Recent cases: Philippines Labor Law

1. LBC Express-Vis, Inc. v. Monica C. Palco, G.R. No. 217101, 12 February 2020, THIRD
DIVISION (Leonen, J.).

This case involves a complaint for illegal dismissal and sexual harassment filed
by a customer associate against her team leader and employer. The Supreme
Court affirmed the lower courts’ ruling that the employee was constructively
dismissed due to the hostile and offensive work environment created by the
team leader’s acts and the employer’s indifference . 1

FACTS: Monica Palco was hired by LBC Express-Vis, Inc. as a data encoder and was
designated as a regular employee after her probationary period. However, she was
terminated from her employment due to alleged violation of company policies and
procedures. Palco filed a complaint for illegal dismissal and non-payment of benefits
before the National Labor Relations Commission (NLRC), claiming that her termination
was without just cause and that she was not given due process.

The NLRC found that Palco's termination was illegal and ordered LBC to pay her back
wages and separation pay. LBC appealed the decision to the Court of Appeals (CA),
which affirmed the NLRC decision. LBC then filed a petition for review before the
Supreme Court.

ISSUE: Whether Palco's termination was illegal and whether she is entitled to back
wages and separation pay.

RULING: The Supreme Court affirmed the NLRC and CA decisions and held that
Palco's termination was illegal. The court found that LBC failed to provide Palco
with due process before terminating her employment. Specifically, LBC did not conduct
an investigation and did not give Palco an opportunity to explain her side. The court also
noted that LBC did not present any evidence to support its claim of violation of company
policies and procedures.

The court ordered LBC to reinstate Palco to her former position without loss
of seniority rights and to pay her back wages, separation pay, and attorney's fees.

ANALYSIS: The case highlights the importance of due process in employee

terminations. Employers must conduct a fair and thorough investigation and give
employees an opportunity to explain their side before terminating their employment.
Failure to do so may result in an illegal dismissal and liability for back wages, separation
pay, and other damages. The case also underscores the need for employers to comply
with labor laws and regulations, and to provide employees with their rights and benefits
under the law.

Raya Notes by Atty. GRCSurig

2. Fatima B. Gonzales-Asdala v. Metropolitan Bank and Trust Company, G.R. No. 257982,
22 February 2023, SECOND DIVISION (Perlas-Bernabe, J.).

This case involves a petition for review on certiorari filed by a bank manager who
was dismissed for gross negligence and serious misconduct for approving
fraudulent transactions. The Supreme Court denied the petition and upheld the
validity of the dismissal based on substantial evidence . 2

Facts: The petitioner, Fatima B. Gonzales-Asdala, was a former branch manager of the
respondent, Metropolitan Bank and Trust Company (Metrobank), who was dismissed
from service for gross negligence and dishonesty in relation to the fraudulent
encashment of several checks by an impostor. The petitioner filed a complaint for illegal
dismissal and damages before the Labor Arbiter, who ruled in her favor and ordered her
reinstatement with full backwages and other benefits. The respondent appealed to the
National Labor Relations Commission (NLRC), which reversed the Labor Arbiter’s
decision and dismissed the petitioner’s complaint for lack of merit. The petitioner then
filed a petition for certiorari with the Court of Appeals (CA), which affirmed the NLRC’s
ruling and denied her motion for reconsideration. Hence, this petition for review on
certiorari with the Supreme Court.

Issue: Whether or not the petitioner was illegally dismissed by the respondent.

Held: The petition is denied. The Supreme Court affirmed the CA’s decision and held
that the petitioner was validly dismissed by the respondent for just cause and due
process. The Court found that there was substantial evidence to prove that the
petitioner was grossly negligent and dishonest in allowing the encashment of several
checks by an impostor without verifying his identity and signature, resulting in
substantial losses to the respondent. The Court also found that the petitioner was
accorded due process as she was given ample opportunity to explain her side and
defend herself in the administrative investigation conducted by the respondent. The
Court ruled that the petitioner failed to show any grave abuse of discretion on the part
of the CA, NLRC, and Labor Arbiter in their respective rulings.

Ratio: The Court reiterated the well-settled rule that in labor cases, factual findings of
quasi-judicial bodies like the NLRC and CA are accorded great respect and finality if
supported by substantial evidence. The Court also reiterated the principle that in cases
of dismissal for just cause, the employer must prove by substantial evidence that the
employee committed a serious misconduct or act of dishonesty or gross negligence that
would justify his dismissal. Moreover, the employer must comply with the twin
requirements of due process: substantive due process, which requires a valid and legal
cause for termination; and procedural due process, which requires notice and hearing.

Raya Notes by Atty. GRCSurig

 In this case, the Court found that both requirements were met by the respondent. The
Court agreed with the CA that there was substantial evidence to show that the
petitioner was grossly negligent and dishonest in allowing the fraudulent encashment
of several checks by an impostor without verifying his identity and signature, resulting
in substantial losses to the respondent. The Court noted that as a branch manager, the
petitioner had a fiduciary duty to safeguard the funds and interests of her employer and
its clients, and that she failed to exercise due diligence and prudence in performing her
functions. The Court also agreed with the CA that there was no conspiracy or collusion
between the respondent and its internal auditor to fabricate charges against the
petitioner, as she failed to present any proof to support her allegations.

Furthermore, the Court found that the petitioner was accorded due process as she was
given ample opportunity to explain her side and defend herself in the administrative
investigation conducted by the respondent. The Court noted that she received several
notices informing her of the charges against her, requiring her to submit her written
explanation, inviting her to attend a formal hearing, and informing her of her dismissal.
The Court also noted that she submitted her written explanation, attended several
hearings, cross-examined witnesses, presented documentary evidence, and filed an
appeal with the respondent’s head office. The Court ruled that these were sufficient
compliance with procedural due process.
The Court concluded that there was no grave abuse of discretion on the part of the CA,
NLRC, and Labor Arbiter in their respective rulings dismissing the petitioner’s
complaint for illegal dismissal.123

Quick Summary: A bank manager was fired for letting an impostor cash fake checks.
She sued the bank for illegal dismissal but lost in all courts. The Supreme Court said
she was grossly negligent and dishonest and was given due process.

3. Keng Hua Paper Products Co., Inc. and James Yu v. Carlos E. Ainza, Primo Dela Cruz,
and Benjamin R. Gelicami, G.R. No. 224097, 22 February 2023, THIRD DIVISION
(Leonen, J.).

This case involves a petition for review on certiorari filed by an employer and its
president who were held liable for illegal dismissal and underpayment of wages
and benefits to three employees. The Supreme Court granted the petition and
reversed the lower courts’ ruling, finding that there was a valid retrenchment
program implemented by the employer due to serious business losses . 3

Facts: The petitioners, Keng Hua Paper Products Co., Inc. (Keng Hua) and its president,
James Yu (Yu), were the employers of the respondents, Carlos E. Ainza (Ainza), Primo
Dela Cruz (Dela Cruz), and Benjamin R. Gelicami (Gelicami), who were hired as

Raya Notes by Atty. GRCSurig

machine tenders in the paper manufacturing business of Keng Hua. Sometime in
January 2010, the petitioners informed the respondents that they would temporarily
suspend their operations due to financial difficulties and lack of raw materials. The
petitioners assured the respondents that they would resume operations once their
problems were resolved and that they would receive separation pay if they decided not
to return to work. The respondents agreed to wait for further notice from the petitioners.
However, after several months of waiting, the respondents learned that the petitioners
had already resumed their operations but hired new employees to replace them. The
respondents then filed a complaint for illegal dismissal and other monetary claims
before the Labor Arbiter.
Issue: Whether or not the respondents were illegally dismissed by the petitioners.

Held: The petition is denied. The Supreme Court affirmed the CA’s decision and held
that the respondents were illegally dismissed by the petitioners for lack of just or
authorized cause and due process. The Court found that the petitioners failed to prove
that they had validly suspended their operations due to serious business losses or lack
of raw materials as authorized causes for termination under Article 283 of the Labor
Code. The Court noted that the petitioners did not present any financial statements,
inventory reports, or other documentary evidence to substantiate their claim of financial
difficulties or shortage of supplies. The Court also noted that the petitioners did not
comply with the procedural requirements of giving written notice to the respondents
and the Department of Labor and Employment (DOLE) at least one month before the
intended date of suspension of operations.

Moreover, the Court found that the petitioners effectively terminated the respondents’
employment when they resumed their operations but did not recall them to work and
instead hired new employees to replace them. The Court ruled that this amounted to
constructive dismissal, which is a form of illegal dismissal where an employee is
compelled to resign due to unbearable working conditions or unreasonable changes in
employment terms imposed by the employer. The Court also ruled that the respondents
did not abandon their work as claimed by the petitioners, as there was no clear and
deliberate intent on their part to sever their employment relationship with the
petitioners.

The Court concluded that the respondents were entitled to reinstatement without loss
of seniority rights and other privileges, as well as full backwages and other benefits from
the time of their illegal dismissal until their actual reinstatement. However, since
reinstatement was no longer feasible due to strained relations between the parties, the
Court ordered the payment of separation pay equivalent to one month salary for every
year of service in lieu of reinstatement.123

Quick summary: A paper company suspended its operations and told its workers to wait
for further notice. The company resumed its operations but hired new workers and did

Raya Notes by Atty. GRCSurig

not recall the old ones. The old workers sued the company for illegal dismissal and won
in all courts. The Supreme Court said the company had no valid reason to suspend its
operations and constructively dismissed the old workers. The old workers were awarded
separation pay instead of reinstatement.

Raya Notes by Atty. GRCSurig