1. SME BANK v. De Guzman et al.
tendered their resignation, Eufemia first tendered resignation,
Security of tenure is a constitutionally guaranteed right.1 Employees
may not be terminated from their regular employment except for just
or authorized causes under the Labor Code2 and other pertinent laws.
A mere change in the equity composition of a corporation is neither a
just nor an authorized cause that would legally permit the dismissal of
the corporation’s employees en masse.
FACTS:
Respondent employees Elicerio Gaspar (Elicerio), Ricardo
Gaspar, Jr. (Ricardo), Eufemia Rosete (Eufemia), Fidel Espiritu
(Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato Mangoba
(Liberato) were employees of Small and Medium Enterprise
Bank, Incorporated (SME Bank). Originally, the principal
shareholders and corporate directors of the bank were Eduardo
M. Agustin, Jr. (Agustin) and Peregrin de Guzman, Jr. (De
Guzman). SME Bank experienced financial difficulties. To
remedy the situation, the bank officials proposed its sale to
Abelardo Samson (Samson).
Negotiations ensued where the preconditions for the sale of
SME Bank’s shares of stock are: 1. You shall guarantee the peaceful turn
over of all assets as well as the peaceful transition of management of the bank and
shall terminate/retire the employees we mutually agree upon, upon transfer of shares
in favor of our group’s nominees; 2. All retirement benefits, if any of the above
officers/stockholders/board of directors are hereby waived upon cosummation [sic]
of the above sale. The retirement benefits of the rank and file employees including the
managers shall be honored by the new management in accordance with B.R. No. 10,
S. 1997
Agustin and De Guzman accepted the terms and
conditions proposed by Samson and signed the conforme
portion of the Letter Agreements. Simeon Espiritu (Espiritu),
then the general manager of SME Bank, held a meeting with all
the employees of SME Bank and persuaded them to tender their
resignations with the promise that they would be rehired upon
reapplication. Relying on their representation All of them
then after tendered retirement. As it turned out, respondent
employees, except for Simeon, Jr., were not rehired.
Respondent-employees demanded the payment of their
respective separation pays, but their requests were denied.
Respondent-employees filed a complaint before the
NLRC-Regional Arbitration Branch No. III and sued spouses
Abelardo, the Samson Group, and Agustin and De Guzman for
unfair labor practice; illegal dismissal; illegal deductions;
underpayment; and nonpayment of allowances, separation pay
and 13th month pay. The LA ruled that the buyer of an
enterprise is not bound to absorb its employees, unless there is
an express stipulation to the contrary. However, he also found
that respondent employees were illegally dismissed. NLRC
denied the MR. CA affirmed the NLRC.
ISSUE: WON respondent employees were illegally dismissed
and, if so, which of the parties are liable for the claims of the
employees and the extent of the reliefs that may be awarded to
these employees.?
HELD: Yes, the employees were illegally dismissed. The law
permits an employer to dismiss its employees in the event of
closure of the business establishment. However, the employer is
required to serve written notices on the worker and the
Department of Labor at least 1 month before the intended date
of closure. Moreover, the dismissed employees are entitled to
separation pay, except if the closure was due to serious business
losses or financial reverses. However, to be exempt from
making such payment, the employer must justify the closure by
presenting convincing evidence that it actually suffered serious
financial reverses.
In this case, the records do not support the contention of SME
Bank that it intended to close the business establishment. On the
contrary, the intention of the parties to keep it in operation is
confirmed by the provisions of the Letter Agreements requiring
Agustin and De Guzman to guarantee the "peaceful transition of
management of the bank" and to appoint "a manager of [the
Samson Group’s] choice x x x to oversee bank operations."
In Simeon, Jr.’s case, he was made to resign, then rehired under
conditions that were substantially less than what he was
enjoying before the illegal termination occurred. Thus, for the
second time, he involuntarily resigned from his employment.
Clearly, this case is illustrative of constructive dismissal, an act
prohibited under our labor laws.
SME Bank, Eduardo M. Agustin, Jr. and Peregrin de Guzman,
Jr. are liable for illegal dismissal. The settled rule is that an
employer who terminates the employment of its employees
without lawful cause or due process of law is liable for illegal
dismissal. None of the parties dispute that SME Bank was the
employer of respondent employees. The fact that there was a
change in the composition of its shareholders did not affect the
employer-employee relationship between the employees and
the corporation, because an equity transfer affects neither the
existence nor the liabilities of a corporation. Thus, SME Bank
continued to be the employer of respondent employees
notwithstanding the equity change in the corporation. This
outcome is in line with the rule that a corporation has a
personality separate and distinct from that of its individual
shareholders or members, such that a change in the composition
of its shareholders or members would not affect its corporate
liabilities.
2. Calalang vs. Williams
G.R. No. 47800 December 2, 1940
Facts: Maximo Calalang in his capacity as a private citizen and a
taxpayer of Manila filed a petition for a writ of prohibition against the
respondents. He is alleged that the National Traffic Commission
resolved to recommend to the Director and the Secretary of Public
Works and Communications that animal-drawn vehicles be
prohibited from passing along Rosario Street extending from Plaza
Calderon de la Barca to Dasmariñas Street from 7:30 Am to 12:30 pm
and from 1:30 pm to 530 pm; and along Rizal Avenue extending from
the railroad crossing at Antipolo Street to Echague Street from 7 am to
11pm for a period of one year from the date of the opening of the
Colgante Bridge to traffic.
The Secretary of Public Works approved the recommendations. The
Mayor of Manila and the Acting Chief of Police of Manila have
enforced and caused to be enforced the rules and regulation. As a
consequence, all animal-drawn vehicles are not allowed to pass and
pick up passengers in the places above mentioned to the detriment
not only of their owners but of the riding public as well.
Issue:
1. Whether the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act
NO. 548 constitute an unlawful inference with legitimate
business or trade and abridged the right to personal liberty and
freedom of locomotion?
2.Whether the rules and regulations complained of infringe
upon the constitutional precept regarding the promotion of
social justice to insure the well-being and economic security of
all the people?
Held:
1) No. The promulgation of the Act aims to promote safe transit
upon and avoid obstructions on national roads in the interest
and convenience of the public. In enacting said law, the
National Assembly was prompted by considerations of public
convenience and welfare. It was inspired by the desire to relieve
congestion of traffic, which is a menace to the public safety.
Public welfare lies at the bottom of the promulgation of the said
law and the state in order to promote the general welfare may
interfere with personal liberty, with property, and with business
and occupations. Persons and property may be subject to all
kinds of restraints and burdens in order to secure the general
comfort, health, and prosperity of the State. To this fundamental
aims of the government, the rights of the individual are
subordinated. Liberty is a blessing which should not be made to
prevail over authority because society will fall into anarchy.
Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The paradox
lies in the fact that the apparent curtailment of liberty is
precisely the very means of insuring its preserving.
2) No. Social justice is “neither communism, nor despotism, nor
atomism, nor anarchy,” but the humanization of laws and the
equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at
least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the
competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the
adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principles of
salus populi estsuprema lex.
Social justice must be founded on the recognition of the
necessity of interdependence among divers and diverse units of
a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social
and economic life, consistent with the fundamental and
paramount objective of the state of promoting health, comfort
and quiet of all persons, and of bringing about “the greatest
good to the greatest number.”
3. International School Alliance of Educators (ISAE) v.
Quisumbing G.R. No. 128845, June 1, 2000
Fact: Private respondent, the School, hires both foreign and local
teachers as members of its faculty, classifying the same into two:
(1) foreign-hires and (2) local-hires. The School employs four
tests to determine whether a faculty member should be
classified as a foreign-hire or a local hire. Should the answer to
any of four tests queries point to the Philippines, the faculty
member is classified as a local hire; otherwise, he or she is
deemed a foreign-hire. The School grants foreign-hires salary
rate twenty-five percent (25%) more than local-hires. The School
justifies the difference on two “significant economic
disadvantages” foreign-hires have to endure, namely: (a) the
“dislocation factor” and (b) limited tenure. When negotiations
for a new collective bargaining agreement were held on June
1995, petitioner International School Alliance of Educators, “a
legitimate labor union and the collective bargaining
representative of all faculty members” of the School, contested
the difference in salary rates between foreign and local-hires.
This issue eventually caused a deadlock between the parties.
Petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a
compromise prompted the DOLE to assume jurisdiction over
the dispute. DOLE Acting Secretary, issued an Order resolving
the parity and representation issues in favor of the School. Then
DOLE Secretary Leonardo A. Quisumbing subsequently denied
petitioner’s motion for reconsideration in an Order dated March
19, 1997. Petitioner now seeks relief to the Supreme Court.
Issue: Whether Foreign-hires are also paid a salary rate twenty-
five percent (25%) more than local-hires is an invalid and
unreasonable classification and violates the Equal Protection
Clause.
Held: Yes, Discrimination, particularly in terms of wages, is
frowned upon by the Labor Code. The foregoing provisions
impregnably institutionalize in this jurisdiction the long
honored legal truism of “equal pay for equal work.” Persons
who work with substantially equal qualifications, skill, effort
and responsibility, under similar conditions, should be paid
similar salaries. This rule applies to the School, its “international
character” notwithstanding. The School contends that petitioner
has not adduced evidence that local-hires perform work equal
to that of foreign-hires. The employer in this case has failed to
show evidence that foreign-hires perform 25% more efficiently
or effectively than the local-hires. Both groups have similar
functions and responsibilities, which they perform under
similar working conditions. In this case, the court find the point-
of-hire classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and local hires
to be an invalid classification. There is no reasonable distinction
between the services rendered by foreign-hires and local-hires.
The practice of the School of according higher salaries to
foreign-hires contravenes public policy and, certainly, does not
deserve the sympathy of the Court.
4(A). Cebu Royal Plant v. Hon Deputy Minister of Labor
G.R. No. L-58639; August 12, 1987
ARTICLE 282 OF THE LABOR CODE : “AN EMPLOYEE WHO IS
ALLOWED TO WORK AFTER A PROBATIONARY PERIOD SHALL BE
CONSIDERED A REGULAR EMPLOYEE
ART. II SEC. 18 OF THE CONSTITUTION: THE STATE AFFIRMS
LABOR AS A PRIMARY SOCIAL ECONOMIC FORCE. IT SHALL PROTECT
THE RIGHTS OF WORKERS AND PROMOTE THEIR WELFARE.
FACTS: Pilones was employed on February 16, 1978 by CRP on
a probationary period of employment for 6 months. His work
involved handling the raw materials used in the manufacturing
of soft drinks.
After the 6-month period, Pilones underwent medical
examination for qualification as regular employee but the
results showed that he is suffering from PTB Minimal, or
Tuberculosis. He was informed of the termination of his
employment on August 21, 1978 (4 days after his probationary
period) since his illness was not curable within 6 months.
Pilones complained to the then Ministry of Labor (MOLE), and
the same was dismissed by the Regional Director. The Deputy
Minister of Labor then reversed the order, and ordered the
reinstatement of Pilones.
The Deputy Minister of Labor held that because Pilones was
terminated after his probationary period, he was a permanent
employee and thus had security of tenure.
CRP, now ordered to reinstate Pilones, appealed before the
Supreme Court. It argued that the Private Respondent was still
on probation at the time of his dismissal and hence had no
security of tenure.
ISSUE: Whether or not Pilones’ dismissal was proper
HELD: NO. IT WAS NOT PROPER. Under Article 282 of the Labor
Code, “an employee who is allowed to work after a
probationary period shall be considered a regular employee.” In
this case, Pilones was already on permanent status when he was
dismissed on August 21, 1978 which is four days after he ceased
to be a probationary employee. As such, Private Respondent
could validly claim the security of tenure guaranteed to him by
the Art. II Sec. 18 of the Constitution and the Art. 282 of the
Labor Code.
 CRP claims that they were not able to terminate Pilones’
employment immediately as they had to wait for the results of
his X-ray examination (the same was conducted on August 17,
1978). The Supreme Court found such an excuse untenable as
CRP had the whole 6-month period to conduct the examination,
yet they waited until the end of said period to do so.
DISPOSITION: Petition dismissed. The Order of the public respondent is affirmed,
but with the modification that the back wages shall be limited to three years only and
the private respondent shall be reinstated only upon certification by a competent
public health authority that he is fit to return to work.
4(B). RIZALDY M. QUITORIANO v. JEBSENS MARITIME
INC.
G.R. No. 179868; January 21, 2010
Doctrine: A total disability does not require that the employee
be absolutely disabled or totally paralyzed. What is necessary is
that the injury must be such that the employee cannot pursue
his usual work and earn therefrom.
Facts: Respondent Jebsens Maritime, Inc. (represented by Ma.
Theresa Gutay), hired petitioner Quitoriano as 2nd Officer
aboard the vessel M/V Trimnes for a period of six months with
a basic monthly salary of US$936. On May 23, 2001, petitioner,
who was assigned as navigating officer from 12:00 midnight to
4:00 a.m. and port watcher from 12:00 midnight to 6:00 a.m.,
complained of dizziness with severe headache, general body
weakness, chest pains, easy fatigability, weak grip strength, and
numbness on the left side of his body and was observed to be
dragging his left foot, his mouth slightly down to one side, and
his speech slurred.
When the vessel berthed on May 26, 2001 at Port Huelva, Spain,
petitioner was brought to a hospital where he was diagnosed as
suffering from hypertension arterial or mild stroke.Since his
health condition did not improve, petitioner was repatriated to
the Philippines on May 30,2001to undergo further medical
examination and treatment.
Upon arrival in Manila, petitioner underwent several tests at the
Medical Center Manila under the care of Dr. Nicomedes G. Cruz
(Dr. Cruz), the company-designated physician. On November
16, 2001or 169 days after petitioners repatriation, Dr. Cruz
issued a medical report declaring him fittowork.
Petitioner later sought the opinion of an independent internist-
cardiologist, Dr. Sharon A. Lacson of the Philippine Heart
Center, who diagnosed him as suffering from hypertension
cardiovascular disease and hyperlipidemia. Dr. Abdias V.
Aquino of the same hospital also found him to have cerebral
infarction, R, basal ganglia area.
Petitioner thus filed a complaint to recover permanent total
disability compensation of US$80,000, as provided for in the
Collective Bargaining Agreement (CBA) forged with
respondents. Respondents disclaimed petitioners entitlement to
any disability benefits in view of the company-designated
physicians certification that he is fit to work. Petitioner
countered, however, that the "fit to work" assessment did not
reflect his real health condition; and that his illness, given its
delicate nature, could recur anytime once he resumes sea duties.
The LA dismissed the complaint as it found that petitioner has
already recovered from illness. On appeal, the NLRC affirmed
the LA decision but ordered respondents to allow petitioner to
resume sea duty. Petitioner filed a certiorari petition before the
CA but the CA denied the same and its subsequent motion for
reconsideration. Hence, this petition.
Issue: Is petitioner entitled to disability benefits? (YES)
Held: Yes. Petitioner is entitled to the disability benefits.
A total disability does not require that the employee be was affirmed by the Court of Appeals, ordering respondents to
absolutely disabled or totally paralyzed. What is necessary is "allow complainant to resume sea duty." GRANTED.
that the injury must be such that the employee cannot pursue
his usual work and earn therefrom.

In accordance with the avowed policy of the State to give

maximum aid and full protection to labor, the Court has applied
the Labor Code concept of permanent total disability to Filipino
seafarers,it holding that the notion of disability is intimately
related to the workers capacity to earn, what is compensated
being not his injury or illness but his inability to work resulting
in the impairment of his earning capacity; hence, disability
should be understood less on its medical significance but more
on the loss of earning capacity.

Permanent disability is inability of a worker to perform his job

for more than 120 days, regardless of whether or not he loses
the use of any part of his body.

Total disability, on the other hand, means the disablement of an

employee to earn wages in the same kind of work of similar
nature that he was trained for, or accustomed to perform, or any
kind of work which a person of his mentality and attainments
could do. It does not mean absolute helplessness. In disability
compensation, it is not the injury which is compensated, but
rather it is the incapacity to work resulting in the impairment of
one's earning capacity.

The "fit to work" certification was issued by Dr. Cruz or more

than five months from the time petitioner was medically
repatriated on May 30, 2001, thus, petitioner's disability is
considered permanent and total.

Significantly, it is gathered that petitioner remained

unemployed even after he filed on February 26, 2002 his
complaint to recover permanent total disability compensation
and despite the August 31, 2005 Decision of the NLRC which