[G.R. No. 101279. August 6, 1992.

]
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. petitioner, vs.
HON. RUBEN D. TORRES, as Secretary of the Department of Labor &
Employment, and JOSE N. SARMIENTO, as Administrator of the PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION, respondents.
FACTS
DOLE Secretary Ruben D. Torres issued Department Order No. 16 Series of 1991
temporarily suspending the recruitment by private employment agencies of Filipino
domestic helpers going to Hong Kong. As a result of the department order DOLE,
through the POEA took over the business of deploying Hong Kong bound workers.
The petitioner, PASEI, the largest organization of private employment and
recruitment agencies duly licensed and authorized by the POEA to engage in the
business of obtaining overseas employment for Filipino land-based workers filed a
petition for prohibition to annul the aforementioned order and to prohibit
implementation.
ISSUES
(1) whether or not respondents acted with grave abuse of discretion and/or in
excess of their rule-making authority in issuing said circulars;
(2) whether or not the assailed DOLE and POEA circulars are contrary to the
Constitution, are unreasonable, unfair and oppressive; and
(3) whether or not the requirements of publication and filing with the Office of the
National Administrative Register were not complied with.
HELD
FIRST, the respondents acted well within in their authority and did not commit grave
abuse of discretion. This is because Article 36 (LC) clearly grants the Labor
Secretary to restrict and regulate recruitment and placement activities, to wit:
Art. 36. Regulatory Power. The Secretary of Labor shall have the power to
restrict and regulate the recruitment and placement activities of all agencies
within the coverage of this title [Regulation of Recruitment and Placement
Activities] and is hereby authorized to issue orders and promulgate rules and
regulations to carry out the objectives and implement the provisions of this
title.
SECOND, the vesture of quasi-legislative and quasi-judicial powers in administrative
bodies is constitutional. It is necessitated by the growing complexities of the
modern society.
THIRD, the orders and circulars issued are however, invalid and unenforceable. The
reason is the lack of proper publication and filing in the Office of the National
Administrative Registrar as required in Article 2 of the Civil Code to wit:
Art. 2. Laws shall take effect after fifteen (15) days following the completion
of their publication in the Official Gazatte, unless it is otherwise provided;
Article 5 of the Labor Code to wit:

Art. 5. Rules and Regulations. The Department of Labor and other

government agencies charged with the administration and enforcement of
this Code or any of its parts shall promulgate the necessary implementing
rules and regulations. Such rules and regulations shall become effective
fifteen (15) days after announcement of their adoption in newspapers of
general circulation;
and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987
which provide:
Sec. 3. Filing. (1) Every agency shall file with the University of the
Philippines Law Center, three (3) certified copies of every rule adopted by it.
Rules in force on the date of effectivity of this Code which are not filed within
three (3) months shall not thereafter be the basis of any sanction against any
party or persons. (Chapter 2, Book VII of the Administrative Code of 1987.)
Sec. 4. Effectivity. In addition to other rule-making requirements provided
by law not inconsistent with this Book, each rule shall become effective
fifteen (15) days from the date of filing as above provided unless a different
date is fixed by law, or specified in the rule in cases of imminent danger to
public health, safety and welfare, the existence of which must be expressed
in a statement accompanying the rule. The agency shall take appropriate
measures to make emergency rules known to persons who may be affected
by them. (Chapter 2, Book VII of the Administrative Code of 1987).
Prohibition granted.

[G.R. No. 162308, November 22, 2006]

G & M PHILIPPINES, INC., PETITIONER,
RESPONDENT.

VS.

ROMIL

V.

CUAMBOT,

FACTS
Cuambot was an overseas worker who was deployed to Saudi Arabia to work as a
car body builder in Al Waha Workshop in Unaizah City, by petitioner G & M
Philippines. Before his two year contract was terminated Cuambot returned to the
Philippines where he filed a complaint in the NLRC against his recruitment agency,
herein petitioner, for unpaid wages, withheld salaries, refund of plane ticket and

repatriation bond, later amended to include illegal dismissal, claim for the unexpired
portion of his employment contract, actual, exemplary and moral damages, and
attorneys fees.
Petitioner, in defense, presented copies of 7 payslips issued in favor of Cuambot.
Cuambot countered that his signatures in the payslips were forged and further
claims that he never got his salaries except only for the SAR100 as monthly
allowance. G&M answered back by saying that there was great possibility that
Cuambot had changed his signature while abroad so that he could file a complaint
or illegal dismissal upon his return.
ISSUES
1. whether or not the respondents signatures are mere forgeries
2. whether respondent executed the resignation letter
HELD
After examination of the evidence on record, the petition must fail.
The petitioners attempts at establishing its case are not enough to convince the
court of the veracity of its claims. Amongst other things, the petitioner failed to
submit the original copies of the pay slips and the resignation letter to prove that
they were actually penned by respondent, they failed to submit an original copy of
the employment contract to prove that they had actually given a copy of such to
respondent for him to sign, and a cursory look at the resignation letter and the
handwritten payslips show that they were written by one person.
Indeed, the rule is that all doubts in the implementation and the interpretation of
the Labor Code shall be resolved in favor of labor, in order to give effect to the
policy of the State to afford protection to labor, promote full employment, ensure
equal work opportunities regardless of sex, race or creed, and regulate the relations
between workers and employers, and to assure the rights of workers to selforganization, collective bargaining, security of tenure, and just and humane
conditions of work.
It is a well-settled doctrine, that if doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be tilted in favor of the
latter. It is a time-honored rule that in controversies between a laborer and his
master, doubts reasonably arising from the evidence, or in the interpretation of
agreements and writing should be resolved in the formers favor. The policy is to
extend the doctrine to a greater number of employees who can avail of the benefits
under the law, which is in consonance with the avowed policy of the State to give
maximum aid and protection of labor.
Moreover, one who pleads payment has the burden of proving it. The reason for the
rule is that the pertinent personnel files, payrolls, records, remittances and other
similar documents which will show that overtime, differentials, service incentive
leave, and other claims of workers have been paid are not in the possession of the
worker but in the custody and absolute control of the employer. Thus, the burden of

showing with legal certainty that the obligation has been discharged with payment
falls on the debtor, in accordance with the rule that one who pleads payment has
the burden of proving it. Only when the debtor introduces evidence that the
obligation has been extinguished does the burden shift to the creditor, who is then
under a duty of producing evidence to show why payment does not extinguish the
obligation In this case, petitioner was unable to present ample evidence to prove its
claim that respondent had received all his salaries and benefits in full.
Petition denied for lack of merit.
[G.R. No. 138051 June 10, 2004]
JOSE Y. SONZA, petitioner,vs. ABS-CBN BROADCASTING CORPORATION,
respondent.
FACTS
ABS-CBN signed an Agreement with the Mel and Jay Management and Development
Corporation (MJMDC). Referred to as AGENT, MJMDC agreed to provide Jay Sonzas
services exclusively to ABS-CBN as talent. After more than two years, Sonza as
agent of MJMDC wrote a letter to ABS-CBN notifying them of the formers intention
to rescind the agreement. Sonza waived and renounced the recovery of the
remaining amounts stipulated in the agreement but reserved the right to seek the
recovery of other benefits under the same.
Later, SONZA filed a complaint against ABS-CBN before the DOLE-NCR, alleging that
ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th
month pay, signing bonus, travel allowance and amounts due under the Employees
Stock Option Plan ("ESOP"). In response ABS-CBN filed a Motion to Dismiss on the
ground that no employer-employee relationship existed between the parties.
Meanwhile, pursuant to the Agreement, ABS-CBN continued to remit SONZAs
monthly talent fees through his account at PCIBank. ABS-CBN later opened a new
account with the same bank where ABS-CBN deposited SONZAs talent fees and
other payments due him under the Agreement.
ISSUE
Whether or not there existed an employee-employer relationship between Sonza
and ABS-CBN.
HELD
Applying the four fold test, there is no employee-employer relationship. The
elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called "control test", is
the most important element.
A. Selection and Engagement of Employee

Sonza says that independent contractors often present themselves as persons

distinguishable form other employees because of their unique skills, expertise or
talent. He however is not such because of the fact that there are other broadcasters
with similar experience and qualification. This is not independent contractorship
therefore because of the presence of other such capable individuals.
The Supreme Court held that the selection of Sonza because of unique expertise
and skills is a circumstance indicative, but not conclusive of an independent
contractual relationship. Also, if indeed Sonza did not possess such skills, ABS CBN
would not have entered into the Agreement but would have hired him through the
personnel department just like an ordinary employee. In any event, the method of
selecting and engaging does not conclusively determine his status.
B. Payment of Wages
Sonza claims that because his monthly fees all went to him and not to MJMDC as
well as all the benefits and privileges indicate his status as employee.
The court said that the compensation and the mode of payment was all a result of
negotiations that led to the Agreement. If indeed Sonza were an employee, there
would be no need for negotiation because these benefits are deemed incorporated
into the contract.
His talent fees are likewise so huge and out of the ordinary that they indicate more
an independent contractual relationship rather than an employer-employee
relationship. Also, the power to bargain talent fees is a circumstance indicative, but
not conclusive, of an independent contractual relationship.
C. POWER OF DISMISSAL
For violation of any provision of the Agreement, either party may terminate their
relationship. Sonza failed to show that ABS CBN could terminate his services on
grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws. In fact, illustrative of the power of the Agreement, ABS
CBN continued to pay Sonza monthly fees even of they suffered losses because it
was what the stipulations commanded.
D. POWER OF CONTROL
This last test is based on the extent the hirer has control over the worker. The
greater the supervision and control over the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well the less control
the hirer exercises, the more likely the worker is considered an independent
contractor.
First, Sonzas argument that ABS CBN exercised control over the means and
methods of his work is misplaced. He was engaged to co-host a TV program and
nothing more. How he delivered is lines, appeared on television, and sounded on
the radio were outside the control of ABS CBN. He did not have to render 8 hours of
work daily. The only prohibition was that he could not criticize ABS CBN or its
interests. Obviously SONZA had a free hand on what to say or discuss in his shows
provided he did not attack ABS-CBN or its interests. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZAs work.
Sonza also claims that ABS CBNs power not to broadcast his show tells of its power
over the methods and means of his work. The argument fails because althought
ABS CBN had this right under the agreement, it could not even dismiss nor
discipline Sonza because it still had to continue paying him. This shows that ABS

CBNs control extended only to the result of Sonzas work.

Next, Sonza claims that ABS CBN exercise control by providing him with all the
equipment and crew. However, these are not the tools and instrumentalities
SONZA needed to perform his job. What SONZA principally needed were his talent
or skills and the costumes necessary for his appearance.
SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN
subjected him to its rules and standards of performance. The Agreement stipulates
that SONZA shall abide with the rules and standards of performance "covering
talents" of ABS-CBN. The Agreement does not require SONZA to comply with the
rules and standards of performance prescribed for employees of ABS-CBN.
In this case, SONZA failed to show that these rules controlled his performance. We
find that these general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio programs that
comply with standards of the industry.
Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most
extreme form of control which ABS-CBN exercised over him. This argument is futile.
Even an independent contractor can validly provide his services exclusively to the
hiring party.
MJMDC as AGENT of SONZA
Sonza says that it is wrong to say that he is a talent of MJMDC. He insists that
MJMDC is a labor-only contractor and ABS CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the "labor-only"
contractor; (2) the employee who is ostensibly under the employ of the "labor-only"
contractor; and (3) the principal who is deemed the real employer. Under this
scheme, the "labor-only" contractor is the agent of the principal. The law makes the
principal responsible to the employees of the "labor-only contractor" as if the
principal itself directly hired or employed the employees.
These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement, namely,
SONZA and ABS-CBN. MJMDC merely acted as SONZAs agent.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like SONZA as independent contractors.
SONZA argues that if such practice exists, it is void for violating the right of labor to
security of tenure. The right of labor to security of tenure as guaranteed in the
Constitution arises only if there is an employer-employee relationship under labor
laws. Not every performance of services for a fee creates an employer-employee
relationship. To hold that every person who renders services to another for a fee is
an employee - to give meaning to the security of tenure clause - will lead to absurd
results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their
services as independent contractors. The right to life and livelihood guarantees this
freedom to contract as independent contractors. The right of labor to security of
tenure cannot operate to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an independent contractor. An
individual like an artist or talent has a right to render his services without any one

controlling the means and methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to compel artists and talents
to render their services only as employees. If radio and television program hosts can
render their services only as employees, the station owners and managers can
dictate to the radio and television hosts what they say in their shows. This is not
conducive to freedom of the press.
Petition denied.

[G.R. No. 87098. November 4, 1996]

ENCYCLOPEDIA BRITANNICA (PHILIPPINES), INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L.
DOGELIO and BENJAMIN LIMJOCO, respondents.
FACTS
Benjamin Limjoco was a Sales Division manager of petitioner Encyclopedia
Britannica. He received commissions from the products sold by his agents, while
office expenses are deducted from his commissions. Later, Limjoco resigned to
pursue his private business. He then filed a complaint against petitioner with DOLE
for non-payment of separation pay and other benefits, as well as illegal deduction
from his sales commissions. Limjoco claimed that he was hired by the petitioner,
was assigned in the sales department and was earning an average of P40,000.00
monthly as commissions; that he was under the supervision of the officials of the
petitioner who issued to him and other personnel, memoranda, guidelines on
company policies, instructions, etc.
Petitioner, on its part, alleged that Limjoco was not its employee but an
independent dealer authorized to promote and sell its products and in return,
received commissions therefrom.
ISSUE
Whether or not Limjoco was an independent contractor or an employee of
Encyclopedia Britannica?
HELD
In determining the existence of an employer-employee relationship, the following
elements must be present: 1. selection and engagement of the employee; 2.
payment of wages; 3. power of dismissal; and 4. the power to control the

employees conduct. Of the above, control of employees conduct is commonly

regarded as the most crucial and determinative factor of the presence or absence of
an employer-employee relationship.
The fact that petitioner issued memoranda to private respondent and other sales
managers did not prove that petitioner had control over them. The memoranda
were mere guidelines on company policies which sales managers follow and further
require on their sales agents. The issuance of memoranda to Limjoco and other
sales managers was only done to appraise them and their respective agents of the
company policies and procedures. Limjoco was free to conduct and promote their
sales operations. The occasional reports to the petitioner from Limjoco were
required in order to update the company of its dealers performance. Even though
petitioner had fixed the prices of the products for reason of uniformity and that
Limjoco cannot alter them, he, nevertheless, had the free rein in the means and
methods in selling them.
He was free to conduct his work and he was free to engage in other means of
livelihood. At the time he was a dealer for the petitioner, Limjoco was also a director
and later the president of the Farmers Rural Bank. Had he been an employee of the
petioner, he could not be employed elsewhere and he would be required to devote
full time for petitioner.
Petition granted.

[G.R. No. 91307

January 24, 1991]
SINGER SEWING MACHINE COMPANY, petitioner vs. HON. FRANKLIN M.
DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE
COLLECTORS UNION-BAGUIO (SIMACUB), respondents.
FACTS
SIMACUB, respondent union, filed a petition for certification as the sole and
exclusive bargaining agent of all the collectors of the Singer Sewing Machine
Company, Bagiuo City branch. The Company opposed the petition saying that the
union members were not employees but independent contractors as evidenced by
the collection agency agreement they signed.
ISSUE
Whether there exists an employee-employer relationship?
HELD
The nature of the relationship between a collecting agent and the company depends
on the circumstances surrounding each case. In this case, the Agreement confirms
the status of the collecting agent as an independent contractor not only because he
is explicitly described as such but because he is allowed by the provisions of the
agreement to perform collection services without being subject to the control of the
latter except only as to the result of his work.
Hence, the requirement that receipt forms issued by the company shall be
submitted once a week is but a method to avoid co-mingling of personal funds of
the agent with the money of the company. Likewise, the use of standard report
forms are only intended to facilitate order in the office. Even if the report
requirements are to be called control measures, any control is only with respect to
the end result of the collection since the requirements regulate the things to be
done after the performance of the collection job or the rendition of the service.
The respondents' contention that the union members are employees of the
Company is based on selected provisions of the Agreement but ignores the
following circumstances which respondents never refuted either in the trial
proceedings before the labor officials nor in its pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to
Singer's office everyday except, naturally and necessarily, for the purpose of
remitting their collections; 2. The collection agents do not have to devote their time
exclusively for SINGER. There is no prohibition on the part of the collection agents
from working elsewhere. Nor are these agents required to account for their time and
submit a record of their activity.; 3. The manner and method of effecting collections
are left solely to the discretion of the collection agents without any interference on
the part of Singer.; 4. The collection agents shoulder their transportation expenses
incurred in the collections of the accounts assigned to them.; 5. The collection
agents are paid strictly on commission basis. The amounts paid to them are based

solely on the amounts of collection each of them make. They do not receive any
commission if they do not effect any collection even if they put a lot of effort in
collecting. They are paid commission on the basis of actual collections.; 6. The
commissions earned by the collection agents are directly deducted by them from
the amount of collections they are able to effect. The net amount is what is then
remitted to Singer." (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are
supposed to perform their collections, they should have explicitly said so in detail by
specifically denying each of the facts asserted by the petitioner. As there seems to
be no objections on the part of the respondents, the Court finds that they miserably
failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the
existence of an employer-employee relationship between the Company and the
collection agents cannot be sustained.
The last and most important element of the control test is not satisfied by the terms
and conditions of the contracts. There is nothing in the agreement which implies
control by the Company not only over the end to be achieved but also over the
means and methods in achieving the end.
The Court finds the contention of the respondents that the union members are
employees under Article 280 of the Labor Code to have no basis. The Court agrees
with the petitioner's argument that Article 280 is not the yardstick for determining
the existence of an employment relationship because it merely distinguishes
between two kinds of employees. The Court finds that since private respondents are
not employees of the Company, they are not entitled to the constitutional right to
join or form a labor organization for purposes of collective bargaining. Accordingly,
there is no constitutional and legal basis for their "union" to be granted their
petition for direct certification.
Order of Med-Arbiter and DOLE Secretary reversed and set aside.

[G.R. No. 159890

May 28, 2004]
EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS
CORP. and JOSE LAMADRID, President, respondents.
FACTS
Petitioner was a salesman of respondent company earning a commission of 3% of
the total paid up sales covering the whole area of Mindanao. Aside from selling, he
was also tasked with collection. Respondent corporation through its president, often
required Abante to report to a particular area and occasionally required him to go to
Manila to attend conferences.
Later on, bad blood ensued between the parties due to some bad accounts that
Lamadrid forced petitioner to cover. Later petitioner found out that respondent had
informed his customers not to deal with petitioner since it no longer recognized him
as a commission salesman. Petitioner filed a complaint for illegal dismissal with
money claims against respondent company and its president, Jose Lamadrid.

By way of defense, respondents countered that petitioner was not its employee but
a freelance salesman on commission basis.
ISSUE
Whether or not petitioner, as a commission salesman, is an employee of respondent
corporation.
HELD
To determine the existence of an employee-employer relationship, we apply the four
fold test: 1) the manner of selection and engagement; (2) the payment of wages;
(3) the presence or absence of the power of dismissal; and (4) the presence or
absence of the power of control.
Applying the aforementioned test, an employer-employee relationship is notably
absent in this case. It is true that he was paid in commission yet no quota was
imposed therefore a dismal performance would not warrant a ground for dismissal.
There was no specific office hours he was required to observe. He was not
designated to conduct services at a particular area or time. He pursued his selling
without interference or supervision from the company. The company did not
prescribe the manner of selling merchandise. While he was sometimes required to
report to Manila, these were only intended to guide him. Moreover, petitioner was
free to offer his services to other companies.
Art. 280 is not a crucial factor because it only determines two kinds of employees. It
doen;t apply where there is no employer-employee relationship. While the term
commission under Article 96 of the LC was construed as being included in the term
wage, there is no categorical pronouncement that the payment of commission is
conclusive proof of the existence of an employee-employer relationship.
The decision of the CA is affirmed.

[G.R. No. 157214. June 7, 2005]

PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE
VERA, respondent.
FACTS
De Vera and petitioner company entered into a contract where respondent was to
attend to the medical needs of petitioners employees while being paid a retainer
fee of P4,000 per month. Later, De Vera was informed y petitioner that the
retainership will be discontinued. Respondent filed a case for illegal dismissal.
ISSUE
Whether or not de Vera is an employee of PhilComm or an independent contractor.
HELD
Applying the four fold test, de Vera is not an employee. There are several indicators
apart from the fact that the power to terminate the arrangement lay on both
parties:

from the time he started to work with petitioner, he never was included in
its payroll; was never deducted any contribution for remittance to the Social
Security System (SSS);

he was subjected by petitioner to the ten (10%) percent withholding tax

for his professional fee, in accordance with the National Internal Revenue Code,
matters which are simply inconsistent with an employer-employee relationship;

the records are replete with evidence showing that respondent had to bill
petitioner for his monthly professional fees. It simply runs against the grain of
common experience to imagine that an ordinary employee has yet to bill his
employer to receive his salary.
Finally, the element of control s absent.
Petition granted.

[G.R. No. 64948 September 27, 1994]

MANILA GOLF & COUNTRY CLUB, INC., petitioner, vs. INTERMEDIATE
APPELLATE COURT and FERMIN LLAMAR, respondents.
FACTS
A petition for certification was filed with the Labor Relations Division of the Ministry
of Labor by PTCCEA in behalf of the caddies of petitioners. The petition was resolved
in favor of the caddies. The same union later filed for SSS coverage but the Social
Security Commission denied them for absence of employee employer relationship.

ISSUE
Whether or not persons rendering caddying services for members of golf clubs and
their guests in said clubs courses or premises are the employees of such clubs and
therefore within the compulsory coverage of the SSS.
HELD
The caddies are not employees for the following reasons:
-rules and regulations are permissible means to impose order where the caddies are
allowed to pursue their profession within the clubs premises
-they do not observe a particular working hour and are not at the call of the club
-the club has no measure of control over the incidents of the caddies work and
compensation
-the group rotation system is only an assurance that the work is distributed fairly
Decision of the CA reversed and set aside.

[G.R. No. 145443. March 18, 2005]

RAQUEL P. CONSULTA, petitioner, vs. COURT OF APPEALS, PAMANA
PHILIPPINES, INC., RAZUL Z. REQUESTO, and ALETA TOLENTINO,
respondents.
FACTS
Consulta was Managing Associate of Pamana. On 1987 she was issued a
certification authorizing her to negotiate for and in behalf of PAMANA with the
Federation of Filipino Civilian Employees Association. Consulta was able to secure an
account with FFCEA in behalf of PAMANA. However, Consulta claimed that PAMANA
did not pay her commission for the PPCEA account and filed a complaint for unpaid
wages or commission.
ISSUE
Whether or not Consulta was an employee of PAMANA.
HELD
The SC held that Pamana was an independent agent and not an employee.
The power of control in the four fold test is missing. The manner in which Consulta
was to pursue her tasked activities was not subject to the control of PAMANA.
Consulta failed to show that she worked definite hours. The amount of time, the
methods and means, the management and maintenance of her sales division were
left to her sound judgment.

Finally, Pamana paid Consulta not for labor she performed but only for the results of
her labor. Without results, Consultas labor was her own burden and loss. Her right
to compensation, or to commission, depended on the tangible results of her work whether she brought in paying recruits.
The fact that the appointment required Consulta to solicit business exclusively for
Pamana did not mean Pamana exercised control over the means and methods of
Consultas work as the term control is understood in labor jurisprudence. Neither did
it make Consulta an employee of Pamana. Pamana did not prohibit Consulta from
engaging in any other business, or from being connected with any other company,
for as long as the business or company did not compete with Pamanas business.
The exclusivity clause was a reasonable restriction to prevent similar acts prejudicial
to Pamanas business interest. Article 1306 of the Civil Code provides that [t]he
contracting parties may establish such stipulation, clauses, terms and conditions as
they may deem convenient, provided that they are not contrary to law, morals,
good customs, public order, or public policy.
There being no employer-employee relationship between Pamana and Consulta, the
Labor Arbiter and the NLRC had no jurisdiction to entertain and rule on Consultas
money claim. Consultas remedy is to file an ordinary civil action to litigate her
claim
Petition is dismissed.
[G.R. No. 84484 November 15, 1989]
INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and MELECIO BASIAO, respondents.
FACTS
Since 1968, respondent Basiao has been an agent for petitioner company, and is
authorized to solicit within the Philippines applications for insurance policies and
annuities in accordance with the existing rules and regulations of the company. In
return, he would receive compensation, in the form of commissions.
Some four years later, in April 1972, the parties entered into another contract an
Agency Manager's Contract and to implement his end of it Basiao organized an
agency or office to which he gave the name M. Basiao and Associates, while
concurrently fulfilling his commitments under the first contract with the Company.
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly
seeking a reconsideration, Basiao sued the Company in a civil action and this, he
was later to claim, prompted the latter to terminate also his engagement under the
first contract and to stop payment of his commissions starting April 1, 1980.
Basiao thereafter filed with the then Ministry of Labor a complaint against the
Company and its president. The complaint sought to recover commissions allegedly
unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's
jurisdiction over Basiao's claim, asserting that he was not the Company's employee,
but an independent contractor.

ISSUE
Whether or not there exist an employer-employee relationship between Basiao and
Insular Life.
HELD
The SC ruled in favor of Insular Life.
Not every form of control that the hiring party reserves to himself over the conduct
of the party hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal or
technical sense of the term. A line must be drawn somewhere, if the recognized
distinction between an employee and an individual contractor is not to vanish
altogether.
Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means
or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means used to achieve it.
The distinction acquires particular relevance in the case of an enterprise affected
with public interest, as is the business of insurance, and is on that account subject
to regulation by the State with respect, not only to the relations between insurer
and insured but also to the internal affairs of the insurance company. Rules and
regulations governing the conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is, therefore, usual and
expected for an insurance company to promulgate a set of rules to guide its
commission agents in selling its policies that they may not run afoul of the law and
what it requires or prohibits. Of such a character are the rules which prescribe the
qualifications of persons who may be insured, subject insurance applications to
processing and approval by the Company, and also reserve to the Company the
determination of the premiums to be paid and the schedules of payment. None of
these really invades the agent's contractual prerogative to adopt his own selling
methods or to sell insurance at his own time and convenience, hence cannot
justifiably be said to establish an employer-employee relationship between him and
the company.
The respondents limit themselves to pointing out that Basiao's contract with the
Company bound him to observe and conform to such rules and regulations as the
latter might from time to time prescribe. No showing has been made that any such
rules or regulations were in fact promulgated, much less that any rules existed or
were issued which effectively controlled or restricted his choice of methods or the
methods themselves of selling insurance. Absent such showing, the Court will not
speculate that any exceptions or qualifications were imposed on the express
provision of the contract leaving Basiao "... free to exercise his own judgment as to
the time, place and means of soliciting insurance."
The Court, therefore, rules that under the contract invoked by him, Basiao was not

an employee of the petitioner, but a commission agent, an independent contractor

whose claim for unpaid commissions should have been litigated in an ordinary civil
action.

NLRC Decision set aside. [G.R. No. 124354. April 11, 2002.]
ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as
natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS,
and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DE LOS
SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DR. PERFECTA
GUTIERREZ, respondents.
FACTS
Sometime in 1985, Erlinda Ramos, petitioner, was advised to undergo an operation
for the removal of a stone in her gall bladder. She was referred to Dr. Hosaka, a
surgeon. Dr. Gutierrez was likewise appointed as anesthesiologist.
During operation, complications arose resulting to injury to Ramos.
ISSUE
Is there an employee-employer relationship between the hospital and visiting
consultants?
HELD
There is no employee-employer relationship.
1. As explained by respondent hospital, that the admission of a physician to
membership in DLSMC's medical staff as active or visiting consultant is first decided
upon by the Credentials Committee thereof, which is composed of the heads of the
various specialty departments such as the Department of Obstetrics and
Gynecology, Pediatrics, Surgery with the department head of the particular
specialty applied for as chairman. The Credentials Committee then recommends to
DLSMC's Medical Director or Hospital Administrator the acceptance or rejection of
the applicant physician, and said director or administrator validates the committee's
recommendation. Similarly, in cases where a disciplinary action is lodged against a
consultant, the same is initiated by the department to whom the consultant
concerned belongs and filed with the Ethics Committee consisting of the
department specialty heads. The medical director/hospital administrator merely
acts as ex-officio member of said committee.
2. Neither is there any showing that it is DLSMC which pays any of its consultants
for medical services rendered by the latter to their respective patients.
3. Moreover, the contract between the consultant in respondent hospital and his
patient is separate and distinct from the contract between respondent hospital and
said patient. The first has for its object the rendition of medical services by the
consultant to the patient, while the second concerns the provision by the hospital of
facilities and services by its staff such as nurses and laboratory personnel necessary
for the proper treatment of the patient.
Further, no evidence was adduced to show that the injury suffered by petitioner
Erlinda was due to a failure on the part of respondent DLSMC to provide for hospital
facilities and staff necessary for her treatment.

For these reasons, DLSMC is absolved from liability and Dr. Hosaka and Dr. Gutierrez
are hereby declared to be solidarily liable.

G.R. No. 118086

December 15, 1997
SUSAN G. CARUNGCONG, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, SUN LIFE ASSURANCE CO. OF CANADA, LANCE KEMP and
MERTON DEVEZA, respondents.
FACTS
Susan Carungcong was an insurance agent for Sun Life assurance Company of
Canada. As an agent she signed a number of agreements with Sun Life some
concerning an agents commission, obligations, limitations on authority and
termination of agreement. It was also stressed that she shall be considered as an
independent contractor and not and employee fo Sun Life.
In 1989, her connection with Sun Life was terminated due to accounting
discrepancies. Petitioner filed a complaint with the NLRC-RAB for illegal dismissal.
ISSUE

Whether or not there exists a, employee-employer relationship.

HELD
It was emphasized in the agreements between the parties that Carungcong would
be considered as an independent contractor and not an employee.
It is germane to advert to the fact, which should by now be apparent, that
Carungcong was not your ordinary run-of-the-mill employee, nor even your average
managerial employee or supervisor. Her stated annual income from her occupation
is impressive by any standards: "in excess of P3,000,000.00," exclusive of overriding
commissions. Certainly, she may not be likened to an ordinary person applying for
employment, or an ordinary employee striving to keep his job, under the moral
dominance of the hiring entity or individual.
These considerations impel concurrence with the conclusions of the challenged
decision and resolution of respondent Commission which considered Carungcong as
an independent contractor, not an employee of Sun Life. It is significant that this
issue of the precise status of Carungcong as an independent contractor, evidently
deemed decisive by respondent Commission, was discussed by it at some length
not once, but twice, first in its Decision of July 29, 1994, and then in its second
Decision of October 28, 1994 resolving the separate motions for reconsideration of
the parties.
Moreover, it is true that complainant Carungcong's duties and functions derived
from her then existing agreements/contracts were made subject to rules and
regulations issued by respondent company, and for that matter, have likewise been
made subject of certain limitations imposed by said respondent company.
Nonetheless, these are not sufficient to accord the effect of establishing employeremployee relationship absent in this case. This is so because the insurance business
is not just any other ordinary business. It is one that is imbued with public interest
hence, it must be governed buy the rules and regulations of the state. The controls
adverted to by complainant are latent in the kind of business she is into and are
mainly aimed at promoting the results the parties so desire and do not necessarily
create any employer-employee relationships, where the employers' controls have to
interfere in the methods and means by which the employee would like to employ to
arrive at the desired results.
For that matter, complainant Carungcong was never paid a fixed wage or salary but
was mainly paid by commissions, depending on the level and volume of her
performance/production, the number of trained agents, when taken in and assigned
to her, being responsible for her added income as she gets a certain percentage
from the said agents' production as part of her commission.
Complainant's "theory of the case" appears to be limited to pointing out that
respondent company issued rules and regulations to which she should conform.
However, no showing has been made that such rules and regulations effectively and
actually controlled or restricted her choice of methods in performing her duties as
New Business Manager. Without such proof, there can be no plausible reason to
believe that her contractual declaration that she was an independent contractor has

been qualified.
Thus, we see no reason to deviate from our original conclusion that complainant
was never respondents' employee. Complainant's motion for reconsideration is,
therefore, denied.
Petition is dismissed.

[G.R. No. 146881 February 5, 2007]

COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager,
Petitioners, vs. DR. DEAN N. CLIMACO, Respondent.
FACTS
Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola by
virtue of a Retainer Agreement. The compensation to be paid is fixed at P3,000.00
per month. He may charge professional fee for hospital services rendered in line
with his specialization. He is to observe clinic hours at the company premises from
Monday to Saturday at least two (2) hours each day unless such schedule is
otherwise changed by the company as the situation so warrants, subject to the
labor Code provisions on Occupational Safety and Health Standards as the Company
may determine. It was also expressly stated in the contract that no employeremployee relationship shall exist between the retainer and the company. The doctor
also agrees to perform the duties and obligations enumerated in the Comprehensive
Medical Plan. After the expiration of the 1-year retainer agreement, respondent
continued to perform his functions as a company doctor to Coca-Cola until he
received a letter from the latter concluding their retainership agreement effective
30 days from receipt thereof.
Respondent then filed a complaint before the NLRC, seeking recognition as a regular
employee of petitioner company and prayed for the payment of all benefits of a
regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay,
Service Incentive Leave Pay, and Christmas Bonus. This was later amended to
include illegal dismissal.
ISSUE
W/n there existed an employee-employer relationship between Climaco and Coca
Cola.

HELD
The SC held that there is no employer-employee relationship between petitioner and
respondent company. The Court, in determining the existence of an employeremployee relationship, has invariably adhered to the four-fold test: (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, or the so-called
control test, considered to be the most important element.
The circumstances of this case show that no employer-employee relationship exists
between the parties because the company lacked the power of control over the
performance by respondent of his duties. The company in providing a
Comprehensive Medical Plan, merely issued guidelines in order to ensue that the
end result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks. The company lacks the power of control
that the contract provides that the respondent shall be directly responsible to the
employee concerned and their dependents for any injury, harm or damage caused
through professional negligence, incompetence, or other valid causes of action. The
Court also finds that the schedule of work and the requirement to be on call for
emergency cases do not amount to such control, but are necessary incidents to the
Retainership Agreement. The Court also notes that the Retainership Agreement
granted to both parties the power to terminate their relationship upon giving a 30day notice. Hence, petitioner company did not wield the sole power of dismissal or
termination. There is nothing wrong with the employment of respondent as a
retained physician of petitioner company and upholds the validity of the
retainership agreement which clearly states that no employer-employee relationship
existed between the parties.
Petition is granted.

[G.R. No. 170087 August 31, 2006]

ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON
ESCUETA, Respondents.
FACTS
Sometime in 1995, petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and Corporate Secretary
and was assigned to handle all the accounting needs of the company. She was also
designated as Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation of the company.
In 1996, petitioner was designated Acting Manager. As Acting Manager, petitioner
was assigned to handle recruitment of all employees and perform management
administration functions; represent the company in all dealings with government
agencies, especially with the Bureau of Internal Revenue (BIR), Social Security
System (SSS) and in the city government of Makati; and to administer all other
matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation.
For five years, petitioner performed the duties of Acting Manager. As of December
31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10%
share in the profit of Kasei Corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner
alleged that she was required to sign a prepared resolution for her replacement but
she was assured that she would still be connected with Kasei Corporation. Timoteo
Acedo, the designated Treasurer, convened a meeting of all employees of Kasei
Corporation and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in
charge of all BIR matters.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning
January up to September 2001 for a total reduction of P22,500.00 as of September
2001. Petitioner was not paid her mid-year bonus allegedly because the company
was not earning well. On October 2001, petitioner did not receive her salary from
the company. She made repeated follow-ups with the company cashier but she was
advised that the company was not earning well.
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the
officers but she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed
an action for constructive dismissal before the labor arbiter.
ISSUE

Whether or not there was an employer-employee relationship between petitioner

and private respondent Kasei Corporation.
HELD
The SC held that there has been no uniform test to determine the existence of an
employer-employee relation. Generally, courts have relied on the so-called right of
control test where the person for whom the services are performed reserves a right
to control not only the end to be achieved but also the means to be used in
reaching such end. In addition to the standard of right-of-control, the existing
economic conditions prevailing between the parties, like the inclusion of the
employee in the payrolls, can help in determining the existence of an employeremployee relationship.
However, in certain cases the control test is not sufficient to give a complete picture
of the relationship between the parties, owing to the complexity of such a
relationship where several positions have been held by the worker. There are
instances when, aside from the employers power to control the employee with
respect to the means and methods by which the work is to be accomplished,
economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employers power to control the employee with respect to the means and
methods by which the work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship. This two-tiered test would provide us with a
framework of analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties.
This is especially appropriate in this case where there is no written agreement or
terms of reference to base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities given to the worker
over the period of the latters employment.
Thus, the determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity, such as: (1) the
extent to which the services performed are an integral part of the employers
business; (2) the extent of the workers investment in equipment and facilities; (3)
the nature and degree of control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or
foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer;
and (7) the degree of dependency of the worker upon the employer for his
continued employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent
on the alleged employer for his continued employment in that line of business. In
the United States, the touchstone of economic reality in analyzing possible
employment relationships for purposes of the Federal Labor Standards Act is

dependency. By analogy, the benchmark of economic reality in analyzing possible

employment relationships for purposes of the Labor Code ought to be the economic
dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of
Kasei Corporation because she was under the direct control and supervision of Seiji
Kamura, the corporations Technical Consultant. She reported for work regularly and
served in various capacities as Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with substantially the same job functions,
that is, rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the corporation such
as securing business permits and other licenses over an indefinite period of
engagement.
Based on the foregoing, there can be no other conclusion that petitioner is an
employee of respondent Kasei Corporation. She was selected and engaged by the
company for compensation, and is economically dependent upon respondent for her
continued employment in that line of business. Her main job function involved
accounting and tax services rendered to respondent corporation on a regular basis
over an indefinite period of engagement. Respondent corporation hired and
engaged petitioner for compensation, with the power to dismiss her for cause. More
importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by
P2,500 a month from January to September 2001. This amounts to an illegal
termination of employment, where the petitioner is entitled to full backwages. Since
the position of petitioner as accountant is one of trust and confidence, and under
the principle of strained relations, petitioner is further entitled to separation pay, in
lieu of reinstatement.
Petition is granted.

[G.R. No. 164156 September 26, 2006]

ABS-CBN BROADCASTING CORPORATION, Petitioner, vs MARLYN
NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE
LERASAN, Respondents.
FACTS
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) employed respondents
Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000.
They were issued ABS-CBN employees identification cards and were required to
work for a minimum of eight hours a day, including Sundays and holidays. The PAs

were under the control and supervision of Assistant Station Manager Dante J. Luzon,
and News Manager Leo Lastimosa.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular
Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay,
Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against
the petitioner before the NLRC.
Complainants alleged that they were engaged by respondent ABS-CBN as regular
and full-time employees for a continuous period of more than five (5) years with a
monthly salary rate of Four Thousand (P4,000.00) pesos beginning 1995 up until the
filing of this complaint on November 20, 2000. Respondents insisted that they
belonged to a work pool from which petitioner chose persons to be given specific
assignments at its discretion, and were thus under its direct supervision and control
regardless of nomenclature. Complainants further pray of this Arbiter to declare
them regular and permanent employees of respondent ABS-CBN as a condition
precedent for their admission into the existing union and collective bargaining unit
of respondent company where they may as such acquire or otherwise perform their
obligations thereto or enjoy the benefits due therefrom.
For its part, petitioner alleged in its position paper that the respondents were PAs
who basically assist in the conduct of a particular program ran by an anchor or
talent. Among their duties include monitoring and receiving incoming calls from
listeners and field reporters and calls of news sources; generally, they perform leg
work for the anchors during a program or a particular production. They are
considered in the industry as program employees in that, as distinguished from
regular or station employees, they are basically engaged by the station for a
particular or specific program broadcasted by the radio station. Petitioner asserted
that as PAs, the complainants were issued talent information sheets which are
updated from time to time, and are thus made the basis to determine the programs
to which they shall later be called on to assist.
Petitioner maintained that PAs, reporters, anchors and talents occasionally
sideline for other programs they produce, such as drama talents in other
productions. As program employees, a PAs engagement is coterminous with the
completion of the program, and may be extended/renewed provided that the
program is on-going; a PA may also be assigned to new programs upon the
cancellation of one program and the commencement of another. As such program
employees, their compensation is computed on a program basis, a fixed amount for
performance services irrespective of the time consumed. At any rate, petitioner
claimed, as the payroll will show, respondents were paid all salaries and benefits
due them under the law. Upon appeal, the NLRC held that respondents are regular
employees of the petitioner and that they are covered by the CBA. The CA likewise
dismissed the petition for certiorari filed by the petitioner. Hence, this petition.
ISSUE
W/n respondents are regular employees of ABS CBN.
HELD

Respondents are Regular employees of the petitioner, ABS CBN.

Where a person has rendered at least one year of service, regardless of the nature
of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason being
that a customary appointment is not indispensable before one may be formally
declared as having attained regular status. Article 280 of the Labor Code 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.
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 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.
Not considered regular employees are project employees, the completion or
termination of which is more or less determinable at the time of employment, such
as those employed in connection with a particular construction project, and
seasonal employees whose employment by its nature is only desirable for a
limited period of time. Even then, any employee who has rendered at least one year
of service, whether continuous or intermittent, is deemed regular with respect to
the activity performed and while such activity actually exists.
It is of no moment that petitioner hired respondents as talents. The fact that
respondents received pre-agreed talent fees instead of salaries, that they did not
observe the required office hours, and that they were permitted to join other
productions during their free time are not conclusive of the nature of their
employment. Respondents cannot be considered talents because they are not
actors or actresses or radio specialists or mere clerks or utility employees. They are
regular employees who perform several different duties under the control and
direction of ABS-CBN executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1) those engaged to
perform activities which are necessary or desirable in the usual business or trade of

the employer; and (2) those casual employees who have rendered at least one year
of service, whether continuous or broken, with respect to the activities in which they
are employed.
Additionally, respondents cannot be considered as project or program employees
because no evidence was presented to show that the duration and scope of the
project were determined or specified at the time of their engagement. Under
existing jurisprudence, project could refer to two distinguishable types of activities.
First, a project may refer to a particular job or undertaking that is within the regular
or usual business of the employer, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. Second, the
term project may also refer to a particular job or undertaking that is not within the
regular business of the employer. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations of
the employer. The job or undertaking also begins and ends at determined or
determinable times.
The principal test is whether or not the project employees were assigned to carry
out a specific project or undertaking, the duration and scope of which were specified
at the time the employees were engaged for that project.
As gleaned from the records of this case, petitioner itself is not certain how to
categorize respondents. In its earlier pleadings, petitioner classified respondents as
program employees, and in later pleadings, independent contractors. Program
employees, or project employees, are different from independent contractors
because in the case of the latter, no employer-employee relationship exists.
Petition is denied.
[G.R. No. 160854 March 3, 2006]
BIG AA MANUFACTURER, Petitioner, vs. EUTIQUIO ANTONIO, JAY ANTONIO,
FELICISIMO ANTONIO, and LEONARDO ANTONIO, SR., Respondents.
FACTS
Petitioner is a sole proprietorship registered in the name of its proprietor, Enrico E.
Alejo. Respondents Eutiquio Antonio,Jay Antonio, Felicisimo Antonio, Leonardo
Antonio, Sr. and Roberto Fabian filed a complaint for illegal lay-off and illegal
deductions before the NLRCs Regional Arbitration Branch No. III. They claimed that
they were dismissed on January 11, 2000 and sought separation pay from petitioner.
The respondents alleged that as regular employees, they worked from 8:00 a.m. to
5:00 p.m. at petitioners premises using petitioners tools and equipment and they
received P250 per day. Eutiquio was employed as carpenter-foreman from 19911999; Jay as carpenter from 1993-1999; Felicisimo as carpenter from 1994-1999;
and Leonardo, Sr. also as carpenter from 1997-1999. According to respondents, they
were dismissed without just cause and due process; hence, their prayer for
reinstatement and full backwages. They also impleaded one Hermie Alejo, a relative
of the petitioners owner, as co-respondent in their complaint.
On the other hand, petitioner Big AA Manufacturer, affirmed it is a sole

proprietorship registered in the name of Enrico Alejo and engaged in manufacturing

office furniture, but it denied that respondents were its regular employees. Instead,
petitioner claimed that Eutiquio Antonio was one of its independent contractors who
used the services of the other respondents. According to petitioner, its independent
contractors were paid by results and were responsible for the salaries of their own
workers. Allegedly, there was no employer-employee relationship between
petitioner and respondents. However, petitioner stated it allowed respondents to
use its facilities to meet job orders. Petitioner also denied that respondents were
laid-off by Big AA Manufacturer, since they were project employees only. It added
that since Eutiquio Antonio had refused a job order of office tables, their contractual
relationship ended. Petitioner surmised that Eutiquio resented the January 10, 2000
Implementing Guidelines it issued to improve efficiency and performance.
ISSUE
Whether or not respondents are regular employees of petitioner Big AA.
HELD
The SC held that considering the submission of the parties, it is constrained to agree
with the unanimous ruling of the Court of Appeals, NLRC and Labor Arbiter that
respondents are petitioners regular employees. Respondents were employed for
more than one year and their work as carpenters was necessary or desirable in
petitioners usual trade or business of manufacturing office furniture. Under Article
280 of the Labor Code, the applicable test to determine whether an employment
should be considered regular or non-regular is the reasonable connection between
the particular activity performed by the employee in relation to the usual business
or trade of the employer.
True, certain forms of employment require the performance of usual or desirable
functions and exceed one year but do not necessarily result to regular employment
under Article 280 of the Labor Code.21Some specific exceptions include project or
seasonal employment. Yet, in this case, respondents cannot be considered project
employees. Petitioner had neither shown that respondents were hired for a specific
project the duration of which was determined at the time of their hiring nor
identified the specific project or phase thereof for which respondents were hired.
It also agreed that Eutiquio was not an independent contractor for he does not carry
a distinct and independent business, and he does not possess substantial capital or
investment in tools, equipment, machinery or work premises.He works within
petitioners premises using the latters tools and materials, as admitted by
petitioner. Eutiquio is also under petitioners control and supervision. Attesting to
this is petitioners admission that it allowed respondents to use its facilities for the
"proper implementation" of job orders. Moreover, the Implementing Guidelines
regulating attendance, overtime, deadlines, penalties; providing petitioners right to
fire employees or "contractors"; requiring the carpentry division to join petitioners
exercise program; and providing rules on machine maintenance, all reflect control
and supervision over respondents.
Petition is denied.

[G.R. No. 126383. November 28, 1997.]

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA.
CONSUELO MAQUILING, LEONARDO MARTINEZ, DOMINGO ELA, JR.,
RODOLFO CALUCIN, JR., PERLA MENDOZA, REX RAPHAEL REYES, ROGELIO
BELMONTE, AND 375 OTHER EMPLOYEE-UNION MEMBERS, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, and SAN JUAN DE DIOS
HOSPITAL, respondents.
SYLLABUS
1.
LABOR AND SOCIAL LEGISLATION; REPUBLIC ACT NO. 5901 ( AN ACT
PRESCRIBING FORTY HOURS A WEEK OF LABOR FOR GOVERNMENT AND PRIVATE
HOSPITALS OR CLINIC PERSONNEL); REPEALED WITH THE PASSAGE OF THE LABOR
CODE ON MAY 1, 1974. Policy Instruction No. 54 relies and purports to implement
Republic Act No. 5901, otherwise known as "An Act Prescribing Forty Hours A Week
of Labor For Government And Private Hospitals Or Clinic Personnel", enacted on June
21, 1969. Reliance on Republic Act No. 5901, however is misplaced for the said
statute, as correctly ruled by respondent NLRC, has long been repealed with the
passage of the Labor Code on May 1, 1974, Article 302 of which explicitly provides:
"All labor laws not adopted as part of this Code either directly or by reference are
repealed. All provisions of existing laws, orders, decrees, rules and regulations
inconsistent herewith are likewise repealed."
2.
ID.; LABOR CODE; ARTICLE 83 THEREOF CONSTRUED; ADMINISTRATIVE
INTERPRETATION; THE COURT MAY STRIKE DOWN INTERPRETATION THAT DEVIATES
FROM THE PROVISION OF THE STATUTE. Only Article 83 of the Labor Code which
appears to have substantially incorporated or reproduced the basic provisions of
Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter's
validity may be gauged. A cursory reading of Article 83 of the Labor Code betrays
petitioners' position that "hospital employees" are entitled to "a full weekly salary
with paid two (2) days' off if they have completed the 40-hours/5-day work week".
What Article 83 merely provides are: (1) the regular office hour of eight hours a day,
five days per week for health personnel, and (2) where the exigencies of service
require that health personnel work for six days or forty-eight hours then such health
personnel shall be entitled to an additional compensation of at least thirty percent
of their regular wage for work on the sixth day. There is nothing in the law that
supports then Secretary of Labor's assertion that "personnel in subject hospitals and

clinics are entitled to a full weekly wage for seven (7) days if they have completed
the 40-hours/5-day workweek in any given workweek." Needless to say, the
Secretary of Labor exceeded his authority by including a two days off with pay in
contravention of the clear mandate of the statute. Such act the Court shall not
countenance. Administrative interpretation of the law is at best merely advisory,
and the Court will not hesitate to strike down an administrative interpretation that
deviates from the provision of the statute.
3.
ID.; SECRETARY OF LABOR'S POLICY INSTRUCTIONS NO. 54; DECLARED
VOID BY THE COURT; RATIONALE. Even if the Court was to subscribe with
petitioner's erroneous assertion that Republic Act No. 5901 has neither been
amended nor repealed by the Labor Code, we nevertheless find Policy Instructions
No. 54 invalid. A perusal of Republic Act No. 5901 reveals nothing therein that gives
two days off with pay for health personnel who complete a 40 or 5-day workweek. In
fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic
Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working
hours of health personnel and not to dole out a two-days off with pay. Further,
petitioners' position is also negated by the very rules and regulations promulgated
by the Bureau of Labor Standards which implement Republic Act No. 5901. If
petitioners are entitled to two days off with pay, then there appears to be no sense
at all why Section 15 of the implementing rules grants additional compensation
equivalent to the regular rate plus at least twenty-five percent thereof for work
performed on Sunday to health personnel, or an "additional straight-time pay which
must be equivalent at least to the regular rate" "[f]or work performed in excess of
forty hours a week . . . Policy Instructions No. 54 to the Court's mind unduly
extended the statute. The Secretary of Labor moreover erred in invoking the "spirit
and intent" of Republic Act No. 5901 and Article 83 of the Labor Code for it is an
elementary rule of statutory construction that when the language of the law is clear
and unequivocal, the law must be taken to mean exactly what it says. No additions
or revisions may be permitted. Policy Instructions No. 54 being inconsistent with and
repugnant to the provisions of Article 83 of the Labor Code, as well as to Republic
Act No. 5901, should be, as it is hereby; declared void.
FACTS
The rank-and-file employee-union officers and members of San Juan De Dios
Hospital Employees Association, sent on July 08, 1991, a letter with attached
support signatures requesting and pleading for the expeditious implementation and
payment by respondent" Juan De Dios Hospital "of the '40-HOURS/5-DAY
WORKWEEK' with compensable weekly two (2) days off provided for by Republic Act
5901 as clarified for enforcement by the Secretary of Labor's Policy Instructions No.
54 dated April 12, 1988." Respondent hospital failed to give a favorable response;
thus, petitioners filed a complaint regarding their "claims for statutory benefits
under the above-cited law and policy issuance. The Labor Arbiter dismissed the
complaint. Petitioners appealed before public respondent National Labor Relations
Commission
(NLRC), which affirmed the Labor Arbiter's decision. Petitioners'
subsequent motion for reconsideration was denied; hence, this petition under Rule
65 of the Rules of Court ascribing grave abuse of discretion on the part of NLRC in
concluding that Policy Instructions No. 54 "proceeds from a wrong interpretation of
RA 5901" and Article 83 of the Labor Code.

ISSUE
Whether Policy Instructions No. 54 issued by then Labor Secretary
Drilon is valid or not?

Franklin M.

HELD
* Content of POLICY INSTRUCTIONS NO. 54 provides personnel in subject hospital
and clinics entitled to a full weekly wage for seven (7) days if they have completed
the 40-hour/5-day workweek in any given workweek which was declared void by SC.
We note that Policy Instruction No. 54 relies and purports to implement Republic Act
No. 5901, otherwise known as "An Act Prescribing Forty Hours A Week Of Labor For
Government and Private Hospitals Or Clinic Personnel", enacted on June 21, 1969.
Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as
correctly ruled by respondent NLRC, has long been repealed with the passage of the
Labor Code on May 1, 1974, Article 302 of which explicitly provides: "All labor laws
not adopted as part of this Code either directly or by reference are hereby repealed.
All provisions of existing laws, orders, decree, rules and regulations inconsistent
herewith are likewise repealed." Accordingly, only Article 83 of the Labor Code
which appears to have substantially incorporated or reproduced the basic provisions
of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter's
validity may be gauged.
A cursory reading of Article 83 of the Labor Code betrays petitioners' position that
"hospital employees" are entitled to "a full weekly salary with paid two (2) days' off
if they have completed the 40-hour/5-day workweek". What Article 83 merely
provides are: (1) the regular office hour of eight hours a day, five days per week for
health personnel, and (2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such health personnel shall be
entitled to an additional compensation of at least thirty percent of their regular
wage for work on the sixth day. There is nothing in the law that supports then
Secretary of Labor's assertion that "personnel in subject hospitals and clinics are
entitled to a full weekly wage for seven (7) days if they have completed the 40hour/5-day workweek in any given workweek". Needless to say, the Secretary of
Labor exceeded his authority by including a two days off with pay in contravention
of the clear mandate of the statute. Such act the Court shall not countenance.
Administrative interpretation of the law, we reiterate, is at best merely advisory,
and the Court will not hesitate to strike down an administrative interpretation that
deviates from the provision of the statute.
Indeed, even if we were to subscribe with petitioners' erroneous assertion that
Republic Act No. 5901 has neither been amended nor repealed by the Labor Code,
we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No.
5901 reveals nothing therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly
states that the bill's sole purpose is to shorten the working hours of health
personnel and not to dole out a two days off with pay.

The Secretary of Labor moreover erred in invoking the "spirit and intent" of Republic
Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule of
statutory construction that when the language of the law is clear and unequivocal,
the law must be taken to mean exactly what it says. 9 No additions or revisions
may be permitted. Policy Instructions No. 54 being inconsistent with and repugnant
to the provision of Article 83 of the Labor Code, as well as to Republic Act No. 5901,
should be, as it is hereby, declared void.

[G.R. No. 106600 March 29, 1996]

COSMOS BOTTLING CORPORATION, petitioner, vs. NATIONAL
RELATIONS COMMISSION and GIL C. CASTRO, respondents.

LABOR

FACTS
Respondent Castro was employed by petitioner for a specific period from Sept. 5,
1988 to Oct. 4, 1988. He was rehired for another specific period from May 30, 1989
to Nov. 6, 1989. After the 2 terms, he was recommended for re-employment with
the companys Maintenance Team for the Davao project on Nov. 22, 1989. On Dec.
22, 1989, he was again re-hired and assigned to the Maintenance Division of Davao
Project tasked to install its annex plant machines. On May 21, 1990, Castros
employment was terminated due to the completion of the special project.
Castro then filed a complaint for illegal dismissal with the NLRC-RAB contending that
being a regular employee, he could not be dismissed without a just and valid cause.
The petitioner, on the other hand, alleged that Castro was a mere project employee
whose employment was co-terminus with the project for which he was hired, hence,
may be terminated upon the end or completion of the project for which he was
hired.
On May 27, 1990, petitioner retrenched some 228 regular employees and Castro
was not named one of those.
The Labor Arbiter decided in favor of Castro and declared that he is a regular
employee of petitioner, but in light of the recent retrenchment, his employment was
validly terminated. Upon appeal, the NLRC ruled that petitioner is guilty of illegal
dismissal and ordered the company to reinstate him. Hence, this petition.
ISSUE
Whether or not private respondent Gil C. Castro is a regular employee or was a
mere project employee of petitioner.
HELD
The SC held that Castro is not a regular employee of the petitioner and thus, was
not illegally dismissed. The first paragraph of Art 280 provides 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 trade or

business of the employer.
A project employee, on the other hand, 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.
The second paragraph of the provision defines casual employees as those who do
not fall under the definition of the first paragraph.
However, with respect to the first two kinds of employees, the principal test for
determining whether an employee is a project employee or a regular employee is
whether or not the project employee was assigned to carry out a "specific project or
undertaking," the duration and scope of which were specified at the time the
employee was engaged for that period.
In the course of its business, petitioner Cosmos undertakes distinct identifiable
projects as it did in the instant case when it formed special teams assigned to install
and dismantle its annex plant machines in various plants all over the country. These
projects are distinct and separate, and are identifiable as such, from its usual
business of bottling beverage. Their duration and scope are made known prior to
their undertaking and their specified goal and purpose are fulfilled once the projects
are completed. When private respondent was initially hired for a period of one
month and re-hired for another five months, and then subsequently re-hired for
another five months, he was assigned to the petitioner's Maintenance Division
tasked with the installation and dismantling of its annex plant machines. Evidently,
these projects or undertakings, the duration and scope of which had been
determined and made known to private respondent at the time of his employment,
can properly be treated as "projects" within the meaning of the "first" kind.
Considered as such, the services rendered by private respondent hired therein for
the duration of the projects may lawfully be terminated at the end or completion of
the same.
The mere fact that a project employee has worked on the Specific project for more
than one (1) year, does not necessary change his status as project employee and
convert it to regular or permanent employment. For it is obvious that the second
paragraph of Article 280 of the Labor Code, quoted above, providing that an
employee who has served for at least one (1) year, shall be considered a regular
employee, relates only to casual employees, not to project employees.
Consequently, private respondent's protestation is completely baseless because
being a project employee, he does not fall within the ambit of the pertinent
provision above-stated.
Clearly, therefore, private respondent being a project employee, or to use the
correct term, seasonal employee, considering that his employment was limited to
the installation and dismantling of petitioner's annex plant machines after which
there was no more work to do, his employment legally ended upon completion of
the project. That being so, the termination of his employment cannot and should not
constitute an illegal dismissal. Neither should it constitute retrenchment as private

respondent was a seasonal employee whose services were already terminated on

May 21, 1990 prior to the termination of the other regular employees of Cosmos by
reason of retrenchment.
Petition is granted.

[G.R. No. 109902 August 2, 1994]

ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others,
namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE,
EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY
BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS,
EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and
GERRY I. FETALVERO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents.
FACTS
Respondent company is a corporation engaged in the production and marketing of
steel products. In the course of its operation, it undertook a Five-year Expansion
Program, which resulted to the employment of the petitioners. The expansion
program would consist of the ff. projects: 1. setting up of a cold rolling mill
expansion project; 2. establishment of a billet steel-making plant; 3. acquisition
and installation of a Five-stand TDM; and 4. the Cold Mill Peripherals Project.
Instead of contracting out with an outside or independent contactor the tasks of
constructing the buildings with related civil and electrical works that would house
the new machineries and equipment, the company chose to execute and carry out
the expansion projects in house, as it were, by administration. Later, petitioners
filed a complaint for unfair labor practice, regularization, etc. The Labor Arbiter
declared petitioners as regular employees. But, upon appeal by the company, the
NLRC ruled that the petitioners are project employees. Hence, this petition.
ISSUE
Whether or not petitioners are project employees of NSC?
HELD
The SC ruled that petitioners are project employees. it is evidently important to
become clear about the meaning and scope of the term "project" in the present
context. The "project" for the carrying out of which "project employees" are hired
would ordinarily have some relationship to the usual business of the employer.
In the realm of business and industry, we note that "project" could refer to one or
the other of at least two (2) distinguishable types of activities. Firstly, a project
could refer to a particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company. Such job or

undertaking begins and ends at determined or determinable times. The typical

example of this first type of project is a particular construction job or project of a
construction company. A construction company ordinarily carries out two or more
discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati;
a residential condominium building in Baguio City; and a domestic air terminal in
Iloilo City. Employees who are hired for the carrying out of one of these separate
projects, the scope and duration of which has been determined and made known to
the employees at the time of employment, are properly treated as "project
employees," and their services may be lawfully terminated at completion of the
project.
The term "project" could also refer to, secondly, a particular job or undertaking
that is not within the regular business of the corporation. Such a job or undertaking
must also be identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends at
determined or determinable times. The case at bar presents what appears to our
mind as a typical example of this kind of "project."
The carrying out of the Five Year Expansion Program (or more precisely, each of its
component projects) constitutes a distinct undertaking identifiable from the ordinary
business and activity of NSC. Each component project, of course, begins and ends at
specified times, which had already been determined by the time petitioners were
engaged. We also note that NSC did the work here involved the construction of
buildings and civil and electrical works, installation of machinery and equipment
and the commissioning of such machinery only for itself. Private respondent NSC
was not in the business of constructing buildings and installing plant machinery for
the general business community, i.e., for unrelated, third party, corporations. NSC
did not hold itself out to the public as a construction company or as an engineering
corporation.
Which ever type of project employment is found in a particular case, a common
basic requisite is that the designation of named employees as "project employees"
and their assignment to a specific project, are effected and implemented in good
faith, and not merely as a means of evading otherwise applicable requirements of
labor laws.
Thus, the particular component projects embraced in the Five Year Expansion
Program, to which petitioners were assigned, were distinguishable from the regular
or ordinary business of NSC which, of course, is the production or making and
marketing of steel products. During the time petitioners rendered services to NSC,
their work was limited to one or another of the specific component projects which
made up the FAYEP I and II. There is nothing in the record to show that petitioners
were hired for, or in fact assigned to, other purposes, e.g., for operating or
maintaining the old, or previously installed and commissioned, steel-making
machinery and equipment, or for selling the finished steel products.
We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that
the petitioners were indeed "project employees:"
The present case therefore strictly falls under the definition of "project employees"

on paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has
been held that the length of service of a project employee is not the controlling test
of employment tenure but whether or not "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".
The proviso in the second paragraph of Article 280 relates only to casual employees
and is not applicable to those who fall within the definition of said Article's first
paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is
to be construed with reference to the immediately preceding part of the provision to
which it is attached, and not to other sections thereof, unless the clear legislative
intent is to restrict or qualify not only the phrase immediately preceding the proviso
but also earlier provisions of the statute or even the statute itself as a whole. No
such intent is observable in Article 280 of the Labor Code, which has been quoted
earlier.
Petition is dismissed.

[G.R. No. 122653 December 12, 1997]

PURE FOODS CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET AL., *
respondents.
FACTS
The private respondents were hired by petitioner Pure Foods to work for a fixed
period of five months at its tuna cannery plant in General Santos City. After the
expiration of their respective contracts of employment, their services were
terminated. They forthwith executed a "Release and Quitclaim" stating that they
had no claim whatsoever against the petitioner. Private respondents then filed
before the NLRC-Sub-RAB a complaint for illegal dismissal against the petitioner.

The Labor Arbiter dismissed the complaint on the ground that the private
respondents were mere contractual workers, and not regular employees; hence,
they could not avail of the law on security of tenure. The termination of their
services by reason of the expiration of their contracts of employment was,
therefore, justified.
The private respondents appealed the decision to the NLRC which affirmed the LAs
decision. However, on private respondents' motion for reconsideration, the NLRC
rendered another decision holding that the private respondent and their cocomplainants were regular employees. It declared that the contract of employment
for five months was a "clandestine scheme employed by the petitioner to stifle
private respondents' right to security of tenure" and should therefore be struck
down and disregarded for being contrary to law, public policy, and morals. Hence,
their dismissal on account of the expiration of their respective contracts was illegal.
Its motion for reconsideration having been denied, the petitioner came to this Court
contending that respondent NLRC committed grave abuse of discretion amounting
to lack of jurisdiction in reversing the decision of the Labor Arbiter.
ISSUE
Whether or not private respondents are regular employees of petitioner company or
mere contractual employees.
HELD
The SC held that the petition devoid of merit. Under Art. 280, there are two kinds of
regular employees are (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those
casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are employed.
In the instant case, the private respondents' activities consisted in the receiving,
skinning, loining, packing, and casing-up of tuna fish which were then exported by
the petitioner. Indisputably, they were performing activities which were necessary
and desirable in petitioner's business or trade. Contrary to petitioner's submission,
the private respondents could not be regarded as having been hired for a specific
project or undertaking. The term "specific project or undertaking" under Article 280
of the Labor Code contemplates an activity which is not commonly or habitually
performed or such type of work which is not done on a daily basis but only for a
specific duration of time or until completion; the services employed are then
necessary and desirable in the employer's usual business only for the period of time
it takes to complete the project. The fact that the petitioner repeatedly and
continuously hired workers to do the same kind of work as that performed by those
whose contracts had expired negates petitioner's contention that those workers
were hired for a specific project or undertaking only.
Although, this Court has upheld the legality of fixed-term employment, none of the
criteria had been met in the present case. It could not be supposed that private
respondents and all other so-called "casual" workers of the petitioner KNOWINGLY

and VOLUNTARILY agreed to the 5-month employment contract. Cannery workers

are never on equal terms with their employers. Almost always, they agree to any
terms of an employment contract just to get employed considering that it is difficult
to find work given their ordinary qualifications. Their freedom to contract is empty
and hollow because theirs is the freedom to starve if they refuse to work as casual
or contractual workers. Indeed, to the unemployed, security of tenure has no value.
It could not then be said that petitioner and private respondents "dealt with each
other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter.
The petitioner does not deny or rebut private respondents' averments (1) that the
main bulk of its workforce consisted of its so-called "casual" employees; (2) that as
of July 1991, "casual" workers numbered 1,835; and regular employee, 263; (3) that
the company hired "casual" every month for the duration of five months, after which
their services were terminated and they were replaced by other "casual" employees
on the same five-month duration; and (4) that these "casual" employees were
actually doing work that were necessary and desirable in petitioner's usual
business. This scheme of the petitioner was apparently designed to prevent the
private respondents and the other "casual" employees from attaining the status of a
regular employee. It was a clear circumvention of the employees' right to security of
tenure and to other benefits like minimum wage, cost-of-living allowance, sick leave,
holiday pay, and 13th month pay. Indeed, the petitioner succeeded in evading the
application of labor laws. Also, it saved itself from the trouble or burden of
establishing a just cause for terminating employees by the simple expedient of
refusing to renew the employment contracts.
The five-month period specified in private respondents' employment contracts
having been imposed precisely to circumvent the constitutional guarantee on
security of tenure should, therefore, be struck down or disregarded as contrary to
public policy or morals. To uphold the contractual arrangement between the
petitioner and the private respondents would, in effect, permit the former to avoid
hiring permanent or regular employees by simply hiring them on a temporary or
casual basis, thereby violating the employees' security of tenure in their jobs.
Petition is dismissed.

[G.R. No. 122122. July 20, 1999]

PHILIPPINE FRUIT & VEGETABLE INDUSTRIES, INC. and its President and
General Manager, MR. PEDRO CASTILLO, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, and Philippine Fruit and Vegetable Workers
Union-Tupas Local Chapter, respondents.
FACTS
The 194 individual complainants are members of complainant union in respondent
company which is engaged in the manufacture and processing of fruit and
vegetable purees for export. They were employed as seeders, operators, sorters,

slicers, janitors, drivers, truck helpers, mechanics and office personnel. On

September 5, 1988 herein private respondent Philippine Fruit and Vegetable
Workers Union-Tupas Local Chapter, for and in behalf of 127 of its members, filed a
complaint for unfair labor practice and/or illegal dismissal with damages against
petitioner corporation. Private respondent alleged that many of its complaining
members started working for San Carlos Fruits Corporation which later incorporated
into PFVII in January or February 1983 until their dismissal on different dates in
1985, 1986, 1987 and 1988. They further alleged that the dismissals were due to
complainants' involvement in union activities and were without just cause.
ISSUE
Whether or not private respondents are seasonal employees whose employments
ceased during the off-season due to no work.
HELD
The SC held that private respondents are regular employees because they have
been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, under the 1st par of Article 280.
Additionally, the proviso under the 2nd par of Article 280 considers as "casual"
employees, all other employees who do not fall under the definition of the 1st
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.
Under Article 280 of the Labor Code, an employment shall be deemed regular where
the employee: a) has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; or b) has
rendered at least one year of service, whether such service is continuous or broken,
with respect to the activity in which he is employed.
In the case at bar, the work of complainants as seeders, operators, sorters, slicers,
janitors, drivers, truck helpers, mechanics and office personnel is without doubt
necessary in the usual business of a food processing company like petitioner PFVII.
It should be noted that complainants' employment has not been fixed for a specific
project or undertaking the completion or termination of which has been determined
at the time of their appointment or hiring. Neither is their employment seasonal in
nature. While it may be true that some phases of petitioner company's processing
operations is dependent on the supply of fruits for a particular season, the other
equally important aspects of its business, such as manufacturing and marketing are
not seasonal. The fact is that large-scale food processing companies such as
petitioner company continue to operate and do business throughout the year even
if the availability of fruits and vegetables is seasonal.
Having determined that private respondents are regular employees under the first
paragraph, we need not dwell on the question of whether or not they had rendered
one year of service.
In this case only 80 of the 194 complainants provided evidence to support their

claims, the other 114 did not. Hence, whatever testimony or other proof of
employment submitted by any of them proves only the status of his own
employment and not that of any other complainant. Thus, only those members of
respondent union who were able to prove their claims are entitled to awards of
backwages, 13th month pay and separation pay.
The decision of the NLRC is affirmed.

[G.R. No. 141717. April 14, 2004]

PHILIPS SEMICONDUCTORS (PHILS.),
FADRIQUELA, respondent.

INC.,

petitioner,

vs.

ELOISA

FACTS
The petitioner Philips Semiconductors is a domestic corporation engaged in the
production and assembly of semiconductors such as power devices, RF modules,
CATV modules, RF and metal transistors and glass diods. It caters to domestic and
foreign corporations that manufacture computers, telecommunications equipment
and cars. Aside from contractual employees, the petitioner employed 1,029 regular
workers. The employees were subjected to periodic performance appraisal based on
output, quality, attendance and work attitude.[2] One was required to obtain a
performance rating of at least 3.0 for the period covered by the performance
appraisal to maintain good standing as an employee.
Respondent, during her 5 consecutive contracts, got the following ratings: 3.15, 3.8,
3.4, and 2.8. The reason for her failed mark on the last contract was her absences.
She was then asked to explain such absences but she failed to do the same.
Subsequently, respondents supervisor recommended that her employment be
terminated due to habitual absenteeism. Thus, her contract of employment was no
longer renewed. Respondent then filed a complaint for illegal dismissal. On the
other hand, petitioner contends that respondent was not dismissed; her contract
merely expired.
The Labor Arbiter and the NLRC based their decision on the CBA between the
petitioner and the labor union which provides that a contractual employee would
only be considered a regular employee if he has completed 17 months of service
and a performance rating of at least 3.0. The respondent filed a motion for
reconsideration but the NLRC denied the same. On appeal, the CA reversed the
decision of the NLRC. Hence, this petition.
ISSUE
Whether or not respondent was still a contractual employee of the company.
HELD

The SC agreed with the appellate court. Article 280 of the Labor Code of the
Philippines was emplaced in our statute books to prevent the circumvention by
unscrupulous employers of the employees right to be secure in his tenure by
indiscriminately and completely ruling out all written and oral agreements
inconsistent with the concept of regular employment defined therein. The language
of the law manifests the intent to protect the tenurial interest of the worker who
may be denied the rights and benefits due a regular employee because of lopsided
agreements with the economically powerful employer who can maneuver to keep
an employee on a casual or temporary status for as long as it is convenient to it. In
tandem with Article 281 of the Labor Code, Article 280 was designed to put an end
to the pernicious practice of making permanent casuals of our lowly employees by
the simple expedient of extending to them temporary or probationary
appointments, ad infinitum.
The two kinds of regular employees under the law are (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the
employer; and (2) those casual employees who have rendered at least one year of
service, whether continuous or broken, with respect to the activities in which they
are employed. The primary standard to determine a regular employment is the
reasonable connection between the particular activity performed by the employee
in relation to the business or trade of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. If
the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business of the employer. Hence, the
employment is also considered regular, but only with respect to such activity and
while such activity exists. The law does not provide the qualification that the
employee must first be issued a regular appointment or must be declared as such
before he can acquire a regular employee status.
In this case, the original contract of employment had been extended or renewed
four times, to the same position, with the same chores. Such a continuing need for
the services of the respondent is sufficient evidence of the necessity and
indispensability of her services to the petitioners business. By operation of law,
then, the respondent had attained the regular status of her employment with the
petitioner, and is thus entitled to security of tenure as provided for in Article 279 of
the Labor Code.
The limited period specified in petitioners employment contract having been
imposed precisely to circumvent the constitutional guarantee on security of tenure
should, therefore, be struck down or disregarded as contrary to public policy or
morals. To uphold the contractual arrangement would, in effect, permit the former
to avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees security of tenure in
their jobs.
Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure
the workers of security of tenure and free them from the bondage of uncertainty of

tenure woven by some employers into their contracts of employment. The

guarantee is an act of social justice. When a person has no property, his job may
possibly be his only possession or means of livelihood and those of his dependents.
When a person loses his job, his dependents suffer as well. The worker should
therefor be protected and insulated against any arbitrary deprivation of his job.
The ruling in Brent School, Inc. v. Zamora is also not applicable in this case because
it could not be supposed that private respondents and all other so-called casual
workers of the petitioner KNOWINGLY and VOLUNTARILY agreed to the employment
contract. Almost always, they agree to any terms of an employment contract just to
get employed considering that it is difficult to find work given their ordinary
qualifications. Their freedom to contract is empty and hollow because theirs is the
freedom to starve if they refuse to work as casual or contractual workers. Indeed, to
the unemployed, security of tenure has no value. It could not then be said that
petitioner and private respondents dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former over the
latter.
The petitioners reliance on the CBA is also misplaced. It is the express mandate of
the CBA not to include contractual employees within its coverage. Such being the
case, we see no reason why an agreement between the representative union and
private respondent, delaying the regularization of contractual employees, should
bind petitioner as well as other contractual employees. Indeed, nothing could be
more unjust than to exclude contractual employees from the benefits of the CBA on
the premise that the same contains an exclusionary clause while at the same time
invoke a collateral agreement entered into between the parties to the CBA to
prevent a contractual employee from attaining the status of a regular employee.
The CBA, during its lifetime, constitutes the law between the parties. Such being the
rule, the aforementioned CBA should be binding only upon private respondent and
its regular employees who were duly represented by the bargaining union. The
agreement embodied in the Minutes of Meeting between the representative union
and private respondent, providing that contractual employees shall become regular
employees only after seventeen months of employment, cannot bind petitioner.
Such a provision runs contrary to law not only because contractual employees do
not form part of the collective bargaining unit which entered into the CBA with
private respondent but also because of the Labor Code provision on regularization.
The law explicitly states that an employee who had rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee. The period set by law is one year. The seventeen months provided by the
Minutes of Meeting is obviously much longer. The principle is well settled that the
law forms part of and is read into every contract without the need for the parties
expressly making reference to it.
Petition is denied.

[G.R. No. 148492 May 9, 2003]

BUENAVENTURA C. MAGSALIN & COCA-COLA BOTTLERS PHILS., INC.,
petitioners, vs. NATIONAL ORGANIZATION OF WORKING MEN (N.O.W.M.),
RODOLFO MELGAR, ARNEL DELOS SANTOS, SILVERIO MINDAJAO, RUBEN
NAVALES, BOBBY AUSTERO, RAYMUNDO GAUDICOS, CHRISTOPHER
PERALTA, GIOVANI DELA CRUZ, JOSELITO OCCIDENTAL, AMADO BODASAN,
FREDERIK MAGALINO, CHITO OCCIDENTAL, ALEXANDER DELOS SANTOS,
DEONIL MESA, OLIVER VILLAFLOR, ROBERTO TUMONBA, RODRIGO
ANGELES, ROMMEL ABAD, FELIX AVENIDO, ARMANDO AMOR, FREDERICK
DE GUZMAN, CEA CARMELO, MARIANO CAETE, ALBERTO ANTONES,
ROMEO BASQUINAS, ROGELIO MALINIS, EDMUNDO BAYOS, RAMIL REVADO,

JOEL PIATA, OSCAR MALINAY, ROBERT REYES, JIMMY REYES, RETCHEL

HAUTEA, VICTORINO TORRALBA, NOEL RUBAI, RENATO DE OCAMPO, JESUS
NOZON, JOEL MALINIS, REYNALDO GREGORY, MICHAEL RUBIA, JOSELITO
VILLANUEVA, LEONARDO MONDINA, EDUARDO BELLA, WILFREDO BELLA,
ALBERTO MAGTIBAY, MIGUEL CUESTA, JOSE MARCOS RODRIGUEZ III,
HERMINIO ROFLO, ERNIE CHAVEZ, NELSON LOGRONIO, LEONILO GALAPIN,
REY PANGILINAN, LARRY JAVIER, MATIAS ARBUES, RONILO AUSTERO,
ADEMAR ESTUITA, EDWIN DE LEON, RANDY DE CHAVEZ, respondents.
FACTS
Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent
workers as "sales route helpers" for a limited period of five months. After five
months, respondent workers were employed by petitioner company on a day-to-day
basis. According to petitioner company, respondent workers were hired to substitute
for regular sales route helpers whenever the latter would be unavailable or when
there would be an unexpected shortage of manpower in any of its work places or an
unusually high volume of work. The practice was for the workers to wait every
morning outside the gates of the sales office of petitioner company. If thus hired,
the workers would then be paid their wages at the end of the day.
Ultimately, respondent workers asked petitioner company to extend to them regular
appointments. Petitioner company refused. Subsequently, the respondents filed
with the NLRC a complaint for the regularization of their employment with petitioner
company. Claiming that petitioner company meanwhile terminated their services,
respondent workers filed a notice of strike and a complaint for illegal dismissal and
unfair labor practice with the NLRC. The parties, later on, agreed to submit the
controversy, for voluntary arbitration but the VA dismissed the complaint on the
ground that the respondent workers were not employees of Coca-cola.
ISSUE
Whether or not the nature of work of respondents in the company is of such nature
as to be deemed necessary and desirable in the usual business or trade of
petitioner that could qualify them to be regular employees.

HELD
The SC ruled that he argument of petitioner that its usual business or trade is
softdrink manufacturing and that the work assigned to respondent workers as sales
route helpers so involves merely postproduction activities, one which is not
indispensable in the manufacture of its products, scarcely can be persuasive. If, as
so argued by petitioner company, only those whose work are directly involved in the
production of softdrinks may be held performing functions necessary and desirable
in its usual business or trade, there would have then been no need for it to even
maintain regular truck sales route helpers. The nature of the work performed must
be viewed from a perspective of the business or trade in its entirety and not on a
confined scope.

The repeated rehiring of respondent workers and the continuing need for their
services clearly attest to the necessity or desirability of their services in the regular
conduct of the business or trade of petitioner company. The Court of Appeals has
found each of respondents to have worked for at least one year with petitioner
company. While this Court, in Brent School, Inc. vs. Zamora, has upheld the legality
of a fixed-term employment, it has done so, however, with a stern admonition that
where from the circumstances it is apparent that the period has been imposed to
preclude the acquisition of tenurial security by the employee, then it should be
struck down as being contrary to law, morals, good customs, public order and public
policy. The pernicious practice of having employees, workers and laborers, engaged
for a fixed period of few months, short of the normal six-month probationary period
of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law.
Any obvious circumvention of the law cannot be countenanced.
The fact that respondent workers have agreed to be employed on such basis and to
forego the protection given to them on their security of tenure, demonstrate nothing
more than the serious problem of impoverishment of so many of our people and the
resulting unevenness between labor and capital. A contract of employment is
impressed with public interest. The provisions of applicable statutes are deemed
written into the contract, and the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply
contracting with each other.
Petition is dismissed.

[G.R. No. 149859. June 9, 2004]

RADIN C. ALCIRA, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, MIDDLEBY PHILIPPINES CORPORATION/FRANK THOMAS,
XAVIER G. PEA and TRIFONA F. MAMARADLO, respondents.
FACTS
Respondent Middleby Philippines Corporation hired petitioner as engineering
support services supervisor on a probationary basis for six months. Apparently
unhappy with petitioner's performance, respondent Middleby terminated petitioner's
services. The bone of contention centered on whether the termination occurred
before or after the six-month probationary period of employment.
The parties, presenting their respective copies of Alcira's appointment paper,
claimed conflicting starting dates of employment: May 20, 1996 according to
petitioner and May 27, 1996 according to respondent. Both documents indicated
petitioner's employment status as "probationary (6 mos.)" and a remark that "after
five months (petitioner's) performance shall be evaluated and any adjustment in
salary shall depend on (his) work performance."
Petitioner asserts that, on November 20, 1996, in the presence of his co-workers
and subordinates, a senior officer of respondent Middleby in bad faith withheld his
time card and did not allow him to work. Considering this as a dismissal "after the

lapse of his probationary employment," petitioner filed on November 21, 1996 a

complaint in the National Labor Relations Commission (NLRC) against respondent
Middleby contending that he had already become a regular employee as of the date
he was illegally dismissed.
In their defense, respondents claim that, during petitioner's probationary
employment, he showed poor performance in his assigned tasks, incurred ten
absences, was late several times and violated company rules on the wearing of
uniform. Since he failed to meet company standards, petitioner's application to
become a regular employee was disapproved and his employment was terminated.
ISSUE
Whether or not petitioner attained regular employment in the private respondents
company.
HELD
The SC ruled that under the terms of his contract, petitioners probationary
employment was only for five months as indicated by the remark "Please be
informed that after five months, your performance shall be evaluated and any
adjustment in salary shall depend on your work performance." The argument lacks
merit. As correctly held by the labor arbiter, the appointment contract also stated in
another part thereof that petitioner's employment status was "probationary (6
mos.)." The five-month period referred to the evaluation of his work.
Petitioner insists that he already attained the status of a regular employee when he
was dismissed on November 20, 1996 because, having started work on May 20,
1996, the six-month probationary period ended on November 16, 1996. According
to petitioner's computation, since Article 13 of the Civil Code provides that one
month is composed of thirty days, six months total one hundred eighty days. As the
appointment provided that petitioner's status was "probationary (6 mos.)" without
any specific date of termination, the 180th day fell on November 16, 1996. Thus,
when he was dismissed on November 20, 1996, he was already a regular employee.
Petitioner's contention is incorrect. In CALS Poultry Supply Corporation, et al. vs.
Roco, et al., this Court dealt with the same issue of whether an employment
contract from May 16, 1995 to November 15, 1995 was within or outside the sixmonth probationary period. We ruled that November 15, 1995 was still within the
six-month probationary period. We reiterate our ruling in CALS Poultry Supply:
Our computation of the 6-month probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month following. In short,
since the number of days in each particular month was irrelevant, petitioner was
still a probationary employee when respondent Middleby opted not to "regularize"
him on November 20, 1996.
Petition is denied.

[G.R. No. 148738 June 29, 2004]

MITSUBISHI MOTORS PHILIPPINES CORPORATION, petitioner, vs. CHRYSLER
PHILIPPINES LABOR UNION and NELSON PARAS, respondents.
FACTS
Respondent Nelson Paras was first employed by Mitsubishi as a shuttle bus driver on
March 19, 1976. He resigned on June 16, 1982. He applied for and was hired as a
diesel mechanic and heavy equipment operator in Saudi Arabia from 1982 to 1993.
When he returned to the Philippines, he was re-hired as a welder-fabricator at
Mitsubishi tooling shop from October 3, 1994 to October 31, 1994. On October 29,
1994, his contract was renewed from November 1, 1994 up to March 3, 1995.
Sometime in May of 1996, Paras was re-hired on a probationary basis as a
manufacturing trainee at the Plant Engineering Maintenance Department. He and
the new and re-hired employees were given an orientation on May 15, 1996 by
Emma P. Aninipot, respecting the company's history, corporate philosophy,
organizational structure, and company rules and regulations, including the company
standards for regularization, code of conduct and company-provided benefits. Paras
started reporting for work on May 27, 1996. He was assigned at the paint ovens, air
make-up and conveyors. As part of the MMPC's policy, Paras was evaluated by his
immediate supervisors Lito R. Lacambacal and Wilfredo J. Lopez after six (6)
months, and received an average rating. Later, Lacambacal informed Paras that
based on his performance rating, he would be regularized.
However, the Department and Division Managers, A.C. Velando and H.T. Victoria,
including Mr. Dante Ong reviewed the performance evaluation made on Paras. They
unanimously agreed, along with Paras' immediate supervisors, that the performance
of Paras was unsatisfactory. As a consequence, Paras was not considered for
regularization. On November 26, 1996, he received a Notice of Termination dated
November 25, 1996, informing him that his services were terminated effective the
said date since he failed to meet the required company standards for regularization.
ISSUE
Whether or not respondent Paras was already a regular employee on November 26,
1996;

HELD
The SC held that indeed, an employer, in the exercise of its management
prerogative, may hire an employee on a probationary basis in order to determine his
fitness to perform work. Under Article 281 of the Labor Code, the employer must
inform the employee of the standards for which his employment may be considered
for regularization. Such probationary period, unless covered by an apprenticeship
agreement, shall not exceed six (6) months from the date the employee started
working. The employee's services may be terminated for just cause or for his failure
to qualify as a regular employee based on reasonable standards made known to
him.
Respondent Paras was employed as a management trainee on a probationary basis.
During the orientation conducted on May 15, 1996, he was apprised of the
standards upon which his regularization would be based. He reported for work on
May 27, 1996. As per the company's policy, the probationary period was from three
(3) months to a maximum of six (6) months.
Applying Article 13 of the Civil Code, the probationary period of six (6) months
consists of one hundred eighty (180) days. This is in conformity with paragraph one,
Article 13 of the Civil Code, which provides that the months which are not
designated by their names shall be understood as consisting of thirty (30) days
each. The number of months in the probationary period, six (6), should then be
multiplied by the number of days within a month, thirty (30); hence, the period of
one hundred eighty (180) days.
As clearly provided for in the last paragraph of Article 13, in computing a period, the
first day shall be excluded and the last day included. Thus, the one hundred eighty
(180) days commenced on May 27, 1996, and ended on November 23, 1996. The
termination letter dated November 25, 1996 was served on respondent Paras only
at 3:00 a.m. of November 26, 1996. He was, by then, already a regular employee of
the petitioner under Article 281 of the Labor Code.

[G.R. No. 157029 December 15, 2005]

JIMMY KENT RAMBUYON, JOVITO CONDEZA, TONY MAQUIDATO, NESTOR

ODCHIGUE, NICOLAS GOMONID, JULITO SISLES, ROBERTO* PILA, VITO
AGAGARING, RUBEN SALE, ELEAZAR CAGO, Petitioners, - versus - FIESTA
BRANDS, INC., Respondent.
FACTS
Petitioners are part of a work pool of shellers for respondent company. They are
hired by the company when there is an oversupply of coconuts to be shelled or
when a regular employee cannot report to work. The company hires them as extra
hand or temporary replacement. In 2000, the company effected a new shelling
system where extra shellers were paid P220/day with a quota of 2000 per 8-hour
daily labor. Those amenable to the new system were preferred by the company.
Petitioners were among those who refused to adopt the new system. As a
consequence, they were not given preference in hiring. They subsequently filed a
complaint with the NLRC-RAB for illegal dismissal. They allege that they are regular
employees performing activities usually necessary and desirable in the business or
trade of respondent. They claim that they were terminated without just cause and
without notice and hearing.
The Labor Arbiter found that the extra shellers in the work pool, such as the
petitioners herein, were not regular employees of respondent. Thus, the Labor
Arbiter held that petitioners were not dismissed, but were simply not given work
assignments because of their unjustified refusal to adopt the new shelling system
being implemented by respondent.
On appeal, the NLRC affirmed the Labor Arbiters ruling. It reasoned that petitioners
adamant refusal to work under the new shelling system cannot be accepted and
sustained without infringing respondents management prerogative to introduce
measures aimed at maximizing production. Petitioners motion for reconsideration
was also denied by the NLRC. Undaunted, petitioners filed with the Court of Appeals
a special civil action for certiorari ascribing to the NLRC grave abuse of discretion.
The CA dismissed the petition.
ISSUE
Whether or not petitioners are regular employees of respondent company, and thus,
illegally dismissed.
HELD
The SC held that there no cogent reason to disturb the factual findings of the Labor
Arbiter as affirmed by the NLRC. We find supported by evidence on record their
finding that petitioners were not illegally dismissed, and that they were not regular
employees to begin with.
Petition is denied.

[G.R. No. 149329 July 12, 2004]

ROSITA PANGILINAN, YOLANDA LAYOLA, SALLY GOLDE, AIDA QUITE,
FERDINAND CALE, RAUL ARUITA, MANUEL ERIFUL, ARNEL PAULO,
ROSEMARIE GEOTINA, SAMUELA KUMAR, REBECCA PEREZ, EDGAR BELLO,
JOSEPH SORIANO, DANILO AMPULLER, TOLENTINO CALLAO, MANOLITA
MANALANG, TORIBIO LETIM, NANCY BELGICA, ALFREDO ARELLANO, JOSEFA
CEBUJANO, JUN DEL ROSARIO, AVELINO AGUILAR, MILAROSA TIAMSON,
EDNA DICHOSO, JASMIN BOLISAY, JULIETA DIDAL, GERARDO BARISO,
ANGELITO PEAFLOR, NERISSA LETIM, ALEXANDER BARBOSA, ELIZABETH
SAENS, NYMPHA LUGTU, MYRNA MORALES, LIZA CRUZ, ELENA FANG, EDNA
CRUZA, GORGONIO PALMA, JOSE VERGARA, ALDRIN REMORQUE, RUDY
BLANCO, MARIO BUENVIAJE, MA. CRISTY CEA, REYNALDO GUELAS
VILLASENOR, RHOY TADO, LYDIA SALIPOT, ANGELITO PEREZ VERGARA,
RODOLFO GACHO, JESSIE SAN PEDRO, MARINAO ORCA, JR., PEBELITO
LERONA, PEPE CONGRESO, NIMFA NAPAO, WILHELMINA BAGUISA, OLIVIA
CAINCAY, JERRY MANUEL NICOLAS, CARLOS ABRATIQUE, JESUS LIM, JR.,
AND GERRY ROXAS, Petitioners, - versus - GENERAL MILLING
CORPORATION, Respondent.

FACTS
The respondent General Milling Corporation is a domestic corporation engaged in
the production and sale of livestock and poultry. It is, likewise, the distributor of
dressed chicken to various restaurants and establishments nationwide. As such, it
employs hundreds of employees, some on a regular basis and others on a casual
basis, as emergency workers. The petitioners were employed by the respondent
on different dates as emergency workers at its poultry plant in Cainta, Rizal, under
separate temporary/casual contracts of employment for a period of five months.
Most of them worked as chicken dressers, while the others served as packers or
helpers. Upon the expiration of their respective contracts, their services were
terminated. They later filed separate complaints for illegal dismissal and nonpayment of holiday pay, 13th month pay, night-shift differential and service
incentive leave pay against the respondent before the Arbitration Branch of the
National Labor Relations Commission.
The petitioners alleged that their work as chicken dressers was necessary and
desirable in the usual business of the respondent, and added that although they
worked from 10:00 p.m. to 6:00 a.m., they were not paid night-shift differential.
They stressed that based on the nature of their work, they were regular employees
of the respondent; hence, could not be dismissed from their employment unless for
just cause and after due notice. They asserted that the respondent GMC terminated
their contract of employment without just cause and due notice. They further
argued that the respondent could not rely on the nomenclature of their employment
as temporary or casual.
ISSUE
Whether or not the petitioners were regular employees of the respondent GMC
when their employment was terminated.
HELD
The SC held the petitioners were employees with a fixed period, and, as such, were
not regular employees. Article 280 of the Labor Code comprehends three kinds of
employees: (a) regular employees or those whose work is necessary or desirable to
the usual business of the employer; (b) 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, (c) casual employees or
those who are neither regular nor project employees.
A regular employee is one who is engaged to perform activities which are necessary
and desirable in the usual business or trade of the employer as against those which
are undertaken for a specific project or are seasonal.[41] There are two separate
instances whereby it can be determined that an employment is regular: (1) if the
particular activity performed by the employee is necessary or desirable in the usual
business or trade of the employer; and, (2) if the employee has been performing the
job for at least a year. Article 280 of the Labor Code 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 thus nothing
essentially contradictory between a definite period of employment and the nature of
the employees duties.
Stipulations in employment contracts providing for term employment or fixed period
employment are valid when the period were agreed upon knowingly and voluntarily
by the parties without 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. An examination of the contracts entered
into by the petitioners showed that their employment was limited to a fixed period,
usually five or six months, and did not go beyond such period. The records reveal
that the stipulations in the employment contracts were knowingly and voluntarily
agreed to by the petitioners without force, duress or improper pressure, or any
circumstances that vitiated their consent. Similarly, nothing therein shows that
these contracts were used as a subterfuge by the respondent GMC to evade the
provisions of Articles 279 and 280 of the Labor Code.
The petitioners were hired as emergency workers and assigned as chicken
dressers, packers and helpers at the Cainta Processing Plant. While the petitioners
employment as chicken dressers is necessary and desirable in the usual business of
the respondent, they were employed on a mere temporary basis, since their
employment was limited to a fixed period. As such, they cannot be said to be
regular employees, but are merely contractual employees. Consequently, there
was no illegal dismissal when the petitioners services were terminated by reason of
the expiration of their contracts. Lack of notice of termination is of no consequence,
because when the contract specifies the period of its duration, it terminates on the
expiration of such period. A contract for employment for a definite period
terminates by its own term at the end of such period.
Petition is denied.

[G.R. No. 148102 July 11, 2006]

BERNARDINO LABAYOG, CRESENCIO GRANZORE, JEANETTE GONZALES,
NOEME DADIZ, GEMMA PANGANIBAN, DALISAY BUENVIAJE, VICTORIANA
RUEDAS, MA. VICTORIA CABALONG, AMALIA SALVARRI, ROWENA
FERNANDEZ, DELIA LOZARES, LUNINGNING ANGELES, ROSEMARIE SALES,
VIVIAN VERZOSA, MARILYN JOSE, ROSANNA ROLDAN, HERMINIO CARANTO,
ANITA
SALVADOR,
JORGE
SALAMAT,
ROBERTO
ODIAMAR,
EFREN
LACAMPUINGAN, NOEL TAGALOG, MARCOS DE LA CRUZ, ELIAS BELO,
DARIUS EROLES, HELEN BARAYUGA,[1] CRISTOPHER HILARIO, JOEL
ESGUERRA, BERNABE DUCUT, JOSEPH TANAUY, EDWIN CEA, NOEL
VILLASCA, ERNESTO ALFONSO, FERNANDO CEBU and REYNALDO

SESBRENO, Petitioners, vs. M.Y. SAN BISCUITS, INC. and MEW WAH LIM,
Respondents.
FACTS
In 1992, petitioners entered into contracts of employment with respondent
company as mixers, packers and machine operators for a fixed term. On the
expiration of their contracts, their services were terminated. Forthwith, they each
executed a quitclaim. On April 15, 1993, petitioners filed complaints for illegal
dismissal, underpayment of wages, non-payment of overtime, night differential and
13th month pay, damages and attorneys fees.
The labor arbiter ruled their dismissal to be illegal on the ground that they had
become regular employees who performed duties necessary and desirable in
respondent companys business. The labor arbiter ordered the reinstatement of
petitioners with award of backwages, 13th month pay and service incentive leave
pay. The claim for moral and exemplary damages was denied for failure to establish
bad faith on the part of respondents. All other claims were likewise denied. On
appeal, the NLRC set aside the LAs decision and ruled that having entered into their
employment contracts freely and voluntarily, they knew that their employment was
only for a fixed period and would end on the prescribed expiration date. Petitioners
motion for reconsideration was denied.
In a petition for certiorari filed by petitioners, the CA set aside the NLRC decision
and reinstated the decision of the labor arbiter. However, on respondents motion
for reconsideration, the CA reversed itself. The CA reasoned that, while petitioners
performed tasks which were necessary and desirable in the usual business of
respondent company, their employment contracts providing for a fixed term
remained valid. No force, duress, intimidation or moral dominance was exerted on
them. Respondents dealt with petitioners in good faith and within the valid
parameters of management prerogatives. Petitioners motion for reconsideration
was denied. Hence, this recourse.
ISSUE
Whether or not petitioners are regular employees of respondent company.
HELD
The SC ruled that where the duties of the employee consist of activities which
necessary or desirable in the usual business of the employer, the parties are
prohibited from agreeing on the duration of employment. Article 280 does
proscribe or prohibit an employment contract with a fixed period provided it is
intended to circumvent the security of tenure.

are
not
not
not

Two criteria validate a contract of employment with a fixed period: (1) 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 on the
employee and without any circumstances vitiating 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. Against these criteria, petitioners contracts of employment with a fixed
period were valid.
Each contract provided for an expiration date. Petitioners knew from the beginning
that the employment offered to them was not permanent but only for a certain fixed
period. They were free to accept or to refuse the offer. When they expressed their
acceptance, they bound themselves to the contract.
Simply put, petitioners were not regular employees. While their employment as
mixers, packers and machine operators was necessary and desirable in the usual
business of respondent company, they were employed temporarily only, during
periods when there was heightened demand for production. Consequently, there
could have been no illegal dismissal when their services were terminated on
expiration of their contracts. There was even no need for notice of termination
because they knew exactly when their contracts would end. Contracts of
employment for a fixed period terminate on their own at the end of such period.
Contracts of employment for a fixed period are not unlawful. What is objectionable
is the practice of some scrupulous employers who try to circumvent the law
protecting workers from the capricious termination of employment. Employers have
the right and prerogative to choose their workers. The law, while protecting the
rights of the employees, authorizes neither the oppression nor destruction of the
employer. When the law angles the scales of justice in favor of labor, the scale
should never be so tilted if the result is an injustice to the employer.
Petition is denied.

[G.R. No. 153832. March 18, 2005]

FILIPINAS PRE-FABRICATED BUILDING SYSTEMS (FILSYSTEMS), INC., and
FELIPE A. CRUZ JR., petitioners, vs. ROGER D. PUENTE, respondent.
FACTS
Respondent Puente alleged that he worked with petitioner Filsystems, Inc. starting
June 1989 initially as an installer, and was later promoted to mobile crane operator
at the company premises He claims that his work was not dependent on the
completion or termination of any project; that since his work was not dependent on
any project, his employment with the company was continuous and without
interruption for the past 10 years. On October 1, 1999, he was dismissed from his
employment allegedly because he was a project employee. He filed a pro forma
complaint for illegal dismissal against the company on November 18, 1999.
Petitioner on the other hand alleged that complainant was hired as a project
employee in the companys various projects; that his employment contracts showed
that he was a project worker with specific project assignments; that after
completion of each project assignment, his employment was likewise terminated
and the same was correspondingly reported to the DOLE.

ISSUE
Whether or not whether respondent is a project employee.
HELD
The SC held that Art 280 of the labor Code defines project employees as those
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. Particularly, DO 19-1993 states that project
employees are those employed in connection with a particular construction project
or phase thereof and whose employment is co-terminous with each project or phase
of the project to which they are assigned.
Either one or more of the following circumstances, among other, may be considered
as indicators that an employee is a project employee: (a) the duration of the
specific/identified undertaking for which the worker is engaged is reasonably
determinable; (b) such duration, as well as the specific work/service to be
performed, is defined in an employment agreement and is made clear to the
employee at the time of hiring; (c) the work/service performed by the employee is in
connection with the particular project/undertaking for which he is engaged; (d) the
employee, while not employed and awaiting engagement, is free to offer his
services to any other employer; (e) The termination of his employment in the
particular project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the workplace within 30
days following the date of his separation from work, using the prescribed form on
employees terminations/dismissals/suspensions; (f) an undertaking in the
employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies.
The above-quoted provisions make it clear that a project employee is 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 services to be performed is seasonal in nature and
the employment is for the duration of the season. The length of service of a project
employee is not the controlling test of employment tenure but whether or not 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.
In the present case, the contracts of employment of Puente attest to the fact that
he was hired for specific projects. His employment was coterminous with the
completion of the projects for which he had been hired. Those contracts expressly
provided that his tenure of employment depended on the duration of any phase of
the project or on the completion of the construction projects. Furthermore,
petitioners regularly submitted to the labor department reports of the termination of
services of project workers. Such compliance with the reportorial requirement
confirms that respondent was a project employee.

That his employment contract does not mention particular dates that establish the
specific duration of the project does not preclude his classification as a project
employee. This fact is clear from the provisions of Clause 3.3(a) of Department
Order No. 19, which states:
a) Project employees whose aggregate period of continuous employment in a
construction company is at least one year shall be considered regular employees, in
the absence of a day certain agreed upon by the parties for the termination of
their relationship. Project employees who have become regular shall be entitled to
separation pay.
A day as used herein, is understood to be that which must necessarily come,
although is may not be known exactly when. This means that where the final
completion of a project or phase thereof is in fact determinable and the expected
completion is made known to the employee, such project employee may not be
considered regular, notwithstanding the one-year duration of employment in the
project or phase thereof or the one-year duration of two or more employments in
the same project or phase of the object.
Evidently, although the employment contract did not state a particular date, it did
specify that the termination of the parties employment relationship was to be on a
day certain -- the day when the phase of work termed Lifting & Hauling of
Materials for the World Finance Plaza project would be completed. Thus,
respondent cannot be considered to have been a regular employee. He was a
project employee.
That he was employed with Petitioner Filsystems for ten years in various projects did
not ipso facto make him a regular employee, considering that the definition of
regular employment in Article 280 of the Labor Code makes a specific exception
with respect to project employment. The mere rehiring of respondent on a projectto-project basis did not confer upon him regular employment status. The practice
was dictated by the practical consideration that experienced construction workers
are more preferred. It did not change his status as a project employee.
Petition is granted.

[G.R. No. 158324. March 14, 2005]

ROBERTO RAVAGO, petitioner, vs. ESSO EASTERN MARINE, LTD. and TRANSGLOBAL MARITIME AGENCY, INC., respondents.
FACTS
The respondent Esso is a foreign company based in Singapore and engaged in
maritime commerce. It is represented in the Philippines by its manning agent and
co-respondent Trans-Global, a corporation organized under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman on board various
Esso vessels. On February 13, 1970, Ravago commenced his duty as S/N wiper on
board the Esso Bataan under a contract that lasted until February 10, 1971.
Thereafter, he was assigned to work in different Esso vessels where he was
designated diverse tasks, such as oiler, then assistant engineer. He was employed

under a total of 34 separate and unconnected contracts, each for a fixed period, by
three different companies, namely, Esso Tankers, Inc. (ETI), EEM and Esso
International Shipping (Bahamas) Co., Ltd. (EIS), Singapore Branch. Ravago worked
with Esso vessels until August 22, 1992, a period spanning more than 22 years.
Shortly after completing his latest contract with Esso, Ravago was granted a
vacation leave with pay. Preparatory to his embarkation under a new contract, he
was ordered to report for a Medical Pre-Employment Examination, which, according
to the records, he passed. He, likewise, attended a Pre-Departure Orientation
Seminar conducted by the Capt. I.P. Estaniel Training Center, a division of TransGlobal.
One night, a stray bullet hit Ravago on the left leg while he was waiting for a bus
ride in Cubao, Quezon City. He fractured his left proximal tibia and was hospitalized
at the Philippine Orthopedic Hospital. Ravagos wife, Lolita, informed the petitioners
of the incident for purposes of availing medical benefits. As a result of his injury,
Ravagos doctor opined that he would not be able to cope with the job of a seaman
and suggested that he be given a desk job. For this reason, the company physician
found him to have lost his dexterity, making him unfit to work once again as a
seaman. Consequently, instead of rehiring Ravago, Esso paid him his Career
Employment Incentive Plan (CEIP) as of and his final tax refund. However, Ravago
filed a complaint for illegal dismissal with prayer for reinstatement, backwages,
damages and attorneys fees against Trans-Global and Esso with the POEA
Adjudication Office.
Respondents denied that Ravago was dismissed without notice and just cause.
Rather, his services were no longer engaged in view of the disability he suffered
which rendered him unfit to work as a seafarer. This fact was further validated by
the company doctor and Ravagos attending physician. They averred that Ravago
was a contractual employee and was hired under 34 separate contracts by different
companies.
Ravago insisted that he was fit to resume pre-injury activities and that he was not a
mere contractual employee because the respondents regularly and continuously
rehired him for 23 years and, for his continuous service, was awarded a CEIP
payment upon his termination from employment.
ISSUE
Whether or not petitioner Ravago is a regular employee of respondent Esso.
HELD
The SC held that seafarers are contractual, not regular, employees. Seamen and
overseas contract workers are not covered by the term regular employment as
defined in Article 280 of the Labor Code.
Petition is denied.
[G.R. No. 110524 July 29, 2002]
DOUGLAS MILLARES and ROGELIO LAGDA, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME AGENCY, INC.
and ESSO INTERNATIONAL SHIPPING CO., LTD. respondents.

FACTS
Petitioners were employed by Esso through its local manning agency, Trans-Global.
Both petitioners individually wrote Esso of their respective intention to avail of the
optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP).
However, their requests were denied by Esso on the following grounds, to wit: (1) he
was employed on a contractual basis; (2) his contract of enlistment (COE) did not
provide for retirement before the age of sixty (60) years; and (3) he did not comply
with the requirement for claiming benefits under the CEIP, i.e., to submit a written
advice to the company of his intention to terminate his employment within thirty
(30) days from his last disembarkation date. Millares filed a leave of absence, but
was later informed that another person was promoted to his position because of his
extended absence without leave. This AWOL was equated by Esso as abandonment
of his position and was he was subsequently dropped from the roster of crew
members. The same this happened to petitioner Lagda.
Petitioners Millares and Lagda then filed a complaint-affidavit for illegal dismissal
and non-payment of employee benefits against private respondents Esso
International and Trans-Global, before the POEA.
ISSUE
Whether or not petitioners are contractual employees whose contractual
employments are terminated every time their contracts of employment expire.
HELD
The SC held that seafarers are not regular employees. They are considered
contractual employees. They cannot be considered as regular employees under
article 280 of the Labor Code. Their employment is governed by the contracts they
sign every time they are rehired and their employment is terminated when the
contact expires. Their employment is contractually fixed for a certain period of time.
They fall under the exception of article 280 whose employment has been fixed for a
specific project/undertaking the completion of which has been determined at the
time of engagement of the employee or where the work/services to be performed is
seasonal in nature and the employment is for the duration of the season.
Petition is partly granted.

[G.R. No. 150478. April 15, 2005]

HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE,
petitioners, vs. CANDIDO CUENCA, FRANCISCO ACULIT, ANGELINA
ALMONIA, DONALD ALPUERTO, NIDA BANGALISAN, ROGELIO CHAVEZ,
ELMO DULINGGIS, MERCEDES EMPERADO, TORIBIO EMPERADO, JULIANA
ENCARNADO,
REYNALDO
ENCARNADO,
GENE
FERNANDO,
JOVEN
FERNANDO, HERNANI FERNANDO, TERESITA FERNANDO, BONIFACIO

GADON, JOSE GALLADA, RAMONITO KILAYKO, ROLANDO KILAYKO, ALFREDO

LASTIMOSO, ANTONIO LOMBO, ELIAS LOMBO, EMMA LOMBO, LAURENCIA
LOMBO, LUCIA LOMBO, JOEL MALACAPAY, ADELA MOJELLO, ERNESTO
MOJELLO, FRUCTOSO MOJELLO, JESSICA MOJELLO, JOSE MOJELLO,
MARITESS MOJELLO, MERLITA MOJELLO, ROMEO MOJELLO, RONALDO
MOJELLO, VALERIANA MOJELLO, JAIME NEMENZO, RODOLFO NAPABLE,
SEGUNDIA OCDEN, JARDIOLINA PABALINAS, LAURO PABALINAS, NOLI
PABALINAS, RUBEN PABALINAS, ZALDY PABALINAS, ALFREDO PANOLINO,
JOAQUIN PEDUHAN, JOHN PEDUHAN, REYNALDO PEDUHAN, ROGELIO
PEDUHAN, JOSEPHINE PEDUHAN, ANTONIO PORRAS, JR., LORNA PORRAS,
JIMMY REYES, ALICIA ROBERTO, MARCOS ROBERTO, JR., MARIA SANGGA,
RODRIGO SANGGA, ARGENE SERON, SAMUEL SERON, SR., ANGELINO
SENELONG, ARMANDO SENELONG, DIOLITO SENELONG, REYNALDO
SENELONG, VICENTE SENELONG, FEDERICO STA. ANA, ROGELIO SUASIM,
EDNA TADLAS, ARTURO TITONG, JR., JOSE TITONG, JR., NANCY VINGNO,
ALMA YANSON, JIMMY YANSON, MYRNA VILLANUEVA BELENARIO,
SALVADOR MALACAPAY, and RAMELO TIONGCO, respondents.
FACTS
The 76 individual respondents were part of the workforce of Hacienda Bino
consisting of 220 workers, performing various works, such as cultivation, planting of
cane points, fertilization, watering, weeding, harvesting, and loading of harvested
sugarcanes to cargo trucks.
On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or
Notice which stated, thus:
To all Hacienda Employees:
Please bear in mind that all those who signed in favor of CARP are expressing their
desire to get out of employment on their own volition.
Wherefore, beginning today, July 18, only those who did not sign for CARP will be
given employment by Hda. Bino.
(Sgd.) Hortencia Starke
The respondents regarded such notice as a termination of their employment. As a
consequence, they filed a complaint for illegal dismissal, wage differentials, 13th
month pay, holiday pay and premium pay for holiday, service incentive leave pay,
and moral and exemplary damages with the NLRC-RAB.
The respondents alleged that they are regular and permanent workers of the
hacienda and that they were dismissed without just and lawful cause. They further
alleged that they were dismissed because they applied as beneficiaries under the
Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner
Starke.
For her part, petitioner Starke recounted that the companys Board of Directors
petitioned the Sangguniang Bayan of Kabankalan for authority to re-classify, from
agricultural to industrial, commercial and residential, the whole of Hacienda Bino,
except the portion earmarked for the CARP. She asserted that half of the workers

supported the re-classification but the others, which included the herein
respondents, opted to become beneficiaries of the land under the CARP. Petitioner
Starke alleged that in July 1996, there was little work in the plantation as it was offseason; and so, on account of the seasonal nature of the work, she issued the order
giving preference to those who supported the re-classification. She pointed out that
when the milling season began in October 1996, the work was plentiful again and
she issued notices to all workers, including the respondents, informing them of the
availability of work. However, the respondents refused to report back to work. With
respect to the respondents money claims, petitioner Starke submitted payrolls
evidencing payment thereof.
ISSUE
Whether or not respondents are seasonal employees.
HELD
The SC held that the primary standard for determining regular employment is the
reasonable connection between the particular activity performed by the employee
in Relation to the usual trade o business of the employer. There is no doubt that the
respondents were performing work necessary and desirable in the usual trade or
business of an employer. For respondents to be excluded from those classified as
regular employees, it is not enough that they perform work or services that are
seasonal in nature. They must have been employed only for the duration of one (1)
season. While the records sufficiently show that the respondents work in the
hacienda was seasonal in nature, there was, however, no proof that they were hired
for the duration of one season. In fact, the payrolls submitted by the petitioners,
show that they availed the services of the respondents since 1991. Absent any
proof to the contrary, the general rule of regular employment should, therefore,
stand. It bears stressing that the employer has the burden of proving the lawfulness
of his employees dismissal.
Petition is denied.

[G.R. No. 149440. January 28, 2003]

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and
CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE
WORKERS-FOOD AND GENERAL TRADE, respondents.
FACTS
In the course of a labor dispute between the petitioner and respondent union, the

union members 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. A conciliation meeting was conducted wherein Luisa
Rombo, Ramona Rombo, Bobong Abrega, and Boboy Silva were not considered by
the company as employees, and thus may not be members of the union. It was also
agreed that a number of other employees will be reinstated. When respondents
again reneged on its commitment, complainants filed the present complaint. It is
alleged by the petitioners that the above employees are mere seasonal employees.
ISSUE
Whether or not the seasonal employees have become regular employees.
HELD
The SC held that for respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are seasonal in
nature. They must have also been employed only for the duration of one season.
The evidence proves the existence of the first, but not of the second, condition. The
fact that respondents -- with the exception of Luisa Rombo, Ramona Rombo, Bobong
Abriga and Boboy Silva -- repeatedly worked as sugarcane workers for petitioners
for several years is not denied by the latter. Evidently, petitioners employed
respondents for more than one season. Therefore, the general rule of regular
employment is applicable.
The primary standard 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 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.
Petition is denied.

G.R. No. 157788. March 08, 2005]

SAINT MARYS UNIVERSITY, represented by its President REV. JESSIE M.
HECHANOVA, CICM, petitioner, vs. COURT OF APPEALS (Former Special
Twelfth Division), NATIONAL LABOR RELATIONS COMMISSION (Second
Division) and MARCELO A. DONELO, respondents.
FACTS

Respondent Donelo started teaching on a contractual basis at St. Marys University

in 1992. In 1995, he was issued an appointment as an Assistant Professor I. Later
on, he was promoted to Assistant Professor III. He taught until the first semester of
school year 1999-2000 when the school discontinued giving him teaching
assignments. For this, respondent filed a complaint for illegal dismissal against the
university.
In its defense, petitioner St. Marys University showed that respondent was merely a
part-time instructor and, except for three semesters, carried a load of less than
eighteen units. Petitioner argued that respondent never attained permanent or
regular status for he was not a full-time teacher. Further, petitioner showed that
respondent was under investigation by the university for giving grades to students
who did not attend classes. Petitioner alleged that respondent did not respond to
inquiries relative to the investigation. Instead, respondent filed the instant case
against the university.
ISSUE
Whether or not respondent Donelo is a full time teacher and thus qualified to
become a permanent teacher of petitioner.
HELD
The SC held that section 93 of the 1992 Manual of Regulations for Private Schools,
provides that full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent.[6] Furthermore, the
probationary period shall not be more than six consecutive regular semesters of
satisfactory service for those in the tertiary level. Thus, the following requisites
must concur before a private school teacher acquires permanent status: (1) the
teacher is a full-time teacher; (2) the teacher must have rendered three consecutive
years of service; and (3) such service must have been satisfactory.
In the present case, petitioner claims that private respondent lacked the requisite
years of service with the university and also the appropriate quality of his service,
i.e., it is less than satisfactory. The basic question, however, is whether respondent
is a full-time teacher.
Section 45 of the same manual provides that full-time academic personnel are those
meeting all the following requirements:
a. Who possess at least the minimum academic qualifications prescribed by the
Department under this Manual for all academic personnel;
b.
Who are paid monthly or hourly, based on the regular teaching loads as
provided for in the policies, rules and standards of the Department and the school;
c. Whose total working day of not more than eight hours a day is devoted to the
school;
d. Who have no other remunerative occupation elsewhere requiring regular hours
of work that will conflict with the working hours in the school; and
e. Who are not teaching full-time in any other educational institution.
All teaching personnel who do not meet the foregoing qualifications are considered

part-time.
A perusal of the various orders of the then Department of Education, Culture and
Sports prescribing teaching loads shows that the regular full-time load of a faculty
member is in the range of 15 units to 24 units a semester or term, depending on the
courses taught. Part-time instructors carry a load of not more than 12 units.
The evidence on record reveals that, except for four non-consecutive terms,
respondent generally carried a load of twelve units or less from 1992 to 1999.
There is also no evidence that he performed other functions for the school when not
teaching. These give the impression that he was merely a part-time teacher.
Although this is not conclusive since there are full-time teachers who are allowed by
the university to take fewer load, in this case, respondent did not show that he
belonged to the latter group, even after the university presented his teaching
record. With a teaching load of twelve units or less, he could not claim he worked
for the number of hours daily as prescribed by Section 45 of the Manual.
Furthermore, the records also indubitably show he was employed elsewhere from
1993 to 1996.
Since there is no showing that respondent worked on a full-time basis for at least
three years, he could not have acquired a permanent status. A part-time employee
does not attain permanent status no matter how long he has served the school. And
as a part-timer, his services could be terminated by the school without being held
liable for illegal dismissal. Moreover, the requirement of twin-notice applicable only
to regular or permanent employees could not be invoked by respondent.
Yet, this is not to say that part-time teachers may not have security of tenure. The
school could not lawfully terminate a part-timer before the end of the agreed period
without just cause. But once the period, semester, or term ends, there is no
obligation on the part of the school to renew the contract of employment for the
next period, semester, or term.
[G.R. No. 148372. June 27, 2005]
CLARION PRINTING HOUSE, INC., and EULOGIO YUTINGCO, petitioners, vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (Third
Division) and MICHELLE MICLAT, respondents.
FACTS
Private Respondent Michelle Miclat (Miclat) was employed on April 21, 1997 on a
probationary basis as marketing assistant by petitioner Clarion Printing House
(CLARION) owned by its co-petitioner Eulogio Yutingco.
At the time of her
employment, she was not informed of the standards that would qualify her as a
regular employee.
On September 16, 1997, the EYCO Group of Companies of which CLARION formed
part filed with the SEC a Petition for Suspension of Payments and Rehabilitation. As
a result of the petition, on September 30, 1997, the SEC issued an Order approving
the creation of an interim receiver for the EYCO Group of Companies.
On October 10, 1997, the EYCO Group of Companies issued to its employees a
Memorandum announcing the formal entry of the Receiver Group and the functions

thereof. Nothing more was said in the Memorandum.

On October 22, 1997, CLARION informed Miclat by telephone that her employment
contract had been terminated effective October 23, 1997.
Miclat filed a case for Illegal Dismissal against CLARION and Yutingco before the
NLRC.
On January 7, 1998 CLARION issued a Memorandum informing their company
managers that the company had to shut down some operations of the company due
to numerous external factors such as slowdown in business and consumer
demand.
Miclats Assertions before the L.A (Labor Arbiter) March, 1998:
1.
She was a regular employee since CLARION never informed her of the
standards to qualify as a regular EE.
2.
The claims of CLARION regarding their financial status is disputable.
3.
Irregardless, assuming that her termination was necessary, it was done in
violation of her right to due process since the requirement for notice was not
followed, she being informed of her termination only a day before it took effect.
4.
Miclat claims separation pay, 13th month pay and salaries for October 21, 22
and 23, 1997.
ON the other hand, CLARION claims that:
1.
Their financial status, as can be deduced from their state of receivership,
justified their retrenchment. They were only following the Last In, First One Out
Policy.
2.
They sufficiently complied with due process, referring to a July 21, 1997
Memorandum where notice of the companys state of receivership and an offer for
voluntary separation to any EE who was interested. This Memo, constituted as
notice issued more than a month before Miclats termination on October 23.
The Labor Arbiter decided in favor of Miclat and ordered her reinstatement,
backwages and proportionate 13th month pay.
CLARION appealed to the NLRC emphasizing that the dismissal of Miclat was done in
good faith and in accordance with law thus she did not deserve the award given by
the LA. In addition, CLARION presented their balance sheets from 1997 to 1998 and
the fact that they had to shut down on 1998 as evidence of a reverse in their
financial situation.
The NLRC affirmed the LAs decision:
There are three (3) valid requisites for valid retrenchment: (1) the retrenchment is
necessary to prevent losses and such losses are proven; (2) written notices to the
employees and to the Department of Labor and Employment at least one (1) month
prior to the intended date of retrenchment; and (3) payment of separation pay
equivalent to one (1) month pay or at least month pay for every year of service,
whichever is higher.
The two notices are mandatory. If the notice to the workers is later than the notices
sent to DOLE, the date of termination should be at least one month from the date of
notice to the workers.

Also in Lopez Sugar Corporation v. Federation of Free Workers Philippine Labor Union
Association (PLUA-NACUSIP) and National Labor Relations Commission, the Supreme
Court had the occasion to set forth four standards which would justify retrenchment,
being, firstly, - the losses expected should be substantial and not merely de minimis
in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly
shown to be insubstantial and inconsequential in character, the bona fide nature of
the retrenchment would appear to be seriously in question; secondly, - the
substantial loss apprehended must be reasonably imminent, as such imminence can
be perceived objectively and in good faith by the employer. There should, in other
words, be a certain degree of urgency for the retrenchment, which is after all a
drastic course with serious consequences for the livelihood of the employees retired
or otherwise laid-off; thirdly, - because of the consequential nature of retrenchment,
it must be reasonably necessary and likely to effectively prevent the expected
losses. The employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other cost than labor costs; and lastly, - the
alleged losses if already realized and the expected imminent losses sought to be
forestalled, must be proven by sufficient and convincing evidence.
The NLRC dismissed CLARIONs petition due to its failure to present sufficient
evidence pointing to the requirements mentioned regarding a justifiable
retrenchment (no sufficient evidence regarding financial status) and a valid
retrenchment (no compliance with two notices or evidence regarding payment of
separation pay, etc.).
Hence, CLARION appealed to the CA, contending in fine that:
1.
That the mere fact that CLARION was placed under receivership is evidence
that they were in dire straights.
2.
They complied in good faith with the requirements under law regarding
dismissal of EEs.
The CA affirmed the NLRCs decision in this wise: that once again, CLARION failed to
prove the justifying circumstances for retrenchment and the evidence they
presented regarding their subsequent shut down was inadmissible since those were
presented for the first time on appeal with cause. And likewise notice was
unsatisfactory.
CLARION appealed to the SC. It contended in addition that Labor cases were not
governed by the usual rules of procedure and therefore, the evidence presented on
appeal should be admitted.
The SC ruled that CLARIONs petition was partly meritorious.
CLARION was right in saying that Labor cases werent governed by the usual Rules
of Procedure hence the evidence should be admitted.
It was also wrong for the lower court not to take judicial notice of the evidences
regarding CLARIONs financial problem. In fine, CLARIONs claim that at the time it
terminated Miclat it was experiencing business reverses gains more light from the
SECs disapproval of the EYCO Group of Companies petition to be declared in state
of suspension of payment, filed before Miclats termination, and of the SECs
consequent order for the group of companies dissolution and liquidation.

Notwithstanding, the SC found that Miclat was a regular EE. Section 6, Rule I of the
Implementing Rules of Book VI of the Labor Code says that :
SEC. 6. Probationary employment. There is probationary employment where the
employee, upon his engagement, is made to undergo a trial period during which the
employer determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:
xxx
(d)
In all cases of probationary employment, the employer shall make known to
the employee the standards under which he will qualify as a regular employee at
the time of his engagement. Where no standards are made known to the employee
at that time, he shall be deemed a regular employee.
Miclat must therefore be entitled to the privileges of a regular EE which brings us to
the question: Should Miclat be entitled to the privileges of an illegally dismissed
regular employee?
The SC said yes since CLARION failed to comply with the requirements for valid
dismissal under Article 283 of the LC to wit:
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 worker and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof.
Hence, nominal damages are awarded to Miclat for CLARIONs violation of her
statutory due process rights. (see Tort principles)
Additionally, Article 283 of the Labor Code also provides that [i]n case of
retrenchment to prevent losses, . . . 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 [being] considered
one (1) whole year,.
Also, paragraph 6 of the Revised Guidelines on the 13th Month Pay Law provides:
6.
13th Month Pay of Resigned or Separated Employee
An employee x x x whose services were terminated any time before the time for
payment of the 13th month pay is entitled to this monetary benefit in proportion to
the length of time he worked during the calendar year up to the time of his
resignation or termination from the service. Thus if he worked only from January up
to September his proportionate 13th month pay shall be equivalent to 1/12 of his
total basic salary he earned during that period.
Hence, Miclat was also rewarded separation pay and 13th month pay in addition to
nominal damages.

[G.R. No. 152427. August 9, 2005]

INTEGRATED CONTRACTOR AND PLUMBING WORKS, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and GLEN SOLON, respondents.
FACTS
Petitioner is a plumbing contractor. Its business depends on the number and
frequency of the projects it is able to contract with its clients. Private respondent
Solon worked for petitioner. And his employment record shows that he has by
petitioner from December 1994 to January 1998 in 10 projects. On February 23,
1998, while private respondent was about to log out from work, he was informed by
the warehouseman that the main office had instructed them to tell him it was his
last day of work as he had been terminated. When private respondent went to the
petitioners office on February 24, 1998 to verify his status, he found out that
indeed, he had been terminated. He went back to petitioners office on February
27, 1998 to sign a clearance so he could claim his 13th month pay and tax refunds.
However, he had second thoughts and refused to sign the clearance when he read
the clearance indicating he had resigned. On March 6, 1998, he filed a complaint
alleging that he was illegally dismissed without just cause and without due process.
The petitioner asserts that the private respondent was a project employee. Thus,
when the project was completed and private respondent was not re-assigned to
another project, petitioner did not violate any law since it was petitioners discretion
to re-assign the private respondent to other projects.
ISSUE
Whether the respondent is a project employee of the petitioner or a regular
employee.
HELD
The SC held that the principal test in determining whether an employee is a project
employee or regular employee, is, whether he is assigned to carry out a specific
project or undertaking, the duration (and scope) of which are specified at the time
the employee is engaged in the project. Project refers to a particular job or
undertaking that is within the regular or usual business of the employer, but which
is distinct and separate and identifiable from the undertakings of the company.
Such job or undertaking begins and ends at determined or determinable times.

The SC was convinced he was initially a project employee. The services he

rendered, the duration and scope of each project are clear indications that he was
hired as a project employee.
However, once a project or work pool employee has been: (1) continuously, as
opposed to intermittently, re-hired by the same employer for the same tasks or
nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be deemed a
regular employee.
The test to determine whether employment is regular or not is the reasonable
connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer. Also, if the employee has been
performing the job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability of that
activity to the business. Thus, we held that where the employment of project
employees is extended long after the supposed project has been finished, the
employees are removed from the scope of project employees and are considered
regular employees.
While length of time may not be the controlling test for project employment, it is
vital in determining if the employee was hired for a specific undertaking or tasked to
perform functions vital, necessary and indispensable to the usual business or trade
of the employer. Here, private respondent had been a project employee several
times over. His employment ceased to be coterminous with specific projects when
he was repeatedly re-hired due to the demands of petitioners business. Where from
the circumstances it is apparent that periods have been imposed to preclude the
acquisition of tenurial security by the employee, they should be struck down as
contrary to public policy, morals, good customs or public order.
Further, Policy Instructions No. 20 requires employers to submit a report of an
employees termination to the nearest public employment office every time his
employment was terminated due to a completion of a project. The failure of the
employer to file termination reports is an indication that the employee is not a
project employee. Department Order No. 19 superseding Policy Instructions No. 20
also expressly provides that the report of termination is one of the indications of
project employment. In the case at bar, there was only one list of terminated
workers submitted to the Department of Labor and Employment. If private
respondent was a project employee, petitioner should have submitted a termination
report for every completion of a project to which the former was assigned.
Juxtaposing private respondents employment history, vis the requirements in the
test to determine if he is a regular worker, we are constrained to say he is.
As a regular worker, private respondent is entitled to security of tenure under Article
279 of the Labor Code and can only be removed for cause. We found no valid cause
attending to private respondents dismissal and found also that his dismissal was
without due process.

[G.R. No. 164736 October 14, 2005]

UNIVERSAL ROBINA CORPORATION and/or RANDY GREGORIO, Petitioners,
vs. BENITO CATAPANG, CARLOS ARARAO, ALVIN ALCANTARA, RESTY
ALCORAN, REYNALDO ARARAO, JUAN ARISTADO, LITO CABRERA, ONOFRE
CASANO, BEN CERVAS, JOSEPH CHUIDIAN, IRENEO COMENDADOR,
ANGELITO CONCHADA, RICHARD CORONADO, ELMER HILING, RAMON
JOYOSA, JOSE LORIA, JR., VICTORIANO LORIA, RUEL MARIKIT, RODERICK
PANG-AO, QUIRINO PLATERO, PABLITO REDONDO, RAMIL ROXAS, RESTY
SALAZAR, NOEL TRINIDAD, FELICISIMO VARELA, BALTAZAR VILLANUEVA,
ELPIDIO VILLANUEVA, JOEL VILLANUEVA, JONATHAN VILLANUEVA, and
JAIME VILLEGAS, Respondents.
FACTS
The respondents were hired by the petitioner company on various dates from 1991
to 1993 to work at its duck farm. The respondents were hired under an employment
contract which provided for a five-month period. After the expiration of the said
employment contracts, the petitioner company would renew them and re-employ
the respondents. This practice continued until sometime in 1996, when the
petitioners informed the respondents that they were no longer renewing their
employment contracts. The respondents, then, filed separate complaints for illegal
dismissal, reinstatement, backwages, damages and attorneys fees against the
petitioners.
The petitioners submit that the respondents are not regular employees. They aver
that it is of no moment that the respondents have rendered service for more than a
year since they were covered by the five-month individual contracts to which they
duly acquiesced. The petitioners contend that they were free to terminate the
services of the respondents at the expiration of their individual contracts. The
petitioners maintain that, in doing so, they merely implemented the terms of the
contracts.
The petitioners further assert that the respondents contracts of employment were
not intended to circumvent security of tenure. They point out that the respondents
knowingly and voluntarily agreed to sign the contracts without the petitioners
having exercised any undue advantage over them. Moreover, there is no evidence
showing that the petitioners exerted moral dominance on the respondents.
ISSUE
Whether or not respondents are regular employees of petitioner corporation.
HELD
The SC held that the CA, the NLRC and the Labor Arbiter correctly categorized the
respondents as regular employees of the petitioner company. The primary standard
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 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.
It is obvious that the said five-month contract of employment was used by
petitioners as a convenient subterfuge to prevent private respondents from
becoming regular employees. Such contractual arrangement should be struck down
or disregarded as contrary to public policy or morals. To uphold the same would, in
effect, permit petitioners to avoid hiring permanent or regular employees by simply
hiring them on a temporary or casual basis, thereby violating the employees
security of tenure in their jobs. Petitioners act of repeatedly and continuously hiring
private respondents in a span of 3 to 5 years to do the same kind of work negates
their contention that private respondents were hired for a specific project or
undertaking only.
Petition is denied.

[G.R. No. 152777 December 9, 2005]

LOLITA R. LACUESTA, Petitioner,- versus -ATENEO DE MANILA UNIVERSITY,
DR. LEOVINO MA. GARCIA and DR. MARIJO RUIZ, Respondents.
FACTS
Respondent Ateneo hired, on a contractual basis, petitioner Lolita R. Lacuesta as a
part-time lecturer in its English Department for the second semester of school year
1988-1989 and was later re-hired still on a contractual basis, for the first and
second semesters of school year 1989-1990. On July 13, 1990, the petitioner was
first appointed as full-time instructor on probation, in the same department effective

June 1, 1990 until March 31, 1991. Thereafter, her contract as faculty on probation
was renewed effective April 1, 1991 until March 31, 1992. She was again hired for a
third year effective April 1, 1992 until March 31, 1993. During these three years
she was on probation status.
In January 27, 1993, respondent Garcia, notified petitioner that her contract would
no longer be renewed because she did not integrate well with the English
Department. Petitioner then appealed to the President of the Ateneo at the time, Fr.
Joaquin Bernas, S.J. Fr. Bernas explained to petitioner that she was not being
terminated, but her contract would simply expire. He also stated that the university
president makes a permanent appointment only upon recommendation of the Dean
and confirmation of the Committee on Faculty Rank and Permanent Appointment.
He added that any appointment he might extend would be tantamount to a
midnight appointment.
He later offered petitioner the job as book editor in the University Press under terms
comparable to that of a faculty member. After accepting the offer of Fr. Bernas,
petitioner applied for clearane to collect her final pay as instructor. She was also
made to sign a Quitclaim, Discharge and Release.
Petitioner worked as editor in the University Press from April 1, 1993 to March 31,
1994 including an extension of two months after her contract expired. Upon expiry
of her contract, petitioner applied for clearance to collect her final salary as editor.
Later, she agreed to extend her contract from June 16, 1994 to October 31, 1994.
Petitioner decided not to have her contract renewed due to a severe back problem.
She did not report back to work, but she submitted her clearance on February 20,
1995.
On December 23, 1996, petitioner filed a complaint for illegal dismissal with prayer
for reinstatement, back wages, and moral and exemplary damages.
Petitioner contends that Articles 280 and 281 of the Labor Code, not the Manual of
Regulations for Private Schools, is the applicable law to determine whether or not an
employee in an educational institution has acquired regular or permanent status.
She argues that (1) under Article 281, probationary employment shall not exceed
six (6) months from date of employment unless a longer period had been stipulated
by an apprenticeship agreement; (2) under Article 280, if the apprenticeship
agreement stipulates a period longer than one year and the employee rendered at
least one year of service, whether continuous or broken, the employee shall be
considered as regular employee with respect to the activity in which he is employed
while such activity exists; and (3) it is with more reason that petitioner be made
regular since she had rendered services as part-time and full-time English teacher
for four and a half years, services which are necessary and desirable to the usual
business of Ateneo.
Respondents, for their part, contend that the Manual of Regulations for Private
Schools is controlling. In the Manual, full-time teachers who have rendered three
consecutive years of satisfactory service shall be considered permanent.
Respondents also claim that the petitioner was not terminated but her employment
contract expired at the end of the probationary period. Further, institutions of
higher learning, such as respondent Ateneo, enjoy the freedom to choose who may

teach according to its standards. Respondents also argue that the quitclaim,
discharge and release by petitioner is binding and should bar her complaint for
illegal dismissal.
ISSUE
Whether or not petitioner has already become a regular employee (faculty) of
respondent Ateneo.
HELD
The SC held that the Manual of Regulations for Private Schools, and not the Labor
Code, determines whether or not a faculty member in an educational institution has
attained regular or permanent status. Under Policy Instructions No. 11 issued by the
Department of Labor and Employment, the probationary employment of
professors, instructors and teachers shall be subject to the standards established by
the Department of Education and Culture. Said standards are embodied in
paragraph 75[11] (now Section 93) of the Manual of Regulations for Private Schools.
Section 93 of the 1992 Manual of Regulations for Private Schools provides that fulltime teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent. Moreover, for those teaching in the tertiary level,
the probationary period shall not be more than six consecutive regular semesters of
satisfactory service. The requisites to acquire permanent employment, or security
of tenure, are (1) the teacher is a full-time teacher; (2) the teacher must have
rendered three consecutive years of service; and (3) such service must have been
satisfactory.
Only when one has served as a full-time teacher can he acquire permanent or
regular status. The petitioner was a part-time lecturer before she was appointed as
a full-time instructor on probation. As a part-time lecturer, her employment as such
had ended when her contract expired. Thus, the three semesters she served as
part-time lecturer could not be credited to her in computing the number of years
she has served to qualify her for permanent status.
Completing the probation period does not automatically qualify petitioner to
become a permanent employee of the university. Petitioner could only qualify to
become a permanent employee upon fulfilling the reasonable standards for
permanent employment as faculty member. Consistent with academic freedom and
constitutional autonomy, an institution of higher learning has the prerogative to
provide standards for its teachers and determine whether these standards have
been met. At the end of the probation period, the decision to re-hire an employee
on probation, belongs to the university as the employer alone.
We reiterate, however, that probationary employees enjoy security of tenure,
but only within the period of probation. Likewise, an employee on probation can
only be dismissed for just cause or when he fails to qualify as a regular employee in
accordance with the reasonable standards made known by the employer at the time
of his hiring. Upon expiration of their contract of employment, academic personnel
on probation cannot automatically claim security of tenure and compel their

employers to renew their employment contracts. In the instant case, petitioner, did
not attain permanent status and was not illegally dismissed.
Petition is denied.

[G.R. No. 168052 February 20, 2006]

POSEIDON FISHING/TERRY DE JESUS, petitioners,- versus - NATIONAL
LABOR RELATIONS COMMISSION and JIMMY S. ESTOQUIA, Respondents.
FACTS
Private respondent was employed by Poseidon Fishing in January 1988 as Chief
Mate. After five years, he was promoted to Boat Captain. In 1999, petitioners,
without reason, demoted respondent from Boat Captain to Radio Operator of
petitioner Poseidon. As a Radio Operator, he monitored the daily activities in their
office and recorded in the duty logbook the names of the callers and time of their
calls.
On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the
logbooks. However, he was able to record the same in the other logbook.
Consequently, when he reviewed the two logbooks, he noticed that he was not able
to record the said call in one of the logbooks so he immediately recorded the 7:25
a.m. call after the 7:30 a.m. entry. Around 9:00 oclock in the morning of 4 July
2000, petitioner Jesus, the manager, detected the error in the entry in the logbook.
Subsequently, she asked private respondent to prepare an incident report to explain
the reason for the said oversight.
At around 2:00 oclock in the afternoon of that same day, petitioner Poseidons
secretary, summoned private respondent to get his separation pay amounting to
Fifty-Five Thousand Pesos (P55,000.00). However, he refused to accept the amount
as he believed that he did nothing illegal to warrant his immediate discharge from
work.
Private respondent then filed a complaint for illegal dismissal with the Labor Arbiter.
He averred that petitioner Poseidon employed him as a Chief Mate sometime in
January 1988. He claimed that he was promoted to the position of Boat Captain five
years after. However, in 1999, he was demoted from Boat Captain to Radio Operator
without any reason and shortly, he was terminated without just cause and without
due process of law.
Conversely, petitioners Poseidon and Terry de Jesus strongly asserted that private
respondent was a contractual or a casual employee whose services could be
terminated at the end of the contract even without a just or authorized cause in
view of Article 280 of the Labor Code. Petitioners further posited that when the
private respondent was engaged, it was made clear to him that he was being
employed only on a por viaje or per trip basis and that his employment would be
terminated at the end of the trip for which he was being hired. As such, the private

respondent could not be entitled to separation pay and other monetary claims.
ISSUE
Whether or not respondent Estoquia is a regular employee of petitioner.
HELD
The SC held that the ruling in the Brent case could not apply in the case at bar. The
acid test in considering fixed-term contracts as valid is: if from the circumstances it
is apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be disregarded for being contrary to public
policy. The SC will not hesitate to nullify employment contracts stipulating a fixed
term after finding that the purpose behind these contracts was to evade the
application of the labor laws, since this is contrary to public policy.
Moreover, unlike in the Brent case where the period of the contract was fixed and
clearly stated, note that in the case at bar, the terms of employment of private
respondent as provided in the Kasunduan was not only vague, it also failed to
provide an actual or specific date or period for the contract. There is nothing in the
contract that says complainant, who happened to be the captain of said vessel, is a
casual, seasonal or a project worker. The date July 1 to 31, 1998 under the heading
Pagdating had been placed there merely to indicate the possible date of arrival of
the vessel and is not an indication of the status of employment of the crew of the
vessel.
Furthermore, as petitioners themselves admitted in their petition before this Court,
private respondent was repeatedly hired as part of the boats crew and he acted in
various capacities onboard the vessel. The test to determine whether employment
is regular or not is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer. And, if the employee has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability of that activity to the business. Ostensibly, in the
case at bar, at different times, private respondent occupied the position of Chief
Mate, Boat Captain, and Radio Operator. The act of hiring and re-hiring in various
capacities is a mere gambit employed by petitioner to thwart the tenurial protection
of private respondent. Such pattern of re-hiring and the recurring need for his
services are testament to the necessity and indispensability of such services to
petitioners business or trade.
Even if petitioners contention that its industry is seasonal in nature, once a project
or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these
tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee.
In fine, inasmuch as private respondents functions as described above are no doubt
usually necessary or desirable in the usual business or trade of petitioner fishing

company and he was hired continuously for 12 years for the same nature of tasks,
we are constrained to say that he belongs to the ilk of regular employee. Being
one, private respondents dismissal without valid cause was illegal.
Petition is denied.

[G.R. No. 141168 April 10, 2006]

ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATIONa nd MR.
OSCAR BANZON, General Manager, Petitioners, vs. ALBERTO RAMIREZ,
BERNARDO DIWA, MANUEL LOYOLA, REYNALDO P. ACODESIN, ALEXANDER
BAUTISTA, EDGAR TAJONERA and GARY DISON,* Respondents.
FACTS
Petitioner company was engaged in a construction business where respondents
were hired on different dates from 1976 to 1992 either as laborers, road roller
operators, painters or drivers.
In 1997, respondents filed two separate complaints for illegal dismissal against the
company and its General Manager, Oscar Banzon, before the Labor Arbiter.
Petitioners allegedly dismissed them without a valid reason and without due process
of law. The complaints also included claims for non-payment of the 13th month pay,
five days service incentive leave pay, premium pay for holidays and rest days, and
moral and exemplary damages. The LA later on ordered the consolidation of the two
complaints.
Petitioners denied liability to respondents and countered that respondents were
project employees since their services were necessary only when the company
had projects to be completed. Petitioners argued that, being project employees,
respondents employment was coterminous with the project to which they were
assigned. They were not regular employees who enjoyed security of tenure and
entitlement to separation pay upon termination from work.
ISSUE
Whether respondents were project employees or regular employees.
HELD
The SC held that respondents were regular employees. The principal test for
determining whether employees are project employees or regular employees is
whether they are assigned to carry out a specific project or undertaking, the
duration and scope of which are specified at the time they are engaged for that
project. Such duration, as well as the particular work/service to be performed, is
defined in an employment agreement and is made clear to the employees at the
time of hiring.

In this case, petitioners did not have that kind of agreement with respondents.
Neither did they inform respondents of the nature of the latters work at the time of
hiring. Hence, for failure of petitioners to substantiate their claim that respondents
were project employees, we are constrained to declare them as regular employees.
Petition is denied.

[G.R. No. 149985 May 5, 2006]

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., Petitioner, vs.
ROSALINA C. ARCEO,*** Respondent.
FACTS:
May 1990 ARCEO applied for the position of telephone operator with PLDT. She,
however, failed the pre-employment qualifying examination. Having failed the test,
ARCEO requested PLDT to allow her to work at the latters office even without pay.
PLDT agreed and assigned her to its commercial section where she was made to
perform various tasks like photocopying documents, sorting out telephone bills and
notices of disconnection, and other minor assignments and activities. After two
weeks, PLDT decided to pay her the minimum wage.
February 15, 1991 PLDT saw no further need for ARCEO's services and decided to
fire her but, through the intervention of PLDTs commercial section supervisor, she
was recommended for an on-the-job training on minor traffic work. When she failed
to assimilate traffic procedures, the company transferred her to auxiliary services, a
minor facility.

Subsequently, ARCEO took the pre-qualifying exams for the position of telephone
operator two more times but again failed in both attempts.
October 30, 1991 PLDT discharged ARCEO from employment. She then filed a case
for illegal dismissal before the labor arbiter. On May 11, 1993, the arbiter ruled in
her favor. PLDT was ordered to reinstate ARCEO to her former position or to an
equivalent position.
June 9, 1993 ARCEO was reinstated as casual employee with a minimum wage of
P106 per day. She was assigned to photocopy documents and sort out telephone
bills.
CAUSE OF ACTION:
September 3, 1996 (more than three years after her reinstatement) ARCEO filed a
complaint for unfair labor practice, underpayment of salary, underpayment of
overtime pay, holiday pay, rest day pay and other monetary claims. She alleged in
her complaint that, since her reinstatement, she had yet to be regularized and had
yet to receive the benefits due to a regular employee.
DECISION of the labor arbiter, NLRC, CA:
August 18, 1997 The labor arbiter ruled that ARCEO was already qualified to
become a regular employee. He also found that PLDT denied her all the benefits and
privileges of a regular employee.
November 28, 1997 The NLRC affirmed the decision of the labor arbiter finding
ARCEO eligible to become a regular employee.
June 29, 2001 The CA affirmed the decision of the NLRC.
ISSUE:
Does the proviso in Art. 280 of the Labor Code which regularizes a casual
employee who has rendered at least one year of service subject to the condition
that the employment subsists or the position still exists?
HELD
Reinstatement to an equivalent position PLDTs argument that respondents
position has been abolished, if indeed true, does not preclude ARCEOs becoming a
regular employee. The order to reinstate her also included the alternative to
reinstate her to a position equivalent thereto. Thus, PLDT can still regularize her
in an equivalent position.
PLDT failed to show position no longer subsists Moreover, PLDTs argument does
not hold water in the absence of proof that the activity in which ARCEO was
engaged (like photocopying of documents and sorting of telephone bills) no longer
subsists. Under Art. 280, any employee who has rendered at least one year of
service 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. For
PLDTs failure to show that the activity undertaken by ARCEO has been
discontinued, we are constrained to confirm her regularization in that position.
Date of regularization (when entitled to benefits) Considering that she has already
worked in PLDT for more than one year at the time she was reinstated, she should

be entitled to all the benefits of a regular employee from June 9, 1993 the day of
her actual reinstatement.

[G. R. No. 154463 September 5, 2006]

CEBU METAL CORPORATION, Petitioner, - versus - GREGORIO ROBERT
SALILING, ELIAS BOLIDO, MANUEL ALQUIZA, and BENJIE AMPARADO,
Respondents.
FACTS
Respondent Cebu Metal is a corporation engaged in buying and selling of scrap
iron. In the Bacolod Branch, it has three regular (3) employees holding such
positions as Officer-in-Charge, a scaler and a yardman, whose salaries are paid
directly by its main office in Cebu while others are undertaking pakiao work in the
unloading of scrap iron for stockpiling. Among those workers who presented for
work in the unloading of scrap iron in the area are the unemployed persons or
trisicad drivers standing by in the vicinity some of whom are the herein. llera,
Eliseo Torralba or any other persons who wanted to augment their income aside
from their regular jobs. They were hired around 1995-1996.
As compensation for their services, these workers including the herein complainants
are paid at the rate of P15.00 per ton for which each person can unload at least two
(2) to three (3) tons per hour or can earn at least P240.00 to P360.00 in eight (8)
hours if work is only available which payment necessarily includes cost of living
allowance (COLA) and 13th-month pay.
On 10 January 1997, respondent complainants filed a Complaint before the Regional
for underpayment of wages and non-payment of the following benefits: 1) 13th
month pay; 2) holiday pay; and 3) service incentive leave pay.
On 6 March 1998, respondent complainants manifested that they were including in
their complaint against petitioner company, the claim for illegal dismissal. Such
belated filing was alleged to have been due to the fact that they were only
dismissed after the filing of their complaint.
The Labor Arbiter ruled that respondents were illegally dismissed and ordered
petitioner to reinstate them plus backwages. On appeal, the NLRC reversed the
decision of the LA. The NLRC rationalized that with the irregular nature of the work

involved, the stoppage and resumption of which depended solely on the availability
or supply of scrap metal, it necessarily follows that after the job of unloading was
completed and unloaders were paid the contract price, the latters working
relationship with petitioner company legally ended. They were then free to offer
their services to others. The CA, on the other hand, reversed the NLRCs decision.
Hence, this petition.
ISSUE
Whether or not respondents are regular employees of petitioner company.
HELD
The SC held that the respondents were not regular employees of petitioner as held
by the NLRC.
The petty cash vouchers show that complainants are not paid on hourly or daily
basis but on pakiao or task basis at P15.00 per metric ton. There is no basis then
for complainants to claim that they are underpaid since there is no minimum wage
in this type of work. Complainants earnings depend upon their own diligence and
speed in unloading and stockpiling scrap iron. More importantly, it depends upon
the availability of scrap iron to be unloaded and stockpiled.
The above findings validate respondents position as to the nature of complainants
work. Their services are needed only when scrap metals are delivered which occurs
only one or twice a week or sometimes no delivery at all in a given week. The
irregular nature of work, stoppage of work and then work again depending on the
supply of scrap metal has not been denied by complainants. Indeed, it would be
unjust to require respondent to maintain complainants in the payroll even if there is
no more work to be done. To do so would make complainants privileged retainers
who collect payment from their employer for work not done. This is extremely unfair
and amount to cuddling of labor at the expense of management.
It should be remembered that The Philippine Constitution, while inexorably
committed towards the protection of the working class from exploitation and unfair
treatment, nevertheless mandates the policy of social justice so as to strike a
balance between an avowed predilection for labor, on the one hand, and the
maintenance of the legal rights of capital, the proverbial hen that lays the golden
egg, on the other. Indeed, we should not be unmindful of the legal norm that justice
is in every case for the deserving, to be dispensed with in the light of established
facts, the applicable law, and existing jurisprudence.
Under the circumstances abovestated, there can be no illegal dismissal to speak of.
Besides, complainants cannot claim regularity in the hiring every time a truck
comes loaded with scrap metal. This is confirmed in the Petty cash Vouchers which
are in the names of different leaders who apportion the amount earned among his
members. And, quite telling is the fact that not every truck delivery of scrap metal
requires the services of respondent complainants when a particular truck is
accompanied by its own unloader. And whenever required, respondent
complainants were not always the ones contracted to undertake the unloading of

the trucks since the work was offered to whomever were available at a given time.
Petition is granted.
[G.R. No. 159862 October 17, 2006]
HERMONIAS L. LIGANZA, Petitioner vs. RBL SHIPYARD CORPORATION and
ENGR. BEN LIM, JR., Respondents.
FACTS
After working as a carpenter for respondent since August 1991, petitioners
employment was terminated on 30 October 1999. This prompted petitioner to file
a complaint for illegal dismissal, alleging that on said date he was verbally informed
that he was already terminated from employment and barred from entering the
premises. On the same occasion, he was told to look for another job. Thus, he
claimed that he was unceremoniously terminated from employment without any
valid or authorized cause. On the other hand, respondent insisted that petitioner
was a mere project employee who was terminated upon completion of the project
for which he was hired.
Petitioner claims he is a regular employee since he worked for respondent
continuously and without interruption from 13 August 1991 up to 30 October 1999
and that his work as a carpenter was necessary and desirable to the latters usual
business of shipbuilding and repair. He asserts that when he was hired by
respondent in 1991, there was no employment contract fixing a definite period or
duration of his engagement, and save for the contract covering the period 20
September 1999 to 19 March 2000, respondent had been unable to show the other
project employment contracts ever since petitioner started working for the
company. Furthermore, respondent failed to file as many termination reports as
there are completed projects involving petitioner, he adds.
On the other hand, respondent insists that petitioner is a project employee as
evidenced by the project employment contracts it signed with him and employee
termination reports it submitted to the DOLE.
ISSUE
Whether or not petitioner is a project employee of respondent company.
HELD
The SC held that a project employee is 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." Before an employee hired on a per project basis can be
dismissed, a report must be made to the nearest employment office of the
termination of the services of the workers every time it completed a project,
pursuant to Policy Instruction No. 20.

While the appropriate evidence to show that a person is a project employee is the
employment contract specifying the project and the duration of such project, the
existence of such contract is not always conclusive of the nature of ones
employment.
In the instant case, respondent seeks to prove the status of
petitioners employment through four (4) employment contracts covering a period
of only two (2) years to declare petitioner as a project employee.
All that respondent submitted were four (4) contracts covering the periods 29 July
1997 to 28 January 1998, 24 August 1998 to 25 February 1999, 3 March 1999 to 2
September 1999, and 20 September 1999 to 19 March 2000, as well as the
employment termination reports for January 1998, August 1998, February 1999 and
October 1999. Respondent failed to present the contracts purportedly covering
petitioners employment from 1991 to July 1997, spanning six (6) years of the total
eight (8) years of his employment. To explain its failure in this regard, respondent
claims that the records and contracts covering said period were destroyed by rains
and flashfloods that hit the companys office. We are not convinced.
To begin with, respondent has been unable to refute petitioners allegation that he
did not sign any contract when he started working for the company.
The four
employment contracts are not sufficient to reach the conclusion that petitioner was,
and has been, a project employee earlier since 1991. The Court is not satisfied with
the explanation that the other employment contracts were destroyed by floods and
rains. Respondent could have used other evidence to prove project employment,
but it did not do so, seemingly content with the convenient excuse of destroyed
documents.
Even assuming that petitioner is a project employee, respondent failed to prove that
his termination was for a just and valid cause. While it is true that the employment
contract states that the contract ends upon a specific date, or upon completion of
the project, respondent failed to prove that the last project was indeed completed
so as to justify petitioners termination from employment.
In termination cases, the burden of proof rests on the employer to show that the
dismissal is for a just cause.
Thus, employers who hire project employees are
mandated to state and, once its veracity is challenged, to prove the actual basis for
the latters dismissal.
Respondent could have easily proved that the project or
phase for which petitioner was hired has already been completed. A certificate from
the owner of the vessel serviced by the company, pictures perhaps, of the work
accomplished, and other proof of completion could have been procured by
respondent. However, all that we have is respondents self-serving assertion that
the project has been completed.
This Court has held that an employment ceases to be co-terminous with specific
projects when the employee is continuously rehired due to the demands of
employers business and re-engaged for many more projects without interruption.
Once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks;
and (2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer, then the employee must be deemed a regular employee,

pursuant to Article 280 of the Labor Code and jurisprudence.

Surely, length of time is not the controlling test for project employment.
Nevertheless, it is vital in determining if the employee was hired for a specific
undertaking or tasked to perform functions vital, necessary and indispensable to the
usual business or trade of the employer.[ Here, respondent had been a project
employee several times over. His employment ceased to be coterminous with
specific projects when he was repeatedly re-hired due to the demands of
petitioners business. Where from the circumstances it is apparent that periods have
been imposed to preclude the acquisition of tenurial security by the employee, they
should be struck down as contrary to public policy, morals, good customs or public
order.
All considered, there are serious doubts in the evidence on record that petitioner is
a project employee, or that he was terminated for just cause. These doubts shall be
resolved in favor of petitioner, in line with the policy of the law to afford protection
to labor and construe doubts in favor of labor.
It is well-settled that the employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause. When there is no showing of
a 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 or authorized cause. For failure to prove
otherwise, the Court has no recourse but to grant the petition.
Petition is granted.

[G.R. No. 155645 November 24, 2006]

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC.(PLDT),Petitioner,
vs. MAYFLOR T. YLAGAN, Respondent.
FACTS
In November 1992, respondent Mayflor T. Ylagan was hired as an accounting clerk in
the Cost Accounting Department (CAD) of petitioner PLDT. In January 1994, she was
transferred to the Revenue Auditing Department. Later, on July 3, 1995, she was
brought back to the CAD to perform the same accounting duties. Respondent
claims that in May 1996, PLDT refused to renew her employment unless she signed
up with an employment agency known as Corporate Executive Search, Inc. (CESI).
She was allegedly constrained to sign an employment contract with the agency in
order to keep her job with PLDT. But on February 5, 1997, PLDT allegedly refused to
allow her to report for work since her employment contract with CESI had already
expired.
PLDT, however, maintains that respondent was hired as a project employee
assigned to the Employment Payroll System Project from the onset of her
employment. The project allegedly started on September 21, 1992. It was
discontinued in March 1997 when a new system was developed to replace it. PLDT
asserts that respondents project employment was covered by contracts for the
period of July 3, 1995 to October 2, 1995 and October 3, 1995 to January 2, 1996.
Hence, respondent was not dismissed from her work; her employment contract
merely expired as of January 2, 1996. PLDT, however, did not explain why

respondent had to sign up with CESI in May 1996. Claiming that her regular
employment was terminated without cause, respondent filed a complaint for illegal
dismissal.
ISSUE
Whether or not respondent is a project employee.
HELD
The SC held that project employee is assigned to carry out a specific project or
undertaking the duration and scope of which are specified at the time the employee
is engaged in the project. A project is a job or undertaking which is distinct,
separate and identifiable from the undertakings of the company. A project employee
is assigned to a project which begins and ends at determined or determinable
times.
Various indicators convince us that respondent was not a project employee but a
regular employee who was illegally dismissed.
First, respondent worked continuously for PLDT from November 1992 to July 1995
without any mention of a project to which she was specifically assigned. She was
hired to perform accounting duties which were not shown as distinct, separate and
identifiable from the usual undertakings of the company. Although essentially a
telephone company, PLDT maintains its own accounting department to which
respondent was assigned.
Second, aside from its statement that respondent was hired as a project employee
for the Employment Payroll System Project which began in 1992, PLDT did not
provide evidence of the project employment contracts covering the period from
November 1992 (when respondent was hired) to July 1995. PLDT mentioned only
two contracts but these pertained to her employment period from July 1995 to
January 1996.
Third, despite the supposed expiration of respondents project employment
contract on January 2, 1996, respondent continued to work for PLDT until May 2,
1996 when respondent was required to sign up with CESI.[12] Respondent worked
for PLDT, under contract with CESI, until February 3, 1997. PLDT explained that it no
longer allowed respondent to report for work by then since the project was already
done. But the project was only completed in March 1997.
Most important of all, based on the records, PLDT did not report the termination of
respondents supposed project employment to the Department of Labor and
Employment as project employee. Department Order No. 19 (as well as the old
Policy Instructions No. 20) required employers to submit a report of an employees
termination to the nearest public employment office every time his employment
was terminated due to a completion of a project.[13] PLDTs failure to file
termination reports was an indication that the respondent was not a project
employee but a regular employee.

The test to determine whether employment is regular or not is the reasonable

connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer. Also, if the employee has been
performing the job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability of that
activity to the business. Thus, we held that where the employment of project
employees is extended long after the supposed project has been finished, the
employees are removed from the scope of project employees and are considered
regular employees. While length of time may not be the controlling test for project
employment, it is crucial in determining if the employee is hired for a specific
undertaking to perform functions vital, necessary and indispensable to the usual
business of the company.
Even assuming that respondent was hired as a project employee from the onset, we
have ruled that once such an employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same tasks or nature of tasks
and (2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer, then the employee must be deemed a regular employee.
From the foregoing, the duration (of at least one year) and necessity of respondents
employment have been established. She was therefore a regular employee of PLDT.
As such, respondent was entitled to all the privileges and benefits attached to that
status.
Petition is denied.

[G.R. No. 150658 February 9, 2007]

NOELITO FABELA, MARCELO DELA CRUZ III, ROGELIO LASAT, HENRY
MALIWANAG, MANUEL DELOS SANTOS, and ROMMEL QUINES, Petitioners,
vs. SAN MIGUEL CORPORATION and ARMAN HICARTE, Respondents.
FACTS
Petitioners were hired by respondent San Miguel Corporation (SMC) as Relief
Salesmen for the Greater Manila Area (GMA) under separate but almost similarly
worded Contracts of Employment with Fixed Period. After having entered into
successive contracts of the same nature with SMC, the services of petitioners were
terminated after SMC no longer agreed to forge another contract with them.
Respondent SMC claimed that the hiring of petitioners was not intended to be
permanent, as the same was merely occasioned by the need to fill in a vacuum
arising from SMCs gradual transition to a new system of selling and delivering its
products. Respondents explained that SMC previously operated under the Route
System, but began implementing in 1993 the Pre-Selling System in which the
salesmen under the earlier system would be replaced by Accounts Specialists which
called for upgraded qualifications. While some of the qualified regular salesmen

were readily upgraded to the position of Accounts Specialist, respondents claimed

that SMC still had to sell its beer products using the conventional routing system
during the transition stage, thus giving rise to the need for temporary employees;
and the members of the regular Route Crew then existing were required to undergo
a training program to determine whether they possessed or could be trained for the
necessary attitude and aptitude required of an Accounts Specialist, hence, the
hiring of petitioners and others for a fixed period, co-terminus with the completion
of the transition period and Training Program for all prospective Accounts
Specialists.
Claiming that they were illegally dismissed, petitioners filed complaints for illegal
dismissal against respondents.
ISSUE
Whether or not petitioners were validly hired for a fixed period.
HELD
The SC held that under article 280 of the Labor Code, there are two kinds of regular
employees, namely: (1) those who are engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer, and (2) those
casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are employed.
Article 280 also recognizes project employees, those whose employment has been
fixed for a specific project or undertaking.
Project employment is distinct from casual employment referred to in the second
paragraph of Article 280 for the proviso that any employee who has rendered at
least one year of service . . . shall be considered a regular employee does not
apply to project employees, but only to casual employees. Although Article 280
does not expressly recognize employment for a fixed period, which is distinct from
employment which has been fixed for a specific project or undertaking, it has been
clarified that employment for a fixed period is not in itself illegal. Even if the duties
of an employee consist of activities usually necessary or desirable in the usual
business of the employer, it does not necessarily follow that the parties are
forbidden from agreeing on a period of time for the performance of such activities
through a contract of employment for a fixed term.
Unfortunately, respondents contention that there are fixed periods stated in the
contracts of employment does not lie.
Brent instructs that a contract of
employment stipulating a fixed-term, even if clear as regards the existence of a
period, is invalid if it can be shown that the same was executed with the intention of
circumventing security of tenure, and should thus be ignored.
Indeed, substantial evidence exists in the present case showing that the subject
contracts were utilized to deprive petitioners of their security of tenure.The contract
of employment of petitioner Fabela, for instance, states that the transition period
from the Route System to the Pre-Selling System would be twelve (12) months from
April 4, 1995. It bears noting, however, that petitioner Fabela, besides being hired

again for another fixed period of four (4) months after the lapse in April 1996 of the
one-year contract, had already been working for respondent SMC on a fixed-term
basis as early as 1992, or one year before respondent SMC even began its shift to
the Pre-selling System in 1993.
Thus, there is sufficient basis to believe that the shift of SMC to the Pre-Selling
System was not the real basis for the forging of fixed-term contracts of employment
with petitioners and that the periods were fixed only as a means to preclude
petitioners from acquiring security of tenure.
A fixed-term employment is valid only under certain circumstances, such as when
the employee himself insists upon the period, or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite
date of termination is a sine qua non.
Petition is granted.

[G.R. No. 167714 March 7, 2007]

ROWELL INDUSTRIAL CORPORATION, Petitioner, vs. HON. COURT OF
APPEALS and JOEL TARIPE, Respondents.
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, respondent Taripe filed a complaint against 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 RIC employed him starting 8 November 1999 as power press machine
operator, such position of which was occupied by 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 CBA 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 RICs company rules and regulations.
Petitioner RIC, for its part, claims that 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, Taripes employment contract expired.

Petitioner RIC emphasizes that while an employees status of employment is vested

by law pursuant to Article 280 of the Labor Code, as amended, said provision of law
admits of two exceptions, to wit: (1) those employments which have 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 employment; and (2) when the
work or services to be performed are seasonal; hence, the employment is for the
duration of the season. Thus, there are certain forms of employment which entail
the performance of usual and desirable functions and which exceed one year but do
not necessarily qualify as regular employment under Article 280 of the Labor Code,
as amended.
ISSUE
Whether respondent was a regular employee of petitioner company.
HELD
The SC held that 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.
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.
The aforesaid 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.
In the case at bar, respondent Taripe signed a contract of employment prior to his
admission into the petitioners company. 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.
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.
In the present case, it cannot be denied that the employment contract signed by
respondent Taripe did not mention that he was hired only for a specific undertaking,
the completion of which had been determined at the time of his engagement. The
said employment contract neither mentioned that respondent Taripes services were
seasonal in nature and that his employment was only for the duration of the
Christmas season as purposely claimed by petitioner RIC. What was stipulated in
the said contract was that respondent Taripes employment was contractual for the
period of five months.
Likewise, other than the bare allegations of petitioner RIC that respondent Taripe
was hired only because of the increase in the demand for packaging materials
during the Christmas season, petitioner RIC failed to substantiate such claim with
any other evidence. Petitioner RIC did not present any evidence which might prove
that respondent Taripe was employed for a fixed or specific project or that his
services were seasonal in nature.
Also, 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 contract with a fixed term of five months willingly and with full
knowledge of the impact thereof.
With regard to the second guideline, petitioner RIC and respondent Taripe cannot be
said to have dealt with each other on more or less equal terms with no moral
dominance exercised by the former over the latter. As a power press operator, a
rank and file employee, he can hardly be on equal terms with petitioner RIC. As the
Court of Appeals said, almost always, employees agree to any terms of an
employment contract just to get employed considering that it is difficult to find work
given their ordinary qualifications.

Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a
valid fixed term employment contract, it can be safely stated that the aforesaid
contract signed by respondent Taripe for a period of five months was a mere
subterfuge to deny to the latter a regular status of employment.
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.
Given the foregoing, indeed, respondent Taripe, as a rectangular power press
machine operator, in charge of manufacturing covers for four liters rectangular tin
cans, was holding a position which is necessary and desirable in the usual business
or trade of petitioner RIC, which was the manufacture of tin cans. Therefore,
respondent Taripe was a regular employee of petitioner RIC by the nature of work he
performed in the company.
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.
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.
Petition is denied.
[G.R. No. 152057. September 29, 2003.]
PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION, petitioner, vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PT&T
PROGRESSIVE WORKERS UNION-NAFLU-KMU, CRISTINA RODIEL, JESUS
PARACALE, ROMEO TEE, BENJAMIN LAKANDULA, AVELINO ACHA, IGNACIO
DELA CERNA and GUILLERMO DEMEGILLO, respondents.
FACTS
Petitioner, after conducting a series of studies regarding the profitability of its retail
operations, its existing branches and the number of employees, the petitioner came
up with a Relocation and Restructuring Program designed to (a) sustain its (PT&T's)

retail operations; (b) decongest surplus workforce in some branches, to promote

efficiency and productivity; (c) lower expenses incidental to hiring and training new
personnel; and (d) avoid retrenchment of employees occupying redundant positions.
On August 11, 1997, private respondents received separate letters from the
petitioner, giving them the option to choose the branch to which they could be
transferred. Thereafter, through HRAG Bulletin No. 97-06-16, the private
respondents and other petitioner's employees were directed to "relocate" to their
new PT&T Branches. The affected employees were directed to report to their
respective relocation assignments in a Letter dated September 16, 1997. Moreover,
the employees who would agree to the transfers would be considered promoted.
The private respondents rejected the petitioner's offer. Petitioner, then, sent letters
to the private respondents requiring them to explain in writing why no disciplinary
action should be taken against them for their refusal to be transferred/relocated. In
their respective replies to the petitioner's letters, the private respondents explained
that: The transfers imposed by the management would cause enormous difficulties
on the individual complainants. For one, their new assignment involves distant
places which would require their separation from their respective families.
Dissatisfied with this explanation, the petitioner considered the private respondents'
refusal as insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from work. 8 They forthwith filed their
respective complaints against the petitioner before the appropriate sub-regional
branches of the NLRC.
In their position paper, the complainants (herein private respondents) declared that
their refusal to transfer could not possibly give rise to a valid dismissal on the
ground of willful disobedience, as their transfer was prejudicial and inconvenient;
thus unreasonable. The private respondents further opined that since their
respective transfers resulted in their promotion, they had the right to refuse or
decline the positions being offered to them. Resultantly, the refusal to accept the
transfers could not have amounted to insubordination or willful disobedience to the
"lawful orders of the employer."
For its part, the company alleged that the private respondents' transfers were made
in the lawful exercise of its management prerogative and were done in good faith.
The transfers were aimed at decongesting surplus employees and detailing them to
a more demanding branch.
ISSUE
Whether or not the private respondents were illegally dismissed.
HELD
The Supreme Court ruled that an employee cannot be promoted, even if merely as a
result of a transfer, without his consent. A transfer that results in promotion or
demotion, advancement or reduction or a transfer that aims to 'lure the employee
away from his permanent position cannot be done without the employees' consent.
There is no law that compels an employee to accept a promotion for the reason that
a promotion is in the nature of a gift or reward, which a person has a right to refuse.

Hence, the exercise by the private respondents of their right cannot be considered
in law as insubordination, or willful disobedience of a lawful order of the employer.
As such, there was no valid cause for the private respondents' dismissal.
Decision of the CA affirmed.

[G.R. No. L-51182 July 5, 1983]

HELMUT DOSCH, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
and NORTHWEST AIRLINES, INC., respondents.
FACTS
Petitioner is an American citizen and the resident Manager of Northwest Airlines,
Inc. in the Philippines. He had been with the respondent company for 11 years, 9 of
which was served in the Philippines as Northwest manager in Manila. On August 18,
1975 he received an inter-office communication from R.C. Jenkins, Northwest's Vice
President for Orient Region based in Tokyo, promoting him to the position of Director
of International Sales and transferring him to Northwest's General Office in
Minneapolis, U.S.A., effective the same day. Petitioner, acknowledging receipt of the
above memo, expressed appreciation for the promotion and at the same time
regretted that for personal reasons and reasons involving his family (living in the
Philippines), he is unable to accept a transfer from the Philippines.
On September 9, 1975, the Vice-President for the Orient Region of Northwest
advised petitioner that "in view of the foregoing, your status as an employee of the
company ceased on the close of business on August 31, 1975" and "the company
therefore considers your letter of August 28, 1975, to be a resignation without
notice." On September 16, 1975, Northwest filed a Report on Resignation of
Managerial Employee i.e., Helmut Dosch before the Department of Labor, copy
thereof furnished petitioner. The Report was contested by the petitioner and the
parties were conciliated by Regional Office No. IV, Manila but failed to agree on a
settlement. The case was thus certified to the Executive Labor

Arbiter, National Labor Relations Commission, for compulsory arbitration.

ISSUE
Whether or not the petitioner is considered resigned from his employment.
HELD
The SC agree with the Labor Arbiter that petitioner did not resign or relinquish his
position as Manager-Philippines, Indeed, the letter sent by petitioner to R.C. Jenkins
cannot be considered as a resignation as petitioner indicated therein clearly that he
preferred to remain as Manager-Philippines of Northwest. The SC treated the Jenkins
letter as directing the promotion of the petitioner from his position as Philippine
manager to Director of International Sales in Minneapolis, U.S.A. It is not merely a
transfer order alone but as the Solicitor General correctly observes, "it is more in the
nature of a promotion that a transfer, the latter being merely incidental to such
promotion." The inter-office communication of Vice President Jenkins is captioned
"Transfer" but it is basically and essentially a promotion for the nature of an
instrument is characterized not by the title given to it but by its body and contents.
The communication informed the petitioner that effective August 18, 1975, he was
to be promoted to the position of Director of International Sales, and his
compensation would be upgraded and the payroll accordingly adjusted.
Petitioner was, therefore, advanced to a higher position and rank and his salary was
increased and that is a promotion. It has been held that promotion denotes a scalar
ascent of an officer or an employee to another position, higher either in rank or
salary.
A transfer is a movement from one position to another of equivalent rank, level or
salary, without break in the service. Promotion, on the other hand, is the
advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in
salary, Whereas, promotion denotes a scalar ascent of a senior officer or employee
to another position, higher either in rank or salary, transfer refers to lateral
movement from one position to another, of equivalent rank, level or salary. There is
no law that compels an employee to accept a promotion, as a promotion is in the
nature of a gift or a reward, which a person has a right to refuse. When petitioner
refused to accept his promotion to Director of International Sales, he was exercising
a right and he cannot be punished for it as qui jure suo utitur neminem laedit. He
who uses his own legal right injures no one.
Assuming for the sake of argument that the communication or letter of Mr. Jenkins
was basically a transfer, under the particular and peculiar facts obtaining in the
case at bar, petitioner's inability or his refusal to be transferred was not a valid
cause for dismissal. While it may be true that the right to transfer or reassign an
employee is an employer's exclusive right and the prerogative of management,
such right is not absolute. The right of an employer to freely select or discharge his
employee is limited by the paramount police power for the relations between capital
and labor are not merely contractual but impressed with public interest. And neither
capital nor labor shall act oppressively against each other.

There can be no dispute that the constitutional guarantee of security of tenure

mandated under the Constitution applies to all employees and laborers, whether in
the government service or in the private sector. The fact that petitioner is a
managerial employee does not by itself exclude him from the protection of the
constitutional guarantee of security of tenure. Even a manager in a private concern
has the right to be secure in his position, to decline a promotion where, although
the promotion carries an increase in his salary and rank but results in his transfer to
a new place of assignment or station and away from his family. Such an order
constitutes removal without just cause and is illegal. Nor can the removal be
justified on the ground of loss of confidence as now claimed by private respondent
Northwest, insisting as it does that by petitioner's alleged contumacious refusal to
obey the transfer order, said petitioner was guilty of insubordination.
[G.R. No. 155421. July 7, 2004.]
ELMER M. MENDOZA, petitioner, vs. RURAL BANK OF LUCBAN, respondent.
FACTS
Respondent bank issued a resolution effecting a reshuffling of employees to further
strengthen the existing internal control system of all offices and employees.
Petitioner was one of those included for reshuffling. In a letter to his manager,
petitioner expressed his refusal to be assigned to another branch and his request to
be excluded from its implementation. Said request was answered in the negative.
Petitioner then requested for a twenty-day sick leave due to his illness. While on
leave, petitioner filed a complaint before the RAB IV for illegal dismissal,
underpayment, separation pay and damages against respondent bank.
ISSUE
Whether petitioner was constructively dismissed from his employment
HELD
The SC ruled that it find no reason to disturb the conclusion of the NLRC and the CA
that there was no constructive dismissal.
Constructive dismissal is defined as an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or unlikely; when there
is a demotion in rank or a diminution of pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee.
Petitioner argues that he was compelled to file an action for constructive dismissal,
because he had been demoted from appraiser to clerk and not given any work to
do, while his table had been placed near the toilet and eventually removed. He adds
that the reshuffling of employees was done in bad faith, because it was designed
primarily to force him to resign.
Jurisprudence recognizes the exercise of management prerogatives. For this reason,
courts often decline to interfere in legitimate business decisions of employers.
Indeed, labor laws discourage interference in employers' judgments concerning the
conduct of their business. The law must protect not only the welfare of employees,

but also the right of employers. In the pursuit of its legitimate business interest,
management has the prerogative to transfer or assign employees from one office or
area of operation to another provided there is no demotion in rank or diminution
of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause. This privilege is inherent in the right of employers to
control and manage their enterprise effectively. The right of employees to security
of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer
them.
Managerial prerogatives, however, are subject to limitations provided by law,
collective bargaining agreements, and general principles of fair play and justice. The
managerial prerogative to transfer personnel must be exercised without grave
abuse of discretion, bearing in mind the basic elements of justice and fair play.
Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of
an undesirable worker. In particular, 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 his salaries, privileges and other
benefits. Should the employer fail to overcome this burden of proof, the employee's
transfer shall be tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him
with no option but to forego with his continued employment."
Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank
employees with the various phases of bank operations and further strengthen the
existing internal control system" of all officers and employees. We have previously
held that employees may be transferred based on their qualifications, aptitudes
and competencies to positions in which they can function with maximum benefit
to the company. 34 There appears no justification for denying an employer the right
to transfer employees to expand their competence and maximize their full potential
for the advancement of the establishment. Petitioner was not singled out; other
employees were also reassigned without their express consent. Neither was there
any demotion in the rank of petitioner; or any diminution of his salary, privileges
and other benefits.
Petition is denied.

[G.R. No. 168159. August 19, 2005]

NORKIS TRADING CO., INC., ATTY. NORBERTO QUISUMBING, JR., RACQUEL
LICSI, EMMANUEL S. TAMAYO and NICHOL JUDE THADDEUS JURIDICO,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and MA.
ARLENE C. GNILO, respondents.
FACTS
Private respondent started working for petitioner Norkis Trading Co., Inc. and was
initially assigned in the Calamba, Laguna branch. She was later appointed as Acting
Administrative Finance Officer with assignment at Naga City Branch, a position she
held until she achieved regular employment status. On December 1, 1993, she was
appointed as Branch Bookkeeper/Cashier of Naga City Branch (Rank Category 4B).
On January 24, 2001, she was promoted as Acting Senior Branch Control Officer for
Bicol Region. During this time, Private respondent was instructed by her immediate
superior to confirm transactions pertaining to collections and deposits of BCO
Marivic Faura at Polangui. However, provate respondent was informed by the
company there was information received that that private respondent allegedly
disregarded the detailed instructions of her superior and failed to perform her duties
as a Senior Branch Control Officer. She was thus directed to explain in writing what
actually transpired during her assignment at Polangui. She complied by submitting
her written. An investigation by the companys Internal Audit Group ensued and
private respondent was formally charged with Negligence Resulting to Material
Loss. She was instructed to make herself available by reporting to the Inquiry
Assistance Panel (IAP) in the companys head office in Mandaluyong. After the
hearing of the IAP was concluded, private respondent made a written Request for
Re-assignment addressed to Ms. De Jesus to be assigned as Cashier of the Naga
Branch which is vacant and considering that she is a resident of Naga City and a
mother. The company did not accede to her requests and she continued reporting at
the main office performing whatever work assigned to her, such as monitoring of
collections at Cubao Branch for which she submitted an accomplishment report to
Deputy Controller Emmanuel S. Tamayo.
For the period March 18 to April 1, 2003, the company withheld the Transportation
and Travel Allowance (TNT) being received by private respondent amounting to
P7,555.00, which prompted her to formally protest her questionable assignment
at the Home Office (HO) in Mandaluyong City which she insisted is against her
appointment as Senior BCO for Bicol Region and Samar. In a letter, addressed to
Deputy Controller Emmanuel S. Tamayo, private respondent berated management
for wanting to ease her out of the company due to a labor case (constructive
dismissal) filed by her husband, who also worked at Norkis for more than thirteen
(13) years, and such withdrawal of her travel allowances is calculated to cause
suffering on her part. She expressed that the situation has become unbearable for
her so that she is constrained to report back to Naga City, there being no written
order issued by management for her to stay in the main office.
Upon returning to Naga City, however, private respondent learned from a coemployee that Deputy Controller Tamayo through a telephone call gave instruction
to deny her entry to the branch premises and access to company records. She

caused this incident to be entered at the local police blotter. She later received a
faxed Speedletter from Deputy Managing Director Nichol Jude Thaddeus C.
Juridico and Deputy Controller Emmanuel S. Tamayo directing her to report back to
the main office reminding her that her new assignment required her to report to the
main office pending issuance of a permanent assignment, and that she was
instructed to monitor the BCO of Porta Coeli Finance Corporation (PCFC) branches
and to assist the BCO Accounting Manager Belen Yaun in the meantime. She was
ordered to explain in writing within forty-eight (48) hours why no disciplinary action
should be taken against her for abandonment of work, which under existing
company policy, carries the penalty of dismissal. She was also directed to refund
the total amount of P123,685.00 of travel and transportation allowance received by
her during the period June 1, 2002 and March 17, 2003 because she is not entitled
thereto while assigned at the main office.
In her faxed reply, private respondent explained that she reported at the main office
starting June 10, 2002 upon assurance given by her former superior, Ms. Aurea De
Jesus, that she shall be receiving her regular TNT package as Senior BCO-Bicol
Region and Samar since her stay in the main office would be just temporary as they
will just iron out the problem in Polangui Branch. There was hesitation on her part
since being a permanent resident of Naga City and mother of three (3) children, she
will be dislocated and separated from her family. She insisted that it was never
clarified to her that her area of assignment is being changed and also denied that
Deputy Controller Tamayo specifically instructed her to monitor the BCOs of Porta
Coeli Finance Corporation (PCFC) or assist Ms. Belen Yaun, pointing out that if she
ever assisted Ms. Yaun it was her initiative to get herself busy and if ever she had a
record of travel to a PCFC branch, it was done out of an emergency or her superior
was just forced to. She asserted that her assignment at the HO is a demotion
intended to make her feel that her continued presence in the company is no longer
necessary because neither Mr. Tamayo nor Ms. Yaun have been talking to her. Were
it not for her monthly TNT, she could not have stayed at the HO because her takehome pay amounted to only a little over P2,500.00 every fifteen (15) days, and its
subsequent withdrawal by the company constrained her to report back to Naga City
branch, her repeated requests to be returned to her post having been ignored for
the reason that top management was against it. She asserted that her TNT being
a long and accepted company policy, may not be arbitrarily withdrawn and that all
her cash advances and liquidations have been previously approved by her superiors
including Mr. Tamayo. She deplored the mental anguish and social humiliation
wrought to her by her present predicament and sought understanding from the
management, wanting to know the reasons behind their instruction to deny her
entry to the premises of the Naga City branch and access to company records as if
she were a thief.
In a memorandum, management reiterated its directive to private respondent for
her to report back to the main office, reminding her that despite her denial
regarding any instruction from Mr. Tamayo for her to monitor the PCFC branches,
records showed that she had complied based on reports she had submitted to the
office. Private respondent, however, maintained her position that she could no
longer report to the Home Office after the company withdrew her monthly TNT.
She asserted that considering her difficult situation, she had no choice but to stick
to her appointment as Senior BCO-Bicol Region and Samar there being no

superseding memo changing her assignment.

Private respondent then received a memorandum from the IAP for an investigation
on the charges of abandonment of work, insubordination and refusal to report back
to the place of work (Head Office), and directing her to attend a hearing at the main
office. Private respondent acknowledged receipt of said memo but proposed that
the hearing be held at Naga City or that she be allowed to make a cash advance to
defray her expenses in going to Mandaluyong City to attend the hearing and
investigation by the IAP. She failed to attend the IAP hearing on the scheduled date
as she had been waiting for action from management regarding the concerns she
had communicated. On that same day, she found out that her salary for the period
April 1 to 15, 2003 was withheld and failing to get an explanation from
management, she again reported the matter to the police. Thereupon, she faxed a
letter addressed to HRD Manager Raquel Licsi that the situation had become
unbearable for her tantamount to constructive dismissal and consequently she will
ventilate her case before the NLRC.
Private respondent subsequently filed a complaint for constructive dismissal before
the regional arbitration branch at Naga City, with claims for nonpayment of salaries,
service incentive leave pay, 13th month pay, and praying for reinstatement with full
back wages, and moral and exemplary damages, and attorneys fees. After, private
respondent received another memo on the rescheduled date of IAP hearing, but in a
handwritten reply she submitted to the Naga City Branch, she manifested that she
could not longer report at the HO in view of the case she had already instituted with
the NLRC. The company later terminated her services effective May 2, 2003.
ISSUE
Whether or not the decision decision to transfer or re-assign private respondent
from Naga City to the head office in Manila was a legitimate exercise of petitioner
corporations management prerogative.
HELD
The Supreme Court ruled in the negative. Employers are allowed, under the broad
concept of management prerogative, to regulate all aspects of personnel
administration including hiring, work assignments, working methods, time, place
and manner of work, tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of
workers, and the dismissal and recall of workers.
It is the employers prerogative, based on its assessment and perception of its
employees qualifications, aptitudes, and competence, to move them around in the
various areas of its business operations in order to ascertain where they will
function with maximum benefit to the company. An employees right to security of
tenure does not give him such a vested right in his position as would deprive the
company of its prerogative to change his assignment or transfer him where he will
be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his
salaries, benefits, and other privileges, the employee may not complain that it

amounts to a constructive dismissal.

The managements right to transfer or re-assign its personnel, however, is not
absolute as it is subject to limitations imposed by law, collective bargaining
agreements, and general principles of fair play and justice.
The managerial prerogative to transfer personnel must be exercised without grave
abuse of discretion, bearing in mind the basic elements of justice and fair play.
Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of
an undesirable worker. In particular, 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 his salaries, privileges and other
benefits. Should the employer fail to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him
with no option but to forego with his continued employment.
In this case, petitioners failed to pass this test. While petitioners invoke
management prerogative in the transfer of private respondent to Manila, there is no
showing at all of any valid and legitimate reason (i.e., business necessity) for the
verbal transfer order, as in fact private respondent was not given work to do, only
occasionally and constantly avoided by her superiors. Her meek and desperate plea
to be allowed to return to her former post in Naga City Branch was met with total
silence on managements end. Such insensitivity and disdain pervading her work
environment became more intense when her travel allowances were withdrawn and
management demanded for refund of those amounts received by her on the ground
that she is not entitled thereto while posted in the main office, which realized such
erroneous grant only at a late stage after all the vouchers underwent routine
approval by the concerned officers of the company. No other conclusion is
discernible from the attendant circumstances except to confirm private
respondents sentiment gleaned from what she had been hearing all along, that top
management indeed wanted to ease her out of the company, as a consequence of
her husbands filing of a similar illegal dismissal suit before the NLRC.
Petition is denied.

[G.R. No. 152689 October 12, 2005]

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., ENRIQUE D.
PEREZ, RICARDO R. ZARATE, ISABELO A. FERIDO, JR. and RODOLFO R.
SANTOS, Petitioners,- versus - ALFREDO S. PAGUIO, Respondent.
ALFREDO S. PAGUIO, Petitioner, - versus - PHILIPPINE LONG DISTANCE
TELEPHONE COMPANY, INC., ENRIQUE D. PEREZ, RICARDO R. ZARATE,
ISABELO A. FERIDO, JR. and RODOLFO R. SANTOS, Respondents.

FACTS
Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27
Exchanges in its Greater Metro Manila (GMM) Network. Alfredo S. Paguio was the
Head of the Garnet Exchange. In 1994, PLDT assessed the performance of the 27
Exchanges comprising the GMM Network. Upon receipt of the ratings, Paguio sent
Rodolfo Santos, his immediate supervisor and the Assistant Vice-President of the
GMM East Center, a letter criticizing the PLDT criteria for performance rating as
unfair because they depended on manpower, and that the criteria failed to
recognize that exchanges with new plants could easily meet the objectives of GMM
compared to those with old plants. Despite Paguios criticism, Garnet Exchange, the
oldest plant in GMM, obtained the top rating in the GMM. Nevertheless, Paguio
reiterated his letter to Santos and objected to the performance rating as it was
based only on the attainment of objectives, without considering other relevant
factors. In June 1996, PLDT rebalanced the manpower of the East Center. Paguio
wrote Santos and requested reconsideration of the manpower rebalancing, claiming
it was unfair to Garnet Exchange because as the oldest exchange in the East
Center, it was disallowed to use contractors for new installations and was not made
beneficiary of the cut-over bonus. After Santos denied his request, Paguio elevated
the matter to respondent Isabelo Ferido, Jr., the First Vice-President-GMM Network
Services.
On January 17, 1997, Paguio was reassigned as Head for Special Assignment at the
Office of the GMM East Center and asked to turn over his functions as Garnet
Exchange Head to Tessie Go. Believing that his transfer was a disciplinary action,
Paguio requested Ferido for a formal hearing of the charges against him and asked
that his reassignment be deferred. He also filed a complaint against Santos for
grave abuse of authority and manipulation of the East Center performance. As no
action was taken by Ferido, Paguio elevated the matter to Enrique D. Perez, the
Senior Executive Vice-President and Chief Operating Officer of PLDT, who advised
him to await the resolution of his complaint.
Consequently, Ferido sent Paguio an inter-office memo stating that he found
Paguios reassignment in order as it was based on the finding that Paguio was not a
team player and cannot accept decisions of management, which is short of
insubordination. Ferido advised Paguio to transfer to any group in the company that
may avail of his services. Likewise, Perez, thru an inter-office memo, informed
Paguio that his transfer was not in the nature of a disciplinary action that required
investigation and that he agreed with the reasons of the transfer. Aggrieved, Paguio
filed, before the NLRC-RAB, a complaint for illegal dismissal which was later
amended to illegal demotion with prayer for reversion to old position,etc..
ISSUE
Whether or not the transfer of Paguio was legal.
HELD
The SC held that except as limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of employment, including

the transfer of employees. It is the employers prerogative, based on its assessment

and perception of its employees qualifications, aptitudes, and competence, to
deploy its employees in the various areas of its business operations in order to
ascertain where they will function with maximum benefit to the company. An
employees right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment
or transfer him where he will be most useful. Nonetheless, there are limits to the
management prerogative. While it may be conceded that management is in the
best position to know its operational needs, the exercise of management
prerogative cannot be utilized to circumvent the law and public policy on labor and
social justice. That prerogative accorded management should not defeat the very
purpose for which our labor laws exist: to balance the conflicting interests of labor
and management. By its very nature, management prerogative must be exercised
always with the principles of fair play and justice. In particular, 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 his salaries,
privileges and other benefits. The employer bears the burden of proving that the
transfer of the employee has complied with the foregoing test.
In the present case, we see no credible reason for Paguios transfer except his
criticisms of the companys performance evaluation methods. Based on the
undisputed facts, Garnet Exchange was doing well and excelled in the performance
rating. In the same way, Paguios performance was consistently rated as
outstanding. There was also no proof that Paguio refused to comply with any
management policy. Patently, his transfer could not be due to poor performance.
Neither was it because he was needed in the new post for the new assignment was
functionless and it was nothing but a title. Paguios transfer could only be caused by
the managements negative reception of his comments. It is prejudicial to Paguio
because it left him out for a possible promotion as he was assigned to a functionless
position with neither office nor staff.
Petition of PLDT denied.
[G.R. No. 164774 April 12, 2006]
STAR PAPER CORPORATION, JOSEPHINE ONGSITCO &SEBASTIAN CHUA,
Petitioners vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E.
ESTRELLA, Respondents.
FACTS
According to the respondents, Simbol and Comia allege that they did not resign
voluntarily; they were compelled to resign in view of an illegal company policy. As to
respondent Estrella, she alleges that she had a relationship with co-worker Zuiga
who misrepresented himself as a married but separated man. After he got her
pregnant, she discovered that he was not separated. Thus, she severed her
relationship with him to avoid dismissal due to the company policy. On November
30, 1999, she met an accident and was advised by the doctor at the Orthopedic
Hospital to recuperate for twenty-one (21) days. She returned to work on December
21, 1999 but she found out that her name was on-hold at the gate. She was denied
entry. She was directed to proceed to the personnel office where one of the staff
handed her a memorandum. The memorandum stated that she was being

dismissed for immoral conduct. She refused to sign the memorandum because she
was on leave for twenty-one (21) days and has not been given a chance to explain.
The management asked her to write an explanation. However, after submission of
the explanation, she was nonetheless dismissed by the company. Due to her urgent
need for money, she later submitted a letter of resignation in exchange for her
thirteenth month pay.
Respondents later filed a complaint for unfair labor practice, constructive dismissal,
separation pay and attorneys fees. They averred that the aforementioned company
policy is illegal and contravenes Article 136 of the Labor Code.
ISSUE
Whether or not the 1995 Policy/Regulation of the company is violative of the
Constitutional rights towards marriage and the family of employees and of article
136 of the Labor Code.
HELD
The Supreme Court held that The 1987 Constitution under Article II, Section 18;
Article XIII, Section 3 state our policy towards the protection of labor under the
following provisions. The Civil Code likewise protects labor with the following
provisions such as articles 1700 and 1702.
The Labor Code is the most comprehensive piece of legislation protecting labor. The
case at bar involves Article 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.
In denying the contention of the petitioner company, the SC applied the two factors
to justify a bona fide occupational qualification:
Since the finding of a bona fide occupational qualification justifies an employers nospouse rule, the exception is interpreted strictly and narrowly. There must be a
compelling business necessity for which no alternative exists other than the
discriminatory practice. To justify a bona fide occupational qualification, the
employer must prove two factors: (1) that the employment qualification is
reasonably related to the essential operation of the job involved; and, (2) that there
is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.
The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative was also at
issue in the 1997 case of Philippine Telegraph and Telephone Company v. NLRC. In
said case, the employee was dismissed in violation of petitioners policy of

disqualifying from work any woman worker who contracts marriage. We held that
the company policy violates the right against discrimination afforded all women
workers under Article 136 of the Labor Code, but established a permissible
exception, viz.:
[A] requirement that a woman employee must remain unmarried could be justified
as a bona fide occupational qualification, or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the workplace. A requirement
of that nature would be valid provided it reflects an inherent quality reasonably
necessary for satisfactory job performance.
The cases of Duncan and PT&T instruct us that the requirement of reasonableness
must be clearly established to uphold the questioned employment policy. The
employer has the burden to prove the existence of a reasonable business necessity.
The burden was successfully discharged in Duncan but not in PT&T.
The SC do not find a reasonable business necessity in the case at bar.
Petitioners sole contention that the company did not just want to have two (2) or
more of its employees related between the third degree by affinity and/or
consanguinity is lame. That the second paragraph was meant to give teeth to the
first paragraph of the questioned rule is evidently not the valid reasonable business
necessity required by the law.
It is significant to note that in the case at bar, respondents were hired after they
were found fit for the job, but were asked to resign when they married a coemployee. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section,
could be detrimental to its business operations. Neither did petitioners explain how
this detriment will happen in the case of Wilfreda Comia, then a Production Helper in
the Selecting Department, who married Howard Comia, then a helper in the cuttermachine. The policy is premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of
a perceived danger at the expense of an employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a
co-employee, but they are free to marry persons other than co-employees. The
questioned policy may not facially violate Article 136 of the Labor Code but it
creates a disproportionate effect and under the disparate impact theory, the only
way it could pass judicial scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy cannot prejudice the
employees right to be free from arbitrary discrimination based upon stereotypes of
married persons working together in one company.
Decision of the CA affirmed.

[G.R. No. 163269 April 19, 2006]

ROLANDO C. RIVERA, Petitioner, - versus - SOLIDBANK CORPORATION,
Respondent.
FACTS
Petitioner had been working for Solidbank Corporation since July 1, 1977. He was
initially employed as an Audit Clerk, then as Credit Investigator, Senior Clerk,
Assistant Accountant, and Assistant Manager. Prior to his retirement, he became the
Manager of the Credit Investigation and Appraisal Division of the Consumers
Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry
business in Cavite.
In December 1994, petitioner retired from Solidbank under its Special Retirement
Program (SRP). He was required by the bank to sign an undated Release, Waiver
and Quitclaim wherein Rivera Rivera acknowledged receipt of the net proceeds of
his separation and retirement benefits and promised that [he] would not, at any
time, in any manner whatsoever, directly or indirectly engage in any unlawful
activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary
companies, their stockholders, officers, directors, agents or employees, and their
successors-in-interest and will not disclose any information concerning the business
of Solidbank, its manner or operation, its plans, processes, or data of any kind.
Aside from acknowledging that he had no cause of action against Solidbank or its
affiliate companies, Rivera agreed that the bank may bring any action to seek an
award for damages resulting from his breach of the Release, Waiver and Quitclaim,
and that such award would include the return of whatever sums paid to him by
virtue of his retirement under the SRP.
Rivera was likewise required to sign an undated Undertaking as a supplement to the
Release, Waiver and Quitclaim in favor of Solidbank in which he declared that he
received in full his entitlement under the law (salaries, benefits, bonuses and other
emoluments), including his separation pay in accordance with the SRP. In this
Undertaking, he promised that [he] will not seek employment with a competitor
bank or financial institution within one (1) year from February 28, 1995, and that
any breach of the Undertaking or the provisions of the Release, Waiver and
Quitclaim would entitle Solidbank to a cause of action against him before the
appropriate courts of law. Unlike the Release, Waiver and Quitclaim, the Undertaking
was not notarized.
On May 1, 1995, the Equitable Banking Corporation (Equitable) employed Rivera as
Manager of its Credit Investigation and Appraisal Division of its Consumers Banking
Group. Upon discovering this, wrote a letter informing Rivera that he had violated
the Undertaking. She likewise demanded the return of all the monetary benefits he
received in consideration of the SRP within five (5) days from receipt; otherwise,
appropriate legal action would be taken against him.
When Rivera refused to return the amount demanded within the given period,

Solidbank filed a complaint for Sum of Money with Prayer for Writ of Preliminary
Attachment before the Regional Trial Court (RTC) of Manila on June 26, 1995.
Solidbank, as plaintiff, alleged therein that in accepting employment with a
competitor bank for the same position he held in Solidbank before his retirement,
Rivera violated his Undertaking under the SRP. Considering that Rivera accepted
employment with Equitable barely three months after executing the Undertaking, it
was clear that he had no intention of honoring his commitment under said deed.
In his Answer, Rivera admitted that he received the net amount of P963,619.28 as
separation pay. However, the employment ban provision in the Undertaking was
never conveyed to him until he was made to sign it on February 28, 1995. He
emphasized that, prior to said date, Solidbank never disclosed any condition to the
retirement scheme, nor did it impose such employment ban on the bank officers
and employees who had previously availed of the SRP. He alleged that the
undertaking not to seek employment with any competitor bank or financial
institution within one (1) year from February 28, 1995 was void for being contrary
to the Constitution, the law and public policy, that it was unreasonable, arbitrary,
oppressive, discriminatory, cruel, unjust, inhuman, and violative of his human
rights. He further claimed that the Undertaking was a contract of adhesion because
it was prepared solely by Solidbank without his participation; considering his moral
and economic disadvantage, it must be liberally construed in his favor and strictly
against the bank.
ISSUE
Whether the employment ban incorporated in the Undertaking which petitioner
executed upon his retirement is unreasonable, oppressive, hence, contrary to public
policy.
HELD
The SC held that Article 1306 of the New Civil Code provides that the contracting
parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs,
public order or public policy. The freedom of contract is both a constitutional and
statutory right. A contract is the law between the parties and courts have no choice
but to enforce such contract as long as it is not contrary to law, morals, good
customs and against public policy. The well-entrenched doctrine is that the law does
not relieve a party from the effects of an unwise, foolish or disastrous contract,
entered into with full awareness of what he was doing and entered into and carried
out in good faith. Such a contract will not be discarded even if there was a mistake
of law or fact. Courts have no jurisdiction to look into the wisdom of the contract
entered into by and between the parties or to render a decision different therefrom.
They have no power to relieve parties from obligation voluntarily assailed, simply
because their contracts turned out to be disastrous deals.
On the other hand, retirement plans, in light of the constitutional mandate of
affording full protection to labor, must be liberally construed in favor of the
employee, it being the general rule that pension or retirement plans formulated by
the employer are to be construed against it. Retirement benefits, after all, are

intended to help the employee enjoy the remaining years of his life, releasing him
from the burden of worrying for his financial support, and are a form of reward for
being loyal to the employer.
In the present case, there is no factual basis to agree with the contention of the
respondent bank. On the face of the Undertaking, the post-retirement competitive
employment ban is unreasonable because it has no geographical limits; respondent
is barred from accepting any kind of employment in any competitive bank within the
proscribed period. Although the period of one year may appear reasonable, the
matter of whether the restriction is reasonable or unreasonable cannot be
ascertained with finality solely from the terms and conditions of the Undertaking, or
even in tandem with the Release, Waiver and Quitclaim.
Undeniably, petitioner retired under the SRP and received P963,619.28 from
respondent. However, petitioner is not proscribed, by waiver or estoppel, from
assailing the post-retirement competitive employment ban since under Article 1409
of the New Civil Code, those contracts whose cause, object or purpose is contrary to
law, morals, good customs, public order or public policy are inexistent or void from
the beginning. Estoppel cannot give validity to an act that is prohibited by law or
one that is against public policy.
Respondent, as employer, is burdened to establish that a restrictive covenant
barring an employee from accepting a competitive employment after retirement or
resignation is not an unreasonable or oppressive, or in undue or unreasonable
restraint of trade, thus, unenforceable for being repugnant to public policy. There
are two principal grounds on which the doctrine is founded that a contract in
restraint of trade is void as against public policy. One is, the injury to the public by
being deprived of the restricted partys industry; and the other is, the injury to the
party himself by being precluded from pursuing his occupation, and thus being
prevented from supporting himself and his family.
Public welfare is first considered, and if it be not involved, and the restraint upon
one party is not greater than protection to the other party requires, the contract
may be sustained. The question is, whether, under the particular circumstances of
the case and the nature of the particular contract involved in it, the contract is, or is
not, unreasonable.
In cases where an employee assails a contract containing a provision prohibiting
him or her from accepting competitive employment as against public policy, the
employer has to adduce evidence to prove that the restriction is reasonable and not
greater than necessary to protect the employers legitimate business interests. The
restraint may not be unduly harsh or oppressive in curtailing the employees
legitimate efforts to earn a livelihood and must be reasonable in light of sound
public policy.
Courts should carefully scrutinize all contracts limiting a mans natural right to
follow any trade or profession anywhere he pleases and in any lawful manner. But it
is just as important to protect the enjoyment of an establishment in trade or
profession, which its employer has built up by his own honest application to every
day duty and the faithful performance of the tasks which every day imposes upon
the ordinary man. What one creates by his own labor is his. Public policy does not

intend that another than the producer shall reap the fruits of labor; rather, it gives
to him who labors the right by every legitimate means to protect the fruits of his
labor and secure the enjoyment of them to himself. Freedom to contract must not
be unreasonably abridged. Neither must the right to protect by reasonable
restrictions that which a man by industry, skill and good judgment has built up, be
denied.
The Court reiterates that the determination of reasonableness is made on the
particular facts and circumstances of each case. The question of reasonableness of
a restraint requires a thorough consideration of surrounding circumstances,
including the subject matter of the contract, the purpose to be served, the
determination of the parties, the extent of the restraint and the specialization of the
business of the employer. The court has to consider whether its enforcement will be
injurious to the public or cause undue hardships to the employee, and whether the
restraint imposed is greater than necessary to protect the employer. Thus, the court
must have before it evidence relating to the legitimate interests of the employer
which might be protected in terms of time, space and the types of activity
proscribed.
Consideration must be given to the employees right to earn a living and to his
ability to determine with certainty the area within which his employment ban is
restituted. A provision on territorial limitation is necessary to guide an employee of
what constitutes as violation of a restrictive covenant and whether the geographic
scope is co-extensive with that in which the employer is doing business. In
considering a territorial restriction, the facts and circumstances surrounding the
case must be considered.
Thus, in determining whether the contract is reasonable or not, the trial court
should consider the following factors: (a) whether the covenant protects a
legitimate business interest of the employer; (b) whether the covenant creates an
undue burden on the employee; (c) whether the covenant is injurious to the public
welfare; (d) whether the time and territorial limitations contained in the covenant
are reasonable; and (e) whether the restraint is reasonable from the standpoint of
public policy.
We are not impervious of the distinction between restrictive covenants barring an
employee to accept a post-employment competitive employment or restraint on
trade in employment contracts and restraints on post-retirement competitive
employment in pension and retirement plans either incorporated in employment
contracts or in collective bargaining agreements between the employer and the
union of employees, or separate from said contracts or collective bargaining
agreements which provide that an employee who accepts post retirement
competitive employment will forfeit retirement and other benefits or will be obliged
to restitute the same to the employer. The strong weight of authority is that
forfeitures for engaging in subsequent competitive employment included in pension
and retirement plans are valid even though unrestricted in time or geography.
A post-retirement competitive employment restriction is designed to protect the
employer against competition by former employees who may retire and obtain
retirement or pension benefits and, at the same time, engage in competitive

employment.
Petition is granted.

G.R. No. 164893 March 1, 2007]

CONSTANCIA DULDULAO, Petitioner,- versus -THE COURT OF APPEALS, and
BAGUIO COLLEGES FOUNDATION, Respondents.
FACTS
Petitioner Constancia P. Duldulao was hired by respondent Baguio Colleges
Foundation (BCF) as secretary/clerk-typist and assigned to the College of Law
sometime in June of 1987. In August 1996, a certain law student filed a complaint
against petitioner for alleged irregularities in the performance of her work. Petitioner
was told to submit her answer to the complaint and given several extensions within
which to do so. However, despite the extensions, she failed to submit her answer.
Consequently, the dean of the College of Law informed the schools President of
petitioners failure to file her answer and recommended the assignment of
petitioner outside the College of Law, not only because of such failure to answer but
also her having admitted fraternizing with students of the College. On the same
day, respondents Vice President for Administration issued a Department Order
informing her that she is transferred to the office of the Principals of the High School
and Elementary Departments.
On 3 October 1996, petitioner moved for reconsideration of the Department Order
and requested another five (5)-day extension within which to file her answer. Dean
Aquino informed petitioner that he could no longer act on her motion for
reconsideration and motion for extension since the matter had already been
elevated to respondents Executive Board due to the delay in the submission of her
answer. Petitioner eventually filed her answer on 7 October 1996.
Petitioner filed a case with the Administrative Investigating Committee which later
found that the Department Order appropriate since it was intended to prevent the
controversy between petitioner and the complaining student from adversely
affecting a harmonious relationship within the College of Law among all its
constituents. It recommended that petitioner start reporting to her new assignment.
The recommendation was approved and adopted by President Tenefrancia on 7
February 1997.
The Department Order notwithstanding, petitioner did not report for work and
instead took a vacation leave and several other leave of absences from October
1996 to January 1997. Finally, petitioner filed a complaint for constructive dismissal
before the NLRC RAB-CAR. She claimed that she was arbitrarily directed to report for
work in a location far from her original place of assignment on account of which she
would be incurring additional expenses in transportation. In addition, she stated

that aside from being tainted with procedural lapses in violation of her right to due
process, the transfer also amounted to her demotion in rank.
ISSUE
Whether petitioners transfer as secretary/clerk-typist from the College of Law to the
High School and Elementary Departments amounts to constructive dismissal.
HELD
The SC held that there is constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving
a demotion in rank and a diminution in pay.
At the onset, it must be stressed that petitioner has no vested right to the position
of secretary/clerk-typist of the College of Law that may operate to deprive
respondent of its prerogative to change or transfer her assignment to another
department where she will be most useful in its judgment. After all, petitioner was
employed by respondent which is the BCF system itself, not the College of Law only,
which is but a component part of the system. Thus, to respondent belongs the
prerogative to reassign petitioner to any of its departments as it sees fit, provided
that such reassignment is made in good faith.
We have long recognized the prerogative of management to transfer an employee
from one office to another within the same business establishment, as the exigency
of the business may require, provided that the transfer does not result in a
demotion in rank or a diminution in salary, benefits and other privileges of the
employee; or is not unreasonable, inconvenient or prejudicial to the latter; or is not
used as a subterfuge by the employer to rid himself of an undesirable worker.
It is the employers prerogative, based on its assessment and perception of its
employees qualifications, aptitudes, and competence, to move them around in the
various areas of its business operations in order to ascertain where they will
function with maximum benefit to the company. An employees right to security of
tenure does not give him such a vested right in his position as would deprive the
company of its prerogative to change his assignment or transfer him where he will
be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his
salaries, benefits, and other privileges, the employee may not complain that it
amounts to a constructive dismissal.
The Court does not see how petitioners transfer from the College of Law to the
Office of the Principals of the Elementary and High School Departments can be
described as unreasonable, inconvenient, or prejudicial to her. In her complaint,
petitioner alleged that by reason of the transfer, she would incur additional
transportation expenses, be constrained to engage the services of a househelp, and
suffer a demotion in rank and status. As explained by respondent, the difference in
traveling distance is not so large as to cause great inconvenience to petitioner as in

fact, by merely changing the route to take, the distance from petitioners house to
the College of Law and that from her house to her new assignment will almost be
the same.
Neither is the transfer equivalent to a demotion in rank and status. Petitioner was a
secretary/clerk-typist of the College of Law. As such secretary/clerk-typist, she
would only have to perform the same duties in the Office of the Principals of the
High School and Elementary Departments.
Petitioner argues that she was denied her right to due process when she was
transferred to another department even before she was able to file her answer.
Reassignments made by management pending investigation of irregularities
allegedly committed by an employee fall within the ambit of management
prerogative. The transfer, while incidental to the pending charges against petitioner,
was not meant to be a penalty, but rather a preventive measure to avoid further
damage to the College of Law. It was not designed to be the culmination of the then
on-going administrative case against petitioner. Hence, he order of transfer prior to
the submission of her answer cannot be deemed a violation of her right to due
process.
This Court has, in several instances, upheld reassignments/transfers pending
investigations of the irregularities allegedly committed by employees, the rationale
being that the purpose of reassignments is no different from that of preventive
suspension which management could validly impose as a measure of protection of
the companys property pending investigation of any malfeasance or misfeasance
committed by the employee.
Petition is denied.

[G.R. No. 152057. September 29, 2003.]

PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION, petitioner, vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PT&T
PROGRESSIVE WORKERS UNION-NAFLU-KMU, CRISTINA RODIEL, JESUS
PARACALE, ROMEO TEE, BENJAMIN LAKANDULA, AVELINO ACHA, IGNACIO
DELA CERNA and GUILLERMO DEMEGILLO, respondents.
FACTS

Petitioner, after conducting a series of studies regarding the profitability of its retail
operations, its existing branches and the number of employees, the petitioner came
up with a Relocation and Restructuring Program designed to (a) sustain its (PT&T's)
retail operations; (b) decongest surplus workforce in some branches, to promote
efficiency and productivity; (c) lower expenses incidental to hiring and training new
personnel; and (d) avoid retrenchment of employees occupying redundant positions.
On August 11, 1997, private respondents received separate letters from the
petitioner, giving them the option to choose the branch to which they could be
transferred. Thereafter, through HRAG Bulletin No. 97-06-16, the private
respondents and other petitioner's employees were directed to "relocate" to their
new PT&T Branches. The affected employees were directed to report to their
respective relocation assignments in a Letter dated September 16, 1997. Moreover,
the employees who would agree to the transfers would be considered promoted.
The private respondents rejected the petitioner's offer. Petitioner, then, sent letters
to the private respondents requiring them to explain in writing why no disciplinary
action should be taken against them for their refusal to be transferred/relocated. In
their respective replies to the petitioner's letters, the private respondents explained
that: The transfers imposed by the management would cause enormous difficulties
on the individual complainants. For one, their new assignment involves distant
places which would require their separation from their respective families.
Dissatisfied with this explanation, the petitioner considered the private respondents'
refusal as insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from work. They forthwith filed their respective
complaints against the petitioner before the appropriate sub-regional branches of
the NLRC.
In their position paper, the complainants (herein private respondents) declared that
their refusal to transfer could not possibly give rise to a valid dismissal on the
ground of willful disobedience, as their transfer was prejudicial and inconvenient;
thus unreasonable. The private respondents further opined that since their
respective transfers resulted in their promotion, they had the right to refuse or
decline the positions being offered to them. Resultantly, the refusal to accept the
transfers could not have amounted to insubordination or willful disobedience to the
"lawful orders of the employer."
For its part, the company alleged that the private respondents' transfers were made
in the lawful exercise of its management prerogative and were done in good faith.
The transfers were aimed at decongesting surplus employees and detailing them to
a more demanding branch.
ISSUE
Whether or not the private respondents were illegally dismissed.
HELD
The Supreme Court ruled that an employee cannot be promoted, even if merely as a
result of a transfer, without his consent. A transfer that results in promotion or
demotion, advancement or reduction or a transfer that aims to 'lure the employee

away from his permanent position cannot be done without the employees' consent.
There is no law that compels an employee to accept a promotion for the reason that
a promotion is in the nature of a gift or reward, which a person has a right to refuse.
Hence, the exercise by the private respondents of their right cannot be considered
in law as insubordination, or willful disobedience of a lawful order of the employer.
As such, there was no valid cause for the private respondents' dismissal.
Decision of the CA affirmed.

[G.R. No. 142875. September 7, 2001.]

EDGAR AGUSTILO, petitioner, vs. COURT OF APPEALS, SAN MIGUEL
CORPORATION, FRANCISCO MANZON, JR., VICE PRESIDENT and DIRECTOR,
LEONOR
CANEJA,
PERSONNEL
OFFICER,
and
RODRIGO
GURREA,
ENGINEERING DEPARTMENT MANAGER, respondents.
FACTS
Petitioner Edgar Agustilo was hired on July 1, 1979 by respondent San Miguel
Corporation (SMC) as a temporary employee at its Mandaue Brewery in Mandaue,
Cebu. On October 1, 1979, he was made permanent and designated as a safety
clerk. On May 1, 1982, he was transferred to the Engineering Department of the
SMC Mandaue Brewery as an administrative secretary. Sometime in 1991, SMC
Mandaue Brewery adopted a policy that managers would no longer be assigned
secretaries and that only director level positions may be given secretaries. As a
result, on August 5, 1991, petitioner's position as administrative secretary was
abolished and he was transferred to the company's Plant Director's Office-Quality
Improvement Team (PDO QIT).
On February 7, 1992, petitioner was informed that 584 employees, including him,
would be retrenched due to the modernization program of the company. Petitioner
was told that his services would be terminated effective March 15, 1992 and that he
would be paid his benefits 30 days after he was cleared of all accountabilities. In a

letter, dated February 13, 1992, SMC notified the DOLE of its modernization
program.
On April 8, 1992, petitioner was given separation pay in the amount of P302,450.38,
representing 175% of his entitlements under the Labor Code. He signed a quitclaim
designated as "Receipt and Release" in favor of SMC before Senior Labor
Employment Officer Mateo P. Baldago of the Labor Standards Enforcement Division
of the DOLE, Region VII.
Petitioner then filed a complaint against respondents for unfair labor practice, illegal
dismissal, and payment of separation pay, attorney's fees, and damages. He alleged
that he was a regular employee of SMC from 1979 to 1992; that on May 1, 1982, he
was promoted to the position of administrative secretary of the Engineering
Department until his employment was terminated on March 15, 1992 by reason of
union activities.
ISSUE
Whether or not petitioner was illegally dismissed.
HELD
The SC held that the contention has no merit. Petitioner's employment was
terminated on the ground of the installation of labor saving devices by SMC. Art.
283 of the Labor Code provides:
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 ()
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.
The respondent company have demonstrated by clear and convincing evidence that
the Mandaue plant where private respondent used to work had instituted a
modernization program which consisted of, among others, "a 45 million cases per
year capacity brewhouse; a 1,400 HI per hour filtration system; a complete cellaring
system with six cylindro-conical tanks at 10,000 HI each to include other tankages
and accessories; a 1,000 bottles per minute liter bottling line; and support systems
such as three 1,000 HP NH3 compressors with two liquid overfeed NH3 separators;
an 80,000 lbs. per hour water tube steam generator and a 700-HO air compressor"

the operations of which are "all automated using microprocessor and electronic
process controllers and instrumentation systems through intelligent interfacing with
Siemens Industrial computers." All of these high-technology innovations, at the cost
of 2.6 billion pesos, truly render the functions of the Plant Director's Office Quality
Control Unit, where private respondent was transferred after his post as
Administrative Secretary to the plant manager was validly abolished, upon
management prerogative that the same "did not add value to the organization."
Petition denied.

[G.R. No. 148848. August 5, 2003.]

JACINTO RETUYA, PRISCILA B. VALE, BALTAZAR QUILAT, ABDON DAYSON
and ELEUTERIO ENSALADA, petitioners, vs. Hon. SALIC B. DUMARPA,
(Presiding Commissioner); Hon. OSCAR N. ABELLA and Hon. LEON G.
GONZAGA JR. (Commissioners); NATIONAL LABOR RELATIONS COMMISSION
(Fifth Division), Cagayan de Oro City; INSULAR BUILDERS, INC./ANTONIO
MURILLO, President and General Manager; and RODOLFO MURILLO,
respondents.
FACTS
Private respondent, Insular Builders, Inc., is a family-owned corporation managed
and operated principally by Antonio Murillo, father, and his son, Rodolfo Murillo. It is
engaged in the construction business. Petitioners, on the other hand, were workers
who have rendered services in various corporations of private respondents, namely
Mindanao Integrated Builders, Inc., Sta. Clara Plywood, Inc., Insular Builders, Inc.
and Queen City Builders, Inc. Early 1993, at the height of the feud between private
respondents Antonio Murillo and Rodolfo Murillo, the former discharged the latter
from his position as manager of Insular Builders, Inc. and assumed control of the
company. Petitioners found themselves in the middle of the crossfire and were told
to temporarily stop working. Later, or on July 26, 1993, private respondent Antonio
Murillo dismissed petitioners and reported the matter to the DOLE. Petitioners were
however made to continue their work, rendering the same services, in the same
place, locality and at the same office but under a different company, the Queen City
Builders, Inc., managed and controlled by private respondent Rodolfo Murillo. On
August 3, 1993, petitioners filed with the NLRC-RAB X, a complaint for illegal
dismissal, non-payment of wages, 13th month pay, and retirement pay as regards
petitioner Abdon Dayson. Petitioners averred that they were terminated from
employment on July 26, 1993 without prior notice and also in absence of any valid
cause. They alleged that their termination was an off-shoot of the supposed
personal rift and disagreements between private respondents Antonio Murillo and
Rodolfo Murillo. On the other hand, private respondents Insular Builders, Inc. and
Antonio Murillo deny having employed petitioners Baltazar Quilat, Abdon Dayson

and Eleuterio Ensalada as they were personal employees of and rendering services
to private respondent Rodolfo Murillo.
ISSUE
Whether or not petitioners are entitled to full back wages and separation pay
considering they were found to be illegally dismissed.
HELD
The SC held that illegally dismissed employees were entitled to full back wages that
should not be diminished or reduced by the amount they had earned from another
employment during the period of their illegal dismissal. While litigating, employees
must still earn a living. Furthermore, as penalty for their illegal dismissal, their
employers must pay them full back wages. This rule has been uniformly applied in
subsequent cases.
In the present case, petitioners were dismissed because of a "change of
management." They were not given any prior written notice, but simply told that
their services were terminated on the day they stopped working for Insular Builders,
Inc. Under the circumstances, the CA was correct in upholding the labor arbiter's
finding that they had been illegally dismissed. Having been illegally dismissed,
petitioners should be awarded back wages in accordance with Bustamante v. NLRC.
The fact that they worked for a sister company immediately after being dismissed
from Insular Builders, Inc. should not preclude such award.
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 comfortably 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 backwages 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. 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.

While it may be true that petitioners continued to work in the same place and office
as in their previous employment, it is equally true that they had in fact been illegally
dismissed by their previous employer. Thus, they lost their former work status and
benefits in a manner violative of the law. Be it noted that without their consent,
their employment was changed from Insular, which was controlled by Antonio
Morillo; to Queen City, which was "managed and controlled by private respondent
Rodolfo Murillo." "Thus, they became new employees of the latter firm and, as such,
were deprived of seniority and other employment benefits they had when they were
still with their former employer. Moreover, petitioners are entitled to separation pay.
As provided by Article 279 of the Labor Code, an illegally dismissed employee is
entitled to the twin reliefs of 1) either reinstatement or separation pay, if
reinstatement is no longer feasible; and 2) back wages. These are distinct and
separate reliefs given to alleviate the economic setback brought about by the
employee's dismissal. The award of one does not bar the other. Back wages may be
awarded without reinstatement, and reinstatement may be ordered without
awarding back wages.
Petition for backwages and separation is granted.

EN BANC
[G.R. No. 158693. November 17, 2004.]
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS,
INC. and VICENTE ANGELES, respondents.
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, 1992 until February 23, 1999 when they were dismissed for
abandonment of work. Petitioners then filed a complaint for illegal dismissal and
payment of money claims, which the Labor Arbiter rendered a decision declaring
the dismissals illegal and ordered private respondent to pay the monetary claims.
ISSUE
Whether or not petitioners were illegally dismissed.
HELD
The SC held that petitioners' dismissal was for a just cause. They had abandoned
their employment and were already working for another employer. 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 by the

employee of the lawful orders of his employer or the latter's representative in
connection with the employee's 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.
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.
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.
In another case, the SC held that an employee who deliberately absented from work
without leave or permission from his employer, for the purpose of looking for a job
elsewhere, is considered to have abandoned his job. We should apply this rule with
more reason here where petitioners were absent because they were already
working in another company.
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.
After establishing that the terminations were for a just and valid cause, we now
determine if the procedures for dismissal were observed. The procedure for
terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus
Rules Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of
employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of

the Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
In case of termination, the foregoing notices shall be served on the employee's last
known address. 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.
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.
The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work
for another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately
for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employee's last known address.
Thus, it should be held liable for non-compliance with the procedural requirements
of due process.
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee
was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor
Relations Commission, we reversed this long-standing rule and held that the
dismissed employee, although not given any notice and hearing, was not entitled to
reinstatement and backwages because the dismissal was for grave misconduct and
insubordination, a just ground for termination under Article 282. The employee had
a violent temper and caused trouble during office hours, defying superiors who tried
to pacify him. We concluded that reinstating the employee and awarding backwages
"may encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe." We further held that:
Under the circumstances, the dismissal of the private respondent for just cause
should be maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend
to private respondent his right to an investigation before causing his dismissal. The
rule is explicit as above discussed. The dismissal of an employee must be for just or
authorized cause and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before dismissing
petitioner from employment. Considering the circumstances of this case petitioner
must indemnify the private respondent the amount of P1,000.00. The measure of
this award depends on the facts of each case and the gravity of the omission
committed by the employer.
The rule thus evolved: where the employer had a valid reason to dismiss an
employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or ineffectual.
However, the employer should indemnify the employee for the violation of his
statutory rights. The indemnity to be imposed should be stiffer to discourage the
abhorrent practice of "dismiss now, pay later," which we sought to deter in the
Serrano ruling. The sanction should be in the nature of indemnification or penalty
and should depend on the facts of each case, taking into special consideration the
gravity of the due process violation of the employer.

Petition dismissed but respondent ordered to pay damages.

EN BANC
[G.R. No. 149349. March 11, 2005]
GLAXO WELLCOME PHILIPPINES, INC. (now known as GLAXO SMITHKLINE),
petitioner, vs. NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA (NEW-DFA),
JOSSIE RODA DE GUZMAN, and NORMAN B. CEREZO, respondents.
FACTS
Petitioner company adopted a new Car Allocation Policy. Under the provisions of the
said car plan, a prioritization schedule in the assignment of company vehicles is to
be fixed based on the sales performance of the employees. Pursuant to the same,
several company cars had to be re-assessed and re-assigned in favor of other
employees more qualified under the priority list. Incidentally, included among the
vehicles that had to be re-allocated in accordance with the priority schedule of the
new car plan were those of union officers Norman Cerezo and Jossie Roda de
Guzman.
A memorandum was sent by the company to de Guzman advising her that she
would have to surrender the vehicle assigned to her in light of the new car policy.
De Guzman, however, refused to turn over said car and instead sought
reconsideration from the companys National Sales Manager. The latter, regrettably,
did not accede to de Guzmans request. On November 29, 1990, de Guzman, thru
counsel, wrote the company, asking that the withdrawal of her car be held in
abeyance. The company, however, rejected her petition. On December 7, 1990, de
Guzman received another memorandum from the company, again instructing her to
return the vehicle. The following day, de Guzman sent a letter to the company
reiterating her plea for the suspension of the withdrawal of her car. On December
17, 1990, a final warning was sent to de Guzman instructing her to return her
assigned vehicle or else she would be charged for insubordination and be
dismissed. Finally, because of de Guzmans staunch refusal to comply with the
order, through a letter dated December 20, 1990, she was cited, and at the same
time, terminated for gross insubordination.
Norman Cerezo, on the other hand, was likewise sent several instructions to
surrender his assigned car. However, he also refused to comply. On account of his
defiance, the company, on December 5, 1990, sent Cerezo a notice of dismissal
effective immediately upon receipt. Forthrightly, Cerezo referred the matter to his
counsel who, on the same date, sought for the reconsideration of Cerezos
discharge. On December 17, 1990, Cerezo received a letter from the company
informing him that his dismissal had been reconsidered and commuted to a thirty
(30) day suspension without pay.
The two respondents, together with their union, lodged a complaint before the
Labor Arbiter against the company for unfair labor practice, illegal dismissal and

illegal suspension. They aver that the new car Allocation Policy adopted by the
company was intended to harass, retaliate and discriminate against union officers
and members in light with the previous altercation between the union and the
management during the heated certification election conducted earlier. The union
also challenged the legality of the suspension and dismissal of two of its officers,
namely: Norman Cerezo and Jossie Roda de Guzman. It argued that the suspension
and dismissal were effected without any prior hearing.
The company, on the other hand, disclaimed any intent to discourage union
activities and to tamper with the right of its employees to self-organization. GLAXOWELLCOME also maintained that its car allocation policy was implemented merely
to rationalize the distribution of company vehicles. It also asserted that de Guzman
and Cerezo were notified, via several memoranda, of the grounds for which the
dismissal and suspension were effected.
ISSUE
Whether or not the notice and hearing requirements were complied with.
HELD
The SC held that section 2(d) of Rule 1 of Book VI of the Omnibus Rules
Implementing the Labor Code (Implementing Rules) sets forth the procedure for
terminating employment as follows:
(d) In all cases of termination of employment, the following standards of due
process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the
Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side.
(ii) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence, or rebut the evidence presented against him; and
(iii) A written notice of termination served on the employee, indicating that upon
due consideration of all the circumstances, grounds have been established to justify
his termination.
To stress, if the dismissal is based on a just cause under Article 282 of the Labor
Code, the employer must give the employee (1) two written notices and (2) a
hearing (or at least, an opportunity to be heard). The first notice is intended to
inform the employee of the employers intent to dismiss and the particular acts or
omissions for which the dismissal is sought. The second notice is intended to inform
the employee of the employers decision to dismiss. This decision, however, must
come only after the employee has been given a reasonable period, from receipt of
the first notice, within which to answer the charge; and ample opportunity to be

heard with the assistance of counsel, if the employee so desires. The twin
requirements of (a) two notices and (b) hearing are necessary to protect the
employees security of tenure, which is enshrined in the Constitution, the Labor
Code and related laws. The notices to be given and the hearing to be conducted
generally constitute the two-part due process requirement of law that the employer
must accord the employee. This requirement was not a mere technicality but a
requirement of due process to which every employee is entitled to insure that the
employers prerogative to dismiss or lay-off is not abused or exercised in an
arbitrary manner.
In the present case, petitioner sent respondents a total of three Memoranda stating
that their stubborn refusal to comply with the car policy and to surrender the
subject vehicle constituted gross insubordination, for which they could be
dismissed. To each Memorandum, respondents were able to reply and explain, with
the aid of their counsel, why they had refused to return the vehicles; and, in effect,
why they should not be dismissed for gross insubordination. Initially, they asked
petitioner not to implement the car policy in the light of the Complaint and the
Motion for the Issuance of a Writ of Preliminary Injunction that they had filed. They
explained that they could not work effectively and efficiently for the company
without the cars that had been assigned to them.
In their written replies to petitioners succeeding Memoranda -- which reiterated
that their actions constituted gross insubordination and could result in their
termination -- respondents, still through their counsel, reasoned that they were not
claiming ownership of the car. They said that their refusal to surrender the car to
the company could not be denominated as gross insubordination, because they
were merely acting upon the advice of their counsel. They added that, to enjoin the
implementation of the car policy, they had already lodged with the NLRC a
complaint for unfair labor practice. Their counsel further alleged that De Guzman
was apprehensive that she might not immediately be given a replacement upon the
return of the car. He stressed that the vehicle was necessary to prevent adverse
effects on the sales performance of respondents. Ultimately, after petitioner had
sent them a final warning, to which they also ably replied, it served them a letter
terminating their employment.
Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of Rule 1 of Book VI of the
Implementing Rules requires strict literal compliance with the stated procedure; only
substantial compliance is needed. On this basis, the Memoranda sent to
respondents may be deemed to have sufficiently conformed to the first notice
required under the Implementing Rules. The Memoranda served the purpose of
informing them of the pending matters beclouding their employment and of
extending to them an opportunity to clear the air. In fact, not only were respondents
duly informed of the particular acts for which their dismissal was sought; they were,
in truth and in fact, able to defend themselves and to respond to the charges with
the assistance of a counsel of their own choosing.
Without a doubt, respondents in the present case deliberately disregarded or
disobeyed a company policy. Their written explanations admitted their refusal to
obey petitioners directive to return the vehicles. Their justification of their refusal to
obey the lawful orders of their employer did not militate against their obvious

disobedience. Under the circumstances, they were nonetheless given adequate

opportunity to answer the charge, which in fact they did. In arriving at the decision
to dismiss them, petitioner took into consideration the explanations they had
offered.
Petition is granted.

[G.R. No. 151378. March 28, 2005]

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT,
ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO
and JONATHAN CAGABCAB, respondents.
FACTS
Private respondents were hired by JAKA but their services were eventually
terminated on August 29, 1997 due to dire financial straits. It is not disputed by
the parties that the termination was effected without compliance of Article 283 of
the LC because no written notice was served on the employees and the DOLE at
least one month before the respondents termination.
Respondents filed a complaint for illegal dismissal against JAKA. JAKA was defeated
on appeal in the lower court hence this petition.
ISSUE
The issues boil down to one question: What are the implications where an employee
is dismissed for cause BUT without compliance of the notice requirement under the
LC?
HELD
It is clear that an employer is liable for nominal damages even if the termination
were upheld due to just causes. However, it is also important to note the different
implications between a dismissal for just cause under Article 282 and one for
authorized causes under Article 283.

JUST CAUSE
Implies that the employee has
committed, or is guilty of, some
violation against the employer; it can
be said that the employee himself
initiated the dismissal process.
The rule is that separation pay is not
required.
Hence,
If the termination is based on cause
but without notice requirement, the
sanction should be tempered
because the dismissal was initiated
by the employee.

AUTHORIZED CAUSE
Usually dismissal process is initiated
by the employers exercise of his
management prerogative but not
because of the employees conduct.
The rule is that separation pay is
required.
If the termination is based on cause
but without notice requirement, the
sanctions should be stiffer because
the sanctions were initiated by the
employer.

SC ruled that the termination was based on authorized cause (retrenchment), but
since JAKA did not comply with the notice requirement they have to pay 50k as
nominal damages for non-compliance with statutory due process. JAKA, however
should not pay separation pay because where it is true that the rule is to grant
separation pay to employees terminated due to authorized causes, the EXCEPTION
is where the closure of business or cessation of operations is due to serious
business losses or financial reverses, duly proved, as in this case.

[G.R. No. 149371. April 13, 2005]

ABERDEEN COURT, INC., and RICHARD NG, petitioners, vs. MATEO C.
AGUSTIN JR., respondent.
FACTS
Aberdeen Court, Inc., employed Mateo C. Agustin (Agustin), herein respondent, for
the purpose of trouble shooting the electrical problems in said petitioners
establishment. Agustin was engaged on a six-month probationary basis. The
employment contract provided that should his performance be considered
unsatisfactory at any time by management during his probationary period, the
management can terminate my services at any time, even before the termination of
the agreed six-month period.
During his probationary period, the personnel of Centigrade Industries, Inc.
performed a reading of the exhaust air balancing at the fifth and sixth floors of
Aberdeens premises. Petitioners claim that Agustin was placed in charge of the
undertaking. On the other hand, Agustin asserts that Engr. Abad merely requested
him to accompany the aforesaid personnel to show the location of the exhaust air
outlet at the fifth and sixth floors of the premises. He avers that the request of Engr.
Abad is actually the responsibility of the companys mechanical engineers. Despite
the fact that the request of Engr. Abad is not a part of his job since he is not a
mechanical engineer and there were three (3) other mechanical engineers on duty
in the company premises, Agustin, being a subordinate of Engr. Abad, obliged and
accompanied the aforementioned personnel to the location. There were no other
specific instructions from Engr. Abad to petitioner with respect to the conduct or
actual reading to be made by the Centigrade personnel.
It must be noted that the reading of exhaust air balancing is under the category of
heating, ventilating and air conditioning (HVAC) which are within the realm of field
of work of mechanical engineers. Being an electrical engineer, petitioner obviously
has no knowledge of the procedure and the equipment used by mechanical
engineers in the conduct of the reading of the exhaust air balancing.
After the Centigrade personnel finished their job, they submitted their report to
Agustin. Petitioners allege that Agustin accepted and signed the report, without
verifying its correctness. Engineer Abad later checked the work of the Centigrade
employees only to find out that four rooms in the fifth floor and five rooms in the
sixth floor were incorrectly done. In contrast, Agustin states that after the report
was handed to him, he took the same to Engr. Abad, who he claims was responsible
for evaluating and confirming the said report. Allegedly, instead of signing it
himself, Engr. Abad directed respondent to sign it, giving the reason that Agustin
was present when the reading was conducted. Respondent Agustin complied, but he
now points out that his signature was not accompanied by any qualification that he
accepted the report on behalf of Aberdeen. He claims that he signed merely to
evidence that he received a copy of the report. According to petitioners, Aberdeen

management confronted Agustin with his failure to check the job and asked him to
explain his side. Agustin allegedly ignored management and left the company,
which made it impossible for Aberdeen to transmit any further notice to him.
However, Agustin claims that two days after the report was submitted by
Centigrade Industries, he was summarily dismissed. In the afternoon of that day, he
received a telephone call from the personnel office of respondent company ordering
him to report to that office after his tour of duty. At about seven p.m. at the
personnel office, Ms. Lani Carlos of the Personnel Department, informed him that
Aberdeen Court is terminating his services as electrical engineer. Petitioner was
flabbergasted. Ms. Carlos then informed him that he could get his two (2) weeks
salary in the amount of P4,000, more or less, on the condition that he will sign some
documents which provides that the company has no more liability and that he is
voluntarily resigning from Aberdeen Court. Aware of his rights, petitioner did not
sign the offered documents. He was then hurriedly led to the door by Ms. Carlos.
The following day or on January 16, 1997, petitioner requested assistance from the
Department of Labor and Employment (DOLE). A DOLE personnel told him to report
for work since private respondents did not serve him a notice of termination. As
instructed, petitioner reported for work on the same day. Upon arriving at the
company premises, petitioner asked Ms. Carlos if he could still report for work but
private respondents personnel officer told him that he cannot do so. Respondent
Agustin then filed a complaint for illegal dismissal.
ISSUE
Whether or not respondent was illegally dismissed.
HELD
The SC held that it can be gleaned from Article 281 of the Labor Code that there are
two grounds to legally terminate a probationary employee. It may be done either: a)
for a just cause or b) when employee fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the
employee at the start of the employment. Petitioners say that Agustin was
terminated because he failed to qualify as a regular employee. Petitioners, however,
allegedly did not show that respondent was apprised of these reasonable standards
at the start of the employment. The rudiments of due process demand that an
employee should be apprised beforehand of the conditions of his employment and
the basis for his advancement.
The Implementing Rules of the Labor Code in Book VI, Rule I, Section 6, also
provides:
Probationary employment. -- There is probationary employment where the
employee, upon his engagement, is made to undergo a trial period during which the
employer determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:
...

(c) The services of an employee who has been engaged on probationary basis may
be terminated only for a just cause, when he fails to qualify as a regular employee
in accordance with the reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the
time of his engagement. Where no standards are made known to the employee at
that time, he shall be deemed a regular employee.
The above rule, however, should not be used to exculpate a probationary employee
who acts in a manner contrary to basic knowledge and common sense, in regard to
which there is no need to spell out a policy or standard to be met. It bears stressing
that even if technically the reading of air exhaust balancing is not within the realm
of expertise of the complainant, still it ought not to be missed that prudence and
due diligence imposed upon him not to readily accept the report handed to him by
the workers of Centigrade Industries. Required of the complainant was that he
himself proceed to the work area, inquire from the workers as to any difficulties
encountered, problems fixed and otherwise observe for himself the progress and/or
condition/quality of the work performed.
As it is, the SC found it hard to believe that complainant would just have been made
to sign the report to signify his presence. By saying so, complainant is inadvertently
degrading himself from an electrical engineer to a mere watchdog. It is in this
regard that the SC concured with the respondents that by his omission, lack of
concern and grasp of basic knowledge and common sense, complainant has shown
himself to be undeserving of continued employment from probationary employee to
regular employee. Nevertheless, it appears that petitioners violated due process in
the dismissal of respondent, by not affording him the required notice. As this Court
held in Agabon, et al. v. NLRC, an employer who dismisses an employee for just
cause but does so without notice, is liable for nominal damages in the amount of
P30,000.

[G.R. No. 159556. May 26, 2005]

PHILIPPINE AIRLINES, INC., petitioner-movant, vs. HONORABLE COURT OF
APPEALS and ALENDRY DE LEON, respondents.
FACTS
A certain Villanueva alleged that he purchased a round trip ticket for the petitioners
Iloilo-Manila-Iloilo flight route. He further averred that he took PAL flight PR 140
bound for Manila but decided not to take the return flight to Iloilo and took a boat
instead. Subsequently, he went to the PAL office in Iloilo to request for a refund of
his unused Manila-Iloilo ticket. To his consternation, he was told that his ticket did
not show that he took the PR 140 (Iloilo-Manila) flight on August 22, 1995 and
neither did his name appear in the passenger boarding manifest for the said flight.
Upon further verification, it was discovered that another person had collected the

refund of his Manila-Iloilo ticket.

Villanuevas complaint triggered an investigation conducted by the petitioner
through its internal audit. The initial findings showed that PAL Ticket No. 079
2420943398 was issued to Villanueva for the Iloilo-Manila-Iloilo route. He was
originally booked on PAL flight PR 140 for Iloilo-Manila on August 22, 1995.
Villanueva actually took that flight and surrendered the Iloilo-Manila coupon of his
ticket to the petitioners check-in counter in Iloilo. The Check-in Clerks then on duty
were Perseus Dinglasa and Claude Corpuz while the Load Control Clerk was Arturo
Garrido.
However, with respect to Villanuevas ticket, which was surrendered to Check-in
Clerks Dinglasa and Corpuz, it did not bear any boarding sequence number, seat
number or baggage information. Neither did it bear the initials of Dinglasa or
Corpuz. Worse, Villanuevas name did not appear in the flight manifest prepared by
Garrido. It appeared that Villanuevas checked-in ticket was not invalidated by
Garrido as it did not bear any perforation or punched holes.
The investigation further showed that Villanuevas PAL Ticket No. 079 2420943398
was cancelled and in lieu thereof PAL Ticket No. 079 2420946097 was issued in his
name, this time for the Bacolod-Manila route initially with an open date. The new
ticket was issued by Ticket Freight Clerk Roberto Dinson. Thereafter, it was received
by respondent Alendry De Leon, also a Ticket Freight Clerk, who affixed revalidation
sticker No. 11277306 thereon showing booking on PAL flight PR 134 (BacolodManila) on August 30, 1995. Subsequently, payment for the refund of Villanuevas
new ticket was made by Dinson.
Upon finding that irregularities attended the refund of Villanuevas ticket, the
petitioner conducted a more thorough investigation on the other tickets that had
been refunded in its Iloilo Airport Ticket Office for the period of July to September
1995. The petitioners auditors were able to contact those passengers who
purportedly had their tickets refunded. These passengers confirmed that they
actually took their flights but, upon verification, their names did not appear in the
passenger boarding manifest of their respective flights. Further, they did not ask for
the refund of their tickets. Some even turned over the passenger coupons of their
flown or used tickets or boarding passes to prove that they took their flights. More
than sixty (60) passengers executed affidavits and/or certificates attesting that they
actually took their respective flights and that they did not request for any refund of
their used or flown tickets nor cancelled their bookings.
The petitioner then formed a Special Committee to look into the anomalous
transactions. The modus operandi was outlined, thus:
1. Upon presentation by the passenger of his ticket to the Check-in Clerk, the
Check-in Clerk issues a Boarding Pass. Without indicating the passengers sequence
number, seat number, baggage information, nor his initial, the Check-in Clerk
forwards the flight ticket coupon to the Load Control Clerk for posting/listing of the
name of the passenger in the Passenger Boarding Manifest/Flight Manifest;
2. The Load Control Clerk instead of posting/listing the needed data in the
Passenger Boarding Manifest/Flight Manifest forwards the flight ticket coupon

(without invalidating/perforating it) to Ticket Freight Clerks/Check-in Clerks where

the surrendered flight ticket coupon is either:
a. Rerouted, reissued or in-lieued to another sector;
b. Revalidated to make it appear that the passenger backed out;
c. Revalidated to open status.
The above-mentioned activities of the Ticket Freight Clerks and Check-in Clerks after
the flight ticket coupons are handed to them by [the] Load Control Clerk allow them
to refund the same without arousing suspicion from the Station and Accounting
Department. There are instances specially in cases of full flights where full fare
coupons were even substituted with child fare (half fare) tickets issued to fictitious
persons or non-revenue tickets (trip pass) of their dependents to ensure that the
passenger whose ticket they intend to refund is assured a seat and would not be
bumped off to prevent early detection of this malevolent scheme.
From the foregoing, it was deduced that the scheme could only have been effected
by the employees of the petitioner themselves and by not just one but several of
them acting in concert. The investigation showed that the fraudulent refunds were
perpetrated by the respondents. These employees were all assigned at the
petitioners Iloilo Airport Ticket Office. It appeared that the anomalous transactions
occurred whenever these employees were on duty and that the fraudulently
refunded tickets passed through their hands for processing. Consequently,
administrative charges were filed against them for Fraud against the Company,
Falsification of Company Documents and Failure on the Job. Each of the eight
employees was furnished with their respective notices of the administrative charges
against them.
As indicated in the notices, the said employees were given ten (10) days to submit
their respective sworn written answers to the charges against them. Clarificatory
hearings were conducted by the petitioners Administrative Investigating Panel
where the said employees appeared with their respective counsels. Thereafter, the
panel submitted its report and recommendation finding the respondent-employees
guilty of the charges against them. Accordingly, the petitioner meted the penalty of
dismissal on these employees. It furnished them their respective notices of
dismissal stating therein the reasons and grounds thereforE.
The employees concerned, including respondent, filed their respective complaints
for illegal dismissal against the petitioner. The cases were consolidated and jointly
tried. The Labor Arbiter conducted a full-blown trial where the petitioner presented
three of its employees who described the procedure the ticket undergoes in the
normal course from when the passenger buys it to when it is used with the
passenger actually boarding his or her flight. The Labor Arbiter later rendered
judgment dismissing the complaints for illegal dismissal. It was held that the
petitioner was able to establish by substantial evidence that there was valid and
just cause to terminate the employment of the complainants.
ISSUE
Whether or not respondent de Leon was illegally terminated.

HELD
The SC held that the CA erred in ruling that de Leon was illegally terminated. It ruled
that the findings and conclusions of the Labor Arbiter with respect to the validity of
the dismissal of respondent De Leon and his companions, which the NLRC affirmed
in toto, are supported by substantial evidence. The Court observes that the
petitioner has presented ample evidence showing respondent De Leons
involvement in the anomalous transactions of refunding used or flown tickets. His
involvement has been shown particularly in the instances of fraudulent refund of
tickets. To the Courts mind these incidents, culled from the affidavits of the
passengers and the documentary evidence, indubitably establish respondent De
Leons involvement in the fraudulent refund of tickets to the petitioners prejudice.
Respondent De Leon claims that his acts were routinary and innocent and were
made in the performance of his functions. This contention is flimsy. Significantly, he
performed these acts of in-lieuing, rerouting, reissuing and affixing revalidation
stickers without the passengers themselves requesting such, because they, in fact,
took their flights. Further, all these occurred in the month of August 1995; hence,
contrary to the CAs theory, they could not be considered as isolated acts which
could be dismissed as negligence or oversight on the part of respondent De Leon.
Rather, his acts were highly irregular and convincingly demonstrate that he acted in
cahoots with the other dismissed employees to perpetrate their scam. In particular,
his acts of in-lieuing, rerouting, reissuing and affixing revalidation stickers
facilitated the fraudulent refund of the tickets.
In this case, there is ample evidence to support the findings and conclusions of the
NLRC, affirming those of the Labor Arbiter, that the dismissed employees, including
respondent De Leon, acted in concert to defraud the petitioner. As shown earlier, in
not a few instances, the tickets that were fraudulently refunded were processed by
respondent De Leon, together with the other dismissed employees, in connection
with their functions without which collusion the said anomalies could not have been
committed.
Accordingly, the NLRC and the Labor Arbiter correctly found that the petitioner was
justified in terminating the employment of the dismissed employees, including
respondent De Leon, as there existed valid and just cause therefor. Their
misconduct rendered them unworthy of the trust and confidence reposed on them
by the petitioner and warranted their dismissal. The CA committed reversible error
in setting aside those findings and conclusions with respect to respondent De Leon.
Petition is granted.

[G.R. No. 166111

August 25, 2005]
STANDARD ELECTRIC MANUFACTURING CORPORATION, Petitioner -versusSTANDARD ELECTRIC EMPLOYEES UNION-NAFLU- KMU and ROGELIO JAVIER,

Respondents.
FACTS
Rogelio Javier was employed by the Standard Electric Manufacturing Corporation
(SEMC) on January 15, 1973 as radial spot machine operator in its Production
Department. On July 31, 1995, Javier failed to report for work. He failed to notify the
SEMC of the reason for his absences. On August 9, 1995, he was arrested and
detained for the charge of rape upon complaint of his neighbor, Genalyn Barotilla.
After the requisite preliminary investigation, an Information for rape was filed in the
Regional Trial Court (RTC) of Pasig. On January 13, 1996, the SEMC received a letter
from Javier, through counsel, informing the SEMC that Javier was detained for the
charge of rape and for that reason failed to report for work. He requested the SEMC
to defer the implementation of its intention to dismiss him. The SEMC denied
Javiers request and issued a Memorandum terminating his employment for having
been absent without leave (AWOL) for more than fifteen days from July 31, 1995;
and (b) for committing rape.
On May 17, 1996, the RTC issued an Order granting Javiers demurrer to evidence
and ordered his release from jail. Shortly thereafter, Javier reported for work, but the
SEMC refused to accept him back. A grievance meeting between the Union, Javier
and the SEMC was held, but SEMC refused to re-admit Javier. On August 2, 1996, the
Union and Javier filed a Complaint for illegal dismissal against the SEMC before the
NLRC. He averred that since the reason for his detention for rape was non-existent,
the termination of his employment was illegal.
For its part, the SEMC averred that Javiers prolonged absences caused irreparable
damages to its orderly operation; he had to be replaced so that the continuity and
flow of production would not be jeopardized. It could not afford to wait for Javiers
indefinite return from detention, if at all. The SEMC insisted that conformably with
its Rules and Regulations, it was justified in dismissing Javier for being absent
without leave for fifteen days or so.
ISSUE
Whether or not Javier was illegally dismissed.
HELD
The SC held that respondent Javiers absence from August 9, 1995 cannot be
deemed as an abandonment of his work. Abandonment is a matter of intention and
cannot lightly be inferred or legally presumed from certain equivocal acts. To
constitute as such, two requisites must concur: first, the employee must have failed
to report for work or must have been absent without valid or justifiable reason; and
second, there must have been a clear intention on the part of the employee to
sever the employer-employee relationship as manifested by some overt acts, with
the second element being the more determinative factor. Abandonment as a just
ground for dismissal requires clear, willful, deliberate, and unjustified refusal of the
employee to resume his employment. Mere absence or failure to report for work,

even after notice to return, is not tantamount to abandonment.

Moreover, respondent Javiers acquittal for rape makes it more compelling to view
the illegality of his dismissal. The trial court dismissed the case for insufficiency of
evidence, and such ruling is tantamount to an acquittal of the crime charged, and
proof that respondent Javiers arrest and detention were without factual and legal
basis in the first place.
The petitioner acted with precipitate haste in terminating respondent Javiers
employment on January 30, 1996, on the ground that he had raped the complainant
therein. Respondent Javier had yet to be tried for the said charge. In fine, the
petitioner prejudged him, and preempted the ruling of the RTC. The petitioner had,
in effect, adjudged respondent Javier guilty without due process of law. While it may
be true that after the preliminary investigation of the complaint, probable cause for
rape was found and respondent Javier had to be detained, these cannot be made as
legal bases for the immediate termination of his employment.
Moreover, the petitioner did not accord respondent Javier an opportunity to explain
his absences from July 31, 1995. The petitioners reliance on the alleged Letter
dated August 17, 1995 is misplaced. There is no evidence on record that respondent
Javier received such letter, and its sudden presence is highly suspect. The Court
agrees with respondent Javiers observation that the letter was not mentioned nor
annexed in the petitioners Position Paper, Rejoinder and even in its Opposition to
the Appeal. The letter surfaced only on a much later date, in 1999, when it was
formally offered in evidence[26] and referred to in the petitioners Memorandum
before the Labor Arbiter a clear inference that the said letter was but an
afterthought to justify petitioners termination of respondent Javiers employment.
Further, we cannot subscribe to the petitioners contention that the due process
requirement relative to the dismissal of respondent Javier was duly complied with
when he was allowed to explain his side during the grievance machinery
conferences. Indeed, in the case at bar, the petitioner did not conduct any
investigation whatsoever prior to his termination, despite being informed of
respondent Javiers predicament by the latters siblings, his Union and his counsel.
The meetings held pursuant to the grievance machinery provisions of the collective
bargaining agreement were only done after his dismissal had already taken effect
on February 5, 1996. Clearly, well-meaning these conferences might be, they can
not cure an otherwise unlawful termination. It bears stressing that for a dismissal to
be validly effected, the twin requirements of due process notice and hearing
must be observed. In dismissing an employee, an employer has the burden of
proving that the former worker has been served two notices: (1) one to apprise him
of the particular acts or omissions for which his dismissal is sought; and (2) the
other to inform him of his employers decision to dismiss him. As to the requirement
of a hearing, the essence of due process lies in an opportunity to be heard, and not
always and indispensably in an actual hearing.
Petition is dismissed.

[G.R. No. 166550

September 22, 2005]
ROBERT C. CASOL and NAGSAMA-PUREFOODS-PULO, Petitioners, - versus PUREFOODS CORPORATION, Respondent.
FACTS
Robert C. Casol was a deliveryman of respondent Purefoods Corporation. After
completing the deliveries on August 29, 1992, Casol allegedly informed Nestor
Polendey who was the designated driver of the van to leave the vehicle behind as
he would use it to load LPG for house use. Polendey thus left the vehicle with Casol
while he proceeded back to the plant to punch out. At around 2:00 a.m. of the
following day, Casol reported to the motorpool of respondent company that the van
broke down and had to be towed. Upon inspection, it was discovered that the van
had a damaged crankcase and a cracked oil pan for which respondent company
spent P26,946.42 for the repair. Casol and Polendey were required to submit their
written explanation on the incident. However, only Polendey complied, alleging that
Casol asked him to get off the vehicle and leave the van with him. After the
investigation, Casol was found guilty of violating Section 15, Article VI of respondent
companys Amended Rules and Regulations,particularly for unauthorized use of
vehicle resulting to damages exceeding P25,000.00. His employment was
terminated effective November 9, 1992.
Casol and his union, filed a complaint for illegal dismissal disclaiming the formers
liability for the damage, and alleging that even assuming that he was, the cost did
not exceed P25,000.00 in which case the imposable penalty under the company
rules should only be suspension for six (6) days. The labor arbiter found that the
respondent company failed to establish that Casol was responsible for the damage
to the vehicle hence his dismissal was declared illegal. On appeal, the NLRC
reversed and set aside the arbiters decision. It found Casols use of the vehicle as
unauthorized and the damage caused exceeded P25,000.00; thus, respondent
company was justified in dismissing him based on loss of trust and confidence. The
NLRC also dismissed the complaint for lack of merit. On certiorari, the Court of
Appeals affirmed the findings of the NLRC that Casols dismissal was justified and
that the amount of damage exceeded P25,000.00. Petitioners motion for
reconsideration was denied.
ISSUE
Whether or not petitioner Casol was illegally dismissed?
HELD
The SC ruled that Casol used the vehicle without authority and should be made
liable therefor.
However, the crux of the dispute lies in the actual amount spent to repair the

vehicle considering that per respondent companys rulebook, the penalty for Casols
offense could either be suspension for six (6) days or outright dismissal, depending
on whether the actual cost of the damage exceeds P25,000.00.
Respondent companys Amended Rules and Regulations provides that the penalty
for the unauthorized use of vehicles, if the amount of damage exceeds P10,000.00
but not more that P25,000.00, is suspension for six (6) working days, for the 1st
offense, suspension of fifteen (15) working days, for the 2nd offense, and dismissal,
for the 3rd offense. If the amount of damage exceeds P25,000.00, the penalty is
outright dismissal. Attached to the affidavit of Efren Espina, an automotive
mechanic and supervisor at respondent companys motorpool, is a listing of the
essential and non-essential expenses incurred to repair the vehicle based on the
itemized receipt[19] issued by Chandler Phils. Inc. (Chandler) which repaired the
van.
It is fair that only those expenses which are essential or indispensable to repair the
damage and directly related to the infraction committed by Casol shall be
considered. Thus, non-essential expenses or those which are required only to put
the vehicle in optimum condition and resulting from the normal wear and tear must
be excluded from the computation. As indicated above, the total expenses essential
and indispensable to repair the damage amounted to P27,219.17. At first glance,
nothing seems amiss in the computation but a closer evaluation reveals that
respondent company erroneously applied the 10% VAT on the aggregate cost of
labor and essential spare parts. It is well to note that in the itemized official receipt
issued by Chandler, the 10% VAT was applied only to the cost of labor. This implies,
therefore, that the VAT component was deemed included in the unit price of the
spare parts. Thus, it was error for respondent company to impose anew the VAT
thereon; it should have limited its application on the cost of labor only.
Plainly, the cost of the damage directly related to or caused by the petitioners
infraction did not exceed the P25,000.00 limit. Thus, the appropriate penalty was
only suspension for six (6) days, it appearing that it was Casols first offense, and
not outright dismissal. We carefully reviewed the records of the case and we find no
evidence and neither did respondent company claim that it paid any amount other
than those indicated in the receipts. Time and again we have said that in illegal
dismissal cases, the employer is burdened to prove just cause for terminating the
employment of its employee with clear and convincing evidence. The weakness of
the employees defense should not operate to relieve nor discharge the employer of
its burden to prove its charges pursuant to the guaranty of tenure granted by the
Constitution to employees under the Labor Code. The case of the employer must
stand or fall on its own merits.
Petition is granted.

[G.R. No. 164635

November 17, 2005]
MAJURINE L. MAURICIO, Petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, The MANILA BANKING CORPORATION, LUIS B.

BENJAMIN YAMBAO and CLARENCE D. GUERRERO, Respondents.

PUYAT,

FACTS
Petitioner, Majurine L. Mauricio, started working as an Administrative Assistant in
the Legal Department of the Manila Banking Corporation on July 1, 1999 as a
probationary employee. As a pre-employment requirement, the bank directed the
submission by petitioner of, among other things, a 1x1 ID picture, 2 x 2 ID picture,
two reference letters, and clearance from the employees previous employment.
Petitioner failed to submit the required documents, however. The bank thus gave
her up to December 15, 1999 to comply, and advised her that the processing of her
regularization as employee would be held in abeyance. Despite the deadline given
her, petitioner still failed to comply with the requirements, drawing the bank to send
her a Memorandum dated December 27, 1999 signed by its Vice-President for
Personnel Department Clarence D. Guerrero (Guerrero), giving her until December
29, 1999 to submit the requirements, and informing that her failure to do so would
cause the termination of her employment effective December 29, 1999.
Petitioner, by letter of December 28, 1999, informed the bank that she could not
secure a clearance from her previous employer, the Manila Bankers Life Insurance
Corporation (MBLIC), as she had a pending case with it. She thus requested that any
action relative to her employment be held in abeyance as she was still following up
the early resolution of the case. Said request was denied by the bank. Petitioner
thus filed on January 21, 2000 a complaint for illegal dismissal, unpaid salary, and
moral and exemplary damages against the bank and Guerrero.
ISSUE
Whether or not petitioner was illegally dismissed.
HELD
The SC held that the CA was correct when it ruled that in terminating petitioners
probationary employment due to her failure to submit a certificate of clearance from
her previous employer, the bank was merely exercising its management
prerogative.
Petition is denied.

[G.R. No. 154410

October 20, 2005]
HEAVYLIFT MANILA, INC. and/or JOSEPHINE EVANGELIO, Administrative &
Finance Manager, AND CAPT. ROLANDO* TOLENTINO, Petitioners, vs. THE
COURT OF APPEALS, MA. DOTTIE GALAY and the NATIONAL LABOR
RELATIONS COMMISSION, Respondents.

FACTS
On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter signed
by petitioner Josephine Evangelio, Administrative and Finance Manager of Heavylift,
informed respondent Ma. Dottie Galay, Heavylift Insurance and Provisions Assistant,
of her low performance rating and the negative feedback from her team members
regarding her work attitude. The letter also notified her that she was being relieved
of her other functions except the development of the new Access program.
Subsequently, on August 16, 1999, Galay was terminated for alleged loss of
confidence. Thereafter, she filed with the Labor Arbiter a complaint for illegal
dismissal and nonpayment of service incentive leave and 13th month pay against
petitioners.
Petitioners alleged that Galay had an attitude problem and did not get along with
her co-employees for which she was constantly warned to improve. Petitioners aver
that Galays attitude resulted to the decline in the companys efficiency and
productivity. Petitioners presented a letter dated February 23, 1999 and a notice of
termination dated August 16, 1999.
ISSUE
Whether or not respondent Galay was illegally dismissed.
HELD
The SC held that an employee who cannot get along with his co-employees is
detrimental to the company for he can upset and strain the working environment.
Without the necessary teamwork and synergy, the organization cannot function
well. Thus, management has the prerogative to take the necessary action to correct
the situation and protect its organization. When personal differences between
employees and management affect the work environment, the peace of the
company is affected. Thus, an employees attitude problem is a valid ground for his
termination. It is a situation analogous to loss of trust and confidence that must be
duly proved by the employer. Similarly, compliance with the twin requirement of
notice and hearing must also be proven by the employer.
However, we are not convinced that in the present case, petitioners have shown
sufficiently clear and convincing evidence to justify Galays termination. Though
they are correct in saying that in this case, proof beyond reasonable doubt is not
required, still there must be substantial evidence to support the termination on the
ground of attitude. The mere mention of negative feedback from her team
members, and the letter dated February 23, 1999, are not proof of her attitude
problem. Likewise, her failure to refute petitioners allegations of her negative
attitude does not amount to admission. Technical rules of procedure are not binding
in labor cases. Besides, the burden of proof is not on the employee but on the
employer who must affirmatively show adequate evidence that the dismissal was
for justifiable cause.
Neither does the February 23, 1999 letter constitute the required notice. The letter
did not inform her of the specific acts complained of and their corresponding

penalty. The law requires the employer to give the worker to be dismissed two
written notices before terminating his employment, namely, (1) a notice which
apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the
employers decision to dismiss him. Additionally, the letter never gave respondent
Galay an opportunity to explain herself, hence denying her due process.
In sum, we find that Galay was illegally dismissed, because petitioners failed to
show adequately that a valid cause for terminating respondent exists, and because
petitioners failed to comply with the twin requirement of notice and hearing.
The decisions assailed are affirmed.

[G.R. No. 167385

December 13, 2005]
JESUS B. LOPEZ, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
(NLRC) SECOND DIVISION, HON. COMMISSIONERS ANGELITA GACUTAN,
VICTORIANO CALAYCAY, RAUL AQUINO, MAYNILAD WATER SERVICES, INC.,
BENJAMIN REYES and CRISTINA M. BONIFACIO,
FACTS
Facts: Regina M. Gopez wrote a letter to respondent Maynilad Water Services, Inc.
alleging that she entered into an agreement with petitioner Jesus B. Lopez,
Maynilads Senior Engineering Assistant, to repair her water meter for a fee.
Despite payment of P500, petitioner allegedly never returned to fix the defective
meter.
Maynilads Head of Technical Operations-Sampaloc Sector issued a memorandum
requiring petitioner to answer the allegations. Petitioner denied the charges against
him.
Maynilad also formed an Ad-Hoc Investigation Panel which recommended
petitioners dismissal from the service based on its findings that petitioner
committed serious misconduct in contracting an unauthorized work for a fee. Thus,
petitioner was served a notice of termination.

Aggrieved, petitioner filed a complaint for illegal dismissal claiming that he was
dismissed without just cause.
ISSUE
Whether or not petitioners termination was valid.
HELD
Misconduct has been defined as improper or wrong conduct. It is the transgression
of some established and definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies wrongful intent and not mere error of
judgment. The misconduct to be serious must be of such grave and aggravated
character. Such misconduct, however serious, must nevertheless be in connection
with the employees work to constitute just cause for his separation. Thus, for
misconduct or improper behavior to be a just cause for dismissal: (a) it must be
serious; (b) must relate to the performance of the employees duties; and, (c) must
show that the employee has become unfit to continue working for the employer.
As a measure of self-preservation against acts inimical to its interests, an employer
has the right to dismiss an employee found committing acts of dishonesty and
disloyalty. The employer may not be compelled to continue to employ such a
person whose continuance in the service would patently be inimical to his
employers interest. The law, in protecting the rights of workers, authorizes neither
oppression nor self-destruction of the employer.
In the instant case, we find the penalty of dismissal from service reasonable and
appropriate and a valid exercise of management prerogative. Maynilad specifically
prescribes that, should any employee begin or continue to engage in conflict of
interest activities despite management pronouncement or disapproval, the
appropriate disciplinary sanctions shall be imposed on him. Appropriate disciplinary
sanction, such as termination, is within the purview of management imposition.
That Maynilad suffered no damage resulting from the acts of petitioner is
inconsequential. In Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng
Wellcome-DFA (NEW-DFA), we held that deliberate disregard or disobedience of
company rules could not be countenanced, and any justification that the
disobedient employee might put forth would be deemed inconsequential. The lack
of resulting damage was unimportant, because the heart of the charge is the
crooked and anarchic attitude of the employee towards his employer. Damage
aggravates the charge but its absence does not mitigate nor negate the employees
liability. What is abhorrent and punishable is the act of contracting unauthorized
work for a fee, regardless of whether the act caused damage to the company. Thus,
we hold that Maynilad validly terminated the services of petitioner on the ground of
serious misconduct which resulted to the loss of trust of Maynilad upon petitioner
because his credibility in doing his job as a team leader of a repair crew has already
been eroded.
As regards to the amount awarded to the petioner for financial assistance, the

same must be deleted. Financial assistance may be given as a measure of social

justice in exceptional circumstances and as an equitable concession. It is allowed
only in those instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character.
WHEREFORE, the petition is DENIED.

[G.R. No. 165811

December 14, 2005]
DAP CORPORATION, FELIX PINEDA, President, and DENSIL PINEDA, General
Manager, Petitioners, vs. COURT OF APPEALS and MAUREEN MARCIAL,
Respondents.
FACTS
On May 8, 2001, DAP received a letter from International Distributors Corporation
(IDC) informing it of the termination of their distributorship agreement. DAP alleges
that by reason of this termination, it was constrained to cease its business
operations and to terminate the employment of its employees, including respondent
Maureen Marcial who had been DAP's salesperson from May 4, 2000 until July 2001.
DAP claims that it notified its employees of the termination of their employments by
reason of redundancy. On July 28, 2001, DAP paid their wages and asked them to
sign the payslips. It likewise informed them that they would be paid their
separation pay in installments because of liquidity problems.
The checks
representing the separation pay were issued to the employees. However, Marcial
and 17 other employees refused to accept the checks and instead, filed a complaint
for illegal dismissal, money claims for non-payment of overtime pay and separation
pay and damages with the NLRC. During the course of the proceedings before the
NLRC, 16 employees withdrew their complaint. Only respondent Marcial and Jason
Diapen pursued their claims.
Respondents alleged that DAP failed to comply with the notice requirement for a
valid termination due to redundancy or retrenchment. Respondent claims that it
was only on July 28, 2001, when the employees of DAP were given their salaries and
were asked to sign the payslips, that they realized that their services were being
terminated. Petitioners argue that respondent cannot complain of lack of notice
because all of DAPs employees were aware of the cancellation of the distributorship
agreement and the case it filed against IDP.
As such, respondent's actual
knowledge of the redundancy is equivalent to notice.
ISSUE

Whether or not respondent was validly dismissed.

HELD
The SC held that article 283 of the Labor Code clearly provides:
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 ....
Thus, we have held that the employer must comply with the following requisites to
ensure the validity of the redundancy program: 1) a written notice served on both
the employees and the Department of Labor and Employment (DOLE) at least one
month prior to the intended date of retrenchment; 2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher; 3) good faith in abolishing the redundant positions;
and 4) fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished. As mentioned earlier, respondent does not
question the soundness of the redundancy program implemented by DAP, but the
lack of notice required by law.
The employees actual knowledge of the termination of DAPs distributorship
agreement with IDP is not sufficient to replace the formal and written notice
required by the law. In the written notice, the employees are informed of the
specific date of the termination, at least a month prior to the date of effectivity, to
give them sufficient time to make necessary arrangements.
In this case,
notwithstanding the employees knowledge of the cancellation of the distributorship
agreement, they remained uncertain about the status of their employment when
DAP failed to formally inform them about the redundancy.
Furthermore, the validity of a termination can exist independently of the procedural
infirmity in the dismissal. This is not the first time where the Court upheld the
dismissal but held the employer liable for non-compliance with the procedural
requirements. In Agabon v. National Labor Relations Commission, the Court found
that the dismissal of the employees therein as valid and for a just cause because
abandonment was firmly established. Nonetheless, the employer was held liable
because it was proven that the twin requirements of notice and hearing were not
followed.
However, in lieu of the payment of backwages, the employer was ordered to pay
indemnity in the form of nominal damages, thus:
The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages.
The amount of such damages is addressed to the sound discretion of the court,
taking into account the relevant circumstances. We believe this form of damages

would serve to deter employers from future violations of the statutory due process
rights of employees. At the very least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code and its Implementing
Rules.
The above ruling was qualified in the case of Jaka Food Processing Corporation v.
Pacot. In Jaka, the employees were terminated because the corporation was
financially distressed. However, the employer failed to comply with the notice
requirement under Article 283 of the Labor Code when it failed to serve a written
notice to the employees and the DOLE at least one month before the intended date
of termination. Significantly, the Court distinguished the case from Agabon saying:
The difference between Agabon and the instant case is that in the former, the
dismissal was based on a just cause under Article 282 of the Labor Code while in the
present case, respondents were dismissed due to retrenchment, which is one of the
authorized causes under Article 283 of the same Code.
A dismissal for just cause under Article 282 implies that the employee concerned
has committed, or is guilty of, some violation against the employer, i.e. the
employee has committed some serious misconduct, is guilty of some fraud against
the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said
that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not
necessarily imply delinquency or culpability on the part of the employee. Instead,
the dismissal process is initiated by the employers exercise of his management
prerogative, i.e. when the employer opts to install labor saving devices, when he
decides to cease business operations or when, as in this case, he undertakes to
implement a retrenchment program.
Thus, we qualified the ruling in Agabon in this wise:
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause
under Article 282 but the employer failed to comply with the notice requirement,
the sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but the employer failed
to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employers exercise of his management
prerogative.
In light of the aforequoted ruling, we find the amount of P50,000.00 sufficient under
the circumstances as indemnity for the violation of respondents statutory rights.
As provided in Article 283 of the Labor Code, respondent is likewise entitled to
separation pay equivalent to at least her one month pay or to at least one month
pay for every year of service, whichever is higher. The records clearly show that
respondents length of service is one year and two months. She is therefore also
entitled to separation pay equivalent to one month pay.

Petition is denied.

[G.R. NO. 146779

January 23, 2006]
RENATO S. GATBONTON, Petitioner, vs.
NATIONAL LABOR RELATIONS
COMMISSION, MAPUA INSTITUTE OF TECHNOLOGY and JOSE CALDERON,
Respondents.
FACTS
Petitioner Renato S. Gatbonton is an associate professor of respondent Mapua
Institute of Technology (MIT), Faculty of Civil Engineering. Some time in November
1998, a civil engineering student of respondent MIT filed a letter-complaint against
petitioner for unfair/unjust grading system, sexual harassment and conduct
unbecoming of an academician. Pending investigation of the complaint, respondent

MIT, through its Committee on Decorum and Investigation placed petitioner under a
30-day preventive suspension effective January 11, 1999. The committee believed
that petitioners continued stay during the investigation affects his performance as
a faculty member, as well as the students learning; and that the suspension will
allow petitioner to prepare himself for the investigation and will prevent his
influences to other members of the community. Thus, petitioner filed with the NLRC
a complaint for illegal suspension, damages and attorneys fees.
Petitioner questioned the validity of the administrative proceedings with the
Regional Trial Court of Manila in a petition for certiorari but the case was terminated
on May 21, 1999 when the parties entered into a compromise agreement wherein
respondent MIT agreed to publish in the school organ the rules and regulations
implementing R.A. No. 7877 or the Anti-Sexual Harassment Act; disregard the
previous administrative proceedings and conduct anew an investigation on the
charges against petitioner. Petitioner agreed to recognize the validity of the
published rules and regulations, as well as the authority of respondent to
investigate, hear and decide the administrative case against him.
ISSUE
Whether or not the preventive suspension of petitioner was valid.
HELD
The SC held that preventive suspension is a disciplinary measure for the protection
of the companys property pending investigation of any alleged malfeasance or
misfeasance committed by the employee. The employer may place the worker
concerned under preventive suspension if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his coworkers. However, when it is determined that there is no sufficient basis to justify
an employees preventive suspension, the latter is entitled to the payment of
salaries during the time of preventive suspension.
R.A. No. 7877 imposed the duty on educational or training institutions to
promulgate rules and regulations in consultation with and jointly approved by the
employees or students or trainees, through their duly designated representatives,
prescribing the procedures for the investigation of sexual harassment cases and the
administrative sanctions therefor. Petitioners preventive suspension was based on
respondent MITs Rules and Regulations for the Implementation of the Anti-Sexual
Harassment Act of 1995, or R.A. No. 7877. Rule II, Section 1 of the MIT Rules and
Regulations provides:
Section 1. Preventive Suspension of Accused in Sexual Harassment Cases. Any
member of the educational community may be placed immediately under
preventive suspension during the pendency of the hearing of the charges of grave
sexual harassment against him if the evidence of his guilt is strong and the school
head is morally convinced that the continued stay of the accused during the period
of investigation constitutes a distraction to the normal operations of the institution
or poses a risk or danger to the life or property of the other members of the
educational community.

However, the same is still not effective since it was still to be published as ruled in
Taada vs. Tuvera:
all statutes, including those of local application and private laws, shall be
published as a condition for their effectivity, which shall begin fifteen days after
publication unless a different effectivity is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by
the President in the exercise of legislative powers whenever the same are validly
delegated by the legislature or, at present, directly conferred by the Constitution.
Administrative rules and regulations must also be published if their purpose is to
enforce or implement existing law pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating
only the personnel of the administrative agency and not the public, need not be
published. Neither is publication required of the so-called letters of instructions
issued by administrative superiors concerning the rules or guidelines to be followed
by their subordinates in the performance of their duties.
The SC agreed that the publication must be in full or it is no publication at all since
its purpose is to inform the public of the contents of the laws.
The Mapua Rules is one of those issuances that should be published for its
effectivity, since its purpose is to enforce and implement R.A. No. 7877, which is a
law of general application.[14] In fact, the Mapua Rules itself explicitly required
publication of the rules for its effectivity, as provided in Section 3, Rule IV
(Administrative Provisions), which states that [T]hese Rules and Regulations to
implement the Anti-Sexual Harassment Act of 1995 shall take effect fifteen (15)
days after publication by the Committee. Thus, at the time of the imposition of
petitioners preventive suspension on January 11, 1999, the Mapua Rules were not
yet legally effective, and therefore the suspension had no legal basis.
Moreover, even assuming that the Mapua Rules are applicable, the Court finds that
there is no sufficient basis to justify his preventive suspension. Under the Mapua
Rules, an accused may be placed under preventive suspension during pendency of
the hearing under any of the following circumstances:
(a)
if the evidence of his guilt is strong and the school head is morally
convinced that the continued stay of the accused during the period of investigation
constitutes a distraction to the normal operations of the institution; or
(b)
the accused poses a risk or danger to the life or property of the other
members of the educational community.
In petitioners case, there is no indication that petitioners preventive suspension
may be based on the foregoing circumstances. Committee Resolution No. 1 passed
by the Committee on Decorum and Investigation states the reasons for petitioners
preventive suspension.
Said resolution does not show that evidence of petitioners guilt is strong and that
the school head is morally convinced that petitioners continued stay during the
period of investigation constitutes a distraction to the normal operations of the

institution; or that petitioner poses a risk or danger to the life or property of the
other members of the educational community.
Even under the Labor Code, petitioners preventive suspension finds no valid
justification. As provided in Section 8, Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code:
Sec. 8. Preventive Suspension.
The employer may place the worker
concerned under preventive suspension if his continued employment poses a
serious threat to the life or property of the employer or of his co-workers.
As previously stated, there is nothing on record which shows that respondent MIT
imposed the preventive suspension on petitioner as his continued employment
poses a serious threat to the life or property of the employer or of his co-workers;
therefore, his preventive suspension is not justified. Consequently, the payment of
wages during his 30-day preventive suspension, i.e., from January 11, 1999 to
February 10, 1999, is in order.
Petition is partially granted.

[G.R. No. 164518

January 25, 2006]
INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD GROUP
CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and TOMAS TAN,
Petitioners vs. VIRGILIO ABABON, IGNACIO ABACAJEN, ANGELINA ABAYABAY, EDITH ABREA, SAMUEL ABREA, BIENVENIDO ACILO, RODRIGO ACILO,
VICTOR ACILO, ARTURO ADVINCULA, GERTRUDES AMPARO, VIRGILIO
ANTONIO, MILA ARQUITA, PRUDENCIO ARQUITA, ALBERT ATON, WARLITA
AUTIDA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMILITA CAINGLES, VICENTE
CAHARIAN, BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA
CARILLO, ALGER CORBETA, GREGORIO DABALOS, TERESITA DABALOS,
VENERANDO DALAUTA, RICARDO DANGCULOS, MONTANO DAPROSA,
LUISITO DIAZ, FELIZARDO DUMULAO, EDITHA DUMANON, ALFREDO
FAELNAR, RAUL
FORTUN,
MAXIMO
GALLA, ANGELES GALUPO,
PERFECTO GAMBE, VERGINITA GANGCA, RUPERTO GORGONIO, ROMEO
HERRERO, SERGIO HORO-HORO, FRANCISCO IBARRA, ABRAHAM JALE,
DANDY LABITAD, ANTONINA LAMBANG, ERNESTO LAUSA, VICTORIA LOOD,
NEMESIO LOPE, JR., ESCARLITO MADLOS, MARCOS MAKINANO, REMEGIO
MAKINANO, VICENTE MAKINANO, REYNALDO MASUHAY, HELEN MARATAS,
ELIZABETH MENDOZA, GUILBERTA MONTEROSO, GILDA NAVALTA, PILAR
NAVARRO, SIMPORIANO NUEZ, JR., ELISEO ORONGAN, ARMANDO OROPA,
ASUNCION OROPA, JOSE EDWIN OROPA, BALDEMAR PAGALAN, BARTOLOME
PAGALAN, DAMASO PALOMA,
MANALO PLAZA, JEREMIAS PELAEZ,
FRANCISCO PICARDAL, HERMINIA PUBLICO, ROMULO QUINTOS, FIDEL
QUITA, FELICIANO RANADA, RODOLFO RARU, LEAN CILDRIC RODRIGUEZ,
SAMUEL SAROMINES, NATIVIDAD SIGNAR, CHERRIE SON, SAMUEL TAGUPA,
VICTOR TAGUPA, BRIGIDA TABANAO, PEDRO TABANAO, ROBERTO TABANAO,
MARIA TAN, RONNIE TAN, TOLENTINO TEE, ROGELIO TAMADA, MINDA
TUMAOB and ROBERTO TUTOR, Respondents.
[G.R. No. 164965]
VIRGILIO ABABON, IGNACIO ABACAJEN, ANGELINA ABAY-ABAY, EDITH
ABREA, SAMUEL ABREA, BIENVENIDO ACILO, RODRIGO ACILO, VICTOR
ACILO, ARTURO ADVINCULA, GERTRUDES AMPARO, MILA ARQUITA,
VIRGILIO ANTONIO,
PRUDENCIO
ARQUITA, ALBERT ATON, WARLITA
AUDITA, ALICIA AWITAN, LEOPOLDO AYATON, ARTURO BALBOTEN, DANILO
BANATE, LOLITA BATAN, RAMIL BUTALON, CARMELITA CAINGLES, VICENTE
CAHARIAN, BENEDICTA CAJIPE, FELIPE CALLANO, ALFREDO CARILLO, NILA
CARILLO, ALGIER CORBETA, GREGORIO DABALOS, TERESITA DABALOS,
VENERANDO DALAUTA, RICARDO DANGCULOS, MONTANO DAPROSA,
LUISITO DIAZ, FELIZARDO DUMULAO, EDITHA DUMANON, ALFREDO
FAELNAR, RAUL FORTUN, MAXIMO GALLA, ANGELES GALUPO, PERFECTO
GAMBE, VIRGINITA GANGCA, RUPERTO GORGONIO, ROMEO HERRERO,

SERGIO HOR-HORO, FRANCISCO IBARRA, ABRAHAM JALE, DANDY LABITAD,

ANTONINA LAMBANG, ERNESTO LAUSA, VICTORIA LOOD, NEMESIO LOPE,
JR., ESCARLITO MADLOS, MARCOS MAKINANO, REMEGIO MAKINANO,
VICENTE MAKINANO, REYNALDO MAHUSAY, HELEN MARATAS, ELIZABETH
MENDOZA, GUILBERTA MONTEROSO, GILDA NAVALTA, PILAR NAVARRO,
SIMPORIANO NUEZ, JR., ELISEO ORONGAN, ARMANDO OROPA, ASUNCION
OROPA, JOSE EDWIN OROPA, BALDEMAR PAGALAN, BARTOLOME PAGALAN,
DAMASO PALOMA,
MANALO PLAZA, JEREMIAS PELAEZ, FRANCISCO
PICARDAL, HERMINIA PUBLICO, ROMULO QUINTOS, FIDEL QUITA,
FELICIANO RANADA, RODOLFO RARU, LEAN CILDRIC RODRIGUEZ, SAMUEL
SAROMINES, NATIVIDAD SIGNAR, CHERRIE SON, SAMUEL TAGUPA, VICTOR
TAGUPA, BRIGIDA TABANAO, PEDRO TABANAO,
ROBERTO
TABANAO,
MARIA TAN, RONNIE TAN, TOLENTINO TEE, ROGELIO TAMADA, MINDA
TUMAOB, and ROBERTO TUTOR, Petitioners, vs. THE HONORABLE COURT
OF APPEALS, INDUSTRIAL TIMBER CORPORATION, INDUSTRIAL PLYWOOD
GROUP CORPORATION, TOMAS TANGSOC, JR., LORENZO TANGSOC and
TOMAS TAN, Respondents.
FACTS
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located
at Agusan, Pequeo, Butuan City, leased to Industrial Timber Corporation (ITC) on
August 30, 1985 for a period of five years. Thereafter, ITC commenced operation of
the plywood plant and hired 387 workers. On March 16, 1990, ITC notified the DOLE
and its workers that effective March 19, 1990 it will undergo a no plant operation
due to lack of raw materials and will resume only after it can secure logs for milling.
Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990
and its intention not to renew the same.
On June 26, 1990, ITC notified the DOLE and its workers of the plants shutdown due
to the non-renewal of anti-pollution permit that expired in April 1990. This fact and
the alleged lack of logs for milling constrained ITC to lay off all its workers until
further notice. This was followed by a final notice of closure or cessation of
business operations on August 17, 1990 with an advice for all the workers to collect
the benefits due them under the law and CBA. On October 15, 1990, IPGC took over
the plywood plant after it was issued a Wood Processing Plant Permit, which
included the anti-pollution permit, by the DENR coincidentally on the same day the
ITC ceased operation of the plant.
This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for
illegal dismissal, unfair labor practice and damages. They alleged, among others,
that the cessation of ITCs operation was intended to bust the union and that both
corporations are one and the same entity being controlled by one owner.
ISSUE
Whether or not complainants were illegally dismissed due to the closure of ITCs
business.
HELD

The SC held that ITCs closure or cessation of business was done in good faith and
for valid reasons. The right to close the operation of an establishment or
undertaking is one of the authorized causes in terminating employment of workers,
the only limitation being that the closure must not be for the purpose of
circumventing the provisions on termination of employment embodied in the Labor
Code.
A reading of article 283 of the Labor Code shows that a partial or total closure or
cessation of operations of establishment or undertaking may either be due to
serious business losses or financial reverses or otherwise. Under the first kind, the
employer must sufficiently and convincingly prove its allegation of substantial
losses, while under the second kind, the employer can lawfully close shop anytime
as long as cessation of or withdrawal from business operations was bona fide in
character and not impelled by a motive to defeat or circumvent the tenurial rights
of employees, and as long as he pays his employees their termination pay in the
amount corresponding to their length of service. Just as no law forces anyone to go
into business, no law can compel anybody to continue the same. It would be
stretching the intent and spirit of the law if a court interferes with management's
prerogative to close or cease its business operations just because the business is
not suffering from any loss or because of the desire to provide the workers
continued employment.
In sum, under Article 283 of the Labor Code, three requirements are necessary for a
valid cessation of business operations: (a) service of a written notice to the
employees and to the DOLE at least one month before the intended date thereof;
(b) the cessation of business must be bona fide in character; and (c) payment to the
employees of termination pay amounting to one month pay or at least one-half
month pay for every year of service, whichever is higher.
The records reveal that the decision to permanently close business operations was
arrived at after a suspension of operation for several months precipitated by lack of
raw materials used for milling operations, the expiration of the anti-pollution permit
in April 1990, and the termination of the lease contract with IPGC in August 1990
over the plywood plant at Agusan, Pequeo, Butuan City.
As borne out from the records, respondent ITC actually underwent no plant
operation since 19 March 1990 due to lack of log supply. This fact is admitted by
complainants (Minutes of hearing, 28 October 1991).
Since then several
subsequent incidents prevented respondent ITC to resume its business operations
e.g. expiration and non-renewal of the wood processing plant permit, anti-pollution
permit, and the lease contract on the plywood plant. Without the raw materials
respondent ITC has nothing to produce. Without the permits it cannot lawfully
operate the plant. And without the contract of lease respondent ITC has no option
but to cease operation and turn over the plant to the lessor.
Moreover, the lack of raw materials used for milling operations was affirmed in
Industrial Timber Corporation v. National Labor Relations Commission as one of the
reasons for the valid closure of ITCs Butuan Logs Plant in 1989. In said case, we
upheld the management prerogative to close the plant as the only remedy available

in order to prevent imminent heavy losses on account of high production costs,

erratic supply of raw materials, depressed prices and poor market conditions for its
wood products.
Having established that ITCs closure of the plywood plant was done in good faith
and that it was due to causes beyond its control, the conclusion is inevitable that
said closure is valid. Consequently, Ababon, et al. could not have been illegally
dismissed to be entitled to full backwages. Thus, we find it no longer necessary to
discuss the issue regarding the computation of their backwages. However, they are
entitled to separation pay equivalent to one month pay or at least one-half month
pay for every year of service, whichever is higher.
Although the closure was done in good faith and for valid reasons, we find that ITC
did not comply with the notice requirement. While an employer is under no
obligation to conduct hearings before effecting termination of employment due to
authorized cause, however, the law requires that it must notify the DOLE and its
employees at least one month before the intended date of closure.
In the case at bar, ITC notified its employees and the DOLE of the no plant
operation on March 16, 1990 due to lack of raw materials. This was followed by a
shut down notice dated June 26, 1990 due to the expiration of the anti-pollution
permit. However, this shutdown was only temporary as ITC assured its employees
that they could return to work once the renewal is acted upon by the DENR. On
August 17, 1990, the ITC sent its employees a final notice of closure or cessation of
business operations to take effect on the same day it was released. We find that
this falls short of the notice requirement for termination of employment due to
authorized cause considering that the DOLE was not furnished and the notice should
have been furnished both the employees and the DOLE at least one month before
the intended date of closure.
Where the dismissal is based on an authorized cause under Article 283 of the Labor
Code but the employer failed to comply with the notice requirement, the sanction
should be stiff as the dismissal process was initiated by the employers exercise of
his management prerogative, as opposed to a dismissal based on a just cause
under Article 282 with the same procedural infirmity where the sanction to be
imposed upon the employer should be tempered as the dismissal process was, in
effect, initiated by an act imputable to the employee.
Decision of the CA is reversed.
[G.R. No. 166616
January 27, 2006]
FIRST DOMINION RESOURCES CORPORATION, Petitioner, vs. MERCURIO
PEARANDA and ROMEO VIDAL, Respondents.
FACTS
Petitioner is a domestic corporation engaged in textile manufacturing. It employed
Pearanda as packer and Vidal as drugman. Both were assigned to the night shift.

Pearanda was caught sleeping on the job on two occasions: first, on February 22,
2001 on the table in the packing section, for which he was penalized with a 2-day
suspension and given a stern warning that a repetition of the offense would mean
his dismissal; and second, on March 30, 2001, for which he was asked to explain
why he should not be terminated for committing the same offense. Pearanda
merely denied the allegations against him. Petitioner, however, found his denial
insufficient and terminated his employment on June 20, 2001.
Similarly, Vidal was caught sleeping during work hours on March 25, 2001. He was
meted the same penalty and warned, as in the case of his co-respondent, since it
was his first offense. On May 18, 2001, Vidal was caught sleeping for the second
time inside a container van parked beside the company premises. He was asked to
explain why he should not be terminated from work but he refused to comply with
the order. This notwithstanding, he was given another chance to submit his written
explanation but again, he stubbornly refused to comply. Petitioner dismissed him
from work on June 20, 2001.
Thereafter, respondents filed separate complaints for illegal dismissal.
ISSUE
Whether or not respondents were validly terminated for just cause.
HELD
The SC held that under Article 282 of the Labor Code, willful disobedience of a
lawful order of the employer is a valid cause for dismissal. Willful disobedience of
the employers lawful orders, as a just cause for the dismissal of an employee,
envisages the concurrence of at least two requisites: (1) the employees assailed
conduct must have been willful or intentional, the willfulness being characterized by
a wrongful and perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties
which he had been engaged to discharge.
On the first requisite, it is undisputed that respondents violated Company Rule 8
twice. For their first offense, both were given stern warning that another violation
would cost them their jobs. Refusing to heed the warning, Vidal cleverly tried to
avoid being caught sleeping a second time by sneaking inside the container van to
doze off. On the other hand, Pearanda, after being awakened and warned by his
supervisor, ignored the same and continued sleeping until caught by the roving
guard. These circumstances clearly show that respondents behavior was perverse
and willful.
The second requisite is also present in this case. As a manufacturer of finished
textile, petitioner utilizes machines which are operated continuously. The machines
functions are interlocked in a way that a disruption in one interrupts the entire
operation. Thus, petitioner found it necessary to be very explicit in prohibiting
sleeping on the job in Company Rule 8.

In numerous decisions, this Court has recognized that management has the right to
formulate reasonable rules to regulate the conduct of its employees for the
protection of its interests. These reasonable house rules are considered by the Court
as lawful orders and therefore violations thereof will justify dismissal under Article
282(a) of the Labor Code.
We find Company Rule 8 to be a valid exercise of management prerogative and thus
a lawful order. Respondents were expected to abide by them and their
transgression, despite clear warnings, provided just cause for the termination of
their employment.
In addition to the presence of just cause, procedural due process must also be
observed to legally dismiss an employee. The Labor Code requires the employer to
furnish the employee two written notices before it can terminate the latter from
service:
(a) a written notice containing a statement of the cause for termination to afford the
employee ample opportunity to be heard and defend himself with the assistance of
his representative, if he so desires; and, (b) if the employer decides to terminate the
services of the employee, the employer must notify him in writing of the decision to
dismiss him, stating clearly the reasons therefor.
Petitioner not only satisfied the two-notice requirement, it also conducted an
investigation, albeit summary, to determine the culpability of the respondents.
Respondents were confronted in detail with the charges against them and given the
opportunity to present their side. Vidal, however, adamantly refused to respond to
the charges and Pearanda merely chose to give a lame denial of the offense
imputed to him. They were afforded a chance to defend themselves but they opted
to be obstinate and complacent.
The requirement of notice and hearing in termination cases does not connote full
adversarial proceedings as elucidated in numerous cases decided by this Court.
Actual adversarial proceedings become necessary only for clarification or when
there is a need to propound searching questions to witnesses who give vague
testimonies. This is a procedural right which the employee must ask for since it is
not an inherent right, and summary proceedings may be conducted thereon. As
long as the employee is given the opportunity to explain his side and to present
evidence in support of his defense, due process is served.
Petition is granted.

[G.R. No. 141371

March 24, 2006]
EDNA ABAD, JOSEPH MARTINEZ and ELISEO ESCANILLAS, JR., Petitioners,
vs.
ROSELLE CINEMA, SILVER SCREEN CORPORATION and VERMY
TRINIDAD, Respondents.
FACTS
This case originated from individual complaints filed by petitioners against Roselle

Cinema, Silver Screen Corporation and Vermy Trinidad (respondents) for illegal
dismissal, underpayment, non-payment of overtime pay, premium for holiday,
premium pay for rest day, holiday pay, service incentive leave, night shift
differentials, separation pay, damages, and attorneys fees.
Escanillas last reported for work on January 5, 1997 after he was chastised by
respondent Trinidad for cleaning the semi-dark theater without a flashlight. When
he did not report for work the next day, Trinidad sent an employee to check on him,
and the employee reported that Escanillas was not sick, but was driving his tricycle.
The next day, an employee was again sent to Escanillas to tell the latter that he
should report for work. On January 16, 1997, Escanillas, who was then under the
influence of alcohol, went to see Trinidad and confronted him. Escanillas left, and
was heard muttering that he was better off driving his tricycle. Escanillas was also
seen milling around the theater premises with other men, in what Trinidad perceived
to be an attempt on Escanillass part to make good his previous threat that he
would pounce on Trinidad should Escanillas see him outside. He never reported for
work again.
With regard to petitioner Martinez, he last reported for work on January 15, 1997. In
the evening of that day, Trinidad called him to replace a light bulb. Instead of
complying, he told Trinidad that it was not his job to do it. Despite this, Trinidad
asked him to report for work early the next day because he has to assist the
repairman that would be coming to fix the electric fan; but Martinez did not report
for work the next day. It was discovered on January 16, 1997 that a part of the
company vehicle that Martinez drove was missing, and the suspect for the loss was
Martinez. Two days after he last reported for work, Martinez assumed his new job as
driver with the Israel Pork and Beef Dealer.
The LA found that petitioner Abad was not dismissed. On January 31, 1997, Abad
was asked to explain regarding the missing shortages and overages on the
canteen stocks and remittances. She was also reminded to observe decorum in the
workplace, as there were several instances when her suitors had been rude to
Trinidad. Abad, however, stated that she would rather resign than her personal life
be interfered with. Abad then verbally offered to resign and left her station without
getting her wages.
ISSUE
Are the employees illegally dismissed? Is there abandonment by employee in the
present case?
HELD
1. No. The employees are not illegally dismissed.
On the part of petitioner Escanillas, he was not deprived of his chance to return to
work despite his disagreement with Trinidad, and in fact, he was reminded several
times by Trinidad, through his employee, to report for work, but he did not do so; he
was seen driving his tricycle on a certain day when Trinidad sent his employee to
ask him to report for work; and he was heard muttering that he was better off

driving his tricycle.

The same goes with petitioner Martinez. Inspite of his earlier insubordination, when
he refused to change the light bulb as ordered by Trinidad, he was asked to report
early the next day, but, like Escanillas, he did not return to work. Instead, two days
after he last reported for work with respondents, he took on another job as a driver
with the Israel Pork and Beef Dealer.
With regard to petitioner Abad, apparently, she resented it when Trinidad asked her
to explain the shortages on her charge, and when she was reminded to observe
proper ethics in the workplace. Consequently, Abad was heard saying that shed
rather resign, after which she manifested her intention to terminate her
employment by leaving her station without getting her pay check.
2. No. The case does not involve abandonment as ground for termination.
Abandonment, involves termination of an employee by the employer. There is no
evidence showing that respondents were actually dismissed by petitioners, let
alone, on ground of abandonment. Neither is there a showing that petitioners
formally resigned from work. What is actually involved herein is the informal
voluntary termination of employment by the petitioners employees.
Given that petitioners were not illegally dismissed, but voluntarily terminated their
work, therefore, they are not entitled to an award of separation pay and backwages.

[G.R. No. 159354 April 7, 2006]

EASTERN SHIPPING LINES, INC., and/or ERWIN L. CHIONGBIAN, Petitioners,
vs. DIOSCORO D. SEDAN, Respondent.
FACTS
On December 30, 1973, petitioners hired on a per-voyage basis private respondent
Dioscoro Sedan as 3rd marine engineer and oiler in one of the vessels owned by
petitioners. His last voyage was on July 27, 1997 on board the vessel M/V Eastern
Universe. His monthly pay was P22,000. Additionally, after each voyage his earned
leave credits are monetized and paid in cash. He said he was disembarking
because he was going to take the board examinations for marine engineers.
Two months later, on September 27, 1997, Sedan sent a letter to petitioners
applying for optional retirement, citing as reason the death of his only daughter,
hence the retirement benefits he would receive would ease his financial burden.
However, petitioners deferred action on his application for optional retirement since
his services on board ship were still needed. Nonetheless, according to petitioners,
the company expressed intention to extend him a loan in order to defray the costs
incurred for the burial and funeral expenses of his daughter. On October 28, 1997,
Sedan sent petitioners another letter insisting on the release of half of his optional
retirement benefits. Later, he said that he no longer wanted to continue working on

board a vessel for reasons of health.

On December 1, 1997, Sedan sent another letter to petitioners threatening to file a
complaint if his application was not granted. In reply, according to petitioners, the
company management sent a telegram on December 9, 1997 informing Sedan that
his services were needed on board a vessel and that he should report immediately
for work as there was no available replacement. Sedan claims he did not receive
the telegram, nor was this fact proved by the company before the Labor Arbiter or
the NLRC.
Sedan proceeded to file a complaint with the Labor Arbiter against petitioners,
demanding payment of his retirement benefits, leave pay, 13th month pay and
attorneys fees.
Petitioners contend that by refusing to report for work and insisting on applying for
optional retirement, private respondent wrongly assumed that he was justified in
abandoning his job. Petitioners maintain that private respondents refusal to report
back to work, despite being duly notified of the need for his service, is tantamount
to voluntary resignation. Therefore, petitioners contend, the respondent should not
be entitled to any financial assistance.
ISSUE
Whether or not respondent is entitled to optional retirement benefits.
HELD
The SC held that respondent is not entitled to retirement benefits. The pertinent
law governing retirement is found in the Labor Code, which provides:
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
agreement and other agreements:
Provided, however, That an employees
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment may retire and shall be entitled to retirement pay equivalent to at
least one half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
xxx
The age of retirement is primarily determined by the existing agreement between
the employer and the employees. However, in the absence of such agreement, the
retirement age shall be fixed by law. Under the aforecited article of the Labor Code,
the legally mandated age for compulsory retirement is 65 years, while the set
minimum age for optional retirement is 60 years.

In the instant case, there is an agreement between petitioner shipping company

and its employees. The agreement states:
xxx
B. Retirement under the Labor Code:
Any employee whether land-based office personnel or shipboard employee
who shall reach the age of sixty (60) while in active employment with this company
may retire from the service upon his written request in accordance with the
provisions of Art. 277 of the Labor Code and its Implementing Rules, Book 6, Rule 1,
Sec. 13 and he shall be paid termination pay equivalent to fifteen (15) days pay for
every year of service as stated in said Labor Code and its Implementing Rules.
However, the company may at its own volition grant him a higher benefit which
shall not exceed the benefits provided for in the Retirement Gratuity table
mentioned elsewhere in this policy.
C. Optional Retirement:
It will be the exclusive prerogative and sole option of this company to retire any
covered employee who shall have rendered at least fifteen (15) years of credited
service for land based employees and 3,650 days actually on board vessel for
shipboard personnel.
Clearly, the eligibility age for optional retirement is set at 60 years. However,
employees of herein petitioners who are under the age of 60 years, but have
rendered at least 3650 days (10 years) on board ship or fifteen (15) years of service
for land-based employees may also avail of optional retirement, subject to the
exclusive prerogative and sole option of petitioner company.
Records show that private respondent was only 48 years old when he applied for
optional retirement. Thus he cannot claim optional retirement benefits as a matter
of right. His application for optional retirement was subject to the exclusive
prerogative and sole option of the shipping company pursuant to the abovecited
agreement between the workers and the company.
Petition is denied.

[G.R. No. 158637

April 12, 2006]
MARICALUM MINING CORPORATION, Petitioner, vs. ANTONIO DECORION,
Respondent
FACTS
Decorion was a regular employee of Maricalum Mining who started out as a Mill
Mechanic assigned to the Concentrator Maintenance Department and was later
promoted to Foreman I.
On April 11, 1996, the Concentrator Maintenance
Supervisor called a meeting which Decorion failed to attend as he was then
supervising the workers under him. Because of his alleged insubordination for
failure to attend the meeting, he was placed under preventive suspension on the

same day. He was also not allowed to report for work the following day. A month
after or on May 12, 1996, Decorion was served a Notice of Infraction and Proposed
Dismissal to enable him to present his side. On May 15, 1996, he submitted to the
Personnel Department his written reply to the notice. A grievance meeting was held
upon Decorions request on June 5, 1996, during which he manifested that he failed
to attend the meeting on April 11, 1996 because he was then still assigning work to
his men. He maintained that he has not committed any offense and that his service
record would show his efficiency.On July 23, 1996, Decorion filed before the NLRCRAB a complaint for illegal dismissal and payment of moral and exemplary damages
and attorneys fees.
In the meantime, the matter of Decorions suspension and proposed dismissal was
referred to Atty. Roman G. Pacia, Jr., Maricalum Minings Chief and Head of Legal and
Industrial Relations, who issued a memorandum on August 13, 1996, recommending
that Decorions indefinite suspension be made definite with a warning that a
repetition of the same conduct would be punished with dismissal. Maricalum
Minings Resident Manager issued a memorandum on August 28, 1996, placing
Decorion under definite disciplinary suspension of six (6) months which would
include the period of his preventive suspension which was made to take effect
retroactively from April 11, 1996 to October 9, 1996.
On September 4, 1996, Decorion was served a memorandum informing him of his
temporary lay-off due to Maricalum Minings temporary suspension of operations
and shut down of its mining operations for six (6) months, with the assurance that in
the event of resumption of operations, he would be reinstated to his former position
without loss of seniority rights. Decorion, through counsel, wrote a letter to
Maricalum Mining on October 8, 1996, requesting that he be reinstated to his former
position. The request was denied with the explanation that priority for retention
and inclusion in the skeleton force was given to employees who are efficient and
whose services are necessary during the shutdown.
Maricalum Mining insists that Decorion was not dismissed but merely preventively
suspended on April 11, 1996. Petitioner contends that constructive dismissal occurs
only after the lapse of more than six (6) months from the time an employee is
placed on a floating status as a result of temporary preventive suspension from
employment. Thus, it goes on to argue, since Decorion was suspended for less than
six (6) months, his suspension was legal.
Decorion, on the other hand, maintained that he was dismissed from employment
on April 11, 1996 as he was then prevented from reporting for work. He avers that
had the intention of Maricalum Mining been to merely suspend him, it could have
manifested this intention by at least informing him of his suspension. As it
happened, he was not served with any notice relative to why he was disallowed to
report for work. The grievance meeting conducted on June 5, 1996 was allegedly
called only after he had repeatedly requested reconsideration of his dismissal.
ISSUE
Whether or not respondent was dismissed by petitioner company.
HELD

The SC held that sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules
are explicit that preventive suspension is justified where the employees continued
employment poses a serious and imminent threat to the life or property of the
employer or of the employees co-workers. Without this kind of threat, preventive
suspension is not proper.
In this case, Decorion was suspended only because he failed to attend a meeting
called by his supervisor. There is no evidence to indicate that his failure to attend
the meeting prejudiced his employer or that his presence in the companys
premises posed a serious threat to his employer and co-workers. The preventive
suspension was clearly unjustified. What is more, Decorions suspension persisted
beyond the 30-day period allowed by the Implementing Rules.
Preventive
suspension which lasts beyond the maximum period allowed by the Implementing
Rules amounts to constructive dismissal.
Similarly, from the time Decorion was placed under preventive suspension on April
11, 1996 up to the time a grievance meeting was conducted on June 5, 1996, 55
days had already passed. Another 48 days went by before he filed a complaint for
illegal dismissal on July 23, 1996. Thus, at the time Decorion filed a complaint for
illegal dismissal, he had already been suspended for a total of 103 days.
Maricalum Minings contention that there was as yet no illegal dismissal at the time
of the filing of the complaint is evidently unmeritorious. Decorions preventive
suspension had already ripened into constructive dismissal at that time. While
actual dismissal and constructive dismissal do take place in different fashion, the
legal consequences they generate are identical. Decorions employment may not
have been actually terminated in the sense that he was not served walking papers
but there is no doubt that he was constructively dismissed as he was forced to
quit because continued employment was rendered impossible, unreasonable or
unlikely by Maricalum Minings act of preventing him from reporting for work.
Petition is denied.

[G.R. No. 159828

April 19, 2006]
KASAPIAN NG MALAYANG MANGGAGAWA SA COCA-COLA (KASAMMA-CCO)CFW LOCAL 245, Petitioner, vs. THE HON. COURT OF APPEALS and COCACOLA BOTTLERS PHILS., INC., Respondents.
FACTS
On 26 December 1998, after a CBA bargaining deadlock and a subsequent strike,
both parties executed and signed a MOA providing for salary increases and other
economic and non-economic benefits. It likewise contained a provision for the
regularization of contractual, casual and/or agency workers who have been working

with private respondent for more than one year. Said MOA was later incorporated to
form part of the 1998-2001 CBA and was thereafter ratified by the employees of the
company.
Pursuant to the provisions of the MOA, both parties identified 64 vacant regular
positions that may be occupied by the existing casual, contractual or agency
employees who have been in the company for more than one year. Fifty-eight (58)
of those whose names were submitted for regularization passed the screening and
were thereafter extended regular employment status, while the other five failed the
medical examination and were granted six months within which to secure a clean
bill of health. Within the six-month period, three of the five employees who have
initially failed in the medical examination were declared fit to work and were
accorded regular employment status. Consequently, petitioner demanded the
payment of salary and other benefits to the newly regularized employees
retroactive to 1 December 1998, in accord with the MOA. However, the private
respondent refused to yield to said demands contending that the date of effectivity
of the regularization of said employees were 1 May 1999 and 1 October 1999.
Thus, on 5 November 1999, petitioner filed a complaint before the NLRC for the
alleged violations of the subject MOA by the private respondent.
Meanwhile, a certification election was conducted on 17 August 1999 pursuant to
the order of the DOLE wherein the KASAMMA-CCO Independent surfaced as the
winning union and was then certified by the DOLE as the sole and exclusive
bargaining agent of the rank-and-file employees of private respondents Manila and
Antipolo plants for a period of five years from 1 July 1999 to 30 June 2004. On 23
August 1999, the KASAMMA-CCO Independent demanded the renegotiation of the
CBA which expired on 30 June 1998.
Such request was denied by private
respondent on the contention that there was no basis for said demand as there was
already an existing CBA which was negotiated and concluded between petitioner
and private respondent, thus, it was untimely to reopen the said CBA which was yet
to expire on 30 June 2001.
On 9 December 1999, despite the pendency of petitioners complaint before the
NLRC, private respondent closed its Manila and Antipolo plants resulting in the
termination of employment of 646 employees. On the same day, about 500
workers were given a notice of termination effective 1 March 2000 on the ground of
redundancy. The affected employees were considered on paid leave from 9
December 1999 to 29 February 2000 and were paid their corresponding salaries.
On 13 December 1999, four days after its closure of the Manila and Antipolo plants,
private respondent served a notice of closure to the DOLE.
As a result of said closure, on 21 December 1999, petitioner amended its complaint
filed before the NLRC to include union busting, illegal dismissal/illegal lay-off,
underpayment of salaries, overtime, premium pay for holiday, rest day, holiday pay,
vacation/sick leaves, 13th month pay, moral and exemplary damages and
attorneys fees.
ISSUE
Whether or not petitioners members were validly terminated due to the closure of

respondents plants.
HELD
The SC held that the closure of said plants is for an authorized cause.
The characterization of the employees service as no longer necessary or
sustainable, and therefore properly terminable, is an exercise of business judgment
on the part of the employer. The wisdom or soundness of such characterizing or
decision is not subject to discretionary review on the part of the Labor Arbiter nor of
the NLRC so long, of course, as violation of law or merely arbitrary and malicious
action is not shown. The determination of the continuing necessity of a particular
officer or position in a business corporation is managements prerogative, and the
courts will not interfere with the exercise of such so long as no abuse of discretion
or merely arbitrary or malicious action on the part of management is shown. In the
case at bar, the closure of the Manila and Antipolo plants and the resulting
termination of the employment of 646 employees is not tainted with bad faith. As
found by the NLRC, the private respondents decision to close the plant was a result
of a study conducted which established that the most prudent course of action for
the private respondent was to stop operations in said plants and transfer production
to other more modern and technologically advanced plants of private respondent.
Other than its mere allegations, petitioner union failed to show that the closure of
the two plants was without factual basis and done in utter bad faith. No evidence
was presented by petitioner to prove its assertion that private respondent resorted
to the closure of the Manila and Antipolo plants to prevent the renegotiations of the
CBA entered into between the parties. As adequately explained by the NLRC, the
subject closure and the resulting termination of the 639 employees was due to
legitimate business considerations, as evidenced by the technical study conducted
by private respondent.
Anent the allegation that private respondent failed to comply with the notice
requirements as provided by the Labor Code in the cessation of its operations, the
employees were served notice on 9 December 1999 that their employment were
being severed effective 1 March 2000; however they were no longer required to
report for work but they will continue to receive their salary up to 29 February 2000.
Therefore, as enunciated in the ruling in Serrano v. NLRC, said act of private
respondent constitutes substantial compliance with the notice requirement of the
Labor Code.
Decision of CA is affirmed.

[G.R. No. 161654

May 5, 2006]
DUSIT HOTEL NIKKO, Petitioner, vs. RENATO M. GATBONTON, Respondent.
FACTS

On November 21, 1998, respondent Renato M. Gatbonton was hired as Chief

Steward in petitioner Dusit Hotel Nikkos Food and Beverage Department. He
signed a three-month probationary employment contract until February 21, 1999,
with a monthly salary of P25,000. At the start of his employment, the standards by
which he would be assessed to qualify for regular employment were explained to
him.
The hotel alleged that at the end of the probation period, Ingo Rauber, Director of
its Food and Beverage Department, observed that Gatbonton failed to meet the
qualification standards for Chief Steward, and Rauber recommended a two-month
extension of Gatbontons probationary period, or until April 22, 1999. At the end of
the 4th month, on March 24, 1999, Rauber informed Gatbonton that the latter had
poor ratings on staff supervision, productivity, quantity of work, and overall
efficiency and did not qualify as Chief Steward. Gatbonton requested another
month or until April 22, 1999 to improve his performance, to which Rauber agreed
but allegedly refused to sign the Performance Evaluation Form. Neither did he sign
the Memorandum on the extension.
On March 31, 1999, a notice of termination of probationary employment effective
April 9, 1999, on the above alleged grounds was served on Gatbonton. On April 12,
1999, he filed a complaint for illegal dismissal and non-payment of wages, with
prayers for reinstatement, full backwages, and damages, including attorneys fees.
ISSUE
Whether or not respondent was a regular employee at the time of his dismissal.
HELD
The SC held that as Article 281 clearly states, a probationary employee can be
legally terminated either: (1) for a just cause; or (2) when the employee fails to
qualify as a regular employee in accordance with the reasonable standards made
known to him by the employer at the start of the employment. Nonetheless, the
power of the employer to terminate an employee on probation is not without
limitations. First, this power must be exercised in accordance with the specific
requirements of the contract. Second, the dissatisfaction on the part of the
employer must be real and in good faith, not feigned so as to circumvent the
contract or the law; and third, there must be no unlawful discrimination in the
dismissal. In termination cases, the burden of proving just or valid cause for
dismissing an employee rests on the employer.
Here, the petitioner did not present proof that the respondent was evaluated from
November 21, 1998 to February 21, 1999, nor that his probationary employment
was validly extended. The petitioner alleged that at the end of the respondents
three-month probationary employment, Rauber recommended that the period be
extended for two months since respondent Gatbonton was not yet ready for regular
employment. The petitioner presented a Personnel Action Form containing the
recommendation. We observed, however, that this document was prepared on
March 31, 1999, the end of the 4th month of the respondents employment. In fact,
the recommended action was termination of probationary employment effective

April 9, 1999, and not extension of probation period. Upon appeal to the NLRC, the
petitioner presented another Personnel Action Form prepared on March 2, 1999,
showing that the respondents probationary employment was extended for two
months effective February 23, 1999.
The Personnel Action Form dated March 2, 1999, contained the following remarks:
subject to undergo extension of probation for two (2) months as per attached
memo. Yet, we find this document inconclusive. First, the action form did not
contain the results of the respondents evaluation. Without the evaluation, the
action form had no basis. Second, the action form spoke of an attached memo
which the petitioner identified as Raubers Memorandum, recommending the
extension of the respondents probation period for two months.
Again, the
supposed Memorandum was not presented. Third, the action form did not bear the
respondents signature.
In the absence of any evaluation or valid extension, we cannot conclude that
respondent failed to meet the standards of performance set by the hotel for a chief
steward. At the expiration of the three-month period, Gatbonton had become a
regular employee. It is an elementary rule in the law on labor relations that a
probationary employee engaged to work beyond the probationary period of six
months, as provided under Article 281 of the Labor Code, or for any length of time
set forth by the employer (in this case, three months), shall be considered a regular
employee. This is clear in the last sentence of Article 281. Any circumvention of
this provision would put to naught the States avowed protection for labor.
Since respondent was not dismissed for a just or authorized cause, his dismissal
was illegal, and he is entitled to reinstatement without loss of seniority rights, and
other privileges as well as to full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.
Petition is denied.

[G.R. No. 141637

June 8, 2006]
ROMYS FREIGHT SERVICE, represented by Roman G. Cruz, Petitioner, vs.
JESUS C. CASTRO, DOMINADOR VELORIA and the FIRST DIVISION of the
COURT OF APPEALS, Respondents.
FACTS
Private respondent Castro was hired by petitioner as a mechanic in April 1975. He
was promoted to supervisor in 1986. On December 31, 1994, he suffered a stroke.
On his doctors advice, he took a leave of absence from work. Pending recovery, he
extended his leave several times. While on leave, however, petitioner Roman G.
Cruz sent him several letters first urging him to return to work. The succeeding ones

assumed the nature of show cause letters requiring him to explain why he should
not be disciplined for his prolonged absence. Cruz also filed complaints for estafa
and qualified theft against him. Because of these, Castro was constrained to file a
case for illegal dismissal against petitioner on the ground that Cruzs acts
constituted constructive dismissal.
On the other hand, private respondent Veloria was hired by petitioner in 1977 as a
carpenter. After several years, he was promoted to mechanic and, in 1993, as senior
mechanic. Sometime in the last week of February 1995, he figured in an accident.
The overheated water coming from the radiator of a car he was repairing spurted
onto his face, burning it. He was forced to absent himself from work to undergo
recuperation. During his absence, he received several letters from Cruz. One letter
required him to explain the loss of several tools, another ordered him to pay his loan
and still another required him to explain his absences. He was later charged for
qualified theft of the missing tools. Because of petitioners acts against him, Veloria
joined Castro in filing a case for illegal constructive dismissal against petitioner.
For its part, petitioner denied that private respondents were dismissed from their
employment, asserting that private respondents abandoned their work.
ISSUE
Whether or not private respondents were constructively dismissed without just
cause.
HELD
The SC held that a perusal of the CA decision shows that the findings that petitioner
failed to overcome the burden of proving just cause for terminating the employment
of private respondents and that private respondents did not abandon their work
were supported by substantial evidence. Moreover, petitioners obstinate insistence
on the alleged serious misconduct (i.e., the commission of estafa and/or qualified
theft) of private respondents belies his claim of abandonment as the ground for the
dismissal of private respondents. Rather, it strengthens the finding of petitioners
discrimination, insensibility and antagonism towards private respondentswhich gave
no choice to private respondents except to forego their employment.
Petition is dismissed.

[G.R. No. 164772 June 8, 2006]

EQUITABLE BANKING CORPORATION (now known as EQUITABLE-PCI BANK),
Petitioner, vs. RICARDO SADAC, Respondent.
FACTS

Respondent Sadac was appointed Vice President of the Legal Department of

petitioner Bank effective 1 August 1981, and subsequently General Counsel on 8
December 1981. On 26 June 1989, nine lawyers of petitioner Banks Legal
Department, in a letter-petition to the Chairman of the Board of Directors, accused
respondent Sadac of abusive conduct, and ultimately, petitioned for a change in
leadership of the department.
On the ground of lack of confidence in respondent Sadac, under the rules of client
and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all
materials in his custody in all cases in which the latter was appearing as its counsel
of record. In reaction thereto, respondent Sadac requested for a full hearing and
formal investigation but the same remained unheeded. On 9 November 1989,
respondent Sadac filed a complaint for illegal dismissal with damages against
petitioner Bank and individual members of the Board of Directors thereof. After
learning of the filing of the complaint, petitioner Bank terminated the services of
respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed
from his office and ordered disentitled to any compensation and other benefits.
ISSUE
Whether or not Respondent Sadac was illegally dismissed.
HELD
The SC held that respondent Sadac was dismissal illegal. The existence of the
employer-employee relationship between petitioner Bank and respondent Sadac
had been duly established bringing the case within the coverage of the Labor Code.
Sec. 26, Rule 138 of the Rules of Court is not applicable, as claimed by the
petitioner, that the association between the parties was one of a client-lawyer
relationship, and, thus, it could terminate at any time the services of respondent
Sadac. Respondent Sadacs dismissal was grounded on any of the causes stated in
Article 282 of the Labor Code.
Petitioner Bank disregarded the procedural
requirements in terminating respondent Sadacs employment as so required by
Section 2 and Section 5, Rule XIV, Book V of the Implementing Rules of the Labor
Code.
Decision of the NLRC is affirmed.

[G.R. NO. 148544

July 12, 2006]
FELIX M. CRUZ, JR., Petitioner, vs. COURT OF APPEALS, NATIONAL LABOR
RELATIONS COMMISSION AND CITYTRUST BANKING CORPORATION,

Respondents.
FACTS
Petitioner Cruz was an employee of private respondent Citytrust from October 8,
1979. He held the confidential position of Micro Technical Support Officer, who is
responsible for the (1) evaluation and recommendation from various
departments/units request for Micro Computers received by the Bidding Committee;
and (b) further evaluation and acceptance of the bids submitted including
recommendation therof, which were done by the Technical Committee of the Bank.
The good performance of Cruz did not remain unnoticed for on several occasions he
was recognized with awards and citations, given salary increases and promoted to
Authorized Signer on May 1, 1991.
Later, there were feedbacks and information that certain irregularities were being
committed in the bidding process and purchase of computers, an area within the
powers and responsibilities of Cruz. To clarify matters, a special investigation was
conducted by the Citytrust Internal Audit Group and it was found out that there were
unauthorized and unreported commissions and rebates given out by one of its
computer suppliers, MECO, for purchases made by Citytrust. This was corroborated
by the letter dated August 5, 1992 of the President and Controller of MECO
certifying that Cruz has received commissions and rebates amounting to
P105,192.00 just for the period of September 1992 to March 1993.
Citytrust, then sent a show-cause memorandum to Cruz on August 6, 1993 placing
him under a 30-day preventive suspension and directing him to appear in an
administrative hearing by the Ad Hoc Committee. Cruz submitted the said
memorandum, the Ad Hoc Committee heard the matter, and found Cruz guilty of
fraud, serious misconduct, gross dishonesty and serious violation of Bank policies,
regulations and procedure. For the resultant loss of confidence, Citytrust terminated
Cruz from employment effective October 6, 1993. Aggrieved by this, Cruz filed
before the Labor Arbiter an action for Illegal Dismissal and Damages claiming that
Citytrust denied him due process and hastily dismissed him from service.
Petitioner claims that while his name appears in the check vouchers issued by
MECO the incontrovertible fact remains that his signature does not appear in any of
said vouchers. Not being a signatory of any of the said check vouchers, petitioner
contends that there can be no basis in concluding that he ever received any
commission, special discount or rebate from MECO. Petitioner also asserts that he
was denied due process because he was not given the opportunity to refute the
charges imputed against him. While it is true that private respondent conducted an
investigation, petitioner claims that the same was done without his participation.
ISSUE
Whether or not petitioner was illegally dismissed.
HELD
The SC held that petitioner was not illegally dismissed.

Jurisprudence has distinguished the treatment of managerial employees or

employees occupying positions of trust and confidence from that of rank-and-file
personnel, insofar as the application of the doctrine of trust and confidence is
concerned. There is no dispute that petitioner is a confidential employee.
Hence, in the case of a managerial employee, the mere existence of a basis for
believing that such employee has breached the trust of his employer would suffice
for his dismissal. Proof beyond reasonable doubt is not required, it being sufficient
that there is some basis for such loss of confidence, such as when the employer has
reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position.
In addition, the language of Article 282(c) of the Labor Code states that the loss of
trust and confidence must be based on willful breach of the trust reposed in the
employee by his employer. Such breach is willful if it is done intentionally,
knowingly, and purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be
based on substantial evidence and not on the employers whims or caprices or
suspicions otherwise, the employee would eternally remain at the mercy of the
employer. Loss of confidence must not be indiscriminately used as a shield by the
employer against a claim that the dismissal of an employee was arbitrary. And, in
order to constitute a just cause for dismissal, the act complained of must be workrelated and shows that the employee concerned is unfit to continue working for the
employer. In addition, loss of confidence as a just cause for termination of
employment is premised on the fact that the employee concerned holds a position
of responsibility, trust and confidence or that the employee concerned is entrusted
with confidence with respect to delicate matters, such as the handling or care and
protection of the property and assets of the employer. The betrayal of this trust is
the essence of the offense for which an employee is penalized.
It is true that the check vouchers alone are not sufficient to prove his guilt owing to
the fact that his signatures do not appear in any of these vouchers. However, aside
from the abovementioned check vouchers, there are other pieces of evidence
presented by Citytrust which petitioner failed to refute and which points to the fact
that he received commissions or rebates from MECO. The evidence consists of the
following:
(1) admission made by petitioner in his letter, dated August 3, 1993, that he
received material considerations from MECO since 1992;
(2) certification issued by MECO categorically stating that he was paid commissions
totaling P105,192.00; (3) testimonies of Leoncio Araullo, Vice President of Citytrust;
and Ma. Lourdes Foronda, Assistant Vice President for Staff Services Division of the
Human Resources Department of Citytrust, that petitioner admitted having received
the amounts of P1,000.00 and P500.00 from Art Cordero, an officer of MECO,
claiming that these amounts are for the boys;
(4) statements in the affidavit of Florante del Mundo, auditor at the Internal Audit
Department of Citytrust that two of the checks issued by MECO in favor of petitioner
were either encashed by the latters common-law-wife or deposited in his account.

In addition, the Court agrees with the CA that annotations appearing in the check
vouchers issued by MECO such as Payment for the Rebate Given to Boy Cruz of
Citytrust and Payment for the Sales Rebate Given to Boy Cruz of Citytrust are
confirmations of the fact that the checks were issued and given specifically by
MECO to petitioner in consideration of his office and services.
These pieces of evidence, when taken together, would constitute substantial
evidence to prove petitioners guilt; and his failure to satisfactorily explain or rebut
them only strengthens Citytrusts case against him.
Thus, petitioners acceptance of commissions and rebates from MECO, without the
knowledge and consent of Citytrust and without said rebates and commissions
being reported and turned over to the latter, are acts which can clearly be
considered as a willful breach of the trust and confidence reposed by Citytrust upon
him. Settled is the rule that an employer cannot be compelled to retain an
employee who is guilty of acts inimical to the interests of the employer. A company
has the right to dismiss its employees if only as a measure of self-protection. This is
all the more true in the case of supervisors or personnel occupying positions of
responsibility. In the present case, the Court finds that the CA did not commit grave
abuse of discretion when it ruled that Citytrust is justified in dismissing petitioner
from his employment for loss of trust and confidence.
Due process was not denied to the petitioner as evidence by the letter of Citytrust
dated August 6, 1993, which petitioner answered; and the investigation conducted
by the Ad Hoc Committee of Citytrust. Petitioners concept of the opportunity to be
heard is the chance to ventilate ones side in a formal hearing where he can have a
face-to-face confrontation with his accusers. It is well settled that the basic
requirement of notice and hearing in termination cases is for the employer to inform
the employee of the specific charges against him and to hear his side and defenses.
This does not, however, mean a full adversarial proceeding. The parties may be
heard through pleadings, written explanations, position papers, memorandum or
oral argument. In all of these instances, the employer plays an active role by
providing the employee with the opportunity to present his side and answer the
charges in substantial compliance with due process.
Further, Citytrust complied with the first requirement of notice when it informed
petitioner through a letter, dated August 6, 1993, of the charges against him,
directing him to explain in writing why his employment should not be terminated
and, thereafter, to appear in a hearing to be conducted by the company to give him
further opportunity to explain his side. Citytrust also complied with the second
requirement of notice when it sent a memorandum dated September 28, 1993, to
petitioner informing him of his dismissal from employment and the reasons therefor.
Petition is dismissed.

[G.R. No. 169464

August 31, 2006]
ROQUE D.A. DATOR, Petitioner, vs. UNIVERSITY OF SANTO TOMAS, REV. FR.
TAMERLANE LANA and REV. FR. RODEL ALIGAN, Respondents.
FACTS
Petitioner Dator was hired by respondent UST in June 1983 as Instructor I of the
Institute of Religion with a maximum teaching load of 24 units. On December 15,
1995, petitioner was also hired as Graft Investigation Officer II with the Office of the
Ombudsman but he failed to disclose such other employment to respondents, who
discovered the same only during the first semester of School Year 2000-2001. Thus,
on June 16, 2000, petitioner was informed that his teaching load would be reduced
to 12 hours per week, pursuant to Section 5, Article III of the UST Faculty Code
which states that faculty members who have a full time outside employment other
than teaching may not be given a teaching load in excess of 12 hours per week.
Petitioner asked for reconsideration of the reduction in his teaching load which was
granted. He was given an additional load of three teaching hours. On June 15,
2001, petitioner again requested for an additional load of three units but his request
was denied by respondent Rev. Fr. Aligan. Petitioner filed a Complaint-Affidavit to
the Chairperson of the Grievance Committee, Dr. Gil Gamila, President of the
University of Sto. Tomas Faculty Union, but the complaint was dismissed. Petitioner
appealed to respondent Rev. Fr. Tamerlane Lana, Rector of respondent UST but the
appeal was denied.
Petitioner thus filed a complaint for Illegal Reduction of Teaching Load and Illegal
Change of Employment Status, Damages, Unpaid Benefits and Attorneys Fees and
illegal constructive dismissal before the Labor Arbiter on February 19, 2002.

Petitioner claimed that his arbitrary demotion from full-time to part-time faculty
member violated the provisions of the CBA, as well as his right to security of tenure.
Likewise, he argued that the UST Faculty Code which respondents relied upon to
reduce his teaching load has been superseded by the CBA, which enumerates
grounds for the reduction of teaching load
Section 5. Reduction of Teaching Load. The teaching load of a faculty member
may be reduced for any of the following reasons:
a)
A reduction in the number of classes or sections in the faculty, college,
school or department concerned, provided that, in such case a compensating load
in other faculties, colleges, school or department shall, as far as possible, be made
available to the faculty member concerned;
b)
Non-offering of his/her specialized subject along his/her expertise in any
given semester or school year;
c)
By way of sanction for inefficiency duly proven after due process and in
accordance with standards or criteria in force in the UNIVERSITY;
d)
Failing Health of the faculty member duly certified by a Board of three (3)
physicians teaching in the Faculty of Medicine and Surgery of the University chosen
as follows: one by the faculty member concerned, one by the UNIVERSITY and one
by the FACULTY UNION.
Petitioner contends that he is a tenured faculty member thus he is entitled to the
same teaching load as he had in the previous semesters; that he was not accorded
due process when respondents unilaterally reduced his teaching load; that Section
5, Article III of the Faculty Code has no application in this case; and that
respondents acted in bad faith.
On the other hand, respondents maintained that petitioners teaching load was
reduced in accordance with Sections 5 and 6 of Article III of the Faculty Code which
provide:
SEC. 5 Faculty members who have a full time outside employment other
than teaching may not be given a teaching load in excess of 12 hours per week.
Respondents maintain that petitioners teaching load was reduced in accordance
with Section 5, Article III of the Faculty Code; that they did not violate petitioners
right to due process and that he was given an opportunity to be heard; that
petitioner falsified at least 13 written statements where he deliberately failed to
mention his full time employment with the Office of the Ombudsman.
ISSUE
Whether or not the reduction of petitioners teaching load was justified.
HELD
The SC held that UST committed no illegality when it ordered the reduction of
Dators load from twenty-four (24) units to twelve (12) units per semester. While
the CBA provides grounds for reduction of teaching load, the question of whether a
faculty member is considered full-time or part-time is addressed by the Faculty
Code which provides that where the full-time faculty member is at the same time

working as a full-time employee elsewhere, the faculty member is considered parttime and a 12-hour teaching load limitation is imposed.
There is no dispute that petitioner was holding a full-time position with the Office of
the Ombudsman while working as a faculty member in UST. Accordingly, Section 5,
Article III of the Faculty Code applies.
The UST Faculty Code continues to exist and to apply to UST faculty members, but
must give way if its terms are in conflict with what the CBA provides. The standard
in determining the applicable is whether a conflict exists between the provisions the
parties cited.
We see no conflict between the provisions the parties respectively cited as these
provisions apply to different situations. Article IV of the CBA are the rules on the
teaching loads that faculty members may normally expect to carry; it provides as
well the grounds or reasons for giving a tenured faculty member less than his
normal teaching load. These provisions do not address the question of when a
faculty member is to be considered a full-time or a part-time faculty member.
Whether a faculty member should only be on part-time basis is governed by Section
5 Article III of the UST Faculty Code we have quoted above. Thus, the provisions
Dator cited regarding deloading and the authorized grounds therefore do not apply
because what is involved is a change of status from full-time faculty member to a
part-time one due to the faculty members full-time employment elsewhere.
In contrast with the authorized causes for deloading under the CBA, the change of
status from full-time faculty member with a 24-unit load to a part-time one with a
12-unit load in effect involves a disqualification to be a full-time faculty member
because of the very practical reason that he or she is already a full-time employee
elsewhere. In the present case, this disqualification is compounded by Dators
repeated misrepresentations about his employment status outside UST.
The
present case therefore is closer to being a disqualification situation coupled with a
disciplinary cause, rather than one involving a purely authorized deloading under
the CBA.
Petitioner argues that he was under no obligation to disclose his employment with
the Office of the Ombudsman. He claims that the only information required of him
pertained to 1) other colleges where he is teaching, 2) teaching loads outside the
university, and 3) a business firm he is employed with. He argues that the Office of
the Ombudsman, being a government agency, does not fall under any of the
foregoing categories.
Section 6, Article III of the Faculty Code states that all faculty members must submit
each semester a statement of the number of teaching hours per week to be
rendered in other institutions and/or daily hours of work or employment, inside or
outside the University. The rationale behind the rule is unmistakable. As pointed
out by respondents, there is a need to maintain USTs quality of education as well
as to ensure that government service is not jeopardized.
Petitioner admitted in his letter-request dated July 15, 2001 that with the
implementation of a CHED Circular, the teaching load assignment of government

employees was limited to only 12 units per semester so as not to prejudice the
interests of both the government and the University and/or college concerned. It is
clear therefore that petitioner was aware of the limitation.
Moreover, we find that petitioner was not denied due process. It is settled that due
process is simply an opportunity to be heard. In this case, respondents informed
petitioner that his teaching load would be reduced as he was working full-time with
the Office of the Ombudsman. Petitioner asked for reconsideration twice. His first
request was granted and he was given an additional load of three units for School
Year 2000-2001.
For School Year 2001-2002, petitioner again requested an
additional load of three units but was denied.
All told, petitioners complaint cannot be sustained. An employees bare allegations
of constructive dismissal, when uncorroborated by the evidence on record, cannot
be given credence. A constructive dismissal occurs when the law deems that there
is effectively a termination of employment or a quitting because continued
employment is rendered impossible, unreasonable or unlikely, such as in an offer
involving a demotion in rank and a diminution in pay. Where, as in the present
case, the employer was fully justified in giving a faculty member a lesser load
because the latter is disqualified under applicable rules from handling a full load,
and where the faculty member committed repeated misrepresentations in his bid to
maintain his full load, we cannot see any legal or factual basis to conclude that the
faculty member had been constructively dismissed.
Petition is denied.

[G.R. No. 149013

August 31, 2006]
HOUSE OF SARA LEE, Petitioner, vs. CYNTHIA F. REY, Respondent.
FACTS

Respondent Rey held the position of Credit Administration Supervisor or CAS at the
Cagayan de Oro City branch of the petitioner. Her primary duty of the CAS is to
strictly monitor deadlines, to supervise the credit and collection of payments and
outstanding accounts due to the petitioner from its independent dealers and various
customers, and to screen prospective IBMs. To discharge these responsibilities, the
CAS is provided with a computer equipped with control systems through which data
is readily generated. Under this organizational setup, the CAS is under the direct
and immediate supervision of the Branch Operations Manager (BOM).
Sometime in June 1995, while respondent was still working in Butuan City, she
allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet, a
certain Ms. Magi Caroline Mendoza, to change the credit term of one of the IBMs of
the petitioner, a certain Ms. Mariam Rey-Petilla, who happens to be respondents
sister-in-law, from the 52-day limit to an unauthorized term of 60 days.
The respondent made the instruction, the petitioner avers, just before the computer
data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about to
be generated. Ms. Mendoza then reported this allegedly unauthorized act of
respondent to her Branch Operations Manager, Mr. Villagracia.
Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified
the records and discovered that it was not only the 52-day credit term of IBM ReyPetilla that had been extended by the respondent, but there were several other
IBMs whose credit terms had been similarly extended beyond the periods allowed
by company policy. BOM Villagracia then summoned the respondent and required
her to explain the unauthorized credit extensions. The petitioner alleges that during
that confrontation, respondent admitted her infractions and begged the BOM not to
elevate or disclose the matter further to higher authorities. In a letter, Villagracia
formally reported the matter to higher management, stating that respondent, in
tears and remorse and confiding her sincerest apology, personally admitted that
the credit terms of certain IBMs were adjusted in the computer for purposes of
computing the Service Fees. Villagracia formally served a show-cause letter to
respondent and placed her on indefinite suspension. Respondent submitted her
explanation denying the accusations made against her and stated that the
discrepancies in the service fees may have been the result of deadlines falling on
holidays, after reconsiderations had been requested by the IBM concerned and
with the full knowledge of and approval by BOM Villagracia as part of his campaign
to increase collections. Additionally, in the same letter-response, respondent
vehemently denied that she waived her right to explain as well as any admission
she allegedly made before Villagracia, and she pointed to the latter as the author of
the discrepancies.
As a consequence of the discovery of the foregoing alleged anomalous practice of
extending the credit terms of certain IBMs, management undertook an audit of the
Cagayan de Oro City and Butuan City branches. During the process, the petitioner
alleges, respondent was interviewed by the auditors before whom she again openly
admitted her infractions. On the basis of the hearing, the alleged voluntary
admissions of respondent, and the findings of the auditors report, the petitioner, on
June 25, 1996, formally dismissed the respondent for breach of trust and

confidence.
Respondent then filed her Complaint for illegal dismissal, backwages and damages,
with the Labor Arbiter.
ISSUE
Whether or not she was illegally dismissed.
HELD
The SC held that respondent Rey was not illegally dismissed. She was dismissed by
reason of loss of trust and confidence.
Loss of confidence as a just cause for dismissal is premised on the fact that an
employee concerned holds a position of trust and confidence. This situation applies
where a person is entrusted with confidence on delicate matters, such as the
custody, handling, or care and protection of the employers property. But, in order
to constitute a just cause for dismissal, the act complained of must be workrelated, such that the employee concerned is unfit to continue working for the
employer.
Distinction on loss of trust and confidence on the following employees:
(1)
Rank-and-file employees - requires proof of involvement in the alleged events
in question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient;
(2)
Managerial employees - the mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal.
Hence, in the case of managerial employees, proof beyond reasonable doubt is not
required; it is sufficient that there is some basis for the loss of confidence, as when
the employer has reasonable ground to believe that the employee concerned is
responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded by his position
In the case at bar, respondent is not an ordinary rank-and-file employee.
Respondent occupied a highly sensitive and critical position and may thus be
dismissed on the ground of loss of trust and confidence. The position carried with it
the duty to observe proper company procedures in the fulfillment of her job, as it
relates closely to the financial interests of the company. Respondents unauthorized
extensions of the credit periods of the dealers are prejudicial to the interest of the
petitioner and bear serious financial implications: First, the dealer concerned is
allowed to withhold remittances to the company for his or her credit purchases
beyond the expiration of the 38- or 52-day rolling deadline; second, the Credit
Administration Charges or interest penalties are not imposed on the erring dealer;
third, the dealer concerned is allowed to purchase goods on credit despite the fact
that he or she has not remitted payment, which is against company policy; and
fourth, undue Service Fees were unknowingly paid by the company to certain IBMs.
Petition is granted.

FIRST DIVISION
[G.R. No. 146068
August 31, 2006]
DR. REY C. TAMBONG, Petitioner, vs. R. JORGE DEVELOPMENT
CORPORATION, DOING BUSINESS AS PREMUIM AGRO-VET PRODUCTS, INC.,
AND/OR ROMEO J. JORGE, Respondents.
FACTS
R. Jorge Development Corporation, doing business as Premium Agro-Vet Products,
Inc., is a distributor of veterinary products. It has a national network of area sales
representatives who generally operate singly in their assigned areas. In 1992, it
hired Dr. Rey C. Tambong, as sales representative. He was assigned as area sales
representative for Area 17, comprising South Cotabato, General Santos City, and
Saranggani. Sometime in May 1996, due to his repeated breach of company
policies and insubordination, petitioner was offered another position, i.e., third party
consultant, without a fixed income or percentage of sales.
ISSUE
Is the petitioner dismissed illegally?
HELD
The SC held that the petitioner was not dismissed illegally. The evidence show that
complainants dismissal from the service is valid and for just causes as provided
under Art. 280 of the Labor Code, as amended. The complainant committed fraud
against respondent company when he claimed reimbursement for expenses despite
the fact that he was on leave of absence and when he failed to account for amounts
released to him for remittance to a customer. Evidence also showed that he was on
leave of absence when he failed to account for amounts released to him for
remittance to a customer. Evidence also showed that he is guilty of gross
negligence, allowing company products to expire. The same is tantamount to willful
misconduct and serious disobedience, as he admitted causing loss to the
respondent. His repeated failure to comply with company directives respecting
submission of report and remittances of sales collection also constitute just causes
for his termination.
Petition is denied.

[G.R. No. 165465

September 13, 2006]
LOIDA V. MALABAGO, Petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and PACIFICA AGRIVET SUPPLIES, INC., Respondents.
FACTS
Petitioner Loida V. Malabago was the OIC-Store Supervisor of Pacifica Agrivet
Supplies, Inc. at Torres Branch in Tacloban City. Petitioner was terminated by
respondent Pacifica Inc. for committing a violation of its company policy by taking
stocks from the company without the proper documentation of the items. She did
this not only once but thrice.
The branch clerk and utility man made a written report to Ms. Nimfa Buenafe, Area
Manager, Leyte, regarding petitioners act of taking out stocks without issuing cash
slips or sales invoices. . Acting on the report, the Area Manager issued a
memorandum directing petitioner to explain why she did not make the proper
documentation for the items that she took from the stores stock.
The
memorandum also stated that releasing stocks without any cash slip or charge
invoice is a Type D offense under the company policy, punishable with dismissal.
Petitioner submitted her explanation on the same date. She admitted the
allegations made in the report. She however argued that only releasing stocks to
customers without charge slip or sales invoice is considered as Type D offense under
their company policy. The act is not punishable if the items are released to the
companys employees like herself. She also highlighted the fact that she always
informed her co-workers every time that she took out items from the store to show
her good faith.
The Area Manager issued a memorandum suspending petitioner for fifteen (15)
days pending the investigation of her case. Petitioner received another
memorandum from the Area Manager advising her to report to the Cebu Main Office
on December 3, 1999 in connection with the ongoing investigation of her case.

Petitioner appeared before a panel of investigators at the companys main office on

December 3, 1999. The investigators apprised petitioner of the charges against her
and asked her to explain her side. Petitioner reiterated her position in her letter
dated November 23, 1999.
On December 7, 1999, Assistant Vice President Isabel Bunac issued a memorandum
informing petitioner that private respondent has approved the recommendation of
the investigating committee for her dismissal. Accordingly, petitioners employment
was immediately terminated.
Petitioner filed a complaint for illegal dismissal against private respondent. She also
included in the complaint claims for overtime pay, separation pay, service incentive
leave pay, vacation/sick leaves, moral and exemplary damages, and attorneys fees.
Petitioner alleged that she was deprived of due process before her dismissal. She
also argued that her act of taking out stocks from the store without cash slip or
sales invoice may not be considered as just cause for termination of employment
under the Labor Code as she had no intention to defraud or cause damage to the
company and that she acted in utmost good faith.
The Labor Arbiter dismissed the complaint for lack of merit.
Petitioner appealed to the NLRC. The Commission, however, dismissed the appeal
and affirmed the decision of the Labor Arbiter. Petitioner filed a petition for certiorari
before the Court of Appeals.
The Court of Appeals upheld the validity of petitioners dismissal on the ground of
violation of a company policy, which violation is punishable by dismissal under the
employees manual. It, however, found appropriate the award of separation pay to
petitioner as financial assistance.
ISSUES
1.Whether petitioners dismissal was valid; and
2.Whether the award of separation pay to petitioner is proper.
HELD
We affirm the decision of the Court of Appeals.
First, we find that petitioners dismissal was valid.
Two requisites must concur for the valid termination of an employees services:
(a) the dismissal must be for any of the causes provided for in Article 282 of the
Labor Code; and
(b) the employee must be afforded an opportunity to be heard and defend himself.
In the case at bar, petitioner was dismissed for having been found guilty of taking
out items from the store without proper documentation.
We have held that it is the employers prerogative to prescribe reasonable rules and

regulations necessary or proper for the conduct of its business or concern, to

provide certain disciplinary measures to implement said rules and to assure that the
same be complied with. At the same time, it is the duty of the employee to obey all
reasonable rules, orders, and instructions of the employer, and willful or intentional
disobedience thereto, as a general rule, justifies rescission of the contract of service
and the peremptory dismissal of the employee.
Under Article 282 of the Labor Code, willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his work is a
ground for terminating an employment. Petitioners violation of the companys
regulations regarding the release of its stock constitutes a valid ground for
terminating her services.
Finally, with respect to the award of separation pay, we sustain the ruling of the
Court of Appeals. Under the Labor Code, an employee dismissed for any of the just
causes enumerated in Article 282 of the Labor Code is not entitled to separation
pay. Exceptionally however, separation pay, in the form of financial assistance, is
granted as a measure of social justice even when the employee is validly dismissed
for cause as long as it is not for serious misconduct or those other causes that
reflect on his moral character.
In the case at bar, we agree with the findings of the Court of Appeals that the cause
for petitioners dismissal did not reflect on her moral character.
The appellate court said:
In the instant case, the cause of petitioners dismissal was the violation of company
policy on releasing stocks without any cash slip or charge slip. While petitioner was
found to have violated the said offense, the same however, does not reflect on her
moral character. The Court accords due consideration to petitioners honesty in
informing the branch clerks of the items she took out and her further act of paying
the value of the items. However and to reiterate, her honesty does not absolve her
from any liability she may have incurred for violating a known company policy. The
Court also considers the fact that petitioners record of employment with private
respondent for more than five (5) years is entirely unblemished. Hence, the
consequent award of separation pay.
Thus, we find that the Court of Appeals did not err in rendering its assailed decision.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is
AFFIRMED.

[G.R. No. 171392

October 30, 2006]
RUPERTO SULDAO, Petitioner, vs. CIMECH SYSTEM CONSTRUCTION, INC.
and ENGR. RODOLFO S. LABUCAY, Respondents.

FACTS
Respondent Cimech employed the services of petitioner Ruperto Suldao as a
machinist with a daily wage of P300.00 on a contractual status for a period of five
months, but was later on retained his services, making him a permanent employee.
Petitioner alleged that owing to a dearth in projects being handled by the
respondent, he was ordered by Ms. Elsa Labocay to take a leave of absence from
November 1 to 6, 2002. He reported for work on November 7, 2002 but was again
ordered to take a leave of absence from November 7 to 14, 2002. On November 15,
2002, he was purportedly ordered to make a letter-request for field work transfer
which he complied. The following day, he failed to report back for work because he
was sick. On November 17, 2002, he reported for work but was allegedly barred
from entering by the security guard on duty. On November 21, 2002, he was again
barred from entering the premises. Hence he filed the instant complaint for
constructive dismissal.
On the other hand, respondent alleged that due to lack of available work in the
machine shop, petitioner was temporarily transferred to its fabrication department
sometime in November 2002. Petitioner refused to accept the transfer and insisted
to work as a machinist. Because of petitioners arrogant and unruly behavior, he
was led away by a guard. When petitioner returned for work, he purportedly
demanded a salary increase and wages for the days that he did not work.
Respondent considered the actuations of petitioner tantamount to insubordination,
hence, it suspended the petitioner for six days.
After his suspension on November 28, 2002, petitioner accepted his transfer to the
fabrication department but worked for only one day. During the companys
Christmas party on December 21, 2002, petitioner came and asked for his 13th
month pay. On January 13, 2003, petitioner demanded to get his one day salary
deposit but was told to secure a clearance which he failed to comply. Thereafter,
petitioner filed the instant complaint for illegal dismissal.
ISSUE
Whether or not petitioner was constructively dismissed.
HELD
The SC held that petitioner was constructively dismissed.
Constructive dismissal or a constructive discharge has been defined as quitting
because continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank and a diminution in pay. In the instant case,
there is constructive dismissal because the continued employment of petitioner is
rendered impossible so as to foreclose any choice on his part except to resign from
such employment.
While the decision to transfer employees to other areas of its operations forms part

of the well recognized prerogatives of management, it must be stressed, however,

that the managerial prerogative to transfer personnel must not be exercised with
grave abuse of discretion, bearing in mind the basic elements of justice and fair
play. Having the right should not be confused with the manner in which that right is
exercised. Thus it cannot be used as a subterfuge by the employer to rid himself of
an undesirable worker.
In the instant case, while petitioners transfer was valid, the manner by which
respondent unjustifiably prevented him from returning to work on several occasions
runs counter to the claim of good faith on the part of respondent corporation. By
reporting for work, petitioner manifested his willingness to comply with the
regulations of the corporation and his desire to continue working for the latter.
However, he was barred from entering the premises without any explanation. This
is a clear manifestation of disdain and insensibility on the part of an employer
towards a particular employee and a veritable hallmark of constructive dismissal.
Petition is granted.

FIRST DIVISION
[G.R. No. 158620
October 11, 2006]
DEL MONTE PHILIPPINES, INC. and WARFREDO C. BALANDRA, vs.
Petitioners, MARIANO SALDIVAR, NENA
TIMBAL, VIRGINIO VICERA,
ALFREDO AMONCIO and NAZARIO S. COLASTE, Respondents.
FACTS
The Associated Labor Union (ALU) is the exclusive bargaining agent of plantation
workers of petitioner Del Monte Philippines, Inc. (Del Monte) in Bukidnon where
respondent is an employee and a member of the said union. Timbal was charged by
ALU for disloyalty to the union, particularly for encouraging defections to a rival
union.
Timbal filed an Answer before the Disloyalty Board, denying the allegations in the
complaint and the averments in Artajos Affidavit. Nevertheless, the ALU Disloyalty
Board concluded that Timbal was guilty of acts or conduct inimical to the interests
of ALU. It found that the acts imputed to Timbal were partisan activities, prohibited
since the freedom period had not yet commenced as of that time. Thus, the
Disloyalty Board recommended the expulsion of Timbal from membership in ALU,
and likewise her dismissal from Del Monte in accordance with the Union Security
Clause in the existing CBA between ALU and Del Monte. The Disloyalty Board also
reached the same conclusions as to the co-employees, expressed in separate
resolutions also recommending their expulsion from ALU. Del Monte, then,
terminated Timbal noting that the termination was upon demand of ALU pursuant to
Sections 4 and 5 of Article III of the current Collective Bargaining Agreement.
Timbal filed a complaint against Del Monte and ALU with the NLRC-RAB for illegal

dismissal, unfair labor practice and damages.

ISSUE
Whether or not there is a sufficient cause for the dismissal of a rank-and-file
employee through the enforcement of a Collective Bargaining Agreement between
the employer and the union.
HELD
The SC held that even if the dismissal of an employee is conditioned not on the
grounds for termination under the Labor Code, but pursuant to the provisions of a
CBA, it still is necessary to observe substantive due process in order to validate the
dismissal. As applied to the Labor Code, adherence to substantive due process is a
requisite for a valid determination that just or authorized causes existed to justify
the dismissal. As applied to the dismissals grounded on violations of the CBA,
observance of substantial due process is indispensable in establishing the presence
of the cause or causes for dismissal as provided for in the CBA.
Substantive due process, as it applies to all forms of dismissals, encompasses the
proper presentation and appreciation of evidence to establish that cause under law
exists for the dismissal of an employee. This holds true even if the dismissal is
predicated on particular causes for dismissal established not by the Labor Code, but
by the CBA. Further, in order that any CBA-mandated dismissal may receive the
warrant of the courts and labor tribunals, the causes for dismissal as provided for in
the CBA must satisfy to the evidentiary threshold of the NLRC and the courts.
It is necessary to emphasize these principles since the immutable truth under our
constitutional and labor laws is that no employee can be dismissed without cause.
The Agabon case may have tempered the procedural due process requirements if
just cause for dismissal existed, but in no way did it eliminate the existence of a
legally prescribed cause as a requisite for any dismissal. The fact that a CBA may
provide for additional grounds for dismissal other than those established under the
Labor Code does not detract from the necessity to duly establish the existence of
such grounds before the dismissal may be validated. And even if the employer or, in
this case, the collective bargaining agent, is satisfied that cause has been
established to warrant the dismissal, such satisfaction will be of no consequence if,
upon legal challenge, they are unable to establish before the NLRC or the courts the
presence of such causes.
The Court sees the danger to jurisprudence and the rights of workers in acceding to
Del Montes position. The dismissal for cause of employees must be justified by
substantial evidence, as appreciated by an impartial trier of facts.
The Disloyalty Board may have appreciated Piqueros testimony in its own finding
that Timbal was guilty, yet the said board cannot be considered as a wholly neutral
or dispassionate tribunal since it was constituted by the very organization that
stood as the offended party in the disloyalty charge. Without impugning the
integrity of ALU and the mechanisms it has employed for the internal discipline of its
members, we nonetheless hold that in order that the dismissal of an employee may

be validated by this Court, it is necessary that the grounds for dismissal are justified
by substantial evidence as duly appreciated by an impartial trier of facts. The
existence of Piqueros testimony was appreciated only by the Disloyalty Board, but
not by any of the impartial tribunals which heard Timbals case. The appreciation of
such testimony by the Disloyalty Board without any similar affirmation or
concurrence by the NLRC-RAB, the NLRC, or the Court of Appeals, cannot satisfy the
substantive due process requirement as a means of upholding Timbals dismissal.
All told, The SC sees no error on the part of the Court of Appeals when it held that
Timbal was illegally dismissed.
Petition is denied.

[G.R. No. 165757

October 17, 2006]
GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), EDUARDO FLORES,
BONIFACIO LABACO, SALVADOR VERDEFLOR, PAULITO NIEVES, NILO
AMENAZOR, BENJAMIN BEDUYA, EUTIQUIO MENESES, CENON LABACO,
DANILO MARANAN, ELISEO LASTIMOSO, JAMES MADERAS, EFREN LABACO,
CESARIO BOLSICO, DARIO DECALAIN, SAMMY CEDENO, PRUDENCIO DELA
CRUZ, EDGARDO PASTRANA, DANILO BERMUDEZ, BILLY BLASCO, ROBERTO
PEPINO, RUBEN TENOSO, ORLANDO TUDILLA, JESSIE SACE, JUNE DALAYAT,
FRANCISO LABACO, EDIN DEMAYO, WILFREDO CHENG, JAIME GANDO,
JOSELITO GUANZON, VICTOR DELMUNDO, NATHANIEL PEROY, ROBERTO
VIRTUDAZO, RICARDO HILAGA, RODRIGO FIRMANEZ, RENE VILLA,
VERGELIO ICO, NOLITO PANUNCIA, ALDRONICO BAHILLO, FLORENCIO
LANZADEROS, ROLLY ROTIL, BENJAMIN ESCANO, DOMINADOR ABAINCIA,
ROMEO
LITANG,
NELSON
PETALIO,
MARIO
VILLAMOR,
AGUSTIN
CONSTANTINO, HERMINIO AGUSTIN, VICTORIO NEMENZO, MABINI YARCIA,
PERCY ZOSIMO, ANGELITO DELOS REYES, ADVINCULA ELMEDULAN,
GORGONIO BOLORAN, ALAN MONIN, JESSIE PACALINGGA, and MICHAEL
DACLAG, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
GALAXIE STEEL CORPORATION and RICARDO CHENG, Respondents.
FACTS
Respondent Galaxie Steel is a corporation engaged in the business of manufacturing
and sale of re-bars and steel billets which are used primarily in the construction of
high-rise buildings. On account of serious business losses which occurred in 1997
up to mid-1999 totaling around P127,000,000.00, Galaxie decided to close down its
business operations. Galaxie thus filed on July 30, 1999 a written notice with DOLE
informing the latter of its intended closure and the consequent termination of its
employees effective August 31, 1999. And it posted the notice of closure on the
corporate bulletin board.
On September 8, 1999, petitioners Galaxie Steel Workers Union and Galaxie

employees filed a complaint for illegal dismissal, unfair labor practice, and money
claims against Galaxie.
Petitioners contend that Galaxies closure of business operations was motivated not
by serious business losses but by their anti-union stance; and that Galaxie did not
serve written notices of the closure of business operations upon its employees, it
having merely posted a notice on the company bulletin board.
ISSUE
Whether or not the closure of respondent company valid.
HELD
The SC held that the closure of the respondent company because the reason of the
closure is valid, being that, it is due to serious business reverses. The NLRCs finding
on the legality of the closure should be upheld for it is supported by substantial
evidence consisting of the audited financial statements showing that Galaxie
continuously incurred losses from 1997 up to mid-1999, to wit: P65,753,480.65 in
1997, P48,429,785.89 in 1998, and P13,204,389.97 in 1999; and of the various
demand notices of payments from creditor banks. Besides, the petitioners had not
presented evidence to the contrary; nor did they establish that the closure was
motivated by Galaxies anti-union stance. True, the union was seeking the holding
of a certification election at the time that Galaxie closed its business operation, but
that, without more, was not sufficient to attribute anti-unionism against Galaxie.
However, the mere posting by the company of the notice in its bulletin board does
not meet the requirement of service of notice under Article 283 of the labor Code.
The purpose of the written notice is to inform the employees of the specific date of
termination or closure of business operations, and must be served upon them at
least one month before the date of effectivity to give them sufficient time to make
the necessary arrangements. In order to meet the foregoing purpose, service of the
written notice must be made individually upon each and every employee of the
company.
Nevertheless, the validity of termination of services can exist independently of the
procedural infirmity in the dismissal. Where the dismissal is for an authorized cause,
the lack of statutory due process should not nullify the dismissal, or render it illegal,
or ineffectual. However, the employer should indemnify the employee, in the form
of nominal damages, for the violation of his right to statutory due process.
Decision of the CA is affirmed with modifications.

[G.R. No. 148261

October 9, 2006]

NENUCA A. VELEZ, Petitioner, vs. SHANGRI-LA'S EDSA PLAZA HOTEL,

TERRY KO, COEN MASSELINK and VANESSA SUATENGCO, Respondents.
FACTS
Petitioner Nenuca A. Velez was employed by respondent Edsa Shangri-la Hotel as an
Executive Housekeeper, the highest ranking executive of the Hotel's housekeeping
department, from April 1, 1991 until her dismissal on July 20, 1995. Her assistants
and supervisors raised some issues and problems involving her working relationship
within the department. She agreed to the petitioner that she would go on leave with
pay. While on leave, investigations were conducted on the matter. Ko required the
petitioner to explain her side and provided her with the staff's individual complaints.
Instead of submitting the desired comment, the petitioner, through counsel,
requested for a formal written notice stating the particular acts or omissions for
which she was being charged. Despite the disagreement on the alleged particularity
of the charges and the non-participation of the petitioner in the fact-finding
investigation, the committee proceeded and came out with the following infractions
committed by the petitioner:
1.
Causing dissatisfaction among her staff as a result of her autocratic
management style.
2.
Violating some important provisions of the Hotel's Code of Conduct, to wit:
Section 19. Use of Company Time Premises, etc., for Personal Benefit: Using
company time, premises, vehicles, tools, equipment or materials for personal
benefit. (accusation of dishonesty (when she brought a vacuum cleaner out of the
Hotel's premises and utilized the services of the Hotel contract employees to work
in her house without the knowledge of the Hotel)
Section 20. Unauthorized Possession of Company Property: Unauthorized possession
or use of any company, employee or guest property, hotel supplies.
3.
Violating, on the basis of the testimonies of her staff, the following provisions
of the Hotel's Code of Conduct:
Section 4. Special Treatment or Privilege/ Bribery: Bribery in any form or manner;
soliciting or demanding anything of value in exchange for or in consideration of any
act, decision or service connected with the performance of the employee's duties or
functions.
Section 5. Borrowing, Accepting Money or Soliciting Material favors from supplier/
customers: Borrowing or accepting money, gifts, commission, offers of promises or
soliciting material favors from suppliers or customers with which the Company has a
business relationship for his own personal benefits.
Section 13. Kickbacks: Entering into arrangements with suppliers, customers or
guests to certain kickbacks or other preferential treatment.
On the basis of the above findings, the Hotel management terminated petitioner's
employment due to "loss of confidence".
The petitioner consequently filed with the NLRC-RAB a complaint for illegal dismissal
against the respondents.

ISSUE
Whether or not the petitioner illegally dismissed by the respondent Hotel.
HELD
The SC held that petitioner was not illegally dismissed by the Hotel. She was
dismissed due to breach of trust, otherwise known as loss of trust and confidence.
The petitioner betrayed the trust and confidence reposed on and expected of her
when she brought home the Hotels vacuum cleaner and personally utilized the
services of the Hotel's contract employees to work in her house without the
knowledge of her employer, in violation of the Hotel's Code of Conduct. She used
employees of a labor contractor of the hotel, to clean her house on a regular basis,
is another case of misconduct.
For a dismissal to be valid, two requisites must concur, namely:
(a) the dismissal must be for any of the causes stated in Article 282 of the Labor
Code; and
(b) the employee must have been accorded due process, basic of which is the
opportunity to be heard and to defend himself.
An employer can terminate the services of an employee for just and valid causes,
which must be supported by clear and convincing evidence, and with due process,
meaning that the employee must be given notice with adequate opportunity to be
heard before he is notified of his actual dismissal for cause.
Paragraph (c) of Article 282 of the Labor Code provides that an employer may
terminate an employment for fraud or willful breach by the employee of the trust
reposed in him by his employer or the latters duly authorized representative. A
breach is willful if done intentionally, knowingly and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. The following guidelines for the application of the doctrine of loss of
confidence:
(a)
the loss of confidence should not be simulated;
(b)
it should not be used as a subterfuge for causes which are improper, illegal
or unjustified;
(c)
it should not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and
(d)
it must be genuine, not a mere afterthought to justify an earlier action
taken in bad faith.
The treatment of managerial employees from that of the rank-and-file personnel,
insofar as the application of the doctrine of loss of trust and confidence is
concerned, with respect to rank-and-file personnel, loss of trust and confidence, as
ground for valid dismissal, requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient. But as regards a managerial employee, the mere
existence of a basis for believing that such employee has breached the trust of his

employer would suffice for his dismissal. Hence, in the case of managerial
employees, proof beyond reasonable doubt is not required, albeit the evidence must
be substantial and must establish clearly and convincingly the facts on which the
loss of confidence rests and not on the employer's arbitrariness, whims and caprices
or suspicion, otherwise the employee would eternally remain at the mercy of the
employer.
Petition is dismissed.

[G.R. No. 172401

October 30, 2006]
CARLOS G. AZUL, Petitioner, BANCO FILIPINO SAVINGS AND MORTGAGE
BANK, Respondent.
FACTS
Petitioner Carlos G. Azul was the branch accountant of respondent Banco Filipino
-Iriga branch. Upon audit, the bank found that petitioner was involved in kiting
operations by treating check deposits as cash and allowing withdrawals from
uncollected check deposits. The audit reported a total loss of P4,469,500.00.
An Ad Hoc Committee conducted a formal investigation, during which petitioner did

not deny his participation in the operations but insisted that he was merely
following the instructions of Danilo Disuanco, the branch manager. The latter
allegedly instructed petitioner to use his password and ID to release the float days,
or the number of days for checks to be cleared for withdrawal. Petitioner denied
that he profited from the prohibited transactions. After the investigation, the bank
terminated petitioners services and forfeited his benefits pursuant to Section IX of
the banks Employee Guidelines.
Petitioner then filed with the NLR-RAB a complaint for illegal dismissal. He claims
that petitioner did not willfully and knowingly connive with Disuanco because it was
the latter who, by himself, engineered the kiting operations using his managerial
powers, discretion and strong personality.
ISSUE
Whether petitioner was illegally dismissed.
HELD
The SC said that there is substantial evidence showing that there was valid cause
for the bank to dismiss petitioners employment for loss of trust and confidence.
Petitioner was a bank accountant, which is a position of trust and confidence. The
amount involved is significant, almost P4.5 million. Petitioner admitted that he
allowed his ID and password to be used in the kiting operations. This admission is
evidence of the highest order and does not require further proof. It binds the person
who makes the same, and absent any showing that this was made thru palpable
mistake, no amount of rationalization can offset it.
By releasing the float days of uncleared checks, he was well aware that the same
would not only put the bank to undue risk but also constitutes a blatant violation of
banking procedure. Thus, his act constituted willful breach of the trust reposed on
him as a bank officer. We might have reached a contrary conclusion favorable to
private respondent had he committed the infraction by inadvertence or through
simple negligence.
Petition is denied.

[G.R. No. 160618

November 2, 2006]
DENNIS D. SY, Petitioner, vs. METROPOLITAN BANK & TRUST COMPANY,
Respondent.
FACTS
Petitioner Dennis D. Sy, herein substituted by his heirs Soledad Y. Sy, Ronald Allan Y.
Sy, and Melinda S. Pompenada, was the branch manager in Bajada, Davao City , of
respondent Metrobank.
On November 10 and 15, 1999, the bank released the results of the audit conducted
in its Bajada branch. The bank alleged that Sy allowed spouses Gorgonio and
Elizabeth Ong to conduct kiting activities in their account with the bank. The bank
placed Sy under preventive suspension and gave him 48 hours to submit a written
explanation. In response, Sy wrote a letter explaining that he only made a wrong
credit judgment.
Not satisfied with his answer, the bank notified Sy of other alleged violations of
company policies, to wit:
1.
Granting of DBP-Clean accommodations totaling [P9.11M] from March to
April 1999 to Sps. Samuel Aquino and Charito Sy-Aquino, your [brother-in-law] and
sister, respectively. This is in patent abuse of authority as you have knowledge that
your branchs lending authority has been suspended since January 1998.
2.
Purchasing checks, Philam Bank and Bank of Commerce under Account
Nos. 001103-00467 and 00-9014-31103-4 which are payable to Landcraft Transport
Services a company owned by your aforementioned relatives. Please note that the
signatories to the said checks are also your aforementioned sister and [brother-inlaw]. This has allowed your relatives to conduct kiting activities through your branch
with your knowledge and consent.
In reply, Sy explained in writing that the accommodation granted to spouses Samuel

Aquino and Charito Sy-Aquino was only P650,000, not P9.11M as claimed by the
bank. He added that the spouses even offered a parcel of land as collateral and
were willing to sell a vehicle in settlement of their obligation with the bank.
Unconvinced, the bank dismissed Sy. He then filed a complaint for illegal dismissal.
Petitioner claims that the alleged anomalous transactions were not at all prohibited,
but were allowed on a case-to-case basis; they were, at worst, simple errors of
judgment on his part. Respondent bank, however, counters that petitioner Sy
committed acts of fraud, dishonesty, and willful breach of the trust reposed in him,
justifying his dismissal.
ISSUE
Whether or not petitioner was illegally terminated.
HELD
The SC held that petitioner Sy was validly dismissed on the ground of fraud and
willful breach of trust under Article 282 of the Labor Code. Records show that as
bank manager, he authorized kiting or drawing of checks against uncollected
funds in wanton violation of the banks policies. It was sufficient basis for the bank
to lose trust in him.
Unlike a rank-and-file worker, where breach of trust as a ground for valid dismissal
requires proof of involvement in the alleged anomaly and where mere
uncorroborated accusation by the employer will not suffice, the sheer existence of a
basis for believing that the employers trust has been breached is enough for the
dismissal of a managerial employee.
As for the requirement of due process, records show that it has been fully satisfied
in the instant case. The bank had complied with the two-notice requirement, i.e.: (a)
a written notice of the cause for his dismissal to afford him ample opportunity to be
heard and to defend himself with the assistance of counsel, if he so desires; and (b)
a written notice of the decision to terminate him, stating clearly the reason therefor.
Petition is denied.

[G.R. NO. 154006

November 2, 2006]
STAR PAPER CORPORATION, Petitioner, vs. CARLITO ESPIRITU, TOMAS
PAGUIRIGAN, TEODORO SUBAGAN, LUISITO MAGNAMPO, Respondents.
FACTS
Complainants worked in respondents paper manufacturing business in various
capacities as machine operator, bookbinding head and/or helper. They claimed
that, for refusal to sign for the ratification of an addendum to an existing Collective
Bargaining Agreement which was intended to effect a reduction in their leave
benefits of fifteen (15) days for every year of service, they were subjected to acts of
harassment such that, on November 11, 1998, when they reported for work, they
were not allowed entry by respondent companys security guard and that, they
were instead instructed by the companys Personnel Manager, Mr. Jessie Ongsitco,
to receive a Memorandum of Transfer which they refused. Complainants alleged
that their transfer to a provincial post constituted a case of constructive dismissal.
Respondents denied the charge, averring that the transfer had, for its sole
consideration, the best interest of the company and that it was an undertaking
which the complainants agreed when they signed their employment contracts with
the respondent company.
Respondents further alleged that there was no reason to get back at the
complainants on account of their refusal to sign the adverted signature sheet for the
ratification of an Addendum to the 1995 CBA, since the majority of the employees in
the bargaining unit had already ratified the said addendum; that during their
employment, complainants committed several offenses in that, Tungpalan failed to
report for work on March 12, 1998 then broke a breaker in August 1998, signed an
overtime form but did not render overtime work, and had several unexcused
absences; Espiritu was also cited for a number of tardiness and absences; that
Regalado was suspended for seven (7) days in November 1997 for absences, issued
a memorandum for not wearing the proper uniform and for tardiness likewise; and
that Paguirigan in 1998 had ten (10) unexcused absences and was suspended twice
on such account.
ISSUE
Whether or not respondents were constructively dismissed.
HELD
The SC held that respondents were constructively dismissed. It must be stressed
that where an employee complains of constructive dismissal, it is the employer who
bears the burden of proving that the transfer of an employee is for just and valid

grounds, such as genuine business necessity, and such transfer is not unreasonable,
inconvenient, or prejudicial to the employee. An employers failure to discharge
such burden would make him liable for unlawful contructive dismissal.
In this case, the main argument of petitioner is that the transfers were an act of
management right and prerogative and respondents should not complain about
such transfers since from the beginning of their employment, they signified their
willingness to be transferred to any of petitioners branches as shown in the
Information Sheet each of them accomplished as a pre-requisite for employment.
Be that as it may, petitioner must show that the transfer was done in good faith.
The management prerogative to transfer personnel must be exercised without
grave abuse of discretion and putting to mind the basic elements of justice and fair
play. There must be no showing that it is unnecessary, inconvenient and prejudicial
to the displaced employee.
Indeed, the combined circumstances of the immediate transfer of respondents to
far-off provinces after their refusal to sign the signature sheet of the document for
the ratification of the Addendum to the Collective Bargaining Agreement of 1995,
and petitioners emphasis on respondents alleged previous infractions at work,
point to the fact that the transfers are motivated by ill-will on the part of petitioner.
Petitioners order for respondents to report for work in petitioners provincial
branches on the very same day that they were served with the Memo of Transfer is
extremely unreasonable as the relocation would unduly inconvenience not only
respondents but their respective families. Petitioner, therefore, failed to sufficiently
prove that respondents transfer is for a just and valid cause and not unreasonable,
inconvenient, or prejudicial to the employee, making it liable for constructive
dismissal.
Petition is denied.

[G.R. No. 152232

February 26, 2007]
GREG ANTHONY L. CAEDA, Petitioner, vs. PHILIPPINE AIRLINES, INC.,
Respondent.
FACTS
Respondent Philippine Airlines, Inc. (PAL) maintained a daily petty cash fund of
P250,000 in the hands of one of its cashiers, petitioner Greg Anthony Caeda. On

July 9, 1996, the fund was audited and found short of P34,338.69.
PALs investigation found petitioner liable for misappropriating company funds. His
employment was terminated effective July 29, 1996. PAL filed a complaint for estafa
and falsification against petitioner in the City Prosecution Office of Makati City. The
case was, however, dismissed.
Petitioner filed a case for illegal dismissal with the labor arbiter where the latter
ruled in favor of Caeda.
During the course of theist appeal, PAL commenced its retrenchment program in
June 1998 brought about by the heavy losses caused by then prevailing Asian
economic crisis and the pilots strike. Out of a workforce of 14,000, it retained only
8,000 employees. One of the positions abolished was petitioners. Since the position
had ceased to exist, reinstatement became impossible.
ISSUE
Whether or not petitioner was illegally dismissed.
HELD
The SC held that petitioner was validly dismissed.
To constitute a valid dismissal from employment, two requisites must be met,
namely: (1) it must be for a just or authorized cause and (2) the employee must be
afforded due process. The alleged violation of the first requirement lies at the root
of this controversy.
Article 282 of the Labor Code allows an employer to dismiss
an employee for willful breach of trust or loss of confidence. The basic premise for
dismissal on this ground is that the employee concerned holds a position of trust.
A special and unique employment relationship exists between a corporation and its
cashier. More than most key positions, that of cashier calls for utmost trust and
confidence. It is the breach of this trust that results in an employers loss of
confidence in the employee.
In dismissing a cashier on the ground of loss of confidence, it is sufficient that there
is some basis for the same or that the employer has a reasonable ground to believe
that the employee is responsible for the misconduct, thus making him unworthy of
the trust and confidence reposed in him. If there is sufficient evidence to show that
the employer has ample reason to distrust the employee, the labor tribunal cannot
justly deny the employer the authority to dismiss him.
The dismissal of the criminal complaint by the prosecutors office could not have
automatically negated loss of confidence as a basis for administrative liability. It
was enough that PAL had a reasonable ground to believe that petitioner was
responsible for the shortage and that he was unworthy of the trust and confidence
in him. This was so because, in holding a position requiring full trust and
confidence, he gave up some of the rigid guarantees available to ordinary

employees. Infractions which, if committed by others, might be overlooked or

condoned may be penalized with a more severe disciplinary action precisely
because of the special trust and confidence given the employee. A companys
resort to self-defense, in the form of termination, would then be more easily
justified.
As a rule this Court leans over backwards to help workers and employees continue
in their employment. We have mitigated penalties imposed by management on
erring employees and ordered employers to reinstate workers who have been
punished enough through suspension. However, breach of trust and confidence and
acts of dishonesty and infidelity in the handling of funds and properties are an
entirely different matter.
It would be most unfair to require an employer to continue employing as its cashier
a person whom it reasonably believes is no longer capable of giving full and
wholehearted trustworthiness in the stewardship of company funds.
Petition is denied.

[G.R. No. 172062

February 21, 2007]
LORENZO MA. D.G. AGUILAR, Petitioner, vs. BURGER MACHINE HOLDINGS
CORPORATION, OSCAR E. RODRIGUEZ and MELCHOR V. DE JESUS, JR.,
Respondents.
FACTS
After the lower court ruled that petitioner was illegally dismissed and ordered
respondent company to reinstate petitioner, respondent company filed a motion for
reconsideration praying that instead of reinstatement, the petitioner will just be
paid his separation pay.
ISSUE
Whether or not reinstatement is proper for the instant case.
HELD
The SC held that it would be best to award separation pay instead of reinstatement,
in view of the strained relations between petitioner and respondents. In fact, while
petitioner prayed for reinstatement, he also admitted that there is a strained

relationship now prevailing between him and respondents. Under the doctrine of
strained relations, the payment of separation pay has been considered an
acceptable alternative to reinstatement when the latter option is no longer desirable
or viable.
In view of the illegal dismissal of petitioner, he is entitled to separation pay in lieu of
reinstatement for the reason above stated, computed from the date of petitioners
employment until finality of our decision; and backwages to be computed from the
date he was constructively dismissed, i.e., July 17, 2002, up to the finality of this
decision, less the amounts paid in accordance with his payroll reinstatement. While
the discretion to choose the mode of reinstatement lies with the employer, the
exercise thereof by respondents in the instant case was
a mockery of the true
import of actual reinstatement, considering that petitioner was reinstated as a
Reserved Franchise Manager and was made to perform demeaning jobs. Moreover,
payroll reinstatement is proper in this case because the physical presence of
petitioner in the office might have worsened the already strained relations between
him and respondents, particularly, his immediate superior respondent De Jesus, to
whom he will directly report every day, as a Manager Reserve.
Petition is partly granted.

[G.R. No. 162053

March 7, 2007]
ST. LUKES MEDICAL CENTER EMPLOYEES ASSOCIATION-AFW (SLMCEAAFW) AND MARIBEL S. SANTOS, Petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION (NLRC) AND ST. LUKES MEDICAL CENTER, INC.,
Respondents.
FACTS
Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology
department of private respondent St. Lukes Medical Center, Inc. On April 22, 1992,
Congress passed and enacted Republic Act No. 7431 known as the Radiologic
Technology Act of 1992. Said law requires that no person shall practice or offer to
practice as a radiology and/or x-ray technologist in the Philippines without having
obtained the proper certificate of registration from the Board of Radiologic
Technology.
St. Lukes issued a final notice to all practitioners of Radiologic Technology to
comply with the requirement of Republic Act No. 7431 by December 31, 1995;
otherwise, the unlicensed employee will be transferred to an area which does not
require a license to practice if a slot is available. Petitioner was issued three
memorandum on different dates requiring her to comply with Republic Act. No. 7431
by taking and passing the forthcoming examination scheduled in June 1997;
otherwise, private respondent SLMC may be compelled to retire her from
employment should there be no other position available where she may be
absorbed. Due to the failure of Santos to comply with such requirement, St. Lukes
issued a notice to petitioner informing the latter that the management of private
respondent SLMC has approved her retirement in lieu of separation pay. The
Personnel Manager of St. Luke also issued a Notice of Separation from the
Company to petitioner Santos in view of the latters refusal to accept St. Lukes
offer for early retirement. The notice also states that while said private respondent
exerted its efforts to transfer petitioner Maribel S. Santos to other position/s, her
qualifications do not fit with any of the present vacant positions in the hospital.
Petitioner Santos filed a complaint against private respondent SLMC for illegal
dismissal.
Private respondent St. Lukes Medical Center, Inc. argues that petitioner was legally
and validly terminated in accordance with Republic Act Nos. 4226 and 7431; that its
decision to terminate petitioner Santos was made in good faith and was not the
result of unfair discrimination; and that petitioner Santos non-transfer to another
position in the SLMC was a valid exercise of management prerogative.

ISSUE
Whether or not petitioner Santos was illegally dismissed.
HELD
The SC held that petitioner was validly dismissed.
The requirement for a certificate of registration is set forth under R.A. No. 7431
thus:
Sec. 15.
Requirement for the Practice of Radiologic Technology and X-ray
Technology. Unless exempt from the examinations under Sections 16 and 17
hereof, no person shall practice or offer to practice as a radiologic and/or x-ray
technologist in the Philippines without having obtained the proper certificate of
registration from the Board.
It is significant to note that petitioners expressly concede that the sole cause for
petitioner Santos separation from work is her failure to pass the board licensure
exam for X-ray technicians, a precondition for obtaining the certificate of
registration from the Board. It is argued, though, that petitioner Santos failure to
comply with the certification requirement did not constitute just cause for
termination as it violated her constitutional right to security of tenure.
While the right of workers to security of tenure is guaranteed by the Constitution, its
exercise may be reasonably regulated pursuant to the police power of the State to
safeguard health, morals, peace, education, order, safety, and the general welfare
of the people. Consequently, persons who desire to engage in the learned
professions requiring scientific or technical knowledge may be required to take an
examination as a prerequisite to engaging in their chosen careers. The most
concrete example of this would be in the field of medicine, the practice of which in
all its branches has been closely regulated by the State. It has long been recognized
that the regulation of this field is a reasonable method of protecting the health and
safety of the public to protect the public from the potentially deadly effects of
incompetence and ignorance among those who would practice medicine. The same
rationale applies in the regulation of the practice of radiologic and x-ray technology.
The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the
States inherent police power. It should be noted that the police power embraces
the power to prescribe regulations to promote the health, morals, educations, good
order, safety or general welfare of the people. The state is justified in prescribing
the specific requirements for x-ray technicians and/or any other professions
connected with the health and safety of its citizens. Respondent-appellee being
engaged in the hospital and health care business, is a proper subject of the cited
law; thus, having in mind the legal requirements of these laws, the latter cannot
close its eyes and let complainant-appellants private interest override public
interest.
No malice or ill-will can be imputed upon private respondent as the separation of
petitioner Santos was undertaken by it conformably to an existing statute. It is

undeniable that her continued employment without the required Board certification
exposed the hospital to possible sanctions and even to a revocation of its license to
operate. Certainly, private respondent could not be expected to retain petitioner
Santos despite the inimical threat posed by the latter to its business. This
notwithstanding, the records bear out the fact that petitioner Santos was given
ample opportunity to qualify for the position and was sufficiently warned that her
failure to do so would result in her separation from work in the event there were no
other vacant positions to which she could be transferred. Despite these warnings,
petitioner Santos was still unable to comply and pass the required exam. To
reiterate, the requirement for Board certification was set by statute. Justice, fairness
and due process demand that an employer should not be penalized for situations
where it had no participation or control.
While our laws endeavor to give life to the constitutional policy on social justice and
the protection of labor, it does not mean that every labor dispute will be decided in
favor of the workers. The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play. Labor laws, to
be sure, do not authorize interference with the employer's judgment in the conduct
of the latters business. Private respondent is free to determine, using its own
discretion and business judgment, all elements of employment, "from hiring to
firing" except in cases of unlawful discrimination or those which may be provided by
law. None of these exceptions is present in the instant case.
Petition is denied.

[G.R. Nos. 170384-85

March 9, 2007]
LORNA DISING PUNZAL, Petitioner, ETSI TECHNOLOGIES, INC., WERNER
GEISERT, and CARMELO D. REMUDARO, Respondents.
FACTS
Petitioner, Lorna Dising Punzal, had been working for respondent, ETSI Technologies,
Inc. (ETSI), holding the position of Department Secretary. On October 30, 2001,
petitioner sent an electronic mail (e-mail) message to her officemates announcing
the holding of a Halloween party that was to be held in the office the following day.
Petitioners immediate superior, Remorado, who was one of those to whom the email message was sent, advised petitioner to first secure the approval of the Senior
Vice President Geisert for the holding of the party in the office. Petitioner soon
learned that Geisert did not approve of the plan to hold a party in the office. She
thereupon sent also on October 30, 2001 another e-mail message to her
officemates, which reads:
Sorry for the mail that I sent you, unfortunately the SVP of ETSI Technologies, Inc.

did not agree to our idea to bring our children in the office for the TRICK or
TREATING. He was so unfairpara bang palagi siyang iniisahan sa trabahobakit
most of the parents na mag-joined ang anak ay naka-VL naman. Anyway, solohin
na lang niya bukas ang office.
Anyway, to those parents who would like to bring their Kids in Megamall there will
be Trick or Treating at Mc Donalds Megamall Bldg. A at 10:00 AM tomorrow and lets
not spoil the fun for our kids.
Petitioner was then informed that Geisert got a copy of her e-mail message and
that he required her to explain in writing within 48 hours why she should not be
given disciplinary action for committing Article IV, No. 5 & 8 Improper conduct or
acts of discourtesy or disrespect and Making malicious statements concerning
Company Officer, whereby such offenses may be subject to suspension to
termination depending upon the gravity of the offense/s as specified in our ETSIs
Code of Conduct and Discipline.
In her explanation she contended that she had no malicious intention in sending the
second e-mail message and that she never expected such kind of words can be
called as acts of discourtesy or disrespect. A conference was also conducted
where petitioner to give her a chance to explain her side. Finding her explanation
not acceptable, the company sent a letter to the petitioner terminating her services.
Petitioner then filed before the NLRC a complaint for illegal dismissal against ETSI,
Geisert, and Remudaro. Petitioner posits that her second e-mail message was
merely an exercise of her right to freedom of expression without any malice on her
part. On the other hand, ETSI, et al. maintain that petitioners second e-mail
message was tainted with bad faith and constituted a grave violation of the
companys code of discipline.
ISSUE
Whether or not petitioner was illegally dismissed by respondent company.

HELD
The SC held that petitioner was validly dismissed. A scrutiny of petitioners second
e-mail message shows that her remarks were not merely an expression of her
opinion about Geiserts decision; they were directed against Geisert himself, viz:
He was so unfair . . . para bang palagi siyang iniisahan sa trabaho. . . Anyway,
solohin na lang niya bukas ang office. Petitioner, in her closing statement even
invited her co-workers to join a trick or treating activity at another venue during
office hours and there is no showing that it was declared a holiday, encouraging
them to ignore Geiserts authority. Additionally, petitioner sent the e-mail message
in reaction to Geiserts decision which he had all the right to make. That it has been
a tradition in ETSI to celebrate occasions such as Christmas, birthdays, Halloween,
and others does not remove Geiserts prerogative to approve or disapprove plans to

hold such celebrations in office premises and during company time.

It is settled that it is the prerogative of management to regulate, according to its
discretion and judgment, all aspects of employment. This flows from the established
rule that labor law does not authorize the substitution of the judgment of the
employer in the conduct of its business. Such management prerogative may be
availed of without fear of any liability so long as it is exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of employees under special laws or valid agreement and
are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or
out of malice or spite.
In the case at bar, the disapproval of the plan to hold the Halloween partymay not
be considered to have been actuated by bad faith.
It may not be ignored that
holding a trick or treat party in the office premises of respondent ETSI would
certainly affect the operations of the office, since children will be freely roaming
around the office premises, things may get misplaced and the noise in the office will
simply be too hard to ignore.
Given the reasonableness of Geiserts decision that provoked petitioner to send the
second e-mail message, the message resounds of subversion and undermines the
authority and credibility of management and petitioner displayed a tendency to
act without managements approval, and even against managements will.
Moreover, in circulating the second e-mail message, petitioner violated Articles III
(8) and IV (5) of ETSIs Code of Conduct on making false or malicious statements
concerning the Company, its officers and employees or its products and services
and improper conduct or acts of discourtesy or disrespect to fellow employees,
visitors, guests, clients, at any time.
In fine, petitioner, having been dismissed for just cause, is neither entitled to
reinstatement nor to backwages.
However, since ETSI failed to inform petitioner of her right to be represented by
counsel during the conference with ETSI, petitioner is entitled to an award of
nominal damage, which is fixed at P30,000.00
Petition is partly granted.

[G.R. No. 1645

March 28, 2007]
PILAR ESPINA, ELEANOR G. AQUINO, LORENE C. BARNUEVO, MARICRIS S. J.
BANDINO, JULIO M. PETALIO, JR., NOEL T. DE BORJA, REMEGIO P. BASCO,
MATEO D. DEOCAREZA, EMILIANO A. EBREO, BENJAMIN PAZ, LEONORA PAZ,
CLAUDIO DE LOS REYES, LEANDRO R. CELIS, PATERNO FERNANDEZ,
ANICETO M. RODRIGUEZ, DONATO M. PUNZALAN, LOURDES ALFONSO Q.,
ALLAN PANLILIO, DAISY V. ARCEO, ALEJANDRO D. PASCUAL, MA. CORAZON
T. BAJO, ARNOLD M. BLANCO, CRISTITO S. ABELA, DIOSCORO FAJANILAG,
and AGUSTIN WONG, Petitioners, vs. HON. COURT OF APPEALS, MONDE
M.Y. SAN BISCUIT CORP., M.Y. SAN BISCUIT INC., MRS. MHEW WHA LIM and
MR. KENG SUN MAR,
Respondents.
FACTS
Respondent MY San informed its employees and union that they intend to sell the
company to respondent Monde and that MY San will terminate their employment
and payment of their separation pay will be in accordance with the law. In
connection with this event, the union and MY San agreed that a list of MY San
employees will be submitted to respondent Monde purposes of rehiring if said
employee applies and qualifies, subject to such criteria as the new corporation may
impose.
Respondent Monde then commenced its operations. All the former
employees of respondent M.Y. San who were terminated upon its closure and who
applied and qualified for probationary employment, including petitioners herein,
started working for respondent Monde on a contractual basis for a period of six
months. Subsequently, petitioners were terminated on various dates.
Thus, petitioners filed a complaint for illegal dismissal and underpayment, damages
and attorneys fees and litigation cost with the NLRC- RAB.
Petitioners alleged that respondent My San stopped its operations, but three days

after, resumed its operation with the same top management running the business;
the union officers, in exchange for being re-hired, acceded to bust the union; and
the sale of respondent M.Y. San to respondent Monde was merely a ploy to
circumvent the provisions of the Labor Code.
Respondent M.Y. San insisted that its employer-employee relationship with
petitioners had ceased to exist, thus, the complaint for illegal dismissal against it
could no longer prosper. It further contended that the power to hire and fire
employees is now lodged in the new business owner, respondent Monde.
On the other hand, respondent Monde alleged that petitioners had no cause of
action against it. Monde claimed that the respective supervisors of Monde
conducted an evaluation of the performance of all its probationary employees,
including herein complainants, to determine their fitness to qualify as regular
employees therein. The probationary employees of Monde who passed the
performance appraisal and who qualified as regular employees thereof were
accordingly appointed as such. Out of the one hundred sixteen (116) probationary
employees engaged by respondent Monde, a total of seventy-four employees
qualified for regular employment. For those who did not qualify for regular
employment, including herein complainants, respondent Monde gave complainants
the remainder of their probationary period within which to prove their qualification
for regular employment therewith. Notwithstanding the opportunity given to herein
complainants to improve their performance to qualify for regular employment with
Monde, complainants either: (a) resigned from their employment with Monde; (b)
refused to report for work on 02 May 2001 and on the days following; or (c) failed to
qualify for regular employment at the expiration of the period of their probationary
employment.
ISSUE
Whether or not petitioners were illegally dismissed.
HELD
The SC held that petitioners were validly dismissed. Petitioners were validly
separated from respondent MY San.
Work is a necessity that has economic significance deserving legal protection. The
provisions on social justice and protection to labor in the Constitution dictate so.
However, employers are also accorded rights and privileges to assure their selfdetermination and independence and reasonable return of capital. This mass of
privileges comprises the so-called management prerogatives. One of the rights
accorded an employer is the right to close an establishment or undertaking. Just as
no law forces anyone to go into business, no law can compel anybody to continue
the same. The right to close the operations of an establishment or undertaking is
explicitly recognized under the Labor Code as one of the authorized causes in
terminating employment of workers, the only limitation being that the closure must
not be for the purpose of circumventing the provisions on terminations of
employment embodied in article 283 of the Labor Code.

Under Article 283 of the Labor Code, three requirements are necessary for a valid
cessation of business operations, namely:
(1)
service of a written notice to the employees and to the DOLE at least
one (1) month before the intended date thereof;
(2)
the cessation must be bona fide in character; and
(3)
payment to the employees of termination pay amounting to at least
one half (1/2) month pay for every year of service, or one (1) month pay, whichever
is higher.
The records reveal that private respondent M.Y. San complied with the aforecited
requirements. M.Y. San employees were adequately informed of the intended
business closure and a written notice to the Regional Director of DOLE was filed by
respondent M.Y. San, informing the DOLE that M.Y. San will be closed effective 31
January 2001.
The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must be bona fide in character. And the burden of proving
such falls upon the employer.
Respondent M.Y. San in good faith complied with the requirements for closure; sold
and conveyed all its assets to respondent Monde for valuable consideration; and
there were no previous labor problems. It has been ruled that an employer may
adopt policies or changes or adjustments in the operations to insure profit to itself
or protect the investments of its stockholders, and in the exercise of such
management prerogative, the employer may merge or consolidate its business with
another, or sell or dispose all or substantially all of its assets and properties which
may bring about the dismissal or termination of its employees in the process.
Petitioners were also validly dismissed by respondent Monde.
There is no dispute that petitioners were probationary employees as stated in their
individual contracts of employment with respondent Monde. While petitioners were
only probationary employees who do not enjoy permanent status, nonetheless, they
were still entitled to the constitutional protection of security of tenure. As may be
gleaned in article 281 of the Labor Code, their employment may only be terminated
for a valid and just cause or for failing to qualify as a regular employee in
accordance with the reasonable standards made known to him by the employer at
the time of engagement and after being accorded due process.
Procedural due process requires that the employee be given two written notices
before he is terminated, consisting of a notice which apprises the employee of the
particular acts/omissions for which the dismissal is sought and the subsequent
notice which informs the employee of the employers decision to dismiss him.
In the case at bar, petitioners were notified of the standards they have to meet to
qualify as regular employees of respondent Monde when the latter apprised them,
at the start of their employment.
Some of the petitioners in this case voluntarily resigned (Barnuevo, Reyes, Ollorsa,

and Cerbito), some were validly dismissed because of Absence Without Leave
(Espina, Aquino, Bandino, Petalio, Jr., Ebreo, B. Paz, Deocareza and L. Paz), while
some others were terminated because they failed to qualify as regular employees in
accordance with the terms and conditions of their probationary employment with
respondent Monde (Celis, Fernandez, Rodriguez, Punzalan, Lourdes Alfonso Q.,
Panlilio, Arceo, Pascual, Bajo, Blanco, Abela, Fajanilag, and Wong).
It must be noted that petitioners were terminated prior to the expiration of their
probationary contracts. As probationary employees, they enjoyed only temporary
employment status. In general terms, this meant that they were terminable
anytime, permanent employment not having been attained in the meantime. The
employer could well decide if he no longer needed the probationarys service or his
performance fell short of expectations, as a probationary employee is one who, for
a given period of time, is under observation and evaluation to determine whether or
not he is qualified for permanent employment. During the probationary period, the
employer is given the opportunity to observe the skill, competence and attitude of
the employee to determine if he has the qualification to meet the reasonable
standards for permanent employment.
The length of time is immaterial in
determining the correlative rights of both the employer and the employee in dealing
with each other during said period. Thus, as long as the termination was made
before the expiration of the six-month probationary period, the employer was well
within his rights to sever the employer-employee relationship.
A contrary
interpretation would defeat the clear meaning of the term probationary.
Terminating employment is one of respondent Mondes prerogatives.
As an
employer, respondent Monde has the right to regulate, according to its discretion
and best judgment, including work assignment, working methods, processes to be
followed, working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of workers. Management has the
prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations.
This Court has upheld a companys management prerogatives so long as they are
exercised in good faith for the advancement of the employers interest and not for
the purpose of defeating or circumventing the rights of the employees under special
laws and valid agreements.
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 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 interest.
Thus, respondent Monde exercised in good faith its management prerogative as
there is no dispute that petitioners had been habitually absent, neglectful of their
work, and rendered unsatisfactory service, to the damage and prejudice of the
company.

The decision of the NLRC was affirmed.

[G.R. No. 169731
March 28, 2007]
ALFREDO BARBA and RENATO GONZALES, Petitioners, vs. HON. COURT OF
APPEALS, NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE
AIRLINES INC., Respondents.
FACTS
Petitioners Barba and Gonzales were terminated from their employment with
respondent Philippine Airlines Inc. (PAL). In the case of Barba, he was terminated
because of Fraud because recorded in the latters baggage tag that Nunez had
checked-in four pieces of baggage, with a total weight of 18 kilos, which was later
found out to be 55 kilos. On the other hand, Gonzales was terminated because of
corruption/extortion/bribery when he offered to have a passengers excess baggage
accommodated for a fee of US$100, for which no receipt would be issued.
The Philippine Airlines Employees Association (PALEA), in behalf of Gonzales and
Barba, filed a complaint against PAL for illegal dismissal before the NLRC.
ISSUE
Whether or not the offenses of petitioners merit the penalty of dismissal.
HELD
The SC held that they are validly dismissed.
Although as a rule this Court leans over backwards to help workers and employees
continue with their employment or to mitigate the penalty imposed on them, acts of
dishonesty in the handling of company property are a different matter. The acts of
Gonzales in offering a passenger the services of the airlines, without compensating
for the same, while at the same time exacting a fee for himself, are undoubtedly
inimical to the interests of his employer PAL. Moreover, his reprehensible act badly
reflects on the reputation of PAL and puts into question the honesty and integrity of
PALs employees.
Such act would obviously merit the penalty of dismissal.
Gonzales attempt to make a profit for himself out of cheating his employer cannot
be mitigated by the fact that it was his first offense, or even his six years of service.
Like Gonzales offense, Barbas act in incorrectly recording the baggage weight, was
clearly an act inimical to the interests of their employer, and of manifest dishonesty
and disregard of his duties, which deserves the supreme penalty of dismissal.
Section 282(c) of the Labor Code, sanctions the dismissal of employees for fraud or
the willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative.
The offenses of both Barba and Gonzales, in compromising the integrity of company
records for their personal reasons, are made more reprehensible because of the
danger their acts pose on the safety of the passengers and the crew. The proper

recording of the weight of cargo is crucial in determining how the cargo would be
distributed in each aircraft. A resulting error could imperil valuable equipment,
even the lives of the passengers and crews. Furthermore, the blatant dishonesty of
their acts has tainted the reputations of the countless honest employees working in
our flagship airlines.
The dismissal of a dishonest employee is as much in the interests of labor as it is of
management. The labor force in any company is protected and the workers
security of tenure strengthened when pilferage of equipment, goods, and products
which endangers the viability of an employer and, therefore, the workers continued
employment is minimized or eliminated and consequently labor-management
relations based on mutual trust and confidence are promoted.
Petition is denied.

[G.R. No. 169812

February 23, 2007]
FEDERITO B. PIDO, Petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, CHERUBIM SECURITY AND GENERAL SERVICES, INC., AND
ROSARIO K. BALAIS, Respondents.
FACTS
Federito B. Pido was employed by Cherubim Security and General Services, Inc. as a
security guard. He was assigned at the Ayala Museum, but was later transferred to
the Tower and Exchange Plaza of Ayala Center where he worked as a computer
operator at the Console Room. Like the other guards deployed by respondent at the
Ayala Center, petitioner was under the operational control and supervision of the
Ayala Security Force (ASF) of the Ayala Group of Companies.
On January 21, 2000, petitioner had an altercation with Richard Alcantara of the
ASF, arising from a statement of Alcantara that petitioners security license for his .
38 caliber revolver service firearm and duty detail order had already expired.
Alcantara filed a complaint for Gross Misconduct, recommended that petitioner be

relieved from his post, and that immediate disciplinary action against him be taken.
Respondent thus conducted an investigation on January 25, 2000 during which
petitioner echoed his tale in his January 21, 2000 information report.
Petitioner was later to claim that he was suspended by respondent following his
argument with Alcantara.
As more than nine months had elapsed since the investigation was conducted by
respondent with no categorical findings thereon made, petitioner filed on October
23, 2000 a complaint for illegal constructive dismissal, illegal suspension, and nonpayment and underpayment of salaries, holiday pay, rest day, service incentive
leave, 13th month pay, meal and travel allowance and night shift differential
against respondent, along with its employee Rosario K. Balais who was allegedly
responsible for running the day to day affairs of respondents business. Petitioner
likewise prayed for reinstatement and payment of full backwages, attorneys fees
and other money claims.
In its position paper, respondent denied that it dismissed petitioner from the
service, it claiming that while it was still in the process of investigating the January
21, 2000 incident, it offered petitioner another assignment which he declined,
saying "pahinga muna ako [I will in the meantime take a rest]."
The Labor Arbiter ruled for separation pay. The NLRC, on appeal, ruled
reinstatement without granting the other monetary claims. The ruling of the NLRC
was affirmed by the Court of Appeals, hence the petition with the Supreme Court.
ISSUE
1. Whether the petitioners nine-month suspension is tantamount to constructive
dismissal.
2. Whether the petitioner should be paid his backwages aside from his separation
pay.
3. Whether the payment of separation pay is more viable than the order of
reinstatement.
HELD
it is gathered that respondent intended to put petitioner under preventive
suspension for an indefinite period of time pending the investigation of the
complaint against him. The allowable period of suspension in such a case is not six
months but only 30 days, following Sections 8 and 9 of Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code (Implementing Rules),
SEC. 8. Preventive suspension. - The employer may place the worker concerned
under preventive suspension if his continued employment poses a serious and
imminent threat to the life or property of the employer or of his co-workers.
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty
(30) days. The employer shall thereafter reinstate the worker in his former or in a
substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides,
after completion of the hearing, to dismiss the worker.
Respondent did not inform petitioner that it was extending its investigation, nor did
it pay him his wages and other benefits after the lapse of the 30-day period of

suspension. Neither did respondent issue an order lifting petitioners suspension, or

any official assignment, memorandum or detail order for him to assume his post or
another post. Respondent merely chose to dawdle with the investigation, in
absolute disregard of petitioners welfare.
At the time petitioner filed the complaint for illegal suspension and/or constructive
dismissal on October 23, 2000, petitioner had already been placed under preventive
suspension for nine months. The Supreme Court ruled that the preventive
suspension which lasted for nine months amounted to constructive dismissal.
Petitioner, who is a regular employee of respondent, is entitled to reinstatement
without loss of seniority and payment of backwages from the time his compensation
was withheld up to the time of his actual reinstatement by virtue of Art. 279.
The Court also ruled that there exists no exception to the general rule that award of
separation pay would be proper in lieu of reinstatement.
Respondent is ordered to reinstate petitioner together with the payment of the
corresponding backwages.

[G.R. No. 151966

July 8, 2005]
JPL MARKETING PROMOTIONS, Petitioner vs., COURT OF APPEALS,
NATIONAL LABOR RELATIONS COMMISSION, NOEL GONZALES, RAMON
ABESA III and FAUSTINO ANINIPOT, Respondents.
FACTS
JPL Marketing and Promotions is a domestic corporation engaged in the
business of recruitment and placement of workers. On the other hand, private
respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed
by JPL as merchandisers on separate dates and assigned at different establishments
in Naga City and Daet, Camarines Norte as attendants to the display of California
Marketing Corporation , one of petitioners clients.
On 13 August 1996, JPL notified private respondents that CMC would stop its
direct merchandising activity in the Bicol Region, Isabela, and Cagayan Valley
effective 15 August 1996. they were advised to wait for further notice as they
would be transferred to other clients. However, on 17 October 1996, private
respondents Abesa and Gonzales filed before the National Labor Relations
Commission Regional Arbitration Branch (NLRC) Sub V complaints for illegal
dismissal, praying for separation pay, 13th month pay, service incentive leave pay
and payment for moral damages. Aninipot filed a similar case thereafter.
Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of
merit. The Labor Arbiter found that Gonzales and Abesa applied with and were
employed by the store where they were originally assigned by JPL even before the
lapse of the six (6)-month period given by law to JPL to provide private respondents
a new assignment. Thus, they may be considered to have unilaterally severed their
relation with JPL, and cannot charge JPL with illegal dismissal. The Labor Arbiter held
that it was incumbent upon private respondents to wait until they were reassigned
by JPL, and if after six months they were not reassigned, they can file an action for
separation pay but not for illegal dismissal. The claims for 13th month pay and
service incentive leave pay was also denied since private respondents were paid
way above the applicable minimum wage during their employment.

NLRC. agreed with the Labor Arbiters finding that when private respondents
filed their complaints, the six-month period had not yet expired, and that CMCs
decision to stop its operations in the areas was beyond the control of JPL, thus, they
were not illegally dismissed. However, it found that despite JPLs effort to look for
clients to which private respondents may be reassigned it was unable to do so, and
hence they are entitled to separation pay.
The Court of Appeals dismissed the petition and affirmed in toto the NLRC
resolution. While conceding that there was no illegal dismissal, it justified the award
of separation pay on the grounds of equity and social justice.
Issue
Whether or not the respondents are entitled to separation pay?
Held
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in
cases of dismissals due to any of these reasons: (a) installation of labor saving
devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer's business;
and (e) when the employee is suffering from a disease and his continued
employment is prohibited by law or is prejudicial to his health and to the health of
his co-employees.
However, separation pay shall be allowed as a measure of social justice in those
cases where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character, but only when he was
illegally dismissed.
In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the
Labor Code provides for the payment of separation pay to an employee entitled to
reinstatement but the establishment where he is to be reinstated has closed or has
ceased operations or his present position no longer exists at the time of
reinstatement for reasons not attributable to the employer.
The common denominator of the instances where payment of separation
pay is warranted is that the employee was dismissed by the employer.
In the
instant case, there was no dismissal to speak of. Private respondents were simply
not dismissed at all, whether legally or illegally. What they received from JPL was
not a notice of termination of employment, but a memo informing them of the
termination of CMCs contract with JPL. More importantly, they were advised that
they were to be reassigned. At that time, there was no severance of employment to
speak of.
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months,
wherein an employee/employees are placed on the so-called floating status.
When that floating status of an employee lasts for more than six months, he may
be considered to have been illegally dismissed from the service. Thus, he is entitled
to the corresponding benefits for his separation, and this would apply to suspension
either of the entire business or of a specific component thereof.
As clearly borne out by the records of this case, private respondents sought
employment from other establishments even before the expiration of the six (6)month period provided by law. As they admitted in their comment, all three of them
applied for and were employed by another establishment after they received the

notice from JPL. JPL did not terminate their employment; they themselves severed
their relations with JPL. Thus, they are not entitled to separation pay.
Nonetheless, JPL cannot escape the payment of 13th month pay and service
incentive leave pay to private respondents. Said benefits are mandated by law and
should be given to employees as a matter of right.
[G.R. No. 167462 October 25, 2005]
MANLY EXPRESS INC. and SIU ENG T. CHING, Petitioners, vs. ROMUALDO
PAYONG, JR., Respondent.
FACTS
Respondent Romualdo Payong, Jr. was employed by Manly Express, Inc. and/or Siy
Eng T. Ching as welder. Sometime in December 1999, he was complaining of
eyesight problems. Brought to an eye specialist by private respondent Ching, he
was diagnosed to be suffering from eye cataract. Despite having the cataract
removed in January of 2000, he was disallowed to return to his work by Ching.
Much later, on August 1, 2000, he was given a letter of termination of employment.
Thus, Payong filed a complaint for illegal dismissal with money claims against Manly.
ISSUE
Whether or not Payong was illegally dismissed by Manly.
HELD
The SC held that Payong was illegally dismissed by Manly. Article 284 of the Labor
Code authorizes an employer to terminate an employee on the ground of disease,
thus:
Art. 284. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: .
However, in order to validly terminate employment on this ground, Section 8, Rule I,
Book VI of the Omnibus Rules Implementing the Labor Code requires:
Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a
disease and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by a competent public health authority
that the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate
such employee to his former position immediately upon the restoration of his
normal health.

The rule is explicit. For a dismissal on the ground of disease to be considered valid,
two requisites must concur: (a) the employee suffers from a disease which cannot
be cured within six months and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, and (b) a certification
to that effect must be issued by a competent public health authority.
In the present case, there was no proof that Payongs continued employment was
prohibited by law or prejudicial to his health and that of his co-employees. No
medical certificate by a competent public health authority was submitted that
Payong was suffering from a disease that cannot be cured within a period of six
months. In the absence of such certification, Payongs dismissal must necessarily
be declared illegal.
The SC also noted that Manly failed to comply with the procedure for terminating an
employee. In dismissing an employee, the employer has the burden of proving that
the employee has been served two notices: (1) one to apprise him of the particular
acts or omissions for which his dismissal is sought, and (2) the other to inform him
of his employers decision to dismiss him. The first notice must state that dismissal
is sought for the act or omission charged against the employee, otherwise, the
notice cannot be considered sufficient compliance with the rules
Petition is denied.

FIRST DIVISION
[G.R. No. 142293. February 27, 2003]
VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT
TRUCKING CORPORATION, petitioners, vs. HON. COURT OF APPEALS and
JAIME SAHOT, respondents.
FACTS
Private respondent Jaime Sahot started working as a truck helper for petitioners

family-owned trucking business named Vicente Sy Trucking. Throughout all the

changes in names and for 36 years, private respondent continuously served the
trucking business of petitioners. When Sahot was already 59 years old, he had been
incurring absences as he was suffering from various ailments. Particularly causing
him pain was his left thigh, which greatly affected the performance of his task as a
driver. Sahot had filed a week-long leave sometime in May 1994. On May 27th, he
was medically examined and treated for EOR, presleyopia, hypertensive retinopathy
G II), HPM, UTI, Osteoarthritis and heart enlargement. On said grounds, Belen
Paulino of the SBT Trucking Service management told him to file a formal request for
extension of his leave. At the end of his week-long absence, Sahot applied for
extension of his leave for the whole month of June, 1994. It was at this time when
petitioners allegedly threatened to terminate his employment should he refuse to
go back to work. They carried out their threat and dismissed him from work,
effective June 30, 1994. He ended up sick, jobless and penniless.
On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a
complaint for illegal dismissal for recovery of separation pay against Vicente Sy and
Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service,
6Bs Trucking and SBT Trucking, herein petitioners.
Petitioners, on their part, claimed that sometime prior to June 1, 1994, Sahot went
on leave and was not able to report for work for almost seven days. On June 1,
1994, Sahot asked permission to extend his leave of absence until June 30, 1994. It
appeared that from the expiration of his leave, private respondent never reported
back to work nor did he file an extension of his leave. Instead, he filed the
complaint for illegal dismissal against the trucking company and its owners.
Petitioners add that due to Sahots refusal to work after the expiration of his
authorized leave of absence, he should be deemed to have voluntarily resigned
from his work. They contended that Sahot had all the time to extend his leave or at
least inform petitioners of his health condition.
The Labor Arbiter ruled in favor of the company. It held that Sahot failed to return to
work. However, upon appeal, the NLRC modified the LAs decision, ruling that Sahot
did not abandon his job but his employment was terminated on account of his
illness, pursuant to Article 284 of the Labor Code.
ISSUE
Whether or not there was valid termination of employment due to his illness.
HELD
The SC held that although illness can be a valid ground for terminating an
employee, the dismissal was invalid. Article 284 of the Labor Code authorizes an
employer to terminate an employee on the ground of disease. However, in order to
validly terminate employment on this ground, Book VI, Rule I, Section 8 of the
Omnibus Implementing Rules of the Labor Code requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a
disease and his continued employment is prohibited by law or prejudicial to his

health or to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by competent public health authority that
the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate
such employee to his former position immediately upon the restoration of his
normal health.
The requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary
determination by the employer of the gravity or extent of the employees illness
and thus defeat the public policy in the protection of labor.
In the case at bar, the employer clearly did not comply with the medical certificate
requirement before Sahots dismissal was effected. Since the burden of proving the
validity of the dismissal of the employee rests on the employer, the latter should
likewise bear the burden of showing that the requisites for a valid dismissal due to a
disease have been complied with. In the absence of the required certification by a
competent public health authority, this Court has ruled against the validity of the
employees dismissal. It is therefore incumbent upon the private respondents to
prove by the quantum of evidence required by law that petitioner was not
dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the
dismissal would be unjustified. This Court will not sanction a dismissal premised on
mere conjectures and suspicions, the evidence must be substantial and not
arbitrary and must be founded on clearly established facts sufficient to warrant his
separation from work.
In addition, we must likewise determine if the procedural aspect of due process had
been complied with by the employer. From the records, it clearly appears that
procedural due process was not observed in the separation of private respondent by
the management of the trucking company. The employer is required to furnish an
employee with two written notices before the latter is dismissed: (1) the notice to
apprise the employee of the particular acts or omissions for which his dismissal is
sought, which is the equivalent of a charge; and (2) the notice informing the
employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense. These, the
petitioners failed to do, even only for record purposes. What management did was
to threaten the employee with dismissal, then actually implement the threat when
the occasion presented itself because of private respondents painful left thigh.
All told, both the substantive and procedural aspects of due process were violated.
Clearly, therefore, Sahots dismissal is tainted with invalidity.
Petition is denied.

[G.R. No. 151021 May 4, 2006]

CAINTA CATHOLIC SCHOOL and MSGR. MARIANO T. BALBAGO, Petitioners,
vs. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU), Respondent.
FACTS
On 15 October 1993, petitioner school retired Llagas and Javier, President and Vicepresident of respondent union, respectively, who had rendered more than twenty
(20) years of continuous service, pursuant to Section 2, Article X of the CBA, to wit:
An employee may be retired, either upon application by the employee himself or by
the decision of the Director of the School, upon reaching the age of sixty (60) or
after having rendered at least twenty (20) years of service to the School the last
three (3) years of which must be continuous.
Because of the foregoing, the union filed a Notice of Strike with the NCMB and later
staged a strike and picketed in the schools entrance. Later, the union filed a
complaint for unfair labor practice against petitioner school before the NLRC.
The School avers that the retirement of Llagas and Javier was clearly in accordance
with a specific right granted under the CBA. The School justifies its actions by
invoking our rulings in Pantranco North Express, Inc. v. NLRC and Bulletin Publishing
Corporation v. Sanchez that no unfair labor practice is committed by management if
the retirement was made in accord with management prerogative or in case of
voluntary retirement, upon approval of management.
The Union, on the other hand, argues that the retirement of the two union officers is
a mere subterfuge to bust the union.
ISSUE
Whether or not the retirement of Llagas and Javier is legal.
HELD
The SC held that the termination of employment of Llagas and Javier was valid,
arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union.
Pursuant to the existing CBA, the School has the option to retire an employee upon
reaching the age limit of sixty (60) or after having rendered at least twenty (20)
years of service to the School, the last three (3) years of which must be continuous.
Retirement is different specie of termination of employment from dismissal for just
or authorized causes under Articles 282 and 283 of the Labor Code. While in all
three cases, the employee to be terminated may be unwilling to part from service,
there are eminently higher standards to be met by the employer validly exercising

the prerogative to dismiss for just or authorized causes. In those two instances, it is
indispensable that the employer establish the existence of just or authorized causes
for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the
result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter after reaching a certain age agrees and/or
consents to sever his employment with the former.
Article 287 of the Labor Code, as amended, governs retirement of employees,
stating:
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 agreement and other agreements: Provided, however, That an
employees retirement benefits under any collective bargaining agreement and
other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay equivalent
to at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year.
By their acceptance of the CBA, the Union and its members are obliged to abide by
the commitments and limitations they had agreed to cede to management. The
questioned retirement provisions cannot be deemed as an imposition foisted on the
Union, which very well had the right to have refused to agree to allowing
management to retire retire employees with at least 20 years of service.
It should not be taken to mean that retirement provisions agreed upon in the CBA
are absolutely beyond the ambit of judicial review and nullification. A CBA, as a
labor contract, is not merely contractual in nature but impressed with public
interest. If the retirement provisions in the CBA run contrary to law, public morals,
or public policy, such provisions may very well be voided. Certainly, a CBA provision
or employment contract that would allow management to subvert security of tenure
and allow it to unilaterally retire employees after one month of service cannot be
upheld. Neither will the Court sustain a retirement clause that entitles the retiring
employee to benefits less than what is guaranteed under Article 287 of the Labor
Code, pursuant to the provisions express proviso thereto in the provision.
Yet the CBA in the case at bar contains no such infirmities which must be stricken
down. Twenty years is a more than ideal length of service an employee can render
to one employer. Under ordinary contemplation, a CBA provision entitling an
employee to retire after 20 years of service and accordingly collect retirement
benefits is reward for services rendered since it enables an employee to reap the
fruits of his labor particularly retirement benefits, whether lump-sum or otherwise
at an earlier age, when said employee, in presumably better physical and mental

condition, can enjoy them better and longer.

A CBA may validly accord management the prerogative to optionally retire an
employee under the terms and conditions mutually agreed upon by management
and the bargaining union, even if such agreement allows for retirement at an age
lower than the optional retirement age or the compulsory retirement age.
Petition is granted.

[G.R. No. 156934 March 16, 2007]

ALPHA C. JACULBE, Petitioner, vs. SILLIMAN UNIVERSITY, Respondent.
FACTS
Sometime in 1958, petitioner began working for respondents university medical
center as a nurse. In a letter dated December 3, 1992, respondent, through its
Human Resources Development Office, informed petitioner that she was
approaching her 35th year of service with the university and was due for automatic
retirement on November 18, 1993, at which time she would be 57 years old. This
was pursuant to respondents retirement plan for its employees, which provided
that its members could be automatically retired upon reaching the age of 65 or
after 35 years of uninterrupted service to the university.
Petitioner emphatically insisted that the compulsory retirement under the plan was
tantamount to a dismissal and pleaded with respondent to be allowed to work until
the age of 60 because this was the minimum age at which she could qualify for SSS
pension. But respondent stood pat on its decision to retire her, citing company
policy.
Petitioner then filed a complaint in the NLRC for termination of service with
preliminary injunction and/or restraining order. On November 18, 1993, respondent
compulsorily retired petitioner.
ISSUE
Whether or not the retirement of petitioner by respondent university amounts to
illegal dismissal.
HELD
The SC held that the retirement of petitioner by respondent university constitutes
illegal dismissal.
Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional
guaranty of security of tenure. Article 287 of the Labor Code provides:

ART. 287. Retirement - Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract. xxx
By its express language, the Labor Code permits employers and employees to fix
the applicable retirement age at below 60 years.
However, after reviewing the assailed decision together with the rules and
regulations of respondents retirement plan, we find that the plan runs afoul of the
constitutional guaranty of security of tenure contained in Article XIII, also known as
the provision on Social Justice and Human Rights. A perusal of the rules and
regulations of the plan shows that participation therein was not voluntary at all.
Retirement is the result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after reaching a
certain age agrees to sever his or her employment with the former. In Pantranco
North Express, Inc. v. NLRC, to which both the CA and respondent refer, the
imposition of a retirement age below the compulsory age of 65 was deemed
acceptable because this was part of the CBA between the employer and the
employees. The consent of the employees, as represented by their bargaining unit,
to be retired even before the statutory retirement age of 65 was laid out clearly in
black and white and was therefore in accord with Article 287.
In this case, neither the CA nor the respondent cited any agreement, collective or
otherwise, to justify the latters imposition of the early retirement age in its
retirement plan, opting instead to harp on petitioners alleged voluntary
contributions to the plan, which was simply untrue. The truth was that petitioner
had no choice but to participate in the plan, given that the only way she could
refrain from doing so was to resign or lose her job. It is axiomatic that employer and
employee do not stand on equal footing, a situation which often causes an
employee to act out of need instead of any genuine acquiescence to the employer.
This was clearly just such an instance.
Not only was petitioner still a good eight years away from the compulsory
retirement age but she was also still fully capable of discharging her duties as
shown by the fact that respondents board of trustees seriously considered rehiring
her after the effectivity of her compulsory retirement.
As already stated, an employer is free to impose a retirement age less than 65 for
as long as it has the employees consent. Stated conversely, employees are free to
accept the employers offer to lower the retirement age if they feel they can get a
better deal with the retirement plan presented by the employer. Thus, having
terminated petitioner solely on the basis of a provision of a retirement plan which
was not freely assented to by her, respondent was guilty of illegal dismissal.
Petition is granted.

[G.R. No. 143686. January 15, 2002]

PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF
THE PHILIPPINES, respondent.
FACTS
Petitioner PAL unilaterally retired airline pilot Captain Albino Collantes under Section
2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. Contending that the
retirement of Captain Collantes constituted illegal dismissal and union busting,
ALPAP filed a Notice of Strike with the Department of Labor and Employment
(DOLE). Pursuant to Article 263 (g) of the Labor Code, the Secretary of the DOLE
assumed jurisdiction over the labor dispute. On June 13, 1998, the Secretary issued
the assailed order upholding PALs action of unilaterally retiring Captain Collantes
and recognizing the same as a valid exercise of its option under Section 2, Article
VII, of the 1967 PAL-ALPAP Retirement Plan. The Secretary further ordered that the
basis of the computation of Captain Collantes retirement benefits should be Article
287 of the Labor Code (as amended by Republic Act No. 7641) and not Section 2,
Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the
exercise of its option to retire pilots, PAL should first consult the pilot concerned
before implementing his retirement.
ISSUE # 1
Whether or not the Article 287 of the Labor Code should be the basis of the
computation of Capt. Collantes retirement benefits.
HELD IN #1
The SC held that it is the PAL-ALPAP Retirement Plan that should be the basis of the
computation of retirement benefits.
The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years
of service as a pilot for PAL or has flown 20,000 hours for PAL shall be eligible for
normal retirement. The normal retirement date is the date on which he completes
twenty (20) years of service, or on which he logs his 20,000 hours as a pilot for PAL.
The member who retires on his normal retirement shall be entitled to either (a) a
lump sum payment of P100,000.00 or (b) to such termination pay benefits to which
he may be entitled to under existing laws, whichever is the greater amount.
SECTION 2. Late Retirement. Any member who remains in the service of the
Company after his normal retirement date may retire either at his option or at the
option of the Company and when so retired he shall be entitled either (a) to a lump
sum payment of P5,000.00 for each completed year of service rendered as a pilot,
or (b) to such termination pay benefits to which he may be entitled under existing
laws, whichever is the greater amount.

A pilot who retires after twenty years of service or after flying 20,000 hours would
still be in the prime of his life and at the peak of his career, compared to one who
retires at the age of 60 years old. Based on this peculiar circumstance that PAL
pilots are in, the parties provided for a special scheme of retirement different from
that contemplated in the Labor Code. Conversely, the provisions of Article 287 of
the Labor Code could not have contemplated the situation of PALs pilots. Rather, it
was intended for those who have no more plans of employment after retirement,
and are thus in need of financial assistance and reward for the years that they have
rendered service.
In any event, petitioner contends that its pilots who retire below the retirement age
of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan
but also an equity of the retirement fund under the PAL Pilots Retirement Benefit
Plan, entered into between petitioner and respondent on May 30, 1972.
The PAL Pilots Retirement Benefit Plan is a retirement fund raised from
contributions exclusively from petitioner of amounts equivalent to 20% of each
pilots gross monthly pay. Upon retirement, each pilot stands to receive the full
amount of the contribution. In sum, therefore, the pilot gets an amount equivalent
to 240% of his gross monthly income for every year of service he rendered to
petitioner. This is in addition to the amount of not less than P100,000.00 that he
shall receive under the 1967 Retirement Plan.
On the other hand, Article 287 of the Labor Code only mandates the employers, in
the absence of a retirement plan to pay retirement pay equivalent to at least onehalf (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year.
In short, the retirement benefits that a pilot would get under the provisions of the
above-quoted Article 287 of the Labor Code are less than those that he would get
under the applicable retirement plans of petitioner.
ISSUE #2
Whether or not the Secretary can compel the company to consult the pilot
concerned before retirement is implemented.
HELD IN #2
The SC held that such additional requirement would constitute as amendment to
the PAL-ALPAP Retirement Plan. The option of an employer to retire its employees is
recognized as valid.
Retirement of an employee may be done upon initiative and option of the
management. And where there are cases of voluntary retirement, the same is
effective only upon the approval of management. There should be no unfair labor
practice committed by management if the retirement of private respondents were
made in accord with the agreed option.
Surely, the requirement to consult the pilots prior to their retirement defeats the

exercise by management of its option to retire the said employees. It gives the pilot
concerned an undue prerogative to assail the decision of management. Due
process only requires that notice be given to the pilot of petitioners decision to
retire him. Hence, the Secretary of Labor overstepped the boundaries of reason and
fairness when he imposed on petitioner the additional requirement of consulting
each pilot prior to retiring him.
Petition is granted.

EN BANC
[G.R. No. 112965. January 30, 1997.]
PHILIPPINES TODAY, INC., BETTY GO-BELMONTE, MAXIMO V. SOLIVEN,
ARTURO A. BORJAL, and ISAAC G. BELMONTE, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and FELIX R. ALEGRE, JR., respondents.
FACTS
Private Respondent Felix R. Alegre, Jr. was employed by PTI as a senior investigative
reporter of the Philippine Star. He later became chief investigative writer and then
assistant to the publisher.
On October 20, 1988, Respondent Alegre filed a request for a thirty-day leave of
absence effective on the same date, citing the advice of his personal physician for
him to undergo further medical consultations abroad. Four days later, he wrote a
"Memorandum for File" addressed to Petitioner Betty Go-Belmonte with copies
furnished to members of the board of directors of PTI,
which expressed
respondents negative feelings towards the company.
On December 6, 1988, Respondent Alegre received from Petitioner Belmonte a
letter, informing the former that the Board has accepted his resignation. The
following day, Respondent Alegre wrote Petitioner Belmonte expressing surprise
over the acceptance of his "resignation", since he did not resign. Unheeded,
Respondent Alegre filed a complaint for illegal dismissal and damages against
herein petitioners.
ISSUE # 1
Whether or not the Memorandum for File constitutes voluntary resignation.
HELD IN # 1
The SC held that said memorandum juridically constituted a letter of resignation.
Alegre's choice of words and way of expression betray his allegation that the
memorandum was simply an "opportunity to open the eyes of Belmonte to the work
environment in petitioners' newspaper with the end in view of persuading her to
take a hand at improving said environment." Apprising his employer of his

frustrations in his job and differences with his immediate superior is certainly not
done in an abrasive, offensive and disrespectful manner. A cordial or, at the very
least, civil attitude, according due deference to one's superiors, is still observed,
especially among high-ranking management officers. The Court takes judicial notice
of the Filipino values of pakikisama and paggalang which are not only prevalent
among members of a family and community but within organizations as well,
including work sites. An employee is expected to extend due respect to
management, the employer being the "proverbial hen that lays the golden egg," so
to speak.
An aggrieved employee who wants to unburden himself of his disappointments and
frustrations in his job or relations with his immediate superior would normally
approach said superior directly or otherwise ask some other officer possibly to
mediate and discuss the problem with the end in view of settling their differences
without causing ferocious conflicts. No matter how the employee dislikes his
employer professionally, and even if he is in a confrontational disposition, he cannot
afford to be disrespectful and dare to talk with an unguarded tongue and/or with a
baleful pen. Here, respondent Alegre was anything but respectful and polite. His
memorandum is too affrontive, combative and confrontational. It certainly causes
resentment, even when read by an objective reader.
His incendiary words and sarcastic remarks negate any desire to improve work
relations with petitioners. Such strongly worded letter constituted an act of
burning his bridges with the officers of the company.
Further, the actions of respondent, such as clearing his work desk of personal
belongings, not reporting back to work after his leave, and his immediate
employment with another employer, confirm his intention to terminate his
employment with petitioner.
ISSUE # 2
Whether or not a resignation be unilaterally withdrawn.
HELD IN # 2
The SC held that resignations, once accepted, may not be withdrawn without the
consent of the employer. If the employer accepts the withdrawal, the employee
retains his job. If the employer does not, the employee cannot claim illegal
dismissal. To say that an employee who has resigned is illegally dismissed, is to
encroach upon the right of employers to hire persons who will be of service to them.
Obviously, this is a recognition of the contractual nature of employment which
requires mutuality of consent between the parties. An employment contract is
consensual and voluntary. Hence, if the employee "finds himself in a situation where
he believes that personal reasons cannot be sacrificed in favor of the exigency of
the service, then he has no other choice but to disassociate himself from his
employment". If accepted by the employer, the consequent effect of resignation is
severance of the contract of employment.

A resigned employee who desires to take his job back has to re-apply therefor and
he shall have the status of a stranger who cannot unilaterally demand an
appointment. He cannot arrogate unto himself the same position which he earlier
decided to leave. To allow him to do so would be to deprive the employer of his
basic right to choose whom to employ. Such is tantamount to undue oppression of
the employer. It has been held that an employer is free to regulate, according to his
own discretion and judgment, all aspects of employment including hiring. The law,
in protecting the rights of the laborer, impels neither the oppression nor selfdestruction of the employer.
Consistent with our ruling in Intertrod, the resignation of respondent Alegre after its
acceptance by petitioners can no longer be withdrawn without the consent of the
latter. In fairness to the employer, an employee cannot backtrack on his resignation
at his whim and without the conformity of the former.
Petition is granted.

[G.R. No. 95940 July 24, 1996]

PANTRANCO NORTH EXPRESS, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and URBANO SUIGA, respondents.
FACTS
Private respondent was hired by petitioner in 1964 as a bus conductor. He
eventually joined the Pantranco Employees Association-PTGWO. He continued the
petitioner's employ until August 12, 1989, when he was retired at the age of fiftytwo (52) after having rendered twenty five years' service. The basis of his
retirement was the compulsory retirement provision of the collective bargaining
agreement between the petitioner and the aforenamed union. Private respondent
received P49,300.00 as retirement pay. On February 15, 1990, private respondent
filed a complaint 4 for illegal dismissal against petitioner with the NLRC-RAB.

ISSUE
Whether or not a Collective Bargaining Agreement provision allowing compulsory
retirement before age 60 but after twenty five years of service legal and
enforceable.
HELD
The SC held that it is.
Retirement and dismissal are entirely different from each other. Retirement is the
result of a bilateral act of the parties, a voluntary agreement between the employer
and the employees whereby the latter after reaching a certain age agrees and/or
consents to severe his employment with the former. On the other hand, dismissal
refers to the unilateral act of the employer in terminating services of an employee
with or without cause. In fine, in the case of dismissal, it is only the employer who
decides when to terminate the services of an employee.
Moreover, concomitant with the provisions on retirement in a Labor Agreement is a
stipulation regarding retirement benefits pertaining to a retired employee. Here
again, the retirement benefits are subject to stipulation by the parties unlike in
dismissals where separation pay is fixed by law in cases of dismissals without just
cause. Evident, therefore, from the foregoing is that retirements which are agreed
upon by the employer and the employee in their collective bargaining agreement
are not dismissals.
To further fortify the aforesaid conclusion, it is noteworthy that even the New Labor
Code recognizes this distinction when it treats retirement from service under a
separate title from that of a dismissal or termination of employment, aside from
expressly recognizing the right of the employer to retire any employee who has
reached the retirement age established in the collective bargaining agreement or
other applicable employment contract and the latter to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
or other agreement.
The Labor Code as worded permits employers and employees to fix the applicable
retirement age at below 60 years. Moreover, providing for early retirement does not
constitute diminution of benefits. In almost all countries today, early retirement, i.e.,
before age 60, is considered a reward for services rendered since it enables an
employee to reap the fruits of his labor particularly retirement benefits, whether
lump-sum or otherwise at an earlier age, when said employee, in presumably
better physical and mental condition, can enjoy them better and longer. As a matter
of fact, one of the advantages of early retirement is that the corresponding
retirement benefits, usually consisting of a substantial cash windfall, can early on be
put to productive and profitable uses by way of income-generating investments,
thereby affording a more significant measure of financial security and independence
for the retiree who, up till then, had to contend with life's vicissitudes within the
parameters of his fortnightly or weekly wages. Thus we are now seeing many CBA's

with such early retirement provisions. And the same cannot be considered a
diminution of employment benefits.
Further, being a union member, private respondent is bound by the CBA because its
terms and conditions constitute the law between the parties. The parties are bound
not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith,
usage and law. It binds not only the union but also its members. Private respondent
cannot therefore claim illegal dismissal when he was compulsorily retired after
rendering twenty-five (25) years of service since his retirement is in accordance
with the CBA.
Petition is granted.

[G.R. No. 162813 February 12, 2007]

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners,
vs. JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS,
Respondents.
FACTS
Petitioner Far East hired on March 4, 1996 private respondent Jimmy Lebatique as
truck driver with a daily wage of P223.50. He delivered animal feeds to the
companys clients. On January 24, 2000, Lebatique complained of nonpayment of
overtime work particularly on January 22, 2000, when he was required to make a
second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of
Far Easts General Manager and petitioner Alexander Uy, suspended Lebatique
apparently for illegal use of company vehicle. Even so, Lebatique reported for work
the next day but he was prohibited from entering the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of Labor
and Employment (DOLE) Public Assistance and Complaints Unit concerning the
nonpayment of his overtime pay. According to Lebatique, two days later, he
received a telegram from petitioners requiring him to report for work. When he did
the next day, January 29, 2000, Alexander asked him why he was claiming overtime
pay. Lebatique explained that he had never been paid for overtime work since he
started working for the company. He also told Alexander that Manuel had fired him.
After talking to Manuel, Alexander terminated Lebatique and told him to look for
another job. On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay.

Petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since
he is a field personnel whose time outside the company premises cannot be
determined with reasonable certainty. According to petitioners, the drivers do not
observe regular working hours unlike the other office employees. The drivers may
report early in the morning to make their deliveries or in the afternoon, depending
on the production of animal feeds and the traffic conditions. Petitioners also aver
that Lebatique worked for less than eight hours a day.
Respondent, on his part claims that he is not a field personnel, thus, he is entitled to
overtime pay and service incentive leave pay.
ISSUE
Whether or not petitioner id entitled to overtime pay and service incentive leave.
HELD
The SC held that Lebatique is not a field personnel for the following reasons:
(1) company drivers, including Lebatique, are directed to deliver the goods at a
specified time and place;
(2) they are not given the discretion to solicit, select and contact prospective
clients; and
(3) Far East issued a directive that company drivers should stay at the clients
premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00
p.m.
Even petitioners admit that the drivers can report early in the morning, to make
their deliveries, or in the afternoon, depending on the production of animal feeds.
Drivers, like Lebatique, are under the control and supervision of management
officers. Lebatique, therefore, is a regular employee whose tasks are usually
necessary and desirable to the usual trade and business of the company. Thus, he
is entitled to the benefits accorded to regular employees of Far East, including
overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee relationship shall be
filed within three years from the time the cause of action accrued; otherwise, they
shall be forever barred. Further, if it is established that the benefits being claimed
have been withheld from the employee for a period longer than three years, the
amount pertaining to the period beyond the three-year prescriptive period is
therefore barred by prescription. The amount that can only be demanded by the
aggrieved employee shall be limited to the amount of the benefits withheld within
three years before the filing of the complaint.
Lebatique timely filed his claim for service incentive leave pay, considering that in
this situation, the prescriptive period commences at the time he was terminated.
On the other hand, his claim regarding nonpayment of overtime pay since he was
hired in March 1996 is a different matter. In the case of overtime pay, he can only
demand for the overtime pay withheld for the period within three years preceding
the filing of the complaint on March 20, 2000.

Petition is denied.

EN BANC
[G.R. No. 164820 March 28, 2007]
VICTORY LINER, INC., Petitioner, vs . PABLO M. RACE, Respondent.
FACTS
In June 1993, respondent was employed by the petitioner as a bus driver. On the
night of 24 August 1994, the bus he was driving was bumped by a Dagupan-bound
bus. As a consequence thereof, respondent suffered a fractured left leg and was
rushed to the Country Medical and Trauma Center in Tarlac City where he was
operated on and confined from 24 August 1994 up to 10 October 1994. One month
after his release from the said hospital, the respondent was confined again for
further treatment of his fractured left leg at the Specialist Group Hospital in
Dagupan City. His confinement therein lasted a month. Petitioner shouldered the
doctors professional fee and the operation, medication and hospital expenses of
the respondent in the aforestated hospitals.
In January 1998, the respondent, still limping heavily, went to the petitioners office
to report for work. He was, however, informed by the petitioner that he was
considered resigned from his job. Respondent refused to accede and insisted on
having a dialogue with the petitioners officer named Yolanda Montes. During their
meeting, Montes told him that he was deemed to have resigned from his work and
to accept a consideration of P50,000.00. Respondent rejected the explanation and
offer. Thereafter, before Christmas of 1998, he again conversed with Montes who
reiterated to him that he was regarded as resigned but raised the consideration
therein to P100,000.00. Respondent rebuffed the increased offer. On 30 June 1999,
respondent, through his counsel, sent a letter to the petitioner demanding
employment-related money claims.
There being no response from the petitioner, the respondent filed before the Labor
Arbiter on 1 September 1999 a complaint for (1) unfair labor practice; (2) illegal
dismissal; (3) underpayment of wages; (4) nonpayment of overtime and holiday
premium, service incentive leave pay, vacation and sick leave benefits, 13th month
pay; (5) excessive deduction of withholding tax and SSS premium; and (6) moral
and exemplary damages and attorneys fees.
In its Position Paper dated 27 March 2000, petitioner claimed that the respondents
cause of action against petitioner had already prescribed because when the former

instituted the aforesaid complaint on 1 September 1999, more than five years had
already lapsed from the accrual of his cause of action on 24 August 1994.
ISSUE
Whether or not the cause of action of respondent has already prescribed.
HELD
The SC held that the cause of action of respondent has not prescribed.
In illegal dismissal cases, the employee concerned is given a period of four years
from the time of his dismissal within which to institute a complaint. This is based on
Article 1146 of the New Civil Code which states that actions based upon an injury to
the rights of the plaintiff must be brought within four years.
The four-year prescriptive period shall commence to run only upon the accrual of a
cause of action of the worker. It is settled that in illegal dismissal cases, the cause
of action accrues from the time the employment of the worker was unjustly
terminated. Thus, the four-year prescriptive period shall be counted and computed
from the date of the employees dismissal up to the date of the filing of complaint
for unlawful termination of employment.
In the case at bar, it is error to conclude that the employment of the respondent
was unjustly terminated on 10 November 1994 because he was, at that time, still
confined at the hospital for further treatment of his fractured left leg. He must be
considered as merely on sick leave at such time. Likewise, the respondent cannot
also be deemed as illegally dismissed from work upon his release from the said
hospital in December 1994 up to December 1997 since the records show that the
respondent still reported for work to the petitioner and was granted sick and
disability leave by the petitioner during the same period.
The respondent must be considered as unjustly terminated from work in January
1998 since this was the first time he was informed by the petitioner that he was
deemed resigned from his work. During that same occasion, the petitioner, in fact,
tried to convince the respondent to accept an amount of P50,000.00 as a
consolation for his dismissal but the latter rejected it. Thus, it was only at this time
that the respondents cause of action accrued. Consequently, the respondents
filing of complaint for illegal dismissal on 1 September 1999 was well within the
four-year prescriptive period.
It is also significant to note that from 10 November 1994 up to December 1997, the
petitioner never formally informed the respondent of the fact of his dismissal either
through a written notice or hearing. Indeed, it cannot be gainfully said that
respondent was unlawfully dismissed on 10 November 1994 and that the cause of
action accrued on that date.
Decision of the CA partly affirmed.

[G.R. No. 154460 November 22, 2005]

LAURO C. DEGAMO, Petitioner, vs. AVANTGARDE SHIPPING CORP., and/or
LEVY RABAMONTAN and SEMBAWANG JOHNSON MGT. PTE. LTD.,
Respondents.
FACTS
Avantgarde, agent of Sembawang hired Degamo as oiler for the vessel Nippon
Reefer. While on duty, Degamo met an accident which resulted to his repatriation
back to the Philippines on 1995. On December 24, 1997 he was declared fit to work
so he went and followed up his sickness benefits with Avantgarde. His efforts proved
fruitless when on January 6, 1998 Avantgarde replied that they could no longer
entertain his request. On March 4-5, 1998 he wrote no Sembawang but likewise to
no avail. Finally on March 2, 2001, he lodged a complaint for payment of disability
benefits and other money claims with the RAB. The RAB and consequently, the
NLRC denied his claim on the ground of prescription. In the CA, Degamos petition
for recon was also denied along with his petition for extension.
ISSUE
1. Whether the action has prescribed, and; 2. Whether the denial of the motion for
extension was proper.
Degamo anchors his argument on Article 1152 of the NCC saying that the
prescriptive period was tolled by his extra-judicial demand on Dec. 24, 1997. On the
other hand, Avantgarde anchors its argument on POEA Memorandum Circular No.
55, Series of 1996 and Article 291 of the Labor Code.
HELD
The POEA Circular is not applicable since it was promulgated on 1997 while the
employment contract of the parties was entered on 1994. On the other hand Article
291 is applicable.
In Cadalin v. POEAs Administrator Article 291 covers all money claims from
employer-employee relationship and is broader in scope than claims arising from a
specific law. It is not limited to money claims recoverable under the Labor Code,
but applies also to claims of overseas contract workers.
Article 291 provides that all money claims arising from employer-employee
relations shall be filed within three years from the time the cause of action accrued,
otherwise, these shall be forever barred. A cause of action accrues upon the
categorical denial of claim. Petitioners cause of action accrued only on January 6,
1998, when Avantgarde denied his claim and so breached its obligation to
petitioner. Petitioner could not have a cause of action prior to this because his
earlier requests were warded off by indefinite promises. The complaint filed on
March 2, 2001 is beyond the three-year period mandated by the Labor Code.
Petition denied.

[G.R. No. 140960. January 20, 2003]

LUDO & LUYM CORPORATION, petitioner, vs. FERDINAND SAORNIDO as
voluntary arbitrator and LUDO EMPLOYEES UNION (LEU) representing 214
of its officers and members, respondents.
FACTS
In the course of its business operations, LUDO engaged the arrastre services of
Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished
products at the wharf. Accordingly, several arrastre workers were deployed by CLAS
to perform the services needed by LUDO. These arrastre workers were subsequently
hired, on different dates, as regular rank-and-file employees of LUDO every time the
latter needed additional manpower services. Said employees thereafter joined
respondent union, the LUDO Employees Union (LEU), which acted as the exclusive
bargaining agent of the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining agreement
with LUDO which provides certain benefits to the employees, the amount of which

vary according to the length of service rendered by the availing employee.

Thereafter, the union requested LUDO to include in its members period of service
the time during which they rendered arrastre services to LUDO through the CLAS so
that they could get higher benefits. LUDO failed to act on the request. Thus, the
matter was submitted for voluntary arbitration.
Petitioner contends that the money claim in this case is barred by prescription.
Respondents, for their part, aver that the three-year prescriptive period is reckoned
only from the time the obligor declares his refusal to comply with his obligation in
clear and unequivocal terms. In this case, respondents maintain that LUDO merely
promised to review the company records in response to respondents demand for
adjustment in the date of their regularization without making a categorical
statement of refusal.
ISSUE
Whether or not the claims of respondent union have already prescribed.
HELD
The SC held that the claims of respondent union have not prescribed.
The cause of action accrues until the party obligated refuses to comply with his
duty. Being warded off by promises, the workers not having decided to assert their
rights, their causes of action had not accrued. Since the parties had continued their
negotiations even after the matter was raised before the Grievance Procedure and
the voluntary arbitration, the respondents had not refused to comply with their duty.
They just wanted the complainants to present some proofs. The complainants
cause of action had not therefore accrued yet.
In fact, the respondents promised to correct their length of service and grant them
the back CBA benefits if the complainants can prove they are entitled rendered the
former in estoppel, barring them from raising the defense of laches or prescription.
To hold otherwise would amount to rewarding the respondents for their duplicitous
representation and abet them in a dishonest scheme against their workers.
Petition is denied.

[G.R. No. 164888

December 6, 2006]
RURAL BANK OF CORON (PALAWAN), INC., EMPIRE COLD STORAGE AND
DEVELOPMENT CORPORATION, CITIZENS DEVELOPMENT INCOPRORATED,
CARIDAD B. GARCIA, SANDRA G. ESCAT, LORNA GARCIA, and OLGA G.
ESCAT, Petitioners, vs. ANNALISA CORTES, Respondent.
FACTS
Respondent Annalisa Cortes was hired as of the Rural Bank of Coron. Later, she
married a member of the family which ran the corporation. Respondent later on
became the Financial Assistant, Personnel Officer and Corporate Secretary of The
Rural Bank of Coron and some other sensitive positions in the sister companies of
the Bank.
On examination of the financial books of the corporations by petitioner Sandra
Garcia Escat, she found out
that respondent was involved in several anomalies,
drawing petitioners to terminate respondents services on November 23, 1998 in
petitioner corporations.
Respondent filed a complaint for illegal dismissal and non-payment of salaries and
other benefits with the NLRC.
Petitioners moved for the dismissal of the complaint on the ground of lack of
jurisdiction, contending that the case was an intra-corporate controversy involving
the removal of a corporate officer, respondent being the Corporate Secretary of the
Rural Bank of Coron, Inc., hence, cognizable by the Securities and Exchange
Commission (SEC) pursuant to Section 5 of PD 902-A.
ISSUE
Whether or not the NLRC had jurisdiction over the case.
HELD
The SC held that Labor Arbiter has jurisdiction over respondents complaint.

While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron,
she was also its Financial Assistant and the Personnel Officer of the two other
petitioner corporations.
Mainland Construction Co., Inc. v. Movilla instructs that a corporation can engage
its corporate officers to perform services under a circumstance which would make
them employees.
The Labor Arbiter has thus jurisdiction over respondents complaint.
Petition is denied.

SECOND DIVISION
[G.R. No. 163768 March 27, 2007]
JULIUS KAWACHI and GAYLE KAWACHI, Petitioners, vs.
DOMINIE DEL
QUERO and HON. JUDGE MANUEL R. TARO, Metropolitan Trial Court, Branch
43, Quezon City, Respondents.
FACTS
Private respondent Dominie Del Quero charged A/J Raymundo Pawnshop, Inc.,
Virgilio Kawachi and petitioner Julius Kawachi with illegal dismissal, non-execution of
a contract of employment, violation of the minimum wage law, and non-payment of
overtime pay. The complaint was filed before NLRC. The complaint essentially
alleged that Virgilio Kawachi hired private respondent as a clerk of the pawnshop
and that on certain occasions, she worked beyond the regular working hours but
was not paid the corresponding overtime pay. The complaint also narrated an
incident on 10 August 2002, wherein petitioner Julius Kawachi scolded private
respondent in front of many people about the way she treated the customers of the
pawnshop and afterwards terminated private respondents employment without
affording her due process.
On 7 November 2002, private respondent Dominie Del Quero filed an action for
damages against petitioners Julius Kawachi and Gayle Kawachi before the MeTC of
Quezon City. The complaint for damages specifically sought the recovery of moral
damages, exemplary damages and attorneys fees.
Petitioners moved for the dismissal of the complaint in the MeTC on the grounds of
lack of jurisdiction and forum-shopping. Petitioners argue that the NLRC has
jurisdiction over the action for damages because the alleged injury is work-related.
They also contend that private respondent should not be allowed to split her causes
of action by filing the action for damages separately from the labor case.
The RTC held that private respondents action for damages was based on the
alleged tortious acts committed by her employers and did not seek any relief under
the Labor Code.

ISSUE
Whether or not the TRC has jurisdiction in this instant action.
HELD
The SC held that the RTC has no jurisdiction in the instant case.
Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor
Arbiter original and exclusive jurisdiction over claims for damages arising from
employer-employee relations in other words, the Labor Arbiter has jurisdiction to
award not only the reliefs provided by labor laws, but also damages governed by
the Civil Code.
Under the reasonable causal connection rule, if there is a reasonable causal
connection between the claim asserted and the employer-employee relations, then
the case is within the jurisdiction of our labor courts. In the absence of such nexus,
it is the regular courts that have jurisdiction.
It is clear that the question of the legality of the act of dismissal is intimately related
to the issue of the legality of the manner by which that act of dismissal was
performed. But while the Labor Code treats of the nature of, and the remedy
available as regards the first the employees separation from employment it
does not at all deal with the second the manner of that separation which is
governed exclusively by the Civil Code. In addressing the first issue, the Labor
Arbiter applies the Labor Code; in addressing the second, the Civil Code. And this
appears to be the plain and patent intendment of the law. For apart from the reliefs
expressly set out in the Labor Code flowing from illegal dismissal from employment,
no other damages may be awarded to an illegally dismissed employee other than
those specified by the Civil Code. Hence, the fact that the issueof whether or not
moral or other damages were suffered by an employee and in the affirmative, the
amount that should properly be awarded to him in the circumstancesis
determined under the provisions of the Civil Code and not the Labor Code, obviously
was not meant to create a cause of action independent of that for illegal dismissal
and thus place the matter beyond the Labor Arbiters jurisdiction.
In the instant case, the allegations in private respondents complaint for damages
show that her injury was the offshoot of petitioners immediate harsh reaction as
her administrative superiors to the supposedly sloppy manner by which she had
discharged her duties. Petitioners reaction culminated in private respondents
dismissal from work in the very same incident. The incident on 10 August 2002
alleged in the complaint for damages was similarly narrated in private respondents
Affidavit-Complaint supporting her action for illegal dismissal before the NLRC.
Clearly, the alleged injury is directly related to the employer-employee relations of
the parties.
Where the employer-employee relationship is merely incidental and the cause of
action proceeds from a different source of obligation, the Court has not hesitated
to uphold the jurisdiction of the regular courts. Where the damages claimed for

were based on tort, malicious prosecution, or breach of contract, as when the

claimant seeks to recover a debt from a former employee or seeks liquidated
damages in the enforcement of a prior employment contract, the jurisdiction of
regular courts was upheld. The scenario that obtains in this case is obviously
different. The allegations in private respondents complaint unmistakably relate to
the manner of her alleged illegal dismissal.
In the instant case, the NLRC has jurisdiction over private respondents complaint
for illegal dismissal and damages arising therefrom. She cannot be allowed to file a
separate or independent civil action for damages where the alleged injury has a
reasonable connection to her termination from employment. Consequently, the
action for damages filed before the MeTC must be dismissed.
Petition is granted.

EN BANC
[G.R. No. 145901 December 15, 2005]
EASYCALL COMMUNICATIONS PHILS., INC., Petitioner, vs. EDWARD KING,
Respondent.
FACTS
Petitioner Easycall
Communications Phils., Inc. was a domestic corporation
primarily engaged in the business of message handling. Petitioner, through its
general manager, Malonzo, hired the services of respondent as assistant to the
general manager. He was given the responsibility of ensuring that the expansion
plans outside Metro Manila and Metro Cebu were achieved at the soonest possible
time. He was promoted to assistant vice president for nationwide expansion and

later appointed to the even higher position of vice president for nationwide
expansion. Respondents promotion was based on his performance during the six
months preceding his appointment. As vice president for nationwide expansion, he
became responsible for the sales and rentals of pager units in petitioners expansion
areas. He was also in charge of coordinating with the dealers in these areas.
Thereafter, Malonzo reviewed the sales performance of respondent and scrutinized
the status of petitioners Nationwide Expansion Program (NEP) which was under
respondents responsibility. He found that respondents actual sales for the period
October 1992March 1993 was 78% of his sales commitment and 70% of his sales
target. Malonzo also checked the frequency and duration of the provincial sales
development visits made by respondent for the same period to expansion areas
under his jurisdiction. He discovered that the latter spent around 40% of the total
number of working days for that period in the field.
The management then confronted respondent regarding his sales performance and
provincial sales development visits. A series of dialogues between petitioners
management and respondent ensued. He was then informed that the general
manager wanted his resignation. Respondent, however, declared that he had no
intention of resigning from his position. Consequently, respondent received a notice
of termination signed by Malonzo. Aggrieved, the respondent filed a complaint for
illegal dismissal with the NLRC.
Petitioner argues that since respondent was a corporate officer, the NLRC had no
jurisdiction over the subject matter under PD 902-A.
ISSUE
Whether or not the NLRC has jurisdiction over the subject matter.
HELD
The SC held that under Section 5 of PD 902-A, the law applicable at the time this
controversy arose, the SEC, not the NLRC, had original and exclusive jurisdiction
over cases involving the removal of corporate officers. Section 5(c) of PD 902-A
applied to a corporate officers dismissal for his dismissal was a corporate act
and/or an intra-corporate controversy.
However, it had to be first established that the person removed or dismissed was a
corporate officer before the removal or dismissal could properly fall within the
jurisdiction of the SEC and not the NLRC. Here, aside from its bare allegation,
petitioner failed to show that respondent was in fact a corporate officer.
Corporate officers in the context of PD 902-A are those officers of a corporation
who are given that character either by the Corporation Code or by the corporations
by-laws. Under Section 25 of the Corporation Code, the corporate officers are the
president, secretary, treasurer and such other officers as may be provided for in the
by-laws.
The burden of proof is on the party who makes the allegation. Here, petitioner

merely alleged that respondent was a corporate officer. However, it failed to prove
that its by-laws provided for the office of vice president for nationwide expansion.
Since petitioner failed to satisfy the burden of proof that was required of it, we
cannot sanction its claim that respondent was a corporate officer whose removal
was cognizable by the SEC under PD 902-A and not by the NLRC under the Labor
Code.
An office is created by the charter of the corporation and the officer is elected by
the directors or stockholders. On the other hand, an employee occupies no office
and generally is employed not by the action of the directors or stockholders but by
the managing officer of the corporation who also determines the compensation to
be paid to such employee.
In this case, respondent was appointed vice president for nationwide expansion by
Malonzo, petitioners general manager, not by the board of directors of petitioner. It
was also Malonzo who determined the compensation package of respondent. Thus,
respondent was an employee, not a corporate officer. It is therefore correct that
jurisdiction over the case was properly with the NLRC, not the SEC.
Petition is denied.

EN BANC
[G.R. No. 166365 September 30, 2005]
DUTY FREE PHILIPPINES, Petitioner, vs. ROSSANO J. MOJICA, Respondent
FACTS
The Discipline Committee of petitioner Duty Free rendered a decision finding
respondent Mojica guilty Neglect of Duty by causing considerable damage to or loss
of materials, assets and property of Duty Free. Thus, Mojica was considered forcibly
resigned from the service with forfeiture of all benefits except his salary and the
monetary value of the accrued leave credits.
Mojica was formally informed of his forced resignation and thereupon, he filed a
complaint for illegal dismissal with prayer for reinstatement, payment of full back
wages, damages, and attorneys fees, against DFP before the NLRC.
ISSUE
Whether or not NLRC has jurisdiction over the controversy.
HELD
The SC held that respondent Mojica is a civil service employee; therefore,
jurisdiction is lodged not with the NLRC, but with the Civil Service Commission.

Duty Free was created under Executive Order No. 46 on September 4, 1986
primarily to augment the service facilities for tourists and to generate foreign
exchange and revenue for the government. In order for the government to exercise
direct and effective control and regulation over the tax and duty free shops, their
establishment and operation was vested in the Ministry, now Department of
Tourism, through its implementing arm, the Philippine Tourism Authority (PTA). All
the net profits from the merchandising operations of the shops accrued to the DOT.
As provided under Presidential Decree (PD) No. 564, PTA is a corporate body
attached to the DOT. As an attached agency, the recruitment, transfer, promotion
and dismissal of all its personnel was governed by a merit system established in
accordance with the civil service rules. In fact, all PTA officials and employees are
subject to the Civil Service rules and regulations.
Accordingly, since Duty Free is under the exclusive authority of the PTA, it follows
that its officials and employees are likewise subject to the Civil Service rules and
regulations. Clearly then, Mojicas recourse to the Labor Arbiter was not proper. He
should have followed the procedure laid down in Duty Frees merit system and the
Civil Service rules and regulations.
The decision of the CA was set aside.

EN BANC
[G.R. No. 154060 August 16, 2005]
YUSEN AIR AND SEA SERVICE PHILIPPINES,INCORPORATED, Petitioner, vs.
ISAGANI A. VILLAMOR, Respondent.
FACTS
Petitioner hired respondent Villamor as branch manager in its Cebu Office. Later,
petitioner reclassified respondents position to that of Division Manager, which
position respondent held until his resignation on February 1, 2002. Immediately
after his resignation, respondent started working for Aspac International, a
corporation engaged in the same line of business as that of petitioner.
Thereafter, petitioner Yusen Air filed against respondent a complaint for injunction
and damages with prayer for a temporary restraining order in the RTC of Paraaque
City, on the ground that respondent violated the provision in his contract that he
should not affiliate himself with competitors for a period of two years from his
resignation or separation from petitioner company.
Respondent also filed against petitioner a case for illegal dismissal before the NLRC.
Instead of filing an answer to the case in the RTC, respondent moved for the
dismissal of said case, arguing that the RTC has no jurisdiction over the subject
matter of said case because an employer-employee relationship is involved.
Petitioner contends that its cause of action did not arise from employer-employee
relations even if the claim therein is based on a provision in its handbook.
ISSUE
Whether or not the RTC has jurisdiction over the present controversy.
HELD
The SC held that the RTC has jurisdiction over the case.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of
Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal
connection with any of the claims provided for in that article. Only if there is such a
connection with the other claims can a claim for damages be considered as arising
from employer-employee relations.
Article 217, as amended by Section 9 of RA 6715, provides:
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, even in the

absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
xxx
xxx
xxx
4.
Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;"
While paragraph 3 above refers to all money claims of workers, it is not necessary
to suppose that the entire universe of money claims that might be asserted by
workers against their employers has been absorbed into the original and exclusive
jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in
isolation from but rather within the context formed by paragraph 1 (relating to
unfair labor practices), paragraph 2 (relating to claims concerning terms and
conditions of employment), paragraph 4 (claims relating to household services, a
particular species of employer-employee relations), and paragraph 5 (relating to
certain activities prohibited to employees or employers).
It is evident that there is a unifying element which runs through paragraph 1 to 5
and that is, that they all refer to cases or disputes arising out of or in connection
with an employer-employee relationship. This is, in other words, a situation where
the rule of noscitur a sociis may be usefully invoked in clarifying the scope of
paragraph 3, and any other paragraph of Article 217 of the Labor Code, as
amended.
We reach the above conclusion from an examination of the terms themselves of
Article 217, as last amended by B.P. Blg 227, and even though earlier versions of
Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor
Arbiters and the NLRC cases arising from employer-employee relations, which
clause was not expressly carried over, in printers ink, in Article 217 as it exists
today. For it cannot be presumed that money claims of workers which do not arise
out of or in connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of regular courts of justice, were
intended by the legislative authority to be taken away from the jurisdiction of the
courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore,
believes and so holds that the money claims of workers referred to in paragraph 3
of Article 217 embraces money claims which arise out of or in connection with the
employer-employee relationship, or some aspect or incident of such relationship.
Put a little differently, that money claims of workers which now fall within the
original and exclusive jurisdiction of Labor Arbiters are those money claims which
have some reasonable causal connection with the employer-employee relationship.
When, as here, the cause of action is based on a quasi-delict or tort, which has no
reasonable causal connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts.
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks
to recover damages based on the parties contract of employment as redress for
respondent's breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts. More so must
this be in the present case, what with the reality that the stipulation refers to the
post-employment relations of the parties.

For sure, a plain and cursory reading of the complaint will readily reveal that the
subject matter is one of claim for damages arising from a breach of contract, which
is within the ambit of the regular courts jurisdiction.
It is basic that jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether or not the plaintiff is
entitled to recover upon the claim asserted therein, which is a matter resolved only
after and as a result of a trial. Neither can jurisdiction of a court be made to depend
upon the defenses made by a defendant in his answer or motion to dismiss. If such
were the rule, the question of jurisdiction would depend almost entirely upon the
defendant.
The orders of the lower courts are set aside.

EN BANC
[G.R. No. 154295. July 29, 2005]
METROMEDIA TIMES CORPORATION and/or
petitioner, vs. JOHNNY PASTORIN, respondent.

ROBINA

GOKONGWIE-PE,

FACTS
Respondent, because of tardiness was supposedly terminated by the petitioner
company, but because of the timely intervention of the union, the dismissal was not
effected. However, he incurred another infraction when he obtained a loan from a
magazine dealer and when he was not able to pay the loan, he stopped collecting
the outstanding dues of the dealer/creditor. After requiring him to explain,
respondent admitted his failure to pay the loan but gave no definitive explanation
for the same. Thereafter, he was penalized with suspension. He was also not
allowed to do field work, and was transferred to a new position. Despite the
completion of his suspension, respondent stopped reporting for work and sent a
letter communicating his refusal to accept the transfer. He then filed a complaint for
constructive dismissal, non-payment of backwages and other money claims with the
labor arbiter.
The complaint was resolved in favor of respondent. Petitioner lodged an appeal
with the NLRC, raising as a ground the lack of jurisdiction of the labor arbiter over
respondents complaint. Significally, this issue was not raised by petitioner in the
proceedings before the Labor Arbiter.
The NLRC reversed the decision of the LA and ruled that the LA has no jurisdiction
over the case, it being a grievance issue properly cognizable by the voluntary
arbitrator. However, the CA reinstated the ruling of the CA. The CA held that the
active participation of the party against whom the action was brought, coupled with

his failure to object to the jurisdiction of the court or quasi-judicial body where the
action is pending, is tantamount to an invocation of that jurisdiction and a
willingness to abide by the resolution of the case and will bar said party from later
on impugning the court or bodys jurisdiction.
ISSUE
Whether or not petitioner is estopped from questioning the jurisdiction of the LA
during appeal.
HELD
The SC held that petitioner is not estopped from questioning the jurisdiction of the
LA during appeal.
The general rule is that the jurisdiction of a court over the subject matter of the
action is a matter of law and may not be conferred by consent or agreement of the
parties. The lack of jurisdiction of a court may be raised at any stage of the
proceedings, even on appeal. This doctrine has been qualified by recent
pronouncements which stemmed principally from the ruling in the cited case of
Sibonghanoy. It is to be regretted, however, that the holding in said case had been
applied to situations which were obviously not contemplated therein. The
exceptional circumstances involved in Sibonghanoy which justified the departure
from the accepted concept of non-waivability of objection to jurisdiction has been
ignored and, instead a blanket doctrine had been repeatedly upheld that rendered
the supposed ruling in Sibonghanoy not as the exception, but rather the general
rule, virtually overthrowing altogether the time honored principle that the issue of
jurisdiction is not lost by waiver or by estoppel.
The operation of the principle of estoppel on the question of jurisdiction seemingly
depends upon whether the lower court actually had jurisdiction or not. If it had no
jurisdiction, but the case was tried and decided upon the theory that it had
jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction,
for the same 'must exist as a matter of law, and may not be conferred by consent of
the parties or by estoppel. However, if the lower court had jurisdiction, and the case
was heard and decided upon a given theory, such, for instance, as that the court
had no jurisdiction, the party who induced it to adopt such theory will not be
permitted, on appeal, to assume an inconsistent positionthat the lower court had
jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is
conferred by law, and does not depend upon the will of the parties, has no bearing
thereon.
Applying the general rule that estoppel does not confer jurisdiction, petitioner is not
estopped from assailing the jurisdiction of the labor arbiter before the NLRC on
appeal.
Decision of the CA is set aside.

EN BANC
[G.R. No. 156589. June 27, 2005]
DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES, INC., FILOMENO
P. HERNANDEZ, ROMMEL A. HERNANDEZ, SEGUNDA A. HERNANDEZ, AND
CINDERELLA A. HERNANDEZ-RAESES, petitioners, vs. FRANCISCO
POTONGAN, respondent.
FACTS
In 1987, respondent started working for petitioner corporation as a Production
Supervisor. In early February 1996, during a strike of the rank-and file union,
respondent was advised to take a leave of absence until further notice. Respondent
later was invited by the company to answer the following charges:
1.) That on February 21, 1996, at around 9:00 A.M. you entered the company
fabrication shop where you were assigned as supervisor and caused to create fire
by secretly switching on the idle plastic oven and grounded the 2 electric machine
welders while the strike was on-going outside the premises.
Witnesses also in the persons of Mr. Luis Mimay, and his men found out later what
you have done and noticed the electric current and the burning of the oven already
very hot. You secretly left the premises and had not for the said witnesses and
contractors, you had vehemently caused to burn the companys main building and
its offices.
3.) That you allegedly on several occasions, urged strongly the same group of
contractors led by Mr. Luis Mimay, working on some left over jobs at the factory, to
slow down work or not to work at all in sympathy to the strikers who are in the
ranking files. Those proved also that as our trusted staff and supervisor you have
caused disruption of work of the contractors. The company suffered losses in its
failure to accomplish its job projects on due dates. Your actuations and actions
proved disastrous to the companys interest. Considering these circumstances, we
urge you to reply your side on these matters so that we could institute proper
corresponding action based on the above in 5 days time from receipt of this letter.
Respondent through counsel, denied the charges proffered against him, and insisted
that they were fabricated to justify his termination due to suspicions that he was a
strike-sympathizer. Respondent later filed on January 29, 1997 a complaint against
herein petitioners for illegal dismissal, reinstatement, backwages and damages with
the NLRC-RAB. Respondent complained that although he was not sent a formal
notice of termination, he was effectively dismissed from employment for after he
was asked to take a leave of absence on February 21, 1996, as he did, and he was
not instructed nor allowed to return to work, nor paid his salaries.
On June 30, 1997, the Labor Arbiter dismissed the complaint on the ground that
respondents cause of action was barred by prior judgment, that was rendered on
June 24, 1996 by Labor Arbiter Nieves V. De Castro in other consolidated cases

which found respondent among those guilty of committing prohibited acts and
whose employment was consequently declared lost.
Respondent appealed the dismissal of his complaint to the NLRC before which he
argued that the Labor Arbiter did not acquire jurisdiction over his person in the
above-said consolidated cases since service of summons to the therein respondents
President of KMM-Katipunan and the President of the local union Bigkis Manggagawa
sa Dynamic Signmakers Outdoor Advertising Services, in either of which he is not a
member, cannot be considered proper service to him. Respondent thus concluded
that a void judgment such as one rendered without jurisdiction over the person of
the party maybe assailed at any time, either directly or collaterally.
ISSUE
whether or not the Labor Arbiter acquired jurisdiction over the person of the
respondent.
HELD
The SC held that the LA did not acquire jurisdiction over the person of the
respondent.
The validity of a judgment or order of a court or quasi-judicial tribunal which has
become final and executory may be attacked when the records show that it lacked
jurisdiction to render the judgment. For a judgment rendered against one in a case
where jurisdiction over his person was not acquired is void, and a void judgment
maybe assailed or impugned at any time either directly or collaterally by means of a
petition filed in the same or separate case, or by resisting such judgment in any
action or proceeding wherein it is invoked.
Petitioners in fact do not even dispute respondents claim that no summons was
ever issued and served on him either personally or through registered mail as
required under Rule III, Sections 3 and 6 of the Rules of Procedure of the NLRC, as
amended by Resolution No. 01-02, Series of 2002:
SEC. 3. Issuance of Summons. Within two (2) days from receipt of a case, the Labor
Arbiter shall issue the required summons, attaching thereto a copy of the
complaint/petition and supporting documents, if any. The summons, together with a
copy of the complaint, shall specify the date, time and place of the conciliation and
mediation conference in two (2) settings.
xxx
SEC. 6. Service of Notices and Resolutions. a) Notices or summonses and copies of
orders, shall be served on the parties to the case personally by the bailiff or duly
authorized public officer within three (3) days from receipt thereof or by registered
mail, provided that in special circumstances, service of summons may be effected in
accordance with the pertinent provisions of the Rules of Court; xxx
Supplementary or applied by analogy to these provisions are the provisions and
prevailing jurisprudence in Civil Procedure. Where there is then no service of

summons on or a voluntary general appearance by the defendant, the court

acquires no jurisdiction to pronounce a judgment in the cause.
At all events, even if administrative tribunals exercising quasi-judicial powers are
not strictly bound by procedural requirements, they are still bound by law and
equity to observe the fundamental requirements of due process.
Petition is denied

FIRST DIVISION
[G.R. No. 154448. August 15, 2003.]
DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS, PHIL. MALAY
POULTRY BREEDERS, INC. and LEONG HUP POULTRY FARM SDN, BHD., Mr.
Francis T.N. Lau, President and Chairman of the Board and Mr. Chor Tee
Lim, Director, respondents.
FACTS
Petitioner was appointed by respondent Phil. Malay Poultry as its general manager.
In 1996-1997, respondents suffered losses which caused them to reduce production
and retrench employees in Philmalay. On June 30, 1997, petitioner Reyes gave
verbal notice to respondent Francis T. Lau that he will serve as General Manager of
Philmalay until December 31, 1997 only. In a letter dated January 12, 1998,
petitioner confirmed his verbal notice of resignation and requested that he be given
the same benefits granted to retrenched and resigned employees of the company,
consisting of separation pay equivalent to 1 month salary for every year of service
and the monetary equivalent of his sick leave and vacation leave. He likewise
requested the benefits stipulated in his contract as well as office rentals for the use
of his house as office of the respondent and the retainer fees for the retained law
firm.
In a letter dated January 19, 1998, respondent Philmalay retrenched petitioner
effective January 20, 1998 and promised to pay him separation benefits pursuant to
the provisions of the Labor Code. 7 He was, however, offered a separation pay
equivalent to four months only, or the total amount of P578,600.00. The offer was
not accepted by petitioner and efforts to settle the impasse proved futile. Petitioner
then filed with the NLRC-RAB a complaint for underpayment of wages and nonpayment of separation pay, sick leave, vacation leave and other benefits against
respondents.
The Labor Arbiter ruled in favor of petitioner but was modified by the NLRC on
appeal. Petitioner filed a motion for reconsideration, however, the same was denied.
Undaunted, petitioner filed a petition for certiorari with the Court of Appeals, which
was dismissed on January 28, 2002 for failure to attach to the petition the following:

"(1) complainant's (petitioner) Position Paper filed before the Labor Arbiter; (2)
Decision dated 22 December 1992 penned by Labor Arbiter Ariel Cadiente Santos;
and (3) Memorandum of Appeal filed by the petitioner." Petitioner, thereafter, filed
a motion for reconsideration, attaching thereto a copy of the Labor Arbiter's
decision and the pleadings he failed to attach to the petition. The Court of Appeals,
however, denied petitioner's motion for reconsideration. Hence, this petition.
ISSUE
Whether or not there was substantial compliance by petitioner when it submitted
belatedly the lacking attachment for his petition.
HELD
The SC held that there was substantial compliance.
Rules of procedure should not be applied in a very technical sense, for they are
adopted to help secure, not override, substantial justice. There is ample
jurisprudence holding that the subsequent and substantial compliance of an
appellant may call for the relaxation of the rules of procedure. The subsequent
submission of the missing documents with the motion for reconsideration amounts
to substantial compliance.
The same leniency should be applied to the instant case considering that petitioner
subsequently submitted with his motion for reconsideration the certified true copy
of the Labor Arbiter's decision, the complainant's position paper and the
respondent's memorandum of appeal. Clearly, petitioner had demonstrated
willingness to comply with the requirements set by the rules. If we are to apply the
rules of procedure in a very rigid and technical sense, as the Court of Appeals did in
this case, the ends of justice would be defeated.
The pleadings and documents filed extensively discussed the issues raised by the
parties. Such being the case, there is sufficient basis to resolve the instant
controversy. Labor laws mandate the speedy disposition of cases, with the least
attention to technicalities but without sacrificing the fundamental requisites of due
process. Remanding the case to the Court of Appeals will only frustrate speedy
justice and, in any event, would be a futile exercise, as in all probability the case
would end up with this Court. We shall thus rule on the substantial claims of the
parties.
Petition is granted.

EN BANC
[G.R. No. 153886. January 14, 2004]
MEL V. VELARDE, petitioner, vs. LOPEZ, INC., respondent.

FACTS
On January 6, 1997, Mel Velarde loaned from Eugenio Lopez, Jr. president of
respondet company an amount of P10,000,000.00. Petitioner was then the general
Manager of Sky Vision, a subsidiary of respondent company. As petitioner failed to
pay the installments as they became due, respondent, apparently in answer to a
proposal of petitioner respecting the settlement of the loan, advised him by letter
dated July 15, 1998 that he may use his retirement benefits in Sky Vision in partial
settlement of his loan after he settles his accountabilities to the latter and gives his
written instructions to it (Sky Vision). Petitioner protested the computation indicated
in the July 15, 1998 letter, he asserting that the imputed unliquidated advances
from Sky Vision had already been properly liquidated.
On August 18, 1998, respondent company filed a complaint for collection of sum of
money with damages at the Pasig City RTC against petitioner Velarde, alleging that
petitioner violated the Section 6 of the loan agreement as he failed to put up the
needed collateral for the loan and pay the installments as they became due, and
that despite his receipt of letters of demand dated December 1, 1997 and January
13, 1998, he refused to pay.
In his answer, petitioner alleged that the loan agreement did not reflect his true
agreement with respondent, it being merely a cover document to evidence the
reward to him of ten million pesos (P10,000,000.00) for his loyalty and excellent
performance as General Manager of Sky Vision and that the payment, if any was
expected, was in the form of continued service; and that it was when he was
compelled by respondent to retire that the form of payment agreed upon was
rendered impossible, prompting the late Eugenio Lopez, Jr. to agree that his
retirement benefits from Sky Vision would instead be applied to the loan. As
counterclaim, he contended that he was entitled to retirement benefits from Sky
Vision in the amount of P98,280,000.00, unpaid salaries in the amount of
P2,740,000.00, unpaid incentives in the amount of P500,000, unpaid share from the
net income of Plaintiff corporation, equity in his service vehicle in the amount of
P1,500,000, reasonable return on the stock ownership plan for services rendered as
General Manager, and moral damages and attorneys fees.
Respondent moved for the dismissal of the counterclaim for want of jurisdiction.
Respondent asserted that the counterclaims, being money claims arising from a
labor relationship, are within the exclusive competence of the NLRC. On the other
hand, petitioner alleged that due to the tortuous manner he was coerced into
retirement, it is the RTC and not the NLRC which has exclusive jurisdiction over his
counterclaims.
ISSUE
Whether or not the RTC has jurisdiction of the present case.
HELD
The SC held that it is the RTC which has jurisdiction by virtue of R.A. 8799.

Section 5(c) of P.D. 902-A (as amended by R.A. 8799, the Securities Regulation
Code) previously applies to a corporate officers dismissal. For a corporate officers
dismissal is always a corporate act and/or an intra-corporate controversy and that
its nature is not altered by the reason or wisdom which the Board of Directors may
have in taking such action.
With regard to petitioners claim for unpaid salaries, unpaid share in net income,
reasonable return on the stock ownership plan and other benefits for services
rendered to Sky Vision, jurisdiction thereon pertains to the Securities Exchange
Commission even if the complaint by a corporate officer includes money claims
since such claims are actually part of the prerequisite of his position and, therefore,
interlinked with his relations with the corporation. The question of remuneration
involving a person who is not a mere employee but a stockholder and officer of the
corporation is not a simple labor problem but a matter that comes within the area of
corporate affairs and management, and is in fact a corporate controversy in
contemplation of the Corporation Code.
While petitioners counterclaims were filed on December 1, 1998, the second
challenged order of the trial court denying respondents motion for reconsideration
of the denial of its motion to dismiss was issued on October 9, 2000 at which time
P.D. 902-A had been amended by R.A. 8799 (approved on July 19, 2000) which
mandated the transfer of jurisdiction over intra-corporate controversies, subject of
the counterclaims, to RTCs.
But even if the subject matter of the counterclaims is now cognizable by RTCs, the
filing thereof against respondent is improper, it not being the real party-in-interest,
for it is petitioners employer Sky Vision, respondents subsidiary. It cannot be
gainsaid that a subsidiary has an independent and separate juridical personality,
distinct from that of its parent company, hence, any claim or suit against the latter
does not bind the former and vice versa.
This Court is thus not convinced that the real party-in-interest with regard to the
counterclaim for damages arising from the alleged tortuous manner by which
petitioner was forced to retire as General Manager of Sky Vision is respondent.
Petition is denied.

EN BANC
[G.R. No. 149578. April 10, 2003]
EVELYN TOLOSA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
QWANA KAIUN (through its resident-agent, FUMIO NAKAGAWA), ASIA BULK
TRANSPORT PHILS. INC., PEDRO GARATE and MARIO ASIS, respondents.
FACTS

Evelyn Tolosa, was the widow of Captain Virgilio Tolosa who was hired by QwanaKaiun, through its manning agent, Asia Bulk, to be the master of the Vessel named
M/V Lady Dona. CAPT. TOLOSA had a monthly compensation of US$1700, plus
US$400.00 monthly overtime allowance. His contract officially began on November
1, 1992, as supported by his contract of employment when he assumed command
of the vessel in Yokohama, Japan. The vessel departed for Long Beach California,
passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT.
TOLOSA was allegedly shown to be in good health.
During channeling activities upon the vessels departure from Yokohama
sometime on November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The
following day, November 7, 1992, he had a slight fever and in the succeeding
twelve (12) days, his health rapidly deteriorated resulting in his death on November
18, 1992. It was alleged that the request for emergency evacuation of Capt Tolosa
was too late.
Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a
Complaint/Position Paper before the POEA against Qwana-Kaiun, thru its residentagent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as
respondents. The case was however transferred to the NLRC, when the amendatory
legislation expanding its jurisdiction, and removing overseas employment related
claims from the ambit of POEA jurisdiction.
Petitioner argues that her cause of action is not predicated on a quasi delict or tort,
but on the failure of private respondents -- as employers of her husband (Captain
Tolosa) -- to provide him with timely, adequate and competent medical services
under Article 161 of the Labor Code.
Respondents aver that the Labor Arbiter has no jurisdiction over the subject matter,
since her cause did not arise from an employer-employee relation, but from a quasi
delict or tort. Further, there is no reasonable causal connection between her suit for
damages and her claim under Article 217 (a)(4) of the Labor Code, which allows an
award of damages incident to an employer-employee relation.

ISSUE
Whether or not the Labor Arbiter has jurisdiction over the subject matter.
HELD
The SC held that the NLRC and the labor arbiter had no jurisdiction over petitioners
claim for damages, because that ruling was based on a quasi delict or tort per
Article 2176 of the Civil Code.
After carefully examining the complaint/position paper of petitioner, we are
convinced that the allegations therein are in the nature of an action based on a
quasidelict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross
negligence. Petitioners complaint/position paper refers to and extensively discusses
the negligent acts of shipmates Garate and Asis, who had no employer-employee

relation with Captain Tolosa. The SC stressed that the case does not involve the
adjudication of a labor dispute, but the recovery of damages based on a quasi
delict.
The jurisdiction of labor tribunals is limited to disputes arising from
employer-employee relations.
Not every dispute between an employer and employee involves matters that only
labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or
quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article
217 of the Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor Code, other labor
statutes, or their collective bargaining agreement.
While it is true that labor arbiters and the NLRC have jurisdiction to award not only
reliefs provided by labor laws, but also damages governed by the Civil Code, these
reliefs must still be based on an action that has a reasonable causal connection with
the Labor Code, other labor statutes, or collective bargaining agreements. The
central issue is determined essentially from the relief sought in the complaint.
Claims for damages under paragraph 4 of Article 217 must have a reasonable
causal connection with any of the claims provided for in the article in order to be
cognizable by the labor arbiter. Only if there is such a connection with the other
claims can the claim for damages be considered as arising from employer-employee
relations. In the present case, petitioners claim for damages is not related to any
other claim under Article 217, other labor statutes, or collective bargaining
agreements.
Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code,
which does not grant or specify a claim or relief. This provision is only a safety and
health standard under Book IV of the same Code. The enforcement of this labor
standard rests with the labor secretary. Thus, claims for an employers violation
thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner
cannot enforce the labor standard provided for in Article 161 by suing for damages
before the labor arbiter.
It is not the NLRC but the regular courts that have jurisdiction over actions for
damages, in which the employer-employee relation is merely incidental, and in
which the cause of action proceeds from a different source of obligation such as a
tort. Since petitioners claim for damages is predicated on a quasi delict or tort that
has no reasonable causal connection with any of the claims provided for in Article
217, other labor statutes, or collective bargaining agreements, jurisdiction over the
action lies with the regular courts -- not with the NLRC or the labor arbiters.
Petition is denied.

SECOND DIVISION
[G.R. No. 152121. July 29, 2003]
EDUARDO G. EVIOTA, petitioner, vs. THE HON. COURT OF APPEALS, THE

HON. JOSE BAUTISTA, Presiding Judge of Branch 136, Regional Trial Court
of Makati, and STANDARD CHARTERED BANK, respondents.
FACTS
Sometime on January 26, 1998, the respondent Standard Chartered Bank and
petitioner Eduardo G. Eviota executed a contract of employment under which the
petitioner was employed by the respondent bank as Compensation and Benefits
Manager, VP (M21). Petitioner came up with many proposals which the bank
approved and made preparations of. He was also given privileges like car,
renovation of the office, and even a trip to Singapore at the companys expense.
However, the petitioner abruptly resigned from the respondent bank barely a month
after his employment and rejoined his former employer. On June 19, 1998, the
respondent bank filed a complaint against the petitioner with the RTC of Makati City
for damages brought about his abrupt resignation.
Though petitioner reimbursed part of the amount demanded by Standard, he was
not able to pay it full.
Standard alleged that assuming arguendo that Eviota had the right to terminate his
employment with the Bank for no reason, the manner in and circumstances under
which he exercised the same are clearly abusive and contrary to the rules governing
human relations, governed by the Civil Code.
Further, Standard alleged that petitioner also violated the Labor Code when he
terminated his employment without one (1) notice in advance. This stipulation was
also provided in the employment contract of Eviota with Standard, which would also
constitute breach of contract.
The petitioner filed a motion to dismiss the complaint on the ground that the action
for damages of the respondent bank was within the exclusive jurisdiction of the
Labor Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as
amended. The petitioner averred that the respondent banks claim for damages
arose out of or were in connection with his employer-employee relationship with the
respondent bank or some aspect or incident of such relationship. The respondent
bank opposed the motion, claiming that its action for damages was within the
exclusive jurisdiction of the trial court. Although its claims for damages incidentally
involved an employer-employee relationship, the said claims are actually predicated
on the petitioners acts and omissions which are separately, specifically and
distinctly governed by the New Civil Code.
ISSUE
Whether or not the RTC had jurisdiction over the case.
HELD
The SC held that the RTC has jurisdiction. Case law has it that the nature of an
action and the subject matter thereof, as well as which court has jurisdiction over

the same, are determined by the material allegations of the complaint and the
reliefs prayed for in relation to the law involved. Not every controversy or money
claim by an employee against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter. A money claim by a worker against the employer or
vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a
reasonable causal connection between the claim asserted and employeeemployer relation. Absent such a link, the complaint will be cognizable by the
regular courts of justice.
Actions between employees and employer where the employer-employee
relationship is merely incidental and the cause of action precedes from a different
source of obligation is within the exclusive jurisdiction of the regular court. The
jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is
limited to disputes arising from an employer-employee relationship which can only
be resolved by reference to the Labor Code of the Philippines, other labor laws or
their collective bargaining agreements.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of
Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal
connection with any of the claims provided for in that article. Only if there is such a
connection with the other claims can the claim for damages be considered as
arising from employer-employee relations.
In this case, the private respondents first cause of action for damages is anchored
on the petitioners employment of deceit and of making the private respondent
believe that he would fulfill his obligation under the employment contract with
assiduousness and earnestness. The petitioner volte face when, without the
requisite thirty-day notice under the contract and the Labor Code of the Philippines,
as amended, he abandoned his office and rejoined his former employer; thus,
forcing the private respondent to hire a replacement. The private respondent was
left in a lurch, and its corporate plans and program in jeopardy and disarray.
Moreover, the petitioner took off with the private respondents computer diskette,
papers and documents containing confidential information on employee
compensation and other bank matters. On its second cause of action, the petitioner
simply walked away from his employment with the private respondent sans any
written notice, to the prejudice of the private respondent, its banking operations
and the conduct of its business. Anent its third cause of action, the petitioner made
false and derogatory statements that the private respondent reneged on its
obligations under their contract of employment; thus, depicting the private
respondent as unworthy of trust.
The primary relief sought is for liquidated damages for breach of a contractual
obligation. The other items demanded are not labor benefits demanded by workers
generally taken cognizance of in labor disputes, such as payment of wages,
overtime compensation or separation pay. The items claimed are the natural
consequences flowing from breach of an obligation, intrinsically a civil dispute.
It is evident that the causes of action of the private respondent against the
petitioner do not involve the provisions of the Labor Code of the Philippines and
other labor laws but the New Civil Code. Thus, the said causes of action are

intrinsically civil. There is no causal relationship between the causes of action of

the private respondents causes of action against the petitioner and their employeremployee relationship. The fact that the private respondent was the erstwhile
employer of the petitioner under an existing employment contract before the latter
abandoned his employment is merely incidental.
Petition is denied.

SECOND DIVISION
[G.R. No. 124382. August 16, 1999]
PASTOR DIONISIO V. AUSTRIA, petitioner, vs. HON. NATIONAL LABOR
RELATIONS COMMISSION (Fourth Division), CEBU CITY, CENTRAL
PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY
ADVENTIST, ELDER HECTOR V. GAYARES, PASTORS REUBEN MORALDE,
OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON
BUHAT, ISACHAR GARSULA, ELISEO DOBLE, PROFIRIO BALACY, DAVID
RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO IBESATE,
MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO
LOBITANA, respondents.
FACTS
Petitioner Pastor Austria worked as a Pastor for respondent Church. He was
dismissed by the respondent Church for misappropriation of denominational funs,
willful breach of trust, serious misconduct, gross and habitual neglect, etc.
Reacting on the dismissal, petitioner filed a complaint with the Labor Arbiter for
illegal dismissal against respondent Church. Respondents averred that that by virtue
of the doctrine of separation of church and state, the Labor Arbiter and the NLRC
have no jurisdiction to entertain the complaint filed by petitioner. Since the matter
at bar allegedly involves the discipline of a religious minister, it is to be considered a
purely ecclesiastical affair to which the State has no right to interfere.
ISSUE
Whether or not the Labor Arbiter and the NLRC have jurisdiction in the case at bar.
HELD
The SC held that the LA and the NLRC have jurisdiction. The principle of separation
of church and state finds no application in this case.
The rationale of the principle of the separation of church and state is summed up in
the familiar saying, Strong fences make good neighbors. The idea advocated by

this principle is to delineate the boundaries between the two institutions and thus
avoid encroachments by one against the other because of a misunderstanding of
the limits of their respective exclusive jurisdictions. The demarcation line calls on
the entities to render therefore unto Ceasar the things that are Ceasars and unto
God the things that are Gods. While the State is prohibited from interfering in
purely ecclesiastical affairs, the Church is likewise barred from meddling in purely
secular matters.
The case at bar does not concern an ecclesiastical or purely religious affair as to bar
the State from taking cognizance of the same. An ecclesiastical affair is one that
concerns doctrine, creed, or form or worship of the church, or the adoption and
enforcement within a religious association of needful laws and regulations for the
government of the membership, and the power of excluding from such associations
those deemed unworthy of membership. Based on this definition, an ecclesiastical
affair involves the relationship between the church and its members and relate to
matters of faith, religious doctrines, worship and governance of the congregation.
To be concrete, examples of this so-called ecclesiastical affairs to which the State
cannot meddle are proceedings for excommunication, ordinations of religious
ministers, administration of sacraments and other activities with which attached
religious significance.
The case at bar does not even remotely concern any of the abovecited examples.
While the matter at hand relates to the church and its religious minister it does not
ipso facto give the case a religious significance. Simply stated, what is involved
here is the relationship of the church as an employer and the minister as an
employee. It is purely secular and has no relation whatsoever with the practice of
faith, worship or doctrines of the church.
In this case, petitioner was not
excommunicated or expelled from the membership of the SDA but was terminated
from employment. Indeed, the matter of terminating an employee, which is purely
secular in nature, is different from the ecclesiastical act of expelling a member from
the religious congregation.
The grounds invoked for petitioners dismissal, namely: misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and habitual
neglect of duties and commission of an offense against the person of his employers
duly authorize representative, are all based on Article 282 of the Labor Code which
enumerates the just causes for termination of employment. By this alone, it is
palpable that the reason for petitioners dismissal from the service is not religious in
nature. Coupled with this is the act of the SDA in furnishing NLRC with a copy of
petitioners letter of termination.
It is, thus, clear that when the SDA terminated the services of petitioner, it was
merely exercising its management prerogative to fire an employee which it believes
to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC,
has the right to take cognizance of the case and to determine whether the SDA, as
employer, rightfully exercised its management prerogative to dismiss an employee.
This is in consonance with the mandate of the Constitution to afford full protection
to labor.

Under the Labor Code, the provision which governs the dismissal of employees, is
comprehensive enough to include religious corporations, such as the SDA, in its
coverage. Article 278 of the Labor Code on post-employment states that the
provisions of this Title shall apply to all establishments or undertakings, whether for
profit or not. Obviously, the cited article does not make any exception in favor of a
religious corporation.
[G.R. No. 165910, April 10, 2006]
HANJIN ENGINEERING and CONSTRUCTION CO. LTD., NAM HYUM KIM,
petitioners, vs. HONORABLE COURT OF APPEALS
FACTS
On October 18, 1991 and August 21, 1992, Hanjin and the Philippine Government,
through the National Irrigation Administration (NIA), executed contracts for the
construction of the Malinao Dam at Pilar, Bohol. From August 1995 to August 1996,
Hanjin contracted the services of 712 carpenters, masons, truck drivers, helpers,
laborers, heavy equipment operators, leadmen, engineers, steelmen, mechanics,
electricians and others.
In April 1998, 712 employees filed complaints for illegal dismissal and for payment
of benefits against Hanjin and Nam Hyun Kim before the National Labor Relations
Commission (NLRC). The complainants averred that they were regular employees of
Hanjin and that they were separated from employment without any lawful or just
cause. Petitioners alleged that the complainants were mere project employees in its
Bohol Irrigation Project.
On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428
complainants.
Petitioners appealed the decision to the NLRC, which affirmed with modification the
Labor Arbiters ruling. The NLRC dismissed the complaints of 34 complainants and
awarded monetary benefits to the others.
Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised
Rules of Court in the CA.
On March 18, 2004, the CA dismissed the petition and affirmed the NLRCs ruling.
Petitioners moved to reconsider the decision, which the CA denied.
Thus Petitioner filed for Petition for Certiorari under Rule 65 of the Revised Rules of
Court.
ISSUE
Whether or not the petitioner, Hanjin Engineering should have filed an Appeal under
Rule 45 of the Rules of Court or Petition for certiorari under Rule 65.
HELD

The proper recourse of the aggrieved party from a decision of the CA is a petition
for review on certiorari under Rule 45 of the Revised Rules of Court.
As gleaned from the records, petitioners received a copy of the assailed CA decision
on March 24, 2004 and filed its motion for reconsideration on April 6, 2004.
Petitioners received a copy of the Order dated October 11, 2004 denying their
Motion for Reconsideration on October 20, 2004. Instead of filing a petition under
Rule 45, they filed on November 23, 2004 the instant Petition for Certiorari under
Rule 65.
Petitioners had until November 4, 2004 within which to file a petition for review on
certiorari on pure questions of law. However, as already stated, petitioners filed
their petition in this Court only on November 23, 2004; indubitably, the decision of
the CA had by then already become final and executory, beyond the purview of this
Court to act upon.
Since the Court of Appeals had jurisdiction over the petition under Rule 65, any
alleged errors committed by it in the exercise of its jurisdiction would be errors of
judgment which are reviewable by timely appeal and not by a special civil action of
certiorari. If the aggrieved party fails to do so within the reglementary period, and
the decision accordingly becomes final and executory, he cannot avail himself of the
writ of certiorari, his predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a petition for review
under Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now
Rule 45 and Rule 65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 is
clear that the decisions, final orders or resolutions of the Court of Appeals in any
case, i.e., regardless of the nature of the action or proceeding involved, may be
appealed to this Court by filing a petition for review, which would be but a
continuation of the appellate process over the original case. Under Rule 45, the
reglementary period to appeal is fifteen (15) days from notice of judgment or denial
of motion for reconsideration.
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner
must show that he has no plain, speedy and adequate remedy in the ordinary
course of law against its perceived grievance. A remedy is considered plain,
speedy and adequate if it will promptly relieve the petitioner from the injurious
effects of the judgment and the acts of the lower court or agency. In this case,
appeal was not only available but also a speedy and adequate remedy.
Clearly, petitioners interposed the present special civil action of certiorari
under Rule 65 as an alternative to their petition not because it is the speedy and
adequate remedy but to make up for the loss of their right of an ordinary appea l. It
is elementary that the special civil action of certiorari is not and cannot be a
substitute for an appeal, where the latter remedy is available, as it was in this case.
A special civil action under Rule 65 of the Rules of Court cannot cure a partys
failure to timely file a petition for review on certiorari under Rule 45 of the Revised
Rules of Court. Rule 65 is an independent action that cannot be availed of as a
substitute for the lost remedy of an ordinary appeal, including that under Rule 45,

especially if such loss or lapse was occasioned by a partys neglect or error in the
choice of remedies. There are exceptions to this rule: (a) when public welfare and
the advancement of public policy dictates; (b) when the broader interest of justice
so requires; (c) when the writs issued are null and void; or (d) when the questioned
order amounts to an oppressive exercise of judicial authority. None of these
recognized exceptions, however, is present in the case at bar. Petitioners failed to
show circumstances that would justify a deviation from the general rule as to make
available a petition for certiorari in lieu of taking an appeal.

[G.R. No. 147806. November 12, 2002]

NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO, GENALYN PELOBELLO,
MARY JANE MENOR, JOSIE RAQUERO, ESTRELITA MANAHAN, REBECCA
EBOL, and ERLINDA ARGA, petitioners, vs. THE HONORABLE COURT OF
APPEALS
FACTS
Petitioners were former employees of Cottonway Marketing Corp. (Cottonway), hired
as promo girls for their garment products. In October, 1994, after their services
were terminated as the company was allegedly suffering business losses,
petitioners filed with the National Labor Relations Commission (NLRC) a complaint
for illegal dismissal, underpayment of salary, and non-payment of premium pay for
rest day, service incentive leave pay and thirteenth month pay against Cottonway
Marketing Corp. and Network Fashion Inc./JCT International Trading.
On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a Decision finding
petitioners' retrenchment valid and ordering Cottonway to pay petitioners'
separation pay and their proportionate thirteenth month pay.
On appeal, the NLRC, in its Decision dated March 26, 1996, reversed the Decision of
the Labor Arbiter and ordered the reinstatement of petitioners without loss of
seniority rights and other privileges. Cottonway filed a motion for reconsideration
which was denied by the Commission in a Resolution dated July 31, 1996.
On August 30, 1996, Cottonway filed with the NLRC a manifestation stating that
they have complied with the order of reinstatement by sending notices dated June
5, 1996 requiring the petitioners to return to work, but to no avail; and
consequently, they sent letters to petitioners dated August 1, 1996 informing them
that they have lost their employment for failure to comply with the return to work
order. Cottonway also filed a petition for certiorari with the Supreme Court which
was dismissed on October 14, 1996.
On November 6, 1997, petitioners filed with the NLRC a motion for execution of its
Decision on the ground that it had become final and executory. Meanwhile,
Cottonway filed a motion for reconsideration of the Supreme Court Resolution of
October 14, 1996 dismissing the petition for certiorari.
The motion for
reconsideration was denied with finality on January 13, 1997.
On March 4, 1997, Cottonway filed a manifestation with the NLRC reiterating their
allegations in their manifestation dated August 30, 1996, and further alleging that

petitioners have already found employment elsewhere. The Commission ruled that
its Decision dated March 26, 1996 has become final and executory and it is the
ministerial duty of the Labor Arbiter to issue the corresponding writ of execution to
effect full and unqualified implementation of said decision.
Cottonway filed a petition for certiorari with the Court of Appeals seeking the
reversal of the ruling of the NLRC and the reinstatement. The appellate court
granted the petition in its Decision dated March 13, 2000. It ruled that petitioners'
reinstatement was no longer possible as they deliberately refused to return to work
despite the notice given by Cottonway. The Court of Appeals thus held that the
amount of backwages due them should be computed only up to the time they
received their notice of termination.
ISSUE
Whether or not the Court of Appeals acted with grave abuse of discretion when it
set aside the Decision of the NLRC reinstating the petitioners and ordering the
payment of backwages and other benefits.
HELD
The decision of the NLRC dated March 26, 1996 has become final and executory
upon the dismissal by this Court of Cottonways petition for certiorari assailing said
decision and the denial of its motion for reconsideration. Said judgment may no
longer be disturbed or modified by any court or tribunal. It is a fundamental rule
that when a judgment becomes final and executory, it becomes immutable and
unalterable, and any amendment or alteration which substantially affects a final and
executory judgment is void, including the entire proceedings held for that purpose.
Once a judgment becomes final and executory, the prevailing party can have it
executed as a matter of right, and the issuance of a writ of execution becomes a
ministerial duty of the court. A decision that has attained finality becomes the law of
the case regardless of any claim that it is erroneous. The writ of execution must
therefore conform to the judgment to be executed and adhere strictly to the very
essential particulars.
To justify the modification of the final and executory decision of the NLRC dated
March 26, 1996, the Court of Appeals cited the existence of a supervening event,
that is, the valid termination of petitioners' employment due to their refusal to
return to work despite notice from respondents reinstating them to their former
position.
We cannot concur with said ruling. Petitioners' alleged failure to return to work
cannot be made the basis for their termination. Such failure does not amount to
abandonment which would justify the severance of their employment. To warrant a
valid dismissal on the ground of abandonment, the employer must prove the
concurrence of two elements: (1) the failure to report for work or absence without
valid or justifiable reason, and (2) a clear intention to sever the employer-employee
relationship.
We note that Cottonway, before finally deciding to dispense with their services, did
not give the petitioners the opportunity to explain why they were not able to report
to work. The records also do not bear any proof that all the petitioners received a

copy of the letters. Cottonway merely claimed that some of them have left the
country and some have found other employment.
This, however, does not
necessarily mean that petitioners were no longer interested in resuming their
employment at Cottonway as it has not been shown that their employment in the
other companies was permanent. It should be expected that petitioners would seek
other means of income to tide them over during the time that the legality of their
termination is under litigation. Furthermore, petitioners never abandoned their suit
against Cottonway.
It appears that the supposed notice sent by Cottonway to the petitioners
demanding that they report back to work immediately was only a scheme to
remove the petitioners for good. Petitioners failure to instantaneously abide by the
directive gave them a convenient reason to dispense with their services. This the
Court cannot allow. Cottonway cited Article 223 of the Labor Code providing that
the decision ordering the reinstatement of an illegally dismissed employee is
immediately executory even pending appeal as basis for its decision to terminate
the employment of petitioners.
The foregoing provision is intended for the benefit of the employee and cannot be
used to defeat their own interest. The law mandates the employer to either admit
the dismissed employee back to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate him in the payroll to abate further
loss of income on the part of the employee during the pendency of the appeal. But
we cannot stretch the language of the law as to give the employer the right to
remove an employee who fails to immediately comply with the reinstatement order,
especially when there is reasonable explanation for the failure. If Cottonway were
really sincere in its offer to immediately reinstate petitioners to their former
positions, it should have given them reasonable time to wind up their current
preoccupation or at least to explain why they could not return to work at Cottonway
at once. Cottonway did not do either. Instead, it gave them only five days to report
to their posts and when the petitioners failed to do so, it lost no time in serving
them their individual notices of termination.

[G.R. No. 152329. April 22, 2003]

ALEJANDRO ROQUERO, petitioner,
respondent.

vs.

PHILIPPINE

AIRLINES,

INC.,

FACTS
Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent
PAL. From the evidence on record, it appears that Roquero and Pabayo were caught
red-handed possessing and using Methampethamine Hydrochloride or shabu in a
raid conducted by PAL security officers and NARCOM personnel. Roquero and
Pabayo received a notice of administrative charge for violating the PAL Code of
Discipline. They were required to answer the charges and were placed under

preventive suspension. Roquero and company alleged that they were set up by PAL
to take the drugs through a certain trainee. In a Memorandum dated July 14, 1994,
Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal
dismissal.
The Labor Arbiter ruled against Roquero and upheld the validity of their dismissal,
but awarded separation pay.
While the case was on appeal with the NLRC, the complainants were acquitted by
the RTC, in the criminal case which charged them with conspiracy for possession
and use of a regulated drug in violation of Section 16, Article III of Republic Act
6425, on the ground of instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation.
It ordered reinstatement to their former positions but without backwages.
Complainants did not appeal from the decision but filed a motion for a writ of
execution of the order of reinstatement. The Labor Arbiter granted the motion but
PAL refused to execute the said order on the ground that they have filed a Petition
for Review before this Court. In accordance with the case of St. Martin Funeral Home
vs. NLRC and Bienvenido Aricayos, PALs petition was referred to the Court of
Appeals.
The CA reversed the decision of the NLRC and held that petitioners dismissal was
valid, but it denied the award of separation pay. Hence, petitioner filed this petition
for review under Rule 45.

ISSUE
Whether or not PAL can validly refuse to execute an order for reinstatement on the
ground that the case is still on appeal.
HELD
The SC held that PAL cannot refuse to execute an order for reinstatement on the
ground that the case is still on appeal.
Article 223(3) of the Labor Code (as amended by Section 12 of Republic Act No.
6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715,
Amending the Labor Code) provide that an order of reinstatement by the Labor
Arbiter is immediately executory even pending appeal.
In authorizing execution pending appeal of the reinstatement aspect of a decision of
the Labor Arbiter reinstating a dismissed or separated employee, the law itself has
laid down a compassionate policy which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and the working man. These duties and
responsibilities of the State are imposed not so much to express sympathy for the
workingman as to forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms with equal

intensity. Labor is an indispensable partner for the nations progress and stability. In
short, with respect to decisions reinstating employees, the law itself has determined
a sufficiently overwhelming reason for its execution pending appeal.
Then, by and pursuant to the same power (police power), the State may authorize
an immediate implementation, pending appeal, of a decision reinstating a dismissed
or separated employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the appellant, a continuing
threat or danger to the survival or even the life of the dismissed or separated
employee and his family.
The order of reinstatement is immediately executory. The unjustified refusal of the
employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of
a writ of execution. Unless there is a restraining order issued, it is ministerial upon
the Labor Arbiter to implement the order of reinstatement. In the case at bar, no
restraining order was granted.
Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate him in the
payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as
if he was reinstated, from the time of the decision of the NLRC until the finality of
the decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where the Rules
of Court are applied only in a suppletory manner and only to effectuate the
objectives of the Labor Code and not to defeat them. Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement
order is reversed with finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he actually rendered services
during the period.
Dismissal of Petitioner is affirmed, but respondent PAL is ordered to pay the wages
to which Roquero is entitled from the time the reinstatement order was issued until
the finality of this decision.

[G.R. No. 140294. May 9, 2005]

MARY ABIGAILS FOOD SERVICES, INC., MARY RESURRECCION T. PUNO,
petitioners, vs. COURT OF APPEALS and PERLA B. BOLANDO, respondents.
FACTS
Sometime in September, 1997, private respondent Perla B. Bolando was hired by
petitioner Mary Abigails Food Services, Inc. (Abigails for brevity), to work as a
counter-girl at its branch at the Rizal Technological College. Bolandos work
schedule was from 10:00 oclock a.m. to 8:00 oclock p.m., except on Saturdays
when she works from 9:00 oclock a.m. to 4:00 oclock p.m. She likewise works on
Sundays when required by management. Bolando receives a daily wage of P 180.00
with two (2) complete meal allowances of P40.00.
On February 10, 1998, Bolando was given a memorandum by management
terminating her services due to excessive tardiness and falsification of time record.
Contending that her dismissal by reason of tardiness is unjust, harsh and
unreasonable, and that she was denied due process as she was not given an
opportunity to be heard, Bolando filed with the arbitration branch of the NLRC,
National Capital Region, a complaint for illegal dismissal.
In a decision dated November 12, 1998, the Labor Arbiter rendered judgment for
Bolando.
Petitioners received, thru counsel, their copy of the aforementioned decision of the
Labor Arbiter on December 23, 1998. As such, the last day of the 10-day period for
them to take an appeal therefrom to the NLRC under the Labor Code would be on
January 2, 1999. Because January 2, 1999 was a Saturday, petitioners filed their
Notice of Appeal and Memorandum of Partial Appeal on the following business day,
January 4, 1999, a Monday, and subsequently posted a surety bond only on January
7, 1999.
In a Resolution dated February 26, 1999, the NLRCs Third Division, finding that the
required bond was posted three (3) days beyond the 10-day reglementary period for
perfecting an appeal, dismissed petitioners appeal for failure to perfect the same
within the reglementary period.
Petitioners moved for a reconsideration, asseverating that their late filing of the

required bond should not prejudice the perfection of their appeal considering the
timely filing of their Notice of Appeal and Memorandum of Partial
Appeal, and the liberal interpretation given to the provisions of the Labor Code in
the matter of appeal bond in cases involving monetary awards, as in the instant
case. Such was denied by the NLRC
Therefrom, petitioners went to the Court of Appeals on a petition for certiorari under
Rule 65 maintaining that the NLRC should have relaxed the time-requirement for the
posting of appeal bond, additionally claiming that the long holiday (Christmas
season) which followed their receipt on December 23, 1998 of the Labor Arbiters
decision rendered the timely filing of the required bond an impossibility. The same
was dismissed by the Court of Appeals and accordingly affirmed the assailed
decision of the NLRC.
ISSUE
Whether or not petitioners appeal with the NLRC was correctly dismissed for failure
to perfect the same by not posting the required bond within the reglementary
period provided for by law.
HELD
The posting of a cash or surety bond is a requirement sine qua non for the
perfection of an appeal from the labor arbiters monetary award. Notably, the
perfection of an appeal within the period and in the manner prescribed by law is
jurisdictional and non-compliance with the requirements therefore is fatal and has
the effect of rendering the judgment sought to be appealed final and executory.
Such requirement cannot be trifled with.
Here, while it is true that petitioners seasonably filed their notice of appeal and
memorandum of partial appeal, they admittedly posted the required bond three (3)
days late. Hence, their appeal from the decision of the Labor Arbiter to the NLRC
was never perfected.
It is of no moment that petitioners notice of appeal and memorandum of partial
appeal were timely filed. We need
not stress that Article 223 of the Labor Code, as amended, is explicit that an
appeal by the employer may be perfected only upon the posting of a cash or surety
bond.
The intention of the lawmakers to make the bond an indispensable requisite for the
perfection of an appeal by the employer is clearly limned in the provision that an
appeal by the employer may be perfected only upon the posting of a cash or surety
bond. The word only makes it perfectly clear, that the lawmakers intended that
the posting of a cash or surety bond by the employer to be the exclusive means by
which an employer's appeal may be perfected.
With the reality that herein petitioners failed to perfect their appeal by the nonpayment of the appeal bond within the ten-day period provided for by law, it follows
that the judgment of the labor arbiter has passed to the realm of finality. Neither,
therefore, the NLRC nor the Court of Appeals may be faulted for ruling against

petitioners.
On a final note, it bears stressing that the right to appeal is merely statutory and
one who seeks to avail of it must comply with the statute or rules. The requirements
for perfecting an appeal within the reglementary period specified in the law must be
strictly followed as they are considered indispensable interdictions against needless
delays.
[G.R. No. 157010. June 21, 2005]
PHILIPPINE NATIONAL BANK, petitioner, vs. FLORENCE O. CABANSAG,
respondent.
FACTS
In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a
tourist. She applied for employment, with the Singapore Branch of the Philippine
National Bank. At the time, the Singapore PNB Branch was under the helm of Ruben
C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank.
She applied for employment as Branch Credit Officer, at a total monthly package of
$SG4,500.00, effective upon assumption of duties after approval. Ruben C. Tobias
found her eminently qualified and wrote on October 26, 1998, a letter to the
President of the Bank in Manila, recommending the appointment of Florence O.
Cabansag, for the position.
On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag
offering her a temporary appointment, as Credit Officer, at a basic salary of
Singapore Dollars 4,500.00, a month and, upon her successful completion of her
probation to be determined solely, by the Bank, she may be extended at the
discretion of the Bank, a permanent appointment and that her temporary
appointment was subject to certain terms and conditions.
Cabansag accepted the position and assumed office.
In the meantime, the
Philippine Embassy in Singapore processed the employment contract of Florence O.
Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas
Employment Administration, an Overseas Employment Certificate, certifying that
she was a bona fide contract worker for Singapore.
Barely three (3) months in office Tobias told Cabansag that her resignation was
imperative as a cost-cutting measure of the Bank. Tobias, likewise, told Cabansag
that the PNB Singapore Branch will be sold or transformed into a remittance office
and that, in either way, she had to resign from her employment. She then asked
Ruben C. Tobias that she be furnished with a Formal Advice from the PNB Head
Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did
not submit any letter of resignation.
On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his
office and demanded that she submit her letter of resignation, with the pretext that
he needed a Chinese-speaking Credit Officer to penetrate the local market, with the
information that a Chinese-speaking Credit Officer had already been hired and will
be reporting for work soon. She was warned that, unless she submitted her letter of
resignation, her employment record will be blemished with the notation DISMISSED
spread thereon. Without giving any definitive answer, Florence O. Cabansag asked

Ruben C. Tobias that she be given sufficient time to look for another job. Ruben C.
Tobias told her that she should be out of her employment by May 15, 1999.
However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag
and adamantly ordered her to submit her letter of resignation. She refused. On
April 20, 1999, she received a letter from Ruben C. Tobias terminating her
employment with the Bank.
On January 18, 2000, the Labor Arbiter rendered judgment in favor of the
Complainant and against the Respondents. PNB appealed the labor arbiters
Decision to the NLRC. In a Resolution dated June 29, 2001, the Commission
affirmed that Decision.
Petitioner appealed to the Court of Appeals which rendered a decision in favor of
Florence Cabansag.
ISSUE
Whether or not the arbitration branch of the NLRC in the National Capital Region has
jurisdiction
over
the
instant
controversy.
HELD
The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor
Code and more specifically, Section 10 of RA 8042 reads in part:
SECTION 10. Money Claims. Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and
other forms of damages.
Based on the foregoing provisions, labor arbiters clearly have original and exclusive
jurisdiction over claims arising from employer-employee relations, including
termination disputes involving all workers, among whom are overseas Filipino
workers (OFW). We are not unmindful of the fact that respondent was directly hired,
while on a tourist status in Singapore, by the PNB branch in that city state. Prior to
employing respondent, petitioner had to obtain an employment pass for her from
the Singapore Ministry of Manpower.
Securing the pass was a regulatory
requirement pursuant to the immigration regulations of that country.
Noteworthy is the fact that respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the Philippine Embassy in
Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide
contract worker for Singapore. Under Philippine law, this document authorized her
working status in a foreign country and entitled her to all benefits and processes
under our statutes. Thus, even assuming arguendo that she was considered at the
start of her employment as a direct hire governed by and subject to the laws,
common practices and customs prevailing in Singapore she subsequently became a
contract worker or an OFW who was covered by Philippine labor laws and policies
upon certification by the POEA.
At the time her employment was illegally

terminated, she already possessed the POEA employment Certificate.

Whether employed locally or overseas, all Filipino workers enjoy the protective
mantle of Philippine labor and social legislation, contract stipulations to the contrary
notwithstanding.
For purposes of venue, workplace shall be understood as the place or locality where
the employee is regularly assigned when the cause of action arose. It shall include
the place where the employee is supposed to report back after a temporary detail,
assignment or travel. In the case of field employees, as well as ambulant or
itinerant workers, their workplace is where they are regularly assigned, or where
they are supposed to regularly receive their salaries/wages or work instructions
from, and report the results of their assignment to their employers.
Under the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), a
migrant worker refers to a person who is to be engaged, is engaged or has been
engaged in a remunerated activity in a state of which he or she is not a legal
resident; to be used interchangeably with overseas Filipino worker.[21] Undeniably,
respondent was employed by petitioner in its branch office in Singapore.
Admittedly, she is a Filipino and not a legal resident of that state. She thus falls
within the category of migrant worker or overseas Filipino worker.

[G.R. No. 155651, July 28, 2005]

COCA-COLA BOTTLERS PHILIPPINES, INC., SALES FORCE UNION-PTGWOBALAIS, PETITIONER, VS. COCA-COLA BOTTLERS, PHILIPPINES, INC.,
RESPONDENT.
FACTS
In January 1989, the Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO
(UNION) filed a Notice of Strike with the National Conciliation and Mediation Board
raising certain issues for conciliation. As a result of said dispute, the UNION staged a
strike.
Subsequently, the Board succeeded in making the parties agree to a voluntary
settlement of the case via a Memorandum of Agreement signed by them on
February 9, 1989. Among others, the petitioner and the respondent agreed, as
follows:
1. Christmas Bonus
The Company shall grant to all those covered by the Bargaining Unit represented by
the Union an amount equivalent to fifty (50%) percent of their average commission
for the last six (6) months.
The union hereby acknowledges that the granting of a Christmas bonus is purely a

Management prerogative and as such, in determining the amount thereof the same
is solely a discretion of Management. The parties however agree that henceforth
whenever Management exercises this prerogative, the same shall include the
average commission for the last six (6) months prior to the grant.
Since then, the management granted to each covered employee every December of
the year a certain percentage of his basic pay and an amount equivalent to fifty
(50%) percent of his average commission for the last six months prior to the grant.
However, in December 1999, the respondent granted a fixed amount of P4,000.00
only, eliminating thereby the said 50% employees average commission for the last
six months for members of the union. Thus, claiming the same as violation of the
MOA, the union submitted its grievance to the respondent. No settlement was
reached, hence, the case was then referred to a Panel of Voluntary Arbitrators.
The Union asseverates that the grant of the additional 50% of the average
commission has become a practice since 1989 and has ripened into a contractual
obligation. On the other hand, the respondent company countered that in 1999 it
suffered its worst financial performance in its history; that its sales volume was
twenty percent (20%) behind plan and ten percent (10%) below the sales in 1998,
as a result, it suffered an abnormal loss of Two Billion Five Hundred Million Pesos
(P2,500,000,000.00); that faced with tremendous losses, the management decided
not to grant bonuses to its employees in 1999; that through Memorandum 99010
dated December 14, 1999, its President, Mr. Peter Baker explained to the employees
the companys financial situation and the decision not to grant bonuses; that in the
same memo however, the company granted a special ex gratia payment of Four
Thousand Pesos (P4,000.00) to all its permanent employees.
After hearing and the submission of evidence and position papers, the Arbitration
Panel composed of Apron Mangabat and Noel Sanchez, as chairman and member,
respectively, denied petitioners claim and declared that the P4,000.00 given as ex
gratia is not a bonus, while Arnel Dolendo, another member dissented.
A copy of this Decision dated 21 January 2001 was received by petitioners counsel
on 20 February 2001. It was only signed by the Chairman of the Panel, Mr. Apron
Mangabat, and one of its members, Atty. Noel Sanchez and not by Atty. Arnel
Dolendo. Petitioners claim that because the Panels decision without such
dissenting and separate opinion attached thereto makes the decision incomplete
and prematurely issued.
On 12 March 2001, petitioner filed a motion for reconsideration of the 21
January 2001 Decision.On 30 May 2001, the Panel denied petitioners motion for
reconsideration. A copy of the Order of denial was received by petitioner on 09 July
2001. By virtue thereof, petitioner filed a Petition for Review before the Court of
Appeals on 24 July 2001.
The Court of Appeals ruled that the the P4,000.00 special ex gratia payment is a
Christmas bonus, hence, petitioners members are entitled to the additional 50%
average commission but dismissed the petition on the ground that petitioners
motion for reconsideration dated 12 March 2001 of the Decision of the Panel that
was originally received on 20 February 2001 was filed out of time; hence, the said

Decision already became final and executory after ten (10) calendar days from
receipt of the copy of the Decision by the parties pursuant to Article 262-A of the
Labor Code.
ISSUE
Whether or not the Court of Appeals committed a reversible error when it dismissed
the petition on mere technicality contrary to settled jurisprudence, after favorably
ruling on the merits in favor of petitioner.
HELD
The resolution of the present controversy hinges for the most part on the correct
disposition of petitioners argument that the Panels Decision sans the dissenting
opinion of one of its members was irregularly issued; hence, did not toll the running
of the prescriptive period within which to file a motion for reconsideration. To
sustain petitioners argument would mean that the subject Decision could still be
reviewed by the Court of Appeals. A contrary resolution would stamp the subject
decision with finality rendering it impervious to review pursuant to the doctrine of
finality of judgments.
Rule VII, Section 1 of the Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings provides the key. Therein, what constitutes the voluntary
arbitrators decision is defined with precision, to wit:
Section 1. Decision Award. -- The final arbitral disposition of issue/s submitted to
voluntary arbitration is the Decision. The disposition may take the form of a
dismissal of a claim or grant of specific remedy, either by way of prohibition of
particular acts or specific performance of particular acts. In the latter case the
decision is called an Award.
In herein case, the Decision of the Panel was in the form of a dismissal of
petitioners complaint. Naturally, this dismissal was contained in the main decision
and not in the dissenting opinion. Thus, under Section 6, Rule VII of the same
guidelines implementing Article 262-A of the Labor Code, this Decision, as a matter
of course, would become final and executory after ten (10) calendar days from
receipt of copies of the decision by the parties even without receipt of the
dissenting opinion unless, in the meantime, a motion for reconsideration or a
petition for review to the Court of Appeals under Rule 43 of the Rules of Court is
filed within the same 10-day period. As correctly pointed out by the Court of
Appeals, a dissenting opinion is not binding on the parties as it is a mere expression
of the individual view of the dissenting member from the conclusion held by the
majority of the Court, following our ruling in Garcia v. Perez as reiterated in National
Union of Workers in Hotels, Restaurants and Allied Industries v. NLRC.
Prescinding from the foregoing, the Court of Appeals correctly dismissed the petition
before it as it no longer had any appellate jurisdiction to alter or nullify the decision
of the Panel. The Panels Decision had become final and executory, hence,
unchallengeable.

[G.R. No. 154002 August 19, 2005]

PHILIPPINE SCOUT VETERANS SECURITY & INVESTIGATION AGENCY, INC.
(PSVSIA), Petitioner- versus -JOSE PASCUA,Respondent.
FACTS
This is a petition for review on certiorari assailing NLRC's Resolution in dismissing
the appeal for petitioner's failure to post an appeal bond.
Respondent was employed as a security guard by petitioner. When petitioner's
personal manager proposed to change his employment from regular to retainer & to
pay him his retirement benefits amounting to P 15,000.00, respondent denied.
When he reported to work, he was told that petitioner has terminated his
employment.
Petitioner, in its answer to the complaint denied the allegation. Labor Arbiter
rendered a decision dismissing the complaint. On appeal, NLRC issued a resolution
remanding the case to LA for further proceeding. LA rendered decision finding that
respondent was illegally dismissed from employment and ordered petitioner to pay
him full backwages, separation pay, unpaid portion of his 13th month pay and
service incentive leave, cash bond refund, and attorney's fees.
Petitioner filed with NLRC an appeal and motion to reduce the appeal bond.

NLRC's dismissed the appeal for petitioner's failure to post an appeal bond.
Petitioner filed a motion for reconsideration but was denied by NLRC. Petitioner then
filed for petition for certiorari alleging that NLRC committed grave abuse of
discretion in dismissing its appeal.
ISSUE
Whether or not NLRC committed grave abuse of discretion in dismissing its appeal.
HELD
Under Art 223 of the Labor Code, the posting of appeal bond is mandatory. In case
of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash/surety bond issued by a reputable bond
company duly accredited by the commission in the amount equivalent to the
monetary award in the judgment appealed from.
If NLRC was not able to resolve such "Motion to Reduce Bond" within the ten (10)
reglementary period following receipt of the order, resolution or decision of the
NLRC, appellant still has to post an appeal bond to forestall the finality of such
order, resolution or decision.
Requisites for perfection of appeal laid down in Sec 4(a) & 6 of Rule VI of the NLRC
Rules of Procedure (as amended by Resolution No 01-02 Series of 2002). The appeal
shall be filed within the reglementary period as provided in Sec 1 of Rule VI, shall be
verified by appellant himself in accordance with Sec 4, Rule 7 of the Rules of Court
with proof of payment of the required appeal fee and the posting of a cash/surety
bond as provided in Sec 6, Rule VI; shall be accompanied by a memorandum of
appeal in three (3) legibly typewritten copies which shall state the grounds relied
upon and the arguments in support thereof; the relief prayed for; and a statement
of the date when the appellant received the appellant decision, resolution or order &
certification of non-forum shopping with proof of service on the other party of such
appeal. A mere notice of appeal without complying with the other requisites
aforestated shall not stop the running period of perfecting an appeal.
The perfection of an appeal in the manner and within the period prescribed by law is
not only mandatory but jurisdictional, and failure to conform to the rules will render
the judgment sought to be received final and unappealable.
Petition is denied.

[G.R. No. 160871 February 6, 2006]

TRIAD SECURITY & ALLIED SERVICES, INC. and ANTHONY U. QUE,
Petitioners, VS.
SILVESTRE ORTEGA, JR., ARIEL ALVARO, RICHARD
SEVILLANO, MARTIN CALLUENG, and ISAGANI CAPILA, Respondents.
FACTS
On 25 March 1999, respondents filed a complaint against petitioners and a certain
Ret. B/Gen. Javier D. Carbonell for underpayment/nonpayment of salaries, overtime
pay, premium pay for holiday and rest day, service incentive leave pay, holiday pay,
and attorneys fees. The complaint was amended on 20 April 1999 to include the
charges of illegal dismissal, illegal deductions, underpayment/nonpayment of
allowance, separation pay, and claims for 13th month pay, moral and exemplary
damages as well as night shift differential.
According to respondents, during the time that they were in the employ of
petitioners, they were receiving compensation which was below the minimum wage
fixed by law. They were also made to render services everyday for 12 hours but
were not paid the requisite overtime pay, nightshift differential, and holiday pay.
Respondents likewise lamented the fact that petitioners failed to provide them with
weekly rest period, service incentive leave pay, and 13th month pay. As a result of
these perceived unfairness, respondents filed a complaint before the Labor
Standards Enforcement Division of the Department of Labor on 6 January 1999.
Upon learning of the complaint, respondents services were terminated without the
benefit of notice and hearing.
For their part, petitioners denied respondents claim of illegal dismissal. Petitioners
explained that management policies dictate that the security guards be rotated to
different assignments to avoid fraternization and that they be required to take
refresher courses at their headquarters. Respondents allegedly refused to comply
with these policies and instead went on leave or simply refused to report at their
headquarters.
As for respondents money claims, petitioners insisted that
respondents worked for only eight hours a day, six days a week and that they
received their premium pays for services rendered during holidays and rest day.
The service incentive leave of respondents was allegedly made payable as soon as
respondents applied for said benefit.
ISSUE
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT THE
REMEDY ADOPTED BY THE PETITIONERS IS ERRONEOUS.

HELD
Petitioners contend that based on the rules of procedure of the NLRC, the order
granting the issuance of the 2nd alias writ of execution could not have been the
proper subject of an appeal before the NLRC neither could petitioners have sought
the remedy of certiorari from the NLRC. Petitioners argue that the rules of
procedure of the NLRC do not provide for any remedy or procedure for challenging
the order granting a writ of execution; hence, the pertinent provision of the Revised
Rules of Court should apply which in this case is Section 1 of Rule 41
It is a basic tenet of procedural rules that for a special civil action for a petition for
certiorari to prosper, the following requisites must concur: (1) the writ is directed
against a tribunal, a board or an officer exercising judicial or quasi-judicial functions;
(2) such tribunal, board or officer has acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3)
there is no appeal or any plain, speedy and adequate remedy in the ordinary course
of law.
In this case, petitioners insist that the NLRC is bereft of authority to rule on a matter
involving grave abuse of discretion that may be committed by a labor arbiter. Such
conclusion, however, proceeds from a limited understanding of the appellate
jurisdiction of the NLRC under
Article 223 of the Labor Code
Given the foregoing, we hold that the Court of Appeals correctly dismissed the
petition for certiorari brought before it. Notwithstanding this procedural defect
committed by petitioners, in the interest of substantial justice
WHEREFORE, premises considered, this Court AFFIRMS the Decision of the Court of
Appeals dated 31 July 2003 and the Order dated 23 April 2003 of the Labor Arbiter
declaring petitioners liable for additional accrued backwages. The amount of
money claims due the respondents is, however, MODIFIED. Let the records of this
case be remanded to the Computation and Examination Unit of the NLRC for proper
computation of subject money claims as above-discussed.

[G.R. Nos. 146653-54, February 20, 2006]

WESTMONT PHARMACEUTICALS, INC., UNITED LABORATORIES, INC.,
AND/OR JOSE YAO CAMPOS, CARLOS EJERCITO, ERNESTO SALAZAR,
ELIEZER SALAZAR, JOSE SOLIDUM, JR., PETITIONERS, VS. RICARDO C.
SAMANIEGO, RESPONDENT.

[G.R. NOS. 147407-08]

RICARDO C. SAMANIEGO, PETITIONER, VS. WESTMONT PHARMACEUTICALS,
INC. AND UNITED LABORATORIES, INC., RESPONDENTS.
FACTS
Ricardo Samaniego was initially hired by Unilab as Professional Service
Representative of its marketing arm, Westmont. Later, Unilab promoted him as a
Senior Business Development Associate and assigned him in Isabela as Acting
District Manager of Westmont and Chairman of Unilab Special Projects. He was then
transferred to Metro Manila pending the investigation of his subordinate and
physicians of Region II involved in a sales discount and Rx trade-off controversy. He
was placed under floating status and assigned to perform duties not connected with
his position. This transfer resulted in the diminution of his salary.
Ricardo Samaniego then filed with the Office of the Labor Arbiter for illegal dismissal
and damages against Westmont and Unilab, as well as Unilabs Officer
Westmont and Unilab filed a motion to dismiss Samaniegos complaint on the
ground of improper venue and lack of cause of action. They argued that it should be
filed with the NLRC in Manila, not with the Office of the Labor Arbiter in Tuguegarao
City, Cagayan, and that the action should be against Westmont, Samaniegos
employer.
The Labor Arbiter denied the motion to dismiss, Citing Section 1, Rule IV, of the
NLRC Rules and Procedure allowing the Labor Arbiter to order a change of venue in
meritous cases, he then set the case for preliminary conference during which the
petitioners expressly reserved their right to contest the order denying motion to
dismiss.
Petitioners filed with the NLRC an Urgent Petition to Change or Transfer Venue. They
also filed to suspend proceedings in view of the pendency of their petition.
The Labor Arbiter issued an order directing parties to submit their respective papers
and supporting documents within 20 days from notice, after which the case shall be
submitted for decision.
The NLRC acting on the petition to change venue, ordered the Labor Arbiter to
forward the records of the case. The Labor Arbiter retained a complete duplicate
original copies of the records and set the case for hearing. They petitioners filed a
motion for cancellation of the hearings because their petition for change of venue
has remained unresolved. They did not submit their position papers and did not
attend hearing, thus the Labor Arbiter considered the case submitted for Decision
based on the records and the evidence submitted by Samaniego and rendered a
decision finding that Samaniego is illegally and unjustly dismissed constructively.
Petitioners appeal to the NLRC. The NLRC dismissed the petition for change of venue
because when the cause of action arouse, Samaniegos workplace in Isabela over
which the Labor Arbiter in Cagayan has the jurisdiction. However it declared the

decision of the NLRC null and void because it continued to conduct further
proceedings despite the pendency of the appeal-treated Urgent Petition for Change
and Westmont and Unilab are denied due process.
Both Parties applied for motion for reconsideration but both were denied by the
NLRC.
Hence this petition.
ISSUE
1. Whether or Not Court of Appeals erred in denying their motion to dismiss by
reason of improper venue.
2. Whether or Not Westmont and Unilab are denied of due process.
HELD
The petition to change or transfer venue filed by herein petitioners with the NLRC is
not the proper remedy to assail the Labor Arbiters order denying their motion to
dismiss. Such order is merely interlocutory, hence not appealable as provided in
Section 3 of the 1997 NLRC Rules and Procedures.
An order denying a motion to dismiss is interlocutory, and so the proper in such a
case is to appeal after a decision has been rendered.
Assuming that the petition to change or transfer venue is the proper remedy, still
we find that the CA did not err in sustaining the Labor Arbiters Order of denying the
motion to dismiss because under the 1997 NLRC rules and procedure under Section
1, All cases which the Labor Arbiters have authority to hear and decide may be filed
in the Regional Arbitration Branch having jurisdiction over the workplace of the
complainant/petitioner. The question of venue essentially relates to the trial and
touches more upon the convenience of the parties, rather than upon the substance
and merits of the case. Our permissive rules underlying the provisions on venue are
intended to assure convenience for the plaintiff and his witnesses and to promote
the end of justice. This axiom all the more finds applicability in cases involving labor
and management because of the principle, paramount in our jurisdiction, that the
State shall afford to full protection of labor.
Because Samaniegos regular place of assignment was in Isabela when he was
transferred to Metro Manila or when the cause of action arose. Clearly, the Appellate
Court was correct in Affirming the Labor Arbiters finding that the proper venue is in
the RAB No. II at Tuguegarao City, Cagayan.
On the contention that Westmont and Unilab that they were denied due process,
well settled is the rule that the essence of due process is simply an opportunity to
be heard or as applied to administrative proceeding, an opportunity to explain ones
side or an opportunity to seek a reconsideration of the action or ruling complained
of. The requirement of due process in labor cases before a Labor Arbiter is satisfied
when the parties are given the opportunity to submit their position papers to which
they are supposed to attach all the supporting documents or documentary evidence

that would prove their respective claims, in the even the Labor Arbiter determines
that no formal hearing would be conducted of that such hearing was not necessary.
As shown by the records, the Labor Arbiter gave Westmont and Unilab, not only
once, but thrice, the opportunity to submit their position papers and supporting
affidavits and documents. But they were obstinate. Clearly, they were not denied
their right to due process.
The assailed decision of the CA is affirmed.

[May 31, 2006 G.R. No. 165486]

CENTRO ESCOLAR UNIVERSITY FACULTY AND ALLIED WORKERS UNION
INDEPENDENT, Petitioner, versus HON. COURT OF APPEALS, APRON
MANGABAT as Voluntary Arbitrator, and CENTRO ESCOLAR UNIVERSITY,
Respondents
FACTS
Petitioner union represents the teaching and the non-teaching staff of respondent
university. The union has existing collective bargaining agreements with the
university. Increases in the salary of both teaching and non-teaching personnel for
the period 2000 to 2005 were provided in the collective bargaining agreements.
Respondent university admits that for the salary increases for the schools faculty,
some were taken from the university fund and the others are deducted form the
incremental proceeds.
Petitioner asserts that the integrated IP granted in the CBAs should not be deducted
from the personnels 70% share in the IP. Petitioner filed with the NCMB a preventive
mediation for the recovery of IP losses due to the universitys alleged deduction of
the cost of CBA-won economic benefits form the 70% share of the teachers and
employees in the IP.
The parties submitted the case for a voluntary arbitration. On April 10, 2003,
Voluntary Arbitrator Apron Mangabat upheld the position of the university and
dismissed the case. Petitioner brought the case to the Court of Appeals via petition
for certiorari under Rule 65 of the 1997 Rules of Court. The CA dismissed the
petition on the ground that petitioner used a wrong mode of appeal. It held that
petitioner should have filed an appeal under Ruled 43.
ISSUE
Is the decision of the voluntary arbitrator appealable to the Court of Appeals under
Rule 43?

HELD
No. Decisions of the voluntary arbitrator under the Labor Code are appealable to the
Court of Appeals. In Luzon Developemnt Bank vs. Association of Luzon Development
Bank Employees, the Court observed that the Labor Code was silent as regards the
appeals from the decisions of the voluntary arbitrator, unlike those of the Labor
Arbiter which may be appealed to the National Labor Relations Commission. The
Court noted, however, that the voluntary arbitrator is a government instrumentality
within the contemplation of Section 9 of Batas Pambansa Blg. (BP) 129 which
provides for the appellate jurisdiction of the Court of Appeals. The decisions of the
voluntary arbitrator are akin to those of the Regional Trial Court, and, therefore,
should first be appealed to the Court of Appeals before being elevated to this Court.
This is in furtherance and consistent with the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasijudicial agencies not expressly excepted from the coverage of Section 9 of BP 129.
Circular No. 1-91 was later revised and became Revised Administrative Circular No.
1-95. The Rules of Court Revision Committee incorporated said circular in Rule 43 of
the 1997 Rules of Civil Procedure. The inclusion of the decisions of the voluntary
arbitrator in the Rule was based on the Courts pronouncements in Luzon
Development Bank v. Association of Luzon Development Bank Employees.
Petitioners argument, therefore, that the ruling in said case is inapplicable in this
case is without merit.
Moreover, petition for certiorari is an extraordinary remedy that is adopted to
correct errors of jurisdiction committed by the lower court or quasi-judicial agency,
or when there is grave abuse of discretion on the part of such court or agency
amounting to lack or excess of jurisdiction. Where the error is not one of jurisdiction,
but of law or fact which is a mistake of judgment, the proper remedy should be
appeal. In addition, an independent action for certiorari may be availed of only
when there is no appeal or any plain, speedy and adequate remedy in the ordinary
course of law. There was no question of jurisdiction involved in the decision of the
voluntary arbitrator. What was being questioned was merely his findings of whether
the universitys practice of sourcing the integrated IP in the CBA from the 70% share
of the personnel in the IP violates the provisions of the CBA. Such is a proper subject
of an appeal.

[G.R. NO. 148247 August 7, 2006]

AIR PHILIPPINES CORPORATION, Petitioner, VS. ENRICO E. ZAMORA,
Respondent.
FACTS
Enrico Zamora was an employee of Air Phils. Corp. as a flight deck crew. He applied
for promotion to the position of airplane captain and underwent the requisite

training program. After training, he inquired about his promotion but APC did not act
on it, instead, it continued to give him assignments as flght deck crew.
He filed a complaint with the Labor Arbiter with the contention that the withholding
of his promotion amounted to constructive dismissal. APC, on its side, contended
that complainant stopped reporting for work, not because he was forced to resign
but because he had joined a rival company, Grand Air.
The Labor Arbiter ruled in favor of Zamora. On appeal, the NLRC held that there was
no dismissal, constructive or otherwise because it was Zamora himself who
voluntarily terminated his employment by not reporting for work and by joining the
competitor Grand Air. However, upon Motion for Reconsideration filed by Zamora,
the NLRC affirmed its decision but ordered APC to pay Zamora his unpaid salaries
and allowances in the total amount of P198, 502.00. Hence, this petition for review
on certiorari with APC questioning why it should be made to pay.
ISSUE
Whether or not APC should be made to pay respondents unpaid salaries and
allowances?
HELD
The premise of award of unpaid salary to respondent is that prior to the reversal of
NLRC of the decision of the Labor Arbiter, the order of reinstatement embodied
therein was already the subject of an alias writ of execution pending appeal.
Although petitioner did not comply with this writ of execution, its intransigence
made it liable nonetheless to the salaries of respondent pending appeal.
In Roquero vs Philippine Airlines, Inc. 401 SCRA 424(2003), it was ruled that
technicalities have no room in labor cases where the Rules of Court are applied ony
in suppletory manner and only to effectuate the objectves of the Labor Code and
not to defeat them. Hence, even if the order of reinsatment of the labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay
the wages of the dismissed employee during the period of appeal until reversal by
the higher court. On the other hand, if the employee has been reinstated during the
appeal period and such reinstatement order is reversed with finality, the employee
is not required to reimburse whatever salary he received for he is entitled to such,
more so if he actually rendered services during the period.
Petition granted.

[G.R. No. 160913 August 31, 2006]

EUROTECH HAIR SYSTEMS, INC., LUTZ KUNACK, and JOSE BARIN, vs.
ANTONIO S. GO,Respondent.
FACTS
Petitioner Eurotech Hair Systems, Inc. is a domestic corporation engaged in the
manufacture and export of wigs and toupees. Petitioners Lutz Kunack and Jose E.
Barin are the companys president and general manager, respectively.Respondent
Antonio S. Go served as Eurotechs operations manager from September 2, 1996
until he was dismissed on September 27, 1999. As operations manager, he drafted
and implemented the plans for the production of wigs and toupees. Respondents
responsibilities included manpower planning to meet the monthly production
targets.In 1999, the company suffered production shortfalls. Thus, on September 2,
1999, petitioner Barin issued respondent a memorandum, strongly advising him to
improve his performance. He was also admonished because of the late shipment of
80 units of hairpieces to one of petitioners clients, Bergmann Company. On
September 7, 1999, Eurotech issued another memorandum reiterating the previous
reminder for respondent to improve his performance. Again, on September 21,
1999, Eurotech issued two memoranda, reminding respondent of his continued
failure to improve his performance. He was given 24 hours to explain in writing why
the company should not terminate his services on the ground of loss of trust and
confidence. On September 24, 1999, Eurotech issued yet another memorandum
reminding respondent of his failure to submit his written explanation and granting
him another 24 hours to submit such explanation. The second 24-hour period lapsed
without respondents explanation. On September 27, 1999, petitioner Kunack finally
issued respondent a termination letter citing loss of trust and confidence.
Respondent filed against a complaint petitioners. The Labor Arbiter ruled for
respondent. The NLRC reversed the Labor Arbiter and dismissed the complaint. The
CA set aside the decision of the NLRC and essentially reinstated the ruling of the
Labor Arbiter.
Respondent received said Decision of the Court of Appeals on July 21, 2003. Prior to
such receipt, he had executed a quitclaim in consideration of P450,000. Hence, on
July 16, 2003, the Labor Arbiter issued an Order dismissing with prejudice the
complaint for illegal dismissal in view of the said waiver.
ISSUE/S

1. Was the respondent's dismissal in accordance with the law?

2. Is the compromise agreement entered into by the parties valid?
HELD
1. No. In the instant case, petitioners failed to prove that respondent was
terminated for a valid cause. Evidence adduced was utterly wanting as to
respondents alleged inefficiency constituting a willful breach of the trust and
confidence reposed in him by petitioners.
Loss of trust and confidence to be a valid ground for an employees dismissal must
be based on a willful breach and founded on clearly established facts. A breach is
willful if it is done intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. While failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may be a just cause for dismissal,
the employer must show what standards of work or reasonable work assignments
were prescribed which the employee failed to observe. In addition, the employer
must prove that the employees failure to observe any such standards or
assignments was due to his own inefficiency.
In this case, petitioners showed that respondent failed to meet production
targets despite reminders to measure up to the goals set by the company. However,
they were unable to prove that such failure was due to respondents inefficiency.
Significant factors that might explain the companys poor production include
existing market conditions at the time, the overall spending behavior of consumers,
and the prevailing state of the countrys economy as a whole. The companys
production shortfalls cannot be attributed to respondent alone, absent any showing
that he willfully breached the trust and confidence reposed in him by the
petitioners.
2. Yes, the compromise agreement entered into by the parties is valid.
Article 227 of the Labor Code provides:
ART. 227. Compromise agreements. Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department of Labor, shall be
final and binding upon the parties.
Note, however, that even if contracted without the assistance of labor officials,
compromise agreements between workers and their employers remain valid and are
still considered desirable means of settling disputes.
A compromise agreement is valid as long as the consideration is reasonable and the
employee signed the waiver voluntarily, with a full understanding of what he was
entering into. All that is required for the compromise to be deemed voluntarily
entered into is personal and specific individual consent. Thus, contrary to
respondents contention, the employees counsel need not be present at the time of

the signing of the compromise agreement.

In this case, we find the consideration of P450,000 fair and reasonable under the
circumstances. In addition, records show that respondent gave his personal and
specific individual consent with a full understanding of the stakes involved. In our
view, the compromise agreement in this case does not suffer from the badges of
invalidity.
The fact that the Order, which dismissed the case in view of the compromise
agreement, was issued during the pendency of the petition for certiorari in the
Court of Appeals does not divest the Labor Arbiter of jurisdiction. A petition for
certiorari is an original action and does not interrupt the course of the principal case
unless a temporary restraining order or a writ of preliminary injunction has been
issued against the public respondent from further proceeding. The Labor Arbiter
thus acted well within his jurisdiction. Therefore, the Labor Arbiters Order
dismissing the case with prejudice in view of the compromise agreement entered
into by the parties must be upheld.

[G.R. No. 166421 September 5, 2006]

PHILIPPINE JOURNALISTS, INC., BOBBY DELA CRUZ, ARNOLD BANARES and
ATTY. RUBY RUIZ BRUNO, Petitioners, versus NATIONAL LABOR RELATIONS
COMMISSION, HON. COMMS. LOURDES JAVIER, TITO GENILO and ERNESTO
VERCELES, JOURNAL EMPLOYEES UNION, and THE COURT OF APPEALS,
Respondents
FACTS
The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in the
publication and sale of newspapers and magazines. The exclusive bargaining agent
of all the rank-and-file employees in the company is the Journal Employees Union.
Sometime in April 2005, the Union filed a notice of strike before the National
Conciliation and Mediation Board (NCMB), claiming that PJI was guilty of unfair labor
practice. PJI was then going to implement a retrenchment program due to overstaffing or bloated work force and continuing actual losses sustained by the
company for the past three years resulting in negative stockholders equity of
P127.0 million. The Secretary of the Department of Labor and Employment (DOLE)
certified the labor dispute to the National Labor Relations Commission (NLRC) for
compulsory arbitration pursuant to Article 263 (g) of the Labor Code.
The parties were required to submit their respective position papers. PJI filed a
motion to dismiss, contending that the Secretary of Labor had no jurisdiction to
assume over the case and thus erred in certifying it to the Commission. The NLRC
denied the motion. PJI, thereafter, filed a Motion to Defer Further Proceedings,
alleging, among others, that the filing of its position paper might jeopardize

attempts to settle the matter extrajudicially, which the NLRC also denied. The case
was, thereafter, submitted for decision.
In its Resolution dated May 31, 2001, the NLRC declared that the 31 complainants
were illegally dismissed and that there was no basis for the implementation of
petitioners retrenchment program. Thereafter, the parties executed a Compromise
Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainantemployees effective July 1, 2001 without loss of seniority rights and benefits; 17 of
them who were previously retrenched were agreed to be given full and complete
payment of their respective monetary claims, while 14 others would be paid their
monetary claims minus what they received by way of separation pay. The
compromise agreement was submitted to the NLRC for approval. The compromise
agreement was approved and was deemed closed and terminated.
However, the Union filed another Notice of Strike on July 1, 2002, The Union
claimed that 29 employees were illegally dismissed from employment, and that the
salaries and benefits of 50 others had been illegally reduced. After the retrenchment
program was implemented, 200 Union members-employees who continued working
for petitioner had been made to sign five-month contracts. The Union also alleged
that the company, through its legal officer, threatened to dismiss some 200 union
members from employment if they refused to conform to a 40% to 50% salary
reduction; indeed, the 29 employees who refused to accede to these demands were
dismissed on June 28, 2002. The Union prayed that the dismissed employees be
reinstated with payment of full backwages and all other benefits or their monetary
equivalent from the date of their dismissal on July 3, 2002 up to the actual date of
reinstatement; and that the CBA benefits (as of November 2002) of the 29
employees and 50 others be restored.
In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were not
illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment
program illegal did not attain finality as it had been academically mooted by the
compromise agreement entered into between both parties on July 9, 2001.
According to the Commission, it was on the basis of this agreement that the July 25,
2002 Resolution which declared the case closed and terminated was issued.
Pursuant to Article 223 of the Labor Code, this later resolution attained finality upon
the expiration of ten days from both parties receipt thereof. Thus, the May 31, 2001
Resolution could not be made the basis to justify the alleged continued employment
regularity of the 29 complainants subsequent to their retrenchment.
The Union assailed the ruling of the NLRC before the CA via petition for certiorari
under Rule 65. In its Decision dated August 17, 2004, the appellate court held that
the NLRC gravely abused its discretion in ruling for PJI. The compromise agreement
referred only to the award given by the NLRC to the complainants in the said case,
that is, the obligation of the employer to the complainants. The CA further held that
the act of respondent in hiring the retrenched employees as contractual workers
was a ploy to circumvent the latters security of tenure. This is evidenced by the
admission of PJI, that it hired contractual employees (majority of whom were those
retrenched) because of increased, albeit uncertain, demand for its publications. The
CA pointed out that this was done almost immediately after implementing the
retrenchment program. Another telling feature is the fact that the said employees
were re-hired for five-month contracts only, and were later offered regular

employment with salaries lower than what they were previously receiving. The CA
also ruled that the dismissed employees were not barred from pursuing their
monetary claims despite the fact that they had accepted their separation pay and
signed their quitclaims.
ISSUE
The primary issue before the Court is whether an NLRC Resolution, which includes a
pronouncement that the members of a union had been illegally dismissed, is
abandoned or rendered moot and academic by a compromise agreement
subsequently entered into between the dismissed employees and the employer and
if such a compromise agreement constitutes res judicata to a new complaint later
filed by other union members-employees, not parties to the agreement, who
likewise claim to have been illegally dismissed.
HELD
Article 227 of the Labor Code of the Philippines authorizes compromise agreements
voluntarily agreed upon by the parties, in conformity with the basic policy of the
State to promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and conciliation, as modes
of settling labor or industrial disputes.
ART. 227 Compromise Agreements. Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department of Labor, shall be
final and binding upon the parties. The National Labor Relations Commission or any
court shall not assume jurisdiction over issues involved therein except in case of
noncompliance thereof or if there is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion.
Thus, a judgment rendered in accordance with a compromise agreement is not
appealable, and is immediately executory unless a motion is filed to set aside the
agreement on the ground of fraud, mistake, or duress, in which case an appeal may
be taken against the order denying the motion. Under Article 2037 of the Civil Code,
a compromise has upon the parties the effect and authority of res judicata, even
when effected without judicial approval; and under the principle of res judicata, an
issue which had already been laid to rest by the parties themselves can no longer
be relitigated.
Adjective law governing judicial compromises annunciate that once approved by the
court, a judicial compromise is not appealable and it thereby becomes immediately
executory but this rule must be understood to refer and apply only to those who are
bound by the compromise and, on the assumption that they are the only parties to
the case, the litigation comes to an end except only as regards to its compliance
and the fulfillment by the parties of their respective obligations thereunder.
In any event, the compromise agreement cannot bind a party who did not
voluntarily take part in the settlement itself and gave specific individual consent. It
must be remembered that a compromise agreement is also a contract; it requires

the consent of the parties, and it is only then that the agreement may be
considered as voluntarily entered into.
A careful perusal of the wordings of the compromise agreement will show that the
parties agreed that the only issue to be resolved was the question of the monetary
claim of several employees.
The findings of the appellate court are in accord with the evidence on record, and
we note with approval the following pronouncement:
Respondents alleged that it hired contractual employees majority of whom were
those retrenched because of the increased but uncertain demand for its
publications. Respondent did this almost immediately after its alleged retrenchment
program. Another telling feature in the scheme of respondent is the fact that these
contractual employees were given contracts of five (5) month durations and
thereafter, were offered regular employment with salaries lower than their previous
salaries. The Labor Code explicitly prohibits the diminution of employees benefits.
Clearly, the situation in the case at bar is one of the things the provision on security
of tenure seeks to prevent.
Lastly, it could not be said that the employees in this case are barred from pursuing
their claims because of their acceptance of separation pay and their signing of
quitclaims. It is settled that quitclaims, waivers and/or complete releases executed
by employees do not stop them from pursuing their claims if there is a showing of
undue pressure or duress. The basic reason for this is that such quitclaims, waivers
and/or complete releases being figuratively exacted through the barrel of a gun, are
against public policy and therefore null and void ab initio (ACD Investigation
Security Agency, Inc. v. Pablo D. Daquera, G.R. No. 147473, March 30, 2004).
In the case at bar, the employees were faced with impending termination. As such,
it was but natural for them to accept whatever monetary benefits that they could
get.
G.R. No. 144376, September 13, 2006
SALVADOR BUNAGAN versus SENTINEL WATCHMAN & PROTECTIVE AGENCY,
INC.,
FACTS
Petitioner was employed by respondent as security guard and was assigned to one
of its clients, La Suerte Cigar and Cigarette Factory (La Suerte).
In May 1994, petitioner filed a criminal complaint for oral defamation against Lt.
Maravillas, Security Manager of La Suerte. Lt. Maravillas thus requested respondent
to replace petitioner. On June 1, 1994, respondent formally relieved petitioner from
his post at La Suerte. Prior to said date, however, petitioner was no longer allowed
to report for duty at the clients premises.
Petitioner filed a complaint for illegal dismissal and money claims against
respondent and La Suerte. He claimed, among others, that there was no valid or just
cause for his dismissal and that he was not accorded due process before his
services were terminated.

The Labor Arbiter ruled in favor of petitioner. Respondent appealed to the NLRC.
The NLRC, in its resolution dated February 13, 1996, dismissed the appeal for late
filing. Entry of judgment was made on March 18, 1996.
On March 22, 1996, respondent filed a motion for reconsideration of the February
13, 1996 resolution. In its Decision dated July 31, 1996, the NLRC granted the
motion for reconsideration despite the entry of judgment, as it was shown that
respondent received a copy of the February 13, 1996 resolution only on March 21,
1996. The entry of judgment on March 18, 1996 was therefore premature.
ISSUE
Whether or not the Court of Appeals and the NLRC erred:
1.
in not considering the Resolution dismissing the appeal of Sentinel -- with
the issuance and release of Entry of Judgment for having been filed out of time,
final and nothing more could be done as the NLRC thereafter had lost jurisdiction
over the case; and
2.
in holding that the petitioner merely relied upon his submission that there
was already an Entry of Judgment and did not argue anymore on the merits of the
case, which failure of petitioner was even made point against him.
HELD
We agree with the Court of Appeals that the entry of judgment made on March 18,
1996 was premature as respondent received a copy of the NLRC resolution
dismissing the appeal only on March 21, 1996. However, despite the timeliness of
the motion for reconsideration which was filed on March 22, 1996, it still failed on
the merits.
The NLRC initially dismissed respondents appeal for being late. It is undisputed
that respondent received a copy of the decision of the Labor Arbiter on December 1,
1995. On the tenth day, or on December 11, 1995, respondent filed a Notice of
Appeal with Motion for Extension of Time to File Memorandum of Appeal. Although
respondent posted a surety bond on that date, it nonetheless moved for an
extension of one day to file its memorandum of appeal.
Under the law, an appeal from the decision of the Labor Arbiter is perfected upon
filing of a memorandum of appeal and payment of the appeal fee within ten (10)
calendar days from receipt of the questioned decision, award or order of the Labor
Arbiter. In case of a judgment involving a monetary award, the appellant is also
required to post a cash or surety bond in the amount equivalent to the monetary
award in the judgment appealed from. The Rules of Procedure of the NLRC prohibits
the filing of a motion for extension of time to perfect the appeal, and the filing of a
notice of appeal without the memorandum of appeal will not stall the running of the
period to appeal. A mere notice of appeal without complying with the other
requisites shall not stop the running of the period for perfecting an appeal.
Respondent did not even cite in its motion for reconsideration any justifiable excuse
for the belated filing of the memorandum of appeal. Well-settled is the principle

that the perfection of an appeal within the statutory or reglementary period is not
only mandatory, but jurisdictional, and failure to do so renders the questioned
decision final and executory and deprives the appellate court of jurisdiction to alter
the final judgment, much less to entertain the appeal.
Moreover, under Article 223 of the Labor Code, an appeal from the decisions,
awards or orders of the Labor Arbiter may be entertained only on the following
grounds:
a. If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;
b. If the decision, order or award was secured through fraud or coercion, including
graft and corruption;
c. If made purely on questions of law; and
d. If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
A reading of the decision of the Labor Arbiter shows that none of these conditions
exists in the case at bar thus petition is GRANTED.
[G.R. No. 156761, October 17, 2006]
LADY LYDIA CORNISTA-DOMINGO, SYLVIA SALANGA, LIWAYWAY SILAPAN,
CYNTHIA ALICANTE, ALBERTO ANCHETA, ANA MARIA SANCHEZ, ELENA
TUMBAGA, PEDRO JOSU, TERESITA VOCAL, ROSIE ANCHETA, LILIA
PINUELA-JULIAN, IMELDA ERESE, NORMA YABUT, LOURDES PINEDA,
CORAZON CARANDANG, ERLINDA GUTIERREZ, MARIO MILAN, FLAVIANO
MEJIA, JR., ESTELA AYSON, ENRIQUE GARAYGAY, ROSE DAILEG, JOSE
CALDO, RITA BATAC, MARIA CORAZON GALAN, MA. ELISA GAYO, DEBBIE
RODRIGUEZ, CAROLINA CABEBE, EDGARDO BOLIVAR, FE ILAGAN, TERESITA
MONDEJAR, ELVIRA ANGELES, PEDRO EMPIG, LUZ MARQUEZ, TERESITA
DORIA, ABELARDO BONTOC, MADELON REYES-YEE AND FILOMENO CINCO,
JR., PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, LABOR
ARBITER EDUARDO J. CARPIO, PHILIPPINE VETERANS BANK AND/OR
SUNDAY LAVIN, PHILIPPINE VETERANS BANK EMPLOYEES UNION AND/OR
FELIZARDO SARAPAT, AMELITA DURIAN, RICARDO RICAFRENTE, LEON
MAGALONA, FERMIN CASTILLO, NORMINIO MOJICA AND OLYMPIO DE
GUZMAN, RESPONDENTS.
FACTS
By virtue of Resolution No. 334 of the Central Banks Monetary Board, the Philippine
Veterans Bank (Bank, hereafter) was placed under receivership.
In consequence, the Bank adopted a retrenchment and reorganization program
which was challenged before the Supreme Court by the Philippine Veterans Bank
Employees Union (Union, hereafter) on the ground that the program allegedly
violated the security of tenure of the Banks employees.
While G.R. No. 67125 was pending, the Monetary Board issued Resolution No. 612,
dated June 7, 1985, ordering the liquidation of the Bank. The Monetary Board then
appointed a liquidator who, pursuant to the authority vested by the same Board,
terminated the employment of all the employees of the Bank Thereafter, the

liquidator commenced payment of separation pay and other benefits to the

terminated employees.
Congress enacted Republic Act (R.A.) No. 7169, authorizing the Central Bank to
reopen the Bank.
Labor Arbiter
The Labor Arbiter rendered a decision dismissing the claim of the Union for
reinstatement of the individual complainants it represents as well as the claims for
payment of backwages, for lack of merit.
NLRC
In time, the Union appealed the Labor Arbiters decision to the NLRC proper.
NLRC rendered a Decision reversing and setting aside that of the Labor Arbiter.
Additionally, the NLRC directed the immediate reinstatement of all Union members
subject to the operational requirements of the Bank which it likewise ordered to
cease and desist from further hiring new employees.
The Bank, in its petition, docketed as G.R. No. 113423, sought to nullify the NLRC
decision of September 14, 1993, reinstating the members of the Union, and its
Resolution of November 22, 1993, denying the Banks motion for reconsideration.
While in its petition, docketed as G.R. No. 115421, the Union sought a modification
of the same decision so as to include the award of backwages.
While G.R. Nos. 113423 and 115421 were pending before the Court, the Union,
through its duly authorized officers, and the Bank entered into a Compromise
Agreement for the amicable settlement of all other cases and claims then pending
with the NLRC and/or other tribunals arising from the employment of the individual
complainants with the Bank.
A substantial majority of the members of the Union ratified the compromise
agreement.
The Labor Arbiter approved the compromise agreement and issued an Order finding
the terms and conditions set forth in the Compromise Agreement to be not contrary
to law, morals and public policy.
A number of the employees, in separate appeals to the NLRC, contested the
foregoing Order of the Labor Arbiter. They argued that the compromise agreement
is contrary to law and jurisprudence.
On October 2, 1996, the NLRC decided the aforementioned separate appeals from
the Labor Arbiters Order of February 16, 1996 approving the compromise
agreement. The NLRC ruled that those who received and acknowledged receipt of
the first payment, as agreed upon in the questioned Compromise Agreement, and
who executed the corresponding Quitclaim, Waiver and Release were bound by the
same Compromise Agreement.

CA
On December 21, 2001, the CA rendered the herein challenged consolidated
decision declaring that the NLRC gravely abused its discretion in ordering the
reinstatement of the union members and accordingly declared null and void its
September 14, 1993 decision and the November 22, 1993 resolution, and instead
reiterated the March 31, 1993 decision of the Labor Arbiter.
ISSUE
Was the compromise agreement entered into by the Union officers with the Bank
valid?
RULING
Yes. The compromise agreement entered into by the Union with the Bank was valid.
Petitioners fault the CA in upholding the validity of the Compromise Agreement.
They claim that said agreement is not binding on employees who did not ratify it
and even to those who were allegedly tricked and/or deceived by the Union into
accepting the first payment under the same agreement.
The argument is utterly baseless. A labor unions function is to represent its
members. It can file an action or enter into compromise agreements on behalf of its
members. Here, majority of the Banks employees authorized the Union to enter
into a compromise agreement with the Bank on their behalves. Union members
were bound by the resulting compromise agreement when they affixed their
signatures thereon, thereby giving their individual assent thereto, and when they
accepted the benefits due them under that agreement. As it is, the Compromise
Agreement in question detailed the amounts to be received by each employee.
Petitioners and other employees of the Bank knew exactly what they were ratifying
when they affixed their signatures in the said compromise agreement.
Further, respondent Union is a closed shop union. For this reason, it was the only
one with legal authority to negotiate, transact, and enter into any agreement with
the Bank. The Compromise Agreement was ratified by 282 Union members
representing a majority of its entire 529 membership. The ratification of the
Compromise Agreement by the majority of the Union members necessarily binds
the minority.
The general rule that the Labor Arbiter must be present during the signing of the
compromise agreement is not immune to certain exceptions. Here, the submission
of the Compromise Agreement on joint motion of the parties for approval by the
Labor Arbiter cured whatever defect the signing of the agreement in the absence of
the Labor Arbiter would have caused. So it is that in Santiago v. De Guzman, the
Court ruled:
A compromise agreement entered into by the parties not in the presence of the
Labor Arbiter before whom the case is pending shall be approved by him, if after
confronting the parties, particularly the complainants, he is satisfied that they

understand the terms and conditions of the settlement and that it was entered into
freely and voluntarily by them.
It is incumbent upon the Labor Arbiter not only to persuade the parties to settle
amicably, but equally to ensure the compromise agreement is a fair one and that
the same was forged freely, voluntarily with full understanding of the terms and
conditions embodies therein as well as the consequences thereof.
It is likewise noteworthy that as of March 31, 2004, thirty (30) of the herein thirtyseven (37) petitioners already received payment under the same Compromise
Agreement. The acceptance by said petitioners of the benefits bars them from
repudiating the agreement. They cannot be allowed to adopt an inconsistent
position at the expense of the Bank. Petitioners cannot belatedly reject or repudiate
their acts of accepting the monetary consideration under the compromise
agreement, to the prejudice of the Bank.
Evidently, Domingo, et. al. ratified the Compromise Agreement and even voluntarily
received the first payment under that agreement, executing the corresponding
Quitclaim, Waiver and Release in the process. Having done that, they are deemed
bound by the Compromise Agreement under the previously discussed principle of
res judicata and/or estoppel.
We find that the subsequent decision of petitioners Domingo, et. al. to repudiate the
Compromise Agreement was merely an afterthought, whatever would be the reason
for their subsequent change of mind. Since they had entered into a binding
contract on their own volition and received benefits therefrom, they are therefore
estopped from questioning the validity of said contract later on. Parenthetically, it
is interesting to note that while the petitioners try to impugn the Compromise
Agreement that they themselves entered into, they have not made any offer or
effort to return the money they received as first payment under said agreement.
Records reveal that when the Bank offered termination or separation pay to its
remaining employees by way of a compromise agreement, a great majority of them
accepted the amount as justifiable settlement of their claims. Like these quitclaims
and releases, there are voluntary agreements which represent reasonable
settlements and are considered binding on the parties. Petitioners, therefore, cannot
renege on the compromise agreement they entered into after accepting benefits
earlier simply because they may have felt that they committed a mistake in
accepting their termination/separation pay. As no proof was presented to show that
the compromise agreement in dispute was entered into through fraud,
misrepresentation or coercion, the same must be recognized as valid and binding
upon all the 529 employees of the Bank. In fine, the petitioners and the other
employees are estopped from questioning the validity of the Compromise
Agreement.
In law, a compromise agreement, once approved, has the effect of res judicata
between the parties and should not be disturbed except for vices of consent,
forgery, fraud, misrepresentation and coercion, none of which exists in this case.
The Compromise Agreement between the Union and the Bank binds the minority
Union members.

[G.R. No. 159268 October 27, 2006]

BALAGTAS MULTI-PURPOSE COOPERATIVE, INC., and AURELIO SANTIAGO,
Petitioners, versus COURT OF APPEALS, NATIONAL LABOR RELATIONS
COMMISSION and JOSEFINA HIPOLITO-HERRERO, Respondents.
FACTS
Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing
cooperative under the laws of the Philippines. Sometime in April 1991, Balagtas
hired Josefina G. Hipolito-Herrero, as part time manager in its office in Sulok,
Panginay, Balagtas, Bulacan, where she was required to report.
In September 1992, Balagtas created a branch office at Wawa, Balagtas, Bulacan.
Josefina was required to report at the said Wawa branch from 8:00 to 12:00 noon
before reporting to her office at Sulok from 2:00 to 6:00 p.m. For the additional
work, Josefina received a proportionate increase in salary.
In the early part of 1994, the board members contemplated closing its Wawa Branch
Office inasmuch as the desired number of the members and volume of transactions
were not met with, rendering it more costly to maintain.
On May 1, 1994, in their monthly meeting, Josefina informed them that she intends
to take a leave of absence from May 9 to May 30, 1994. Her proposal was
immediately approved by the board.
Subsequently, the board members resolved to close its Wawa branch. Meantime,
after the lapse of her leave of absence on May 30, 1994, Josefina did not report for
work anymore. Later on, she filed her resignation.
Almost nine (9) months thereafter Josefina filed a complaint with the Provincial
Office of the Department of Labor in Malolos, Bulacan for illegal dismissal, and nonpayment of 13th month pay or Christmas Bonus. She prayed that she be reinstated
and paid backwages as well as moral damages.
The Labor Arbiter rendered a decision in favor of Josefina ordering the petitioners to
pay separation pay, backwages and 13th month pay.
Aggrieved, Balagtas appealed the decision to the National Labor Relations
Commission (NLRC) but failed to post either a cash or surety bond as required by
Article 223 of the Labor Code. Instead, petitioners filed a manifestation and motion,
stating, among others, that under Republic Act No. 6938, Article 62(7) of the
Cooperative Code of the Philippines, petitioners are exempt from putting up a bond
in an appeal from the decision of the inferior court. In a Resolution, the NLRC
ordered the Petitioner to post a bond within 10 days.
Petitioners then filed a petition for certiorari with the CA, alleging that the NLRC
acted with grave abuse of discretion amounting to excess or lack of jurisdiction in
directing them to post an appeal bond despite the clear mandate of Article 62,

paragraph (7) of Republic Act No. 6938 (Cooperative Code) which dispensed with
such requirement.
After the parties submitted their respective pleadings, the CA resolved to dismiss
the petition in the assailed decision dated September 27, 2002 holding that the
exemption from putting up a bond by a cooperative applies to cases decided by
inferior courts only.
ISSUE
Whether cooperatives are exempted from filing a cash or surety bond required to
perfect an employers appeal under Section 223 of Presidential Decree No. 442 ,the
Labor Code.
HELD
The provision cited by petitioners cannot be taken in isolation and must be
interpreted in relation to the Cooperative Code in its entirety. It must be kept in
mind that the enactment of the Cooperative Code is pursuant to the States
declared policy of fostering the creation and growth of cooperatives as a practical
vehicle for prompting self-reliance and harnessing people power towards the
attainment of economic development and social justice. In line with this, certain
benefits and privileges were expressly granted to cooperative entities under the
statute. The provision invoked by petitioners regarding the exemption from payment
of an appeal bond is only one among a number of such privileges which appear
under the article entitled Tax and Other Exemptions of the code.
Considering that the provision relates to tax and other exemptions, the same
must be strictly construed. This follows the well-settled principle that exceptions are
to be strictly. An express exception, exemption, or saving clause excludes other
exceptions. Express exceptions constitute the only limitations on the operation of a
statute and no other exception will be implied. The rule proceeds from the premise
that the legislative body would not have made specific enumerations in a statute, if
it had the intention not to restrict its meaning and confine its terms to those
expressly mentioned.
The term court has a settled meaning in this jurisdiction which cannot be
reasonably interpreted as extending to quasi-judicial bodies like the NLRC unless
otherwise clearly and expressly indicated in the wording of the statute. Simply
because these tribunals or agencies exercise quasi-judicial functions does not
convert them into courts of law.
For this reason, petitioners must comply with the requirement set forth in Article
223 of the Labor Code in order to perfect their appeal to the NLRC. It must be
pointed out that the right to appeal is not a constitutional, natural or inherent right.
It is a privilege of statutory origin and, therefore, available only if granted or
provided by statute. The law may validly provide limitations or qualifications thereto
or relief to the prevailing party in the event an appeal is interposed by the losing
party.

In this case, the obvious and logical purpose of an appeal bond is to insure, during
the period of appeal, against any occurrence that would defeat or diminish recovery
by the employee under the judgment if the latter is subsequently affirmed. This is
consistent with the States constitutional mandate to afford full protection to labor
in order to forcefully and meaningfully underscore labor as a primary social and
economic force.

[G.R. No. 154628, December 06, 2006]

ESTRELLITA G. SALAZAR PETITIONER, VS PHILIPPINE DUPLICATORS, INC.,
AND /OR LEONORA FONTANILLA, RESPONDENTS.
FACTS
Petitioner Estrellita Salazar became Sales Representative of respondent company,
Philippine Duplicators, Inc. on May 1, 1987. She was assigned at the Southern
Section of Metro Manila under the direct supervision of respondent Leonora
Fontanilla. Petitioner received her last compensation in the amount of PhP
14,095.73 which covered her basic salary and monthly commission.
Petitioner alleged that on December 7, 1998, respondent Fontanilla called her to the
latters office and handed her a memorandum with a ball pen requesting her to
receive it. Petitioner refused to receive it because it stated her termination from
employment and asked Fontanilla why she should be terminated as she had done
nothing wrong.
On December 9, 1998, respondent Fontanilla directed Salazar, through a
memorandum to explain, within 72 hours from receipt of said document, why no
disciplinary action should be taken against her in violation of Section 8, Category V
of the companys Handbook on Constructive Discipline for falsifying company
records.
On December 8, 1999, Labor Arbiter Manuel R. Caday rendered his Decision finding
that petitioners dismissal was for a just cause, but respondent Duplicators
breached the twin-notice requirement for dismissal under Section 2 (c), Rule XXIII,
Book V of the Implementing Rules and Regulations of the Labor Code. Thus,
Duplicators was ordered to pay an indemnity of PhP 10,000.00 to petitioner Salazar.
On January 26, 2000, Salazar filed a Memorandum of Appeal from the adverse
Decision. On August 28, 2000, the NLRC decided the appeal finding that there was
actually no termination of Salazars employment but considering that reinstatement
was not advisable due to the strained relationship between the parties, separation
pay was ordered paid to petitioner in lieu of reinstatement.
The CA AFFIRMED the decision of the NLRC with modification. The dismissal of the
petitioner is perforce declared lawful and valid. Nonetheless, as a measure of
compassion and social justice, she is hereby pronounced entitled to separation pay

equivalent to one months salary for every year of service rendered.

Simply stated, the CA ruled that the termination of Salazars employment was legal
and valid. While the dismissed employee was not entitled to separation pay, the CA
nonetheless awarded severance pay pursuant to settled jurisprudence and in the
interest of social justice. Lastly, it ruled that there was no breach of the due process
requirements prescribed for dismissal from employment.
Under Petition for Review on Certiorari is before SC, Salazar contends that NLRC
should not have deleted the award of indemnity of PhP 10,000.00 in her favor since
both Duplicators and Fontanilla did not interpose any appeal from the Decision of
Labor Arbiter Manuel Caday and hence, no affirmative relief could be granted to
said respondents.
ISSUE
Whether or not the NLRC could validly delete the award of indemnity in Salazars
favor since respondents did not appeal.
HELD
As a general rule, a party who has not appealed cannot obtain from the appellate
court any affirmative relief other than the ones granted in the appealed decision.
The reason for this rule is that since parties did not appeal from the decision or
resolution, they are presumed to be satisfied with the adjudication. Furthermore,
Rule 141 on Legal Fees provides that if the fee is not paid, then the court may
refuse to proceed with the action until they are paid and may dismiss the appeal or
the action or proceeding. The case or appeal is deemed filed only upon payment
of the docket or appeal fee considering that jurisdiction is acquired by the court
over the case or the appeal only upon full payment of the prescribed fee. Thus, the
court has no jurisdiction or authority to grant affirmative relief to the party who did
not appeal as there is no obligation to pay any fee. Furthermore, in the interest of
fairness, it would not be proper and just to award affirmative relief to the appellees
since they did not comply with the requirements of appeal. In this case, Rule VI,
Section 3 of the NLRC Rules of Procedure [2000] prescribes the following:
Section 3. REQUISITES FOR PERFECTION OF APPEAL. a) The Appeal shall be filed
within the reglementary period as provided in Section 1 of this Rule; shall be under
oath with proof of payment of the required appeal fee and the posting of a cash or
surety bond as provided in Section 6 of this Rule; shall be accompanied by
memorandum of appeal which shall state the grounds relied upon and the
arguments in support thereof; the relief prayed for; and a statement of the date
when the appellant received the appealed decision, order or award and proof of
service on the other party of such appeal.
Complying with these specifications is a difficult and tedious process, specifically
the posting of cash or surety bond. It would be discriminatory and inequitable if a
party who has not complied with these requirements will be granted affirmative
relief.

In the instant case, did the NLRC violate the rule in labor cases that an appellee
cannot be awarded any affirmative relief?
We find no deviation from the doctrine.
The Labor Arbiter ruled that petitioner Salazars dismissal was for a just cause but
discovered an infraction of the two-notice requirement on the dismissal of an
employee for which he ordered Duplicators to pay the indemnity of PhP 10,000.00
to Salazar. However, on petitioners appeal, the NLRC believed that there was after
all no dismissal of petitioner Salazar but due to strained relationship, the company
was made to pay separation pay of PhP 14,095.73 instead of paying the indemnity
of PhP 10,000.00 imposed by the Labor Arbiter. It is the deletion of the PhP
10,000.00 indemnity that is being assailed by the petitioner as a grant of affirmative
relief to respondent Duplicators.
We are not persuaded.
Petitioners first ground in her Memorandum of Appeal before the NLRC stated that
Labor Arbiter Cadays rulingthat she was not illegally dismissed was erroneous.
In resolving this issue, the NLRC overturned Cadays finding of petitioners valid
dismissal, and instead concluded that there was no termination of petitioners
employment. As a consequence, the NLRC had to recall the award of PhP 10,000.00
indemnity imposed by Arbiter Caday although not prayed for by respondent
Duplicators since the said award was inconsistent with the finding that petitioners
employment subsisted. Without petitioners dismissal, there can be no legal basis
for the indemnity; hence, Duplicators is not obliged to comply with the two (2)
notice requirement. In annulling the award, the NLRC merely exercised its authority
under Article 218 (d) of the Labor Code to correct or amend any error committed by
a labor arbiter in aid of its exclusive appellate jurisdiction. Petitioner has no reason
to complain that she was deprived of monetary benefits since the NLRCs Decision
did not actually benefit Duplicators as the PhP 14,095.76 separation pay granted to
petitioner is certainly greater than the PhP 10,000.00 indemnity deleted by the
NLRC.
WHEREFORE, the petition is DENIED and the March 15, 2002 Decision of the Court
of Appeals and the August 7, 2002 Resolution in CA-G.R. SP No. 62556 are
AFFIRMED.

[Adm. Case No. 7252 (CBD 05-1434), November 22, 2006]

JOHNNY NG, COMPLAINANT, VS. ATTY. BENJAMIN C. ALAR, RESPONDENT.

FACTS
Atty. Benjamin Alar is the counsel for the complainants in a labor case filed with the
Labor Arbiter which dismissed the complaint. On appeal, NLRCs First Division
upheld the dismissal. In his Motion for Reconsideration with Motion to Inhibit (MRMI),
Atty. Alar used improper and abusive language full of diatribes castigating the Labor
Arbiter and the ponente of the NLRC decision. Johnny Ng, one of the respondents,
filed a disbarment case against Alar before the IBP Commission on Bar Discipline for
such misbehavior.
Alar contended, inter alia, that the Rules of Court/Code of Professional Responsibility
applies only suppletorily at the NLRC when the NLRC Rules of Procedure has no
provision on disciplinary matters for litigants and lawyers appearing before it and
that Rule X of the NLRC Rules of Procedure provides for adequate sanctions against
misbehaving lawyers and litigants appearing in cases before it. Finally he asserted
that the Rules of Court/Code of Professional Responsibility does not apply to lawyers
practicing at the NLRC, the latter not being a court and that LAs and NLRC
Commissioners are not judges nor justices and the Code of Judicial Conduct similarly
do not apply to them, not being part of the judiciary
ISSUE
Is a lawyers misbehavior before the NLRC susceptible of the provisions of the Code
of Professional Conduct?
HELD
The MRMI contains insults and diatribes against the NLRC, attacking both its moral
and intellectual integrity, replete with implied accusations of partiality, impropriety
and lack of diligence. Respondent used improper and offensive language in his
pleadings that does not admit any justification.
The assertion that the NLRC not being a court, its commissioners, not being judges
or justices and therefore not part of the judiciary and that consequently, the Code of
Judicial Conduct does not apply to them, is unavailing. In Lubiano v. Gordolla, the
Court held that respondent became unmindful of the fact that in addressing the
NLRC, he nonetheless remained a member of the Bar, an oath-bound servant of the
law, whose first duty is not to his client but to the administration of justice and
whose conduct ought to be and must be scrupulously observant of law and ethics.
Respondent has clearly violated Canons 8 and 11 of the Code of Professional
Responsibility. His actions erode the publics perception of the legal profession.

[G.R. No. 142351, November 22, 2006]

ST. MARTIN FUNERAL HOMES, PETITIONER, VS. NATIONAL LABOR
RELATIONS COMMISSION , AND BIENVENIDO ARICAYOS, RESPONDENTS.
FACTS
St. Martin Funeral Homes, Inc. (St. Martin) was originally owned by the mother of
Amelita Malabed. Bienvenido Aricayos, a former overseas contract worker, was
granted financial assistance by Amelitas mother. In return, Aricayos extended
assistance to Amelitas mother in managing St. Martin without compensation. There
was no written employment contract between Amelitas mother and Aricayos nor is
he listed as an employee in the payroll of St. Martin.
When Amelitas mother died, she took over as manager of St. Martin. After
discovering some alleged anomalies, Amelita removed the authority of Aricayos and
his wife from taking part in managing St. Martins operations.
Aricayos filed a complaints for illegal dismissal with prayer for reinstatement,
payment of back wages, and damages. After requiring the parties to submit
memoranda, position papers, and other documentary evidences in support of their
respective positions, the Labor Arbiter rendered a Decision, in favor of petitioner
declaring that his office had no jurisdiction over the case citing Dela Salle University
vs. NLRC, 135 SCR 674, 677 (1988) where the existence of an employer-employee
relationship is disputed and not assumed, as in these cases, the determination of
that question should be handled by the regular courts after full dress trial and not
by the Labor Arbiter.
ISSUE
Whether the Labor Arbiter made a determination of the presence of an employeremployee relationship between St. Martin and respondent Aricayos based on the
evidence on record.
HELD
It is clear that the issue submitted for resolution is a question of fact which is
proscribed by the rule disallowing factual issues in appeal by certiorari to the
Supreme Court under Rule 45. This is explicit in Rule 45, Section 1 that petitions of
this nature shall raise only questions of law which must be distinctly set forth.
Petitioner St. Martin would like the Court to examine the pleadings and
documentary evidence extant on the records of the Labor Arbiter to determine if
said official indeed made a finding on the existence of the alleged employeremployee nexus between the parties based on the facts contained in said pleadings
and evidence. Evidently this issue is embraced by the circumscription.
Even with the inadequate information and few documents on hand, one thing is
clearthat the Labor Arbiter did not set the labor case for hearing to be able to
determine the veracity of the conflicting positions of the parties. On this point alone,
a remand is needed.

We held in a catena of cases that while a formal trial or hearing is discretionary on

the part of the Labor Arbiter, when there are factual issues that require a formal
presentation of evidence in a hearing, the Labor Arbiter cannot simply rely on the
position papers, more so, on mere unsubstantiated claims of parties.

[G.R. No. 143527, December 06, 2006]

UNITED FIELD SEA WATCHMAN AND CHECKERS AGENCY, JAIME AMAMIO,
GLENN GUIRAL, AND PHILIPPINE PORTS AUTHORITY, PETITIONERS, VS.
WILLIE REQUILLO, NORBEM DAHANG, JR., ROMEO BUHANGIN, ANTONIO
RUAZA, ELSIE TABLA, AND CONSTANTINO DANUCO, RESPONDENTS .
FACTS
Respondents were security guards of the United Field Sea Watchman and Checkers
Agency (UFSWCA) assigned to the Port of Surigao City operated by the Philippine
Ports Authority (PPA). UFSWCA is a single proprietorship owned by Jaime Amamio.
Its operations in Surigao City are managed by Glenn Guiral.
In the course of their employment, respondents applied for loans with the SSS Office
at Surigao City. To their dismay, they found that UFSWCA has not been remitting to
the SSS their contributions being deducted regularly from their salaries. Upon
advice of the SSS, they filed with the DOLE in Surigao del Norte complaints against
UFSWCA.
On June 30, 1997, UFSWCA issued Agency Order No. 167-97 reassigning
respondents to various PPA offices in Iligan City, Ozamiz City, Cagayan, Nasipit, and
Iloilo. Respondents refused to heed the agency order as they were residing in
Surigao City with their families and they considered the order a form of retaliation
on the part of UFSWCA. Instead, they continued reporting for work at the PPA office
in Surigao City. Hence, UFSWCA refused to pay their salaries for the month of June
1997 as they were considered absent without leave.
Consequently, respondents filed with the Labor Arbitration Branch in Butuan City a
complaint for illegal dismissal, unfair labor practice and nonpayment of wages,
backwages, differential pay, and rest day premium pay against petitioners.
Labor Arbiter Rogelio Legaspi found repondents dismissal illegal and ordered
UFSWCA and/or Jaime Amamio and PPA, Surgao City to jointly and severally pay
respondents salary differentials, 13th month pay, service incentive leave pay,
unpaid salaries, premium pay for holidays and rest days, backwages as well as
damages for illegal dismissal and unfair labor practice.

On appeal by petitioners, NLRC deleted the awards for backawages, damages, and
attorneys fees as well as the awards granted to Constancio Danuco.
On petition for certiorari by respondents, the CA set aside the Resolution of the
NLRC holding that it committed grave abuse of discretion amounting to lack or
excess of jurisdiction when it gave due course to petitioners appeal which was filed
beyond the reglementary period. The CAs decision was premised on the finding of
patent irregularity in the registry return slips addressed to private respondent Jaime
Amamio and his counsel Atty. Estanislao Ebarle which are not the original return
slips of the Decision of the Labor Arbiter. The non-submission of the original return
slips is an indication that if the originals were submitted they would reveal that
private respondent Jaime Amamio and Atty. Estanislao Ebarle received the Decision
of the Labor Arbiter on a much earlier date.
Hence, the instant petition.
ISSUE
Whether or not the Court of Appeals erred in holding that petitioners appeal to the
NLRC was filed beyond the reglementary period.
HELD
Petition is denied. The decision and resolution of the CA are affirmed.
Rule 131, Section 3 (e) of the Revised Rules of Evidence provides that evidence
willfully suppressed would be adverse if produced. There being no contradictory
evidence to debunk such supposition, the presumption stands.
Article 223 of the Labor Code provides in part:
ART. 223. Appeals. Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders, x x x.
The appeal not having been filed within the ten (10) day period to appeal, the
appeal filed by private respondents before the NLRC should not have been given
due course. The failure of private respondents to perfect the appeal in accordance
with the prescribed procedure renders the same ineffective to stop the running of
the ten (10) day reglementary period to appeal
The right to appeal is not part of due process but a mere statutory privilege that has
to be exercised only in the manner and in accordance with the provisions of law.
Since the perfection of an appeal within the statutory reglementary period is not
only mandatory but also jurisdictional, petitioners failure to perfect their appeal to
the NLRC seasonably rendered the Labor Arbiters Decision final and executory.
Accordingly, the NLRC has no jurisdiction to give due course to petitioners appeal,
much less render a Resolution modifying the Labor Arbiters Decision. Indeed, such
Resolution is a patent nullity for want of jurisdiction.

[G.R. No. 151407, February 06, 2007]

INTERCONTINENTAL BROADCASTING CORPORATION, PETITIONER, , VS.
IRENEO PANGANIBAN, RESPONDENT.
FACTS
Ireneo Panganiban (respondent) was employed as Assistant General Manager of the
Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his
preventive suspension on August 26, 1988. Respondent resigned from his
employment on September 2, 1988. On April 12, 1989, respondent filed with the
Regional Trial Court of Quezon City, Branch 93, Civil Case No. Q-89-2244 against the
members of the Board of Administrators (BOA) of petitioner alleging, among others,
non-payment of his unpaid commissions.
A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the
ground of lack of jurisdiction, as respondent's claim was a labor money claim, but
this was denied by the RTC per Orders dated October 19, 1990 and November 23,
1990.
Thus, Santiago filed a petition for certiorari with the CA, docketed as CA-G.R. SP No.
23821, and in a Decision dated October 29, 1991, the CA granted Santiago's
petition for lack of jurisdiction and set aside the RTC's Orders dated October 19,
1990 and November 23, 1990.
Thereafter, respondent was elected by the BOA as Vice-President for Marketing in
July 1992. He resigned in April 1993.
On July 24, 1996, respondent filed against petitioner a complaint for illegal
dismissal, separation pay, retirement benefits, unpaid commissions, and damages.
In a Decision dated September 23, 1997, the Labor Arbiter (LA) ordered
respondent's reinstatement with full backwages, and the payment of his unpaid
commission in the amount of P2,521,769.77, damages and attorney's fees.
Petitioner appealed to the National Labor Relations Commission (NLRC) but, the
appeal was dismissed. Petitioner filed a motion for reconsideration of the NLRC's
dismissal, which was denied.
Petitioner then filed a petition with the CA .On July 30, 1999, the CA rendered its
Decision, granting the petition.Respondent filed a motion for reconsideration of the
CA Decision, and on August 21, 2001, the CA rendered the assailed Resolution.
Hence, this petition.
ISSUE
Whether or not respondent's claim for unpaid commissions in the amount of
P2,521,769.77 has already prescribed.
HELD

The applicable law in this case is Article 291 of the Labor Code which provides that
all money claims arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three (3) years from the time the cause
of action accrued; otherwise they shall be forever barred. The term money claims
covers all money claims arising from an employer-employee relation.
Corollarily, Article 217 of the Labor Code provides for the jurisdiction of labor courts,
which includes money claims arising from employer-employee relations
Like other causes of action, the prescriptive period for money claims is subject to
interruption, and in the absence of an equivalent Labor Code provision for
determining whether the said period may be interrupted, Article 1155 of the Civil
Code may be applied.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a
written extrajudicial demand by the creditor, and (c) a written acknowledgment of
the debt by the debtor. On this point, the Court ruled that although the
commencement of a civil action stops the running of the statute of prescription or
limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in
exactly the same position as though no action had been commenced at all.
Hence, while the filing of Civil Case No. Q-89-2244 could have interrupted the
running of the three-year prescriptive period, its consequent dismissal by the CA in
CA-G.R. SP No. 23821 due to lack of jurisdiction effectively canceled the tolling of
the prescriptive period within which to file his money claim, leaving respondent in
exactly the same position as though no civil case had been filed at all.[17] The
running of the three-year prescriptive period not having been interrupted by the
filing of Civil Case No. Q-89-2244, respondent's cause of action had already
prescribed on September 2, 1991, three years after his cessation of employment on
September 2, 1988. Consequently, when respondent filed his complaint for illegal
dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his
claim, clearly, had already been barred by prescription.

[G.R. No. 157488 February 6, 2007]

SOLGUS CORPORATION, Petitioner, VS. HON. COURT
DIOSDADO TELIN and ALEJANDRE ALAGOS, Respondents.

OF

APPEALS,

FACTS
Sometime during the first quarter of 1994, they separately filed complaints for
illegal dismissal and underpayment of salaries and related benefits against the
above mentioned corporation and its principals.
On 5 December 1996, the Labor Arbiter issued an Order declaring the instant case
submitted for resolution. The Order in part reads: [I]nstant case is deemed
submitted for decision based on the pleadings and records on hand. Be this as it

may, parties are however given fifteen (15) days upon receipt of this Order to
file/submit their last responsive pleadings on this case.
On 29 August 1997, Solgus submitted a Memorandum alleging that: complainants
Telin, Lacerna, Emano, Ballon, Menor, Jr., and Alagos had executed Affidavits of
Desistance evidencing that their complaints had been amicably settled; and the
complaints of Deseo and Soriano should be dismissed because they failed to
complete their six-month probationary period and were, therefore, not regular
employees. In a Decision dated 15 October 1997, the Labor Arbiter dismissed the
complaints and affirmed the validity of the Affidavits of Desistance. On 27
November 1998, the NLRC reversed.
ISSUE
Whether or not the Affidavits of Desistance should be considered
HELD
The NLRC Rules of Procedure particularly Section 3, Rule V, provides:
Section 3. Submission of Position Papers/Memorandum. Should the parties fail to
agree upon an amicable settlement, either in whole or in part, during the
conferences, the Labor Arbiter shall issue an order stating therein the matters taken
up and agreed upon during the conferences and directing the parties to
simultaneously file their respective verified position papers.
These verified position papers shall cover only those claims and causes of action
raised in the complaint excluding those that may have been amicably settled, and
shall be accompanied by all supporting documents including the affidavits of their
respective witnesses which shall take the place of the latters direct testimony. The
parties shall thereafter not be allowed to allege facts, or present evidence to prove
facts, not referred to and any cause or causes of action not included in the
complaint or position papers, affidavits and other documents. x x x. (Emphasis
supplied.)
The records clearly indicate that Solgus received the 5 December 1996 Order of the
Labor Arbiter on 2 January 1997. However, it inexplicably managed to submit its
Memorandum only on 27 August 1997 when it presented for the first time the
alleged Affidavits of Desistance executed by complainants Telin and Alagos.
Therefore, the Affidavits of Desistance of complainants as presented by Solgus
should not be considered on the ground that it made no reference at all in its
position paper, reply, and rejoinder to the existence of the said affidavits in patent
violation of the aforementioned rule of the NLRC. The belated presentation of the
purported Affidavits of Desistance deprived complainants Telin and Alagos of the
opportunity to debunk the authenticity of said Affidavits of Desistance before the
Labor Arbiter in gross violation of the rules of fair play. Pertaining as it does to a
waiver of rights, Solgus should have exercised more prudence in the custody of
these documents.

The genuineness of the allegedly executed affidavits of desistance by Telin and

Alagos is doubtful since the two deny having executed the same. Such being the
case, the rule that when the voluntariness of the execution of the affidavit of
desistance or release is put into issue then the claim of the employee may still be
given due course, finds application in this case.
The Affidavits of Desistance do not even bear the prima facie evidence of their due
execution accorded to private documents, because even the notaries public before
whom they were acknowledged issued a certification that no such affidavit was
acknowledged by Telin and Alagos before them.
Quitclaims, releases and other waivers of benefits granted by law or contracts in
favor of workers should be strictly scrutinized, in regard not only to the words and
terms used but also to the factual circumstances under which they have been
executed, to protect the weak and the disadvantaged. Under prevailing
jurisprudence, a deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled. It is the employers duty to
prove that such quitclaims were voluntary. The mere fact that the respondents
were not physically coerced or intimidated does not necessarily imply that they
freely or voluntarily consented to the terms thereof. Settled is the rule that
quitclaims are ineffective in barring full recovery of the benefits due the employee.

[G.R. No. 166920, February 19, 2007]

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. AND JENS PETER
HENRICHSEN, PETITIONERS, VS. KLAUS K. SCHONFELD, RESPONDENT.
FACTS
Respondent is a Canadian citizen and was a resident of New Westminster, British
Columbia, Canada. He had been a consultant in the field of environmental
engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a
corporation duly established and incorporated in accordance with the laws of the
Philippines. The primary purpose of PPI was to engage in the business of providing
specialty and technical services both in and out of the Philippines. It is a subsidiary
of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter
Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan.
On January 7, 1998, Henrichsen transmitted a letter of employment to respondent
in Canada, requesting him to accept the same and affix his conformity thereto.
Respondent made some revisions in the letter of employment and signed the
contract. He then sent a copy to Henrichsen. The letter of employment contains
among others a stipulation which states:

Any question of interpretation, understanding or fulfillment of the conditions of

employment, as well as any question arising between the Employee and the
Company which is in consequence of or connected with his employment with the

Company and which can not be settled amicably, is to be finally settled, binding to
both parties through written submissions, by the Court of Arbitration in London.
Respondent arrived in the Philippines and assumed his position as PPI Sector
Manager. He was accorded the status of a resident alien.
As required by Rule XIV (Employment of Aliens) of the Omnibus Rules
Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit)
for respondent before the Department of Labor and Employment (DOLE).
On May 5, 1999, respondent received a letter from Henrichsen informing him
that his employment had been terminated effective August 4, 1999 for the reason
that PCIJ and PPI had not been successful in the water and sanitation sector in the
Philippines. However, on July 24, 1999, Henrichsen, by electronic mail, requested
respondent to stay put in his job after August 5, 1999, until such time that he would
be able to report on certain projects and discuss all the opportunities he had
developed. Respondent continued his work with PPI until the end of business hours
on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary, leave pay,
air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI
partially settled some of his claims (US$5,635.99), but refused to pay the rest.
On December 5, 2000, respondent filed a Complaint for Illegal Dismissal against
petitioners PPI and Henrichsen with the Labor Arbiter. In his Complaint, respondent
alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision
to close one of its departments, which resulted in his dismissal; and they failed to
notify him that his employment was terminated after August 4, 1999. Respondent
also claimed for separation pay and other unpaid benefits. He alleged that the
company acted in bad faith and disregarded his rights.
Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the
Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was
improperly laid. It averred that respondent was a Canadian citizen, a transient
expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a
foreign corporation with principal office in Tokyo, Japan. Since respondents cause of
action was based on his letter of employment executed in Tokyo, Japan dated
January 7, 1998, under the principle of lex loci contractus, the complaint should
have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer
any justification for filing his complaint against PPI before the NLRC in the
Philippines. Moreover, under Section 12 of the General Conditions of Employment
appended to the letter of employment dated January 7, 1998, complainant and PCIJ
had agreed that any employment-related dispute should be brought before the
London Court of Arbitration. Since even the Supreme Court had already ruled that
such an agreement on venue is valid, Philippine courts have no jurisdiction.
The Labor Arbiter rendered a decision granting petitioners Motion to Dismiss. The
Labor Arbiter found, among others, that the January 7, 1998 contract of
employment between respondent and PCIJ was controlling; the Philippines was only
the duty station where Schonfeld was required to work under the General
Conditions of Employment. PCIJ remained respondents employer despite his having

been sent to the Philippines. Since the parties had agreed that any differences
regarding employer-employee relationship should be submitted to the jurisdiction of
the court of arbitration in London, this agreement is controlling.
On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed
the latters decision in toto.
Respondent then filed a petition for certiorari under Rule 65 with the CA. The CA
found the petition meritorious. Applying the four-fold test of determining an
employer-employee relationship, the CA declared that respondent was an employee
of PPI. On the issue of venue, the appellate court declared that, even under the
January 7, 1998 contract of employment, the parties were not precluded from
bringing a case related thereto in other venues. While there was, indeed, an
agreement that issues between the parties were to be resolved in the London Court
of Arbitration, the venue is not exclusive, since there is no stipulation that the
complaint cannot be filed in any other forum other than in the Philippines. It
ordered the remand of the case to the Labor Arbiter for disposition of the merits of
the case.
ISSUE
Whether or not the Philippine Labor Arbiter can take cognizance over the
case notwithstanding what was stated in the Employment Contract?
RULING
The settled rule on stipulations regarding venue, as held by this Court in the vintage
case of Philippine Banking Corporation v. Tensuan, is that while they are considered
valid and enforceable, venue stipulations in a contract do not, as a rule, supersede
the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of
qualifying or restrictive words. They should be considered merely as an agreement
or additional forum, not as limiting venue to the specified place. They are not
exclusive but, rather permissive. If the intention of the parties were to restrict
venue, there must be accompanying language clearly and categorically expressing
their purpose and design that actions between them be litigated only at the place
named by them.
In the instant case, no restrictive words like only, solely, exclusively in this
court, in no other court save , particularly, nowhere else but/except , or
words of equal import were stated in the contract. It cannot be said that the court
of arbitration in London is an exclusive venue to bring forth any complaint arising
out of the employment contract.
Petitioners contend that respondent should have filed his Complaint in his place of
permanent residence, or where the PCIJ holds its principal office, at the place where
the contract of employment was signed, in London as stated in their contract. By
enumerating possible venues where respondent could have filed his complaint,
however, petitioners themselves admitted that the provision on venue in the
employment contract is indeed merely permissive.
Petitioners insistence on the application of the principle of forum non
conveniens must be rejected. The bare fact that respondent is a Canadian citizen
and was a repatriate does not warrant the application of the principle for the

following reasons:
First. The Labor Code of the Philippines does not include forum non
conveniens as a ground for the dismissal of the complaint.
Second. The propriety of dismissing a case based on this principle requires a
factual determination; hence, it is properly considered as defense.
Third. In Bank of America, NT&SA, Bank of America International, Ltd. v.
Court of Appeals, this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the case if it chooses
to do so; provided, that the following requisites are met: (1) that the Philippine
Court is one to which the parties may conveniently resort to; (2) that the Philippine
Court is in a position to make an intelligent decision as to the law and the facts;
and, (3) that the Philippine Court has or is likely to have power to enforce its
decision. x x x
Admittedly, all the foregoing requisites are present in this case.
WHEREFORE, the petition is DENIED.

[G.R. No. 169494, March 14, 2007]

CABALEN MANAGEMENT CO., INC.,

MA.

ESTELA

O.

NIEVERA,

IAN

TIONGSON, ADJI TIONGSON, ESTER O. NIEVERA AND ANASTACIA NAVAL,

ADRIANO JR. CORPORATION, LEDA A. PANGILINAN, EVA S. CANDELARIA,
ROSE MARIE MORALES, DANILO SUNUBA, LETECIA DAVID, MARLON
BULANADI, MA. THERESA L. GADDI AND CONSUELO HALILI REYES,
PETITIONERS, VS. JESUS P. QUIAMBAO, GERALDINE M. PALERMO, RODEL B.
PANGILINAN, WILLIAM F. LACSON, ROCHELLE B. DE LEON, JOCELYN B.
DEANG, EDGAR E. DE GUZMAN, VIZIER INOCENCIO, VINCENT EDWARD C.
MAPUA AND JESSEBEL G. OBIEN, RESPONDENTS.
FACTS
On September 4, 2001, respondents received a memorandum placing each one of
them on preventive suspension for 30 days without pay and ordering them to
explain within 48 hours reported violations of the companys Code of Conduct.
In compliance with the memorandum, respondents filed their written explanations,
denying or refuting the charges against them.
On October 4, 2001, respondents, with the exception of Quiambao and Palermo,
were served with notices of dismissal after petitioners adjudged them guilty of the
charges.
The dismissal of respondents was based on the statements of two witnesses, Henry
dela Vega Balen (Balen) and Roderick Malana (Malana), their co-employees, that
they had connived with one another in pocketing tips which were intended for the
group, serving food or drinks without receipts or with tampered ones, and
committing like forms of stealing, resulting in losses or damages to the company.
An audit report dated September 19, 2001 on the companys accountable forms and
on incidents of missing bar order slips (OS), swapping of dining and bar OS,
unrecorded bar OS issuance, and excessive cancellation of OS and official receipts,
was also considered as evidence against respondents.
As for Quiambao and Palermo, while they were directed to immediately report to the
Human Resources Department (HRD), they were allegedly not given any
assignments.
Respondents thus filed three separate cases against herein petitioners, the
company and Adriano Jr. Corporation, together with the Cabalen restaurant at the
Glorietta, for illegal dismissal and illegal suspension, with claims for 13th month
pay, sick and vacation leaves, monthly allowances, weekly tip, monthly signed chit,
unpaid salaries, moral and exemplary damages, attorneys fees, and regularization
for respondents Palermo, Pangilinan, Lacson, Deang and De Guzman.
The
complaints were later amended to implead herein individual petitioners as
respondents.
Labor arbiter ordered their reinstatement.
NLRC affirmed the decision.

Court of Appeals set aside and reversed the decision.

Hence this petition.
ISSUE
Whether or not there was a valid dismissal
HELD
SC affirmed the decision of the Court of appeals.
It is a well-established rule that the employer has the burden of proving a valid
dismissal of an employee,for which two requisites must concur: (a) the dismissal
must be for any of the causes expressed in the Labor Code; and (b) the employee
must be accorded due process, basic of which is the opportunity to be heard and to
defend himself.
To establish a just or authorized cause for dismissal, substantial evidence or such
amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion is required. Further required is that an employee sought to be
dismissed must be served two written notices before the termination of his
employment. The first notice must apprise him of the particular acts or omissions
upon which his dismissal is grounded; the second, to inform him of the employers
decision to terminate his employment. While the failure of the employer to comply
with these notice requirements does not make the dismissal illegal as long as a just
or authorized cause has been proved, it renders the employer liable for payment of
damages because of the violation of the workers right to statutory due process.
Section 3 of Rule V of the New Rules of Procedure of the NLRC, which governs the
proceedings before the Labor Arbiter, provides:
Section 3. Submission of Position Papers/Memorandum. Should the parties fail to
agree upon an amicable settlement, either in whole or in part, during the
conferences, the Labor Arbiter shall issue an order stating therein the matters taken
up and agreed upon during the conferences and directing the parties to
simultaneously file their respective verified position papers.
These verified position papers shall cover only those claims and causes of action
raised in the complaint excluding those that may have been amicably settled, and
shall be accompanied by all supporting documents including the affidavits of their
respective witnesses which shall take the place of the latters direct testimony. The
parties shall thereafter not be allowed to allege facts, or present evidence to prove
facts, not referred to and any cause or causes of action not included in the
complaint or position papers, affidavits and other documents . . . (Emphasis and
underscoring supplied)
Section 9 of the same Rule states that proceedings before a Labor Arbiter shall be
non-litigious in nature and that subject to the requirements of due process, the
technicalities of law and procedure and the rules obtaining in the courts of law shall
not strictly apply thereto. It is sufficient that the documents submitted by the

parties have a bearing on the issue at hand and support the positions taken by
them.
In light of the afore-quoted provisions, there was no necessity for the statements of
Balen and Malana to be sworn to before a notary public or that the said witnesses
be presented in person before the Labor Arbiter. For the statements to be of
probative value, however, they must measure up to basic evidentiary requirements.
In IBM Philippines, Inc. v. NLRC, this Court clarified that the liberality in
administrative procedure does not go so far as to justify orders without a basis in
evidence having rational probative value. And in Uichico v. National Labor
Relations Commission, it held:
x x x It is true that administrative and quasi-judicial bodies like the NLRC are not
bound by technical rules of procedure in the adjudication of cases. However, this
procedural rule should not be construed as a license to disregard certain
fundamental evidentiary rules. While the rules of evidence prevailing in courts of
law or equity are not controlling in the proceedings before the NLRC, the evidence
presented before it must at least have a modicum of admissibility for it to be given
some probative value. x x x. (Emphasis and underscoring supplied)
In the instant case, only photocopies of the statements of Balen and Malana form
part of the records despite petitioners reliance thereon to prove respondents
purported transgressions. Jarcia Machine Shop and Auto Supply, Inc. v. NLRC held
that the unsigned photocopies of daily time records (DTRs), which were presented
by the therein employer to show that its employee was neglectful of his duties, were
of doubtful or dubious probative value.
Indeed, the DTRs annexed to the present petition would tend to establish private
respondents neglectful attitude towards his work duties as shown by repeated and
habitual absences and tardiness and propensity for working undertime for the year
1992. But the problem with these DTRs is that they are neither originals nor
certified true copies. They are plain photocopies of the originals, if the latter do
exist. More importantly, they are not even signed by private respondent nor by any
of the employers representatives x x x.
Likewise, although Balen and Malanas statements bore their signatures, they are
wanting in material particulars, the most glaring of which are the dates of
execution. Understandably, respondents objected to their admission, they claiming
that the statements were presented only after their cases for illegal dismissal were
filed before the Labor Arbiter.
In Balens statement, his name was hand printed on the first page thereof on the
space provided therefor, but the spaces intended for the date and the witnesses
were left blank.
The purported transcript of Malanas 15-page question-and-answer testimony, on
the other hand, while bearing his hand printed name and signature at the top
rightmost margin of the first page and on every page thereafter, merely indicated
the person making the inquiry with the initials TLG. While the initials may have

referred to Theresa L. Gaddi, manager of the HRD, this point was never clarified by
petitioners, hence, it remains in the realm of speculation and surmises. Neither
were the omissions as to date and other particulars rectified. The appellate courts
discrediting of the statements as bereft of rational probative value upon which a
decision or order may properly be based is thus well-taken.
Respecting the audit report, petitioners posit that the therein mentioned
documented incidents-bases of faulting respondents were so numerous to have
been incurred in the normal course of business. It added that the statements of
Balen and Malana regarding the alleged wrongdoings of respondents who had
possession of the accountable forms were corroborated by the audit report.
It bears noting that while the audit report covered a 20-month period (January 2000
to August 31, 2001), respondents had served only partly in the restaurants
Glorietta branch due to the companys practice of rotating employees every so
often. For that matter, respondents Quiambao and Obien were assigned to the
same branch in March and August of 2000, respectively; Deang and Lacson, in
October 2000; De Leon in April 2001; and De Guzman in June 2001 only.
Respondents alleged involvement in the reported irregularities moreover appeared
to be incongruent with the companys awarding them of certificates of
commendation, recognition or appreciation for their invaluable service during the
same period.
Petitioners contention that the number of cancelled OS and receipts and the
incidents of swapping dining OS with bar OS were beyond the normal course of
business deserves scant attention, petitioners not having established the average
figures in the ordinary course of its business.
All told, neither the statements of Balen and Malana nor the audit report could
support a valid ground for dismissal.
It also does not help petitioners cause that they failed to follow rudiments of due
process and even the rules laid down in their own Code of Conduct. Section 2 of
Rule XIV of the Omnibus Rules Implementing the Labor Code specifically provides,
as follows:
Section 2. Standards of due process; requirements of notice. In all cases of
termination of employment, the following standards of due process shall be
substantially observed:
1. For termination of employment based on just causes as defined in Article 282 of
the Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel, if the employee so desires, is given opportunity to respond to
the charge, present his evidence, or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
The foregoing provision has been interpreted to mean that the written notice to the
employees who stand to lose their employment must specify the particular acts or
omissions constituting the grounds for their dismissal. The rule ensures that the
employees are able to answer the charges and to defend themselves from imputed
wrongdoings before their dismissals are ordered.
A review of the charges in the Notice to Explain and Suspension of September 4,
2001 shows that most, if not all, were couched in general terms. Thus, respondents
Quiambao and Obien were charged with negligence in the performance of duties
resulting to losses or damages amounting to more than P5,000.00 and
involvement in stealing in any form. On the other hand, Palermo, Lacson and De
Leon were charged with issuing /serving food or drinks without corresponding
receipts or [with] tampered receipts and stealing in any form, while Pangilinan
and De Guzman were charged with pocketing tips intended for the group and
stealing in any form. The charges against Deang, meanwhile, consisted of
withholding information on administrative or legal cases and stealing in any
form.
Precisely because of petitioners failure to sufficiently state the acts or omissions
constituting the alleged transgressions that respondent Obien asked to be clarified
of the charges against her. Because of the vagueness of the charges, it followed
that respondents could only issue a general denial.
The Corrective Action Report (CARE) furnished each of the respondents in
accordance with the companys Code of Conduct was not any better. It did not
contain the date/s when the alleged infractions were committed, the person/s who
reported the same for investigation, or the signatures of the employees immediate
supervisors.
Petitioners did not even heed their own procedures on disciplinary actions. The
only facts extant in the records are that respondents were issued above-said CARE
Forms asking them to explain their alleged infractions within 48 hours; and they
subsequently received notices of dismissal after they submitted their written
explanations. There is, however, nothing to show that before their dismissal,
respondents were informed of their immediate supervisors decision to terminate
their services, or that they were thereafter invited to an administrative investigation
before the HRD manager or officer who is tasked to conduct the investigation in the
presence of the employees immediate supervisor/s and the witnesses, if necessary,
as provided under Section IV of the companys Code of Conduct.
No record of any administrative investigation proceeding, which under the
companys rules, was to be minuted, had also been presented. Hence, only
petitioners allegation that the statements of the witnesses were taken as part of
the administrative investigation is before this Court. Allegations without proof do
not deserve consideration.

Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it

was incumbent upon petitioners to prove it by substantial evidence. It did not,
however. In fact, Quiambao presented documents to disprove the validity of his
retrenchment on that ground. For petitioners failure to discharge its burden then,
this Court is constrained to hold that respondent Quiambaos dismissal was not
valid.
Petition is DENIED. The challenged Decision of the Court of Appeals is AFFIRMED

[G.R. No. 151021 May 4, 2006]

CAINTA CATHOLIC SCHOOL vs. CAINTA CATHOLIC SCHOOL EMPLOYEES
UNION
FACTS
On 6 March 1986, a Collective Bargaining Agreement was entered into between
Cainta Catholic School (School) and the Cainta Catholic School Employees Union
(Union) effective 1 January 1986 to 31 May 1989.
Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From
this time, the Union became inactive.
It was only in 10 September 1993 that the Union held an election of officers, with
Mrs. Rosalina Llagas (Llagas) being elected as President;
Paz Javier (Javier), Vice-President;
Fe Villegas (Villegas), Treasurer; and
Maria Luisa Santos (Santos), Secretary.
Llagas was then the Dean of the Student Affairs
Year-Level Chairmen. The other elected officers
Amigo, secretaries; Nena Marvilla, treasurer; Gilda
auditors; Filomeno Dacanay and Adelina Andres,
Arturo Guevarra, business managers.

while Villegas and Santos were

were Rizalina Fernandez, Ester
Galange and Jimmy del Rosario,
P.R.O.s; and Danilo Amigo and

On 15 October 1993, the School retired Llagas and Javier, who had rendered more
than twenty (20) years of continuous service, pursuant to Section 2, Article X of the
CBA, to wit:
An employee may be retired, either upon application by the employee himself or by
the decision of the Director of the School, upon reaching the age of sixty (60) or
after having rendered at least twenty (20) years of service to the School the last
three (3) years of which must be continuous.
Because of this union struck and picketed the Schools entrances.

On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an

Order certifying the labor dispute to the National Labor Relations Commission
(NLRC).
On 20 December 1993, the School filed a petition directly with the NLRC to declare
the strike illegal. While On 27 July 1994, the Union filed a complaint for unfair labor
practice before the NLRC
On 31 January 1997, the NLRC rendered a Resolution favoring the School.
The NLRC ruled that the retirement of Llagas and Javier is legal as the School was
merely exercising an option given to it under the CBA. The NLRC dismissed the
unfair labor practice charge against the School for insufficiency of evidence.
Furthermore, it was found that the strike declared by the Union from 8 to 12
November 1993 is illegal, thereby declaring all union officers to have lost their
employment status.
However Court of Appeals ruled in favor of the respondents And concluded that the
retirement of the two (2) union officers was clearly to bust the reactivated union.
ISSUE
Whether or not Llagas a supervisory level is entitled to join a union?
HELD
Llagas cannot join the union.
The School insisted that Llagas and Javier were actually managerial employees, and
it was illegal for the Union to have called a strike on behalf of two employees who
were not legally qualified to be members of the Union in the first place. The Union,
on the other hand, maintains that they are rank-and-file employees.
Article 212(m) of the Labor Code defines a managerial employee as "one who is
vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees, or to effectively recommend such managerial actions." The functions of
the Dean of Student Affairs, as occupied by Llagas, are enumerated in the Faculty
Manual. The salient portions are hereby enumerated:
a.
Manages the High School Department with the Registrar and Guidance
Counselors (acting as a COLLEGIAL BODY) in the absence of the Director or
Principal.
b.
Enforces the school rules and regulations governing students to maintain
discipline.
g. Plans with the Guidance Counselors student leadership training programs to
encourage dynamic and responsible leadership among the students and submits
the same for the approval of the Principal/Director.
i. Studies proposals on extra-curricular or co-curricular activities and projects
proposed by teachers and students and recommends to the Principal/Director the
necessary approval.

j. Implements and supervises activities and projects approved by the

Principal/Director so that the activities and projects follow faithfully the conditions
set forth by the Principal/Director in the approval.
k. Assists in the planning, supervising and evaluating of programs of co-curricular
activities in line with the philosophy and objectives of the School for the total
development of the students.
l. Recommends to the Principal policies and rules to serve as guides to effective
implementation of the student activity program.
It is fairly obvious from a perusal of the list that the Dean of Student Affairs
exercises managerial functions, thereby classifying Llagas as a managerial
employee.
Javier was occupying the position of Subject Area Coordinator. Her duties and
responsibilities include:
1. Recommends to the principals consideration the appointment of faculty
members in the department, their promotion, discipline and even termination;
2. Recommends advisory responsibilities of faculty members;
3. Recommends to the principal curricular changes, purchase the books and
periodicals, supplies and equipment for the growth of the school;
4. Recommends his/her colleagues and serves as channel between teachers in the
department the principal and/or director.
Supervisory employees, as defined in Article 212(m) are those who, in the interest
of the employer, effectively recommend such managerial actions if the exercise of
such authority is not merely routinary or clerical in nature but requires the use of
independent judgment.
In the same vein, a reading of the above functions leads us to conclude that Javier
was a supervisory employee. Verily, Javier made recommendations as to what
actions to take in hiring, termination, disciplinary actions, and management policies,
among others.
We can concede, as the Court of Appeals noted, that such job descriptions or
appellations are meaningless should it be established that the actual duties
performed by the employees concerned are neither managerial nor supervisory in
nature. Yet on this point, we defer to the factual finding of the NLRC, the proximate
trier of facts, that Llagas and Javier were indeed managerial and supervisory
employees, respectively.
Having established that Llagas is a managerial employee, she is proscribed from
joining a labor union, more so being elected as union officer. In the case of Javier, a
supervisory employee, she may join a labor union composed only of supervisory
employees. Finding both union officers to be employees not belonging to the rankand-file, their membership in the Union has become questionable, rendering the
Union inutile to represent their cause.