16. PESRI vs. Paramio, GR No.

144786, April 15, 2004

FACTS:

Respondents applied for employment in Taiwan with petitioner, Phil. Employ Services and
Resources, Inc. (PSRI). They executed in the Philippines separate one-year contracts of
employment with their employer in Taiwan, Kuan Yuan Fiber Co., Ltd. Hsei Chang.
They encountered worse problems in the course of their employment, However, Chua cautioned
the respondents not to air their sentiments. Disappointed, the respondents contacted the Overseas
Workers Welfare Administration (OWWA) but their requests were not favorably acted upon.
On May 10, 1997, respondent Navarra and, Pio Gabito, were repatriated. After the negotiations,
the petitioner agreed to pay, in consideration thereof, the latter executed a quitclaim releasing the
petitioner from any or all liabilities for his repatriation. Meanwhile, the other respondents also
decided to go home, but they were unable to pay $30,000, therefore, respondents failed to return
to the Philippines.
On May 14, 1997, respondent Paramio got ill as a result of the employer's failure to give breakfast
on the said date and dinner the night before. Due to his condition, he got injured while on duty.
Instead of giving him financial assistance for his hospital bills, his employer told him that it would
be better for him to go home to the Philippines to recuperate.
On July 1, 1997, he was assigned to do the second hardest job in the company. When the manager
saw him resting, he was ordered to return to work. Respondent Paramio refused and contended
that he could not resume work because of his thumb injury. On September 23, 1997, he was given
his paycheck and a plane ticket to the Philippines.
In October 1997, the remaining employees decided to go home. Their employer agreed to have
them repatriated and to return their respective bonds, but required them to write letters of
resignation.
On October 22, 1997, respondents Sarmiento, Guillermo, Curameng, Jr. and Bautista, together
with respondents Paramio and Navarra, filed separate complaints before the NLRC against Bayani
Fontanilla for illegal dismissal, non-payment of overtime pay, refund of placement fee, tax refund,
refund of plane fares, attorney’s fees and litigation expenses.
Labor Arbiter declared that the dismissal of the respondents was illegal. Aggrieved, the petitioner
appealed before the National Labor Relations Commission (NLRC) insisting that the dismissal of
the complainants was anchored on valid and legal grounds.
On March 29, 1999, the NLRC issued a resolution finding that the respondents were legally
dismissed and set aside the decision of the labor arbiter. Dissatisfied, the respondents filed a motion
for reconsideration of the resolution, but the NLRC denied the motion.
The respondents appealed before the CA. On May 29, 2000, the CA rendered a decision partly
granting the petition in that it nullified the NLRC and reinstated the decision of the labor arbiter
with modification. The CA held that respondents Curameng, Bautista, Sarmiento and Guillermo
were constructively dismissed, as the petitioner failed to substantiate its claim that the aforesaid
petitioners voluntarily resigned from work. The CA also ruled that the repatriation of respondent
Paramio was in violation of his employment contract. The petitioner PSRI filed a motion for
reconsideration but the appellate court denied the said motion. Hence, this petition.
ISSUE:
Whether the respondents were illegally dismissed.
RULING:
Yes. The petitioner contends that the termination of respondent Paramio’s employment was
sanctioned by paragraph 8.2, Nos. 5 and 6, Article VIII of the employment contract.
In the case at bar, the petitioner did not adduce in evidence a certification from a public authority
to the effect that respondent Paramio had been heavily wounded. It also failed to show that by
reason of his thumb injury, he lost the ability to work. However, despite his injury, he managed to
perform the other tasks assigned to him. The fact that respondent Paramio was assigned to perform
the second hardest and heaviest task in the company shows the heartlessness of the company’s
manager. Despite his wound, the respondent tried to accomplish the work assigned to him. The
least the manager should have done was to assign the respondent to a lighter task, until such time
that the latter’s wound had completely healed.
It must be stressed where there is no showing of a clear, valid and legal cause for the termination
of employment, the law considers the matter a case of illegal dismissal.
Consequently, respondent Paramio is entitled to the full reimbursement of his placement fee with
interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract for three months for every year of the unexpired term, whichever is less
under paragraph 5, Section 10 of Rep. Act No. 8042.
Respondent Paramio was deployed on December 6, 1996. Since the termination of his employment
was not based on any valid or legal ground, he is entitled to the payment of his salary equivalent
to the unexpired portion of his contract. He is likewise entitled to full reimbursement of his
placement fee.
As to the other respondents, the petitioner alleges that they refused to go to work and, in fact,
voluntarily resigned. However, the Court does not agree. The records reveal that the three
respondents agreed to execute the resignation letter because they could no longer bear the working
conditions in their place of employment. Thus, the Court ruled that there was constructive
dismissal because their continued employment is rendered impossible, unreasonable or unlikely.
In sum, there can be no other conclusion than that the aforementioned respondents were illegally
dismissed, and their employment contract illegally terminated.
17. Uniwide Sales vs. NLRC 547 SCRA 220, G.R. NO. 154503: February 29, 2008
FACTS:

Private respondent was a Full Assistant Store Manager at Uniwide. Later, Uniwide, through Store
Manager Apduhan, issued a Memorandum addressed to Kawada summarizing the various reported
incidents signifying unsatisfactory performance on the latter’s part which include the commingling
of good and damaged items, sale of a voluminous quantity of damaged toys and ready-to-wear
items at unreasonable prices, and failure to submit inventory reports.

On an earlier setting on the investigation of her case, Kawada filed a sick leave, thus causing the
hearing/investigation to be rescheduled. Again, upon rescheduling, Kawada, despite notice and
warning that failure to appear would mean abandonment of her work, did not appear, this time
coming up with the excuse that she had been already “constructively dismissed”. Uniwide
terminated her work.

Private respondent claims that from the months of February to June 1998, she had been subjected
to constant harassment, ridicule and inhumane treatment by Apduhan, with the hope that the latter
can get the private respondent to resign. The harassment allegedly came in the form of successive
memoranda which private respondent would receive almost every week, enumerating a litany of
offenses and maligning her reputation and spreading rumors among the employees that private
respondent shall be dismissed soon. The last straw of the imputed harassment was the July 31,
1998 incident wherein private respondent’s life was put in danger when she lost consciousness due
to hypertension as a result of Apduhan’s alleged hostility and shouting. She filed a case for illegal
dismissal.

LA dismissed the case but NLRC ruled in favor of Kawada. Upon appeal by Uniwide, CA affirmed
NLRC’s decision.

ISSUE:

Whether or not as a managerial employee, one may be dismissed by reason of mere existence of a
basis for believing that such employee has breached the trust of his employer.

HELD:

Yes. 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, 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 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 trust and
confidence demanded by his position. The evasive attitude of Kawada more than enough supports
the impression that she could be guilty or is guilty of the charges against her and believes that she
might not be able to defend herself. This is even bolstered by the information that complainant
called on several of the witnesses against her, simply to influence them and their testimonies. She
could not have been “constructively dismissed.”

Constructive dismissal is defined as a 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.

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 made to appear as if it were not. In fact, the employee who is constructively dismissed
may be allowed to keep on 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.
 18. VIRGILIO CALLANTA vs. NLRC

G.R. No. 105083; August 20, 1993

Bidin, J.

FACTS:

Petitioner Callanta was promoted as the national promoter salesman of respondent company
who, during a “spot audit,” was found to have a tentative shortage P49, 005.59. Two days later he
rendered a resignation letter effectively to the company president Mr. Julius Limpe.

After seven months, petitioner wrote a letter to Limpe complaining of his false resignation and
demanding a refund of P76, 465.81 and reinstatement which was ignored by respondent company.
Petitioner then filed a case of illegal dismissal, unpaid commission and receivables due before the NLRC-
RAB No. X who rendered a decision based on position papers that the dismissal was illegal and ordered
for his re-instatement with backwages and payment of reliefs prayed for.

Respondent filed an appeal to the NLRC who issued an order for respondent company to post a
surety bond equal to the monetary award pursuant to the provisions of RA 6715 and to re-instate the
petitioner to his former position or in the payroll. Respondent posted the bond but did not re-instate
petitioner, hence petitioner filed to the NLRC for a Motion for Writ of Execution pending appeal of the
Labor Arbiter’s decision. The motion was not acted upon and the NRLC rendered a decision setting aside
the decision of the labor arbiter. Hence, this special civil action of certiorari.

ISSUE:

Whether or not the resignation of the petitioner valid and effective.

RULING:

YES. The Court believes and so holds that the resignation tendered by petitioner was voluntary,
and therefore valid, in the absence of any evidence of coercion and intimidation on the part of private
respondent company. The Court also agreed with the NLRC that petitioner failed to adduce evidence that
may prove his contention that his resignation was obtained by coercion and intimidation.

Moreover, it is a well-settled principle that for intimidation to vitiate consent, petitioner must
have been compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his
person or property, or upon the person or property of his spouse, descendants or ascendants (Article
1335, par. 2 New Civil Code). In present case, what allegedly constituted the "intimidation" was the threat
by private respondent company to file a case for estafa against petitioner unless the latter resigns. The
threat of estafa was a valid and legal act to enforce a claim, and therefore does not vitiate consent.
Furthermore, the Court also finds it unbelievable that petitioner was rattled and confused into signing a
resignation letter on account of a mere "spot audit" report given that petitioner is a man of high
educational attainment and qualification.
 19. PNOC-EDC and Marcelino Tongco vs. NLRC and Manuel S. Pineda

G.R. No. 100947; May 31, 1993

Narvasa, C. J.

FACTS:

Manuel Pineda is an employee of the PNOC-EDC in Ormoc city, Leyte who decided to run for
councilor in Kanangan and filed the corresponding certificate of candidacy for the position. Objection to
Pineda’s candidacy while retaining his job was communicated by the Mayor of Kanangan but the protest
resulted to nothing and Pineda was eventually elected to office.

Due to varying opinions on his circumstance, Pineda took his oath of office and assumed both
duties as councilor-elect, and as Geothermal Construction Secretary of PNOC-EDC.

PNOC-EDC Legal Department rendered an Opinion that Pineda should be considered ipso facto
resigned in accordance with Section 66 of the Omnibus Election Code and despite separate opinion from
the Undersecretary of the DILG, PNOC-EDC considered Pineda separated from service.

Pineda filed an illegal dismissal case with the labor arbiter who rendered his dismissal illegal and
ordering his reinstatement to his former position without loss of seniority rights and payment of full back
wages corresponding to the period from his illegal dismissal up to the time of actual reinstatement. The
PNOC-EDC appealed to the NLRC which was dismissed and the subsequent Motion for Reconsideration
was also denied. Hence, this special civil action for certiorari.

ISSUE:

Whether or not the dismissal is valid pursuant to Section 66 of the Omnibus Election Code.

RULING:

YES. It seems obvious to the Court that a government-owned or controlled corporation does not
lose its character as such because not possessed of an original charter but organized under the general
law. If a corporation's capital stock is owned by the Government, or it is operated and managed by officers
charged with the mission of fulfilling the public objectives for which it has been organized, it is a
government-owned or controlled corporation even if organized under the Corporation Code and not
under a special statute; and employees thereof, even if not covered by the Civil Service but by the Labor
Code, are nonetheless "employees in government-owned or controlled corporations" and come within
the letter of Section 66 of the Omnibus Election Code which reads:

Sec. 66. Candidates holding appointive office or position. — Any person holding a public
appointive office or position, including active members of the Armed Forces of the Philippines,
and officers and employees in government-owned or controlled corporations, shall be
considered ipso facto resigned from his office upon the filing of his certificate of candidacy.
 20. AURELIO VS. NLRC
G.R. No. 99034, Apr 12, 1993

FACTS:

Petitioner started as clinical instructor of the College of Nursing of Northwestern College (NWC) in June
1917. In October 1979, petitioner was appointed Dean of the College of Nursing. In September 1981,
petitioner was promoted to College Administrator or Vice-President for Administration, retaining
concurrently her position of Dean of the College of Nursing then she was later promoted to Executive
Vice-President.

April 10, 1988, petitioner’s husband, Oscar Aurelio, a stockholder of respondent NWC, was elected
Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over the management
of respondent NWC. This new management unleashed a series of reorganization affecting the petitioner
and her husband, Oscar Aurelio.

Petitioner, wrote a letter informing the President of Northwestern College that she was going on an
indefinite leave. Petitioner sent a copy of the letter to the Secretary of DECS praying for assistance. The
Secretary DECS referred the letter to the DECS Director of Region I and the latter was ordered “to
investigate and look into the problem of NWC College of Nursing, Laoag City immediately. PRC
recommends suspension of the operation of College of Nursing due to lack of Dean and faculty to
supervise students.” The representatives of the Regional Director submitted their official findings and
recommendations confirming the truth of the allegations of petitioner in her letter. The DECS also
confirmed the willingness of petitioner to withdraw her indefinite leave of absence. They refused to
accept petitioner. Petitioner filed her complaint for illegal dismissal against private respondents and
prayed for reinstatement plus back wages, moral and exemplary damages, and attorney’s fees.

On April 30, 1988, the annual regular meeting of stockholders was held at the principal office of the
corporation in Laoag City. New set of Board members were elected. The new Board conducted a
preliminary audit which revealed that the college was financially distressed, unable to meet its maturing
obligations with its creditor bank. The new management embarked on a realignment of positions and
functions of the different department in order to minimize expenditures. As a result of the audit, NWC
was compelled to abolish the administrative positions held by petitioner, which she did not contest.

LA dismissed the complaint. Petitioner went to NLRC which merely modified the decision of LA. Hence
this appeal.

ISSUE:

1. whether NWC can validly terminate the administrative position held by petitioner.

2. Whether NWC observed due process in dismissing petitioner.

RULING:

1. YES. As found by the NLR, Petitioner was a managerial employee who has to have the complete
trust and confidence of respondents. Respondents’ evidence showed that under the principle of
command responsibility, complainant was in a sense responsible in the monitoring of monetary
transactions involving funds from library collections and from Related Learning Science collection.
For it has been held that in case of termination due to loss of trust and confidence proof beyond
reasonable doubt of misconduct is not necessary but some basis being sufficient.

From the time petitioner assumed the position of Executive Vice President, she did not possess any legal
right to claim security of tenure concerning this position because she assumed the same without authority
from the Board of Directors. Petitioner cannot claim that she was dismissed from the position of
Administrator and Vice-President for Administration because her continuous occupation of the positions
is at the discretion or pleasure of the Board of Directors.

The teacher designated as administrative officer ordinarily serves for a definite term or at the pleasure of
the school head or board of trustees or regents depending on the rules of the school and the agreement
he may enter into with the institution

The management of NWC rests on its Board of Directors including the selection of members of the faculty
who may be allowed to assume other positions in the college aside from that of teacher or instructor.
When the then new Board of Directors abolished the additional positions held by the petitioner, it was
merely exercising its right.

The Board abolished the positions not because the petitioner was the occupant thereof but because the
positions had become redundant with functions overlapping those of the President of the college. The
Board of Directors has the power granted by the Corporation Code to implement a reorganization of
respondent college’s offices, including the abolition of various positions, since it is implied or incidental to
its power to conduct the regular business affairs of the corporation.

Article 282(c) of the Labor Code 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 his duly authorized
representative.”

Loss of trust and confidence is a valid ground for dismissing an employee. Termination of employment on
this ground does not require proof beyond reasonable doubt. All that is needed is for the employer to
establish sufficient basis for the dismissal of the employee. The dismissal of the petitioner was for a just
and valid cause

2. NO. It appears on record that the investigation of petitioner’s alleged irregularities was conducted
only after the filing of the complaint for illegal dismissal. Under Section 1, Rule XIV of the
Implementing Rules and Regulations of the Labor Code, the dismissal of an employee must be for
a just or authorized cause and after due process.

The two requirements of this legal provision are:

 1. The legality of the act of dismissal, that is, dismissal under the ground provided under Article 283
of the New Labor Code; and

2. The legality in the manner of dismissal, that is, with due observance of the procedural
requirements of Sections 2, 5, and 6 of BP Blg. 130.

While the Labor Code treats of the nature and the remedies available with regard to the first, such as: (a)
reinstatement to his former position without loss of seniority rights, and (b) payment of backwages
corresponding to the period from his illegal dismissal up to actual reinstatement, said Code does not deal
at all with the second, that is, the manner of dismissal, which is therefore, governed exclusively by the
Civil Code.

In cases where there was a valid ground to dismiss an employee but there was non-observance of due
process, this Court held that only a sanction must be imposed upon the employer for failure to give formal
notice and to conduct an investigation required by law before dismissing the employee. Employer must
be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by
law before dismissing petitioner from employment. The measure of this award depends on the facts of
each case and the gravity of the omission committed by the employer.

21. SAN MIGUEL BREWERY VS. PETER SANTOS

2 SCRA 1081

FACTS:

Peter C. Santos was employed off and on as a temporary security guard during the period from
December 16, 1952, to February 3, 1955, when he was dismissed, the total time of his actual
service being eight and a half months; that on April 11, 1954, Santos was appointed confidential
agent of the union and on October 23, 1954, formally became a member thereof.
On April 1, 1954 , the union filed charges against Col. Rueda with Santos gathering the materials
for some of the charges, and the union at the same time demanded that positions vacated by the
members of the union be filled with applicant's recommended by the board of directors of the
union
On September 26, 1954, the board of directors of the union recommended Santos to take the
place of Carlos Abelardo who was a permanent guard and a member of the union and on October
23, 1954, Santos was called or employed for the last time; that on November 3, 1954, Santos was
physically examined to find out if he could be made permanent guard, he was allegedly found by
Dr. Horilleno to be suffering from a chronic O.M.P.C. on his left ear which is described as a 'decided
liability because it impairs the hearing to some degree if not markedly'. and that on January 27,
1955, he was again physically examined to find out if he was already cured when he had not been
advised of, nor treated for, his ailment. Apparently on February 3, 1955, Santos was dismissed
instead of being made permanent guard.
ISSUE:
1.Whether or not respondent was validly dismissed
2. Whether or not respondent Peter C. Santos should be reinstated as a permanent security guard
when he was discharged as a temporary security guard

HELD:

1. NO. Col. Rueda and the management knowing Santos to be the confidential agent of the
union and member thereof and knowing that he gathered materials in support of some of
the charges against Rueda, it could hardly be a mistake to conclude that because of his
(Rueda) disappointment, the respondents dismissed Peter C. Santos for his union activities
with the physical defect as a pretext. There is no showing, not even a claim, that because
Santos is suffering from chronic O.M.P.C., on his left ear, something untoward in the
performance of his duties, happened as a result thereof for more than two years when he
was with the respondent company off and on. On the contrary, his efficiency record is
commendable. Upon the whole, the evidence supports the conclusion that respondents
committed unfair labor practice against Peter C. Santos in discharging him.

2. Reinstatement, in its generally accepted sense, refers to a restoration to a state from which
one has been removed or separated; it is the return to the position from which he was
removed. The records show that Santos was employed as temporary guard, on and off for
short durations between December 16, 1952 and February 3, 1955. On the date of his
separation from the service, he was still occupying the position of temporary guard. There
is no question that, having been the subject of unfair labor practice, Santos is entitled to
reinstatement. However, the company cannot be required to appoint said dismissed
employee to a position which he had not previously occupied. Santos, therefore, should
be ordered reinstated to his former position of temporary guard.

22. PINES CITY EDUCATIONAL CENTER VS NLRC,

GR. NO. 96779, NOVEMBER 10, 1993

Facts: Private respondents were all employed as teachers on probationary basis by petitioner Pines
City Educational Center, represented in this proceedings by its President, Eugenio Baltao. With
the exception of Jane Bentrez who was hired as a grade school teacher, the remaining private
respondents were hired as college instructors. All the private respondents, except Picart and Chan,
signed contracts of employment with petitioner for a fixed duration. On March 31, 1989, due to
the expiration of private respondents' contracts and their poor performance as teachers, they were
notified of petitioners' decision not to renew their contracts anymore.
Issue: that there is prima facie evidence of grave abuse of discretion on the part of the labor arbiter
by wantonly, capriciously and maliciously disregarding provisions of the law and jurisprudence
laid down in decisions of the honorable supreme court.

Ruling:
In the present case, however, we have to make a distinction.
Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of
employment are concerned, their services were lawfully terminated by reason of the expiration of
the periods of their respective contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr., Ruperta
Ribaya, Virginia Boado, Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose Ann
Bermudez. Thus, public respondent committed grave abuse of discretion in affirming the decision
of the Labor Arbiter ordering the reinstatement and payment of full backwages and other benefits
and privileges.
With respect to private respondents Roland Picart and Lucia Chan, both of whom did not sign any
contract fixing the periods of their employment nor to have knowingly and voluntarily agreed upon
fixed periods of employment, petitioners had the burden of proving that the termination of their
services was legal. As probationary employees, they are likewise protected by the security of
tenure provision of the Constitution. Consequently, they cannot be removed from their positions
unless for cause.
We concur with these factual findings, there being no showing that they were resolved arbitrarily.
Thus, the order for their reinstatement and payment of full backwages and other benefits and
privileges from the time they were dismissed up to their actual reinstatement is proper,
conformably with Article 279 of the Labor Code, as amended by Section 34 of Republic Act No.
6715, which took effect on March 21, 1989. It should be noted that private respondents Roland
Picart and Lucia Chan were dismissed illegally on March 31, 1989, or after the effectivity of said
amendatory law.
However, in ascertaining the total amount of backwages payable to them, we go back to the rule
prior to the mercury drug rule that the total amount derived from employment elsewhere by the
employee from the date of dismissal up to the date of reinstatement, if any, should be deducted
therefrom. We restate the underlying reason that employees should not be permitted to enrich
themselves at the expense of their employer. In addition, the law abhors double compensation. 19
to this extent, our ruling in Alex Ferrer, et al., v. NLRC, et al., G.R. No. 100898, promulgated on
July 5, 1993, is hereby modified.
 23. Buenviaje vs CA
G.R. No. 147806, November 12, 2002

FACTS: Petitioners were former employees of Cottonway Marketing Corp. (Cottonway), hired as
promo girls for their garment products. In October, 1994, after their services were terminated as
the company was allegedly suffering business losses, petitioners filed with the National Labor
Relations Commission (NLRC) a complaint for illegal dismissal, underpayment of salary, and non-
payment of premium pay for rest day, service incentive leave pay and thirteenth month pay against
Cottonway Marketing Corp. and Network Fashion Inc./JCT International Trading.

On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a Decision finding petitioners'
retrenchment valid and ordering Cottonway to pay petitioners' separation pay and their
proportionate thirteenth month pay.

On appeal, the NLRC, in its Decision dated March 26, 1996, reversed the Decision of the Labor
Arbiter and ordered the reinstatement of petitioners without loss of seniority rights and other
privileges. It also ordered Cottonway to pay petitioners their proportionate thirteenth month pay
and their full backwages inclusive of allowances and other benefits, or their monetary equivalent
computed from the time their salaries were withheld from them up to the date of their actual
reinstatement.

Cottonway filed a motion for reconsideration which was denied.

Cottonway also filed a petition for certiorari with the Supreme Court which was dismissed.

Hence, Cottonway filed a petition for certiorari with the Court of Appeals seeking the reversal of
the ruling of the NLRC and the reinstatement of the Order of the Labor Arbiter. The appellate
court granted the petition, it ruled that petitioners' reinstatement was no longer possible as they
deliberately refused to return to work despite the notice given by Cottonway. CA thus held that
the amount of backwages due them should be computed only up to the time they received their
notice of termination.

ISSUE: W/N the computation of the petitioners’ backwages should be computed from the time of
their illegal dismissal until their actual reinstatement.

RULING: Yes, the court agrees with the petitioners. The issue of the legality of the termination of
petitioners’ services has been settled in the NLRC decision. Thus, Cottonway was ordered to
reinstate petitioners to their former position without loss of seniority rights and other privileges
and to pay them full backwages.

Under R.A. 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.
The Court explained the meaning of full backwages in the case of Bustamante vs. NLRC:
The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of
backwages as enunciated in said Pines City Educational Center case, by now holding that
conformably with the evident legislative intent as expressed in Rep. Act No. 6715, above-quoted,
backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be
diminished or reduced by the earnings derived by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is that the employee, while litigating the legality
(illegality) of his dismissal, must still earn a living to support himself and family, while full
backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally
dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to
give more benefits to workers than was previously given them under the Mercury Drug rule or the
"deduction of earnings elsewhere" rule. Thus, a closer adherence to the legislative policy behind
Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed
employees is clear, plain and free from ambiguity and, therefore, must be applied without
attempted or strained interpretation. Index animi sermo est.

Also, petitioners' alleged failure to return to work cannot be made the basis for their termination.
Such failure does not amount to abandonment which would justify the severance of their
employment. To warrant a valid dismissal on the ground of abandonment, the employer must prove
the concurrence of two elements: (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.

24. BUSTAMANTE vs. NLRC

GR. NO. 111651, 11/28/1996

FACTS:
The respondent company has a banana plantation in Davao del Norte where it produces
high-quality bananas. Petitioners Paulino Bantayan, Fernando Bustamante, Mario Sumonod, and
Osmalik Bustamante worked as laborers and harvesters at the respondent company's plantation,
while petitioner Sabu Lamaran worked as a worker and sprayer. All of the petitioners signed
employment contracts for a period of six (6) months, from January 2 to July 2, 1990, yet they
began working in September 1989. From 1985 to 1989, they were recruited to execute the same
task for intervals of a month or more. Petitioners' employments were terminated on June 25, 1990,
before their contracts of employment ended on July 2, 1990, on the basis of poor performance due
to age, as none of them were purportedly under the age of forty (40).
Petitioners filed a complaint for illegal dismissal.

ISSUE:
Whether or not private respondent exercises its power to terminate in good faith so as to
make the award of back wages improper in this case.
RULING:
We reject the public respondent's argument that private respondent should not be required
to reimburse petitioners for back pay because their termination was not undertaken in bad faith.
The fact that the petitioners were hired and rehired over a period of time without being considered
regular workers demonstrates the private respondent's bad faith. The public reply reached this
conclusion when it noted that petitioners' subsequent rehiring on a probationary basis "clearly
appears to be a handy deception on the part of management to prevent complainants (petitioners)
from becoming regular employees."
In the case at bar, there is no valid cause for dismissal. The employees (petitioners) have not
performed any act to warrant termination of their employment. Consequently, petitioners are
entitled to their full backwages and other benefits from the time their compensation was withheld
from them up to the time of their actual reinstatement.

25. JAM TRANSPORTATION v. LUIS HERMOSA FLORES

22O SCRA 114
G.R. No. 82829

FACTS:
"Complainant, in his position paper and supplemental position paper, avers that he was employed
by the respondent company as a conductor since 1967. He was paid on percentage basis and
received a commission of about P40.00 to P50.00 a day. Sometime in 1985, complainant further
alleges that he had an accident, which burned his body partially necessitating his hospitalization
for several days. After hospitalization, complainant reported to respondent Josefina Alon-Alon
Mercado, in compliance with the letter dated May 20, 1986 of the respondent ordering him to
immediately report for work, but was told to wait. For several days he kept on reporting but the
Operations Manager just kept promising to give him a route assignment which did not materialize.
Finally, complainant was able to talk to respondent Joselito Medrano who told him that he will be
accepted back to work as a new employee. Complainant rejected the offer since it would mean
losing his eighteen (18) years of service with the respondents. Because of his refusal, he was
allegedly told in the presence of some other employees: "Balik ka pa ng balik. Ang kapal naman
ng mukha mo." Feeling aggrieved, complainant instituted the present complaint charging the
respondents with illegal dismissal, unfair labor practice, non-payment of overtime pay, legal
holiday pay and violations of Presidential Decrees No. 525 and 851.

Respondents, in its position paper contend that in 1986, complainant, for unknown reasons, failed
to report for work for about a month. No notice was given to the company for such continued
absence. On May 20, 1986, respondent company, thru its Personnel Manager, Joselito Medrano
sent a letter to the complainant advising him to immediately report for work, otherwise, his
continued absence will be construed as a ground for his dismissal and separation from the service.
Respondents further alleged that complainant failed to respond to its demand that he immediately
report for work, hence, they filed a termination report with the Ministry of Labor on June 4, 1986,
terminating the services of the complainant for 'AWOL' (Absent Without Official Leave)."

ISSUE:
WHETHER OR NOT LABOR ARBITER’S FINDING THE PRIVATE RESPONDENT
IS PHYSICALLY UNFIT TO WORK CONSEQUENTLY ENTITLED TO SEPERATION PAY

RULING:
The matter of private respondents' physical capacity to work was never a point of controversy
between the parties. It was not at all an issue in the proceeding. The complaint was one for illegal
dismissal anchored on the question of abandonment. There was never an occasion in the course of
the proceeding that the angle of "termination due to illness" ever cropped up. And the Labor Arbiter
on his part did not so much as attempt to get the parties to thresh out such inexistent/non
controversial issue.
There was no controversy on the aspect of private respondent physical fitness for work; therefore,
as a matter of course, such inexistent controversy was never brought before the Labor Arbiter for
adjudication. In view of the foregoing, the Labor Arbiter was bereft of "judicial power" to rule
motu propio that private respondent was not physically capacitated to work.
Private respondent, however, counters that such ruling "was or may have been done in good faith
and without malice on the part of Labor Arbiter Guevarra."
Petitioner is correct.
Executive Labor Arbiter Alvarez held that private respondent was constructively dismissed i.e., he
was illegally dismissed, when, after petitioner informed private respondent that if he wanted to
work again with petitioner, he would have to start as a new employee, private respondent,
considering his 18 years of service with petitioner, refused to start anew.
Private respondent's re-employment as a new employee would be very prejudicial to him as it
would mean a demotion in rank and privileges, retirement benefits, for example, as his entire
previous eighteen (18) years of service with petitioner, would simply be considered as non-
existent.
But instead of resolving whether petitioner accorded private respondent due process in
constructively dismissing him.Executive Labor Arbiter Alvarez, however, ruled in this wise:
It appears, however, on record that complainant is suffering from heart ailment which, on two
occasions, was the reason for cancelling the scheduled hearings or conciliation. Thus, on July 21,
1986 and on August 5, 1986, complainant manifested to have the setting transferred to another
date because he (complainant) is suffering from heart ailment.
We have perused the record and we found no medical certificate attesting to his fitness to return
to his work as indicated in his position paper. Complainant's termination, therefore, would be
justified under Article 285 of the Labor Code as amended.
sWe cannot, however, order the reinstatement of private respondent with petitioner as relations
between the two are now strained 12 after private respondent was humiliated and embarrassed by
petitioner's Mr. Medrano when he tried to report back to work.