Good evening.

Assignment for Friday, June 11, 2021:

1. *Phil. Village Hotel vs. NLRV GR No. 115033 2/28/9

FACTS:
 Private respondents were employees of petitioner Philippine Village
Hotel.
 However, on May 19, 1986, petitioner had to close and totally discontinue
its operations due to serious financial and business reverses resulting in
the termination of the services of its employees.
 Thereafter, the Philippine Village Hotel Employees and Workers Union
filed against petitioner a complaint for separation pay, unfair labor
practice and illegal lock-out.
 The Labor Arbiter issued and Order finding the losses suffered by
petitioner to be actual, genuine and of such magnitude as to validly
terminate the services of private respondents but directed petitioner "to
give priority to the complainants (herein private respondents) in [the]
hiring of personnel should they resume their business operations in the
future."
 The NLRC affirmed the validity of the closure of petitioner but ordered
petitioner to pay private respondent separation pay at the rate of 1/2
month pay every year of service.
 However, there is nothing in the records to show that private respondents
received their separation pay.
 Petitioner decided to have a one (1) month dry-run operation to ascertain
the feasibility of resuming its business operations. In order to carry out its
dry-run operation, petitioner hired casual workers, including private
respondents, for a one (1) month period, or from February 1, 1989 to
March 1, 1989, as evidenced by the latter's Contract of Employment.
 After evaluating the individual performance of all the employees and upon
the lapse of the contractual one-month period or on March 2, 1989,
petitioner terminated the services of private respondents.
 Private respondents and Tupas Local Chapter No. 1362 filed a complaint
against petitioner for illegal dismissal and unfair labor practice with the
NLRC-NCR Arbitration Branch which was dismissed. On appeal to NLRC,
it reversed the decision of the Labor Arbiter and ordered to reinstate the
above-named complainants to their former or substantially equivalent
positions without loss of seniority rights plus full backwages from the
time they were actually dismissed on 02 March 1989 up to the time of
their actual reinstatement.

ISSUE :
 Whether or not the private respondents are deemed to be regular
employees

RULING:
  In the instant case, private respondents were validly terminated by the
petitioner when the latter had to close its business due to financial losses.
Following the directives of the NLRC to give priority in hiring private
respondents should it resume its business, petitioner hired private
respondents during their one (1) month dry-run operation.
 However, this does not mean that private respondents were deemed to
have continued their regular employment status, which they had enjoyed
before their aforementioned termination due to petitioner's financial
losses.
 As stated by the Labor Arbiter in his decision: It should be borne in mind
that when complainants were first terminated as a result of the company's
cessation from operation in May, 1986 the employer-employee
relationship between the parties herein was totally and completely
severed.
 Such being the case, respondent acted well within its discretion when in
rehiring the complainants (herein private respondents) it made them
casual and for a specific period. The complainants are no better than the
new employees of respondent (petitioner) for the matter of what status or
designation to be given them exclusively rests in the discretion of
management. 8 The prior employment which was terminated cannot be
joined or tacked to the new employment for purposes of security of
tenure. While it is true that security of tenure is a constitutionally
guaranteed right of the employees, it does not, however, mean perpetual
employment for the employee because our law, while affording protection
to the employee, does not authorize oppression or destruction of an
employer. The questioned of the order of NLRC is hereby SET ASIDE.

2. *Chu vs NLRC GR No. 106107 6/2/9

Facts
 Petitioner retired from the service of private respondent upon reaching the age of
sixty under its regular retirement program. He was granted an extension of
service by the Board of Directors of private respondent under a “Special Contract
of Employment.”
 The contract provided, inter alia, that its term was for a period of one year
commencing on August 1, 1988;
 that petitioner was employed as Head of the Warehousing, Sugar, Shipping and
Marine Department; and that he was to receive basic salary of P6,941.00 per
month.
 Private respondent issued Memorandum No. 1012-PS dated December 12, 1988
and Memorandum No. 1028-PS dated January 16, 1989, both providing for a
rotation of the personnel and other organizational changes.
 Pursuant to the memoranda, petitioner was transferred to the Sugar Sales
Department.
 Petitioner protested his transfer and requested a reconsideration thereof, which
was denied. Consequently, on February 27, 1989, petitioner filed a complaint for
illegal dismissal, contending that he was constructively dismissed from his
employment.

Labor Arbiter
 : Ruled that there was no constructive dismissal. The Labor Arbiter said that:(1)
petitioner was transferred to the Sugar Sales Department from the Warehousing,
Sugar, Shipping and Marine Department, both of which are under the Sugar
Sales Area; (2) petitioner’ s transfer was without change in rank or salary;(3)
petitioner’s designation in either department was the same;(4) the personnel
rotation was pursuant to organizational changes done in the valid exercise of
management prerogatives;(5) there was no bad faith in the transfer of petitioner,
as other employees similarly situated as he were likewise affected; and(6)
petitioner failed to show that he was prejudiced by thechanges or transferred to a
demeaning or humiliating position.

NLRC
 Petitioner appealed to the NLRC which, in a resolution dated January 13, 1992,
affirmed the Labor Arbiter’s decision. In a resolution dated March 20, 1992, the
NLRC denied petitioner’s motion for reconsideration. Petitioner argues that
private respondent’s prerogative to transfer him was limited by the “Special
Contract of Employment” which was the “law “between the parties. Thus,
petitioner urges that private respondent, by employing him specifically as Head
of the Warehousing, Sugar, Shipping, and Marine Department, waived its
prerogative to reassign him within the term of the contract to another
department.

Issue
: W/N valid exercise of management prerogative since the law between the
parties is governed by their special contract of employment which thus limits the
company’s management prerogative.

Held
 : No. An owner of a business enterprise is given considerable leeway in
managing his business because it is deemed important to society as a
whole that he should succeed. Our law, therefore, recognizes certain
rights as inherent in the management of business enterprises. These
rights are collectively called management prerogatives or acts by which
one directing a business is able to control the variables thereof so as to
enhance the chances of making a profit. One of the prerogatives of
management, and a very important one at that, is the right to transfer
employees in their workstation.
 We find nothing in the “Special Contract of Employment” invoked by
petitioner wherein private respondent had waived its right to transfer or
re-assign petitioner to any other position in the company.
  Before such right can be deemed to have been waived or contracted away,
the stipulation to that effect must be clearly stated so as to leave no room
to doubt the intentions of the parties. The mere specification in the
employment contract of the position to be held by the employee is not
such stipulation. Petitioner’s bare assertion that the transfer was
unreasonable and caused him inconvenience cannot override the fact, as
found by the Labor Arbiter and respondent Commission, that the rotation
was made in good faith and was not discriminatory, and that there was no
demotion in rank or a diminution of his salary, benefits and privileges.

3. *Singer Sewing Machine vs. Sec. of Labor GR No. 91307 1/24/9[193 SCRA
271]

 Singer Machine Collectors Union-Baguio filed a petition for direct

certification as the sole and exclusive bargaining agent of all collectors of
Singer Sewing Machine.
 The company opposed the petition mainly because the union members
are not employees but independent contractors as evidenced by the
collection agency agreement which they signed.
 Med-Arbiter ruled that there exists an employee-employer relationship
and granted the certification election which was affirmed by Sec. Drilon.
 The company files the present petition on the determination of the
relationship. The union insist that the provisions of the Collection
Agreement belie the company’s position that the union members are
independent contractors.

Issue:
Whether or not there exists an employer-employee relationship between the
parties.

SC Ruling:
 The present case calls for the application of the control test, which if not
satisfied, would lead to the conclusion that no employee-employer
relationship exists. If the union members are not employees, no right to
organize for the purpose of bargaining or as a bargaining agent cannot be
recognized.
 The following elements are generally considered in the determination of
the relationship: the selection and engagement of the employee, payment
of wages, power of dismissal and the power to control the employee’s
conduct which is the most important element.
 The nature of the relationship between a company and its collecting
agents depends on the circumstances of each particular relationship. Not
all collecting agents are employees and neither are all collecting agents
independent contractors. The agreement confirms the status of the
collecting agents as independent contractor.
  The requirement that collection agents utilize only receipt forms and
report forms issued by the company and that reports shall be submitted at
least once a week is not necessarily an indication of control over the
means by which the job collection is to be performed. Even if report
requirements are to be called control measures, any control is only with
respect to the end result of the collection since the requirements regulate
the things to be done after the performance of the collection job or the
rendition of service.
 The plain language of the agreement reveals that the designation as
collection agent does not create an employment relationship and that the
applicant is to be considered at all times as an independent contractor.
 The court finds that since private respondents are not employees of the
company, they are not entitled to the constitutional right to form or join a
labor organization for the purposes of collective bargaining. There is no
constitutional and legal basis for their union to be granted their petition
for direct certification.

Facts:

Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive
bargaining agent of all collectors of Singer Sewing Machine. The company opposed the petition mainly
because the union members are not employees but independent contractors as evidenced by the collection
agency agreement which they signed.

Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election
which was affirmed by Sec. Drilon. The company files the present petition on the determination of the
relationship. The union insists that the provisions of the Collection Agreement belie the company’s position
that the union members are independent contractors.

Ruling:

The present case calls for the application of the control test, which if not satisfied, would lead to the
conclusion that no employee-employer relationship exists. If the union members are not employees, no right
to organize for the purpose of bargaining or as a bargaining agent cannot be recognized. The following
elements are generally considered in the determination of the relationship: the selection and engagement of
the employee, payment of wages, power of dismissal and the power to control the employee’s conduct
which is the most important element. The nature of the relationship between a company and its collecting
agents depends on the circumstances of each particular relationship. Not all collecting agents are
employees and neither are all collecting agents independent contractors. The agreement confirms the status
of the collecting agents as independent contractor. The requirement that collection agents utilize only receipt
forms and report forms issued by the company and that reports shall be submitted at least once a week is
not necessarily an indication of control over the means by which the job collection is to be performed. Even
if report requirements are to be called control measures, any control is only with respect to the end result of
the collection since the requirements regulate the things to be done after the performance of the collection
job or the rendition of service.

The plain language of the agreement reveals that the designation as collection agent does not create an
employment relationship and that the applicant is to be considered at all times as an independent
contractor. The court finds that since private respondents are not employees of the company, they are not
entitled to the constitutional right to form or join a labor organization for the purposes of collective
bargaining. There is no constitutional and legal basis for their union to be granted their petition for direct
certification.

4. *Mehitabel Furniture vs NLRC 220 SCRA 602

MEHITABEL v. JUFHEL L. ALCUIZAR, GR Nos. 228701-02, 2017-12-13

Facts:

 Petitioner Mehitabel, Inc. is a duly registered corporation engaged in

manufacturing high-end furniture for export.[3] The company's
Purchasing Department is composed of only four (4) persons: one (1)
Purchasing Manager, one (1) Purchasing Officer handling local purchases,
one (1) QC Inspector, and one (1) Expediter.[4] On August 31, 2010, the
company hired respondent as its Purchasing Manager.[5]

 Respondent was able to earn a satisfactory rating during his first few
months in the company, but beginning March 2011, his immediate
supervisor, Rossana J. Arcenas (Arcenas), started receiving complaints on
his work ethics. Petitioner averred that respondent's dismal work
performance resulted in delays in the production and delivery of the
company's goods.[6] To address these issues, Arcenas talked to
respondent and counselled him to improve. As months passed, however,
the complaints against respondent's performance have exacerbated to the
point that even the top level officers of the company have expressed their
dissatisfaction over his ineptitude.[7] Sensing no improvement from the
respondent and the rising complaints, Arcenas decided to sit down and
talk with respondent anew sometime in early August 2011 to encourage
the latter to shape up. She advised respondent that should he fail to heed
her advice, she may be forced to initiate disciplinary proceedings against
him for gross inefficiency.

 Arcenas then alleged that respondent left the premises of petitioner's

company on August 10, 2011 and gave word that he was quitting his job.

 On even date, petitioner wrote to respondent via registered mail to inform

him that the company decided to treat his act of leaving the office as a
violation of its code of conduct, specifically on the provision of
abandonment.

 Despite respondent's receipt of the afore-quoted letter, he neither

reported back to work nor submitted his written explanation.[10] Instead
of receiving a reply, petitioner received summons pertaining to a labor
 dispute that respondent had filed, docketed as NLRC-RAB VII 08-1241-
2011.

 respondent lodged a complaint for illegal dismissal, non-payment of

salary, 13th month pay, damages and attorney's fees with claims for
reinstatement and backwages against the company and its president,
Robert L. Booth (Booth).

 Respondent emphasized that as early as May 29, June 10, and June 28,
2011, petitioner caused the publication in a newspaper and online a notice
of a vacant position for Purchasing Manager, the very same item he was
occupying in the company. Subsequently, he was allegedly advised by
Arcenas on August 10, 2011 that the company no longer required his
services for his failure to satisfactorily meet the company's performance
standards, and that he should turn over his work to the newly-hired
Purchasing Manager, Zardy Enriquez (Enriquez). It was further alleged
that Booth confirmed that respondent was being replaced.

 Labor Arbiter Butch Donabel Ragas-Bilocura, before whom the case was
pending, rendered a Decision[12] dismissing the complaint for lack of
merit.

 NLRC, in its July 31, 2012 Decision,[13] reversed the ruling of the Labor
Arbiter

 NLRC held that there was dismissal for just cause.

 declaring petitioner Jufhel L. Alcuizar as having been illegally dismissed.

 In reversing the NLRC, the appellate court applied Art. 4 of the Labor
Code, which prescribes that all doubts in the implementation and
interpretation of the provisions of the Code

 On the issue of abandonment, petitioner advances the theory that

respondent's intention to sever his employment with petitioner was
established through the sworn statements of the company's human
resource officer and security guard.

 petitioner would convince the Court to reinstate the Labor Arbiter's

finding that respondent was not illegally dismissed—for not only did he
fail to prove the fact of dismissal, it was he who abandoned his work.
Petitioner also postulates that respondent is consequently not entitled to
reinstatement, full backwages, and to the other benefits under Art. 279 of
the Labor Code. Finally, petitioner likewise questions the basis for the
award of attorney's fees.
Issues:

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS

REVERSIBLE ERROR IN HOLDING THAT RESPONDENT DID NOT
ABANDON HIS EMPLOYMENT WITH PETITIONER COMPANY

Ruling:

His asseveration that Arcenas instructed him to turnover his functions to

Enriquez remains to be a naked claim. Apart from his bare self-serving allegation,
nothing in the records even hints of him being severed from employment by
petitioner.

The publication of the purported vacancy for Purchasing Manager does not
bolster respondent's claim of dismissal. We find more credible petitioner's
assertion that said publications were made through sheer inadvertence, and that
the vacancy is actually for the position of Purchasing Officer, rather than
Purchasing Manager. This version is corroborated by the fact that petitioner
caused an earlier publication, dated February 6, 2011, advertising the vacancy for
Purchasing Officer, but with qualifications strikingly similar with, if not an
almost verbatim reproduction of, those subsequently published on the May 29,
June 10, and June 28, 2011 notices for Purchasing Manager

The theory of petitioner is further supported by the affidavit of its Human

Resource Officer, Cañete, who admitted to committing the erratum... he was
never terminated from service at that time in spite of his poor performance. With
these considerations, the Court cannot readily treat the publications, by
themselves, as sufficient substantial proof of the fact of dismissal.

Respondent's non-compliance with the directive in the Return to Work to Our

mind, signifies his intention to sever the employment relation with petitioner,
and gives credence to the latter's claim that it was respondent who abandoned his
job. Moreover, such omission substantiates the testimonies of Cañete and Molina
who positively attested to the fact of respondent's desertion.

Principles:

The burden of proof is on the one who declares, not on one who denies. A party
alleging a critical fact must support his allegation with substantial evidence, for
any decision based on unsubstantiated allegation cannot stand without offending
due process.[17] And in illegal termination cases, jurisprudence had underscored
that the fact of dismissal must be established by positive and overt acts of an
employer indicating the intention to dismiss[18] before the burden is shifted to
the employer that the dismissal was legal.
 5. *Pantranco North Express, Inc vs NLRC and Urbano Suiga GR no. 106654
12/16/1994

FACTS:

 Private respondent was hired by petitioner in 1964 as a bus conductor. He

eventually joined the Pantranco Employees Association-PTGWO.
 Worked until August 12, 1989, when he was retired at the age of fifty-two (52)
after having rendered twenty five years' service.
 The basis of his retirement was the compulsory retirement provision of the
collective bargaining agreement between the petitioner and the forenamed union.
Private respondent received P49,300.00 as retirement pay.
 On February 15, 1990, private respondent filed a complaint for illegal dismissal
against petitioner.
 On March 26, 1990, Labor Arbiter Olairez rendered his decision that private
respondent was illegally and unjustly dismissed and ordered the reinstatement
without loss of seniority rights with full backwages and other benefits.
 Petitioner appealed to public respondent, which issued the questioned Resolution
affirming the labor arbiter's decision in toto. Hence, this petition
ISSUE:
WON Collective Bargaining Agreement provision allowing compulsory retirement before
age 60 but after twenty five years of service legal and enforceable?
HELD:
 Yes. The compulsory retirement of private respondent effected in accordance
with the CBA is legal and binding.
 A CBA incorporates the agreement reached after negotiations between employer
and bargaining agent with respect to terms and conditions of employment. A CBA
is not an ordinary contract. Being a product of negotiation, the CBA between the
petitioner and the union intended the provision on compulsory retirement to be
beneficial to the employees-union members, including herein private respondent.
When private respondent ratified the CBA with the union, he not only agreed to
the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot
be said that he was illegally dismissed when the CBA provision on compulsory
retirement was applied to his case.
 Providing in a CBA for compulsory retirement of employees after twenty-five (25)
years of service is legal and enforceable so long as the parties agree to be
governed by such CBA.
 The law presumes that employees know what they want and what is good for
them absent any showing that fraud or intimidation was employed to secure their
consent thereto
 6. *Brent School vs Zamora 181 SCRA 702 G.R. No. L-48494 February 5,
1990

FACTS:

 Private respondent Doroteo R. Alegre was engaged as athletic director by

petitioner Brent School, Inc. at a yearly compensation of P20,000.00.
 The contract fixed a specific term for its existence, five (5) years, i.e., from July
18, 1971, the date of execution of the agreement, to July 17, 1976.
 Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the
expiry date, as those contained in the original contract of July 18, 1971.
 On April 20,1976, Alegre was given a copy of the report filed by Brent School with
the Department of Labor advising of the termination of his services effective on
July 16, 1976.
 The stated ground for the termination was "completion of contract, expiration of
the definite period of employment."
 Although protesting the announced termination stating that his services were
necessary and desirable in the usual business of his employer, and his
employment lasted for 5 years - therefore he had acquired the status of regular
employee - Alegre accepted the amount of P3,177.71, and signed a receipt therefor
containing the phrase, "in full payment of services for the period May 16, to July
17, 1976 as full payment of contract."
 The Regional Director considered Brent School's report as an application for
clearance to terminate employment (not a report of termination), and accepting
the recommendation of the Labor Conciliator, refused to give such clearance and
instead required the reinstatement of Alegre, as a "permanent employee," to his
former position without loss of seniority rights and with full back wages.

ISSUE:

 Whether or not the provisions of the Labor Code, as amended, have

anathematized "fixed period employment" or employment for a term.

RULING:
 Respondent Alegre's contract of employment with Brent School having lawfully
terminated with and by reason of the expiration of the agreed term of period
thereof, he is declared not entitled to reinstatement.
 The employment contract between Brent School and Alegre was executed on July
18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet
been promulgated. At that time, the validity of term employment was impliedly
recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787.
Prior, thereto, it was the Code of Commerce (Article 302) which governed
employment without a fixed period, and also implicitly acknowledged the
propriety of employment with a fixed period. The Civil Code of the Philippines,
which was approved on June 18, 1949 and became effective on August 30,1950,
itself deals with obligations with a period. No prohibition against term-or fixed-
period employment is contained in any of its articles or is otherwise deducible
therefrom.
 It is plain then that when the employment contract was signed between Brent
School and Alegre, it was perfectly legitimate for them to include in it a
stipulation fixing the duration thereof Stipulations for a term were explicitly
recognized as valid by this Court.
 The status of legitimacy continued to be enjoyed by fixed-period employment
contracts under the Labor Code (PD 442), which went into effect on November 1,
1974. The Code contained explicit references to fixed period employment, or
employment with a fixed or definite period. Nevertheless, obscuration of the
principle of licitness of term employment began to take place at about this time.
 Article 320 originally stated that the "termination of employment of probationary
employees and those employed WITH A FIXED PERIOD shall be subject to such
regulations as the Secretary of Labor may prescribe." Article 321 prescribed the
just causes for which an employer could terminate "an employment without a
definite period." And Article 319 undertook to define "employment without a
fixed period" in the following manner: …where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the
duration of the season.
 Subsequently, the foregoing articles regarding employment with "a definite
period" and "regular" employment were amended by Presidential Decree No.
850, effective December 16, 1975.
 Article 320, dealing with "Probationary and fixed period employment," was
altered by eliminating the reference to persons "employed with a fixed period,"
and was renumbered (becoming Article 271).

 As it is evident that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment contracts to
which the lack of a fixed period would be an anomaly, but would also appear to
 restrict, without reasonable distinctions, the right of an employee to freely
stipulate with his employer the duration of his engagement, it logically follows
that such a literal interpretation should be eschewed or avoided. The law must be
given a reasonable interpretation, to preclude absurdity in its application.
Outlawing the whole concept of term employment and subverting to boot the
principle of freedom of contract to remedy the evil of employer's using it as a
means to prevent their employees from obtaining security of tenure is like cutting
off the nose to spite the face or, more relevantly, curing a headache by lopping off
the head.
 Such interpretation puts the seal on Bibiso upon the effect of the expiry of an
agreed period of employment as still good rule—a rule reaffirmed in the recent
case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989)
where, in the fairly analogous case of a teacher being served by her school a
notice of termination following the expiration of the last of three successive fixed-
term employment contracts, the Court held:
 Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive
period. At the expiration of the period stipulated in the contract, her appointment
was deemed terminated and the letter informing her of the non-renewal of her
contract is not a condition sine qua non before Reyes may be deemed to have
ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes'
contract of employment was due to expire and that the contract would no longer
be renewed. It is not a letter of termination.
 Paraphrasing Escudero, respondent Alegre's employment was terminated upon
the expiration of his last contract with Brent School on July 16, 1976 without the
necessity of any notice. The advance written advice given the Department of
Labor with copy to said petitioner was a mere reminder of the impending
expiration of his contract, not a letter of termination, nor an application for
clearance to terminate which needed the approval of the Department of Labor to
make the termination of his services effective. In any case, such clearance should
properly have been given, not denied.

7. *Mercado vs NLRC GR No. 79869 9/5/1991

 Petitioners were agricultural workers of the private respondent's sugar land who
were dismissed.
 They had worked in all agriculture phases for several years in the said sugar land.
 The respondent denied that petitioners were regular employees alleging that their
services were engaged through 'mandarols' or supply workers to do a particular
phase of the agricultural work.

 As a result, the petitioners filed a complaint for illegal dismissal. The Labor
Arbiter held that the petitioners were not regular employees and the NLRC
affirmed this ruling.
Issue: W/N the petitioners are regular and permanent farm workers

RULING:
No, they are project/seasonal employees.
A project employee is one whose employment has been fixed for a specific project or
undertaking, the completion has been determined at the time of engagement, or where
work or service is seasonal in nature and employment is for the duration of the season.
As such, the termination of employment cannot be considered as illegal dismissal.
The petitioners are free to contract their services to work for other farm owners.

8. *??DM Consunji Inc vs NLRC GR no. 116572 12/18/2000

D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI,

Petitioners, v. ESTELITO L. JAMIN, Respondent.

BRION,J.:

FACTS:

Petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired

respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin
became a helper carpenter. Since his initial hiring, Jamins employment
contract had been renewed a number of times. On March 20, 1999, his
work at DMCI was terminated due to the completion of the SM Manila
project. This termination marked the end of his employment with DMCI as
he was not rehired again.

Jamin filed a complaintfor illegal dismissal, with several money claims

(including attorneys fees), against DMCI and its President/General
Manager, David M. Consunji. Jamin alleged that DMCI terminated his
employment without a just and authorized cause at a time when he was
already 55 years old and had no independent source of livelihood. He
claimed that he rendered service to DMCI continuously for almost 31 years.

DMCI denied liability. It argued that it hired Jamin on a project-to-project

basis, from the start of his engagement in 1968 until the completion of its
SM Manila project on March 20, 1999 where Jamin last worked. With the
completion of the project, it terminated Jamins employment.

The LA dismissed the complaint for lack of merit. On appeal, the NLRC
affirmed the decision of the LA. On further appeal, the CA reversed the
NLRC decision and ruled that Jamin was a regular employee. Hence,
DMCI seeks a reversal of the CA rulings on the ground that the appellate
court committed a grave error in annulling the decisions of the labor
arbiter and the NLRC.

ISSUE: Whether or not Jamin is a regular employee

HELD: Yes. CA Decision Affirmed.

Labor Law

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.

While the contracts indeed show that Jamin had been engaged as a project
employee, there was an almost unbroken string of Jamins rehiring from
December 17, 1968 up to the termination of his employment on March 20,
1999. While the history of Jamins employment (schedule of projects) relied
upon by DMCI shows a gap of almost four years in his employment for the
period between July 28, 1980 (the supposed completion date of the
Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the companys omission of the three
projects above mentioned.

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CASE DIGEST: D.M. CONSUNJI V. JAMIN

G.R. No. 192514: April 18, 2012

D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, Petitioners, v. ESTELITO L.

JAMIN, Respondent.
BRION,J.:

FACTS:

Petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent

Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter.
Since his initial hiring, Jamins employment contract had been renewed a number of
times. On March 20, 1999, his work at DMCI was terminated due to the completion of
the SM Manila project. This termination marked the end of his employment with DMCI
as he was not rehired again.

Jamin filed a complaintfor illegal dismissal, with several money claims (including
attorneys fees), against DMCI and its President/General Manager, David M. Consunji.
Jamin alleged that DMCI terminated his employment without a just and authorized
cause at a time when he was already 55 years old and had no independent source of
livelihood. He claimed that he rendered service to DMCI continuously for almost 31
years.

DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from
the start of his engagement in 1968 until the completion of its SM Manila project on
March 20, 1999 where Jamin last worked. With the completion of the project, it
terminated Jamins employment.

The LA dismissed the complaint for lack of merit. On appeal, the NLRC affirmed the
decision of the LA. On further appeal, the CA reversed the NLRC decision and ruled that
Jamin was a regular employee. Hence, DMCI seeks a reversal of the CA rulings on the
ground that the appellate court committed a grave error in annulling the decisions of the
labor arbiter and the NLRC.

ISSUE: Whether or not Jamin is a regular employee

HELD: Yes. CA Decision Affirmed.

Labor Law
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.

While the contracts indeed show that Jamin had been engaged as a project employee,
there was an almost unbroken string of Jamins rehiring from December 17, 1968 up to
the termination of his employment on March 20, 1999. While the history of Jamins
employment (schedule of projects) relied upon by DMCI shows a gap of almost four
years in his employment for the period between July 28, 1980 (the supposed completion
date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the companys omission of the three projects above
mentioned.

To reiterate, Jamins employment history with DMCI stands out for his continuous,
repeated and successive rehiring in the companys construction projects. In all the 38
projects where DMCI engaged Jamins services, the tasks he performed as a carpenter
were indisputably necessary and desirable in DMCIs construction business. He might
not have been a member of a work pool as DMCI insisted that it does not maintain a
work pool, but his continuous rehiring and the nature of his work unmistakably made
him a regular employee. Further, as we stressed in Liganza, respondent capitalizes on
our ruling in D.M. Consunji, Inc. v. NLRC which reiterates the rule that the length of
service of a project employee is not the controlling test of employment tenure but
whether or not the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement
of the employee."
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CASE DIGEST: D.M. CONSUNJI V. JAMIN

G.R. No. 192514: April 18, 2012

D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, Petitioners, v. ESTELITO L.

JAMIN, Respondent.
BRION,J.:

FACTS:

Petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent

Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter.
Since his initial hiring, Jamins employment contract had been renewed a number of
times. On March 20, 1999, his work at DMCI was terminated due to the completion of
the SM Manila project. This termination marked the end of his employment with DMCI
as he was not rehired again.

Jamin filed a complaintfor illegal dismissal, with several money claims (including
attorneys fees), against DMCI and its President/General Manager, David M. Consunji.
Jamin alleged that DMCI terminated his employment without a just and authorized
cause at a time when he was already 55 years old and had no independent source of
livelihood. He claimed that he rendered service to DMCI continuously for almost 31
years.

DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from
the start of his engagement in 1968 until the completion of its SM Manila project on
March 20, 1999 where Jamin last worked. With the completion of the project, it
terminated Jamins employment.

The LA dismissed the complaint for lack of merit. On appeal, the NLRC affirmed the
decision of the LA. On further appeal, the CA reversed the NLRC decision and ruled that
Jamin was a regular employee. Hence, DMCI seeks a reversal of the CA rulings on the
ground that the appellate court committed a grave error in annulling the decisions of the
labor arbiter and the NLRC.

ISSUE: Whether or not Jamin is a regular employee

HELD: Yes. CA Decision Affirmed.

Labor Law
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.

While the contracts indeed show that Jamin had been engaged as a project employee,
there was an almost unbroken string of Jamins rehiring from December 17, 1968 up to
the termination of his employment on March 20, 1999. While the history of Jamins
employment (schedule of projects) relied upon by DMCI shows a gap of almost four
years in his employment for the period between July 28, 1980 (the supposed completion
date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the companys omission of the three projects above
mentioned.

To reiterate, Jamins employment history with DMCI stands out for his continuous,
repeated and successive rehiring in the companys construction projects. In all the 38
projects where DMCI engaged Jamins services, the tasks he performed as a carpenter
were indisputably necessary and desirable in DMCIs construction business. He might
not have been a member of a work pool as DMCI insisted that it does not maintain a
work pool, but his continuous rehiring and the nature of his work unmistakably made
him a regular employee.

Further, as we stressed in Liganza, respondent capitalizes on our ruling in D.M.

Consunji, Inc. v. NLRC which reiterates the rule that the length of service of a project
employee is not the controlling test of employment tenure but whether or not the
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the
employee."
"Surely, length of time is not the controlling test for project employment. Nevertheless, it
is vital in determining if the employee was hired fora specific undertaking or tasked to
perform functions vital, necessary and indispensable to the usual business or trade of the
employer. Here, private respondent had been a project employee several times over. His
employment ceased to be coterminous with specific projects when he was repeatedly re-
hired due to the demands of petitioners business.Without doubt, Jamins case fits
squarely into the employment situation just quoted. PETITION DENIED.

9. *Mitsubishi Motors vs. Chrysler Labor Union GR No. 148738 June 29,
2004

Petitioner: Mitsubishi Motors Philippines Corporation

Respondents: Chrysler Philippines Labor Union and Nelson Paras

FACTS:

 Private respondent Nelson Paras first worked with Mitsubishi Philippines as a

shuttle bus driver on March 19, 1976.
 He resigned on June 16, 1982 because he went to Saudi Arabia and worked there
as a diesel mechanic and heavy machine operator from 1982 to 1993.
 Upon his return, Mitsubishi Philippines re-hired him as a welder-fabricator at a
tooling shop from November 1, 1994 to March 3, 1995.
 On May 1996, Paras was re-hired again, this time as a probationary
manufacturing trainee at the Plant Engineering Maintenance Department.
 He had an orientation on May 15, 1996 and after which, with respect to the
company’s rules and guidelines, started reporting for work on May 27, 1996.
 Paras was evaluated by his immediate supervisors after six months of working.
The supervisors rating Paras’ performance were Lito R. Lacambacal and Wilfredo
J. Lopez, as part of the MMPC’s company policies. Upon this evaluation, Paras
garnered an average rating.
 Later, respondent Paras was informed by his supervisor, Lacambacal, that he
received an average performance rating but it is a rate which would still qualify
him to be regularized.
 But as part of the company protocols, the Division Managers namely A.C.
Velando, H.T. Victoria and Dante Ong reviewed the performance evaluation
made on Paras. Despite the recommendations of the supervisors, they
unanimously agreed that the performance was unsatisfactory. As a consequence,
Paras was not considered for regularization.
 Paras received a Notice of Termination on November 26, 1996 which was dated
November 25, 1996. This letter’s intent is to formally relieve him off of his
 services and position effective the date since he failed to meet the company’s
standards.

 ISSUE: Whether or not respondent Paras’ termination was legal or not.

HELD:
 The Court holds that a company employer may indeed hire an employee on a
probationary basis in order to determine his fitness to perform work. The Court
stresses the existence of the statements under Article 281 of the Labor Code
which specifies that the employer must inform the employee of the standards
they were to meet in order to be granted regularization and that such
probationary period shall not exceed six (6) months from the date the employee
started working, unless specified in the apprenticeship agreement.
 Respondent Paras was employed on a probationary basis and was apprised of the
standards upon which his regularization would be based during the orientation.
His first day to report for work was on May 27, 1996. As per the company's policy,
the probationary period was from three (3) months to a maximum of six (6)
months.
 Applying Article 13 of the Civil Code, the probationary period of six (6) months
consists of one hundred eighty (180) days. The Court conforms with paragraph
one, Article 13 of the Civil Code providing that the months which are not
designated by their names shall be understood as consisting of thirty (30) days
each.
 This case, the Labor Code pertains to 180 days. Also, as clearly provided for in the
last paragraph of Article 13, it is said that in computing a period, the first day
shall be excluded and the last day included. Thus, the one hundred eighty (180)
days commenced on May 27, 1996, and ended on November 23, 1996. The
termination letter dated November 25, 1996 was served on respondent Paras only
at 3:00 a.m. of November 26, 1996.
 The Court held that by that time, he was actually already a regular employee of
the petitioner under Article 281 of the Labor Code. His position as a regularized
employee is thus secured until further notice.

10. ***Manggagawa ng Komunikasyon vs NLRC GR No. 90964 2/10/1992

11. *Agabon vs NLRC GR No. 158693 11/7/2004

AGABON vs NLRC
DECEMBER 19, 2016 ~ VBDIAZ
Agabon vs NLRC

GR 158693

Facts:

 Private respondent Riviera Home Improvements, Inc. is engaged in the business

of selling and installing ornamental and construction materials.
 It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and
cornice installers on January 2, 1992 until February 23, 1999 when they were
dismissed for abandonment of work. Thus, Petitioners then filed a complaint for
illegal dismissal and payment of money claims
 Petitioners also claim that private respondent did not comply with the twin
requirements of notice and hearing. Private respondent, on the other hand,
maintained that petitioners were not dismissed but had abandoned their work.

Issue: WON petitioners were illegally dismissed.

Held:

Accordingly, petitioners’ dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.

To dismiss an employee, the law requires not only the existence of a just and valid cause
but also enjoins the employer to give the employee the opportunity to be heard and to
defend himself.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer.
After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of
the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. – In all cases of termination of

employment, 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
Code:

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;
A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present
his evidence or rebut the evidence presented against him; and
(c) 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.

In case of termination, the foregoing notices shall be served on the employee’s last
known address.

Procedurally,
(1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for
which dismissal is sought a hearing or an opportunity to be heard and after hearing or
opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and Employment written
notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived:

(1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized
cause under Article 283, or for health reasons under Article 284, and due process was
observed;
(2) the dismissal is without just or authorized cause but due process was observed;
(3) the dismissal is without just or authorized cause and there was no due process; and
(4) the dismissal is for just or authorized cause but due process was not observed.

The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work for
another company.
Private respondent, however, did not follow the notice requirements and instead argued
that sending notices to the last known addresses would have been useless because they
did not reside there anymore.
Unfortunately for the private respondent, this is not a valid excuse because the law
mandates the twin notice requirements to the employee’s last known address. Thus, it
should be held liable for non-compliance with the procedural requirements of due
process.

Petition denied. CA affirmed with modifications.

Note:

The Supreme Court reviewed and compared the Serrano and Wenphil cases.
In doing so, they came up with a clear cut rule on employment termination and payment
of separation pay, and if proper, with damages.
The said review is not included in the digest.
Ergo, just read it in the full text.

12. *Wenphil vs NLRC GR No. 80587 2/8/1989

Version 1

WENPHIL Corporation vs. NLRC - GR No. 80587 Case Digest

FACTS:

 Private respondent Mallare had an altercation with a co-employee.

 The following day, the Operations Manager served them memorandum of
suspension and in the afternoon of that same day, Mallare was dismissed from
work.
 Labor Arbiter dismissed Mallare’s petition for unfair labor practice for lack of
merit.
 NLRC reversed the decision and ordered the reinstatement of Mallare with full
backwages of one year without qualification and deduction.

ISSUE:

Whether or not an employee dismissed for just cause but without due process be
reinstated to work.

RULING:

The basic requirement of due process is that which hears before it condemns, proceeds
upon inquiry and renders judgment only after trial. The dismissal of an employee must
be for a just cause and after due process.
Petitioner committed an infraction of the second requirement thus it must be imposed a
sanction for its failure to give a formal notice and conduct an investigation as required by
law before dismissing Mallare from employment.
Petitioner must indemnify the dismissed employee which depends on the facts of each
case and the gravity of the omission committed by the employer.
Where the private respondent appears to be of violent temper, caused trouble during
office hours and even defied his supervisors as they tried to pacify him, he should not be
rewarded with re-employment and backwages. The dismissal of the respondent should
be maintained.

Version 2
Wenphil Corporation vs. NLRC
G.R. No. 80587 February 8, 1989
Facts:
• Robert Mallare was hired by Wenphil Corporation as a crew member at its Cubao
Branch and thereafter became the assistant head of the Backroom department of the
same branch.
• Mallare had an altercation with a co-employee, Job Barrameda, as a result of
which he and Barrameda were suspended on the following morning and in the afternoon
of the same day a memorandum was issued by the Operations Manager advising Mallare
of his dismissal from the service in accordance with their Personnel Manual. The notice
of dismissal was served on Mallare.
• Thus Mallare filed a complaint against Wenphil Corporation for unfair labor
practice, illegal suspension and illegal dismissal. After submitting their respective
position papers to the Labor Arbiter and as the hearing could not be conducted due to
repeated absence of counsel for respondent, the case was submitted for resolution.
Thereafter a decision was rendered by the Labor Arbiter dismissing the complaint for
lack of merit.
• Mallare appealed to the National Labor Relations Commission (NLRC) wherein
in due course a decision was rendered setting aside the appealed decision and ordering
the reinstatement of Mallare to his former position without loss of seniority and other
related benefits and one (1) year backwages without qualification and deduction.

Issues:
1. Whether or not Mallare waived his right to investigation? No.
2. Whether or not an employee dismissed for just cause but without due process be
reinstated to work? No.

Held:
1. The defiant attitude of private respondent immediately after the incident amounted to
insubordination. Nevertheless, his refusal to explain his side under the circumstances
cannot be considered as a waiver of his right to an investigation. Although in the
Personnel Manual of the petitioner, it states that an erring employee must request for an
investigation it does not thereby mean that petitioner is thereby relieved of the duty to
conduct an investigation before dismissing private respondent. Indeed the provision of
the Personnel Manual of petitioner which may effectively deprive its employees of the
right to due process is clearly against the law and hence null and void. The security of
tenure of a laborer or employee is enshrined in the Constitution, the Labor Code and
other related laws.

Under Section 1, Rule XIV of the Implementing Regulations of the Labor Code, it is
provided that "No worker shall be dismissed except for just or authorized cause provided
by law and after due process." Sections 2, 5, 6, and 7 of the same rules require that before
an employer may dismiss an employee the latter must be given a written notice stating
the particular act or omission constituting the grounds thereof; that the employee may
answer the allegations within a reasonable period; that the employer shall afford him
ample opportunity to be heard and to defend himself with the assistance of his
representative, if he so desires; and that it is only then that the employer may dismiss the
employee by notifying him of the decision in writing stating clearly the reasons therefor.
Such dismissal is without prejudice to the right of the employee to contest its validity in
the Regional Branch of the NLRC.

2. The failure of petitioner to give private respondent the benefit of a hearing before he
was dismissed constitutes an infringement of his constitutional right to due process of
law and equal protection of the laws. The standards of due process in judicial as well as
administrative proceedings have long been established. In its bare minimum due process
of law simply means giving notice and opportunity to be heard before judgment is
rendered.

However, it is a matter of fact that when the Mallare filed a complaint against petitioner
he was afforded the right to an investigation by the labor arbiter. He presented his
position paper as did the petitioner. If no hearing was had, it was the fault of Mallare as
his counsel failed to appear at the scheduled hearings. The labor arbiter concluded that
the dismissal of private respondent was for just cause. He was found guilty of grave
misconduct and insubordination. This is borne by the sworn statements of witnesses.
The Court is bound by this finding of the labor arbiter.
By the same token, the conclusion of the public respondent NLRC on appeal that private
respondent was not afforded due process before he was dismissed is binding on this
Court. Indeed, it is well taken and supported by the records. However, it can not justify a
ruling that private respondent should be reinstated with back wages as the public
respondent NLRC so decreed. Although belatedly, private respondent was afforded due
process before the labor arbiter wherein the just cause of his dismissal bad been
established. With such finding, it would be arbitrary and unfair to order his
reinstatement with back wages.

Petitioner must nevertheless be held to account for failure to extend to private

respondent his right to an investigation before causing his dismissal. The rule is explicit
as above discussed. The dismissal of an employee must be for just or authorized cause
and after due process. Petitioner committed an infraction of the second requirement.
Thus, it 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.
Considering the circumstances of this case petitioner must indemnify Mallare the
amount of P1,000.00. The measure of this award depends on the facts of each case and
the gravity of the omission committed by the employer.

13. *Serrano vs. NLRC 323 SCRA 445

Version 1

Serrano vs. NLRC / ISETANN - GR No. 117040 Case Digest

FACTS:

 Serrano was a regular employee of Isetann Department Store as the head of

Security Checker.
 In 1991, as a cost-cutting measure, Isetann phased out its entire security section
and engaged the services of an independent security agency. Petitioner filed a
complaint for illegal dismissal among others.
 Labor arbiter ruled in his favor as Isetann failed to establish that it had
retrenched its security section to prevent or minimize losses to its business;
 that private respondent failed to accord due process to petitioner; that private
respondent failed to use reasonable standards in selecting employees whose
employment would be terminated.
 NLRC reversed the decision and ordered petitioner to be given separation pay.

ISSUE:

Whether or not the hiring of an independent security agency by the private respondent
to replace its current security section a valid ground for the dismissal of the employees
classed under the latter.

RULING:

 An employer’s good faith in implementing a redundancy program is not

necessarily put in doubt by the availment of the services of an independent
contractor to replace the services of the terminated employees to promote
economy and efficiency.
  Absent proof that management acted in a malicious or arbitrary manner, the
Court will not interfere with the exercise of judgment by an employer.

 If termination of employment is not for any of the cause provided by law, it is

illegal and the employee should be reinstated and paid back wages. To contend
that even if the termination is for a just cause, the employee concerned should be
reinstated and paid backwages would be to amend Art 279 by adding another
ground for considering dismissal illegal.

 If it is shown that the employee was dismissed for any of the causes mentioned in
Art 282, the in accordance with that article, he should not be reinstated but must
be paid backwages from the time his employment was terminated until it is
determined that the termination of employment is for a just cause because the
failure to hear him before he is dismissed renders the termination without legal
effect.

Version 2

[G.R. No. 117040. January 27, 2000] RUBEN SERRANO, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE,
respondents.
FACTS

 Ruben Serrano was the head of the security checkers section of Isetann
Department Store. He was charged with the task of supervising security checkers
in their jobs (apprehending shoplifters and preventing pilfirege of merchandise).
On October 11, 1991, the management sent him a letter immediately terminating
his services as security section head, effective on the same day. The reason given
by the management was “retrenchment”; they had opted to hire an independent
security agency as a cost-cutting measure. Serrano filed a complaint for ID, illegal
layoff, ULP, underpayment of wages and nonpayment of salary and OT pay with
the LA. The LA rendered a decision in favor of Serrano. It stated that Isetann
failed to establish that it had retrenched its security division, that the petitioner
was not accorded due process, etc. and even stated that the day after Serrano’s
dismissal, Isetann employed a safety and security supervisor with similar duties
to that of the former. The NLRC on the other hand reversed the LA but ordered
Isetann to pay separation pay equivalent to one month per year of service, unpaid
salary, et al. It held that the phase-out of the security section was a valid exercise
of management prerogative on the part of Isetann, for which the NLRC cannot
substitute its judgment in the absence of bad faith or abuse of discretion on the
part of the latter; and that the security and safety supervisor’s position was long
in place prior to Serrano’s separation from the company, or the phase-out of the
Security Section.
ISSUE Whether the petitioner’s dismissal was illegal.

RULING: Valid, but ineffectual (without legal effect) – payment of backwages,

separation pay and other monetary claims No. The Court held that the dismissal was due
to an authorized cause under Art. 283 of the Labor Code, i.e. redundancy. However,
while an authorized cause exists, Isetann failed to follow the procedural requirement
provided by Art. 283 of LC. For termination due to authorized causes, the employer must
give a written notice of termination to the employee concerned and to the DOLE at least
30 days prior to its effectivity. This Isetann failed to do. The question now arises as to
whether the failure of Isetann to comply with the procedural requirements renders the
dismissal invalid, or, in the event that it is valid, what the appropriate sanction or
penalty must be meted out. Prior to the doctrine laid down in the decision rendered in
Wenphil Corp. NLRC in 1989, the termination of an employee, even for just cause but
without following the requisite procedure, renders such dismissal illegal, and therefore
null and void. In the Wenphil doctrine, this was reversed; the said rule was unjust to
employers. Instead, the dismissal was held to be still valid but the employer was
sanctioned by way of the payment of indemnity (damages) – in that case, P1,000. The
amount of indemnity will be depended on the circumstances of each case, taking into
account the gravity of the offense committed by the employer. Now, the Court once again
examines the Wenphil doctrine. Puno says that the effect of the Wenphil doctrine was
such that there has been a “dismiss now, pay later” policy where the employers were able
to circumvent the procedural requisites of termination, which is more convenient than
the compliance with the 30-day notice. Panganiban said that the monetary sanctions
were too insignificant, niggardly, sometimes even late. Both justices are of the opinion
that the deprivation of due process which must be accorded to the employee renders the
dismissal illegal. Puno quoted that Legislative, Executive and Judicial proceedings that
deny due process do so under the pain of nullity. Panganiban stated that such denial of
due process renders decisions and proceedings void for lack of jurisdiction. The present
ruling of the Court held that the dismissal of the employee is merely ineffectual, not void.
The dismissal was upheld but it is ineffectual.

The sanction provided was the payment of backwages from the time of dismissal up to
the decision of the court finding just or authorized cause. This was thought to balance
the interests of both parties, recognizing the employee’s right to notice and at the same
time the right of the employer to dismiss for any of the just and authorized causes. The
Court also responded to the arguments of Justices Puno and Panganiban by stating that
the violation in the procedural requirement of termination is not a denial of the
fundamental right to due process. This is because of the ff reasons: 1) The due process
clause is a limitation on governmental powers, inapplicable to the exercise of private
power, such as in this case. The provision “No person shall be deprived of life, liberty and
property without due process of law” pertains only to the State, as only it has the
authority to do the same. 2) The purpose of the notice and hearing under the Due
process clause is to provide an opportunity for the employee to be heard before the
power of the organized society is brought upon the individual. Under Art. 283, however,
the purpose is to give him time to prepare for the eventual loss of his job and for DOLE
to determine whether economic causes exist to justify termination. It is not to give
opportunity to be heard – there is no charge against the employee under Art. 283 3) The
employer cannot be expected to be an impartial judge of his own cause. 4) Not all notice
requirements are requisites of due process. Some are simply a part of a procedure to be
followed before a right granted to party can be exercised; others are an application of the
Justinian precept. Such is the case here. The failure of the employer to observe a
procedure for the termination of employment which makes the termination of
employment merely ineffectual. 5) Art. 279 of the LC provides that only dismissal
without just or authorized cause renders such dismissal illegal. To consider termination
without observing procedural reqt’s as also ID is to add another ground for ID, thereby
amending Art. 279.; Further, there is a disparity in legal treatment, as employees who
resign without giving due notice are only liable for damages; it does not make their
resignation void. In this case, the separation pay was a distinct award from the payment
of backwages as a way of penalty. Petition was denied.

14. ***BLTB co. vs CA 71 SCRA 470

163 Phil. 494

MARTIN, J.:

The issue in this petition is whether an employee who has already received his separation
pay can still recover retirement benefits from his employer.
Private respondent was first employed as a bus conductor by the Batangas Laguna
Tayabas Bus Company, the herein petitioner, on July 1, 1933 and worked with it until
December 31, 1941 when it ceased operation in its transportation business due to the
outbreak of World War II. When the petitioner resumed its business after the war, the
private respondent rejoined the company on May 22, 1945. From a mere bus conductor,
the private respondent rose to the position of administrative officer of the petitioner with
a basic salary of P1,000.00 a month. His total length of service was for 30 years, 9
months and 17 days which under Republic Act No. 1787 amounts to 31 years. Sometime
in the month of September, 1967, the private respondent drew two cash advances or
"vales" of P100.00 each or a total of P200.00 from the company's station at Infanta,
Quezon where he was then on vacation without the prior approval of the petitioner, in
violation of a memorandum restricting cash advances of confidential employees to
P100.00 each payroll period. Due to this infraction, the services of private respondent
were terminated in a Special Order issued by the petitioner's Acting General Manager
effective September 9, 1967. As a result of his dismissal, the private respondent was
constrained to file a complaint before the Court of First Instance of Laguna (Branch III)
against the petitioner to recover the sums of P19,987.56 as separation pay; P17,050.00 as
retirement benefits; P35,018.53 as "would-be earnings" had he not been separated and
reached the compulsory retirement age; P13,720.50 for loss of Social Security benefits;
P200,000.00 as moral damages; P100,000.00 as exemplary damages; P10,000.00 for
attorney's fees and P2,000.00 as expenses for litigation.

In answer, the petitioner denies the claim of private respondent that he was
unceremoniously and without any valid cause or investigation summarily dismissed
from the service by its Acting Manager. According to the petitioner, the private
respondent's act of obtaining from the company's dispatcher in Infanta, Quezon, two
cash advances or "vales" in the total amount of P200.00 without the previous approval of
the petitioner, was a violation of the company's memorandum restricting cash advances
of confidential employees to P100.00 each payroll period, and constituted an abuse of
trust and confidence reposed upon him. Petitioner belies the charge of the private
respondent that his dismissal was arbitrary as he was fully aware of the strict policy of
the company restricting the cash advances or "vales" of its confidential employees and
that he even signed a promissory note that if found to be abusing the same he was willing
to receive severe punishment from the company. However, in spite of his promise the
private respondent still obtained cash advances for the payroll period ending May 31,
1967 (Exhibit D-18, and June 5, 1967 (Exhibit D-19) in excess of P100.00 limit allowed
for each payroll period without the approval of the petitioner. Then again on September 1
and 6, 1967 despite his promissory note the private respondent drew the unauthorized
cash advances of P200.00 in violation of the existing memorandum of the company.

After trial, the Court of First Instance of Laguna (Branch III) found that the dismissal of
the private respondent was for just cause and that he was therefore not entitled to
separation pay and that since it has not been shown that the petitioner had violated the
law or contract or had committed any act of quasi-delict, said court also ruled that the
private respondent has no cause of action against the petitioner for unearned income,
Social Security benefits and damages. However, it ordered the petitioner to pay the
private respondent the sum of P17,050.00 as his retirement pay with interest thereon at
the legal rate from filing of the case until fully paid, plus attorney's fees of P2,000.00 and
the cost of the suit and dismissed all other claims of the private respondent.

From said decision, both the petitioner and the private respondent appealed to the Court
of Appeals, with the private respondent pressing upon the following errors:

1. That the lower court erred in not holding that plaintiff-appellant's dismissal was
unlawful and/or arbitrary.
2. That the lower court erred in dismissing all of plaintiff-appellant's claim with the
exception of retirement pay.

and with petitioner alleging the following errors:

1. That while the lower court correctly found that the dismissal of plaintiff was for just
cause, nevertheless the lower court erred in directing defendant to pay P17,050.00 as
retirement benefits to the plaintiff, with interest thereon at the legal rate from the date of
filing of the case until fully paid, plus attorney's fees and the costs of the suit.

2. That the lower court erred in failing to order plaintiff to pay his indebtedness to
defendant in the sum of P13,087.86 with legal interest thereon from the date of demand,
as embodied in the Special Order dated September 9, 1967, as well as to pay a reasonable
sum as attorney's fees and the costs.

3. That the lower court erred in not rendering judgment for the defendant in all respects
and in not completely absolving defendant from all liability.

On February 28, 1974, the Court of Appeals thru a Special Division of Five Justices
modified the decision of the trial court by ordering the petitioner to pay the private
respondent, in addition to the retirement benefit of P17,050.00 with interest thereon at
the legal rate from the date of the filing of this case until fully paid, plus attorney's fees of
P2,000.00, the sum of P19,987.56 as separation pay, also with legal interest from the
date of the filing of the complaint until fully paid minus the indebtedness of private
respondent in the amount of P13,087.86 with legal interest from September 9, 1967 until
paid with costs against the petitioner. Justice Ameurfina Melencio-Herrera of the
respondent Court of Appeals, however, dissented from the majority opinion. A motion
for reconsideration of the decision was denied.

Hence this instant petition to review on certiorari the decision of the respondent Court.

There is no dispute that at the time of his dismissal on September 9, 1967, private
respondent had an outstanding account of P13,087.86 with the petitioner. Due to the
abuse of the "vale" privilege, specially by the confidential employees, the petitioner
issued on July 21, 1965, a Memorandum (Exhibit 26) prohibiting the employees from
drawing cash advances in excess of P100.00 every payroll period. Then on May 25, 1967,
the Finance Manager of the petitioner issued a Circular in the following tenor:
"To all Employees Concerned:

In view of the increase on the payroll shortages, the Management is planning to transfer
your payroll shortage to Due from Officer & Employees, provided that you sign the
promissory note below that you will not get short again.

Remember, this will definitely be the last time.

(Sgd.) R.Z. NAVARRO

Finance Officer"

At the bottom of one of the copies of the Circular, the private respondent signed a
promissory note (Exhibit I) which reads:
"Promissory Note

I promise that from now on, I will never abuse my vale privilege should I be found
abusing my vale privilege and get short again, the Management will have the right to
impose severe disciplinary action against me.
(Sgd.) TEOTIMO DE MESA
(Signature of Employee P/R-)"

In total disregard of the foregoing promissory note, the private respondent again
obtained cash advances for the payroll period ending May 31, 1967 (Exhibit D-18, and
June 15, 1967, (Exhibit D-19), without the approval of the management, thus exceeding
the limit allowed in the petitioner's memorandum of July 21, 1965 (Exhibit 26). As the
abuse of the "vale" privilege remained unabated, the company issued again another
memorandum on June 2, 1967 limiting the cash advances of confidential employees to
P100.00 for every payroll period, any excess of which shall be approved by the President,
General Manager or Finance Officer (Exhibit 23). Thereafter, came the memorandum of
July 1, 1967 which again restricted the cash advances of confidential employees to
P100.00 per payroll period. Despite the last memorandum of July 1, 1967 and his
promissory note on May 25, 1967, the private respondent drew cash advances in the
amount of P200.00 between September 1 and 6, 1967. This precipitated the action of the
petitioner to dismiss the private respondent on September 9, 1967.
The main contention of private respondent is that his dismissal was unlawful and/or
arbitrary because (a) he was not given a hearing on the alleged cause of his dismissal; (b)
the petitioner disregarded his Service Manual and (c) the petitioner violated the
"Schedule of Penalties" (Exhibit K) which had been agreed upon between the petitioner
and its employees. One of the fundamental duties of the employee is to yield obedience
to all reasonable rules, orders and instructions of the employer and willful or intentional
disobedience thereof, as a general rule justifies recission of the contract of service and
the peremptory dismissal of the employee. However, in order to constitute disobedience,
the employee's conduct must have been willful or intentional, willfulness being
characterized by a wrongful and perverse mental attitude rendering the employee's act
inconsistent with proper subordination.[1] The rules, instructions or commands in order
to be a ground for discharge on the score of disobedience, must be reasonable and lawful,
must be known to the employee, and must pertain to the duties which the employees
have been engaged to discharge.[2] There can be no doubt that the private respondent
here has repeatedly abused the "vale" privilege and therefore in this respect can be
considered willful. He cannot claim that he is ignorant of the memoranda and the
circulars limiting the cash advances of employees to not more than P100.00 each payroll
period. But the rules, instructions or commands limiting the cash advances of
confidential employees, do not pertain to the duties which the petitioner has been
engaged to discharge. Said rules, instructions or commands are primarily intended for
the benefit of the company itself and have nothing to do with the duties of its employees
and therefore cannot be a valid ground for their discharge on the score of disobedience.

But, even granting that a willful disobedience of said rules, instructions or commands
limiting the cash advances of the employees is a valid cause for his discharge, yet his
dismissal was arbitrary because he was not given a hearing on the alleged cause of his
dismissal in total disregard of the Service Manual of 1962 of the joint management of the
Laguna Tayabas Company and Batangas Transportation Company (Exhibit I) which
among others provides:

"2. In all cases where punishment of any sort is imposed, the penalty shall be
commensurate with the nature and gravity of the offenses charged, taking into
consideration the varying circumstances surrounding each particular case; the offender
shall, however, be given the benefit of all doubts that may exist as to his responsibility for
the offense charged.

"3. No employee shall be summarily punished for any offense or dereliction alleged to
have been committed without having been given an opportunity to be heard and defend
himself. Unless otherwise decided by the Management, the Legal Department is
designated to investigate all complaints against employees and to take such statement or
hear such defenses as the erring employee may wish to make. Upon termination of the
investigation, The Legal Department will submit its findings to the Management for
decision. No penalty involving a fine, suspension or dismissal will take effect until finally
approved by the General Manager. (Chapter X, pars. 2 and 3, Exh. I-1; Italics supplied.)"

They also violate the following Table of Penalties (Exhibit K):

OFFENSES: 1st: 2nd: 3rd: 4th: 5th: 6th:

xxxx
Abusing Vale Privilege : Warn : Warn : Disc : Disc : Disc :

7th : 8th : 9th : 10th : MAX :

Disc : Disc : Disc : Disc : Disc :
(Exhibit K1)
It is explicitly provided in the Service Manual of 1962 that the petitioner cannot
summarily be punished for any offense or dereliction alleged to have been committed
without having been given an opportunity to be heard and defend himself. The records
do not show that private respondent was ever given any hearing for the alleged violation
of the memorandum of July 1, 1967. He was not given a chance to give his side. Besides
the memorandum of petitioner of July 1, 1967 is inconsistent with the Table of Penalties
which fixes the penalty for violation of the "vale" privilege as indicated in the above table.
The table does not provide for dismissal. It simply mentions warning for the first and
second offense and discipline for the third, fourth, fifth, sixth offense, etc. The word
"discipline" is by itself vague. It is doubtful if it includes outright dismissal and in case of
such doubt, the doubt should be resolved in favor of the employee. Besides, the
memorandum allegedly violated by the private respondent cannot prevail over the Table
of Penalties which is the result of the mutual agreement of the petitioner and its
employees, unlike the memorandum which is only prepared by the petitioner. The fact
that the private respondent obtained two cash advances in the total amount of P200.00
without previous approval of the petitioner does not warrant his summary dismissal
considering his length of service and considering further the fact that had he not been
dismissed summarily, the salary which he expected to receive for the quincena of
September 1967 would be more than enough to cover the advance of P200.00 to private
respondent. Likewise in Article X of the Labor Agreement entered into by and between
the petitioner and the Batangas Transportation Company Employees Association of
Batangas on August 27, 1967 which also appears in the Labor Agreement entered into by
the petitioner with its Laguna side employees in its Article X thereof, it is so provided
that:
"1. Considering the nature of the business of the COMPANY and its obligations to the
public, the right to discipline an employees is hereby vested solely in the COMPANY.
The management, operation of the business and the supervision of the working forces
and also hereby vested exclusively in the COMPANY, including but not limited to, the
right to hire, suspend, lay off, transfer, promote, demote, reprimand, fine, or discharged
an employee for lack of work or other just cause. It is understood that no employee shall
be suspendedor discharged from the service without cause and without proper hearing
and investigation: PROVIDED HOWEVER, that the parties hereto recognize as
sufficient for this purpose the current practice and procedure of the COMPANY with
respect to hearing and investigation of erring employees: PROVIDED, HOWEVER, that
in case of grave offenses the penalty for which is vested in the discretion of the
management, the employee may be allowed to be confronted with the witnesses against
him. Any employee not satisfied with the action taken against him after said
investigation shall have the right to appeal, by himself directly or through the President
of the ASSOCIATION, to the President of the COMPANY or his authorized
representative. The decision rendered in such appeal shall be respected by the
ASSOCIATION and the employees concerned; HOWEVER, the ASSOCIATION and/or
the employees are not precluded from resorting to the mediation procedure hereinafter
provided or from bringing the case to the proper agency of the Government if they are
not satisfied with the decision. (Italics supplied.)'

Obviously under the foregoing provisions of the Labor Agreement, the petitioner cannot
arbitrarily and summarily dismiss the private respondent for alleged violation of the
memorandum of July 1, 1967 and of his promissory note dated May 25, 1967 without
giving him the opportunity to be heard and defend himself. Having promulgated the
Service Manual itself, the petitioner is bound by its provisions. So with the labor
agreement it had signed with the Batangas Transportation Employees Association of
which private respondent is a member. It must be noted that the terms and conditions of
a collective bargaining contract constitute the law between the parties.[3] Those who are
entitled to its benefits can invoke its provisions. In the event that an obligation
prescribed therein is not fulfilled, the aggrieved party can go to court for redress.[4]
Undoubtedly, the act of the petitioner in dismissing private respondent without the
benefit of a hearing is in violation of the Service Manual of the petitioner and the Labor
Agreement it has with its employees. Besides, the failure of petitioner to give the private
respondent the benefit of a hearing before he was dismissed constitutes an infringement
on his constitutional right to due process of law and not to be denied the equal protection
of the laws.[5] The right of a person to his labor is deemed to be his property within the
meaning of the constitutional guarantee. This is his means of livelihood. He cannot be
deprived of his labor or work without due process of law.[6] Since the right of private
respondent to his labor is in itself a property and that the labor agreement between him
and petitioner is the law between the parties, his summary and arbitrary dismissal
amounted to a deprivation of his property without due process. For such unlawful
dismissal, the private respondent is entitled to separation pay. Section 1, Republic Act
No. 1052, as amended by Republic Act No. 1787, provides:
"SEC. 1. In cases of employment without a definite period, in a commercial, industrial, or
agricultural establishment or enterprise, the employer or the employee may terminate at
any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or in
the case of an employer, by serving such notice to the employee at least one month in
advance or one-half month for every year of notice of the employee, whichever is longer,
a fraction of at least six months being considered as one whole year.

The employer, upon whom no such notice was served in case of termination of
employment without just cause may hold the employee liable for damages.

The employee, upon whom no such notice was served in case of termination of
employment without just cause shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice. (Italics supplied.)"

Pursuant to the foregoing provision, since private respondent was dismissed without
cause, he is entitled to compensation from the date of termination of his employment
equivalent to his wages or salaries corresponding to the required period of notice. Private
respondent worked with the petitioner from July 1, 1933 up to December 31, 1941,
covering a period of 8 years and 6 months and then after the war he re-entered the
service of petitioner on May 22, 1945 until he was separated on September 9, 1967 or a
period of 22 years 8 months and 21 days. His total length of service is 30 years, 9 months
and 17 days which under Republic Act No. 1787 is equivalent to 31 years and his basic
salary was P1,000.00 a month. Since his dismissal was without cause he is entitled under
the law to one half (1/2) month salary for every year of service, so for 31 years of service
he is entitled to 15-1/2 months salary or the amount of P19,957.56 as his separation pay
with legal interest from the filing of the complaint until fully paid.

After finding private respondent's dismissal from the service to be without cause and
arbitrary and upholding his right to separation pay, is he also entitled to retirement
benefits pursuant to the Labor Agreement entered by petitioner with its employees under
Section 5, Article XVI thereof which reads:

"A member or his designated beneficiary shall be entitled to receive the benefits
established under this Plan should he retire or is separated from the COMPANY for any
cause provided for in Section 4. The benefits which a member or his beneficiary is
entitled to receive shall be paid by the COMPANY in lump sum within a period of thirty
(30) days, if possible, but in no case beyond sixty (60) days, from the date of accrual. * *
*"
One of the grounds for retirement provided for in Section 4(b) is "upon attainment of his
optional retirement." And according to Section 1, paragraph (g), Article XVI, of the Labor
Agreement "by optional retirement is meant retirement of an employee after his 8 years
in the service at which date an employee may elect to retire subject to conditions herein
below established." Considering that private respondent has already served the
petitioner 31 years he has more than reached the optional retirement age under the
agreement. According to his Certificate of Baptism, private respondent (Exh. C) was born
on December 9, 1909 so that when his services were terminated on September 9, 1967,
he was exactly 58 years, 9 months and 10 days old. Under Section 6, Article XVI of the
same Labor Agreement, "an employee shall receive one-half (1/2) month's salary for
every year of service as defined in Sections 1(a) and 2(a) above, and, therefore, the same
excludes overtime pay, bonuses and other supplements from the time an employee
entered the service up to his retirement or separation from the service of the company."
And under Section 7, thereof, "an employee who has rendered at least eight (8) years of
continuous service may, at its option, retire and enjoy the benefits prescribed in the Plan:
* * *."

But petitioner contends that private respondent can only avail himself of either
separation pay or retirement benefits but not both, citing in support thereof, the ruling of
this Court in the case of Cipriano vs. San Miguel Corporation.[7] The foregoing ruling
cannot be made to apply to the present suit because in said case it is so expressly
provided in the Labor Agreement that:

"Regular employees who are separated from the service of the company for any reason
other than misconduct or voluntary resignation shall be entitled to either 100% of the
benefits provided in Section 2, Article VIII hereof regardless of their length of service in
the company or to the severance pay provided by law, whichever is the greater amount."

Thus in said case the employee was entitled to either the amount prescribed in the plan
or the severance pay provided by law whichever is the greater amount. In the present
case, there is nothing in the labor agreement entered into by petitioner with the Batangas
Transportation Employees Association of which private respondent is a member barring
the latter from recovering whatever benefits he is entitled to under the law in addition to
the gratuity benefits under the labor agreement between him and his employer. Neither
is there any provision in the Termination Pay Law (Republic Act No 1052, as amended by
Republic Act No. 1787) that an employee who receives his termination pay upon
separation from the service without cause is precluded from recovering any other
benefits agreed upon by him and his employer. In the absence of any such prohibition,
both in the aforesaid Labor Agreement and the Termination Pay Law the private
respondent has the right to recover from the petitioner whatever benefits he is entitled to
under the Termination Pay Law in addition to other benefits conferred upon him by the
aforesaid labor agreement.

WHEREFORE, the instant petition is hereby dismissed with costs against the petitioner.
SO ORDERED.

15. *Asian Alchohol vs NLRC GR No. 131108 3/25/1999

Asian Alcohol v NLRC

GR 131108 March 25, 1999

FACTS

 The Parsons family who owned controlling stocks in Asian Alcohol

Corporation suffered major business losses prompting it to sell the
corporation to Prior Holding which took over its management and operation.

 Prior Holding implemented re-organizational plan and other cost-saving

measures for the company.

 As a result 117 employees were separated. Of

72 of them occupied redundant positions,

21 were held by union members and
51 by non-union members.

 private respondents were members of the union whose positions were

abolished due to redundancy. Private respondents Carias, Martines, and
Sendon were water pump tenders, Amacio was a machine shop mechanic,
Verayo was plant operator while Tormo was a plant helper under him.

• They received individual notices of termination; were paid the equivalent of

one month salary for every year of service as separation pay. The money value
of their unused sick vacation, emergency, and seniority leave credits, 13th
month pay, medicine allowance, tax refunds and good will cash bonuses for
those with at least 10 years of service. All of them executed sworn releases,
waivers and quitclaims.

• Private respondents filed with the NLRC complaints for illegal dismissal with
a prayer for reinstatement and backwages. Moral damages and attorney’s
fees.
• They alleged that Asian Alcohol used the retrenchment to dismiss them
because they were members of the union. They also alleged that Asian Alcohol
was not bankrupt as it has engaged in aggressive scheme in contractual
hiring.

• Labor Arbiter: Dismissed the complaint. The dismissal of the respondents on

the ground of redundancy/retrenchment is valid or legal. The fact that the
Asian Alcohol incurred losses in its business operations was not seriously
challenged by the complainants. The facts of business losses incurred in its
business operations prior to the implementation of the retrenchment
program was sufficiently supported by documents indicating a deficit of 26,
117,889.

• NLRC: Reversed. Illegal dismissal. The positions of the respondents were not
redundant because casuals replaced them. The company was not in the state
of reverses at the time of retrenchment.

ISSUE

Whether or not there is a valid retrenchment thus making the dismissal of private
respondents illegal.

RULING:

• There was a valid dismissal.

• The right of management to dismiss workers during periods of business

recession and to install labor saving devices to prevent losses is governed by Art.
283 (Please see Art 283 of Labor Code)

• Under the said provision, retrenchment and redundancy are just cause for
the employer to terminate the services to preserve the viability of the business. In
exercising its right, however management must faithfully comply with the
substantive and procedural requirements laid down by law and jurisprudence.

• The requirements for a valid retrenchment which must be proved by clear

and convincing evidence are
1) the retrenchment is reasonably necessary and likely to prevent
business loses which, if already incurred are not merely diminish
but substantial, serious, actua l and real or if only expected are
reasonably imminent as perceived objectively in good faith by the
employer
2) that the employer served written notice both the employees and to
the DOLE 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
5) that the employers used fair and reasonable criteria in ascertaining
who would be retained among the employees.

• An important requirement would also to state the condition of the

business losses. This is normally shown by audited financial documents like
yearly balance sheets and profit and loss statements as well as annual income tax
return.

• In the case at bar, private respondents never contested the veracity of the
audited financial documents proferred by Asian Alcohol before the LA.
Documents show that the petitioner has an accumulated losses amounting to
306, 764, 349

• In rejecting the petitioner’s claim the NLRC stated that the alleged deficits
of the corporation did not prove anything for the petitioner since they were
incurred before the take over of Prior Holdings. Under Art 283 of the Labor Code,
retrenchment to prevent losesse means that retrenchment must be undertaken by
the employer before loses are actually sustained. The employer need not keep his
employees until after loses shall materialize.

• The law gives the new management every right to undertake measures to
save the company from bankruptcy. In this case, when Prior Land bought the
corporation and took over the management of it there were no signs that the loses
would end, hence Prior land undertook re-organizational plan which retrenched
number of employees because ultimately they will absorb all the loses that the
prior corporation incurred.

• In the issue of redundancy, when the service capability of work force is in

excess of what is reasonably needed to meet the demands on the enterprise.
Under this condition the employer has no legal obligation to keep in its payroll
more employees than necessary for the operation of its business. For the
implementation of redundancy program to be valid it must (1) written notice
served on both the employees and the DOLE (2) payment of separation pay at
least one month pay for every year of service, whichever is higher, (3) good faith
in abolishing the redundant positions and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly
abolished.

• In this case, when the company made introduction of the services of an

independent contractor it was justified when the latter is undertaken in order to
effectuate more economic and sufficient methods of production. Respondent
 failed to prove that company acted in malicious or arbitrary manner to operate
the Laura wells.

16. *Pesri vs Paramio GR No. 144786 4/15/2004

Respondents Paramio, Navarra, Sarmiento, Guillermo, Bautista and Curameng

applied for employment in Taiwan with Phil Employ Services and Resource
(PSRI), a domestic corp engaged in the recruitment and deployment of OFWs.
They paid 19000 each as placement fee and then they executed a one-year
contract employment with employer Taiwan Kuan Yuan Fiber with a monthly
salary of NTS$15,360.
They were deployed but upon their arrival, they discovered that their quarters
had no beddings, pillows and blankets. There was also a mandatory imposition of
overtime work exceeding 10 hrs without just overtime compensation, and there
were irregular deductions amounting to 400 NT for littering violation of only one
employee.
They brought their problems to the attention of the management. However, the
manager of PSRI cautioned them not to air their complaints and just forget about
their plans. Disappointed, they contacted OWWA but their requests were not
favorably acted upon.
Respondent Navarra was repatriated without being informed of the cause, and
worse, he was escorted by the police to the airport. The other respondents
decided to go home, however, they were informed that they should pay to their
employer NT$30k, otherwise they cannot go home. They failed to pay.
Then the management gave them two options, imprisonment or signing separate
agreement authorizing the employer to deduct the 30k from their salaries and
another 10k as bond. However, they were still not repatriated. Conditions in the
workplace worsened.
Respondent Paramio got ill as a result of the employer’s failure to give breakfast
and dinner the night before but he was still ordered to go to work. He was made
to carry a container weighing 30kg. Due to his condition, the container slipped
from his hands and he injured his thumb.
The employer told him to return to the Philippines, then the Taiwanese Labor
Dept intervened and told them that employer had no right to repatriate him as
the injury happened at the workplace.
When Paramio reported for work, after recuperating from may 14 to june 30, he
was given the second hardest job and then later, he was assigned to the hardest,
carry 200m of maong. There was also a deduction in his salary. As to the other
respondents, they could no longer bear the worsening working conditions. they
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. All of them were
repatriated but they paid for their own plane ticket.
 When they returned, the six respondents filed complaints before NLRC for illegal
dismissal, refund of placement fees and plane fares and litigation expenses.
The respondents argued that under Section 10, Republic Act No. 8042, otherwise
known as the Migrant Workers and Overseas Filipinos Act of 1995, PSRI was
solidarily liable with Kuan Yuan for their claims. Since they were repatriated
prior to the expiration of their respective contracts for no valid reason, PSRI was
liable to pay their salaries for the unexpired portion of their contracts.
The petitioner denied any liability on the respondents’ claims and asserted that
the latter were validly dismissed. It averred that since complainant Paramio
could no longer do his job because of his thumb injury, the termination of his
contract was valid, and his dismissal proper.
Anent respondent Navarra’s claim, the petitioner PSRI ratiocinated that the
termination of his services was for a valid cause because of an altercation he had
with his supervisor.
As for the claims of the other respondents, the petitioner alleged that the
respondents Guillermo, Bautista and Curameng, Jr. voluntarily resigned.
On October 29, 1998, Labor Arbiter Felipe P. Pati rendered a decision declaring
that the dismissal of the respondents was illegal and awarded the salaries due
them for the unexpired portion of their contracts, as well as the refund of their
plane fare. NLRC reversed. CA reinstated the decision of Labor Arbiter however it
reduced the award of refund of placement fee from 75k to 19k.
ISSUE: WON the respondents were illegally dismissed.
RULING:
 We rule that the respondents’ dismissal was not based on just, valid and legal
grounds. Preliminarily, it bears stressing that the respondents who filed
complaints for illegal dismissal against the petitioner were overseas Filipino
workers whose employment contracts were approved by the Philippine and
Overseas Employment Administration (POEA) and were entered into and
perfected here in the Philippines. As such, the rule lex loci contractus (the law of
the place where the contract is made) governs. Therefore, the Labor Code, its
implementing rules and regulations, and other laws affecting labor, apply in this
case.
 In order to effect a valid dismissal of an employee, the law requires that there be
just and valid cause as provided in Article 282 and that the employee was
afforded an opportunity to be heard and to defend himself. Applying the law and
the rule, the employer is burdened to prove that the employee was suffering from
a disease which prevented his continued employment, or that the employee’s
wound prevented his continued employment.
 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. Respondent Paramio was not, for a time, able to perform the backbreaking
tasks required by his manager. However, despite his injury, he managed to
perform the other tasks assigned to him.
  The claim of petitioner that respondent Navarra shouted invectives against his
supervisor was, likewise, unsubstantiated. The petitioner did not even present an
affidavit of the superior with whom the respondent reportedly fought.
 As to the other respondents, the petitioner alleges that they refused to go to work
and, in fact, voluntarily resigned. We do not agree. The records reveal that the
three respondents agreed to execute the foregoing because they could no longer
bear the working conditions in their place of employment. there can be no other
conclusion than that the aforementioned respondents were illegally dismissed,
and their employment contract illegally terminated.
 Under Section 10, paragraph 5 of Rep. Act No. 8042, respondents Sarmiento,
Bautista, Curameng and Guillermo are entitled to the full reimbursement of their
placement fees. Since each of the respondents remitted only P19,000 to the
petitioner, each of them is entitled to P19,000, plus 12% interest per annum.
According to Section 10, paragraph 2 of Rep. Act No. 8042, the agency which
deployed the employees whose employment contract were adjudged illegally
terminated, shall be jointly and solidarily liable with the principal for the money
claims awarded to the aforesaid employees. Consequently, the petitioner, as the
agency of the respondents, is solidarily liable with its principal Kuan Yuan for the
payment of the salaries due to the respondents corresponding to the unexpired
portion of their contract, as well as the reimbursement of their placement fees.
 PETITION OF PSRI DENIED. PAY RESPONDENTS THEIR RESPECTIVE
SALARIES CORRESPONDING TO THE UNEXPIRED PORTION OF
RESPECTIVE CONTRACTS. 4,300 FOR EXPENSE INCURRED AND RETURN
PLACEMENT FEE.

17. ***Uniwide Sales va NLRC 547 SCRA 220

18. ***Callanta vs NLRC GR No. 105083 8/20/1993

19. *PNOC-EDC vs NLRC Gr no. 100947 5/31/1993

PNOC-EDC v NLRC
Facts:

Danilo Mercado, an employee of the Philippine National Oil Company- Energy

Development Corporation, was dismissed on the grounds of serious acts of dishonesty
and violation of company rules and regulations allegedly committed as follows:

1. Withdrew P1680.00 from company funds, appropriated P680.00 for personal use and
paid the nipa supplier P1000.00.
2. Withdrew P28.66 as payment for the fabrication of rubber stamp but appropriated the
P8.66 for personal use.
3. Absence without leave and without proper turn-over thus disrupting and delaying
company work activities.
4. Vacation leave without prior leave.

Mercado filed a complaint against PNOC-EDC before the NLRC Regional Arbitration
Branch. After considerations of position papers presented by both parties, the labor
arbiter ruled in favour of Mercado.

Issues:

1. Whether or not matters of employment of PNOC-EDC is within the jurisdiction of the

labor arbiter and the NLRC.

2. Whether or not the labor arbiter and the NLRC are justified in ordering the
reinstatement of the private respondent, payment of his savings, 13th month pay, and
payment of damages as well as attorney’s fees.

Held:

The High Court affirmed the resolution of the respondent NLRC with modification:
reducing moral damages to P10000 and exemplary damages to P5000.
1. The test whether a government-owned or controlled corporation is subject to Civil
Service Law is the manner of its creation. Those created by special charter are subject to
its provision while those created under General Corporation Law are not within its
coverage. The PNOC-EDC, having been incorporated under General Corporation Law, is
subject to the provisions of the Labor Law.

2. PNOC-EDC’s accusations are not supported by evidence. Loss of trust or breach of

confidence is a valid ground for dismissing an employee, but such loss or breach must
have some basis.

PNOC-Energy Development Corp. v. NLRC

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

FACTS: Manuel S. Pineda was employed with the Philippine National Oil Co. - Energy
Development Corp. (PNOC-EDC) from September 17, 1981, when he was hired as clerk,
to January 26, 1989, when his employment was terminated. In November, 1987, while
holding the position of Geothermal Construction Secretary, Engineering and
Construction Department at Tongonan Geothermal Project, Ormoc City. Pineda decided
to run for councilor of the Municipality of Kananga, Leyte, in the local elections
scheduled in January, 1988, and filed the corresponding certificate of candidacy for the
position. Thereafter, Pineda won the election and was thus proclaimed. Despite so
qualifying as councilor, and assuming his duties as such, he continued working for
PNOC-EDC. Legal Department of PNOC rendered an opinion to the effect that Manuel S.
Pineda should be considered ipso facto resigned upon the filing of his Certificate of
Candidacy in November, 1987, in accordance with Section 66 of the Omnibus Election
Code.

ISSUE: Whether or not an employee in a government-owned or controlled corporations

without an original charter (and therefore not covered by Civil Service Law) nevertheless
falls within the scope of Section 66 of the Omnibus Election Code.

RULING: When the Congress of the Philippines reviewed the Omnibus Election Code of
1985, Congress made no effort to distinguish between two classes of government-owned
or controlled corporations or their employees in the Omnibus Election Code or
subsequent related statutes, particularly as regards the rule that an any employee "in
government-owned or controlled corporations, shall be considered ipso facto resigned
from his office upon the filing of his certificate of candidacy." What all this imports is
that Section 66 of the Omnibus Election Code applies to officers and employees in
government-owned or controlled corporations, even those organized under the general
laws on incorporation and therefore not having an original or legislative charter, and
even if they do not fall under the Civil Service Law but under the Labor Code. In other
words, Section 66 constitutes just cause for termination of employment in addition to
those set forth in the Labor Code, as amended.||

20.*Aurelio vs NLRC 221 SCRA 432

AURELIO VS. NLRC ET AL DIGEST

DECEMBER 19, 2016 ~ VBDIAZ
JEAN C. AURELIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
NORTHWESTERN COLLEGE, BEN A. NICOLAS, ERNESTO B. ASUNCION, JOFFREY
AURELIO, JOSE G. CASTRO, FRANCISCO SANTELLA, ALBA B. CADAY, LILIA PAZ,
WILFRED A. NICOLAS, GLENN AQUINO, LUCIDIA RUIZ-FLOREZ, respondents., 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 backwages, 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:

whether NWC can validly terminate the administrative position held by petitioner.
Whether NWC observed due process in dismissing petitioner.

RULING:

 YES. As found by the NLR, Petitioner was a managerial employee who has to
have the complete trust and confidence of respondents. While it may be true that
complainant was not strictly an accountable employee primarily responsible for
 disbursement of whatever funds, respondents had some basis in losing its trust
and confidence in complainant.
 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.
 Petitioner’s claim of constructive dismissal stems from her alleged removal from
the positions of Administrator, Vice President for Administration and Executive
Vice President. 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 acquisition of security of tenure by the teacher signifies that he/she shall
thenceforth have the right to remain in employment as such teacher until he
reaches the compulsory retirement age in accordance with the rules of the school
or the law. That tenure, once acquired, cannot be adversely affected or defeated
by requiring the teacher to execute contracts stipulating the termination of
his/her employment upon the expiration of a fixed period or term. Contracts of
that sort are anathema and will be struck down as null and void.

 Now, a teacher may also be appointed as a department head or administrative

officer of the school, e.g., as member of the school’s governing council, as college
dean or assistant dean, as high school principal, as college secretary. Except in
the case of a clear and explicit agreement to the contrary, the acceptance by a
teacher of an administrative position offered to him or to which he might have
aspired, does not operate as a relinquishment or loss by him of his security of
tenure as a faculty member; he retains his tenure as a teacher during all the time
that he occupies the additional position of department head or administrative
officer of the school.

 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. There is nothing wrong in said practice of having teachers serve as
administrative officials for a fixed term or in a non-permanent capacity.

 A distinction should be drawn between the teaching staff of private educational

institutions, on one hand — teachers, assistant instructors, assistant professors,
 associate professors, full professors — and department or administrative heads or
officials on the other — college or department secretaries, principals, directors,”
assistant, deans, deans. The teaching staff, the faculty members, may and should
acquire tenure in accordance with the rules and regulations of the Department of
Education and Culture and the school’s own rules and standards. On the other
hand, teachers appointed to serve as administrative officials do not normally and
should not expect to, acquire a second or additional tenure. The acquisition of
such an additional tenure is not normal, is the exception rather than the rule, and
should therefore be clearly and specifically provided by law or contract.

 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.

 Petitioner also failed to rebut the findings of the labor arbiter. In the instant
petition, she has again failed to overturn private respondents’ evidence as well as
the findings of the labor arbiter which were affirmed by the NLRC. Petitioner’s
application for an indefinite leave of absence was not approved by the college
authorities, but this notwithstanding, she failed to follow-up her application and
did not report for work. Believing she was dismissed, petitioner filed the
complaint for illegal dismissal, illegal deductions, underpayment, unpaid wages
or commissions and for moral damages and attorney’s fees.

 Employers, generally, are allowed a wider latitude of discretion in terminating

the employment of managerial personnel or those of similar rank performing
functions which by their nature require the employer’s trust and confidence, than
in the case of ordinary rank-and-file employees.

 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. Both the LA NLRC found that there is
some basis for respondent NWC’s loss of trust and confidence on petitioner. The
dismissal of the petitioner was for a just and valid cause

 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:

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

WHEREFORE, the decision under review is hereby AFFIRMED with MODIFICATION.

21. ***San Miguel Brewery vs Santos 2 SCRA 1081

112 Phil. 978

BARRERA, J.:

In a complaint filed in the Court of Industrial Relations by the court prosecutor,

San Miguel Brewery and Col. Jose P. Rueda, its Security Officer, were charged
with unfair labor practices allegedly committed by (1) interfering with,
restraining, and coercing complainant Peter C. Santos, a member of the SMB
Special Police Union, in the exercise of his rights to self-organization; (2)
harassing and discriminating against him by not appointing said complainant to
the position of permanent security guard and by dismissing him instead from the
service, on account of his union activities; and (3) refusing to reinstate or
reappoint complainant notwithstanding the union's recommendation, because he
was instrumental in the filing of charges (by the union) against the Security
Officer, Col. Rueda.

Col. Rueda and San Miguel Brewery, in their answer, denied the charges of
interference or harassment because of union activities, claiming that complainant
was not even a member of the union; that there was no discrimination in his non-
appointment to a permanent position, because it is the Company's prerogative to
determine who may be appointed or not; and that the charges, if at all, were
purely personal to complainant and the Security Officer, and have no bearing on
labor relations between the union and the company.

After due hearing, the court rendered a decision, in part reading as follows:
"The evidence presented by the parties show the following to be undisputed or
duly established: that 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 (Exhibit 'F') and on October 23, 1954, formally became a member thereof
(Exhibit 'H'); that on April 1, 1954 (must be August 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 (Exhibit 'G'); that on September 26, 1955, 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 (Exhibit 'N'); that 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; and that on January 27, 1955, he was again physically
examined and on February 3, 1955, dismissed instead of being made permanent
guard.

"That there were meetings and conversations between Santos And Col. Rueda
and investigations of Santos' possession of firearms conducted by Col. Rueda
himself and by the MIS and PC agents on October 29, November 10, November
17, November 20, and/or December 11, all in the year 1954, either at the instance
of Col. Rueda or of their (MIS & PC) own volition, is not disputed.

"Under the circumstances, it is safe to say that if Santos' possession of the

firearms was found illegal, that would have been the best 'way and means' to stop
him from becoming a regular security guard and to dismiss him from his work.
Failing in this, Col. Rueda sent Santos to the medical department of the San
Miguel Brewery for a physical examination, the reason, according to the
management, being to find out if Santos could be made a regular guard. Santos
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'.

"The Court cannot see why Dr. Horilleno did not tell or advise Santos of the said
defect; why no treatment whatsoever was given; why, if the medical department
did not have the necessary medicine, the doctor did not issue any prescription so
that Santos could buy the medicine elsewhere; why Santos was allowed to
continue in the service for three months while suffering from a chronic O.M.P.C.
which is a 'decided liability'; and why, after three months from the first physical
examination, he was again examined physically to find out if he was already
cured when he had not been advised of, nor treated for, his ailment.

"Rueda explained that he 'let him stay to give him time to be cured' because '* * *
I (Rueda) never suspected him to be the one to be doing things like that because I
was the one who put him in the job and put him there from time to time.' Then he
added; "If I ever knew that, I would not have put him in again if he will be doing
that, but I have confidence in him because I was the one giving him bread and
butter. Because I do not think a man to whom you give bread and butter will work
against you' (t.s.n., p. 44, December 19, 1955). Stated otherwise, Rueda is
disappointed, so that if he knew Santos would work against him, he would not
have employed him time and again.

"But did Rueda really not know that Santos worked against him (Rueda) prior to
the investigations conducted by the MIS and PC agents and by him of Santos'
possession of firearms from and between October 29, 1954 and December 11,
1954?

"The evidence belies Rueda's and the San Miguel Brewery's contention. It will be
recalled that Rueda knew Santos to be a confidential agent of the Union (t.s.n., p.
9, Hearing of December 19, 1955); that he saw the charges against him filed by
the union with the petition to fill positions vacated by the members of the union
with applicants recommended by the board of directors of the union (t.s.n., pp.
11-12, Hearing of August 17, 1955, and pp. 39-41, Hearing of December 11, 1955);
that the management received the recommendation of the union's board of
directors in favor of Santos to take the place of Carlos Abelardo who was a
permanent guard and a member of the union; and that Rueda had him examined
physically in order to find out if he could be made a permanent guard. 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."
The court, consequently, directed the reinstatement of Peter C. Santos to the
position of permanent security guard vacated by Carlos Abelardo, and the
payment of back wages from the date of his dismissal until actually reinstated.
Therein respondents were further directed to cease and desist from committing
similar unfair labor practice.

Their motion for reconsideration of the aforementioned decision having been

denied by resolution of the court en banc[1] on July 19, 1957, San Miguel Brewery
and Col. Rueda filed the instant appeal by certiorari upon the following grounds:
Error I. That the CIR committed an error of law in denying petitioners' motion
for reconsideration without any hearing on oral arguments by the court en banc
and notwithstanding the fact that the CIR is without a full membership, contrary
to the provisions of law.

Error II. That the Court of Industrial Relations committed an error of law in
making findings and conclusions not supported by substantial evidence on the
record taken as a whole, contrary to the decision of the Supreme Court in "Ang
Tibay vs. Court of Industrial Relations" [40 Off. Gaz., pp. 35, 37] and Section 6,
Industrial Peace Act.

Error III. That the decision of the Court of Industrial Relations is contrary to the
decision of the Supreme Court in "Olaivar vs. Manila Electric Co." [Off. Gaz.,
14th Supp. 73].
On August 16, 1957, this Court, deliberating upon the allegations of the petition,
resolved to dismiss it on the ground that the questions involved were factual and
that there was no merit in the petition. A motion for reconsideration of this
resolution was denied. However, upon a second motion for reconsideration
predicated on an additional ground
Error IV. That the Court of Industrial Relations acted with grave abuse of
discretion and in excess of its jurisdiction by directing the employment of
respondent Peter C. Santos as a permanent security guard when he was
discharged as a temporary security guard an affirmative action which clearly
exceeded the basic objective of "effectuation of the policies" of Republic Act No.
875
the petition was given due course.

We now take up the first three assignments of error urged by the petitioner.

Error No. 1. There is no merit in the contention that the lower court erred in
resolving the motion for reconsideration by the vote of four of the five judges of
the court Judge Lanting, who penned the original decision, being on leave at the
time. The requirement that a motion for reconsideration shall be resolved by the
court en banc, the judges sitting together, simply demands that all the available
judges shall take part and as long as three, at least, of the judges attending
concur, it is enough for the pronouncement of a decision, order or award. (C.A.
No. 559).

Errors Nos. 2 and 3. These two assignments of error involve the factual findings
of the lower court. It is an oft repeated doctrines that is not for this Court to
review the findings of fact of the Court of Industrial Relations in the absence of a
showing that it had abused its discretion to an extent amounting to a lack or
excess of jurisdiction. In the case at bar, we are not prepared to conclude that
there is lack of substantial evidence to support the finding of the trial court that
the dismissal of respondent Santos was attributable to his union activities. This
conclusion is borne out by the following established facts:

(1) Santos was appointed confidential agent of the Union on April 11, 1954 (Exh.
F); (2) it was Santos who gathered data or information which became the basis of
the complaint filed with the Company against Col. Rueda on August 1, 1954 (See
Exh. G), charging him, among others, with unfair labor practices, in that he had
been keeping "an eye on the officers and members of the Union who have
previous records"; advising his recommendees and protegees not to join the
union; and imposing severe punishment on union members, but lighter
impositions to non-members for any violation of the rules and regulations of the
Security Department, for the purpose of discouraging union membership; (3) Col.
Rueda learned of this complaint and, consequently, became prejudiced against
Santos who gathered such information; (4) in the same communication
(complaint), Exh. G, sent by the union to the management, it was petitioned that
vacancies created by the resignation or retirement of union members be filled in
by recommendees of the union; (5) Santos was recommended by the union to fill
the vacancy created by the resignation of Carlos Abelardo. With these
antecedents, it is not at all far-fetched to conclude, as did the trial court, that
because of the activities of Santos, joined in by the union, Rueda would not only
oppose the appointment of Santos as permanent guard, but would also work for
his dismissal. Hence, the harassment of the investigation and the pretext of the
affected ear. It is uncontradicted that when examined by private specialists in
February and March, 1955, Santos' left ear was found to be normal. (Exhs. B and
C).

It is urged for the company that the differences between Santos and Col. Rueda
were purely personal and did not concern the company, and that there was no
evidence of hostility between the management and the union or any of its
members. It can not be gainsaid, however, that the acts of Col. Rueda,
constituting an unfair labor practice, while may have been prompted by personal
motives, were executed in his capacity as Security Officer of the company and in
the course of his duties. In dismissing the complainant, with full knowledge of the
actuations of Col. Rueda and the circumstances of Santos' case, the petitioner
company in effect ratified the acts of Col. Rueda complained of and,
consequently, became liable therefore.[2]

Taking together these attendant circumstances and the joint activities of Santos
and the union, the trial court, we believe, was justified in concluding that the
herein petitioners committed unfair labor practice against herein respondent
Santos in discharging him.
"It has previously been indicated that an employer may treat freely with an
employee and is not obliged to support his actions with a reason or purpose.
However, where the attendant circumstances, the history of the employer's past
conduct and like considerations, coupled with an intimate connection between
the employer's action and the union affiliations or activities of the particular
employee or employees taken as a whole raise a suspicion as to the motivation for
the employer's action, the failure of the employer to ascribe a valid reason
therefor may justify an inference that his unexplained conduct in respect of the
particular employee or employees was inspired by the latter's union membership
or activities. While the presence of this mere suspicion neither takes the place of
evidence that the employer's conduct was improperly motivated nor dispenses
with the requirement of proof of the fact, such suspicion, when coupled with
other facts which, in themselves, might have been inadequate to support an
adverse finding against the employer, may suffice to sustain a finding that the
employer's actions violated the prohibition of the Act." (Rothenberg on Labor
Relations, pp. 401-402, and the cases cited therein.)
Error 4. We find this to be meritorious.

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 can not be required to
appoint said dismissed employee to a position which he had not previously
occupied. 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[3] Santos, therefore, should be ordered
reinstated to his former position of temporary guard.

With this modification, the appealed decision and confirmatory resolution of the
court a quo are hereby affirmed, without costs. So ordered.

Bengzon, C. J., Concepcion, Reyes, J. B. L., Paredes, Dizon, De Leon, and

Natividad, JJ., concur.
 Padilla, J., took no part.
Bautista Angelo, J., on leave, took no part.

22. ***Pines City Educational vs NLRC GR No. 96779 11/10/1999

G.R. No. 96779

NOCON, J.:

This is a petition for certiorari seeking reversal of the resolution of public respondent
National Labor Relations Commission dated November 29, 1990, in NLRC Case No. 01-
04-0056-89, which affirmed in toto the decision of the Labor Arbiter dated February 28,
1990.

The antecedent facts are, as follows:

Private respondents Dangwa Bentrez, Roland Picart, Apollo Ribaya, Sr., Ruperta Ribaya,
Virginia Boado, Cecilia Emocling, Jane Bentrez, Leila Dominguez, Rose Ann Bermudez
and Lucia Chan were all employed as teachers on probationary basis by petitioner Pines
City Educational Center, represented in this proceeding 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 Roland Picart and Lucia 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.

On April 10, 1989, private respondents filed a complaint for illegal dismissal before the
Labor Arbiter, alleging that their dismissals were without cause and in violation of due
process. Except for private respondent Leila Dominguez who worked with petitioners for
one semester, all the other private respondents were employed for one to two years. They
were never informed in writing by petitioners regarding the standards or criteria of
evaluation so as to enable them to meet the requirements for appointment as regular
employees. They were merely notified in writing by petitioners, through its Chancellor,
Dra. Nimia R. Concepcion, of the termination of their respective services as of March 31,
1989, on account of their below-par performance as teachers.
For their part, petitioners contended that private respondents' separation from
employment, apart from their poor performance, was due to the expiration of the periods
stipulated in their respective contracts. In the case of private respondent Dangwa
Bentrez, the duration of his employment contract was for one year, or beginning June,
1988 to March, 1989 whereas in the case of the other private respondents, the duration
of their employment contracts was for one semester, or beginning November, 1988 to
March 1989. These stipulations were the laws that governed their relationships, and
there was nothing in said contracts which was contrary to law, morals, good customs and
public policy. They argued further that they cannot be compelled to enter into new
contracts with private respondents. They concluded that the separation of private
respondents from the service was justified.

On February 28, 1990, the Labor Arbiter rendered judgment in favor of private
respondents, the dispositive portion of which reads:

"WHEREFORE, in the light of the foregoing considerations, judgment is hereby

rendered ORDERING the respondents to reinstate the complainants immediately to
their former positions end to pay their full backwages and other benefits and privileges
without qualification and deduction from the time they were dismissed up to their actual
reinstatement.
Thus, respondents should pay complainants the following:
BACKWAGES
NOTE: Computation covers only the period complainants were terminated up to January
31, 1990 or 10 months and does not include backwages from January 31, 1990 up to their
actual reinstatement.
1) ROLAND PICART
a) Latest salary per month……………………………………………P 2,136.00
b) Multiplied by the period covered.
(March 31, 1989 to January 31, 1990). x 10 months
c) Equals backwages due……………………………………………P21, 360.00
2) LUCIA CHAN
a) Latest salary per month……………………………………………P 1,600.00
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due……………………………………………P16, 000.00
3) LEILA DOMINGUEZ
a) Latest salary per month…………………………………………….P1,648.24
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due……………………………………………P16,482.40
4) RUPERTA RIBAYA
a) Latest salary per month…………………………………………….P1,856.00
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due…………………………………………….P18,560.00
5) CECILIA EMOCLING
a) Latest salary per month…………………………………………….P1,648.00
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due…………………………………………….P16,480.00
6) ROSE ANN BERMUDEZ
a) Latest salary per month…………………………………………….P2,600.00
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due…………………………………………… P26,000.00
7) DANGWA BENTREZ
a) Latest salary per month…………………………………………….P1,700.00
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due…………………………………………… P17,000.00
8) JANE BENTREZ
a) Latest salary per month…………………………………………….P1,315.44
b) Multiplied by the period covered………………………………… .x 10 months
c) Equals backwages due……………………………………………P13,154.40
9) APOLLO RIBAYA
a) Latest salary per month…………………………………………….P1,875.00
b) Multiplied by the period covered………………………………….x 10 months
c) Equals backwages due……………………………………………P18,750.00
10) VIRGILIO BOADO
a) Latest salary per month…………………………………………….P1,648.00
b) Multiplied by the period covered…………………………………. x 10 months
c) Equals backwages due……………………………………………P16,482.40
SUMMARY
1) Roland Picart……………………………………..P21,360.00
2) Lucia Chan………………………………………….16,000.00
3) Leila Domonguez…………………………………. 16,482.40
4) Ruperta Ribaya……………………………………. 18,560.00
5) Cecilia Emocling……………………………………16,480.00
6) Rose Ann Bermudez……………………………….26,000.00
7) Dangwa Bentrez……………………………………17,000.00
8) Jane Bentrez………………………………………. 13,154.40
9) Apollo Ribaya………………………………………. 18,750.00
10) Virginia Boado……………………………………….16,482.00
GRAND TOTAL (Backwages)……………………….P180,269.20

Complainants' claims for indemnity pay, premium pay for holidays and rest days, illegal
deduction, 13th month pay and underpayment are hereby DENIED for lack of merit.
SO ORDERED."[1]
In support of this decision, the Labor Arbiter rationalized that the teacher's contracts[2]
are vague and do not include the specific description of duties and assignments of private
respondents. They do not categorically state that there will be no renewal because their
appointments automatically terminate at the end of the semester. Petitioners did not
present any written evidence to substantiate their allegation that the Academic
Committee has evaluated private respondents' performance during their one semester
employment. On the contrary, they were hastily dismissed.

On appeal to the National Labor Relations Commission, the decision was affirmed in
toto in its resolution dated November 29, 1990, with the additional reasoning that "the
stipulation in the contract providing for a definite period in the employment of
complainants is obviously null and void, as such stipulation directly assails the
safeguards laid down in Article 280 (of the Labor Code),[3] which explicitly abhors the
consideration of written or oral agreements pertaining to definite period in regular
employment."[4] Hence, the present petition for certiorari with prayer for the issuance
of a temporary restraining order.
As prayed for, this Court issued a temporary restraining order on March 11, 1991,
enjoining respondents from enforcing the questioned resolution.[5]

Petitioners raise this sole 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
LAW AND JURISPRUDENCE LAID DOWN IN DECISIONS OF THE HONORABLE
SUPREME COURT."[6]

Petitioners reiterate their previous arguments, relying heavily in the case of Brent
School, Inc., et al. v. Zamora, et al.[7]

It is quite easy to resolve the present controversy because the Brent case, which is a
product of extensive research, already provides the answer. We were categorical therein
that:

"Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been, as
already observed, to prevent circumvention of the employees right to be secure in his
tenure, the clause in said article indiscriminately and completely ruling out all written or
oral agreements conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where a fixed period of employment was agreed upon knowingly
and voluntarily 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 where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its purview, the law would
be made to apply to purposes other than those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences."(Underscoring supplied.)
This ruling was reiterated in Pakistan International Airlines Corporation v. Ople, etc., et
al.[8] and La Salette of Santiago, Inc. v. NLRC, et al.[9]

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 their 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.[10] On the
other hand, petitioners contended that based on the evaluation of the Academic
Committee their performance as teachers was poor. The Labor Arbiter, however, was not
convinced. Thus, he found as follows:

"Respondents likewise aver that the Academic Committee has evaluated their
performance during their one semester employment (see Annexes "M" to "X" of
complainants' position paper). However, they did not present any written proofs or
evidence to support their allegation.[11]
"xxx.
"There is absolutely nothing in the record which will show that the complainants were
afforded even an iota of chance to refute respondents' allegations that the complainants
did not meet the reasonable standards and criteria set by the school. x x x."[12]
We concur with these factual findings, there being no showing that they were resolved
arbitrarily.[13] 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,[14] which took effect on March 21, 1989.[15] 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[16] 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.[17] We restate the underlying reason that employees should not
be permitted to enrich themselves at the expense of their employer.[18] 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.

Public respondent cannot claim not knowing the ruling in the Brent case because in its
questioned resolution, it stated that one of the cases invoked by petitioners in their
appeal is said case.[20] This notwithstanding, it disregarded Our ruling therein without
any reason at all and expressed the erroneous view that:

"The agreement of the parties fixing a definite date for the termination of the
employment relations is contrary to the specific provision of Article 280. Being contrary
to law, the agreement cannot be legitimized. x x x."[21]
Stare decisis et non quieta movere. Once a case has been decided one way, then another
case, involving exactly the same point at issue, should be decided in the same manner.
Public respondent had no choice on the matter. It could not have ruled in any other way.
This Tribunal having spoken in the Brent case, its duty was to obey.[22] Let it be warned
that to defy its decisions is to court contempt.[23]

WHEREFORE, the resolution of public respondent National Labor Relations

Commission dated November 29, 1990 is hereby MODIFIED. Private respondents
Roland Picart and Lucia Chan are ordered reinstated without loss of seniority rights and
other privileges and their backwages paid in full inclusive of allowances, and to their
other benefits or their monetary equivalent pursuant to Article 279 of the Labor Code, as
amended by Section 34 of Republic Act No. 6715, subject to deduction of income earned
elsewhere during the period of dismissal, if any, to be computed from the time they were
dismissed up to the time of their actual reinstatement. The rest of the Labor Arbiter's
decision dated February 28, 1990, as affirmed by the NLRC is set aside. The temporary
restraining order issued on March 11, 1991 is made permanent.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo,
Quiason, and Vitug, JJ., concur.
Puno, J., joins J. Padilla on his separate opinion.
Griño-Aquino, J., retired on October 22, 1993.

LESSON

PINES CITY V NLRC

Separation Pay and Backwages
CONSEQUENCES OF TERMINATION

SEPARATION PAY – FOUR CONTEXT

Separation pay for authorized causes under arts. 283-284.

Separation Pay. An employee lawfully dismissed for a just cause is not entitled to any
separation pay; while an employee separated for an authorized cause is entitled to
separation pay in accordance with the rates prescribed by law. (Chan. The Labor Code of
the Philippines Annotated – Volume II).

Art. 298. [283] Closure of Establishment and Reduction of Personnel. – The employer
may also terminate the employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one (1) whole year.

In case the CBA or company policy provides for a higher separation pay, the same must
be followed instead of the one provided in Article 283. (Chan. The Labor Code of the
Philippines Annotated – Volume II).

Art. 299. [284] Disease as a Ground of Termination – An employer may terminate the
services of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to the
health of his co-employees: Provided, That he is paid separation pay equivalent to at
least one (1) month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered as one (1)
whole year.
Separation pay as financial assistance in legal dismissal under art. 282

The basis of the grant of financial assistance is equity. (Chan. The Labor Code of the
Philippines Annotated – Volume II).

An employee who is dismissed for just cause is generally not entitled to separation pay. A
reading of Art. 279 in relation to Art. 282 of the Labor Code, reveals that an employee
who is dismissed for cause after appropriate proceedings in compliance with due process
requirements is not entitled to an award of separation pay. In some cases however, the
SC awarded separation pay to a legally dismissed employee on the grounds of equity and
social justice. This is not allowed though when the employee has been dismissed for
serious misconduct or some other causes reflecting on his moral character or personal
integrity. (Etcuban, Jr. v. Sulpicio Lines, Inc. G.R. No. 148410, Jan. 17, 2005, among
others).

Separation Pay In Lieu Of Reinstatement

If reinstatement is no longer possible, the employer has the alternative of paying the
employee his separation pay in lieu of reinstatement. (Manila Water Co, Inc. v. Pena,
G.R. No. 158255, Jul. 8, 2004).

Reinstatement cannot be awarded when what is prayed for is separation pay. As

pronounced in Dela Cruz v. NLRC, [G.R. No. 121288, November 20, 1998], the petitioner
therein would have been entitled to reinstatement as a consequence of his illegal
dismissal from employment. However, by expressly asking for separation pay, he is
deemed to have opted for separation pay in lieu of reinstatement.

In Deguzman v. NLRC, [G.R. No. 167701, Dec. 12, 2007], and in several other earlier
cases, where the employee explicitly prayed for an award of separation pay in lieu of
reinstatement, it was held that by so praying, he forecloses reinstatement as a relief by
implication. Consequently, he is entitled to separation pay equivalent to one month pay
for every year of services, computed from the time of his illegal dismissal up to the
finality of the judgement, as an alternative to reinstatement.
The amount of separation pay that should be paid in lieu of reinstatement is not
provided in the Labor Code or its implementing rules. Jurisprudence, however, dictates
that the following should be included in its computation:

The amount equivalent to at least one (1) month salary or to one (1) month salary for
every year of services, whichever is higher, a fraction of at least six (6) months being
considered as one (1) whole year. (Sec. 4[b], Rule I, Book VI, Rules to Implement the
Labor Code).
Allowances that the employee has been receiving on a regular basis. (Planters Products,
Inc. v. NLRC, G.R. No. 78524, Jan. 20, 1989).

Separation Pay As An Employee Benefit

Employers may lawfully and effectively reduce their personnel by offering resignation
benefits through a Voluntary Resignation Program where employees are afforded the
right to voluntarily terminate the employment relationship. If made in good faith, such
as scheme should be considered a valid form of terminating employment. Consequently,
the employer need not comply with the requirement under Article 283 of the Labor Code
that notice be sent to the Department of Labor and Employment at least a month prior to
the effectivity of the termination of employment. The reason is that by applying to
voluntarily resign, the employee thereby acknowledges the existence of a valid cause for
terminating his employment. (Dole Philippines Inc. v. NLRC, G.R. No. 120009, Sept. 13,
2001; International Hardware, Inc. v. NLRC, G.R. No. 80770, Aug. 10, 1989).

BACKWAGES

DISTINGUISH FROM SEPARATION PAY

Separation pay in lieu of reinstatement and backwages are two different things. Payment
of separation pay is not inconsistent with payment of backwages. (Cabatulan v. Buat,
G.R. No. 147142, Feb. 14, 2005).
Separation pay is paid when reinstatement is not possible; while backwages are paid for
the compensation which otherwise the employee should have earned had he not been
illegally dismissed. (Equitable Banking Corp. v. Sadac, G.R. No. 164772, June 8, 2006).

Separation pay is computed on the basis of employee’s length of service; while

backwages are based on the actual period when he was unlawfully prevented from
working. (Lim v. NLRC, G.R. Nos. 79907 and 79975, Mar. 16, 1989).

Separation pay is paid where a wherewithal during the period that an employee is
looking for another employment; while backwages are paid for the loss of earnings
during the period between illegal dismissal and reinstatement. (Quebec, Sr. v. NLRC,
G.R. No. 123184, Jan. 22, 1999).

Separation pay is oriented towards the immediate future; while backwages involve the
restoration of the past income lost. (Lopez, Jr. v. NLRC, G.R. No. 109166, Jul. 6, 1995).

Separation pay cannot be paid in lieu of backwages. (Torillo v. Leogardo, G.R. No. 77205,
May 27, 1991).

23. ***Buenviaje vs CA GR No. 147806 11/12/2002

24. *Bustamante vs NLRC GR No. 111651 11/28/1996

Case Digest: Bustamante vs NLRC, G.R. No. 111651 March 15, 1996
Facts – Petitioners were hired for the same job on various periods – broken employment
or services were not continuous – but the services rendered when added together
comprise over a year of service in total. Respondent company and petitioner signed a 6-
month contract but petitioners were fired earlier than what was stipulated in the contract
on the grounds of poor performance due to old age.

Petitioner filed a complaint before the Regional Arbitration Branch of the National Labor
Relations Commission (NLRC) in Davao City.
First Decision of NLRC: In favour of petitioner; their dismissal by respondent company
was declared illegal; ordering respondent company to reinstate the petitioner employees
and pay for their 6 months backwages. If reinstatement is not possible, an additional
compensation equivalent to 1 month salary must be given to the petitioners. Petitioners’
claim for underpayment was dismissed for lack of merit.

Appeal of Respondent: the respondent Evergreen Farms Inc. made an appeal but was
dismissed by NRLC. It again filed a motion for reconsideration and this time the decision
of NLRC was favourable to the respondent company, “public respondent issued a second
resolution on 3 May 1993 affirming its earlier resolution on illegal dismissal but deleting
the award of backwages on the ground that the termination of petitioners' employments
"was the result of the latter's (private respondent) mistaken interpretation of the law and
that the same was therefore not necessarily attended by bad faith, nor arbitrariness”

Action (case at bar before the Supreme Court) – petition for certiorari, from the decision
of NLRC –after appeal from respondent company—setting aside its previous decision to
provide petitioners backwages.

Issue - whether or not petitioners (employees of the banana plantation) are entitled to
backwages after a finding by the NLRC itself that they had become regular employees
after serving for more than one (1) year of broken or non-continuous service as
probationary employees.

Ruling – In favour of petitioner, upholding their illegal dismissal invoking Article 280 of
the Labor Code which draws a line between regular and casual employment. The regular
employees consist of the following:
1) those 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 such service is
continuous or broken.

In the case at bar, petitioners were employed at various periods from 1985 to 1989 for
the same kind of work they were hired to perform in September 1989. Some of the
petitioners were hired as far back as 1985, although the hiring was not continuous. They
were hired and re-hired in a span of from two to four years to do the same type of work
which conclusively shows the necessity of petitioners' service to the respondent
company's business.
Bases of Court decision:

Petitioners have, therefore, become regular employees after performing activities which
are necessary in the usual business of their employer. But, even assuming that the
activities of petitioners in respondent company's plantation were not necessary or
desirable to its business, we affirm the public respondent's finding that all of the
complainants (petitioners) have rendered non-continuous or broken service for more
than one (1) year and are consequently considered regular employees.
The act of hiring and re-hiring the petitioners over a period of time without considering
them as regular employees evidences bad faith on the part of private respondent.

WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May
1993 is modified in that its deletion of the award for backwages in favor of petitioners, is
SET ASIDE. The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with
the modification that backwages shall be paid to petitioners from the time of their illegal
dismissal on 25 June 1990 up to the date of their reinstatement. If reinstatement is no
longer feasible, a one-month salary shall be paid the petitioners as ordered in the labor
arbiter's decision; in addition to the adjudged backwages.

25. ***JAM Transportation Co. vs. Flores 220 SCRA 114.

G.R. No. 82829

NOCON, J.:

Petitioner complains to Us that the respondent National Labor Relations Commission

affirmed[1] the Labor Arbiter's ruling[2] that private respondent was physically unfit to
work and was thus awarded separation pay in addition to backwages based on a thirty
(30) day month instead of his actual -- as claimed by petitioner -- eleven (11) working
days per month. Petitioner insists that private respondent was physically fit to work.

As succinctly summarized by the Office of the Solicitor General, the facts of the case are
as follows:
"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)."[3]
After hearing, the Executive Labor Arbiter rendered judgment "in favor of complainant
and against respondents ordering the latter to pay complainant separation pay
equivalent to one-half (1/2) the average daily commission per every year of service, in the
amount of TWELVE THOUSAND ONE HUNDRED FIFTY PESOS (P12,150.00)
computed as follows: (P45.00 x 30 = P1350.00 ÷ 2 = P675 x 18 = P12,150.00)."[4]

On appeal by both parties, the respondent NLRC (First Division) set aside the Labor
Arbiter's decision and ordered therein respondent (herein petitioner) "to pay the
complainant limited backwages of six (6) months without qualification and deduction,
and separation pay equivalent to one-half (1/2) of his average monthly commission per
each year of service in the amount of Twelve Thousand One Hundred Fifty (P12,150.00)
Pesos computed as follows: (P45.00 x 30 = P1,350.00 ÷ 2 = P675 x 18 = P12,150.00)."[5]

Thus, this petition where petitioner claims that public respondent NLRC acted in excess
of jurisdiction and/or gravely abused its discretion (1) in affirming the Labor Arbiter's
finding that private respondent is physically unfit to work and consequently entitled to
separation pay; and (2) in adopting the Labor Arbiter's finding pegging at '30' private
respondent's average working days per month.
I

With regard to its first assignment of error, petitioner claims that:

"[T]he 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. x x x."[6]
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."[7]

Petitioner is correct.

Executive Labor Arbiter Alvarez held that private respondent was constructively
dismissed,[8] 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. Executive Labor Arbiter Alvarez, reasoned out as follows:
"[W]e are, however, of the considered view and we hold that complainant was
constructively dismissed. Notified in writing that complainant would lose his job for
abandonment if he fails to return, complainant reported for work only to be refused
because respondent wanted him to be hired as a new employee. Naturally, complainant
had to object considering that his length of service had already run for 18 years. What we
are saying is that complainant had signified his intention to return to his job, and,
abandonment is negated when the employee manifests his intention to return to his job.
Moreover, after working for 18 years, we find it difficult to believe that he would abandon
his job more so that he is married and job nowadays is difficult to find."[9]
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[10] 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 canceling 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 position paper. Complainant's termination, therefore,
would be justified under Article 285 of the Labor Code as amended, which provides:

'An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees; Provided, That he is
paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is greater, a fraction of at least six (6) months
being considered as one (1) whole year.'"[11]
which ratiocination was glaringly off-tangent to the issue posed before him.

Clearly, petitioner has a valid reason to gripe. We 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.[13]

II

With regard to its second assignment of error, petitioner claims that:

"Petitioner hereby manifests that it does not question the NLRC's ruling awarding six-
month backwages in favor of private respondent. It, however, respectfully takes
exception to the computation of private respondent's average monthly commission pay,
which the NLRC adopted from the Labor Arbiter's finding.

The computation provides as follows:

'P45.00 x 30 = P1,350.00.'

The 'P45.00' pertains to private respondent's average daily pay while the '30' to his
supposed average working days per month. The Honorable Arbiter duly established the
basis for the 'P45.00' as follows:

'Since as aforesaid complainant was paid on percentage basis and that he earned
between P40.00 to P50.00 daily the computation of his separation would be based on
the average commission per day of forty-five (P45.00) pesos a day.' (p. 5, Decision)

But he failed to do so in regard to the '30'. A careful perusal of his Decision (Annex 'B')
reveals that nowhere therein has reference ever been made to the average working days
per month of private respondent. The reason is simply that the parties completely
overlooked the matter during the proceeding. No allegation was made let alone evidence
introduced thereon.

xxxxxxxxx

The maximum number of working days per month of private respondent was only eleven
(11). The Certification attached to private respondent's NLRC Appeal as Annex 'B-2'
thereof (copy of said Appeal together with cited annex attached as Annex "D" hereof),
reveals that for the period from January 1984 to March 1896, i.e, two (2) years prior to
his dismissal, the maximum amount of his SSS premium payment was P35.70 pertaining
to the month March 1985. Under the SSS Table of Rates, copy attached as Annex "E"
hereof, which this Honorable Court may take judicial notice of, it is shown in the portion
bracketed as Annex "E-1" that premium payment of P35.70 corresponds to a monthly
salary wage bracket of 'P350.00 - P499.99'. The implication is that the maximum
monthly commission pay that private respondent received during his last two (2) years of
employment with petitioner was P499.99. As his average daily commission pay was
P45.00, it means that his maximum working days per month was eleven (11) days which
is arrived at by simply dividing P499.99 by P45.00.

x x x. But as a concession to private respondent, petitioner is willing to use the maximum

aforesaid for purpose of computing his 'average' monthly commission pay. Thus, the
'average' monthly commission pay may be computed as follows: P45.00 x 11 = P495.00.
And the six-month backwages awarded in favor of private respondent will thereby
amount to P2,970.00.
Petitioner hereby manifests willingness and readiness to pay said amount of P2,970.00
upon issuance of the appropriate resolution by this Honorable Court."[14]
As to this second assigned error, private respondent says that:
"To use as basis the Certification issued by petitioner marked as Annex 'B', 'B-1' to 'B-3'
particularly Annex 'B-2' attached to private respondent's appeal for the years 1884 to
1986 will be most unfair to private respondent. What about the years 1967 to 1983. How
could anyone or employee for that matter live and support a family if he works only 11
days in a month?"[15]
Petitioner, itself, provides the solution to its own problem. Under Sections 10, 11 and 12
of Rule X, Book III, Omnibus Rules Implementing the Labor Code, amended as of 1986,
[16] petitioner is supposed to keep employment records of its employees. Such records
could have been AND SHOULD HAVE BEEN used by petitioner in clarifying the number
of days petitioner actually worked per month. Unfortunately for petitioner, it did not for
"the parties completely overlooked the matter during the proceeding. No allegation was
made let alone evidence introduced thereon."[17]

Petitioner is asking Us to make a new finding of fact on private respondent's actual

working days in a month from evidence that it is presenting for the first time on appeal--
and here in this Court. It is well-settled, too well-settled to require a citation of
jurisprudence, that this Court does not make findings of facts specially on evidence
raised for the first time on appeal. We cannot countenance petitioner's ploy to make Us
commit this double heresy.

III

Following the general rule that where the illegal dismissal transpired before the
effectivity of RA 6715, or before March 21, 1989, the award of backwages in favor of its
dismissed employee is limited to three (3) years without deduction or qualification,[18]
this Court grants private respondent three (3) years backwages.

Since, however, private respondent cannot be reinstated, he is entitled to separation pay

equivalent to at least one (1) month for every year of service.[19]

Both awards,[20] to be computed on the basis of a 30-day month, will come out as
follows:
(1) Three Years Backwages = P45.00/day x 30 days/month x 12 months/year x 3 years
= P48,600.00.
(2) Separation pay for Eighteen Years = P45.00/day x 30days/months x 18 months =
P24,300.00.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered SETTING
ASIDE the questioned respondent NLRC's decision. A new decision is entered where
private respondent is awarded three years backwages in the amount of P48,600.00 and
separation pay in the amount of P24,300.00. Costs against petitioner.
SO ORDERED.