8, 2010.
Dismissal; willful disobedience. To justify willful disobedience or insubordination as a valid
ground for termination, the employee’s assailed conduct must have been willful or
characterized by a wrongful or perverse attitude and 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. In the case at bar, while petitioner’s manual of procedures does not
absolutely prohibit the negotiation or acceptance of second-endorsed checks for deposits, it
expressly disallows the acceptance of checks endorsed by corporations, societies, firms, etc. and
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checks with unusual endorsements. As shown by the records, this explicit policy was
transgressed by respondent intentionally and willfully. Respondent was instructed by
management to stop the transgression but he did not stop. Respondent admittedly disobeyed
not only his superiors’ directives but also simple bank rules. Equitable PCI Bank (Now Banco De
Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Dismissal; willful breach of trust. Willful breach of trust requires that the loss of confidence must
not be simulated; it should not be used as a subterfuge for causes which are illegal, improper or
unjustified; it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; it must be genuine, not a mere afterthought to justify earlier action taken in bad faith;
and, the employee involved holds a position of trust and confidence. Respondent, as bank
manager, has the duty to ensure that bank rules are strictly complied with to serve the best
interest of the bank as he holds a position of trust and confidence. Any negligence in the
exercise of his responsibilities can be sufficient ground for loss of trust and confidence. As held
in one case, the mere existence of a basis for believing that a managerial employee has
breached the trust of his employer would suffice for his dismissal. Proof beyond reasonable
doubt is not required. In the case at bar, respondent’s wanton violation of bank policies equates
to abuse of authority and, therefore, abuse of the trust reposed in him. Such is enough for his
dismissal from service. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A.
Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Illegal dismissal; reinstatement and backwages. 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. Respondent is entitled to such
award. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December
15, 2010.
Job contracting; conditions. Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to farm out to the contractor the performance of a
specific work, or service within a predetermined period, regardless of whether such work, or
service is to be performed within or outside the premises of the principal. Thus, the following
conditions must concur: (a) The contractor carries on a distinct and independent business and
undertakes the contract work on his account under his own responsibility according to his own
manner and method, free from the control and direction of his principal in all matters connected
with the performance of his work except as to the results thereof; (b) The contractor has
substantial capital or investment; and (c) The agreement between the principal and the
contractor assures the contractual employees’ entitlement to all labor and occupational safety
and health standards, free exercise of the right to self-organization, security of tenure, and social
welfare benefits. In the case at bar, BMSI is engaged in labor-only contracting for LSC. First,
petitioners worked at LSC’s premises, and nowhere else. There was no evidence that BMSI
exercised control over them. Second, there is no proof that BMSI had substantial capital. The
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equipment used by BMSI was merely rented from LSC. Third, petitioners performed activities
which were directly related to the main business of LSC. Lastly, BMSI had no other client except
for LSC.Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo,
Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping
Corporation, G.R. No. 186091, December 15, 2010.
Jurisdiction of Supreme Court; errors of fact; exceptions. The Court has stressed that its
jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is limited to
reviewing only errors of law, not of fact, unless the findings of fact complained of are devoid of
support by the evidence on record, or the assailed judgment is based on the misapprehension of
facts. In previous rulings, the Court has declared that when there is enough basis on which a
proper evaluation of the merits can be made, it may dispense with the time-consuming
procedure in order to prevent further delays in the disposition of the case. However, in the case
at bar, based on the nature of the two remaining issues which involve factual issues, and given
the inadequacy of the records, pleadings, and other evidence available before the Court to
properly resolve those questions, it is constrained to refrain from passing upon them. South
Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto.
Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc,
Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
Jopson, G.R. No. 173326, December 15, 2010.
Labor-only contracting and job contracting; how determined. The character of a business, that is,
whether as labor-only contractor or as job contractor, should be determined in terms of the
criteria set by statute. In one case the Court has explained that despite the fact that the service
contracts contain stipulations which are earmarks of independent contractorship, they do not
make it legally so. The language of a contract is neither determinative nor conclusive of the
relationship between the parties. The parties cannot dictate, by a declaration in a contract, the
character of a business. Thus, in distinguishing between the prohibited labor-only contracting
and permissible job contracting, the totality of the facts and the surrounding circumstances of
the case are to be considered. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin
Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao,
vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Labor-only contracting; elements. Labor-only contracting, a prohibited act, is an arrangement
where the contractor or subcontractor merely recruits, supplies, or places workers to perform a
job, work, or service for a principal. In labor-only contracting, the following elements are
present: (a) the contractor or subcontractor does not have substantial capital or investment to
actually perform the job, work, or service under its own account and responsibility; and (b) the
employees recruited, supplied, or placed by such contractor or subcontractor perform activities
which are directly related to the main business of the principal. Emmanuel Babas, Danilo T.
Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr.,
Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091,
December 15, 2010.
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Labor-only contracting; workers are regular employees of principal. Indubitably, BMSI can only
be classified as a labor-only contractor. Consequently, the workers that BMSI supplied to its
principal LSC became regular employees of the latter. Having gained regular status, petitioners
were entitled to security of tenure and could only be dismissed for just or authorized causes and
after they had been accorded due process. The termination of LSC’s Agreement with BMSI
cannot be considered a just or an authorized cause for petitioners’ dismissal. Emmanuel Babas,
Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano,
Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
186091, December 15, 2010.
Payroll reinstatement; effect of reversal on appeal. Since Metrobank chose payroll reinstatement
for Aboc, he then became a reinstated regular employee. This means that he was restored to his
previous position as a regular employee without loss of seniority rights and other privileges
appurtenant thereto. His payroll reinstatement put him on equal footing with the other regular
employees insofar as entitlement to the benefits given under the Collective Bargaining
Agreement is concerned. The fact that the decision of the LA was reversed on appeal has no
controlling significance. The rule is that even if the order of reinstatement of the LA 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 final reversal by the higher court. Antonio
A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust
Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13,
2010.
Petition for certiorari; period for filing; retroactive application of amendments. By virtue of the
latest amendment of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by
Circular No. 56-2000, the 60-day period to file a petition for certiorari should be reckoned from
the date of receipt of the notice of the denial of the motion for reconsideration or new trial, if
one was filed. Being a curative statute, Circular No. 56-2000 has been applied by Court
retroactively in a number of cases. Given the above, respondent had a fresh 60-day period from
the date she received a copy of the NLRC Resolution denying her motion for reconsideration
within which to file the petition for certiorari. Thus, the Court ruled that respondent seasonably
filed the petition within the reglementary period provided.The Coca-Cola Export Corporation, vs.
Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.
Registration as independent contractor; effect of. The CA erred in considering BMSI’s Certificate
of Registration as sufficient proof that it is an independent contractor. In the case of San Miguel
Corporation v. Vicente B. Semillano, et. al., the Court has held that a Certificate of Registration
issued by the Department of Labor and Employment is not conclusive evidence of such status.
The fact of registration simply prevents the legal presumption of being a mere labor-only
contractor from arising.Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier,
Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs.
Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
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Reinstatement; immediately executory pending appeal. 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 be immediately executory 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 herein. In the case at bench, it cannot be denied that Metrobank opted to reinstate
Aboc in its payroll. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan
Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460,
December 13, 2010.
Separation pay as a measure of social justice; when awarded. In several instances the Court has
awarded separation pay as a measure of social justice. However, the matter has been clarified
in PLDT Co. v. NLRC where the Court categorically declared that separation pay shall be
allowed as a measure of social justice only in those instances where the employee is validly
dismissed for cause other than serious misconduct. In another case, the Court ruled that in
addition to serious misconduct, separation pay should not be conceded to an employee who
was dismissed based on willful disobedience. In the case at bar, it was established that the
infractions committed by the respondent constituted serious misconduct or willful disobedience
resulting to loss of trust and confidence. Clearly therefore, even based on equity and social
justice, respondent does not deserve the award of separation pay. Equitable PCI Bank (Now
Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December
8, 2010.
Termination; grounds. Under the requirement of substantial due process, the grounds for
termination of employment must be based on just or authorized causes. Article 282 of the
Labor Code enumerates the just causes for the termination of employment, thus: (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. The Coca-Cola
Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.
Verification and certification; effect of failure to sign. A petition satisfies the formal requirements
only with regard to those who signed the petition, but not the co-petitioners who did not sign
nor authorize the other petitioners to sign it on their behalf. In the case at bar, only seven (7) of
the nine petitioners signed the verification and certification against forum shopping. Thus, the
other petitioners who did not sign cannot be recognized as petitioners and have no legal
standing before the Court. The petition should be dismissed outright with respect to such non-
conforming petitioners. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier,
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Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs.
Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Verification and certification; “substantial compliance” rule. The requirement of the certification
of non-forum shopping is rooted in the principle that a party-litigant shall not be allowed to
pursue simultaneous remedies in different fora. However, the Court has relaxed the rule under
justifiable circumstances, considering that, although it is obligatory, it is not jurisdictional. Not
being jurisdictional, it can be relaxed under the rule of substantial compliance. In the case at
bar, the Court holds that there has been substantial compliance on the petitioners’ part in
consonance with our ruling in one case that the President of a petitioner-corporation is in a
position to verify the truthfulness and correctness of the allegations in the petition. Petitioner
Benzonan clearly satisfies the aforementioned jurisprudential requirement because he is the
President of petitioner-corporation. Moreover, he is also named as co-respondent of petitioner-
corporation in the labor case which is the subject matter of the special civil action. South
Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto.
Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc,
Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
Jopson, G.R. No. 173326, December 15, 2010.
Verification and certification; who can sign for the company without need of board
resolution. In previous cases, the Court has held that the following can sign the verification and
certification against forum shopping without need of a board resolution: (1) the Chairperson of
the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.
While the above cases do not provide a complete listing of authorized signatories, the
determination of the sufficiency of the authority was done on a case to case basis. In the
foregoing cases the authority of said corporate representatives to sign the verification or
certificate is justified in their being in a position to verify the truthfulness and correctness of the
allegations in the petition. However, the better procedure is still to append a board resolution to
the complaint or petition to obviate questions regarding the authority of the signatory of the
verification and certification. South Cotabato Communications Corporation and Gauvain J.
Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando
Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel
Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010.
Apprenticeship agreement; validity. The apprenticeship agreements did not indicate the trade or
occupation in which the apprentice would be trained; neither was the apprenticeship program
approved by the Technical Education and Skills Development Authority (TESDA). These were
defective as they were executed in violation of the law and the rules. Moreover, with the
expiration of the first agreement and the retention of the employees, the employer, to all intents
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and purposes, recognized the completion of their training and their acquisition of a regular
employee status. To foist upon them the second apprenticeship agreement for a second skill
which was not even mentioned in the agreement itself, is a violation of the Labor Code’s
implementing rules and is an act manifestly unfair to the employees. Atlanta Industries, Inc.
and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Complaint; reinstatement. Petitioners question the order to reinstate respondents to their former
positions, considering that the issue of reinstatement was never brought up before the Court of
Appeals and respondents never questioned the award of separation pay to them. Section 2 (c),
Rule 7 of the Rules of Court provides that a pleading shall specify the relief sought, but may add
a general prayer for such further or other reliefs as may be deemed just and equitable. Under
this rule, a court can grant the relief warranted by the allegation and the evidence even if it is
not specifically sought by the injured party; the inclusion of a general prayer may justify the
grant of a remedy different from or in addition to the specific remedy sought, if the facts alleged
in the complaint and the evidence introduced so warrant. The prayer in the complaint for other
reliefs equitable and just in the premises justifies the grant of a relief not otherwise specifically
prayed for. Therefore, the court may grant relief warranted by the allegations and the proof even
if no such relief is prayed for. In the instant case, aside from their specific prayer for
reinstatement, respondents, in their separate complaints, prayed for such reliefs which are
deemed just and equitable. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et
al., G.R. No. 167291, January 12, 2011.
Collection of accrued wages; two-fold test. After the Labor Arbiter’s decision is reversed by a
higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown
that the delay in enforcing the reinstatement pending appeal was without fault on the part of the
employer. The two-fold test in determining whether an employee is barred from recovering his
accrued wages requires that — (1) there must be actual delay or 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. Social Security System vs. Efren Capada, et al., G.R. No. 168501, January 31,
2011.
Disciplinary measures; management prerogative. The policy of suspending drivers pending
payment of arrears in their boundary obligations is reasonable. It is acknowledged that an
employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline on his employees and to impose
penalties, including dismissal, if warranted, upon erring employees. This is a management
prerogative. Indeed, the manner in which management conducts its own affairs to achieve its
purpose is within the management’s discretion. The only limitation on the exercise of
management prerogative is that the policies, rules, and regulations on work-related activities of
the employees must always be fair and reasonable, and the corresponding penalties, when
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prescribed, commensurate to the offense involved and to the degree of the infraction. Primo E.
Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.
Dismissal; constructive dismissal. Respondent was suspended for one year after being charged
with and found liable for AWOL. After serving her suspension, respondent was allowed to return
to work. Respondent cannot be considered to have been constructively dismissed by the
petitioner during her period of suspension. 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. In this case, there was no cessation of employment relations
between the parties. It is unrefuted that respondent promptly resumed teaching at the university
right after the expiration of the suspension period. In other words, respondent never quit. Hence,
she cannot claim to have been left with no choice but to quit, a crucial element in a finding of
constructive dismissal. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R.
No. 181146, January 26, 2011.
Dismissal; due process. Respondent employee reported to the petitioner employer the loss of
cash which she placed inside the company locker. Immediately, petitioner ordered that she be
strip-searched by the company guards. However, the search on her and her personal belongings
yielded nothing. The petitioner also reported the matter to the police and requested the
Prosecutor’s Office for an inquest. Respondent was constrained to spend two weeks in jail for
failure to immediately post bail. The Court ruled that petitioners failed to accord respondent
substantive and procedural due process. Article 277(b) of the Labor Code mandates that subject
to the constitutional right of workers to security of tenure and their right to be protected against
dismissal, except for just and authorized cause and without prejudice to the requirement of
notice under Article 283 of the same Code, the employer shall furnish the worker, whose
employment is sought to be terminated, a written notice containing a statement of the causes of
termination, and shall afford the latter ample opportunity to be heard and to defend himself with
the assistance of a representative if he so desires, in accordance with company rules and
regulations pursuant to the guidelines set by the Department of Labor and Employment. The due
process requirements under the Labor Code are mandatory and may not be supplanted by
police investigation or court proceedings. The criminal aspect of the case is considered
independent of the administrative aspect. Thus, employers should not rely solely on the findings
of the Prosecutor’s Office. They are mandated to conduct their own separate investigation, and
to accord the employee every opportunity to defend himself. Robinsons Galleria/Robinsons
Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19,
2011.
Dismissal; neglect of duty. Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. Gross negligence connotes want of care in the performance of one’s duties. Habitual
neglect implies repeated failure to perform one’s duties for a period of time, depending upon the
circumstances. A single or isolated act of negligence does not constitute a just cause for the
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dismissal of the employee. Hospital Management Services – Medical Center Manila vs. Hospital
Management Services, Inc. – Medical Center Manila Employees Association-AFW., G.R. No.
176287, January 31, 2011.
Dismissal; negligence in patient management. Negligence is defined as the failure to exercise
the standard of care that a reasonably prudent person would have exercised in a similar
situation. The Court emphasizes that the nature of the business of a hospital requires a higher
degree of caution and exacting standard of diligence in patient management and health care as
what is involved are lives of patients who seek urgent medical assistance. An act or omission
that falls short of the required degree of care and diligence amounts to serious misconduct
which constitutes a sufficient ground for dismissal. Hospital Management Services – Medical
Center Manila vs. Hospital Management Services, Inc. – Medical Center Manila Employees
Association-AFW., G.R. No. 176287, January 31, 2011.
Employee benefits; compensable illness. The degree of proof required under P.D. 626 is merely
substantial evidence, which means such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion. Accordingly, the claimant must show, at least by
substantial evidence that the development of the disease was brought about largely by the
conditions present in the nature of the job. What the law requires is a reasonable work
connection, not a direct causal relation. Alexander B. Gatus vs. Social Security System, G.R. No.
174725, January 26, 2011.
Employer-employee relationship; jeepney driver. It is already settled that the relationship
betweenjeepney owners/operators and jeepney drivers under the boundary system is that of
employer-employee and not of lessor-lessee. The fact that the drivers do not receive fixed wages
but only get the amount in excess of the so-called “boundary” that they pay to the
owner/operator is not sufficient to negate the relationship between them as employer and
employee. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.
Employer-employee relationship; primary element. Control over the performance of the task of
one providing service – both with respect to the means and manner, and the results of the
service – is the primary element in determining whether an employment relationship exists.
Petitioner asserts that his employer Manulife’s control over him was demonstrated (1) when it set
the objectives and sales targets regarding production, recruitment and training programs; and (2)
when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct
to govern his activities. However, the court ruled that all these appear to speak of control by the
insurance company over its agents. There are built-in elements of control specific to an
insurance agency, which do not amount to the elements of control that characterize an
employment relationship governed by the Labor Code. They are, however, controls aimed only
at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in
defining an insurance agency and the attendant duties and responsibilities an insurance agent
must observe and undertake. They do not reach the level of control into the means and manner
of doing an assigned task that invariably characterizes an employment relationship as defined by
labor law. To reiterate, guidelines indicative of labor law “control” do not merely relate to the
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mutually desirable result intended by the contractual relationship; they must have the nature of
dictating the means and methods to be employed in attaining the result. Petitioner is an
insurance agent not an employee. Gregorio V. Tongko vs. The Manufacturers Life Insurance Co.
(Phils.), Inc. and Renato A. Vergel de Dios, G.R. No. 167622, January 25, 2011.
Employer-employee relationship; probationary employment. A probationary employee, like a
regular employee, enjoys security of tenure. However, in cases of probationary employment,
aside from just or authorized causes of termination, an additional ground is provided under
Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance with reasonable standards made known
by the employer to the employee at the time of the engagement. Thus, the services of an
employee who has been engaged on probationary basis may be terminated for any of the
following: (1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the employer. Robinsons
Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No.
177937, January 19, 2011.
Employer-employee relationship; regular employment. The respondent employees were already
rendering service to the company when they were made to undergo apprenticeship. The
respondent were regular employees because they occupied positions such as machine operator,
scaleman and extruder operator – tasks that are usually necessary and desirable in petitioner
employer’s usual business or trade as manufacturer of plastic building materials. These tasks and
their nature characterized the respondents as regular employees under Article 280 of the Labor
Code. Thus, when they were dismissed without just or authorized cause, without notice, and
without the opportunity to be heard, their dismissal was illegal under the law. Atlanta Industries,
Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Illegal dismissal; strained relations. 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. However, due to the strained relations of the parties, the
payment of separation pay has been considered an acceptable alternative to reinstatement,
when the latter option 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. Thus, as an illegally or constructively dismissed
employee, 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. Robinsons Galleria/Robinsons Supermarket
Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.
Illegal recruitment; elements. Recruitment and placement refers to the act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
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contract services, promising or advertising for employment, locally or abroad, whether for profit
or not. When a person or entity, in any manner, offers or promises for a fee employment to two
or more persons, that person or entity shall be deemed engaged in recruitment and placement.
Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by
non-licensees or non-holders of authority are deemed illegal and punishable by law. And when
the illegal recruitment is committed against three or more persons, individually or as a group,
then it is deemed committed in large scale and carries with it stiffer penalties as the same is
deemed a form of economic sabotage. But to prove illegal recruitment, it must be shown that
the accused, without being duly authorized by law, gave complainants the distinct impression
that he had the power or ability to send them abroad for work, such that the latter were
convinced to part with their money in order to be employed. It is important that there must at
least be a promise or offer of an employment from the person posing as a recruiter, whether
locally or abroad. People of the Philippines vs. Teresita “Tessie” Laogo, G.R. No. 176264,
January 10, 2011.
Illegal dismissal; execution of waiver and quitclaim. An employee’s execution of a final
settlement and receipt of amounts agreed upon does not foreclose his right to pursue a claim for
illegal dismissal. Thus, an employee illegally retrenched is entitled to reinstatement without
loss of seniority rights and privileges, as well as to payment of full backwages from the time of
her separation until actual reinstatement, less the amount which he/she received as
retrenchment pay. Bernadeth Londonio and Joan Corcoro vs. Bio Research, Inc. and Wilson Y.
Ang, G.R. No. 191459, January 17, 2011.
Jurisdiction; labor arbiter. Petitioner was removed from his position as a manager through a
Board Resolution. Petitioner filed a complaint for illegal dismissal before the labor arbiter.
Respondents claimed that petitioner is both a stockholder and a corporate officer of respondent
corporation, hence, his action against respondents is an intra-corporate controversy over which
the Labor Arbiter has no jurisdiction. The Court ruled that this is not an intra-corporate
controversy but a labor case cognizable by the labor arbiter. To determine whether a case
involves an intra-corporate controversy that is to be heard and decided by the branches of the
RTC specifically designated by the Court to try and decide such cases, two tests must be
applied: (a) the status or relationship test, and (2) the nature of the controversy test. The first test
requires that the controversy arise out of intra-corporate or partnership relations among the
stockholders, members or associates of the corporation, partnership or association, between any
or all of them and the corporation, partnership or association of which they are stockholders,
members or associates; between such corporation, partnership, or association and the public or
between such corporation, partnership, or association and the State insofar as it concerns its
franchise, license or permit to operate. The second test requires that the dispute among the
parties be intrinsically connected with the regulation of the corporation. The Court in this case
held that petitioner is not a corporate officer because he was not validly appointed by the Board,
thus, failing the relationship test, and that this is a case of employment termination which is a
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labor controversy and not an intra-corporate dispute, thus failing the nature of the controversy
test. Renato Real vs. Sangu Philippines, Inc. et al., G.R. No. 168757. January 19, 2011.
Jurisdiction; labor dispute. Article 217 of the Labor Code states that unfair labor practices and
termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an
exception, under Article 262 the Voluntary Arbitrator, upon agreement of the parties, shall also
hear and decide all other labor disputes including unfair labor practices and bargaining
deadlocks. For the exception to apply, there must be agreement between the parties clearly
conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a
collective bargaining agreement. However, in the absence of a collective bargaining agreement,
it is enough that there is evidence on record showing the parties have agreed to resort to
voluntary arbitration. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R.
No. 181146, January 26, 2011.
NLRC; factual findings. Factual findings of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are generally accorded not only respect but even
finality by the courts when supported by substantial evidence, i.e., the amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. But these
findings are not infallible. When there is a showing that they were arrived at arbitrarily or in
disregard of the evidence on record, they may be examined by the courts. The CA can grant the
petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a
factual finding not supported by substantial evidence. Thus, it is within the jurisdiction of the CA
to review the findings of the NLRC. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado
Garcia, et al., G.R. No. 167291, January 12, 2011.
Petition; certificate of non-forum shopping. While the general rule is that the certificate of non-
forum shopping must be signed by all the plaintiffs in a case and the signature of only one of
them is insufficient, the Court has stressed that the rules on forum shopping, which were
designed to promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective.
Strict compliance with the provision regarding the certificate of non-forum shopping
underscores its mandatory nature in that the certification cannot be altogether dispensed with or
its requirements completely disregarded. It does not, however, prohibit substantial compliance
therewith under justifiable circumstances, considering especially that although it is obligatory, it
is not jurisdictional. In a number of cases, the Court has consistently held that when all the
petitioners share a common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping substantially complies
with the rules. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No.
167291, January 12, 2011.
Petition; failure to attach documents. The respondent workers sought that the petition be
dismissed outright for the petitioners’ failure to attach to the petition a copy of the Production
and Work Schedule and a copy of the compromise agreement allegedly entered into — material
portions of the record that should accompany and support the petition, pursuant to Section 4,
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Rule 45 of the Rules of Court. In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J.
Garchitorena the Court held that the phrase “of the pleadings and other material portions of the
record xxx as would support the allegation of the petition clearly contemplates the exercise of
discretion on the part of the petitioner in the selection of documents that are deemed to be
relevant to the petition. The crucial issue to consider then is whether or not the documents
accompanying the petition sufficiently supported the allegations therein.” The failure to attach
copy of the subject documents is not fatal as the challenged CA decision clearly summarized the
labor tribunal’s rulings. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et
al., G.R. No. 187320, January 26, 2011.
Petition; verification. The verification requirement is deemed substantially complied with when
some of the parties who undoubtedly have sufficient knowledge and belief to swear to the truth
of the allegations in the petition had signed the same. Such verification is deemed a sufficient
assurance that the matters alleged in the petition have been made in good faith or are true and
correct, and not merely speculative. In any case, the settled rule is that a pleading which is
required by the Rules of Court to be verified, may be given due course even without a
verification if the circumstances warrant the suspension of the rules in the interest of justice.
Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does
not of itself justify a court in refusing to allow and act on a case. Hence, the failure of some of
the respondents to sign the verification attached to their Memorandum of Appeal filed with the
NLRC is not fatal to their cause of action. Prince Transport, Inc. and Mr. Renato Claros vs.
Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.
Regional director; review of decision. Petitioner appealed an adverse decision to the BLR. BLR
Director inhibited himself from the case because he had been a former counsel of respondent.
In view of the inhibition, DOLE Secretary took cognizance of the appeal. Jurisdiction to review
the decision of the Regional Director lies with the BLR. Once jurisdiction is acquired by the
court, it remains with it until the full termination of the case. Thus, jurisdiction remained with
the BLR despite the BLR Director’s inhibition. When the DOLE Secretary resolved the appeal,
she merely stepped into the shoes of the BLR Director and performed a function that the latter
could not himself perform. She did so pursuant to her power of supervision and control over the
BLR. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs.
National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila
Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.
Union registration; cancellation. The amendment introduced by RA 9481 sought to strengthen
the workers’ right to self-organization and enhance the Philippines’ compliance with its
international obligations as embodied in the International Labour Organization (ILO)
Convention No. 87, pertaining to the non-dissolution of workers’ organizations by
administrative authority. ILO Convention No. 87 provides that “workers’ and employers’
organizations shall not be liable to be dissolved or suspended by administrative authority.” The
ILO has expressed the opinion that the cancellation of union registration by the registrar of labor
unions, which in our case is the BLR, is tantamount to dissolution of the organization by
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administrative authority when such measure would give rise to the loss of legal personality of
the union or loss of advantages necessary for it to carry out its activities, which is true in our
jurisdiction. Although the ILO has allowed such measure to be taken, provided that judicial
safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded
its members that dissolution of a union, and cancellation of registration for that matter, involve
serious consequences for occupational representation. It has, therefore, deemed it preferable if
such actions were to be taken only as a last resort and after exhausting other possibilities with
less serious effects on the organization. It is undisputed that appellee failed to submit its annual
financial reports and list of individual members in accordance with Article 239 of the Labor
Code. However, the existence of this ground should not necessarily lead to the cancellation of
union registration. At any rate, the Court in this case took note of the fact that on 19 May 2000,
appellee had submitted its financial statement for the years 1996-1999. With this submission,
appellee has substantially complied with its duty to submit its financial report for the said
period. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs.
National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila
Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.
Wages; payment pending reinstatement. Employees are entitled to their accrued salaries during
the period between the Labor Arbiter’s order of reinstatement pending appeal and the resolution
of the National Labor Relations Commission (NLRC) overturning that of the Labor
Arbiter. Otherwise stated, even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, the employer is still obliged to reinstate and pay the wages of the employee during the
period of appeal until reversal by a higher court or tribunal. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period. Social Security System vs.
Efren Capada, et al., G.R. No. 168501, January 31, 2011.
Abandonment; elements. Respondents filed an illegal dismissal case against the petitioner-
corporation. For its defense, petitioner-corporation alleged that the respondents abandoned their
work and were not dismissed, and that it sent letters advising respondents to report for work, but
they refused. The Court held that for abandonment to exist, it is essential (a) that the employee
must have failed to report for work or must have been absent without valid or justifiable reason;
and (b) that there must have been a clear intention to sever the employer-employee relationship
manifested by some overt acts. The employer has the burden of proof to show the employee’s
deliberate and unjustified refusal to resume his employment without any intention of returning.
Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee
to discontinue his employment. Based on the evidence presented, the reason why respondents
failed to report for work was because petitioner-corporation barred them from entering its
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construction sites. It is a settled rule that failure to report for work after a notice to return to work
has been served does not necessarily constitute abandonment. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and unjustified. Petitioner-
corporation failed to show overt acts committed by respondents from which it may be deduced
that they had no more intention to work. Respondents’ filing of the case for illegal dismissal
barely four (4) days from their alleged abandonment is totally inconsistent with the known
concept of what constitutes abandonment. E.G. & I. Construction Corporation and Edsel Galeos
v. Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.
Certification election; petition for cancellation of union registration. Respondent union filed a
petition for certification election. Petitioner moved to dismiss the petition for certification
election alleging the pendency of a petition for cancellation of the union’s registration. The
DOLE Secretary ruled in favor of the legitimacy of the respondent as a labor organization and
ordered the immediate conduct of a certification election. Pending appeal in the Court of
Appeals, the petition for cancellation was granted and became final and executory. Petitioner
argued that the cancellation of the union’s certificate of registration should retroact to the time
of its issuance. Thus, it claimed that the union’s petition for certification election and its demand
to enter into collective bargaining agreement with the petitioner should be dismissed due to
respondent’s lack of legal personality. The Court ruled that the pendency of a petition for
cancellation of union registration does not preclude collective bargaining, and that an order to
hold a certification election is proper despite the pendency of the petition for cancellation of the
union’s registration because at the time the respondent union filed its petition, it still had the
legal personality to perform such act absent an order cancelling its registration. Legend
International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, February
23, 2011.
Certiorari under Rule 65; review of facts by the Court of Appeals. While it is true that factual
findings made by quasi-judicial and administrative tribunals, if supported by substantial
evidence, are accorded great respect and even finality by the courts, this general rule admits of
exceptions. When there is a showing that a palpable and demonstrable mistake that needs
rectification has been committed or when the factual findings were arrived at arbitrarily or in
disregard of the evidence on record, these findings may be examined by the courts. In the
present case, the Court of Appeals found itself unable to completely sustain the findings of the
NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of
grave abuse of discretion. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et
al. G.R. No. 165381, February 9, 2011.
Construction Industry; project employees. Petitioner is a duly licensed labor contractor engaged
in painting houses and buildings. Respondents, former painters of the petitioner, filed an illegal
dismissal case against petitioner. Petitioner alleged that the respondents abandoned their job
and were not dismissed by the petitioner. The Labor Arbiter ruled that there was neither illegal
dismissal nor abandonment of job and that the respondents should be reinstated but without any
backwages. On appeal, petitioner alleged that the reinstatement of respondents to their former
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positions, which were no longer existing, is impossible, highly unfair and unjust. It further
alleged that the project they were working on at the time of their alleged dismissal was already
completed. Having completed their tasks, their positions automatically ceased to exist. Thus,
there were no more positions where they can be reinstated as painters. The Court ruled that
there are two types of employees in the construction industry. The first is referred to as project
employees or those employed in connection with a particular construction project or phase
thereof and such employment is coterminous with each project or phase of the project to which
they are assigned. The second is known as non-project employees or those employed without
reference to any particular construction project or phase of a project. Respondents belonged to
the second type and are classified as regular employees of petitioner. It is clear from the records
of the case that when one project is completed, respondents were automatically transferred to
the next project awarded to petitioners. There was no employment agreement given to
respondents which clearly spelled out the duration of their employment and the specific work to
be performed and there is no proof that they were made aware of these terms and conditions of
their employment at the time of hiring. Thus, it is now too late for petitioner to claim that
respondents are project employees whose employment is coterminous with each project or
phase of the project to which they are assigned. Nonetheless, assuming that respondents were
initially hired as project employees, a project employee may acquire the status of a regular
employee when the following factors concur: (1) There is a continuous rehiring of project
employees even after cessation of a project; and (2) The tasks performed by the alleged project
employee are vital, necessary and indispensable to the usual business or trade of the employer.
In this case, the evidence on record shows that respondents were employed and assigned
continuously to the various projects of petitioners. As painters, they performed activities which
were necessary and desirable in the usual business of petitioner, which was engaged in
subcontracting jobs for painting of residential units, condominium and commercial buildings. As
regular employees, respondents are entitled to be reinstated without loss of seniority
rights. Exodus International Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R.
No. 166109, February 23, 2011.
Constructive Dismissal; security guards. Respondent was hired by petitioner, a security agency,
as a security guard. He was assigned at the Philippine Heart Center until his relief on January 30,
2006. Respondent was not given any assignment thereafter. Thus, on August 2, 2006, he filed a
complaint for constructive dismissal and nonpayment of 13th month pay, with prayer for
damages against petitioner. To refute the claim, petitioner alleged that respondent was not
constructively or illegally dismissed, but had voluntarily resigned. The Court held that
respondent was constructively dismissed. In cases involving security guards, a relief and transfer
order in itself does not sever employment relationship between a security guard and his agency.
An employee has the right to security of tenure, but this does not give him a vested right to his
position as would deprive the company of its prerogative to change his assignment or transfer
him where his service, as security guard, will be most beneficial to the client. Temporary “off-
detail” or the period of time security guards are made to wait until they are transferred or
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assigned to a new post or client does not constitute constructive dismissal, so long as such status
does not continue beyond six months. The onus of proving that there is no post available to
which the security guard can be assigned rests on the employer. In the instant case, the failure of
petitioner to give respondent a work assignment beyond the reasonable six-month period makes
it liable for constructive dismissal. Nationwide Security and Allied Services, Inc. v. Ronald P.
Valderama, G.R. No. 186614, February 23, 2011.
Constructive dismissal; defense of abandonment. Respondent filed an illegal dismissal case
against the petitioner. Petitioner alleged that respondent abandoned his job and was not
dismissed. The Court held that respondent was illegally dismissed. The jurisprudential rule on
abandonment is constant. It is a matter of intention and cannot lightly be presumed from certain
equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report
for work or absence without valid or justifiable reason; and (2) a clear intent, manifested through
overt acts, to sever the employer-employee relationship. In this case, petitioner failed to
establish clear evidence of respondent’s intention to abandon his employment. Except for
petitioner’s bare assertion that respondent did not report to the office for reassignment, no proof
was offered to prove that respondent intended to sever the employer-employee
relationship. Besides, the fact that respondent filed the instant complaint negates any intention
on his part to forsake his work. It is a settled doctrine that the filing of a complaint for illegal
dismissal is inconsistent with the charge of abandonment, for an employee who takes steps to
protest his dismissal cannot by logic be said to have abandoned his work. Nationwide Security
and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.
Constructive dismissal; defense of resignation. Respondent, a security guard, filed an illegal
dismissal case against the petitioner. To refute the claim, petitioner alleged that respondent was
not constructively or illegally dismissed, but had voluntarily resigned. Petitioner alleged that
respondent’s resignation is evident from his withdrawal of his cash and firearm bonds.
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office. The intent to relinquish must concur with the overt act of
relinquishment. Thus, 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.
Should the employer interpose the defense of resignation, it is incumbent upon the employer to
prove that the employee voluntarily resigned. On this point, the Court held that petitioner failed
to discharge its burden. Moreover, the filing of a complaint belies petitioner’s claim that
respondent voluntarily resigned. Nationwide Security and Allied Services, Inc. v. Ronald P.
Valderama,G.R. No. 186614, February 23, 2011.
Execution of Judgment; properties covered. Premier Allied and Contracting Services, Inc.
(PACSI) and its President, the petitioner, were held liable to pay the respondents separation pay
and attorney’s fees. To execute this judgment, the NLRC sheriff issued a Notice of Sale of a
property with a TCT in the name of the petitioner and his wife. The Court ruled that the Notice
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of Sale is null and void. The power of the NLRC, or the courts, to execute its judgment extends
only to properties unquestionably belonging to the judgment debtor alone. A sheriff, therefore,
has no authority to attach the property of any person except that of the judgment
debtor. Likewise, there is no showing that the sheriff ever tried to execute on the properties of
the corporation. The TCT of the property bears out that, indeed, it belongs to petitioner and his
wife. Thus, even if we consider petitioner as an agent of the corporation – and, therefore, not a
stranger to the case – such that the provision on third-party claims will not apply to him, the
property was registered not only in the name of petitioner but also of his wife. She stands to lose
the property subject of execution without ever being a party to the case. This will be tantamount
to deprivation of property without due process. Paquito V. Ando v. Andresito Y. Campo, et
al., G.R. No. 184007, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against petitioner.
Petitioner alleged that the respondents abandoned their work and were never dismissed by the
petitioner. NLRC ruled that the respondents were not illegally dismissed since they failed to
present a written notice of termination. This was however reversed by the Court of Appeals. The
Court held that a written notice of dismissal is not a pre-requisite for a finding of illegal dismissal.
Petitioner failed to prove that respondents were dismissed for a just or authorized cause. In an
illegal dismissal case, theonus probandi rests on the employer to prove that the dismissal of an
employee is for a valid cause.E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P.
Sato, et al., G.R. No. 182070, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against the
petitioners. Petitioners, in their defense, alleged that the respondents abandoned their work and
were not dismissed by the petitioners. Although In cases of illegal dismissal, the employer bears
the burden of proof to prove that the termination was for a valid or authorized cause, the
employee must first establish by substantial evidence the fact that he was dismissed. If there is
no dismissal, then there can be no question as to the legality or illegality thereof. In the present
case, the Court held that there was no evidence that respondents were dismissed or that they
were prevented from returning to their work. It was only respondents’ unsubstantiated
conclusion that they were dismissed. As a matter of fact, respondents could not name the
particular person who effected their dismissal and under what particular circumstances. Absent
any showing of an overt or positive act proving that petitioners had dismissed respondents, the
latters’ claim of illegal dismissal cannot be sustained. Exodus International Construction
Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.
Illegal dismissal; final and executory judgment. Respondent employee filed an illegal dismissal
case against the petitioner-company and Tom Madula, its operations manager. The case was
dismissed by the labor arbiter and the dismissal was affirmed by NLRC. On August 29, 2002, the
Court of Appeals reversed and set aside the NLRC decision and resolution. The CA ordered the
petitioner company to pay respondent separation pay, moral and exemplary damages, and
attorney’s fees. The decision became final and executory on February 27, 2004, and
consequently a writ of execution was issued. Petitioner-company filed a Motion to Quash Writ
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of Execution. The Labor Arbiter granted the Motion and exonerated the petitioner company from
paying backwages and held that it was petitioner Madula who should be liable to pay
backwages. Respondent then filed before the CA a Very Urgent Motion for Clarification of
Judgment. On December 10, 2004, CA granted the Motion and held that petitioner-company is
solely liable for the judgment award. As a general rule, final and executory judgments are
immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors;
(b)nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments. The
underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and
thus make orderly the discharge of judicial business, and (2) to put judicial controversies to an
end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to drag on
indefinitely and the rights and obligations of every litigant must not hang in suspense for an
indefinite period of time. What the CA rendered on December 10, 2004 was a nunc pro
tunc order clarifying the decretal portion of its August 29, 2002 Decision. The object of a
judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and
determination of new rights, but is one placing in proper form on the record, the judgment that
had been previously rendered, to make it speak the truth, so as to make it show what the
judicial action really was. It is not to correct judicial errors, such as to render a judgment anew
in place of the one it rendered, nor to supply nonaction by the court, however erroneous the
judgment may have been. Filipinas Palmoil Processing, Inc. and Dennis T. Villareal v. Joel P.
Dejapa, represented by his Attorney-in-Fact Myrna Manzano, G.R. No. 167332, February 7,
2011.
Illegal dismissal; liability of corporate officers. Petitioner filed a complaint against respondent
company and its officers for illegal dismissal, unfair labor practice, and money claims. Petitioner
alleged that the officers should be held personally liable for the acts of company which were
tainted with bad faith and arbitrariness. As a general rule, a corporate officer cannot be held
liable for acts done in his official capacity because a corporation, by legal fiction, has a
personality separate and distinct from its officers, stockholders, and members. To pierce this
fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or an
illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal
dismissal cases, corporate officers may be held solidarily liable with the corporation if the
termination was done with malice or bad faith. Moral damages are awarded only where the
dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy. Exemplary damages may
avail if the dismissal was effected in a wanton, oppressive or malevolent manner. In the present
case, the Court held that petitioner failed to prove that his dismissal was orchestrated by the
individual respondents and their acts were attended with bad faith or were done
oppressively. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No.
165381, February 9, 2011.
Illegal dismissal; redundancy. Respondent-company, due to business troubles and losses,
implemented a Right-Sizing Program which entailed a company-wide reorganization involving
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the transfer, merger, absorption or abolition of certain departments of the company. As a result,
respondent-company terminated the services of petitioner on account of redundancy. Petitioner
filed a complaint against respondent-company and its officers for illegal dismissal, unfair labor
practice, and money claims. The Court ruled that petitioner was validly dismissed. There is
redundancy when the service capability of the workforce is greater than what is reasonably
required to meet the demands of the business enterprise. A position becomes redundant when it
is rendered superfluous by any number of factors such as over-hiring of workers, decrease in
volume of business, or dropping a particular product line or service activity previously
manufactured or undertaken by the enterprise. The Court has been consistent in holding that the
determination of whether or not an employee’s services are still needed or sustainable properly
belongs to the employer. Provided there is no violation of law or a showing that the employer
was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of
business judgment is not subject to the discretionary review of the Labor Arbiter and the
NLRC. However, an employer cannot simply declare that it has become overmanned and
dismiss its employees without producing adequate proof to sustain its claim of
redundancy. Among the requisites of a valid redundancy program are: (1) the good faith of the
employer in abolishing the redundant position; and (2) fair and reasonable criteria in
ascertaining what positions are to be declared redundant, such as but not limited to: preferred
status, efficiency, and seniority. The Court also held that the following evidence may be
proffered to substantiate redundancy: adoption of a new staffing pattern, feasibility studies/
proposal on the viability of the newly created positions, job description and the approval by the
management of the restructuring.Nelson A. Culili v. Eastern Telecommunications Philippines,
Inc., et al. G.R. No. 165381, February 9, 2011.
Labor Union; collateral attack on legal personality. . Petitioner moved to dismiss the petition for
certification election filed by respondent union by questioning the validity of the respondent’s
union registration. The Court held that legitimacy of the legal personality of respondent cannot
be collaterally attacked in a petition for certification election proceeding but only through a
separate action instituted particularly for the purpose of assailing it. The Implementing Rules
stipulate that a labor organization shall be deemed registered and vested with legal personality
on the date of issuance of its certificate of registration. Once a certificate of registration is issued
to a union, its legal personality cannot be subject to a collateral attack. It may be questioned
only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book V
of the Implementing Rules. Legend International Resorts Limited v. Kilusang Manggagawa ng
Legenda, G.R. No. 169754 , February 23, 2011.
Money claims; burden of proof. Respondents alleged that petitioner-corporation failed to pay
them their full compensation. The Labor Arbiter granted their monetary claims but the NLRC
reversed the award considering that the petitioner-corporation submitted copies of payrolls,
which it annexed to its memorandum on appeal, showing full payment. The general rule is that
the burden rests on the employer to prove payment, rather than on the employee to prove non-
payment. The reason for the rule is that the pertinent personnel files, payrolls, records,
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remittances, and other similar documents — which will show that overtime, differentials, service
incentive leave, and other claims of the worker have been paid — are not in the possession of
the worker but in the custody and absolute control of the employer. In this case, the submission
by petitioner-corporation of the time records and payrolls only when the case was on appeal
before the NLRC is contrary to the elementary precepts of justice and fair play. Respondents
were not given the opportunity to check the authenticity and correctness of the evidence
submitted on appeal. Thus, the Supreme Court held that the monetary claims of respondents
should be granted. It is a time-honored principle that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter. It is the rule in controversies between a laborer and his master that doubts reasonably
arising from the evidence, or in the interpretation of agreements and writing, should be resolved
in the former’s favor. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato, et
al., G.R. No. 182070 ,February 16, 2011.
National Labor Relations Commission; jurisdiction. Respondents filed an illegal dismissal case
against Premier Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner.
PACSI and the petitioner were held liable to pay the respondents separation pay and attorney’s
fees. To execute this judgment, NLRC sheriff issued a Notice of Sale of a property with TCT in
the name of the petitioner and his wife. Petitioner filed an action for prohibition and damages
with prayer for the issuance of a temporary restraining order (TRO) before the Regional Trial
Court (RTC). The Court ruled that the RTC lacks jurisdiction to resolve the matter. The Court has
long recognized that regular courts have no jurisdiction to hear and decide questions which
arise from and are incidental to the enforcement of decisions, orders, or awards rendered in
labor cases by appropriate officers and tribunals of the Department of Labor and Employment.
To hold otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly
administration of justice. The NLRC Manual on the Execution of Judgment deals specifically
with third-party claims in cases brought before that body. It defines a third-party claim as one
where a person, not a party to the case, asserts title to or right to the possession of the property
levied upon. It also sets out the procedure for the filing of a third-party claim, to wit: “such
person shall make an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title and shall file the same with the sheriff and copies thereof served
upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party.” In the
present case, there is no doubt that petitioner’s complaint is a third-party claim within the
cognizance of the NLRC. Petitioner may indeed be considered a “third party” in relation to the
property subject of the execution since there is no question that the property belongs to
petitioner and his wife, and not to the corporation. It can be said that the property belongs to the
conjugal partnership, and not to petitioner alone. At the very least, the Court can consider
petitioner’s wife to be a third party within the contemplation of the law. Paquito V. Ando v.
Andresito Y. Campo, et al., G.R. No. 184007, February 16, 2011.
Placement Fee; proof of excessive collection. Petitioner filed a complaint against respondent for
collection of excess placement fee defined in Article 34(a) of the Labor Code. Petitioner
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presented as her evidence a promissory note reflecting excessive fees and testified as to the
deductions made by her foreign employer. On the other hand, respondent presented an
acknowledgment receipt reflecting collection of an amount authorized by POEA. The Court held
that the pieces of evidence presented by petitioner are not substantial enough to show that the
respondent collected from her more than the allowable placement fee. In proceedings before
administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact
is substantial evidence, or that level of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. The Court gave more credence to respondent’s evidence
consisting of the acknowledgment receipt showing the amount paid by petitioner and received
by respondent. A receipt is a written and signed acknowledgment that money or goods have
been delivered. Although a receipt is not conclusive evidence, an exhaustive review of the
records of the case fails to disclose any other evidence sufficient and strong enough to overturn
the acknowledgment embodied in respondent’s receipt as to the amount it actually received
from petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the
contents of the receipt issued by respondent. The subject receipt remains as the primary or best
evidence. The promissory note presented by petitioner cannot be considered as adequate
evidence to show the excessive placement fee. It must be emphasized that a promissory note is
a solemn acknowledgment of a debt and a formal commitment to repay it on the date and under
the conditions agreed upon by the borrower and the lender. A person who signs such an
instrument is bound to honor it as a legitimate obligation duly assumed by him through the
signature he affixes thereto as a token of his good faith. The fact that respondent is not a lending
company does not preclude it from extending a loan to petitioner for her personal use. As for the
deductions purportedly made by petitioner’s foreign employer, the Court noted that there is no
single piece of document or receipt showing that deductions have in fact been made, or is there
any proof that these deductions from the salary formed part of the subject placement fee. To be
sure, mere general allegations of payment of excessive placement fees cannot be given merit as
the charge of illegal exaction is considered a grave offense which could cause the suspension or
cancellation of the agency’s license. They should be proven and substantiated by clear,
credible, and competent evidence. Avelina F. Sagun v. Sunace International Management
Services, Inc., G.R. No. 179242, February 23, 2011.
Procedural due process; notice requirements. Petitioner was dismissed by respondent-company
due to redundancy. However, it failed to provide the Department of Labor and Employment
with a written notice regarding petitioner’s termination. The notice of termination was also not
properly served on the petitioner. Further, a reading of the notice shows that respondent-
company failed to properly inform the petitioner of the grounds for his termination. There are
two aspects which characterize the concept of due process under the Labor Code: one is
substantive — whether the termination of employment was based on the provision of the Labor
Code or in accordance with the prevailing jurisprudence; the other is procedural — the manner
in which the dismissal was effected. There is a psychological effect or a stigma in immediately
finding one’s self laid off from work. This is why our labor laws have provided for procedural
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due process. While employers have the right to terminate employees it can no longer sustain,
our laws also recognize the employee’s right to be properly informed of the impending
termination of his employment. Though the failure of respondent-company to comply with the
notice requirements under the Labor Code did not affect the validity of the dismissal, petitioner
is however entitled to nominal damages in addition to his separation pay.Nelson A. Culili v.
Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Quitclaims; validity. Respondents were terminated from employment due to retrenchment
implemented by petitioner. Upon their dismissal, the respondents signed individual “Release
Waiver and Quitclaim.” The Court ruled that a waiver or quitclaim is a valid and binding
agreement between the parties, provided that it constitutes a credible and reasonable settlement,
and that the one accomplishing it has done so voluntarily and with a full understanding of its
import. In this case, the respondents were sufficiently apprised of their rights under the waivers
and quitclaims that they signed. Each document contained the signatures of the union president
and its counsel, which proved that respondents were duly assisted when they signed the waivers
and quitclaims. Hence, the Court upheld the validity of the waivers and quitclaims signed by the
respondents in this case. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et
al., G.R. No. 183390, February 16, 2011.
Retrenchment; notice requirements. Petitioner issued a Memorandum informing all its
employees of the decision of the company’s Board of Directors to downsize and reorganize its
business operations due to the change of its corporate structure. Petitioner served the individual
notice of termination on its employees on May 14, 2004 or 30 days before the effective date of
their termination on 13 June 2004, while it submitted the notice of termination to the
Department of Labor and Employment only on 26 May 2004, short of the one-month prior
notice requirement under Article 283 of the Labor Code. The Court held that petitioners’ failure
to comply with the one-month notice to the DOLE is only a procedural infirmity and does not
render the retrenchment illegal. When the dismissal is for a just cause, the absence of proper
notice will not nullify the dismissal or render it illegal or ineffectual. Instead, the employer
should indemnify the employee for violation of his statutory rights. Plastimer Industrial
Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Retrenchment; notice requirements. In 2004, the petitioner had to retrench and consequently
terminate the employment of the respondents. Respondents questioned the validity of the
retrenchment, and alleged that though petitioner’s financial statements in 2001 and 2002
reflected losses, it declared net income in 2003. The Court ruled that the fact that there was a
net income in 2003 does mean that there was no valid reason for the retrenchment. Records
showed that the net income of P6,185,707.05 in 2003 was not enough to allow petitioners to
recover the loss ofP52,904,297.88 which it suffered in 2002. Article 283 of the Labor Code
recognizes retrenchment to prevent losses as a right of the management to meet clear and
continuing economic threats or during periods of economic recession to prevent losses. There is
no need for the employer to wait for substantial losses to materialize before exercising ultimate
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and drastic option to prevent such losses.Plastimer Industrial Corporation and Teo Kee Bin v.
Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Unfair Labor Practice; right to self-organize. Respondent-company implemented a company-
wide reorganization which resulted in the abolition of petitioner’s position. Petitioner alleged
that he was illegally dismissed and that respondent-company is guilty of unfair labor practice
because his functions were outsourced to labor-only contractors. The Supreme Court held
unfair labor practice refers to acts that violate the workers’ right to organize. The prohibited acts
are related to the workers’ right to self-organization and to the observance of a CBA. Thus, an
employer may be held liable for unfair labor practice only if it can be shown that his acts
interfere with his employees’ right to self-organization. Since there is no showing that the
respondent company’s implementation of the Right-Sizing Program was motivated by ill will,
bad faith or malice, or that it was aimed at interfering with its employees’ right to self-
organization, there is no unfair labor practice to speak of in this case. Nelson A. Culili v. Eastern
Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of

alleged habitual absenteeism and abandonment of work. Jurisprudence provides for two
essential requirements for abandonment of work to exist: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) clear intention to sever the employer-
employee relationship manifested by some overt acts should both concur. Further, the
employee’s deliberate and unjustified refusal to resume his employment without any intention of
returning should be established and proven by the employer. The Court held that petitioners
failed to prove that it was respondent employee who voluntarily refused to report back for work
by his defiance and refusal to accept the memoranda and the notices of absences sent to
him. Petitioners failed to present evidence that they sent these notices to respondent employee’s
last known address for the purpose of warning him that his continued failure to report would be
construed as abandonment of work. Moreover, the fact that respondent employee never prayed
for reinstatement and has sought employment in another company which is a competitor of
petitioners cannot be construed as his overt acts of abandoning employment. Neither can the
delay of four months be taken as an indication that the respondent employee’s filing of a
complaint for illegal dismissal is a mere afterthought. Records show that respondent employee
attempted to get his separation pay and alleged commissions from the company, but it was only
after his requests went unheeded that he resorted to judicial recourse.Harpoon Marine Services,
Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.
Corporate officer; solidary liability. Respondent employee filed an illegal dismissal case against
the Petitioner Corporation and its President. Though the Court found that Respondent was
illegally dismissed, it held that the President of the Petitioner Corporation should not be held
solidarily liable with Petitioner Corporation. Obligations incurred by corporate officers, acting as
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such corporate agents, are not theirs but the direct accountabilities of the corporation they
represent. Thus, they should not be generally held jointly and solidarily liable with the
corporation. The general rule is grounded on the theory that a corporation has a legal
personality separate and distinct from the persons comprising it. As exceptions to the general
rule, solidary liability may be imposed: (1) When directors and trustees or, in appropriate cases,
the officers of a corporation –(a) vote for or assent to [patently] unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of
conflict of interest to the prejudice of the corporation, its stockholders or members, and other
persons; (2) When the director or officer has consented to the issuance of watered stock or who,
having knowledge thereof, did not forthwith file with the corporate secretary his written
objection thereto; (3) When a director, trustee or officer has contractually agreed or stipulated
to hold himself personally and solidarily liable with the corporation; (4) When a director, trustee
or officer is made, by specific provision of law, personally liable for his corporate action. To
warrant the piercing of the veil of corporate fiction, the officer’s bad faith or wrongdoing must
be established clearly and convincingly as bad faith is never presumed. Harpoon Marine
Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.
Labor organization; collateral attack on legal personality. Respondent company questioned the
legal personality of the petitioner union in a certification election proceeding. The Court ruled
that the legal personality of the petitioner union cannot be collaterally attacked by respondent
company. Except when it is requested to bargain collectively, an employer is a mere bystander
to any petition for certification election; such proceeding is non-adversarial and merely
investigative, considering that its purpose is to determine if the employees would like to be
represented by a union and to select the organization that will represent them in their collective
bargaining with the employer. The choice of their representative is the exclusive concern of the
employees; the employer cannot have any partisan interest therein; it cannot interfere with,
much less oppose, the process by filing a motion to dismiss or an appeal from it; not even the
allegation that some employees participating in a petition for certification election are actually
managerial employees will give an employer legal personality to block the certification election.
The employer’s only right in the proceeding is to be notified or informed thereof. Samahang
Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and
Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and
Coating Corporation, G.R. No. 169717, March 16, 2011.
Labor organization; membership of supervisory employees. Petitioner union filed a Petition for
Certification Election among the regular rank-and-file employees of the respondent company.
Respondent contends that petitioner union is not a legitimate labor organization because its
composition is a mixture of supervisory and rank-and-file employees. The Court ruled that the
inclusion of the supervisory employees in petitioner union does not divest it of its status as a
legitimate labor organization. After a labor organization has been registered, it may exercise all
the rights and privileges of a legitimate labor organization. Any mingling between supervisory
and rank-and-file employees in its membership cannot affect its legitimacy for that is not among
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the grounds for cancellation of its registration, unless such mingling was brought about by
misrepresentation, false statement or fraud under Article 239 of the Labor Code. Samahang
Labor organization; registration. Petitioner union filed a Petition for Certification Election among
the regular rank-and-file employees of the respondent company. Respondent company filed an
Answer with Motion to Dismiss on the ground that petitioner union is not a legitimate labor
organization because of its failure to comply with the documentary requirements set by law, i.e.
non-verification of the charter certificate. The Court ruled that it was not necessary for the
charter certificate to be certified and attested by the local/chapter officers. Considering that the
charter certificate is prepared and issued by the national union and not the local/chapter, it does
not make sense to have the local/chapter’s officers certify or attest to a document which they did
not prepare. In accordance with this ruling, petitioner union’s charter certificate need not be
executed under oath. Consequently, it validly acquired the status of a legitimate labor
organization upon submission of (1) its charter certificate, (2) the names of its officers, their
addresses, and its principal office, and (3) its constitution and by-laws— the last two
requirements having been executed under oath by the proper union officials. Samahang
Reinstatement; accrued backwages. The Labor Arbiter and the NLRC held that petitioner
employer illegally dismissed the respondent employee. On appeal, the Court of Appeals
reversed the decision and ruled that the dismissal was valid. However, the Court of Appeals
ordered petitioner employer to pay respondent employee her salary from the date of the Labor
Arbiter’s decision ordering her reinstatement until the Court of Appeals rendered its decision
declaring the dismissal valid. Petitioner employer questioned the order and refused to pay. The
Court held 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 wages of the dismissed employee
during the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he received, more so, if
he actually rendered services during the period. The payment of such wages cannot be deemed
as unjust enrichment on respondent’s part. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No.
177467, March 9, 2011.
Reinstatement; immediately executory order. The Labor Arbiter held that petitioner employer
illegally dismissed the respondent employee. Pending its appeal, petitioner employer failed to
immediately admit respondent employee back to work despite of an order of reinstatement. The
Court held that that the provision of Article 223 is clear that an award by the Labor Arbiter for
reinstatement shall be immediately executory even pending appeal and the posting of a bond by
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the employer shall not stay the execution for reinstatement. The legislative intent is to make an
award of reinstatement immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray the executory nature of a reinstatement order or
award. In the case at bar, petitioner employer did not immediately admit respondent employee
back to work which, according to the law, should have been done as soon as an order or award
of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of
execution. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011.
Reinstatement; terms and conditions. Due to the order of reinstatement issued by the Labor
Arbiter, petitioner employer sent a letter to the respondent employee to report back to work and
assigned her to a new location. The Court held that such is not a bona fide reinstatement. 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
or, at the option of the employer, merely reinstated in the payroll. It is established in
jurisprudence that reinstatement means restoration to a state or condition from which one had
been removed or separated. The person reinstated assumes the position he had occupied prior
to his dismissal. Reinstatement presupposes that the previous position from which one had been
removed still exists, or that there is an unfilled position which is substantially equivalent or of
similar nature as the one previously occupied by the employee. Applying the foregoing principle,
it cannot be said that petitioner employer has a clear intent to reinstate respondent employee to
her former position under the same terms and conditions nor to a substantially equivalent
position. To begin with, the return-to-work order petitioner sent to respondent employee is
silent with regard to the position it wanted the respondent employee to assume. Moreover, a
transfer of work assignment without any justification therefor, even if respondent employee
would be presumably doing the same job with the same pay, cannot be deemed as faithful
compliance with the reinstatement order. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No.
177467, March 9, 2011.
Termination by employer; willful disobedience. Petitioner employer ordered the respondent
employee to prepare checks for payment of petitioner’s obligations. Respondent did not
immediately comply with the instruction since petitioner employer has no sufficient funds to
cover the checks. Petitioner employer dismissed respondent employee for willful disobedience.
The Court held that respondent employee was illegally dismissed. The offense of willful
disobedience requires the concurrence of two (2) requisites: (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. Though there is nothing unlawful
in the directive of petitioner employer to prepare checks in payment of petitioner’s obligations,
respondent employee’s initial reluctance to prepare the checks, although seemingly
disrespectful and defiant, was for honest and well intentioned reasons. Protecting the petitioner
employer from liability under the Bouncing Checks Law was foremost in her mind. It was not
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wrongful or willful. Neither can it be considered an obstinate defiance of company

authority. The Court takes into consideration that respondent employee, despite her initial
reluctance, eventually did prepare the checks on the same day she was tasked to do it. Lores
Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No. 171189, March 9,
2011.
Wages; facilities and supplements. Respondent employees alleged underpayment of their wages.
Petitioner employer claimed that the cost of food and lodging provided by petitioner to the
respondent employees should be included in the computation of the wages received by
respondents. The Court makes a distinction between “facilities” and
“supplements.” Supplements 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, 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 petitioner employer for the purpose of
maintaining the efficiency and health of its workers while they were working at their respective
projects. Thus, the Court is of the view that the food and lodging, or the electricity and water
allegedly consumed by respondents in this case were not facilities but supplements which
should not be included in the computation of wages received by respondent employees. SLL
International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No.
172161, March 2, 2011.
Wages; proof of payment. In an illegal dismissal case against the petitioner employer,
respondent employees alleged that they were underpaid. In their defense, petitioner employer
alleged that respondent employees actually received wages higher than the prescribed minimum.
The Court held that as a general rule, a party who alleged payment of wages as a defense has
the burden of proving it. Specifically with respect to labor cases, the burden of proving payment
of monetary claims rests on the employer, the rationale being that the pertinent personnel files,
payrolls, records, remittances and other similar documents — which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid — are not in
the possession of the worker but in the custody and absolute control of the employer. In this
case, petitioner employer, aside from bare allegations that respondent employees received
wages higher than the prescribed minimum, failed to present any evidence, such as payroll or
payslips, to support their defense of payment. Thus, petitioner employer utterly failed to
discharge the onus probandi. SLL International Cables Specialist and Sonny L. Lagon v. NLRC,
Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.
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Wages; value of facilities. Petitioner employer alleged that the cost of facilities must be included
in the computation of wages paid. The Court held that before the value of facilities can be
deducted from the employees’ wages, the following requisites must all be attendant: first, proof
must be shown that such facilities are customarily furnished by the trade; second, the provision
of deductible facilities must be voluntarily accepted in writing by the employee; and finally,
facilities must be charged at reasonable value. Mere availment is not sufficient to allow
deductions from employees’ wages. These requirements, however, have not been met in this
case. Petitioner employer failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employee’s salaries. It also failed to provide
proof of the employees’ written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether respondent employees actually enjoyed said
facilities. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et
al., G.R. No. 172161, March 2, 2011.
Dismissal; breach of trust and confidence. Petitioner was employed as Assistant Vice-President
of the Jewelry Department in respondent bank. His employment was terminated on the ground
of willful breach of trust and confidence. Jurisprudence provides for two requisites for dismissal
on the ground of loss of trust and confidence; (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. Loss of trust and confidence, to be a valid cause for dismissal, 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. Furthermore, the burden of establishing facts as bases for an employer’s loss of
confidence is on the employer. The court held that the termination of petitioner was without just
cause and therefore illegal. Although the first requisite was present, the respondent failed to
satisfy the second requisite. Respondent bank was not able to show any concrete proof that
petitioner had participated in the approval of the questioned accounts. The invocation by
respondent of the loss of trust and confidence as ground for petitioner’s termination has
therefore no basis at all. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No.
169564. April 6, 2011.
Breach of Trust and Confidence; duties of employee. Petitioner was employed as Assistant Vice-
President in respondent bank. His employment was terminated on the ground of willful breach
of trust and confidence for endorsing VISA card applicants who later turned out to be impostors
resulting in financial losses to respondent bank. The court held that petitioner was illegally
dismissed. As provided in Article 282 of the Labor Code, an employer may terminate an
employee’s employment for fraud or willful breach of trust reposed in him. However, 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. The act of
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betrayal of trust, if any, must have been committed by the employee in connection with the
performance of his function or position. The court found that the element of ‘work-connection’
was not present in this case since petitioner was assigned under the Jewelry department, and
therefore had nothing to do with the approval of VISA Cards, which was under a different
department altogether. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No.
169564. April 6, 2011.
Certiorari under Rule 45; questions of law and exceptions. The Labor Arbiter and the NLRC
found that respondent employer neglected to pay petitioner’s sickness allowance. However, on
appeal, the Court of Appeals reversed such findings and held that petitioner already received his
sickness allowance from respondent. Petitioner questioned the ruling of the Court of Appeals by
filing a petition for review on certiorari under Rule 45. The Supreme Court held that, as a rule,
only questions of law, not questions of fact, may be raised in a petition for review
on certiorari under Rule 45. However, this principle is subject to recognized exceptions. In the
labor law setting, the Court will delve into factual issues when conflict of factual findings exists
among the labor arbiter, the NLRC, and the Court of Appeals. Considering that in the present
case there were differing factual findings on the part of the Court of Appeals, on one hand, and
the Labor Arbiter and the NLRC, on the other, the Supreme Court found it necessary to make an
independent evaluation of the evidence on record. Wilfredo Y. Antiquina v. Magsaysay
Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011.
Rules of Procedure; liberal construction in favor of working class. Petitioner claimed disability
benefits under a Collective Bargaining Agreement that the respondent employer entered into
with a foreign union. The Court of Appeals refused to admit the evidence of petitioner showing
his membership in the union on the ground that it was submitted only with the Motion for
Reconsideration. The Supreme Court, in agreeing to examine the evidence belatedly submitted
by petitioner, pointed out that technical rules of procedure shall be liberally construed in favor
of the working class in accordance with the demands of substantial justice. Rules of procedure
and evidence should not be applied in a very rigid and technical sense in labor cases in order
that technicalities would not stand in the way of equitably and completely resolving the rights
and obligations of the parties. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation
and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011.
Disability Benefits; entitlement and burden of proof. Petitioner suffered a fractured arm while
working on respondent’s vessel. He filed a complaint for permanent disability benefits, among
others. Petitioner claims that he is entitled to the higher amount of disability benefits under the
Collective Bargaining Agreement which respondent entered into with a union of which
petitioner was a member. The Court of Appeals denied the petitioner’s claim. The Supreme
Court, in upholding the Court of Appeals, held that the burden of proof rests upon the party who
asserts the affirmative of an issue. And in labor cases, 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. Petitioner had the duty to prove by substantial
evidence his own positive assertions. He did not discharge this burden of proof when he
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submitted photocopied portions of a different CBA with a different union.Wilfredo Y.

Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No.
168922. April 13, 2011.
Public office; casual employees. Respondent was a casual teller who was dismissed from service
by petitioner without being formally charged. On appeal, the Civil Service Commission (CSC)
upheld the dismissal and reasoned that respondent was a casual employee, and therefore her
services may be terminated at any time, without need of a just cause. Upon review, both the
Court of Appeals and the Supreme Court found that respondent was illegally terminated. The
Supreme Court recognized its pronouncement in a recent case that “Even a casual or temporary
employee enjoys security of tenure and cannot be dismissed except for cause enumerated in Sec.
22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent laws.”
However, the Court also went on to state that, despite this new ruling on casual employees, it is
not the intention of the Court to make the status of a casual employee at par with that of a
regular employee, who enjoys permanence of employment. The rule is still that casual
employment will cease automatically at the end of the period unless renewed. Casual
employees may also be terminated anytime though subject to certain conditions or
qualifications with reference to the CSC Form No. 001. Thus, they may be laid-
off anytime before the expiration of the employment period provided any of the following
occurs: (1) when their services are no longer needed; (2) funds are no longer available; (3) the
project has already been completed/finished; or (4) their performance are below par. Philippine
Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C.
Lapid, G.R. No. 191940. April 12, 2011.
Public office; security of tenure. Respondent was a casual teller who, having been found guilty
of ‘Discourtesy in the Course of Official Duties’ and of ‘Grave Misconduct’, was dismissed from
service by petitioner. On appeal, the Civil Service Commission (CSC) ruled that despite lapses in
procedural due process committed by petitioner employer, the dismissal was proper since
respondent belonged to the category of a casual employee which does not enjoy security of
tenure. Hence, she may be separated from service at any time, there being no need to show
cause. The Court of Appeals disagreed and declared the dismissal illegal. The Supreme Court
affirmed the findings of the Court of Appeals. In doing so, the Court relied on Section 3(2),
Article XIII of the Constitution which guarantees the rights of all workers to security of tenure.
The Court also recognized its pronouncement in a recent case that “Even a casual or temporary
employee enjoys security of tenure and cannot be dismissed except for cause enumerated in Sec.
22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent
laws.” Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v.
Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011.
Dismissal; due process. Respondent was dismissed from her post as casual teller. When
respondent appealed her dismissal to the Civil Service Commission (CSC), the latter found that
respondent was never formally charged for the administrative offenses for which she was
dismissed. However, despite finding that procedural due process was not complied with, the
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CSC nevertheless upheld the dismissal on the ground that being a casual employee, respondent
enjoyed no security of tenure and can be dismissed anytime. The Court found that respondent
was illegally terminated and ordered her reinstatement. Casual employees are entitled to due
process especially if they are to be removed for more serious causes or for causes other than the
reasons mentioned in CSC Form No. 001. This is pursuant to Section 2, Article IX(B) of the
Constitution. Furthermore, Section 46 of the Civil Service Law provides that “no officer or
employee in the Civil Service shall be suspended or dismissed except for cause as provided by
law after due process.” The reason for this is that their termination from the service could carry a
penalty affecting their rights and future employment in the government. Philippine Charity
Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No.
191940. April 12, 2011.
Section 10, Republic Act No. 8042; unconstitutional. Petitioner Yap was employed as an
electrician for respondent’s vessel under a 12-month contract. He was found to be illegally
terminated with nine months remaining on his contract term. The Court of Appeals (CA)
awarded petitioner salaries for three months as provided under Section 10 of Republic Act No.
8042. On certiorari, the Supreme Court reversed the CA and declared that petitioner was
entitled to his salaries for the full unexpired portion of his contract. The Court has previously
declared in Serrano v. Gallant Maritime Services, Inc. (2009) that the clause “or for three
months for every year of the unexpired term, whichever is less” provided in the 5th paragraph of
Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas
Filipino Workers (OFWs) to equal protection of the laws. The subject clause contains a suspect
classification in that, in the computation of the monetary benefits of fixed-term employees who
are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired
portion of one year or more in their contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause singles out one classification of OFWs
and burdens it with a peculiar disadvantage. Moreover, the subject clause does not state or
imply any definitive governmental purpose; hence, the same violates not just petitioner’s right to
equal protection, but also his right to substantive due process under Section 1, Article III of the
Constitution. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime
Agencies, Inc., G.R. No. 179532, May 30, 2011
Doctrine of Operative Fact; applied as a matter of equity and fair play. Petitioner Yap was
employed on respondent’s vessel under a 12-month contract. Upon finding that he was illegally
terminated, the Court of Appeals (CA) awarded petitioner salaries for three months as provided
under Section 10 of Republic Act No. 8042 (RA 8042). While the case was pending in the
Supreme Court, Section 10 of RA 8042 was declared unconstitutional. In deciding to award
petitioner his salaries for the entire unexpired portion of his contract, the Supreme Court
rejected the application of the operative fact doctrine. As an exception to the general rule, the
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doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a
statute prior to a determination of unconstitutionality is an operative fact and may have
consequences which cannot always be ignored. The doctrine is applicable when a declaration
of unconstitutionality will impose an undue burden on those who have relied on the invalid law.
This case should not be included in the aforementioned exception. After all, it was not the fault
of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To
rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a
wrong signal that principals/employers and recruitment/manning agencies may violate an
OFW’s security of tenure which an employment contract embodies and actually profit from
such violation based on an unconstitutional provision of law. Claudio S. Yap vs. Thenamaris
Ship’s Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011.
Migrant workers; computation of salary award. Petitioner Yap was employed as an electrician
for respondent’s vessel under a 12-month contract. He was found to be illegally terminated with
nine months remaining on his contract term, and was declared to be entitled to his salaries for
the balance of his contract. Respondents claim that the tanker allowance should be excluded
from the definition of the term “salary.” The Supreme Court, after examining the relevant clauses
of the contract, rejected respondent’s claim. The word salaries in Section 10 (5) does not include
overtime and leave pay. For seafarers, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the basic
wage, exclusive of overtime, leave pay and other bonuses. A close perusal of the contract
reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather
encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. If
respondents intended it differently, the contract per se should have indicated that said
allowance does not form part of the basic salary or, simply, the contract should have separated
it from the basic salary clause. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare
Maritime Agencies, Inc. G.R. No. 179532, May 30, 2011.
Termination for Just Cause; separation pay by way of financial assistance. Petitioner Juliet
Apacible was employed as Assistant Area Sales Manager for respondent’s Cebu operations. She
was informed that she would be transferred to the Pasig office on account of the ongoing
reorganization. Petitioner’s repeated refusal to comply with the transfer order was treated by
respondent as insubordination and grounds for her dismissal. The Labor Arbiter, the NLRC and
the Court of Appeals all found that petitioner was justly dismissed from employment. The NLRC
awarded separation pay as financial assistance, however, noting that petitioner’s obstinacy was
upon the advice of her counsel and, therefore, there was a modicum of good faith on her part.
On appeal, the Court of Appeals (CA) deleted the award of separation pay. The Supreme Court
upheld the CA and declared that the award of financial assistance shall not be given to validly
terminated employees, whose offenses are iniquitous or reflective of some depravity in their
moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the
grant of financial assistance is misplaced compassion. In this case, petitioner’s adamant refusal
to transfer, coupled with her failure to heed the order for her to return the company vehicle
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assigned to her and, more importantly, allowing her counsel to write letters couched in harsh
language to her superiors unquestionably show that she was guilty of insubordination, hence,
not entitled to the award of separation pay. Juliet G. Apacible vs. Multimed Industries, et al., G.R.
No. 178903, May 30, 2011.
Appeal; posting of Appeal Bond; Government’s exemption from the same. Respondents are
supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned
by petitioner Banahaw Broadcasting Corporation (BBC). Respondents filed a complaint for
illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining
Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision ordering
petitioner BBC to pay the money claims. On appeal to the NLRC, petitioner BBC averred that
since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond.
The NLRC dismissed the appeal of BBC for non-perfection. The Court of Appeals affirmed the
NLRC. The Supreme Court, in sustaining the CA, held that as a general rule, the government and
all the attached agencies with no legal personality distinct from the former are exempt from
posting appeal bonds. The rationale is to protect the presumptive judgment creditor against the
insolvency of the presumptive judgment debtor. When the State litigates, it is not required to
put up an appeal bond because it is presumed to be always solvent. This exemption, however,
does not, as a general rule, apply to government-owned and controlled corporations (GOCCs)
for the reason that the latter has a personality distinct from its shareholders. In this case, BBC,
though owned by the government, is a corporation with a personality distinct from the Republic
or any of its agencies or instrumentalities, and therefore do not partake in the latter’s exemption
from the posting of appeal bonds. Banahaw Broadcasting Corporation vs. Cayetano PACANa III,
et al, G.R. No. 171673, May 30, 2011.
Appeal; posting of appeal bond within the 10-day period is mandatory and jurisdictional.
Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of
unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter
rendered a decision in favor of respondents and ordered petitioner BBC to pay the money claims.
Petitioner appealed to the NLRC, and without posting the appeal bond, filed a Motion for the
Re-computation of the Monetary Award in order that the appeal bond may be reduced. The
NLRC denied the motion and dismissed the appeal of BBC for non-perfection. The Court of
Appeals and the Supreme Court both sustained the dismissal by the NLRC. The Motion for the
Re-computation of the Monetary Award filed by BBC was tantamount to a motion for extension
to perfect the appeal, which is prohibited by the rules. The payment of the appeal bond within
the period provided by law is an indispensable and jurisdictional requisite and not a mere
technicality of law or procedure. Hence, the failure on the part of BBC to perfect the appeal had
the effect of rendering the judgment final and executory. Banahaw Broadcasting Corporation vs.
Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.
Voluntary Resignation; financial assistance may be awarded on equity considerations. Petitioner
filed a complaint for illegal dismissal against respondent. Finding instead that petitioner had
voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered
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the latter to payP18,000.00 by way of financial assistance. On appeal, the NLRC found
petitioner to be illegally dismissed. The Court of Appeals reaffirmed the findings of the LA but
deleted the award of financial assistance, ruling that the same may not be awarded in cases of
voluntary resignation. The Supreme Court, in upholding the award of financial assistance, stated
that while the rule is that financial assistance is allowed only in instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral
character, there are instances when financial assistance may be allowed as a measure of social
justice and as an equitable concession. In this case, petitioner, who has served respondent for
more than eight years without committing any infraction, may be granted such financial
assistance on equity considerations. Rodolfo Luna vs. Allado Construction Company, Inc. and/or
Ramon Allado, G.R. No. 175251, May 30, 2011.
National Labor Relations Commission; authority to review is limited to issues specifically
brought before it on appeal. Petitioner filed a complaint for illegal dismissal against respondent.
Finding that petitioner had voluntarily resigned, the Labor Arbiter dismissed the complaint
against respondent, but ordered the latter to pay P18,000.00 by way of financial
assistance. Respondents interposed an appeal with the National Labor Relations Commission
(NLRC), purely for the purpose of questioning the validity of the grant of financial assistance
made by the Labor Arbiter. Instead, the NLRC ruled that petitioner was illegally dismissed and
was entitled to separation pay. The Court of Appeals (CA) held that it was grave abuse of
discretion for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it
on appeal was the propriety of the award of financial assistance. The Supreme Court sustained
the view of the CA, reasoning that Section 4(d), Rule VI of the 2005 Revised Rules of Procedure
of the NLRC expressly provides that, on appeal, the NLRC shall limit itself only to the specific
issues that were elevated for review. In the case at bar, the NLRC evidently went against its own
rules of procedure when it passed upon the issue of illegal dismissal although this question was
not raised by respondents in their appeal. Rodolfo Luna vs. Allado Construction Company, Inc.
and/or Ramon Allado,G.R. No. 175251, May 30, 2011.
Appeal; decision of DOLE Secretary. For petitioner’s refusal to comply with his deployment
assignment, respondent manning agency filed a complaint against him for breach of contract
before the Philippine Overseas Employment Administration (POEA). The POEA penalized
petitioner with one year suspension from overseas deployment. The suspension was reduced to
six months by the Secretary of Labor. Petitioner appealed the latter’s decision with the Office of
the President (OP). The Supreme Court ruled that petitioner’s appeal was erroneous. The proper
remedy to question the decisions or orders of the Secretary of Labor is via Petition for Certiorari
under Rule 65. Appeals to the OP in labor cases have been eliminated, except those involving
national interest over which the President may assume jurisdiction. The present case does not
affect national interest. Hence, petitioner’s appeal to the OP did not toll the running of the
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period and the assailed decision of the Secretary of Labor is deemed to have attained
finality. Miguel Dela Pena Barairo vs. Office of the President and MST Marine Services (Phils.)
Inc., G.R. No. 189314. June 15, 2011.
Appeal from decisions of labor arbiter; bond requirement for perfection of appeal may be
relaxed in meritorious cases. The posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the labor arbiter. However,
under Section 6, Rule VI of the NLRC’s Revised Rules of Procedure, the bond may be reduced
albeit only (1) on meritorious grounds and (2) upon posting of a partial bond in a reasonable
amount in relation to the monetary award. For this purpose, the NLRC is not precluded from
conducting a preliminary determination of the employer’s financial capability to post the
required bond, without necessarily passing upon the merits. In the present case, the NLRC
gravely abused its discretion in denying petitioner’s motion to reduce bond peremptorily
without considering the evidence presented by petitioner showing that it was under a state of
receivership. Such circumstance constitutes meritorious grounds to reduce the bond. Moreover,
the petitioner exhibited its good faith by posting a partial cash bond during the reglementary
period. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No. 170416, June 22, 2011
Certiorari; substantial compliance. The three material dates which should be stated in the
petition forcertiorari under Rule 65 are the dates when the notice of judgment was received,
when a motion for reconsideration was filed and when the notice of the denial of the motion for
reconsideration was received. These dates should be reflected in the petition to enable the
reviewing court to determine if the petition was filed on time. In the present case, the petition
filed with the Court of Appeals failed to state when petitioner received the assailed NLRC
Decision and when he filed his partial motion for reconsideration. However, this omission is
not at all fatal because these material dates are reflected in petitioner’s Partial Motion for
Reconsideration attached to the petition. The failure to state these two dates in the petition may
be excused if the same are evident from the records of the case. The Court further stated that
the more important material date which must be duly alleged in the petition is the date of
receipt of the resolution of denial of the motion for reconsideration. Since petitioner has duly
complied with this rule, there was substantial compliance with the requisite formalities. William
Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27,
2011
Collective bargaining agreement; duty of parties to maintain status quo pending renegotiation.
Article 253 of the Labor Code mandates the parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60-day period
prior to the expiration of the old CBA and/or until a new agreement is reached by the parties.
The law does not provide for any exception nor qualification on which economic provisions of
the existing agreement are to retain its force and effect. Likewise, the law does not distinguish
between a CBA duly agreed upon by the parties and an imposed CBA like the one in the present
case. Hence, considering that no new CBA had been, in the meantime, agreed upon by
respondent GMC and the Union, the provisions of the imposed CBA continues to have full force
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and effect until a new CBA is entered into by the parties. General Milling Corporation-
Independent Labor Union [GMC-ILU] vs. General Milling Corporation/General Milling
Corporation vs.General Milling Corporation-Independent Labor Union [GMC-ILU], et al., G.R.
Nos. 183122/183889, June 15, 2011.
Damages; fraud or bad faith for the award of moral damages. Moral and exemplary damages are
recoverable where the dismissal of an employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or were done in a manner contrary to morals, good
customs or public policy. In the present case, P&G dismissed its employees in a manner
oppressive to labor. The sudden and peremptory barring of petitioners from work, and from
admission to the work place, after just a one-day verbal notice, and for no valid cause,
constitutes oppression and utter disregard of the right to due process of the concerned
petitioners. Hence, the Supreme Court held that an award of moral damages is called for under
the circumstances. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No.
160506, June 6, 2011.
Dismissal; constructive dismissal. Petitioner was employed as an instructor of Data Center
College located in Ilocos Norte. When the college proposed to transfer him to Abra, he filed a
complaint alleging constructive dismissal since his re-assignment will entail an indirect
reduction of his salary or diminution of pay considering that no additional allowance will be
given to cover for board and lodging expenses. He claims that such additional allowance was
given in the past and therefore cannot be discontinued and withdrawn without violating the
prohibition against non-diminution of benefits. The Supreme Court affirmed the findings of the
lower bodies and declared that petitioner’s re-assignment did not amount to constructive
dismissal. Constructive dismissal is quitting because continued employment is rendered
impossible, unreasonable or unlikely, or because of a demotion in rank or a diminution of
pay. It exists when there is a clear act of discrimination, insensibility or disdain by an employer
which becomes unbearable for the employee to continue his employment. In the present case,
the college’s right to transfer petitioner is based on contractual stipulation, particularly the
condition laid down in petitioner’s employment contract that respondents have the prerogative
to assign petitioner in any of its branches or tie-up schools as the necessity demands. In any
event, it is management prerogative for employers to transfer employees on just and valid
grounds such as genuine business necessity. Since respondents have shown that it was
experiencing some financial constraints at the time, the re-assignment was not tainted with bad
faith. Furthermore, petitioner failed to present evidence that respondents committed to provide
the additional allowance or that they were consistently granting such benefit as to have ripened
into a practice which cannot be peremptorily withdrawn. Hence, there is no violation of the rule
against diminution of pay. William Endeliseo Barroga vs. Data Center College of the Philippines,
et al., G.R. No. 174158. June 27, 2011.
Dismissal; elements for loss of trust or confidence. Petitioners were employees of Promm-Gem,
a legitimate independent contractor, and were hired to work as merchandisers for respondent
P&G. When petitioners filed a claim against P&G for regularization and other benefits, it
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likewise attacked Promm-Gem as being merely a labor-only contractor. The latter treated such
move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the ground
of grave misconduct and breach of trust. The Supreme Court declared such termination illegal
for being without valid cause. Loss of trust and confidence, as a cause for termination of
employment, is premised on the fact that the employee concerned holds a position of
responsibility or of trust and confidence. As such, he must be invested with confidence on
delicate matters, such as custody, handling or care and protection of the property and assets of
the employer. Moreover, in order to constitute a just cause for dismissal, the act complained of
must be work-related and must show that the employee is unfit to continue to work for the
employer. In the instant case, the petitioners have not been shown to be occupying positions of
responsibility or of trust and confidence. Neither is there any evidence to show that they are
unfit to continue to work as merchandisers for Promm-Gem. Joeb M. Aliviado, et al. vs. Procter
and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.
Dismissal; elements for serious misconduct. Petitioners were employees of Promm-Gem, a
legitimate independent contractor. After several years of working as merchandisers for
respondent P&G, petitioners filed a claim against P&G for regularization and other benefits, and
asserted incidentally that Promm-Gem was merely a labor-only contractor. The latter treated
such move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the
ground of grave misconduct and breach of trust. The Supreme Court declared such termination
illegal for lack of a valid clause. To be a just cause for dismissal, such misconduct (a) must be
serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the
employee has become unfit to continue working for the employer. In other words, in order to
constitute serious misconduct under Article 282 (a) of the Labor Code, it is not sufficient that the
act or conduct complained of has violated some established rules or policies. It is equally
important and required that the act or conduct must have been performed with wrongful intent.
In the instant case, petitioners may have committed an error of judgment in claiming to be
employees of P&G, but it cannot be said that they were motivated by any wrongful intent in
doing so. As such, the court found them guilty of simple misconduct only which does not
warrant a dismissal. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No.
160506, June 6, 2011.
Dismissal; financial assistance based on equity . The award of separation pay is authorized
under Article 283 and 284 of the Labor Code, and under Section 4 (b), Rule I, Book VI of the
Implementing Rules and Regulations where there is illegal dismissal and reinstatement is no
longer feasible. By way of exception, the courts have allowed grants of separation pay to stand
as “a measure of social justice” where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. However, there is no provision in
the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule
is that an employee who voluntarily resigns from employment is not entitled to separation pay,
except when it is stipulated in the employment contract or collective bargaining agreement
(CBA), or it is sanctioned by established employer practice or policy. In the present case, neither
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the abovementioned provisions of the Labor Code nor the exceptions apply because petitioner
was not dismissed from his employment nor is there any evidence to show that payment of
separation pay is stipulated in his employment contract or sanctioned by established practice or
policy of his employer. Nevertheless, the Court noted that petitioner never had any derogatory
record during his long years of service with respondent and that his employment was severed
not by reason of any infraction on his part but because of his failing physical condition. Hence,
as a measure of social and compassionate justice and as an equitable concession, the Court
granted separation pay to petitioner by way of financial assistance. Romeo Villaruel vs. Yeo Han
Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1,
2011.
Dismissal; separation pay due to disease. Petitioner was employed as a machine operator until
he stopped working when he suffered from an illness. After his recovery, petitioner was directed
to report for work but he refused. Instead, he filed a case with the NLRC demanding his
separation pay. The NLRC awarded him separation benefits under Article 284 of the Labor
Code. However, the Court of Appeals (CA) deleted such award. On appeal, the Supreme Court
stated that Article 284 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. In the present case, petitioner was not terminated from his
employment and, instead, is deemed to have resigned therefrom, and therefore he is not entitled
to separation pay under Article 284 of the Labor Code. Romeo Villaruel vs. Yeo Han Guan,
doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011.
DOLE assumption of jurisdiction; effects. A strike conducted after the Secretary of Labor has
assumed jurisdiction over a labor dispute is illegal and any union officer who knowingly
participates in the strike may be declared as having lost his employment. The present case
involved a slowdown strike. Unlike other forms of strike, the employees involved in a
slowdown do not walk out of their jobs to hurt the company. They need only to stop work or
reduce the rate of their work while generally remaining in their assigned post. The Supreme
Court upheld the finding that the union officers committed illegal acts that warranted their
dismissal from work when they refused to work or abandoned their work to join union
assemblies after the Labor Secretary assumed jurisdiction over the labor dispute. Yolito
Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng
mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011.
Independent job contracting; required substantial capital. Petitioners assert that they are
employees of P&G and that Promm-Gem and SAPS are merely labor-only contractors providing
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manpower services to P&G. There is “labor-only” contracting where the person supplying
workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal business of such
employer. In the instant case, the Supreme Court found that Promm-Gem has substantial
investment which relates to the work to be performed. The financial statementsshow that it has
authorized capital stock of P1 million and a substantial amount of paid-in capital and other
assets to support its operations. Under the circumstances, Promm-Gem cannot be considered a
labor-only contractor; it is in fact a legitimate independent contractor. On the other hand, the
financial records of SAPS show that it has a paid-in capital of only P31,250.00. There is no
other evidence presented to show how much its working capital and assets are. Furthermore,
there is no showing of substantial investment in tools, equipment or other assets. Considering
that SAPS has no substantial capital or investment and the workers it recruited are performing
activities which are directly related to the principal business of P&G, SAPS is considered to be
engaged in “labor-only contracting”. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc.,
et al., G.R. No. 160506, June 6, 2011.
Labor law; labor-only contracting v. independent job contracting. The law allows contracting
arrangements for the performance of specific jobs, works or services, regardless of whether such
activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it
must be made to an independent contractor because the current labor rules expressly prohibit
labor-only contracting. There is labor-only contracting when the contractor or sub-contractor
merely recruits, supplies or places workers to perform a job, work or service for a
principaland any of the following elements are present: (i) 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 (ii)
The contractor does not exercise the right of control on the performance of the work of the
contractual employee. Where ‘labor-only’ contracting exists, the law establishes an employer-
employee relationship between the employer and the employees of the ‘labor-only’ contractor.
The statute establishes this relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. In the present case,
petitioners, who were recruited by Promm-Gem and SAPS to work as merchandisers of
respondent P&G, filed a complaint against the latter for regularization, service incentive leave
pay and other benefits on the ground that they were employees of P&G. With respect to the
contractor Promm-Gem, it was found to be a legitimate independent job contractor; hence,
there was no employer-employee relationship between its workers and P&G. On the other hand,
SAPS was found to be engaged in labor-only contracting. Consequently, the petitioners who
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have been recruited and supplied by SAPSare considered to be the employees of P&G. Joeb M.
Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al.,G.R. No. 160506, June 6, 2011.
Labor strikes; liability of union officers and participating workers. A distinction exists between
the ordinary workers’ liability for illegal strike and that of the union officers who participated in
it. The ordinary worker cannot be terminated for merely participating in the strike. There must
be proof that he committed illegal acts during its conduct. On the other hand, a union officer
can be terminated upon mere proof that he knowingly participated in the illegal strike.
Moreover, the participating union officers have to be properly identified. In the present case,
with respect to those union officers whose identity and participation in the strike having been
properly established, the termination was legal.Yolito Fadriquelan, et al. vs. Monterey Foods
Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW,
et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011.
Secretary of Labor; power to give arbitral awards. The Secretary of Labor is empowered to give
arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes under
Art. 263 (g) of the Labor Code. In the present case, the Supreme Court upheld the authority of
the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon
in the Memorandum of Agreement (MOA) between the parties. The Court further stated that
while an arbitral award cannotper se be categorized as an agreement voluntarily entered into by
the parties because it requires the interference and imposing power of the State thru the
Secretary of Labor when he assumes jurisdiction, the award can be considered as an
approximation of a collective bargaining agreement which would otherwise have been entered
into by the parties. Hence, it has the force and effect of a valid contract obligation between the
parties. Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics,
Inc., G.R. No. 190515. June 6, 2011.
Termination of employment; resignation v. dismissal. Petitioner claims he was dismissed on the
ground of illness and was therefore entitled to separation benefits under Article 284 of the Labor
Code. The Supreme Court (SC) disagreed and instead found that petitioner was the one who
initiated the severance of his employment relations on the ground that his health was failing. In
fact, he rejected respondent’s offer for him to return to work. The SC declared that this is
tantamount to resignation. Resignation is defined as 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 and he has no other choice but to disassociate himself from his
employment. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style
Yuhans Enterprises, G.R. No. 169191, June 1, 2011.
Unions; disaffiliation. A local union may disaffiliate at any time from its mother federation,
absent any showing that the same is prohibited under its constitution or rules. Such disaffiliation,
however, does not result in it losing its legal personality. A local union does not owe its
existence to the federation with which it is affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its members. The mere act of affiliation does not
divest the local union of its own personality, neither does it give the mother federation the
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license to act independently of the local union. It only gives rise to a contract of agency where
the former acts in representation of the latter. In the present case, whether the FFW went against
the will of its principal (the member-employees) by pursuing the case despite the signing of the
MOA, is not for the Court, nor for respondent employer to determine, but for the Union and
FFW to resolve on their own pursuant to their principal-agent relationship. Moreover, the issue
of disaffiliation is an intra-union dispute which must be resolved in a different forum in an
action at the instance of either or both the FFW and the union or a rival labor organization,
but not the employer as in this case. Cirtek Employees Labor Union-Federation of Free workers
vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011.
Labor relations; in pari delicto rule in illegal strikes or lockouts. When management and union
are in pari delicto, the contending parties must be brought back to their respective positions
before the controversy; that is, before the strike. In this case, management’s fault arose from the
fact that a day after the union filed a petition for certification election before the DOLE, it hit
back by requiring all its employees to undergo a compulsory drug test. Indeed, the timing of the
drug test was suspicious. Moreover, management engaged in a runaway shop when it began
pulling out machines from the main building (AER building) to the compound (AER-PSC
premises) located on another street on the pretext that the main building was undergoing
renovation. On the other hand, like management, the union and the affected workers were also
at fault for resorting to a concerted work slowdown and walking out of their jobs in protest of
their illegal suspension. It was also wrong for them to have forced their way to the AER-PSC
premises to try to bring out the boring machines. Adding to the injury was the fact that the
picketing employees prevented the entry and exit of non-participating employees and possibly
AER’s clients to the premises. Thus, the Supreme Court affirmed the ruling of the Court of
Appeals favoring the reinstatement of all the complaining employees, including those who
tested positive for illegal drugs, without backwages. Automotive Engine Rebuilders, Inc. et al. v.
Progresibong Unyon ng mga Manggagawa sa AER, et al./Progresibong Unyon ng mga
Manggagawa sa AER, et al. v. Automotive Engine Rebuilders, Inc., et al., G.R. No. 160138/G.R.
No. 160192. July 13, 2011.
Employee dismissal; reorganization. Resignation is the voluntary act of an employee who is in a
situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of
the service, and he has then no other choice but to disassociate himself from employment. The
intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the
employee before and after the alleged resignation must be considered in determining whether
he, in fact, intended to terminate his employment. In this case, the element of voluntariness was
lacking. San Miguel Properties Philippines, Inc. (SMPI) claims that there was an existing
reorganization plan in 1998 and that it was implemented shortly after the effective date of
Gucaban’s resignation. While a reorganization of SMPI’s corporate structure might have indeed
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taken place, it happened more than a year after Gucaban’s separation from the company and
incidentally, after she filed the complaint. And although the company might have been suffering
from losses due to market decline as alleged, there was still no concrete plan for a corporate
reorganization at the time Gonzalez presented to Gucaban the seemingly last available
alternative options of voluntary resignation and termination by abolition of her office. In other
words, Gucaban’s separation from the company was the confluence of the fraudulent
representation to her that her office would be declared redundant, coupled with the subsequent
alienation which she suffered from the company by reason of her refusal to tender
resignation. The element of voluntariness in her resignation is, therefore, missing. San Miguel
Properties Philippines, Inc. vs. Gwendellyn Rose Gucaban, G.R. No. 153982. July 18, 2011.
Factual Findings of the CA and NLRC. The Supreme Court, as a rule, is bound by the factual
findings of the Court of Appeals, but has the discretion to reexamine the evidence in a case
when a basic conflict exists between the CA’s findings of fact and those of the NLRC. In this
case, such a conflict existed and the SC had to determine whether Barit had been underpaid
and/or was not paid her wages during her employment in Saudi Arabia. The SC found that Barit
was fully paid her wages during her employment in Saudi Arabia. Nowhere in the records did it
appear that Barit complained about the alleged underpayment and non-payment of her wages
with the Philippine labor or consular representatives in Saudi Arabia, or even with the Saudi
authorities themselves. Neither was there any showing that she ever objected to or protested her
iniquitous work situation directly with the foreign principal, Hameed, if that had really been the
case, nor that Barit identified or spoke of any problem that could have prevented her from
seeking relief in Saudi Arabia. To make the agency liable for Barit’s alleged unpaid and
underpaid wages on the sole ground that it failed to submit copies of payslips and payrolls is
unfair, as the agency appeared to have taken all available means to secure the
necessary documents from Barit’s employer to dispute her claims. Jones International
Manpower Services, Inc., represented by its President, Edward G. Cue vs. Bella Agcaoili-
Barit, G.R. No. 181919. July 20, 2011.
Compensable death. To be considered as a compensable death under the GSIS law, the injury
must be the result of an employment accident satisfying all of the following: 1) the employee
must have been injured at the place where his work requires him to be; 2) the employee must
have been performing his official functions; and 3) if the injury is sustained elsewhere, the
employee must have been executing an order for the employer. The requirement that the injury
must arise out of and in the course of employment proceeds from the limiting premise that the
injury must be the result of an accident. An accident excludes that which happens with
intention or design, with one’s foresight or expectation or that which under the circumstances is
expected by the person to whom it happens. In this case, the Supreme Court found that the
death of Sgt. Angel did not result from an accident which is compensable under Presidential
Decree No. 626. It was, on the contrary, occasioned by an intentional or designed act which
removes the resulting death from the coverage of the State Insurance Fund. The circumstances of
Sgt. Angel’s death – his lifeless body was found hanging inside his cell with an electric cord tied
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around his neck − taken together with the unrebutted finding that there is no evidence of foul
play – negate respondent’s claim of murder of her husband and of the compensability of such
death. Government Service Insurance System vs. Jum Angel, G.R. No. 166863. July 20, 2011.
Employee dismissal; evidence. Substantial evidence means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise. In this case, it was found that the agency
succeeded in showing by substantial evidence that its principal, Panstar, had a valid reason for
terminating Flores’ employment. Capt. B.H. Mun, decided to dismiss Flores (the ship’s Master)
not only for agitating the crew to rebel against the authorities of the vessel M/V Morning Charm,
but for several other infractions. As the records showed, and as Capt. B.H. Mun stressed in his
letter of November 17, 1997 to the agency management, Flores was also charged with
inefficiency or neglect of duty, insubordination, insolent and disrespectful behavior, and other
actuations which made him unfit for his position and rank.Abosta Shipmanagement Corporation
vs. National Labor Relations Commission (First Division) and Arnulfo R. Flores, G.R. No. 163252.
July 27, 2011.
Grounds for Dismissal. An employee’s propensity to commit repetitious infractions evinces
wrongful intent, making him undeserving of the compassion accorded by law to labor; thus,
dismissal of said employee would be justified. In this case, as petitioner’s employment record
showed, it was not the first time that he refused to collect fares from passengers. In fact, it was
already the third instance that he failed to collect fares from the riding public. His repeated
violation of the company’s policies and rules showed his want of care for the employer’s
policies. And although petitioner already suffered the corresponding penalties for his past
misconduct, those infractions were still found to be relevant and may be considered in assessing
his liability for his present infraction. Jerry Mapili vs.. Philippine Rabbit Bus Lines, Inc., G.R. No.
172506. July 27, 2011.
Labor relations; appropriate bargaining unit. An appropriate bargaining unit is defined as “a

group of employees of a given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law”. The test of grouping is community or mutuality
of interest. In this case, there should be only one bargaining unit for the employees in the
Cabuyao, San Fernando, and Otis plants of the Magnolia Poultry Products involved in “dressed”
chicken processing and Magnolia Poultry Farms engaged in “live” chicken operations. Certain
factors, such as specific line of work, working conditions, location of work, mode of
compensation, and other relevant conditions do not affect or impede their commonality of
interest. Although they seem separate and distinct from each other, the specific tasks of each
division are actually interrelated and there exists mutuality of interests which warrants the
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formation of a single bargaining unit. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors
and Exempt Union, G.R. No. 146206. August 1, 2011.
Labor organization; confidential employees. Confidential employees are defined as those who
(1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine,
and effectuate management policies in the field of labor relations. The two criteria are
cumulative, and both must be met if an employee is to be considered a confidential
employee. Confidential employees, such as accounting personnel, should be excluded from the
bargaining unit, as their access to confidential information may become the source of undue
advantage. However, such fact does not apply to the position of Payroll Master (as in this case)
and the whole gamut of employees who has access to salary and compensation data. The CA
correctly held that the position of Payroll Master does not involve dealing with confidential
labor relations information in the course of the performance of his functions. In other words,
since the nature of his work does not pertain to company rules and regulations and confidential
labor relations, it follows that he cannot be excluded from the subject bargaining unit. San
Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No.
146206. August 1, 2011.
Labor organization; ineligibility to join. Although Article 245 of the Labor Code limits the
ineligibility to join, form and assist any labor organization to managerial employees,
jurisprudence has extended this prohibition to confidential employees. In this regard, the CA
correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to
the category of confidential employees and, hence, are excluded from the bargaining unit,
considering their respective positions and job descriptions. As Human Resource Assistant, the
scope of one’s work necessarily involves labor relations, recruitment and selection of employees,
access to employees’ personal files and compensation package, and human resource
management. As regards a Personnel Assistant, one’s work includes the recording of minutes for
management during collective bargaining negotiations, assistance to management during
grievance meetings and administrative investigations, and securing legal advice for labor issues
from the petitioner’s team of lawyers, and implementation of company programs. Therefore, in
the discharge of their functions, both gain access to vital labor relations information which
outrightly disqualifies them from union membership. San Miguel Foods, Inc. vs. San Miguel
Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011.
Certification election; role of employers. The general rule is that an employer has no standing to
question the process of certification election, since this is the sole concern of the workers. Law
and policy demand that employers take a strict, hands-off stance in certification elections. The
bargaining representative of employees should be chosen free from any extraneous influence of
management. The only exception is where the employer itself has to file the petition pursuant to
Article 258 of the Labor Code because of a request to bargain collectively. San Miguel Foods,
Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011.
Appeal of the decision of the labor arbiter; posting of bond. The posting of a bond is
indispensable to the perfection of an appeal in cases involving monetary awards from the
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Decision of the Labor Arbiter. However, the Supreme Court, considering the substantial merits
of the case, has on certain occasions relaxed this rule on, and excused the late posting of, the
appeal bond when there are strong and compelling reasons for the liberality. In this case, the
exception applies. The rule on the posting of an appeal bond cannot defeat the substantive
rights of respondents to be free from an unwarranted burden of answering for an illegal dismissal
for which they were never responsible since no employer-employee relationship existed
between the two. Marticio Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No.
196426. August 15, 2011.
Employer-employee relationship; four-fold test. Petitioners are not employees of respondents,
since their relationship failed to pass the four-fold test of employment: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employee’s conduct, which is the most important element. As found by
both the NLRC and the CA, respondents had no part in petitioners’ selection and management;
petitioners’ compensation was paid out of the arriba (which is a percentage deducted from the
total bets), not by petitioners; and petitioners performed their functions
as masiador and sentenciador free from the direction and control of respondents. Marticio
Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011.
Labor; illegal recruitment in large scale. To prove illegal recruitment, it must be shown that
appellant gave complainants the distinct impression that she 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. All eight private complainants in this case consistently declared that
Ochoa offered and promised them employment overseas. Moreover, Ochoa can also be
convicted for illegal recruitment based on Section 6 of Republic Act No. 8042, which clearly
provides that any person, whether or not a licensee or holder of authority may be held liable for
illegal recruitment for certain acts as enumerated in paragraphs (a) to (m). Among such acts is
the “failure to reimburse expenses incurred by the worker in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually
take place without the worker’s fault.” In this case, Ochoa received placement and medical fees
from private complainants and failed to reimburse the private complainants the amounts they
had paid when they were not able to leave for Taiwan and Saudi Arabia, through no fault of
their own. People of the Philippines vs. Rosario “Rose” Ochoa, G.R. No. 173792. August 31,
2011.
Illegal recruitment; admissibility of POEA certification. Section 36, Rule 130 of the Revised
Rules on Evidence, states that a witness can testify only to those facts which he knows of or
comes from his personal knowledge, that is, which are derived from his perception. This is
known as the hearsay rule. The law, however, provides for specific exceptions to the hearsay
rule, and one of the exceptions refers to entries in official records made in the performance of
duty by a public officer. Accordingly, in the case at bar, although Dir. Mateo was not
presented in court or did not testify during the trial to verify the said certification, such
certification is considered as prima facie evidence of the facts stated therein and is therefore
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presumed to be truthful, because Ochoa did not present any plausible proof to rebut its
truthfulness. People of the Philippines vs. Rosario “Rose” Ochoa, G.R. No. 173792. August 31,
2011.
Illegal recruitment and estafa; may be charged separately. A person may be charged and
convicted separately of illegal recruitment under Republic Act No. 8042, in relation to the Labor
Code, and estafa under Article 315, paragraph 2(a) of the Revised Penal Code. The offense of
illegal recruitment ismalum prohibitum, while estafa is malum in se. In this case, therefore,
Ochoa may also be charged and correspondingly held liable for estafa since all the elements for
the crime are present in Criminal Case Nos. 98-77301, 98-77302, and 98-77303. Ochoa’s
deceit was evident in her false representation to private complainants Gubat, Cesar, and Agustin
that she possessed the authority and capability to send said private complainants to
Taiwan/Saudi Arabia for employment as early as one to two weeks from completion of the
requirements, among which were the payment of placement fees and submission of a medical
examination report. People of the Philippines vs. Rosario “Rose” Ochoa, G.R. No.
173792. August 31, 2011.
Floating status; validity. The rule is settled that “off-detailing” is not equivalent to dismissal, so
long as such status does not continue beyond a reasonable time and that it is only when such a
“floating status” lasts for more than six months that the employee may be considered to have
been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse of the six-
month period and/or the actual dismissal of the employee is generally considered as
prematurely filed. In this case, the evidence adduced a quo clearly indicates that petitioners
were not in bad faith when they placed Leynes under floating status. Disgruntled by NHPI’s
countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified
her intention to resign from her position on 12 February 2002. In view of the sensitive nature of
Leynes’ position and the critical stage of the Project’s business development, NHPI was
constrained to hire Engr. Jose as Leynes’ replacement as a remedial measure. Nippon Housing
Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3, 2011.
Constructive dismissal; burden of proof. 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. In constructive dismissal cases, the
employer is, concededly, charged with the burden of proving that its conduct and action or the
transfer of an employee are for valid and legitimate grounds such as genuine business
necessity. The Supreme Court found that in this case, respondents have more than amply
discharged this burden with proof of the circumstances surrounding Engr. Carlos’ employment
as Property Manager for the Project and the consequent unavailability of a similar position for
Leynes. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3,
2011.
Pleading; verification. Verification of a pleading is a formal, not jurisdictional, requirement
intended to secure the assurance that the matters alleged in a pleading are true and correct. It is
deemed substantially complied with when one who has ample knowledge to swear to the truth
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of the allegations in the complaint or petition signs the verification, and when matters alleged in
the petition have been made in good faith or are true and correct. In this case, the Supreme
Court found that the petition’s verification substantially complied with the requirements of the
rules. The SPA authorized Bello-Ona to represent Bello in the case from which the present
petition with the Supreme Court originated. As the daughter of Bello, Bello-Ona is deemed to
have sufficient knowledge to swear to the truth of the allegations in the petition, which are
matters of record in the lower tribunals and the appellate court. Francis Bello, represented
herein by his daughter and attorney-in-fact, Geraldine Bello-Ona vs. Bonifacio Security Services,
Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011.
Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work
because continued employment has been rendered impossible, unreasonable, or unlikely, as
when there is a demotion in rank or diminution in pay, or both, or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee. In this case,
other than his bare and self-serving allegations, Bello has not offered any evidence that he was
promoted in a span of four months since his employment as traffic marshal in July 2001 to a
detachment commander in November 2001. At most, the BSSI merely changed his assignment
or transferred him to the post where his service would be most beneficial to its clients. The
management’s prerogative of transferring and reassigning employees from one area of operation
to another in order to meet the requirements of the business is generally not constitutive of
constructive dismissal. This was what exactly occurred in this case. Francis Bello, represented
herein by his daughter and attorney-in-fact, Geraldine Bello-Ona vs. Bonifacio Security Services,
Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011.
Procedural rules; failure to attach duplicate original or certified true copy of the assailed
decision. The refusal of the Court of Appeals to consider the petition was the absence of a
duplicate original or certified true copy of the assailed NLRC decision, in violation of Section 3,
Rule 46 of the Rules of Court (in relation to Section 1, Rule 65). The company, however,
corrected the procedural lapse by attaching a certified copy of the NLRC decision to its motion
for reconsideration. The Supreme Court found that the CA precipitately denied the petition
for certiorari based on an overly rigid application of the rules of procedure. In effect, it sacrificed
substance to form in a situation where the petitioners’ recourse was not patently frivolous or
meritless. Thus, the case was remanded to the NLRC for resolution of its appeal. Jobel
Enterprises and/or Mr. Benedict Lim vs. NLRC and Eric Martinez, Sr., G.R. No. 194031, August 8,
2011.
Appeal; decision or resolution of NLRC. As was enunciated in the case of St. Martin Funeral
Home v. NLRC, the special civil action of certiorari under Rule 65 of the Rules of Civil
Procedure, which is filed before the CA, is the proper vehicle for judicial review of decisions of
the NLRC. The petition should be initially filed before the Court of Appeals in strict observance
of the doctrine on hierarchy of courts as the appropriate forum for the relief desired. Thus,
respondent’s recourse to the CA was the proper remedy to question the resolution of the
NLRC. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
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Employer-employee relationship; four-fold test. To ascertain the existence of an employer-

employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee’s conduct, or the so-called “control test.”
Applying the aforementioned test, an employer-employee relationship was found to be absent in
the case at bar. Among other things, respondent was not required to report everyday during
regular office hours of petitioner. Respondent’s monthly retainer fees were paid to him either at
his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in
which respondent would accomplish any of the tasks in which his expertise as a liaison officer
was needed; respondent was left alone and given the freedom to accomplish the tasks using his
own means and method. Verily, the absence of the element of control on the part of the
petitioner engenders a conclusion that he is not an employee of the petitioner. Atok Big Wedge
Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
Employment; regular employee. Article 280 of the Labor Code, in which the lower court used
to buttress its findings that respondent became a regular employee of the petitioner, is not
applicable in the case at bar. The Supreme Court has ruled that said provision is not the
yardstick for determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual employees,
for purposes of determining the right of an employee to certain benefits, to join or form a union,
or to security of tenure; it does not apply where the existence of an employment relationship is
in dispute. It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in
determining whether an employer-employee relationship exists between respondent and the
petitioner. Therefore, despite the fact that petitioner made use of the services of respondent as a
part-time consultant on retainer basis for eleven years, he still cannot be considered as a regular
employee of petitioner using only as basis Article 280 of the Labor Code. Atok Big Wedge
Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
Claim of disability benefits and sickness allowance; reporting requirements. Anent a seafarer’s
entitlement to compensation and benefits for injury and illness, Section 20-B (3) of 2000 POEA-
SEC provides that in order for the seafarer to claim the said benefits, he must submit himself to a
post-employment medical examination by a company-designated physician within three
working days upon his return, except when he is physically incapacitated to do so, in which
case, a written notice to the agency within the same period is deemed as compliance. Failure of
the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of
the right to claim the above benefits. In this case, there was no dispute regarding the fact that
Esguerra had altogether failed to comply with the mandatory reporting requirement. Esguerra
also did not present any evidence to prove justification for his inability to submit himself to a
post-employment medical examination by a company-designated physician. Self-serving and
unsubstantiated declarations are insufficient to establish a case before quasi-judicial bodies
where the quantum of evidence required in establishing a fact is substantial evidence. Coastal
Safeway Marine Services vs. Esguerra, G.R. No. 185352, August 10, 2011.
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Employee; probationary employee. Employment on probationary status of teaching personnel is

not only governed by the Labor Code but also by the Manual of Regulations for Private
Schools. Section 91 of the Manual of Regulations for Private Schools, states that: “Every
contract of employment shall specify the designation, qualification, salary rate, the period and
nature of service and its date of effectivity, and such other terms and condition of employment
as may be consistent with laws and rules, regulations and standards of the school.” Thus, it is
important that the contract of probationary employment specify the period or term of its
effectivity. In this case, therefore, the letters sent by petitioner College Dean Sr. Racadio, which
were devoid of specifics, cannot be considered as contracts. The closest they can resemble to
are that of informal correspondence among the said individuals. As such, petitioner school has
the right not to renew the contracts of the respondents, the old ones having expired at the end of
their terms. Assuming, arguendo, that the employment contracts between the petitioner school
and the respondent spouses were renewed, the SC found that there was a valid and just cause
for their dismissal since petitioners have repeatedly violated several departmental and
instructional policies, such as the late submission of final grades, failure to submit final test
questions to the Program Coordinator, the giving of tests in essay form instead of the multiple
choice format as mandated by the school and the high number of students with failing grades in
the classes that he handled. St. Paul College Quezon City, et al. vs. Remigio Michael A. Ancheta
II and Cynthia A. Ancheta, G.R. No. 169905. September 7, 2011.
Employee; existence of employer-employee relationship. To determine the existence of an
employer-employee relationship, case law has consistently applied the four-fold
test. Respondents argue that the element of control is lacking in this case, making petitioner-
referee an independent contractor and not an employee of respondents. The Supreme Court
agreed as it found that there was no control over the means and methods by which petitioner
performs his work as a referee officiating a PBA basketball game. The contractual stipulations in
the retainer contracts do not pertain to, much less dictate, how and when petitioner will blow
the whistle and make calls. On the contrary, they merely serve as rules of conduct or guidelines
in order to maintain the integrity of the professional basketball league. Moreover, the following
circumstances indicate that petitioner is an independent contractor: (1) the referees are required
to report for work only when PBA games are scheduled, which is three times a week spread
over an average of only 105 playing days a year, and they officiate games at an average of two
hours per game; and (2) the only deductions from the fees received by the referees are
withholding taxes. There are no deductions for contributions to the Social Security System,
Philhealth or Pag-Ibig, which are the usual deductions from employees’ salaries. These
undisputed circumstances buttress the fact that petitioner is an independent contractor, and not
an employee of respondents. Jose Mel Bernante vs. Philippine Basketball Association, et al., G.R.
No. 192084. September 14, 2011.
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Employee benefits; principle against diminution of benefits. The issue in this case was whether
or not the change in the scheme of distribution of the incremental proceeds from tuition fee
increase is a diminution of benefit. The Court held that it was not. Generally, employees have
a vested right over existing benefits voluntarily granted to them by their employer. The principle
against diminution of benefits, however, 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. In other words, the benefit must be characterized by regularity and the
voluntary and deliberate intent of the employer to grant the benefits over a significant period of
time. In the case at bench, contrary to UEEA’s claim, the distribution of the 70% incremental
proceeds based on equal sharing scheme cannot be held to have ripened into a company
practice since the practice has not been for a long period of time. The same could not also have
ripened into a vested right because such grant was not a deliberate and voluntary act on the part
of the petitioner. The Supreme Court held that the grant by an employer of benefits through an
erroneous application of the law due to the absence of clear administrative guidelines is not
considered a voluntary act which cannot be unilaterally discontinued. University of the East vs.
University of the East Employees’ Association, G.R. No. 179593. September 14, 2011.
Employment benefits; entitlement to vacation and sick leave. BPI contends that at the time of
Uy’s dismissal, she was no longer functioning as a teller of the bank but as a low-counter staff
and as such, Uy is not anymore entitled to the teller’s functional allowance pursuant to
company policy. BPI further argues that Uy is neither entitled to the monetary conversion of
vacation and sick leaves for failure to prove that she is entitled to these benefits at the time of
her dismissal. The Supreme Court ruled that Uy is entitled to the teller’s functional
allowance but not to the monetary conversion of vacation and sick leaves. Uy’s function as a
teller at the time of her dismissal was factually established and was never impugned by the
parties during the proceedings held in the main case. Besides, BPI did not present any evidence
to substantiate its allegation that Uy was assigned as a low-counter staff at the time of her
dismissal. It is a hornbook rule that he who alleges must prove. As to the vacation and sick
leave cash conversion benefit, the Supreme Court held that entitlement to the same should be
necessarily proved since this privilege is not statutory or mandatory in character but only
voluntarily granted. As such, the existence of this benefit as well as the employee’s entitlement
thereto cannot be presumed but should be proved by the employee. In this case, however, the
records failed to prove that Uy was receiving this benefit at the time of her dismissal on
December 14, 1995. BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine
Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos.
178699/178735. September 21, 2011.
Termination; constructive dismissal. The concept of constructive dismissal is inapplicable to
respondents in this case. 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
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to quit. That the respondents were indeed not constructively dismissed was found by the
Supreme Court to be supported by substantial evidence. First, respondents Domingo and
Remigio, even while their petition for certiorari was pending before the CA, remained employed
at UNILAB. In those instances, there was actually no dismissal to speak of. Second, the
respondents’ positions were not abolished, unlike its provincial depots where the employees
therein were considered redundant employees. In this case, their accounting functions were
merely consolidated under the Finance Division of Unilab pursuant to its Shared Services Policy
(SSP). Respondents, who are accounting employees, cannot refuse their assignment to the
Finance Division. The Supreme Court noted that it cannot accept the proposition that when an
employee opposes his employer’s decision to transfer him to another work place, there being no
bad faith or underhanded motives on the part of either party, that the employee’s wishes should
be made to prevail. United Laboratories, Inc. vs. Jaime Domingo Substituted by his spouse
Carmencita Punzalan Domingo, et al., G.R. No. 186209, September 21, 2011.
Termination; loss of trust and confidence. Loss of confidence should ideally apply only to: (1)
cases involving employees occupying positions of trust and confidence, or (2) situations where
the employee is routinely charged with the care and custody of the employer’s money or
property. As branch manager of the bank, Lopez occupied a “position of trust.” His hold on his
position and his stay in the service depend on the employer’s trust and confidence in him and
on his managerial services. In this case, the Supreme Court found that Lopez’s dismissal was
justified. He betrayed the trust and confidence of the employer-bank when he issued the
subject purchase orders without authority and despite the express directive of the bank to put
the client’s application on hold. The bank had a genuine concern over the granted loan
applications as it found through its credit committee that Hertz was a credit risk. Whether the
credit committee was correct or not is immaterial as the bank’s direct order left Lopez without
any authority to clear the loan application on his own. Elmer Lopez vs. Keppel Bank Philippines,
Inc. et al., G.R. No. 176800. September 5, 2011.
Termination; loss of trust and confidence. Jumuad was found to have willfully breached her
duties as to be unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a managerial
employee; she executed management policies and had the power to discipline the employees of
KFC branches in her area. She recommended actions on employees to the head
office. According to the Supreme Court, based on established facts, the mere existence of the
grounds for the loss of trust and confidence justifies petitioner’s dismissal. In the present case,
the CER’s reports of Hi-Flyer show that there were anomalies committed in the KFC branches
managed by Jumuad. On the principle of respondeat superior or command responsibility alone,
Jumuad may be held liable for negligence in the performance of her managerial duties. She may
not have been directly involved in causing the cash shortages in KFC-Bohol, but her
involvement in not performing her duty monitoring and supporting the day to day operations of
the branches and ensure that all the facilities and equipment at the restaurant were properly
maintained and serviced, could have prevented the whole debacle from occurring. Pamela
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Florentina P. Jumuad vs. Hi-Flyer Food, Inc. and/or Jesus R. Montemayor, G.R. No. 187887.
September 7, 2011.
Termination; illegal dismissal. In the case at bar, respondent security guards were relieved from
their posts because they filed with the Labor Arbiter a complaint against their employer for
money claims due to underpayment of wages. The Supreme Court found that this was not a
valid cause for dismissal. The Labor Code enumerates several just and authorized causes for a
valid termination of employment. An employee asserting his right and asking for minimum wage
is not among those causes. Alert Security and Investigation Agency, Inc., et al. vs. Saidali
Pasawilan, et al., G.R. No. 182397. September 14, 2011.
Termination; abandonment of work. Petitioners aver that respondents were merely transferred
to a new post wherein the wages are adjusted to the current minimum wage standards. They
maintain that the respondents voluntarily abandoned their jobs when they failed to report for
duty in the new location. Assuming that this contention was true, the Supreme Court held that
there was no abandonment of work. For there to be abandonment: first, there should be a failure
of the employee to report for work without a valid or justifiable reason, and second, there
should be a showing that the employee intended to sever the employer-employee relationship.
The fact that petitioners filed a complaint for illegal dismissal is indicative of their intention to
remain employed with private respondent. On the first element of failure to report for work, in
this case, there was no showing that respondents were notified of their new assignments.
Granting that the “Duty Detail Orders” were indeed issued, they served no purpose unless the
intended recipients of the orders are informed of such. Therefore, the Court held that there was
no abandonment of work in this case. Alert Security and Investigation Agency, Inc., et al. vs.
Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.
Termination; gross and habitual neglect. Neglect of duty, to be a ground for dismissal, must be
both gross and habitual. In this case, Respondent’s repeated failure to turn over his task of
preparing the payroll of the petitioner’s employees to someone capable of performing the vital
tasks which he could not effectively perform or undertake because of his heart ailment or
condition constitutes gross neglect. However, although the dismissal was legal, respondent was
still held to be entitled to a separation pay as a measure of compassionate justice, considering
his length of service and his poor physical condition which was one of the reasons he filed a
leave of absence. 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 separation pay. By
way of exception, however, the grant of separation pay or some other financial assistance may
be allowed to an employee dismissed for just causes on the basis of equity. Nissan Motors Phils.,
Inc. vs. Victorino Angelo, G.R. No. 164181. September 14, 2011.
Termination; award of backwages. The base figure in computing the award of back wages to an
illegally dismissed employee is the employee’s basic salary plus regular allowances and benefits
received at the time of dismissal, unqualified by any wage and benefit increases granted in the
interim. The full backwages, as referred to in the body of the March 31, 2005 Supreme Court
decision pertains to “backwages” as defined in Republic Act No. 6715. Under said law, and as
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provided in jurisprudence, “full backwages” means backwages without any deduction or

qualification, including benefits or their monetary equivalent the employee is enjoying at the
time of his dismissal. Consequently, any benefit or allowance over and above that allowed and
provided by said law is deemed excluded under the said Supreme Court Decision. BPI
Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine
Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735. September 21,
2011.
Dismissal; constructive dismissal. 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. 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 or the transfer of an employee are for valid and legitimate grounds such as
genuine business necessity. In the instant case, the overt act relied upon by petitioner is not only
a doubtful occurrence but is, if it did transpire, even consistent with the dismissal from
employment posited by the respondent. The factual appraisal of the Court of Appeals is correct.
Petitioner was displeased after incurring expenses for respondent’s medical check-up and, it is
credible that, thereafter, respondent was prevented entry into the work premises. This is
tantamount to constructive dismissal. The Supreme Court agreed with the Court of Appeals that
the incredibility of petitioner’s submission about abandonment of work renders credible the
position of respondent that she was prevented from entering the property. This was even
corroborated by the affidavits of Siarot and Mendoza which were made part of the records of
this case. Ma. Melissa A. Galang vs. Julia Malasuqui, G.R. No. 174173. March 7, 2012.
Dismissal; loss of trust and confidence. The rule is long and well settled that, in illegal dismissal
cases like the one at bench, the burden of proof is upon the employer to show that the
employee’s termination from service is for a just and valid cause. The employer’s case succeeds
or fails on the strength of its evidence and not on the weakness of that adduced by the employee,
in keeping with the principle that the scales of justice should be tilted in favor of the latter in
case of doubt in the evidence presented by them. Often described as more than a mere scintilla,
the quantum of proof is substantial evidence which is understood as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other equally
reasonable minds might conceivably opine otherwise. Failure of the employer to discharge the
foregoing onus would mean that the dismissal is not justified and therefore illegal.
In the case at bar, the Supreme Court agreed with the petitioners that mere substantial evidence
and not proof beyond reasonable doubt is required to justify the dismissal from service of an
employee charged with theft of company property. However, the Court found no error in the
CA’s findings that the petitioners had not adequately proven by substantial evidence that Arlene
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and Joseph indeed participated or cooperated in the commission of theft relative to the six
missing intensifying screens so as to justify the latter’s termination from employment on the
ground of loss of trust and confidence.Blue Sky Trading Company, Inc. et al. vs. Arlene P. Blas
and Joseph D. Silvano, G.R. No. 190559. March 7, 2012.
Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of
company property on May 25, 2006. He maintains that he had no direct participation in the
incident and that he was not aware that an illegal activity was going on as he was at some
distance from the trucks when the alleged theft was being committed. He adds that he did not
call the attention of the foremen because he was a mere lineman and he was focused on what
he was doing at the time. He argues that in any event, his mere presence in the area was not
enough to make him a conspirator in the commission of the pilferage.
Gala misses the point. He forgets that as a probationary employee, his overall job performance
and his behavior were being monitored and measured in accordance with the standards (i.e., the
terms and conditions) laid down in his probationary employment agreement. Under paragraph 8
of the agreement, he was subject to strict compliance with, and non-violation of the Company
Code on Employee Discipline, Safety Code, rules and regulations and existing policies. Par. 10
required him to observe at all times the highest degree of transparency, selflessness and integrity
in the performance of his duties and responsibilities, free from any form of conflict or
contradicting with his own personal interest. Manila Electric Company vs. Jan Carlo Gala, G.R.
No. 191288. March 7, 2012.
Dismissal; relief of illegally dismissed employee. An illegally dismissed employee is entitled to
two reliefs: back wages 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 such is viable, or separation pay if reinstatement is
no longer viable, and to back wages. The normal consequences of respondent’s illegal dismissal,
then, are reinstatement without loss of seniority rights, and payment of back wages computed
from the time compensation was withheld from him 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.
Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its
March 31, 2008 Decision which has already attained finality insofar as respondent is concerned.
Such contention is misplaced. The CA merely clarified the period of payment of back wages and
separation pay up to the finality of its decision (March 31, 2008) modifying the Labor Arbiter’s
decision. In view of the modification of monetary awards in the Labor Arbiter’s decision, the
time frame for the payment of back wages and separation pay is accordingly modified to the
finality of the CA decision. Norkis Distribution, Inc., et al. vs. Delfin S. Descallar, G.R. No.
185255. March 14, 2012
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Employees; project vs. regular employees. The principal test for determining whether particular
employees are properly characterized as “project employees” as distinguished from “regular
employees” is whether or not the project employees were assigned to carry out a “specific
project or undertaking,” the duration and scope of which were specified at the time the
employees were engaged for that project.
In a number of cases, the Court has held that the length of service or the re-hiring of
construction workers on a project-to-project basis does not confer upon them regular
employment status, since their re-hiring is only a natural consequence of the fact that
experienced construction workers are preferred. Employees who are hired for carrying out a
separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment
are properly treated as project employees and their services may be lawfully terminated upon
the completion of a project. Should the terms of their employment fail to comply with this
standard, they cannot be considered project employees.
Applying the above disquisition, the Court agreed with the findings of the CA that petitioners
were project employees. It is not disputed that petitioners were hired for the construction of the
Cordova Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is clear
that petitioners’ employment was to carry out a specific project. Wilfredo Aro, Ronilo Tirol, et
al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. March 7, 2012.
Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship.
If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the
jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which
provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving
wages, rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an employer-
employee relationship has been subjected to review by the Supreme Court, with the finding
being that there was no employer-employee relationship between petitioner and private
respondent, based on the evidence presented. The DOLE had no jurisdiction over the case, as
there was no employer-employee relationship present. Thus, the dismissal of the complaint
against petitioner is proper. People’s Broadcasting Service (Bombo Rado Phils., Inc.) vs. The
Secretary of the Dept. of Labor & Employment, et al.G.R. No. 179652. March 6, 2012.
Management prerogative; resignation of employees running for public office. The Supreme
Court has consistently held that so long as a company’s management prerogatives are exercised
in good faith for the advancement of the employer’s interest and not for the purpose of defeating
or circumventing the rights of the employees under special laws or under valid agreements, the
Court will uphold them. In the instant case, ABS-CBN validly justified the implementation of
Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and
credibility and freeing itself from any appearance of impartiality so that the confidence of the
viewing and listening public in it will not be in any way eroded. Even as the law is solicitous of
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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 purpose cannot be denied. Ernesto Ymbong vs. ABS-CBN Broadcasting
Corporation, Veranda Sy & Dante Luzon, G.R. No. 184885. March 7, 2012.
Separation pay; payment to those who participated in illegal strikes. Separation pay may be
given as a form of financial assistance when a worker is dismissed in cases such as the
installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or
cessation of operation of the establishment, or in case the employee was found to have been
suffering from a disease such that his continued employment is prohibited by law. It is a
statutory right defined as the amount that an employee receives at the time of his severance from
the service and is designed to provide the employee with the wherewithal during the period that
he is looking for another employment. It is oriented towards the immediate future, the
transitional period the dismissed employee must undergo before locating a replacement job. As
a general rule, when just causes for terminating the services of an employee exist, the employee
is not entitled to separation pay because lawbreakers should not benefit from their illegal acts.
The rule, however, is subject to exceptions.
Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to
have knowingly participated in the illegal strike. Worse, the Union members committed
prohibited acts during the strike. Thus, as the Court has concluded in other cases it has
previously decided, such Union officers are not entitled to the award of separation pay in the
form of financial assistance. C. Alcantara & Sons, Inc. vs. Court of Appeals, et al./Nagkahiusang
Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al./Nagkahiusang Mamumuo
sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No. 155109/G.R. No.
155135/G.R. No. 179220. March 14, 2012.
October 2011 Philippine Supreme Court Decisions on Labor Law and Procedure
Labor Law
Dismissal; constructive dismissal. For a transfer not to be considered a constructive dismissal,
the employer must be able to show that the transfer is for a valid reason, entails no diminution
in the terms and conditions of employment, and must not be unreasonably inconvenient or
prejudicial to the employee. If the employer fails to meet these standards, the employee’s
transfer shall amount, at the very least, to constructive dismissal. In this case, the Supreme
Court found that the real reason Menese was transferred from being the agency’s payroll and
billing clerk of the PGH detachment to being a lady guard in the agency’s main office, was
because of the request of Dapula, the new chief of the UP-PGH Security Division. The latter’s
request was based on the fact that she had committed the previous position of Menese to a
certain Amy Claro, a protégée of Dapula. Thus, the Supreme Court found justification for
Menese’s refusal to be transferred. Not only was the transfer arbitrary and done in bad faith, it
would also result in a demotion in rank and a diminution in pay: (1) she would hold the
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position of lady guard and (2) she would be paid in accordance with the statutory minimum
wage, or from P11,720.00 to P7,500.00. Clearly, there was a demotion in rank and salary
undertaken in bad faith amounting to constructive dismissal. Emirate Security and Maintenance
Systems, Inc. and Roberto Yan vs. Glenda M. Menese, G.R. No. 182848. October 5, 2011.
Dismissal; illegal. Resignation is defined as “the voluntary act of employees who are compelled
by personal reasons to disassociate themselves from their employment. It must be done with the
intention of relinquishing an office, accompanied by the act of abandonment.” In this case, the
evidence on record suggested that petitioner did not resign; he was orally dismissed by Sy. The
crucial factor is the verbal order directly given by Sy, the company president, for petitioner to
immediately turn over his accountabilities. It is this lack of clear, valid and legal cause, not to
mention due process that made his dismissal illegal, warranting reinstatement and the award of
backwages. Moreover, the filing of a complaint for illegal dismissal just three weeks later is
difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily
relinquish his employment after being unceremoniously dismissed by no less than the company
president, he would not have sought redress from the NLRC and vigorously pursued this case
against the respondents. Jhorizaldy Uy vs. Centro Ceramica Corporation, et al., G.R. No.
174631. October 19, 2011.
Employee; death benefits. The death of a seaman during the term of employment makes the
employer liable to his heirs for death compensation benefits. This rule, however, is not absolute.
The employer may be exempt from liability if he can successfully prove that the seaman’s death
was caused by an injury directly attributable to his deliberate or willful act. The Supreme Court
agreed that Danilo died of Asphyxia by strangulation as proved by the NBI post-mortem findings
and certification issued by the medico-legal officer, Dr. Reyes. The photocopy of the fax
transmission of the purported English translation of Dr. Hameed’s medical report to prove that
Danilo committed suicide should not be considered since the medical report’s genuineness and
due execution were unverifiable: (1) the existence of the original medical report, which was
written in the arabic language, was not even attached to the records and has not been proved;
(2) the identity of the person who made the translation and whether the translator has the
recognized competence in both English and the language the medical report was originally
written were not established; (3) the alleged translated medical report was not even signed by Dr.
Hameed which creates doubt as to its authenticity. The unsigned translated medical report is
nothing but a self-serving document which ought to be treated as a mere scrap of paper devoid
of any evidentiary value even in administrative proceedings. Maritime Factors Inc. vs.
Bienvenido R. Hindang, G.R. No. 151993. October 19, 2011.
Employee benefits; entitlement to retirement benefits. A separation pay at the time of the
reorganization of the National Power Corporation and retirement benefits at the appropriate
future time are two separate and distinct entitlements. Stated otherwise, a retirement plan is a
different program from a separation package. In R.A. No. 1616, the retirees are entitled to
gratuity benefits to be paid by the last employer and refund of premiums to be paid by the
GSIS. On the other hand, retirement benefits under C.A. No. 186, as amended by R.A. No.
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8291, are to be paid by the GSIS. In view of the fact that separation pay and retirement benefits
are different entitlements, as they have different legal bases, different sources of funds, and
different intents, the “exclusiveness of benefits” rule provided under R.A. No. 8291 is not
applicable. (Section 55 of R.A. No. 8291 states: “Whenever other laws provide similar benefits
for the same contingencies covered by this Act, the member who qualifies to the benefits shall
have the option to choose which benefits will be paid to him.”) Enrique U. Betoy vs. The Board
of Directors, National Power Corporation, G.R. Nos. 156556-57. October 4, 2011.
Employee; overtime pay. A claim for overtime pay will not be granted in the absence of any
factual and legal basis. In this respect, the records indicated that the labor arbiter granted
Menese’s claim for holiday pay, rest day and premium pay on the basis of payrolls. There is no
such proof in support of Menese’s claim for overtime pay other than her contention that she
worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was
working during the entire one hour meal break. The Supreme Court thus found the NLRC’s
deletion of the overtime pay award in order. Emirate Security and Maintenance Systems, Inc.
and Roberto Yan vs. Glenda M. Menese, G.R. No. 182848. October 5, 2011.
Employee; permanent disability benefits. Permanent disability refers to the inability of a worker
to perform his job for more than 120 days, regardless of whether he loses the use of any part of
his body. What determines petitioner’s entitlement to permanent disability benefits is his
inability to work for more than 120 days. The certification by the company-designated
physician that petitioner is fit to work was issued after 199 days or more than 120 days from the
time he was medically repatriated to the Philippines. Petitioner herein was medically
repatriated to the Philippines on October 8, 2001. However, it was only on April 25, 2002 or
after a lapse of 199 days that Dr. Cruz issued a certification declaring him fit to work. Thus, the
Supreme Court found that petitioner’s disability is consideredpermanent and total because the
“fit to work” certification was issued by Dr. Cruz only on April 25, 2002, or more than 120 days
after he was medically repatriated on October 8, 2001. Furthermore, the company-designated
physician’s certification that petitioner is fit to work does not make him ineligible for permanent
total disability benefits. It does not matter that the company-designated physician assessed
petitioner as fit to work. It is undisputed that from the time petitioner was repatriated on
October 8, 2001, he was unable to work for more than 120 days as he was only certified fit to
work on April 25, 2002. Consequently, petitioner’s disability is considered permanent and
total. Carmelito N. Valenzona vs. Fair Shipping Corporation, et al., G.R. No. 176884. October
19, 2011.
GSIS; retirement plan. Section 41(n) of Republic Act No. 8291 contemplates a situation wherein
GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance,
which calls for the termination of some of its employees, must design a plan to encourage,
induce, or motivate these employees, who are not yet qualified for either optional or
compulsory retirement under our laws, to instead voluntarily retire. Such is not the case with
the GSIS RFP. Its very objective, “to motivate and reward employees for meritorious, faithful,
and satisfactory service,” contradicts the nature of an early retirement incentive plan, or a
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financial assistance plan, which involves a substantial amount that is given to motivate
employees to retire early. Instead, it falls exactly within the purpose of a retirement benefit,
which is a form of reward for an employee’s loyalty and lengthy service, in order to help him or
her enjoy the remaining years of his life. Without a doubt, the GSIS RFP is a supplementary
retirement plan, which is prohibited by the Teves Retirement Law. Government Service
Insurance System (GSIS), et al. vs. Commission on Audit, et al., G.R. No. 162372. October 19,
2011.
Strike; illegal strike. There is no question that the May 6, 2002 strike was illegal, first, because
when Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative
(KMLMS) filed the notice of strike on March 5 or 14, 2002, it had not yet acquired legal
personality and, thus, could not legally represent the eventual union and its
members. And second, similarly, when KMLMS conducted the strike-vote on April 8, 2002,
there was still no union to speak of, since KMLMS only acquired legal personality as an
independent legitimate labor organization only on April 9, 2002 or the day after it conducted
the strike-vote. Consequently, the mandatory notice of strike and the conduct of the strike-vote
report were ineffective for having been filed and conducted before KMLMS acquired legal
personality as a legitimate labor organization, violating Art. 263(c), (d) and (f) of the Labor Code
and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code. It is, thus, clear
that KMLMS did not comply with the mandatory requirement of law and implementing rules on
possession of a legal personality as a legitimate labor organization. Magdala Multipurpose &
Livelihood, et al. vs. KMLMS, et al.,G.R. No. 191138-39. October 19, 2011.
Union shop; new employees. May a corporation invoke its merger with another corporation as
a valid ground to exempt its “absorbed employees” from the coverage of a union shop clause
contained in its existing Collective Bargaining Agreement (CBA) with its own certified labor
union? The Supreme Court ruled in the negative. The former FEBTC employees retained the
regular status that they possessed while working for their former employer upon their absorption
by petitioner BPI. This fact would not remove them from the scope of the phrase “new
employees” as contemplated in the Union Shop Clause of the CBA. The Union Shop Clause in
the CBA simply states that “new employees” who during the effectivity of the CBA “may be
regularly employed” by the Bank must join the union within thirty (30) days from their
regularization. The plain language of the CBA provision notwithstanding, the SC held that there
is nothing in the said clause that limits its application to only new employees who possess non-
regular status, meaning probationary status, at the start of their employment. What is
indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner’s new
regular employees (regardless of the manner by which they became employees of BPI) are
required to join the Union as a condition of their continued employment. Bank of the Philippine
Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No.
164301. October 19, 2011.
Procedural Law
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NLRC; Certiorari. A writ of certiorari is a remedy to correct errors of jurisdiction, for which
reason it must clearly show that the public respondent has no jurisdiction to issue an order or to
render a decision. Rule 65 of the Rules of Court has instituted the petition for certiorari to
correct acts of any tribunal, board or officer exercising judicial or quasi-judicial functions with
grave abuse of discretion amounting to lack or excess of jurisdiction. This remedy serves as a
check on acts, either of excess or passivity, that constitute grave abuse of discretion of a judicial
or quasi-judicial function. In this case, the SC found that the CA proceeded to review the
records and to rule on issues that were no longer disputed during the appeal to the NLRC, such
as the existence of an employer-employee relationship. The pivotal issue before the NLRC was
whether petitioner’s telling respondent to take a rest, or to have a break, was already a positive
act of dismissing him. This issue was not discussed by the CA. The SC reviewed the NLRC
Resolution that reversed the LA Decision and found nothing in it that was whimsical,
unreasonable or patently violative of the law. It was the CA which erred in finding faults that
were inexistent in the NLRC Resolution. AGG Trucking and/or Alex Ang Gaeid vs. Melanio B.
Yuag, G.R. No. 195033. October 12, 2011.
NLRC; motion for reconsideration. On the issue of the propriety of entertaining the Petition for
Certiorari despite the prescribed Motion for Reconsideration with the NLRC, the SC found that
the CA committed error when it entertained the petition for certiorari and explained that when
respondent failed to file a Motion for Reconsideration of the NLRC’s 30 November 2006
Resolution within the reglementary period, the Resolution attained finality and could no longer
be modified by the Court of Appeals. Untimeliness in filing motions or petitions is not a mere
technical or procedural defect, as leniency regarding this requirement will impinge on the right
of the winning litigant to peace of mind resulting from the laying to rest of the
controversy. AGG Trucking and/or Alex Ang Gaeid vs. Melanio B. Yuag, G.R. No. 195033.
October 12, 2011.
Certiorari; effect of receipt of award. The prevailing party’s receipt of the full amount of the
judgment award pursuant to a writ of execution issued by the labor arbiter does not close or
terminate the case if such receipt is qualified as without prejudice to the outcome of the petition
for certiorari pending with the Court of Appeals. Timoteo H. Sarona vs. National Labor Relations
Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.
Constructive dismissal; change in position. Constructive dismissal exists where there is cessation
of work because “continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay” and other benefits. Aptly called a
dismissal in disguise of an act amounting to dismissal but made to appear as if it were
not,constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment.In cases of a transfer of
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an employee, the rule is settled that the employer is charged with the burden of proving that its
conduct and action are for valid and legitimate grounds such as genuine business necessity and
that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the
employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to
unlawful constructive dismissal. Jonathan V. Morales vs. Harbour Centre Port Terminal,
Inc., G.R. No. 174208, January 25, 2011.
Contract; novation. Novation is the extinguishment of an obligation by the substitution or
change of the obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the debtor, or
by subrogating a third person in the rights of the creditor. In order for novation to take place, the
concurrence of the following requisites is indispensable: (1) There must be a previous valid
obligation; (2) There must be an agreement of the parties concerned to a new contract; (3) There
must be the extinguishment of the old contract; and (4) There must be the validity of the new
contract. The parties impliedly extinguished the first contract by agreeing to enter into the
second contract. The records also reveal that the 2ndcontract extinguished the first contract by
changing its object or principal. These contracts were for overseas employment aboard different
vessels. The first contract was for employment aboard the MV “Stolt Aspiration” while the
second contract involved working in another vessel, the MV “Stolt Pride.” Petitioners and
Madequillo, Jr. accepted the terms and conditions of the second contract. Undoubtedly, he was
still employed under the first contract when he negotiated with petitioners on the second
contract. Since Madequillo was still employed under the first contract when he negotiated with
petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen
Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; money claims. On the issue of how the seafarer will be compensated by reason of
the unreasonable non-deployment, the Supreme Court decreed the application of Section 10 of
Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a
contract involving Filipino workers for overseas deployment. The law provides:
Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages. x x x (Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the
second phrase of the provision. Applying the rules on actual damages, Article 2199 of the New
Civil Code provides that one is entitled to an adequate compensation only for such pecuniary
loss suffered by him as he has duly proved. Stolt-Nielsen Transportation Group, Inc., et al. vs.
Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary
measure resorted to by the employer pending investigation of an alleged malfeasance or
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misfeasance committed by an employee. The employer temporarily bars the employee from
working if his continued employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers. On the other hand, the penalty of suspension refers to the
disciplinary action imposed on the employee after an official investigation or administrative
hearing is conducted. The employer exercises its right to discipline erring employees pursuant to
company rules and regulations. In the present case, Henry Delada filed a grievance against
Manila Pavilion Hotel (MPH). Failing to reach a settlement, Delada lodged a Complaint before
the National Conciliation and Mediation Board, which was eventually referred to a panel of
voluntary arbitrators (PVA). Meanwhile, citing security and safety reasons, MPH placed Delada
on a 30-day preventive suspension and proceeded with the administrative case against him.
MPH eventually found Delada liable for insubordination and willful disobedience of the transfer
order and imposed upon him a penalty of 90-day suspension. The PVA ruled that there was no
legal and factual basis to support MPH’s imposition of preventive suspension on Delada, and
that the penalty of 90-day suspension imposed by MPH against Delada went beyond the 30-day
period of preventive suspension prescribed by the Implementing Rules of the Labor Code. PVA
also ruled that MPH lost its authority to continue with the administrative proceedings for
insubordination and willful disobedience of the transfer order and to impose the penalty of 90-
day suspension on Delada. According to the panel, it acquired exclusive jurisdiction over the
issue when the parties submitted the aforementioned issues before it. The Supreme Court held
that MPH did not lose its authority to discipline, and that MPH had the authority to continue
with the administrative proceedings for insubordination and willful disobedience against Delada
and to impose on him the penalty of suspension. Manila Pavilion Hotel, etc. vs. Henry
Delada, G.R. No. 189947, January 25, 2011.
Employee; release and quitclaim. While the law looks with disfavor upon releases and
quitclaims by employees who are inveigled or pressured into signing them by unscrupulous
employers seeking to evade their legal responsibilities, a legitimate waiver representing a
voluntary settlement of a laborer’s claims should be respected by the courts as the law between
the parties. Considering the petitioner’s claim of fraud and bad faith against Philcomsat to be
unsubstantiated, the Supreme Court found the quitclaim in dispute to be a legitimate waiver.
The Court of Appeals and the National Labor Relations Commission were unanimous in holding
that the petitioner voluntarily executed the subject quitclaim. The Supreme Court is not a trier of
facts, and this doctrine applies with greater force in labor cases. Factual questions are for the
labor tribunals to resolve and whether the petitioner voluntarily executed the subject quitclaim
is a question of fact. In this case, the factual issues have already been determined by the
National Labor Relations Commission and its findings were affirmed by the Court of Appeals.
Judicial review by the Supreme Court does not extend to a reevaluation of the sufficiency of the
evidence upon which the proper labor tribunal has based its determination. Hypte R. Aujero vs.
Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.
Employee benefit; holiday pay, service incentive leave pay and proportionate 13th month
pay. Under the Labor Code, the employee is entitled to his regular rate on holidays even if he
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does not work. Likewise, express provision of the law entitles him to service incentive leave
benefit if he has rendered service for more than a year already. Furthermore, under Presidential
Decree No. 851, the employee should be paid his 13th month pay. The employer has the
burden of proving that it has paid these benefits to its employees. AbdulJuahid R. Pigcaulan vs.
Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16,
2011.
Employee benefit; overtime pay. In the absence of any concrete proof that additional service
beyond the normal working hours and days had been rendered, overtime pay cannot be granted.
Handwritten itemized computations are self-serving, unreliable and unsubstantiated evidence to
sustain the grant of salary differentials, particularly overtime pay. Unsigned and
unauthenticated as they are, there is no way of verifying the truth of the handwritten entries
stated therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene
Amby Reyes, G.R. No. 173648, January 16, 2011.
Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National
Labor Relations Commission, G.R. No. 159887, April 12, 2006, which stated that: “Thus, the
Court has applied the Labor Code concept of permanent total disability to the case of seafarers.
In Philippine Transmarine Carriers v. NLRC, G.R. No. 123891, February 28, 2001, seaman
Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy and
was declared as unfit to work by the company-accredited physician. The Court affirmed the
award of disability benefits to the seaman, citing ECC v. Sanico, G.R. No. 134028, December
17, 1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA, G.R. No. 116015, July
31, 1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that “disability should not
be understood more on its medical significance but on the loss of earning capacity. Permanent
total disability means disablement of an employee to earn wages in the same kind of work, or
work of similar nature that [he] was trained for or accustomed to perform, or any kind of work
which a person of [his] mentality and attainment could do. It does not mean absolute
helplessness.” It likewise citedBejerano to reiterate that in a disability compensation, it is not the
injury which is compensated, but rather it is the incapacity to work resulting in the impairment
of one’s earning capacity. The Court also cited the more recent case of Crystal Shipping, Inc. v.
Natividad, G.R. No. 154798, October 20, 2005,applying the same principles, and GSIS v.
Cadiz, G.R. No. 145093, July 8, 2003, and Ijares v. CA, G.R. No. 105854, August 26, 1999,
which declared that “permanent disability is the inability of a worker to perform his job for more
than 120 days, regardless of whether or not he loses the use of any part of his body.” Magsaysay
Maritime Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.
Employee dismissal; due process. Notice and hearing constitute the essential elements of due
process in the dismissal of employees. 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. With regard to the requirement of a
hearing, the essence of due process lies simply in an opportunity to be heard, and not that an
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actual hearing should always and indispensably be held. These requirements were satisfied in
this case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of
the particular acts being imputed against him, as well as the applicable law and the company
rules considered to have been violated. On November 17, 2003, Meralco conducted a hearing
on the charges against the petitioner where he was accorded the right to air his side and present
his defenses on the charges against him. Significantly, a high-ranking officer of the supervisory
union of Meralco assisted him during the said investigation. His sworn statement that forms part
of the case records even listed the matters that were raised during the investigation. Finally,
Meralco served a notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified
the latter of the company’s decision to dismiss him from employment on the grounds clearly
discussed therein.Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No.
190436, January 16, 2011.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an
employee, it is necessary to comply with the requirements of due process prior to the
termination. Lolita S. Concepcion vs. Minex Import Corporation/Minerama Corporation, et
al., G.R. No. 153569, January 24, 2011.
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as
the “want of care in the performance of one’s duties” and habitual neglect has been defined as
“repeated failure to perform one’s duties for a period of time, depending upon the
circumstances.” These are not overly technical terms, which, in the first place, are expressly
sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by employer. –
An employer may terminate an employment for any of the following causes: [xxx](b) Gross and
habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from
service due to habitual tardiness and absenteeism, and for having continued disregarding
attendance policies despite his undertaking to report on time. His weekly time record for the first
quarter of the year 2000 revealed that he came late 19 times out of the 47 times he reported for
work. He also incurred 19 absences out of the 66 working days during the quarter. His absences
without prior notice and approval from March 11-16, 2000 were considered to be the most
serious infraction of all because of its adverse effect on business operations. The Supreme Court
held that even in the absence of a written company rule defining gross and habitual neglect of
duties, Bitara’s omissions qualify as such warranting his dismissal from the service. Mansion
Printing Center and Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120, January 25, 2011.
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the
existence of a just and valid cause. Article 282 of the Labor Code enumerates the just causes for
termination by the employer: (a) serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or the latter’s representative in connection with the employee’s
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 his duly authorized representative;
(d) commission of a crime or offense by the employee against the person of his employer or any
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immediate member of his family or his duly authorized representative; and (e) other causes
analogous to the foregoing.
It is unfair to require an employer to first be morally certain of the guilt of the employee by
awaiting a conviction before terminating him when there is already sufficient showing of the
wrongdoing. Requiring that certainty may prove too late for the employer, whose loss may
potentially be beyond repair. In the present case, no less than the DOJ Secretary found probable
cause for qualified theft against Concepcion. That finding was enough to justify her termination
for loss of confidence. Lolita S. Concepcion vs. Minex Import Corporation/Minerama
Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid
ground for dismissal, it must be based on a willful breach of trust and founded on clearly
established facts. A 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. In addition, loss of trust and confidence must rest on substantial
grounds and not on the employer’s arbitrariness, whims, caprices or suspicion. Manila Electric
Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.
Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an
employment because of an employee’s serious misconduct, a cause that was present in this case
in view of the petitioner’s violation of his employer’s code of conduct. Misconduct is defined as
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.” For
serious misconduct to justify dismissal, the following requisites must be present: (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. Installation of shunting
wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate,
pursued solely to wrongfully obtain electric power through unlawful means. The act clearly
relates to the petitioner’s performance of his duties given his position as branch field
representative who is equipped with knowledge on meter operations, and who has the duty to
test electric meters and handle customers’ violations of contract. Instead of protecting the
company’s interest, the petitioner himself used his knowledge to illegally obtain electric power
from Meralco. His involvement in this incident deems him no longer fit to continue performing
his functions for respondent-company. Norman Yabut vs. Manila Electric Company and Manuel
M. Lopez, G.R. No. 190436, January 16, 2011.
Employer-employee relationship; commencement. The POEA Standard Employment Contract
provides that employment shall commence “upon the actual departure of the seafarer from the
airport or seaport in the port of hire.” Distinction must be made between the perfection of the
employment contract and the commencement of the employer-employee relationship. The
perfection of the contract, which in this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the object and the cause, as well as the rest
of the terms and conditions therein. The commencement of the employer-employee relationship
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would have taken place had petitioner been actually deployed from the point of hire. Stolt-
Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18,
2011.
Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has
already become final and executory as to Canoy since he did not appeal from it. Canoy cannot
now simply incorporate in his affidavit a verification of the contents and allegations of the
petition as he is not one of the petitioners therein. AbdulJuahid R. Pigcaulan vs. Security and
Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be
stated as follows: (1) The judgment or decree of a court of competent jurisdiction on the merits
concludes the parties and their privies to the litigation and constitutes a bar to a new action or
suit involving the same cause of action either before the same or any other tribunal; and (2) Any
right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of
an action before a competent court in which a judgment or decree is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated between the parties
and their privies whether the claim or demand, purpose, or subject matter of the two suits is the
same or not. These two main rules mark the distinction between the principles governing the
two typical cases in which a judgment may operate as evidence. In speaking of these cases, the
first general rule, and which corresponds to paragraph (b) of Section 47 of Rule 39 of the Rules
of Court is referred to as “bar by former judgment” while the second general rule, which is
embodied in paragraph (c) of the same section, is known as “conclusiveness of judgment.” The
present labor case is closely related to the civil case that was decided with finality. The acts and
omissions alleged by the Bank in the civil case as basis of its counterclaim against Mauricio are
the very same acts and omissions which were used as grounds to terminate his employment.
Considering that it has already been conclusively determined with finality in the civil case that
the questioned acts of Mauricio were well within his discretion as branch manager and
approving officer of the Bank, and the same were sanctioned by the Head Office, the Supreme
Court found that the Court of Appeals did not err in holding that there was no valid or just cause
for the Bank to terminate Mauricio’s employment. Prudential Bank (now Bank of the Philippine
Islands) vs. Antonio S.A. Mauricio, substituted by his legal heirs Maria Fe, Voltaire, Antonio, Jr.,
Antonio, Earl John, and Francisco Roberto all surnamed Mauricio, G.R. No. 183350, January 18,
2011.
Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator
Magsalin, G.R. No. 90426, December 15, 1989, the Supreme Court ruled that the voluntary
arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to
determine the scope of his own authority – subject only, in a proper case, to the certiorari
jurisdiction of this Court. It was also held in that case that the failure of the parties to specifically
limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over the
related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20, 2003, the
Supreme Court recognized that voluntary arbitrators are generally expected to decide only those
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questions expressly delineated by the submission agreement; that, nevertheless, they can assume
that they have the necessary power to make a final settlement on the related issues, since
arbitration is the final resort for the adjudication of disputes. Thus, the Supreme Court ruled that
even if the specific issue brought before the arbitrators merely mentioned the question of
“whether an employee was discharged for just cause,” they could reasonably assume that their
powers extended beyond the determination thereof to include the power to reinstate the
employee or to grant back wages. In the same vein, if the specific issue brought before the
arbitrators referred to the date of regularization of the employee, law and jurisprudence gave
them enough leeway as well as adequate prerogative to determine the entitlement of the
employees to higher benefits in accordance with the finding of regularization. Indeed, to require
the parties to file another action for payment of those benefits would certainly undermine labor
proceedings and contravene the constitutional mandate providing full protection to labor and
speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25,
2011.
Procedural rules; liberal application; when waived. Procedural rules may be waived or
dispensed with in absolutely meritorious cases. The Supreme Court, in past cases, has adhered
to the strict implementation of the rules and considered them inviolable when it is shown that
the patent lack of merit of the appeals render liberal interpretation pointless and naught. The
contrary obtains in this case as Philcomsat’s case is not entirely unmeritorious. Specifically,
Philcomsat alleged that the petitioner’s execution of the subject quitclaim was voluntary despite
his claim that he did not do so. Philcomsat likewise argued that the petitioner’s educational
attainment and the position he occupied in Philcomsat’s hierarchy militate against his claim that
he was pressured or coerced into signing the quitclaim. The emerging trend in our jurisprudence
is to afford every party-litigant the amplest opportunity for the proper and just determination of
his cause free from the constraints of technicalities. Far from having gravely abused its discretion,
the NLRC correctly prioritized substantial justice over the rigid and stringent application of
procedural rules. In the present case, the Supreme Court held that the CA was correct in not
finding grave abuse of discretion in the NLRC’s decision to give due course to Philcomsat’s
appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine Communications Satellite
Corporation, G.R. No. 193484, January 18, 2011.
Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment
of personnel is permissible even without the employee’s prior consent, it cannot be done when
the transfer is a preliminary step toward his removal, or a scheme to lure him away from his
permanent position, or when it is designed to indirectly terminate his service, or force his
resignation. Such a transfer would in effect circumvent the provision which safeguards the
tenure of office of those who are in the Civil Service. Significantly, Section 6, Rule III of CSC
Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when
an employee quits his work because of the agency head’s unreasonable, humiliating, or
demeaning actuations which render continued work impossible. Hence, the employee is
deemed to have been illegally dismissed. This may occur although there is no diminution or
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reduction of salary of the employee. It may be a transfer from one position of dignity to a more
servile or menial job. Republic of the Phil., represented by the Civil Service Commission vs.
Minerva M.P. Pacheco, G.R. No. 178021, January 31, 2011.
Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement is
no longer feasible, backwages shall be computed from the time of illegal dismissal up to the
finality of the decision should separation pay not be paid in the meantime. It is the employee’s
actual receipt of the full amount of his separation pay that will effectively terminate the
employment of an illegally dismissed employee. Otherwise, the employer-employee
relationship subsists and the illegally dismissed employee is entitled to backwages, taking into
account the increases and other benefits, including the 13th month pay, that were received by
his co-employees who are not dismissed. It is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits
and bonuses and general increases, to which he would have been normally entitled had he not
been dismissed and had not stopped working. Timoteo H. Sarona vs. National Labor Relations
Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.
Reorganization; management prerogative. Admittedly, the right of employees to security of
tenure does not give them vested rights to their positions to the extent of depriving management
of its prerogative to change their assignments or to transfer them. By management prerogative is
meant the right of an employer to regulate all aspects of employment, such as the freedom to
prescribe work assignments, working methods, processes to be followed, regulation regarding
transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall
of workers. Although jurisprudence recognizes said management prerogative, it has been ruled
that the exercise thereof, while ordinarily not interfered with, is not absolute and is subject to
limitations imposed by law, collective bargaining agreement, and general principles of fair play
and justice. Thus, an employer may transfer or assign employees from one office or area of
operation to another, provided there is no demotion in rank or diminution of salary, benefits,
and other privileges, and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. Indeed, having the right
should not be confused with the manner in which that right is exercised. Jonathan V. Morales
was hired by Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance
Officer, with a monthly salary of P18,000.00. Regularized on November 17, 2000, Morales was
promoted to Division Manager of the Accounting Department, for which he was compensated a
monthly salary of P33,700.00, plus allowances starting July 1, 2002. Subsequent to HCPTI’s
transfer to its new offices at Vitas, Tondo, Manila on January 2, 2003, Morales received an inter-
office memorandum dated March 27, 2003, reassigning him to Operations Cost Accounting,
tasked with the duty of “monitoring and evaluating all consumables requests, gears and
equipment” related to the corporation’s operations and of interacting with its sub-contractor,
Bulk Fleet Marine Corporation. The memorandum was issued by HCPTI’s new Administration
Manager, duly noted by its new Vice President for Administration and Finance, and approved by
its President and Chief Executive Officer. Morales protested that his reassignment was a clear
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demotion since the position to which he was transferred was not even included in HCPTI’s
plantilla. In response to Morales’ grievance that he had been effectively placed on floating status,
an inter-office memorandum was issued on April 4, 2003 to the effect that “transfer of
employees is a management prerogative” and that HCPTI had “the right and responsibility to
find the perfect balance between the skills and abilities of employees to the needs of the
business.” However, the Supreme Court found that HCPTI did not even bother to show that it
had implemented a corporate reorganization and/or approved a new plantilla of positions which
included the one to which Morales was being transferred. Thus, the Court reinstated the NLRC’s
July 29, 2005 Decision which found Morales’ reassignment to be a clear demotion despite lack
of showing of diminution of salaries and benefits. Jonathan V. Morales vs. Harbour Centre Port
Terminal, Inc., G.R. No. 174208, January 25, 2011.
Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a
petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise
questions of law. Moreover, if factual findings of the National Labor Relations Commission and
the Labor Arbiter have been affirmed by the Court of Appeals, the Supreme Court accords them
the respect and finality they deserve. It is well-settled and oft-repeated that 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 respect, but finality
when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to
deviate from what are clearly procedural guidelines and disturb and strike down the findings of
the Court of Appeals and those of the labor tribunals if there is a showing that they are
unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed,
that the impugned decision of the Court of Appeals is consistent with the findings of the labor
tribunals does not per se conclusively demonstrate the correctness thereof. By way of exception
to the general rule, the Supreme Court will scrutinize the facts if only to rectify the prejudice and
injustice resulting from an incorrect assessment of the evidence presented. Timoteo H. Sarona vs.
National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January
18, 2011.
Appeal; factual finding of NLRC. 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 respect but finality when affirmed by the Court of Appeals.
Factual findings of quasi-judicial bodies like the NLRC, if supported by substantial evidence, are
accorded respect and even finality by the Supreme 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. In the present case, the Supreme Court found no reason to
depart from these principles since the Labor Arbiter found that there was substantial evidence to
conclude that Oasay had breached the trust and confidence of Palacio Del Gobernador
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Condominium Corporation, which finding the NLRC had likewise upheld. Sebastian F. Oasay, Jr.
vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz,G.R. No. 194306,
February 6, 2012.
Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its
existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be
the implementing and operating arm of the Bases Conversion and Development Authority
tasked to manage the Clark Special Economic Zone. Expressly, CDC was formed in accordance
with Philippine corporation laws and existing rules and regulations promulgated by the
Securities and Exchange Commission pursuant to Section 16 of Republic Act 7227. CDC, a
government owned or controlled corporation without an original charter, was incorporated
under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the Constitution, the civil
service embraces only those government owned or controlled corporations with original charter.
As such, CDC and its employees are covered by the Labor Code and not by the Civil Service
Law. Antonio B. Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.
Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of resignation. Article
285 of the Labor Code recognizes termination by the employee of the employment contract by
“serving written notice on the employer at least one (1) month in advance.” Given that provision,
the law contemplates the requirement of a written notice of resignation. In the absence of a
written resignation, it is safe to presume that the employer terminated the seafarers. In this
case, the Supreme Court found the dismissal of De Gracia, et al. to be illegal since Cosmoship
merely sent a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were
repatriated because the latter voluntarily pre-terminated their contracts. Skippers United Pacific,
Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No.
175558. February 8, 2012.
Dismissal; substantive and procedural due process. For a worker’s dismissal to be considered
valid, it must comply with both procedural and substantive due process. The legality of the
manner of dismissal constitutes procedural due process, while the legality of the act of dismissal
constitutes substantive due process. Procedural due process in dismissal cases consists of the
twin requirements of notice and hearing. The employer must furnish the employee with two
written notices before the termination of employment can be effected: (1) the first notice
apprises the employee of the particular acts or omissions for which his dismissal is sought; and
(2) the second notice informs the employee of the employer’s decision to dismiss him. Before
the issuance of the second notice, the requirement of a hearing must be complied with by giving
the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted.
Substantive due process, on the other hand, requires that dismissal by the employer be made
based on a just or authorized cause under Articles 282 to 284 of the Labor Code. In this case,
there was no written notice furnished to De Gracia, et al. regarding the cause of their dismissal.
Cosmoship furnished a telex to Skippers, the local manning agency, claiming that De Gracia, et
al. were repatriated because they voluntarily pre-terminated their contracts. This telex was given
credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination
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of the employment contract “akin to resignation” and no illegal dismissal. However, as correctly
ruled by the CA, the telex message is “a biased and self-serving document that does not satisfy
the requirement of substantial evidence.” If, indeed, De Gracia, et al. voluntarily pre-terminated
their contracts, then De Gracia, et al. should have submitted their written resignations. Skippers
United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No.
175558. February 8, 2012.
Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity
or act of liberality of the giver which the recipient cannot demand as a matter of right. The grant
of a bonus is basically a management prerogative which cannot be forced upon the employer
who may not be obliged to assume the onerous burden of granting bonuses. However, a bonus
becomes a demandable or enforceable obligation if the additional compensation is granted
without any conditions imposed for its payment. In such case, the bonus is treated as part of the
wage, salary or compensation of the employee. Particularly instructive is the ruling of the Court
in Metro Transit Organization, Inc. v. National Labor Relations Commission (G.R. No. 116008,
July 11, 1995) where the Court said:
Whether or not a bonus forms part of wages depends upon the circumstances and conditions for
its payment. If it is additional compensation which the employer promised and agreed to give
without any conditions imposed for its payment, such as success of business or greater
production or output, then it is part of the wage. But if it is paid only if profits are realized or if a
certain level of productivity is achieved, it cannot be considered part of the wage. Where it is
not payable to all but only to some employees and only when their labor becomes more
efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part
of the wage.
In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern
Telecoms Employees Union agreed on the inclusion of a provision for the grant of 14th,
15th and 16th month bonuses in the 1998-2001 CBA Side Agreement, as well as in their 2001-
2004 CBA Side Agreement, which contained no qualification for its payment. There were no
conditions specified in the CBA Side Agreements for the grant of the bonus. There was nothing
in the relevant provisions of the CBA which made the grant of the bonus dependent on the
company’s financial standing or contingent upon the realization of profits. There was also no
statement that if the company derives no profits, no bonus will be given to the employees. In
fine, the payment of these bonuses was not related to the profitability of business
operations. Consequently, the giving of the subject bonuses cannot be peremptorily withdrawn
by Eastern Telecommunications Phils., Inc. without violating Article 100 of the Labor Code,
which prohibits the unilateral elimination or diminution of benefits by the employer. The rule is
settled that any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution of
benefits is founded on the constitutional mandate to protect the rights of workers and to promote
their welfare and to afford labor full protection. Eastern Telecommunications Philippines, Inc. vs.
Eastern Telecoms Employees Union,G.R. No. 185665, February 8, 2012.
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Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has
the burden of proving that the transfer of an employee is for just or valid ground, such as
genuine business necessity. The employer must demonstrate that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not
involve a demotion in rank or a diminution in salary and other benefits. “If the employer fails to
overcome this burden of proof, the employee’s transfer is tantamount to unlawful constructive
dismissal.” [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25,
2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or
valid ground. Petitioners’ bare assertions of imminent threat from the respondents are mere
accusations which are not substantiated by any proof. The Supreme Court agreed with the Court
of Appeals in ruling that the transfer of respondents amounted to a demotion. Julie’s Bakeshop
and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.
Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for
termination, Article 284 of the Labor Code provides that 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. In order to validly terminate employment on this ground, Section 8, Rule I, Book VI
of the Omnibus Rules Implementing the Labor Code requires that: (i) the employee be suffering
from a disease and his continued employment is prohibited by law or prejudicial to his health or
to the health of his co-employees, and (ii) 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. If the disease or ailment can be cured within the
period, the employer shall not terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former position immediately upon the
restoration of his normal health. In Triple Eight Integrated Services, Inc. v. NLRC (G.R. No.
129584, December 3, 1998), the Court held that the requirement for a medical certificate under
Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s
illness and, thus, defeat the public policy on the protection of labor.
In this case, Ynson should have reported back to work or attended the investigations conducted
by Wuerth Philippines, Inc. immediately upon being permitted to work by his doctors, knowing
that his position remained vacant for a considerable length of time. However, he did not even
show any sincere effort to return to work. Clearly, since there is no more hindrance for him to
return to work and attend the investigations set by Wuerth Philippines, Inc., Ynson’s failure to
do so was without any valid or justifiable reason. His conduct shows his indifference and utter
disregard of his work and his employer’s interest, and displays his clear, deliberate, and gross
dereliction of duties. 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, 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
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for cause. As a general rule, employers are allowed wide latitude of discretion in terminating the
employment of managerial personnel. The mere existence of a basis for believing that such
employee has breached the trust and confidence of his employer would suffice for his dismissal.
Needless to say, an irresponsible employee like Ynson does not deserve a position in the
workplace, and it is Wuerth Philippines, Inc.’s management prerogative to terminate his
employment. To be sure, an employer cannot be compelled to continue with the employment of
workers when continued employment will prove inimical to the employer’s interest. Wuerth
Philippines, Inc. vs. Rodante Ynson, G.R. No. 175932, February 15, 2012.
Employee dismissal; due process. With respect to due process requirement, the employer is
bound to furnish the employee concerned with two (2) written notices before termination of
employment can be legally effected. One is the notice apprising the employee of the particular
acts or omissions for which his dismissal is sought and this may loosely be considered as the
proper charge. The other is the notice informing the employee of the management’s decision to
sever his employment. This decision, however, must come only after the employee is given a
reasonable period from receipt of the first notice within which to answer the charge, thereby
giving him ample opportunity to be heard and defend himself with the assistance of his
representative should he so desire. The requirement of notice, it has been stressed, is not a mere
technicality but a requirement of due process to which every employee is entitled. Here, Palacio
Del Gobernador Condominium Corporation complied with the “two-notice rule” stated
above. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar
T. Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; due process. Cityland did not afford Galang the required notice before he
was dismissed. As the Court of Appeals noted, the investigation conference Tupas called to look
into the janitors’ complaints against Galang did not constitute the written notice required by law
as he had no clear idea what the charges against him were. Romeo A. Galang vs. Citiland Shaw
Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.
Employee dismissal; grounds. The validity of an employee’s dismissal from service hinges on the
satisfaction of the two substantive requirements for a lawful termination. These are, first,
whether the employee was accorded due process the basic components of which are the
opportunity to be heard and to defend himself. This is the procedural aspect. And second,
whether the dismissal is for any of the causes provided in the Labor Code of the
Philippines. This constitutes the substantive aspect. On the substantive aspect, the Supreme
Court found that Palacio Del Gobernador Condominium Corporation’s termination of the
Oasay’s employment was for a cause provided under the Labor Code. In terminating Oasay’s
employment, Palacio Del Gobernador Condominium Corporation invoked loss of trust and
confidence. The first requisite for dismissal on the ground of loss of trust and confidence is that
the employee concerned must be holding a position of trust and confidence. Here, it is
indubitable that Oasay holds a position of trust and confidence. The position of Building
Administrator, being managerial in nature, necessarily enjoys the trust and confidence of the
employer. The second requisite is that there must be an act that would justify the loss of trust
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and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based
on a willful breach of trust and founded on clearly established facts. Palacio Del Gobernador
Condominium Corporation had established, by clear and convincing evidence, Oasay’s acts
which justified its loss of trust and confidence on the former. Sebastian F. Oasay, Jr. vs. Palacio
del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6,
2012.
Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to
continue his employment. The evidence supports the view that he continued to exhibit
undesirable traits as an employee and as a person, in relation to both his co-workers and his
superiors, particularly Tupas, her immediate supervisor. Quoting the Court of Appeals’ decision
with approval, the Supreme Court held: “Without offering any possible ill motive that might
have impelled [the respondents] to summarily dismiss [Galang], who admitted having been
absorbed by the former as janitor upon the termination of his contract with his agency, this
Court is more inclined to give credence to the evidence pointing to the conclusion that
[Galang’s] employment was actually severed for a just cause.” Romeo A. Galang vs. Citiland
Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.
Employer; right to discipline employee. In Sagales v. Rustan’s Commercial Corporation (G.R.
No. 166554, November 27, 2008), the Supreme Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its
employees, this prerogative is subject to the regulation by the State in the exercise of its police
power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should merit
only the corresponding penalty demanded by the circumstance. The penalty must be
commensurate with the act, conduct or omission imputed to the employee and must be
imposed in connection with the disciplinary authority of the employer. (Emphasis in the
original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of
dismissal. There was no warning or admonition for respondent’s violation of team rules, only
outright termination of his services for an act which could have been punished appropriately
with a severe reprimand or suspension. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente
Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to
establish or substantiate such claim by the requisite quantum of evidence. The issue of Javier’s
alleged illegal dismissal is anchored on the existence of an employer-employee relationship
between him and Fly Ace. As the records bear out, the Labor Arbiter and the Court of Appeals
found Javier’s claim of employment with Fly Ace as wanting and deficient. Although Section 10,
Rule VII of the New Rules of Procedure of the NLRC allows a relaxation of the rules of
procedure and evidence in labor cases, this rule of liberality does not mean a complete
dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts
speedily and objectively with little regard to technicalities or formalities but nowhere in the
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rules are they provided a license to completely discount evidence, or the lack of it. The
quantum of proof required, however, must still be satisfied. Hence, “when confronted with
conflicting versions on factual matters, it is for them in the exercise of discretion to determine
which party deserves credence on the basis of evidence received, subject only to the
requirement that their decision must be supported by substantial evidence.” [Salvador Lacorte v.
Hon. Amado G. Inciong, 248 Phil. 232 (1988)] Accordingly, Javier needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal
dismissal. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No.
192558, February 15, 2012.
Employer-employee relationship; test. To determine the existence of an employer-employee
relationship, the following are considered: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct. Of these elements, the most important criterion is whether the employer
controls or has reserved the right to control the employee not only as to the result of the work
but also as to the means and methods by which the result is to be accomplished. In this case,
Javier was not able to persuade the Court that the above elements exist in his case. He could
not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly
Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be
while at work. In other words, Javier’s allegations did not establish that his relationship with Fly
Ace had the attributes of an employer-employee relationship on the basis of the above-
mentioned four-fold test. Worse, Javier was not able to refute Fly Ace’s assertion that it had an
agreement with a hauling company to undertake the delivery of its goods. It was also baffling to
realize that Javier did not dispute Fly Ace’s denial of his services’ exclusivity to the company. In
short, all that Javier laid down were bare allegations without corroborative proof. Bitoy Javier
(Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15,
2012.
Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation;
perfection or birth; and consummation. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends at the moment of agreement
of the parties. Perfection or birth of the contract takes place when the parties agree upon the
essential elements of the contract. Consummation occurs when the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment thereof. Under Article
1315 of the Civil Code, a contract is perfected by mere consent and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in keeping with good faith, usage
and law. An employment contract, like any other contract, is perfected at the moment (1) the
parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a)
consent of the contracting parties, (b) object certain which is the subject matter of the contract
and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal,
International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a
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3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is
the service to be rendered by Agustin and Minimo on board the vessel while the cause of the
contract is the monthly compensation they expect to receive. These terms were embodied in
the Contract of Employment which was executed by the parties. The agreement upon the terms
of the contract was manifested by the consent freely given by both parties through their
signatures in the contract. Neither parties disavow the consent they both voluntarily gave. Thus,
there is a perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer
Insurance and Surety Corporation, et al.,G.R. No. 179469, February 15, 2012.
Employment relationship; commencement. The commencement of an employer-employee
relationship must be treated separately from the perfection of an employment contract. Santiago
v. CF Sharp Crew Management, Inc., (G.R. No. 162419, 10 July 2007) is an instructive
precedent on this point. In that case, the Supreme Court made a distinction between the
perfection of the employment contract and the commencement of the employer-employee
relationship, thus:
The perfection of the contract, which in this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the object and the cause, as well as the rest
of the terms and conditions therein. The commencement of the employer-employee relationship,
as earlier discussed, would have taken place had petitioner been actually deployed from the
point of hire. Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth of certain rights
and obligations, the breach of which may give rise to a cause of action against the erring party.
Despite the fact that the employer-employee relationship has not commenced due to the failure
to deploy Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising
from the perfected Contract of Employment, such as the right to demand performance by C.F.
Sharp of its obligation under the contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer
Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.
Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there
be identity of parties or at least such parties that represent the same interests in both actions; (b)
there be identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in
one action will, regardless of which party is successful, amount to res judicata in the other
action. Petitioners are correct as to the first two requisites of forum shopping. First, there is
identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is identity
of rights asserted i.e., the right of management to terminate employment and the right of an
employee against illegal termination. However, the third requisite of forum shopping is missing
in this case. Any judgment or ruling of the Office of the Commissioner of the Metropolitan
Basketball Association will not amount to res judicata.Res judicata is defined in jurisprudence as
to have four basic elements: (1) the judgment sought to bar the new action must be final; (2) the
decision must have been rendered by a court having jurisdiction over the subject matter and the
parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as
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between the first and second action, identity of parties, subject matter, and causes of action.
Here, although contractually authorized to settle disputes, the Office of the Commissioner of the
Metropolitan Basketball Association is not a court of competent jurisdiction as contemplated by
law with respect to the application of the doctrine of res judicata. At best, the Office of the
Commissioner of the Metropolitan Basketball Association is a private mediator or go-between as
agreed upon by team management and a player in the Metropolitan Basketball Association
Player’s Contract of Employment. Any judgment that the Office of the Commissioner of the
Metropolitan Basketball Association may render will not result in a bar for seeking redress in
other legal venues. Hence, respondent’s action of filing the same complaint in the Regional
Arbitration Branch of the NLRC does not constitute forum shopping. Negros Slashers, Inc.,
Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified
and certified against forum-shopping by the parties-in-interest themselves. The purpose of
verification is to secure an assurance that the allegations in the pleading are true and correct and
have been filed in good faith. In the case at bar, the parties-in-interest are petitioner Salenga, as
the employee, and respondent Clark Development Corporation as the employer. A corporation
can only exercise its powers and transact its business through its board of directors and through
its officers and agents when authorized by a board resolution or its bylaws. The power of a
corporation to sue and be sued is exercised by the board of directors. The physical acts of the
corporation, like the signing of documents, can be performed only by natural persons duly
authorized for the purpose by corporate bylaws or by a specific act of the board. Absent the
requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the
Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent
corporation, may be considered as the “appellant” and “employer” referred to by the NLRC
Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B.
Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.
Labor; effect if procedural due process not followed but with a valid cause for termination. It is
required that the employer furnish the employee with two written notices: (1) a written notice
served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side; and (2) a written notice of
termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. The twin requirements
of notice and hearing constitute the elements of due process in cases of employee’s
dismissal. The requirement of notice is intended to inform the employee concerned of the
employer’s intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his employer’s charges
against him and accordingly, to defend himself therefrom before dismissal is
effected. Obviously, the second written notice, as indispensable as the first, is intended to
ensure the observance of due process. In this case, there was only one written notice which
required respondents to explain within five (5) days why they should not be dismissed from the
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service. Alcovendas was the only one who signed the receipt of the notice. The others, as
claimed by Lynvil, refused to sign. The other employees argue that no notice was given to
them. Despite the inconsistencies, what is clear is that no final written notice or notices of
termination were sent to the employees. Due to the failure of Lynvil to follow the procedural
requirement of two-notice rule, nominal damages in the amount of P50,000 were granted to
Ariola, et al. despite their dismissal for just cause. Lynvil Fishing Enterprises, Inc. vs. Andres G.
Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate
directors and officers are solidarily liable with the corporation for the termination of
employment of employees done with malice or in bad faith. Indeed, moral damages are
recoverable when the dismissal of an employee 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. The term “bad faith” contemplates a “state of mind affirmatively operating with
furtive design or with some motive of self-interest or will or for ulterior purpose.” The Supreme
Court agreed with the ruling of both the NLRC and the Court of Appeals when they pronounced
that there was no evidence on record that indicates commission of bad faith on the part of De
Borja, the general manager of Lynvil, who was tasked with the supervision of the employees and
the operation of the business. There is no proof that he imposed on Ariola, et al. the “por viaje”
provision for purpose of effecting their summary dismissal.Lynvil Fishing Enterprises, Inc. vs.
Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; nature of employment; security of tenure. In the context of these facts — (1) Ariola, et al.
were doing tasks necessary to Lynvil’s fishing business with positions ranging from captain of the
vessel tobodegero; (2) after the end of a trip, they will again be hired for another trip with new
contracts; and (3) this arrangement continued for more than ten years – the Court believed that
Lynvil intended to go around the security of tenure of Ariola, et al. as regular employees. The
Court held that by the express provisions of the second paragraph of Article 280 which cover
casual employment, Ariola, et al. had become regular employees of Lynvil. Lynvil Fishing
Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; procedural and substantive due process; grounds for valid termination; breach of
trust. Just cause is required for a valid dismissal. The Labor Code provides that an employer
may terminate an employment based on fraud or willful breach of the trust reposed on the
employee. Such breach is considered willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. It must also be based on substantial evidence and not on the
employer’s whims or caprices or suspicions otherwise, the employee would eternally remain at
the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by
the employer against a claim that the dismissal of an employee was arbitrary. And, in order to
constitute a just cause for dismissal, the act complained of must be work-related and shows that
the employee concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on the fact that the
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employee concerned holds a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence in delicate matters, such as the handling or
care and protection of the property and assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is penalized. The Supreme Court found that
breach of trust is present in this case, when Ariola (the captain), Alcovendas (Chief Mate),
Calinao (Chief Engineer), Nubla (cook), Bañez (oiler), and Sebullen (bodegero) conspired with
one another and stole “pampano” and “tangigue” fish and delivered them to another vessel, to
the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No.
181974, February 1, 2012.
Labor; public prosecutor’s decision not binding on the labor tribunal. The Supreme Court has
held inNicolas v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a
criminal conviction is not necessary to find just cause for employment termination. Otherwise
stated, an employee’s acquittal in a criminal case, especially one that is grounded on the
existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty
of acts inimical to the employer’s interests. In the reverse, the finding of probable cause is not
followed by automatic adoption of such finding by the labor tribunals. In other words,
whichever way the public prosecutor disposes of a complaint, the finding does not bind the
labor tribunal. Lynvil contends that the filing of a criminal case before the Office of the
Prosecutor is sufficient basis for a valid termination of employment based on serious misconduct
and/or loss of trust and confidence. The Supreme Court held that Lynvil cannot argue that since
the Office of the Prosecutor found probable cause for theft, the Labor Arbiter must follow the
finding as a valid reason for the termination of respondents’ employment. The proof required
for purposes that differ from one and the other are likewise different. Lynvil Fishing Enterprises,
Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court
decisions have laid two conditions for the validity of a fixed-contract agreement between the
employer and employee: First, 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 Second, it
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. Lynvil contends that
Ariola, et al. were employed under a fixed-term contract which expired at the end of the voyage.
Contrarily, Ariola, et al. contend that they became regular employees by reason of their
continuous hiring and performance of tasks necessary and desirable in the usual trade and
business of Lynvil. Textually, the provision in the contract between Lynvil and Ariola, et al.
that: “NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa
patakarang “por viaje” na magmumula sa pagalis sa Navotas papunta sa pangisdaan at
pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila” is for a fixed period of
employment. In the context, however, of the facts that: (1) Ariola, et al. were doing tasks
necessarily to Lynvil’s fishing business with positions ranging from captain of the vessel
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to bodegero; (2) after the end of a trip, they will again be hired for another trip with new
contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go
around the security of tenure of Ariola, et al. as regular employees. As such, the Supreme Court
found that Ariola, et al. are regular employees. Lynvil Fishing Enterprises, Inc. vs. Andres G.
Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor Code; maximum award of attorney’s fees in cases of recovery of wages. Article 111 of the
Labor Code provides for a maximum award of attorney’s fees in cases of recovery of wages:
a. In 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.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative
proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount
of wages recovered.
Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries
and protect their interest, attorney’s fees in the amount of ten percent (10%) of the total claims
was imposed. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd.
vs. Nathaniel Doza, et al.,G.R. No. 175558. February 8, 2012.
Labor contracting; elements. There is labor-only contracting where: (a) the person supplying
workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others; and (b) the workers recruited and
placed by such person are performing activities which are directly related to the principal
business of the employer. In the present case, the Supreme Court found that both the
capitalization requirement and the power of control on the part of Requiño are wanting.
Generally, the presumption is that the contractor is a labor-only contractor unless such
contractor overcomes the burden of proving that it has the substantial capital, investment, tools
and the like. In the present case, though Garden of Memories is not the contractor, it has the
burden of proving that Requiño has sufficient capital or investment since it is claiming the
supposed status of Requiño as independent contractor. Garden of Memories, however, failed to
adduce evidence purporting to show that Requiño had sufficient capitalization. Neither did it
show that she invested in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the completion of the service contract. Garden of Memories
Park and Life Plan, Inc., et al. vs. NLRC, 2nd Div., et al., G.R. No. 160278, February 8, 2012.
Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of
Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust
termination of employment contracts:
In case of termination of overseas employment without just, valid or authorized cause as defined
by law or contract, the workers shall be entitled to the full reimbursement of his placement fee
with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of
his employment contract or for three (3) months for every year of the unexpired term, whichever
is less.
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The Migrant Workers Act provides that salaries for the unexpired portion of the employment
contract or three (3) months for every year of the unexpired term, whichever is less, shall be
awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March
2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc. (G.R. No. 167614),
the Court, in an En Banc Decision, declared unconstitutional the clause “or for three months for
every year of the unexpired term, whichever is less” and awarded the entire unexpired portion
of the employment contract to the overseas Filipino worker. On 8 March 2010, however,
Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers
Act, and once again reiterated the provision of awarding the unexpired portion of the employent
contract or three (3) months for every year of the unexpired term, whichever is less.
Nevertheless, since the termination occurred on January 1999 before the passage of the
amendatory RA 10022, the Supreme Court applied RA 8042, without touching on the
constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the
unconstitutionality of the clause “or for three months for every year of the unexpired term,
whichever is less” in RA 8042 shall be given retroactive effect to the termination that occurred
in January 1999 because an unconstitutional clause in the law confers no rights, imposes no
duties and affords no protection. The unconstitutional provision is inoperative, as if it was not
passed into law at all. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd.
vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters)
may hold any offending party in contempt, directly or indirectly, and impose appropriate
penalties in accordance with law. The penalty for direct contempt consists of either
imprisonment or fine, the degree or amount depends on whether the contempt is against the
Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the
Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules
of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate
indirect contempt proceedings before the trial court. This mode is to be observed only when
there is no law granting them contempt powers. As is clear under Article 218(d) of the Labor
Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the
offending party or parties in direct or indirect contempt. Robosa, et al., therefore, have not
improperly brought the indirect contempt charges against the respondents before the
NLRC. Federico S. Robosa, et al. vs. National Labor Relations Commission (First Division), et
al., G.R. No. 176085, February 8, 2012.
NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming
those of the Labor Arbiter, are accorded respect and due consideration when supported by
substantial evidence. The Supreme Court, however, found that the doctrine of great respect and
finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.’s
complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent
rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution,
it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively
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dismissed. But later on, it again reversed itself in its third and final resolution of the case and
ruled in favor of Julie’s bakeshop. Therefore, contrary to Reyes’s claim, the NLRC did not, on
any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus
correct in reviewing the entire records of the case to determine which findings of the NLRC is
sound and in accordance with law. Besides, the Court of Appeals may still resolve factual issues
by express mandate of the law despite the respect given to administrative findings of fact. Julie’s
Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.
Probationary employee; valid cause for dismissal but without procedural due process; employee
entitled to nominal damages. Section 2, Rule I, Book VI of the Labor Code’s Implementing Rules
and Regulations provides: “If the termination is brought about by the completion of a contract or
phase thereof, or by failure of an employee to meet the standards of the employer in the 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.” Dalangin was hired by
Canadian Opportunities as Immigration and Legal Manager, subject to a probationary period of
six months. One month after hiring Dalangin, the company terminated his employment,
declaring him “unfit” and “unqualified” to continue as Immigration and Legal Manager, for
reasons which included obstinacy and utter disregard of company policies. Propensity to take
prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the
policies and objectives, lack of concern for the company’s interest despite having just been
employed in the company (Declined to attend company sponsored activities, seminars intended
to familiarize company employees with Management objectives and enhancement of company
interest and objectives), lack of enthusiasm toward work, and lack of interest in fostering
relationship with his co-employees. The company contends that it complied with the rule on
procedural due process when it asked Dalangin, through a Memorandum, to explain why he
could not attend the seminar. When he failed to submit his explanation, the company served
him a notice the following day terminating his employment. According to the Supreme Court,
the notice to Dalangin was not served within a reasonable time from the effective date of his
termination as required by the rules since he was dismissed on the very day the notice was
given to him. However, because of the existence of a valid cause for termination, the Supreme
Court did not invalidate his dismissal but penalized the company for its non-compliance with
the notice requirement, and ordered the company to pay an indemnity, in the form of nominal
damages amounting to P10,000. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin,
Jr., G.R. No. 172223, February 6, 2012.
Probationary employee; valid dismissal even before 6 months. The essence of a probationary
period of employment fundamentally lies in the purpose or objective of both the employer and
the employee during the period. While the employer observes the fitness, propriety and
efficiency of a probationer to ascertain whether he is qualified for permanent employment, the
latter seeks to prove to the former that he has the qualifications to meet the reasonable standards
for permanent employment. The “trial period” or the length of time the probationary employee
remains on probation depends on the parties’ agreement, but it shall not exceed six (6) months
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under Article 281 of the Labor Code. The Supreme Court found substantial evidence indicating
that the company was justified in terminating Dalangin’s probationary employment. Dalangin
admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to
attend the company’s “Values Formation Seminar” scheduled for October 27, 2001, a Saturday.
He refused to attend the seminar after he learned that it had no relation to his duties, as he
claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in the
province. When the Chief Operations Officer, insisted that he attend the seminar to encourage
his co-employees to attend, he stood pat on not attending, arguing that marked differences exist
between their positions and duties, and insinuating that he did not want to join the other
employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not
supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close
of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of
the law. This incident reveals Dalangin’s lack of interest in establishing a good working
relationship with his co-employees, especially the rank and file; he did not want to join them
because of his view that the seminar was not relevant to his position and duties. It also betrays
his arrogant and condescending attitude towards his co-employees, and a lack of support for the
company objective. Dalangin also exhibited negative working habits, particularly with respect
to the one hour lunch break policy of the company and the observance of the company’s
working hours. Dalangin would take prolonged lunch breaks or would go out of the office –
without leave of the company – and call the personnel manager later only to say that he would
be unable to return to the office because of some personal matters he needs to attend
to. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February
6, 2012.
Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by
courts in order to impart stability in the legal system. However, in not a few instances, the
Supreme Court has relaxed the rigid application of the rules of procedure to afford the parties
the opportunity to fully ventilate their cases on the merits. This is in line with the time honored
principle that cases should be decided only after giving all the parties the chance to argue their
causes and defenses. In that way, the ends of justice would be better served. For indeed, the
general objective of procedure is to facilitate the application of justice to the rival claims of
contending parties, bearing always in mind that procedure is not to hinder but to promote the
administration of justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No.
168115, June 8, 2007), the Supreme Court ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties’
right to due process. In numerous cases, this Court has allowed liberal construction of the rules
when to do so would serve the demands of substantial justice and equity. x x x
Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and
just determination of their causes, free from the constraints of needless technicalities. In this
case, besides the fact that a denial of the recourse to the Court of Appeals would serve more to
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perpetuate an injustice and violation of Teng’s rights under our labor laws, the Supreme Court
found that as correctly held by the Court of Appeals, no intent to delay the administration of
justice could be attributed to Teng. The Court of Appeals therefore did not commit reversible
error in excusing Teng’s one-day delay in filing his motion for reconsideration and in giving due
course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs.
Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages,
inclusive of allowances and other benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of their actual reinstatement.
But if reinstatement is no longer possible, the backwages shall be computed from the time of
their illegal termination up to the finality of the decision. Thus, when there is an order of
reinstatement, the computation of backwages shall be reckoned from the time of illegal
dismissal up to the time that the employee is actually reinstated to his former position. Pursuant
to the order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent Manabat a
letter requiring him to report back to work on May 4, 2007. Notwithstanding the said letter,
Manabat opted not to report for work. Thus, it is but fair that the backwages to be awarded to
Manabat should be computed from the time that he was illegally dismissed until the time when
he was required to report for work, i.e. from September 1, 2005 until May 4, 2007. Bank of
Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.
Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing
jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right.
However, 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
strainedby reason of their irreconcilable differences, particularly where the illegally dismissed
employee held a managerial or key position in the company, it would be more prudent to order
payment of separation pay instead of reinstatement. Under the doctrine of strained relations, 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. In such cases, it should be proved that the employee concerned
occupies a position where he enjoys the trust and confidence of his employer; and that it is
likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of the employee concerned. In the present case,
the Supreme Court found that the relations between the parties had been already strained
thereby justifying the grant of separation pay in lieu of reinstatement in favor of Manabat.
Manabat’s reinstatement to his former position would only serve to intensify the atmosphere of
antipathy and antagonism between the parties. Undoubtedly, Bank of Lubao’s filing of various
criminal complaints against Manabat for qualified theft and the subsequent filing by the latter of
the complaint for illegal dismissal against the former, taken together with the pendency of the
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instant case for more than six years, had caused strained relations between the parties.
Considering that Manabat’s former position as bank encoder involves the handling of accounts
of the depositors of the Bank of Lubao, it would not be equitable on the part of the Bank of
Lubao to be ordered to maintain the former in its employ since it may only inspire
vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is in itself
an indication of the existence of strained relations between him and the petitioner. Bank of
Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.
Seafarers; employment contract; perfection stage vs. commencement stage. An employment
contract, like any other contract, is perfected at the moment (1) the parties come to agree upon
its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties,
(b) object certain which is the subject matter of the contract, and (c) cause of the obligation. The
object of the contract was the rendition of service by Fantonial on board the vessel for which
service he would be paid the salary agreed upon. In this case, the employment contract was
perfected on January 15, 2000 when it was signed by the parties who entered into the contract
in behalf of their principal. However, the employment relationship never commenced since
Fantonial was not allowed to leave on January 17, 2000 and go on board the vessel M/V AUK in
Germany on the ground that he was not yet declared fit to work on the day of his scheduled
departure. But, even if no employer-employee relationship commenced, there was,
contemporaneous with the perfection of the employment contract, the birth of certain rights and
obligations, the breach of which may give rise to a cause of action against the erring
party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs. Ricardo B. Fantonial, G.R. No.
165935, February 8, 2012.
Dismissal; due process. When the Labor Code speaks of procedural due process, the reference is
usually to the two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code. MGG Marine Services, Inc. v. NLRC tersely
described the mechanics of what may be considered a two-part due process requirement which
includes the two-notice rule, “x x x one, of the intention to dismiss, indicating therein his acts or
omissions complained against, and two, notice of the decision to dismiss; and an opportunity to
answer and rebut the charges against him, in between such notices.”
Here, the first and second notice requirements have not been properly observed. The adverted
memo would have had constituted the “charge sheet,” sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent to and received by
him. Neither was there compliance with the imperatives of a hearing or conference. Suffice it to
point out that the record is devoid of any showing of a hearing or conference having been
conducted. And the written notice of termination itself did not indicate all the circumstances
involving the charge to justify severance of employment. For violating petitioner’s right to due
process, the Supreme Court ordered the payment to petitioner of the amount of P30,000 as
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nominal damages. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No.
185829. April 25, 2012.
Dismissal; just cause. In fine, an employee’s failure to meet sales or work quotas falls under the
concept of gross inefficiency, which in turn is analogous to gross neglect of duty that is a just
cause for dismissal under Article 282 of the Code. However, in order for the quota imposed to
be considered a valid productivity standard and thereby validate a dismissal, management’s
prerogative of fixing the quota must be exercised in good faith for the advancement of its interest.
The duty to prove good faith, however, rests with WWWEC as part of its burden to show that the
dismissal was for a just cause. WWWEC must show that such quota was imposed in good faith.
This WWWEC failed to do, perceptibly because it could not. The fact of the matter is that the
alleged imposition of the quota was a desperate attempt to lend a semblance of validity to
Aliling’s illegal dismissal. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et
al., G.R. No. 185829. April 25, 2012.
Dismissal; retrenchment. Retrenchment is a valid exercise of management prerogative subject to
the strict requirements set by jurisprudence, to wit:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month
pay or at least ½ month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security of
tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, x x x efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to
retrench its employees in good faith and the considerable reduction of work allotments of
Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its
personnel. As for the notice requirement, however, contrary to petitioner’s contention, proper
notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and
must be complied with despite the fact that respondent is an overseas Filipino worker. In the
present case, although respondent was duly notified of his termination by Petrocon 30 days
before its effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon
ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus, this
requirement of the law was not complied with. Despite the fact that respondent was employed
by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the
provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all
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Filipino workers, whether employed locally or overseas, enjoy the protective mantle of
Philippine labor and social legislations (citing Philippine National Bank v. Cabansag, G.R. No.
157010, June 21, 2005, 460 SCRA 514, 518 and Royal Crown Internationale v. NLRC, G.R. No.
78085, October 16, 1989, 178 SCRA 569.) International Management Services/Marilyn C.
Pascual vs. Roel P. Logarta, G.R. No. 163657, April 18, 2012.
Employee; probationary employee. The aforequoted Section 6 of the Implementing Rules of
Book VI, Rule VIII-A of the Code specifically requires the employer to inform the probationary
employee of such reasonable standards at the time of his engagement, not at any time later; else,
the latter shall be considered a regular employee. Thus, pursuant to the explicit provision of
Article 281 of the Labor Code, Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of
the Labor Code and settled jurisprudence, petitioner Aliling is deemed a regular employee as of
June 11, 2004, the date of his employment contract.
The letter-offer to Aliling states that the regularization standards or the performance norms to be
used are still to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to
GX trucking sales, an activity entirely different to the Seafreight Sales for which he was originally
hired and trained for. In the present case, there was no proof that Aliling was informed of the
standards for his continued employment, such as the sales quota, at the time of his
engagement. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No.
185829. April 25, 2012.
Employee; separation package. Article 283 of the Labor Code provides only the required
minimum amount of separation pay, which employees dismissed for any of the authorized
causes are entitled to receive. Employers, therefore, have the right to create plans, providing for
separation pay in an amount over and above what is imposed by Article 283. There is nothing
therein that prohibits employers and employees from contracting on the terms of employment,
or from entering into agreements on employee benefits, so long as they do not violate the Labor
Code or any other law, and are not contrary to morals, good customs, public order, or public
policy.
Consequently, petitioners are not allowed to receive separation pay from both the Labor Code,
on the one hand, and the New Gratuity Plan and the SSP, on the other, they would receive
double compensation for the same cause (i.e., separation from the service due to
redundancy). Ma. Corina C. Jiao, et al. vs. Global Business Bank, Inc., et al., G.R. No. 182331,
April 18, 2012.
Employer-employee relationship. In determining the presence or absence of an employer-
employee relationship, the Court has consistently looked for the following incidents, to wit: (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 on the means and methods by
which the work is accomplished. The last element, the so-called control test, is the most
important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his
authority to deliver some 158 checks to SFC. Considering that petitioner contested respondents’
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challenge by pointing to the existing arrangements between BCC and SFC, it should be clear
that respondents did not exercise the power of control over petitioner, because he thereby acted
for the benefit and in the interest of SFC more than of BCC. Charlie Jao vs. BCC Products Sales,
Inc. and Terrance Ty, G.R. No. 163700, April 18, 2012.
Project employee; conversion into regular employee. In all the 38 projects where DMCI
engaged Jamin’s services, the tasks he performed as a carpenter were indisputably necessary and
desirable in DMCI’s construction business. He might not have been a member of a work pool
since DMCI insisted that it does not maintain a work pool, but his continuous rehiring in 38
projects over a period of 31 years and the nature of his work unmistakably made him a regular
employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the Court held that once a project
or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the
same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be
deemed a regular employee.
Surely, length of time is not the controlling test for project employment but it is vital in
determining if the employee was hired for a specific undertaking or if it is tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the employer. Here,
[private] respondent had been a project employee several times over. The nature of his
employment ceased to be project-based when he was repeatedly re-hired due to the demands of
petitioner’s business. D.M. Consunji, Inc. and/or David M. Consunji vs. Estelito, G.R. No.
192514, April 18, 2012.
Dismissal; willful disobedience. 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.
The petitioner’s arbitrary defiance to Graphics, Inc.’s order for him to render overtime work
constitutes willful disobedience. Because of his refusal to render overtime work, the company
failed to meet its printing deadlines, resulting in losses to the company. The Supreme Court took
into account the fact that petitioner was inclined to absent himself and to report late for work
despite being previously penalized, and affirmed the CA’s ruling that the petitioner is indeed
utterly defiant of the lawful orders and the reasonable work standards prescribed by his
employer. The Court reiterated its previous rulings stating that an employer has the right to
require the performance of overtime service in any of the situations contemplated under Article
89 of the Labor Code and an employee’s non-compliance is willful disobedience. Realda v.
New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; inefficiency. The petitioner’s failure to observe Graphics, Inc.’s work standards
constitutes inefficiency that is a valid cause for dismissal. Failure to observe prescribed standards
of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause
for dismissal. Such inefficiency is understood to mean failure to attain work goals or work
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quotas, either by failing to complete the same within the alloted reasonable period, or by
producing unsatisfactory results. As the operator of Graphics, Inc.’s printer, he is mandated to
check whether the colors that would be printed are in accordance with the client’s
specifications and for him to do so, he must consult the General Manager and the color guide
used by Graphics, Inc. before making a full run. The employee in this case failed to observe this
simple procedure and proceeded to print without making sure that the colors were at par with
the client’s demands. This resulted to delays in the delivery of output, client dissatisfaction, and
additional costs to Graphics, Inc.. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190,
April 25, 2012.
Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the
manner by which the procedural due requirements of due process can be satisfied:
(1) The first written notice to be served on the employees should contain the 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 (5) 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.
(2) After serving the first notice, the employers should schedule and conduct
a hearing orconference wherein the employees will be given the opportunity to: (a) explain and
clarify their defenses to the charge against them; (b) present evidence in support of their
defenses; and (c) rebut the evidence presented against them by the management. During the
hearing or conference, the employees are given the chance to defend themselves personally,
with the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.
Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and
defend itself. An administrative hearing set on the same day that the petitioner received the
memorandum and the 24-hour period given to him to submit a written explanation is far from
reasonable. Furthermore, there is no indication that Graphics, Inc. issued a second notice,
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informing the petitioner of his dismissal. Graphics, Inc. admitted that it decided to terminate the
petitioner’s employment when he ceased to report for work after being served with the
memorandum requiring him to explain and subsequent to his failure to submit a written
explanation. However, there is nothing on record showing that Graphics, Inc. placed its
decision to dismiss in writing and that a copy thereof was sent to the petitioner. Notwithstanding
the existence of a just cause to terminate petitioner’s employment, respondent was ordered to
pay P30,000 as nominal damages for violation of the employee’s right to due process. Realda v.
New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; willful disobedience. Willful disobedience requires the concurrence of two elements:
(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.
Both elements are present in this case.
First, at no point did the dismissed employees deny Kingspoint Express’ claim that they refused
to comply with the directive for them to submit to a drug test or, at the very least, explain their
refusal. This gives rise to the impression that their non-compliance is deliberate. The utter lack
of reason or justification for their insubordination indicates that it was prompted by mere
obstinacy, hence, willful thereby justifying their dismissal. Second, that the company’s order to
undergo a drug test is necessary and relevant in the performance of petitioners’ functions as
drivers of Kingspoint Express is obvious. As the NLRC correctly pointed out, drivers are
indispensable to Kingspoint Express’ primary business of rendering door-to-door delivery
services. It is common knowledge that the use of dangerous drugs has adverse effects on driving
abilities that may render employees incapable of performing their duties. Not only are they
acting against the interests of Kingspoint Express, they also pose a threat to the public. Kakampi
and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No.
194813, April 25, 2012.
Dismissal; procedural due process requirements. While Kingspoint Express had reason to sever
petitioners’ employment, this Court finds its supposed observance of the requirements of
procedural due process pretentious. While Kingspoint Express required the dismissed employees
to explain their refusal to submit to a drug test, the two (2) days afforded to them to do so cannot
qualify as “reasonable opportunity”, which the Court construed in King of Kings Transport, Inc.
v. Mamac as a period of at least five (5) calendar days from receipt of the notice.
Thus, even if a just cause exists for the dismissal of petitioners, Kingspoint Express is still liable
to indemnify the dismissed employees, with the exception of Panuelos, Dizon and Dimabayao,
who did not appeal the dismissal of their complaints, with nominal damages in the amount of
P30,000.00.Kakampi and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann
Co, G.R. No. 194813, April 25, 2012.
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Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a
fundamental rule of procedure that higher courts are precluded from entertaining matters neither
alleged in the pleadings nor raised during the proceedings below, but ventilated for the first time
only in a motion for reconsideration or on appeal. The alleged absence of employer-employee
relationship cannot be raised for the first time on appeal. The resolution of this issue requires the
admission and calibration of evidence and the LA and the NLRC did not pass upon it in their
decisions. Petitioner is bound by its submissions that respondent is its employee and it should
not be permitted to change its theory. Such change of theory cannot be tolerated on appeal, not
on account of the strict application of procedural rules, but as a matter of fairness. Duty Free
Philippines Services, Inc. vs. Manolito Q. Tria. G.R. No. 174809. June 27, 2012.
Dismissal; abandonment. Abandonment cannot be inferred from the actuations of respondent.
When he discovered that his time card was off the rack, he immediately inquired from his
supervisor. He later sought the assistance of his counsel, who wrote a letter addressed to
Polyfoam requesting that he be re-admitted to work. When said request was not acted upon, he
filed the instant illegal dismissal case. These circumstances clearly negate the intention to
abandon his work. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs.
Edgardo Concepcion. G.R. No. 172349, June 13, 2012.
Dismissal; due process. To meet the requirements of due process in the dismissal of an
employee, an employer must furnish the worker with two written notices: (1) a written notice
specifying the grounds for termination and giving to said employee a reasonable opportunity to
explain his side and (2) another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer’s decision to dismiss the
employee. The law does not require that an intention to terminate one’s employment should be
included in the first notice. It is enough that employees are properly apprised of the charges
brought against them so they can properly prepare their defenses. It is only during the second
notice that the intention to terminate one’s employment should be explicitly stated.
The guiding principles in connection with the hearing requirement in dismissal cases are the
following:
1. “Ample opportunity to be heard” means any meaningful opportunity (verbal or written)
given to the employee to answer the charges against him and submit evidence in support
of his defense, whether in a hearing, conference or some other fair, just and reasonable
way.
2. A formal hearing or conference becomes mandatory only when requested by the
employee in writing or substantial evidentiary disputes exist or a company rule or
practice requires it, or when similar circumstances justify it.
3. The “ample opportunity to be heard” standard in the Labor Code prevails over the
“hearing or conference” requirement in the implementing rules and regulations.
The existence of an actual, formal “trial-type” hearing, although preferred, is not absolutely
necessary to satisfy the employee’s right to be heard. Esguerra was able to present her defenses;
and only upon proper consideration of it did Valle Verde send the second memorandum
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terminating her employment. Since Valle Verde complied with the two-notice requirement, no
procedural defect exists in Esguerra’s termination. Dolores T. Esguerra vs. Valle Verde Country
Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; loss of trust and confidence. There are two (2) classes of positions of trust. The first
class consists of managerial employees, or those vested with the power to lay down
management policies; and the second class consists of cashiers, auditors, property custodians or
those who, in the normal and routine exercise of their functions, regularly handle significant
amounts of money or property. Esguerra held the position of Cost Control Supervisor and had
the duty to remit to the accounting department the cash sales proceeds from every transaction
she was assigned to. This is not a routine task that a regular employee may perform; it is related
to the handling of business expenditures or finances. For this reason, Esguerra occupies a
position of trust and confidence – a position enumerated in the second class of positions of trust.
Any breach of the trust imposed upon her can be a valid cause for dismissal.
Loss of confidence as a just cause for termination of employment can be invoked when an
employee holds a position of responsibility, trust and confidence. In order to constitute a just
cause for dismissal, the act complained of must be related to the performance of the duties of
the dismissed employee and must show that he or she is unfit to continue working for the
employer for violation of the trust reposed in him or her. It was Esguerra’s responsibility to
account for the cash proceeds; in case of problems, she should have promptly reported it,
regardless of who was at fault. Instead, she settled the unaccounted amount only after the
accounting department informed her about the discrepancy, almost one month following the
incident. Esguerra’s failure to make the proper report reflects her irresponsibility in the custody
of cash for which she was accountable. Dolores T. Esguerra vs. Valle Verde Country Club, Inc.
and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; serious misconduct and loss of trust and confidence. Dejan is liable for violation of
Section 7, paragraphs 4 and 11 of the Company Code of Employee Discipline, constituting
serious misconduct, fraud and willful breach of trust of the employer, which are just causes for
termination of employment under the law. There is no dispute about the release of the meter
sockets. Also, the persons involved were clearly identified – Dejan; Gozarin, a private
electrician who received the meter sockets; Reyes, the owner of the jeep where the meter
sockets were loaded by Gozarin; Duenas, a Meralco field representative; and Depante, another
private electrician who purportedly owned the meter sockets. The release by Dejan of the meter
sockets to Gozarin without the written authority or SPA from the customer or customers who
applied for electric connection (as a matter of company policy) served as a key element in
proving the private contracting activity for electric service connection being undertaken by
Dejan and Duenas.
Moreover, it was bad enough that Dejan failed to ask for a written authorization from the
customers for the release of the meter sockets as required by company policy, but the elaborate
scheme pursued by Dejan in concert with Duenas, were all undertaken to defraud Meralco.
Hence, Meralco had valid reasons for losing its trust and confidence in Dejan. He is no
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ordinary employee. As branch representative, he was principally charged with the function and
responsibility to accept payment of fees required for the installation of electric service and
facilitate issuance of meter sockets. The duties of his position require him to always act with the
highest degree of honesty, integrity and sincerity, as the company puts it. In light of his
fraudulent act, Meralco, an enterprise imbued with public interest, cannot be compelled to
continue Dejan’s employment, as it would be inimical to its interest. Manila Electric Company
(Meralco) vs. Herminigildo H. Dejan. G.R. No. 194106, June 18, 2012.
Employee benefit; attorney’s fees. Lazaro must establish a legal basis – either by law, contract or
other sources of obligations – to merit the receipt of the additional 10% attorney’s fees collected
in the various foreclosure procedures he settled as the bank’s legal officer. Lazaro has not
produced any contract or provision of law that would warrant the payment of the additional
attorney’s fees. He is only entitled to his salaries as the bank’s legal officer, because the services
he rendered in the foreclosure proceedings were part of his official tasks. Banco Filipino Savings
and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012.
Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it
was under liquidation should not be credited in computing Lazaro’s retirement pay because,
during that period, the bank was considered closed. The Supreme Court held that banks under
liquidation retain their legal personality. In fact, even if they are prohibited from conducting
regular banking business, it is necessary that debts owed to them be collected. Lazaro performed
the duty of foreclosing debts in favor of Banco Filipino. It cannot rightfully disclaim Lazaro’s
work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the
absence of an applicable retirement agreement shall Article 287 of the Labor Code apply. There
is aproviso however, that an employee’s retirement benefits under any agreement shall not be
less than those provided in the said article. The Rules of the Banco Filipino Retirement Fund do
not provide for benefits lower than those in the Labor Code. In fact, the bank offers a retirement
pay equivalent to one andone-half month salary for every year of service, a rate over and above
the one-half month salary threshold provided by the law. Although the Rules of the Banco
Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide
that prorated credit shall be given for incomplete years, regardless of the fraction of months in
the retiree’s length of service. Notwithstanding the lack of a rounding-up provision, still, the
higher retirement pay, together with the prorated crediting, cannot be deemed to be less
favorable than that provided for by the law. Ultimately, the more important threshold to be
considered in construing whether the retirement agreement provides less benefits, compared to
those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement
should at least amount to one-half of the employee’s monthly salary. Banco Filipino Savings and
Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012
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Employee dismissal. When the floating status of employees lasts for more than six (6) months,
they may be considered to have been illegally dismissed from the service. “Floating status”
means an indefinite period of time when one does not receive any salary or financial benefit
provided by law. In this case, petitioners were actually reassigned to new posts, albeit in a
different location from where they resided. Thus, there can be no floating status or indefinite
period to speak of. Instead, petitioners were the ones who refused to report for work in their new
assignment.
In cases involving security guards, a relief and transfer order in itself does not sever the
employment relationship between the security guards and their agency. Employees have the
right to security of tenure, but this does not give them such a vested right to their positions as
would deprive the company of its prerogative to change their assignment or transfer them where
their services, as security guards, will be most beneficial to the client. An employer has the right
to transfer or assign its employees from one office or area of operation to another 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. While petitioners may
claim that their transfer to Manila will cause added expenses and inconvenience, absent any
showing of bad faith or ill motive on the part of the employer, the transfer remains
valid. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No.
187188, June 27, 2012.
Employee dismissal; burden of proof. Under the law, the burden of proving that the termination
of employment was for a valid or authorized cause rests on the employer. Failure to discharge
this burden would result in an unjust or illegal dismissal. The company’s evidence on the
respondents’ alleged infractions do not substantially show that they violated company rules and
regulations to warrant their dismissal. It is obvious that the company overstepped the bounds of
its management prerogative in the dismissal of Mauricio and Camacho. It lost sight of the
principle that management prerogative must be exercised in good faith and with due regard to
the rights of the workers in the spirit of fairness and with justice in mind. Philbag Industrial
Manufacturing Corp. vs. Philbag Workers Union-Lakas at Gabay ng Manggagawang
Nagkakaisa. G.R. No. 182486, June 20, 2012.
Employee dismissal; due process. Retrenchment is subject to faithful compliance with the
substantive and procedural requirements laid down by law and jurisprudence. For a valid
retrenchment, the following elements must be present:
1. That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;
2. That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
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3. That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least ½ month pay for every year of service, whichever is higher;
4. That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to
security of tenure; and
5. That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered by the
Club for the past two years had forced petitioner to close it down to avert further losses which
would eventually affect the operations of petitioner. Second, all 45 employees working in the
Club were served with notice of termination. The corresponding notice was likewise served to
the DOLE one month prior to retrenchment. Third, the employees were offered separation pay,
most of whom have accepted and opted not to join in this complaint. Fourth, the cessation of or
withdrawal from business operations was bona fide in character and not impelled by a motive to
defeat or circumvent the tenurial rights of employees. Waterfront Cebu City Hotel vs. Ma.
Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; due process. The following are the guiding principles in connection with
the hearing requirement in dismissal cases:
1. “Ample opportunity to be heard” means any meaningful opportunity (verbal or written)
given to the employee to answer the charges against him and submit evidence in support
of his defense, whether in a hearing, conference or some other fair, just and reasonable
way.
2. A formal hearing or conference becomes mandatory only when requested by the
employee in writing or substantial evidentiary disputes exist or a company rule or
practice requires it, or when similar circumstances justify it.
3. The “ample opportunity to be heard” standard in the Labor Code prevails over the
“hearing or conference” requirement in the implementing rules and regulations.
Given that the petitioners expressly requested a conference or a convening of a grievance
committee, such formal hearing became mandatory. After PGAI failed to affirmatively respond
to such request, it follows that the hearing requirement was not complied with and, therefore,
Vallota was denied his right to procedural due process. Prudential Guarantee and Assurance
Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance Inc.,
and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; just cause. Article 282(e) of the Labor Code talks of other analogous causes
or those which are susceptible of comparison to another in general or in specific detail as a
cause for termination of employment. A cause analogous to serious misconduct is a voluntary
and/or willful act or omission attesting to an employee’s moral depravity. Theft committed by an
employee against a person other than his employer, if proven by substantial evidence, is a cause
analogous to serious misconduct. Previous infractions may be cited as justification for dismissing
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an employee only if they are related to the subsequent offense. However, it must be noted that
such a discussion was unnecessary since the theft, taken in isolation from Fermin’s other
violations, was in itself a valid cause for the termination of his employment. Cosmos Bottling
Corp. vs. Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and Cecilia Bautista. G.R. No.
193676 & G.R. No. 194303. June 20, 2012.
Employee dismissal; loss of trust and confidence. The Labor Code recognizes that an employer,
for just cause, may validly terminate the services of an employee for serious misconduct or
willful disobedience of the lawful orders of the employer or representative in connection with
the employee’s work. Fraud or willful breach by the employee of the trust reposed by the
employer in the former, or simply loss of confidence, also justifies an employee’s dismissal from
employment. Willful breach of trust or loss of confidence requires that the employee (1)
occupied a position of trust or (2) was routinely charged with the care of the employer’s
property. To warrant dismissal based on loss of confidence, there must be some basis for the loss
of trust or the employer must have reasonable grounds to believe that the employee is
responsible for the misconduct that renders the latter unworthy of the trust and confidence
demanded by his or her position. For more than a month, the petitioners did not even inform
PLDT of the whereabouts of the plant materials. Instead, he stocked these materials at his
residence even if they were needed in the daily operations of the company. In keeping with the
honesty and integrity demanded by his position, he should have turned over these materials to
the plant’s warehouse. Thus, PLDT reasonably suspected petitioner of stealing the company’s
property. At that juncture, the employer may already dismiss the employee since it had
reasonable grounds to believe or to entertain the moral conviction that the latter was responsible
for the misconduct, and the nature of his participation therein rendered him absolutely
unworthy of the trust and confidence demanded by his position. Romeo E. Paulino vs. NLRC,
Philippine Long Distance Co., Inc. G.R. No. 176184, June 13, 2012.
Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for dismissal
was never intended to provide employers with a blank check for terminating their employees. It
should ideally apply only to cases involving employees occupying positions of trust and
confidence or to those situations where the employee is routinely charged with the care and
custody of the employer’s money or property. To the first class belong managerial employees,
i.e., those vested with the powers or prerogatives to lay down management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions; and to the second class belong cashiers, auditors, property
custodians, etc., or those who, in the normal and routine exercise of their functions, regularly
handle significant amounts of money or property.
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. The second requisite is that
there must be an act that would justify the loss of trust and confidence. Vallota’s position as
Junior Programmer is analogous to the second class of positions of trust and confidence. Though
he did not physically handle money or property, he became privy to confidential data or
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information by the nature of his functions. At a time when the most sensitive of information is
found not printed on paper but stored on hard drives and servers, an employee who handles or
has access to data in electronic form naturally becomes the unwilling recipient of confidential
information. There was no other evidence presented to prove fraud in the manner of securing or
obtaining the files found in Vallota’s computer. The presence of the files would merely merit the
development of some suspicion on the part of the employer, but should not amount to a loss of
trust and confidence such as to justify the termination of his employment. Such act is not of the
same class, degree or gravity as the acts that have been held to be of such character. Prudential
Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential
Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; loss of trust and confidence. To validly dismiss an employee on the ground
of loss of trust and confidence under Article 282 (c) of the Labor Code of the Philippines, the
following guidelines must be observed: 1) loss of confidence should not be simulated; 2) it
should not be used as 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 earlier action taken in bad faith. More importantly,
it must be based on a willful breach of trust and founded on clearly established facts. The
testimony of Lobitaña constitutes substantial evidence to prove that respondent, as the then
Power Plant Manager, accepted commissions and/or “kickbacks” from suppliers, which is a
clear violation of Section 2.04 of petitioner’s Company Rules and Regulations. Jurisprudence
consistently holds that 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.
Respondent’s termination was for a just and valid cause. Apo Cement Corporation Vs. Zaldy E.
Baptisma. G.R. No. 176671. June 20, 2012.
Employee dismissal; order of reinstatement. Article 223 of the Labor Code provides that in case
there is an order of reinstatement, the employer must admit the dismissed employee under the
same terms and conditions, or merely reinstate the employee in the payroll. The order shall be
immediately executory. Thus, 3rd Alert cannot escape liability by simply invoking that Navia
did not report for work. The law states that the employer must still reinstate the employee in the
payroll. Where reinstatement is no longer viable as an option, separation pay equivalent to one
(1) month salary for every year of service could be awarded as an alternative. 3rd Alert Security
and Detective Services, Inc. vs. Romualdo Navia. G.R. No. 200653, June 13, 2012.
Employee dismissal; retrenchment. Retrenchment is the termination of employment initiated by
the employer through no fault of and without prejudice to the employees. It is resorted to 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. 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.
In this case, the closure of a department or division of a company constitutes retrenchment by,
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and not closure of, the company itself. Petitioner has not totally ceased its business
operations. It merely ceased operations of a department. Waterfront Cebu City Hotel vs. Ma.
Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; willful breach of trust. The loss of trust and confidence must be based on
willful breach of the trust reposed in the employee by his employer. 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. Moreover, it must be
based on substantial evidence and not on the employer’s whims or caprices or suspicions
otherwise, the employee would eternally remain at the mercy of the employer. The Supreme
Court has laid down the guidelines for the application of the loss of trust and confidence
doctrine: (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. Villanueva worked for Meralco as a
Branch Representative whose tasks included the issuance of Contracts for Electric Service after
receipt of the amount due for service connection from customers. Obviously, he was entrusted
not only with the responsibility of handling company funds but also to cater to customers who
intended to avail of Meralco’s services. This is nothing but an indication that trust and
confidence were reposed in him by the company, although his position was not strictly
managerial by nature. Meralco’s loss of trust and confidence arising out of Villanueva’s act of
misappropriation of company funds in the course of processing customer applications has been
proven by substantial evidence, thus, justified. Verily, the issuance of additional receipts for
excessive payments exacted from customers is a willful breach of the trust reposed in him by the
company.Vicente Villanueva, Jr. vs.. The National Labor Relations Commission, Third Division,
Manila Electric Company, Manuel Lopez, Chairman and CEO, and Francisco Collantes,
Manager. G.R. No. 176893, June 13, 2012.
Employee suit; damages. To obtain moral damages, the claimant must prove the existence of
bad faith by clear and convincing evidence, for the law always presumes good faith. It is not
even enough that one merely suffered sleepless nights, mental anguish and serious anxiety as
the result of the actuations of the other party. In this case, Lazaro did not state any moral
anguish that he suffered. Neither did he substantiate his imputations of malice to Banco Filipino.
He only made a sweeping declaration, without concrete proof, that the bank in refusing his
claim maliciously damaged his property rights and interest. Accordingly, neither moral damages
nor exemplary damage can be awarded to him.
With respect to attorney’s fees, an award is proper only if that person was forced to litigate and
incur expenses to protect one’s rights and interest by reason of an unjustified act or omission of
the party for whom it is sought. Banco Filipino had a prima facie legitimate defense that,
because it underwent liquidation proceedings, it cannot be compelled to credit that period in
the computation of the employee’s the retirement pay and profit shares. Considering that Banco
Filipino’s refusal cannot be accurately characterized as unjustified, Lazaro cannot claim an
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award of attorney’s fees. Banco Filipino Savings and Mortgage Bank vs. Miguelito M.
Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No.
185346 & G.R. No. 185442. June 27, 2012.
Independent contractor; tests. Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor
the performance or completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal. A person is considered engaged in
legitimate job contracting or subcontracting if the following conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, and free from the control and direction
of the principal in all matters connected with the performance of the work except as to the
results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and
(c) The agreement between the principal and contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social welfare benefits.
In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a
principal. In labor-only contracting, the following elements are present:
(a) The contractor or subcontractor does not have substantial capital or investment to actually
perform the job, work or service under its own account and responsibility; and
(b) 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.
The test 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 subject to the
control of the employer, except only as to the results of the work.
Gramaje is not an independent job contractor, but a “labor-only” contractor. First, Gramaje has
no substantial capital or investment. The presumption is that a contractor is a labor-only
contractor unless he overcomes the burden of proving that it has substantial capital, investment,
tools, and the like. Neither Gramaje nor Polyfoam presented evidence showing Gramaje’s
ownership of the equipment and machineries used in the performance of the alleged contracted
job.
Second, Gramaje did not carry on an independent business or undertake the performance of its
service contract according to its own manner and method, free from the control and supervision
of its principal, Polyfoam, its apparent role having been merely to recruit persons to work for
Polyfoam. It is undisputed that respondent had performed his task of packing Polyfoam’s foam
products in Polyfoam’s premises. As to the recruitment of respondent, petitioners were able to
establish only that respondent’s application was referred to Gramaje, but that is all. Prior to his
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termination, respondent had been performing the same job in Polyfoam’s business for almost six
(6) years. He was even furnished a copy of Polyfoam’s “Mga Alituntunin at Karampatang
Parusa,” which embodied Polyfoam’s rules on attendance, the manner of performing the
employee’s duties, ethical standards, cleanliness, health, safety, peace and order. These rules
carried with them the corresponding penalties in case of violation. While it is true that
petitioners submitted the Affidavit of Polyfoam’s supervisor, claiming that the latter did not
exercise supervision over respondent because the latter was not Polyfoam’s but Gramaje’s
employee, said Affidavit is insufficient to prove such claim. Petitioners should have presented
the person who they claim to have exercised supervision over respondent and their alleged
other employees assigned to Polyfoam. It was never established that Gramaje took entire charge,
control and supervision of the work and service agreed upon. Polyfoam-RGC International,
Corporation and Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13, 2012.
NLRC; jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a special law
governing overseas Filipino workers. However, there is no specific provision thereunder which
provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or
implementation of a CBA. Section 10 of R.A. 8042 simply speaks, in general, of “claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms
of damages.” On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in
stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. In the present case, the basic issue raised
by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA
applies insofar as death benefits due to the heirs of Nelson are concerned. This issue clearly
involves the interpretation or implementation of the said CBA. Thus, the specific or special
provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and
between respondent GCI and AMOSUP provides that the Company and the Union agree that in
case of dispute or conflict in the interpretation or application of any of the provisions of this
Agreement, or enforcement of Company policies, the same shall be settled through negotiation,
conciliation or voluntary arbitration. The provisions of the CBA are in consonance with Rule VII,
Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that for
OFWs with collective bargaining agreements, the case shall be submitted for voluntary
arbitration in accordance with Articles 261 and 262 of the Labor Code. With respect to disputes
involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining
agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator
or panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties
may opt to submit the dispute to either the NLRC or to voluntary arbitration. Estate of Nelson R.
Dulay, represented by his wife Meddiry Jane P. Dulay vs. Aboitiz Jebsen Maritime, Inc. and
General Charterers, Inc. G.R. No. 172642, June 13, 2012.
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Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA
Petition. However, the Supreme Court noted that in the CA Resolution, the appellate court
stated that their records revealed that Atty. Espinas, petitioners’ counsel of record at the time,
was duly served a copy of the following: CA Resolution granting respondent’s Motion for
Extension of Time to file the CA Petition; CA Resolution requiring petitioners to file their
Comment on the CA Petition; and CA Resolution, submitting the case for resolution, as no
comment was filed. Such service to Atty. Espinas was valid despite the fact he was already
deceased at the time. If a party to a case has appeared by counsel, service of pleadings and
judgments shall be made upon his counsel or one of them, unless service upon the party is
specifically ordered by the court. It is not the duty of the courts to inquire, during the progress of
a case, whether the law firm or partnership representing one of the litigants continues to exist
lawfully, whether the partners are still alive, or whether its associates are still connected with the
firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No.
187188, June 27, 2012.
Dismissal; due process. Due process requirement is met when there is simply an opportunity to
be heard and to explain one’s side even if no hearing is conducted. An employee may be
afforded ample opportunity to be heard by means of any method, verbal or written, whether in a
hearing, conference or some other fair, just and reasonable way. After receiving the first notice
apprising him of the charges against him, the employee may submit a written explanation
(which may be in the form of a letter, memorandum, affidavit or position paper) and offer
evidence in support thereof, like relevant company records and the sworn statements of his
witnesses. For this purpose, he may prepare his explanation personally or with the assistance of
a representative or counsel. He may also ask the employer to provide him copy of records
material to his defense. His written explanation may also include a request that a formal hearing
or conference be held. In such a case, the conduct of a formal hearing or conference becomes
mandatory, just as it is where there exist substantial evidentiary disputes or where company
rules or practice requires an actual hearing as part of employment pre-termination procedure.
Petitioner’s written response to the prerequisite notice provided her with an avenue to explain
and defend her side and thus served the purpose of due process. That there was no hearing,
investigation or right to appeal, which petitioner opined to be a violation of company policies, is
of no moment since the record is bereft of any showing that there is an existing company policy
that requires these procedures with respect to the termination of a CHR Director like petitioner
or that company practice calls for the same. There was also no request for a formal hearing on
the part of petitioner. As she was served with a notice apprising her of the charges against her
and also a subsequent notice informing her of the management’s decision to terminate her
services after respondents found her written response to the first notice unsatisfactory, petitioner
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was clearly afforded her right to due process. Flordeliza Maria Reyes-Rayel vs. Philippine Luen
Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.
Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider
latitude of discretion in dismissing a managerial personnel who performs functions which by
their nature require the employer’s full trust and confidence.As distinguished from a rank and
file personnel, mere existence of a basis for believing that a managerial employee has breached
the trust of the employer justifies dismissal. Loss of confidence as a ground for dismissal does
not require proof beyond reasonable doubt as the law requires only that there be at least some
basis to justify it.
Petitioner was L&T’s CHR Director for Manufacturing, which is a managerial position saddled
with great responsibility. As such, she was directly responsible for managing her own
departmental staff. Because of this, petitioner must enjoy the full trust and confidence of her
superiors. However, petitioner delivered dismal performance and displayed poor work attitude,
which constitute sufficient reasons for an employer to terminate an employee on the ground of
loss of trust and confidence. First, records show that petitioner indeed unreasonably failed to
effectively communicate with her immediate superior. Second, the affidavits of petitioner’s co-
workers revealed her negative attitude and unprofessional behavior towards them and the
company. Lastly, petitioner displayed inefficiency and ineptitude in her job as a CHR Director.
Taking all these circumstances collectively, the Court is convinced that respondents have
sufficient and valid reasons for terminating the services of petitioner as her continued
employment would be patently inimical to respondents’ interest. Flordeliza Maria Reyes-Rayel vs.
Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.
Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for
the dismissal of employees recognized by the Labor Code. It is a management prerogative
resorted to by employers to avoid or to minimize business losses. The Court has laid down the
following standards that an employer should meet to justify retrenchment and to foil abuse,
namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause
rests upon the employer. The petitioner did not submit evidence of the losses to its business
operations and the economic havoc it would thereby imminently sustain. It only claimed that
respondent’s termination was due to its “present business/financial condition”. This bare
statement fell short of the norm to show a valid retrenchment. Indeed, 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
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to avert such losses. Thus, by its failure to present sufficient and convincing evidence to prove
that retrenchment was necessary, respondent’s termination due to retrenchment is not
allowed. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs. Hernani S. Realuyo,
also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Employee training; reimbursement. The Supreme Court recognized the right of PAL to recoup
the costs of a pilot’s training in the form of service for a period of at least three (3) years. By
carrying over the same stipulation setting the age of fifty-seven (57) years as the reckoning point
when a pilot becomes disqualified to bid for a higher position in the present CBA, both PAL and
ALPAP recognized that the company’s effort in sending pilots for training abroad is an
investment which necessarily expects a reasonable return in the form of service for a period of at
least three (3) years. This stipulation had been repeatedly adopted by the parties in the
succeeding renewals of their CBA, thus validating the impression that it is a reasonable and
acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently
disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot
to remain within PAL’s employ within a period of 3 years after he has been sent on training. The
supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly
covered the petitioner’s obligation to render service to PAL within 3 years to enable it to recoup
the costs of its investment. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July
16, 2012.
Employer-employee relationship; existence. The issue of whether or not an employer-employee
relationship existed is essentially a question of fact. The factors that determine the issue include
who has the power to select the employee, who pays the employee’s wages, who has the power
to dismiss the employee, and who exercises control of the methods and results by which the
work of the employee is accomplished. Although no particular form of evidence is required to
prove the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He
was undeniably employed as a pianist in petitioner’s Restaurant. First of all, petitioner actually
wielded the power of selection at the time it entered into the service contract with respondent.
The power of selection was firmly evidenced by, among others, the express written
recommendation by petitioner’s restaurant manager, for the increase of his remuneration.
Secondly, there is no denying that the remuneration denominated as talent fees was fixed on the
basis of his talent and skill and the quality of the music he played during the hours of
performance each night, taking into account the prevailing rate for similar talents in the
entertainment industry. Respondent’s remuneration, albeit denominated as talent fees, was still
considered as included in the term wagein the sense and context of the Labor Code, regardless
of how petitioner chose to designate the remuneration. Thirdly, the petitioner has the power to
dismiss respondent. The memorandum informing respondent of the discontinuance of his
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service because of the present business or financial condition of petitioner showed that the latter
had the power to dismiss him from employment. Lastly, 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. Respondent performed his work
as a pianist under petitioner’s supervision and control. Petitioner’s control of both the end
achieved and the manner and means used to achieve that end was demonstrated by the
following, to wit: (1)He could not choose the time of his performance, which petitioners had
fixed from 7:00 pm to 10:00 pm, three to six times a week; (2)He could not choose the place of
his performance; (3) The restaurant’s manager required him at certain times to perform only
Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and
(4)He was subjected to the rules on employees’ representation check and chits, a privilege
granted to other employees. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs.
Hernani S. Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Management prerogative; transfer of employees. An employer’s decision to transfer an employee,
if made in good faith, is a valid exercise of a management prerogative, although it may result in
personal inconvenience or hardship to the employee. Re-assignments made by management
pending investigation of irregularities allegedly committed by an employee fall within the ambit
of management prerogative. The purpose of reassignments is no different from that of preventive
suspension which management could validly impose as a disciplinary measure for the
protection of the company’s property pending investigation of any alleged malfeasance or
misfeasance committed by the employee.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position
that required her employer’s utmost trust and confidence. Having lost his trust and confidence in
petitioner, respondent Delfin had the right to transfer her to ensure that she would no longer
have access to the companies’ confidential files. Although it is true that petitioner has yet to be
proven guilty, respondents had the authority to reassign her, pending investigation. When
petitioner was assigned to Cavite, there was an ongoing investigation of the charges filed against
her. It is undisputed that she refused to fill up, for no justifiable reasons, the questionnaire
distributed by her employer to determine who among those who had access to the confidential
files was responsible for their taking. Furthermore, a witness had executed an Affidavit claiming
that she found the missing files, and that her husband told her that it was petitioner who handed
those files to him. Lastly, the person who supposedly received these documents from petitioner
did not deny or rebuke the statements made by his wife. Josephine Ruiz vs. Wendel Osaka
Realty Corp., et al. G.R. No. 189082, July 11, 2012.
Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it
is applicable only to a situation where (1) there is no CBA or other applicable employment
contract providing for retirement benefits for an employee, or (2) there is a CBA or other
applicable employment contract providing for retirement benefits for an employee, but it is
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below the requirement set by law. The rationale for the first situation is to prevent the absurd
situation where an employee, deserving to receive retirement benefits, is denied to them through
the nefarious scheme of employers to deprive employees of the benefits due them under existing
labor laws. On the other hand, the second situation aims to prevent private contracts from
derogating from the public law. The determining factor in choosing which retirement scheme to
apply is still superiorityin terms of benefits provided. Thus, even if there is an existing CBA but
the same does not provide for retirement benefits equal or superior to that which is provided
under Article 287 of the Labor Code, the latter will apply.
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and;
(2) the PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan. The two
retirement schemes are alternative in nature such that the retired pilot can only be entitled to
that which provides for superior benefits. Comparing the benefits under the two (2) retirement
schemes, it can readily be perceived that the 22.5 days worth of salary for every year of service
provided under Article 287 of the Labor Code cannot match the 240% of salary or almost two
and a half worth of monthly salary per year of service provided under the PAL Pilots’ Retirement
Benefit Plan, which will be further added to the ₱125,000.00 to which the petitioner is entitled
under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioner’s advantage that PAL’s
retirement plans were applied in the computation of his retirement benefits. Bibiano C. Elegir vs.
Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
Unjust enrichment. There is unjust enrichment when a person unjustly retains a benefit at the
loss of another, or when a person retains the money or property of another against the
fundamental principles of justice, equity and good conscience. Two conditions must concur: (1)
a person is unjustly benefited; and (2) such benefit is derived at the expense of or with damages
to another. The enrichment may consist of a patrimonial, physical, or moral advantage, so long
as it is appreciable in money. It must have a correlative prejudice, disadvantage or injury to the
plaintiff which may consist, not only of the loss of the property or the deprivation of its
enjoyment, but also of the non-payment of compensation for a prestation or service rendered to
the defendant without intent to donate on the part of the plaintiff, or the failure to acquire
something that the latter would have obtained.
PAL invested a considerable amount of money in sending the petitioner abroad to undergo
training to prepare him for his new appointment as B747-400 Captain. In the process, the
petitioner acquired new knowledge and skills which effectively enriched his technical know-
how. As all other investors, PAL expects a return on investment in the form of service by the
petitioner for a period of 3 years, which is the estimated length of time within which the costs of
the latter’s training can be fully recovered. The petitioner is, thus, expected to work for PAL and
utilize whatever knowledge he had learned from the training for the benefit of the company.
However, after only one (1) year of service, the petitioner opted to retire from service, leaving
PAL stripped of a necessary manpower. Undeniably, the petitioner was enriched at the expense
of PAL. After undergoing the training fully shouldered by PAL, he acquired a higher level of
technical competence which, in the professional realm, translates to a higher compensation.
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Further, his training broadened his opportunities for a better employment as in fact he was able
to transfer to another airline company immediately after he left PAL. To allow the petitioner to
simply leave the company without reimbursing it for the proportionate amount of the expenses it
incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason
and fairness dictate that he must return to the company a proportionate amount of the costs of
his training. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not

only by medical findings but also by contract and by law. By contract, Department Order No. 4,
series of 2000, of the Department of Labor and Employment and the parties’ Collective
Bargaining Agreement bind the seafarer and the employer. By law, the Labor Code provisions
on disability apply with equal force to seafarers. The seafarer, upon sign-off from his vessel,
must report to the company-designated physician within three (3) days from arrival for diagnosis
and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman
is on temporary total disability as he is totally unable to work. He receives his basic wage during
this period until he is declared fit to work or his temporary disability is acknowledged by the
company to be permanent, either partially or totally, as his condition is defined under the POEA
Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period
is exceeded and no such declaration is made because the seafarer requires further medical
attention, then the temporary total disability period may be extended up to a maximum of 240
days, subject to the right of the employer to declare within this period that a permanent partial
or total disability already exists. The seaman may of course also be declared fit to work at any
time such declaration is justified by his medical condition.
From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the
care and treatment of the company-designated physician. When the company-designated
physician made a declaration on July 25, 2003 that Tomacruz was already fit to work, 249 days
had already lapsed from the time he was repatriated. As such, his temporary total disability
should be deemed total and permanent, pursuant to Article 192 (c)(1) of the Labor Code and its
implementing rule. Philasia Shipping Agency Corporation, et al. vs. Andres G. Tomacruz. G.R.
No. 181180, August 15, 2012.
Employee dismissal; due process requirements. The following standards of due process shall be
substantially observed for termination of employment based on just causes as defined in Article
282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination,
and giving said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of
counsel if he so desires is given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him.
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(iii) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.
Petitioners’ evidence fails to prove their contention that they afforded Atencio with due process.
The June 21, 1999 letter, which allegedly proves Atencio’s knowledge of the charges against
him, and which allegedly constitutes Atencio’s explanation, clearly discusses an entirely
different topic – which is the removal of his construction company from the Caltex project. As
for the May 24, 1999 letter, which allegedly constitutes the notice of termination of Atencio’s
employment as JARL’s chief operating manager, the said letter involves the termination of the
subcontracting agreement between JARL and Atencio’s company, and not the termination of
Atencio’s employment. For petitioners’ failure to observe the two-notice rule under Article
277(b) of the Labor Code, respondent is entitled to nominal damages. Jarl Construction and
Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Judgment; law of the case.The law of the case has been defined as the opinion delivered on a
former appeal. It means that whatever is once irrevocably established as the controlling legal
rule or decision between the same parties in the same case continues to be the law of the case,
whether correct on general principles or not, so long as the facts on which such decision was
predicated continue to be the facts of the case before the court.
Both G.R. No. 168477 and this petition are offshoots of petitioner’s purported temporary
measures to preserve its neutrality with regard to the perceived void in the union leadership.
While these two cases arose out of different notices to strike, it is undeniable that the facts cited
and the arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and
this petition seek only one relief, that is, to absolve petitioner from respondent’s charge of
committing an unfair labor practice. For this reason, we are constrained to apply the law of the
case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in
G.R. No. 168477. In other words, our previous affirmance of the Court of Appeals’ finding – that
petitioner erred in suspending collective bargaining negotiations with the union and in placing
the union funds in escrow considering the intra-union dispute between the Aliazas and Bañez
factions was not a justification therefor — is binding in the present case. De la Salle University
vs. De la Salle University Employees Association. G.R. No. 169254. August 23, 2012.
Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial
Rehabilitation and Insolvency Act of 2010, the right of a secured creditor to enforce his lien
during liquidation proceedings is retained. On the right of first preference as regards unpaid
wages, a distinction should be made between a preference of credit and a lien. A preference
applies only to claims which do not attach to specific properties. A lien creates a charge on a
particular property. The right of first preference as regards unpaid wages recognized by Article
110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor
of workers. It is but a preference of credit in their favor, a preference in application. It is a
method adopted to determine and specify the order in which credits should be paid in the final
distribution of the proceeds of the insolvent’s assets. It is a right to a first preference in the
discharge of the funds of the judgment debtor. Consequently, the right of first preference for
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unpaid wages may not be invoked in this case to nullify the foreclosure sales conducted
pursuant to PNB’s right as a secured creditor to enforce its lien on specific properties of its
debtor, ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co.,
Inc.) vs. Philippine National Bank. G.R. No. 171132, August 15, 2012.
NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the
original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino
workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the
original and exclusive jurisdiction to hear and decide all disciplinary action cases and other
special cases administrative in character involving such workers. The obvious intent of Republic
Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters
affecting and involving such workers. The NLRC had no appellate jurisdiction to review the
decision of the POEA in disciplinary cases involving overseas contract workers.
Although, as a rule, all laws are prospective in application unless the contrary is expressly
provided, or unless the law is procedural or curative in nature, there is no serious question
about the retroactive applicability of Republic Act No. 8042 to the appeal of the POEA’s
decision on petitioners’ disciplinary action against respondents. In a way, Republic Act No.
8042 was a procedural law due to its providing or omitting guidelines on appeal. Republic Act
No. 8042 applies to petitioners’ complaint by virtue of the case being then still pending or
undetermined at the time of the law’s passage, there being no vested rights in rules of procedure.
They could not validly insist that the reckoning period to ascertain which law or rule should
apply was the time when the disciplinary complaint was originally filed in the POEA in 1993.
Moreover, Republic Act No. 8042 and its implementing rules and regulations were already in
effect when petitioners took their appeal. When Republic Act No. 8042 withheld the appellate
jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate jurisdiction was
vested in the Secretary of Labor in accordance with his power of supervision and control under
Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987. Eastern
Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012.
Petition for review; question of fact. While generally, only questions of law can be raised in a
petition for review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain
exceptions, namely: (1) when the findings are grounded entirely on speculations, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3)
when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of
facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the same are
contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner’s main and reply briefs are not disputed by the respondent; and (10) when the findings
of fact are premised on the supposed absence of evidence and contradicted by the evidence on
record. The illegality of petitioner’s dismissal was an issue that was squarely raised before the
NLRC. When the NLRC decision was reversed by the Court of Appeals, there was a situation
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where “the findings of facts are conflicting”. The petition for review filed by the Petitioner comes
within the purview of exception (5) and by analogy, exception (7). Mylene Carvajal vs. Luzon
Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.
Probationary employee; security of tenure. A probationary employee, like a regular employee,
enjoys security of tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under Article 281 of the
Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of the engagement.
Punctuality is a reasonable standard imposed on every employee, whether in government or
private sector. As a matter of fact, habitual tardiness is a serious offense that may very well
constitute gross or habitual neglect of duty, a just cause to dismiss a regular employee.
Assuming that petitioner was not apprised of the standards concomitant to her job, it is but
common sense that she must abide by the work hours imposed by the bank. Satisfactory
performance is and should be one of the basic standards for regularization. Naturally, before an
employer hires an employee, the former can require the employee, upon his engagement, to
undergo a trial period during which the employer determines his fitness to qualify for regular
employment based on reasonable standards made known to him at the time of engagement.
It is evident that the primary cause of respondent’s dismissal from her probationary employment
was her “chronic tardiness.” At the very start of her employment, petitioner already exhibited
poor working habits. Even during her first month on the job, she already incurred eight (8)
tardiness. Respondent also cited other infractions such as unauthorized leaves of absence,
mistake in clearing of a check, and underperformance. All of these infractions were not refuted
by petitioner. Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No.
186169, August 1, 2012.
Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and
other monetary benefits, it is the employer’s burden to prove its payment to its employee. The
employer’s evidence must show, with a reasonable degree of certainty, that it paid and that the
workers actually received the payment. The reason for the rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents are not in the possession of the
worker but are in the custody and absolute control of the employer. In the case at bar, the two
official receipts issued by Safemark, and offered as JARL’s evidence, only prove that JARL made
a total partial payment of P1,891,509.50 to the said company for its “professional services.”
Since JARL admits that the said company actually rendered services for JARL on its Caltex
project, the payment can only be assumed as covering for the said services. There is nothing on
the face of the receipts to support the conclusion that Atencio (and not his company) received it
as payment for his service as a JARL employee. Jarl Construction and Armando K. Tejada vs.
Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Seafarers; contract. The employment of seafarers, and its incidents, including claims for death
benefits, is governed by the contracts they sign every time they are hired or rehired. Such
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contracts have the force of law between the parties as long as their stipulations are not contrary
to law, morals, public order or public policy. While the seafarers and their employers are
governed by their mutual agreements, the POEA rules and regulations require that the POEA
Standard Employment Contract, which contains the standard terms and conditions of the
seafarers’ employment in foreign ocean-going vessels, be integrated in every seafarer’s contract.
The pertinent provision of the 1996 POEA SEC, which was in effect at the time of Tanawan’s
employment, was Section 20(B) – Compensation and Benefits. Wallem Maritime Services, Inc.
vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.
Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any
disability or is fit to work is the company-designated physician. As such, the seafarer must
submit himself to the company-designated physician for a post-employment medical
examination within three days from his repatriation. But the assessment of the company-
designated physician is not final, binding or conclusive on the seafarer, the labor tribunals, or
the courts. The seafarer may request a second opinion and consult a physician of his choice
regarding his ailment or injury, and the medical report issued by the physician of his choice
shall also be evaluated on its inherent merit by the labor tribunal and the court.
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical
examination within the 3-day reglementary period from his repatriation. The medical
examination conducted focused on Tanawan’s foot injury, the cause of his repatriation. Dr. Lim
treated Tanawan for the foot injury from December 1, 1997 until May 21, 1998, when Dr. Lim
declared him fit to work. Within that period that lasted 172 days, Tanawan was unable to
perform his job, an indication of a permanent disability. Under the law, there is permanent
disability if a worker is unable to perform his job for more than 120 days, regardless of whether
or not he loses the use of any part of his body. Disability should be understood more on the loss
of earning capacity rather than on the medical significance of the disability. Even in the absence
of an official finding by the company-designated physician to the effect that the seafarer suffers a
disability and is unfit for sea duty, the seafarer may still be declared to be suffering from a
permanent disability if he is unable to work for more than 120 days. On the other hand,
Tanawan’s claim for disability benefits due to the eye injury was already barred by his failure to
report the injury and to have his eye examined by a company-designated physician. The
rationale for the rule is that reporting the illness or injury within three days from repatriation
fairly makes it easier for a physician to determine the cause of the illness or injury.
Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during
the term of the contract. The Court has declared that the unqualified phrase “during the term”
found in Section 20(B) thereof covered all injuries or illnesses occurring during the lifetime of
the contract. Whoever claims entitlement to the benefits provided by law should establish his
right to the benefits by substantial evidence. Tanawan did not present any proof of having
sustained the eye injury during the term of his contract. All that he submitted was his bare
allegation that his eye had been splashed with some thinner while he was on board the
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vessel. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29,
2012.
Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency
and its principal, Modern Metal, committed a prohibited practice and engaged in illegal
recruitment when they altered or substituted the contracts approved by the Philippine Overseas
Employment Administration (POEA). Article 34 (i) of the Labor Code provides: It shall be
unlawful for any individual, entity, licensee, or holder of authority to substitute or alter
employment contracts approved and verified by the Department of Labor from the time of actual
signing thereof by the parties up to and including the period of expiration of the same without
the approval of the Secretary of Labor. Meanwhile, Article 38 (i) of the Labor Code, as amended
by R.A. 8042, defined “illegal recruitment” to include the substitution or alteration, to the
prejudice of the worker, of employment contracts approved and verified by the Department of
Labor and Employment from the time of actual signing thereof by the parties up to and including
the period of the expiration of the same without the approval of the Department of Labor and
Employment.
Furthermore, the agency and Modern Metal committed breach of contract by providing
substandard working and living arrangements, when the contract provided free and suitable
housing. The living quarters were cramped as they shared them with 27 other workers. The
lodging house was far from the jobsite, leaving them only three to four hours of sleep every
workday because of the long hours of travel to and from their place of work, not to mention that
there was no potable water in the lodging house which was located in an area where the air was
polluted. They complained with the agency about the hardships that they were suffering, but
the agency failed to act on their reports. Significantly, the agency failed to refute their claims.
Thus, with their original contracts substituted and their oppressive working and living conditions
unmitigated or unresolved, the decision to resign is not surprising. They were compelled by the
dismal state of their employment to give up their jobs; effectively, they were constructively
dismissed. A constructive dismissal or discharge is “a quitting because continued employment
is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and
a diminution in pay.”
Without doubt, continued employment with Modern Metal had become unreasonable. A
reasonable mind would not approve of a substituted contract that pays a diminished salary –
from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment
letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an
extended employment (from 2 to 3 years) at such inferior terms, or a “free and suitable” housing
which is hours away from the job site, cramped and crowded, without potable water and
exposed to air pollution.
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We thus cannot accept the agency’s insistence that the respondents voluntarily resigned since
they personally prepared their resignation letters in their own handwriting. Pert/CPM Manpower
Exponent Co., Inc. vs. Amando A. Vinuya, et al. G.R. No. 197528. September 5, 2012.
Disability benefit. Deemed read and incorporated into the Contract of Employment between
David and respondents are the provisions of the 2000 Philippine Overseas Employment Agency
Standard Employment Contract (POEASEC). Sec. 20(B)(4) of the POEA-SEC clearly established a
disputable presumption in favor of the compensability of an illness suffered by a seafarer during
the term of his contract. Hence, unless contrary evidence is presented by the seafarer’s
employer/s, this disputable presumption stands.
In this case, David not only relies on this disputable presumption of the compensability of his
illness but David has provided more than a reasonable nexus between the nature of his job and
the disease that manifested itself on the sixth month of his last contract with respondents.
It is not necessary that the nature of the employment be the sole and only reason for the illness
suffered by the seafarer. It is sufficient that there is a reasonable linkage between the disease
suffered by the employee and his work to lead a rational mind to conclude that his work may
have contributed to the establishment or, at the very least, aggravation of any pre-existing
condition he might have had.
David showed that part of his duties as a Third Officer of the crude tanker M/T Raphael involved
“overseeing the loading, stowage, securing and unloading of cargoes.” As a necessary corollary,
David was frequently exposed to the crude oil that M/T Raphael was carrying. The chemical
components of crude oil include, among others, sulfur, vanadium and arsenic compounds.
Hydrogen sulfide and carbon monoxide may also be encountered, while benzene is a naturally
occurring chemical in crude oil. It has been regarded that these hazardous chemicals can
possibly contribute to the formation of cancerous masses.
In this case, David was diagnosed with MFH (now known as undifferentiated pleomorphic
sarcoma [UPS]), which is a class of soft tissue sarcoma or an illness that account for
approximately 1% of the known malignant tumors. As stated by Dr. Peña of the MMC, who was
consulted by the company-designated physician, the etiology of soft tissue sarcomas are
multifactorial. However, some factors are associated with a higher risk. These factors include
exposure to chemical carcinogens like some of the chemical components of crude oil. Jessie V.
David, represented by his wife, Ma. Theresa S. David, and children, Katherine and Kristina
David vs. OSG Shipmanagement Manila, Inc. and/or Michaelmar Shipping Services. G.R. No.
197205. September 26, 2012.
Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary
damages. The requisites for a valid dismissal are: (a) the employee must be afforded due process,
i.e., he must be given an opportunity to be heard and defend himself; and (b) the dismissal must
be for a valid cause as provided in Article 282 of the Labor Code, or for any of the authorized
causes under Articles 283 and 284 of the same Code. In the case before us, both elements are
completely lacking. Respondents were dismissed without any just or authorized cause and
without being given the opportunity to be heard and defend themselves. The law mandates that
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the burden of proving the validity of the termination of employment rests with the
employer. Failure to discharge this evidentiary burden would necessarily mean that the
dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and
conclusions of employers do not provide for legal justification for dismissing employees. In case
of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of
labor laws and the Constitution.
Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair
labor practice when an employer interferes, restrains or coerces employees in the exercise of
their right to self-organization or the right to form an association. In order to show that the
employer committed unfair labor practice under the Labor Code, substantial evidence is
required to support the claim. Substantial evidence has been defined as such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion. In the case at bar,
respondents were indeed unceremoniously dismissed from work by reason of their intent to
form and organize a union.
A corporation, being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, while acting as corporate agents, are not their
personal liability but the direct accountability of the corporation they represent. However,
corporate officers may be deemed solidarily liable with the corporation for the termination of
employees if they acted with malice or bad faith. In the present case, the lower tribunals
unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos,
acted maliciously in terminating the services of respondents without any valid ground and in
order to suppress their right to self-organization. Section 31 of the Corporation Code makes a
director personally liable for corporate debts if he willfully and knowingly votes for or assents to
patently unlawful acts of the corporation. It also makes a director personally liable if he is guilty
of gross negligence or bad faith in directing the affairs of the corporation. Thus, Percy and
Harbutt, having acted in bad faith in directing the affairs of Burgos, are jointly and severally
liable with the latter for respondents’ dismissal.
The awards of moral and exemplary damages in favor of respondents are also in order. Moral
damages may be recovered where the dismissal of the employee was tainted by bad faith or
fraud, or where it constituted an act oppressive to labor, and done in a manner contrary to
morals, good customs or public policy, while exemplary damages are recoverable only if the
dismissal was done in a wanton, oppressive, or malevolent manner. The grant of attorney’s fees
is likewise proper. Attorney’s fees may likewise be awarded to respondents who were illegally
dismissed in bad faith and were compelled to litigate or incur expenses to protect their rights by
reason of the oppressive acts of petitioners. The unjustified act of petitioners had obviously
compelled respondents to institute an action primarily to protect their rights and interests which
warrants the granting of the award. Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118.
September 10, 2012.
Employment termination; Substantive and procedural due process; Mass leave;
Strike. Petitioners were illegally dismissed as they were not afforded substantive and procedural
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due process. To justify the dismissal of an employee on the ground of serious misconduct, the
employer must first establish that the employee is guilty of improper conduct, that the employee
violated an existing and valid company rule or regulation, or that the employee is guilty of a
wrongdoing. In the instant case, Biomedica failed to even present a copy of the rules and to
prove that petitioners were made aware of such regulations. The accusation is for engaging in a
mass leave tantamount to an illegal strike. The phrase “mass leave” may refer to a simultaneous
availment of authorized leave benefits by a large number of employees in a company. Here,
only 5 employees were absent on the same day. They did not go on strike, which is a temporary
stoppage of work by the concerted action of employees as a result of any industrial or labor
dispute. “Concerted” is defined as “mutually contrived or planned” or “performed in unison”. In
the case at bar, the 5 petitioners went on leave for various reasons. They were in different places
to attend to their personal needs or affairs.
The petitioners were charged with conducting an illegal strike, not a mass leave, without
specifying the exact acts that the company considers as constituting an illegal strike or violative
of company policies. Such allegation falls short of the requirement in King of Kings Transport,
Inc. of “a detailed narration of the facts and circumstances that will serve as basis for the charge
against the employees.” A bare mention of an “illegal strike” will not suffice. Further, while
Biomedica cites the provisions of the company policy which petitioners purportedly violated, it
failed to quote said provisions in the notice so petitioners can be adequately informed of the
nature of the charges against them and intelligently file their explanation and defenses to said
accusations.
Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely
insufficient and in violation of the implementing rules of the Labor Code. Under the
implementing rule of Art. 277, an employee should be given “reasonable opportunity” to file a
response to the notice.
In addition, Biomedica did not set the charges against petitioners for hearing or conference.
While petitioners did not submit any written explanation to the charges, it is incumbent for
Biomedica to set the matter for hearing or conference to hear the defenses and receive evidence
of the employees. More importantly, Biomedica is duty-bound to exert efforts, during said
hearing or conference, to hammer out a settlement of its differences with petitioners. These
prescriptions Biomedica failed to satisfy. Lastly, Biomedica again deviated from the dictated
contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the
Implementing Rules that it should embody the facts and circumstances to support the grounds
justifying the termination. Alex Q. Naranjo, et al. vs. Biomedica Health Care, Inc., et al. G.R. No.
193789. September 19, 2012.
Employee dismissal; Reinstatement. Following Article 279 of the Labor Code, an employee who
is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages computed from the time he was illegally dismissed.
However, considering that respondent Dakila was terminated one (1) day prior to his
compulsory retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the
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NLRC correctly held him entitled to the payment of his retirement benefits pursuant to the CBA.
On the other hand, his backwages should be computed only for days prior to his compulsory
retirement which in this case is only a day. Consequently, the award of reinstatement wages
pending appeal must be deleted for lack of basis. The New Philippine Skylanders, Inc. and/or
Jennifer M. Eñano-Bote vs. Francisco N. Dakila. G.R. No. 199547. September 24, 2012
Evidence; Constructive dismissal; Transfer; Substantial evidence. In labor cases, strict adherence
with the technical rules is not required. This liberal policy, however, should still conform to the
rudiments of equitable principles of law. For instance, belated submission of evidence may only
be allowed if the delay is adequately justified and the evidence is clearly material to establish
the party’s cause. Labor tribunals, such as the NLRC, are not precluded from receiving evidence
submitted on appeal as technical rules are not binding in cases submitted before
them. However, any delay in the submission of evidence should be adequately explained and
should adequately prove the allegations sought to be proven. In the present case, MORESCO II’s
belated submission of evidence cannot be permitted. MORESCO II did not cite any reason why
it had failed to file its position paper or present its cause before the Labor Arbiter despite
sufficient notice and time given to do so. Only after an adverse decision was rendered did it
present its defense and rebut the evidence of Cagalawan by alleging that his transfer was made
in response to the letter-request of the area manager of the Ginoog sub-office asking for
additional personnel to meet its collection quota. To our mind, however, the belated
submission of the said letter-request without any valid explanation casts doubt on its credibility,
especially so when the same is not a newly discovered evidence.
The rule is that it is within the ambit of the employer’s prerogative to transfer an employee for
valid reasons and according to the requirement of its business, provided that the transfer does
not result in demotion in rank or diminution of salary, benefits and other privileges. This Court
has always considered the management’s prerogative to transfer its employees in pursuit of its
legitimate interests. But this prerogative should be exercised without grave abuse of discretion
and with due regard to the basic elements of justice and fair play, such that if there is a showing
that the transfer was unnecessary or inconvenient and prejudicial to the employee, it cannot be
upheld. Here, while we find that the transfer of Cagalawan neither entails any demotion in rank
since he did not have tenurial security over the position of head of the disconnection crew, nor
result to diminution in pay as this was not sufficiently proven by him, MORESCO II’s evidence is
nevertheless not enough to show that said transfer was required by the exigency of the electric
cooperative’s business interest. Simply stated, the evidence sought to be admitted by
MORESCO II is not substantial to prove that there was a genuine business urgency that
necessitated the transfer.
When there is doubt between the evidence submitted by the employer and that submitted by the
employee, the scales of justice must be tilted in favor of the employee. This is consistent with
the rule that an employer’s cause could only succeed on the strength of its own evidence and
not on the weakness of the employee’s evidence. Thus, MORESCO II cannot rely on the
weakness of Ortiz’s certification in order to give more credit to its own evidence. Self-serving
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and unsubstantiated declarations are not sufficient where the quantum of evidence required to
establish a fact is substantial evidence, described as more than a mere scintilla. The evidence
must be real and substantial, and not merely apparent. MORESCO II has miserably failed to
discharge the onus of proving the validity of Cagalawan’s transfer. Misamis Oriental II Electric
Service Cooperative (MORESCO II) vs. Virgilio M. Cagalawan. G.R. No. 175170. September 5,
2012.
Retirement benefits. While it is true that based on prevailing jurisprudence, disallowed benefits
received in good faith need not be refunded, the case before us may be distinguished from those
cases with that ruling because the monies involved here are retirement benefits. Retirement
benefits belong to a different class of benefits. All the cases with that ruling involved benefits
such as cash gifts, representation allowances, rice subsidies, uniform allowances, per diems,
transportation allowances, and the like. The foregoing allowances or fringe benefits are given in
addition to one’s salary, either to reimburse him for expenses he might have incurred in relation
to his work, or as a form of supplementary compensation. On the other hand, retirement
benefits are given to one who is separated from employment either voluntarily or
compulsorily. Such benefits, subject to certain requisites imposed by law and/or contract, are
given to the employee on the assumption that he can no longer work. They are also given as a
form of reward for the services he had rendered. The purpose is not to enrich him but to help
him during his non-productive years.
Our Decision does not preclude the retirees from receiving retirement benefits provided by
existing retirement laws. What they are prohibited from getting are the additional benefits under
the GSIS RFP, which we found to have emanated from a void and illegal board resolution. To
allow the payees to retain the disallowed benefits would amount to their unjust enrichment to
the prejudice of the GSIS, whose avowed purpose is to maintain its actuarial solvency to finance
the retirement, disability, and life insurance benefits of its members. Government Service
Insurance System (GSIS), et al. vs. Commission on Audit (COA), et al. G.R. No. 162372.
September 11, 2012.
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against
public policy for two reasons: (1) the terms of the settlement are unconscionable; the separation
pay for termination due to reorganization/restructuring was deficient by Php400,000.00 for each
employee; they were given only half of the amount they were legally entitled to; and (2) the
absence of voluntariness when the employees signed the document, it was their dire
circumstances and inability to support their families that finally drove them to accept the
amount offered. Without jobs and with families to support, they dallied in executing the
quitclaim instrument, but were eventually forced to sign given their circumstances. To be sure, a
settlement under these terms is not and cannot be a reasonable one, given especially the
respondent’s length of service – 25 years for Ybarola and 19 years for Rivera. Radio Mindanao
Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12,
2012.
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Res judicata. “Res judicata means a matter adjudged; a thing judicially acted upon or decided; a
thing or matter settled by judgment.” It denotes “that a final judgment or decree on the merits
by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all
latter suits on all points and matters determined in the former suit. For res judicata, in its
concept as a bar by former judgment to apply, the following must be present:
1. The former judgment or order is final;
2. It is rendered by a court having jurisdiction over the subject matter and the parties;
3. It is a judgment or an order on the merits; and,
4. There is between the first and the second identity of parties, identity of subject matter,
and identity of cause of action.
The Decision of this Court in G.R. Nos. 159460 and 159461 became final and executory on
May 20, 2011. It is a decision based on the merits of the case and rendered by this Court in the
exercise of its appellate jurisdiction after the parties invoked its jurisdiction. There is also,
between the two sets of consolidated cases, identity of the parties, subject matter and causes of
action. The parties in G.R. No. 159460 and 159461 are also impleaded as parties in these
consolidated cases. And while some of the parties herein are not included in G.R. Nos. 159460
and 159461, the same are only few. In any event, it is well-settled that only substantial, and not
absolute, identity of the parties is required for res judicata to lie. “There is substantial identity of
the parties when there is a community of interest between a party in the first case and a party in
the second case albeit the latter was not impleaded in the first case.”
With regard to identity of cause of action, it has been held that there is identity of causes of
action when the same evidence will sustain both actions or when the facts essential to the
maintenance of the two actions are identical. Here, the bone of contention in both sets of
consolidated cases boils down to the nature and consequences of complainants’ April 3, 2000
mass action. The antecedent facts that gave rise to all the cases were the same. Necessarily,
therefore, the same evidence would sustain all actions. Such similarity in the evidence required
to sustain all actions is also borne out by the identity of the issues involved in all these
cases. While the parties have presented a plethora of arguments which we earlier discussed at
length, the same nonetheless boil down to the same crucial issues formulated in G.R. Nos.
159460 and 159461.
It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated
January 14, 2002 and February 20, 2002 of the CA’s Fourth Division granting Metrobank’s
request for injunctive reliefs. They claimed that the reinstatement aspect of the Labor Arbiter’s
Decision is immediately executory. Hence, they are entitled to backwages from the time the
Labor Arbiter promulgated his Decision until it was reversed by the NLRC.
As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos.
159460 and 159461 already adjudicated the respective rights and liabilities of the parties. Said
Decision pronouncing the monetary awards to which the parties herein are entitled became
final and executory on May 20, 2011. Under the rule on immutability of judgment, this Court
cannot alter or modify said Decision. It is a well-established rule that once a judgment has
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become final and executory, it is no longer susceptible to any modification. Solidbank Union, et
al. vs. Metropolitan Bank and Trust Company/Metropolitan Bank and Trust Company vs.
Solidbank Union, et al./Solidbank Corporation, etc., et al. vs. Solidbank Union, et al./Solidbank
Union, et al. vs. Metropolitan Bank and Trust Company. G.R. No. 153799/G.R. No. 157169/G.R.
No. 157327/G.R. No. 157506. September 17, 2012.
Reinstatement; Strained relations. A determination of the applicability of the doctrine of strained
relations is essentially a factual question and, thus, not a proper subject in this petition. This
rule, however, admits of exceptions. In cases where the factual findings of the LA and the NLRC
are conflicting, the Court, in the exercise if equity jurisdiction, may review and re-evaluate the
factual issues and look into the records of the case and re-examine the questioned findings.
As the records bear out, the LA found that patent animosity existed between ACMC and Bides
considering the confrontation that took place between the latter and Matthew. The
confrontation coupled with Bides’ refusal to be reinstated led to the LA’s finding of “strained
relations” necessitating an award of separation pay in lieu of reinstatement. The NLRC, on the
other hand, deleted the said award for lack of factual basis. The CA reinstated the LA’s finding
of “strained relations” and explained that too much enmity had developed between ACMC and
Bides that necessarily barred the latter’s reinstatement.
The Court is well aware 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.
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. Moreover,
the doctrine of strained relations has been made applicable to cases where the employee
decides not to be reinstated and demands for separation pay.
In the present case, Bides has consistently maintained, from the proceedings in the LA up to the
CA, his refusal to be reinstated due to his fear of reprisal which he could experience as a
consequence of his return. By doing so, Bides unequivocally foreclosed reinstatement as a relief.
Apo Chemical Manufacturing and Michael Cheng vs. Ronaldo A. Bides. G.R. No. 186002.
September 19, 2012.
Seafarers disability benefits; Attorney’s fees. In determining the disability benefits due a seafarer
the POEA Standard Employment Contract (SEC), specifically its schedule of benefits, medical
findings, Article 192 (c)(1) of the Labor Code, and Rule X, Section 2 of its implementing rules
and regulations must be considered. The initial treatment period of 120 days may be extended
up to a maximum of 240 days under the conditions prescribed by law.
Under Article 2298 of the Civil Code, attorney’s fees can be recovered “[w]hen the defendant’s
act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to
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protect his interest.” This Court sees no reason why damages or attorney’s fees should be
awarded to Penales. It is obvious that he did not give the petitioners’ company-designated
physician ample time to assess and evaluate his condition, or to treat him properly for that
matter. The petitioners had a valid reason for refusing to pay his claims, especially when they
were complying with the terms of the POEA SEC with regard to his allowances and
treatment. Pacific Ocean Manning Inc., et al. vs. Benjamin D. Penales.G.R. No. 162809.
September 5, 2012.
Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal;
Joint declaration under oath accompanying the surety bond; Substantial compliance with
procedural rules. There was substantial compliance with the NLRC Rules of Procedure when the
respondents PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit
belatedly, the Joint Declaration Under Oath, which is required when an employer appeals from
the Labor Arbiter’s decision granting a monetary award and posts a surety bond. Under the
NLRC rules, the following requisites are required to perfect the employer’s appeal: (1) it must be
filed within the reglementary period; (2) it must be under oath, with proof of payment of the
required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by
typewritten or printed copies of the memorandum of appeal, stating the grounds relied upon, the
supporting arguments, the reliefs prayed for, and a statement of the date of receipt of the
appealed decision, with proof of service on the other party of said appeal. If the employer posts
a surety bond, the NLRC rules further require the submission by the employer, his or her counsel,
and the bonding company of a joint declaration under oath attesting that the surety bond posted
is genuine and that it shall be in effect until the final disposition of the case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award and
filed the notice of appeal and the appeal memorandum within the reglementary period. When
the NLRC subsequently directed the filing of a Joint Declaration Under Oath, the respondents
immediately complied with the said order. There was only a late submission of the Joint
Declaration. Considering that there was substantial compliance with the rules, the same may be
liberally construed. The application of technical rules may be relaxed in labor cases to serve the
demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime Corporation and/or
Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Completeness of service by registered mail; Exception to the general rule regarding a

corporation’s verification and certification of non-forum shopping; Interpretation of school
CBA. A school CBA must be read in conjunction with statutory and administrative regulations
governing faculty qualifications. Such regulations form part of a valid CBA without need for the
parties to make express reference to the same.
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In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester
faculty appointments to the respondents Pepanio and Bueno, since they had not completed
postgraduate degrees. The respondents, however, claimed that the 1994 CBA between UE and
the faculty union did not yet require a master’s degree for a teacher to acquire regular
status. Having rendered more than three consecutive years of full-time service to the school, the
respondents insisted that UE should have given them permanent appointments.
The Supreme Court observed that the policy requiring college teachers to have postgraduate
degrees was provided in the Manual of Regulations issued as early as 1992 by the Department
of Education, Culture and Sports (DECS), now the Department of Education. In promulgating
the Manual of Regulations, DECS exercised its power of regulation over educational institutions,
which includes prescribing the minimum academic qualifications for teaching personnel. The
legislature subsequently transferred the power to prescribe such qualifications for teachers in
institutions of higher learning to the Commission on Higher Education (CHED). However, the
1992 Manual of Regulations issued by DECS continued to apply to colleges and universities
until 2010, when CHED issued a Revised Manual of Regulations.
Thus, the requirement of a master’s degree for college teachers, as originally provided in the
1992 Manual of Regulations, was deemed incorporated in the 1994 CBA between UE and the
faculty union. Furthermore, the subsequent CBA in 2001, which provided for the extension of
conditional probationary status to the respondents, subject to their obtaining a master’s degree
within the probationary period, clearly showed that UE intended to subject the respondents’
appointments to the standards set by the law.
The requirement of a master’s degree for tertiary education teachers is not unreasonable,
considering that the operation of educational institutions involves public interest. The
government has a right to ensure that only qualified persons, in possession of sufficient
academic knowledge and teaching skills, are allowed to teach in such institutions.
The Supreme Court also overruled the respondents’ contention that UE filed its appeal to the
NLRC beyond the required ten (10)-day period. For completeness of service by registered mail,
the reckoning period starts either from the date of actual receipt of the mail by the addressee or
after five (5) days from the date he or she received the first notice from the postmaster. In this
case, the respondents averred that, on March 17, 2005, the postmaster gave UE’s counsel a
notice to claim the mail containing the Labor Arbiter’s decision. The respondents claimed that
UE’s counsel was deemed in receipt of the decision 5 days after the giving of the notice, or on
March 22, 2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on
April 14, 2005, the 10-day reglementary period had already lapsed. The Supreme Court,
however, ruled that there must be conclusive proof that the registry notice was received by or at
least served on the addressee. In this case, the records did not show that UE’s counsel in fact
received the alleged registry notice requiring him to claim the mail. On the other hand, UE was
able to present a registry return receipt showing that its counsel actually received a copy of the
Labor Arbiter’s decision on April 4, 2005. Reckoned from this date, the 10-day reglementary
period had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.
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Anent UE’s failure to comply with the general rule that the Board of Directors or Board of
Trustees of a corporation must authorize the person who shall sign the verification and
certification of non-forum shopping accompanying a petition, the Supreme Court held that such
authorization is not necessary when it is self-evident that the signatory is in a position to verify
the truthfulness and correctness of the allegations in the petition. The Supreme Court declared
that Dean Eleanor Javier, who signed UE’s verification and certification, was in such a position,
since she knew the factual antecedents of the case and she actually communicated with the
respondents regarding the required postgraduate qualification. University of the East, et al. vs.
Analiza F. Pepanio and Mariti D. Bueno. G.R. No. 193897. January 23, 2013.
Disease as a ground for termination; Retirement under the Labor Code; Age and tenure
requirements for retirement; Financial assistance. Under the Labor Code provision on disease as
a ground for termination (formerly, Article 284, but now renumbered pursuant to Republic Act
No. 10151), it must be the employer who initiates the termination of the employee’s
services. The aforementioned provision cannot be applied in this case, considering that it was
the late petitioner Padillo, and not the Rural Bank of Nabunturan, Inc. (Bank), who severed the
employment relations. With his memory impaired after suffering a mild stroke due to
hypertension, Padillo wrote a letter to the Bank, expressing his intention to avail of an early
retirement package. The clear import of Padillo’s letter and the fact that he had stopped
reporting for work even before sending the said letter shows that he voluntarily retired. Given
the inapplicability of the Labor Code provision on disease as a ground for termination, it
necessarily follows that Padillo’s claim for separation pay must be denied.
As regards Padillo’s claim for retirement benefits, the provision of the Labor Code on retirement
(formerly, Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence
of any applicable agreement, an employee who has served at least five (5) years in the company
may retire upon reaching the age of sixty (60) years, but not beyond sixty-five (65) years, to be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, with a fraction of at least six (6) months being considered as one whole year. Notably,
the aforementioned age and tenure requirements are cumulative, and non-compliance with
either negates the employee’s entitlement to the retirement pay under the Labor Code. In this
case, the Bank did not have a retirement plan or any other contract with its employees, setting
the terms and conditions for retirement. Padillo also served the Bank for twenty-nine (29) years,
far more than the 5-year tenure requirement. Padillo, however, did not meet the age
requirement, considering that he was only fifty-five (55) years old, or less than 60 years of age,
when he retired. Thus, Padillo’s claim for retirement pay must also be denied.
Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000,
considering the length of time which had supervened before the disposition of this case and
Padillo’s unblemished record of 29 years of service to the Bank. The award was in addition to
the P100,000 benefit receivable under the Philam Life Plan that the Bank had procured in favor
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of Padillo. Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et al. G.R. No. 199338.
January 21, 2013.
Redundancy as an authorized cause for termination; Difference between retirement and

termination due to redundancy; General rule regarding the factual findings of the NLRC and the
exceptions thereto. Under the Labor Code, redundancy is one of the authorized causes for
termination of employment. The following are the requisites for the valid implementation of a
redundancy program: (a) the employer must serve a written notice to the affected employees
and to the Department of Labor and Employment (DOLE) at least one month before the intended
date of termination; (b) the employer must pay the employees 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. The Supreme Court has also held that a company cannot simply declare redundancy
without basis. To exhibit its good faith and to show that there were fair and reasonable criteria
in ascertaining redundant positions, a company claiming to be over manned must produce
adequate proof of the same.
In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written
notice informing her of the termination of her services on the ground of redundancy. GMC also
submitted to the DOLE an Establishment Termination Report, regarding the employees,
including Viajar, whose positions were deemed redundant. Viajar and the DOLE received the
respective notices one month before the effective date of the employees’
termination. Furthermore, GMC issued to Viajar two checks amounting to P440,253.02 and
P21,211.35, representing her separation pay. However, the Supreme Court held that,
notwithstanding compliance with the requirements on notice and the payment of separation pay,
GMC is still considered to have illegally dismissed Viajar because the company failed to present
substantial proof to support its general allegations of redundancy. GMC could have presented
evidence to substantiate redundancy, such as a new staffing pattern or feasibility studies or
proposals on the viability of newly created positions, job descriptions and the approval by
management of the restructuring program, or the company’s audited financial reports. However,
no such evidence was submitted by GMC.
On the other hand, Viajar presented proof negating GMC’s claim of redundancy and clearly
showing GMC’s bad faith in implementing the redundancy program: (1) GMC had hired new
employees before it terminated Viajar’s employment; (2) Vaijar was barred from entering the
company premises even before the effectivity of her separation; and (3) Viajar was also forced to
sign an “Application for Retirement and Benefits” so that she could avail of her separation
pay. The last circumstance is significant, considering that there is a difference between
voluntary retirement and forced termination of an employee. Retirement from service is
contractual or based on a bilateral agreement of the employer and the employee, while
termination of employment is statutory or governed by the Labor Code and other related
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laws. Voluntary retirement cuts employment ties, leaving no residual employer liability;
involuntary retirement amounts to a discharge, rendering the employer liable for termination
without cause. GMC’s demand that Viajar sign an Application for Retirement and Benefits,
when she had already been informed of the termination of her services due to redundancy,
shows that this case involves not a voluntary retirement, but an illegal termination.
While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general
rule that the factual findings of the NLRC must be accorded respect and finality is not applicable
in this case. One of the exceptions to the said rule covers instances when the findings of fact of
the trial court, or of the quasi-judicial agencies concerned, are conflicting or contradictory with
those of the Court of Appeals, as in the present case. Another exception to the general rule is
when the said findings are not supported by substantial evidence or the inference or conclusion
arrived at is manifestly erroneous. In the case at bar, the Supreme Court agreed with the Court
of Appeals that the NLRC’s conclusion that Viajar was legally dismissed is manifestly
erroneous. General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738. January 30,
2013.
Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are

entitled to reinstatement with backwages plus interest at the legal rate.
This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and
the Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other
for violating labor laws. AER filed a complaint against the Union and eighteen (18) of its
members for conducting an illegal strike. On the other hand, thirty-two (32) employees filed a
complaint against AER for unfair labor practices, illegal dismissal, illegal suspension, and run-
away shop. In a previous decision (G.R. No. 160138, July 13, 2011), the Supreme Court had
held that both parties were at fault or in pari delicto; hence, the complaining employees should
be reinstated but without backwages. The Motion for Partial Reconsideration filed by the Union
is resolved in the present case.
The Supreme Court found that, of the 32 employees who filed the complaint against AER, only
18 had been charged by AER with illegal strike, leaving 14 excluded from the employer’s
complaint. As no charges had been filed against the 14 workers, they cannot be found guilty of
illegal strike. Neither can they be considered in pari delicto. However, of the 14 employees,
five failed to write their names and affix their signatures in the Membership Resolution attached
to their petition before the Court of Appeals, authorizing the union president to represent
them. Thus, while these five employees will also be reinstated, they cannot be granted
backwages. On the other hand, the nine workers who signed their names in the aforementioned
Membership Resolution will be reinstated with backwages plus interest at the legal
rate. Automotive Engine Rebuilders, Inc. (AER), et al. vs. Progresibong Unyon ng mga
Manggagawa sa AER, et al. / Progresibong Unyon ng mga Manggagawa sa AER, et al. vs.
Automotive Engine Rebuilders, Inc., et al. G.R. Nos. 160138 and 160192. January 16, 2013.
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Resignation; Resignation in relation to the subsequent filing of an illegal dismissal

case. Petitioner Cervantes’s claim that he did not resign but was terminated from employment is
untenable. 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.
In the present case, Cervantes’s employer merely informed him of the numerous complaints
against him. It was Cervantes himself who opted to be relieved from his post and who initiated
his repatriation to Manila. This is clear from the tenor of his telex message, which reads in
part: “ANYHOW TO AVOID REPETITION [ON] MORE HARSH REPORTS TO COME. BETTER
ARRANGE MY RELIEVER [AND] C/O BUSTILLO RELIEVER ALSO. UPON ARR NEXT USA
LOADING PORT FOR THEIR SATISFACTION.” Cervantes’s message contains an unmistakable
demand to be relieved of his assignment. His employer merely accepted his resignation. Thus,
the rule that the filing of a complaint for illegal dismissal is inconsistent with resignation does
not hold true in this case. The clear tenor of Cervantes’s resignation letter and the filing of this
case one year after his alleged termination shows that the complaint for illegal dismissal was a
mere afterthought. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping
Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and
exercise of management prerogative; Limitations on the exercise of management prerogative;
Nature of collective bargaining agreements (CBA). Goya, Inc.’s contention that the Voluntary
Arbitrator (VA) exceeded his power in ruling on a matter not covered by the sole issue submitted
for voluntary arbitration is untenable. In a prior case, the Supreme Court has ruled that, in
general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator can assume that he has the power to make a final settlement. The VA
has plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or
her own authority. Subject to judicial review, this leeway of authority and adequate prerogative
is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice.
In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary
arbitration the sole issue of whether or not the company is guilty of an unfair labor practice in
engaging the services of PESO, a third party service provider, under existing CBA, laws, and
jurisprudence. The Union claimed that the hiring of contractual workers from PESO violated the
CBA provision that prescribes only three categories of workers in the company, namely: the
probationary, the regular, and the casual employees. Instead of hiring contractual workers,
Goya, Inc. should have hired probationary or casual employees, who could have become
additional Union members, pursuant to the union security clause in the CBA. The VA ruled that
while Goya, Inc. was not guilty of any unfair labor practice, it still committed a violation of the
CBA, though such violation was not gross in character. The Supreme Court held that the VA’s
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ruling is interrelated and intertwined with the sole issue submitted for arbitration. The ruling
was necessary to make a complete and final adjudication of the dispute between the parties.
Furthermore, Goya, Inc.’s assertion that its hiring of contractual workers was a valid exercise of
management prerogative is erroneous. Declaring that a particular act falls within the concept of
management prerogative is significantly different from acknowledging that such act is a valid
exercise thereof. While the VA and the Court of Appeals ruled that the act of contracting out or
outsourcing work is within the purview of management prerogative, they did not declare such
act to be a valid exercise thereof. As repeatedly held, the exercise of management prerogative is
not unlimited; it is subject to the limitations found in the law, CBA, or general principles of fair
play and justice.
In this case, the CBA provision prescribing the categories of employees in the company and the
union security clause are interconnected and must be given full force and effect. The parties in
a CBA are free to establish such stipulations they may deem convenient, provided that the same
are not contrary to law, morals, good customs, public order, or public policy. Where the CBA is
clear and unambiguous, the literal meaning of its stipulations shall control. The CBA becomes
the law between the parties, and compliance therewith is mandated by the express policy of the
law. Goya, Inc. vs. Goya, Inc. Employees Union-FFW. G.R. No. 170054. January 21, 2013.
December 2013 Philippine Supreme Court Decisions on Labor Law
Appeal; NLRC; accredited bonding company; revocation of authority is prospective in

application. The respondents filed a surety bond issued by Security Pacific Assurance
Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific was still an
accredited bonding company. However, the NLRC revoked its accreditation on February 16,
2003. This subsequent revocation should not prejudice the respondents who relied in good
faith on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine
Journalists, Inc. (G.R. No. 181516, August 19, 2009), it was held that a bonding company’s
revocation of authority is prospective in application. Nonetheless, the respondents should post a
new bond issued by an accredited bonding company in compliance with paragraph 4, Section 6,
Rule 6 of the NLRC Rules of Procedure, which states that “[a] cash or surety bond shall be valid
and effective from the date of deposit or posting, until the case is finally decided, resolved or
terminated or the award satisfied.” Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No.
189404, December 11, 2013.
Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code provides that
“[i]n 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 NLRC in the amount equivalent to the monetary award in the
judgment appealed from.” Contrary to the respondents’ claim, the issue of the appeal bond’s
validity may be raised for the first time on appeal since its proper filing is a jurisdictional
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requirement. The requirement that the appeal bond should be issued by an accredited bonding
company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to
discourage the employers from using an appeal to delay or evade the employees’ just and lawful
claims. It is intended to assure the workers that they will receive the money judgment in their
favor if the employer’s appeal is dismissed. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R.
No. 189404, December 11, 2013.
Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor the rules
require the verification of the supplemental appeal. Furthermore, verification is a formal, not a
jurisdictional, requirement. It is mainly intended to give assurance that the matters alleged in the
pleading are true and correct and not of mere speculation. Also, a supplemental appeal is
merely an addendum to the verified memorandum on appeal that was earlier filed in the case;
hence, the requirement for verification has been substantially complied. Wilgen Loon, et al. v.
Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; Rule 45; limited to review of questions of law. In this Rule 45 petition for review on
certiorari, the Supreme Court (SC) reviewed the Court of Appeals’ (CA) decision of a Rule 65
petition for certiorari. The Supreme Court’s power of review in such case is limited to legal
errors that the CA might have committed in issuing its assailed decision, in contrast with the
review for jurisdictional errors which it undertakes in an original certiorari (Rule 65) action filed
with it. The SC examines the CA decision based on how it determined the presence or absence
of grave abuse of discretion in the manner by which the NLRC rendered its decision and not on
the basis of whether the NLRC decision on the merits of the case was correct. Moreover, the
Court’s power in a Rule 45 petition limits it to a review of questions of law raised against the
assailed CA decision. Baguio Central University v. Ignacio Gallente,G.R. No. 188267, December
2, 2013.
Attorney’s fees; when entitled. An employee is entitled to an award of attorney’s fees equivalent
to ten percent (10%) of the amount of the wages in actions for unlawful withholding of wages
pursuant to Article 111 of the Labor Code. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R.
No. 189404, December 11, 2013.
Backwages; when entitled. In termination cases, the burden of proving just and valid cause for
dismissing an employee from his employment rests upon the employer. The employer’s failure
to discharge this burden in the instant case arising from their non-submission of evidence at the
proceedings before the labor arbiter resulted in the finding that the dismissal is unjustified. Thus,
the employees are entitled to the payment of backwages. Wilgen Loon, et al. v. Power Master,
Inc., et al.,G.R. No. 189404, December 11, 2013.
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Deeds of release and quitclaim; grounds to invalidate. As a rule, deeds of release and 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. To excuse respondents from complying with the terms of their waivers, any one of the
following grounds must exist: (1) the employer used fraud or deceit in obtaining the waivers; (2)
the consideration the employer paid is incredible and unreasonable; or (3) the terms of the
waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial
to a third person with a right recognized by law. The Court concluded that the instant case falls
under the first situation.
As the ground for termination of employment was illegal, the quitclaims are deemed illegal
because the employees’ consent had been 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. The circumstances show that petitioner’s
misrepresentation led its employees, specifically respondents herein, to believe that the
company was suffering losses which necessitated the implementation of the voluntary retirement
and retrenchment programs, and eventually the execution of the deeds of release, waiver and
quitclaim. The amounts already received by respondents as consideration for signing the
releases and quitclaims, however, should be deducted from their respective monetary
awards. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R.
No. 191475, December 11, 2013.
Disability benefits; principle of work-aggravation; concept of. Compensability may be

established on the basis of the theory of work aggravation if, by substantial evidence, it can be
demonstrated that the working conditions aggravated or at least contributed in the advancement
of respondent’s cancer. As held in Rosario v. Denklav Marine, “the burden is on the
beneficiaries to show a reasonable connection between the causative circumstances in the
employment of the deceased employee and his death or permanent total disability.” In the
present case, both parties failed to discharge their respective burdens – for petitioners, they
failed to prove the non-work-relatedness of the disease; and for respondent, he failed to prove
that his work aggravated his condition. Thus, the Court had to resolve the case on some other
basis. The Court held that disability should be understood not more on its medical significance,
but on the loss of earning capacity. Permanent total disability means disablement of an
employee to earn wages in the same kind of work or work of similar nature that he was trained
for or accustomed to perform, or any kind of work which a person of his mentality and
attainment could do. It does not mean absolute helplessness. Evidence of this condition can be
found in a certification of fitness/unfitness to work issued by the company-designated physician.
In this case, records reveal that the medical report issued by the company-designated oncologist
was bereft of any certification that respondent remained fit to work as a seafarer despite his
cancer. This is important, according to the Court, since the certification is the document that
contains the assessment of his disability which can be questioned in case of disagreement as
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provided under Section 20 (B) (3) of the POEA-SEC. In the absence of any certification, the law
presumes that the employee remains in a state of temporary disability. Should no certification be
issued within 240 day maximum period, as in this case, the pertinent disability becomes
permanent in nature. Accordingly, the Court affirmed respondent’s entitlement to permanent
total disability benefits awarded to him. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No.
204076, December 4, 2013.
Disability benefits; principle of work-relation; concept of. As a general rule, the principle of
work-relation requires that the disease in question must be one of those listed as an
occupational disease under Sec. 32-A of the POEA-SEC. Nevertheless, should it be not classified
as occupational in nature, Section 20 (B) paragraph 4 of the POEA-SEC provides that such
diseases are disputably presumed as work-related.
In this case, it is undisputed that Nasopharyngeal Carcinoma (NPC) afflicted respondent while
on board the petitioners’ vessel. As a non-occupational disease, it has the disputable
presumption of being work-related. This presumption obviously works in the seafarer’s favor.
Hence, unless contrary evidence is presented by the employers, the work-relatedness of the
disease must be sustained. The Court held that the petitioners, as employers, failed to disprove
the presumption of NPC’s work-relatedness. The petitioners primarily relied on the medical
report issued by Dr. Co Pefia which, however, failed to make a categorical statement confirming
the total absence of work relation. As the doctor opined only a probability, there was no
certainty that his condition was not work related. There being no certainty, the Court will lean
in favor of the seafarer consistent with the mandate of POEA-SEC to secure the best terms and
conditions of employment for Filipino workers. Hence, the presumption of NPC’s work-
relatedness stays. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4,
2013.
Illegal dismissal; burden of proof. In termination cases, the burden of proving just and valid
cause for dismissing an employee from his employment rests upon the employer. The
employer’s failure to discharge this burden results in the finding that the dismissal is unjustified.
Failing to prove just and valid cause for the dismissal, the Court held that the petitioners are
entitled to salary differential, service incentive, holiday, and thirteenth month pays. As in illegal
dismissal cases, the general rule is that the burden rests on the defendant to prove payment
rather than on the plaintiff to prove non-payment of these money claims. However, the Court
decided that they are not entitled to overtime and premium pays. The burden of proving
entitlement to overtime pay and premium pay for holidays and rest days rests on the employee
because these are not incurred in the normal course of business. In the present case, the
petitioners failed to adduce any evidence that would show that they actually rendered service in
excess of the regular eight working hours a day, and that they in fact worked on holidays and
rest days. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013.
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Labor cases; strict adherence to the technical rules of procedure is not required; when liberality
allowed. In labor cases, strict adherence to the technical rules of procedure is not required.
Time and again, the Court has allowed evidence to be submitted for the first time on appeal
with the NLRC in the interest of substantial justice. Thus, it has consistently supported the rule
that labor officials should use all reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law or procedure, in the interest of due
process. However, this liberal policy should still be subject to rules of reason and fairplay. The
liberality of procedural rules is qualified by two requirements: (1) a party should adequately
explain any delay in the submission of evidence; and (2) a party should sufficiently prove the
allegations sought to be proven. The reason for these requirements is that the liberal application
of the rules before quasi-judicial agencies cannot be used to perpetuate injustice and hamper
the just resolution of the case. Neither is the rule on liberal construction a license to disregard
the rules of procedure. In the present case, the Court held that the respondents failed to
adequately explain their delay in the submission of evidence and prove the allegations sought to
be proven. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013.
Labor; ground for valid dismissal; loss of trust and confidence; requisites. Loss of trust and
confidence is a just cause for dismissal under Article 282(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. 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 willful, i.e., it was done intentionally, knowingly and purposely,
without justifiable excuse.
In Lopez v. Keppel Bank Philippines, Inc. (G.R. No. 176800, September 5, 2011), 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
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nature of his participation therein renders him unworthy of the trust and confidence demanded
of his position,” the dismissal on this ground is valid.
The Court held that there was sufficient basis to dismiss the respondent for loss of trust and
confidence. First, the Court believed that the respondent held a position of trust and confidence
because he was a managerial employee of the petitioner. As the Dean of two of the petitioner’s
departments, he was tasked, among others, to assist the school head in all matters affecting the
general policies of the entire institution, to direct and advise the students in their programs of
study and to approve their subject load and exercise educational leadership among his
faculty. These tasks involved the exercise of powers and prerogatives equivalent to managerial
actions. Second, the Court ruled that the respondent committed wilful breach of trust sufficient
to justify dismissal. The heart of the loss-of-trust charge is the employee’s betrayal of the
employer’s trust. “Damage aggravates the charge but its absence does not mitigate nor negate
the employee’s liability. The respondent betrayed his owed fidelity the moment he engaged in a
venture that required him to perform tasks and make calculated decisions which his duty to the
petitioner would have equally required him to perform or would have otherwise required him to
oppose. The Court was convinced that actual conflict of interest existed when respondent
sought to conduct review courses for nursing examination knowing that the petitioner was
already offering similar classes. The respondent’s good intentions were beside the
point. Ultimately, the determinant is his deliberate engagement in a venture that would have
directly conflicted with the petitioner’s interests. If respondent merely intended to help the
petitioner and its students in increasing their chances of passing the Civil Service Examination,
he could have just offered, as part of the BCU’s course curriculum, review classes for the Civil
Service Examination instead of altogether organizing a review center that obviously will offer the
course to everyone minded to enroll. Baguio Central University v. Ignacio Gallente, G.R. No.
188267, December 2, 2013.
Labor; valid dismissal; requisites. Our Constitution, statutes and jurisprudence uniformly
guarantee to every employee or worker tenurial security. What this means is that an employer
shall not dismiss an employee except for just or authorized cause and only after due process is
observed. Thus, for an employee’s dismissal to be valid, the employer must meet these basic
requirements of: (1) just or authorized cause (which constitutes the substantive aspect of a valid
dismissal); and (2) observance of due process (the procedural aspect). Baguio Central University
v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Petition for review on certiorari; only questions of law can be reviewed; exceptions.The well-
entrenched rule in this jurisdiction is that only questions of law may be entertained by the SC in
a petition for review on certiorari under Rule 45. This rule, however, is not absolute and admits
certain exceptions, such as when the petitioner persuasively alleges that there is insufficient or
insubstantial evidence on record to support the factual findings of the tribunal or court a quo as
Section 5, Rule 133 of the Rules of Court states in express terms that in cases filed before
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administrative or quasi-judicial bodies, a fact may be deemed established only if supported by

substantial evidence. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076,
December 4, 2013.
Probationary employment; concept of; probationer can only qualify upon fulfillment of the
reasonable standards set for permanent employment of a teaching personnel. Probationary
employment refers to the trial stage or period during which the employer examines the
competency and qualifications of job applicants, and determines whether they are qualified to
be extended permanent employment status. Such an arrangement affords an employer the
opportunity – before the full force of the guarantee of security of tenure comes into play – to
fully scrutinize and observe the fitness and worth of probationers while on the job and to
determine whether they would become proper and efficient employees. It also gives the
probationers the chance to prove to the employer that they possess the necessary qualities and
qualifications to meet reasonable standards for permanent employment.
Mere completion of the three-year probation, even with an above-average performance, does
not guarantee that the employee will automatically acquire a permanent employment status. It
is settled jurisprudence that the probationer can only qualify upon fulfillment of the reasonable
standards set for permanent employment of a teaching personnel.
The Court ruled that the requirement to obtain a master’s degree was made known to the
petitioner. The contract she signed clearly incorporates the rules, regulations, and employment
conditions contained in the SSC Faculty Manual. The Manual provided for a criteria for
permanency which includes, among others, the requirement that the faculty member must have
completed at least a master’s degree. Viewed next to the statements and actions of Manaois –
i.e., the references to obtaining a master’s degree in her application letter, in the subsequent
correspondences between her and SSC, and in the letter seeking the extension of a teaching
load for the school year 2003-2004; and her submission of certifications from UP and from her
thesis adviser – the Court found that there is indeed substantial evidence proving that she knew
about the necessary academic qualifications to obtain the status of permanency. Jocelyn
Herrera-Manaois v. St. Scholastica’s College, G.R. No. 188914, December 11, 2013.
Probationary employment; part-time member of the academic personnel; requisites to acquire

permanence of employment and security of tenure. Pursuant to the 1992 Manual of Regulations
for Private Schools, private educational institutions in the tertiary level may extend “full-time
faculty” status only to those who possess, inter alia, a master’s degree in the field of study that
will be taught. This minimum requirement is neither subject to the prerogative of the school nor
to the agreement between the parties. For all intents and purposes, this qualification must be
deemed impliedly written in the employment contracts between private educational institutions
and prospective faculty members. The issue of whether probationers were informed of this
academic requirement before they were engaged as probationary employees is thus no longer
material, as those who are seeking to be educators are presumed to know these mandated
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qualifications. Thus, all those who fail to meet the criteria under the 1992 Manual cannot legally
attain the status of permanent full-time faculty members, even if they have completed three
years of satisfactory service.
Further, the Court stated that in line with academic freedom and constitutional autonomy, an
institution of higher learning has the discretion and prerogative to impose standards on its
teachers and determine whether these have been met. Upon conclusion of the probation period,
the college or university, being the employer, has the sole prerogative to make a decision on
whether or not to re-hire the probationer. The probationer cannot automatically assert the
acquisition of security of tenure and force the employer to renew the employment contract. In
the case at bar, petitioner failed to comply with the stated academic qualifications required for
the position of a permanent full-time faculty member. Jocelyn Herrera-Manaois v. St.
Scholastica’s College, G.R. No. 188914, December 11, 2013.
Question of law; distinguished from a question of fact. A question of law arises when the doubt
or controversy concerns the correct application of law or jurisprudence to a certain set of facts.
In contrast, a question of fact exists when a doubt or difference arises as to the truth or falsehood
of facts.
In this petition, the petitioner essentially asks the question – whether, under the circumstances
and the presented evidence, the termination of respondent’s employment was valid. As framed,
therefore, the question before the Court is a proscribed factual issue that it cannot generally
consider in this Rule 45 petition, except to the extent necessary to determine whether the CA
correctly found the NLRC in grave abuse of its discretion in considering and appreciating this
factual issue.
Nonetheless, as an exception to the Rule 45 requirement, the Court deemed it proper to review
the conflicting factual findings of the LA and the CA, on the one hand, and the NLRC, on the
other. Such exception applies when, based on the records, the factual findings of the tribunals
below are in conflict. Baguio Central University v. Ignacio Gallente, G.R. No. 188267,
December 2, 2013.
Stare decisis; doctrine of. Under the doctrine of stare decisis, when a court has laid down a
principle of law as applicable to a certain state of facts, it will adhere to that principle and apply
it to all future cases in which the facts are substantially the same, even though the parties may
be different. Where the facts are essentially different, however, stare decisis does not apply
because a perfectly sound principle as applied to one set of facts might be entirely inappropriate
when a factual variant is introduced.
This case and the Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas case
(Philcea case; G.R. No. 168719, February 22, 2006), involve the same period which is March to
April 2004; the issuance of the 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
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execution of deeds of release, waiver, and quitclaim, and the acceptance of separation pay by
the affected employees. As the respondents here were similarly situated as the union members
in the Philcea case, and considering that the questioned dismissal from the service was based on
the same grounds under the same circumstances, there is no need to re-litigate the issues
presented herein. In short, stare decisis applies and the Court deems it wise to adopt its earlier
findings in the Philcea case that there was no valid ground to terminate the services of the
employees. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et
al., G.R. No. 191475, December 11, 2013.
Substantial evidence; definition of. The assertions of respondent do not constitute as substantial
evidence that a reasonable mind might accept as adequate to support the conclusion that there
is a causal relationship between his illness and the working conditions on board the petitioners’
vessel. Although the Court has recognized as sufficient that work conditions are proven to have
contributed even to a small degree, such must, however, be reasonable, and anchored on
credible information. The claimant must, therefore, prove a convincing proposition other than
by his mere allegations.Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076,
December 4, 2013.
Termination of employment; authorized causes; retrenchment. 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 Philippine Carpet Employees Association (PHILCEA) v.
Hon. Sto. Tomas (G.R. No. 168719, February 22, 2006). It discussed the requisites of both
retrenchment and redundancy as authorized causes of termination and concluded 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 the company is invalid due to a substantive defect. Philippine Carpet Manufacturing
Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Termination of employment; ground; closure of business due to serious business losses; notice
requirement. Article 297 of the Labor Code provides that before any employee is terminated due
to closure of business, it must give one (1) month’s prior written notice to the employee and to
the Department of Labor and Employment. 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
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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. The Court held that the Labor Arbiter, NLRC, and
Court of Appeals 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.
SPI is required to serve individual written notices of termination to its employees. Sangwoo
Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees
Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-
OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso
Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013
Termination of employment; authorized cause; closure of business due to serious business

losses; separation pay. 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. As explained in the case of Galaxie Steel Workers Union
(GSWU-NAFLU-KMU) v. NLRC (G.R. No. 165757, October 17, 2006): “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 [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 [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.”
In this case, the Labor Arbiter, NLRC, and the Court of Appeals all consistently found that
petitioners 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
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by evidence on record or the judgment is based on a misapprehension of facts, the Court shall
not examine anew the evidence submitted by the parties. Perforce, without any cogent reason to
deviate from the findings on the validity of respondent’s closure, the Court held that it is not
obliged to give separation benefits to minority employees pursuant to Article 297 of the Labor
Code. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines,
Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc.
Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or
Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.
Termination of employment due to closure; procedural infirmity; nominal damages as

sanction. It is well to stress that while respondent 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. Based on existing
jurisprudence, an employer which has a valid cause for dismissing its employee but conducts
the dismissal with procedural infirmity is liable to pay the employee nominal damages in the
amount of P30,000.00 if the ground for dismissal is a just cause, or the amount of P50,000.00 if
the ground for dismissal is an authorized cause. However, case law exhorts that in instances
where the payment of such damages becomes impossible, unjust, or too burdensome,
modification becomes necessary in order to harmonize the disposition with the prevailing
circumstance. 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 as in
the case of Industrial Timber Corporation v. Ababon (G.R. No. 164518, March 30, 2006), deems
it just to reduce the amount of nominal damages to be awarded to each of the minority
employees from P50,000.00 to Pl0,000.00. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso
Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia
Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia
Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No.
173154./G.R. No. 173229, December 9, 2013.
January 2014 Philippine Supreme Court Decisions on Labor Law
Backwages; when awarded. As a general rule, backwages are granted to indemnify a dismissed
employee for his loss of earnings during the whole period that he is out of his job. Considering
that an illegally dismissed employee is not deemed to have left his employment, he is entitled to
all the rights and privileges that accrue to him from the employment. The grant of backwages to
him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the
nature of a command to the employer to make a public reparation for dismissing the employee
in violation of the Labor Code.
The Court held that the respondents are not entitled to the payment of backwages. The Court,
citing G&S Transport Corporation v. Infante (G. R. No. 160303, September 13, 2007) stated that
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the principle of a “fair day’s wage for a fair day’s labor” remains as the basic factor in
determining the award thereof. An exception to the rule would be if the laborer was able,
willing and ready to work but was illegally locked out, suspended or dismissed or otherwise
illegally prevented from working. It is, however, required, for this exception to apply, that the
strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical
Center (VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et
al.,G.R. No. 196156, January 15, 2014
Dismissal; burden of proof on employer. The burden is on the employer to prove that the
termination was for valid cause. Unsubstantiated accusations or baseless conclusions of the
employer are insufficient legal justifications to dismiss an employee. “The unflinching rule in
illegal dismissal cases is that the employer bears the burden of proof.”
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. If CCBPI expects to proceed with its case against
petitioner, it should have negated this policy, for its existence and application are inextricably
tied to CCBPI’s accusations against petitioner. In the first place, as petitioner’s employer, upon it
lay the burden of proving by convincing evidence that he was dismissed for cause. If petitioner
continued to work until June 2004, this meant that he committed no infraction, going by this
company policy; it could also mean that any infraction or shortage/non-remittance incurred by
petitioner has been duly settled. Respondents’ decision to ignore this issue generates the belief
that petitioner is telling the truth, and that the alleged infractions are fabricated, or have been
forgiven. Coupled with Macatangay’s statement – which remains equally unrefuted – that the
charges against petitioner are a scheme by local CCBPI management to cover up problems in
the Naga City Plant, the conclusion is indeed telling that petitioner is being wrongfully made to
account.Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972.
January 20, 2014.
Embezzlement; failure to remit collections. 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 for failure to remit funds which he has not collected. There was nothing to
embezzle or remit because the customer made no payment yet. 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
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would immediately issue the check covering the said amount, which she failed to do. Jonas
Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014
Grave abuse of discretion; concept of. Having established through substantial evidence that
respondent’s injury was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of
the 1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in
upholding LA’s decision to dismiss respondent’s complaint for disability benefits. It is well-
settled that an act of a court or tribunal can only be considered to be tainted with grave abuse of
discretion when such act is done in a capricious or whimsical exercise of judgment as is
equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo
and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Illegal strike and illegal acts during the strike; distinction between union members and union
officers in determining when they lose their employment status. The Supreme Court stressed that
the law makes a distinction between union members and union officers. A union member who
merely participates in an illegal strike may not be terminated from employment. It is only when
he commits illegal acts during a strike that he may be declared to have lost employment status.
In contrast, a union officer may be terminated from employment for knowingly participating in
an illegal strike or participates in the commission of illegal acts during a strike. The law grants
the employer the option of declaring a union officer who participated in an illegal strike as
having lost his employment. It possesses the right and prerogative to terminate the union officers
from service.
NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders
and members was declared illegal. The union leaders who conducted the illegal strike despite
knowledge that NAMA-MCCH-NFL is not a duly registered labor union were declared to have
been validly terminated by petitioner. However, as to the respondents who were mere union
members, it was not shown that they committed any illegal act during the strike. The Labor
Arbiter and the NLRC were one in finding that respondents actively supported the concerted
protest activities, signed the collective reply of union members manifesting that they launched
the mass actions to protest management’s refusal to negotiate a new CBA, refused to appear in
the investigations scheduled by petitioner because it was the union’s stand that they would only
attend these investigations as a group, and failed to heed petitioner’s final directive for them to
desist from further taking part in the illegal strike. The CA, on the other hand, found that
respondents’ participation in the strike was limited to the wearing of armbands. Since an
ordinary striking worker cannot be dismissed for such mere participation in the illegal strike, the
CA correctly ruled that respondents were illegally dismissed. However, the CA erred in
awarding respondents full back wages and ordering their reinstatement despite the prevailing
circumstances. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu
Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
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Labor law; kinds of employment; casual employment; requisites. Casual employment, the third
kind of employment arrangement, refers to any other employment arrangement that does not fall
under any of the first two categories, i.e., regular or project/seasonal. Universal Robina Sugar
Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; fixed term employment; requisites. The Labor Code does not
mention another employment arrangement – contractual or fixed term employment (or
employment for a term) – which, if not for the fixed term, should fall under the category of
regular employment in view of the nature of the employee’s engagement,
which is to perform an activity usually necessary or desirable in the employer’s business.
In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first
time, recognized and resolved the anomaly created by a narrow and literal interpretation
of Article 280 of the Labor Code that appears to restrict the employee’s right to freely stipulate
with his employer on the duration of his engagement. In this case, the Court upheld the validity
of the fixed-term employment agreed upon by the employer, Brent School, Inc., and the
employee, Dorotio Alegre, declaring that the restrictive clause in Article 280
“should be construed to refer to the substantive evil that the Code itself x x x singled out:
agreements entered into precisely to circumvent security of tenure. It should have no application
to instances where [the] fixed period of employment was agreed upon knowingly and
voluntarily by the parties x x x absent any x x x circumstances vitiating [the employee’s] consent,
or where [the facts satisfactorily show] that the employer and [the] employee dealt with each
other on more or less equal terms[.]” The indispensability or desirability of the activity
performed by the employee will not preclude the parties from entering into an otherwise valid
fixed term employment agreement; a definite period of employment does not essentially
contradict the nature of the employee’s duties as necessary and desirable to the usual business
or trade of the employer.
Nevertheless, “where the circumstances evidently show that the
employer imposed the period precisely to preclude the employee from acquiring tenurial
security, the law and this Court will not hesitate to strike down or disregard the period as
contrary to public policy, morals, etc.” In such a case, the general restrictive rule under Article
280 of the Labor Code will apply and the employee shall be deemed regular. Universal Robina
Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; nature of the employment depends on the nature of the
activities to be performed by the employee. 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, taking into account the nature of the employer’s
business, the duration and scope of work to be done, and, in some cases, even the length of
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time of the performance and its continued existence. Universal Robina Sugar Milling
Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; project employment; requisites; length of time not
controlling. A project employment, on the other hand, contemplates on
arrangement whereby “the employment has been fixed for a specific project
or undertaking whose completion or termination has been determined at the time of the
engagement of the employee[.]” Two requirements, therefore, clearly need to be satisfied to
remove the engagement from the presumption of regularity of employment, namely: (1)
designation of a specific project or undertaking for which the employee is hired; and (2) clear
determination of the completion or termination of the project at the time of the employee’s
engagement. The services of the project employees are legally and automatically terminated
upon the end or completion of the project as the employee’s services are coterminous with the
project. Unlike in a regular employment under Article 280 of the Labor Code, however, the
length of time of the asserted “project” employee’s engagement is not controlling as the
employment may, in fact, last for more than a year, depending on the needs or circumstances of
the project. Nevertheless, this length of time (or the continuous rehiring of the employee even
after the cessation of the project) may serve as a badge of regular employment when the
activities performed by the purported “project” employee are necessary and indispensable to the
usual business or trade of the employer. In this latter case, the law will regard the arrangement
as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No.
186439. January 15, 2014.
Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code
provides for three kinds of employment arrangements, namely: regular, project/seasonal and
casual. Regular employment refers to that arrangement whereby the employee “has been
engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer[.]” Under this definition, the primary standard that determines
regular employment is the reasonable connection between the particular activity
performed by the employee and the usual business or trade of the
employer; the emphasis is on the necessity or desirability of the employee’s activity. Thus,
when the employee performs activities considered necessary and desirable to the overall
business scheme of the employer, the law regards the employee as regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a
casual employment arrangement when the casual employee’s engagement is made to last for at
least one year, whether the service is continuous or broken. The controlling test in this
arrangement is the length of time during which the employee is engaged. Universal Robina
Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
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Labor law; kinds of employment; seasonal employment; requisites.

Seasonal employment operates much in the same way as project employment, albeit it
involves work or service that is seasonal in nature or
lasting for the duration of the season. As with project employment,
although the seasonal employment arrangement involves work that is seasonal or periodic
in nature, the employment itself is not automatically considered seasonal so as to prevent the
employee from attaining regular status. To exclude the asserted “seasonal” employee from
those classified as regular employees, the employer must show 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. Hence, when the “seasonal” workers are continuously and repeatedly
hired to perform the same tasks or activities for several seasons or even after the cessation of the
season, this length of time may likewise serve as badge of regular employment. In fact, even
though denominated as “seasonal workers,” if these workers are called to work from time to
time and are only temporarily laid off during the off-season, the law does not consider them
separated from the service during the off-season period. The law simply considers these seasonal
workers on leave until re-employed. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Overseas employment; that the entitlement of seamen on overseas work to disability benefits is
a matter governed, not only by medical findings, but by law and by contract. With respect to the
applicable rules, it is doctrinal that the entitlement of seamen on overseas work to disability
benefits “is a matter governed, not only by medical findings, but by law and by contract. The
material statutory provisions are Articles 191 to 193 under Chapter VI (Disability Benefits) of the
Labor Code, in relation [to] Rule X of the Rules and Regulations Implementing Book IV of the
Labor Code. By contract, the POEA-SEC, as provided under Department Order No. 4, series of
2000 of the Department of Labor and Employment, and the parties’ Collective Bargaining
Agreement bind the seaman and his employer to each other.”
In the foregoing light, the Court observes that respondent executed his contract of employment
on July 17, 2000, incorporating therein the terms and conditions of the 2000 POEA-SEC which
took effect on June 25, 2000. However, since the implementation of the provisions of the
foregoing 2000 POEA-SEC was temporarily suspended by the Court on September 11, 2000,
particularly Section 20, paragraphs (A), (B), and (D) thereof, and was lifted only on June 5, 2002,
through POEA Memorandum Circular No. 2, series of 2002, the determination of respondent’s
entitlement to the disability benefits should be resolved under the provisions of the 1996 POEA-
SEC as it was, effectively, the governing circular at the time respondent’s employment contract
was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient
Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Payment of separation pay as alternative relief for union members who were dismissed for
having participated in an illegal strike is in lieu of reinstatement; circumstances when applicable.
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The alternative relief for union members who were dismissed for having participated in
an illegal strike is the payment of separation pay in lieu of reinstatement under the following
circumstances: (a) when reinstatement can no longer be effected in view of the passage of a
long period of time or because of the realities of the situation; (b) reinstatement is inimical to
the employer’s interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve
the best interests of the parties involved; (e) the employer is prejudiced by the workers’
continued employment; (f) facts that make execution unjust or inequitable have supervened; or
(g) strained relations between the employer and employee.
The Court ruled that the grant of separation pay to respondents is the appropriate relief under
the circumstances considering that 15 years had lapsed from the onset of this labor dispute, and
in view of strained relations that ensued, in addition to the reality of replacements already hired
by the hospital which had apparently recovered from its huge losses, and with many of the
petitioners either employed elsewhere, already old and sickly, or otherwise
incapacitated. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu
Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
Rule 45; only questions of law are allowed in a petition for review on certiorari. It is a settled
rule in this jurisdiction that only questions of law are allowed in a petition for review on
certiorari. The Court’s power of review in a Rule 45 petition is limited to resolving matters
pertaining to any perceived legal errors, which the CA may have committed in issuing the
assailed decision. In reviewing the legal correctness of the CA’s Rule 65 decision in a labor case,
the Court examines the CA decision in the context that it determined whether or not there is
grave abuse of discretion in the NLRC decision subject of its review and not on the basis of
whether the NLRC decision on the merits of the case was correct. Universal Robina Sugar
Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Rule 45; the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure questions
of law; exceptions. The Court’s jurisdiction in cases brought before it from the CA via Rule 45 of
the Rules of Court is generally limited to reviewing errors of law. The Court is not the proper
venue to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad
and a departure therefrom may be warranted where the findings of fact of the CA are contrary to
the findings and conclusions of the NLRC and LA, as in this case. In this regard, there is
therefore a need to review the records to determine which of them should be preferred as more
conformable to evidentiary facts. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo
and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014.
Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness
suffered by a seafarer during the term of his contract; exception. The prevailing rule under
Section 20 (B) of the 1996 POEA-SEC on compensation and benefits for injury or illness was that
an employer shall be liable for the injury or illness suffered by a seafarer during the term of his
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contract. To be compensable, the injury or illness must be proven to have been contracted
during the term of the contract. However, the employer may be exempt from liability if he can
successfully prove that the cause of the seaman’s injury was directly attributable to his
deliberate or willful act as provided under Section 20 (D) thereof, to wit:
D. No compensation shall be payable in respect of any injury, incapacity, disability or death of
the seafarer resulting from his willful or criminal act, provided however, that the employer can
prove that such injury, incapacity, disability or death is directly attributable to seafarer.
Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim
that the respondent’s injury was caused by his willful act with the requisite quantum of
evidence. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient
Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only
substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient
to support a conclusion is required. To note, considering that substantial evidence is an
evidentiary threshold, the Court, on exceptional cases, may assess the factual determinations
made by the NLRC in a particular case.
The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully
discharged the burden of proving by substantial evidence that respondent’s injury was directly
attributable to himself. Records bear out circumstances which all lead to the reasonable
conclusion that respondent was responsible for the flooding and burning incidents.
While respondent contended that the affidavits and statements of the vessel’s officers and
his fellow crew members should not be given probative value as they were biased, self-
serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate
his own theory. Besides, as
correctly pointed out by the NLRC, the corroborating affidavits and
statements of the vessel’s officers and crew members must be taken as a whole and
cannot just be perfunctorily dismissed as self-serving absent any showing that they were lying
when they made the statements therein. INC Shipmanagement, Inc. Captain Sigfredo E.
Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15,
2014
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Labor Law Philippine Supreme Court Decisions

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Labor Law Philippine Supreme Court Decisions

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Philippine Supreme Court Decisions on Labor Law

Lexoterica 2009 – January 2014

Labor-only contracting. The law clearly establishes an employer-employee relationship

probable since probability, not certainty, is the touchstone.Government Service Insurance

Transfer. Jurisprudence recognizes the exercise of management prerogative to transfer or assign

Employer-employee relationship; evidence. It has long been established that in administrative

might accept as adequate to justify a conclusion.” No particular form of evidence is required to

Employer-employee relationship; existence. In order to determine the existence of an employer-

Code or of any labor law? The existence of an employer-employee relationship is a statutory

Serious misconduct. Respondent’s acts of forging subscribers’ signatures, attempting to cover up

Diminution of benefits; company practice. To be considered a company practice, the giving of

Employer-employee relationship. There existed no employer-employee relationship between the

and adjustment of grievances of employees with the supervisor of the employer. He is

nature. Davao Contractors Development Cooperative (DACODECO), represented by Chairman

Dismissal; misconduct. In its 14 February 2000 decision, PNB’s Administrative Adjudication

Labor organization; bargaining unit. A bargaining unit is a “group of employees of a given

September 2009 Philippine Supreme Court Decisions on Labor Law

Dismissal; redundancy. The separation of the petitioner by reason of redundancy was

Dismissal; retrenchment. Retrenchment to avoid or minimize business losses is a justified

Employee benefits; retirement. It is settled that entitlement of employees to retirement benefits

Waiver; binding effect. Petitioners bound themselves, in individually signed contracts, to

October 2009 Philippine Supreme Court Decisions on Labor Law

Dismissal; abandonment. To constitute abandonment, there must be a clear and deliberate

November 2009 Philippine Supreme Court Decisions on Labor Law

Compensability of death; requirements. To be entitled to compensation, a claimant must show

Dismissal; constructive dismissal. Constructive dismissal exists when an act of clear

Termination; abandonment. Abandonment of work, or the deliberate and unjustified refusal of

Termination; reorganization. The grant of retirement benefits to the employees in addition to

Termination; retrenchment. Retrenchment is the termination of employment initiated by the

Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable

Management prerogatives; contract of perpetual employment. The Court cannot countenance

Execution of judgments; separation pay/backwages; computation. In concrete terms, the

Jurisdiction; absence of employer-employee relationship. Jurisdiction over the subject matter of

Cessation of operations; financial assistance. Based on Article 283, in case of cessation of

Compensable illness. Jurisprudence provides that to establish compensability of a non-

Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries

Representation and Transportation Allowance; entitlement. Statutory law, as implemented by

Termination of employment; conviction in criminal case. Conviction in a criminal case is not

Dismissal; backwages. Reprimand being the appropriate imposable penalty for

Dismissal; management prerogative. Respondent’s right of management prerogative was

Employer employee relationship. The elements to determine the existence of an employment

Approval for company’s early retirement program; management prerogative. Approval of

Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is

Constructive dismissal; off-detailing; resignation; notice requirement. The company evidently

Death benefits; post-medical examination; inadvertence of employer. In the cases of

Employer-Employee Relationship; agents of insurance companies; exception to the Insular case;

Nature of employer; privatization; entitlement to benefits. Although the transformation of the

Procedure; verification by counsel sufficient. The counsel’s verification in a Position Paper

Procedure; quantum of evidence on appeal; substantial evidence. In administrative proceedings,

Dismissal of employees; requirements. The validity of an employee’s dismissal from service

Dismissal of employees; procedural due process. In order to validly dismiss an employee, he

Government agencies; reorganization. A reorganization is valid provided it is done in good

Illegal dismissal; relief available to employee. An illegally dismissed employee is entitled to

Labor-only contracting; evidence. A Certificate of Registration as an Independent Contractor is

Preventive suspension. Preventive suspension is justified where the employee’s continued

Public employees; demotion. There is demotion when an employee is appointed to a position

Public employees; downgrading of employees. The summary reallocation of Go’s position to a

Retrenchment; definition; requisites. Retrenchment is the termination of employment initiated by

Dismissal; constructive dismissal. There is constructive dismissal if an act of clear discrimination,

contemplated by the provisions of the employment contract in order to be entitled to the

Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of

wrongful or willful. Neither can it be considered an obstinate defiance of company

submitted photocopied portions of a different CBA with a different union.Wilfredo Y.

Labor relations; appropriate bargaining unit. An appropriate bargaining unit is defined as “a