Sasan vs NLRC

FACTS: Sasan et al are employed by Helpmate, Inc (HI), a janitorial and messengerial service
provider, and assigned to E PCI Bank in Gorordo Branch, Cebu City. Their services were cut off
when EPCI decided to bid out the janitorial and messengerial jobs to two other service providers.
Sasan et al then filed an action for illegal dismissal alleging that they are regular employees of PCI,
and HI has no authority to dismiss them.

After submission of legal positions to the Labor Arbiter, it concluded that HI is engaged in labor on
contracting as it operates without substantial capital as required by the Labor Code, declaring PCI as
the principal employer and awarding money claims to the employees for their illegal dismissal. PCI
and Hi appealed the LA's decision to the NLRC and submitted for the first time photocopy of
documents proving that they have sufficient capital to operate as an independent contractor. The
NLRC modified the LA's decision taking into consideration the documentary evidence submitted by
HI. On charges of illegal dismissal, the NLRC ruled that the complaint for illegal dismissal was
prematurely filed, furhter, deleted the award of backwages and separation pay, but affirmed the
award of 13th month pay and attorneys' fee. The petitioners appeal to CA, which affirmed the
NLRC's decision. Further, appealed to the SC, hence, this petition.

Issue: Whether HI is a labor-only contactor and E-PCIBank should be deemed petitioners principal
employer; and whether petitioners were illegally dismissed from their employment.

Ruling: In the case at bar, we find substantial evidence to support the finding of the NLRC, affirmed
by the Court of Appeals, that HI is a legitimate job contractor. HI has been issued by the Department
of Labor and Employment (DOLE) Certificate of Registration numbered VII-859-1297-048 also
evidence shows that HI is carrying on a distinct and independent business from E-PCIBank. The
employees of HI are assigned to clients to perform janitorial and messengerial services, clearly
distinguishable from the banking services in which E-PCIBank is engaged. Also while these services
rendered by the petitioners as janitors, messengers and drivers are considered directly related to the
principal business of a bank, in this case E-PCIBank, nevertheless, they are not necessary in the
conduct of E-PCIBANK’s principal business. HI also has substantial capital in the amount
of P20,939,935.72. It has its own building where it holds office and it has been engaged in business
for more than a decade now. Existence of ER-EE relationship is also present between HI and the
employees as it was HI which selected and engaged the services of petitioners as its
employees. This is fortified by the provision in the contract of services between HI and E-PCIBank
which states: Selection, Engagement, Discharge. HI shall have exclusive discretion in the selection,
engagement, investigation, discipline and discharge of its employees 
 
 Also it was HI who paid petitioners their wages and who provided their daily time records and
uniforms and other materials necessary for the work they performed. Therefore, it is HI who is
responsible for petitioners claims for wages and other employees benefits. As to the power to control
the employees conduct, and the fourth requisite regarding the power of dismissal, again E-PCIBank
did not have the power to control petitioners with respect to the means and methods by which their
work was to be accomplished. It likewise had no power of dismissal over the petitioners. All that E-
PCIBank could do was to report to HI any untoward act, negligence, misconduct or malfeasance of
any employee assigned to the premises. All these circumstances establish that HI undertook said
contract on its account, under its own responsibility, according to its own manner and method, and
free from the control and direction of E-PCIBank. Where the control of the principal is limited only to
the result of the work, independent job contracting exists. The janitorial service agreement between
E-PCIBank and HI is definitely a case of permissible job contracting.

As to the second issue, petitioners also were not illegally dismissed by HI. Upon the
termination of the Contract of Service between HI and E-PCIBank, petitioners cannot insist to
continue to work for the latter. Their pull-out from E-PCIBank did not constitute illegal dismissal
since, first, petitioners were not employees of E-PCIBank; and second, they were pulled out from
said assignment due to the non-renewal of the Contract of Service between HI and E-PCIBank. At
the time they filed their complaints with the Labor Arbiter, petitioners were not even dismissed by HI;
they were only off-detail pending their re-assignment by HI to another client. And when they were
actually given new assignments by HI with other clients, petitioners even refused the same. As the
NLRC pronounced, petitioners complaint for illegal dismissal is apparently premature.
 
Santos vs NLRC

FACTS: Petitioner was employed by the private respondent Bank from 10 December 1951 until 30
April 1976, when her services were terminated. Her last position was that of Branch Manager, with a
monthly basic salary of P1,750.00 plus a monthly living allowance of P650.00 and a monthly
transportation allowance of P250.00, or a total of P2,650.00 per month. In addition, she also enjoyed
a mid-year bonus equivalent to one (1) month's salary; a christmas bonus equivalent to two (2)
months' salary; and vacation and sick leave with pay. Petitioner later filed a complaint for illegal
dismissal. LA ruled finding petitioner's dismissal to be illegal and ordering private respondent Bank to
reinstate her with backwages and other accrued benefits.

On appeal by private respondent Bank from the Labor Arbiter's decision, NLRC modified the
decision on the portion which orders the reinstatement of the complainant with full backwages. It
mentioned that if the complainant, being a branch manager of the respondent bank, is undisputedly
a managerial employee and would be reinstated, then this would mean forcing unto the respondent
a manager upon whom it has lost its trust and confidence. Furthermore, considering that the
relationship between the complainant and the respondent bank has become strained as a result of
the firing of this case, the remedy of reinstatement with full backwages would not be appropriate and
conducive to smooth employee relationship within the company. Because of this, we order the
respondent to pay to the complainant her separation pay, equivalent to one-half month pay for every
year of service, in lieu of reinstatement. 

Decision of NLRC became final and the petitioner moved for execution. The Socio-Economic Analyst
submitted a report dated 15 July 1982 recommending payment to petitioner of the total amount of
P353,295.89. This amount included backwages of P122,202.00 and provident fund benefits of
P25,844.61. The Bank questioned the correctness of the computation of the Analyst. NLRC ruled
that the complainant is only entitled to separation pay, equivalent to one-half month pay for every
year of service computed on the basic pay of the employee. Petitioner filed an MR to which NLRC
ruled it would limit the benefits recoverable by petitioner Lydia Santos to: (1) her separation pay (i.e.,
P24,500.00), in lieu of reinstatement and backwages; and (2) gratuities which accrued in her favor
during the period from her illegal dismissal on 30 April 1976 until 28 December 1979, when the
NLRC (First Division) declared that reinstatement with full backwages would not be appropriate and
ordered in lieu thereof payment of separation pay (i.e., P91,185.50), making a total award of
P15,685.50. 

ISSUE: Whether or not petitioner is entitled to an award for backwages, in addition to: (1)

her separation pay,-and (2) gratuities accruing before the Labor Arbiter's order for reinstatement was
modified

RULING: The normal consequences of a finding that an employee has been illegally dismissed are,
firstly, that the employee becomes entitled to reinstatement to his former position without loss of
seniority rights and, secondly, the payment of backwages corresponding to the period from his legal
dismissal up to actual reinstatement. Reinstatement restores the employee who was unjustly
dismissed to the position from which he was removed, that is, to his status quo ante dismissal, while
the grant of backwages allows the same employee to recover from the employer that which he had
lost by way of wages as a result of his dismissal. The two forms of relief are distinct and separate,
one from the other. Though the grant of reinstatement commonly carries with it an award of
backwages, the inappropriateness or non-availability of one does not carry with it the
inappropriateness or non-availability of the other.
Separation pay was awarded in favor of petitioner Lydia Santos because the NLRC found that her
reinstatement was no longer feasible or appropriate. As the term suggests, separation pay is the
amount that an employee receives at the time of his severance from the service and, the
wherewithal during the period that he is looking for another employment. In the instant case, the
grant of separation pay was a substitute for immediate and continued re-employment with the private
respondent Bank. The grant of separation pay did not redress the injury that is intended to be
relieved by the second remedy of backwages, that is, the loss of earnings that would have accrued
to the dismissed employee during the period between dismissal and reinstatement. Put a little
differently, payment of backwages is a form of relief that restores the income that was lost by reason
of unlawful dismissal; separation pay, in contrast, is oriented towards the immediate future, the
transitional period the dismissed employee must undergo before locating a replacement job. The
grant of separation pay was a proper substitute only for reinstatement; it could not be an adequate
substitute both for reinstatement and for backwages. In effect, the NLRC failed to give to petitioner
the full relief to which she was entitled under the statute. 

We conclude that petitioner Lydia Santos is entitled to receive, and private respondent Bank is
obligated to pay, (1) the benefits which had accrued in petitioner's favor during the period from her
illegal dismissal and until reinstatement was declared non-available; (2) separation pay equivalent to
one-half (1/2) month's pay for every year of service, in lieu of reinstatement; and (3) backwages for
three (3) years without qualification and deduction. The monetary value of the above items is to be
computed in accordance with the following guidelines: (a) in the computation of accrued benefits and
separation pay, the appropriate cut-off date is 28 December 1979, when the NLRC declared that
reinstatement of petitioner Lydia Santos had become non-feasible and inappropriate; and (b) in the
computation of backwages and separation pay, account must be taken not only of the basic salary of
petitioner but also of her transportation and emergency living allowances, 6 as was correctly done by
the Labor Arbiter. Petitioner was unjustly dismissed in 1976. Eleven years later, she has yet to
receive a single centavo. In the interest of expeditious justice and to avoid any further ambiguities,
we hold that the total amount due petitioner Lydia Santos is P223,685.50.
Virgilio Agabon vs NLRC

FACTS: Virgilio and Jenny Agabon worked for respondent Riviera Home Improvements, Inc. as
gypsum and cornice installers from January 1992 until Feb 1999. Their employment was terminated
when they were dismissed for allegedly abandoning their work. Petitioners Agabon then filed a case
of illegal dismissal. /// The LA ruled in favor of the spouses and ordered Riviera to pay them their
money claims. The NLRC reversed the LA, finding that the Agabons were indeed guilty of
abandonment. The CA modified the LA by ruling that there was abandonment but ordering Riviera to
pay the Agabons’ money claims.///

The arguments of both parties are as follows:

The Agabons claim, among others that Riviera violated the requirements of notice and hearing when
the latter did not send written letters of termination to their addresses.
Riviera admitted to not sending the Agabons letters of termination to their last known addresses
because the same would be futile, as the Agabons do not reside there anymore. However, it also
claims that the Agabons abandoned their work. More than once, they subcontracted installation
works for other companies. They already were warned of termination if the same act was repeated,
still, they disregarded the warning.

ISSUES
1. Whether the Agabons were illegally dismissed
2. Whether Riviera violated the requirements of notice and hearing
3. Is the violation of the procedural requirements of notice and hearing for termination of employees
a violation of the Constitutional due process?
4. What are the consequences of violating the procedural requirements of termination?

RULING: Valid dismissal but violation of statutory due process = payment of nominal damages
(P30,000) & balance of 13th month pay, etc.
1. No. There was just cause for their dismissal, i.e., abandonment. Art. 282 specifies the grounds for
just dismissal, to wit:
a. Serious misconduct or willful disobedience of the lawful orders of the employer or his duly
authorized representative in connection with the employee’s work
b. Gross and habitual neglect of the by the employee of his duties (includes abandonment)
c. Fraud or willful breach of the trust reposed by the employer or his duly authorized
representative to the employee
d. Commission of a crime or offense by the employee against the person of the employer or any
member of his immediate family or his duly authorized representative
e. Any other causes analogous to the foregoing.

To establish abandonment, two elements must be present:

a. The unjustified failure of the employee to report for work
b. A clear intention to sever e-e relationship, manifested by overt acts

Here, the Agabons were frequently absent from work for having performed installation work for
another company, despite prior warning given by Riviera. This clearly establishes an intention to
sever the e-e relationship between them, and which constitutes abandonment.
2. Yes. While the employer has the right to expect good performance, diligence, good conduct and
loyalty from its employees, it also has the duty to provide just compensation to his employees and
to observe the procedural requirements of notice and hearing in the termination of his employees.
Procedure of termination (Omnibus Rules Implementing the Labor Code):
a. A written notice to the employee specifying the grounds for termination and giving the
employee reasonable opportunity to be heard
b. A hearing where the employee is given the opportunity to respond to the charges against
him and present evidence or rebut the evidence presented against him (if he so requests)
c. A written notice of termination indicating that grounds have been established to justify his
termination upon due consideration of all circumstances

In this case, Riviera failed to notify the Agabons of their termination to their last known
addresses. Hence, they violated the procedural requirement laid down by the law in the
termination of employees.

3. No. Constitutional due process is that provided under the Constitution, which involves the
protection of the individual against governmental oppression and the assurance of his rights In
civil, criminal and administrative proceedings; statutory due process is that found in the Labor
Code and its Implementing Rules and protects the individual from being unjustly terminated
without just or authorized cause after notice and hearing.

The two are similar in that they both have two aspects: substantive due process and procedural
due process. However, they differ in that under the Labor Code, the first one refers to the valid
and authorized causes of employment termination, while the second one refers to the manner of
dismissal. A denial of statutory due process is not the same as a denial of Constitutional due
process for reasons enunciated in Serrano v. NLRC.

4. The dismissal is valid, but Riviera should pay nominal damages to the Agabons in vindication of
the latter for violating their right to notice and hearing. The penalty is in the nature of a penalty or
indemnification, the amount dependent on the facts of each case, including the nature of gravity
of offense of the employer.

In this case, the Serrano doctrine was re-examined.

First, in the Serrano case, the dismissal was upheld, but it was held to be ineffectual (without
legal effect). Hence, Serrano was still entitled to the payment of his backwages from the time of
dismissal until the promulgation of the court of the existence of an authorized cause. Further, he
was entitled to his separation pay as mandated under Art. 283. The ruling is unfair to employers
and has the danger of the following consequences:
a. The encouragement of filing frivolous suits even by notorious employees who were justly
dismissed but were deprived of statutory due process; they are rewarded by invoking due
process
b. It would create absurd situations where there is just or authorized cause but a procedural
infirmity invalidates the termination, ie an employee who became a criminal and threatened
his co-workers’ lives, who fled and could not be faound
c. It could discourage investments that would generate employment in the economy

Second, the payment of backwages is unjustified as only illegal termination gives the employee
the right to be paid full backwages. When the dismissal is valid or upheld, the employee has no
right to backwages.