LABOR RELATIONS

(1) Capitol Medical vs. NLRC, 457 SCRA

235/ G.R. No. 147080 April 26, 2005
FACTS
The petitioners refusal to negotiate for a
collective bargaining agreement (CBA) resulted in a
union-led strike on April 15, 1993.
The Capitol Medical Center Employees
Association-Alliance of Filipino Workers, the Union,
had to contend with another union, the Capitol Medical
Center Alliance of Concerned Employees (CMC-ACE),
which demanded for a certification election among the
rank-and-file employees of the petitioner. Med-Arbiter
Brigida Fadrigon granted the petition, and the matter was
appealed to the Secretary of Labor and Employment
(SOLE). Undersecretary Bienvenido E. Laguesma
rendered a Resolution granting the appeal. He, likewise,
denied the motion filed by the petitioner and the CMCACE. The latter thereafter brought the matter to the
Court which rendered judgment affirming the resolution
of Undersecretary Laguesma, thus: (1) Dismissing the
petition for certification election filed by the Capitol
Medical Center Alliance of Concerned EmployeesUnited Filipino Services Workers for lack of merit; and;
(2) Directing the management of the Capitol Medical
Center to negotiate a CBA with the Capitol Medical
Center Employees Association-Alliance of Filipino
Workers, the certified bargaining agent of the rank-andfile employees.
The decision of the Court became final and
executory. Thereafter, in a Letter dated October 3, 1997
addressed to Dr. Thelma N. Clemente, the President and
Director of the petitioner, the Union requested for a
meeting to discuss matters pertaining to a negotiation for
a CBA, conformably with the decision of the Court.4
However, in a Letter to the Union dated October 10,
1997, Dr. Clemente rejected the proposed meeting, on
her claim that it was a violation of Republic Act No.
6713 and that the Union was not a legitimate one. On
October 15, 1997, the petitioner filed a Petition for the
Cancellation of the Unions Certificate of Registration
with the Department of Labor and Employment (DOLE)
on the following grounds: (1) Respondent has failed for
several years to submit annually its annual financial
statements and other documents as required by law. For
this reason, respondent has long lost its legal personality
as a union; (2) Respondent also engaged in a strike
which has been declared illegal by the NLRC.
The Union alleged as grounds for the projected strike the
following acts of the petitioner: (a) refusal to bargain;
(b)
coercion
on
employees;
and
(c)
interference/restraint to self-organization.
A series of conferences was conducted before the NCMB
(National Capital Region), but no agreement was
reached. On November 6, 1997, the petitioner even filed
a Letter with the Board requesting that the notice of
strike be dismissed;8 the Union had apparently failed to

furnish the Regional Branch of the NCMB with a copy

of a notice of the meeting where the strike vote was
conducted.
On November 20, 1997, the Union submitted to the
NCMB the minutes9 of the alleged strike vote
purportedly held on November 10, 1997 at the parking
lot in front of the petitioners premises, at the corner of
Scout Magbanua Street and Panay Avenue, Quezon City.
It appears that 178 out of the 300 union members
participated therein, and the results were as follows: 156
members voted to strike; 14 members cast negative
votes; and eight votes were spoiled.
On November 28, 1997, the officers and members of the
Union staged a strike.
The Labor Arbiter found and declared in his decision that
no secret voting ever took place in the parking lot
fronting the hospital on November 10, 1997 by and
among the 300 members of the respondent Union. Erwin
Barbacena, the overseer of the only parking lot fronting
the hospital, and security guards Simon Ting-zon and
Reggie Barawid, declared in their respective affidavits
that no secret voting ever took place on November 10,
1997; 17 employees of the petitioner also denied in their
respective statements that they were not members of the
respondent Union, and were asked to merely sign
attendance papers and unnumbered votes. The NLRC
and the CA declared in their respective decisions that the
affidavits of the petitioners 17 employees had no
probative weight because the said employees merely
executed their affidavits out of fear of losing their jobs.
The NLRC and the CA anchored their conclusion on
their finding that the affidavits of the employees were
uniform and pro forma.
ISSUES
(1)Whether the respondent Capitol Medical Center
Employees Association-Alliance of Filipino
Workers (the Union, for brevity) was the exclusive
bargaining agent of the rank-and-file employees of
the petitioner Capitol Medical Center, Inc.?; (2)
WON the strike staged by the Union is legal?
HELD
NO. The Supreme Court agree with the finding
of the Labor Arbiter that no secret balloting to strike was
conducted by the respondent Union on November 10,
1997 at the parking lot in front of the hospital, at the
corner of Scout Magbanua Street and Panay Avenue,
Quezon City. It was agreed with the petitioner that the
respondent Union failed to comply with the second
paragraph of Section 10, Rule XXII of the Omnibus
Rules of the NLRC which reads: Section 10. Strike or
lockout vote.A decision to declare a strike must be
approved by a majority of the total union membership in
the bargaining unit concerned obtained by secret ballot in
meetings or referenda called for the purpose. A decision
to declare a lockout must be approved by a majority of
the Board of Directors of the employer, corporation or

LABOR RELATIONS

association or the partners obtained by a secret ballot in a

meeting called for the purpose. The regional branch of
the Board may, at its own initiative or upon the request
of any affected party, supervise the conduct of the secret
balloting. In every case, the union or the employer shall
furnish the regional branch of the Board and notice of
meetings referred to in the preceding paragraph at
least twenty-four (24) hours before such meetings as
well as the results of the voting at least seven (7) days
before the intended strike or lockout, subject to the
cooling-off period provided in this Rule. Although the
second paragraph of Section 10 of the said Rule is not
provided in the Labor Code of the Philippines,
nevertheless, the same was incorporated in the Omnibus
Rules Implementing the Labor Code and has the force
and effect of law.

attendant thereto; and (c) should the NCMB decide on

its own initiative or upon the request of an interested
party including the employer, to supervise the strike vote,
to give it ample time to prepare for the deployment of the
requisite personnel, including peace officers if need be.
Unless and until the NCMB is notified at least 24 hours
of the unions decision to conduct a strike vote, and the
date, place, and time thereof, the NCMB cannot
determine for itself whether to supervise a strike vote
meeting or not and insure its peaceful and regular
conduct. The failure of a union to comply with the
requirement of the giving of notice to the NCMB at least
24 hours prior to the holding of a strike vote meeting
will render the subsequent strike staged by the union
illegal.
_________________________________

RULING
The petition is GRANTED. The Decisions of the Court
of Appeals and NLRC are SET ASIDE AND
REVERSED. The Decision of the Labor Arbiter is
REINSTATED.

A union is mandated to notify the NCMB (National

Conciliation Mediation Board) of an impending dispute
in a particular bargaining unit via a notice of strike.
Thereafter, the NCMB, through its conciliator-mediators,
shall call the parties to a conference at the soonest
possible time in order to actively assist them in exploring
all possibilities for amicable settlement. In the event of
the failure in the conciliation/mediation proceedings, the
parties shall be encouraged to submit their dispute for
voluntary arbitration. However, if the parties refuse, the
union may hold a strike vote, and if the requisite number
of votes is obtained, a strike may ensue. The purpose of
the strike vote is to ensure that the decision to strike
broadly rests with the majority of the union members in
general and not with a mere minority, and at the same
time, discourage wildcat strikes, union bossism and even
corruption. A strike vote report submitted to the NCMB
at least seven days prior to the intended date of strike
ensures that a strike vote was, indeed, taken. In the event
that the report is false, the seven-day period affords the
members an opportunity to take the appropriate remedy
before it is too late. The 15 to 30 day cooling-off period
is designed to afford the parties the opportunity to
amicably resolve the dispute with the assistance of the
NCMB conciliator/mediator, while the seven-day strike
ban is intended to give the DOLE an opportunity to
verify whether the projected strike really carries the
imprimatur of the majority of the union members.
The requirement of giving notice of the conduct of a
strike vote to the NCMB at least 24 hours before the
meeting for the said purpose is designed to (a) inform the
NCMB of the intent of the union to conduct a strike vote;
(b) give the NCMB ample time to decide on whether or
not there is a need to supervise the conduct of the strike
vote to prevent any acts of violence and/or irregularities

(2) Sarmiento vs. Tuico, 162 SCRA 676/

Nos. L-75271-73 June 27, 1988
FACTS
The case arose when on May 7, 1986, petitioner
Asian Transmission Corporation terminated the services
of Catalino Sarmiento, vice-president of the Bisig ng
Asian Transmission Labor Union (BATU), for allegedly
carrying a deadly weapon in the company premises. As a
result, the BATU filed a notice of strike on May 26,
1986, claiming that the ATC had committed an unfair
labor practice. The conciliatory conference held on June
5, 1986, failed to settle the dispute. The ATC then filed a
petition asking the Ministry of Labor and Employment to
assume jurisdiction over the matter or certify the same to
the NLRC for compulsory arbitration. Noting that the
impending strike would prejudice the national interest as
well as the welfare of some 350 workers and their
families, the MOLE issued an order on June 3, 1986,
certifying the labor dispute to the NLRC. At the same
time, it enjoined the management from locking out its
employees and the union from declaring a strike or
similar concerted action. This order was reiterated on
June 13, 1986, upon the representation of the ATC that
some 40 workers had declared a strike and were
picketing the company premises. Proceedings could not
continue in the NLRC, however, because of the
acceptance by President Aquino of the resignations of
eight of its members, leaving only the vice-chair- man in
office. For this reason, the MOLE, on September 9,
1986, set aside the orders of June 9 and 13, 1986, and
directly assumed jurisdiction of the dispute, at the same
time enjoining the company to accept all returning
workers. This order was itself set aside on November 24,
1986, upon motion of both the BATU and the ATC, in
view of the appointment of new commissioners in the
NLRC. The MOLE then returned the case to the
respondent NLRC and directed it to expeditiously
resolve all issues relating to the dispute, adding that the
union and the striking workers are ordered to return to
work immediately. Conformably, the NLRC issued on
January 13, 1987 the following resolution, which it

LABOR RELATIONS

affirmed in its resolution of February 12, 1987, denying

the motion for reconsideration.
Asian Transmission Corporation is an export-oriented
enterprise and its annual export amounts to 90% of its
sales generating more than twelve (12) million dollars
per year. The corporation employs three hundred fifty
(350) workers with a total monthly take home pay or
approximately P1,300,000.00 a month.
ISSUE:
Whether or not a return-to-work order may be
validly issued by the National Labor Relations
Commission pending determination of the legality of the
strike; and
HELD
NO. It is contended by the ATC that the NLRC
had no jurisdiction in issuing the return-to-work order
and that in any case the same should be annulled for
being oppressive and violative of due process. The
question of competence is easily resolved. The authority
for the order is found in Article 264(g) of the Labor
Code, as amended by B.P. Blg. 227.
Accordingly, the Court holds that the return-towork order should benefit only those workers who
complied therewith and, regardless of the outcome of the
compulsory arbitration proceedings, are entitled to be
paid for work they have actually performed. Conversely,
those workers who refused to obey the said order and
instead waged the restrained strike are not entitled to
be paid for work not done or to reinstatement to the
positions they have abandoned by their refusal to
return thereto as ordered.
RULING:
The temporary restraining order of August 12,
1986, and September 21, 1986, are CONTINUED IN
FORCE until completion of the compulsory arbitration
proceedings in the NLRC.
--------------------------------------(3) Lapanday Workers Union & et. al. vs. National
Labor Relations Commission, 248 SCRA 95/ G.R.
Nos. 95494-97.September 7, 1995
FACTS
Petitioner Lapanday Agricultural Workers
Union (Union for brevity) and petitioners-workers of
Lapanday Agricultural and Development Corporation
and CADECO Agro Development Philippines, Inc., seek
to reverse the consolidated Decision, dated August 29,
1990, rendered by public respondent NLRC, declaring
their strike illegal and ordering the dismissal of their
leaders. Private respondents are sister companies
engaged in the production of bananas. Their agricultural
establishments are located in Davao City.

On the other hand, petitioner Lapanday Workers Union

(Union) is the duly certified bargaining agent of the rank
and file employees of private respondents. The Union is
affiliated with the KMU-ANGLO (Alliance of
Nationalist and Genuine Labor Organization). The other
petitioners are all members of the Union.
The records show that petitioner Union has a collective
bargaining agreement with private respondents, covering
the period from December 5, 1985 to November 30,
1988. A few months before the expiration of their CBA,
private respondents initiated certain management policies
which disrupted the relationship of the parties.
Private respondents contracted Philippine Eagle
Protectors and Security Agency, Inc., to provide security
services for their business premises. Their contract also
called for the protection of the lives and limbs of private
respondents officers, employees and guests within
company premises. The Union branded the security
guards posted within the company premises as private
respondents goons and special forces. It also
accused the guards of intimidating and harassing their
members.
The Union filed on August 25, 1988, a Notice of Strike
with the National Conciliation and Mediation Board
(NCMB). It accused the company of unfair labor
practices consisting of coercion of employees,
intimidation of union members and union-busting.2
These were the same issues raised by the Union during
the August 2, 1988 labor-management meeting.
On August 29, 1988, the NCMB called a conciliation
conference. The conference yielded the following
agreement:
(1) Union officers, including the officials of KMUANGLO, and the Executive Director of the NCMB
would attend the HDIR seminar on September 5, 1988;
and;
(2) A committee shall convene on September 10, 1988, to
establish guidelines governing the guards.
The Union officials did attend the September 5,
1988 seminar. While they no longer objected to the
continuation of the seminar, they reiterated their demand
for the deletion of the discussion pertaining to the KMUANGLO.
On September 14, 1988, private respondents filed
separate charges against the Union and its members for
illegal strike, unfair labor practice and damages, with
prayer for injunction.
On October 3, 1988, a strike vote was conducted among
the members of the Union and those in favor of the strike
won overwhelming support from the workers. The result
of the strike vote was then submitted to the NCMB on
October 10, 1988. Two days later, or on October 12,
1988, the Union struck.
On the bases of the foregoing facts, Labor Arbiter
Antonio Villanueva ruled that the Union staged an illegal
strike.
Petitioners now claim that public respondent NLRC
gravely abused its discretion in: a) declaring that their
activities, from September 9, 1988 to October 12, 1988,
were strike activities; and b) declaring that the strike
staged on October 12, 1988 was illegal.
The critical issue is the legality of the strike held on
October 12, 1988. The applicable laws are Articles 263
and 264 of the Labor Code, as amended by E.O. No. 111,
dated December 24, 1986.

LABOR RELATIONS

Paragraphs (c) and (f) of Article 263 of the Labor Code,

as amended by E.O. 111.
ISSUES: (1) WON the strike conducted by the union on
October 12, 1988 is valid? (2) WON union members who
were merely instigated to participate in the illegal strike
should be treated differently from their leaders?
HELD
1) NO. Applying the law to the case at bar, the court
ruled that strike conducted by the union on October 12,
1988 is plainly illegal as it was held within the seven (7)
day waiting period provided for by paragraph (f), Article
263 of the Labor Code, as amended. The haste in holding
the strike prevented the Department of Labor and
Employment from verifying whether it carried the
approval of the majority of the union members;
2) YES. The Supreme Court, likewise, agreed with the
public respondent that the union members who were
merely instigated to participate in the illegal strike
should be treated differently from their leaders. Part of
their benign consideration for labor is the policy of
reinstating rank-and-file workers who were merely
misled in supporting illegal strikes. Nonetheless, these
reinstated workers shall not be entitled to backwages as
they should not be compensated for services skipped
during the illegal strike.
RULING: The petition is dismissed for failure to show
grave abuse of discretion on the part of the public
respondent.
______________________________
(4) Stamford Marketing Corp. vs. Julian, 423 SCRA
633/ G.R. No. 145496. February 24, 2004
FACTS
The instant controversy stemmed from a letter sent by
Zoilo V. De La Cruz, Jr., president of the Philippine
Agricultural, Commercial and Industrial Workers
Union (PACIWU-TUCP), on November 2, 1994, to
Rosario A. Apacible, the treasurer and general manager
of herein petitioners Stamford Marketing Corporation,
GSP Manufacturing Corporation, Giorgio Antonio
Marketing
Corporation,
Clementine
Marketing
Corporation, and Ultimate Concept Phils., Inc. Said letter
advised Apacible that the rank-and-file employees of the
aforementioned companies had formed the Apacible
Enterprise Employees Union-PACIWU-TUCP. The
union demanded that management recognize its
existence. Shortly thereafter, discord reared its ugly head,
and rancor came hard on its wake.
petitioner Stamford alleged that private respondent Julian
was a supervising employee at the Patricks Boutique at
Shoemart (SM) Northmall. In October 1994, when she
was four (4) to five (5) months pregnant, the
management of SM Northmall asked her to go on
maternity leave, pursuant to company policy. Julian was

then directed to report at Stamfords Head Office for

reassignment. She was also asked to submit a medical
certificate to enable the company to approximate her
delivery date. Julian, however, allegedly failed to comply
with these directives and instead, ceased to report for
work without having given notice. Stamford then
allegedly asked Tejada to take over Julians position, but
the former inexplicably refused to comply with the
management directive. Instead, like Julian, she
abandoned her work with nary a notice or an
explanation.
On March 17, 1995, PACIWU-TUCP, filed on behalf of
fifty (50) employees allegedly illegally dismissed for
union membership by the petitioners, a Complaint before
the Arbitration Branch of NLRC, Metro Manila.
PACIWU-TUCP charged petitioners herein with unfair
labor practice. The Complaint alleged that when
Apacible received the letter of PACIWU-TUCP,
management began to harass the members of the local
chapter, a move which culminated in their outright
dismissal from employment, without any just or lawful
cause. It was a clear case of union-busting, averred
PACIWU-TUCP.
Petitioners argue that respondents were legally
dismissed, pursuant to Article 26411 of the Labor Code
in view of the determination by the Labor Arbiter that the
strike conducted by respondents are illegal and that
illegal acts attended the mass action. The respondents
counter that the determination of the illegality of strike is
inconsequential as the conclusion by the appellate court
on the illegality of dismissal was based on the
petitioners non-compliance with the due process
requirements on terminating employees, which had
nothing to do with the legality of the strike.
In the instant case, we find no reason to disagree with the
findings of the NLRC that the strike conducted by the
respondent union is illegal. First, it has not been shown
to the satisfaction of this Court that said union is a
legitimate labor organization, entitled under Article 263
(c) to file a notice of strike on behalf of its members.
Second, the other requirements under Article 263 (c) and
(f) were not complied with by the striking union. On this
matter, the record is bare of any showing to the contrary.
Hence, what is left for this Court to do is to determine
the effects of the illegality of the strike on respondents
union officers and members, specifically (a) whether
such would justify their dismissal from employment, and
(b) whether they ceased to be entitled to the monetary
awards and other appropriate reliefs and remedies.
While holding the strike illegal, the Court of Appeals
nonetheless still ruled that the union officers and
members were illegally dismissed for non-observance of
due process requirements and union busting by
management. It likewise gave no credence to the charge
of abandonment against Julian and Tejada. Thus, it
awarded separation pay in lieu of reinstatement to all
union officers including respondents Julian and Tejada

LABOR RELATIONS

and affirmed all other monetary awards by the Labor

Arbiter including backwages.
On this point, we affirm the findings of the appellate
court that Julian and Tejada did not abandon their
employment. Petitioners utterly failed to show proof that
Julian and Tejada had the intent to abandon their work
and sever their employment relationship with petitioners.
It is established that an employee who forthwith takes
steps to protest his layoff cannot be said to have
abandoned his work.20 However, we cannot sustain the
appellate courts ruling that the dismissal of Julian and
Tejada was tantamount to unfair labor practice. There is
simply nothing on record to show that Julian and Tejada
were discouraged or prohibited from joining any union.
Hence, the petitioners cannot be held liable for unfair
labor practice.
ISSUES
(1) Whether the respondents union officers and members
were validly and legally dismissed from employment
considering the illegality of the strike;
(2) Whether the respondents union officers and members
are entitled to backwages, separation pay and
reinstatement, respectively?
HELD
1) YES. The dismissals per se are not invalid but only
ineffectual in accordance with Serrano v. National Labor
Relations Commission. In said case, the court held that
(1) the employers failure to comply with the notice
requirement does not constitute denial of due process,
but mere failure to observe a procedure for termination
of employment which makes the termination merely
ineffectual, and (2) the dismissal shall be upheld but the
employer must be sanctioned for non-compliance with
the prescribed procedure.
2) As a sanction for non-compliance with notice
requirements for lawful termination by the petitioners,
only backwages are AWARDED to the union officers
computed from the time they were dismissed until the
final entry of judgment of this case. The court affirm the
findings of the appellate court that Julian and Tejada did
not abandon their employment. Petitioners utterly failed
to show proof that Julian and Tejada had the intent to
abandon their work and sever their employment
relationship with petitioners. It is established that an
employee who forthwith takes steps to protest his layoff
cannot be said to have abandoned his work.
RULING
The assailed Decision of the Court of Appeals, dated
April 26, 2000 and its Resolution of October 11, 2000, in
CA-G.R. SP No. 53169 are AFFIRMED with
MODIFICATION. Dismissal of the union officers is
declared NOT INVALID, and the award of separation
pay to said union officers is hereby DELETED.
However, as a sanction for non-compliance with notice

requirements for lawful termination by the petitioners,

backwages are AWARDED to the union officers
computed from the time they were dismissed until the
final entry of judgment of this case. The rest of the
dispositions of the Court of Appeals in its Decision of
April 26, 2000, in CA-G.R. SP No. 53169, are hereby
AFFIRMED.
___________________________
(5) St. Scholastica's College vs. Torres, 210 SCRA 565/
G.R. No. 100158 June 29, 1992
FACTS
On 20 July 1990, petitioner St. Scholasticas
Collegeor COLLEGE and private respondent Samahan
ng Manggagawang Pang-Edukasyon sa Sta.
Eskolastika-NAFTEU or UNION initiated negotiations
for a first-ever collective bargaining agreement. A
deadlock in the negotiations prompted the UNION to file
on 4 October 1990 a Notice of Strike with the
Department
of
Labor
and
Employment
or
DEPARTMENT.
On 5 November 1990, the UNION declared a strike
which paralyzed the operations of the COLLEGE.
Affecting as it did the interest of the students, public
respondent
SECRETARY immediately
assumed
jurisdiction over the labor dispute and issued on the same
day, 5 November 1990, a return-to-work order. The
following day, 6 November 1990, the UNION was
served the Order. On 7 November 1990, instead of
returning to work, the UNION filed a motion for
reconsideration of the return-to-work order questioning
inter alia the assumption of jurisdiction by the
SECRETARY over the labor dispute.
On 9 November 1990, the COLLEGE sent individual
letters to the striking employees enjoining them to return
to work not later than 8:00 oclock A.M. of 12 November
1990 and, at the same time, giving notice to some
twenty-three (23) workers that their return would be
without prejudice to the filing of appropriate charges
against them. In response, the UNION presented a list of
six (6) demands to the COLLEGE in a dialogue
conducted on 11 November 1990. The most important of
these demands was the unconditional acceptance back to
work of the striking employees. But these were flatly
rejected.
Likewise, on 9 November 1990, respondent
SECRETARY denied reconsideration of his return-towork order and sternly warned the striking employees to
comply with its terms. On 12 November 1990, the
UNION received the Order.
On 23 November 1990, the COLLEGE mailed individual
notices of termination to the striking employees, which
were received on 26 November 1990, or later. The
UNION officers and members then tried to return to
work but were no longer accepted by the COLLEGE.

LABOR RELATIONS

On 5 December 1990, a Complaint for Illegal Strike was

filed against the UNION, its officers and several of its
members before the National Labor Relations
Commission (NLRC).
On 12 April 1991, respondent SECRETARY issued the
assailed Order which, inter alia, directed the
reinstatement of striking UNION members, premised on
his finding that no violent or otherwise illegal act
accompanied the conduct of the strike and that a
fledgling UNION like private respondent was naturally
expected to exhibit unbridled if inexperienced
enthusiasm, in asserting its existence.2 Nevertheless,
the aforesaid Order held UNION officers responsible for
the violation of the return-to-work orders of 5 and 9
November 1990, correspondingly, sustained their
termination.
Petitioner questions the assumption by respondent
SECRETARY of jurisdiction to decide on termination
disputes, maintaining that such jurisdiction is vested
instead in the Labor Arbiter pursuant to Art. 217 of the
Labor Code, thus
Art. 217. Jurisdiction of Labor Arbiters and the
Commission.(a) Except as otherwise provided under
this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty
(30) calendar days after the submission of the case by the
parties for decision without extension, the following
cases involving all workers, whether agricultural or nonagricultural: x x x x 2. Termination disputes x x x x 5.
Cases arising from any violation of Article 264 of this
Code, including questions on the legality of strikes and
lock-outs x x x x
Petitioner further contends that following the doctrine
laid down in Sarmiento v. Tuico and Union of Filipro
Employees v. Nestl Philippines, Inc., workers who
refuse to obey a return-to-work order are not entitled to
be paid for work not done, or to reinstatement to the
positions they have abandoned by reason of their refusal
to return thereto as ordered.
Private respondent UNION maintains that the reason
they failed to immediately comply with the return-towork order of 5 November 1990 was because they
questioned the assumption of jurisdiction of respondent
SECRETARY. They were of the impression that being an
academic institution, the school could not be considered
an industry indispensable to national interest, and that
pending resolution of the issue, they were under no
obligation to immediately return to work.
This position of the UNION is simply flawed. Article
263 (g) of the Labor Code provides that if a strike has
already taken place at the time of assumption, all
striking x x x employees shall immediately return to
work. This means that by its very terms, a return-towork order is immediately effective and executory
notwithstanding the filing of a motion for reconsideration
(University of Sto. Tomas v. NLRC).9 It must be strictly

complied with even during the pendency of any petition

questioning its validity (Union of Filipro Employees v.
Nestl Philippines, Inc., supra). After all, the assumption
and/or certification order is issued in the exercise of
respondent SECRETARYs compulsive power of
arbitration and, until set aside, must therefore be
immediately complied with.
The rationale for this rule is explained in University of
Sto. Tomas v. NLRC, supra, citing Philippine Airlines
Employees Association v. Philippine Airlines, Inc.,10
thus
To say that its (return-to-work order) effectivity must
wait affirmance in a motion for reconsideration is not
only to emasculate it but indeed to defeat its import, for
by then the deadline fixed for the return to work would,
in the ordinary course, have already passed and hence
can no longer be affirmed insofar as the time element is
concerned.
Thus, we held in Sarmiento v. Tuico, supra, that by
insisting on staging the restrained strike and defiantly
picketing the company premises to prevent the
resumption of operations, the strikers have forfeited their
right to be readmitted, having abandoned their positions,
and so could be validly replaced.
The PAL v. Secretary of Labor and Employment, supra,
which was cited by petitioner. But the conflict is only
apparent, not real.
To recall, We ruled in the latter case that the jurisdiction
of the Secretary of Labor and Employment in assumption
and/or certification cases is limited to the issues that are
involved in the disputes or to those that are submitted to
him for resolution. The seeming difference is, however,
reconcilable. Since the matter on the legality or illegality
of the strike was never submitted to him for resolution,
he was thus found to have exceeded his jurisdiction when
he restrained the employer from taking disciplinary
action against employees who staged an illegal strike.
ISSUES
(1) Whether striking union members terminated
for abandonment of work after failing to comply with
return-to-work orders of the Secretary of Labor and
Employment (SECRETARY, for brevity) should by law
be reinstated? (2) Whether respondent SECRETARY has
the power to assume jurisdiction over a labor dispute
with respect to the matter of termination of union
members?
HELD
1) NO. The respective liabilities of striking union
officers and members who failed to immediately comply
with the return-to-work order is outlined in Art. 264 of
the Labor Code which provides that any declaration of a
strike or lockout after the Secretary of Labor and
Employment has assumed jurisdiction over the labor
dispute is considered an illegal act. Any worker or union

LABOR RELATIONS

officer who knowingly participates in a strike defying a

return-to-work order may, consequently, be declared to
have lost his employment status.

harassment of union officers and members, (7) nonrecognition of duly-elected union officers, and (8) other
acts of unfair labor practice.4

The court held in Sarmiento v. Tuico, supra, that by

insisting on staging the restrained strike and defiantly
picketing the company premises to prevent the
resumption of operations, the strikers have forfeited their
right to be readmitted, having abandoned their positions,
and so could be validly replaced.

The next day, IBM filed another notice of strike, this

time through its president Edilberto Galvez, raising
similar grounds: (1) illegal transfer, (2) labor-only
contracting, (3) violation of CBA, (4) dismissal of union
officers and members, and (5) other acts of unfair labor
practice. This was docketed as NCMB-NCR-NS-04-18294.

2) YES. The assumption of jurisdiction by the Secretary

of Labor and Employment over labor disputes
involving academic institutions was already upheld in
Philippine School of Business Administration v. Noriel
11 where the court ruled thus:

The Galvez group subsequently requested the NCMB to

consolidate its notice of strike with that of the Colomeda
group, to which the latter opposed, alleging Galvezs
lack of authority in filing the same.

There is no doubt that the on-going labor dispute at the

school adversely affects the national interest. The school
is a duly registered educational institution of higher
learning with more or less 9,000 students. The on-going
work stoppage at the school unduly prejudices the
students and will entail great loss in terms of time, effort
and money to all concerned. More important, it is not
amiss to mention that the school is engaged in the
promotion of the physical, intellectual and emotional
well-being of the countrys youth.

Petitioner thereafter filed a Motion for Severance of

Notices of Strike with Motion to Dismiss, on the grounds
that the notices raised non-strikeable issues and that they
affected four corporations which are separate and distinct
from each other. After several conciliation meetings,
NCMB Director Reynaldo Ubaldo found that the real
issues involved are non-strikeable. Hence on May 2,
1994, he issued separate letter-orders to both union
groups, converting their notices of strike into preventive
mediation.

RULING

During the conciliation meetings, it was clearly

established that the real issues involved are illegal
dismissal, labor only contracting and internal union
disputes, which affect not only the interest of the San
Miguel Corporation but also the interests of the
MAGNOLIA-NESTL CORPORATION, the SAN
MIGUEL FOODS, INC., and the SAN MIGUEL
JUICES, INC.

The Petition for Certiorari is hereby GRANTED. The

Order of 12 April 1991 and the Resolution of 31 May
1991 both issued by respondent Secretary of Labor and
Employment are SET ASIDE insofar as they order the
reinstatement of striking union members terminated by
petitioner, and the temporary restraining order We issued
on June 26, 1991, is made permanent.
________________________
(6) San Miguel Corporation vs. National Labor
Relations Commission, 403 SCRA 418/ G.R. No.
119293. June 10, 2003
FACTS
Petitioner San Miguel Corporation (SMC) and
respondent Ilaw at Buklod ng Manggagawa (IBM),
exclusive bargaining agent of petitioners daily-paid rank
and file employees, executed a Collective Bargaining
Agreement (CBA) under which they agreed to submit
all disputes to grievance and arbitration proceedings. The
CBA also included a mutually enforceable no-strike nolockout agreement.
On April 11, 1994, IBM, through its vice-president
Alfredo Colomeda, filed with the National Conciliation
and Mediation Board (NCMB) a notice of strike,
docketed as NCMB-NCR-NS-04-180-94, against
petitioner for allegedly committing: (1) illegal dismissal
of union members, (2) illegal transfer, (3) violation of
CBA, (4) contracting out of jobs being performed by
union members, (5) labor-only contracting, (6)

Considering that San Miguel Corporation is the only

impleaded employer-respondent, and considering further
that the aforesaid companies are separate and distinct
corporate entities, we deemed it wise to reduce and treat
your Notice of Strike as Preventive Mediation case for
the four (4) different companies in order to evolve
voluntary settlement of the disputes . . . . (Emphasis
supplied)
Two days after the declaration of strike, or on June 6,
1994, petitioner filed with public respondent NLRC an
amended Petition for Injunction with Prayer for the
Issuance of Temporary Restraining Order, Free Ingress
and Egress Order and Deputization Order. After due
hearing and ocular inspection, the NLRC on June 13,
1994 resolved to issue a temporary restraining order
(TRO) directing free ingress to and egress from
petitioners plants, without prejudice to the unions right
to peaceful picketing and continuous hearings on the
injunction case.
ISSUE
WON the request by the petitioner for the
issuance of injunction or restraining order may be validly
granted?

LABOR RELATIONS

HELD
YES. Pursuant to Article 218 (e), the coercive
measure of injunction may also be used to restrain an
actual or threatened unlawful strike. In the case of San
Miguel Corporation v. NLRC, where the same issue of
NLRCs duty to enjoin an unlawful strike was raised, we
ruled that the NLRC committed grave abuse of discretion
when it denied the petition for injunction to restrain the
union from declaring a strike based on non- strikeable
grounds. Further, in IBM v. NLRC we held that it is the
legal duty and obligation of the NLRC to enjoin a
partial strike staged in violation of the law. Failure to
issue promptly an injunction by the public respondent
was likewise held therein to be an abuse of discretion.
Respondent however resorted to force without
exhausting all available means within its reach. Such
infringement of the aforecited CBA provisions
constitutes further justification for the issuance of an
injunction against the strike. As we said long ago:
Strikes held in violation of the terms contained in a
collective bargaining agreement are illegal especially
when they provide for conclusive arbitration clauses.
These agreements must be strictly adhered to and
respected if their ends have to be achieved.
As to petitioners allegation of violation of the no-strike
provision in the CBA, jurisprudence has enunciated that
such clauses only bar strikes which are economic in
nature, but not strikes grounded on unfair labor
practices. The notices filed in the case at bar alleged
unfair labor practices, the initial determination of
which would entail fact-finding that is best left for the
labor arbiters. Nevertheless, our finding herein of the
invalidity of the notices of strike dispenses with the need
to discuss this issue.
In the case at bar, petitioner sought a permanent
injunction to enjoin the respondents strike. A strike is
considered as the most effective weapon in protecting the
rights of the employees to improve the terms and
conditions of their employment. However, to be valid, a
strike must be pursued within legal bounds. One of the
procedural requisites that Article 263 of the Labor
Code and its Implementing Rules prescribe is the filing
of a valid notice of strike with the NCMB. Imposed for
the purpose of encouraging the voluntary settlement of
disputes, this requirement has been held to be mandatory,
the lack of which shall render a strike illegal.
RULING
The instant petition is hereby GRANTED. The decision
and resolution of the NLRC in Injunction Case No.
00468-94 are REVERSED and SET ASIDE. Petitioner
and private respondent are hereby directed to submit the
issues raised in the dismissed notices of strike to
grievance procedure and proceed with arbitration
proceedings as prescribed in their CBA, if necessary.
__________________________

(7) MSF Tire and Rubber, Inc. vs. Court of Appeals,

311 SCRA 784/ G.R. No. 128632 August 5, 1999
FACTS
A labor dispute arose between Philtread Tire
and Rubber Corporation (Philtread) and private
respondent, Philtread Tire Workers Union (Union), as
a result of which the Union filed on May 27, 1994 a
notice of strike in the National Conciliation and
Mediation BoardNational Capital Region charging
Philtread with unfair labor practices for allegedly
engaging in union-busting for violation of the provisions
of the collective bargaining agreement. This was
followed by picketing and the holding of assemblies by
the Union outside the gate of Philtreads plant at Km. 21,
East Service Road, South Superhighway, Muntinlupa,
Metro Manila. Philtread, on the other hand, filed a notice
of lock-out on May 30, 1994 which it carried out on June
15, 1994. In an order, dated September 4, 1994,2 then
Secretary of Labor Nieves Confesor assumed jurisdiction
over the labor dispute and certified it for compulsory
arbitration. She enjoined the Union from striking and
Philtread from locking out members of the Union.
Philtread entered into a Memorandum of Agreement with
Siam Tyre Public Company Limited (Siam Tyre), a
subsidiary of Siam Cement. Under the Memorandum of
Agreement, Philtreads plant and equipment would be
sold to a new company (petitioner MSF Tire and Rubber,
Inc.), 80% of which would be owned by Siam Tyre and
20% by Philtread, while the land on which the plant was
located would be sold to another company (Sucat Land
Corporation), 60% of which would be owned by
Philtread and 40% by Siam Tyre.
On June 13, 1995, the Union moved to dismiss the
complaint alleging lack of jurisdiction on the part of the
trial court. It insisted that the parties were involved in a
labor dispute and that petitioner, being a mere alter ego
of Philtread, was not an innocent bystander.
ISSUE
Whether petitioner has shown a clear legal right
to the issuance of a writ of injunction under the
innocent bystander rule?
HELD
NO. Petitioner asserts that its status as an
innocent bystander with respect to the labor dispute
between Philtread and the Union entitles it to a writ of
injunction from the civil courts and that the appellate
court erred in not upholding its corporate personality as
independent of Philtreads. In Philippine Association of
Free Labor Unions (PAFLU) v. Cloribel, this Court,
through Justice J.B.L. Reyes, stated the innocent
bystander rule as follows: The right to picket as a means
of communicating the facts of a labor dispute is a phase
of the freedom of speech guaranteed by the constitution.
If peacefully carried out, it cannot be curtailed even in
the absence of employer-employee relationship. The

LABOR RELATIONS

right is, however, not an absolute one. While peaceful

picketing is entitled to protection as an exercise of free
speech, we believe the courts are not without power to
confine or localize the sphere of communication or the
demonstration to the parties to the labor dispute,
including those with related interest, and to insulate
establishments or persons with no industrial connection
or having interest totally foreign to the context of the
dispute. Thus the right may be regulated at the instance
of third parties or innocent bystanders if it appears that
the inevitable result of its exercise is to create an
impression that a labor dispute with which they have no
connection or interest exists between them and the
picketing union or constitutes an invasion of their rights.
Although, as petitioner contends, the corporate fiction
may be disregarded where it is used to defeat public
convenience, justify wrong, protect fraud, defend crime,
or where the corporation is used as a mere alter-ego or
business conduit,15 it is not these standards but those of
the innocent bystander rule which govern whether or
not petitioner is entitled to an injunctive writ. Since
petitioner is not an innocent bystander, the trial
courts order, dated July 2, 1996, is a patent nullity, the
trial court having no jurisdiction to issue the writ of
injunction. No motion for reconsideration need be filed
where the order is null and void.

On July 30, 1986, the Labor Arbiter rendered a decision

holding that Zamoras, as overseer of the respondents
plantation, was a regular employee whose services were
necessary and desirable to the usual trade or business of
his employer. The Labor Arbiter held that the dismissal
of Zamoras was without just cause, hence, illegal. The
private respondents were ordered to reinstate him to his
former position as overseer of the plantation and to pay
him backwages equivalent to P31,975.83 in the event
that he opted not to be reinstated or that his reinstatement
was not feasible. The private respondents appealed to the
National Labor Relations Commission. The latter
rendered a decision reversing the Labor Arbiter. It held
that the right to control test used in determining the
existence of an employer-employee relationship is
unavailing in the instant case and that what exists
between the parties is a landlord-tenant relationship
ISSUE
Whether, upon the established facts, the
petitioner was an employee or tenant of the private
respondents
HELD

RULING
The Petition for writ of preliminary injunction is hereby
DENIED and the decision of the Court of Appeals is
AFFIRMED.
______________________________
(8) Zamoras vs. Su, Jr., 184 SCRA 248/ G.R. No.
85611. April 6, 1990
FACTS
The petitioner, Victoriano Zamoras, was hired by the
respondent, Roque Su, Jr., in 1957 as overseer of his
coconut land in Asenario, Dapitan City. Zamoras was
charged with the task of having the land titled in Sus
name, and of assigning portions to be worked by tenants,
supervising the cleaning, planting, care and cultivation of
the land, the harvesting of coconuts and selling of the
copra. As compensation, Su paid Zamoras a salary of
P2,400 per month plus one-third (1/3) of the proceeds of
the sales of copra which normally occurred every two
months. Another one-third of the proceeds went to the
tenants and the other third to Su. This system of sharing
was regularly observed up to September, 1981. As the
coconut plantation yielded an average harvest of 21,000
nuts worth P18,900, based on the current market price of
P3 per kilo, Zamoras share amounted to P6,300 every
two months.
On August 8, 1983, Zamoras filed in the Regional
Arbitration Branch of the Ministry of Labor and
Employment in Zamboanga City a complaint against
Roque Su, Jr. and Anita Su Hortellano for illegal

termination and breach of contract with damages of not

less than P75,600 as his uncollected share of the copra
sales from September 15, 1981 to August 1983.

Petitioner Zamoras was an employee. It is the

NLRC, not the Court of Agrarian Relations, that has
jurisdiction to try and decide Zamoras complaint for
illegal dismissal. Since Zamoras was an employee, not a
tenant of Su, it is the NLRC, not the Court of Agrarian
Relations, that has jurisdiction to try and decide
Zamoras complaint for illegal dismissal (Art. 217, Labor
Code; Manila Mandarin Employees Union vs. NLRC,
154 SCRA 368; Jacqueline Industries Dunhill Bags
Industries, et al. vs. NLRC, et al., 69 SCRA 242).
RULING
The assailed decision is reversed and a new one
is entered, declaring Zamoras to be an employee of
respondent Roque Su, Jr. and that his dismissal was
illegal and without lawful cause. He is entitled to
reinstatement with backwages, but because he is dead
and may no longer be reinstated, the private respondents
are ordered to pay to his heirs the backwages due him, as
well as his share of the copra sales from the plantation
for a period of three (3) years from his illegal dismissal
in September, 1981, plus separation pay in lieu of
reinstatement. Costs against the private respondents.
________________________________

LABOR RELATIONS

(9) Globe-Mackay Cable and Radio Corporation

(GMCR) vs. NLRC, 206 SCRA 701/ G.R. No. 82511
March 3, 1992
Labor Laws; Preventive suspension.On the matter of
preventive suspension, we find for petitioner GMCR.
The investigative findings of Mr. Maramara, which
pointed to Delfin Saldivars acts in conflict with his
position as technical operations manager, necessitated
immediate and decisive action on any employee closely
associated with Saldivar. The suspension of Salazar was
further impelled by the discovery of the missing Fedders
airconditioning unit inside the apartment private
respondent shared with Saldivar. Under such
circumstances, preventive suspension was the proper
remedial recourse available to the company pending
Salazars investigation. By itself, preventive suspension
does not signify that the company has adjudged the
employee guilty of the charges she was asked to answer
and explain. Such disciplinary measure is resorted to for
the protection of the companys property pending
investigation of any alleged malfeasance or misfeasance
committed by the employee.
Employees illegally dismissed entitled to reinstatement
and full backwages.To go back to the instant case,
there being no evidence to show an authorized, much
less a legal, cause for the dismissal of private respondent,
she had every right, not only to be entitled to
reinstatement, but as well, to full backwages. The
intendment of the law in prescribing the twin remedies of
reinstatement and payment of backwages is, in the
former, to restore the dismissed employee to her status
before she lost her job, for the dictionary meaning of the
word reinstate is to restore to a state, condition,
position, etc. from which one had been removed and in
the latter, to give her back the income lost during the
period of unemployment. Both remedies, looking to the
past, would perforce make her whole.
Statutory construction; Plain-meaning rule.In the
case at bar, the law is on the side of private respondent.
In the first place, the wording of the Labor Code is clear
and unambiguous: An employee who is unjustly
dismissed from work shall be entitled to
reinstatement . . . and to his full backwages . . . Under
the principles of statutory construction, if a statute is
clear, plain and free from ambiguity, it must be given its
literal meaning and applied without attempted
interpretation. This plain-meaning rule or verba legis
derived from the maxim index animi sermo est (speech is
the index of intention) rests on the valid presumption that
the words employed by the legislature in a statute
correctly express its intent or will and preclude the court
from construing it differently. The legislature is
presumed to know the meaning of the words, to have
used words advisedly, and to have expressed its intent by
the use of such words as are found in the statute. Verba
legis non est recedendum, or from the words of a statute
there should be no departure. Neither does the provision
admit of any qualification. If in the wisdom of the Court,

10

there may be a ground or grounds for non-application of

the above-cited provision, this should be by way of
exception, such as when the reinstatement may be
inadmissible due to ensuing strained relations between
the employer and the employee. 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.
Principle of strained relations.Obviously, the
principle of strained relations cannot be applied
indiscriminately. Otherwise, reinstatement can never be
possible simply because some hostility is invariably
engendered between the parties as a result of litigation.
That is human nature. Besides, no strained relations
should arise from a valid and legal act of asserting ones
right; otherwise an employee who shall assert his right
could be easily separated from the service, by merely
paying his separation pay on the pretext that his
relationship with his employer had already become
strained. Here, it has not been proved that the position of
private respondent as systems analyst is one that may be
characterized as a position of trust and confidence such
that if reinstated, it may well lead to strained relations
between employer and employee. Hence, this does not
constitute an exception to the general rule mandating
reinstatement for an employee who has been unlawfully
dismissed.
FACTS
For private respondent Imelda L. Salazar, it
would seem that her close association with Delfin
Saldivar would mean the loss of her job. In May 1982,
private respondent was employed by Globe-Mackay
Cable and Radio Corporation (GMCR) as general
systems analyst. Also employed by petitioner as manager
for technical operations support was Delfin Saldivar
with whom private respondent was allegedly very close.
Sometime in 1984, petitioner GMCR, prompted by
reports that company equipment and spare parts worth
thousands of dollars under the custody of Saldivar were
missing, caused the investigation of the latters activities.
The report dated September 25, 1984 prepared by the
companys internal auditor, Mr. Agustin Maramara,
indicated that Saldivar had entered into a partnership
styled Concave Commercial and Industrial Company
with Richard A. Yambao, owner and manager of Elecon
Engineering Services (Elecon), a supplier of petitioner
often recommended by Saldivar. The report also
disclosed that Saldivar had taken petitioners missing
Fedders airconditioning unit for his own personal use
without authorization and also connived with Yambao to
defraud petitioner of its property. The airconditioner was
recovered only after petitioner GMCR filed an action for
replevin against Saldivar.

LABOR RELATIONS

Petitioner company placed private respondent Salazar

under preventive suspension for one (1) month, effective
October 9, 1984, thus giving her thirty (30) days within
which to explain her side. But instead of submitting an
explanation, three (3) days later or on October 12, 1984,
private respondent filed a complaint against petitioner for
illegal suspension, which she subsequently amended to
include illegal dismissal, vacation and sick leave
benefits, 13th month pay and damages, after petitioner
notified her in writing that effective November 8, 1984,
she was considered dismissed in view of (her) inability
to refute and disprove these findings.
After due hearing, the Labor Arbiter in a decision dated
July 16, 1985, ordered petitioner company to reinstate
private respondent to her former or equivalent position
and to pay her full backwages and other benefits she
would have received were it not for the illegal dismissal.
Petitioner was also ordered to pay private respondent
moral damages of P50,000.00. On appeal, public
respondent National Labor Relations Commission in
the questioned resolution dated December 29, 1987
affirmed the aforesaid decision with respect to the
reinstatement of private respondent but limited the
backwages to a period of two (2) years and deleted the
award for moral damages.
The suspension of Salazar was further impelled by the
discovery of the missing Fedders airconditioning unit
inside the apartment private respondent shared with
Saldivar. Under such circumstances, preventive
suspension was the proper remedial recourse available to
the company pending Salazars investigation. By itself,
preventive suspension does not signify that the company
has adjudged the employee guilty of the charges she was
asked to answer and explain. Such disciplinary measure
is resorted to for the protection of the companys
property pending investigation of any alleged
malfeasance or misfeasance committed by the employee.
Art. 279 of the Labor Code, as amended, provides:
Security of Tenure.In cases of regular employment,
the employer shall not terminate the services of an
employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the
time of his actual reinstatement.
ISSUE
WON the private respondent (Imelda L.
Salazar) has been legally dismissed from her
employment?
HELD
NO. In the case at bar, the law is on the side of
private respondent. In the first place, the wording of the

11

Labor Code is clear and unambiguous: An employee

who is unjustly dismissed from work shall be entitled to
reinstatement . . . and to his full backwages . . .Under
the principles of statutory construction, if a statute is
clear, plain and free from ambiguity, it must be given its
literal meaning and applied without attempted
interpretation. This plain-meaning rule or Qerbal egis
derived from the maxim index animi sermo est (speech is
the index of intention) rests on the valid presumption that
the words employed by the legislature in a statute
correctly express its intent or will and preclude the court
from construing it differently. The legislature is
presumed to know the meaning of the words, to have
used words advisedly, and to have expressed its intent by
the use of such words as are found in the statute.27
Verba legis non est recedendum, or from the words of a
statute there should be no departure. Neither does the
provision admit of any qualification. If in the wisdom of
the Court, there may be a ground or grounds for nonapplication of the above-cited provision, this should be
by way of exception, such as when the reinstatement
may be inadmissible due to ensuing strained relations
between the employer and the employee.
RULING
The assailed resolution of public respondent
National Labor Relations Commission dated December
29, 1987 is hereby AFFIRMED. Petitioner GMCR is
ordered to REINSTATE private respondent Imelda
Salazar and to pay her backwages equivalent to her
salary for a period of two (2) years only.
___________________________
10) Bustamante vs.
National Labor Relations
Commission, 265 SCRA 61/ G.R. No. 111651
November 28, 1996
Labor Law; Backwages; Court has applied different
methods in the computation of backwages.This Court
has, over the years, applied different methods in the
computation of backwages. The first labor relations law
governing the award of backwages was Republic Act No.
875, the Industrial Peace Act, approved on 17 June 1953.
Backpay could be awarded where in the opinion of the
Court of lndustrial Relations such was necessary to
effectuate the policies of the Industrial Peace Act.In
accordance with these provisions, backpay (the same as
backwages) could be awarded where, in the opinion of
the Court of Industrial Relations (CIR), such was
necessary to effectuate the policies of the Industrial
Peace Act. Only in one case was backpay a matter of
right, and that was, when an employer had declared a
lockout without having first bargained collectively with
his employees in accordance with the provisions of the
Act.
CIR also had the implied power of mitigating the
backpay where backpay was allowed.As the CIR was
given wide discretion to grant or disallow payment of

LABOR RELATIONS

backpay (backwages) to an employee, it also had the

implied power of mitigating (reducing) the backpay
where backpay was allowed. Thus, in the exercise of its
jurisdiction, the CIR increased or diminished the award
of backpay, depending on several circumstances, among
them, the good faith of the employer, the employee's
employment in other establishments during the period of
illegal dismissal, or the probability that the employee
could have realized net earnings from outside
employment if he had exercised due diligence to search
for outside employment.
Court ruled in the case of Mercury Drug Co., Inc., et
al. v. CIR, et al. that a fixed amount of backwages
without qualifications should be awarded to an illegally
dismissed employee.From this ruling came the burden
of disposing of an illegal dismissal case on its merits and
of determining whether or not the computation of the
award of backwages is correct. In order not to unduly
delay the disposition of illegal dismissal cases, this Court
found occasion in the case of Mercury Drug Co., Inc., et
al. v. CIR, et al. to rule that a fixed amount of backwages
without further qualifications should be awarded to an
illegally dismissed employee (hereinafter the Mercury
Drug rule). This ruling was grounded upon
considerations of expediency in the execution of the
decision.
Under P.D. No. 442 it became mandatory to award
backwages to illegally dismissed regular employees.
Under the abovequoted provision, it became mandatory
to award backwages to illegally dismissed regular
employees. The law specifically declared that the award
of backwages was to be computed from the time
compensation was withheld from the employee up to the
time of his reinstatement. This notwithstanding, the rule
generally applied by the Court after the promulgation of
the Mercury Drug case, and during the effectivity of P.D.
No. 442 was still the Mercury Drug rule. A survey of
cases from 1974 until 1989, when the amendatory law to
P.D. No. 442, namely, R.A. No. 6715 took effect,
supports this conclusion.
Court declared in a later case that the general principle
is that an employee is entitled to receive as backwages
all the amounts he may have received from the date of
his dismissal up to the time of his reinstatement.In
the case of New Manila Candy Workers Union
(Naconwa-Paflu) v, CIR (1978), or after the Labor Code
(P.D. No. 442) had taken effect, the Court still followed
the Mercury Drug rule to avoid the necessity of a hearing
on earnings obtained elsewhere by the employee during
the period of illegal dismissal. In an even later case
(1987) the Court declared that the general principle is
that an employee is entitled to receive as backwages all
the amounts he may have received from the date of his
dismissal up to the time of his reinstatement. However, in
compliance with the jurisprudential policy of fixing the
amount of backwages to a just and reasonable level, the
award of backwages equivalent to three (3) years,

12

without qualification or deduction, was nonetheless

followed in said case.
Any decision or order granting backwages in excess of
three (3) years is null and void as to the excess.In a
more direct approach to the rule on the award of
backwages, this Court declared in the 1990 case of
Medado v. Court of Appeals that "any decision or ordergranting backwages in excess of three (3) years is null
and void as to the excess."
Court qualified the provision under P.D. No. 442 by
limiting the award of backwages to three (3) years.In
sum, during the effectivity of P.D. 442, the Court
enforced the Mercury Drug rule and, in effect, qualified
the provision under P.D. No. 442 by limiting the award
of backwages to three (3) years.
Backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished
or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal.The Court
deems it appropriate, however, to reconsider such earlier
ruling on the computation of backwages as enunciated in
said Pines City Educational Center case, by now holding
that conformably with the evident legislative intent as
expressed in Rep. Act No. 6715, above-quoted,
backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or
reduced by the earnings derived by him elsewhere during
the period of his illegal dismissal. The underlying reason
for this ruling is that the employee, while litigating the
legality (illegality) of his dismissal, must still earn a
living to support himself and family, while full
backwages have to be paid by the employer as part of the
price or penalty he has to pay for illegally dismissing his
employee. The clear legislative intent of the amendment
in Rep. Act No. 6715 is to give more benefits to workers
than was previously given them under the Mercury Drug
rule or the "deduction of earnings elsewhere" rule. Thus,
a closer adherence to the legislative policy behind Rep.
Act No. 6715 points to "full backwages" as meaning
exactly that, i.e., without deducting from back-wages the
earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal. In other words,
the provision calling for "full backwages" to illegally
dismissed employees is clear, plain and free from
ambiguity and, therefore, must be applied without
attempted or strained interpretation. Index animi sermo
est.
FACTS
Private respondent now moves to reconsider the decision
on grounds that (a) petitioners are not entitled to recover
backwages because they were not actually dismissed but
their probationary employment was not converted to
permanent employment; and (b) assuming that
petitioners are entitled to backwages, computation
thereof should not start from cessation of work up to
actual reinstatement, and that salary earned elsewhere

LABOR RELATIONS

(during the period of illegal dismissal) should be

deducted from the award of such backwages.

_____________________________

There is no compelling reason to reconsider the decision

of the Court (First Division) dated 15 March 1996.
However, we here clarify the computation of backwages
due an employee on account of his illegal dismissal from
employment.

11) Viernes vs. National Labor Relations Commission,

400 SCRA 557/ G.R. No. 108405 April 4, 2003

Then came Presidential Decree No. 442 (the Labor Code

of the Philippines) which was signed into law on 1 May
1974 and which took effect on 1 November 1974. Its
posture on the award of backwages, as amended, was
expressed as follows:
"ART. 279. Security of Tenure.In cases of regular
employment, the employer shall not terminate the
services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement
without loss of seniority rights and to his back wages
computed from the time his compensation was withheld
from him up to the time of his reinstatement. (italics
supplied)."
Under the abovequoted provision, it became mandatory
to award backwages to illegally dismissed regular
employees. The law specifically declared that the award
of backwages was to be computed from the time
compensation was withheld from the employee up to the
time of his reinstatement. This notwithstanding, the rule
generally applied by the Court after the promulgation of
the Mercury Drug case,11 and during the effectivity of
P.D. No. 442 was still the Mercury Drug rule. A survey
of cases from 1974 until 1989, when the amendatory law
to P.D. No. 442, namely, R.A. No. 6715 took effect,
supports this conclusion.
ISSUE
WON the petitioners are entitled to full
backwages?
HELD
YES. Therefore, in accordance with R.A. No.
6715, petitioners are entitled to their full backwages,
inclusive of allowances and other benefits or their
monetary equivalent, from the time their actual
compensation was withheld from them up to the time of
their actual reinstatement.
As to reinstatement of petitioners, this Court has already
ruled that since reinstatement is no longer feasible,
because the company would be unjustly prejudiced by
the continued employment of petitioners who at present
are overage, a separation pay equal to one-month salary
granted to them in the Labor Arbiter's decision was in
order and, therefore, affirmed in the Court's decision of
15 March 1996. Furthermore, since reinstatement in this
case is no longer feasible, the amount of backwages shall
be computed from the time of their illegal termination on
25 June 1990 up to the time of finality of this decision.
RULING
ACCORDINGLY, private respondent's Motion for
Reconsideration, dated 10 April 1996, is DENIED.

13

Labor Law; Illegal Dismissal; Reinstatement; Words

and Phrases; Reinstatement means restoration to a state
or condition from which one had been removed or
separated.Reinstatement means restoration to a state or
condition from which one had been removed or
separated. In case of probationary employment, Article
281 of the Labor Code requires the employer to make
known to his employee at the time of the latters
engagement of the reasonable standards under which he
may qualify as a regular employee.
Regular Employees; A regular employee is one who is
engaged to perform activities which are necessary or
desirable in the usual business or trade of the employer,
or a casual employee who has rendered at least one
year of service, whether continuous or broken, with
respect to the activity in which he is employed.The
principle we have enunciated in Brent applies only with
respect to fixed term employments. While it is true that
petitioners were initially employed on a fixed term basis
as their employment contracts were only for October 8 to
31, 1990, after October 31, 1990, they were allowed to
continue working in the same capacity as meter readers
without the benefit of a new contract or agreement or
without the term of their employment being fixed anew.
After October 31, 1990, the employment of petitioners is
no longer on a fixed term basis. The complexion of the
employment relationship of petitioners and private
respondent is thereby totally changed. Petitioners have
attained the status of regular employees. Under Article
280 of the Labor Code, a regular employee is one who is
engaged to perform activities which are necessary or
desirable in the usual business or trade of the employer,
or a casual employee who has rendered at least one year
of service, whether continuous or broken, with respect to
the activity in which he is employed.
Clearly therefrom, there are two separate instances
whereby it can be determined that an employment is
regular: (1) The particular activity performed by the
employee is necessary or desirable in the usual business
or trade of the employer; or (2) if the employee has been
performing the job for at least a year.
With the continuation of their employment beyond the
original term, petitioners, have become full-fledged
regular employees. The fact alone, that petitioners
rendered service for a period of less than six months
does not make their employment status as probationary.
Herein petitioners fall under the first category. They
were engaged to perform activities that are necessary to
the usual business of private respondent. We agree with
the labor arbiters pronouncement that the job of a meter
reader is necessary to the business of private respondent
because unless a meter reader records the electric
consumption of the subscribing public, there could not be
a valid basis for billing the customers of private
respondent. The fact that the petitioners were allowed to
continue working after the expiration of their
employment contract is evidence of the necessity and
desirability of their service to private respondents
business. In addition, during the preliminary hearing of
the case on February 4, 1991, private respondent even
offered to enter into another temporary employment

LABOR RELATIONS

contract with petitioners. This only proves private

respondents need for the services of herein petitioners.
With the continuation of their employment beyond the
original term, petitioners have become full-fledged
regular employees. The fact alone that petitioners have
rendered service for a period of less than six months does
not make their employment status as probationary.
Since petitioners are already regular employees at the
time of their illegal dismissal from employment, they
are entitled to be reinstated to their former position as
regular employees, not merely probationary.
An illegally dismissed employee is entitled to full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to
the time of his actual reinstatement.As to the second
issue, Article 279 of the Labor Code, as amended by
R.A. No. 6715, which took effect on March 21, 1989,
provides that an illegally dismissed employee is entitled
to full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed
from the time his compensation was withheld from him
up to the time of his actual reinstatement. Since
petitioners were employed on October 8, 1990, the
amended provisions of Article 279 of the Labor Code
shall apply to the present case. Hence, it was patently
erroneous, tantamount to grave abuse of discretion on the
part of the public respondent in limiting to one year the
backwages awarded to petitioners.
An employer becomes liable to pay indemnity
to an employee who has been dismissed if, in effecting
such dismissal, the employer fails or comply with the
requirements of due process.With respect to the third
issue, an employer becomes liable to pay indemnity to an
employee who has been dismissed if, in effecting such
dismissal, the employer fails to comply with the
requirements of due process. The indemnity is in the
form of nominal damages intended not to penalize the
employer but to vindicate or recognize the employees
right to procedural due process which was violated by
the employer. Under Article 2221 of the Civil Code,
nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for
the purpose of indemnifying the plaintiff for any loss
suffered by him.
Backwages are granted on grounds of equity to workers
for earnings lost due to their illegal dismissal from
work. On the other hand, the award of indemnity is
meant to vindicate or recognize the right of an
employee to due process which has been violated by the
em-ployer.We do not agree with the ruling of the
NLRC that indemnity is incompatible with the award of
backwages. These two awards are based on different
considerations. Backwages are granted on grounds of
equity to workers for earnings lost due to their illegal
dismissal from work. On the other hand, the award of
indemnity, as we have earlier held, is meant to vindicate
or recognize the right of an employee to due process
which has been violated by the employer.
In effecting the dismissal of petitioners from their
employment, private respondent failed to comply with
the provisions of Article 283 of the Labor Code which
requires an employer to serve a notice of dismissal
upon the employees sought to be terminated and to the

14

Department of Labor, at least one month before the

intended date of termination.In the present case, the
private respondent, in effecting the dismissal of
petitioners from their employment, failed to comply with
the provisions of Article 283 of the Labor Code which
requires an employer to serve a notice of dismissal upon
the employees sought to be terminated and to the
Department of Labor, at least one month before the
intended date of termination. Petitioners were served
notice on January 3, 1991 terminating their services,
effective December 29, 1990, or retroactively, in
contravention of Article 283. This renders the private
respondent liable to pay indemnity to petitioners.
Rule VIII of the New Rules of Procedure of the NLRC
provides that should there be a motion for
reconsideration entertained pursuant to Section 14,
Rule VII of these Rules, the decision shall be executed
after ten calendar days from receipt of the resolution
on such motion.As to the last issue, Article 223 of the
Labor Code is plain and clear that the decision of the
NLRC shall be final and executory after ten (10)
calendar days from receipt thereof by the parties. In
addition, Section 2(b), Rule VIII of the New Rules of
Procedure of the NLRC provides that should there be a
motion for reconsideration entertained pursuant to
Section 14, Rule VII of these Rules, the decision shall be
executory after ten calendar days from receipt of the
resolution on such motion.
Since the Rules allow the filing of a motion for
reconsideration of a decision of the NLC, it simply
follows that the ten-day period provided under Article
223 of the Labor Code should be reckoned from the
date of receipt by the parties of the resolution on such
motion.We find nothing inconsistent or contradictory
between Article 223 of the Labor Code and Section 2(b),
Rule VIII, of the NLRC Rules of Procedure. The
aforecited provision of the NLRC Rules of Procedure
merely provides for situations where a motion for
reconsideration is filed. Since the Rules allow the filing
of a motion for reconsideration of a decision of the
NLRC, it simply follows that the ten-day period provided
under Article 223 of the Labor Code should be reckoned
from the date of receipt by the parties of the resolution
on such motion. In the case at bar, petitioners received
the resolution of the NLRC denying their motion for
reconsideration on October 22, 1992. Hence, it is on
November 2, 1992 that the questioned decision became
executory.
FACTS
Fifteen (15) in all, these are consolidated cases
for illegal dismissal, underpayment of wages and claim
for indemnity pay against a common respondent, the
Benguet Electric Cooperative, Inc., (BENECO for
short) represented by its Acting General Manager,
Gerardo P. Versoza. Complainants services as meter
readers were contracted for hardly a months duration, or
from October 8 to 31, 1990.
The said term notwithstanding, the complainants were
allowed to work beyond October 31, 1990, or until
January 2, 1991. On January 3, 1991, they were each
served their identical notices of termination dated
December 29, 1990.
On the same date, the complainants filed separate
complaints for illegal dismissal. And following the
amendment of said complaints, they submitted their joint

LABOR RELATIONS

position paper on April 4, 1991. Respondent filed its

position paper on April 2, 1991.
It is the contention of the complainants that they were
not apprentices but regular employees whose services
were illegally and unjustly terminated in a manner that
was whimsical and capricious. On the other hand, the
respondent invokes Article 283 of the Labor Code in
defense of the questioned dismissal.
On October 18, 1991, the Labor Arbiter rendered a
decision, dismissing the complaints for illegal dismissal
filed by the complainants for lack of merit. On July 2,
1992, the NLRC modified labor arbiters judgment.
ISSUES
1. Whether the respondent NLRC committed grave abuse
of discretion in ordering the reinstatement of petitioners
to their former position as meter readers on probationary
status in spite of its finding that they are regular
employees under Article 280 of the Labor Code;
2. Whether the respondent NLRC committed grave abuse
of discretion in limiting the backwages of petitioners to
one year only in spite of its finding that they were
illegally dismissed, which is contrary to the mandate of
full backwages until actual reinstatement but not to
exceed three years;
HELD
1) The Supreme Court ruled to sustain
petitioners claim that they should be reinstated to their
former position as meter readers, not on a probationary
status, but as regular employees. Reinstatement means
restoration to a state or condition from which one had
been removed or separated. In case of probationary
employment, Article 281 of the Labor Code requires the
employer to make known to his employee at the time of
the latters engagement of the reasonable standards under
which he may qualify as a regular employee.
The principle we have enunciated in Brent applies only
with respect to fixed term employments. While it is true
that petitioners were initially employed on a fixed term
basis as their employment contracts were only for
October 8 to 31, 1990, after October 31, 1990, they were
allowed to continue working in the same capacity as
meter readers without the benefit of a new contract or
agreement or without the term of their employment being
fixed anew. After October 31, 1990, the employment of
petitioners is no longer on a fixed term basis. The
complexion of the employment relationship of
petitioners and private respondent is thereby totally
changed. Petitioners have attained the status of
regular employees.
Clearly therefrom, there are two separate instances
whereby it can be determined that an employment is
regular: (1) The particular activity performed by the
employee is necessary or desirable in the usual business
or trade of the employer; or (2) if the employee has been
performing the job for at least a year.
The Court agreed with the labor arbiters pronouncement
that the job of a meter reader is necessary to the business
of private respondent because unless a meter reader
records the electric consumption of the subscribing
public, there could not be a valid basis for billing the
customers of private respondent. The fact that the

15

petitioners were allowed to continue working after the

expiration of their employment contract is evidence of
the necessity and desirability of their service to private
respondents business;
2) As to the second issue, Article 279 of the
Labor Code, as amended by R.A. No. 6715, which took
effect on March 21, 1989, provides that an illegally
dismissed employee is entitled to full backwages,
inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the time of
his actual reinstatement. Since petitioners were employed
on October 8, 1990, the amended provisions of Article
279 of the Labor Code shall apply to the present case.
Hence, it was patently erroneous, tantamount to grave
abuse of discretion on the part of the public respondent
in limiting to one year the backwages awarded to
petitioners.
In the present case, the private respondent, in effecting
the dismissal of petitioners from their employment,
failed to comply with the provisions of Article 283 of
the Labor Code which requires an employer to serve a
notice of dismissal upon the employees sought to be
terminated and to the Department of Labor, at least one
month before the intended date of termination.
Petitioners were served notice on January 3, 1991
terminating their services, effective December 29, 1990,
or retroactively, in contravention of Article 283. This
renders the private respondent liable to pay indemnity to
petitioners.
RULING
The petition is partially GRANTED. The
decision of the National Labor Relations Commission
dated July 2, 1992 is MODIFIED. Private respondent
Benguet Electric Cooperative, Inc. (BENECO) is hereby
ordered to reinstate petitioners to their former or
substantially equivalent position as regular employees,
without loss of seniority rights and other privileges
appurtenant thereto, with full backwages from the time
of their dismissal until they are actually reinstated. The
amount of P2,590.50 awarded by the labor arbiter as
indemnity to petitioners is REINSTATED. Private
respondent is also ordered to pay attorneys fees in the
amount often percent (10%) of the total monetary award
due to the petitioners. In all other respects the assailed
decision and resolution are AFFIRMED.
_____________________________
12) Rowell Industrial Corporation vs. Court of
Appeals, 517 SCRA 691/ G.R. No. 167714. March 7,
2007
Labor Law; Employer-Employee Relationship;
Article 280 of the Labor Code, as amended, classifies
employees into three categories, namely, (1) regular
employees, (2) project employees, and (3) casual
employees; Regular employees are classified into (a)
regular employees by nature of work, and, (b) regular
employees by years of service.Article 280 of the
Labor Code, as amended, classifies employees into three
categories, namely: (1) regular employees or those
whose work is necessary or desirable to the usual
business of the employer; (2) project employees or those
whose employment has been fixed for a specific project
or undertaking, the completion or termination of which
has been determined at the time of the engagement of the
employee or where the work or services to be performed

LABOR RELATIONS

is seasonal in nature and the employment is for the

duration of the season; and (3) casual employees or those
who are neither regular nor project employees. Regular
employees are further classified into: (1) regular
employees by nature of work; and (2) regular employees
by years of service. The former refers to those employees
who perform a particular activity which is necessary or
desirable in the usual business or trade of the employer,
regardless of their length of service; while the latter
refers to those employees who have been performing the
job, regardless of the nature thereof, for at least a year.
Fixed-Term Employment; Article 280 of the Labor
Code does not proscribe or prohibit an employment
contract with a fixed period.Article 280 of the Labor
Code, as amended, however, does not proscribe or
prohibit an employment contract with a fixed period. It
does not necessarily follow that where the duties of the
employee consist of activities usually necessary or
desirable in the usual business of the employer, the
parties are forbidden from agreeing on a period of time
for the performance of such activities. There is nothing
essentially contradictory between a definite period of
employment and the nature of the employees duties.
What Article 280 of the Labor Code, as amended, seeks
to prevent is the practice of some unscrupulous and
covetous employers who wish to circumvent the law that
protects lowly workers from capricious dismissal from
their employment. The aforesaid provision, however,
should not be interpreted in such a way as to deprive
employers of the right and prerogative to choose their
own workers if they have sufficient basis to refuse an
employee a regular status. Management has rights which
should also be protected.
Guidelines.Although Article 280 of the Labor Code,
as amended, does not forbid fixed term employment, it
must, nevertheless, meet any of the following guidelines
in order that it cannot be said to circumvent security of
tenure: (1) that 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 (2) it satisfactorily
appears that the employer and employee dealt with each
other on more or less equal terms with no moral
dominance whatever being exercised by the former on
the latter.
Contracts of Adhesion; Words and Phrases; A contract
in which the terms prepared by only one party and the
other party merely affixes his signature signifying his
adhesion thereto is called contract of adhesion, an
agreement in which the parties bargaining are not on
equal footing, the weaker partys participation being
reduced to the alternative to take it or leave it.
Petitioner RIC failed to controvert the claim of
respondent Taripe that he was made to sign the contract
of employment, prepared by petitioner RIC, as a
condition for his hiring. Such contract in which the terms
are prepared by only one party and the other party
merely affixes his signature signifying his adhesion
thereto is called contract of adhesion. It is an agreement
in which the parties bargaining are not on equal footing,
the weaker partys participation being reduced to the
alternative to take it or leave it. In the present case,
respondent Taripe, in need of a job, was compelled to
agree to the contract, including the five-month period of
employment, just so he could be hired. Hence, it cannot
be argued that respondent Taripe signed the employment

16

contract with a fixed term of five months willingly and

with full knowledge of the impact thereof.
Regular Employees; The primary standard of
determining regular employment is the reasonable
connection between the particular activity performed by
the employee in relation to the casual business or trade
of the employer.Settled is the rule that the primary
standard of determining regular employment is the
reasonable connection between the particular activity
performed by the employee in relation to the casual
business or trade of the employer. The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the particular
business or trade in its entirety.
Regular employees enjoy security of tenure and they
can only be dismissed for just cause and with due
process, notice and hearing.Well-established is the
rule that regular employees enjoy security of tenure and
they can only be dismissed for just cause and with due
process, notice and hearing. And in case of employees
dismissal, the burden is on the employer to prove that the
dismissal was legal. Thus, respondent Taripes summary
dismissal, not being based on any of the just or
authorized causes enumerated under Articles 282, 283,
and 284 of the Labor Code, as amended, is illegal.
FACTS
Petitioner RIC is a corporation engaged in
manufacturing tin cans for use in packaging of consumer
products, e.g., foods, paints, among other things.
Respondent Taripe was employed by petitioner RIC on 8
November 1999 as a rectangular power press machine
operator with a salary of P223.50 per day, until he was
allegedly dismissed from his employment by the
petitioner on 6 April 2000.
On [17 February 2000], [herein respondent Taripe] filed
a [C]omplaint against [herein petitioner RIC] for
regularization and payment of holiday pay, as well as
indemnity for severed finger, which was amended on [7
April 2000] to include illegal dismissal.
[Respondent Taripe] alleges that [petitioner RIC]
employed him starting [8 November 1999] as power
press machine operator, such position of which was
occupied by [petitioner RICs] regular employees and the
functions of which were necessary to the latters
business. [Respondent Taripe] adds that upon
employment, he was made to sign a document, which
was not explained to him but which was made a
condition for him to be taken in and for which he was not
furnished a copy. [Respondent Taripe] states that he was
not extended full benefits granted under the law and the
[Collective Bargaining Agreement] and that on [6 April
2000], while the case for regularization was pending, he
was summarily dismissed from his job although he never
violated any of the [petitioner RICs] company rules and
regulations.
[Petitioner RIC], for [its] part, claim[s] that [respondent
Taripe] was a contractual employee, whose services were
required due to the increase in the demand in packaging
requirement of [its] clients for Christmas season and to
build up stock levels during the early part of the
following year; that on [6 March 2000], [respondent
Taripes] employment contract expired. [Petitioner RIC]
avers that the information update for union members,
which was allegedly filled up by [respondent Taripe] and
submitted by the Union to [petitioner] company, it is
stated therein that in the six (6) companies where

LABOR RELATIONS

[respondent Taripe] purportedly worked, the latters

reason for leaving was finished contract, hence,
[respondent Taripe] has knowledge about being
employed by contract contrary to his allegation that the
document he was signing was not explained to him.
[Petitioner RIC] manifest[s] that all benefits, including
those under the [Social Security System], were given to
him on [12 May 2000].
On 29 September 2000, the Labor Arbiter rendered a
Decision dismissing respondent Taripes Complaint
based on a finding that he was a contractual employee
whose contract merely expired. However, the NLRC
granted the appeal filed by respondent Taripe and
declared that his employment with the petitioner was
regular in status; hence, his dismissal was illegal.
Petitioner RIC moved for the reconsideration of the
aforesaid Resolution but it was denied in the Resolution
of the NLRC dated 20 August 2002.
Petitioner filed a Petition for Certiorari under Rule 65 of
the 1997 Revised Rules of Civil Procedure before the
Court of Appeals
Article 280 of the Labor Code, as amended, provides:
ART.
280.
REGULAR
AND
CASUAL
EMPLOYMENT.The
provisions
of
written
agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been
engaged to perform activities which are usually
necessary or desirable in the usual business or trade of
the employer, except where the employment has been
fixed for a specific project or undertaking the completion
or termination of which has been determined at the time
of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the
activity in which he is employed and his employment
shall continue while such activity exists.
In the case at bar, respondent Taripe signed a contract of
employment prior to his admission into the petitioners
company. Said contract of employment provides, among
other things:
That my employment shall be contractual for
the period of five (5) months which means that the end of
the said period, I can (sic) discharged unless this contract
is renewed by mutual consent or terminated for cause.
Based on the said contract, respondent Taripes
employment with the petitioner is good only for a period
of five months unless the said contract is renewed by
mutual consent. And as claimed by petitioner RIC,
respondent Taripe, along with its other contractual
employees, was hired only to meet the increase in
demand for packaging materials during the Christmas
season and also to build up stock levels during the early
part of the year.
Such contract in which the terms are prepared by only
one party and the other party merely affixes his signature
signifying his adhesion thereto is called contract of
adhesion
ISSUE

17

Whether the Court of Appeals misinterpreted

Article 280 of the Labor Code, as amended, and
ignored jurisprudence when it affirmed that respondent
Taripe was a regular employee and was illegally
dismissed?
HELD
NO. Respondent Taripe does not fall under the
exceptions mentioned in Article 280 of the Labor Code,
as amended, because it was not proven by petitioner RIC
that he was employed only for a specific project or
undertaking or his employment was merely seasonal.
Similarly, the position and function of power press
operator cannot be said to be merely seasonal. Such
position cannot be considered as only needed for a
specific project or undertaking because of the very nature
of the business of petitioner RIC. Indeed, respondent
Taripe is a regular employee of petitioner RIC and as
such, he cannot be dismissed from his employment
unless there is just or authorized cause for his dismissal.
The aforesaid Article 280 of the Labor Code, as
amended, classifies employees into three categories,
namely: (1) regular employees or those whose work is
necessary or desirable to the usual business of the
employer; (2) project employees or those whose
employment has been fixed for a specific project or
undertaking, the completion or termination of which
has been determined at the time of the engagement of
the employee or where the work or services to be
performed is seasonal in nature and the employment is
for the duration of the season; and (3) casual
employees or those who are neither regular nor project
employees
RULING
Premises considered, the instant Petition is
hereby DENIED. The Decision and Resolution of the
Court of Appeals dated 30 September 2004 and 1 April
2005, respectively, which affirmed with modification the
Resolutions of the NLRC dated 7 June 2002 and 20
August 2002, respectively, finding herein respondent
Taripe as a regular employee who had been illegally
dismissed from employment by petitioner RIC, are
hereby AFFIRMED. Costs against petitioner RIC.
____________________________
13) Lambo vs. National Labor Relations Commission,
317 SCRA 420/ G.R. No. 111042. October 26, 1999

Computation by Labor Arbiter (affirmed by

Supreme Court): recovery of overtime pay,
holiday pay, premium pay on holiday and rest
day, service incentive leave pay, separation pay,
13th month pay, and attorneys fees.

Labor Law; Employer-Employee Relationship; There

are two categories of employees paid by results(1)
those whose time and performance are supervised by
the employer, and, (2) those whose time and
performance are unsupervised.There is no dispute
that petitioners were employees of private respondents
although they were paid not on the basis of time spent on
the job but according to the quantity and the quality of
work produced by them. There are two categories of
employees paid by results: (1) those whose time and
performance are supervised by the employer. (Here,
there is an element of control and supervision over the
manner as to how the work is to be performed. A piecerate worker belongs to this category especially if he

LABOR RELATIONS

performs his work in the company premises.); and (2)

those whose time and performance are unsupervised.
(Here, the employers control is over the result of the
work. Workers on pakyao and takay basis belong to this
group.) Both classes of workers are paid per unit
accomplished. Piece-rate payment is generally practiced
in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is
commonly observed in the agricultural industry, such as
in sugar plantations where the work is performed in bulk
or in volumes difficult to quantify. Petitioners belong to
the first category, i.e., supervised employees.
Elements; Control Test.In determining the existence
of an employer-employee relationship, the following
elements must be 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.
Wages; Words and Phrases; The term wage is
broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in
terms of money whether fixed or ascertained on a time,
task, piece or commission basis; Payment by the piece is
just a method of compensation and does not define the
essence of the relationship.In this case, private
respondents exercised control over the work of
petitioners. As tailors, petitioners worked in the
companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere fact that they
were paid on a piece-rate basis does not negate their
status as regular employees of private respondents. The
term wage is broadly defined in Art. 97 of the Labor
Code as remuneration or earnings, capable of being
expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation
and does not define the essence of the relations. Nor does
the fact that petitioners are not covered by the SSS affect
the employer-employee relationship.
Illegal Dismissal; Abandonment; To justify a finding of
abandonment of work, there must be proof of a
deliberate and unjustified refusal on the part of an
employee to resume his employment.To justify a
finding of abandonment of work, there must be proof of
a deliberate and unjustified refusal on the part of an
employee to resume his employment. The burden of
proof is on the employer to show an unequivocal intent
on the part of the employee to discontinue employment.
Mere absence is not sufficient. It must be accompanied
by manifest acts unerringly pointing to the fact that the
employee simply does not want to work anymore.
Abandonment is a matter of intentionit cannot be
inferred or presumed from equivocal acts.Private
respondents failed to discharge this burden. Other than
the self-serving declarations in the affidavits of their two
employees, private respondents did not adduce proof of
overt acts of petitioners showing their intention to
abandon their work. On the contrary, the evidence shows
that petitioners lost no time in filing the case for illegal
dismissal against private respondent. This fact negates
any intention on their part to sever their employment

18

relationship. Abandonment is a matter of intention; it

cannot be inferred or presumed from equivocal acts.
Quitclaims and Releases; Not all quitclaims are per se
invalid or against public policy, but those (1) where there
is clear proof that the waiver was wangled from an
unsuspecting or gullible person or (2) where the terms of
settlement are unconscionable on their face are invalid.
To be sure, not all quitclaims are per se invalid or
against public policy. But those (1) where there is clear
proof that the waiver was wangled from an unsuspecting
or gullible person or (2) where the terms of settlement
are unconscionable on their face are invalid. In these
cases, the law will step in to annul the questionable
transaction. However, considering that the Labor Arbiter
had given petitioner Lambo a total award of P94,719.20,
the amount of P10,000.00 to cover any and all monetary
claims is clearly unconscionable.
An employee who is merely constrained to accept the
wages paid to him is not precluded from recovering the
difference between the amount he actually received and
that amount which he should have received.As we
have held in another case, the subordinate position of the
individual employee vis-a-vis management renders him
specially vulnerable to its blandishments, importunings,
and even intimidations, and results in his improvidently
waiving benefits to which he is clearly entitled. Thus,
quitclaims, waivers or releases are looked upon with
disfavor for being contrary to public policy and are
ineffective to bar claims for the full measure of the
workers legal rights. An employee who is merely
constrained to accept the wages paid to him is not
precluded from recovering the difference between the
amount he actually received and that amount which he
should have received.
Illegal Dismissals; Backwages; Where the employees
were dismissed from the service prior to March 21, 1989,
the Mercury Drug rule applies, according to which the
recovery of backwages should be limited to three years
without qualifications or deductions.As petitioners
were illegally dismissed, they are entitled to
reinstatement with backwages. Considering that
petitioners were dismissed from the service on January
17, 1989, i.e., prior to March 21, 1989, the Labor Arbiter
correctly applied the rule in the Mercury Drug case,
according to which the recovery of backwages should be
limited to three years without qualifications or
deductions. Any award in excess of three years is null
and void as to the excess.
Separation Pay; Where considerable time has lapsed
since the employees dismissal, so that reinstatement
would now be impractical and hardly in the best interest
of the parties, separation pay may be awarded in lieu of
reinstatement.The Labor Arbiter correctly ordered
private respondents to give separation pay. Considerable
time has lapsed since petitioners dismissal, so that
reinstatement would now be impractical and hardly in
the best interest of the parties. In lieu of reinstatement,
separation pay should be awarded to petitioners at the
rate of one month salary for every year of service, with a
fraction of at least six (6) months of service being
considered as one (1) year.
FACTS
Petitioners Avelino Lambo and Vicente
Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on

LABOR RELATIONS

September 10, 1985 and March 3, 1985, respectively.

They worked from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. As in the case of the
other 100 employees of private respondents, petitioners
were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they
finished in a day, they were each given a daily pay of at
least P64.00.
On January 17, 1989, petitioners filed a complaint
against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium
pay on holiday and rest day, service incentive leave pay,
separation pay, 13th month pay, and attorneys fees.
After hearing, Labor Arbiter Jose G. Gutierrez found
private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners claims.
On appeal by private respondents, the NLRC reversed
the decision of the Labor Arbiter. It found that
petitioners had not been dismissed from employment but
merely threatened with a closure of the business if they
insisted on their demand for a straight payment of their
minimum wage, after petitioners, on January 17, 1989,
walked out of a meeting with private respondents and
other employees. The NLRC held petitioners guilty of
abandonment of work and accordingly dismissed their
claims except that for 13th month pay.
Petitioners allege that they were dismissed by private
respondents as they were about to file a petition with the
Department of Labor and Employment (DOLE) for the
payment of benefits, such as Social Security System
(SSS) coverage, sick leave and vacation leave. They
deny that they abandoned their work.
To justify a finding of abandonment of work, there
must be proof of a deliberate and unjustified refusal on
the part of an employee to resume his employment. The
burden of proof is on the employer to show an
unequivocal intent on the part of the employee to
discontinue employment. Mere absence is not sufficient.
It must be accompanied by manifest acts unerringly
pointing to the fact that the employee simply does not
want to work anymore.
ISSUE
WON petitioners (employees) are to
reinstatement with backwages?
HELD
YES. As petitioners were illegally dismissed,
they are entitled to reinstatement with backwages.
Considering that petitioners were dismissed from the
service on January 17, 1989, i.e., prior to March 21,
1989,18 the Labor Arbiter correctly applied the rule in
the Mercury Drug case,19 according to which the
recovery of backwages should be limited to three years
without qualifications or deductions. Any award in
excess of three years is null and void as to the excess.20
The Labor Arbiter correctly ordered private respondents
to give separation pay. Considerable time has lapsed
since petitioners dismissal, so that reinstatement would
now be impractical and hardly in the best interest of the
parties. In lieu of reinstatement, separation pay should be
awarded to petitioners at the rate of one month salary for
every year of service, with a fraction of at least six (6)
months of service being considered as one (1) year.

19

The following factors show that petitioners, although

piece-rate workers, were regular employees of private
respondents: (1) within the contemplation of Art. 280 of
the Labor Code, their work as tailors was necessary or
desirable in the usual business of private respondents,
which is engaged in the tailoring business; (2)
petitioners worked for private respondents throughout
the year, their employment not being dependent on a
specific project or season; and, (3) petitioners worked
for private respondents for more than one year.
RULING
The decision of the National Labor Relations
Commission is SET ASIDE and another one is
RENDERED ordering private respondents to pay
petitioners the total amount of One Hundred Eighty-One
Thousand One Hundred Two Pesos and 40/100
(P181,102.40), as computed above.
_____________________________
14) San Miguel Corporation vs. NLRC, Third
Division, 297 SCRA 277/ G.R. No. 125606 October 7,
1998

PROJECT EMPLOYMENT

Labor Law; Classification of Employment; Regular,

Project and Seasonal Employment, Distinguished.
Under Article 280 of the Labor Code, an employment is
deemed regular when the activities performed by the
employee are usually necessary or desirable in the usual
business or trade of the employer even if the parties enter
into an agreement stating otherwise. But considered not
regular under said Article are (1) the so-called project
employment the termination of which is more or less
determinable at the time of employment, such as those
connected with a particular construction project; and
(2) seasonal employment, which by its nature is only for
one season of the year and the employment is limited for
the duration of that season, such as the Christmas holiday
season. Nevertheless, an exception to this exception is
made: any employee who has rendered at least one (1)
year of service, whether continuous or intermittent, with
respect to the activity he performed and while such
activity actually exists, must be deemed regular.
Whether one is employed as a project employee
or not would depend on whether he was hired to carry
out a specific project or undertaking, the duration and
scope of which were specified at the time his services
were engaged for that particular project.Following
Article 280, whether one is employed as a project
employee or not would depend on whether he was hired
to carry out a specific project or undertaking, the
duration and scope of which were specified at the time
his services were engaged for that particular project.
Another factor that may be considered is the reasonable
connection between the particular activity undertaken by
the employee in relation to the usual trade or business of
the employer; if without specifying the duration and
scope, the work to be undertaken is usually necessary or
desirable in the usual business or trade of the employer,
then it is regular employment and not just project
much less casual employment.
The nature of ones employment depends on
the nature of the activities to be performed by the
employee, considering the employers nature of

LABOR RELATIONS

business and the duration and scope of the work to be

done.The nature of ones employment does not depend
on the will or word of the employer. Nor on the
procedure of hiring and the manner of designating the
employee, but on the nature of the activities to be
performed by the employee, considering the employers
nature of business and the duration and scope of the
work to be done.
FACTS
The facts on record show that in November
1990, private respondent was hired by petitioner as
helper/bricklayer for a specific project, the repair and
upgrading of furnace C at its Manila Glass Plant. His
contract of employment provided that said temporary
employment was for a specific period of approximately
four (4) months.
On April 30, 1991, private respondent was able to
complete the repair and upgrading of furnace C. Thus,
his services were terminated on that same day as there
was no more work to be done. His employment contract
also ended that day.
On May 10, 1991, private respondent was again hired for
a specific job or undertaking, which involved the
draining/cooling down of furnace F and the emergency
repair of furnace E. This project was for a specific period
of approximately three (3) months.
After the completion of this task, namely the
draining/cooling down of furnace F and the emergency
repair of furnace E, at the end of July 1991, private
respondents services were terminated.
On August 1, 1991, complainant saw his name in a
Memorandum posted at the Companys Bulletin Board as
among those who were considered dismissed.
On August 12, 1994, or after the lapse of more than
three (3) years from the completion of the last
undertaking for which private respondent was hired,
private respondent filed a complaint for illegal dismissal
against petitioner.
On June 30, 1995, Labor Arbiter Felipe Garduque
rendered the decision dismissing said complaint for
lack of merit. In his ruling Labor Arbiter Garduque
sustained petitioners argument that private
respondent was a project employee. The position of a
helper does not fall within the classification of regular
employees. Hence, complainant never attained
regular employment status. Moreover, his silence for
more than three (3) years without any reasonable
explanation tended to weaken his claim.
On April 18, 1996, public respondent NLRC,
promulgated its assailed decision, reversing Labor
Arbiter Garduques decision.
ISSUES
(1) WON private respondent is a project
employee or a regular employee? and (2) Was he
terminated legally or dismissed illegally?
HELD
It was held that private respondent is a project
employee. Clearly, private respondent was hired for a
specific project that was not within the regular business
of the corporation. For petitioner is not engaged in the
business of repairing furnaces. Although the activity was
necessary to enable petitioner to continue manufacturing
glass, the necessity therefor arose only when a particular
furnace reached the end of its life or operating cycle. Or,
as in the second undertaking, when a particular furnace

20

required an emergency repair. In other words, the

undertakings where private respondent was hired
primarily as helper/bricklayer have specified goals and
purposes which are fulfilled once the designated work
was completed. Moreover, such undertakings were also
identifiably separate and distinct from the usual, ordinary
or regular business operations of petitioner, which is
glass manufacturing. These undertakings, the duration
and scope of which had been determined and made
known to private respondent at the time of his
employment, clearly indicated the nature of his
employment as a project employee. Thus, his services
were terminated legally after the completion of the
project.
Public respondent NLRCs decision, if upheld, would
amount to negating the distinctions made in Article 280
of the Labor Code. It would shunt aside the rule that
since a project employees work depends on the
availability of a project, necessarily, the duration of his
employment is coterminous with the project to which he
is assigned. It would become a burden for an employer to
retain an employee and pay him his corresponding wages
if there was no project for him to work on.
Thus, under Article 280 of the Labor Code, an
employment is deemed regular when the activities
performed by the employee are usually necessary or
desirable in the usual business or trade of the employer
even if the parties enter into an agreement stating
otherwise. But considered not regular under said Article
are (1) the so-called project employment the
termination of which is more or less determinable at the
time of employment, such as those connected with a
particular construction project; and (2) seasonal
employment, which by its nature is only for one season
of the year and the employment is limited for the
duration of that season, such as the Christmas holiday
season. Nevertheless, an exception to this exception is
made: any employee who has rendered at least one (1)
year of service, whether continuous or intermittent, with
respect to the activity he performed and while such
activity actually exists, must be deemed regular.
RULING
The instant petition is hereby GRANTED. The decision
of respondent NLRC is hereby REVERSED, and the
judgment of the Labor Arbiter REINSTATED.
____________________________
15) Mercado, Sr. vs. NLRC, 201 SCRA 332/ G.R. No.
79869. September 5, 1991

PROJECT EMPLOYEE OR SEASONAL

EMPLOYEE

Labor Law; Evidence; Administrative decision in

matters within the executives jurisdiction can only be set
aside upon proof of gross abuse of discretion, fraud or
error of law.The invariable rule set by the Court in
reviewing administrative decisions of the Executive
Branch of the Government is that the findings of fact
made therein are respected, so long as they are supported
by substantial evidence, even if not overwhelming or
preponderant; that it is not for the reviewing court to
weigh the conflicting evidence, determine the credibility
of the witnesses or otherwise substitute its own judgment
for that of the administrative agency on the sufficiency of
the evidence; that the administrative decision in matters
within the executives jurisdiction can only be set aside

LABOR RELATIONS

upon proof of gross abuse of discretion, fraud, or error of

law.
Findings of the Labor Arbiter in this case are ably
supported by evidence.A careful examination of the
foregoing statements reveals that the findings of the
Labor Arbiter in the case are ably supported by evidence.
There is, therefore, no circumstance that would warrant a
reversal of the questioned decision of the Labor Arbiter
as affirmed by the National Labor Relations
Commission.
Regular employee, definition of.The first paragraph
answers the question of who are regular employees. It
states that, regardless of any written or oral agreement to
the contrary, an employee is deemed regular where he is
engaged in necessary or desirable activities in the usual
business or trade of the employer, except for project
employees.
Who are deemed casual employees.The second
paragraph of Art. 280 demarcates as casual employees,
all other employees who do not fall under the definition
of the preceding paragraph. The proviso, in said second
paragraph, deems as regular employees those casual
employees who have rendered at least one year of service
regardless of the fact that such service may be
continuous or broken.
Project employee, definition of.A project employee
has been defined to be one whose employment has been
fixed for a specific project or undertaking, the
completion or termination of which has been determined
at the time of the engagement of the employee, or where
the work or service to be performed is seasonal in nature
and the employment is for the duration of the season, as
in the present case.
FACTS
Assailed in this petition for certiorari is the decision** of
the respondent national Labor Relations Commission
(NLRC) dated 8 August 1984 which affirmed the
decision of respondent Labor Arbiter Luciano P. Aquino
with the slight modification of deleting the award of
financial assistance to petitioners, and the resolution of
the respondent NLRC dated 17 August 1987, denying
petitioners motion for reconsideration.
This petition originated from a complaint for illegal
dismissal, underpayment of wages; non-payment of
overtime pay, holiday pay, service incentive leave
benefits, emergency cost of living allowances and 13th
month pay, filed by above-named petitioners.
Petitioners alleged in their complaint that they were
agricultural workers utilized by private respondents in all
the agricultural phases of work on the 7 1/2 hectares of
rice land and 10 hectares of sugar land owned by the
latter; that Fortunato Mercado, Sr. and Leon Santillan
worked in the farm of private respondents since 1949,
Fortunato Mercado, Jr. and Antonio Mercado since 1972
and the rest of the petitioners since 1960 up to April
1979, when they were all allegedly dismissed from their
employment.
Private respondent Aurora Cruz in her answer to
petitioners complaint denied that said petitioners were
her regular employees and instead averred that she
engaged their services, through Spouses Fortunato
Mercado, Sr. and Rosa Mercado, their mandarols, that

21

is, persons who take charge in supplying the number of

workers needed by owners of various farms, but only to
do a particular phase of agricultural work necessary in
rice production and/or sugar cane production, after which
they would be free to render services to other farm
owners who need their services.
The other private respondents denied having any
relationship whatsoever with the petitioners and state that
they were merely registered owners of the land in
question included as co-respondents in this case.
Respondent Labor Arbiter Luciano P. Aquino ruled in
favor of private respondents and held that petitioners
were not regular and permanent workers of the private
respondents, for the nature of the terms and conditions of
their hiring reveal that they were required to perform
phases of agricultural work for a definite period of time
after which their services would be available to any other
farm owner.4 Respondent Labor Arbiter deemed
petitioners contention of working twelve (12) hours a
day the whole year round in the farm, an exaggeration,
for the reason that the planting of rice and sugar cane
does not entail a whole year as reported in the findings of
the Chief of the NLRC Special Task Force.
The NLRC ruled in favor of private respondents
affirming the decision of the respondent Labor Arbiter,
with the modification of the deletion of the award for
financial assistance to petitioners.
ISSUE
Whether or not petitioners are regular and
permanent farm workers and therefore entitled to the
benefits which they pray for. And corollary to this,
whether or not said petitioners were illegally dismissed
by private respondents?
HELD
NO. Petitioners being project employees or
to use the correct term seasonal employees, their
employment legally ends upon completion of the
project or the season. The termination of their
employment cannot and should not constitute an
illegal dismissal.
RULING
The petition is DISMISSED. The decision of
the National Labor Relations Commission affirming that
of the Labor Arbiter, under review, is AFFIRMED. No
pronouncement as to costs.
_____________________________
16) Abasolo vs. National Labor Relations
Commission, 346 SCRA 293/ G.R. No. 118475
November 29, 2000

REGULAR
SEASONAL
(PETITIONERS)

EMPLOYEES

Labor Law; Classification of Employment; Nature of

ones employment does not depend solely on the will or
word of the employer nor on the procedure for hiring
and the manner of designating the employee, but on the
nature of the activities to be performed by the employee,
considering the employers nature of business and the
duration and scope of work to be done.The nature of
ones employment does not depend solely on the will or
word of the employer. Nor on the procedure for hiring
and the manner of designating the employee, but on the
nature, of the activities to be performed by the employee,

LABOR RELATIONS

considering the employers nature of business and the

duration and scope of work to be done.
Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid
off during offseason are not separated from service in
said period but are merely considered on leave until reemployed.In the case at bar, while it may appear that
the work of petitioners is seasonal, inasmuch as
petitioners have served the company for many years,
some for over 20 years, performing services necessary
and indispensable to LUTORCOs business, serve as
badges of regular employment. Moreover, the fact that
petitioners do not work continuously for one whole year
but only for the duration of the tobacco season does not
detract from considering them in regular employment
since in a litany of cases this Court has already settled
that seasonal workers who are called to work from time
to time and are temporarily laid off during off-season are
not separated from service in said period, but are merely
considered on leave until re-employed.
FACTS
Private respondent La Union Tobacco
Redrying Corporation (LUTORCO), which is owned
by private respondent See Lin Chan, is engaged in the
business of buying, selling, redrying and processing of
tobacco leaves and its by-products. Tobacco season starts
sometime in October of every year when tobacco farmers
germinate their seeds in plots until they are ready for
replanting in November. The harvest season starts in
mid-February. Then, the farmers sell the harvested
tobacco leaves to redrying plants or do the redrying
themselves. The redrying plant of LUTORCO receives
tobacco for redrying at the end of February and starts
redrying in March until August or September.
Petitioners have been under the employ of LUTORCO
for several years until their employment was abruptly
interrupted sometime in March 1993 when Compania
General de Tabaccos de Filipinas (also known as
TABACALERA) took over LUTORCOs tobacco
operations. New signboards were posted indicating a
change of ownership and petitioners were then asked by
LUTORCO to file their respective applications for
employment with TABACALERA. Petitioners were
caught unaware of the sudden change of ownership and
its effect on the status of their employment, though it was
alleged that TABACALERA would assume and respect
the seniority rights of the petitioners.
On March 17, 1993, the disgruntled employees instituted
before the NLRC Regional Arbitration Branch No. 1,
San Fernando, La Union a complaint for separation pay
against private respondent LUTORCO on the ground that
there was a termination of their employment due to the
closure of LUTORCO as a result of the sale and turnover
to TABACALERA. Other equally affected employees
filed two additional complaints, also for separation pay,
which were consolidated with the first complaint.
Private respondent corporation raised as its defense that
it is exempt from paying separation pay and denied that
it terminated the services of the petitioners; and that it
stopped its operations due to the absence of capital and
operating funds caused by losses incurred from 1990 to
1992 and absence of operating funds for 1993, coupled
with adverse financial conditions and downfall of prices.
It alleged further that LUTORCO entered into
an agreement with TABACALERA to take over
LUTORCOs tobacco operations for the year 1993 in the
hope of recovering from its serious business losses in the

22

succeeding tobacco seasons and to create a continuing

source of income for the petitioners. Lastly, it manifested
that LUTORCO, in good faith and with sincerity, is
willing to grant reasonable and adjusted amounts to the
petitioners, as financial assistance, if and when
LUTORCO could recover from its financial crisis.
On December 29, 1993, Labor Arbiter Ricardo
N. Olairez rendered his decision dismissing the
complaint for lack of merit. In upholding private
respondent LUTORCOs position, the Labor Arbiter
declared that the petitioners are not entitled to the
benefits under Article 283 of the Labor Code since
LUTORCO ceased to operate due to serious business
losses and, furthermore, TABACALERA, the new
employer of the petitioner has assumed the seniority
rights of the petitioners and other employment liabilities
of the LUTORCO.
Petitioners were not terminated from
employment but petitioners instead refused to work with
TABACALERA, despite the notice to petitioners to
return to work in view of LUTORCOs need for workers
at its Agoo plant which had approximately 300,000 kilos
of Virginia tobacco for processing and redrying.
Furthermore, petitioners are not entitled to separation
pay because petitioners are seasonal workers.
Petitioners vigorously maintain that they are regular
workers of respondent LUTORCO since they worked
continuously for many years with LUTORCO, some of
them even for over 20 years, and that they performed
functions necessary and desirable in the usual business of
LUTORCO. According to them, the fact that some of
them work only during the tobacco season does not
affect their status as regular workers since they have
been repeatedly called back to work for every season,
year after year.18 Thus, petitioners take exception to the
factual findings and conclusions of the NLRC, stressing
that the conclusions of the NLRC were based solely on
the new theory advanced by private respondent
LUTORCO only on appeal, that is, that it was only
LUTORCOs tobacco re-drying operation that was sold,
and hence, diametrically opposed to its theory before the
Labor Arbiter, i.e., that it is the entire company
(LUTORCO) itself that was sold.
Private respondent LUTORCO, on the other hand, insists
that petitioners employment was not terminated; that it
never ceased to operate, and that it was petitioners
themselves who severed their employer-employee
relationship when they chose employment with
TABACALERA because petitioners found more stability
working with TABACALERA than with LUTORCO.19
It likewise insists that petitioners are seasonal workers
since almost all of petitioners never continuously worked
in LUTORCO for any given year20 and they were
required to reapply every year to determine who among
them shall be given work for the season.
The public respondent NLRC in the case at bar erred in
its total affirmance of the dismissal of the consolidated
complaint, for separation pay, against private
respondents LUTORCO and See Lin Chan considering
that petitioners are regular seasonal employees entitled to
the benefits of Article 283 of the Labor Code which
applies to closures or cessation of an establishment or
undertaking, whether it be a complete or partial
cessation or closure of business operation.
ISSUES
(1) Whether petitioners employment with
LUTORCO was terminated, and (2) Whether petitioners
are regular or seasonal workers, as defined by law?

LABOR RELATIONS

HELD
1) NO. Court has already settled that seasonal workers
who are called to work from time to time and are
temporarily laid off during offseason are not separated
from service in said period but are merely considered on
leave until re-employed.
2) Petitioner are regular workers. In the case at bar,
while it may appear that the work of petitioners is
seasonal, inasmuch as petitioners have served the
company for many years, some for over 20 years,
performing services necessary and indispensable to
LUTORCOs business, serve as badges of regular
employment. Moreover, the fact that petitioners do not
work continuously for one whole year but only for the
duration of the tobacco season does not detract from
considering them in regular employment since in a litany
of cases this Court has already settled that seasonal
workers who are called to work from time to time and
are temporarily laid off during off-season are not
separated from service in said period, but are merely
considered on leave until re-employed.
Private respondents reliance on the case of Mercardo v.
NLRC is misplaced considering that since in said case of
Mercado, although the respondent company therein
consistently availed of the services of the petitioners
therein from year to year, it was clear that petitioners
therein were not in respondent companys regular
employ. Petitioners therein performed different phases of
agricultural work in a given year. However, during that
period, they were free to contract their services to work
for other farm owners, as in fact they did. Thus, the
Court ruled in that case that their employment would
naturally end upon the completion of each project or
phase of farm work for which they have been contracted.
The test of whether or not an employee is a regular
employee has been laid down in De Leon v. NLRC, in
which this Court held:
The primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in relation
to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in
the usual business or trade of the employer. The
connection can be determined by considering the nature
of the work performed and its relation to the scheme of
the particular business or trade in its entirety. Also if the
employee has been performing the job for at least a year,
even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need
for its performance as sufficient evidence of the necessity
if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only
with respect to such activity and while such activity
exists.
RULING
The petition is hereby GRANTED, and the
assailed Resolutions dated July 6, 1994 and September
23, 1994 of public respondent NLRC are REVERSED
and SET ASIDE. Private respondent La Union Tobacco
Redrying Corporation is ORDERED: (a) to pay
petitioners separation pay equivalent to one (1)
month, or one-half (1/2) month pay for each year that
they rendered service, whichever is higher, provided
that they rendered service for at least six (6) months

23

in a given year, and; (b) to pay ten percent (10%) of the

total amount due to petitioners, as and for attorneys fees.
Consequently, public respondent NLRC is ORDERED to
COMPUTE the total amount of separation pay which
each petitioner who has rendered service to private
respondent LUTORCO for at least six (6) months in a
given year is entitled to receive in accordance with this
decision, and to submit its compliance thereon within
forty-five (45) days from notice of this decision.
_____________________________
In the case of Philippine Tobacco Flue-Curing &
Redrying Corporation v. NLRC this Court, when faced
with the question of whether the separation pay of a
seasonal worker, who works for only a fraction of a
year, should be equated with the separation pay of a
regular worker, resolved that question in this wise:
The amount of separation pay is based on two factors:
the amount of monthly salary and the number of years of
service. Although the Labor Code provides different
definitions as to what constitutes one year of service,
Book Six31 does not specifically define one year of
service for purposes of computing separation pay.
However, Articles 283 and 284 both state in connection
with separation pay that a fraction of at least six months
shall be considered one whole year. Applying this case at
bar, we hold that the amount of separation pay which
respondent members x x x should receive is one-half
(1/2) their respective average monthly pay during the last
season they worked multiplied by the number of years
they actually rendered service, provided that they worked
for at least six months during a given year.
Thus, in the said case, the employees were awarded
separation pay equivalent to one (1) month, or to onehalf (1/2) month pay for every year they rendered
service, whichever is higher, provided they rendered
service for at least six (6) months in a given year. As
explained in the text of the decision in the said case,
month pay shall be understood as average monthly
pay during the last season they worked. An award of
ten percent (10%) of the total amount due petitioners as
attorneys fees is legally and morally justifiable under
Art. 111 of the Labor Code,33 Sec. 8, Rule VIII, Book III
of its Implementing Rules,34 and par. 7, Art. 220835 of
the Civil Code.
____________________________
17) Hacienda Fatima vs. National Federation of
Sugarcane Workers-Food and General Trade, 396
SCRA 518/ G.R. No. 149440 January 28, 2003

REGULAR EMPLOYMENT

Labor Law; Employment; Regular Employee;

Definition.[T]he test of whether or not an employee
is a regular employee has been laid down in De Leon v.
NLRC, in which this Court held: The primary standard,
therefore, of determining regular employment is the
reasonable connection between the particular activity
performed by the employee in relation to the usual trade
or business of the employer. The test is whether the
former is usually necessary or desirable in the usual trade
or business of the employer. The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the particular
business or trade in its entirety. Also if the employee has
been performing the job for at least a year, even if the
performance is not continuous and merely intermittent,
the law deems repeated and continuing need for its

LABOR RELATIONS

performance as sufficient evidence of the necessity if not

indispensability of that activity to the business. Hence,
the employment is considered regular, but only with
respect to such activity and while such activity exists. x x
x x x x x x x x x x [T]he fact that [respondents] do not
work continuously for one whole year but only for the
duration of the x x x season does not detract from
considering them in regular employment since in a litany
of cases this Court has already settled that seasonal
workers who are called to work from time to time and
are temporarily laid off during off-season are not
separated from service in said period, but merely
considered on leave until re-employed.
Dismissals; The burden is on the employer to prove
that the termination was for a valid and authorized
cause.Where there is no showing of clear, valid and
legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the
burden is on the employer to prove that the termination
was for a valid and authorized cause. In the case at bar,
petitioners failed to prove any such cause for the
dismissal of respondents who, as discussed above, are
regular employees.
Appeals; Factual findings of labor officials, who are
deemed to have acquired expertise in matters within
their respective jurisdictions, are generally accorded not
only respect but even finality.We uphold the CAs
affirmation of the above findings. Indeed, factual
findings of labor officials, who are deemed to have
acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but
even finality. Their findings are binding on the Supreme
Court. Verily, their conclusions are accorded great weight
upon appeal, especially when supported by substantial
evidence. Consequently, the Court is not duty-bound to
delve into the accuracy of their factual findings, in the
absence of a clear showing that these were arbitrary and
bereft of any rational basis.
FACTS
Although the employers have shown that respondents
performed work that was seasonal in nature, they failed
to prove that the latter worked only for the duration of
one particular season. In fact, petitioners do not deny that
these workers have served them for several years already.
Hence, they are regularnot seasonalemployees.
The facts are summarized in the NLRC Decision as
follows:
Contrary to the findings of the Labor Arbiter that
complainants [herein respondents] refused to work
and/or were choosy in the kind of jobs they wanted to
perform, the records is replete with complainants
persistence and dogged determination in going back to
work.
Indeed, it would appear that respondents did not look
with favor workers having organized themselves into a
union. Thus, when complainant union was certified as
the collective bargaining representative in the
certification elections, respondents under the pretext that
the result was on appeal, refused to sit down with the
union for the purpose of entering into a collective
bargaining agreement. Moreover, the workers including
complainants herein were not given work for more than
one month. In protest, complainants staged a strike
which was however settled upon the signing of a
Memorandum of Agreement.

24

The CA affirmed that while the work of respondents was

seasonal in nature, they were considered to be merely on
leave during the off-season and were therefore still
employed by petitioners. Moreover, the workers enjoyed
security of tenure. Any infringement upon this right was
deemed by the CA to be tantamount to illegal dismissal.
The appellate court found neither rhyme nor reason in
petitioners argument that it was the workers themselves
who refused to or were choosy in their work. As found
by the NLRC, the record of this case is replete with
complainants persistence and dogged determination in
going back to work.6
The CA likewise concurred with the NLRCs finding that
petitioners were guilty of unfair labor practice.
ISSUES
(1) Whether or not the Court of Appeals erred in holding
that respondents, admittedly seasonal workers, were
regular employees, contrary to the clear provisions of
Article 280 of the Labor Code, which categorically state
that seasonal employees are not covered by the definition
of regular employees under paragraph 1, nor covered
under paragraph 2 which refers exclusively to casual
employees who have served for at least one year;
(2) Whether or not the Court of Appeals erred in
rejecting the ruling in Mercado, x x x, and relying
instead on rulings which are not directly applicable to the
case at bench, viz., Philippine Tobacco, BacolodMurcia,
and Gaco, x x x;
(3) Whether or not the Court of Appeals committed grave
abuse of discretion in upholding the NLRCs conclusion
that private respondents were illegally dismissed, that
petitioner[s were] guilty of unfair labor practice, and that
the union be awarded moral and exemplary damages.
HELD
The Petition has no merit.
First Issue: Regular Employment
At -the outset, we must stress that only errors of law are
generally reviewed by this Court in petitions for review
on certiorari of CA decisions.9 Questions of fact are not
entertained.10 The Court is not a trier of facts and, in
labor cases, this doctrine applies with greater force.11
Factual questions are for labor tribunals to resolve.12 In
the present case, these have already been threshed out by
the NLRC. Its findings were affirmed by the appellate
court.
Contrary to petitioners contention, the CA did not err
when it held that respondents were regular employees.
Article 280 of the Labor Code, as amended, states:
Art. 280. Regular and Casual Employment.The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed
is seasonal in nature and the employment is for the
duration of the season.
The fact that respondentswith the exception of Luisa
Rombo, Ramona Rombo, Bobong Abriga and Boboy
Silvarepeatedly worked as sugarcane workers for
petitioners for several years is not denied by the latter.

LABOR RELATIONS

Evidently, petitioners employed respondents for more

than one season. Therefore, the general rule of regular
employment is applicable.
Petitioners move actually amounted to unjustified
dismissal of respondents, in violation of the Labor Code.
Where there is no showing of clear, valid and legal
cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the
burden is on the employer to prove that the termination
was for a valid and authorized cause.16 In the case at
bar, petitioners failed to prove any such cause for the
dismissal of respondents who, as discussed above, are
regular employees.
Second Issue: Unfair Labor Practice
The NLRC also found herein petitioners guilty of unfair
labor practice. It ruled as follows:
Indeed, from respondents refusal to bargain, to their
acts of economic inducements resulting in the promotion
of those who withdrew from the union, the use of armed
guards to prevent the organizers to come in, and the
dismissal of union officials and members, one cannot but
conclude that respondents did not want a union in their
haciendaa clear interference in the right of the workers
to self-organization.
The finding of unfair labor practice done in bad faith
carries with it the sanction of moral and exemplary
damages.
RULING
The Petition is hereby DENIED and the assailed
Decision AFFIRMED. Costs against petitioners.
____________________________
18) University of Sto. Tomas vs. NLRC, 182 SCRA
371/ G.R. No. 85519. February 15, 1990

Respondent did not become a permanent

employee of petitioner UST

Labor Law; Teachers; Permanent Employment; Under

the Manual of Regulations for Private Schools, a parttime member of the faculty cannot acquire permanence
in employment.The legal requisites, therefore, for
acquisition by a teacher of permanent employment, or
security of tenure, are as follows: 1) the teacher is a full
time teacher; 2) the teacher must have rendered three (3)
consecutive years of service; and 3) such service must
have been satisfactory. Now, the Manual of Regulations
also states that a full-time teacher is one whose total
working day is devoted to the school, has no other
regular remunerative employment and is paid on a
regular monthly basis regardless of the number of
teaching hours (Par. 77); and that in college, the
normal teaching load of a full-time instructor shall be
eighteen hours a week (par. 78). It follows that a parttime member of the faculty cannot acquire permanence
in employment under the Manual of Regulations in
relation to the Labor Code.
Employment of private respondent, whose total
working day was not devoted to the school alone, and
who had other regular remunerative employment,
merely part-time, hence, he could not have and did not
become a permanent employee even after completion of
three (3) years of service.It cannot be said that
respondents total working day was devoted to the school
alone. It is clear from the record that he was practising
his profession as a doctor and maintaining a clinic in the

25

hospital for this purpose during the time that he was

given a teaching load. In other words, he had another
regular remunerative work aside from teaching. His total
working day was not, therefore, devoted to the school.
Indeed, his salaries from teaching were computed by the
respondent Commission itself at only an average of
P660.00 per month; he, therefore, had to have other
sources of income, and this of course was his selfemployment as a practising psychiatrist. That the
compensation for teaching had to be averaged also shows
that he was not paid on a regular monthly basis.
Moreover, there is absolutely no evidence that he
performed other functions for the school when not
teaching. All things considered, it would appear that
teaching was only a secondary occupation or side-line,
his professional practice as a psychiatrist being his main
vocation. x x x The private respondent, therefore, could
not be regarded as a full-time teacher in any aspect. He
could not be regarded as such because his total working
day was not devoted to the school and he had other
regular remunerative employment. Moreover, his average
teaching load was only 6.33 hours a week. In view of the
explicit provisions of the Manual of Regulations abovequoted, and the fact that private respondent was not a
full-time teacher, he could not have and did not become a
permanent employee even after the completion of three
(3) years of service.
Private respondents temporary appointment having
lapsed, his reappointment is a matter addressed to the
discretion of said petitioner.Having found that private
respondent did not become a permanent employee of
petitioner UST, it correspondingly follows that there
was no duty on the part of petitioner UST to reappoint
private respondent as Instructor, the temporary
appointment having lapsed. Such appointment is a matter
addressed to the discretion of said petitioner.
FACTS
The private respondent Dr. Basilio E. Borja
was first appointed as affiliate faculty in the Faculty
of Medicine and Surgery at the University of Sto. Tomas
(UST for short) on September 29, 1976. In the second
semester of the school year 1976-77 he was appointed
instructor with a load of twelve (12) hours a week. He
was reappointed instructor for the school year 1977-78
with a load of nine (9) hours a week in the first semester
and two (2) hours a week in the second. On June 10,
1978 he was appointed as Instructor III for the school
year 1978-79. His load for the first semester was eight
(8) hours a week, and for the second semester, seven (7)
hours a week.
On March 19, 1979 Dean Gilberto Gamez
observed that Dr. Borja should not be reappointed based
on the evaluation sheet that shows his sub-standard and
inefficient performance. Nevertheless in view of the
critical shortage of staff members in the Department of
Neurology and Psychiatry, Dr. Gamez recommended the
reappointment of Dr. Borja, after informing the latter of
the negative feedbacks regarding his teaching and his
promise to improve his performance. Thus on July 27,
1979 he was extended a reappointment as Instructor III
in the school year 1979-80. He was given a load of six
(6) hours a week. In all these appointments he was a part
time instructor.
At the end of the academic year, it appearing that Dr.
Borja had not improved his performance in spite of his
assurances of improvement, his reappointment was not
recommended.

LABOR RELATIONS

In July, 1982 he filed a complaint in the National Labor

Relations Commission (NLRC for short) for illegal
dismissal against the UST. After the submission of the
pleadings and due proceedings the labor arbiter rendered
a decision on July 19, 1984, the dispositive part of which
reads as follows:
WHEREFORE this Office finds in favor of the
complainant. The respondents (sic) university are hereby
ordered to effect the immediate reinstatement of
complainant to his former position with full backwages,
rights and benefits appertaining thereto. Respondent
university is likewise ordered to pay the complainant the
sum of FIVE HUNDRED THOUSAND PESOS
(P500,000.00) as and by way of moral damages and
another 10% of the gross amount due him, and as and by
way of attorneys fees.
Respondents are hereby ordered to effect this decision
immediately.
The UST appealed therefrom to the NLRC which in due
course rendered a decision on September 30, 1988,
modifying the appealed decision
ISSUE
Whether or not the private respondent was a
full-time or part-time member of the faculty during the
three (3) years that he served in the petitioneruniversitys College of Medicine?
HELD
The Employment of private respondent, whose
total working day was not devoted to the school alone,
and who had other regular remunerative employment,
merely part-time, hence, he could not have and did not
become a permanent employee even after completion of
three (3) years of service.
Having found that private respondent did not
become a permanent employee of petitioner UST, it
correspondingly follows that there was no duty on the
part of petitioner UST to reappoint private respondent as
Instructor, the temporary appointment having lapsed.
Such appointment is a matter addressed to the discretion
of said petitioner.
The findings, therefore, of the public respondent
NLRC that private respondent was constructively
terminated is without lawful basis. By the same token,
the order for reinstatement of private respondent with
backwages plus an award of actual or compensatory,
moral and exemplary damages must be struck down.
RULING
The petition is hereby GRANTED. The
questioned orders of public respondent NLRC dated
September 13, 1988 and public respondent labor arbiter
Bienvenido S. Her-nandez dated July 19, 1988 are
hereby SET ASIDE and another judgment is hereby
rendered DISMISSING the complaint of private
respondent, without pronouncement as to costs.
________________________
19) Paguio vs. National Labor Relations Commission,
403 SCRA 190/ G.R. No. 147816 May 9, 2003
Labor Law; Employer-Employee Relationship;
Regular Employees; Words and Phrases; The control
test assumes primacy in the overall consideration of the
nature of an employment, whether regular or otherwise.
A regular employment, whether it is one or not, is
aptly gauged from the concurrence, or the nonconcurrence, of the following factorsa) the manner of
selection and engagement of the putative employee, b)

26

the mode of payment of wages, c) the presence or

absence of the power of dismissal; and d) the presence or
absence of the power to control the conduct of the
putative employee or the power to control the employee
with respect to the means or methods by which his work
is to be accomplished. The control test assumes
primacy in the overall consideration. Under this test, an
employment relation obtains where work is performed or
services are rendered under the control and supervision
of the party contracting for the service, not only as to the
result of the work but also as to the manner and details of
the performance desired.
Mass Media; Newspaper; An account executive
responsible for soliciting advertisements is clearly
necessary and desirable, for the survival and continued
operation of an employer in the newspaper business.
That petitioner performed activities which were
necessary and desirable to the business of the employer,
and that the same went on for more than a year, could
hardly be denied. Petitioner was an account executive
in soliciting advertisements, clearly necessary and
desirable, for the survival and continued operation of
the business of respondent corporation. Robina
Gokongwei, its President, herself admitted that the
income generated from paid advertisements was the
lifeblood of the newspapers existence. Implicitly,
respondentcorporation recognized petitioners invaluable
contribution to the business when it renewed, not just
once but five times, its contract with petitioner.
A lawful dismissal must meet both substantive and
procedural requirementsthe dismissal must be for a
just or authorized cause and must comply with the
rudimentary due process of notice and hearing.The
real question that should thus be posed is whether or not
petitioner has been justly dismissed from service. A
lawful dismissal must meet both substantive and
procedural requirements; in fine, the dismissal must be
for a just or authorized cause and must comply with the
rudimentary due process of notice and hearing. It is not
shown that respondent company has fully bothered itself
with either of these requirements in terminating the
services of petitioner. The notice of termination recites
no valid or just cause for the dismissal of petitioner nor
does it appear that he has been given an opportunity to be
heard in his defense.
FACTS
On 22 June 1992, respondent Metromedia Times
Corporation entered, for the fifth time, into an agreement
with petitioner Efren P. Paguio, appointing the latter to
be an account executive of the firm.1 Again, petitioner
was to solicit advertisements for The Manila Times, a
newspaper of general circulation, published by
respondent company. Petitioner, for his efforts, was to
receive compensation consisting of a 15% commission
on direct advertisements less withholding tax and a 10%
commission on agency advertisements based on gross
revenues less agency commission and the corresponding
withholding tax. The commissions, released every fifteen
days of each month, were to be given to petitioner only
after the clients would have paid for the advertisements.
Apart from commissions, petitioner was also entitled to a
monthly allowance of P2,000.00 as long as he met the
P30,000.00-monthly quota.
Apart from vague allegations of misconduct on which he
was not given the opportunity to defend himself, i.e.,
pirating clients from his co-executives and failing to
produce results, no definite cause for petitioners

LABOR RELATIONS

termination was given. Aggrieved, petitioner filed a case

before the labor arbiter, asking that his dismissal be
declared unlawful and that his reinstatement, with
entitlement to backwages without loss of seniority rights,
be ordered. Petitioner also prayed that respondent
company officials be held accountable for acts of unfair
labor practice, for P500,000.00 moral damages and for
P200,000.00 exemplary damages.
In their defense, respondent Metromedia Times
Corporation asserted that it did not enter into any
agreement with petitioner outside of the contract of
services under Articles 1642 and 1644 of the Civil Code
of the Philippines.4 Asserting their right to terminate the
contract with petitioner, respondents pointed to the last
provision thereof stating that both parties could opt to
end the contract provided that either party would serve,
thirty days prior to the intended date of termination, the
corresponding notice to the other.
The labor arbiter found for petitioner and declared
his dismissal illegal. The arbiter ordered respondent
Metromedia Times Corporation and its officers to
reinstate petitioner to his former position, without loss of
seniority rights, and to pay him his commissions and
other remuneration accruing from the date of dismissal
on 15 August 1992 up until his reinstatement. He
likewise adjudged that Liberato I. Gomez, general
manager of respondent corporation, be held liable to
petitioner for moral damages in the amount of
P20,000.00.
On appeal, the National Labor Relations Commission
(NLRC) reversed the ruling of the labor arbiter and
declared the contractual relationship between the parties
as being for a fixed-term employment. The NLRC
declared a fixed-term employment to be lawful as long as
it was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure
being brought to bear upon the worker and absent any
other circumstances vitiating his consent.5 The finding
of the NLRC was primarily hinged on the assumption
that petitioner, on account of his educated stature, having
indeed personally prepared his pleadings without the aid
of counsel, was an unlikely victim of a lopsided contract.
Rejecting the assertion of petitioner that he was a regular
employee, the NLRC held: The decisive determinant
would not be the activities that the employee (was) called
upon to perform but rather, the day certain agreed upon
by the parties for the commencement and termination of
their employment relationship, a day certain being
understood to be that which (would) necessarily come,
although it (might) not be known when.
Petitioner appealed the ruling of the NLRC before the
Court of Appeals which upheld in toto the findings of the
commission.
ISSUE
Whether or not petitioner has been justly
dismissed from service?
HELD
NO. A lawful dismissal must meet both
substantive and procedural requirements; in fine, the
dismissal must be for a just or authorized cause and must
comply with the rudimentary due process of notice and
hearing. It is not shown that respondent company has
fully bothered itself with either of these requirements in
terminating the services of petitioner. The notice of
termination recites no valid or just cause for the
dismissal of petitioner nor does it appear that he has been
given an opportunity to be heard in his defense.

27

That petitioner performed activities which were

necessary and desirable to the business of the employer,
and that the same went on for more than a year, could
hardly be denied. Petitioner was an account executive in
soliciting advertisements, clearly necessary and
desirable, for the survival and continued operation of the
business of respondent corporation. Robina Gokongwei,
its President, herself admitted that the income generated
from paid advertisements was the lifeblood of the
newspapers
existence.
Implicitly,
respondent
corporation
recognized
petitioners
invaluable
contribution to the business when it renewed, not just
once but five times, its contract with petitioner.
RULING
The instant petition is GRANTED. The decision of the
Court of Appeals in CA-G.R. SP No. 527773 and that of
the National Labor Relations Commission are hereby
SET ASIDE and that of the Labor Arbiter is
REINSTATED except with respect to the P20,000.00
moral damages adjudged against respondent Liberato I.
Gomez which award is deleted.
________________________
20) Brent School, Inc. vs. Zamora, 181 SCRA 702/
G.R. No. 48494. February 5, 1990
Labor Relations; Termination of Employment; R.A.
1052; Before the advent of the Labor Code, term
employment was impliedly but clearly recognized under
R.A. 1052, as amended by R.A. 1787.The employment
contract between Brent School and Alegre was executed
on July 18, 1971, at a time when the Labor Code of the
Philippines (P.D. 442) had not yset been promulgated.
Indeed, the Code did not come into effect until
November 1, 1974, some three years after the perfection
of the employment contract, and rights and obligations
thereunder had arisen and been mutually observed and
enforced. At that time, i.e., before the advent of the
Labor Code, there was no doubt whatever about the
validity of term employment. It was impliedly but
nonetheless clearly recognized by the Termination Pay
Law, R.A. 1052, as amended by R.A. 1787. Basically,
this statute provided thatIn cases of employment,
without a definite period, in a commercial, industrial, or
agricultural establishment or enterprise, the employer or
the employee may terminate at any time the employment
with just cause; or without just cause in the case of an
employee by serving written notice on the employer at
least one month in advance, or in the case of an
employer, by serving such notice to the employee at least
one month in advance or one-half month for every year
of service of the employee, whichever is longer, a
fraction of at least six months being considered as one
whole year. The employer, upon whom no such notice
was served in case of termination of employment without
just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in
case of termination of employment without just cause,
shall be entitled to compensation from the date of
termination of his employment in an amount equivalent
to his salaries or wages corresponding to the required
period of notice. There was, to repeat, clear albeit
implied recognition of the licitness of term employment.
RA 1787 also enumerated what it considered to be just
causes for terminating an employment without a definite
period, either by the employer or by the employee
without incurring any liability therefor.
The decisive determinant in term employment is
not the nature of the activities performed by the

LABOR RELATIONS

employee, but the day certain agreed upon by the

parties for the commencement and termination of
their employment relationship.The question
immediately provoked by a reading of Article 319 is
whether or not a voluntary agreement on a fixed term or
period would be valid where the employee has been
engaged to perform activities which are usually
necessary or desirable in the usual business or trade of
the employer. The definition seems a non sequitur.
From the premisethat the duties of an employee entail
activities which are usually necessary or desirable in the
usual business or trade of the employerthe conclusion
does not necessarily follow that the employer and
employee should be forbidden to stipulate any period of
time for the performance of those activities. There is
nothing essentially contradictory between a definite
period of an employment contract and the nature of the
employees duties set down in that contract as being
usually necessary or desirable in the usual business or
trade of the employer. The concept of the employees
duties as being usually necessary or desirable in the
usual business or trade of the employer is not
synonymous with or identical to employment with a
fixed term. Logically, the decisive determinant in term
employment should not be the activities that the
employee is called upon to perform, but the day certain
agreed upon by the parties for the commencement and
termination of their employment relationship, a day
certain being understood to be that which must
necessarily come, although it may not be known when.
Seasonal employment, and employment for a particular
project are merely instances of employment in which a
period, where not expressly set down, is necessarily
implied.
Stipulations in employment contracts providing
for term employment or fixed period employment
are valid when the period where agreed upon knowingly,
and voluntarily by the parties without force, duress or
improper pressure exerted on the employee; and when
such stipulations were not designed to circumvent the
laws on security of tenure.Accordingly, and since the
entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code
clearly appears to have been, as already observed, to
prevent circumvention of the employees right to be
secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or
oral agreements conflicting with the concept of regular
employment as defined therein should be construed to
refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to
circumvent security of tenure. It should have no
application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily
by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal
terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus
limited in its purview, the law would be made to apply to
purposes other than those explicitly stated by its framers;
it thus becomes pointless and arbitrary, unjust in its
effects and apt to lead to absurd and unintended
consequences.
FACTS

28

The root of the controversy at bar is an

employment contract in virtue of which Doroteo R.
Alegre was engaged as athletic director by Brent
School, Inc. at a yearly compensation of P20,000.00.
The contract fixed a specific term for its existence, five
(5) years, i.e., from July 18, 1971, the date of execution
of the agreement, to July 17, 1976. Subsequent
subsidiary agreements dated March 15, 1973, August 28,
s1973, and September 14, 1974 reiterated the same terms
and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971.
Some three months before the expiration of the stipulated
period, or more precisely on April 20, 1976, Alegre was
given a copy of the report filed by Brent School with the
Department of Labor advising of the termination of his
services effective on July 16, 1976. The stated ground for
the termination was completion of contract, expiration
of the definite period of employment. And a month or
so later, on May 26, 1976, Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the
phrase, in full payment of services for the period May
16, to July 17, 1976 as full payment of contract.
Alegre argued that although his contract did stipulate that
the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual
business of his employer, and his employment had lasted
for five years, he had acquired the status of a regular
employee and could not be removed except for valid
cause.6 The Regional Director considered Brent Schools
report as an application for clearance to terminate
employment (not a report of termination), and accepting
the recommendation of the Labor Conciliator, refused to
give such clearance and instead required the
reinstatement of Alegre, as a permanent employee, to
his former position without loss of seniority rights and
with full back wages. The Director pronounced the
ground relied upon by the respondent (Brent) in
terminating the services of the complainant (Alegre) x x
x (as) not sanctioned by P.D. 442, and, quite oddly, as
prohibited by Circular No. 8, series of 1969, of the
Bureau of Private Schools.
Brent School filed a motion for reconsideration. The
Regional Director denied the motion and forwarded the
case to the Secretary of Labor for review.8 The latter
sustained the Regional Director.9 Brent appealed to the
Office of the President. Again it was rebuffed. That
Office dismissed its appeal for lack of merit and affirmed
the Labor Secretarys decision, ruling that Alegre was a
permanent employee who could not be dismissed except
for just cause, and expiration of the employment contract
was not one of the just causes provided in the Labor
Code for termination of services.
ISSUE
Whether or not a voluntary agreement on a
fixed term or period would be valid where the employee
has been engaged to perform activities which are
usually necessary or desirable in the usual business or
trade of the employer?
HELD
YES. Stipulations in employment contracts
providing for term employment or fixed period
employment are valid when the period where agreed
upon knowingly, and voluntarily by the parties without
force, duress or improper pressure exerted on the

LABOR RELATIONS

employee; and when such stipulations were not designed

to circumvent the laws on security of tenure.
RULING
The public respondents Decision complained of is
REVERSED and SET ASIDE. Respondent Alegres
contract of employment with Brent School having
lawfully terminated with and by reason of the expiration
of the agreed term of period thereof, he is declared not
entitled to reinstatement and the other relief awarded and
confirmed on appeal in the proceedings below. No
pronouncement
as
to
costs.
_______________________________
From the premisethat the duties of an
employee entail activities which are usually necessary
or desirable in the usual business or trade of the
employerthe conclusion does not necessarily follow
that the employer and employee should be forbidden to
stipulate any period of time for the performance of those
activities. There is nothing essentially contradictory
between a definite period of an employment contract and
the nature of the employees duties set down in that
contract as being usually necessary or desirable in the
usual business or trade of the employer. The concept of
the employees duties as being usually necessary or
desirable in the usual business or trade of the
employer is not synonymous with or identical to
employment with a fixed term. Logically, the decisive
determinant in term employment should not be the
activities that the employee is called upon to perform,
but the day certain agreed upon by the parties for the
commencement and termination of their employment
relationship, a day certain being understood to be that
which must necessarily come, although it may not be
known
when.19
Seasonal
employment,
and
employment for a particular project are merely instances
of employment in which a period, where not expressly
set down, is necessarily implied.
Of course, the term period has a definite and settled
signification. It means, Length of existence; duration.
A point of time marking a termination as of a cause or an
activity; an end, a limit, a bound; conclusion;
termination. A series of years, months or days in which
something is completed. A time of definite length. x x x
the period from one fixed date to another fixed date x
x.20 It connotes a space of time which has an influence
on an obligation as a result of a juridical act, and either
suspends its demandableness or produces its
extinguishment.21 It should be apparent that this settled
and familiar notion of a period, in the context of a
contract of employment, takes no account at all of the
nature of the duties of the employee; it has absolutely no
relevance to the character of his duties as being usually
necessary or desirable to the usual business of the
employer, or not
___________________________
21) Kimberly Independent Labor Union For
Solidarity, Activism And Nationalism-Organized
Labor Association In Line Industries And Agriculture
vs. Drilon, 185 SCRA 190/ G.R. No. 77629. May 9,
1990
Labor Law; Jurisdiction; Authority of former
Minister Sanchez to assume jurisdiction over the
issue of the regularization of the 64 casual workers
upheld.We uphold the authority of former Minister
Sanchez to assume jurisdiction over the issue of the
regularization of the 64 casual workers, which fact is
not even disputed by KILUSAN-OLALIA as may be
gleaned from its request for an interim order in the notice

29

of strike case (BLR-NS-5-164-86), asking that the

regularization issue be immediately resolved.
Furthermore, even the med-arbi-ter who ordered the
holding of the certification election refused to resolve the
protest on the ground that the issue raised therein
correctly pertains to the jurisdiction of the then labor
minister. No opposition was offered by KILUSANOLALIA. We hold that the issue of regularization was
properly addressed to the discretion of said former
minister.
Labor Relations; Former labor minister gravely
abused his discretion in holding that those workers
not engaged in janitorial or yard maintenance service
attained the status of regular employees only on
November 13, 1986.We find and so hold that the
former labor minister gravely abused his discretion in
holding that those workers not engaged in janitorial or
yard maintenance service attained the status of regular
employees only on November 13, 1986, which thus
deprived them of their constitutionally protected right to
vote in the certification election and choose their rightful
bargaining representative.
Article 280 of the Labor Code provides for
two kinds of regular employees.The law thus
provides for two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are
usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered
at least one year of service, whether continuous or
broken, with respect to the activity in which they are
employed.
Individual petitioners adjudged to be regular
employees fall under the second category.The
individual petitioners herein who have been adjudged to
be regular employees fall under the second category.
These are the mechanics, electricians, machinists,
machine shop helpers, warehouse helpers, painters,
carpenters, pipefitters and masons. It is not disputed that
these workers have been in the employ of KIMBERLY
for more than one year at the time of the filing of the
petition for certification election by KILUSANOLALIA.
It is more in keeping with the intent and spirit of the law
to rule that the status of regular employment attached to
the casual worker on the day immediately after the end
of his first year of service.Owing to their length of
service with the company, these workers became
regular employees, by operation of law, one year after
they were employed by KIMBERLY through RANK.
While the actual regularization of these employees
entails the mechanical act of issuing regular appointment
papers and compliance with such other operating
procedures as may be adopted by the employer, it is
more in keeping with the intent and spirit of the law to
rule that the status of regular employment attaches to the
casual worker on the day immediately after the end of his
first year of service. To rule otherwise, and to instead
make their regularization dependent on the happening of
some contingency or the fulfillment of certain
requirements, is to impose a burden on the employee
which is not sanctioned by law.
As long as the employee has rendered at least one
year of service, he becomes a regular employee with
respect to the activity in which he is employed.That
the first stated position is the situation contemplated and
sanctioned by law is further enhanced by the absence of
a statutory limitation before regular status can be

LABOR RELATIONS

acquired by a casual employee. The law is explicit. As

long as the employee has rendered at least one year of
service, he becomes a regular employee with respect to
the activity in which he is employed. The law does not
provide the qualification that the employee must first be
issued a regular appointment or must first be formally
declared as such before he can acquire a regular status.
Obviously, where the law does not distinguish, no
distinction should be drawn.
FACTS
Kimberly-Clark Philippines, Inc. (KIMBERLY,
for brevity) executed a three-year collective bargaining
agreement (CBA) with United Kimberly-Clark
Employees Union-Philippine Transport and General
Workers Organization (UKCEU-PTGWO) which
expired on June 30, 1986.
Within the 60-day freedom period prior to the expiration
of and during the negotiations for the renewal of the
aforementioned CBA, some members of the bargaining
unit formed another union called Kimberly Independent
Labor Union for Solidarity, Activism and NationalismOrganized Labor Association in Line Industries and
Agriculture (KILUSAN-OLALIA).
On April 21, 1986, KILUSAN-OLALIA filed a
petition for certification election in Regional Office No.
IV, Ministry of Labor and Employment (MOLE),
docketed
as
Case
No.
RO4-OD-M-4-15-86.5
KIMBERLY and UKCEU-PTGWO did not object to the
holding of a certification election but objected to the
inclusion of the so-called contractual workers whose
employment with KIMBERLY was coursed through an
independent contractor, Rank Manpower Company
(RANK, for short), as among the qualified voters.
Pending resolution of the petition for
certification election by the med-arbiter, KILUSANOLALIA filed a notice of strike on May 7, 1986 with the
Bureau of Labor Relations, docketed as BLR Case No.
NS-5-164-86,6 charging KIMBERLY with unfair labor
practices based on the following alleged acts: (1)
dismissal of union members (KILUSAN-OLALIA); (2)
non-regularization of casuals/contractuals with over six
months service; (3) non-implementation of appreciation
bonus for 1982 and 1983; (4) non-payment of minimum
wages (5) coercion of employees; and (6) engaging in
CBA negotiations despite the pendency of a petition for
certification election. This was later amended to
withdraw the charge of coercion but to add, as new
charges, the dismissal of Roque Jimenez and the nonpayment of backwages of the reinstated Emerito Fuentes.
Conciliation proceedings conducted by the bureau
proved futile, and KILUSAN-OLALIA declared a strike
at KIMBERLYs premises in San Pedro, Laguna on May
23, 1986.
During the pre-election conference, 64 casual workers
were challenged by KIMBERLY and UKCEU-PTGWO
on the ground that they are not employees of
KIMBERLY but of RANK. It was agreed by all the
parties that the 64 voters shall be allowed to cast their
votes but that their ballots shall be segregated and subject
to challenge proceedings. The certification election was
conducted on July 1, 1986.
On July 2, 1986, KILUSAN-OLALIA filed with the
medarbiter a Protest and Motion to Open and Count
Challenged Votes12 on the ground that the 64 workers
are employees of KIMBERLY within the meaning of
Article 212(e) of the Labor Code. On July 7, 1986,

30

KIMBERLY filed an opposition to the protest and

motion, asserting that there is no employer-employee
relationship between the casual workers and the
company, and that the med-arbiter has no jurisdiction to
rule on the issue of the status of the challenged workers
which is one of the issues covered by the assumption
order. The med-arbiter opted not to rule on the protest
until the issue of regularization has been resolved by
MOLE.
The petition of KILUSAN-OLALIA avers that the
respondent Secretary of Labor and/or the former Minister
of Labor have acted with grave abuse of discretion
and/or without jurisdiction in (1) ruling on the issue of
bargaining representation and declaring respondent
UKCEU-PTGWO as the collective bargaining
representative of all regular rank-and-file employees of
the respondent company; (2) holding that petitioners are
not entitled to vote in the certification election; (3)
considering the regularization of petitioners (who are not
janitors and maintenance employees) to be effective only
on the date of the disputed decision; (4) declaring
petitioners who are assigned janitorial and yard
maintenance work to be employees of respondent RANK
and not entitled to be regularized; (5) not awarding to
petitioners differential pay arising out of such illegal
work scheme; and (6) ordering the mere reinstatement of
petitioner Jimenez.
ISSUES
(1) Whether or not former Minister Sanchez
committed a grave abuse of discretion amounting to lack
of jurisdiction in declaring respondent UKCEU-PTGWO
as the certified bargaining representative of the regular
employees of KIMBERLY, after ruling that the 64 casual
workers, whose votes are being challenged, were not
entitled to vote in the certification election?;(2) WON
said workers, not performing janitorial or yard
maintenance service, became regular employees of
KIMBERLY and thus entitled to vote?
HELD
1) NO. KILUSAN-OLALIA contends that after
finding that the 64 workers are regular
employees of KIMBERLY, Minister Sanchez
should have remanded the representation case to
the medarbiter, instead of declaring UKCEUPTGWO as the winner in the certification
election and setting aside the med-arbiters
order which allowed the 64 casual workers to
cast their votes.
Respondents argue that since the issues of regularization
and representation are closely interrelated and that a
resolution of the former inevitably affects the latter, it
was necessary for the former labor minister to take
cognizance of the representation issue; that no timely
motion for reconsideration or appeal was made from his
decision of November 13, 1986 which has become final
and executory; and that the aforesaid decision was
impliedly accepted by KILUSAN-OLALIA when it
demanded from KIMBERLY the issuance of regular
appointments to its affected members in compliance with
said decision, hence petitioner employees are now
estopped from questioning the legality thereof.
The Court uphold the authority of former Minister
Sanchez to assume jurisdiction over the issue of the
regularization of the 64 casual workers, which fact is
not even disputed by KILUSANOLALIA as may be
gleaned from its request for an interim order in the notice
of strike case (BLR-NS-5-164-86), asking that the
regularization issue be immediately resolved.

LABOR RELATIONS

Furthermore, even the med-arbiter who ordered the

holding of the certification election refused to resolve the
protest on the ground that the issue raised therein
correctly pertains to the jurisdiction of the then labor
minister. No opposition was offered by KILUSANOLALIA. We hold that the issue of regularization was
properly addressed to the discretion of said former
minister.
2)YES. On the basis of the foregoing circumstances,
and as a consequence of their status as regular
employees, those workers not perforce janitorial and
yard maintenance service were performace entitled
to the payment of salary differential, cost of living
allowance, 13th month pay, and such other benefits
extended to regular employees under the CBA, from
the day immediately following their first year of
service in the company. These regular employees are
likewise entitled to vote in the certification election
held in July 1, 1986. Consequently, the votes cast by
those employees not performing janitorial and yard
maintenance service, which form part of the 64
challenged votes, should be opened, counted and
considered for the purpose of determining the
certified bargaining representative.
The court hold that the former labor minister
gravely abused his discretion in holding that those
workers not engaged in janitorial or yard
maintenance service attained the status of regular
employees only on November 13, 1986, which thus
deprived them of their constitutionally protected
right to vote in the certification election and choose
their rightful bargaining representative.
RULING
The judgment is hereby rendered in G.R. No.
77629:
1. Ordering the med-arbiter in Case No. R04-OD-M-415-86 to open and count the 64 challenged votes, and
that the union with the highest number of votes be
thereafter declared as the duly elected certified
bargaining representative of the regular employees of
KIMBERLY;
2. Ordering KIMBERLY to pay the workers who have
been regularized their differential pay with respect to
minimum wage, cost of living allowance, 13th month
pay, and benefits provided for under the applicable
collective bargaining agreement from the time they
became regular employees.
All other aspects of the decision appealed from, which
are not so modified or affected thereby, are hereby
AFFIRMED. The temporary restraining order issued in
G.R. No. 77629 is hereby made permanent.
___________________________
22) Cebu Marine Beach Resort vs. National Labor
Relations Commission, 414 SCRA 173/ G.R. No.
143252. October 23, 2003
Labor Law; Probationary Employees; Security of
Tenure; It is settled that while probationary
employees do not enjoy permanent status, they are
entitled to the constitutional protection of security of
tenure.It is settled that while probationary employees
do not enjoy permanent status, they are entitled to the
constitutional protection of security of tenure. Their
employment may only be terminated for just cause or
when they fail to qualify as regular employees in
accordance with reasonable standards made known to

31

them by their employer at the time of engagement, and

after due process.
Abandonment; Words and Phrases; To
constitute abandonment, there must be clear proof of
deliberate and unjustified intent to sever the employeremployee relationship.Indeed, we find no indication
that respondents have shown by some overt acts their
intention to sever their employment in petitioner
company. To constitute abandonment, there must be clear
proof of deliberate and unjustified intent to sever the
employer-employee relationship. Clearly, the operative
factor is still the employers ultimate act of putting an
end to his employment.
The filing of a complaint for illegal dismissal is
inconsistent with the charge of abandonment, for an
employee who takes steps to protest his dismissal cannot
by logic be said to have abandoned his work.Here,
respondents did not report back for work because they
were warned by petitioner Sasaki not to return. But
immediately, they filed with the Labor Arbiters Office a
complaint for illegal dismissal. It is a settled doctrine that
the filing of a complaint for illegal dismissal is
inconsistent with the charge of abandonment, for an
employee who takes steps to protest his dismissal cannot
by logic be said to have abandoned his work.
Being in the nature of a trial period, the essence of a
probationary period of employment fundamentally lies in
the purpose or objective sought to be attained by both
the employer and the employee during said period.
That respondents failed to qualify for their positions,
suffice it to state that at the time they were dismissed,
they were still in a trial period or probationary period.
Being in the nature of a trial period, the essence of a
probationary period of employment fundamentally lies in
the purpose or objective sought to be attained by both the
employer and the employee during said period. While the
employer observes the fitness, propriety and efficiency of
a probationer to ascertain whether he is qualified for
permanent employment, the probationer, on the other
hand, seeks to prove to the employer that he has the
qualifications to meet the reasonable standards for
permanent employment which obviously were made
known to him. To reiterate, in the case at bar, far from
allowing the respondents to prove that they possessed the
qualifications to meet the reasonable standards for their
permanent employment, petitioners peremptorily
dismissed them from the service.
Backwages; Absent the grounds for termination of a
probationary employee, he is entitled to continued
employment even beyond his probationary period.On
another tack, petitioners argument that the Appellate
Courts award of full backwages and separation pay in
effect unilaterally extended respondents 6-month
probationary employment is bereft of merit. In Philippine
Manpower Services, Inc. vs. NLRC, we held that absent
the grounds for termination of a probationary employee,
he is entitled to continued employment even beyond the
probationary period.
FACTS
Probationary employees need strong protection
from the exploitation of employers since they are usually
the lowliest of the lowly and the most vulnerable to
abuses of management, who would rather suffer in
silence than risk losing their jobs.
Cebu Marine Beach Resort (herein petitioner
company), a single proprietorship owned by Victor

LABOR RELATIONS

Dualan, commenced its operations sometime in January,

1990 with the recruitment of its employees, including
Ric Rodrigo Rodriguez, Manulita Villegas and Lorna G.
Igot, respondents.
On the last week of March, 1990 when Japanese tourists
began arriving at the resort, petitioner company became
fully operational. Inasmuch as the beach resort was
intended to cater principally to Japanese tourists,
respondents had to undergo a special training in Japanese
customs, traditions, discipline as well as hotel and resort
services. This special training was supervised by
Tsuyoshi Sasaki, also a petitioner.
During a seminar conducted on May 24, 1990, petitioner
Sasaki suddenly scolded respondents and hurled brooms,
floor maps, iron trays, fire hoses and other things at
them. In protest, respondents staged a walk-out and
gathered in front of the resort.
Immediately, petitioner Sasaki reacted by shouting at
them to go home and never to report back to work.
Heeding his directive, respondents left the premises.
Eventually, they filed with the Regional Arbitration
Branch at Cebu City a complaint for illegal dismissal and
other monetary claims against petitioners.
On May 28, 1990, petitioner company, through its acting
general manager, Ofelia Pelaez, also a petitioner, sent
letters to respondents requiring them to explain why they
should not be terminated from employment on the
grounds of abandonment of work and failure to qualify
with the standards for probationary employees.
The Labor Arbiter rendered a Decision dated March 23,
1993 dismissing respondents complaint but directing
them to immediately report back to work.
On appeal, the National Labor Relations Commission
(NLRC), in its Decision dated June 28, 1994, reversed
the Labor Arbiters Decision, declaring that the
respondents were dismissed illegally and ordering their
reinstatement with payment of full backwages from May
24, 1990 up to their actual reinstatement or in lieu
thereof, the payment of their respective separation pay
(equivalent to one month salary) from May 24, 1990 up
to the date they were supposed to be reinstated, as well
as attorneys fees (equivalent to 10% of the total
monetary award).
On February 28, 1995, the NLRC issued a Resolution
declaring that the backwages shall correspond only to the
period from May 24, 1990 (the date of their dismissal)
until March 23, 1993 (when they were ordered reinstated
by the Labor Arbiter), subject to the deduction of their
earnings from other sources during the pendency of the
appeal.
On March 22, 1995, petitioners filed with this Court a
petition for certiorari, prohibition and injunction with
prayer for the issuance of a temporary restraining order.
On November 5, 1999, the Court of Appeals
rendered its Decision affirming with modification the
Decision and Resolution of the NLRC. Here, petitioners
terminated respondents probationary employment on the
grounds of abandonment and failure to qualify for the
positions for which they were employed.
ISSUE
Whether respondents were illegally dismissed
from employment by Petitioner Company?
HELD
YES. It is settled that while probationary
employees do not enjoy permanent status, they are

32

entitled to the constitutional protection of security of

tenure. Their employment may only be terminated for
just cause or when they fail to qualify as regular
employees in accordance with reasonable standards
made known to them by their employer at the time of
engagement, and after due process.
That respondents failed to qualify for their positions,
suffice it to state that at the time they were dismissed,
they were still in a trial period or probationary period.
Being in the nature of a trial period, the essence of a
probationary period of employment fundamentally lies in
the purpose or objective sought to be attained by both the
employer and the employee during said period. While the
employer observes the fitness, propriety and efficiency of
a probationer to ascertain whether he is qualified for
permanent employment, the probationer, on the other
hand, seeks to prove to the employer that he has the
qualifications to meet the reasonable standards for
permanent employment which obviously were made
known to him.7 To reiterate, in the case at bar, far from
allowing the respondents to prove that they possessed the
qualifications to meet the reasonable standards for their
permanent employment, petitioners peremptorily
dismissed them from the service.
RULING
The assailed Decision and Resolution of the Court of
Appeals dated November 5, 1999 and April 18, 2000 are
hereby AFFIRMED WITH MODIFICATION in the
sense that, in lieu of reinstatement, respondents are
awarded separation pay equivalent to at least one month
pay, or one month pay for every year of service,
whichever is higher; and their full backwages, other
privileges and benefits, or their monetary equivalent
during the period of their dismissal up to their supposed
actual reinstatement.
Costs against petitioners.
___________________________
23) Phil. Long Distance Telephone Co. vs. NLRC, 164
SCRA 671/ No. L-80609. August 23, 1988
Labor; Illegal Dismissal; Separation Pay; Rule in the
Labor Code that a person dismissed for cause is not
entitled to separation pay; Exception is based upon
equity considerations; Definition and concept of
equity.The rule embodied in the Labor Code is that a
person dismissed for cause as defined therein is not
entitled to separation pay. The cases above cited
constitute the exception, based upon considerations of
equity. Equity has been defined as justice outside law,
being ethical rather than jural and belonging to the
sphere of morals than of law. It is grounded on the
precepts of conscience and not on any sanction of
positive law. Hence, it cannot prevail against the
expressed provision of the labor laws allowing dismissal
of employees for cause and without any provision for
separation pay.
Grant of separation pay is not merely based on equity
but on the provisions of the Constitution on the
promotion of social justice and protection of the
rights of the workers.Strictly speaking, however, it is
not correct to say that there is no express justification for
the grant of separation pay to lawfully dismissed
employees other than the abstract consideration of
equity. The reason is that our Constitution is replete with
positive commands for the promotion of social justice,
and particularly the protection of the rights of the
workers. The enhancement of their welfare is one of the

LABOR RELATIONS

primary concerns of the present charter. In fact, instead

of confining itself to the general commitment to the
cause of labor in Article II on the Declaration of
Principles of State Policies, the new Constitution
contains a separate article devoted to the promotion of
social justice and human rights with a separate sub-topic
for labor. Article XIII expressly recognizes the vital role
of labor, hand in hand with management, in the
advancement of the national economy and the welfare of
the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the
workers are more than sufficient basis to justify the
award of separation pay in proper cases even if the
dismissal be for cause.
Award of separation pay distinguished;
Grant of separation pay to the dismissed employee is
just where the separation was due to valid but
inequitous causes as failure to comply with work
standards; Grant of award is based on the social
justice policy even if separation is for cause.There
should be no question that where it comes to such valid
but not iniquitous causes as failure to comply with work
standards, the grant of separation pay to the dismissed
employee may be both just and compassionate,
particularly if he has worked for some time with the
company. For example, a subordinate who has
irreconcilable policy or personal differences with his
employer may be validly dismissed for demonstrated loss
of confidence, which is an allowable ground. A working
mother who has to be frequently absent because she has
also to take care of her child may also be removed
because of her poor attendance, this being another
authorized ground. It is not the employees fault if he
does not have the necessary aptitude for his work but on
the other hand the company cannot be required to
maintain him just the same at the expense of efficiency
of its operations. He too may be validly replaced. Under
these and similar circumstances, however, the award to
the employee of separation pay would be sustainable
under the social justice policy even if the separation is
for cause.
Where the cause of separation is more
serious than mere inefficiency, the award is not
justified.But where the cause of the separation is more
serious that mere inefficiency, the generosity of the law
must be more discerning. There is no doubt it is
compassionate to give separation pay to a salesman if he
is dismissed for his inability to fill his quota but surely he
does not deserve such generosity if his offense is
misappropriation of the receipt of his sales. This is no
longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless
subject to dismissal but may be allowed separation pay
since his conduct, while inept, is not depraved. But if he
was in fact not really sleeping but sleeping with a
prostitute during his tour of duty and in the company
premises, the situation is changed completely. This is not
only inefficiency but immorality and the grant of
separation pay would be entirely unjustified.
Henceforth, separation pay shall be allowed
only in those instances where the employee is validly
dismissed for causes other than serious misconduct or
those reflecting on his moral character; Where the
reason for the valid dismissal is habitual
insubordination or an offense involving moral
turpitude, the employer may not be required to give
the dismissed employee separation pay or financial
assistance.We hold that henceforth separation pay
shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed

33

for causes other than serious misconduct or those

reflecting on his moral character. Where the reason for
the valid dismissal is, for example, habitual intoxication
or an offense involving moral turpitude, like theft or
illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee
separation pay, of financial assistance, or whatever other
name it is called, on the ground of social justice.
A contrary rule would have the effect of
rewarding rather than punishing the erring employee
for his offense.A contrary rule would, as the petitioner
correctly argues, have the effect of rewarding rather than
punishing the erring employee for his offense. And we do
not agree that the punishment is his dismissal only and
that the separation pay has nothing to do with the wrong
he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not
unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like
leniency if he is again found out. This kind of misplaced
compassion is not going to do labor in general any good
as it will encourage the infiltration of its ranks by those
who do not deserve the protection and concern of the
Constitution.
The policy of social justice is not intended to
countenance wrongdoing.The policy of social justice
is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it
may mitigate the penalty but it certainly will not condone
the offense. Compassion for the poor is an imperative of
every humane society but only when the recipient is not
a rascal claiming an undeserved privilege. Social justice
cannot be permitted to be the refuge of scoundrels any
more than can equity be an impediment to the
punishment of the guilty. Those who invoke social
justice may do so only if their hands are clean and their
motives blameless and not simply because they happen
to be poor. This great policy of our Constitution is not
meant for the protection of those who have proved they
are not worthy of it, like the workers who have tainted
the cause of labor with the blemishes of their own
character.
Grant of separation pay to the private
respondent who has been dismissed for dishonesty, is
justified; Reason.Applying the above considerations,
we hold that the grant of separation pay in the case at bar
is unjustified. The private respondent has been dismissed
for dishonesty, as found by the labor arbiter and affirmed
by the NLRC and as she herself has impliedly admitted.
The fact that she has worked with the PLDT for more
than a decade, if it is, to be considered at all, should be
taken against her as it reflects a regrettable lack of
loyalty that she should have strengthened instead of
betraying during all of her 10 years of service with the
company. If regarded as a justification for moderating the
penalty of dismissal, it will actually become a prize for
disloyalty, perverting the meaning of social justice and
undermining the efforts of labor to cleanse its ranks of all
undesirables.
Separation pay, if found due under the circumstances
of each case, should be computed at the rate of one
month salary for every year of service.The Court
also rules that the separation pay, if found due under the
circumstance of each case, should be computed at the
rate of one month salary for every year of service,
assuming the length of such service is deemed material.
This is without prejudice to the application of special
agreements between the employer and the employee

LABOR RELATIONS

stipulating a higher rate of computation and providing

for more benefits to the discharged employee.

dismissed for cause as found by the public respondent is

proper?

FACTS

HELD

Marilyn Abucay, a traffic operator of the

Philippine Long Distance Telephone Company, was
accused by two complainants of having demanded and
received from them the total amount of P3, 800.00 in
consideration of her promise to facili- tate approval of
their
applications
for
telephone
installation.1
Investigated and heard, she was found guilty as charged
and accordingly separated from the service. She went to
the Ministry of Labor and Employment claiming she had
been illegally removed. After consideration of the
evidence and arguments of the parties, the company was
sustained and the complaint was dismissed for lack of
merit.
Both the petitioner and the private respondent
appealed to the National Labor Relations Board, which
upheld the said decision in toto and dismissed the
appeals.4 The private respondent took no further action,
thereby impliedly accepting the validity of her dismissal.
The petitioner, however, is now before us to question the
affirmance of the above-quoted award as having been
made with grave abuse of discretion.

NO. The court hold that the grant of separation

pay in the case at bar is unjustified. The private
respondent has been dismissed for dishonesty, as found
by the labor arbiter and affirmed by the NLRC and as she
herself has impliedly admitted. The fact that she has
worked with the PLDT for more than a decade, if it is to
be considered at all, should be taken against her as it
reflects a regrettable lack of loyalty that she should have
strengthened instead of betraying during all of her 10
years of service with the company. If regarded as a
justification for moderating the penalty of dismissal, it
will actually become a prize for disloyalty, perverting the
meaning of social justice and undermining the efforts of
labor to cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due
under the circumstances of each case, should be
computed at the rate of one month salary for every year
of service, assuming the length of such service is deemed
material. This is without prejudice to the application of
special agreements between the employer and the
employee stipulating a higher rate of computation and
providing for more benefits to the discharged employee.

The position of the petitioner is simply stated: It

is conceded that an employee illegally dismissed is
entitled to reinstatement and backwages as required by
the labor laws. However, an employee dismissed for
cause is entitled to neither reinstatement nor backwages
and is not allowed any relief at all because his dismissal
is in accordance with law. In the case of the private
respondent, she has been awarded financial assistance
equivalent to ten months pay corresponding to her 10year service in the company despite her removal for
cause. She is, therefore, in effect rewarded rather than
punished for her dishonesty, and without any legal
authorization or justification. The award is made on the
ground of equity and compassion, which cannot be a
substitute for law. Moreover, such award puts a premium
on dishonesty and encourages instead of deterring
corruption.
The public respondent claims that the employee is
sufficiently punished with her dismissal. The grant of
financial assistance is not intended as a reward for her
offense but merely to help her for the loss of her
employment after working faithfully with the company
for ten years. In support of this position, the Solicitor
General cites the cases of Firestone Tire and Rubber
Company of the Philippines v. Lariosa and Soco v.
Mercantile Corporation of Davao, where the employees
were dismissed for cause but were nevertheless allowed
separation pay on grounds of social and compassionate
justice. As the Court put it in the Firestone case:
In view of the foregoing, We rule that Firestone had
valid grounds to dispense with the services of Lariosa
and that the NLRC acted with grave abuse of discretion
in ordering his reinstatement. However, considering that
Lariosa had worked with the company for eleven years
with no known previous bad record, the ends of social
and compassionate justice would be served if he is paid
full separation pay but not reinstatement without
backwages by the NLRC.
ISSUE
WON the award of separation pay in the form
of financial assistance to an employee who had been

34

RULING
The petition is GRANTED. The challenged
resolution of September 22, 1987, is AFFIRMED in toto
except for the grant of separation pay in the form of
financial assistance, which is hereby DISALLOWED.
The temporary restraining order dated March 23, 1988, is
LIFTED. It is so ordered.
________________________________
24) Agabon vs. National Labor Relations
Commission, 442 SCRA 573/ G.R. No. 158693
November 17, 2004

ABANDONMENT OF WORK

Labor Law; Administrative Law; If the factual

findings of the NLRC and the Labor Arbiter are
conflicting, the reviewing court may delve into the
records and examine for itself the questioned findings.
It is well-settled that findings of fact of quasi-judicial
agencies like the NLRC are accorded not only respect
but even finality if the findings are supported by
substantial evidence. This is especially so when such
findings were affirmed by the Court of Appeals.
However, if the factual findings of the NLRC and the
Labor Arbiter are conflicting, as in this case, the
reviewing court may delve into the records and examine
for itself the questioned findings. Accordingly, the Court
of Appeals, after a careful review of the facts, ruled that
petitioners dismissal was for a just cause. They had
abandoned their employment and were already working
for another employer.
Dismissal of Employees; To dismiss an employee, the
law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee
the opportunity to be heard and to defend himself.To
dismiss an employee, the law requires not only the
existence of a just and valid cause but also enjoins the
employer to give the employee the opportunity to be
heard and to defend himself. Article 282 of the Labor
Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience

LABOR RELATIONS

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.
Moonlighting; Subcontracting for another company
clearly shows the intention to sever the employeremployee relationship; The record of an employee is a
relevant consideration in determining the penalty that
should be meted out to him.In February 1999,
petitioners were frequently absent having subcontracted
for an installation work for another company.
Subcontracting for another company clearly showed the
intention to sever the employer-employee relationship
with private respondent. This was not the first time they
did this. In January 1996, they did not report for work
because they were working for another company. Private
respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners
disregarded the warning and exhibited a clear intention
to sever their employer-employee relationship. The
record of an employee is a relevant consideration in
determining the penalty that should be meted out to him.
The employer may not be compelled to continue to
employ such persons whose continuance in the service
will patently be inimical to his interests.The law
imposes many obligations on the employer such as
providing just compensation to workers, observance of
the procedural requirements of notice and hearing in the
termination of employment. On the other hand, the law
also recognizes the right of the employer to expect from
its workers not only good performance, adequate work
and diligence, but also good conduct and loyalty. The
employer may not be compelled to continue to employ
such persons whose continuance in the service will
patently be inimical to his interests.
Dismissals based on just causes contemplate acts or
omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate
employees.Dismissals based on just causes
contemplate acts or omissions attributable to the
employee while dismissals based on authorized causes
involve grounds under the Labor Code which allow the
employer to terminate employees. A termination for an
authorized cause requires payment of separation pay.
When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under
Article 279. If reinstatement is no longer possible where
the dismissal was unjust, separation pay may be granted.
Same; Same; Due Process; Notice Requirement;
Procedurally, (1) if the dismissal is based on a just cause
under Article 282 of the Labor Code, the employer must
give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee
before terminating the employment, and (2) if the
dismissal is based on authorized causes under Articles
283 and 284, the employer must give the employee and
the Department of Labor and Employment written
notices 30 days prior to the effectivity of his separation;
Failure to observe due process in a dismissal for just or
authorized cause does not invalidate the dismissal but

35

makes the employer liable for non-compliance with the

procedural requirements of due process.Procedurally,
(1) if the dismissal is based on a just cause under Article
282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if
requested by the employee before terminating the
employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be
heard and after hearing or opportunity to be heard, a
notice of the decision to dismiss; and (2) if the dismissal
is based on authorized causes under Articles 283 and
284, the employer must give the employee and the
Department of Labor and Employment written notices 30
days prior to the effectivity of his separation. From the
foregoing rules four possible situations may be derived:
(1) the dismissal is for a just cause under Article 282 of
the Labor Code, for an authorized cause under Article
283, or for health reasons under Article 284, and due
process was observed; (2) the dismissal is without just or
authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there
was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed. In
the first situation, the dismissal is undoubtedly valid and
the employer will not suffer any liability. In the second
and third situations where the dismissals are illegal,
Article 279 mandates that the employee is entitled to
reinstatement without loss of seniority rights and other
privileges and full backwages, inclusive of allowances,
and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the
time of actual reinstatement. In the fourth situation, the
dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the
dismissal. However, the employer should be held liable
for non-compliance with the procedural requirements of
due process.
FACTS
Private
respondent
Riviera
Home
Improvements, Inc. is engaged in the business of selling
and installing ornamental and construction materials. It
employed petitioners Virgilio Agabon and Jenny Agabon
as gypsum board and cornice installers on January 2,
19922 until February 23, 1999 when they were dismissed
for abandonment of work.
Petitioners then filed a complaint for illegal dismissal
and payment of money claims3 and on December 28,
1999, the Labor Arbiter rendered a decision declaring the
dismissals illegal and ordered private respondent to pay
the monetary claims.
On appeal, the NLRC reversed the Labor Arbiter because
it found that the petitioners had abandoned their work,
and were not entitled to backwages and separation pay.
The other money claims awarded by the Labor Arbiter
were also denied for lack of evidence.5
Upon denial of their motion for reconsideration,
petitioners filed a petition for certiorari with the Court of
Appeals.
The Court of Appeals in turn ruled that the dismissal of
the petitioners was not illegal because they had
abandoned their employment but ordered the payment of
money claims.
Petitioners assert that they were dismissed
because the private respondent refused to give them
assignments unless they agreed to work on a pakyaw
basis when they reported for duty on February 23, 1999.
They did not agree on this arrangement because it would
mean losing benefits as Social Security System (SSS)
members. Petitioners also claim that private respondent

LABOR RELATIONS

did not comply with the twin requirements of notice and

hearing.8
Private respondent, on the other hand, maintained that
petitioners were not dismissed but had abandoned their
work.9 In fact, private respondent sent two letters to the
last known addresses of the petitioners advising them to
report for work. Private respondents manager even
talked to petitioner Virgilio Agabon by telephone
sometime in June 1999 to tell him about the new
assignment at Pacific Plaza Towers involving 40,000
square meters of cornice installation work. However,
petitioners did not report for work because they had
subcontracted to perform installation work for another
company. Petitioners also demanded for an increase in
their wage to P280.00 per day. When this was not
granted, petitioners stopped reporting for work and filed
the illegal dismissal case.
ISSUE
WON the petitioners were legally dismissed for
abandonment of work?
HELD
YES. Abandonment is the deliberate and
unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just
cause for termination of employment by the employer.
For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or
absence without valid or justifiable reason; and (2) a
clear intention to sever employer-employee relationship,
with the second as the more determinative factor which
is manifested by overt acts from which it may be
deduced that the employees has no more intention to
work. The intent to discontinue the employment must be
shown by clear proof that it was deliberate and
unjustified.
RULING
In view of the foregoing, the petition is
DENIED. The decision of the Court of Appeals dated
January 23, 2003, in CA-G.R. SP No. 63017, finding that
petitioners Jenny and Virgilio Agabon abandoned their
work, and ordering private respondent to pay each of the
petitioners holiday pay for four regular holidays from
1996 to 1998, in the amount of P6,520.00, service
incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabons thirteenth
month pay for 1998 in the amount of P2,150.00 is
AFFIRMED with the MODIFICATION that private
respondent Riviera Home Improvements, Inc. is further
ORDERED to pay each of the petitioners the amount of
P30,000.00 as nominal damages for non-compliance
with statutory due process.
__________________________
25) Perez vs. Philippine Telegraph and Telephone
Company, 584 SCRA 110/ G.R. No. 152048April 7,
2009
Labor Law; Termination of Employment; Loss of
Trust and Confidence; Unless duly proved or
sufficiently substantiated otherwise, impartial
tribunals should not rely only on the statement of the
employer that it has lost confidence in its employee.
Without undermining the importance of a shipping order
or request, we find respondents evidence insufficient to
clearly and convincingly establish the facts from which
the loss of confidence resulted. Other than their bare
allegations and the fact that such documents came into
petitioners hands at some point, respondents should have

36

provided evidence of petitioners functions, the extent of

their duties, the procedure in the handling and approval
of shipping requests and the fact that no personnel other
than petitioners were involved. There was, therefore, a
patent paucity of proof connecting petitioners to the
alleged tampering of shipping documents. The alterations
on the shipping documents could not reasonably be
attributed to petitioners because it was never proven that
petitioners alone had control of or access to these
documents. Unless duly proved or sufficiently
substantiated otherwise, impartial tribunals should not
rely only on the statement of the employer that it has lost
confidence in its employee.
Willful breach by the employee of the trust reposed in
him by his employer or duly authorized
representative is a just cause for termination; Loss of
confidence should not be simulated.Willful breach
by the employee of the trust reposed in him by his
employer or duly authorized representative is a just cause
for termination. However, in General Bank and Trust Co.
v. CA, 135 SCRA 569 (1985), we said: [L]oss of
confidence should not be simulated. It should not be used
as a subterfuge for causes which are improper, illegal or
unjustified. Loss of confidence may not be arbitrarily
asserted in the face of overwhelming evidence to the
contrary. It must be genuine, not a mere afterthought to
justify an earlier action taken in bad faith.
Two Notice Requirement for Terminating Employees.
Respondents illegal act of dismissing petitioners was
aggravated by their failure to observe 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 opportunity to be heard afforded by law to the
employee is qualified by the word ample which
ordinarily means considerably more than adequate or
sufficient.Article 277(b) of the Labor Code provides
that, in cases of termination for a just cause, an employee
must be given ample opportunity to be heard and to
defend himself. Thus, the opportunity to be heard
afforded by law to the employee is qualified by the word
ample which ordinarily means considerably more
than adequate or sufficient. In this regard, the phrase
ample opportunity to be heard can be reasonably
interpreted as extensive enough to cover actual hearing
or conference. To this extent, Section 2(d), Rule I of the
Implementing Rules of Book VI of the Labor Code is in
conformity with Article 277(b).
FACTS
Petitioners Felix B. Perez and Amante G. Doria were
employed by respondent Philippine Telegraph and
Telephone Company (PT&T) as shipping clerk and
supervisor, respectively, in PT&Ts Shipping Section,
Materials Management Group.
Acting on an alleged unsigned letter regarding
anomalous transactions at the Shipping Section,
respondents formed a special audit team to investigate
the matter. It was discovered that the Shipping Section
jacked up the value of the freight costs for goods shipped
and that the duplicates of the shipping documents

LABOR RELATIONS

allegedly showed traces of tampering, alteration and

superimposition.
On September 3, 1993, petitioners were placed on
preventive suspension for 30 days for their alleged
involvement in the anomaly.1 Their suspension was
extended for 15 days twice: first on October 3, 19932
and second on October 18, 1993.
On November 9, 1993, petitioners filed a complaint for
illegal suspension and illegal dismissal.5 They alleged
that they were dismissed on November 8, 1993, the date
they received the above-mentioned memorandum.
The labor arbiter found that the 30-day extension of
petitioners suspension and their subsequent dismissal
were both illegal. He ordered respondents to pay
petitioners their salaries during their 30-day illegal
suspension, as well as to reinstate them with backwages
and 13th month pay.
The National Labor Relations Commission (NLRC)
reversed the decision of the labor arbiter. It ruled that
petitioners were dismissed for just cause, that they were
accorded due process and that they were illegally
suspended for only 15 days (without stating the reason
for the reduction of the period of petitioners illegal
suspension).
Petitioners appealed to the Court of Appeals (CA). In its
January 29, 2002 decision,7 the CA affirmed the NLRC
decision insofar as petitioners illegal suspension for 15
days and dismissal for just cause were concerned.
However, it found that petitioners were dismissed
without due process.
Petitioners now seek a reversal of the CA decision. They
contend that there was no just cause for their dismissal,
that they were not accorded due process and that they
were illegally suspended for 30 days.
ISSUE
WON the petitioners were legally dismissed for
15 days?

Labor Law; Dismissals; The right to terminate the

services of employees to obviate or minimize business
losses may not be exercised arbitrarily or whimsically.
The law gives an employer the right to terminate the
services of its employees to obviate or to minimize
business losses. This right, however, may not be
exercised arbitrarily or whimsically.
Retrenchment; Requisites for a Valid Retrenchment.
The requisites for valid retrenchment under the
foregoing provision are: (1) necessity of the retrenchment
to prevent losses and proof of such losses; (2) written
notice to the employees and to the Department of Labor
and Employment at least one month prior to the intended
date of retrenchment; and (3) payment of separation pay
equivalent to one month pay or at least 1/2 month pay
for every year of service, whichever is higher.
Respondent company did not satisfy the legal
requirements for a valid retrenchment.Considering the
circumstances in the case at bar, we find that respondent
company did not satisfy the legal requirements for valid
retrenchment.
To justify the employees termination of service, the
losses must be serious, actual and real and they must
be supported by sufficient and convincing evidence.
First, respondent company did not present sufficient
evidence to prove the extent of its losses. To justify the
employees termination of service, the losses must be
serious, actual and real, and they must be supported by
sufficient and convincing evidence. The burden of proof
rests on the employer. Respondent company alleged that
the strike paralyzed its operations and resulted in the
withdrawal of its clients orders. Respondent company,
however, failed to prove its claim with competent
evidence which would show that it was indeed suffering
from business losses so serious as would necessitate
retrenchment or reduction of personnel.

HELD
NO. Respondents illegal act of dismissing
petitioners was aggravated by their failure to observe 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.
RULING
The petition is hereby GRANTED. The decision
of the Court of Appeals dated January 29, 2002 in CAG.R. SP No. 50536 finding that petitioners Felix B. Perez
and Amante G. Doria were not illegally dismissed but
were not accorded due process and were illegally
suspended for 15 days, is SET ASIDE. The decision of
the labor arbiter dated December 27, 1995 in NLRC
NCR CN. 11-06930-93 is hereby AFFIRMED with the
MODIFICATION that petitioners should be paid their
separation pay in lieu of reinstatement.
_________________________
26) Guerrero vs. National Labor Relations
Commission, 261 SCRA 301/ G.R. No. 119842. August
30, 1996

37

The rule is that not every loss incurred or expected to

be incurred by a company will justify retrenchment.
We reject respondent companys contention that it was
not necessary to present proof of severity of the losses it
sustained since petitioners were aware of the strike and
its adverse effects on the companys operations. The rule
is that not every loss incurred or expected to be incurred
by a company will justify retrenchment. The losses must
be substantial and the retrenchment must be reasonably
necessary to avert such losses.
Retrenchment is justified only when all other less
drastic means have been tried and found insufficient.
Second, respondent company failed to prove that
retrenchment was necessary to prevent further losses.
There is no showing in this case that respondent
company has taken other measures to abate the losses it
sustained because of the strike. Retrenchment must be
exercised only as a last resort, considering that it will
lead to the loss of the employees livelihood.
Retrenchment is justified only when all other less drastic
means have been tried and found insufficient.
Employees who receive their separation pay are not
barred from contesting the legality of their dismissal.
Finally, petitioners availment of the financial
assistance given by respondent company did not estop
them from questioning.the legality of their separation
from the company. When respondent company made the
offer, petitioners were made to believe that the company

LABOR RELATIONS

would cease to operate for an indefinite period of time.

Hence, petitioners were constrained to accept whatever
relief the respondent company offered at that time. In De
Leon vs. NLRC, we held that employees who receive
their separation pay are not barred from contesting the
legality of their dismissal. The acceptance of those
benefits (will) not amount to estoppel.
FACTS
The petitioners are former employees of
respondent R.O.H. Auto Products Phils., Inc., a
corporation engaged in the manufacture of automotive
steel wheels.
On March 24, 1992, members of the union in respondent
company went on strike. The petitioners, however, did
not participate in the strike.
Respondent company allegedly sustained huge
losses as the strike virtually paralyzed its operations. To
prevent further losses, respondent proposed on April 22,
1992 to the nonstriking employees a financial
assistance in exchange for their resignation. Respondent
company, nevertheless, assured them priority in hiring
when positions of equal stature and compensation
become available.
On April 24, 1992, the petitioners availed of
respondent companys offer. They signed individual
Quitclaim and Release deeds upon receipt of their
separation pay. On May 3, 1992, the strike ended. The
operations in respondent company resumed and all the
striking employees returned to their posts. The
petitioners offered to re-assume their former positions
but respondent company refused to admit them. They
filed separate complaints for illegal dismissal.
In a consolidated Decision dated June 29, 1993, Labor
Arbiter Geobel A. Bartolabac dismissed the complaints
for lack of merit. The NLRC affirmed the said decision.
ISSUE
WON petitioners availment of the financial
assistance given by respondent company estop them
from questioning the legality of their separation from the
company?

from business losses so serious as would necessitate

retrenchment or reduction of personnel. As we held in
Lopez Sugar Corporation vs. Federation of Free
Workers:
Lastly but certainly not the least important, alleged losses
if already realized, and the expected imminent losses
sought to be forestalled, must be proved by sufficient and
convincing evidence. The reason for requiring this
quantum of proof is readily apparent: any less exacting
standard of proof would render too easy the abuse of this
ground for termination of services of employees. In
Garcia v. National Labor Relations Commission, the
Court said:
x x x But it is essentially required that the alleged losses
in business operations must be prove[n]. Otherwise, said
ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning
business losses or reverses in their business ventures in
order to ease out employees.
RULING
The assailed Decision is REVERSED and SET
ASIDE. Respondents R.O.H. Auto Products Phils., Inc.
and Goeff Kemp are hereby ordered to REINSTATE the
petitioners without loss of seniority rights and with full
backwages minus the amount received by them as
financial assistance upon their separation.
-----------------------------------------------The requisites for valid retrenchment under the
article 283 (now Article 289) of labor code are:
(1) necessity of the retrenchment to prevent losses and
proof of such losses;
(2) written notice to the employees and to the
Department of Labor and Employment at least one
month prior to the intended date of retrenchment;
and
(3) payment of separation pay equivalent to one
month pay or at least 1/2 month pay for every year of
service, whichever is higher.
___________________________________
27) North Davao Mining Corporation vs. NLRC, 254
SCRA 721/ G.R. No. 112546 March 13, 1996

HELD
NO. Petitioners availment of the financial
assistance given by respondent company did not estop
them from questioning the legality of their separation
from the company. When respondent company made the
offer, petitioners were made to believe that the company
would cease to operate for an indefinite period of time.
Hence, petitioners were constrained to accept whatever
relief the respondent company offered at that time. In De
Leon vs. NLRC,14 we held that employees who receive
their separation pay are not barred from contesting the
legality of their dismissal. The acceptance of those
benefits (will) not amount to estoppel.
In the case at bar, the court find that respondent company
did not satisfy the legal requirements for valid
retrenchment.
First, respondent company did not present sufficient
evidence to prove the extent of its losses. To justify the
employees termination of service, the losses must be
serious, actual and real, and they must be supported by
sufficient and convincing evidence. The burden of proof
rests on the employer. Respondent company alleged that
the strike paralyzed its operations and resulted in the
withdrawal of its clients orders. Respondent company,
however, failed to prove its claim with competent
evidence which would show that it was indeed suffering

38

Labor Law; Termination; Separation Pay; Art. 283 of

the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to losses.
As already stated, Art. 283 of the Labor Code does not
obligate an employer to pay separation benefits when the
closure is due to losses. In the case before us, the basis
for the claim of the additional separation benefit of 17.5
days is alleged discrimination, i.e., unequal treatment of
employees, which is proscribed as an unfair labor
practice by Art. 248 (e) of said Code. Under the facts and
circumstances of the present case, the grant of a lesser
amount of separation pay to private respondent was
done, not by reason of discrimination, but rather, out of
sheer financial bankruptcya fact that is not controlled
by management prerogatives. Stated differently, the total
cessation of operation due to mind-boggling losses was a
supervening fact that prevented the company from
continuing to grant the more generous amount of
separation pay. The fact that North Davao at the point of
its forced closure voluntarily paid any separation benefits
at allalthough not required by lawand 12.5 days
worth at that, should have elicited admiration instead of
condemnation. But to require it to continue being
generous when it is no longer in a position to do so
would certainly be unduly oppressive, unfair and most
revolting to the conscience.

LABOR RELATIONS

The law in protecting the rights of the laborer,

authorizes neither oppression nor self-destruction of
the employer.As this Court held in Manila Trading &
Supply Co. vs. Zulueta, and reiterated in San Miguel
Corporation vs. NLRC and later, in Allied Banking
Corporation vs. Castro, (t)he law, in protecting the
rights of the laborer, authorizes neither oppression nor
self-destruction of the employer.

FACTS
Petitioner North Davao Mining Corporation
(North Davao) was incorporated in 1974 as a 100%
privately-owned company. Later, the Philippine National
Bank (PNB) became part owner thereof as a result of a
conversion into equity of a portion of loans obtained by
North Davao from said bank. On June 30, 1986, PNB
transferred all its loans to and equity in North Davao in
favor of the national government which, by virtue of
Proclamation No. 50 dated December 8, 1986, later
turned them over to petitioner Asset Privatization Trust
(APT). As of December 31, 1990 the national
government held 81.8% of the common stock and 100%
of the preferred stock of said company.
Respondent Wilfredo Guillema is one among several
employees of North Davao who were separated by
reason of the companys closure on May 31, 1992, and
who were the complainants in the cases before the
respondent labor arbiter.
On May 31, 1992, petitioner North Davao
completely ceased operations due to serious business
reverses. From 1988 until its closure in 1992, North
Davao suffered net losses averaging three billion pesos
(P3,000,000,000.00) per year, for each of the five years
prior to its closure. All told, as of December 31, 1991, or
five months prior to its closure, its total liabilities had
exceeded its assets by 20.392 billion pesos, as shown by
its financial statements audited by the Commission on
Audit. When it ceased operations, its remaining
employees were separated and given the equivalent of
12.5 days pay for every year of service, computed on
their basic monthly pay, in addition to the commutation
to cash of their unused vacation and sick leaves.
However, it appears that, during the life of the petitioner
corporation, from the beginning of its operations in 1981
until its closure in 1992, it had been giving separation
pay equivalent to thirty (30) days pay for every year of
service. Moreover, inasmuch as the region where North
Davao operated was plagued by insurgency and other
peace and order problems, the employees had to collect
their salaries at a bank in Tagum, Davao del Norte, some
58 kilometers from their workplace and about 2 1/2
hours travel time by public transportation; this
arrangement lasted from 1981 up to 1990.
Subsequently, a complaint was filed with
respondent Labor Arbiter by respondent Wilfredo
Guillema and 271 other separated employees for: (1)
additional separation pay of 17.5 days for every year of
service; (2) back wages equivalent to two days a month;
(3) transportation allowance; (4) hazard pay; (5) housing
allowance; (6) food allowance; (7) post-employment
medical clearance; and (8) future medical allowance, all
of which amounted to P58,022,878.31 as computed by
private respondent.5

39

On May 6, 1993, respondent Labor Arbiter rendered a

decision ordering petitioner North Davao to pay the
complainants.
ISSUES
1. Whether or not an employer whose business
operations ceased due to serious business losses or
financial reverses is obliged to pay separation pay to its
employees separated by reason of such closure.
2. Whether or not time spent in collecting wages in a
place other than the place of employment is compensable
notwithstanding that the same is done during official
time.
3.Whether or not private respondents are entitled to
transportation expenses in the absence of evidence that
these expenses were incurred.
HELD
The First Issue: Separation Pay
To resolve this issue, it is necessary to revisit the
provision of law adverted to by the parties in their
submissions, namely, Art. 283 of the Labor Code, which
reads as follows:
Art. 283. Closure of establishment and reduction of
personnel.The employer may also terminate the
employment of any employee due to the installation of
labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of
the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of
termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or
undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent
to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered one (1)
whole year. (italics supplied)
The underscored portion of Art. 283 governs the grant of
separation benefits in case of closures or cessation of
operation of business establishments NOT due to
serious business losses or financial reverses x x x.
Where, however, the closure was due to business losses
as in the instant case, in which the aggregate losses
amounted to over P20 billionthe Labor Code does not
impose any obligation upon the employer to pay
separation benefits, for obvious reasons. There is no need
to belabor this point. Even the public respondents, in
their Comment10 filed by the Solicitor General,
impliedly concede this point.
However, respondents tenaciously insist on the award of
separation pay, anchoring their claim solely on petitioner
North Davaos long-standing policy of giving separation
pay benefits equivalent to 30-days pay, which policy had
been in force in the years prior to its closure.
Respondents contend that, by denying the same
separation benefits to private respondent and the others
similarly situated, petitioners discriminated against them.
They rely on this Courts ruling in Businessday
Information Systems and Services, Inc. (BISSI) vs.

LABOR RELATIONS

NLRC, (supra). In said case, petitioner, BISSI, after

experiencing financial reverses, decided as a
retrenchment measure to lay-off some employees on
May 16, 1988 and gave them separation pay equivalent
to one-half (1/2) month pay for every year of service.
BISSI retained some employees in an attempt to
rehabilitate its business as a trading company.
The Second and Third Issues: Back Wages
and Transportation Allowance
Anent the award of back wages and transportation
allowance, the issues raised in connection therewith are
factual, the determination of which is best left to the
respondent NLRC. It is well settled that this Court is
bound by the findings of fact of the NLRC, so long as
said findings are supported by substantial evidence.15
As the Solicitor General pointed out in his comment:
It is undisputed that because of security reasons, from
the time of its operations, petitioner NDMC maintained
its policy of paying its workers at a bank in Tagum,
Davao del Norte, which usually took the workers about
two and a half (2 1/2) hours of travel from the place of
work and such travel time is not official.
Records also show that on February 12, 1992, when an
inspection was conducted by the Department of Labor
and Employment at the premises of petitioner NDMC at
Amacan, Maco, Davao del Norte, it was found out that
petitioners had violated labor standards law, one of
which is the place of payment of wages.
RULING
The judgment is hereby rendered MODIFYING
the assailed Resolution by SETTING ASIDE and
deleting the award for additional separation pay of 17.5
days for every year of service, and AFFIRMING it in all
other aspects.
_____________________________
28) National Federation of Labor vs. NLRC, 327
SCRA 158/ G.R. No. 127718 March 2, 2000
Labor Law; Separation Pay; Agrarian Reform; An
employer is not liable to pay separation pay where the
cessation of its operation is caused by the compulsory
acquisition by the government of its land for purposes of
agrarian reform.It is clear that Article 283 of the
Labor Code applies in cases of closures of establishment
and reduction of personnel. The peculiar circumstances
in the case at bar, however, involves neither the closure
of an establishment nor a reduction of personnel as
contemplated under the aforesaid article. When the
Patalon Coconut Estate was closed because a large
portion of the estate was acquired by DAR pursuant to
CARP, the ownership of that large portion of the estate
was precisely transferred to PEARA and ultimately to the
petitioners as members thereof and as agrarian lot
beneficiaries. Hence, Article 283 of the Labor Code is
not applicable to the case at bench.
Where the closure of the establishment was due to the act
of the government of acquiring the land to benefit the
employees by making them agrarian lot beneficiaries,
they are not entitled to separation pay.As earlier stated,
the Patalon Coconut Estate was closed down because a
large portion of the said estate was acquired by the DAR
pursuant to the CARP. Hence, the
closure of the Patalon Coconut Estate was not effected
voluntarily by private respondents who even filed a
petition to have said estate exempted from the coverage
of RA 6657. Unfortunately, their petition was denied by
the Department of Agrarian Reform. Since the closure

40

was due to the act of the government to benefit the

petitioners, as members of the Patalon Estate Agrarian
Reform Association, by making them agrarian lot
beneficiaries of said estate, the petitioners are not entitled
to separation pay. The termination of their employment
was not caused by the private respondents. The blame, if
any, for the termination of petitioners employment can
even be laid upon the petitioner-employees themselves
inasmuch as they formed themselves into a cooperative,
PEARA, ultimately to take over, as agrarian lot
beneficiaries, of private respondents landed estate
pursuant to RA 6657. The resulting closure of the
business establishment, Patalon Coconut Estate, when it
was placed under CARP, occurred through no fault of the
private respondents.
FACTS
Petitioners are bona fide members of the
National Federation of Labor (NFL), a legitimate labor
organization duly registered with the Department of
Labor and Employment. They were employed by private
respondents Charlie Reith and Susie Galle Reith, general
manager and owner, respectively, of the 354-hectare
Patalon Coconut Estate located at Patalon, Zamboanga
City. Patalon Coconut Estate was engaged in growing
agricultural products and in raising livestock.
In 1988, Congress enacted into law Republic Act (R.A.)
No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law (CARL), which mandated the
compulsory acquisition of all covered agricultural lands
for distribution to qualified farmer beneficiaries under
the so-called Comprehensive Agrarian Reform
Programme (CARP). Pursuant to R.A. No. 6657, the
Patalon Coconut Estate was awarded to the Patalon
Estate Agrarian Reform Association (PEARA), a
cooperative accredited by the Department of Agrarian
Reform (DAR), of which petitioners are members and
co-owners. As a result of this acquisition, private
respondents shut down the operation of the Patalon
Coconut Estate and the employment of the petitioners
was severed on July 31, 1994. Petitioners did not receive
any separation pay.
On April 25, 1995, petitioners filed individual complaints
before the Regional Arbitration Branch (RAB) of the
National Labor Relations Commission (NLRC) in
Zamboanga City, praying for their reinstatement with full
backwages on the ground that they were illegally
dismissed.
ISSUE
WON the petitioners are enititled to separation
pay?
HELD
NO. An employer is not liable to pay separation
pay where the cessation of its operation is caused by the
compulsory acquisition by the government of its land for
purposes of agrarian reform.
RULING
The petition is DISMISSED. The Resolutions of the
National Labor Relations Commission dated April 24,
1996 and August 29, 1996 are hereby AFFIRMED.
____________________________
29) Chiang Kai Shek College vs. Court of Appeals,
437 SCRA 171/ G.R. No. 152988 August 24, 2004
Labor Law; Security of Tenure; Requisites for a
Private School Teacher to Acquire a Permanent Status of
Employment and Therefore Entitled to a Security of

LABOR RELATIONS

Tenure; The fundamental guarantees of security of

tenure and due process dictate that no worker shall be
dismissed except for just and authorized cause provided
by law and after due notice and hearing.Under the
Manual of Regulations for Private Schools, for a private
school teacher to acquire a permanent status of
employment and, therefore, be entitled to a security of
tenure, the following requisites must concur: (a) the
teacher is a full-time teacher; (b) the teacher must have
rendered three consecutive years of service; and (c) such
service must have been satisfactory. Since Ms. Belo has
measured up to these standards, she therefore enjoys
security of tenure. The fundamental guarantees of
security of tenure and due process dictate that no worker
shall be dismissed except for just and authorized cause
provided by law and after due notice and hearing.
Dismissal; Definition of Constructive Dismissal.
Case law defines constructive dismissal as a cessation
from work because continued employment is rendered
impossible, unreasonable, or unlikely; when there is a
demotion in rank or a diminution in pay or both; or
when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee.

The Labor Arbiter thus offered a Solomonic solution by

directing the petitioners to give her a teaching load in the
ensuing year 1996-1997 and the succeeding years
without loss of seniority rights.
On appeal by the private respondent, the NLRC reversed
the decision of the Labor Arbiter. It considered as
misplaced the Labor Arbiters utter reliance on Mr.
Chiens letter to Ms. Belo enunciating the questioned
school policies. It reasoned that if the school policy was
to extend free tuition fees to children of teachers in
school, then the petitioners must have considered her
already not in school or summarily dismissed or
separated the very moment [she] applied for leave, for,
otherwise, her children would have been granted that
privilege. Thus, it directed the petitioners to immediately
reinstate Ms. Belo to her former position with full back
wages from the time of her dismissal up to her actual
reinstatement. It, however, dismissed Ms. Belos prayer
for moral and exemplary damages and attorneys fees for
lack of evidence that the petitioners acted in bad faith
and malice
ISSUE
WON Diana P. Belo, private respondent, was
legally dismissed as a teacher of petitioner Chiang Kai
Shek College (CKSC)?

FACTS
The controversy began on 8 June 1992, when
Ms. Belo, a teacher of CKSC since 1977, applied for a
leave of absence for the school year 1992-1993 because
her children of tender age had no yaya to take care of
them. The then principal, Mrs. Joan Sy Cotio, approved
her application. However, on 15 June 1992, Ms. Belo
received a letter dated 9 June 1992 of Mr. Chien Yin
Shao, President of CKSC, informing her of the schools
existing policy; thus:
Regarding your letter of request for leave of absence
dated June 8, 1992, we would like to inform you of the
existing policy of our school:
(1) We could not assure you of any teaching load should
you decide to return in the future.
(2) Only teachers in service may enjoy the privilege and
benefits provided by our school. Hence, your children
are no longer entitled to free tuition starting school year
1992-1993.
Ms. Belo, nonetheless, took her leave of absence. On 8
July 1992, she learned that Laurence, one of her three
children studying at the CKSC, was sent out of the
examination room because his tuition fees were not paid.
This embarrassing incident impelled Ms. Belo to pay,
allegedly under protest, all the school fees of her
children.
In May 1993, after her one-year leave of absence, Ms.
Belo presented herself to Ms. Cotio and signified her
readiness to teach for the incoming school year 19931994. She was, however, denied and not accepted by Ms.
Cotio. She then relayed the denial to Mr. Chien on 17
May 1993. On 21 July 1993, she received the reply of
Mr. Chien dated 1 July 1993 informing her that her
confirmation to teach was filed late and that there was no
available teaching load for her because as early as April
21 of that year, the school had already hired nonpermanent teachers. Adversely affected by the
development, Ms. Belo filed with the Labor Arbitration
Office a complaint for illegal dismissal; non-payment of
salaries, 13th month pay, living allowance, teachers day
pay; loss of income; and moral damages.

HELD
NO. The court agreed with the Court of Appeals
that the NLRC did not commit any grave abuse of
discretion in finding that Ms. Belo was constructively
dismissed when the petitioners, in implementing their
policies, effectively barred her from teaching for the
school year 1993-1994. The three policies are (1) the
non-assurance of a teaching load to a teacher who took a
leave of absence; (2) the hiring of non-permanent
teachers in April to whom teaching loads were already
assigned when Ms. Belo signified in May 1993 her
intention to teach; and (3) the non-applicability to
children of teachers on leave of the free tuition fee
benefits extended to children of teachers in service.
Case law defines constructive dismissal as a cessation
from work because continued employment is rendered
impossible, unreasonable, or unlikely; when there is a
demotion in rank or a diminution in pay or both; or
when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee.
When in the school year 1992-1993, the petitioners
already applied to Ms. Belos children the policy of
extending free tuition fee benefits only to children of
teachers in service, Ms. Belo was clearly discriminated
by them. True, the policy was made known to Ms. Belo
in a letter dated 9 June 1992, but, this only additionally
and succinctly reinforced the clear case of
discrimination. Notably, petitioners statements of
policies dated 13 March 1992 for the school year 19921993.
RULING
The petition is DENIED. The decision of 12 October
2001 and resolution of 11 April 2002 of the Court of
Appeals in CA-GR. SP No. 59996 are hereby
AFFIRMED. Costs against the petitioners.
_____________________
30) Philippine Industrial Security Agency
Corporation (PISAC) vs. Aguinaldo, 460 SCRA 229/
G.R. No. 149974 June 15, 2005
Labor Law; National Labor Relations Commission
(NLRC); Factual Findings; Appeals; Settled is the rule

41

LABOR RELATIONS

that findings of fact of the Court of Appeals are

accorded respect, even finality, and will not be
disturbed especially where such findings are supported
by substantial evidence.Settled is the rule that findings
of facts of the Court of Appeals are accorded respect,
even finality, and will not be disturbed especially where
such findings are supported by substantial evidence. One
of the exceptions, however, is when there is a variance
between the findings of the NLRC and the Court of
Appeals, as in this case.
Transfers; Constructive Dismissals; In constructive
dismissal, the employer has the burden of proving that
the transfer and demotion of an employee are for just and
valid grounds, such as genuine business necessity.A
transfer amounts to constructive dismissal when the
transfer is unreasonable, unlikely, inconvenient,
impossible, or prejudicial to the employee, as in this
case. It is defined as an involuntary resignation resorted
when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee. In
constructive dismissal, the employer has the burden of
proving that the transfer and demotion of an employee
are for just and valid grounds, such as genuine business
necessity. The employer must be able to show that the
transfer is not unreasonable, inconvenient, or prejudicial
to the employee; nor does it involve a demotion in rank
or a diminution of salary and other benefits. Should the
employer fail to overcome this burden of proof, the
employees transfer shall be tantamount to unlawful
constructive dismissal.
FACTS
On April 11, 1988, Philippine Industrial
Security Agency Corporation (PISAC), petitioner, hired
Percival Aguinaldo, respondent, as a security guard. He
was assigned to secure the premises of Far East Bank &
Trust Company (FEBTC) Branch in Santiago City. In
1993, he was promoted as Branch Head Guard.2
On November 13, 1998, Ms. Remy Tumamao,
petitioners roving personnel, caught respondent without
headgear and smoking while on duty.
On November 23, 1998, petitioner security agency issued
a memorandum to respondent directing him to report to
the FEBTC main office in Malabon City for
investigation.4 The following day, or on November 24,
petitioner issued a Relief Order5 ordering him to report
to its head office for further clarification of his status.
On the morning of November 13, 1998 our armoured car
was on its way to deliver cash to Central Bank in
Tuguegarao. At around 10:00 A.M., our armoured car
personnel called up Mr. Aguinaldo and informed him that
they incurred a mechanical trouble. Upon receiving the
message, Mr. Aguinaldo went out to fetch or call a
mechanic. Since it was raining on that morning, he did
not wear his perching cap because his hair was still wet.
It was during that moment when Ms. Tumamao saw him
in the branch.
In view of the degree of offense committed by our
Security Guard, he should be given a written reprimand
and not relieved from his post since this was his first
offense.
Mr. Aguinaldo has been with the branch for ten years, he
is a person of good moral character and has performed
his job above our expectations.
In view of this, I would like to seek your approval for the
retention of Mr. Aguinaldo.

42

A constructive dismissal 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 (Philippine Japan Active Carbon Corp. vs. NLRC, G.R. No.
83239, March 8, 1989). As further explained in Jarcia vs.
NLRC (266 SCRA 97 [1997]):
In case of constructive dismissal, the employer has the
burden of proving that the transfer and demotion of an
employee are for valid and legitimate grounds such as
genuine business necessity. Particularly, for a transfer not
to be considered a constructive dismissal, the employer
must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the
employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits.
Failure of the employer to overcome this burden of
proof, the employees demotion shall no doubt be
tantamount to unlawful constructive dismissal.
ISSUE
WON the PISAC, the employer, was able prove
that the transfer and demotion of an employee are for just
and valid grounds?
HELD
NO. By transferring respondent to the Malabon
City FEBTC Branch, petitioner resorted to constructive
dismissal. A transfer amounts to constructive dismissal
when the transfer is unreasonable, unlikely, inconvenient,
impossible, or prejudicial to the employee, as in this
case. It is defined as an involuntary resignation resorted
when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee.
In constructive dismissal, the employer has the burden
of proving that the transfer and demotion of an employee
are for just and valid grounds, such as genuine business
necessity. The employer must be able to show that the
transfer is not unreasonable, inconvenient, or prejudicial
to the employee; nor does it involve a demotion in rank
or a diminution of salary and other benefits. Should the
employer fail to overcome this burden of proof, the
employees transfer shall be tantamount to unlawful
constructive dismissal.
RULING
The petition is hereby DENIED. The assailed Decision
of the Court of Appeals is AFFIRMED. Costs against
petitioner.
_____________________________
31) Superstar Security Agency, Inc. vs. NLRC, 184
SCRA 74/ G.R. No. 81493. April 3, 1990
Labor Law; Illegal Dismissal; Temporary off-detail is
not equivalent to dismissal.We resolve the issue in
the negative. The charge of illegal dismissal was
prematurely filed. The records show that a month after
Hermosa was placed on a temporary off-detail, she
readily filed a complaint against the petitioners on the
presumption that her services were already terminated.
Temporary off-detail is not equivalent to dismissal. In
security parlance, it means waiting to be posted. (TSN,
January 14, 1980, p. 35) It is a recognized fact that
security guards employed in a security agency may be
temporarily sidelined as their assignments primarily
depend on the contracts entered into by the agency with
third parties (Agro Commercial Security Agencies, Inc.
v. NLRC, et al., G.R. Nos. 82823-24, July 31, 1989).

LABOR RELATIONS

However, it must be emphasized that such temporary

inactivity should continue only for six months.
Otherwise the security agency concerned could be liable
for constructive dismissal under Article 287 (now Article
286) of the Labor Code (see Agro case, supra). We note
that Hermosas off-detail from SMY was due not to
petitioners machination but to a previous request of
SMY which was reiterated by the management on
January 29, 1985 (Exhibit 22, Records, p. 69).
Moreover, the defenses raised by the petitioners, namely,
their clients cost reduction program and their refusal to
accept the complainants services do not appear to Us as
a scheme to camouflage (Hermosas) illegal dismissal x
x x (NLRC decision, Records, p. 201). We simply
cannot ignore the reality of the situation obtaining in this
case. In the business world, companies which offer
contracts for services cater to the whims and wishes of
clients whether the same are reasonable or not. Clients
are not expected to explain the reasons for their demands
while these companies are not only expected but also are
bound to comply with their clients directives. In the case
at bar, We do not find it unusual for clients to resort to a
cost-cutting program in view of the prevailing economic
condition and then to manifest their preferences of
people they want to work with in their establishments.
Same; Same; Evidence; In the absence of contrary
evidence, memoranda are credible.Hermosa denies
that she committed the foregoing acts of misconduct. She
claims that the evidence were planned and fabricated to
lend a semblance of legality to the cause of (her)
dismissal. (Memorandum of Petitioners, Rollo, p. 87).
Hermosas supposition is untenable. A study of the
records reveals that other than her statement of denial,
Hermosa did not present any corroborative evidence.
Upon the other hand, the subject memoranda contained
detailed reports on the incidents which would be difficult
for petitioners to concoct. In the absence of a contrary
evidence, the said memoranda are credible.

temporary off-detail was the cost-cutting program of

the Rustan Group of Companies and the refusal of
Agencys clients to accept her allegedly due to poor
performance, and lack of elementary courtesy and tact.
Finally, Hermosa averred that she was denied due
process in that she was neither informed of the alleged
complaints against her nor afforded the opportunity to
explain her side.
Petitioners, on the other hand, claimed that Hermosa was
relieved of her SMY post due to the cost-cutting program
of its clients; that while she was on temporary offdetail since February 1, 1985, the Agency continued to
look for an available assignment for her with the other
detachments; that, however, the respective Security
Directors of the said detachments signified their
unwillingness to accept her because of her poor
performance and undesirable conduct and behavior
(Exhs. 6 to 13); that the Agency did not dismiss her at
all; that Mr. Fermo did not receive any anonymous report
of any irregularity committed by some security guards,
hence, there was no basis for the supposed threat and
instruction to complainant to be silent; that the Agency
usually welcomes any report, if it exists, regarding the
behavior of its personnel by conducting an inquiry
thereon; that the Agency is committed to maintain the
trust placed upon it by its clients as well as heed the
latters demands for good service; and that the
complainant has been previously warned and
reprimanded for breach or violation of the Agencys rules
on discipline (Exh. 16 to 22). On April 7, 1986, the
Labor Arbiter rendered a decision, to wit:
WHEREFORE, pursuant to the above premises, the
respondent Superstar Security Agency, Inc. is hereby
ordered to pay the complainant the amount of P3,848.00
by way of separation pay.
ISSUE
Whether or not the petitioners are guilty of
illegal dismissal of private respondent?

FACTS
On June 24, 1981, Filomena Hermosa
(Hermosa, for short) was hired by petitioner Superstar
Security Agency (Agency, for short) as a Security Guard
with a daily salary of P37.00 and an emergency cost of
living allowance of P510.00 per month. She was
assigned to different detachments in premises owned by
the Agencys clients such as the Supergarment Malugay
Yakal (SMY) or Rustan Commercial Corporation
Warehouse, Rustan Group of Companies consisting of
Rustan Commercial Corporation (Cubao and Makati
Detachments), Tourist Duty Free Shop (FTI Detachment,
Hyatt, Hilton and Sheraton Detachments), and Rustan
Supermarket Warehouse.
On February 1, 1985, the Agency placed Hermosa on a
temporary off-detail. On March 5, 1985, Hermosa filed
a complaint for illegal dismissal. She claimed that she
was unceremoniously dismissed on suspicion that she
was the author of an anonymous report about the
irregularities committed by her fellow lady security
guards; that it was this precise reason why she was called
to the headquarters by the Agencys Personnel
Supervisor, Rafael Fermo; that, thereafter, Fermo
threatened and directed her to keep any information
regarding the matter to herself; that further, she was
instructed not to report for duty at SMY effective
February 1, 1985 as she would be given a new
assignment; that she did as she was told but no new
assignment came despite repeated follow-ups; and that
instead, the Agency informed her that the cause of her

43

HELD
NO. The court resolve the issue in the negative.
The charge of illegal dismissal was prematurely filed.
The records show that a month after Hermosa was placed
on a temporary off-detail, she readily filed a complaint
against the petitioners on the presumption that her
services were already terminated. Temporary off-detail
is not equivalent to dismissal. In security parlance, it
means waiting to be posted. (TSN, January 14, 1980, p.
35) It is a recognized fact that security guards employed
in a security agency may be temporarily sidelined as
their assignments primarily depend on the contracts
entered into by the agency with third parties (Agro
Commercial Security Agencies, Inc. v. NLRC, et al.,
G.R. Nos. 82823-24, July 31, 1989). However, it must be
emphasized that such temporary inactivity should
continue only for six months. Otherwise the security
agency concerned could be liable for constructive
dismissal under Article 287 (now Article 286) of the
Labor Code (see Agro case, supra)
RULING
The decision of the NLRC dated October 30,
1987 is SET ASIDE and the decision of the Labor
Arbiter dated April 7, 1986 is hereby REINSTATED. No
costs.

LABOR RELATIONS

32) Soliman Security Services, Inc. vs. Court of

Appeals, 384 SCRA 514/ G.R. No. 143215. July 11,
2002
Labor Law; Dismissals; Temporary off-detail of
respondent Valenzuela not a constructive dismissal.
Constructive dismissal exists when an act of clear
discrimination, insensibility or disdain, on the part of an
employer has become so unbearable as to leave an
employee with no choice but to forego continued
employment. The temporary off-detail of respondent
Valenzuela is not such a case.

computed at one-half (1/2) month for every year of

service, reckoned from date of employment on October
9, 1990 up to September 9, 1995, the date the
complainant should have been redeployed.
A motion for reconsideration, filed by herein private
respondent Valenzuela, was denied by the NLRC.
Valenzuela forthwith brought the matter up to the Court
of Appeals.
ISSUE
Whether or not private respondent should be
deemed constructively dismissed by petitioner for having
been placed on floating status, i.e., with no
reassignment, for a period of 29 days?

FACTS

HELD

Respondent Eduardo Valenzuela, a security

guard, was a regular employee of petitioner Soliman
Security Services assigned at the BPI-Family Bank,
Pasay City. On 09 March 1995, he received a
memorandum from petitioners relieving him from his
post at the bank, said to be upon the latter's request, and
requiring him to report to the security agency for
reassignment. The following month, or on 07 April 1995,
respondent filed a complaint for illegal dismissal on the
ground that his services were terminated without a valid
cause and that, during his tenure at the bank, he was not
paid his overtime pay, 13th month pay, and premium pay
for services rendered during holidays and rest days. He
averred that, after receiving the memorandum of 09
March 1995, he kept on reporting to the office of
petitioners for reassignment but, except for a brief stint
in another post lasting for no more than a week, he was
put on a floating status.
Petitioners contended that the relief of
respondent from his post, made upon request of the
client, was merely temporary and that respondent had
been offered a new post but the latter refused to accept it.
Petitioners argued that respondents floating
status for barely 29 days did not constitute constructive
dismissal.

NO. Constructive dismissal exists when an act

of clear discrimination, insensibility or disdain, on the
part of an employer has become so unbearable as to
leave an employee with no choice but to forego
continued employment. The temporary off-detail of
respondent Valenzuela is not such a case.

On 31 July 1995, the Labor Arbiter, Ariel Cadiente

Santos, arrived at a decision holding petitioners guilty of
constructive dismissal and ordering the reinstatement of
the complainant to his former position with full
backwages from the date of his dismissal until his
actual reinstatement; directing the Research and
Information Unit to compute the various monetary
benefits awarded to the complainant; and adjudging the
payment, by way of attorneys fees, of ten percent (10%)
of all sums owing to the complainant.
On 16 October 1998, petitioners filed an appeal to the
National Labor Relations Commission (NLRC).
On 11 November 1998, the NLRC issued an order
directing petitioners to submit an affidavit to the effect
that their appeal bond was genuine and that it would be
in force and effect until the final disposition of the case.
In his reply memorandum, dated 28 November 1998,
respondent, asseverating that petitioners failed to deposit
the required bond for the appeal, sought the appeal to be
declared as not having been validly perfected.
The NLRC, on 30 April 1999, gave due course to the
appeal and rendered the presently assailed decision,
reversing that of the Labor Arbiter, to wit:
WHEREFORE, the decision appealed from is hereby
SET ASIDE. However, respondent [before the NLRC] is
hereby ordered to pay complainant separation pay

44

RULING
The instant petition is GRANTED. The assailed
decision and resolution of the Court of Appeals are SET
ASIDE and the decision of the National Labor Relations
Commission
in
NCR
CN.
04-02620-95
is
REINSTATED. No costs. [Soliman Security Services,
Inc. vs. Court of Appeals, 384 SCRA 514(2002)]
___________________________
33) Esco Hale Shoe Company, Inc. vs. NLRC, 193
SCRA 678/ G.R. No. 87051 February 7, 1991
Labor Law; Secs. 13 & 14 of Rule 1, Bk. VI of the
Implementing Rules not applicable to case at bar.
Considering that it is admitted by both parties that the
petitioner has no collective bargaining agreement nor
bona-fide retirement plan, the aforementioned provisions
of the Implementing Rules are inapplicable to the instant
case. Said provisions merely recognize and qualify the
retirement benefits a retiring employee is entitled to
receive, in case there is a separate retirement or private
benefit plan. In fact, Article 287, the law being
implemented by the aforesaid sections states: Art. 287.
Retirement.Any employee may be retired upon
reaching the retirement age established in the collective
bargaining agreement or other applicable employment
contract. In case of retirement, the employee shall be
entitled to receive such retirement benefits as he may
have earned under existing laws and any collective
bargaining or other agreement. (Section 287, Labor
Code, as amended).
To grant separation pay to private respondent is just
and equitable as she is retiring from service of the
petitioner ten (10) years beyond the statutory age of
sixty (60).However, since private respondent had
worked with the petitioner for such a long time, We deem
it just and equitable to grant her separation pay as she is
retiring from the service of the petitioner ten (10) years
beyond the statutory age of sixty (60).
FACTS
It appears that private respondent had been employed by
the petitioner for forty nine (49) years commencing in
1937 as a shoe box maker until 1986 as a heel pad
attacher.

LABOR RELATIONS

In 1982, having reached the age of sixty five (65),

private respondent applied for retirement with the Social
Security Commission and she received retirement
benefits therefrom. Although she had already retired,
private respondent continued working for the petitioner
until November 1, 1986 when she was excluded by the
petitioner from the regular work schedule. Private
respondent, thereafter, demanded that she be retired from
employment and/or be paid separation pay, but the
petitioner refused despite repeated demands.
Thus, on February 12, 1987, private respondent filed a
complaint against the petitioner for violation of PD 851
and for payment of retirement benefits and/or separation
pay and other claims.
As defense, the petitioner argued that the only reason for
the filing of the complaint is private respondents
baseless demand to be retired anew; that the petitioner
has no separate retirement nor private benefit plan and all
its employees, including the private respondent, are
reported to the SSS for coverage; that private respondent
had effectively retired from the petitioner in 1982 when
she received retirement benefits from the SSS; and that
all the other claims of private respondent, except
vacation leave pay for the years 1985 and 1986 in the
amount of P1,008.00, had been paid by the petitioner to
her.
Finding the employers obligation to pay retirement
benefits to its retiring employee separate and distinct
from that of the SSS, the respondent Labor Arbiter
rendered a decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, respondent Esco
Hale Shoe Company, Inc. and/or Elmer H. Cobb, as
Owner and President, are hereby ordered to pay
complainant Casimira B. Pedrosa the total amount of
TWENTY THREE THOUSAND FIVE HUNDRED
THIRTY FOUR PESOS AND EIGHTY-THREE
CENTAVOS (P23,534.83) which represents her 13th
month pay for 1986, unpaid vacation/sick leave benefits
and retirement benefits, by depositing the same with this
Office within fifteen (15) days from receipt hereof.
Failure to comply within the period herein prescribed, a
writ of execution shall automatically issue to satisfy this
Decision.
In so ruling, said respondent Labor Arbiter relied on
Sections 13 and 14 of Rule 1, Book VI of the Omnibus
Hules Implementing the Labor Code, which provide:
Section 13. Retirement.In the absence of any
collective agreement or other applicable agreement
concerning terms and conditions of employment which
provides for retirement at an older age, an employee may
be retired upon reaching the age of sixty (60) years.
Section 14. Retirement benefits.(a) An employee who
is retired pursuant to a bona-fide retirement plan or in
accordance with the applicable individual or collective
agreement or established employer policy shall be
entitled to all the retirement benefits provided therein or
to termination pay equivalent to at least one month
salary, or to one-half month salary for every year of
service, whichever is higher, a fraction of at least (6)
months being considered as one whole year. (emphasis
ours)
Said decision was affirmed by the respondent
Commission on appeal.
In this petition, the petitioner contends that there is no
basis for twice granting retirement benefits to the private
respondent, who is admittedly a retired employee and a
pensioner of the SSS.

45

Considering that it is admitted by both parties that the

petitioner has no collective bargaining agreement nor
bona-fide retirement plan, the aforementioned provisions
of the Implementing Rules are inapplicable to the instant
case. Said provisions merely recognize and qualify the
retirement benefits a retiring employee is entitled to
receive, in case there is a separate retirement or private
benefit plan. In fact, Article 287, the law being
implemented by the aforesaid sections states:
Art. 287. Retirement.Any employee may be retired
upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to
receive such retirement benefits as he may have earned
under existing laws and any collective bargaining or
other agreement. (Section 287, Labor Code, as
amended)
Anent the issue of 13th month pay, respondents, either
in their position paper or in the affidavit of respondent
Cobb, have been mum, an indication that complainant
was not paid.
As to the claim for vacation and sick leave benefits,
since there is an admission by the respondents that
complainant is entitled to the amount of P1,008.00 for
the years 1985 and 1986 and are ready and willing to pay
any time, the same need not have to be passed upon.
In computing the separation or retirement benefits of
complainants, we have to consider the period when the
country was at war with Japan and also the occupation
years which started in December, 1941 up to 1945. The
separation benefits, therefore, have to be based on fortyfive (45) years instead of forty-nine years as claimed and
computed on the basis of the minimum wage rate in 1986
at P37.00 a day when complainant was separated from
work. And being a daily paid employee, the computation
has to be computed at 13 days per year of service, as
follows:
P37.00 x 13/days = P481.00/mo.
P481.00 x 45 years = P21,645.00
or a total of Twenty One Thousand Six Hundred FortyFive Pesos (P21,645.00). In fine, the total benefits to be
received by complainant is P23,534.83 representing her
13 month pay for 1986, the unpaid vacation/sick leave
benefits and retirement pay.
ISSUE
WON Casimira B. Pedrosa, the private
respondent, shall be entitled to retirement pay?
HELD
YES. Since private respondent had worked with
the petitioner for such a long time, We deem it just and
equitable to grant her separation pay as she is retiring
from the service of the petitioner ten (10) years beyond
the statutory age of sixty (60).
As Article 287, the law being implemented by the
aforesaid sections states: Art. 287. Retirement.Any
employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or
other applicable employment contract. In case of
retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing
laws and any collective bargaining or other agreement.
RULING

LABOR RELATIONS

The petition is hereby DISMISSED.

__________________________
34) Callanta vs. Carnation Philippines, Inc., 145
SCRA 268/ No. L-70615 October 28, 1986
Labor Law; Ilegal Dismissal; Dismissal with out just
cause of an employee from his employment, a violation
of the Labor Code, but which does not amount to an
offense under said Code; Offense, concept of.
Verily, the dismissal without just cause of an employee
from his employment constitutes a violation of the Labor
Code and its implementing rules and regulations. Such
violation, however, does Hot amount to an offense as
understood under Article 291 of the Labor Code In its
broad sense, an offense is an illegal act which does not
amount to a crime as defined in the penal law, but which
by statute carries with it a penalty similar to those
imposed by law for the punishment of a crime. It is in
this sense that a general penalty clause is provided under
Article 289 of the Labor Code which provides that x x
x any violation of the provisions of this Code declared to
be unlawful or penal in nature shall be punished with a
fine of not less than One Thousand Pesos [1,000.00] nor
more than Ten Thousand Pesos [10,000.00], or
imprisonment of not less than three [3] months nor more
than three [3] years, or both such fine and imprisonment
at the discretion of the court.
Termination of an employment with out just cause,
not an unlawful practice; Reason.The confusion
arises over the use of the term illegal dismissal which
creates the impression that termination of an employment
without just cause constitutes an offense. It must be
noted, however that unlike in cases of commission of any
of the prohibited activities during strikes or lockouts
under Article 265, unfair labor practices under Articles
248, 249 and 250 and illegal recruitment activities under
Article 38, among others, which the Code itself declares
to be unlawfal, termination of an employment without
just or valid cause is not categorized as an unlawful
practice.
Reliefs principally sought by an employee illegally
dismissed from employmentBesides, the reliefs
principally sought by an employee who was illegally
dismissed from his employment are reinstatement to his
former position without loss of seniority rights and
privileges, if any, backwages and damages, in case
there is bad faith in his dismissal. As an affirmative
relief, reinstatement may be ordered, with or without
backwages.
Reinstatement and backwages; Award of one, not a
condition precedent to an award of the other;
Backwages may be ordered without ordering
reinstatementWhile ordinarily, reinstatement is a
concomitant of backwages, the two are not necessarily
complements, nor is the award of one a condition
precedent to an award of the other. And, in proper cases,
backwages may be awarded without ordering
reinstatement. In either case, no penalty of fine nor
imprisonment is imposed on the employer upon a finding
of illegality in the dismissal.
Backwages, not the principal cause of action in an
illegal dismissal case, but the unlawful deprivation of
ones employment committed by the empfoyer;
Award of backwages, nature and concept of.It is
true that the backwages sought by an illegally

46

dismissed employee may be considered, by reason of its

practical effect, as a money claim. However, it is not
the principal cause of action in an illegal dismissal case
but the unlawful deprivation of ones employment
committed by the employer in violation of the right of an
employee. Backwages is merely one of the reliefs which
an iiiegaiiy dismissed employee prays the labor arbiter
and the NLRC to render in his favor as a consequence of
the unlawful act committed by the employer. The award
thereof is not private compensation or damages but is in
furtherance and effectuation of the public objectives of
the Labor Code. Even though the practical effect is the
enrichment of the individual, the award of backwages is
not in redress of a private right, but, rather, is in the
nature of a command upon the employer to make public
reparation for his violation of the Labor Code.
Prescription: Action for illegal dismissal prescribes in
4 years under the Civil Code; Action for damages due
to separation from employment for alleged unjustifiable
causes is one for injury to plaintiffand must be brought
within 4 years.The case of Valencia vs. Cebu Portland
Cement, et al, 106 PhiL 732, a 1959 case cited by
petitioner, is applicable in the instant case insofar as it
concerns the issue of prescription of actions. In said case,
this Court had occasion to hold that an action for
damages involving a plaintiff separated from his
employment for alleged unjustifiable causes is one for
injury to the rights of the plaintiff, and must be brought
within four [4] years. In Santos vs. Court of Appeals, 96
SCRA 448 [1980], this Court, thru then Chief Justice
Enrique M. Fernando, sustained the stand of the Soiicitor
General that the period of prescription mentioned under
Article 281, now Article 292, of the Labor Code, refers
to and is limited to money claims, all other cases of
injury to rights of a workingman being governed by the
Civil Code. Accordingly, this Court ruled that petitioner
Marciana Santos, who sought reinstatement, had four [4]
years within which to file her complaint for the injury to
her rights as provided under Article 1146 of the Civil
Code.
Four-year prescriptive period under Art. 1146 of the
Civil Code applies by way of supplement to the Labor
CodeIndeed there is, merit in the contention of
petitioner that the four [4]-year prescriptive period under
Article 1146 of the New Civil Code, applies by way of
supplement, in the instant case.
Strict application of Arts. 291 and292 of the Labor
Code providing for a 3-year prescriptive period does not
destroy
enforcement
of
fundamental
rights
ofemployees; Articles 291 and 292 go to matters of
remedy, not destruction of the fundamental right;
Statute of limitations extinguish the remedy only.
Even on the assumption that an action for illegal
dismissal falls under the category of offenses or
money claims under Articles 291 and 292, Labor
Code, which provide for a three-year prescriptive
period, still, a strict application of said provisions will
not destroy the enforcement of fundamental rights of the
employees. As a statutory provision on limitations of
actions, Articles 291 and 292 go to matters of remedy
and not to the destruction of fundamental rights. As a
general rule, a statute of limitation extinguishes the
remedy only. Although the remedy to enforce a right may
be barred, that right may be enf orced by some other
available remedy which is not barred.
FACTS

LABOR RELATIONS

Petitioner Virgilio Callanta was employed by

private respondent Carnation Philippines, Inc.
[Carnation, for brevity] in January 1974 as a salesman in
the Agusan del Sur area. Five [5] years later or on June 1,
1979, respondent Carnation filed with the Regional
Office No. X of the Ministry of Labor and Employment
[MOLE], an application for clearance to terminate the
employment of Virgilio Callanta on the alleged grounds
of serious misconduct and misappropriation of company
funds amounting to Pl2,000.00, more or less.
Upon approval on June 26, 1979 by MOLE Regional
Director Felizardo G. Baterbonia, of said clearance
application, petitioner Virgilio Callantas employment
with Carnation was terminated effective June 1,1979.
On July 5, 1982, Virgilio Callanta filed with the MOLE,
Regional Office No. X, a complaint for illegal disinissal
with claims for reinstatement, backwages, and damages
against respondent Carnation.
In its position paper dated October 5,1982, respondent
Carnation put in issue the timeliness of petitioners
complaint alleging that the same is barred by prescription
for having been filed more than three [3] years after the
date of Callantas dismissal.
On March 24,1983, Labor Arbiter Pedro C. Ramos
rendered a decision finding the termination of Callantas
employment to be without valid cause. Respondent
Carnation was therefore ordered to reinstate Virgilio
Callanta to his former position with backwages of one
[1] year without qualification including all fringe
benefits provided for by law and company policy, within
ten [10] days from receipt of the decisibn. It was likewise
provided that failure on the part of respondent to comply
with the decision shall entitle complainant to full
backwages and all fringe benefits without loss of
seniority rights.
On April 18,1983, respondent Carnation appealed to
respondent National Labor Relations Commission
[NLRC] which in a decision dated February 25,1985,1
set aside the decision of the Labor Arbiter. It declared the
complaint for illegal dismissal filed by Virgilio Callanta
to have already prescribed

47

ISSUE
Whether or not the filing of an action by
petitioner Virgilio Callanta for illegal dismissal against
his employer had already prescribed pursuant to three
[3] years prescriptive period provided in Articles 291
and 292 of the Labor Code?
HELD
NO. The court grant the petition and the
decision of the NLRC is hereby reversed and set aside.
Although We are strongly inclined to affirm that part of
the decision of the Labor Arbiter ordering the
reinstatement of petitioner to his former position without
loss of seniority rights and privileges, a supervening
event, which petitioner mentioned in his motion for early
decision dated January 6, 198618 that is, FILIPRO, Inc/s
taking over the business of Carnation, has legally
rendered the order of reinstatement difficult to enforce,
unless there is an express agreement on assumption of
liabilities19 by the purchasing corporation, FILIPRO,
Inc. Besides, there is no law requiring that the purchasing
corporation should absorb the employees of the selling
corporation.20 In any case, the very concept of social
justice dictates that petitioner shall be entitled to
backwages of three [3] years.
RULING
The respondent Carnation Philippines, Inc. is
hereby ordered to pay petitioner Virgilio Callanta
backwages for three [3] years without qualification and
deduction. This decision is immediately executory. No
costs.

MARIA KATRINA S. TANJUSAY LLB-III