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SURVEY OF RECENT CASES ON LABOR LAW


January 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on February 17, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases
Here are selected January 2012 rulings of the Supreme Court of the Philippines on labor law and
procedure:
Certiorari; effect of receipt of award. The prevailing partys receipt of the full amount of the judgment
award pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if
such receipt is qualified as without prejudice to the outcome of the petition for certiorari pending with
the Court of Appeals. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security
Agency, et al., G.R. No. 185280, January 18, 2011.
Constructive dismissal; change in position. Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving
a demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise of an
act amounting to dismissal but made to appear as if it were not,constructive dismissal may, likewise,
exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on
the part of the employee that it could foreclose any choice by him except to forego his continued
employment.In cases of a transfer of an employee, the rule is settled that the employer is charged with
the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine
business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the
employee. If the employer cannot overcome this burden of proof, the employees transfer shall be
tantamount to unlawful constructive dismissal. Jonathan V. Morales vs. Harbour Centre Port Terminal,
Inc., G.R. No. 174208, January 25, 2011.
Contract; novation. Novation is the extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or
principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person
in the rights of the creditor. In order for novation to take place, the concurrence of the following
requisites is indispensable: (1) There must be a previous valid obligation; (2) There must be an
agreement of the parties concerned to a new contract; (3) There must be the extinguishment of the old
contract; and (4) There must be the validity of the new contract. The parties impliedly extinguished the
first contract by agreeing to enter into the second contract. The records also reveal that the 2
nd
contract
extinguished the first contract by changing its object or principal. These contracts were for overseas
employment aboard different vessels. The first contract was for employment aboard the MV Stolt
Aspiration while the second contract involved working in another vessel, the MV Stolt Pride.
Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Undoubtedly,
he was still employed under the first contract when he negotiated with petitioners on the second
contract. Since Madequillo was still employed under the first contract when he negotiated with
petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen
Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; money claims. On the issue of how the seafarer will be compensated by reason of the
unreasonable non-deployment, the Supreme Court decreed the application of Section 10 of Republic Act
No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving
Filipino workers for overseas deployment. The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear
and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x
(Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase
of the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that
one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly
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proved. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January
18, 2011.
Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary
measure resorted to by the employer pending investigation of an alleged malfeasance or misfeasance
committed by an employee. The employer temporarily bars the employee from working if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his co-
workers. On the other hand, the penalty of suspension refers to the disciplinary action imposed on the
employee after an official investigation or administrative hearing is conducted. The employer exercises
its right to discipline erring employees pursuant to company rules and regulations. In the present case,
Henry Delada filed a grievance against Manila Pavilion Hotel (MPH). Failing to reach a settlement,
Delada lodged a Complaint before the National Conciliation and Mediation Board, which was eventually
referred to a panel of voluntary arbitrators (PVA). Meanwhile, citing security and safety reasons, MPH
placed Delada on a 30-day preventive suspension and proceeded with the administrative case against
him. MPH eventually found Delada liable for insubordination and willful disobedience of the transfer
order and imposed upon him a penalty of 90-day suspension. The PVA ruled that there was no legal and
factual basis to support MPHs imposition of preventive suspension on Delada, and that the penalty of
90-day suspension imposed by MPH against Delada went beyond the 30-day period of preventive
suspension prescribed by the Implementing Rules of the Labor Code. PVA also ruled that MPH lost its
authority to continue with the administrative proceedings for insubordination and willful disobedience
of the transfer order and to impose the penalty of 90-day suspension on Delada. According to the panel,
it acquired exclusive jurisdiction over the issue when the parties submitted the aforementioned issues
before it. The Supreme Court held that MPH did not lose its authority to discipline, and that MPH had
the authority to continue with the administrative proceedings for insubordination and willful
disobedience against Delada and to impose on him the penalty of suspension. Manila Pavilion Hotel, etc.
vs. Henry Delada, G.R. No. 189947, January 25, 2011.
Employee; release and quitclaim. While the law looks with disfavor upon releases and quitclaims by
employees who are inveigled or pressured into signing them by unscrupulous employers seeking to
evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborers
claims should be respected by the courts as the law between the parties. Considering the petitioners
claim of fraud and bad faith against Philcomsat to be unsubstantiated, the Supreme Court found the
quitclaim in dispute to be a legitimate waiver. The Court of Appeals and the National Labor Relations
Commission were unanimous in holding that the petitioner voluntarily executed the subject quitclaim.
The Supreme Court is not a trier of facts, and this doctrine applies with greater force in labor cases.
Factual questions are for the labor tribunals to resolve and whether the petitioner voluntarily executed
the subject quitclaim is a question of fact. In this case, the factual issues have already been determined
by the National Labor Relations Commission and its findings were affirmed by the Court of Appeals.
Judicial review by the Supreme Court does not extend to a reevaluation of the sufficiency of the
evidence upon which the proper labor tribunal has based its determination. Hypte R. Aujero vs.
Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.
Employee benefit; holiday pay, service incentive leave pay and proportionate 13
th
month pay. Under the
Labor Code, the employee is entitled to his regular rate on holidays even if he does not work. Likewise,
express provision of the law entitles him to service incentive leave benefit if he has rendered service for
more than a year already. Furthermore, under Presidential Decree No. 851, the employee should be
paid his 13
th
month pay. The employer has the burden of proving that it has paid these benefits to its
employees. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes,
G.R. No. 173648, January 16, 2011.
Employee benefit; overtime pay. In the absence of any concrete proof that additional service beyond
the normal working hours and days had been rendered, overtime pay cannot be granted. Handwritten
itemized computations are self-serving, unreliable and unsubstantiated evidence to sustain the grant of
salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no
way of verifying the truth of the handwritten entries stated therein. AbdulJuahid R. Pigcaulan vs.
Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National Labor
Relations Commission, G.R. No. 159887, April 12, 2006, which stated that: Thus, the Court has applied
the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine
Carriers v. NLRC, G.R. No. 123891, February 28, 2001, seaman Carlos Nietes was found to be suffering
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from congestive heart failure and cardiomyopathy and was declared as unfit to work by the company-
accredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v.
Sanico, G.R. No. 134028, December 17, 1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA,
G.R. No. 116015, July 31, 1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that disability
should not be understood more on its medical significance but on the loss of earning capacity.
Permanent total disability means disablement of an employee to earn wages in the same kind of work,
or 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 attainment could do. It does not mean absolute helplessness. It likewise
cited Bejerano to reiterate that in a disability compensation, it is not the injury which is compensated,
but rather it is the incapacity to work resulting in the impairment of ones earning capacity. The Court
also cited the more recent case of Crystal Shipping, Inc. v. Natividad, G.R. No. 154798, October 20, 2005,
applying the same principles, and GSIS v. Cadiz, G.R. No. 145093, July 8, 2003, and Ijares v. CA, G.R. No.
105854, August 26, 1999, which declared that permanent disability is the 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. Magsaysay Maritime Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.
Employee dismissal; due process. Notice and hearing constitute the essential elements of due process in
the dismissal of employees. The employer must furnish the employee with two written notices before
termination of employment can be legally effected. The first apprises the employee of the particular acts
or omissions for which dismissal is sought. The second informs the employee of the employers decision
to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an
opportunity to be heard, and not that an actual hearing should always and indispensably be held. These
requirements were satisfied in this case. The first required notice was dated November 3, 2003,
sufficiently notifying Yabut of the particular acts being imputed against him, as well as the applicable law
and the company rules considered to have been violated. On November 17, 2003, Meralco conducted a
hearing on the charges against the petitioner where he was accorded the right to air his side and
present his defenses on the charges against him. Significantly, a high-ranking officer of the supervisory
union of Meralco assisted him during the said investigation. His sworn statement that forms part of the
case records even listed the matters that were raised during the investigation. Finally, Meralco served a
notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified the latter of the companys
decision to dismiss him from employment on the grounds clearly discussed therein.Norman Yabut vs.
Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is
necessary to comply with the requirements of due process prior to the termination. Lolita S. Concepcion
vs. Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the want
of care in the performance of ones duties and habitual neglect has been defined as repeated failure
to perform ones duties for a period of time, depending upon the circumstances. These are not overly
technical terms, which, in the first place, are expressly sanctioned by the Labor Code of the Philippines,
to wit: ART. 282. Termination by employer. An employer may terminate an employment for any of the
following causes: [xxx](b) Gross and habitual neglect by the employee of his duties; [xxx] Diosdado
Bitara was dismissed from service due to habitual tardiness and absenteeism, and for having continued
disregarding attendance policies despite his undertaking to report on time. His weekly time record for
the first quarter of the year 2000 revealed that he came late 19 times out of the 47 times he reported
for work. He also incurred 19 absences out of the 66 working days during the quarter. His absences
without prior notice and approval from March 11-16, 2000 were considered to be the most serious
infraction of all because of its adverse effect on business operations. The Supreme Court held that even
in the absence of a written company rule defining gross and habitual neglect of duties, Bitaras
omissions qualify as such warranting his dismissal from the service. Mansion Printing Center and
Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120, January 25, 2011.
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the
existence of a just and valid cause. Article 282 of the Labor Code enumerates the just causes for
termination by the employer: (a) serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or the latters representative in connection with the employees work; (b)
gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of
the trust reposed in him by his employer or his duly authorized representative; (d) commission of a
crime or offense by the employee against the person of his employer or any immediate member of his
family or his duly authorized representative; and (e) other causes analogous to the foregoing.
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It is unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a
conviction before terminating him when there is already sufficient showing of the wrongdoing.
Requiring that certainty may prove too late for the employer, whose loss may potentially be beyond
repair. In the present case, no less than the DOJ Secretary found probable cause for qualified theft
against Concepcion. That finding was enough to justify her termination for loss of confidence. Lolita S.
Concepcion vs. Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24,
2011.
Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid ground
for dismissal, it must be based on a willful breach of trust and founded on clearly established facts. A
breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of
trust and confidence must rest on substantial grounds and not on the employers arbitrariness, whims,
caprices or suspicion. Manila Electric Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January
30, 2011.
Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an
employment because of an employees serious misconduct, a cause that was present in this case in view
of the petitioners violation of his employers code of conduct. Misconduct is defined as the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in judgment. For serious
misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it
must relate to the performance of the employees duties; and (c) it must show that the employee has
become unfit to continue working for the employer. Installation of shunting wires is without doubt a
serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully obtain
electric power through unlawful means. The act clearly relates to the petitioners performance of his
duties given his position as branch field representative who is equipped with knowledge on meter
operations, and who has the duty to test electric meters and handle customers violations of contract.
Instead of protecting the companys interest, the petitioner himself used his knowledge to illegally
obtain electric power from Meralco. His involvement in this incident deems him no longer fit to continue
performing his functions for respondent-company. Norman Yabut vs. Manila Electric Company and
Manuel M. Lopez, G.R. No. 190436, January 16, 2011.
Employer-employee relationship; commencement. The POEA Standard Employment Contract provides
that employment shall commence upon the actual departure of the seafarer from the airport or
seaport in the port of hire. Distinction must be made between the perfection of the employment
contract and the commencement of the employer-employee relationship. The perfection of the
contract, which in this case coincided with the date of execution thereof, occurred when petitioner and
respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein.
The commencement of the employer-employee relationship would have taken place had petitioner
been actually deployed from the point of hire. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio
Modequillo, G.R. No. 177498, January 18, 2011.
Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has already
become final and executory as to Canoy since he did not appeal from it. Canoy cannot now simply
incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one
of the petitioners therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or
Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be stated as
follows: (1) The judgment or decree of a court of competent jurisdiction on the merits concludes the
parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same
cause of action either before the same or any other tribunal; and (2) Any right, fact, or matter in issue
directly adjudicated or necessarily involved in the determination of an action before a competent court
in which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein
and cannot again be litigated between the parties and their privies whether the claim or demand,
purpose, or subject matter of the two suits is the same or not. These two main rules mark the distinction
between the principles governing the two typical cases in which a judgment may operate as evidence. In
speaking of these cases, the first general rule, and which corresponds to paragraph (b) of Section 47 of
Rule 39 of the Rules of Court is referred to as bar by former judgment while the second general rule,
which is embodied in paragraph (c) of the same section, is known as conclusiveness of judgment. The
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present labor case is closely related to the civil case that was decided with finality. The acts and
omissions alleged by the Bank in the civil case as basis of its counterclaim against Mauricio are the very
same acts and omissions which were used as grounds to terminate his employment. Considering that it
has already been conclusively determined with finality in the civil case that the questioned acts of
Mauricio were well within his discretion as branch manager and approving officer of the Bank, and the
same were sanctioned by the Head Office, the Supreme Court found that the Court of Appeals did not
err in holding that there was no valid or just cause for the Bank to terminate Mauricios employment.
Prudential Bank (now Bank of the Philippine Islands) vs. Antonio S.A. Mauricio, substituted by his legal
heirs Maria Fe, Voltaire, Antonio, Jr., Antonio, Earl John, and Francisco Roberto all surnamed Mauricio,
G.R. No. 183350, January 18, 2011.
Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, G.R.
No. 90426, December 15, 1989, the Supreme Court ruled that the voluntary arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own
authority subject only, in a proper case, to the certiorari jurisdiction of this Court. It was also held in
that case that the failure of the parties to specifically limit the issues to that which was stated allowed
the arbitrator to assume jurisdiction over the related issue. In Ludo & Luym Corporation v. Saornido, G.R.
No. 140960, January 20, 2003, the Supreme Court recognized that voluntary arbitrators are generally
expected to decide only those questions expressly delineated by the submission agreement; that,
nevertheless, they can assume that they have the necessary power to make a final settlement on the
related issues, since arbitration is the final resort for the adjudication of disputes. Thus, the Supreme
Court ruled that even if the specific issue brought before the arbitrators merely mentioned the question
of whether an employee was discharged for just cause, they could reasonably assume that their
powers extended beyond the determination thereof to include the power to reinstate the employee or
to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the
date of regularization of the employee, law and jurisprudence gave them enough leeway as well as
adequate prerogative to determine the entitlement of the employees to higher benefits in accordance
with the finding of regularization. Indeed, to require the parties to file another action for payment of
those benefits would certainly undermine labor proceedings and contravene the constitutional mandate
providing full protection to labor and speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada,
G.R. No. 189947, January 25, 2011.
Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed with in
absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the strict
implementation of the rules and considered them inviolable when it is shown that the patent lack of
merit of the appeals render liberal interpretation pointless and naught. The contrary obtains in this case
as Philcomsats case is not entirely unmeritorious. Specifically, Philcomsat alleged that the petitioners
execution of the subject quitclaim was voluntary despite his claim that he did not do so. Philcomsat
likewise argued that the petitioners educational attainment and the position he occupied in
Philcomsats hierarchy militate against his claim that he was pressured or coerced into signing the
quitclaim. The emerging trend in our jurisprudence is to afford every party-litigant the amplest
opportunity for the proper and just determination of his cause free from the constraints of
technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized substantial
justice over the rigid and stringent application of procedural rules. In the present case, the Supreme
Court held that the CA was correct in not finding grave abuse of discretion in the NLRCs decision to give
due course to Philcomsats appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine
Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.
Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment of
personnel is permissible even without the employees prior consent, it cannot be done when the
transfer is a preliminary step toward his removal, or a scheme to lure him away from his permanent
position, or when it is designed to indirectly terminate his service, or force his resignation. Such a
transfer would in effect circumvent the provision which safeguards the tenure of office of those who are
in the Civil Service. Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998,
defines constructive dismissal as a situation when an employee quits his work because of the agency
heads unreasonable, humiliating, or demeaning actuations which render continued work impossible.
Hence, the employee is deemed to have been illegally dismissed. This may occur although there is no
diminution or reduction of salary of the employee. It may be a transfer from one position of dignity to a
more servile or menial job. Republic of the Phil., represented by the Civil Service Commission vs. Minerva
M.P. Pacheco, G.R. No. 178021, January 31, 2011.
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Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement is no
longer feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the
decision should separation pay not be paid in the meantime. It is the employees actual receipt of the
full amount of his separation pay that will effectively terminate the employment of an illegally dismissed
employee. Otherwise, the employer-employee relationship subsists and the illegally dismissed employee
is entitled to backwages, taking into account the increases and other benefits, including the 13th month
pay, that were received by his co-employees who are not dismissed. It is the obligation of the employer
to pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all
other benefits and bonuses and general increases, to which he would have been normally entitled had
he not been dismissed and had not stopped working. Timoteo H. Sarona vs. National Labor Relations
Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.
Reorganization; management prerogative. Admittedly, the right of employees to security of tenure does
not give them vested rights to their positions to the extent of depriving management of its prerogative
to change their assignments or to transfer them. By management prerogative is meant the right of an
employer to regulate all aspects of employment, such as the freedom to prescribe work assignments,
working methods, processes to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of workers. Although jurisprudence recognizes
said management prerogative, it has been ruled that the exercise thereof, while ordinarily not interfered
with, is not absolute and is subject to limitations imposed by law, collective bargaining agreement, and
general principles of fair play and justice. Thus, an employer may transfer or assign employees from one
office or area of operation to another, provided there is no demotion in rank or diminution of salary,
benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. Indeed, having the right should
not be confused with the manner in which that right is exercised. Jonathan V. Morales was hired by
Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly
salary of P18,000.00. Regularized on November 17, 2000, Morales was promoted to Division Manager of
the Accounting Department, for which he was compensated a monthly salary of P33,700.00, plus
allowances starting July 1, 2002. Subsequent to HCPTIs transfer to its new offices at Vitas, Tondo,
Manila on January 2, 2003, Morales received an inter-office memorandum dated March 27, 2003,
reassigning him to Operations Cost Accounting, tasked with the duty of monitoring and evaluating all
consumables requests, gears and equipment related to the corporations operations and of interacting
with its sub-contractor, Bulk Fleet Marine Corporation. The memorandum was issued by HCPTIs new
Administration Manager, duly noted by its new Vice President for Administration and Finance, and
approved by its President and Chief Executive Officer. Morales protested that his reassignment was a
clear demotion since the position to which he was transferred was not even included in HCPTIs plantilla.
In response to Morales grievance that he had been effectively placed on floating status, an inter-office
memorandum was issued on April 4, 2003 to the effect that transfer of employees is a management
prerogative and that HCPTI had the right and responsibility to find the perfect balance between the
skills and abilities of employees to the needs of the business. However, the Supreme Court found that
HCPTI did not even bother to show that it had implemented a corporate reorganization and/or approved
a new plantilla of positions which included the one to which Morales was being transferred. Thus, the
Court reinstated the NLRCs July 29, 2005 Decision which found Morales reassignment to be a clear
demotion despite lack of showing of diminution of salaries and benefits. Jonathan V. Morales vs.
Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.
Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a petition for
review on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law.
Moreover, if factual findings of the National Labor Relations Commission and the Labor Arbiter have
been affirmed by the Court of Appeals, the Supreme Court accords them the respect and finality they
deserve. It is well-settled and oft-repeated that findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect, but finality when affirmed by the Court of
Appeals.Nevertheless, the Supreme Court will not hesitate to deviate from what are clearly procedural
guidelines and disturb and strike down the findings of the Court of Appeals and those of the labor
tribunals if there is a showing that they are unsupported by the evidence on record or there was a
patent misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is consistent
with the findings of the labor tribunals does not per se conclusively demonstrate the correctness
thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if only to
rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented.
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Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No.
185280, January 18, 2011.
(Leslie thanks Dianne Caroline V. Ducepec for assisting in the preparation of this post.)
February 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on March 5, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged appeal, Civil Service Commission, constructive dismissal, dismissal, employee benefits,
employer-employee relationship, forum shopping, NLRC, probationary employment, reinstatement, res
judicata, security of tenure
Here are select February 2012 rulings of the Supreme Court on labor law and procedure:
Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial bodies,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only respect but finality when affirmed by the Court of Appeals. Factual findings of quasi-
judicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even
finality by the Supreme Court, more so when they coincide with those of the Labor Arbiter. Such factual
findings are given more weight when the same are affirmed by the Court of Appeals. In the present case,
the Supreme Court found no reason to depart from these principles since the Labor Arbiter found that
there was substantial evidence to conclude that Oasay had breached the trust and confidence of Palacio
Del Gobernador Condominium Corporation, which finding the NLRC had likewise upheld. Sebastian F.
Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306,
February 6, 2012.
Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its existence
to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the implementing
and operating arm of the Bases Conversion and Development Authority tasked to manage the Clark
Special Economic Zone. Expressly, CDC was formed in accordance with Philippine corporation laws and
existing rules and regulations promulgated by the Securities and Exchange Commission pursuant to
Section 16 of Republic Act 7227. CDC, a government owned or controlled corporation without an
original charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the
Constitution, the civil service embraces only those government owned or controlled corporations with
original charter. As such, CDC and its employees are covered by the Labor Code and not by the Civil
Service Law. Antonio B. Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.
Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of resignation. Article 285 of
the Labor Code recognizes termination by the employee of the employment contract by serving written
notice on the employer at least one (1) month in advance. Given that provision, the law contemplates
the requirement of a written notice of resignation. In the absence of a written resignation, it is safe to
presume that the employer terminated the seafarers. In this case, the Supreme Court found the
dismissal of De Gracia, et al. to be illegal since Cosmoship merely sent a telex to Skippers, the local
manning agency, claiming that De Gracia, et al. were repatriated because the latter voluntarily pre-
terminated their contracts. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd.
vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
Dismissal; substantive and procedural due process. For a workers dismissal to be considered valid, it
must comply with both procedural and substantive due process. The legality of the manner of dismissal
constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due
process. Procedural due process in dismissal cases consists of the twin requirements of notice and
hearing. The employer must furnish the employee with two written notices before the termination of
employment can be effected: (1) the first notice apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second notice informs the employee of the
employers decision to dismiss him. Before the issuance of the second notice, the requirement of a
hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that
an actual hearing be conducted. Substantive due process, on the other hand, requires that dismissal by
the employer be made based on a just or authorized cause under Articles 282 to 284 of the Labor Code.
In this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their
dismissal. Cosmoship furnished a telex to Skippers, the local manning agency, claiming that De Gracia, et
al. were repatriated because they voluntarily pre-terminated their contracts. This telex was given
8

credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the
employment contract akin to resignation and no illegal dismissal. However, as correctly ruled by the
CA, the telex message is a biased and self-serving document that does not satisfy the requirement of
substantial evidence. If, indeed, De Gracia, et al. voluntarily pre-terminated their contracts, then De
Gracia, et al. should have submitted their written resignations. Skippers United Pacific, Inc. and Skippers
Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity or act of
liberality of the giver which the recipient cannot demand as a matter of right. The grant of a bonus is
basically a management prerogative which cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses. However, a bonus becomes a demandable
or enforceable obligation if the additional compensation is granted without any conditions imposed for
its payment. In such case, the bonus is treated as part of the wage, salary or compensation of the
employee. Particularly instructive is the ruling of the Court in Metro Transit Organization, Inc. v.
National Labor Relations Commission (G.R. No. 116008, July 11, 1995) where the Court said:
Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its
payment. If it is additional compensation which the employer promised and agreed to give without any
conditions imposed for its payment, such as success of business or greater production or output, then it
is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is
achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some
employees and only when their labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefore, not a part of the wage.
In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecoms
Employees Union agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month
bonuses in the 1998-2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement,
which contained no qualification for its payment. There were no conditions specified in the CBA Side
Agreements for the grant of the bonus. There was nothing in the relevant provisions of the CBA which
made the grant of the bonus dependent on the companys financial standing or contingent upon the
realization of profits. There was also no statement that if the company derives no profits, no bonus will
be given to the employees. In fine, the payment of these bonuses was not related to the profitability of
business operations. Consequently, the giving of the subject bonuses cannot be peremptorily
withdrawn by Eastern Telecommunications Phils., Inc. without violating Article 100 of the Labor Code,
which prohibits the unilateral elimination or diminution of benefits by the employer. The rule is settled
that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on
the constitutional mandate to protect the rights of workers and to promote their welfare and to afford
labor full protection. Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees
Union, G.R. No. 185665, February 8, 2012.
Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the
burden of proving that the transfer of an employee is for just or valid ground, such as genuine business
necessity. The employer must demonstrate that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee and that the transfer does not involve a demotion in rank or a diminution in
salary and other benefits. If the employer fails to overcome this burden of proof, the employees
transfer is tantamount to unlawful constructive dismissal. *Merck Sharp and Dohme (Philippines) v.
Robles, G.R. No. 176506, November 25, 2009] Petitioners failed to satisfy the burden of proving that the
transfer was based on just or valid ground. Petitioners bare assertions of imminent threat from the
respondents are mere accusations which are not substantiated by any proof. The Supreme Court agreed
with the Court of Appeals in ruling that the transfer of respondents amounted to a demotion. Julies
Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.
Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for termination,
Article 284 of the Labor Code provides that 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. In order to validly
terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing
the Labor Code requires that: (i) the employee be suffering from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees, and (ii)
a certification by a competent public health authority that the disease is of such nature or at such a
9

stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If
the disease or ailment can be cured within the period, the employer shall not terminate the employee
but shall ask the employee to take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health. In Triple Eight Integrated Services, Inc. v.
NLRC (G.R. No. 129584, December 3, 1998), the Court held that the requirement for a medical certificate
under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness
and, thus, defeat the public policy on the protection of labor.
In this case, Ynson should have reported back to work or attended the investigations conducted by
Wuerth Philippines, Inc. immediately upon being permitted to work by his doctors, knowing that his
position remained vacant for a considerable length of time. However, he did not even show any sincere
effort to return to work. Clearly, since there is no more hindrance for him to return to work and attend
the investigations set by Wuerth Philippines, Inc., Ynsons failure to do so was without any valid or
justifiable reason. His conduct shows his indifference and utter disregard of his work and his employers
interest, and displays his clear, deliberate, and gross dereliction of duties. The power to dismiss an
employee is a recognized prerogative inherent in the employers right to freely manage and regulate his
business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-
destruction of the employer. The workers right to security of tenure is not an absolute right, for the law
provides that he may be dismissed for cause. As a general rule, employers are allowed wide latitude of
discretion in terminating the employment of managerial personnel. The mere existence of a basis for
believing that such employee has breached the trust and confidence of his employer would suffice for
his dismissal. Needless to say, an irresponsible employee like Ynson does not deserve a position in the
workplace, and it is Wuerth Philippines, Inc.s management prerogative to terminate his employment.
To be sure, an employer cannot be compelled to continue with the employment of workers when
continued employment will prove inimical to the employers interest. Wuerth Philippines, Inc. vs.
Rodante Ynson, G.R. No. 175932, February 15, 2012.
Employee dismissal; due process. With respect to due process requirement, the employer is bound to
furnish the employee concerned with two (2) written notices before termination of employment can be
legally effected. One is the notice apprising the employee of the particular acts or omissions for which
his dismissal is sought and this may loosely be considered as the proper charge. The other is the notice
informing the employee of the managements decision to sever his employment. This decision,
however, must come only after the employee is given a reasonable period from receipt of the first
notice within which to answer the charge, thereby giving him ample opportunity to be heard and defend
himself with the assistance of his representative should he so desire. The requirement of notice, it has
been stressed, is not a mere technicality but a requirement of due process to which every employee is
entitled. Here, Palacio Del Gobernador Condominium Corporation complied with the two-notice rule
stated above. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T.
Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; due process. Cityland did not afford Galang the required notice before he was
dismissed. As the Court of Appeals noted, the investigation conference Tupas called to look into the
janitors complaints against Galang did not constitute the written notice required by law as he had no
clear idea what the charges against him were. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio
Baldemor, G.R. No. 173291, February 8, 2012.
Employee dismissal; grounds. The validity of an employees dismissal from service hinges on the
satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the
employee was accorded due process the basic components of which are the opportunity to be heard
and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of
the causes provided in the Labor Code of the Philippines. This constitutes the substantive aspect. On the
substantive aspect, the Supreme Court found that Palacio Del Gobernador Condominium Corporations
termination of the Oasays employment was for a cause provided under the Labor Code. In terminating
Oasays employment, Palacio Del Gobernador Condominium Corporation invoked loss of trust and
confidence. The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be holding a position of trust and confidence. Here, it is indubitable that
Oasay holds a position of trust and confidence. The position of Building Administrator, being managerial
in nature, necessarily enjoys the trust and confidence of the employer. The second requisite is that there
must be an act that would justify the loss of trust and confidence. Loss of trust and confidence, to be a
valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established
10

facts. Palacio Del Gobernador Condominium Corporation had established, by clear and convincing
evidence, Oasays acts which justified its loss of trust and confidence on the former. Sebastian F. Oasay,
Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6,
2012.
Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to continue his
employment. The evidence supports the view that he continued to exhibit undesirable traits as an
employee and as a person, in relation to both his co-workers and his superiors, particularly Tupas, her
immediate supervisor. Quoting the Court of Appeals decision with approval, the Supreme Court held:
Without offering any possible ill motive that might have impelled [the respondents] to summarily
dismiss [Galang], who admitted having been absorbed by the former as janitor upon the termination of
his contract with his agency, this Court is more inclined to give credence to the evidence pointing to the
conclusion that *Galangs+ employment was actually severed for a just cause. Romeo A. Galang vs.
Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.
Employer; right to discipline employee. In Sagales v. Rustans Commercial Corporation (G.R. No. 166554,
November 27, 2008), the Supreme Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its employees,
this prerogative is subject to the regulation by the State in the exercise of its police power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only
the corresponding penalty demanded by the circumstance. The penalty must be commensurate with
the act, conduct or omission imputed to the employee and must be imposed in connection with the
disciplinary authority of the employer. (Emphasis in the original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of
dismissal. There was no warning or admonition for respondents violation of team rules, only outright
termination of his services for an act which could have been punished appropriately with a severe
reprimand or suspension. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R.
No. 187122, February 22, 2012.
Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. The issue of Javiers alleged illegal
dismissal is anchored on the existence of an employer-employee relationship between him and Fly Ace.
As the records bear out, the Labor Arbiter and the Court of Appeals found Javiers claim of employment
with Fly Ace as wanting and deficient. Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does
not mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to
ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere
in the rules are they provided a license to completely discount evidence, or the lack of it. The quantum
of proof required, however, must still be satisfied. Hence, when confronted with conflicting versions on
factual matters, it is for them in the exercise of discretion to determine which party deserves credence
on the basis of evidence received, subject only to the requirement that their decision must be supported
by substantial evidence. *Salvador Lacorte v. Hon. Amado G. Inciong, 248 Phil. 232 (1988)] Accordingly,
Javier needs to show by substantial evidence that he was indeed an employee of the company against
which he claims illegal dismissal. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo,
G.R. No. 192558, February 15, 2012.
Employer-employee relationship; test. To determine the existence of an employer-employee
relationship, the following are considered: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. Of
these elements, the most important criterion is whether the employer controls or has reserved the right
to control the employee not only as to the result of the work but also as to the means and methods by
which the result is to be accomplished. In this case, Javier was not able to persuade the Court that the
above elements exist in his case. He could not submit competent proof that Fly Ace engaged his services
as a regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his
conduct should be while at work. In other words, Javiers allegations did not establish that his
relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of the
above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an
agreement with a hauling company to undertake the delivery of its goods. It was also baffling to realize
11

that Javier did not dispute Fly Aces denial of his services exclusivity to the company. In short, all that
Javier laid down were bare allegations without corroborative proof. Bitoy Javier (Danilo P. Javier) vs. Fly
Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.
Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or
birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest
their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of
the contract takes place when the parties agree upon the essential elements of the contract.
Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof. Under Article 1315 of the Civil Code, a contract is perfected
by mere consent and from that moment the parties are bound not only to the fulfillment of what has
been expressly stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law. An employment contract, like any other contract, is perfected at
the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements
thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the
contract and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal,
International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a 3-
month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is the service
to be rendered by Agustin and Minimo on board the vessel while the cause of the contract is the
monthly compensation they expect to receive. These terms were embodied in the Contract of
Employment which was executed by the parties. The agreement upon the terms of the contract was
manifested by the consent freely given by both parties through their signatures in the contract. Neither
parties disavow the consent they both voluntarily gave. Thus, there is a perfected contract of
employment. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al.,
G.R. No. 179469, February 15, 2012.
Employment relationship; commencement. The commencement of an employer-employee relationship
must be treated separately from the perfection of an employment contract. Santiago v. CF Sharp Crew
Management, Inc., (G.R. No. 162419, 10 July 2007) is an instructive precedent on this point. In that
case, the Supreme Court made a distinction between the perfection of the employment contract and
the commencement of the employer-employee relationship, thus:
The perfection of the contract, which in this case coincided with the date of execution thereof, occurred
when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and
conditions therein. The commencement of the employer-employee relationship, as earlier discussed,
would have taken place had petitioner been actually deployed from the point of hire. Thus, even before
the start of any employer-employee relationship, contemporaneous with the perfection of the
employment contract was the birth of certain rights and obligations, the breach of which may give rise to
a cause of action against the erring party.
Despite the fact that the employer-employee relationship has not commenced due to the failure to
deploy Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising from the
perfected Contract of Employment, such as the right to demand performance by C.F. Sharp of its
obligation under the contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety
Corporation, et al., G.R. No. 179469, February 15, 2012.
Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there be
identity of parties or at least such parties that represent the same interests in both actions; (b) there be
identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity of the two preceding particulars is such that any judgment rendered in one action will,
regardless of which party is successful, amount to res judicata in the other action. Petitioners are correct
as to the first two requisites of forum shopping. First, there is identity of parties involved: Negros
Slashers Inc. and respondent Teng. Second, there is identity of rights asserted i.e., the right of
management to terminate employment and the right of an employee against illegal
termination. However, the third requisite of forum shopping is missing in this case. Any judgment or
ruling of the Office of the Commissioner of the Metropolitan Basketball Association will not amount to
res judicata. Res judicata is defined in jurisprudence as to have four basic elements: (1) the judgment
sought to bar the new action must be final; (2) the decision must have been rendered by a court having
jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment
on the merits; and (4) there must be as between the first and second action, identity of parties, subject
matter, and causes of action. Here, although contractually authorized to settle disputes, the Office of
12

the Commissioner of the Metropolitan Basketball Association is not a court of competent jurisdiction as
contemplated by law with respect to the application of the doctrine of res judicata. At best, the Office
of the Commissioner of the Metropolitan Basketball Association is a private mediator or go-between as
agreed upon by team management and a player in the Metropolitan Basketball Association Players
Contract of Employment. Any judgment that the Office of the Commissioner of the Metropolitan
Basketball Association may render will not result in a bar for seeking redress in other legal
venues. Hence, respondents action of filing the same complaint in the Regional Arbitration Branch of
the NLRC does not constitute forum shopping. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan
vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified and
certified against forum-shopping by the parties-in-interest themselves. The purpose of verification is to
secure an assurance that the allegations in the pleading are true and correct and have been filed in good
faith. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent
Clark Development Corporation as the employer. A corporation can only exercise its powers and
transact its business through its board of directors and through its officers and agents when authorized
by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the
board of directors. The physical acts of the corporation, like the signing of documents, can be performed
only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the
board. Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the
Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent
corporation, may be considered as the appellant and employer referred to by the NLRC Rules of
Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B. Salenga, et al.
vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.
Labor; effect if procedural due process not followed but with a valid cause for termination. It is required
that the employer furnish the employee with two written notices: (1) 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; and (2) 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. The twin requirements of notice and hearing constitute the
elements of due process in cases of employees dismissal. The requirement of notice is intended to
inform the employee concerned of the employers intent to dismiss and the reason for the proposed
dismissal. Upon the other hand, the requirement of hearing affords the employee an opportunity to
answer his employers charges against him and accordingly, to defend himself therefrom before
dismissal is effected. Obviously, the second written notice, as indispensable as the first, is intended to
ensure the observance of due process. In this case, there was only one written notice which required
respondents to explain within five (5) days why they should not be dismissed from the
service. Alcovendas was the only one who signed the receipt of the notice. The others, as claimed by
Lynvil, refused to sign. The other employees argue that no notice was given to them. Despite the
inconsistencies, what is clear is that no final written notice or notices of termination were sent to the
employees. Due to the failure of Lynvil to follow the procedural requirement of two-notice rule, nominal
damages in the amount of P50,000 were granted to Ariola, et al. despite their dismissal for just cause.
Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate directors
and officers are solidarily liable with the corporation for the termination of employment of employees
done with malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an
employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a
manner contrary to good morals, good customs or public policy. The term bad faith contemplates a
state of mind affirmatively operating with furtive design or with some motive of self-interest or will or
for ulterior purpose. The Supreme Court agreed with the ruling of both the NLRC and the Court of
Appeals when they pronounced that there was no evidence on record that indicates commission of bad
faith on the part of De Borja, the general manager of Lynvil, who was tasked with the supervision of the
employees and the operation of the business. There is no proof that he imposed on Ariola, et al. the
por viaje provision for purpose of effecting their summary dismissal. Lynvil Fishing Enterprises, Inc. vs.
Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; nature of employment; security of tenure. In the context of these facts (1) Ariola, et al. were
doing tasks necessary to Lynvils fishing business with positions ranging from captain of the vessel to
bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3)
13

this arrangement continued for more than ten years the Court believed that Lynvil intended to go
around the security of tenure of Ariola, et al. as regular employees. The Court held that by the express
provisions of the second paragraph of Article 280 which cover casual employment, Ariola, et al. had
become regular employees of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No.
181974, February 1, 2012.
Labor; procedural and substantive due process; grounds for valid termination; breach of trust. Just cause
is required for a valid dismissal. The Labor Code provides that an employer may terminate an
employment based on fraud or willful breach of the trust reposed on the employee. Such breach is
considered willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must also be
based on substantial evidence and not on the employers whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer. Loss of confidence must not be
indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was
arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-
related and shows that the employee concerned is unfit to continue working for the employer. In
addition, loss of confidence as a just cause for termination of employment is premised on the fact that
the employee concerned holds a position of responsibility, trust and confidence or that the employee
concerned is entrusted with confidence in delicate matters, such as the handling or care and protection
of the property and assets of the employer. The betrayal of this trust is the essence of the offense for
which an employee is penalized. The Supreme Court found that breach of trust is present in this case,
when Ariola (the captain), Alcovendas (Chief Mate), Calinao (Chief Engineer), Nubla (cook), Baez (oiler),
and Sebullen (bodegero) conspired with one another and stole pampano and tangigue fish and
delivered them to another vessel, to the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G.
Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; public prosecutors decision not binding on the labor tribunal. The Supreme Court has held in
Nicolas v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a criminal conviction
is not necessary to find just cause for employment termination. Otherwise stated, an employees
acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will
not preclude a determination in a labor case that he is guilty of acts inimical to the employers interests.
In the reverse, the finding of probable cause is not followed by automatic adoption of such finding by
the labor tribunals. In other words, whichever way the public prosecutor disposes of a complaint, the
finding does not bind the labor tribunal. Lynvil contends that the filing of a criminal case before the
Office of the Prosecutor is sufficient basis for a valid termination of employment based on serious
misconduct and/or loss of trust and confidence. The Supreme Court held that Lynvil cannot argue that
since the Office of the Prosecutor found probable cause for theft, the Labor Arbiter must follow the
finding as a valid reason for the termination of respondents employment. The proof required for
purposes that differ from one and the other are likewise different. Lynvil Fishing Enterprises, Inc. vs.
Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court
decisions have laid two conditions for the validity of a fixed-contract agreement between the employer
and employee: First, the fixed period of employment was knowingly and voluntarily agreed upon 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 Second, it satisfactorily appears that the
employer and the employee dealt with each other on more or less equal terms with no moral
dominance exercised by the former or the latter. Lynvil contends that Ariola, et al. were employed
under a fixed-term contract which expired at the end of the voyage. Contrarily, Ariola, et al. contend
that they became regular employees by reason of their continuous hiring and performance of tasks
necessary and desirable in the usual trade and business of Lynvil. Textually, the provision in the contract
between Lynvil and Ariola, et al. that: NA ako ay sumasang-ayon na maglingkod at gumawa ng mga
gawain sang-ayon sa patakarang por viaje na magmumula sa pagalis sa Navotas papunta sa
pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of
employment. In the context, however, of the facts that: (1) Ariola, et al. were doing tasks necessarily to
Lynvils fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end
of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement
continued for more than ten years, the clear intention is to go around the security of tenure of Ariola, et
al. as regular employees. As such, the Supreme Court found that Ariola, et al. are regular employees.
Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
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Labor Code; maximum award of attorneys fees in cases of recovery of wages. Article 111 of the Labor
Code provides for a maximum award of attorneys fees in cases of recovery of wages:
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings
for the recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.
Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and
protect their interest, attorneys fees in the amount of ten percent (10%) of the total claims was
imposed. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al.,
G.R. No. 175558. February 8, 2012.
Labor contracting; elements. There is labor-only contracting where: (a) the person supplying workers to
an employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others; and (b) the workers recruited and placed by such person are
performing activities which are directly related to the principal business of the employer. In the present
case, the Supreme Court found that both the capitalization requirement and the power of control on the
part of Requio are wanting. Generally, the presumption is that the contractor is a labor-only contractor
unless such contractor overcomes the burden of proving that it has the substantial capital, investment,
tools and the like. In the present case, though Garden of Memories is not the contractor, it has the
burden of proving that Requio has sufficient capital or investment since it is claiming the supposed
status of Requio as independent contractor. Garden of Memories, however, failed to adduce evidence
purporting to show that Requio had sufficient capitalization. Neither did it show that she invested in
the form of tools, equipment, machineries, work premises and other materials which are necessary in
the completion of the service contract. Garden of Memories Park and Life Plan, Inc., et al. vs. NLRC, 2nd
Div., et al., G.R. No. 160278, February 8, 2012.
Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of Republic Act
No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of
employment contracts:
In case of termination of overseas employment without just, valid or authorized cause as defined by law
or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less.
The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or
three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the
overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant
Maritime Services and Marlow Navigation Co. Inc. (G.R. No. 167614), the Court, in an En Banc Decision,
declared unconstitutional the clause or for three months for every year of the unexpired term,
whichever is less and awarded the entire unexpired portion of the employment contract to the
overseas Filipino worker. On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022)
amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding
the unexpired portion of the employent contract or three (3) months for every year of the unexpired
term, whichever is less. Nevertheless, since the termination occurred on January 1999 before the
passage of the amendatory RA 10022, the Supreme Court applied RA 8042, without touching on the
constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the unconstitutionality of
the clause or for three months for every year of the unexpired term, whichever is less in RA 8042 shall
be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional
clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional
provision is inoperative, as if it was not passed into law at all. Skippers United Pacific, Inc. and Skippers
Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters) may hold
any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance
with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount
depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code,
however, requires the labor arbiter or the Commission to deal with indirect contempt in the manner
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prescribed under Rule 71 of the Rules of Court. Rule 71 of the Rules of Court does not require the labor
arbiter or the NLRC to initiate indirect contempt proceedings before the trial court. This mode is to be
observed only when there is no law granting them contempt powers. As is clear under Article 218(d) of
the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the
offending party or parties in direct or indirect contempt. Robosa, et al., therefore, have not improperly
brought the indirect contempt charges against the respondents before the NLRC. Federico S. Robosa, et
al. vs. National Labor Relations Commission (First Division), et al., G.R. No. 176085, February 8, 2012.
NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of
the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence.
The Supreme Court, however, found that the doctrine of great respect and finality has no application to
the case at bar. The Labor Arbiter dismissed Arnaiz, et al.s complaints on mere technicality. The NLRC,
upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor
Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that
Arnaiz, et al. were constructively dismissed. But later on, it again reversed itself in its third and final
resolution of the case and ruled in favor of Julies bakeshop. Therefore, contrary to Reyess claim, the
NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is
thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound
and in accordance with law. Besides, the Court of Appeals may still resolve factual issues by express
mandate of the law despite the respect given to administrative findings of fact. Julies Bakeshop and/or
Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.
Probationary employee; valid cause for dismissal but without procedural due process; employee entitled
to nominal damages. Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations
provides: If the termination is brought about by the completion of a contract or phase thereof, or by
failure of an employee to meet the standards of the employer in the case of probationary employment, it
shall be sufficient that a written notice is served the employee within a reasonable time from the
effective date of termination. Dalangin was hired by Canadian Opportunities as Immigration and Legal
Manager, subject to a probationary period of six months. One month after hiring Dalangin, the company
terminated his employment, declaring him unfit and unqualified to continue as Immigration and
Legal Manager, for reasons which included obstinacy and utter disregard of company policies.
Propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with
the policies and objectives, lack of concern for the companys interest despite having just been
employed in the company (Declined to attend company sponsored activities, seminars intended to
familiarize company employees with Management objectives and enhancement of company interest
and objectives), lack of enthusiasm toward work, and lack of interest in fostering relationship with his
co-employees. The company contends that it complied with the rule on procedural due process when it
asked Dalangin, through a Memorandum, to explain why he could not attend the seminar. When he
failed to submit his explanation, the company served him a notice the following day terminating his
employment. According to the Supreme Court, the notice to Dalangin was not served within a
reasonable time from the effective date of his termination as required by the rules since he was
dismissed on the very day the notice was given to him. However, because of the existence of a valid
cause for termination, the Supreme Court did not invalidate his dismissal but penalized the company for
its non-compliance with the notice requirement, and ordered the company to pay an indemnity, in the
form of nominal damages amounting to P10,000. Canadian Opportunities Unlimited, Inc. vs. Bart Q.
Dalangin, Jr., G.R. No. 172223, February 6, 2012.
Probationary employee; valid dismissal even before 6 months. The essence of a probationary period of
employment fundamentally lies in the purpose or objective of both the employer and the employee
during the period. While the employer observes the fitness, propriety and efficiency of a probationer to
ascertain whether he is qualified for permanent employment, the latter seeks to prove to the former
that he has the qualifications to meet the reasonable standards for permanent employment. The trial
period or the length of time the probationary employee remains on probation depends on the parties
agreement, but it shall not exceed six (6) months under Article 281 of the Labor Code. The Supreme
Court found substantial evidence indicating that the company was justified in terminating Dalangins
probationary employment. Dalangin admitted in compulsory arbitration that the proximate cause for his
dismissal was his refusal to attend the companys Values Formation Seminar scheduled for October
27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no relation to his
duties, as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in
the province. When the Chief Operations Officer, insisted that he attend the seminar to encourage his
co-employees to attend, he stood pat on not attending, arguing that marked differences exist between
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their positions and duties, and insinuating that he did not want to join the other employees. He also
questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a
company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays;
thus, holding them beyond 2:00 p.m. would be in violation of the law. This incident reveals Dalangins
lack of interest in establishing a good working relationship with his co-employees, especially the rank
and file; he did not want to join them because of his view that the seminar was not relevant to his
position and duties. It also betrays his arrogant and condescending attitude towards his co-employees,
and a lack of support for the company objective. Dalangin also exhibited negative working habits,
particularly with respect to the one hour lunch break policy of the company and the observance of the
companys working hours. Dalangin would take prolonged lunch breaks or would go out of the office
without leave of the company and call the personnel manager later only to say that he would be
unable to return to the office because of some personal matters he needs to attend to. Canadian
Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012.
Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts in
order to impart stability in the legal system. However, in not a few instances, the Supreme Court has
relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully
ventilate their cases on the merits. This is in line with the time honored principle that cases should be
decided only after giving all the parties the chance to argue their causes and defenses. In that way, the
ends of justice would be better served. For indeed, the general objective of procedure is to facilitate
the application of justice to the rival claims of contending parties, bearing always in mind that procedure
is not to hinder but to promote the administration of justice. In Ong Lim Sing, Jr. v. FEB Leasing and
Finance Corporation (G.R. No. 168115, June 8, 2007), the Supreme Court ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of
the duty to reconcile both the need to speedily put an end to litigation and the parties right to due
process. In numerous cases, this Court has allowed liberal construction of the rules when to do so would
serve the demands of substantial justice and equity. x x x
Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just
determination of their causes, free from the constraints of needless technicalities. In this case, besides
the fact that a denial of the recourse to the Court of Appeals would serve more to perpetuate an
injustice and violation of Tengs rights under our labor laws, the Supreme Court found that as correctly
held by the Court of Appeals, no intent to delay the administration of justice could be attributed to
Teng. The Court of Appeals therefore did not commit reversible error in excusing Tengs one-day delay
in filing his motion for reconsideration and in giving due course to his petition for certiorari. Negros
Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages,
inclusive of allowances and other benefits or their monetary equivalent, computed from the time their
actual compensation was withheld from them up to the time of their actual reinstatement. But if
reinstatement is no longer possible, the backwages shall be computed from the time of their illegal
termination up to the finality of the decision. Thus, when there is an order of reinstatement, the
computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the
employee is actually reinstated to his former position. Pursuant to the order of reinstatement rendered
by the Labor Arbiter, the Bank of Lubao sent Manabat a letter requiring him to report back to work on
May 4, 2007. Notwithstanding the said letter, Manabat opted not to report for work. Thus, it is but fair
that the backwages to be awarded to Manabat should be computed from the time that he was illegally
dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until May
4, 2007. Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.
Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing
jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right.
However, if reinstatement would only exacerbate the tension and strained relations between the
parties, or where the relationship between the employer and the employee has been unduly strained by
reason of their irreconcilable differences, particularly where the illegally dismissed employee held a
managerial or key position in the company, it would be more prudent to order payment of separation
pay instead of reinstatement. Under the doctrine of strained relations, the payment of separation pay is
considered an acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation of
17

maintaining in its employ a worker it could no longer trust. In such cases, it should be proved that the
employee concerned occupies a position where he enjoys the trust and confidence of his employer; and
that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of the employee concerned. In the present case, the
Supreme Court found that the relations between the parties had been already strained thereby
justifying the grant of separation pay in lieu of reinstatement in favor of Manabat. Manabats
reinstatement to his former position would only serve to intensify the atmosphere of antipathy and
antagonism between the parties. Undoubtedly, Bank of Lubaos filing of various criminal complaints
against Manabat for qualified theft and the subsequent filing by the latter of the complaint for illegal
dismissal against the former, taken together with the pendency of the instant case for more than six
years, had caused strained relations between the parties. Considering that Manabats former position as
bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be
equitable on the part of the Bank of Lubao to be ordered to maintain the former in its employ since it
may only inspire vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is
in itself an indication of the existence of strained relations between him and the petitioner. Bank of
Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.
Seafarers; employment contract; perfection stage vs. commencement stage. An employment contract,
like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2)
concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which
is the subject matter of the contract, and (c) cause of the obligation. The object of the contract was the
rendition of service by Fantonial on board the vessel for which service he would be paid the salary
agreed upon. In this case, the employment contract was perfected on January 15, 2000 when it was
signed by the parties who entered into the contract in behalf of their principal. However, the
employment relationship never commenced since Fantonial was not allowed to leave on January 17,
2000 and go on board the vessel M/V AUK in Germany on the ground that he was not yet declared fit to
work on the day of his scheduled departure. But, even if no employer-employee relationship
commenced, there was, contemporaneous with the perfection of the employment contract, the birth of
certain rights and obligations, the breach of which may give rise to a cause of action against the erring
party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs. Ricardo B. Fantonial, G.R. No.
165935, February 8, 2012.
(Leslie thanks Dianne Caroline V. Ducepec for her assistance in the preparation of this post.)

March 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on April 20, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged Department of Labor and Employment, dismissal, illegal strike, loss of trust and confidence,
probationary employment, project employee
Here are select March 2012 rulings of the Supreme Court of the Philippines on labor law and procedure.
Dismissal; constructive dismissal. Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay. Constructive dismissal is a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not. In constructive dismissal cases, the
employer is, concededly, charged with the burden of proving that its conduct and action or the transfer
of an employee are for valid and legitimate grounds such as genuine business necessity. In the instant
case, the overt act relied upon by petitioner is not only a doubtful occurrence but is, if it did transpire,
even consistent with the dismissal from employment posited by the respondent. The factual appraisal of
the Court of Appeals is correct. Petitioner was displeased after incurring expenses for respondents
medical check-up and, it is credible that, thereafter, respondent was prevented entry into the work
premises. This is tantamount to constructive dismissal. The Supreme Court agreed with the Court of
Appeals that the incredibility of petitioners submission about abandonment of work renders credible
the position of respondent that she was prevented from entering the property. This was even
corroborated by the affidavits of Siarot and Mendoza which were made part of the records of this case.
Ma. Melissa A. Galang vs. Julia Malasuqui, G.R. No. 174173. March 7, 2012.
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Dismissal; loss of trust and confidence. The rule is long and well settled that, in illegal dismissal cases like
the one at bench, the burden of proof is upon the employer to show that the employees termination
from service is for a just and valid cause. The employers case succeeds or fails on the strength of its
evidence and not on the weakness of that adduced by the employee, in keeping with the principle that
the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by
them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence which
is understood as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other equally reasonable minds might conceivably opine otherwise. Failure of the
employer to discharge the foregoing onus would mean that the dismissal is not justified and therefore
illegal.
In the case at bar, the Supreme Court agreed with the petitioners that mere substantial evidence and
not proof beyond reasonable doubt is required to justify the dismissal from service of an employee
charged with theft of company property. However, the Court found no error in the CAs findings that the
petitioners had not adequately proven by substantial evidence that Arlene and Joseph indeed
participated or cooperated in the commission of theft relative to the six missing intensifying screens so
as to justify the latters termination from employment on the ground of loss of trust and confidence.
Blue Sky Trading Company, Inc. et al. vs. Arlene P. Blas and Joseph D. Silvano, G.R. No. 190559. March 7,
2012.
Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of company
property on May 25, 2006. He maintains that he had no direct participation in the incident and that he
was not aware that an illegal activity was going on as he was at some distance from the trucks when the
alleged theft was being committed. He adds that he did not call the attention of the foremen because he
was a mere lineman and he was focused on what he was doing at the time. He argues that in any event,
his mere presence in the area was not enough to make him a conspirator in the commission of the
pilferage.
Gala misses the point. He forgets that as a probationary employee, his overall job performance and his
behavior were being monitored and measured in accordance with the standards (i.e., the terms and
conditions) laid down in his probationary employment agreement. Under paragraph 8 of the agreement,
he was subject to strict compliance with, and non-violation of the Company Code on Employee
Discipline, Safety Code, rules and regulations and existing policies. Par. 10 required him to observe at all
times the highest degree of transparency, selflessness and integrity in the performance of his duties and
responsibilities, free from any form of conflict or contradicting with his own personal interest. Manila
Electric Company vs. Jan Carlo Gala, G.R. No. 191288. March 7, 2012.
Dismissal; relief of illegally dismissed employee. An illegally dismissed employee is entitled to two
reliefs: back wages and reinstatement. The two reliefs provided are separate and distinct. In instances
where reinstatement is no longer feasible because of strained relations between the employee and the
employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either
reinstatement if such is viable, or separation pay if reinstatement is no longer viable, and to back wages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of back wages computed from the time compensation was withheld from
him up to the date of actual reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment of back wages.
Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its March 31,
2008 Decision which has already attained finality insofar as respondent is concerned. Such contention is
misplaced. The CA merely clarified the period of payment of back wages and separation pay up to the
finality of its decision (March 31, 2008) modifying the Labor Arbiters decision. In view of the
modification of monetary awards in the Labor Arbiters decision, the time frame for the payment of back
wages and separation pay is accordingly modified to the finality of the CA decision. Norkis Distribution,
Inc., et al. vs. Delfin S. Descallar, G.R. No. 185255. March 14, 2012
Employees; project vs. regular employees. The principal test for determining whether particular
employees are properly characterized as project employees as distinguished from regular
employees is whether or not the project employees were assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time the employees were engaged
for that project.
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In a number of cases, the Court has held that the length of service or the re-hiring of construction
workers on a project-to-project basis does not confer upon them regular employment status, since their
re-hiring is only a natural consequence of the fact that experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct from the other undertakings of the
company, the scope and duration of which has been determined and made known to the employees at
the time of the employment are properly treated as project employees and their services may be
lawfully terminated upon the completion of a project. Should the terms of their employment fail to
comply with this standard, they cannot be considered project employees.
Applying the above disquisition, the Court agreed with the findings of the CA that petitioners were
project employees. It is not disputed that petitioners were hired for the construction of the Cordova
Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners
employment was to carry out a specific project. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth
Division, et al., G.R. No. 174792. March 7, 2012.
Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor
Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of
work, and other terms and conditions of employment, if accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an employer-employee
relationship has been subjected to review by the Supreme Court, with the finding being that there was
no employer-employee relationship between petitioner and private respondent, based on the evidence
presented. The DOLE had no jurisdiction over the case, as there was no employer-employee relationship
present. Thus, the dismissal of the complaint against petitioner is proper. Peoples Broadcasting Service
(Bombo Rado Phils., Inc.) vs. The Secretary of the Dept. of Labor & Employment, et al. G.R. No. 179652.
March 6, 2012.
Management prerogative; resignation of employees running for public office. The Supreme Court has
consistently held that so long as a companys management prerogatives are exercised in good faith for
the advancement of the employers interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, the Court will uphold them. In the
instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its
rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of
impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded.
Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied. Ernesto Ymbong vs. ABS-CBN
Broadcasting Corporation, Veranda Sy & Dante Luzon, G.R. No. 184885. March 7, 2012.
Separation pay; payment to those who participated in illegal strikes. Separation pay may be given as a
form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving
devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the
establishment, or in case the employee was found to have been suffering from a disease such that his
continued employment is prohibited by law. It is a statutory right defined as the amount that an
employee receives at the time of his severance from the service and is designed to provide the
employee with the wherewithal during the period that he is looking for another employment. It is
oriented towards the immediate future, the transitional period the dismissed employee must undergo
before locating a replacement job. As a general rule, when just causes for terminating the services of an
employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit
from their illegal acts. The rule, however, is subject to exceptions.
Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have
knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during
the strike. Thus, as the Court has concluded in other cases it has previously decided, such Union officers
are not entitled to the award of separation pay in the form of financial assistance. C. Alcantara & Sons,
Inc. vs. Court of Appeals, et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons,
Inc., et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No.
155109/G.R. No. 155135/G.R. No. 179220. March 14, 2012.
20

(Leslie thanks Rommel Lumagui for his assistance in the preparation of this post.)
April 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on May 10, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged dismissal, due process, employer-employee relationship, probationary employment, project
employee, retrenchment
Here are select April 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process. When the Labor Code speaks of procedural due process, the reference is usually
to the two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code. MGG Marine Services, Inc. v. NLRC tersely described the mechanics of
what may be considered a two-part due process requirement which includes the two-notice rule, x x x
one, of the intention to dismiss, indicating therein his acts or omissions complained against, and two,
notice of the decision to dismiss; and an opportunity to answer and rebut the charges against him, in
between such notices.
Here, the first and second notice requirements have not been properly observed. The adverted memo
would have had constituted the charge sheet, sufficient to answer for the first notice requirement, but
for the fact that there is no proof such letter had been sent to and received by him. Neither was there
compliance with the imperatives of a hearing or conference. Suffice it to point out that the record is
devoid of any showing of a hearing or conference having been conducted. And the written notice of
termination itself did not indicate all the circumstances involving the charge to justify severance of
employment. For violating petitioners right to due process, the Supreme Court ordered the payment to
petitioner of the amount of P30,000 as nominal damages. Armando Ailing vs. Jose B. Feliciano, Manuel
F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.
Dismissal; just cause. In fine, an employees failure to meet sales or work quotas falls under the concept
of gross inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal
under Article 282 of the Code. However, in order for the quota imposed to be considered a valid
productivity standard and thereby validate a dismissal, managements prerogative of fixing the quota
must be exercised in good faith for the advancement of its interest. The duty to prove good faith,
however, rests with WWWEC as part of its burden to show that the dismissal was for a just cause.
WWWEC must show that such quota was imposed in good faith. This WWWEC failed to do, perceptibly
because it could not. The fact of the matter is that the alleged imposition of the quota was a desperate
attempt to lend a semblance of validity to Alilings illegal dismissal. Armando Ailing vs. Jose B. Feliciano,
Manuel F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.
Dismissal; retrenchment. Retrenchment is a valid exercise of management prerogative subject to the
strict requirements set by jurisprudence, to wit:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and
Employment 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 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
advancement of its interest and not to defeat or circumvent the employees right to security of tenure;
and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.
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As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to
retrench its employees in good faith and the considerable reduction of work allotments of Petrocon by
Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel. As for the notice
requirement, however, contrary to petitioners contention, proper notice to the DOLE within 30 days
prior to the intended date of retrenchment is necessary and must be complied with despite the fact that
respondent is an overseas Filipino worker. In the present case, although respondent was duly notified of
his termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by
petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days before the respondent was
terminated. Thus, this requirement of the law was not complied with. Despite the fact that respondent
was employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the
provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino
workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and
social legislations (citing Philippine National Bank v. Cabansag, G.R. No. 157010, June 21, 2005, 460
SCRA 514, 518 and Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA
569.) International Management Services/Marilyn C. Pascual vs. Roel P. Logarta, G.R. No. 163657, April
18, 2012.
Employee; probationary employee. The aforequoted Section 6 of the Implementing Rules of Book VI,
Rule VIII-A of the Code specifically requires the employer to inform the probationary employee of such
reasonable standards at the time of his engagement, not at any time later; else, the latter shall be
considered a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code,
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled
jurisprudence, petitioner Aliling is deemed a regular employee as of June 11, 2004, the date of his
employment contract.
The letter-offer to Aliling states that the regularization standards or the performance norms to be used
are still to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to GX trucking
sales, an activity entirely different to the Seafreight Sales for which he was originally hired and trained
for. In the present case, there was no proof that Aliling was informed of the standards for his continued
employment, such as the sales quota, at the time of his engagement. Armando Ailing vs. Jose B.
Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.
Employee; separation package. Article 283 of the Labor Code provides only the required minimum
amount of separation pay, which employees dismissed for any of the authorized causes are entitled to
receive. Employers, therefore, have the right to create plans, providing for separation pay in an amount
over and above what is imposed by Article 283. There is nothing therein that prohibits employers and
employees from contracting on the terms of employment, or from entering into agreements on
employee benefits, so long as they do not violate the Labor Code or any other law, and are not contrary
to morals, good customs, public order, or public policy.
Consequently, petitioners are not allowed to receive separation pay from both the Labor Code, on the
one hand, and the New Gratuity Plan and the SSP, on the other, they would receive double
compensation for the same cause (i.e., separation from the service due to redundancy). Ma. Corina C.
Jiao, et al. vs. Global Business Bank, Inc., et al., G.R. No. 182331, April 18, 2012.
Employer-employee relationship. In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority
to deliver some 158 checks to SFC. Considering that petitioner contested respondents challenge by
pointing to the existing arrangements between BCC and SFC, it should be clear that respondents did not
exercise the power of control over petitioner, because he thereby acted for the benefit and in the
interest of SFC more than of BCC. Charlie Jao vs. BCC Products Sales, Inc. and Terrance Ty, G.R. No.
163700, April 18, 2012.
Project employee; conversion into regular employee. 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 since DMCI insisted that it does
22

not maintain a work pool, but his continuous rehiring in 38 projects over a period of 31 years and the
nature of his work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580
(1998), the Court held that 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.
Surely, length of time is not the controlling test for project employment but it is vital in determining if
the employee was hired for a specific undertaking or if it is 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. The nature of his employment ceased to be project-based when he
was repeatedly re-hired due to the demands of petitioners business. D.M. Consunji, Inc. and/or David
M. Consunji vs. Estelito, G.R. No. 192514, April 18, 2012.
Dismissal; willful disobedience. For willful disobedience to be a valid cause for dismissal, these two
elements must concur: (1) the employees assailed conduct must have been willful, that is, characterized
by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful,
made known to the employee, and must pertain to the duties which he had been engaged to discharge.
The petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes
willful disobedience. Because of his refusal to render overtime work, the company failed to meet its
printing deadlines, resulting in losses to the company. The Supreme Court took into account the fact
that petitioner was inclined to absent himself and to report late for work despite being previously
penalized, and affirmed the CAs ruling that the petitioner is indeed utterly defiant of the lawful orders
and the reasonable work standards prescribed by his employer. The Court reiterated its previous rulings
stating that an employer has the right to require the performance of overtime service in any of the
situations contemplated under Article 89 of the Labor Code and an employees non-compliance is willful
disobedience. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; inefficiency. The petitioners failure to observe Graphics, Inc.s work standards constitutes
inefficiency that is a valid cause for dismissal. Failure to observe prescribed standards of work, or to
fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the alloted reasonable period, or by producing unsatisfactory results. As the
operator of Graphics, Inc.s printer, he is mandated to check whether the colors that would be printed
are in accordance with the clients specifications and for him to do so, he must consult the General
Manager and the color guide used by Graphics, Inc. before making a full run. The employee in this case
failed to observe this simple procedure and proceeded to print without making sure that the colors were
at par with the clients demands. This resulted to delays in the delivery of output, client dissatisfaction,
and additional costs to Graphics, Inc.. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25,
2012.
Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the manner by
which the procedural due requirements of due process can be satisfied:
(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. Reasonable opportunity under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at least
five (5) calendar days from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which company
rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the
employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (a) explain and clarify their
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defenses to the charge against them; (b) present evidence in support of their defenses; and (c) rebut the
evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.
Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and defend itself.
An administrative hearing set on the same day that the petitioner received the memorandum and the
24-hour period given to him to submit a written explanation is far from reasonable. Furthermore, there
is no indication that Graphics, Inc. issued a second notice, informing the petitioner of his dismissal.
Graphics, Inc. admitted that it decided to terminate the petitioners employment when he ceased to
report for work after being served with the memorandum requiring him to explain and subsequent to
his failure to submit a written explanation. However, there is nothing on record showing that Graphics,
Inc. placed its decision to dismiss in writing and that a copy thereof was sent to the petitioner.
Notwithstanding the existence of a just cause to terminate petitioners employment, respondent was
ordered to pay P30,000 as nominal damages for violation of the employees right to due process. Realda
v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; willful disobedience. Willful disobedience requires the concurrence of two elements: (1) the
employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been engaged to discharge. Both elements are present in
this case.
First, at no point did the dismissed employees deny Kingspoint Express claim that they refused to
comply with the directive for them to submit to a drug test or, at the very least, explain their refusal.
This gives rise to the impression that their non-compliance is deliberate. The utter lack of reason or
justification for their insubordination indicates that it was prompted by mere obstinacy, hence, willful
thereby justifying their dismissal. Second, that the companys order to undergo a drug test is necessary
and relevant in the performance of petitioners functions as drivers of Kingspoint Express is obvious. As
the NLRC correctly pointed out, drivers are indispensable to Kingspoint Express primary business of
rendering door-to-door delivery services. It is common knowledge that the use of dangerous drugs has
adverse effects on driving abilities that may render employees incapable of performing their duties. Not
only are they acting against the interests of Kingspoint Express, they also pose a threat to the public.
Kakampi and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No. 194813,
April 25, 2012.
Dismissal; procedural due process requirements. While Kingspoint Express had reason to sever
petitioners employment, this Court finds its supposed observance of the requirements of procedural
due process pretentious. While Kingspoint Express required the dismissed employees to explain their
refusal to submit to a drug test, the two (2) days afforded to them to do so cannot qualify as
reasonable opportunity, which the Court construed in King of Kings Transport, Inc. v. Mamac as a
period of at least five (5) calendar days from receipt of the notice.
Thus, even if a just cause exists for the dismissal of petitioners, Kingspoint Express is still liable to
indemnify the dismissed employees, with the exception of Panuelos, Dizon and Dimabayao, who did not
appeal the dismissal of their complaints, with nominal damages in the amount of P30,000.00. Kakampi
and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No. 194813, April 25,
2012.
(Leslie thanks Rommel Lumagui for assisting in the preparation of this post.)
June 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
24

Posted on July 20, 2012 by Leslie C. Dy Posted in Labor Law Tagged abandonment, appeal, attorney's
fees, damages, dismissal, due process, independent contractor, jurisdiction, loss of trust and confidence,
NLRC, reinstatement, retirement, retrenchment
Here are select June 2012 rulings of the Supreme Court of the Philippine on labor law and procedure:
Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a fundamental
rule of procedure that higher courts are precluded from entertaining matters neither alleged in the
pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for
reconsideration or on appeal. The alleged absence of employer-employee relationship cannot be raised
for the first time on appeal. The resolution of this issue requires the admission and calibration of
evidence and the LA and the NLRC did not pass upon it in their decisions. Petitioner is bound by its
submissions that respondent is its employee and it should not be permitted to change its theory. Such
change of theory cannot be tolerated on appeal, not on account of the strict application of procedural
rules, but as a matter of fairness. Duty Free Philippines Services, Inc. vs. Manolito Q. Tria. G.R. No.
174809. June 27, 2012.
Dismissal; abandonment. Abandonment cannot be inferred from the actuations of respondent. When he
discovered that his time card was off the rack, he immediately inquired from his supervisor. He later
sought the assistance of his counsel, who wrote a letter addressed to Polyfoam requesting that he be re-
admitted to work. When said request was not acted upon, he filed the instant illegal dismissal
case. These circumstances clearly negate the intention to abandon his work. Polyfoam-RGC
International, Corporation and Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13,
2012.
Dismissal; due process. To meet the requirements of due process in the dismissal of an employee, an
employer must furnish the worker with two written notices: (1) a written notice specifying the grounds
for termination and giving to said employee a reasonable opportunity to explain his side and (2) another
written notice indicating that, upon due consideration of all circumstances, grounds have been
established to justify the employers decision to dismiss the employee. The law does not require that an
intention to terminate ones employment should be included in the first notice. It is enough that
employees are properly apprised of the charges brought against them so they can properly prepare their
defenses. It is only during the second notice that the intention to terminate ones employment should
be explicitly stated.
The guiding principles in connection with the hearing requirement in dismissal cases are the following:
1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or
when similar circumstances justify it.
3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.
The existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to
satisfy the employees right to be heard. Esguerra was able to present her defenses; and only upon
proper consideration of it did Valle Verde send the second memorandum terminating her employment.
Since Valle Verde complied with the two-notice requirement, no procedural defect exists in Esguerras
termination. Dolores T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No.
173012, June 13, 2012.
Dismissal; loss of trust and confidence. There are two (2) classes of positions of trust. The first class
consists of managerial employees, or those vested with the power to lay down management policies;
and the second class consists of cashiers, auditors, property custodians or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or property. Esguerra
held the position of Cost Control Supervisor and had the duty to remit to the accounting department the
cash sales proceeds from every transaction she was assigned to. This is not a routine task that a regular
employee may perform; it is related to the handling of business expenditures or finances. For this
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reason, Esguerra occupies a position of trust and confidence a position enumerated in the second class
of positions of trust. Any breach of the trust imposed upon her can be a valid cause for dismissal.
Loss of confidence as a just cause for termination of employment can be invoked when an employee
holds a position of responsibility, trust and confidence. In order to constitute a just cause for dismissal,
the act complained of must be related to the performance of the duties of the dismissed employee and
must show that he or she is unfit to continue working for the employer for violation of the trust reposed
in him or her. It was Esguerras responsibility to account for the cash proceeds; in case of problems, she
should have promptly reported it, regardless of who was at fault. Instead, she settled the unaccounted
amount only after the accounting department informed her about the discrepancy, almost one month
following the incident. Esguerras failure to make the proper report reflects her irresponsibility in the
custody of cash for which she was accountable. Dolores T. Esguerra vs. Valle Verde Country Club, Inc.
and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; serious misconduct and loss of trust and confidence. Dejan is liable for violation of Section 7,
paragraphs 4 and 11 of the Company Code of Employee Discipline, constituting serious misconduct,
fraud and willful breach of trust of the employer, which are just causes for termination of employment
under the law. There is no dispute about the release of the meter sockets. Also, the persons involved
were clearly identified Dejan; Gozarin, a private electrician who received the meter sockets; Reyes, the
owner of the jeep where the meter sockets were loaded by Gozarin; Duenas, a Meralco field
representative; and Depante, another private electrician who purportedly owned the meter sockets. The
release by Dejan of the meter sockets to Gozarin without the written authority or SPA from the
customer or customers who applied for electric connection (as a matter of company policy) served as a
key element in proving the private contracting activity for electric service connection being undertaken
by Dejan and Duenas.
Moreover, it was bad enough that Dejan failed to ask for a written authorization from the customers for
the release of the meter sockets as required by company policy, but the elaborate scheme pursued by
Dejan in concert with Duenas, were all undertaken to defraud Meralco. Hence, Meralco had valid
reasons for losing its trust and confidence in Dejan. He is no ordinary employee. As branch
representative, he was principally charged with the function and responsibility to accept payment of
fees required for the installation of electric service and facilitate issuance of meter sockets. The duties of
his position require him to always act with the highest degree of honesty, integrity and sincerity, as the
company puts it. In light of his fraudulent act, Meralco, an enterprise imbued with public interest,
cannot be compelled to continue Dejans employment, as it would be inimical to its interest. Manila
Electric Company (Meralco) vs. Herminigildo H. Dejan. G.R. No. 194106, June 18, 2012.
Employee benefit; attorneys fees. Lazaro must establish a legal basis either by law, contract or other
sources of obligations to merit the receipt of the additional 10% attorneys fees collected in the
various foreclosure procedures he settled as the banks legal officer. Lazaro has not produced any
contract or provision of law that would warrant the payment of the additional attorneys fees. He is only
entitled to his salaries as the banks legal officer, because the services he rendered in the foreclosure
proceedings were part of his official tasks. Banco Filipino Savings and Mortgage Bank vs. Miguelito M.
Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R.
No. 185442. June 27, 2012.
Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it was
under liquidation should not be credited in computing Lazaros retirement pay because, during that
period, the bank was considered closed. The Supreme Court held that banks under liquidation retain
their legal personality. In fact, even if they are prohibited from conducting regular banking business, it is
necessary that debts owed to them be collected. Lazaro performed the duty of foreclosing debts in favor
of Banco Filipino. It cannot rightfully disclaim Lazaros work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the absence
of an applicable retirement agreement shall Article 287 of the Labor Code apply. There is a proviso
however, that an employees retirement benefits under any agreement shall not be less than those
provided in the said article. The Rules of the Banco Filipino Retirement Fund do not provide for benefits
lower than those in the Labor Code. In fact, the bank offers a retirement pay equivalent to one andone-
half month salary for every year of service, a rate over and above the one-half month salary threshold
provided by the law. Although the Rules of the Banco Filipino Retirement Fund do not grant a rounding
off scheme, they nonetheless provide that prorated credit shall be given for incomplete years,
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regardless of the fraction of months in the retirees length of service. Notwithstanding the lack of a
rounding-up provision, still, the higher retirement pay, together with the prorated crediting, cannot be
deemed to be less favorable than that provided for by the law. Ultimately, the more important
threshold to be considered in construing whether the retirement agreement provides less benefits,
compared to those provided by the Retirement Pay Law, is that the retirement benefits in the said
agreement should at least amount to one-half of the employees monthly salary. Banco Filipino Savings
and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012
Employee dismissal. When the floating status of employees lasts for more than six (6) months, they may
be considered to have been illegally dismissed from the service. Floating status means an indefinite
period of time when one does not receive any salary or financial benefit provided by law. In this case,
petitioners were actually reassigned to new posts, albeit in a different location from where they resided.
Thus, there can be no floating status or indefinite period to speak of. Instead, petitioners were the ones
who refused to report for work in their new assignment.
In cases involving security guards, a relief and transfer order in itself does not sever the employment
relationship between the security guards and their agency. Employees have the right to security of
tenure, but this does not give them such a vested right to their positions as would deprive the company
of its prerogative to change their assignment or transfer them where their services, as security guards,
will be most beneficial to the client. An employer has the right to transfer or assign its employees from
one office or area of operation to another in pursuit of its legitimate business interest, provided there is
no demotion in rank or diminution of salary, benefits, and other privileges; and the transfer is not
motivated by discrimination or bad faith, or effected as a form of punishment or demotion without
sufficient cause. While petitioners may claim that their transfer to Manila will cause added expenses and
inconvenience, absent any showing of bad faith or ill motive on the part of the employer, the transfer
remains valid. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No.
187188, June 27, 2012.
Employee dismissal; burden of proof. Under the law, the burden of proving that the termination of
employment was for a valid or authorized cause rests on the employer. Failure to discharge this burden
would result in an unjust or illegal dismissal. The companys evidence on the respondents alleged
infractions do not substantially show that they violated company rules and regulations to warrant their
dismissal. It is obvious that the company overstepped the bounds of its management prerogative in the
dismissal of Mauricio and Camacho. It lost sight of the principle that management prerogative must be
exercised in good faith and with due regard to the rights of the workers in the spirit of fairness and with
justice in mind. Philbag Industrial Manufacturing Corp. vs. Philbag Workers Union-Lakas at Gabay ng
Manggagawang Nagkakaisa. G.R. No. 182486, June 20, 2012.
Employee dismissal; due process. Retrenchment is subject to faithful compliance with the substantive
and procedural requirements laid down by law and jurisprudence. For a valid retrenchment, the
following elements must be present:
1. That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
2. That the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment;
3. That the employer pays the retrenched employees separation pay equivalent to one (1) month
pay or at least 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
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure; and
5. That the employer used fair and reasonable criteria in ascertaining who would be dismissed and
who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered by the Club for
the past two years had forced petitioner to close it down to avert further losses which would eventually
affect the operations of petitioner. Second, all 45 employees working in the Club were served with
notice of termination. The corresponding notice was likewise served to the DOLE one month prior to
27

retrenchment. Third, the employees were offered separation pay, most of whom have accepted and
opted not to join in this complaint. Fourth, the cessation of or withdrawal from business operations was
bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of
employees. Waterfront Cebu City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13,
2012.
Employee dismissal; due process. The following are the guiding principles in connection with the hearing
requirement in dismissal cases:
1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule or practice requires it, or
when similar circumstances justify it.
3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.
Given that the petitioners expressly requested a conference or a convening of a grievance committee,
such formal hearing became mandatory. After PGAI failed to affirmatively respond to such request, it
follows that the hearing requirement was not complied with and, therefore, Vallota was denied his right
to procedural due process. Prudential Guarantee and Assurance Employee Labor Union and Sandy T.
Vallota vs. NLRC, Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June
13, 2012.
Employee dismissal; just cause. Article 282(e) of the Labor Code talks of other analogous causes or those
which are susceptible of comparison to another in general or in specific detail as a cause for termination
of employment. A cause analogous to serious misconduct is a voluntary and/or willful act or omission
attesting to an employees moral depravity. Theft committed by an employee against a person other
than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.
Previous infractions may be cited as justification for dismissing an employee only if they are related to
the subsequent offense. However, it must be noted that such a discussion was unnecessary since the
theft, taken in isolation from Fermins other violations, was in itself a valid cause for the termination of
his employment. Cosmos Bottling Corp. vs. Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and
Cecilia Bautista. G.R. No. 193676 & G.R. No. 194303. June 20, 2012.
Employee dismissal; loss of trust and confidence. The Labor Code recognizes that an employer, for just
cause, may validly terminate the services of an employee for serious misconduct or willful disobedience
of the lawful orders of the employer or representative in connection with the employees work. Fraud or
willful breach by the employee of the trust reposed by the employer in the former, or simply loss of
confidence, also justifies an employees dismissal from employment. Willful breach of trust or loss of
confidence requires that the employee (1) occupied a position of trust or (2) was routinely charged with
the care of the employers property. To warrant dismissal based on loss of confidence, there must be
some basis for the loss of trust or the employer must have reasonable grounds to believe that the
employee is responsible for the misconduct that renders the latter unworthy of the trust and confidence
demanded by his or her position. For more than a month, the petitioners did not even inform PLDT of
the whereabouts of the plant materials. Instead, he stocked these materials at his residence even if they
were needed in the daily operations of the company. In keeping with the honesty and integrity
demanded by his position, he should have turned over these materials to the plants warehouse. Thus,
PLDT reasonably suspected petitioner of stealing the companys property. At that juncture, the
employer may already dismiss the employee since it had reasonable grounds to believe or to entertain
the moral conviction that the latter was responsible for the misconduct, and the nature of his
participation therein rendered him absolutely unworthy of the trust and confidence demanded by his
position. Romeo E. Paulino vs. NLRC, Philippine Long Distance Co., Inc. G.R. No. 176184, June 13, 2012.
Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for dismissal was
never intended to provide employers with a blank check for terminating their employees. It should
ideally apply only to cases involving employees occupying positions of trust and confidence or to those
situations where the employee is routinely charged with the care and custody of the employers money
or property. To the first class belong managerial employees, i.e., those vested with the powers or
prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall,
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discharge, assign or discipline employees or effectively recommend such managerial actions; and to the
second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or property.
The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence. The second requisite is that there
must be an act that would justify the loss of trust and confidence. Vallotas position as Junior
Programmer is analogous to the second class of positions of trust and confidence. Though he did not
physically handle money or property, he became privy to confidential data or information by the nature
of his functions. At a time when the most sensitive of information is found not printed on paper but
stored on hard drives and servers, an employee who handles or has access to data in electronic form
naturally becomes the unwilling recipient of confidential information. There was no other evidence
presented to prove fraud in the manner of securing or obtaining the files found in Vallotas computer.
The presence of the files would merely merit the development of some suspicion on the part of the
employer, but should not amount to a loss of trust and confidence such as to justify the termination of
his employment. Such act is not of the same class, degree or gravity as the acts that have been held to
be of such character. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota
vs. NLRC, Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13,
2012.
Employee dismissal; loss of trust and confidence. To validly dismiss an employee on the ground of loss of
trust and confidence under Article 282 (c) of the Labor Code of the Philippines, the following guidelines
must be observed: 1) loss of confidence should not be simulated; 2) it should not be used as subterfuge
for causes which are improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and 4) it must be genuine, not a mere afterthought to justify
earlier action taken in bad faith. More importantly, it must be based on a willful breach of trust and
founded on clearly established facts. The testimony of Lobitaa constitutes substantial evidence to
prove that respondent, as the then Power Plant Manager, accepted commissions and/or kickbacks
from suppliers, which is a clear violation of Section 2.04 of petitioners Company Rules and Regulations.
Jurisprudence consistently holds that for managerial employees, the mere existence of a basis for
believing that such employee has breached the trust of his employer would suffice for his dismissal.
Respondents termination was for a just and valid cause. Apo Cement Corporation Vs. Zaldy E. Baptisma.
G.R. No. 176671. June 20, 2012.
Employee dismissal; order of reinstatement. Article 223 of the Labor Code provides that in case there is
an order of reinstatement, the employer must admit the dismissed employee under the same terms and
conditions, or merely reinstate the employee in the payroll. The order shall be immediately executory.
Thus, 3rd Alert cannot escape liability by simply invoking that Navia did not report for work. The law
states that the employer must still reinstate the employee in the payroll. Where reinstatement is no
longer viable as an option, separation pay equivalent to one (1) month salary for every year of service
could be awarded as an alternative. 3rd Alert Security and Detective Services, Inc. vs. Romualdo Navia.
G.R. No. 200653, June 13, 2012.
Employee dismissal; retrenchment. Retrenchment is the termination of employment initiated by the
employer through no fault of and without prejudice to the employees. It is resorted to during periods of
business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production program or the introduction
of new methods or more efficient machinery or of automation. It is an act of the employer of dismissing
employees because of losses in the operation of a business, lack of work, and considerable reduction on
the volume of his business. In this case, the closure of a department or division of a company constitutes
retrenchment by, and not closure of, the company itself. Petitioner has not totally ceased its business
operations. It merely ceased operations of a department. Waterfront Cebu City Hotel vs. Ma. Melanie P.
Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; willful breach of trust. The loss of trust and confidence must be based on willful
breach of the trust reposed in the employee by his employer. Such breach is willful if it is done
intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial
evidence and not on the employers whims or caprices or suspicions otherwise, the employee would
eternally remain at the mercy of the employer. The Supreme Court has laid down the guidelines for the
application of the loss of trust and confidence doctrine: (1) loss of confidence should not be simulated;
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(2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may
not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be
genuine, not a mere afterthought, to justify an earlier action taken in bad faith. Villanueva worked for
Meralco as a Branch Representative whose tasks included the issuance of Contracts for Electric Service
after receipt of the amount due for service connection from customers. Obviously, he was entrusted
not only with the responsibility of handling company funds but also to cater to customers who intended
to avail of Meralcos services. This is nothing but an indication that trust and confidence were reposed
in him by the company, although his position was not strictly managerial by nature. Meralcos loss of
trust and confidence arising out of Villanuevas act of misappropriation of company funds in the course
of processing customer applications has been proven by substantial evidence, thus, justified. Verily, the
issuance of additional receipts for excessive payments exacted from customers is a willful breach of the
trust reposed in him by the company. Vicente Villanueva, Jr. vs.. The National Labor Relations
Commission, Third Division, Manila Electric Company, Manuel Lopez, Chairman and CEO, and Francisco
Collantes, Manager. G.R. No. 176893, June 13, 2012.
Employee suit; damages. To obtain moral damages, the claimant must prove the existence of bad faith
by clear and convincing evidence, for the law always presumes good faith. It is not even enough that one
merely suffered sleepless nights, mental anguish and serious anxiety as the result of the actuations of
the other party. In this case, Lazaro did not state any moral anguish that he suffered. Neither did he
substantiate his imputations of malice to Banco Filipino. He only made a sweeping declaration, without
concrete proof, that the bank in refusing his claim maliciously damaged his property rights and interest.
Accordingly, neither moral damages nor exemplary damage can be awarded to him.
With respect to attorneys fees, an award is proper only if that person was forced to litigate and incur
expenses to protect ones rights and interest by reason of an unjustified act or omission of the party for
whom it is sought. Banco Filipino had a prima facie legitimate defense that, because it underwent
liquidation proceedings, it cannot be compelled to credit that period in the computation of the
employees the retirement pay and profit shares. Considering that Banco Filipinos refusal cannot be
accurately characterized as unjustified, Lazaro cannot claim an award of attorneys fees. Banco Filipino
Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012.
Independent contractor; tests. Permissible job contracting or subcontracting refers to an arrangement
whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or
completion of a specific job, work or service within a definite or predetermined period, regardless of
whether such job, work or service is to be performed or completed within or outside the premises of the
principal. A person is considered engaged in legitimate job contracting or subcontracting if the following
conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to
perform the job, work or service on its own account and under its own responsibility according to its
own manner and method, and free from the control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and
(c) The agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of the
right to self-organization, security of tenure, and social welfare benefits.
In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a
principal. In labor-only contracting, the following elements are present:
(a) The contractor or subcontractor does not have substantial capital or investment to actually
perform the job, work or service under its own account and responsibility; and
(b) The employees recruited, supplied or placed by such contractor or subcontractor, are performing
activities which are directly related to the main business of the principal.
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The test of independent contractorship is whether one claiming to be an independent contractor has
contracted to do the work according to his own methods and without being subject to the control of the
employer, except only as to the results of the work.
Gramaje is not an independent job contractor, but a labor-only contractor. First, Gramaje has no
substantial capital or investment. The presumption is that a contractor is a labor-only contractor unless
he overcomes the burden of proving that it has substantial capital, investment, tools, and the
like. Neither Gramaje nor Polyfoam presented evidence showing Gramajes ownership of the equipment
and machineries used in the performance of the alleged contracted job.
Second, Gramaje did not carry on an independent business or undertake the performance of its service
contract according to its own manner and method, free from the control and supervision of its principal,
Polyfoam, its apparent role having been merely to recruit persons to work for Polyfoam. It is undisputed
that respondent had performed his task of packing Polyfoams foam products in Polyfoams premises. As
to the recruitment of respondent, petitioners were able to establish only that respondents application
was referred to Gramaje, but that is all. Prior to his termination, respondent had been performing the
same job in Polyfoams business for almost six (6) years. He was even furnished a copy of Polyfoams
Mga Alituntunin at Karampatang Parusa, which embodied Polyfoams rules on attendance, the
manner of performing the employees duties, ethical standards, cleanliness, health, safety, peace and
order. These rules carried with them the corresponding penalties in case of violation. While it is true
that petitioners submitted the Affidavit of Polyfoams supervisor, claiming that the latter did not
exercise supervision over respondent because the latter was not Polyfoams but Gramajes employee,
said Affidavit is insufficient to prove such claim. Petitioners should have presented the person who they
claim to have exercised supervision over respondent and their alleged other employees assigned to
Polyfoam. It was never established that Gramaje took entire charge, control and supervision of the
work and service agreed upon. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs.
Edgardo Concepcion. G.R. No. 172349, June 13, 2012.
NLRC; jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a special law governing
overseas Filipino workers. However, there is no specific provision thereunder which provides for
jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a
CBA. Section 10 of R.A. 8042 simply speaks, in general, of claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. On the other hand, Articles
217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction
over cases arising from the interpretation or implementation of collective bargaining agreements. In the
present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which
provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are
concerned. This issue clearly involves the interpretation or implementation of the said CBA. Thus, the
specific or special provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between
respondent GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or
conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement
of Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration.
The provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by
Republic Act No. 10022, which states that for OFWs with collective bargaining agreements, the case
shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code.
With respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a
collective bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a
voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective bargaining agreement
that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration. Estate of
Nelson R. Dulay, represented by his wife Meddiry Jane P. Dulay vs. Aboitiz Jebsen Maritime, Inc. and
General Charterers, Inc. G.R. No. 172642, June 13, 2012.
Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA Petition.
However, the Supreme Court noted that in the CA Resolution, the appellate court stated that their
records revealed that Atty. Espinas, petitioners counsel of record at the time, was duly served a copy of
the following: CA Resolution granting respondents Motion for Extension of Time to file the CA Petition;
CA Resolution requiring petitioners to file their Comment on the CA Petition; and CA Resolution,
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submitting the case for resolution, as no comment was filed. Such service to Atty. Espinas was valid
despite the fact he was already deceased at the time. If a party to a case has appeared by counsel,
service of pleadings and judgments shall be made upon his counsel or one of them, unless service upon
the party is specifically ordered by the court. It is not the duty of the courts to inquire, during the
progress of a case, whether the law firm or partnership representing one of the litigants continues to
exist lawfully, whether the partners are still alive, or whether its associates are still connected with the
firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No. 187188, June
27, 2012.
(Leslie thanks Leanne Herschel C. Que for assisting in the preparation of this post.)





July 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on August 8, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Law Tagged due process,
employer-employee relationship, illegal dismissal, loss of trust and confidence, retirement
Here are select July 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process. Due process requirement is met when there is simply an opportunity to be
heard and to explain ones side even if no hearing is conducted. An employee may be afforded ample
opportunity to be heard by means of any method, verbal or written, whether in a hearing, conference or
some other fair, just and reasonable way. After receiving the first notice apprising him of the charges
against him, the employee may submit a written explanation (which may be in the form of a letter,
memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company
records and the sworn statements of his witnesses. For this purpose, he may prepare his explanation
personally or with the assistance of a representative or counsel. He may also ask the employer to
provide him copy of records material to his defense. His written explanation may also include a request
that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or
conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where
company rules or practice requires an actual hearing as part of employment pre-termination procedure.
Petitioners written response to the prerequisite notice provided her with an avenue to explain and
defend her side and thus served the purpose of due process. That there was no hearing, investigation or
right to appeal, which petitioner opined to be a violation of company policies, is of no moment since the
record is bereft of any showing that there is an existing company policy that requires these procedures
with respect to the termination of a CHR Director like petitioner or that company practice calls for the
same. There was also no request for a formal hearing on the part of petitioner. As she was served with a
notice apprising her of the charges against her and also a subsequent notice informing her of the
managements decision to terminate her services after respondents found her written response to the
first notice unsatisfactory, petitioner was clearly afforded her right to due process. Flordeliza Maria
Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.
Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider latitude of
discretion in dismissing a managerial personnel who performs functions which by their nature require
the employers full trust and confidence.As distinguished from a rank and file personnel, mere existence
of a basis for believing that a managerial employee has breached the trust of the employer justifies
dismissal. Loss of confidence as a ground for dismissal does not require proof beyond reasonable doubt
as the law requires only that there be at least some basis to justify it.
Petitioner was L&Ts CHR Director for Manufacturing, which is a managerial position saddled with great
responsibility. As such, she was directly responsible for managing her own departmental staff. Because
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of this, petitioner must enjoy the full trust and confidence of her superiors. However, petitioner
delivered dismal performance and displayed poor work attitude, which constitute sufficient reasons for
an employer to terminate an employee on the ground of loss of trust and confidence. First, records
show that petitioner indeed unreasonably failed to effectively communicate with her immediate
superior. Second, the affidavits of petitioners co-workers revealed her negative attitude and
unprofessional behavior towards them and the company. Lastly, petitioner displayed inefficiency and
ineptitude in her job as a CHR Director. Taking all these circumstances collectively, the Court is
convinced that respondents have sufficient and valid reasons for terminating the services of petitioner
as her continued employment would be patently inimical to respondents interest. Flordeliza Maria
Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.
Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for the
dismissal of employees recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid or to minimize business losses. The Court has laid down the following standards that
an employer should meet to justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected
losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled
must be proved by sufficient and convincing evidence
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests
upon the employer. The petitioner did not submit evidence of the losses to its business operations and
the economic havoc it would thereby imminently sustain. It only claimed that respondents termination
was due to its present business/financial condition. This bare statement fell short of the norm to show
a valid retrenchment. Indeed, not every loss incurred or expected to be incurred by an employer can
justify retrenchment. The employer must prove, among others, that the losses are substantial and that
the retrenchment is reasonably necessary to avert such losses. Thus, by its failure to present sufficient
and convincing evidence to prove that retrenchment was necessary, respondents termination due to
retrenchment is not allowed. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs. Hernani S.
Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Employee training; reimbursement. The Supreme Court recognized the right of PAL to recoup the costs
of a pilots training in the form of service for a period of at least three (3) years. By carrying over the
same stipulation setting the age of fifty-seven (57) years as the reckoning point when a pilot becomes
disqualified to bid for a higher position in the present CBA, both PAL and ALPAP recognized that the
companys effort in sending pilots for training abroad is an investment which necessarily expects a
reasonable return in the form of service for a period of at least three (3) years. This stipulation had been
repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the
impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the
petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract
expressly requiring the pilot to remain within PALs employ within a period of 3 years after he has been
sent on training. The supposed absence of contract being raised by the petitioner cannot stand as the
CBA clearly covered the petitioners obligation to render service to PAL within 3 years to enable it to
recoup the costs of its investment. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16,
2012.
Employer-employee relationship; existence. The issue of whether or not an employer-employee
relationship existed is essentially a question of fact. The factors that determine the issue include who
has the power to select the employee, who pays the employees wages, who has the power to dismiss
the employee, and who exercises control of the methods and results by which the work of the employee
is accomplished. Although no particular form of evidence is required to prove the existence of the
relationship, and any competent and relevant evidence to prove the relationship may be admitted, a
finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount
of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.
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A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was
undeniably employed as a pianist in petitioners Restaurant. First of all, petitioner actually wielded the
power of selection at the time it entered into the service contract with respondent. The power of
selection was firmly evidenced by, among others, the express written recommendation by petitioners
restaurant manager, for the increase of his remuneration. Secondly, there is no denying that the
remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality of
the music he played during the hours of performance each night, taking into account the prevailing rate
for similar talents in the entertainment industry. Respondents remuneration, albeit denominated as
talent fees, was still considered as included in the term wagein the sense and context of the Labor Code,
regardless of how petitioner chose to designate the remuneration. Thirdly, the petitioner has the power
to dismiss respondent. The memorandum informing respondent of the discontinuance of his service
because of the present business or financial condition of petitioner showed that the latter had the
power to dismiss him from employment. Lastly, the power of the employer to control the work of the
employee is considered the most significant determinant of the existence of an employer-employee
relationship. This is the so-called control test, and is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved and the manner and means
used to achieve that end. Respondent performed his work as a pianist under petitioners supervision
and control. Petitioners control of both the end achieved and the manner and means used to achieve
that end was demonstrated by the following, to wit: (1)He could not choose the time of his
performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week; (2)He
could not choose the place of his performance; (3) The restaurants manager required him at certain
times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana
motif; and (4)He was subjected to the rules on employees representation check and chits, a privilege
granted to other employees. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs. Hernani S.
Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Management prerogative; transfer of employees. An employers decision to transfer an employee, if
made in good faith, is a valid exercise of a management prerogative, although it may result in personal
inconvenience or hardship to the employee. Re-assignments made by management pending
investigation of irregularities allegedly committed by an employee fall within the ambit of management
prerogative. The purpose of reassignments is no different from that of preventive suspension which
management could validly impose as a disciplinary measure for the protection of the companys
property pending investigation of any alleged malfeasance or misfeasance committed by the employee.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position that
required her employers utmost trust and confidence. Having lost his trust and confidence in petitioner,
respondent Delfin had the right to transfer her to ensure that she would no longer have access to the
companies confidential files. Although it is true that petitioner has yet to be proven guilty, respondents
had the authority to reassign her, pending investigation. When petitioner was assigned to Cavite, there
was an ongoing investigation of the charges filed against her. It is undisputed that she refused to fill up,
for no justifiable reasons, the questionnaire distributed by her employer to determine who among those
who had access to the confidential files was responsible for their taking. Furthermore, a witness had
executed an Affidavit claiming that she found the missing files, and that her husband told her that it was
petitioner who handed those files to him. Lastly, the person who supposedly received these documents
from petitioner did not deny or rebuke the statements made by his wife. Josephine Ruiz vs. Wendel
Osaka Realty Corp., et al. G.R. No. 189082, July 11, 2012.
Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it is
applicable only to a situation where (1) there is no CBA or other applicable employment contract
providing for retirement benefits for an employee, or (2) there is a CBA or other applicable employment
contract providing for retirement benefits for an employee, but it is below the requirement set by law.
The rationale for the first situation is to prevent the absurd situation where an employee, deserving to
receive retirement benefits, is denied to them through the nefarious scheme of employers to deprive
employees of the benefits due them under existing labor laws. On the other hand, the second situation
aims to prevent private contracts from derogating from the public law. The determining factor in
choosing which retirement scheme to apply is still superiorityin terms of benefits provided. Thus, even if
there is an existing CBA but the same does not provide for retirement benefits equal or superior to that
which is provided under Article 287 of the Labor Code, the latter will apply.
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the
PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two retirement schemes
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are alternative in nature such that the retired pilot can only be entitled to that which provides for
superior benefits. Comparing the benefits under the two (2) retirement schemes, it can readily be
perceived that the 22.5 days worth of salary for every year of service provided under Article 287 of the
Labor Code cannot match the 240% of salary or almost two and a half worth of monthly salary per year
of service provided under the PAL Pilots Retirement Benefit Plan, which will be further added to the
125,000.00 to which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is
to the petitioners advantage that PALs retirement plans were applied in the computation of his
retirement benefits. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
Unjust enrichment. There is unjust enrichment when a person unjustly retains a benefit at the loss of
another, or when a person retains the money or property of another against the fundamental principles
of justice, equity and good conscience. Two conditions must concur: (1) a person is unjustly benefited;
and (2) such benefit is derived at the expense of or with damages to another. The enrichment may
consist of a patrimonial, physical, or moral advantage, so long as it is appreciable in money. It must have
a correlative prejudice, disadvantage or injury to the plaintiff which may consist, not only of the loss of
the property or the deprivation of its enjoyment, but also of the non-payment of compensation for a
prestation or service rendered to the defendant without intent to donate on the part of the plaintiff, or
the failure to acquire something that the latter would have obtained.
PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to
prepare him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new
knowledge and skills which effectively enriched his technical know-how. As all other investors, PAL
expects a return on investment in the form of service by the petitioner for a period of 3 years, which is
the estimated length of time within which the costs of the latters training can be fully recovered. The
petitioner is, thus, expected to work for PAL and utilize whatever knowledge he had learned from the
training for the benefit of the company. However, after only one (1) year of service, the petitioner opted
to retire from service, leaving PAL stripped of a necessary manpower. Undeniably, the petitioner was
enriched at the expense of PAL. After undergoing the training fully shouldered by PAL, he acquired a
higher level of technical competence which, in the professional realm, translates to a higher
compensation. Further, his training broadened his opportunities for a better employment as in fact he
was able to transfer to another airline company immediately after he left PAL. To allow the petitioner to
simply leave the company without reimbursing it for the proportionate amount of the expenses it
incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason and
fairness dictate that he must return to the company a proportionate amount of the costs of his training.
Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
(Leslie thanks Leanne Herschel C. Que for assisting in the preparation of this post.)


August 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on September 10, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines -
Law, Philippines - Regulation
Here are select rulings of the Philippine Supreme Court on labor law and procedure:
Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not only by
medical findings but also by contract and by law. By contract, Department Order No. 4, series of 2000, of
the Department of Labor and Employment and the parties Collective Bargaining Agreement bind the
seafarer and the employer. By law, the Labor Code provisions on disability apply with equal force to
seafarers. The seafarer, upon sign-off from his vessel, must report to the company-designated physician
within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in
no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work.
He receives his basic wage during this period until he is declared fit to work or his temporary disability is
acknowledged by the company to be permanent, either partially or totally, as his condition is defined
under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial
period is exceeded and no such declaration is made because the seafarer requires further medical
attention, then the temporary total disability period may be extended up to a maximum of 240 days,
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subject to the right of the employer to declare within this period that a permanent partial or total
disability already exists. The seaman may of course also be declared fit to work at any time such
declaration is justified by his medical condition.
From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and
treatment of the company-designated physician. When the company-designated physician made a
declaration on July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from
the time he was repatriated. As such, his temporary total disability should be deemed total and
permanent, pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule. Philasia Shipping
Agency Corporation, et al. vs. Andres G. Tomacruz. G.R. No. 181180, August 15, 2012.
Employee dismissal; due process requirements. 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 Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving
said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he
so desires is given opportunity to respond to the charge, present his evidence or rebut the evidence
presented against him.
(iii) 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.
Petitioners evidence fails to prove their contention that they afforded Atencio with due process. The
June 21, 1999 letter, which allegedly proves Atencios knowledge of the charges against him, and which
allegedly constitutes Atencios explanation, clearly discusses an entirely different topic which is the
removal of his construction company from the Caltex project. As for the May 24, 1999 letter, which
allegedly constitutes the notice of termination of Atencios employment as JARLs chief operating
manager, the said letter involves the termination of the subcontracting agreement between JARL and
Atencios company, and not the termination of Atencios employment. For petitioners failure to
observe the two-notice rule under Article 277(b) of the Labor Code, respondent is entitled to nominal
damages. Jarl Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1,
2012.
Judgment; law of the case.The law of the case has been defined as the opinion delivered on a former
appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision
between the same parties in the same case continues to be the law of the case, whether correct on
general principles or not, so long as the facts on which such decision was predicated continue to be the
facts of the case before the court.
Both G.R. No. 168477 and this petition are offshoots of petitioners purported temporary measures to
preserve its neutrality with regard to the perceived void in the union leadership. While these two cases
arose out of different notices to strike, it is undeniable that the facts cited and the arguments raised by
petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek only one relief, that is,
to absolve petitioner from respondents charge of committing an unfair labor practice. For this reason,
we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005 and
September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the
Court of Appeals finding that petitioner erred in suspending collective bargaining negotiations with
the union and in placing the union funds in escrow considering the intra-union dispute between the
Aliazas and Baez factions was not a justification therefor is binding in the present case. De la Salle
University vs. De la Salle University Employees Association. G.R. No. 169254. August 23, 2012.
Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial Rehabilitation and
Insolvency Act of 2010, the right of a secured creditor to enforce his lien during liquidation proceedings
is retained. On the right of first preference as regards unpaid wages, a distinction should be made
between a preference of credit and a lien. A preference applies only to claims which do not attach to
specific properties. A lien creates a charge on a particular property. The right of first preference as
regards unpaid wages recognized by Article 110 of the Labor Code does not constitute a lien on the
property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a
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preference in application. It is a method adopted to determine and specify the order in which credits
should be paid in the final distribution of the proceeds of the insolvents assets. It is a right to a first
preference in the discharge of the funds of the judgment debtor. Consequently, the right of first
preference for unpaid wages may not be invoked in this case to nullify the foreclosure sales conducted
pursuant to PNBs right as a secured creditor to enforce its lien on specific properties of its debtor,
ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co., Inc.) vs. Philippine
National Bank. G.R. No. 171132, August 15, 2012.
NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the original and
exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the
POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction
to hear and decide all disciplinary action cases and other special cases administrative in character
involving such workers. The obvious intent of Republic Act No. 8042 was to have the POEA focus its
efforts in resolving all administrative matters affecting and involving such workers. The NLRC had no
appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract
workers.
Although, as a rule, all laws are prospective in application unless the contrary is expressly provided, or
unless the law is procedural or curative in nature, there is no serious question about the retroactive
applicability of Republic Act No. 8042 to the appeal of the POEAs decision on petitioners disciplinary
action against respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or
omitting guidelines on appeal. Republic Act No. 8042 applies to petitioners complaint by virtue of the
case being then still pending or undetermined at the time of the laws passage, there being no vested
rights in rules of procedure. They could not validly insist that the reckoning period to ascertain which
law or rule should apply was the time when the disciplinary complaint was originally filed in the POEA in
1993. Moreover, Republic Act No. 8042 and its implementing rules and regulations were already in
effect when petitioners took their appeal. When Republic Act No. 8042 withheld the appellate
jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate jurisdiction was vested in
the Secretary of Labor in accordance with his power of supervision and control under Section 38(1),
Chapter 7, Title II, Book III of the Revised Administrative Code of 1987. Eastern Mediterranean Maritime
Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012.
Petition for review; question of fact. While generally, only questions of law can be raised in a petition for
review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely:
(1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the
inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of
discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant
and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in
the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; and
(10) when the findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record. The illegality of petitioners dismissal was an issue that was squarely raised
before the NLRC. When the NLRC decision was reversed by the Court of Appeals, there was a situation
where the findings of facts are conflicting. The petition for review filed by the Petitioner comes within
the purview of exception (5) and by analogy, exception (7). Mylene Carvajal vs. Luzon Development
Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.
Probationary employee; security of tenure. A probationary employee, like a regular employee, enjoys
security of tenure. However, in cases of probationary employment, aside from just or authorized causes
of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the
probationary employee may also be terminated for failure to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time of the
engagement.
Punctuality is a reasonable standard imposed on every employee, whether in government or private
sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or
habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not
apprised of the standards concomitant to her job, it is but common sense that she must abide by the
work hours imposed by the bank. Satisfactory performance is and should be one of the basic standards
for regularization. Naturally, before an employer hires an employee, the former can require the
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employee, upon his engagement, to undergo a trial period during which the employer determines his
fitness to qualify for regular employment based on reasonable standards made known to him at the
time of engagement.
It is evident that the primary cause of respondents dismissal from her probationary employment was
her chronic tardiness. At the very start of her employment, petitioner already exhibited poor working
habits. Even during her first month on the job, she already incurred eight (8) tardiness. Respondent also
cited other infractions such as unauthorized leaves of absence, mistake in clearing of a check, and
underperformance. All of these infractions were not refuted by petitioner. Mylene Carvajal vs. Luzon
Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.
Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and other
monetary benefits, it is the employers burden to prove its payment to its employee. The employers
evidence must show, with a reasonable degree of certainty, that it paid and that the workers actually
received the payment. The reason for the rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents are not in the possession of the worker but are in the custody
and absolute control of the employer. In the case at bar, the two official receipts issued by Safemark,
and offered as JARLs evidence, only prove that JARL made a total partial payment of P1,891,509.50 to
the said company for its professional services. Since JARL admits that the said company actually
rendered services for JARL on its Caltex project, the payment can only be assumed as covering for the
said services. There is nothing on the face of the receipts to support the conclusion that Atencio (and
not his company) received it as payment for his service as a JARL employee. Jarl Construction and
Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Seafarers; contract. The employment of seafarers, and its incidents, including claims for death benefits,
is governed by the contracts they sign every time they are hired or rehired. Such contracts have the
force of law between the parties as long as their stipulations are not contrary to law, morals, public
order or public policy. While the seafarers and their employers are governed by their mutual
agreements, the POEA rules and regulations require that the POEA Standard Employment Contract,
which contains the standard terms and conditions of the seafarers employment in foreign ocean-going
vessels, be integrated in every seafarers contract. The pertinent provision of the 1996 POEA SEC, which
was in effect at the time of Tanawans employment, was Section 20(B) Compensation and Benefits.
Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.
Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any
disability or is fit to work is the company-designated physician. As such, the seafarer must submit
himself to the company-designated physician for a post-employment medical examination within three
days from his repatriation. But the assessment of the company-designated physician is not final, binding
or conclusive on the seafarer, the labor tribunals, or the courts. The seafarer may request a second
opinion and consult a physician of his choice regarding his ailment or injury, and the medical report
issued by the physician of his choice shall also be evaluated on its inherent merit by the labor tribunal
and the court.
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical examination
within the 3-day reglementary period from his repatriation. The medical examination conducted focused
on Tanawans foot injury, the cause of his repatriation. Dr. Lim treated Tanawan for the foot injury from
December 1, 1997 until May 21, 1998, when Dr. Lim declared him fit to work. Within that period that
lasted 172 days, Tanawan was unable to perform his job, an indication of a permanent disability. Under
the law, there is permanent disability if a worker is unable to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body. Disability should be understood
more on the loss of earning capacity rather than on the medical significance of the disability. Even in the
absence of an official finding by the company-designated physician to the effect that the seafarer suffers
a disability and is unfit for sea duty, the seafarer may still be declared to be suffering from a permanent
disability if he is unable to work for more than 120 days. On the other hand, Tanawans claim for
disability benefits due to the eye injury was already barred by his failure to report the injury and to have
his eye examined by a company-designated physician. The rationale for the rule is that reporting the
illness or injury within three days from repatriation fairly makes it easier for a physician to determine
the cause of the illness or injury.
Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during the
term of the contract. The Court has declared that the unqualified phrase during the term found in
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Section 20(B) thereof covered all injuries or illnesses occurring during the lifetime of the contract.
Whoever claims entitlement to the benefits provided by law should establish his right to the benefits by
substantial evidence. Tanawan did not present any proof of having sustained the eye injury during the
term of his contract. All that he submitted was his bare allegation that his eye had been splashed with
some thinner while he was on board the vessel. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan.
G.R. No. 160444. August 29, 2012.
(Leslie thanks Leanne Herschel C. Que for her assisting is the preparation of this post.)
September 2012 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on October 8, 2012 by Leslie C. Dy Posted in Labor Law
Here are select September 2012 rulings of the Philippine Supreme Court on labor law and procedure:
Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency and its
principal, Modern Metal, committed a prohibited practice and engaged in illegal recruitment when they
altered or substituted the contracts approved by the Philippine Overseas Employment Administration
(POEA). Article 34 (i) of the Labor Code provides: It shall be unlawful for any individual, entity, licensee,
or holder of authority to substitute or alter employment contracts approved and verified by the
Department of Labor from the time of actual signing thereof by the parties up to and including the
period of expiration of the same without the approval of the Secretary of Labor. Meanwhile, Article 38
(i) of the Labor Code, as amended by R.A. 8042, defined illegal recruitment to include the substitution
or alteration, to the prejudice of the worker, of employment contracts approved and verified by the
Department of Labor and Employment from the time of actual signing thereof by the parties up to and
including the period of the expiration of the same without the approval of the Department of Labor and
Employment.
Furthermore, the agency and Modern Metal committed breach of contract by providing substandard
working and living arrangements, when the contract provided free and suitable housing. The living
quarters were cramped as they shared them with 27 other workers. The lodging house was far from the
jobsite, leaving them only three to four hours of sleep every workday because of the long hours of travel
to and from their place of work, not to mention that there was no potable water in the lodging house
which was located in an area where the air was polluted. They complained with the agency about the
hardships that they were suffering, but the agency failed to act on their reports. Significantly, the
agency failed to refute their claims.
Thus, with their original contracts substituted and their oppressive working and living conditions
unmitigated or unresolved, the decision to resign is not surprising. They were compelled by the dismal
state of their employment to give up their jobs; effectively, they were constructively dismissed. A
constructive dismissal or discharge is a quitting because continued employment is rendered impossible,
unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay.
Without doubt, continued employment with Modern Metal had become unreasonable. A reasonable
mind would not approve of a substituted contract that pays a diminished salary from 1350 AED a
month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150
AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years)
at such inferior terms, or a free and suitable housing which is hours away from the job site, cramped
and crowded, without potable water and exposed to air pollution.
We thus cannot accept the agencys insistence that the respondents voluntarily resigned since they
personally prepared their resignation letters in their own handwriting. Pert/CPM Manpower Exponent
Co., Inc. vs. Amando A. Vinuya, et al. G.R. No. 197528. September 5, 2012.
Disability benefit. Deemed read and incorporated into the Contract of Employment between David and
respondents are the provisions of the 2000 Philippine Overseas Employment Agency Standard
Employment Contract (POEASEC). Sec. 20(B)(4) of the POEA-SEC clearly established a disputable
presumption in favor of the compensability of an illness suffered by a seafarer during the term of his
contract. Hence, unless contrary evidence is presented by the seafarers employer/s, this disputable
presumption stands.
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In this case, David not only relies on this disputable presumption of the compensability of his illness but
David has provided more than a reasonable nexus between the nature of his job and the disease that
manifested itself on the sixth month of his last contract with respondents.
It is not necessary that the nature of the employment be the sole and only reason for the illness suffered
by the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the
employee and his work to lead a rational mind to conclude that his work may have contributed to the
establishment or, at the very least, aggravation of any pre-existing condition he might have had.
David showed that part of his duties as a Third Officer of the crude tanker M/T Raphael involved
overseeing the loading, stowage, securing and unloading of cargoes. As a necessary corollary, David
was frequently exposed to the crude oil that M/T Raphael was carrying. The chemical components of
crude oil include, among others, sulfur, vanadium and arsenic compounds. Hydrogen sulfide and carbon
monoxide may also be encountered, while benzene is a naturally occurring chemical in crude oil. It has
been regarded that these hazardous chemicals can possibly contribute to the formation of cancerous
masses.
In this case, David was diagnosed with MFH (now known as undifferentiated pleomorphic sarcoma
[UPS]), which is a class of soft tissue sarcoma or an illness that account for approximately 1% of the
known malignant tumors. As stated by Dr. Pea of the MMC, who was consulted by the company-
designated physician, the etiology of soft tissue sarcomas are multifactorial. However, some factors are
associated with a higher risk. These factors include exposure to chemical carcinogens like some of the
chemical components of crude oil. Jessie V. David, represented by his wife, Ma. Theresa S. David, and
children, Katherine and Kristina David vs. OSG Shipmanagement Manila, Inc. and/or Michaelmar
Shipping Services. G.R. No. 197205. September 26, 2012.
Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary damages. The
requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be
given an opportunity to be heard and defend himself; and (b) the dismissal must be for a valid cause as
provided in Article 282 of the Labor Code, or for any of the authorized causes under Articles 283 and 284
of the same Code. In the case before us, both elements are completely lacking. Respondents were
dismissed without any just or authorized cause and without being given the opportunity to be heard and
defend themselves. The law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary burden would necessarily
mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions,
accusations, and conclusions of employers do not provide for legal justification for dismissing
employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution.
Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair labor
practice when an employer interferes, restrains or coerces employees in the exercise of their right to
self-organization or the right to form an association. In order to show that the employer committed
unfair labor practice under the Labor Code, substantial evidence is required to support the
claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. In the case at bar, respondents were indeed
unceremoniously dismissed from work by reason of their intent to form and organize a union.
A corporation, being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, while acting as corporate agents, are not their personal
liability but the direct accountability of the corporation they represent. However, corporate officers
may be deemed solidarily liable with the corporation for the termination of employees if they acted with
malice or bad faith. In the present case, the lower tribunals unanimously found that Percy and Harbutt,
in their capacity as corporate officers of Burgos, acted maliciously in terminating the services of
respondents without any valid ground and in order to suppress their right to self-organization. Section
31 of the Corporation Code makes a director personally liable for corporate debts if he willfully and
knowingly votes for or assents to patently unlawful acts of the corporation. It also makes a director
personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the
corporation. Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are
jointly and severally liable with the latter for respondents dismissal.
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The awards of moral and exemplary damages in favor of respondents are also in order. Moral damages
may be recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or public
policy, while exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive,
or malevolent manner. The grant of attorneys fees is likewise proper. Attorneys fees may likewise be
awarded to respondents who were illegally dismissed in bad faith and were compelled to litigate or
incur expenses to protect their rights by reason of the oppressive acts of petitioners. The unjustified act
of petitioners had obviously compelled respondents to institute an action primarily to protect their
rights and interests which warrants the granting of the award. Park Hotel, et al. vs. Manolo Soriano, et
al. G.R. No. 171118. September 10, 2012.
Employment termination; Substantive and procedural due process; Mass leave; Strike. Petitioners were
illegally dismissed as they were not afforded substantive and procedural due process. To justify the
dismissal of an employee on the ground of serious misconduct, the employer must first establish that
the employee is guilty of improper conduct, that the employee violated an existing and valid company
rule or regulation, or that the employee is guilty of a wrongdoing. In the instant case, Biomedica failed
to even present a copy of the rules and to prove that petitioners were made aware of such regulations.
The accusation is for engaging in a mass leave tantamount to an illegal strike. The phrase mass leave
may refer to a simultaneous availment of authorized leave benefits by a large number of employees in a
company. Here, only 5 employees were absent on the same day. They did not go on strike, which is a
temporary stoppage of work by the concerted action of employees as a result of any industrial or labor
dispute. Concerted is defined as mutually contrived or planned or performed in unison. In the case
at bar, the 5 petitioners went on leave for various reasons. They were in different places to attend to
their personal needs or affairs.
The petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the
exact acts that the company considers as constituting an illegal strike or violative of company policies.
Such allegation falls short of the requirement in King of Kings Transport, Inc. of a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees. A bare
mention of an illegal strike will not suffice. Further, while Biomedica cites the provisions of the
company policy which petitioners purportedly violated, it failed to quote said provisions in the notice so
petitioners can be adequately informed of the nature of the charges against them and intelligently file
their explanation and defenses to said accusations.
Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely insufficient
and in violation of the implementing rules of the Labor Code. Under the implementing rule of Art. 277,
an employee should be given reasonable opportunity to file a response to the notice.
In addition, Biomedica did not set the charges against petitioners for hearing or conference. While
petitioners did not submit any written explanation to the charges, it is incumbent for Biomedica to set
the matter for hearing or conference to hear the defenses and receive evidence of the employees. More
importantly, Biomedica is duty-bound to exert efforts, during said hearing or conference, to hammer out
a settlement of its differences with petitioners. These prescriptions Biomedica failed to satisfy. Lastly,
Biomedica again deviated from the dictated contents of a written notice of termination as laid down in
Sec. 2, Book V, Rule XIII of the Implementing Rules that it should embody the facts and circumstances to
support the grounds justifying the termination. Alex Q. Naranjo, et al. vs. Biomedica Health Care, Inc., et
al. G.R. No. 193789. September 19, 2012.
Employee dismissal; Reinstatement. Following Article 279 of the Labor Code, an employee who is
unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages computed from the time he was illegally dismissed. However,
considering that respondent Dakila was terminated one (1) day prior to his compulsory retirement on
May 2, 2007, his reinstatement is no longer feasible. Accordingly, the NLRC correctly held him entitled to
the payment of his retirement benefits pursuant to the CBA. On the other hand, his backwages should
be computed only for days prior to his compulsory retirement which in this case is only a day.
Consequently, the award of reinstatement wages pending appeal must be deleted for lack of basis. The
New Philippine Skylanders, Inc. and/or Jennifer M. Eano-Bote vs. Francisco N. Dakila. G.R. No. 199547.
September 24, 2012
Evidence; Constructive dismissal; Transfer; Substantial evidence. In labor cases, strict adherence with
the technical rules is not required. This liberal policy, however, should still conform to the rudiments of
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equitable principles of law. For instance, belated submission of evidence may only be allowed if the
delay is adequately justified and the evidence is clearly material to establish the partys cause. Labor
tribunals, such as the NLRC, are not precluded from receiving evidence submitted on appeal as technical
rules are not binding in cases submitted before them. However, any delay in the submission of evidence
should be adequately explained and should adequately prove the allegations sought to be proven. In the
present case, MORESCO IIs belated submission of evidence cannot be permitted. MORESCO II did not
cite any reason why it had failed to file its position paper or present its cause before the Labor Arbiter
despite sufficient notice and time given to do so. Only after an adverse decision was rendered did it
present its defense and rebut the evidence of Cagalawan by alleging that his transfer was made in
response to the letter-request of the area manager of the Ginoog sub-office asking for additional
personnel to meet its collection quota. To our mind, however, the belated submission of the said letter-
request without any valid explanation casts doubt on its credibility, especially so when the same is not a
newly discovered evidence.
The rule is that it is within the ambit of the employers prerogative to transfer an employee for valid
reasons and according to the requirement of its business, provided that the transfer does not result in
demotion in rank or diminution of salary, benefits and other privileges. This Court has always
considered the managements prerogative to transfer its employees in pursuit of its legitimate
interests. But this prerogative should be exercised without grave abuse of discretion and with due
regard to the basic elements of justice and fair play, such that if there is a showing that the transfer was
unnecessary or inconvenient and prejudicial to the employee, it cannot be upheld. Here, while we find
that the transfer of Cagalawan neither entails any demotion in rank since he did not have tenurial
security over the position of head of the disconnection crew, nor result to diminution in pay as this was
not sufficiently proven by him, MORESCO IIs evidence is nevertheless not enough to show that said
transfer was required by the exigency of the electric cooperatives business interest. Simply stated, the
evidence sought to be admitted by MORESCO II is not substantial to prove that there was a genuine
business urgency that necessitated the transfer.
When there is doubt between the evidence submitted by the employer and that submitted by the
employee, the scales of justice must be tilted in favor of the employee. This is consistent with the rule
that an employers cause could only succeed on the strength of its own evidence and not on the
weakness of the employees evidence. Thus, MORESCO II cannot rely on the weakness of Ortizs
certification in order to give more credit to its own evidence. Self-serving and unsubstantiated
declarations are not sufficient where the quantum of evidence required to establish a fact is substantial
evidence, described as more than a mere scintilla. The evidence must be real and substantial, and not
merely apparent. MORESCO II has miserably failed to discharge the onus of proving the validity of
Cagalawans transfer. Misamis Oriental II Electric Service Cooperative (MORESCO II) vs. Virgilio M.
Cagalawan. G.R. No. 175170. September 5, 2012.
Retirement benefits. While it is true that based on prevailing jurisprudence, disallowed benefits received
in good faith need not be refunded, the case before us may be distinguished from those cases with that
ruling because the monies involved here are retirement benefits. Retirement benefits belong to a
different class of benefits. All the cases with that ruling involved benefits such as cash gifts,
representation allowances, rice subsidies, uniform allowances, per diems, transportation allowances,
and the like. The foregoing allowances or fringe benefits are given in addition to ones salary, either to
reimburse him for expenses he might have incurred in relation to his work, or as a form of
supplementary compensation. On the other hand, retirement benefits are given to one who is
separated from employment either voluntarily or compulsorily. Such benefits, subject to certain
requisites imposed by law and/or contract, are given to the employee on the assumption that he can no
longer work. They are also given as a form of reward for the services he had rendered. The purpose is
not to enrich him but to help him during his non-productive years.
Our Decision does not preclude the retirees from receiving retirement benefits provided by existing
retirement laws. What they are prohibited from getting are the additional benefits under the GSIS RFP,
which we found to have emanated from a void and illegal board resolution. To allow the payees to
retain the disallowed benefits would amount to their unjust enrichment to the prejudice of the GSIS,
whose avowed purpose is to maintain its actuarial solvency to finance the retirement, disability, and life
insurance benefits of its members. Government Service Insurance System (GSIS), et al. vs. Commission on
Audit (COA), et al. G.R. No. 162372. September 11, 2012.
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Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public
policy for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for
termination due to reorganization/restructuring was deficient by Php400,000.00 for each employee;
they were given only half of the amount they were legally entitled to; and (2) the absence of
voluntariness when the employees signed the document, it was their dire circumstances and inability to
support their families that finally drove them to accept the amount offered. Without jobs and with
families to support, they dallied in executing the quitclaim instrument, but were eventually forced to
sign given their circumstances. To be sure, a settlement under these terms is not and cannot be a
reasonable one, given especially the respondents length of service 25 years for Ybarola and 19 years
for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No.
198662. September 12, 2012.
Res judicata. Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment. It denotes that a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all latter suits on all
points and matters determined in the former suit. For res judicata, in its concept as a bar by former
judgment to apply, the following must be present:
1. The former judgment or order is final;
2. It is rendered by a court having jurisdiction over the subject matter and the parties;
3. It is a judgment or an order on the merits; and,
4. There is between the first and the second identity of parties, identity of subject matter, and
identity of cause of action.
The Decision of this Court in G.R. Nos. 159460 and 159461 became final and executory on May 20,
2011. It is a decision based on the merits of the case and rendered by this Court in the exercise of its
appellate jurisdiction after the parties invoked its jurisdiction. There is also, between the two sets of
consolidated cases, identity of the parties, subject matter and causes of action. The parties in G.R. No.
159460 and 159461 are also impleaded as parties in these consolidated cases. And while some of the
parties herein are not included in G.R. Nos. 159460 and 159461, the same are only few. In any event, it
is well-settled that only substantial, and not absolute, identity of the parties is required for res judicata
to lie. There is substantial identity of the parties when there is a community of interest between a
party in the first case and a party in the second case albeit the latter was not impleaded in the first
case.
With regard to identity of cause of action, it has been held that there is identity of causes of action when
the same evidence will sustain both actions or when the facts essential to the maintenance of the two
actions are identical. Here, the bone of contention in both sets of consolidated cases boils down to the
nature and consequences of complainants April 3, 2000 mass action. The antecedent facts that gave
rise to all the cases were the same. Necessarily, therefore, the same evidence would sustain all
actions. Such similarity in the evidence required to sustain all actions is also borne out by the identity of
the issues involved in all these cases. While the parties have presented a plethora of arguments which
we earlier discussed at length, the same nonetheless boil down to the same crucial issues formulated in
G.R. Nos. 159460 and 159461.
It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated January
14, 2002 and February 20, 2002 of the CAs Fourth Division granting Metrobanks request for injunctive
reliefs. They claimed that the reinstatement aspect of the Labor Arbiters Decision is immediately
executory. Hence, they are entitled to backwages from the time the Labor Arbiter promulgated his
Decision until it was reversed by the NLRC.
As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos. 159460 and
159461 already adjudicated the respective rights and liabilities of the parties. Said Decision pronouncing
the monetary awards to which the parties herein are entitled became final and executory on May 20,
2011. Under the rule on immutability of judgment, this Court cannot alter or modify said Decision. It is
a well-established rule that once a judgment has become final and executory, it is no longer susceptible
to any modification. Solidbank Union, et al. vs. Metropolitan Bank and Trust Company/Metropolitan
Bank and Trust Company vs. Solidbank Union, et al./Solidbank Corporation, etc., et al. vs. Solidbank
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Union, et al./Solidbank Union, et al. vs. Metropolitan Bank and Trust Company. G.R. No. 153799/G.R. No.
157169/G.R. No. 157327/G.R. No. 157506. September 17, 2012.
Reinstatement; Strained relations. A determination of the applicability of the doctrine of strained
relations is essentially a factual question and, thus, not a proper subject in this petition. This rule,
however, admits of exceptions. In cases where the factual findings of the LA and the NLRC are
conflicting, the Court, in the exercise if equity jurisdiction, may review and re-evaluate the factual issues
and look into the records of the case and re-examine the questioned findings.
As the records bear out, the LA found that patent animosity existed between ACMC and Bides
considering the confrontation that took place between the latter and Matthew. The confrontation
coupled with Bides refusal to be reinstated led to the LAs finding of strained relations necessitating
an award of separation pay in lieu of reinstatement. The NLRC, on the other hand, deleted the said
award for lack of factual basis. The CA reinstated the LAs finding of strained relations and explained
that too much enmity had developed between ACMC and Bides that necessarily barred the latters
reinstatement.
The Court is well aware that reinstatement is the rule and, for the exception of strained relations to
apply, it should be proved that it is likely that, if reinstated, an atmosphere of antipathy and antagonism
would be generated as to adversely affect the efficiency and productivity of the employee concerned.
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ
a worker it could no longer trust. Moreover, the doctrine of strained relations has been made applicable
to cases where the employee decides not to be reinstated and demands for separation pay.
In the present case, Bides has consistently maintained, from the proceedings in the LA up to the CA, his
refusal to be reinstated due to his fear of reprisal which he could experience as a consequence of his
return. By doing so, Bides unequivocally foreclosed reinstatement as a relief.
Apo Chemical Manufacturing and Michael Cheng vs. Ronaldo A. Bides. G.R. No. 186002. September 19,
2012.
Seafarers disability benefits; Attorneys fees. In determining the disability benefits due a seafarer the
POEA Standard Employment Contract (SEC), specifically its schedule of benefits, medical findings, Article
192 (c)(1) of the Labor Code, and Rule X, Section 2 of its implementing rules and regulations must be
considered. The initial treatment period of 120 days may be extended up to a maximum of 240 days
under the conditions prescribed by law.
Under Article 2298 of the Civil Code, attorneys fees can be recovered *w+hen the defendants act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest. This Court sees no reason why damages or attorneys fees should be awarded to Penales. It is
obvious that he did not give the petitioners company-designated physician ample time to assess and
evaluate his condition, or to treat him properly for that matter. The petitioners had a valid reason for
refusing to pay his claims, especially when they were complying with the terms of the POEA SEC with
regard to his allowances and treatment. Pacific Ocean Manning Inc., et al. vs. Benjamin D. Penales. G.R.
No. 162809. September 5, 2012.
(Leslie thanks Ma. Luisa D. Manalaysay for assisting in the preparation of this post.)
January 2013 Philippine Supreme Court Decisions on Labor Law and Procedure
Posted on February 11, 2013 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged appeal, arbitration, backwages, forum shopping, NLRC, redundancy, reinstatement
Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and
procedure:
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Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal; Joint
declaration under oath accompanying the surety bond; Substantial compliance with procedural
rules. There was substantial compliance with the NLRC Rules of Procedure when the respondents PAL
Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint
Declaration Under Oath, which is required when an employer appeals from the Labor Arbiters decision
granting a monetary award and posts a surety bond. Under the NLRC rules, the following requisites are
required to perfect the employers appeal: (1) it must be filed within the reglementary period; (2) it
must be under oath, with proof of payment of the required appeal fee and the posting of a cash or
surety bond; and (3) it must be accompanied by typewritten or printed copies of the memorandum of
appeal, stating the grounds relied upon, the supporting arguments, the reliefs prayed for, and a
statement of the date of receipt of the appealed decision, with proof of service on the other party of
said appeal. If the employer posts a surety bond, the NLRC rules further require the submission by the
employer, his or her counsel, and the bonding company of a joint declaration under oath attesting that
the surety bond posted is genuine and that it shall be in effect until the final disposition of the case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the
notice of appeal and the appeal memorandum within the reglementary period. When the NLRC
subsequently directed the filing of a Joint Declaration Under Oath, the respondents immediately
complied with the said order. There was only a late submission of the Joint Declaration. Considering
that there was substantial compliance with the rules, the same may be liberally construed. The
application of technical rules may be relaxed in labor cases to serve the demands of substantial justice.
Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd. G.R.
No. 175209. January 16, 2013.
Completeness of service by registered mail; Exception to the general rule regarding a corporations
verification and certification of non-forum shopping; Interpretation of school CBA. A school CBA must
be read in conjunction with statutory and administrative regulations governing faculty
qualifications. Such regulations form part of a valid CBA without need for the parties to make express
reference to the same.
In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester faculty
appointments to the respondents Pepanio and Bueno, since they had not completed postgraduate
degrees. The respondents, however, claimed that the 1994 CBA between UE and the faculty union did
not yet require a masters degree for a teacher to acquire regular status. Having rendered more than
three consecutive years of full-time service to the school, the respondents insisted that UE should have
given them permanent appointments.
The Supreme Court observed that the policy requiring college teachers to have postgraduate degrees
was provided in the Manual of Regulations issued as early as 1992 by the Department of Education,
Culture and Sports (DECS), now the Department of Education. In promulgating the Manual of
Regulations, DECS exercised its power of regulation over educational institutions, which includes
prescribing the minimum academic qualifications for teaching personnel. The legislature subsequently
transferred the power to prescribe such qualifications for teachers in institutions of higher learning to
the Commission on Higher Education (CHED). However, the 1992 Manual of Regulations issued by DECS
continued to apply to colleges and universities until 2010, when CHED issued a Revised Manual of
Regulations.
Thus, the requirement of a masters degree for college teachers, as originally provided in the 1992
Manual of Regulations, was deemed incorporated in the 1994 CBA between UE and the faculty
union. Furthermore, the subsequent CBA in 2001, which provided for the extension of conditional
probationary status to the respondents, subject to their obtaining a masters degree within the
probationary period, clearly showed that UE intended to subject the respondents appointments to the
standards set by the law.
The requirement of a masters degree for tertiary education teachers is not unreasonable, considering
that the operation of educational institutions involves public interest. The government has a right to
ensure that only qualified persons, in possession of sufficient academic knowledge and teaching skills,
are allowed to teach in such institutions.
The Supreme Court also overruled the respondents contention that UE filed its appeal to the NLRC
beyond the required ten (10)-day period. For completeness of service by registered mail, the reckoning
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period starts either from the date of actual receipt of the mail by the addressee or after five (5) days
from the date he or she received the first notice from the postmaster. In this case, the respondents
averred that, on March 17, 2005, the postmaster gave UEs counsel a notice to claim the mail containing
the Labor Arbiters decision. The respondents claimed that UEs counsel was deemed in receipt of the
decision 5 days after the giving of the notice, or on March 22, 2005. Thus, according to the respondents,
when UE filed its appeal to the NLRC on April 14, 2005, the 10-day reglementary period had already
lapsed. The Supreme Court, however, ruled that there must be conclusive proof that the registry notice
was received by or at least served on the addressee. In this case, the records did not show that UEs
counsel in fact received the alleged registry notice requiring him to claim the mail. On the other hand,
UE was able to present a registry return receipt showing that its counsel actually received a copy of the
Labor Arbiters decision on April 4, 2005. Reckoned from this date, the 10-day reglementary period had
not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.
Anent UEs failure to comply with the general rule that the Board of Directors or Board of Trustees of a
corporation must authorize the person who shall sign the verification and certification of non-forum
shopping accompanying a petition, the Supreme Court held that such authorization is not necessary
when it is self-evident that the signatory is in a position to verify the truthfulness and correctness of the
allegations in the petition. The Supreme Court declared that Dean Eleanor Javier, who signed UEs
verification and certification, was in such a position, since she knew the factual antecedents of the case
and she actually communicated with the respondents regarding the required postgraduate
qualification. University of the East, et al. vs. Analiza F. Pepanio and Mariti D. Bueno. G.R. No. 193897.
January 23, 2013.
Disease as a ground for termination; Retirement under the Labor Code; Age and tenure requirements
for retirement; Financial assistance. Under the Labor Code provision on disease as a ground for
termination (formerly, Article 284, but now renumbered pursuant to Republic Act No. 10151), it must be
the employer who initiates the termination of the employees services. The aforementioned provision
cannot be applied in this case, considering that it was the late petitioner Padillo, and not the Rural Bank
of Nabunturan, Inc. (Bank), who severed the employment relations. With his memory impaired after
suffering a mild stroke due to hypertension, Padillo wrote a letter to the Bank, expressing his intention
to avail of an early retirement package. The clear import of Padillos letter and the fact that he had
stopped reporting for work even before sending the said letter shows that he voluntarily retired. Given
the inapplicability of the Labor Code provision on disease as a ground for termination, it necessarily
follows that Padillos claim for separation pay must be denied.
As regards Padillos claim for retirement benefits, the provision of the Labor Code on retirement
(formerly, Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence of any
applicable agreement, an employee who has served at least five (5) years in the company may retire
upon reaching the age of sixty (60) years, but not beyond sixty-five (65) years, to be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of service, with a
fraction of at least six (6) months being considered as one whole year. Notably, the aforementioned age
and tenure requirements are cumulative, and non-compliance with either negates the employees
entitlement to the retirement pay under the Labor Code. In this case, the Bank did not have a
retirement plan or any other contract with its employees, setting the terms and conditions for
retirement. Padillo also served the Bank for twenty-nine (29) years, far more than the 5-year tenure
requirement. Padillo, however, did not meet the age requirement, considering that he was only fifty-
five (55) years old, or less than 60 years of age, when he retired. Thus, Padillos claim for retirement pay
must also be denied.
Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000,
considering the length of time which had supervened before the disposition of this case and Padillos
unblemished record of 29 years of service to the Bank. The award was in addition to the P100,000
benefit receivable under the Philam Life Plan that the Bank had procured in favor of Padillo. Eleazar S.
Padillo vs. Rural Bank of Nabunturan, Inc., et al. G.R. No. 199338. January 21, 2013.
Redundancy as an authorized cause for termination; Difference between retirement and termination
due to redundancy; General rule regarding the factual findings of the NLRC and the exceptions
thereto. Under the Labor Code, redundancy is one of the authorized causes for termination of
employment. The following are the requisites for the valid implementation of a redundancy
program: (a) the employer must serve a written notice to the affected employees and to the
Department of Labor and Employment (DOLE) at least one month before the intended date of
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termination; (b) the employer must pay the employees separation pay equivalent to at least one month
pay or at least one month pay for every year of service, whichever is higher; (c) the employer must
abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria
in ascertaining which positions are redundant and may be abolished. The Supreme Court has also held
that a company cannot simply declare redundancy without basis. To exhibit its good faith and to show
that there were fair and reasonable criteria in ascertaining redundant positions, a company claiming to
be over manned must produce adequate proof of the same.
In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written notice
informing her of the termination of her services on the ground of redundancy. GMC also submitted to
the DOLE an Establishment Termination Report, regarding the employees, including Viajar, whose
positions were deemed redundant. Viajar and the DOLE received the respective notices one month
before the effective date of the employees termination. Furthermore, GMC issued to Viajar two checks
amounting to P440,253.02 and P21,211.35, representing her separation pay. However, the Supreme
Court held that, notwithstanding compliance with the requirements on notice and the payment of
separation pay, GMC is still considered to have illegally dismissed Viajar because the company failed to
present substantial proof to support its general allegations of redundancy. GMC could have presented
evidence to substantiate redundancy, such as a new staffing pattern or feasibility studies or proposals
on the viability of newly created positions, job descriptions and the approval by management of the
restructuring program, or the companys audited financial reports. However, no such evidence was
submitted by GMC.
On the other hand, Viajar presented proof negating GMCs claim of redundancy and clearly showing
GMCs bad faith in implementing the redundancy program: (1) GMC had hired new employees before it
terminated Viajars employment; (2) Vaijar was barred from entering the company premises even
before the effectivity of her separation; and (3) Viajar was also forced to sign an Application for
Retirement and Benefits so that she could avail of her separation pay. The last circumstance is
significant, considering that there is a difference between voluntary retirement and forced termination
of an employee. Retirement from service is contractual or based on a bilateral agreement of the
employer and the employee, while termination of employment is statutory or governed by the Labor
Code and other related laws. Voluntary retirement cuts employment ties, leaving no residual employer
liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination
without cause. GMCs demand that Viajar sign an Application for Retirement and Benefits, when she
had already been informed of the termination of her services due to redundancy, shows that this case
involves not a voluntary retirement, but an illegal termination.
While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general rule that
the factual findings of the NLRC must be accorded respect and finality is not applicable in this case. One
of the exceptions to the said rule covers instances when the findings of fact of the trial court, or of the
quasi-judicial agencies concerned, are conflicting or contradictory with those of the Court of Appeals, as
in the present case. Another exception to the general rule is when the said findings are not supported
by substantial evidence or the inference or conclusion arrived at is manifestly erroneous. In the case at
bar, the Supreme Court agreed with the Court of Appeals that the NLRCs conclusion that Viajar was
legally dismissed is manifestly erroneous. General Milling Corporation vs. Violeta L. Viajar. G.R. No.
181738. January 30, 2013.
Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are entitled to
reinstatement with backwages plus interest at the legal rate.
This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and the
Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other for violating
labor laws. AER filed a complaint against the Union and eighteen (18) of its members for conducting an
illegal strike. On the other hand, thirty-two (32) employees filed a complaint against AER for unfair labor
practices, illegal dismissal, illegal suspension, and run-away shop. In a previous decision (G.R. No.
160138, July 13, 2011), the Supreme Court had held that both parties were at fault or in pari delicto;
hence, the complaining employees should be reinstated but without backwages. The Motion for Partial
Reconsideration filed by the Union is resolved in the present case.
The Supreme Court found that, of the 32 employees who filed the complaint against AER, only 18 had
been charged by AER with illegal strike, leaving 14 excluded from the employers complaint. As no
charges had been filed against the 14 workers, they cannot be found guilty of illegal strike. Neither can
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they be considered in pari delicto. However, of the 14 employees, five failed to write their names and
affix their signatures in the Membership Resolution attached to their petition before the Court of
Appeals, authorizing the union president to represent them. Thus, while these five employees will also
be reinstated, they cannot be granted backwages. On the other hand, the nine workers who signed
their names in the aforementioned Membership Resolution will be reinstated with backwages plus
interest at the legal rate. Automotive Engine Rebuilders, Inc. (AER), et al. vs. Progresibong Unyon ng
mga Manggagawa sa AER, et al. / Progresibong Unyon ng mga Manggagawa sa AER, et al. vs.
Automotive Engine Rebuilders, Inc., et al. G.R. Nos. 160138 and 160192. January 16, 2013.
Resignation; Resignation in relation to the subsequent filing of an illegal dismissal case. Petitioner
Cervantess claim that he did not resign but was terminated from employment is
untenable. Resignation is the voluntary act of an employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service, such that he
has no other choice but to disassociate himself from his employment.
In the present case, Cervantess employer merely informed him of the numerous complaints against
him. It was Cervantes himself who opted to be relieved from his post and who initiated his repatriation
to Manila. This is clear from the tenor of his telex message, which reads in part: ANYHOW TO AVOID
REPETITION [ON] MORE HARSH REPORTS TO COME. BETTER ARRANGE MY RELIEVER [AND] C/O
BUSTILLO RELIEVER ALSO. UPON ARR NEXT USA LOADING PORT FOR THEIR SATISFACTION. Cervantess
message contains an unmistakable demand to be relieved of his assignment. His employer merely
accepted his resignation. Thus, the rule that the filing of a complaint for illegal dismissal is inconsistent
with resignation does not hold true in this case. The clear tenor of Cervantess resignation letter and the
filing of this case one year after his alleged termination shows that the complaint for illegal dismissal
was a mere afterthought. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping
Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and exercise
of management prerogative; Limitations on the exercise of management prerogative; Nature of
collective bargaining agreements (CBA). Goya, Inc.s contention that the Voluntary Arbitrator (VA)
exceeded his power in ruling on a matter not covered by the sole issue submitted for voluntary
arbitration is untenable. In a prior case, the Supreme Court has ruled that, in general, the arbitrator is
expected to decide those questions expressly stated and limited in the submission
agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator
can assume that he has the power to make a final settlement. The VA has plenary jurisdiction and
authority to interpret the CBA and to determine the scope of his or her own authority. Subject to
judicial review, this leeway of authority and adequate prerogative is aimed at accomplishing the
rationale of the law on voluntary arbitration speedy labor justice.
In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary
arbitration the sole issue of whether or not the company is guilty of an unfair labor practice in engaging
the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence. The
Union claimed that the hiring of contractual workers from PESO violated the CBA provision that
prescribes only three categories of workers in the company, namely: the probationary, the regular, and
the casual employees. Instead of hiring contractual workers, Goya, Inc. should have hired probationary
or casual employees, who could have become additional Union members, pursuant to the union security
clause in the CBA. The VA ruled that while Goya, Inc. was not guilty of any unfair labor practice, it still
committed a violation of the CBA, though such violation was not gross in character. The Supreme Court
held that the VAs ruling is interrelated and intertwined with the sole issue submitted for
arbitration. The ruling was necessary to make a complete and final adjudication of the dispute between
the parties.
Furthermore, Goya, Inc.s assertion that its hiring of contractual workers was a valid exercise of
management prerogative is erroneous. Declaring that a particular act falls within the concept of
management prerogative is significantly different from acknowledging that such act is a valid exercise
thereof. While the VA and the Court of Appeals ruled that the act of contracting out or outsourcing
work is within the purview of management prerogative, they did not declare such act to be a valid
exercise thereof. As repeatedly held, the exercise of management prerogative is not unlimited; it is
subject to the limitations found in the law, CBA, or general principles of fair play and justice.
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In this case, the CBA provision prescribing the categories of employees in the company and the union
security clause are interconnected and must be given full force and effect. The parties in a CBA are free
to establish such stipulations they may deem convenient, provided that the same are not contrary to
law, morals, good customs, public order, or public policy. Where the CBA is clear and unambiguous, the
literal meaning of its stipulations shall control. The CBA becomes the law between the parties, and
compliance therewith is mandated by the express policy of the law. Goya, Inc. vs. Goya, Inc. Employees
Union-FFW. G.R. No. 170054. January 21, 2013.
(Leslie thanks Carlos Manuel S. Prado for his assistance in the preparation of this post.)