16

Arco Metal Products vs. SAMARM-NAFLU

Magallanes vs. Sun Yat Sen

G.R. No. 170734 May 14, 2008

G.R. No. 160876 January 18, 2008

Facts: Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs), petitioners,
Grace Gonzales, and Bella Gonzales were all employed as teachers in the Sun Yat Sen Elementary
School in Surigao City. Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng
and Benito Ang are its directors, while Teotimo Tan is the school treasurer. They are all respondents
herein.
On May 22, 1994, respondents terminated the services of petitioners. Thus, on August 3, 1994, they filed
with the Sub-Regional Arbitration Branch No. X, National Labor Relations Commission (NLRC), Butuan
City, complaints against respondents for illegal dismissal, underpayment of wages, payment of
backwages, 13th month pay, ECOLA, separation pay, moral damages, and attorneys fees. Likewise, on
August 22, 1994, petitioner Cotecson filed a separate complaint praying for the same reliefs.
Issue: (1) whether the Court of Appeals (Seventh Division) erred in holding that affixing a wrong docket
number on a motion renders it "non-existent;" and (2) whether the issuance by the NLRC of the Order
dated March 30, 2001, amending the amounts of separation pay and backwages, awarded by the Court
of Appeals (Sixteenth Division) to petitioners and computed by the Labor Arbiter, is tantamount to grave
abuse of discretion amounting to lack or excess of jurisdiction.
Held: WHEREFORE, we GRANT the petition. The challenged Resolutions dated October 29, 2001, May
8, 2003, and October 10, 2003 in CA-G.R. SP No. 67068 are REVERSED. The Order of the NLRC
dated March 30, 2001 in NLRC Case No. M-006176-2001 is SET ASIDE. The Order of the Labor Arbiter
dated January 8, 2001 is REINSTATED.
Ratio Decidendi: 1. Court of Appeals (Seventh Division) is correct when it ruled that petitioners motion
for reconsideration of its Resolution dated October 29, 2001 in CA-G.R. SP No. 67068 is "non-existent."
Petitioners counsel placed a wrong case number in their motion. Where a pleading bears an erroneous
docket number and thus "could not be attached to the correct case," the said pleading is, for all intents
and purposes, "non-existent." It has neither the duty nor the obligation to correct the error or to transfer
the case to the Seventh Division. However, we opt for liberality in the application of the rules to the
instant case in light of the following considerations. First, the rule that negligence of counsel binds the
client may be relaxed where adherence thereto would result in outright deprivation of the clients liberty
or property or where the interests of justice so require. Second, this Court is not a slave of technical
rules, shorn of judicial discretion in rendering justice; it is guided by the norm that on the balance,
technicalities take a backseat against substantive rights. Thus, if the application of the rules would tend
to frustrate rather than promote justice, it is always within this Courts power to suspend the rules or
except a particular case from its application.
2. We sustain petitioners contention that the NLRC, in modifying the award of the Court of Appeals,
committed grave abuse of discretion amounting to lack or excess of jurisdiction. Quasi-judicial agencies
have neither business nor power to modify or amend the final and executory Decisions of the appellate
courts. Under the principle of immutability of judgments, any alteration or amendment which substantially
affects a final and executory judgment is void for lack of jurisdiction.8 We thus rule that the Order dated
March 30, 2001 of the NLRC directing that the monetary award should be computed from June 1994, the
date petitioners were dismissed from the service, up to June 20, 1995 only, is void.

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is
the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the
13th month pay, bonus, and leave encashment of three union members in amounts proportional to the
service they actually rendered in a year, which is less than a full twelve (12) months. The employees
were Rante Lamadrid, Alberto Gamban, and Rodelio Collantes. Respondent protested the prorated
scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits
to seven (7) employees who had not served for the full 12 months. The payments were made in 1992,
1993, 1994, 1996, 1999, 2003, and 2004. According to respondent, the prorated payment violates the
rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint
before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for
voluntary arbitration. The voluntary arbitrator, Apron M. Mangabat, ruled in favor of the petitioner.
Issue/s: Whether or not the Court of Appeals erred when it ruled that the grant of 13th month pay, bonus,
and leave encashment in full regardless of actual service rendered constitutes voluntary employer
practice and, consequently, the prorated payment of the said benefits does not constitute diminution of
benefits under Article 100 of the Labor Code.
Whether the intent of the CBA provisions is to grant full benefits regardless of service actually rendered
by an employee to the company.
Held: IN VIEW HEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP
No. 85089 dated 29 September 2005 is and its Resolution dated 9 December 2005 are
hereby AFFIRMED.
Ratio Decidendi: The Petition fails.
In cases involving money claims of employees, the employer has the burden of proving that the
employees did receive the wages and benefits and that the same were paid in accordance with law.
Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily
presented other proofs, such as the names of other employees who did not fully serve for one year and
thus were given prorated benefits. Experientially, a perfect attendance in the workplace is always the
goal but it is seldom achieved. There must have been other employees who had reported for work less
than a full year and who, as a consequence received only prorated benefits. This could have easily
bolstered petitioners theory of mistake/error, but sadly, no evidence to that effect was presented.
PLDT v NLRC and Marilyn Abucay, G.R. No. L- 80609
http://www.lawphil.net/judjuris/juri1988/aug1988/gr_80609_1988.html

FACTS: Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was
accused by two complainants of having demanded and received from them the total amount of
P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone
installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated from
the service. 2 She went to the Ministry of Labor and Employment claiming she had been illegally

removed. After consideration of the evidence and arguments of the parties, the company was sustained
and the complaint was dismissed for lack of merit.
Both the petitioner and the private respondent appealed to the National Labor Relations Board, which
upheld the said decision in toto and dismissed the appeals. 4 The private respondent took no further
action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us
to question the affirmance of the above- quoted award as having been made with grave abuse of
discretion.
The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is
entitled to reinstatement and backwages as required by the labor laws. However, an employee
dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any relief at all
because his dismissal is in accordance with law. In the case of the private respondent, she has been
awarded financial assistance equivalent to ten months pay corresponding to her 10 year service in the
company despite her removal for cause. She is, therefore, in effect rewarded rather than punished for
her dishonesty, and without any legal authorization or justification. The award is made on the ground of
equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on
dishonesty and encourages instead of deterring corruption.
For its part, the public respondent claims that the employee is sufficiently punished with her dismissal.
The grant of financial assistance is not intended as a reward for her offense but merely to help her for
the loss of her employment after working faithfully with the company for ten years.
ISSUE: The legality of the award of financial assistance to an employee who had been dismissed for
cause as found by the public respondent.
HELD:
The Court notes, however, that where the exception has been applied, the decisions have not been
consistent as to the justification for the grant of separation pay and the amount or rate of such award.
Thus, the employees dismissed for theft in the Firestone case and for animosities with fellow workers in
the Engineering Equipment case were both awarded separation pay not withstanding that the first cause
was certainly more serious than the second. No less curiously, the employee in the Soco case was
allowed only one-half month pay for every year of his 18 years of service, but in Filipro the award was
two months separation pay for 2 years service. In Firestone, the employee was allowed full separation
pay corresponding to his 11 years of service, but in Metro, the employee was granted only one-half
month separation pay for every year of her 15year service. It would seem then that length of service is
not necessarily a criterion for the grant of separation pay and neither apparently is the reason for the
dismissal.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was
considered warranted, was required regardless of the nature or degree of the ground proved, be it mere
inefficiency or something graver like immorality or dishonesty. The benediction of compassion was made
to cover a multitude of sins, as it were, and to justify the helping hand to the validly dismissed employee
whatever the reason for his dismissal. This policy should be re-examined. It is time we rationalized the
exception, to make it fair to both labor and management, especially to labor.

There should be no question that where it comes to such valid but not iniquitous causes as failure to
comply with work standards, the grant of separation pay to the dismissed employee may be both just
and compassionate, particularly if he has worked for some time with the company. For example, a
subordinate who has irreconcilable policy or personal differences with his employer may be validly
dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has
to be frequently absent because she has also to take care of her child may also be removed because of
her poor attendance, this being another authorized ground. It is not the employee's fault if he does not
have the necessary aptitude for his work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its operations. He too may be validly
replaced. Under these and similar circumstances, however, the award to the employee of separation pay
would be sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law
must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if
he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his
offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really
sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation
is changed completely. This is not only inefficiency but immorality and the grant of separation pay would
be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.
We hold that the grant of separation pay in the case at bar is unjustified. The private respondent has
been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she
herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it
is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she
should have strengthened instead of betraying during all of her 10 years of service with the company. If
regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for
disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its
ranks of all undesirables.
The Court also rules that the separation pay, if found due under the circumstances of each case, should
be computed at the rate of one month salary for every year of service, assuming the length of such
service is deemed material. This is without prejudice to the application of special agreements between
the employer and the employee stipulating a higher rate of computation and providing for more benefits
to the discharged employee.
The petition is GRANTED.
Toyota Motors Phils. Corp. workers Association v. NLRC, J. Velasco Jr.
http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/158786_158789.htm

FACTS:

The Union is a legitimate labor organization duly registered with the Department of Labor and
Employment (DOLE) and is the sole and exclusive bargaining agent of all Toyota rank and file
employees.[5]
Toyota, on the other hand, is a domestic corporation engaged in the assembly and sale of
vehicles and parts.
On February 14, 1999, the Union filed a petition for certification election among
the Toyota rank and file employees with the National Conciliation and Mediation Board (NCMB), which
was docketed as Case No. NCR-OD-M-9902-001. Med-Arbiter Ma. Zosima C. Lameyra denied the
petition, but, on appeal, the DOLE Secretary granted the Unions prayer, and, through the June 25, 1999
Order, directed the immediate holding of the certification election.[7]
After Toyotas plea for reconsideration was denied, the certification election was
conducted. Med-Arbiter Lameyras May 12, 2000 Order certified the Union as the sole and exclusive
bargaining agent of all the Toyota rank and file employees. Toyota challenged said Order via an appeal
to the DOLE Secretary.
In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) proposals
to Toyota, but the latter refused to negotiate in view of its pending appeal.
In connection with Toyotas appeal, Toyota and the Union were required to attend a hearing
on February 21, 2001 before the Bureau of Labor Relations (BLR) in relation to the exclusion of the
votes of alleged supervisory employees from the votes cast during the certification election.
The February 21, 2001 hearing was cancelled and reset to February 22, 2001. On February 21, 2001,
135 Union officers and members failed to render the required overtime work, and instead marched to
and staged a picket in front of the BLR office in Intramuros, Manila.[9] The Union, in a letter of the same
date, also requested that its members be allowed to be absent on February 22, 2001 to attend the
hearing and instead work on their next scheduled rest day. This request however was denied by Toyota.
Despite denial of the Unions request, more than 200 employees staged mass actions on
February 22 and 23, 2001 in front of the BLR and the DOLE offices, to protest the partisan and antiunion stance of Toyota. Due to the deliberate absence of a considerable number of employees
on February 22 to 23, 2001, Toyotaexperienced acute lack of manpower in its manufacturing and
production lines, and was unable to meet its production goals resulting in huge losses of PhP
53,849,991.
February 27, 2001, Toyota sent individual letters to some 360 employees requiring them to
explain within 24 hours why they should not be dismissed for their obstinate defiance of the companys
directive to render overtime work on February 21, 2001, for their failure to report for work on February 22
and 23, 2001, and for their participation in the concerted actions which severely disrupted and paralyzed
the plants operations.
On the next day, the Union filed with the NCMB another notice of strike docketed as NCMBNCR-NS-02-061-01 for union busting amounting to unfair labor practice.

March 1, 2001, the Union nonetheless submitted an explanation in compliance with

the February 27, 2001 notices sent by Toyota to the erring employees. The Union members explained
that their refusal to work on their scheduled work time for two consecutive days was simply an exercise
of their constitutional right to peaceably assemble and to petition the government for redress of
grievances. It further argued that the demonstrations staged by the employees on February 22 and 23,
2001 could not be classified as an illegal strike or picket, and that Toyota had already condoned the
alleged acts when it accepted back the subject employees.
March 2 and 5, 2001, Toyota issued two (2) memoranda to the concerned employees to
clarify whether or not they are adopting the March 1, 2001 Unions explanation as their own. The
employees were also required to attend an investigative interview,[14] but they refused to do so.
On March 16, 2001, Toyota terminated the employment of 227 employees [15] for participation
in concerted actions in violation of its Code of Conduct and for misconduct under Article 282 of the Labor
Code.
In reaction to the dismissal of its union members and officers, the Union went on strike
on March 17, 2001. Subsequently, from March 28, 2001 to April 12, 2001, the Union intensified its strike
by barricading the gates of Toyotas Bicutan and Sta. Rosa plants. The strikers prevented workers who
reported for work from entering the plants.
Toyota filed a petition to declare the strike illegal with the NLRC arbitration branch, which was
docketed as NLRC NCR (South) Case No. 30-04-01775-01, and prayed that the erring Union officers,
directors, and members be dismissed.
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an
Order[20] certifying the labor dispute to the NLRC. In said Order, the DOLE Secretary directed all striking
workers to return to work at their regular shifts by April 16, 2001. On the other hand, it ordered Toyota to
accept the returning employees under the same terms and conditions obtaining prior to the strike or at its
option, put them under payroll reinstatement. The parties were also enjoined from committing acts that
may worsen the situation.
The Union ended the strike on April 12, 2001. The union members and officers tried to return
to work on April 16, 2001 but were told that Toyota opted for payroll-reinstatement authorized by the
Order of the DOLE Secretary.
The Union filed a motion for reconsideration of the DOLE Secretarys April 10, 2001 certification Order,
which, however, was denied by the DOLE Secretary in her May 25, 2001 Resolution. Consequently, a
petition for certiorari was filed before the CA.
Despite the issuance of the DOLE Secretarys certification Order, several payroll-reinstated
members of the Union staged a protest rally in front of Toyotas Bicutan Plant bearing placards and
streamers in defiance of the April 10, 2001 Order.
May 28, 2001, around forty-four (44) Union members staged another protest action in front of
the Bicutan Plant. At the same time, some twenty-nine (29) payroll-reinstated employees picketed in
front of the Santa Rosa Plants main entrance, and were later joined by other Union members.
June 5, 2001, notwithstanding the certification Order, the Union filed another notice of strike.
Notwithstanding repeated orders to file its position paper, the Union still failed to submit its position paper
on July 19, 2001. Consequently, the NLRC issued an Order directing the Union to submit its position

paper on the scheduled August 3, 2001 hearing; otherwise, the case shall be deemed submitted for
resolution based on the evidence on record.
During the August 3, 2001 hearing, the Union, despite several accommodations, still failed to
submit its position paper. Later that day, the Union claimed it filed its position paper by registered mail.
Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes staged by
the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as illegal.
The NLRC considered the mass actions staged on February 21 to 23, 2001 illegal as the Union failed to
comply with the procedural requirements of a valid strike under Art. 263 of the Labor Code.
After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10, 2001,
the Union again staged strikes on May 23 and 28, 2001. The NLRC found the strikes illegal as they
violated Art. 264 of the Labor Code which proscribes any strike or lockout after jurisdiction is assumed
over the dispute by the President or the DOLE Secretary.
The NLRC held that both parties must have maintained the status quo after the DOLE
Secretary issued the assumption/certification Order, and ruled that theUnion did not respect the DOLE
Secretarys directive.
Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC
denied in its September 14, 2001 Resolution.[23] Consequently, both parties questioned the August 9,
2001 Decision[24] and September 14, 2001 Resolution of the NLRC in separate petitions for certiorari
filed with the CA.

We rule otherwise.

It is entirely the Unions fault that its position paper was not considered by the NLRC. Records
readily reveal that the NLRC was even too generous in affording due process to the Union. It issued no
less than three (3) orders for the parties to submit its position papers, which the Union ignored until the
last minute. No sufficient justification was offered why the Union belatedly filed its position paper.
The proper ruling in this situation is to consider the petition as compliant with the formal requirements
with respect to the parties who signed it and, therefore, can be given due course only with regard to
them. The other petitioners who did not sign the verification and certificate against forum shopping
cannot be recognized as petitioners have no legal standing before the Court. The petition should be
dismissed outright with respect to the non-conforming petitioners.

The alleged protest rallies in front of the offices of BLR and DOLE Secretary and at
the Toyota plants constituted illegal strikes

When is a strike illegal?

CA considered the participation in illegal strikes as serious misconduct. It defined

serious misconduct as a transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.

Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz:

However, in its June 20, 2003 Resolution,[28] the CA modified its February 27, 2003 Decision
by reinstating severance compensation to the dismissed employees based on social justice.

(1)
[when it] is contrary to a specific prohibition of law, such as
strike by employees performing governmental functions; or

ISSUE:

(2)
[when it] violates a specific requirement of law[, such as Article
263 of the Labor Code on the requisites of a valid strike]; or
(1) Whether the mass actions committed by the Union on different occasions are illegal
strikes; (2) Whether separation pay should be awarded to the Union members who
participated in the illegal strikes.

(3)
[when it] is declared for an unlawful purpose, such as inducing
the employer to commit an unfair labor practice against non-union employees; or

HELD:

The Union contends that the NLRC violated its right to due process when it disregarded its
position paper in deciding Toyotas petition to declare the strike illegal.

(4)
[when it] employs unlawful means in the pursuit of its objective,
such as a widespread terrorism of non-strikers [for example, prohibited acts under
Art. 264(e) of the Labor Code]; or

(5)
[when it] is declared in violation of an existing injunction[, such
as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC
under Art. 263 of the Labor Code]; or

(6)
[when it] is contrary to an existing agreement, such as a nostrike clause or conclusive arbitration clause.[33]

Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001
are not within the ambit of strikes as defined in the Labor Code, since they were legitimate exercises of
their right to peaceably assemble and petition the government for redress of grievances.
A strike means any temporary stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute. A labor dispute, in turn, includes any controversy or matter concerning terms
or conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of the employer and the employee.
Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken
by the Union officials and members on February 21 to 23, 2001are not valid and proper exercises of
their right to assemble and ask government for redress of their complaints, but are illegal strikes in
breach of the Labor Code. TheUnions position is weakened by the lack of permit from the City
of Manila to hold rallies. Shrouded as demonstrations, they were in reality temporary stoppages of work
perpetrated through the concerted action of the employees who deliberately failed to report for work on
the convenient excuse that they will hold a rally at the BLR and DOLE offices in Intramuros, Manila, on
February 21 to 23, 2001. The purported reason for these protest actions was to safeguard their rights
against any abuse which the med-arbiter may commit against their cause. However, the Union failed to
advance convincing proof that the med-arbiter was biased against them. The acts of the med-arbiter in
the performance of his duties are presumed regular. Sans ample evidence to the contrary,
the Union was unable to justify the February 2001 mass actions. What comes to the fore is that the
decision not to work for two days was designed and calculated to cripple the manufacturing arm
of Toyota. It becomes obvious that the real and ultimate goal of the Union is to coerce Toyota to finally
acknowledge the Union as the sole bargaining agent of the company. This is not a legal and valid
exercise of the right of assembly and to demand redress of grievance.
We sustain the CAs affirmance of the NLRCs finding that the protest rallies staged
on February 21 to 23, 2001 were actually illegal strikes.
The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the
illegal strikes held from February 21 to 23, 2001, from March 17 to April 12, 2001, and on May 23 and
28, 2001. We uphold the findings of fact of the NLRC on the involvement of said union officials in the
unlawful concerted actions as affirmed by the CA.

The answer is in the affirmative.

As we have ruled that the strikes by the Union on the three different occasions were illegal,
we now proceed to determine the individual liabilities of the affected union members for acts committed
during these forbidden concerted actions.
There can be no good faith in intentionally incurring absences in a collective fashion from
work on February 22 and 23, 2001 just to attend the DOLE hearings. The Unions strategy was plainly
to cripple the operations and bring Toyota to its knees by inflicting substantial financial damage to the
latter to compel union recognition. The Union officials and members are supposed to know through
common sense that huge losses would befall the company by the abandonment of their regular work. It
was not disputed thatToyota lost more than PhP 50 million because of the willful desertion of company
operations in February 2001 by the dismissed union members. In addition, further damage was
experienced by Toyota when the Union again resorted to illegal strikes from March 28 to April 12, 2001,
when the gates of Toyota were blocked and barricaded, and the company officials, employees, and
customers were intimidated and harassed. Moreover, they were fully aware of the company rule on
prohibition against concerted action inimical to the interests of the company and hence, their resort to
mass actions on several occasions in clear violation of the company regulation cannot be excused nor
justified. Lastly, they blatantly violated the assumption/certification Order of the DOLE Secretary,
exhibiting their lack of obeisance to the rule of law. These acts indeed constituted serious misconduct.
A painstaking review of case law renders obtuse the Unions claim for separation pay. In a
slew of cases, this Court refrained from awarding separation pay or financial assistance to union officers
and members who were separated from service due to their participation in or commission of illegal acts
during strikes.
The petitions in G.R. Nos. 158786 and 158789 are DENIED while those in G.R. Nos. 15879899 are GRANTED.
The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the grant
of severance compensation is ANNULLED and SET ASIDE.
The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which affirmed
the August 9, 2001 Decision of the NLRC but deleted the grant of severance compensation,
is REINSTATED and AFFIRMED.No costs.

Reno Foods Inc v. Nagkakakisang Lakas ng Manggagawa (NLM), J. del Castillo

FACTS:
Members liability depends on participation in illegal acts
Did they commit illegal acts during the illegal strikes on February 21 to 23, 2001, from March
17 to April 12, 2001, and on May 23 and 28, 2001?

Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which
Vicente Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor) was
an employee of Reno Foods until her dismissal on October 27, 1998.

It is a standard operating procedure of petitioner-company to subject all its employees to

reasonable search of their belongings upon leaving the company premises. On October 19, 1998, the
guard on duty found six Reno canned goods wrapped in nylon leggings inside Capors fabric clutch
bag. The only other contents of the bag were money bills and a small plastic medicine container.

Petitioners accorded Capor several opportunities to explain her side, often with the assistance of
the union officers of Nagkakaisang Lakas ng Manggagawa(NLM) Katipunan. In fact, after petitioners
sent a Notice of Termination to Capor, she was given yet another opportunity for reconsideration through
a labor-management grievance conference held on November 17, 1999. Unfortunately, petitioners did
not find reason to change its earlier decision to terminate Caporsemployment with the company.

On December 8, 1998, petitioners filed a complaint-affidavit against Capor for qualified theft in
the Office of the City Prosecutor, Malabon-NavotasSubstation. On April 5, 1999, a Resolution was
issued finding probable cause for the crime charged. Consequently, an Information was filed
against Capordocketed as Criminal Case No. 207-58-MN.

Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan filed on behalf

of Capor a complaint[4] for illegal dismissal and money claims against petitioners with the Head
Arbitration Office of the National Labor Relations Commission (NLRC) for the National Capital
Region. The complaint prayed thatCapor be paid her full backwages as well as moral and exemplary
damages. The complaint was docketed as NLRC NCR Case No. 00-01-00183-99.

The Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who commits theft of
company property may be validly terminated and consequently, the said employee is not entitled to
separation pay.
The NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but added an award of
financial assistance.

The appellate court affirmed the NLRCs award of financial assistance to Capor. It stressed that the
laborers welfare should be the primordial and paramount consideration when carrying out and
interpreting provisions of the Labor Code. It explained that the mandate laid down in Philippine Long
Distance Telephone Company v. National Labor Relations Commission was not absolute, but merely
directory.

ISSUE: The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack
or excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for
theft of company property.

HELD: Conviction in a criminal case is not necessary to find just cause for termination of employment Criminal cases require proof beyond reasonable doubt while labor
disputes require only substantial evidence, which means such relevant evidence as a
reasonable mind might accept as adequate to justify a conclusion.[20] The evidence in this case was
reviewed by the appellate court and two labor tribunals endowed with expertise on the matter the
Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been
validly dismissed for dishonesty or serious misconduct. It is settled that factual findings of quasi-judicial
agencies are generally accorded respect and finality so long as these are supported by substantial
evidence. In the instant case, we find no compelling reason to doubt the common findings of the three
reviewing bodies.

The award of separation pay is not warranted under the law and jurisprudence.- We find no justification
for the award of separation pay to Capor. This award is a deviation from established law and
jurisprudence.

The law is clear. Separation pay is only warranted when the cause for termination is not
attributable to the employees fault, such as those provided in Articles 283 and 284 of the Labor Code,
as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when
an employee is dismissed for just cause, such as serious misconduct.

Jurisprudence has classified theft of company property as a serious misconduct and denied the award of
separation pay to the erring employee. We see no reason why the same should not be similarly applied
in the case of Capor. She attempted to steal the property of her long-time employer. For committing
such misconduct, she is definitely not entitled to an award of separation pay.

It is true that there have been instances when the Court awarded financial assistance to employees who
were terminated for just causes, on grounds of equity and social justice. The same, however, has been
curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor Relations
Commission. In that case, we recognized the harsh realities faced by employees that forced them,
despite their good intentions, to violate company policies, for which the employer can rightfully terminate
their employment. For these instances, the award of financial assistance was allowed. But, in clear and

unmistakable language, we also held that the award of financial assistance shall not be given to validly
terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral
character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial
assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or
dishonest act, but an endorsement thereof. It will be an insult to all the laborers who, despite their
economic difficulties, strive to maintain good values and moral conduct.

While we sympathize with Capors plight, being of retirement age and having served petitioners for 39
years, we cannot award any financial assistance in her favor because it is not only against the law but
also a retrogressive public policy.

of excessive AWOPs and falsification of company records or documents because of the testimony of the
staff assistant and the plant doctor. SMC accordingly dismissed him.
On 30 March 1998, respondent filed a complaint for illegal dismissal against SMC.
The LA rendered his Decision, for the respondent. The labor arbiter believed that respondent had
committed the absences pointed out by SMC but found the imposition of termination of employment
based on his AWOPs to be disproportionate since SMC failed to show by clear and convincing evidence
that it had strictly implemented its company policy on absences. It also noted that termination based on
the alleged falsification of company records was unwarranted in view of SMCs failure to establish
respondents guilt.
The NLRC affirmed the decision of the LA.
On 28 June 2000, the Court of Appeals rendered its Decision affirming the findings of the LA and NLRC.

Petition is granted.
SAN MIGUEL CORPORATION v. NLRC, 551 SCRA 410
Facts:
Ernesto M. Ibias (respondent) was employed by petitioner SMC on 24 December 1978 initially as a CRO
operator in its Metal Closure and Lithography Plant.
According to SMCs Policy on Employee Conduct, [4] absences without permission or AWOPs, which are
absences not covered either by a certification of the plant doctor that the employee was absent due to
sickness or by a duly approved application for leave of absence filed at least six (6) days prior to the
intended leave, are subject to disciplinary action.
The same Policy on Employee Conduct also punishes falsification of company records or documents
with discharge or termination for the first offense if the offender himself or somebody else benefits from
falsification or would have benefited if falsification is not found on time.[6]
It appears that per company records, respondent was AWOP on a number of dates. For his absences
on 2, 4 and 11 January and 28 and 29 April, he was given a written warning [7] dated 9 May 1997 that he
had already incurred five (5) AWOPs and that further absences would be subject to disciplinary
action. For his absences on 28 and 29 April and 7 and 8 May, respondent was alleged to have falsified
his medical consultation card by stating therein that he was granted sick leave by the plant clinic on said
dates when in truth he was not.
Respondent was required to explain his AWOPs. Respondent did not comply with these notices. He
was again issued two Notices to Explain [10] both dated 3 June 1997, one for his AWOPs from 26 May to 2
June 1997 and another for falsification of medical consultation card entries for 28 April and 8 May 1997.
On 5 June 1997, respondent submitted a handwritten explanation to the charges denying the falsification
charge.
Not satisfied with the explanation, SMC conducted an administrative investigation on 17 and 23 June
1997. After the completion of the investigation, SMC concluded that respondent committed the offenses

Issue: W/N the respondent was illegally dismissed? NO

Held:
Petition partly granted.
The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt
is not required in determining the legality of an employers dismissal of an employee and not even a
preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial
evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably
opine otherwise. Thus, substantial evidence is the least demanding in the hierarchy of evidence.[24]
The Court agrees with the tribunals below that SMC was unable to prove the falsification charge against
respondent. Respondent cannot be legally dismissed on the basis of the uncorroborated and selfserving testimonies of SMCs employees. SMC merely relied on the testimonies of Marabe and Siwa,
who both stated that respondent admitted to them that he falsified his medical consultation card to cover
up his excessive AWOPs. For his part, respondent denied having had any knowledge of said
falsification, both in his testimony during the company-level investigation and in his handwritten
explanation. He did not even claim that he had requested for, nor had been granted any sick leave for
the days that the falsified entries were made. Siwa, being responsible for the medical cards, should take
the blame for the loss and alleged tampering thereof, and not respondent who had no control over the
same.
The issue of the unauthorized absences, however, is another matter.
However, while respondent has admitted these absences, before the Court, he also seeks to belittle the
plain by countering that SMC has not been too rigid in its application of company rules pertaining to
leave availments. In the proceedings below he claimed that during the days that he was absent, he had
attended to some family matters.
Respondent cannot feign surprise nor ignorance of the earlier AWOPs he had incurred. He was even
given a warning.
Thus, even if he was not punished for his subsequent AWOPs, the same remained on record. He was
aware of the number of AWOPs he incurred and should have known that these were punishable under

company rules. The fact that he was spared from suspension cannot be used as a reason to incur
further AWOPs and be absolved from the penalty therefor.
Respondents dismissal was well within the purview of SMCs management prerogative.
Management also has its own rights, which, as such, are entitled to respect and enforcement in
the interest of simple fair play. Out of its concern for those with [fewer] privileges in life, the
Supreme Court has inclined more often than not toward the worker and upheld his cause in his
conflicts with the employer. Such favoritism, however, has not blinded the Court to rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and
applicable law and doctrine.[38]
What the lower tribunals perceived as laxity, we consider as leniency.
It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition.
[37]
Thus, in the implementation of its rules and policies, the employer has the choice to do so strictly or
not, since this is inherent in its right to control and manage its business
effectively. Consequently, management has the prerogative to impose sanctions lighter than those
specifically prescribed by its rules, or to condone completely the violations of its erring employees. Of
course, this prerogative must be exercised free of grave abuse of discretion, bearing in mind the
requirements of justice and fair play.
Television and Production Exponents(TAPE) Inc. v. Servana, J. Tinga

was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked
to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed
its relationship with the security agency, TAPE engaged respondents services, as part of the support
group and thus a talent, to provide security service to production staff, stars and guests of Eat Bulaga!
as well as to control the audience during the one-and-a-half hour noontime program; (4) that it was
agreed that complainant would render his services until such time that respondent company shall have
engaged the services of a professional security agency; (5) that in 1995, when his contract with RPN-9
expired, respondent was retained as a talent and a member of the support group, until such time that
TAPE shall have engaged the services of a professional security agency; (6) that respondent was not
prevented from seeking other employment, whether or not related to security services, before or after
attending to his Eat Bulaga! functions; (7) that sometime in late 1999, TAPE started negotiations for the
engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March
2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the
engagement of the security agency, informing them of the managements decision to terminate their
services.
TAPE averred that respondent was an independent contractor falling under the talent group category
and was working under a special arrangement which is recognized in the industry.

Respondent for his part insisted that he was a regular employee having been engaged to perform an
activity that is necessary and desirable to TAPEs business for thirteen (13) years.

FACTS:
Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of TAPE.
TAPE is a domestic corporation engaged in the production of television programs, such as the longrunning variety program, Eat Bulaga!. Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto
C. Servana had served as a security guard for TAPE from March 1987 until he was terminated on 3
March 2000.
Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged
that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE
as a regular company guard. He was detailed at Broadway Centrum in Quezon City where Eat Bulaga!
regularly staged its productions. On 2 March 2000, respondent received a memorandum informing him
of his impending dismissal on account of TAPEs decision to contract the services of a professional
security agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00.
He claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary
considerations were withheld from him. He further contended that his dismissal was undertaken without
due process and violative of existing labor laws, aggravated by nonpayment of separation pay.

the National Labor Relations Commission (NLRC) in a Decision dated 22 April 2002 reversed the Labor
Arbiter and considered respondent a mere program employee, thus:
We have scoured the records of this case and we find nothing to support the Labor Arbiters conclusion
that complainant was a regular employee.
xxxx
The primary standard to determine regularity of employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer.

Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee.
TAPE countered that the labor arbiter had no jurisdiction over the case in the absence of an employeremployee relationship between the parties. TAPE made the following assertions: (1) that respondent

ISSUE: WON there was an employer-employee relationship between the petitioner and respondent.

TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the
policy instruction. It did not even present its contract with respondent. Neither did it comply with the
contract-registration requirement.

HELD:
In concluding that respondent was an employee of TAPE, the Court of Appeals applied the four-fold test
in this wise:
First. The selection and hiring of petitioner was done by private respondents. In fact, private
respondents themselves admitted having engaged the services of petitioner only in 1995 after TAPE
severed its relations with RPN Channel 9.
By informing petitioner through the Memorandum dated 2 March 2000, that his services will be
terminated as soon as the services of the newly hired security agency begins, private respondents in
effect acknowledged petitioner to be their employee. For the right to hire and fire is another important
element of the employer-employee relationship.

In sum, we find no reversible error committed by the Court of Appeals in its assailed decision.
However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he
acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with
TAPE. Thus, the Court of Appeals ruling on this point has to be modified.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with
MODIFICATION in that only petitioner Television and Production Exponents, Inc. is liable to pay
respondent the amount of P10,000.00 as nominal damages for non-compliance with the statutory due
process and petitioner Antonio P. Tuviera is accordingly absolved from liability.

Second. Payment of wages is one of the four factors to be considered in determining the existence of
employer-employee relation. . . Payment as admitted by private respondents was given by them on a
monthly basis at a rate of P5,444.44.
Third. Of the four elements of the employer-employee relationship, the control test is the most important.
xxx
The bundy cards representing the time petitioner had reported for work are evident proofs of private
respondents control over petitioner more particularly with the time he is required to report for work during
the noontime program of Eat Bulaga! If it were not so, petitioner would be free to report for work anytime
even not during the noontime program of Eat Bulaga! from 11:30 a.m. to 1:00 p.m. and still gets his
compensation for being a talent. Precisely, he is being paid for being the security of Eat Bulaga! during
the above-mentioned period. The daily time cards of petitioner are not just for mere record purposes as
claimed by private respondents. It is a form of control by the management of private respondent TAPE.

Policy Instruction No. 40 defines program employees as

x x x those whose skills, talents or services are engaged by the station for a particular or specific
program or undertaking and who are not required to observe normal working hours such that on some
days they work for less than eight (8) hours and on other days beyond the normal work hours observed
by station employees and are allowed to enter into employment contracts with other persons, stations,
advertising agencies or sponsoring companies. The engagement of program employees, including those
hired by advertising or sponsoring companies, shall be under a written contract specifying, among other
things, the nature of the work to be performed, rates of pay and the programs in which they will work.
The contract shall be duly registered by the station with the Broadcast Media Council within three (3)
days from its consummation.

Peoples Broadcasting v. Sec. of DOLE

G.R. no. 179652. May 8, 2009
Facts:
Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service,
Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave,
13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment
of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and
Employment (DOLE) Regional Office No. VII,Cebu City.
On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September
2003. In the Inspection Report Form, the Labor Inspector wrote under the heading
Findings/Recommendations non-diminution of benefits and Note: Respondent deny employeremployee relationship with the complainant- see Notice of Inspection results.
Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No
rectification was effected by petitioner; thus, summary investigations were conducted, with the parties
eventually ordered to submit their respective position papers.
In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao
(Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to
his money claims amounting to P203, 726.30. Petitioner sought reconsideration of the Order, claiming
that the Regional Director gave credence to the documents offered by respondent without examining the
originals, but at the same time he missed or failed to consider petitioners evidence. Petitioners motion
for reconsideration was denied.[ On appeal to the DOLE Secretary, petitioner denied once more the
existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE
Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and

instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no
employer-employee relationship had ever existed between it and respondent because it was the drama
directors and producers who paid, supervised and disciplined respondent. It also added that the case
was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter
because respondents claim exceeded P5,000.00.
Issue:
Does the Secretary of Labor have the power to determine the existence of an employeremployee relationship?
Held:
No.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee
relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the
second situation especially, the existence of an employer-employee relationship is a matter which is not
easily determinable from an ordinary inspection, necessarily so, because the elements of such a
relationship are not verifiable from a mere ocular examination. The intricacies and implications of an
employer-employee relationship demand that the level of scrutiny should be far above the cursory and
the mechanical. While documents, particularly documents found in the employers office are the
primary source materials, what may prove decisive are factors related to the history of the employers
business operations, its current state as well as accepted contemporary practices in the industry. More
often than not, the question of employer-employee relationship becomes a battle of evidence, the
determination of which should be comprehensive and intensive and therefore best left to the
specialized quasi-judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power
somehow has to make a determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot be coextensive with the
visitorial and enforcement power itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee relationship is still
primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must
be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an
employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any
labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and
a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled
to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions
of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best
resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the
executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and
enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on
itself which it cannot otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized
representatives was granted visitorial and enforcement powers for the purpose
of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules

and regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee
relationship affects the complexion of the putative findings that the Secretary of Labor may determine,
since employees are entitled to a different set of rights under the Labor Code from the employer as
opposed to non-employees. Among these differentiated rights are those accorded by the labor
standards provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there
is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor
standards with respect to the non-employees is questionable.
At least a prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been
precluded from exercising the powers under Article 128 (b) over petitioner if another person with bettergrounded claim of employment than that which respondent had. Respondent, especially if he were an
employee, could have very well enjoined other employees to complain with the DOLE, and, at the same
time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its
aegis.
The most important consideration for the allowance of the instant petition is the
opportunity for the Court not only to set the demarcation between the NLRCs jurisdiction and
the DOLEs prerogative but also the procedure when the case involves the fundamental
challenge on the DOLEs prerogative based on lack of employer-employee relationship.
As exhaustively discussed here, the DOLEs prerogative hinges on the existence of employeremployee relationship, the issue is which is at the very heart of this case. And the evidence
clearly indicates private respondent has never been petitioners employee. But the DOLE did not
address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the
instant petition on a technicality would deprive the Court of the opportunity to
resolve the novel controversy.
WHEREFORE, the petition is GRANTED.
Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008
G.R. No. 167622, November 07, 2008
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life
insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief
Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977
by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein
shall be construed or interpreted as creating an employer-employee relationship between the Company
and the Agent.
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof
by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery
of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous failure to exercise its right

under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to
the other party fifteen (15) days notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he
became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife,
consisting of commissions, persistency income, and management overrides. The problem started
sometime in 2001, when Manulife instituted manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko
regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was
the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues
to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their
earnings and would want to revert to the position of agents." And "Sales Managers are doing what the
company asks them to do but, in the process, they earn less." Tongko was then terminated.

products which satisfies those set by the Company and sufficiently meets the volume of new business
required of Production Club membership.Under this provision, an agent of Manulife must comply with
three (3) requirements: (1) compliance with the regulations and requirements of the company; (2)
maintenance of a level of knowledge of the company's products that is satisfactory to the company; and
(3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of conduct such as the Agent Code
of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement,
which demonstrate the power of control exercised by the company over Tongko. The fact that Tongko
was obliged to obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of
Manulife may already be established. Certainly, these requirements controlled the means and methods
by which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform
administrative duties that establishes his employment with Manulife.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for
illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the
complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife and
Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an
appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the
absence of an employer-employee relationship between the parties and deeming the NLRC with no
jurisdiction over the case. Hence, Tongko filed this petition.
Issue:
1.

WON Tongko was an employee of Manulife

2.

WON Tongko was illegally dismissed.

Held:

1.

Yes
In the instant case, Manulife had the power of control over Tongko that would make him its employee.
Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as herein
provided as well as maintain a standard of knowledge and competency in the sale of the Company's

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number
of agents, in addition to his other administrative functions, leads to no other conclusion that he was an
employee of Manulife.
2. Yes

In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife argued that even if
Tongko is considered as its employee, his employment was validly terminated on the ground of gross
and habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of
Manulife. Manulife stated:

In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape
up and altogether disregarded the latter's advice resulting in his laggard performance clearly indicative of
his willful disobedience of the lawful orders of his superior. As private respondent has patently failed to
perform a very fundamental duty, and that is to yield obedience to all reasonable rules, orders and
instructions of the Company, as well as gross failure to reach at least minimum quota, the termination of
his engagement from Manulife is highly warranted and therefore, there is no illegal dismissal to speak of.
It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota
of evidence to support its claims. Manulife did not even point out which order or rule that Tongko
disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that
would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's
alleged "laggard performance," without substantiating such claim, and equated the same to
disobedience and neglect of duty.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of
proving the validity of the termination of employment rests on the employer. Failure to discharge this
evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just cause
and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial
proceedings is that proof beyond reasonable doubt is not required in determining the legality of an
employer's dismissal of an employee, and not even a preponderance of evidence is necessary as
substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of
evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might conceivably opine otherwise.

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to
identify the specific acts by which Tongko's employment was terminated much less support the same
with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their
means of livelihood. Thus, it must be concluded that Tongko was illegally dismissed.
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its
employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however,
Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal
dismissal.

In January 2001, Francisco was replaced as Manager. She 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. The Treasurer convened a meeting of all employees and announced that Francisco was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR
matters.
Thereafter, Kasei 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. She was not paid her mid-year bonus allegedly
because the company was not earning well. In October 2001, she did not receive her salary from the
company, made repeated follow-ups with the cashier but was advised that the company was not earning
well. On October 15, 2001, she asked for her salary, 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.
Kasei Corporation claimed that Francisco was not their employee, having been designated as technical
consultant who performed work at her own discretion without the control and supervision of the
Corporation, and that her consultancy may be terminated any time considering that her services were
only temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of
employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among
the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which
included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji
Corporation.
ISSUES:
Whether or not there was an employer-employee relationship between Francisco and Kasei Corporation;
and whether Francisco was illegally dismissed.

FRANCISCO vs. NLRC

HELD:

ANGELINA FRANCISCO vs. NLRC, KASEI CORPORATION, et al.

G.R. No. 170087
August 31, 2006

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 employer-employee relationship.

FACTS:
In 1995, petitioner Angelina Francisco was hired by Kasei Corporation (Kasei) during its incorporation
stage. She was designated as Accountant, Corporate Secretary and Liaison Officer of the company. In
1996, Francisco was designated Acting Manager to handle recruitment of all employees and perform
management administration functions, represent the company in all dealings with government agencies,
and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei.
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.

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.
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.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to December
18, 2000. When petitioner was designated General Manager, respondent corporation made a report to
the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the
SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion
of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation.
It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latters line of business.
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.
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive
dismissal is an involuntary resignation resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex,
race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between
employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor
Code to a greater number of employees. This would enable employees to avail of the benefits accorded
to them by law, in line with the constitutional mandate giving maximum aid and protection to labor,
promoting their welfare and reaffirming it as a primary social economic force in furtherance of social
justice and national development.

Peoples Broadcasting v. Sec. of DOLE | G.R. no. 179652. May 8, 2009

Facts:
Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service,
Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave,
13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment
of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and
Employment (DOLE) Regional Office No. VII,Cebu City.
On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September
2003. In the Inspection Report Form, the Labor Inspector wrote under the heading
Findings/Recommendations non-diminution of benefits and Note: Respondent deny employeremployee relationship with the complainant- see Notice of Inspection results.
Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No
rectification was effected by petitioner; thus, summary investigations were conducted, with the parties
eventually ordered to submit their respective position papers.
In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao
(Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to
his money claims amounting to P203, 726.30. Petitioner sought reconsideration of the Order, claiming
that the Regional Director gave credence to the documents offered by respondent without examining the
originals, but at the same time he missed or failed to consider petitioners evidence. Petitioners motion
for reconsideration was denied.[ On appeal to the DOLE Secretary, petitioner denied once more the
existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE
Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and
instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no
employer-employee relationship had ever existed between it and respondent because it was the drama
directors and producers who paid, supervised and disciplined respondent. It also added that the case
was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter
because respondents claim exceeded P5,000.00.
Issue:
Does the Secretary of Labor have the power to determine the existence of an employeremployee relationship?
Held:
No.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee
relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the
second situation especially, the existence of an employer-employee relationship is a matter which is not
easily determinable from an ordinary inspection, necessarily so, because the elements of such a
relationship are not verifiable from a mere ocular examination. The intricacies and implications of an
employer-employee relationship demand that the level of scrutiny should be far above the cursory and
the mechanical. While documents, particularly documents found in the employers office are the
primary source materials, what may prove decisive are factors related to the history of the employers
business operations, its current state as well as accepted contemporary practices in the industry. More
often than not, the question of employer-employee relationship becomes a battle of evidence, the
determination of which should be comprehensive and intensive and therefore best left to the
specialized quasi-judicial body that is the NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power
somehow has to make a determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot be coextensive with the
visitorial and enforcement power itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee relationship is still
primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must
be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an
employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any
labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and
a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled
to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions
of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best
resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the
executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and
enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on
itself which it cannot otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized
representatives was granted visitorial and enforcement powers for the purpose
of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules
and regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee
relationship affects the complexion of the putative findings that the Secretary of Labor may determine,
since employees are entitled to a different set of rights under the Labor Code from the employer as
opposed to non-employees. Among these differentiated rights are those accorded by the labor
standards provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there
is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor
standards with respect to the non-employees is questionable.
At least a prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been
precluded from exercising the powers under Article 128 (b) over petitioner if another person with bettergrounded claim of employment than that which respondent had. Respondent, especially if he were an
employee, could have very well enjoined other employees to complain with the DOLE, and, at the same
time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its
aegis.
The most important consideration for the allowance of the instant petition is the
opportunity for the Court not only to set the demarcation between the NLRCs jurisdiction and
the DOLEs prerogative but also the procedure when the case involves the fundamental
challenge on the DOLEs prerogative based on lack of employer-employee relationship.
As exhaustively discussed here, the DOLEs prerogative hinges on the existence of employeremployee relationship, the issue is which is at the very heart of this case. And the evidence
clearly indicates private respondent has never been petitioners employee. But the DOLE did not
address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the

instant petition on a technicality would deprive the Court of the opportunity to

resolve the novel controversy.
WHEREFORE, the petition is GRANTED.
Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008 | G.R. No. 167622,
November 07, 2008
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life
insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief
Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977
by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein
shall be construed or interpreted as creating an employer-employee relationship between the Company
and the Agent.
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof
by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery
of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous failure to exercise its right
under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to
the other party fifteen (15) days notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he
became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife,
consisting of commissions, persistency income, and management overrides. The problem started
sometime in 2001, when Manulife instituted manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko
regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was
the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues
to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their
earnings and would want to revert to the position of agents." And "Sales Managers are doing what the
company asks them to do but, in the process, they earn less." Tongko was then terminated.
Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for
illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the
complaint for lack of an employer-employee relationship.
The NLRC's First Division, while finding an employer-employee relationship between Manulife and
Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an

appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the
absence of an employer-employee relationship between the parties and deeming the NLRC with no
jurisdiction over the case. Hence, Tongko filed this petition.

1.
2.
1.

Issue:
WON Tongko was an employee of Manulife
WON Tongko was illegally dismissed.
Held:
Yes
In the instant case, Manulife had the power of control over Tongko that would make him its employee.
Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as herein
provided as well as maintain a standard of knowledge and competency in the sale of the Company's
products which satisfies those set by the Company and sufficiently meets the volume of new business
required of Production Club membership.Under this provision, an agent of Manulife must comply with
three (3) requirements: (1) compliance with the regulations and requirements of the company; (2)
maintenance of a level of knowledge of the company's products that is satisfactory to the company; and
(3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of conduct such as the Agent Code
of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement,
which demonstrate the power of control exercised by the company over Tongko. The fact that Tongko
was obliged to obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of
Manulife may already be established. Certainly, these requirements controlled the means and methods
by which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform
administrative duties that establishes his employment with Manulife.
Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number
of agents, in addition to his other administrative functions, leads to no other conclusion that he was an
employee of Manulife.
2. Yes
In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife argued that even if
Tongko is considered as its employee, his employment was validly terminated on the ground of gross
and habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of
Manulife. Manulife stated:

In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape
up and altogether disregarded the latter's advice resulting in his laggard performance clearly indicative of
his willful disobedience of the lawful orders of his superior. As private respondent has patently failed to
perform a very fundamental duty, and that is to yield obedience to all reasonable rules, orders and
instructions of the Company, as well as gross failure to reach at least minimum quota, the termination of
his engagement from Manulife is highly warranted and therefore, there is no illegal dismissal to speak of.
It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota
of evidence to support its claims. Manulife did not even point out which order or rule that Tongko
disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that
would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's
alleged "laggard performance," without substantiating such claim, and equated the same to
disobedience and neglect of duty.
Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of
proving the validity of the termination of employment rests on the employer. Failure to discharge this
evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.
The Labor Code provides that an employer may terminate the services of an employee for just cause
and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial
proceedings is that proof beyond reasonable doubt is not required in determining the legality of an
employer's dismissal of an employee, and not even a preponderance of evidence is necessary as
substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of
evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might conceivably opine otherwise.
Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to
identify the specific acts by which Tongko's employment was terminated much less support the same
with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their
means of livelihood. Thus, it must be concluded that Tongko was illegally dismissed.
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its
employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however,
Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal
dismissal.
FRANCISCO vs. NLRC
ANGELINA FRANCISCO vs. NLRC, KASEI CORPORATION, et al.
G.R. No. 170087
August 31, 2006
FACTS:
In 1995, petitioner Angelina Francisco was hired by Kasei Corporation (Kasei) during its incorporation
stage. She was designated as Accountant, Corporate Secretary and Liaison Officer of the company. In

1996, Francisco was designated Acting Manager to handle recruitment of all employees and perform
management administration functions, represent the company in all dealings with government agencies,
and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei.
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, Francisco was replaced as Manager. She 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. The Treasurer convened a meeting of all employees and announced that Francisco was still
connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR
matters.
Thereafter, Kasei 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. She was not paid her mid-year bonus allegedly
because the company was not earning well. In October 2001, she did not receive her salary from the
company, made repeated follow-ups with the cashier but was advised that the company was not earning
well. On October 15, 2001, she asked for her salary, 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.
Kasei Corporation claimed that Francisco was not their employee, having been designated as technical
consultant who performed work at her own discretion without the control and supervision of the
Corporation, and that her consultancy may be terminated any time considering that her services were
only temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of
employees for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among
the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which
included petitioner. SSS records were also submitted showing that petitioners latest employer was Seiji
Corporation.
ISSUES:
Whether or not there was an employer-employee relationship between Francisco and Kasei Corporation;
and whether Francisco was illegally dismissed.
HELD:
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 employer-employee 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.
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.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to December
18, 2000. When petitioner was designated General Manager, respondent corporation made a report to
the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the
SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion
of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation.
It is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latters line of business.
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.
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive
dismissal is an involuntary resignation resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.

In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex,
race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between
employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor
Code to a greater number of employees. This would enable employees to avail of the benefits accorded
to them by law, in line with the constitutional mandate giving maximum aid and protection to labor,
promoting their welfare and reaffirming it as a primary social economic force in furtherance of social
justice and national development.
Pharmacia and Upjohn v. Albayda, Jr.
Facts: Respondent Ricardo P. Albayda, Jr. was an employee of Upjohn until the merger between
Pharmacia and Upjohn wherein petitioner designated respondent as District Sales Manager to District XI
in the Western Visayas area. Respondent settled in Bacolod City with his family. Respondent received a
memorandum announcing the new sales force structure reassigning him to District XII in the Northern
Mindanao area, Cagayan de Oro City. Respondent replied that he was unwilling to transfer because of
concerns about his family and additional expenses and that it is an unfamiliar territory which would make
it difficult for him to improve sales, requesting to remain in the Western Visayan area. Respondents
request was denied with the reason that the relocation was to maximize business opportunities and
growth development of personnel. Respondent was on sick leave and made other letter requests to the
company stating his reasons that were denied until he received a memorandum informing him that he
has consumed all his sick leave and would be considered on indefinite sick leave without pay as per
company policy. Respondent replied that his doctor has declared him fit to work and that he is ready to
work with his old position or anywhere in Western Visayas. The case was referred to the Human
Resource Department as it appears that respondent was not willing to work anywhere outside western
Visayas. A Mr. Montilla met with respondent to discuss the situation and respondent received a
memorandum after the meeting which states that the company needed him in Cagayan de Oro for his
abilities but he also has the option of being transferred to manila as there were no more vacancies in the
western visayas. Respondent wrote that he will be airing his grievance before the National Labor
Relations Commission to which Montilla replied that he will be entitled to Relocation Benefits and
Allowance pursuant to the companys Benefits Manual. Montilla did not hear from respondent and wrote
another memorandum as a final notice for respondent to report for work in Manila within 5 working days
from receipt of the memo otherwise will be terminated due to AWOL. A few weeks after Montilla sent a
memorandum of the companys decision to terminate his services for his refusal to report for work and
that it is indicated in his contract that he is willing to be assigned anywhere in the Philippines as the
company sees fit and the termination is pursuant to Art 282 of the Labor Code due to AWOL and
insubordination. Respondent filed a complaint with the NLRC in Bacolod which was dismissed by the
labor arbiter for lack of merit. Respondent appealed and the NLRC dismissed for lack of merit and
affirmed the decision of the labor arbiter. Respondent filed for motion for reconsideration and was again
denied, respondent filed a petition for certiorari before the CA. CA favored respondent, the NLRC
decision reversed and set aside, remanded to NLRC Bacolod for the proper determination of petitioners
claims. Petitioners filed motion for reconsideration denied by CA hence petition with petitioner raising a
lone assignment of error to wit:
Issue: whether or not the CA (Cebu) can reverse or set aside the factual and legal findings of the NLRC
which was based on substantial evidence when there is no showing of palpable error or that the findings
of fact of the labor arbiter is contrary to that of the NLRC

Ruling: petition is meritorious. The reassignment of respondent was a valid exercise of petitioners
management prerogative, 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 affected as a
form of punishment or demotion without sufficient cause. CA overstepped its legal mandate as it appears
that the NLRC and labor arbiters decisions were based on substantial evidence and should not be
disturbed. There is no proof of arbitrariness or abuse of discretion. Petition is partially granted,
petitioners are ordered to pay respondent separation pay as a measure of social justice where the
employee is validly dismissed for causes other than serious misconduct or those reflecting moral
character.
http://www.lawphil.net/judjuris/juri2010/aug2010/gr_172724_2010.html
Rolando C. Rivera v Solidbank Corporation
Facts: Petitioner has been working with Solidbank for 18 years when he was offered a retirement
program which he took wherein he would receive P1,045,258.95 by way of benefits. Deciding to devote
his time to the poultry business, petitioner applied for retirement which was approved. Petitioner received
net amt of P963,619.28 minus total accountabilities amounting to P106,973.00 and confirmed his
separation from Solidbank. Bank required Rivera to sign an undated Release, Waiver and Quitclaim 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 and willnot disclose any information concerning
the business the bank may also bring any action to seek an award for damages resulting from his
breach of the release, waiver and quitclaim to include whatever sums paid to him by virtue of his
retirement and was required to sign an undated Undertaking wherein he promised that he will not seek
employment with a competitor bank or financial institution within 1 year and that any breach would entitle
to a cause of action against him before the appropriate courts of law. Three months after Rivera worked
for Equitable Banking Corporation and he received information from the human resources division of
Solidbank that he had violated the undertaking with a demand for the return of all the monetary benefits
he received. Rivera refused, solidbank filed complaint for sum of money with prayer for preliminary
attachment before RTC manila. The trial court issued a writ of preliminary attachment to attach all of
Riveras properties not exempt from execution. The sheriff levied on a parcel of land owned by rivera.
Rivera, in his answer with affirmative defenses and counterclaim alleging that the undertaking was void
for being contrary to the constitution, law and public policy. Solidbank filed verified motion for summary
judgment alleging that Rivera raised no genuine issue as to any material fact in his answer except as to
the amount of damages and that he was obliged to return the money as he had signed the undertaking
and that whether it was unreasonable, arbitrary, or oppressive is a question of law. Rivera opposed the
motion contending that as gleaned from the pleadings, there are genuine issues as to material facts
which call for the presentation of evidence. He averred that there was a need for the parties to adduce
evidence to prove that he did not sign the Undertaking voluntarily. He claimed that he would not have
been allowed to avail of the benefits if he had not signed it. He also asserted that he could not cause
injury or prejudice to Solidbanks interest since he never acquired any sensitive or delicate information
which could prejudice the banks interest if disclosed. Rivera appended to his Opposition his counteraffidavit in which he reiterated that he had to sign the undertaking containing the employment ban
provision other wise his availment would not push through and there was no truth to the banks
allegations that he agreed not to seek employment in a competitor bank or financial institution within one

year in exchange for what he receive instead of the other retirement option for a smaller amount. His
superior did not inform him that he would have to sign the undertaking when he applied for the
retirement benefit and it was the bank who offered it to streamline their organization and he would have
continued working for the bank for at least 15 more years earning more than what he received for
retirement. He intended to go full time into the poultry business but found out in 2 months that it was not
sufficient to support his family. He was then forced to look for a job and with his current training and
experience, the job at Equitable bank was all he could find. In his supplemental opposition, Rivera
insisted that the ban was not necessary to protect the interst of Solidbank as in the first place he did not
have any secret information which if revealed would be prejudicial to the bank. In Solidbanks reply they
averred that the wisdom of requiring the undertaking for the retirement benefit is purely a management
prerogative. It was not for rivera to question and decry the banks policy to protect itself from unfair
competition and disclosure of its trade secrets. The substantial monetary windfall given the retiring
officers was meant to tide them over the one year period of hiatus and did not prevent them from
engaging in any kind of business or bar them form being employed except with competitor
banks/financial institutions. Trial court issued summary judgment in favor of plaintiff and against
defendant to pay bank the retirement benefit plus 12% interest per annum until fully paid. The trial court
declared that there was no genuine issue as to a matter of fact since rivera voluntarilyexecuted the
release waiver quitclaim and undertaking, and had a choice not to retire. The undertaking was not
unreasonable and for rivera to be excused would be enrichment at the expense of the bank. Rivera
appealed to CA, partially granted, decision affirmed with modification that the attachment and levy upon
the family home set aside and discharged. CA declared that there were no earmarks of coercion, undue
influence, or fraud in the deeds execution, he is deemed to have waived the right to assail the same
hence stopped from insisting or retaining the money. Hence recourse to the court:

Issue: CA erred in the summary judgment with regard to existence of genuine issues as to material facts
which call for presentation of evidence; 1 year ban violates public policy as enunciated in our constitution
and laws; CA erred in affirming decision ordering respondent to give benefits to Solidbank plus 12% per
annum until fully paid

Ruling: Petition is meritorious. For a summary judgment to be proper, the movant must establish 2
requisites:1. There must be no genuine issue as to any material fact except for the amount of
damages;2. The party presenting the motion for summary judgment must be entitled to a judgment as a
matter of law. If opposing party fails to produce a genuine issue, the moving party is entitled to a
summary judgment.(genuine issue is an issue of fact which requires the presentation of evidence, where
the facts pleaded by the parties are disputed or contested, proceedings for a summary judgment cannot
take the place of a trial). Court agrees that issue on the ban as against public policy is a genuine issue of
fact, requiring parties to present evidence to support their respective claims. Petitioner also declared in
the undertaking that any breach on his part of said undertaking or the terms and conditions of the
release, waiver, quitclaim will entitle respondent to a cause of action for protection before the appropriate
courts of law. Art 1306 of the new CC provides tat te contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they arenot contrary to law,
morals, good customs, public order or public policy. 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. Estoppels 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 unreasonable or oppressive. It
is settled that actual damages or compensatory damages may be awarded fro breach of contracts.
Actual damages are primarily intended to simply make good or replace the loss covered by said breach
and cannot be presumed. Even if petitioner had admitted to having breached the undertaking,
respondent must still prove that it suffered damages and the amount thereof. On the assumption that the
ban is valid, restitution of the money will not follow as a matter of course as any breach of petitioner of
his promise entitles respondent a cause of action for protection IN THE COURTS OF LAW. Respondent
is still burdened to prove its entitlement by producing the best evidence.
http://www.lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html
G.R. No. 162957 March 6, 2006 UNITED KIMBERLY-CLARK EMPLOYEES UNION PHILIPPINE
TRANSPORT GENERAL WORKERS ORGANIZATION (UKCEU-PTGWO), Petitioner,
vs. KIMBERLY CLARK PHILIPPINES, INC., Respondent.
Facts:KCPI and UKCEU executed a collective Bargaining agreement (CBA) Art XX section1 for
recommendations of retired, resigned, deceased or disabled employees of their legitimate children and
in default a relative within the 3rd civil degree, if qualified shall be hired on probationary status. There
were no qualifying standards, high school graduates were hired as an act of liberality. On nov 95, KCPI
issued guidelines for the implementation of artXX sec1 wich require among others, that:1 recomendees
must at least be 18 notmore than 30 at the time of hiring;2. Completed high school and at least 2 years
of technical/vocational course or 3rd yr level of college educ; if both husband and wife are employees,
theyshall be treated as one family, hence, only one of the spouses would be allowed to avail of the
benefit. UKCEU requested for a grievance meeting requesting for the deferment until January 97 after
the next CBA negotiations where it will be taken up. KCPI agreed but only with respect to th educational
qualification. During negotiations, UKCEU proposed the amendment of art XX sec1 of the existing CBA.
KCPI and UKCEU executed a CBA to cover the period form julu 97 to june 99. The educational
qualifications were not incorporated neither were the proposed amendment, art XX sec1 was reteained
without any modification. In the second half of 98, KCPI started to suspend the implementation of the
CBA due to depressed economic conditions then in the philippines and in compliance with the freeze
hiring policy of its Asia-Pacific headquarters. On april 23, the parties filed before the natl conciliation and
mediation board NCMB, a submission agreement referring to arbitration the issue of whether KCPI
violated art XX sec1. The parties agreed not to appeal resolution of the VA. In aug 99 KCPI and UKCEU
executed a new CBA incorporating artXX sec1, governing the relation of te parties up to june 2002.
UKCEU averred in its pleadings that admitting high school graduates had been an established practice
since 1980 and that the educational req does not apply to recommendees as per art XX sec 1 and that
denying husband and wife employees of individual rights is a clear violation of the CBA and
discrimination since both are paying union dues and individually vote for any policy determination.
KCPI in its pleadings maintained that its management prerogative, it had the right to determine hiring
standards underartxx sec1 without consent or approval of UKCEU. It averred that after its

implementation was deferred the union did not take any action hence stopped from questioning its
implementation. It was justified to temporarily suspend the implementation because of existing
conditions. KCPI also avers that it never anticipated the undue burden of having to hire recomendees
from both husband and wife which do not usually possess the same qualifications and skills of his/her
predecessor and was not in a position to sustain the practice considering the low volume in sales and a
reduction in the number of working days in some areas of its operations.
The voluntary arbitrator visited the premises of KCPI on may 1999, with prior notice to the parties and
discovered that KCPI employed casuals who performed the work of certain regular employees. On
march 2001 the va issued resolution that the company cannot suspend the implementation of Art XX
sec1 of the existing CBA unilaterally by upgrading the educational qualifications and that husband and
wife are each entitled to recommend a replacement. According to the va management prerogative does
not give license to a company to set aside or ignore what had been agreed upon through negotiation,
KCPI could not just unilaterally change or suspend the implementation of the existing employment
requirements. Since KCPI failed to explain why it continued to hire casual workers doing the job of
regular employees, it failed to substantiate its contention that the economic crisis did not warrant the
hiring of regular employees. Va referred to art1 of the CBA providing that the agreement covers all
regular rank and file employees, had it the intention to grant husband and wife only one applicantreplacement, it should have been stated in unequivocal terms.
KCPI assailed decision via petition before the CA: partially granted. CA ruled that KCPI may validly
exercise management prerogative and that the right to recommend employees as per artXX sec1 is not
absolute. CA ruled that the company must prove financial distress by sufficient convincing evidence ,
that it made it extremely difficult for company to comply with art xx sec1, and that the change in the
circumstance must be one which could not be foreseen at the time the contract was executed. UKCEU
moved for partial reconsideration, denied. UKCEU, now petitioner seeks relief from this court in the
instant petition:
Issue: CA erred in agreeing with management prerogative, that to allow respondent to set higher
educational standards is to render nugatory the right granted to them under CBA.
Ruling: we rule against petitioner. The court has recognized in numerous instances the undoubted right
of the employer to regulate, according to his own discretion and best judgment, all aspects of
employment. The exercise of thios right is not absolute, management prerogative must always be
exercised in good faith for the advancement of employers interest and not for the purpose of defeating
or circumventing the rights of the employess under special laws, valid agreements scuh as the individual
contract of employment and the collective bargaining agreement and general principles of justice and fair
play. In this case the court finds that respondent acted in accord with the CBA and the November 1995
guidelines wihcih by agreement of the parties may be implemented by respondent after January 1997.
http://www.lawphil.net/judjuris/juri2006/mar2006/gr_162957_2006.html
[G.R. No. 165968, April 14, 2008] PEPSI COLA PRODUCTS PHILIPPINES, INC. AND ERNESTO F.
GOCHUICO, PETITIONERS, VS. EMMANUEL V. SANTOS, RESPONDENT.

Facts: respondent was employed by pepsi cola products and was promoted to acting regional sales
manager at the libis sales office in 1996. In 1997 respondent received from petitioner memorandum
charging him of fraud and acts of dishonesty out of alleged artificial sales by the sales personnel of the
libis sales office in march 1996 allegedly upon instruction of respondent resulting to damages amounting
to P795, 454.54. also apprised respondent of preventive suspension and hearings of the administrative
investigation. Respondent found guilty and was dismissed. Respondent filed for illegal dismissal which
the labor arbiter dismissed. On appeal the NLRC remanded the case to the labor arbiter. The decision is
that petitioners failed to satisfactorily prove the serious charges against respondent and ordered
petitioners separation pay of 165,000 for 11 yrs of service, 180,000 1yr backwage, 345,000 and atty fees
equivalent to 10% of the monetary award. In addition for the illegal dismissal apparently tainted with
malice and bad faith, an award of 1000,000 as moral damages and 50,000 as exemplary damages.
Petitioners appealed to NLRC which affirmed LAs decision but deleted the award of moral and
exemplary damages in the absence of evidence of malice and bad faith. Petitioners elevated matter to
CA which affirmed the NLRC decision. petitioners submit the ff issues for reconsideration:
Issue: whether respondent was validly dismissed; whether trial on merits was necessary; whether award
of attys fees was proper.
Ruling: first issue involves question of fact not an error of law, however the records were still reviewed
carefully and petitioner failed to present evidence to justify respondents dismissal. Second issue, it is not
legally objectionable, for being violative of due process, for the LA to resolve a case based solely on the
position papers, affidavits or documentary evidence submitted by the parties. third issue, we have ruled
that attys fees may be awarded only in case of an illegal dismissal. In this case there is an absence of
evidence that respondents suspension and eventual dismissal were tainted with malice and bad faith
hence, the NLRC deleted the award for moral and exemplary damages. Although the labor arbiter
awarded attys fees, the basis for the same was not discussed in the decision. there must always be a
factual basis for the award of attys fees, consistent with the policy that no premium should be placed on
the right to litigate. Attys fees award should be deleted.
http://elibrary.judiciary.gov.ph/decisions.php?doctype=Decisions%20/%20Signed
%20Resolutions&docid=1212366437969076709
G.R. No. 150861 | January 22, 2008 | AL ARELLANO, SOLOMON BRITANICO, VALERIANO
MENDOZA, JOSE PERPETUA, REY PAMINIANO, FREDDIE JIMENA, JOEL UBANA, ALEX
MABANTA, ALEXANDER ANTONIO, JERRY NACAYTUNA, ELIZER DELFIN, FRANCISCO CORPUZ,
ALEX GARIDO, DANTE DIMAANO, NARCISO ALBAY, MAXIMO GAGARIN, APOLLO CAYABYAB,
RONALD GESTIADA, SERGIO ESPERANZA, ROMEO CARPIO and RODRIGO
ORDINIZA,petitioners, vs. POWERTECH CORPORATION, WILLIE CABOBOS and COURT OF
APPEALS (Former Special Ninth Division), respondents.
Facts: 20 petitioners from the Nagkakaisang Manggagawa ng Powertech Corp (petitioners) were
granted by labor arbiter dela cruz monetary claims for illegal termination totaling to P2,538,728.84.
Powertech appealed to the NLRC, during its pendency, Calros Gestiada for himself and on behalf of
other petitioners executed a quitclaim, release and waiver in favor of Powertech in consideration of the
amount of P150,000. Earlier, Gestiada was appointed by his co-petitioners as their atty in fact evidenced
by a special power of atty. The compromise amt was paid to gestiada by check. Relying on the quitclaim
and release, Powertech filed a motion for the withdrawal of the appeal and cash bond. NLRC granted

the motion. The P150,000 check bounced due to a stop payment order of powertech. Aggrieved,
petitioners moved to nullify the release and quitclaim for lack of consideration. NLRC declared the
quitclaim, release and waiver void for lack of consideration, reinstated the appeal and ordered
Powertech to post a cash or surewty bond for the monetary judgment less the amount it had previously
posted. After 2 wks gestiada terminated the services of their counsel, atty evangelista and instead
retained atty Manuel Felipe of the PAO. A day later, Powertech paid P150,000 to Gestiada purportedly
as compromise amount for all of petitioners. That same day, Gestiada through atty Felipe and Powertech
filed a joint motion to dismiss with the NLRC based on the compromise agreement. Atty Evangelista
opposed the motion alleging that the compromise agreement is unconscionable that he was illegally
terminated as counsel for the other petitioners without their consent and that the P150,000 was received
by Gestiada as payment solely for his backwages and other monetary claims. NLRC denied for lack of
merit. NLRC held that P150,000 received by Gestiada did not cover the monetary claim of petitioners.
Admitted in a letter to atty evangelista that it is solely for his backwages and monetary claims. Granting
Gestiada had the authority to enter into a compromise agreement in behalf of the other complainants,
the quitclaim and release cannot be recognized as a valid and binding undertaking as the consideration
therefore (P150,000) as opposed to the total monetary award in the amount equivalent to P2,538,728.84
is clearly unconscionable and thus void for being contrary to public policy. The NLRC ruled that the labor
arbiter decision had attained finality for failure of Powertech to post the required cash or surety bond.
Undaunted, Powertech elevated the matter to the CA via petition for certiorari under rule 65 of the 1997
rules of civil procedure. CA rendered a decision in favor of powertech. The dispositive portion of the
decision reads:

Ruling: we find that the CA erred in upholding the compromise agreement between powertech and
gestiada as there is collusion. Powertech knew that Gestiada had plenary authority to act for petitioners
in the labor case. It had prior dealings with him. It also knew that gestiada was authorized to negotiate
for any amount he may deem just and reasonable and to sign wivers and quitclaims on behalf of
petitioners. Powertech obviously used that knowledge, capitalized on the vulnerable position of Gestiada
in entering into the agreement and took advantage of the situation to disadvantage petitioners. Collusion
is a species of fraud. Art. 227 of the Labor Code empowers the NLRC to void a compromise agreement
for fraud.
Considering that Powertech failed to post the required bond, its applea was not deemed
perfected and te labor arbiter;s decision is now final and executory.
In the recent case of Mary Abigails Food Service, Inc. v. Court of Appeals,31 this Court again reiterated:
A mere notice of appeal without complying with the other requisites aforestated shall not stop
the running of the period for perfecting an appeal.
Clear it is from the above that an appeal to the NLRC from any decision, award or order of
the Labor Arbiter must have to be made within ten (10) calendar days from receipt of such
decision, award or order with proof of payment of the required appeal bond accompanied by
a memorandum of appeal. And where, as here, the decision of the Labor Arbiter involves a
monetary award, the appeal is deemed perfected only upon the posting of a cash or surety
bond also within ten (10) calendar days from receipt of such decision in an amount equivalent
to the monetary award.

WHEREFORE, premises considered, the petition is GIVEN DUE COURSE and is hereby GRANTED.
The Resolution of the National Labor Relations Commission dated July 31, 2000 declaring the Quitclaim
and Release void ab initio and denying the Joint Motion to Dismiss and dismissing the appeal of the
petitioners is ANNULLED and SET ASIDE. No pronouncement as to costs.

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.

SO ORDERED.16
The CA held the validity of the compromise agreement between petitioners and Powertech in the
following tenor:
The public respondents act of dismissing the appeal and declaring the compromise agreement void is a
grave abuse of discretion. Apparently the NLRC has already lost the jurisdiction over the case because
the appeal was already considered withdrawn and th cash bond released. It is noted that said resolution
withdrawing the appeal has become final and executor since the same had not been subject of a motion
for reconsideration. The public respondent (NLRC) in taking cognizance therefor of the motion for
reconsideration by the complainants seeking to declare the compromise agreement void on the ground
of non payment and consequently declaring the same as being contrary to law acted in excess of
jusrisdiction since the procedure for acquiring jurisdiction over the case was not properly observed. The
proper remedy of the aggrieved party is not to file a motion for reconsideration on the ground ofnonpayment but to have the compromise agreement enforced by means of a writ of execution. Petitioners
moved to reconsider the CA decision but their motion was denied. Hence the present recourse:
Issue: petitioners impute to the CA grave abuse of discretion in ruling that the NLRC committed grave
abuse of discretion in declaring void the compromise agreement; that NLRC lost jurisdiction; and
assuming jurisdiction over the present petition considering that private respondents failed to perfect their
appeal with the NLRC.

Given the foregoing ruling we find it unnecessary to tackle petitioners contention that the NLRC had lost
jurisdiction over the case when it dismissed Powertechs appeal. It had become inconsequential, the
crucial issue having been resolved in their favor.
Final Note
As a final note, We rebuke Powertechs unscrupulous and despicable act of using an apparently valid
compromise agreement to evade payment of its legal obligation to petitioners. We will not allow
employers to make a mockery of our legal system by using legal means to perpetrate fraud. This should
serve as a warning to parties in labor cases to endeavor to achieve a just and equitable resolution of
their disputes and to enter into compromise agreements in good faith.
http://www.lawphil.net/judjuris/juri2008/jan2008/gr_150861_2008.html

G.R. No. 145587 October 26, 2007 EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents.

the NLRC, in such a case, is to require the appellant to comply with the rule that the opposing
party should be provided with a copy of the appeal memorandum.

This Petition for Review on Certiorari[1] seeks to set aside the October 18, 2000 Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999 Decision [3] and September
30, 1999 Resolution[4] rendered by the National Labor Relations Commission (NLRC) (Third Division) in
POEA ADJ (L) 94-06-2194, ordering Expertise Search International (ESI), EDI-Staffbuilders
International, Inc. (EDI), and Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar
S. Gran (Gran) the amount of USD 16,150.00 as unpaid salaries.

An allegation of incompetence should have a factual foundation. Incompetence may be shown

by weighing it against a standard, benchmark, or criterion. However, EDI failed to establish any such
bases to show how petitioner found Gran incompetent.
EDI failed to discharge the burden of proving Grans insubordination or willful disobedience. As
indicated by the second requirement provided for in Micro Sales Operation Network, in order to justify
willful disobedience, we must determine whether the order violated by the employee is reasonable,
lawful, made known to the employee, and pertains to the duties which he had been engaged to
discharge. In the case at bar, petitioner failed to show that the order of the company which was violated
the submission of Daily Activity Reportswas part of Grans duties as a Computer
Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company policy, Grans job
description, or any other document that would show that the Daily Activity Reports were required for
submission by the employees, more particularly by a Computer Specialist.

Facts: Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work
for OAB, in Riyadh, Kingdom of Saudi Arabia. EDI sent OAB a list upon the latters request for qualified
applicants of computer specialist. Gran was chosen for the list, and signed an employment contract that
granted him a monthly salary of USD 850 for a period of 2 yrs. Upon arrival in Riyadh, Gran questioned
the discrepancy in his monthly salaryhis employment contract stated USD 850.00; while his Philippine
Overseas Employment Agency (POEA) Information Sheet indicated USD 600.00 only. However, through
the assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. After 5
months Gran was terminated for on compliance and insubordination. Gran received from OAB the total
amount of SR 2,948.00 representing his final pay, and on the same day, he executed a Declaration
releasing OAB from any financial obligation or otherwise, towards him.
Gran constituted complaint in the Philippines against EDI, ESI, OAB for underpayment and
illegal dismissal. Labor arbiter ruled that there was neither. NLRC reversed LAs decision, declared that
charges was not substantiated and there was no investigation, with payment of USD16,150.00 to gran.
Gran filed motion for execution of judgment. Petitioner filed opposition and motion for reconsideration,
denied. Edi filed for review with CA for NLRCs grave abuse of discretion despite grans failure to perfect
appeal for failure to furnish copy of appeal memorandum to EDI. CA denied petition and declared lack of
evidence and denial of due process, and quitclaim is contrary to public policy where the monetary
consideration given in the Declaration is much less than what he was legally entitled to. Hence the
petition before this court:
Issues: will failure to furnish copy of memorandum justify dismissal of grans appeal?; if there
is substabtial evidence of grans termination and is justified; if there was due process; if entitled to
backwages
Ruling: The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW
v. National Labor Relations Commission,[27] Pagdonsalan v. NLRC,[28] and in Sunrise Manning Agency,
Inc. v. NLRC.[29]
Thus, the doctrine that evolved from these cases is that failure to furnish the adverse party with a
copy of the appeal is treated only as a formal lapse, an excusable neglect, and hence, not a
jurisdictional defect. Accordingly, in such a situation, the appeal should not be dismissed; however, it
should not be given due course either. As enunciated in J.D. Magpayo, the duty that is imposed on

Under the twin notice requirement, the employees must be given two (2) notices before their
employment could be terminated: (1) a first notice to apprise the employees of their fault, and (2) a
second notice to communicate to the employees that their employment is being terminated. In between
the first and second notice, the employees should be given a hearing or opportunity to defend
themselves personally or by counsel of their choice.[55]
A careful examination of the records revealed that, indeed, OABs manner of dismissing Gran fell short
of the two notice requirement.
In the present case, the employment contract provides that the employment contract shall be valid
for a period of two (2) years from the date the employee starts to work with the employer. [61] Gran arrived
in Riyadh, Saudi Arabia and started to work on February 7, 1994;[62] hence, his employment contract is
untilFebruary 7, 1996. Since he was illegally dismissed on July 9, 1994, before the effectivity of R.A. No.
8042, he is therefore entitled to backwages corresponding to the unexpired portion of his contract, which
was equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of backwages and mainly relies on the
Declaration which is claimed to have been freely and voluntarily executed by Gran.
The foregoing events readily reveal that Gran was forced to sign the Declaration and constrained
to receive the amount of SR 2,948.00 even if it was against his willsince he was told on July 10,
1994 to leave Riyadh on July 12, 1994. He had no other choice but to sign the Declaration as he
needed the amount of SR 2,948.00 for the payment of his ticket. He could have entertained some
apprehensions as to the status of his stay or safety in Saudi Arabia if he would not sign the quitclaim.
Petition is denied.
http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/145587.htm
LABOR CASES (Part II ng Syllabus)
G.R. No. 86773 February 14, 1992 | SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTERAQUACULTURE DEPARTMENT (SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS
(HEAD, ADMINISTRATIVE DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents. | J. NOCON
NATURE

Petition for certiorari to review the decision of the NLRC

FACTS
1.) SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries
Development Center. Private Respondent Lazaga was hired as a Research Associate and eventually
became the Head of External Affairs Office of SEAFDEC-AQD. However, he was terminated allegedly
due to financial constraints being experienced by SEAFEC-AQD. He was supposed to receive
separation benefits but SEAFDEC-AQD failed to pay private respondent his separation pay so Lazaga
filed a complaint for non-payment of separation benefits, plus moral damages and attorneys fees with
the NLRC.
2.) In their ANSWER WITH COUNTERCLAIM, SEAFDEC alleged that NLRC has no jurisdiction over
the case because: (1) It is an international organization; (2) Lazaga must first secure clearances from
the proper departments for property or money accountability before any claim for separation pay will be
paid (and clearances has not been paid)
COUNTERCLAIM: Lazaga had property accountability and outstanding obligation to SEAFDEC-AQD
amounting to P27, 532.11 and that Lazaga was not entitled to the accrued sick leave benefits due to his
failure to avail of the same during his employment
3.) LA: for Lazaga
4.) NLRC: affirmed LA, deleted attorneys fees and actual damages
5.) SEAFDEC-AQD filed MFR, denied

G.R. No. L-58494 July 5, 1989 | PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT
CORPORATION, petitioner, vs. HON. VICENTE T. LEOGARDO, DEPUTY MINISTER OF LABOR AND
VICENTE D. ELLELINA, respondents. | MELENCIOHERRERA, J.
FACTS
On 20 January 1978, petitioner PNOC-EDC is a subsidiary of the Philippine National Oil Company
(PNOC), filed with the Ministry of Labor and Employment, Regional Office No. VII, Cebu City (MOLE), a
clearance application to dismiss/ terminate the services of private respondent, Vicente D. Ellelina, a
contractual employee.
The application for clearance was premised on Ellelina's alleged commission of a crime (Alarm or Public
Scandal) during a Christmas part at petitioner's camp in Uling, Cebu, when, because of the refusal of the
raffle committee to give him the prize corresponding to his lost winning ticket, he tried to grab the
armalite rifle of the PC Officer outside the building despite the warning shots fired by the latter.
Clearance to dismiss was initially granted by MOLE but was subsequently revoked and petitioner was
ordered to reinstate Ellelina to his former position, without loss of seniority rights, and with backwages
from I February 1978 up to his actual reinstatement.
Petitioner appealed to the Minister of Labor who affirmed the appealed Order.
Petitioner:

ISSUES
1. WON SEAFEC-AQD is immune from suit owing to its international character
2. WON SEAFDEC-AQD is estopped from claiming that the court had no jurisdiction

1. Under Article 277 of the Labor Code, the Ministry of Labor and Employment has no jurisdiction over
petitioner because it is a government-owned or controlled corporation;

HELD
1. YES
Ratio. Being an intergovernmental organization, SEAFDEC including its departments enjoys functional
independence and freedom from control of the state in whose territory its office is located.
Reasoning. One of the basic immunities of an international organization is immunity from local
jurisdiction (immune from legal writs and processes issued by the tribunals of the country where it is
found) that the subjection of such an organization to the authority of the local courts would afford a
convenient medium thru which the host government may interfere in their operations or even influence or
control its policies and decisions of the organization. Such subjection to local jurisdiction would impair
the capacity of such body to discharge its responsibilities impartially on behalf of its member-states.

2. Ellelina's dismissal is valid and just because it is based upon the commission of a crime.

2. NO
Ratio. Estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action.
Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one.
Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void.
-The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal.
-The issue of jurisdiction is not lost by waiver or by estoppel

(c) Dismissal is too harsh a penalty.

Respondent:
(a) While the petitioner is a subsidiary of the PNOC, it is still covered by the Labor Code and, therefore,
within the jurisdiction of the Ministry of Labor inasmuch as petitioner was organized as a private
corporation under the Corporation Law and registered with the Securities and Exchange Commission;
(b) Petitioner is estopped from assailing the Labor Department's jurisdiction, having subjected itself to
the latter when it filed the application for clearance to terminate Ellelina's services; and

ISSUES/RULING
1. Whether or not public respondent committed grave abuse of discretion in holding that petitioner is
governed by the Labor Code
- Article 277 of the Labor Code (PD 442) provides that terms and conditions of employment of all
government employees, including employees of government- owned and controlled corporations shall be
governed by the Civil Service Law.

- The The Civil Service embraces every branch, agency, subdivision and instrumentality of the
government, including government-owned or controlled corporations.
2. Whether or not Ellelina's dismissal was justified.
- The reinstatement ordered by public respondent, without loss of seniority rights, is proper. However,
consistent with the rulings of the Court, backwages should be limited to three years from 1 February
1978. The dismissal ordered by petitioner was a bit too harsh considering the nature of the act which he
had committed and that it was his first offense.
WHEREFORE, the Petition is DISMISSED, and the judgment of respondent public official is hereby
AFFIRMED. No costs.
G.R. No. 148415, July 14, 2008 | RICARDO G. PALOMA, PETITIONER, VS. PHILIPPINE AIRLINES,
INC. AND THE NATIONAL LABOR RELATIONS COMMISSION, RESPONDENTS. | VELASCO JR.,
J.:
FACTS
Paloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of
continuous service, as senior vice president for finance. In March 1992, or some nine (9) months before
Paloma retired on November 30, 1992, PAL was privatized.
By way of post-employment benefits, PAL paid Paloma the total amount of PhP 5,163,325.64 which
represented his separation/retirement gratuity and accrued vacation leave pay. For the benefits thus
received, Paloma signed a document denominated Release and Quitclaim but inscribed the following
reservation therein: "Without prejudice to my claim for further leave benefits embodied in my aide
memoire transmitted to Mr. Roberto Anonas covered by my 27 Nov. 1992 letter x x x."
The leave benefits Paloma claimed being entitled to refer to his 450-day accrued sick leave credits
which PAL allegedly only paid the equivalent of 18 days. He anchored his entitlement on Executive
Order No. (EO) 1077 dated January 9, 1986, and his having accumulated a certain number of days of
sick leave credits, as acknowledged in a letter of Alvia R. Leano, then an administrative assistant in PAL.

The labor arbiter held that PAL is not covered by the civil service system and, accordingly, its employees,
like Paloma, cannot avail themselves of the beneficent provision of EO 1077. This executive issuance,
per the labor arbiter's decision, applies only to government officers and employees covered by the civil
service, exclusive of the members of the judiciary whose leave and retirement system is covered by a
special law.
However, the labor arbiter ruled that Paloma is entitled to a commutation of his alternative claim for 202
accrued sick leave credits less 40 days for 1990 and 1991. Thus, the grant of commutation for 162
accrued leave credits.
CA RULING
Justifying its amendatory action, the CA stated that EO 1077 applies to PAL and necessarily to Paloma
on the following rationale: Section 2(1) of Article IX(B) of the 1987 Constitution applies prospectively and,
thus, the expressed limitation therein on the applicability of the civil service law only to governmentowned and controlled corporations (GOCCs) with original charters does not preclude the applicability of
EO 1077 to PAL and its then employees.
ISSUES
WHETHER OR NOT THE [CA], IN HOLDING THAT E.O. NO. 1077 IS APPLICABLE TO PETITIONER
AND YET APPLYING COMPANY POLICY BY AWARDING THE CASH EQUIVALENT OF ONLY 162
DAYS SICK LEAVE CREDITS INSTEAD OF THE 450 DAYS SICK LEAVE CREDITS PETITIONER IS
ENTITLED TO UNDER E.O. NO. 1077, DECIDED A QUESTION OF SUBSTANCE IN A MANNER
CONTRARY TO LAW AND APPLICABLE JURISPRUDENCE
HELD
Paloma maintains that he comes within the coverage of EO 1077, the same having been issued in 1986,
before he severed official relations with PAL, and at a time when the applicable constitutional provision
on the coverage of the civil service made no distinction between GOCCs with original charters and those
without, like PAL which was incorporated under the Corporation Code. Implicit in Paloma's contention is
the submission that he earned the bulk of his sick leave credits under the aegis of the 1973 Constitution
when PAL, being then a government-controlled corporation, was under civil service coverage.
The contention is without merit.

Answering Paloma's written demands for conversion to cash of his accrued sick leave credits, PAL
asserted having paid all of Paloma's commutable sick leave credits due him pursuant to company policy
made applicable to PAL officers starting 1990.
Subsequently, Paloma filed before the Arbitration Branch of the National Labor Relations Commission
(NLRC) a Complaint for Commutation of Accrued Sick Leaves Totaling 392 days. In the complaint,
docketed as NLRC-NCR-Case No. 00-08-05792-94, Paloma alleged having accrued sick leave credits
of 450 days commutable upon his retirement pursuant to EO 1077 which allows retiring government
employees to commute, without limit, all his accrued vacation and sick leave credits. And of the 450-day
credit, Paloma added, he had commuted only 58 days, leaving him abalance of 392 days of accrued
sick leave credits for commutation.
RULING OF LABOR ARBITER

G.R. No. 154472. June 30, 2005 | Lopez et. al. v. MWSS | J. Tinga
FACTS:
In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and BenpressLyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively
terminating the contracts of service between petitioners and MWSS. Regular employees of the MWSS,
except those who had retired or opted to remain with the latter, were absorbed by the concessionaires.
Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Instead, they
were refused said benefits, MWSS relying on a resolution of the Civil Service Commission (CSC) that
contract-collectors of the MWSS are not its employees and therefore not entitled to the benefits due
regular government employees.
Petitioners filed a complaint with the CSC. In its Resolution dated 1 July 1999,the CSC denied their
claims, stating that petitioners were engaged by MWSS through a contract of service, which explicitly
provides that a bill collector-contractor is not an MWSS employee. Moreover, it found that petitioners

were unable to show that they have contractual appointments duly attested by the CSC. In addition, the
CSC stated that petitioners, not being permanent employees of MWSS and not included in the list
submitted to the concessionaire, are not entitled to severance pay. Petitioners claims for retirement
benefits and terminal leave pay were likewise denied. Thereafter the petitioner filed for a Motion for
Reconsideration which was later on Denied.
Petitioners filed a petition for with the Court of Appeals. Affirming and generally reiterating the ruling of
the CSC, the Court of Appeals held that the Agreement entered into by petitioners and MWSS was clear
and unambiguous, and should be read and interpreted according to its literal sense. Hence, as per the
terms of the agreement, petitioners were not MWSS employees. The Court of Appeals held that no
other evidence was adduced by petitioners to substantiate their claim that their papers were forwarded
to the CSC for attestation and approval. It added that in any event, as early as 26 June 1996, the CSC
specifically stated that contract collectors are not MWSS employees and therefore not entitled to
severance pay. Thereafter, an appeal was made to the Supreme Court.
ISSUE:
Whether or not 1) the petitioner are employees of the MWSS 2) the latter has power to dismiss the latter
3) if they are entitled to the benefits provided for under the Labor Code of the Philippines
HELD:
The Court has invariably affirmed that it will not hesitate to tilt the scales of justice to the labor class for
no less than the Constitution dictates that the State . . . shall protect the rights of workers and promote
their welfare. It is committed to this policy and has always been quick to rise to defense in the rights of
labor, as in this case.
Protection to labor, it has been said, extends to all of laborlocal and overseas, organized and
unorganized, in the public and private sectors. Besides, there is no reason not to apply this principle in
favor of workers in the government. The government, including government-owned and controlled
corporations, as employers, should set the example in upholding the rights and interests of the working
class.

an unabashed bid to claim credit for itself, MWSS professes that these additional benefits were its acts
of benevolence and generosity. We are not impressed.
Other manifestations of control are evident from the records. The power to transfer or reassign
employees is a management prerogative exclusively enjoyed by employers. In this case, MWSS had
free reign over the transfer of bill collectors from one branch to another. MWSS also monitored the
performance of the petitioners and determined their efficiency.
Even the four-fold test will show that petitioner is the employer of private respondents. The elements to
determine the existence of an employment 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 employees conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the means and methods to
accomplish it.
Petitioners are indeed regular employees of the MWSS. The primary standard of determining regular
employment is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme of the particular business or
trade in its entirety. Likewise, the repeated and continuing need for the performance of the job has been
deemed sufficient evidence of the necessity, if not indispensability of the activity to the business. Some
of the petitioners had rendered more than two decades of service to the MWSS. The continuous and
repeated rehiring of these bill collectors indicates the necessity and desirability of their services, as well
as the importance of the role of bill collectors in the MWSS.
MWSS committed itself to pay severance and terminal leave pay to its regular employees. The
guidelines thereof states that regular employees who have rendered at least a year of service and not
eligible for retirement are entitled to severance pay equivalent to one (1) month basic pay for every full
year of service. In view of the Courts finding that petitioners were employees of MWSS, the
corresponding severance pay, in accordance with the guidelines, should be given to them. Terminal
leave pay are likewise due petitioners, provided they meet the requirements therefore.

For purposes of determining the existence of employer-employee relationship, the Court has consistently
adhered to the four-fold test, namely: (1) whether the alleged employer has the power of selection and
engagement of an employee; (2) whether he has control of the employee with respect to the means and
methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether
the employee was paid wages.Of the four, the control test is the most important element.

G.R. No. 147745. April 9, 2003 | MARIA BUENA OBRA, petitioner, vs. SOCIAL SECURITY SYSTEM
(Jollar Industrial Sales and Services Inc.), respondents.| J. Puno

A review of the circumstances surrounding the case reveals that petitioners are employees of MWSS.
Despite the obvious attempt of MWSS to categorize petitioners as mere service providers, not
employees, by entering into contracts for services, its actuations show that they are its employees, pure
and simple. MWSS wielded its power of selection when it contracted with the individual petitioners,
undertaking separate contracts or agreements. The same goes true for the power to dismiss. Although
termed as causes for termination of the Agreement, a review of the same shows that the grounds
indicated therein can similarly be grounds for termination of employment.

Juanito Buena Obra, husband of petitioner, worked as a driver for twenty-four (24) years and five
(5) months. His first and second employers were logging companies. Thereafter, he was employed at
Jollar Industrial Sales and Services Inc. as a dump truck driver from January 1980 to June 1988. He
was assigned to the following projects:[4]

On the other hand, relevant and appropriate is the definition of wages in the Labor Code, namely, that it
is the remuneration, however designated, for work done or to be done, or for services rendered or to be
rendered. The commissions due petitioners were based on the bills collected as per the schedule
indicated in the Agreement. Significantly, MWSS granted petitioners benefits usually given to employees,
to wit: COLA, meal, emergency, and traveling allowances, hazard pay, cash gift, and other bonuses. In

FACTS

1. January 1980 to December 1981 F.F. Cruz Project, Nabua, Camarines Sur hauling/delivery of
filling materials from quarry to job site
2. January 1982 to December 1983 F.F. Cruz, 300 MW Coal Fire Thermal Plant, Calaca, Bacungan
and Makban Geothermal Plant, Los Baos, Laguna hauling/delivery of filling materials from quarry to
job site

3. January 1984 to December 1985 Dizon Copper Silver Mines, Pili, San Marcelino, Zambales
hauling/delivery filling materials from quarry to job site

be interrupted. In the case at bar, petitioner indeed filed a claim with SSS. In fact, she has been
receiving her pension since November 1988. However, she failed to specify whether the basis of her
claim was any contingency which may be held compensable under the EC Program.[9]

4. January 1986 to June 1988 Metro Manila Hauling Project

In addition, the Court of Appeals cited P.D. No. 626 which states that a contingency may be held
compensable if listed in Annex "A" of the Rules Implementing Employees' Compensation as an
occupational disease, and satisfying all conditions set forth therein; or if not listed as an occupational
disease, or listed but has not satisfied the conditions set forth therein, it must be proven by substantial
evidence that the risk of contracting the disease which caused the death of the member, was increased
by the member's working conditions.[10]

On 27 June 1988, Juanito suffered a heart attack while driving a dump truck inside the work
compound, and died shortly thereafter. In the Report of Death[5] submitted by his employer to the Social
Security System (SSS), Juanito expired at the Worker's Quarters at 10:30 a.m., of Myocardial Infarction.
Petitioner Maria M. Buenaobra immediately filed her claim for death benefits under the SSS
law. She started receiving her pension in November 1988. Petitioner was, however, unaware of the
other compensation benefits due her under Presidential Decree No. 626, as amended, or the Law on
Employees Compensation. In September 1998, or more than ten (10) years after the death of her
husband, that she learned of the benefits under P.D. No. 626 through the television program of then
broadcaster Ted Failon who informed that one may claim for Employees Compensation Commission
(ECC) benefits if the spouse died while working for the company. Petitioner prepared the documents to
support her claim for ECC benefits. On 23 April 1999, she filed with the SSS her claim for funeral
benefits under P.D. No. 626, as amended, which was docketed as SSS # 04-0089326-0.[6]

The appellate court likewise held that the three-year prescriptive period does not apply in the
instant case. Instead, it applied Art. 1142(2) of the Civil Code which reads:
Art. 1144. The following actions must be brought within ten (10) years from the time the right of action
accrues:
(1) Upon a written contract;

On 28 July 1999, the SSS denied the claim of petitioner for funeral benefits ruling that the cause
of death of Juanito was not work-connected, absent a causal relationship between the illness and the
job. Caridad R. Borja, Assistant Vice-President National Capital Region (AVP NCR) Central of the
SSS Member Assistance Center in Quezon City wrote:

(2) Upon an obligation created by law;

Please be informed that funeral claim under the Employees Compensation is hereby denied. Per
medical evaluation, cause of death of subject members (sic) cannot be considered work connected
since there is no causal relationship between the illness and the job.

The appellate court then held that the petitioner's cause of action has prescribed. Petitioner's
husband died on 27 June 1988. She filed her claim for funeral benefits under P.D. No. 626 or the Law
on Employees' Compensation only on 23 April 1999, or more than ten (10) years from his death.

On 8 October 1999, petitioner wrote to Atty. Teofilo E. Hebron, Executive Director of the ECC,
appealing the denial of her claim. On 11 November 1999, Atty. Hebron ordered Dr. Simeon Z. Gonzales,
Assistant Vice-President (AVP) of the Medical Services Group of the SSS to review the claim of
petitioner.
On 23 November 1999, the Medical Services Group through Dr. Perla A. Taday, AVP for Medical
Operations, concluded its re-evaluation and affirmed the denial of petitioners claim. It reiterated that
there is no causal relationship between the cause of death/illness and members job as dump truck
driver.[7] Pursuant to Section 5, Rule XVIII of the Implementing Rules of PD 626, the records of the
deceased Juanito were elevated to the Commission.
[8]

On 13 April 2000, the Commission rendered a decision, dismissing the appeal. It ruled that
petitioner failed to show by substantial evidence that her husbands cause of death was due to, or the
risk of contracting his ailment was increased by his occupation and working conditions, as per Section
1(b), Rule III of P.D. No. 626, as amended. In addition, the Commission declared that petitioners claim
has prescribed, citing ECC Resolution No. 93-08-0068.
Petitioner appealed to the Court of Appeals. She alleged that her cause of action had not
prescribed because the filing of her claim for SSS benefits shortly after Juanitos death suspended the
running of the prescriptive period for filing EC claims, as per Item No. III of ECC Resolution No. 90-030022 dated 23 March 1990. The appellate court dismissed the petition. It ruled that petitioner's filing of
her claim for SSS benefits shortly after Juanitos death did not suspend the running of the prescriptive
period for filing EC claims. It interpreted the aforementioned ECC Resolutions to mean that a claimant
must indicate the kind of claim filed before the running of the prescriptive period for filing EC claims may

(3) Upon a judgment. [Emphasis supplied.]

Lastly, the appellate court ruled that even assuming petitioner's cause of action has not
prescribed, her claim for Employees' Compensation benefits cannot prosper because of her failure to
prove by substantial evidence that her husband's working conditions increased the risk of contracting the
myocardial infarction that caused his death.
Petitioners Motion for Reconsideration dated 27 September 2000 was denied by the appellate
court in a Resolution promulgated on 6 March 2001.
ISSUES
1.
2.

WHETHER, INDEED, THE CLAIM OF PETITIONER, HAD PRESCRIBED.

WHETHER OR NOT THE ILLNESS OF PETITIONERS HUSBAND, MYOCARDIAL
INFARCTION, IS WORK-RELATED.

HELD
1.

The claim of petitioner for funeral benefits under P.D. No. 626, as amended, has not yet
prescribed.
The issue of prescription in the case at bar is governed by P.D. No. 626, or the Law on
Employees' Compensation. Art. 201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987
Amended Rules on Employees' Compensation both read as follows:
No claim for compensation shall be given due course unless said claim is filed with the
System within three years from the time the cause of action accrued.

We agree with the petitioner that her claim for death benefits under the SSS law should be
considered as the Employees Compensation claim itself. This is but logical and reasonable
because the claim for death benefits which petitioner filed with the SSS is of the same nature
as her claim before the ECC. Furthermore, the SSS is the same agency with which
Employees Compensation claims are filed. As correctly contended by the petitioner, when
she filed her claim for death benefits with the SSS under the SSS law, she had already
notified the SSS of her employees compensation claim, because the SSS is the very same
agency where claims for payment of sickness/disability/death benefits under P.D. No. 626 are
filed.
Section 4(b)(2), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of the
Employees Compensation Claims, quoted above, also provides for the conditions when EC
claims filed beyond the three-year prescriptive period may still be given due course. Section
4(b)(2) states the condition for private sector employees, requiring that a claim for Medicare,
sickness, burial, disability or death should be filed within three (3) years from the occurrence
of the contingency. In the instant case, the petitioner was able to file her claim for death
benefits under the SSS law within the three-year prescriptive period. In fact, she has been
receiving her pension under the SSS law since November 1988.
2.

Myocardial infarction is also known as heart attack. It results in permanent heart damage or
death. A heart attack is called myocardial infarction because part of the heart muscle
(myocardium) may literally die (infarction). This occurs when a blood clot blocks one of the
coronary arteries (the blood vessels that bring blood and oxygen to the heart muscle). When
the heart muscle does not obtain the oxygen-rich blood that it needs, it will begin to die. The
severity of a heart attack usually depends on how much of the heart muscle is injured or dies
during the heart attack. Heart attack accounts for 1 out of every 5 deaths. It is a major cause
of sudden death in adults. Heavy exertion or emotional stresscan trigger a heart attack.[16]
In the case at bar, the petitioners husbands heart disease falls under the second condition of
ECC Resolution No. 432 dated July 20, 1977 which states that the strain of work that brought
about the acute attack must be of sufficient severity and must be followed within 24 hours by
the clinical signs of a cardiac insult to constitute causal relationship. Petitioners husband was
driving a dump truck within the company premises where they were stacking gravel and sand
when he suffered the heart attack. He had to be taken down from the truck and brought to
the workers quarters where he expired at 10:30 a.m., just a few minutes after the heart
attack, which is much less than the 24 hours required by ECC Resolution No. 432. This is a
clear indication that severe strain of work brought about the acute attack that caused his
death.
Professional drivers, especially truck drivers like the decedent in the instant case, carry the
burden of being more exposed and subjected to the stress and strain of everyday traffic, and
the greater physical exertion brought about by driving a large and heavy vehicle. In addition,
according to the petitioner, her husband was under a lot of stress in the workplace. He was a
model worker and his employer highly depended on him. He became the object of envy of
his co-workers which caused him much emotional stress. Add to this the fact that he has
been a truck driver for more than twenty-four (24) years. Due to the combination of emotional
stress and vigorous physical exertion, it was easy for him to succumb to the heart
ailment. We hold that the illness of the decedent which caused his death is work-connected,
and thus compensable by virtue of ECC Resolution No. 432 dated 20 July 1977.
As a final note, we find it necessary to reiterate that P.D. No. 626, as amended, is a social
legislation whose primordial purpose is to provide meaningful protection to the working class

against the hazards of disability, illness and other contingencies resulting in the loss of
income.
PETITION GRANTED.
G.R. No. 121777 January 24, 2001 | THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.
CAROL M. DELA PIEDRA, accused-appellant.
Facts: Criminal Investigation Service conducted entrapment of illegal recruitment by Mrs. Carol
Figueroa, alias Carol Llena, and Carol dela Piedra. Both Nancy Araneta and Lourdes Modesto testified
that dela Piedra promised them employment for a fee. Their testimonies corroborate each other on
material points: the briefing conducted by appellant, the time and place thereof, the fees involved.
Appellant has not shown that these witnesses were incited by any motive to testify falsely against her.
The absence of evidence as to an improper motive actuating the principal witnesses of the prosecution
strongly tends to sustain that no improper motive existed and that their testimony is worthy of full faith
and credence.
Accused defense of denial, claiming that she went to Singapore to visit relatives and met Laleen Malicay
who had been working there for six years had instructed her to bring money back to her relatives in the
Philippines. This is how accused went from Cebu to Zamboanga to meet Malicays cousin Jasmine
Alejandro who inquired about going to Singapore. Accussed also says Malicay was the one who
instructed Jasmine to give her the application forms the CIS found with accused on their raid in
Jasmines house in Zamboanga and thought it was for Malicays substitute as she planned to go back to
the Philippines.
RTC found accused guilty, hence appeal.
Issue: Overbreadth and void for vagueness; equal protection clause; legality of arrest;
Held: Here, the provision in question reads:
ART. 13. Definitions.(a) x x x.
(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in
any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged
in recruitment and placement.
x x x.
Vagueness:
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement
of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and
placement even if only one prospective worker is involved. The proviso merely lays down a rule of
evidence that where a fee is collected in consideration of a promise or offer of employment to two or
more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in
the act of recruitment and placement. The words "shall be deemed" create that presumption.
An act will be declared void and inoperative on the ground of vagueness and uncertainty, only upon a
showing that the defect is such that the courts are unable to determine, with any reasonable degree of
certainty, what the legislature intended. An Act will not be declared inoperative and ineffectual on the
ground that it furnishes no adequate means to secure the purpose for which it is passed, if men of
common sense and reason can devise and provide the means, and all the instrumentalities necessary
for its execution are within the reach of those intrusted therewith."
Overbreadth:

That Section 13 (b) encompasses what appellant apparently considers as customary and harmless acts
such as " labor or employment referral" ("referring" an applicant, according to appellant, for employment
to a prospective employer) does not render the law overbroad. Evidently, appellant misapprehends
concept of overbreadth.
A statute may be said to be overbroad where it operates to inhibit the exercise of individual freedoms
affirmatively guaranteed by the Constitution, such as the freedom of speech or religion. A generally
worded statute, when construed to punish conduct which cannot be constitutionally punished is
unconstitutionally vague to the extent that it fails to give adequate warning of the boundary between the
constitutionally permissible and the constitutionally impermissible applications of the statute.26

Appellant also invokes the equal protection clause in her defense. She points out that although the
evidence purportedly shows that Jasmine Alejandro handed out application forms and even received
Lourdes Modesto's payment, appellant was the only one criminally charged. Alejandro, on the other
hand, remained scot-free. From this, appellant concludes that the prosecution discriminated against her
on grounds of regional origins. Appellant is a Cebuana while Alejandro is a Zamboanguea, and the
alleged crime took place in Zamboanga City.The unlawful administration by officers of a statute fair on its
face, resulting in its unequal application to those who are entitled to be treated alike, is not a denial of
equal protection unless there is shown to be present in it an element
of intentional or purposeful discrimination. This may appear on the face of the action taken with respect
to a particular class or person, or it may only be shown by extrinsic evidence showing a
discriminatory design over another not to be inferred from the action itself.But a discriminatory purpose is
not presumed, there must be a showing of "clear and intentional discrimination."33 Appellant has failed
to show that, in charging appellant in court, that there was a "clear and intentional discrimination" on the
part of the prosecuting officials.
While all persons accused of crime are to be treated on a basis of equality before the law, it does not
follow that they are to be protected in the commission of crime. It would be unconscionable, for instance,
to excuse a defendant guilty of murder because others have murdered with impunity. The remedy for
unequal enforcement of the law in such instances does not lie in the exoneration of the guilty at the
expense of society x x x. Protection of the law will be extended to all persons equally in the pursuit of
their lawful occupations, but no person has the right to demand protection of the law in the commission
of a crime.
Illegal recruitment is committed when two elements concur. First, the offender has no valid license or
authority required by law to enable one to lawfully engage in recruitment and placement of workers.
Second, he or she undertakes either any activity within the meaning of "recruitment and placement"
defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor
Code.38 In case of illegal recruitment in large scale, a third element is added: that the accused commits
said acts against three or more persons, individually or as a group. In this case, the first element is
present. The certification of POEA Officer-in-Charge Macarulay states that appellant is not licensed or
authorized to engage in recruitment and placement.
The second element is also present. Appellant is presumed engaged in recruitment and placement
under Article 13 (b) of the Labor Code. Both Nancy Araneta and Lourdes Modesto testified that appellant
promised them employment for a fee. Their testimonies corroborate each other on material points: the
briefing conducted by appellant, the time and place thereof, the fees involved. Appellant has not shown
that these witnesses were incited by any motive to testify falsely against her. The absence of evidence
as to an improper motive actuating the principal witnesses of the prosecution strongly tends to sustain
that no improper motive existed and that their testimony is worthy of full faith and credence. Appellant's
denials cannot prevail over the positive declaration of the prosecution witnesses. Affirmative testimony of
persons who are eyewitnesses of the fact asserted easily overrides negative testimony. That appellant
did not receive any payment for the promised or offered employment is of no moment. From the

language of the statute, the act of recruitment may be "for profit or not;" it suffices that the accused
"promises or offers for a fee employment" to warrant conviction for illegal recruitment.
The testimonies of Araneta and Modesto, coming as they do from credible witnesses, meet the standard
of proof beyond reasonable doubt that appellant committed recruitment and placement. We therefore do
not deem it necessary to delve into the legality of appellant's arrest and the seizure of the application
forms. A warrantless arrest, when unlawful, has the effect of invalidating the search incidental thereto
and the articles so seized are rendered inadmissible in evidence. Here, even if the documents seized
were deemed inadmissible, her conviction would stand in view of Araneta and Modesto's testimonies.
Appellant attempts to cast doubt on the prosecution's case by claiming in that Erlie Ramos of the POEA
supposedly "planted" the application forms. She also assails his character, alleging that he passed
himself off as a lawyer, although this was denied by Ramos.
The claim of "frame-up," like alibi, is a defense that has been invariably viewed by the Court with disfavor
for it can easily be concocted but difficult to prove. Apart from her self-serving testimony, appellant has
not offered any evidence that she was indeed framed by Ramos. She has not even hinted at any motive
for Ramos to frame her. Law enforcers are presumed to have performed their duties regularly in the
absence of evidence to the contrary.
A conviction for large scale illegal recruitment must be based on a finding in each case of illegal
recruitment of three or more persons whether individually or as a group. In this case, only two persons,
Araneta and Modesto, were proven to have been recruited by appellant. The third person named in the
complaint as having been promised employment for a fee, Jennelyn Baez, was not presented in court to
testify.
It is true that law does not require that at least three victims testify at the trial; nevertheless, it is
necessary that there is sufficient evidence proving that the offense was committed against three or more
persons. In this case, evidence that appellant likewise promised her employment for a fee is sketchy.
The only evidence that tends to prove this fact is the testimony of Nancy Araneta, who said that she and
her friends, Baez and Sandra Aquino, came to the briefing and that they (she and her "friends") filled up
application forms.
The affidavit Baez executed jointly with Araneta cannot support Araneta's testimony. The affidavit was
neither identified, nor its contents affirmed, by Baez. Insofar as it purports to prove that appellant
recruited Baez, therefore, the affidavit is hearsay and inadmissible.48 In any case, hearsay evidence,
such as the said affidavit, has little probative value. Neither can appellant be convicted for recruiting CIS
agent Eileen Fermindoza or even the other persons present in the briefing of January 30, 1994.
Appellant is accused of recruiting only the three persons named in the information Araneta, Modesto
and Baez. The information does not include Fermindoza or the other persons present in the briefing as
among those promised or offered employment for a fee. To convict appellant for the recruitment and
placement of persons other than those alleged to have been offered or promised employment for a fee
would violate her right to be informed of the nature and cause of the accusation against her.
Courts may consider a piece of evidence only for the purpose for which it was offered, and the purpose
of the offer of their testimonies did not include the proving of the purported recruitment of other supposed
applicants by appellant.
Appellant claims in her seventh assigned error that the information is fatally defective since it charges
her with committing illegal recruitment in large scale on January 30, 1994 while the prosecution evidence
supposedly indicates that she committed the crime on February 2, 1994.
We find that the evidence for the prosecution regarding the date of the commission of the crime does not
vary from that charged in the information. Both Nancy Araneta and Lourdes Modesto testified that on
January 30, 1994, while in the Alejandro residence, appellant offered them employment for a fee. Thus,
while the arrest was effected only on February 2, 1994, the crime had already been committed three (3)
days earlier on January 30, 1994.
The eighth and tenth assigned errors, respectively, pertain to the penalty of life imprisonment imposed
by the trial court as well as the constitutionality of the law prescribing the same, appellant arguing that it

is unconstitutional for being unduly harsh.55 Section 19 (1), Article III of the Constitution states:
"Excessive fines shall not be imposed, nor cruel, degrading or inhuman punishment inflicted."
The penalty of life imprisonment imposed upon appellant must be reduced. Because the prosecution
was able to prove that appellant committed recruitment and placement against two persons only, she
cannot be convicted of illegal recruitment in large scale, which requires that recruitment be committed
against three or more persons. Appellant can only be convicted of two counts of "simple" illegal
recruitment, one for that committed against Nancy Araneta, and another count for that committed against
Lourdes Modesto. Appellant is sentenced, for each count, to suffer the penalty of four (4) to six (6) years
of imprisonment and to pay a fine of P30,000.00. This renders immaterial the assigned error assumed of
proper imposable penalty of life imprisonment.
G.R. No. 81510 March 14, 1990 HORTENCIA SALAZAR, petitioner,
vs. HON. TOMAS D. ACHACOSO, in his capacity as Administrator of the Philippine Overseas
Employment Administration, and FERDIE MARQUEZ, respondents.
Facts: On November 3, 1987, having ascertained that the petitioner had no license to operate a
recruitment agency, the POEA Administrator issued Closure and Seizure Order No. 1205 ordering the
closure of the alleged recruitment agency operated at No. 615 R.O. Santos st. Mandaluyong Metro
Manila, and the seizure of documents and paraphernalia being used or intended to be used in
committing illegal recruitment. Pursuant to said Order, a team of POEA people swooped down at the
residence of petitioner and at the Hanalie Dance Studio inside said residence. The team confiscated
assorted costumes which according to petitioner were worth P10,000 and which already due for
shipment to japan. Petitioner wrote POEA attesting the legality of the seizure of her personal property,
alleging that the seizure was contrary to the constitutional guarantees of due process and the right of the
people to be secured in their persons, houses, papers and effects against unreasonable searches and
seizure.
On February 2, 1988 the petitioner filed this suit for prohibition. Although the acts sought to be barred are
already fait accompli, thereby making prohibition too late, the SC considered the petition as one for
certiorari in view of the grave public interest involved.
Issue: may the POEA or the Sec. of Labor validly issue warrants of search and seizure or arrest under
art. 38 of the Labor Code?
Held: the petition is granted. Art 38 par. C of the Labor Code is declared unconstitutional and void. The
respondents are ordered to return all materials seized as a result of the implementation of search and
seizure order no. 1205.
Under the constitution only a judge may issue warrants of search and arrest. Art. 38 par. C of the Labor
Code as now written was entered as an amendment by PD No. 1920 and 2018 of the late pres. Marcos
to PD 1693 in the exercise of his legislative powers under amendment no. 6 of the 1973 constitution.
Under the latter, the then Minister of Labor merely exercised recommendatory powers,i.e. to recommend
the arrest and detention of any person engaged in illegal recruitrment.
On may 1, 1984 Mr. Marcos promulgated PD No.1920 with the avowed purpose of giving more teeth to
the campaign against illegal recruitment. The decree gave the minister of labor arrest and closure
powers:
On January 26, 1986 Pres. Marcos promulgated PD No. 2018 giving the Labor Minister search and
seizure powers as well.
The above has now been etched as art 38 par. C of the Labor Code.
The decrees in question it is well to note, stand as the dying vestiges of authoritarian rule in its twilight
moments.

We reiterate the Sec. of Labor, not being a judge may no longer issue search or arrest warrants. Hence,
the authorities must go through the judicial process. To that extent we declare art 38 par. C of the Labor
Code unconstitutional and of no force and effect.
For the guidance of the bench and the bar, we reaffirm the following principles:
1. Under Article III, Section 2, of the l987 Constitution, it is only judges, and no
other, who may issue warrants of arrest and search:
2. The exception is in cases of deportation of illegal and undesirable aliens, whom
the President or the Commissioner of Immigration may order arrested, following a
final order of deportation, for the purpose of deportation.
G.R. No. 129486, July 04, 2008 | PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS.
GLORIA BARTOLOME, ACCUSED-APPELLANT.
Facts: from july to September 1988 in the municipality of indang Cavite accused by 4 private
complainants Fe Rollon, Raymundo Dimatulac, Esperanza Buhay, and Reynaldo Rollon of estafa and
illegal recruitment receiving sum of money for processing and placement fees for employment abroad in
Bahrain. Accused denied but was found guilty by RTC of illegal recruitment affirmed by CA with
modification of penalties in accordance to large scale illegal recruitment. MR denied. Hence petition for
review:
Issue: court erred in affirming lower court
Held: Illegal recruitment is committed when two (2) elements concur: First, the offender does not have
the required license or authority to engage in the recruitment and placement of workers. Second, the
offender undertook (1) recruitment and placement activity defined under Article 13(b) of the Labor Code
or (2) any prohibited practice under Art. 34 of the same code. Illegal recruitment is qualified into large
scale, when three or more persons, individually or as group, are victimized. [11]
Art. 13(b) of the Labor Code defines recruitment and placement, as follows:
x x x [A]ny act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers,
and includes referrals, contract services, promising or advertising for employment, locally or abroad,
whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for
a fee employment to two or more persons shall be deemed engaged in recruitment and placement.
After a circumspect review of the records, the Court is fully convinced as to accused-appellant's guilt of
the crime of illegal recruitment in large scale. The first element is present. Accused-appellant had not
shown any license to recruit or engage in placement activities. As found by the trial court, the POEA no
less initiated the filing of the complaints against accused-appellant, a reality which argues against the
existence of such license or authority.
The second element also obtains. On separate occasions, accused-appellant approached and recruited
at least four (4) persons at the same place and at about the same time, giving them the impression that
she and Capawan had the capability to send them to Bahrain for employment. All four testified that
accused-appellant promised them employment for a fee. Their testimonies corroborate each other on
material points, such as the amount exacted as placement fee, the country of destination, and the
photocopied plane tickets.
The private complainants were positive and categorical in their testimonies that they personally met

accused-appellant and that she asked for, among others, placement fee in consideration for the
promised employment in Bahrain. They had no motive to testify falsely against accused-appellant. In
fact, accused-appellant admitted personally knowing them since childhood, describing them to be "not
misbehaving or perjurious people."[12] The absence of evidence as to improper motive actuating the
principal witnesses of the prosecution augurs well for their credibility. To be sure, the RTC and the CA
found their testimonies to be worthy of full faith and credence. The testimonies of credible witness meet
the standard of proof beyond reasonable doubt.[13]
Accused-appellant cannot plausibly escape liability for her criminal acts by conveniently pointing to and
passing the blame on Capawan as the illegal recruiter. Like the trial court, we entertain serious doubts
on this self-serving and gratuitous version of accused-appellant. What is more, her denials cannot
prevail over the positive declaration of the prosecution witnesses. It is basic that affirmative testimony of
persons who are eyewitnesses of the events or facts asserted easily overrides negative testimony. [14]
The crime of illegal recruitment in large scale is punishable under Art. 39(a) of the Labor Code, as
amended, with life imprisonment and a fine of PhP 100,000. The CA, accordingly, imposed the right
penalty.

Accused-appellant herself took the witness stand and testified in her defense. She resolutely denied
having a hand in the illegal recruitment, claiming that she merely received the money on behalf of one
Mrs. Ganura10 who owned the recruitment agency called Staff Organizers, Inc. She accepted the money
in her capacity as an officer of the said recruitment agency. To bolster this claim, she presented evidence
that she remitted the money to Mrs. Ganura worthP25,000.0011 although she failed to remit the
remaining amount of P8,000.00 since she was already in detention.12Accused-appellant further claimed
that although she was not listed in the POEA as an employee of the recruitment agency of Mrs. Ganura,
she had a special power of attorney issued by her employer to receive payments from applicants.
The trial court found accused-appellant guilty of illegal recruitment.
ISSUES:
I.
II.

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. DELIA SADIOSA y CABENTA, AccusedAppellant.

FACTS: Arsenia Conse went to Bayombong, Nueva Ecija in early 1992 where she met the four
complainants, Cely Navarro, Marcela Manzano, Erly Tuliao and Benilda Domingo. She enticed the four
to apply for overseas employment informing them that she had a cousin who could send them to Kuwait
as domestic helpers. Apparently convinced by Arsenia Conse, the four went with her on February 5,
1992 to Manila. Upon arrival, they proceeded to Room 210, Diamond Building, Libertad St., Pasay City
where Arsenia Conse introduced the group to accused-appellant Delia Sadiosa. The four then applied
for work as domestic helpers.3
On that occasion, accused-appellant assured the four that she could dispatch them to Kuwait 4 and
forthwith demandedP8,000.00 from each of them for processing fee and P1,000.00 for passport
(P1,500.00 from complainant Cely Navarro).5 She assured the group that she would facilitate the
processing of all the necessary documents needed by them. She further promised them that upon
payment of the required fees, they would be able to leave for Kuwait immediately.
The four did give accused-appellant the money demanded although on different dates. The latter issued
the corresponding receipts6 therefor. Again, she assured them that they could leave for Kuwait on
different dates: Cely Navarro and Erly Tuliao on February 17, 1992 which was rescheduled twice on
February 19, 1992 and on February 25, 1992,7 and Benilda Domingo and Marcela Manzano on March
17, 1992 which was moved twice on February 24, 1992 and on March 17, 1992.8 However, not one of
them was able to leave for Kuwait. When they asked for the return of their money, accused-appellant
refused and ignored their demand. Consequently, the four filed the complaint for illegal recruitment
against accused-appellant.
In addition to the complainants testimonies, the prosecution presented Virginia Santiago, a Senior
Officer in the Licensing Branch and Inspection Division of the Philippine Overseas Employment
Administration (POEA). She testified that accused-appellant was neither licensed nor authorized to
recruit workers for overseas employment.9

THE LOWER COURT ERRED IN NOT STATING CLEARLY AND DISTINCTLY THE FACTS
AND THE LAW ON WHICH ITS JUDGMENT CONVICTING THE ACCUSED-APPELLANT
WAS BASED;
THE LOWER COURT ERRED IN NOT DISMISSING MOTU PROPRIO THE INFORMATION
FOR NOT CONFORMING SUBSTANTIALLY TO THE PRESCRIBED FORM,
PARTICULARLY AS TO THE DESIGNATION OF THE OFFENSE AND CAUSE OF THE
ACCUSATION;

III.

THE LOWER COURT ERRED IN NOT DISMISSING MOTU PROPRIO THE INFORMATION
IN VIEW OF ITS INCONSISTENT AND CONTRADICTORY, CONFLICTING AND
IRRECONCILABLE CHARGES OF ILLEGAL RECRUITMENT, ESTAFA UNDER ARTICLE
315, PARAGRAPH 1(b) AND ESTAFA UNDER THE SAME ARTICLE BUT UNDER
PARAGRAPH 2(a) OF THE REVISED PENAL CODE AND IN CONDUCTING TRIAL
THEREUNDER;

IV.

THE LOWER COURT ERRED IN NOT ACQUITTING THE ACCUSED-APPELLANT AND IN

CONVICTING HER OF THE THE CHARGE IN THE INFORMATION;

V.

THE LOWER COURT ERRED IN NOT FINDING THAT THE LIABILITY OF THE ACCUSEDAPPELLANT, IF ANY, IS ONLY CIVIL, NOT CRIMINAL IN NATURE;

VI.

THE LOWER COURT ERRED IN ORDERING THE ACCUSED-APPELLANT TO

INDEMNIFY THE PRIVATE COMPLAINANTS THE SUM OF P8,000.00 EACH.

HELD: It is well-settled in our jurisprudence that the information is sufficient where it clearly states the
designation of the offense by the statute and the acts or omissions complained of as constituting the
offense.14 However, there is no need to specify or refer to the particular section or subsection of the
statute that was violated by the accused. No law requires that in order that an accused may be
convicted, the specific provision penalizing the act charged should be mentioned in the
information.15 What identifies the charge is the actual recital of the facts and not that designated by the
fiscal in the preamble thereof. It is not even necessary for the protection of the substantial rights of the
accused, nor the effective preparation of his defense, that the accused be informed of the technical
name of the crime of which he stands charged. He must look to the facts alleged. 16

In the instant case, the information filed against accused-appellant sufficiently shows that it is for the
crime of illegal recruitment in large scale, as defined in Art. 38 (b) of the Labor Code and penalized in
Art. 39 of the same Code although it is designated as for illegal recruitment only imprisonment and a fine
of P100,000.
Hence, to avoid misconception and misinterpretation of the information, the prosecutor involved in this
case should have indicated in its caption, the offense he had clearly alleged in its body, that the crime
charged was for illegal recruitment in large scale. However, such omission or lack of skill of the
prosecutor who crafted the information should not deprive the people of the right to prosecute a crime
with so grave a consequence against the economic life of the aggrieved parties. What is important is that
he did allege in the information the facts sufficient to constitute the offense of illegal recruitment in large
scale.

engaged in recruitment and placement.33 All the essential elements of the crime of illegal recruitment in
large scale, which we have enumerated above, are present in this case.
The prosecution clearly established the fact that accused-appellant had no license to recruit from the
POEA. Yet, the latter entertained the four complainants when they applied, promised them jobs as
domestic helpers in Kuwait, and collected fees from them for processing travel documents only to
renege on her promise and fail to return the money she collected from complainants despite several
demands.
For engaging in recruitment of the four complainants without first obtaining the necessary license from
the POEA, accused-appellant, therefore, is guilty of illegal recruitment in large scale, an offense
involving economic sabotage. She should, accordingly, be punished with life imprisonment and a fine of
P100,000 under Article 39 (a) of the Labor Code, as amended.

As regards accused-appellants contention that the questioned decision is void because it failed to state
clearly and distinctly the facts and the law on which it was based, this Court is not inclined to grant
credence thereto.

ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION
CO., INC. | GR No. 167614 March 24, 2009

The constitutional requirement that every decision must state distinctly and clearly the factual and legal
bases therefor should indeed be the primordial concern of courts and judges. Be that as it may, there
should not be a mechanical reliance on this constitutional provision. The courts and judges should be
allowed to synthesize and to simplify their decisions considering that at present, courts are harassed by
crowded dockets and time constraints.

FACTS: Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and
Marlow Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief
Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid
vacation leave per month.

While it may be true that the questioned decision failed to state the specific provisions of law violated by
accused-appellant, it however clearly stated that the crime charged was Illegal Recruitment. It discussed
the facts comprising the elements of the offense of illegal recruitment in large scale that was charged in
the information, and accordingly rendered a verdict and imposed the corresponding penalty. The
dispositive portion of the decision quoted earlier, clearly states that appellant was found guilty beyond
reasonable doubt of the charge in the information. As earlier stated, the charge in the information
referred to by the decision could mean only that of illegal recruitment in large scale and not to any other
offense.
The situation would have been altogether different and in violation of the constitutional mandate if the
penalty imposed was for illegal recruitment based on established facts constituting simple illegal
recruitment only. As it is, the trial courts omission to specify the offense committed, or the specific
provision of law violated, is not in derogation of the constitutional requirement that every decision must
clearly and distinctly state the factual and legal bases for the conclusions reached by the trial court. The
trial courts factual findings based on credible prosecution evidence supporting the allegations in the
information and its imposition of the corresponding penalty imposed by the law on such given facts are
therefore sufficient compliance with the constitutional requirement.
This Court agrees with the trial court that the prosecution evidence has shown beyond reasonable doubt
that accused-appellant engaged in unlawful recruitment and placement activities. Accused-appellant
promised the four complainants employment as domestic helpers in Kuwait. Article 13 (b) of the Labor
Code defines recruitment and placement as referring to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or
advertising for employment locally or abroad whether for profit or not; provided that any person or entity
which in any manner offers or promises for a fee employment to two or more persons shall be deemed

On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000 upon the
assurance and representation of respondents that he would be Chief Officer by the end of April 1998.
Respondents did not deliver on their promise to make Serrano Chief Officer. Hence, Serrano refused to
stay on as second Officer and was repatriated to the Philippines on May 26, 1998, serving only two (2)
months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twentythree (23) days.
Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and
for payment of his money claims in the total amount of US$26,442.73 (based on the computation of
$2590/month from June 1998 to February 199, $413.90 for March 1998, and $1640 for March 1999) as
well as moral and exemplary damages.
The LA declared the petitioners dismissal illegal and awarded him US$8,770, representing his salaray
for three (3) months of the unexpired portion of the aforesaid contract of employment, plus $45 for salary
differential and for attorneys fees equivalent to 10% of the total amount; however, no compensation for
damages as prayed was awarded.
On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50, representing three (3)
months salary at $1400/month, plus 445 salary differential and 10% for attorneys fees. This decision
was based on the provision of RA 8042, which was made into law on July 15, 1995.
Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the
last clause in the 5th paragraph of Section 10 of RA 8042, which reads:

Sec. 10. Money Claims. x x x In case of termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement
of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the unexpired
term, whichever is less.
The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of Appeals
(CA), reiterating the constitutional challenge against the subject clause. The CA affirmed the NLRC
ruling on the reduction of the applicable salary rate, but skirted the constitutional issue raised by herein
petitioner Serrano.
ISSUES: 1. Whether or not the subject clause violates Section 10, Article III of the Constitution on nonimpairment of contracts;
2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor as a protected sector.
HELD: On the first issue.
The answer is in the negative. Petitioners claim that the subject clause unduly interferes with the
stipulations in his contract on the term of his employment and the fixed salary package he will receive is
not tenable.
Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall be
passed.
The prohibition is aligned with the general principle that laws newly enacted have only a prospective
operation, and cannot affect acts or contracts already perfected; however, as to laws already in
existence, their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment
clause under Section 10, Article II is limited in application to laws about to be enacted that would in any
way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the
intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the
employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A.
No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when
the parties executed their 1998 employment contract, they were deemed to have incorporated into it all
the provisions of R.A. No. 8042.
But even if the Court were to disregard the timeline, the subject clause may not be declared
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the
exercise of the police power of the State to regulate a business, profession or calling, particularly the
recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and
well-being of OFWs wherever they may be employed. Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare of the people are
generally applicable not only to future contracts but even to those already in existence, for all private
contracts must yield to the superior and legitimate measures taken by the State to promote public
welfare.

On the second issue.

The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees: No person shall be deprived of life, liberty, or
property without due process of law nor shall any person be denied the equal protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction
as to place of deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to
economic security and parity: all monetary benefits should be equally enjoyed by workers of similar
category, while all monetary obligations should be borne by them in equal degree; none should be
denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like
circumstances.
Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees
fit, a system of classification into its legislation; however, to be valid, the classification must comply with
these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law;
3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification
embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification
needs only be shown to be rationally related to serving a legitimate state interest; b) the middle-tier or
intermediate scrutiny in which the government must show that the challenged classification serves an
important state interest and that the classification is at least substantially related to serving that interest;
and c) strict judicial scrutiny in which a legislative classification which impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class is presumed
unconstitutional, and the burden is upon the government to prove that the classification is necessary to
achieve a compelling state interest and that it is the least restrictive means to protect such interest.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a
closer examination reveals that the subject clause has a discriminatory intent against, and an invidious
impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts
of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally
discharged were treated alike in terms of the computation of their money claims: they were uniformly
entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of
R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an
unexpired portion of one year or more in their employment contract have since been differently treated in

that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local
workers with fixed-term employment.

The subject clause or for three months for every year of the unexpired term, whichever is less in the
5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.

The Court concludes that the subject clause contains a suspect classification in that, in the computation
of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap
on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the
claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage.

ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the
Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a
compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the
Constitution and calibrated by history. It is akin to the paramount interest of the state for which some
individual liberties must give way, such as the public interest in safeguarding health or maintaining
medical standards, or in maintaining access to information on matters of public concern.
In the present case, the Court dug deep into the records but found no compelling state interest that the
subject clause may possibly serve.
In fine, the Government has failed to discharge its burden of proving the existence of a compelling state
interest that would justify the perpetuation of the discrimination against OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment
of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will
have to be rejected. There can never be a justification for any form of government action that alleviates
the burden of one sector, but imposes the same burden on another sector, especially when the favored
sector is composed of private businesses such as placement agencies, while the disadvantaged sector
is composed of OFWs whose protection no less than the Constitution commands. The idea that private
business interest can be elevated to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement
agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be employed
to achieve that purpose without infringing on the constitutional rights of OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring
foreign employers who default on their contractual obligations to migrant workers and/or their Philippine
agents. These disciplinary measures range from temporary disqualification to preventive suspension.
The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May
23, 2003, contains similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local
placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of
petitioner and other OFWs to equal protection.

FACTS: Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and
Marlow Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief
Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid
vacation leave per month.
On the date of his departure, Serrano was constrained to accept a downgraded employment contract
upon the assurance and representation of respondents that he would be Chief Officer by the end of April
1998.
Respondents did not deliver on their promise to make Serrano Chief Officer.
Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines, serving only
two months and 7 days, leaving an unexpired portion of nine months and twenty-three days.
Upon complaint filed by Serrano before the Labor Arbiter (LA), the dismissal was declared illegal.
On appeal, the NLRC modified the LA decision based on the provision of RA 8042.
Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the
last clause in the 5th paragraph of Section 10 of RA 8042.
ISSUES:
1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment
of contracts;
2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor as a protected sector.
HELD: On the first issue.
The answer is in the negative. Petitioners claim that the subject clause unduly interferes with the
stipulations in his contract on the term of his employment and the fixed salary package he will receive is
not tenable.
The subject clause may not be declared unconstitutional on the ground that it impinges on the
impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a
business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end
in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed.
On the second issue.
The answer is in the affirmative.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to
economic security and parity.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a
closer examination reveals that the subject clause has a discriminatory intent against, and an invidious
impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts
of one year or more;
Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis--vis local workers with fixed-period employment;
The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of
petitioner and other OFWs to equal protection.
The subject clause or for three months for every year of the unexpired term, whichever is less in the
5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.
BECMEN SERVICE EXPORTER AND PROMOTION, INC. vs. SPOUSES SIMPLICIO and MILA
CUARESMA, WHITE FALCON SERVICES, INC. and JAIME ORTIZ | GR No. 182978-79
FACTS: On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter
and Promotion, Inc. (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi
Arabia (KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per
month. Over a year later, she died allegedly of poisoning. Jessie Fajardo, a co-worker of Jasmin,
narrated that on June 21, 1998, Jasmin was found dead by a female cleaner lying on the floor inside her
dormitory room with her mouth foaming and smelling of poison.
Based on the police report and the medical report of the examining physician of the Al-Birk Hospital, who
conducted an autopsy of Jasmins body, the likely cause of her death was poisoning.
Jasmins body was repatriated to Manila on September 3, 1998. The following day, the City Health
Officer of Cabanatuan City conducted an autopsy and the resulting medical report indicated that Jasmin
died under violent circumstances, and not poisoning as originally found by the KSA examining physician.
The toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and
insecticides.
Simplicio and Mila Cuaresma (the Cuaresmas), Jasmins parents and her surviving heirs, received from
the Overseas Workers Welfare Administration (OWWA) the following amounts: P50,000.00 for death
benefits; P50,000.00 for loss of life; P20,000.00 for funeral expenses; and P10,000.00 for medical
reimbursement.
On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the KSA,
Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and
exemplary damages for Jasmins death, Jasmins death was work-related, having occurred at the

employers premises; that under Jasmins contract with Becmen, she is entitled to iqama insurance
coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is
the sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied
by 35 years (or the remaining years of her productive life had death not supervened at age 25, assuming
that she lived and would have retired at age 60).
In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior
unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the
examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already
recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the
Cuaresmas are not entitled to iqama insurance because this refers to the issuance not insurance
of iqama, or residency/work permit required in the KSA. On the issue of moral and exemplary damages,
they claim that the Cuaresmas are not entitled to the same because they have not acted with fraud, nor
have they been in bad faith in handling Jasmins case.
While the case was pending, Becmen filed a manifestation and motion for substitution alleging that
Rajab terminated their agency relationship and had appointed White Falcon Services, Inc. (White
Falcon) as its new recruitment agent in the Philippines. Thus, White Falcon was impleaded as
respondent as well, and it adopted and reiterated Becmens arguments in the position paper it
subsequently filed.
ISSUES:
(1.) whether the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the
death of their daughter Jasmin.
(2) whether or not Jasmins death be considered as work-connected and thus compensable even while
she was not on duty;
HELD: Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and observe honesty and good
faith. Article 21 of the Code states that any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall compensate the latter for the
damage. And, lastly, Article 24 requires that in all contractual, property or other relations, when one of
the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection.
Clearly, Rajab, Becmen and White Falcons acts and omissions are against public policy because they
undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full
protection under the law. They set an awful example of how foreign employers and recruitment agencies
should treat and act with respect to their distressed employees and workers abroad. Their shabby and
callous treatment of Jasmins case; their uncaring attitude; their unjustified failure and refusal to assist in
the determination of the true circumstances surrounding her mysterious death, and instead finding
satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently
avoid pecuniary liability; placing their own corporate interests above of the welfare of their employees
all these are contrary to morals, good customs and public policy, and constitute taking advantage of the
poor employee and her familys ignorance, helplessness, indigence and lack of power and resources to
seek the truth and obtain justice for the death of a loved one.
Giving in handily to the idea that Jasmin committed suicide, and adamantly insisting on it just to protect
Rajab and Becmens material interest despite evidence to the contrary is against the moral law and
runs contrary to the good custom of not denouncing ones fellowmen for alleged grave wrongdoings that
undermine their good name and honor.

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor
and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in
keeping with the basic public 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. This ruling is likewise rendered imperative by Article 17 of the Civil Code which
states that laws which have for their object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed
upon in a foreign country.
The relations between capital and labor are so impressed with public interest,and neither shall act
oppressively against the other, or impair the interest or convenience of the public. In case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer.
The grant of moral damages to the employee by reason of misconduct on the part of the employer is
sanctioned by Article 2219 (10) of the Civil Code, which allows recovery of such damages in actions
referred to in Article 21.

petitioner herein, who was able to help Libutans sister find work in Australia. Biacora thereafter called
petitioner Ritualo to set up a meeting.
On 1 May 2000, accompanied by his wife, Biacora went to the house of petitioner Ritualo and inquired
from her whether she could help him secure overseas employment in Australia. Petitioner Ritualo
answered in the affirmative, and to be convincing, brought out travel documents of several people she
was able to "help," who were then supposedly scheduled to leave for abroad pretty soon.13 Biacora was
then assured that:
[He could] leave for Australia [in a months time] if [he] will give [petitioner Ritualo] a total amount
of P160,000.00, and [his] salary would be US$700.00 per month as a farm worker.14
On the above-quoted representation on the same date, Biacora paid petitioner Ritualo the amount
of P40,000.00 as downpayment, with the balance to be completed before he left for Australia. Upon
receipt of the money, petitioner Ritualo issued Biacora a Cash Voucher 15 as evidence of said payment.
To complete their transaction, Biacora left her a copy of his Bio-data.16

Thus, in view of the foregoing, the Court holds that the Cuaresmas are entitled to moral damages, which
Becmen and White Falcon are jointly and solidarily liable to pay, together with exemplary damages for
wanton and oppressive behavior, and by way of example for the public good.

On 4 May 2000, Biacora again gave petitioner Ritualo P20,000.00 as additional payment, making the
total amount received by the latter P60,000.00. Again, petitioner Ritualo issued a Cash Voucher.17

On the second issue:

Subsequently, Biacora was informed by petitioner Ritualo that all he needed in securing an employment
in Australia was his Passport and an endorsement from the Representative of his district. Accompanied
by petitioner Ritualo and one Anita Seraspe, the assistant18 of the former, Biacora went to the Batasan
Pambansa to secure the necessary endorsement. Thereafter, all three went to the Australian Embassy
to apply for Biacoras working visa.

While the employers premises may be defined very broadly not only to include premises owned by it,
but also premises it leases, hires, supplies or uses, we are not prepared to rule that the dormitory
wherein Jasmin stayed should constitute employers premises as would allow a finding that death or
injury therein is considered to have been incurred or sustained in the course of or arose out of her
employment. There are certainly exceptions, but they do not appear to apply here. Moreover, a complete
determination would have to depend on the unique circumstances obtaining and the overall factual
environment of the case, which are here lacking.
WHEREFORE, Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and
Promotion, Inc., and their corporate directors and officers are found jointly and solidarily liable and
ORDERED to indemnify the heirs of Jasmin Cuaresma, spouses Simplicio and Mila Cuaresma, the
following amounts: (1) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as moral
damages; (2) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as exemplary
damages; (3)Attorneys fees equivalent to ten percent (10%) of the total monetary award.

On 1 June 2000, Biacora went to see petitioner Ritualo to follow up the date of his departure. Petitioner
Ritualo asked from Biacora another P20,000.00 and told the latter to be patient. As with the other
amounts given, proof of payment19 was similarly issued to acknowledge receipt thereof.
Several dates were set for Biacoras departure, but none pushed through. To top it all, his Australian Visa
application was denied by the Australian Embassy. Consequently, on 9 September 2000, Biacora
demanded from petitioner Ritualo the return of the P80,000.00. The latter promised to pay back the
money on the 13th of September 2000. None came.
Thereafter, Biacora filed the subject criminal complaints against petitioner Ritualo.

Carmen Ritualo v People of the Philippines

This case originated from two Informations, both dated 2 January 2001, which charged Ritualo with the
crimes of Illegal Recruitment defined and penalized by Republic Act No. 8042; and Estafa under Art.
315, par. 2(a) of the Revised Penal Code,
In 1993, Felix Biacora went to Saudi Arabia for overseas employment that was facilitated by one Cynthia
Libutan (Libutan) who worked for a recruitment agency.12 Several years after his return to the country,
Biacora accidentally met Libutan in Baclaran Church sometime in 2000. After they exchanged
pleasantries, the former signified to the latter his desire to seek another overseas employment. Libutan
then gave Biacora the name, address and contact number of her friend, one Carmen Ritualo, the

In two Certifications dated 23 October 200020 and 5 November 2003,21 respectively, both identified by
Belen Blones of the Licensing Division of the POEA, it was confirmed that "per available records of [its]
Office, CARMEN RITUALO, in her personal capacity is not licensed by this Administration to recruit
workers for overseas employment"22 ; and that "[a]ny recruitment activity undertaken by [her] is deemed
illegal."23
To rebut the foregoing evidence presented by the prosecution, the defense presented a diametrically
opposed version of the facts of the present case through the sole testimony of Ritualo.
In her testimony, Ritualo narrated that it was Libutan and Biacora who asked her to introduce them to a
certain Anita Seraspe, the person responsible for sending petitioner Ritualos own sister to

Australia;24 that she had no agreement with Biacora respecting the latters employment in Australia; that
any talk of money was made among Libutan, Biacora and Seraspe only; that she received a total
of P80,000.00 from Biacora, but that the same was merely entrusted to her because Libutan and Biacora
had just met Seraspe,25 and that she turned over all the payments to Seraspe who acknowledged receipt
of the same by writing on pieces of paper said acceptance; that she accompanied Biacora to Batasan
Pambansa at his request; that she did not earn any money out of her referral and introduction of Libutan
and Biacora to Seraspe; that even if she did not earn any money out of the subject transaction, she
returned P10,000.00 and P31,000.00, or a total of P41,000.00, to Biacora out of fear that the latter would
file charges against her; that she tried to find Seraspe, but the latter could not be found at her last known
address; and that she gave Biacora an additional P6,000.000 to obviate any more scandal befalling her
family.26
On 1 December 2004, after trial, the RTC found the evidence presented by the prosecution to be more
credible and logical than that presented by the defense and thus, convicted Ritualo for the crimes of
Simple Illegal Recruitment and Estafa, defined and penalized under the Migrant Workers and Overseas
Filipino Act of 1995 and the Revised Penal Code.
ISSUES:
I.

II.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING WITH

MODIFICATION THE DECISION OF THE REGIONAL TRIAL COURT DESPITE THE
FACT THAT THE EVIDENCE ON RECORD COULD NOT SUPPORT A CONVICTION;
and
ASSUMING ARGUENDO THAT THE PETITIONER IS CULPABLE, THE HONORABLE
COURT OF APPEALS ERRED IN MODIFYING THE DECISION OF THE REGIONAL
TRIAL COURT AS REGARDS THE TERM OF SENTENCE IN THE ILLEGAL
RECRUITMENT CASE.

HELD: Essentially, she argues that there "was no proof beyond reasonable doubt that x x x [she] gave
Biacora a distinct impression that she had the power or ability to send him abroad for work such that the
latter was convinced to part with his money."37 Petitioner Ritualo maintains that Biacora transacted with
Seraspe and not with her. Assuming for the sake of argument that she and Biacora had any agreement
with each other, petitioner Ritualo insisted that it was merely to facilitate the latters application for an
Australian Visa. Particularly, she pointed out that the prosecution failed to present other witnesses who
could have corroborated the claim of Biacora that she (Ritualo) promised him employment abroad. Anent
the penalty imposed by the courts, petitioner disputed the appellate courts reasoning and claimed that
the same was improper in view of the ruling of this Court in People v. Gallardo, 38 in which therein
respondent was also convicted of Simple Illegal Recruitment.
The Office of the Solicitor General, for the People of the Philippines, on the other hand, asserted that the
findings of the Court of Appeals were supported by the records of the case, i.e., "Biacora was consistent
in his testimony that it was petitioner who illegally recruited him for work as a farmhand in Australia."
Thus, "[a]s against the positive and categorical testimony of the private complainant (Biacora),
petitioners denial cannot prevail."
We find no merit in the petition.
Having weighed the evidence for the contending parties, there is no cogent reason to reverse the
findings and conclusion of the RTC as affirmed by the Court of Appeals.

The prosecution established, through Belen Blones of the Licensing Branch of the POEA, who identified
and confirmed the two Certifications issued by the POEA Licensing Branch, that "per available records of
[its] Office, CARMEN RITUALO, in her personal capacity is not licensed by this Administration to recruit
workers for overseas employment."40
As to the second element, it must be shown that the accused gave the private complainant the distinct
impression that he/she had the power or ability to send the private complainant abroad for work, such
that the latter was convinced to part with his/her money in order to be employed. 41 Thus, to be engaged
in illegal recruitment, it is plain that there must at least be a promise or an offer of employment from the
person posing as a recruiter whether locally or abroad.42 In the case at bar, the second element is
similarly present. As testified to by Biacora, petitioner Ritualo professed to have the ability to send him
overseas to be employed as a farm worker in Australia with a monthly salary of US$700.00.43 To further
wet Biacoras appetite, petitioner Ritualo even showed him purported travel documents of other people
about to depart, whose overseas employment she supposedly facilitated. That petitioner Ritualo
personally assisted Biacora in the completion of the alleged requirements, i.e., securing a Letter of
Request and Guarantee from the Representative of his Congressional District in Batangas to ensure the
approval of Biacoras application for an Australian Visa, even accompanying Biacora to the Australian
Embassy, all clearly point to her efforts to convince Biacora that she (petitioner Ritualo) had, indeed, the
ability and influence to make Biacoras dream of overseas employment come true.
The claim of petitioner Ritualo that it was Anita Seraspe who was really the recruiter and the one who
profited from the subject illegal transaction holds no water. Petitioner Ritualos act of receiving payment
from Biacora and issuing personal receipts therefor; of personally assisting Biacora to complete the
"necessary" documents; of failing to present evidence to corroborate her testimony despite several
opportunities given her by the trial court; of petitioner Ritualo having been positively identified as the
person who transacted with Biacora and promised the latter an overseas employment and who
personally received money from Biacora, all unhesitatingly point to petitioner Ritualo as the culprit.
Petitioner Ritualo next tried to impress upon this Court that she received nary a centavo from the subject
illegal transaction; therefore, she should not be held liable.
We reject this outright. In the first place, it has been abundantly shown that she really received the
monies from Biacora. Secondly, even without consideration for her services, she still engaged in
recruitment activities, since it was satisfactorily shown that she promised overseas employment to
Biacora. And, more importantly, Sec. 6 of Republic Act No. 8042 does not require that the illegal
recruitment be done for profit.
Petitioner Ritualo boldly but vainly tried to inject reasonable doubt by complaining that the RTC and the
Court of Appeals affirmed her conviction despite failure of the prosecution to present other vital witness,
i.e., Biacoras wife, who accompanied her husband to the house of petitioner Ritualo and, hence,
witnessed what happened on the first meeting between the latter and Biacora. Non-presentation of said
witness, according to petitioner Ritualo, raises the presumption that her testimony, if presented, would be
adverse to the prosecution.
The prosecution is entitled to conduct its own case and to decide what witnesses to call to support its
charges.48The defense posture that the non-presentation of the wife of Biacora constitutes suppression
of evidence favorable to petitioner Ritualo is fallacious. In fact, the same line of reasoning can be used
against petitioner Ritualo. If the defense felt that the testimony of Biacoras wife would support her
defense, what she could and should have done was to call her (Biacoras wife) to the stand as her own
witness. One of the constitutional rights of the accused is "to have compulsory process to secure the

attendance of witnesses and the production of evidence in his behalf." And, in the same vein, since
petitioner Ritualo is setting the cloak of liability on Seraspes shoulder, she (petitioner Ritualo) could and
should have had the former subpoenaed as well.

On the other hand, pending resolution of NLRC Case No. RAB-IV-10-4560-92-L, respondent filed with
Regional Arbitration Branch No. IV of the NLRC a petition to declare as illegal a strike staged by
petitioner in January 1994.

As held by this Court, the adverse presumption of suppression of evidence does not, moreover, apply
where the evidence suppressed is merely corroborative or cumulative in nature.49 If presented, Biacoras
wife would merely corroborate Biacoras account which, by itself, already detailed what occurred on the
day of the parties first meeting at the house of petitioner Ritualo. Hence, the prosecution committed no
fatal error in dispensing with the testimony of Biacoras wife.

Subsequently, these three cases were consolidated. The case for money claims was originally filed by
petitioner with the DOLE.

Finally, Biacora, the private complainant in this case, did not harbor any ill motive to testify falsely
against petitioner Ritualo. The latter failed to show any animosity or ill feeling on the part of Biacora that
could have motivated him to falsely accuse her of the crimes charged. It would be against human nature
and experience for strangers to conspire and accuse another stranger of a most serious crime just to
mollify their hurt feelings.50

ISSUEs:

The totality of the evidence in the case at bar, when scrutinized and taken together, leads to no other
conclusion than that petitioner Ritualo engaged in recruiting and promising overseas employment to
Felix Biacora under the above-quoted Sec. 6 of Republic Act No. 8042 vis--vis Article 13(b) of the Labor
Code. Hence, she cannot now feign ignorance of the consequences of her unlawful acts.
(1) In Criminal Case No. 01-0076, petitioner Carmen Ritualo is found GUILTY beyond
reasonable doubt of the crime of Simple Illegal Recruitment, and is sentenced to suffer an
indeterminate prison term of eight (8) years and one (1) day as minimum, to twelve (12)
years, as maximum, and to pay a fine of P500,000.00; and
(2) In Criminal Case No. 01-0077, petitioner Carmen Ritualo is also found GUILTY beyond
reasonable doubt of the crime of Estafa and sentenced to suffer an indeterminate prison term
of four (4) years and two (2) months of prision correccional, as minimum, to eleven (11) years
and eight (8) months and twenty-one (21) days of prision mayor, as maximum.
Petitioner Carmen R. Ritualo is similarly ORDERED to indemnify Felix E. Biacora the amount
of P21,000.00. Costs de oficio.
Letran Calamba Faculty v. NLRC | GR No. 156225 | 29 January 2008
Austria-Martinez, J
FACTS: In 1992, the Letran Calamba Faculty and Employees Association filed with the NLRC a
complaint against Colegio de San Juan de Letran, Calamba for collection of various monetary claims
due to its members. In 1994, the Association held a strike.
On January 29, 1993, respondent filed its Position Paper denying all the allegations of petitioner.
On March 10, 1993, petitioner filed its Reply.
Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the
respondent for money claims with Regional Office No. IV of the Department of Labor and Employment
(DOLE).

The Labor Arbiter dismissed the Associations money claims, and also dismissed Letrans petition to
declare the strike illegal. The NLRC affirmed the Labor Arbiter on appeal. The CA also affirmed the
NLRC.

1.

W/N the CA can review the factual findings and legal conclusions of the NLRC in a special
civil action for certiorari.

2.

W/N a teachers overload pay should be considered in the computation of his or her 13th
month pay.

HELD: NO. The Court finds no error in the ruling of the CA that since nowhere in the petition is there any
acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without
or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the
evaluation of evidence which supports the labor tribunals findings of fact.
NO. Overload pay should be excluded in the computation of the 13th month pay of the Associations
members. The peculiarity of an overload lies in the fact that it may be performed within the normal eighthour working day. This is the only reason why the DOLE, in its explanatory bulletin, finds it proper to
include a teachers overload pay in the determination of his or her 13th month pay. However, the DOLE
loses sight of the fact that even if it is performed within the normal eight-hour working day, an overload is
still an additional or extra teaching work which is performed after the regular teaching load has been
completed. Hence, any pay given as compensation for such additional work should be considered as
extra and not deemed as part of the regular or basic salary
RATIONALE: The appellate courts jurisdiction to review a decision of the NLRC in a petition for
certiorari is confined to issues of jurisdiction or grave abuse of discretion. An extraordinary remedy, a
petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the
writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. The writ of certiorari does not include correction of
the NLRCs evaluation of the evidence or of its factual findings. Such findings are generally accorded not
only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal
acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order
that the extraordinary writ of certiorari will lie.
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the
Supreme Court, unless patently erroneous.
The Supreme Court is not a trier of facts, and this applies with greater force in labor cases. Findings of
fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality.

Basic wage means all remuneration or earnings paid by an employer to a worker for services rendered
on normal working days and hours but does not include cost of living allowances, 13th month pay or
other monetary benefits which are not considered as part of or integrated into the regular salary of the
workers.
Overload vs. Overtime: Overtime work is work rendered in excess of normal working hours of eight in a
day. Overload work is additional work after completing the regular workload, may be performed either
within or outside eight hours in a day, and may or may not be considered overtime work.
What are deemed not part of the basic salary:
a. Cost of living allowances granted pursuant to PD 525 and LOI 174;
b. Profit sharing payments;
c. All allowances and monetary benefits which are not considered or integrated as part of the
regular basic salary of the employee at the time of the promulgation of the Decree;
Overtime pay, earnings, and other remunerations as provided for by PD 851s IRR.
ROMEO LAGATIC, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CITYLAND
DEVELOPMENT CORPORATION, STEPHEN ROXAS, JESUS GO, GRACE LIUSON, and ANDREW
LIUSON, respondents | G.R. No. 121004 | January 28, 1998 | J. Romero
NATURE
Petition by certiorari
FACTS
- Petitioner Romeo Lagatic was employed by Cityland as a marketing specialist. He was tasked with
soliciting sales for the company, with the corresponding duties of accepting call-ins, referrals, and
making client calls and cold calls. Cold calls refer to the practice of prospecting for clients through the
telephone directory.
- In order to assess cold calls made by the sales staff, as well as to determine the results thereof,
Cityland requires the submission of daily progress reports on the same.
- On October 22, 1991, Cityland issued a written reprimand to petitioner for his failure to submit cold call
reports for certain days of September & October 1991. This notwithstanding, petitioner again failed to
submit cold call reports for September & October 1992. Petitioner was required to explain his inaction,
with a warning that further non-compliance would result in his termination from the company. In a reply,
petitioner claimed that the same was an honest omission brought about by his concentration on other
aspects of his job. Cityland found said excuse inadequate and suspended him for three days, with a
similar warning.
- Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call
reports for February 1993. He was verbally reminded to submit the same and was even given up to
February 17, 1993 to do so. Instead of complying with said directive, petitioner wrote a note, TO HELL
WITH COLD CALLS! WHO CARES? and exhibited the same to his co-employees.
- Petitioner received a memorandum requiring him to explain why Cityland should not make good its
previous warning for his failure to submit cold call reports, as well as for issuing the written statement
aforementioned. Petitioner sent a letter-reply alleging that his failure to submit cold call reports should
not be deemed as gross insubordination. He denied any knowledge of the damaging statement, TO
HELL WITH COLD CALLS!
- Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him.
Petitioner filed a complaint against Cityland for illegal dismissal, illegal deduction, underpayment,
overtime and rest day pay, damages and attorneys fees.
- The labor arbiter dismissed the petition for lack of merit. On appeal, the same was affirmed by the
NLRC; hence the present recourse.

ISSUE
1. WON respondent NLRC gravely abused its discretion in not finding that petitioner was illegally
dismissed
2. WON respondent NLRC gravely abused its discretion in ruling that petitioner is not entitled to salary
differentials, backwages, separation pay, overtime pay, rest day pay, unpaid commissions, moral and
exemplary damages and attorneys fees
HELD
1. NO
Ratio Except as provided for, or limited by, special laws, an employer is free to regulate, according to
his discretion and judgment, all aspects of employment. Employers may, thus, make reasonable rules
and regulations for the government of their employees, and when employees, with knowledge of an
established rule, enter the service, the rule becomes a part of the contract of employment. It is also
generally recognized that company policies and regulations, unless shown to be grossly oppressive or
contrary to law, are generally valid and binding on the parties and must be complied with.
Reasoning
- Said company policy of requiring cold calls and the concomitant reports thereon is clearly reasonable
and lawful, sufficiently known to petitioner, and in connection with the duties which he had been engaged
to discharge. There is, thus, just cause for his dismissal.
- Based on the foregoing, we find petitioner guilty of willful disobedience. Willful disobedience requires
the concurrence of at least two requisites: the employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and perverse attitude; and 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.
- Well settled is the dictum that the twin requirements of notice and hearing constitute the elements of
due process in the dismissal of employees. Thus, the employer must furnish the employee with two
written notices before the termination of employment can be effected. The first apprises the employee of
the particular acts or omissions for which his dismissal is sought; the second informs him of the
employers decision to dismiss him.
- The chronology of events clearly shows that petitioner was served with the required written notices.
- The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing be conducted. Petitioner had an opportunity to be heard as he
submitted a letter-reply to the charge. He, however, adduced no other evidence on his behalf. In fact, he
admitted his failure to submit cold call reports, praying that the same be not considered as gross
insubordination.
- Denials are weak forms of defenses, particularly when they are not substantiated by clear and
convincing evidence. Given the foregoing, we hold that petitioners constitutional right to due process
has not been violated.
2. NO
- There is no law which requires employers to pay commissions, and when they do so, there is no law
which prescribes a method for computing commissions. The determination of the amount of
commissions is the result of collective bargaining negotiations, individual employment contracts or
established employer practice. Since the formula for the computation of commissions was presented to
and accepted by petitioner, such prescribed formula is in order.
- Petitioner failed to show his entitlement to overtime and rest day pay due, to the lack of sufficient
evidence as to the number of days and hours when he rendered overtime and rest day work. Entitlement
to overtime pay must first be established by proof that said overtime work was actually performed, before
an employee may avail of said benefit.
- Lastly, with the finding that petitioners dismissal was for a just and valid cause, his claims for moral
and exemplary damages, as well as attorneys fees, must fail.
Disposition AFFIRMED.

G.R. No. 122240. November 18, 1999 | Legahi v. NLRC | KAPUNAN, J.:
Facts: In a complaint filed with the Philippine Overseas Employment Administration (POEA), Cristonico
B. Legahi alleged that he was hired as Chief Cook aboard M/V Federal Nord by the Northsouth Ship
Management (PTE), Ltd., Singapore and represented by its local agent United Philippine Lines, Inc.
(UPLI).
The contract of employment stipulated that his term of employment was for ten months beginning
October 9, 1992 with a basic monthly salary of US$450.00 with 44 hours weekly as minimum number of
hours worked with a fixed overtime pay (OT) of $185.00 and three (3) days leave with pay every month.
Sometime in November, 1992 petitioner was asked by the Shipmaster to prepare a victualling cost
statement for the month of October, 1992. After learning that such preparation involves mathematical
skills, as it would require estimation of food cost, value of stocks, etc. he intimated that he did not know
how to do such work as it was not part of the duties of a chief cook. He was told that it was not a difficult
job and that he only needed to copy the previous forms. After much reluctance, petitioner nonetheless
prepared the statement in deference to the Shipmaster.
In December, petitioner was requested again to prepare the victualling cost statement for the month of
November. He obeyed since he was afraid he would earn the ire of his superiors if he refused.
Sometime in January, 1993, the Shipmaster asked petitioner to do the victualling cost statement for
December which he complied. On January 6, 1993, the Shipmaster requested the petitioner to prepare a
corrected victualling statement for the same month of December. Petitioner asked the Shipmaster if he
could defer the correction as he was busy doing his chores. The response certainly did not sit well with
the Shipmaster so he was called for a meeting which petitioner did not attend.
On January 14, 1993, a committee was formed headed by the Shipmaster himself with the Chief Officer,
Chief Engineer and Bosun as members.
In this meeting, the Shipmaster read to him the offenses he committed on board. He was asked to
answer the charges but petitioner opted to remain silent. Thereafter, petitioner was informed that he was
dismissed.
The next day, petitioner was repatriated to the Philippine through the assistance of the Philippine
Consulate.
Upon arrival or on February 16, 1993, petitioner filed with the POEA a complaint for illegal dismissal
against private respondents. He sought the payment of his salary corresponding to the unexpired portion
of his contract, unpaid overtime pay, leave pay, salary differential and damages.
In answer to the complaint, private respondent stated that prior to petitioners deployment, he was asked
if he knew how to prepare the victualling cost statement which he answered yes. On January 6, 1993,
petitioner was asked to prepare the statement. He refused and even arrogantly replied that the
Shipmaster should let some other officer do the job since he only came to the ship to cook. On January
13, 1993, petitioner left the vessel without permission and did not perform his job that day. On January
14, 1993, a committee was formed to hear the case of petitioner. Petitioner remained silent so the

committee decided to send him home. Contrary to petitioners allegation, it was not the Philippine
Consulate, but the shipowners agent, Navios Ship Agencies, which arranged his repatriation. The
respondent noticed petitioner to be very homesick and surmised that he deliberately committed the
offenses just so he could be sent home. Upon his return, petitioner did not even report to the local
representative UPLI implying that he had no cause of action against them. Petitioner was terminated for
just cause and must, therefore, reimburse private respondent for the cost of repatriation.
On April 6, 1994, the POEA promulgated a decision finding that there was just cause for petitioners
dismissal.
On appeal to the National Labor Relations Commission (NLRC), the Commission affirmed in toto the
POEA decision.
Issue: The validity of petitioners dismissal from his employment
Held: To constitute a valid dismissal from employment, two (2) requisites must concur: (a) the dismissal
must be for any of the causes provided in Article 282 of the Labor Code, and (b) the employee must be
accorded due process, the elements of which are notice and the opportunity to be heard and to defend
himself.
Procedural due process requires that the employee must be apprised of the charges against him. He
must be given reasonable time to answer the charges, allowed ample opportunity to be heard and
defend himself, and assisted by a representative if the employee so desires. Two written notices are
required before termination of employment can be legally effected. They are: (1) 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; not to mention
the opportunity to answer and rebut the charges against him, in between such notices.
In the case at bar, the evidence on record belies private respondents claim that petitioner was afforded
due process. It is rather apparent that as early as January 6, 1993, the employer had already decided to
dismiss petitioner and sent home for his alleged refusal to obey the orders of his superiors. On January
14, 1993, the committee read to petitioner his alleged offenses which were his refusal to take orders
from his superior on January 6 and his leaving the vessel without permission on January 13. When
petitioner remained silent, the committee informed him that he was dismissed. He was sent home that
same day. Petitioner was not given reasonable time to answer the charges hurled against him or to
defend himself. The notice apprising him of the charges and the notice of dismissal were done in one
morning all in the January 14 committee hearing. The submission that the entry in the logbook made on
January 6 which stated that for petitioners refusal to take orders from the master of the ship he will be
sent home in first possible port was sufficient compliance of the first notice requirement is not well-taken.
This is not the kind of notice that satisfies due process contemplated by law.
On the substantive issue, we find no just cause for petitioners dismissal. According to the POEA,
petitioner was found guilty for insubordination for his refusal to obey the order of the master to prepare
the victual statement on January 6, 1993,[6 which was presumably for the month of January.
The NLRC, which simply adopted in toto the findings of the POEA, concluded that complainant
refused albeit in a bad manner the request of the Shipmaster to prepare a correct victualling cost
statement for the month of December. Based on the POEA findings, petitioner was dismissed because of

his refusal to prepare the victualling statement for the month of January, 1993. The facts as found by the
POEA are all muddled up.

payment of rest days, sick and vacation leaves, night shift differentials, subsistence allowance, and fixed
overtime pay; actual, moral and exemplary damages; and litigation costs and attorney's fees.

On the other hand, the NLRCs conclusion that petitioner refused to correct the victualling statement for
the month of December as ordered to, was also not sufficient basis for his dismissal. There is no doubt
that petitioner had complied with his superiors orders to prepare the statement for December. It was only
the correction of the December statement that he requested to defer which the Shipmaster took as a
downright refusal to make and considered such act as a serious and gross insubordination.

Dacut and Tungala claimed that they resigned after Reynalyn G. Orlina, the secretary of the Personnel
Manager, told them that they will be paid their separation pay if they voluntarily resigned. They also
resigned because the vessel has become unseaworthy after the company refused to have it repaired
properly. Meanwhile, Cajote alleged that he resigned because the company hired a replacement while
he was still on leave. When he returned, the Operations Manager told him that he will be paid his
separation pay if he voluntarily resigned; otherwise, he would be charged for being AWOL. On the other
hand, Zubista claimed that his wage was below the minimum set by the Regional Tripartite Wages and
Productivity Board. Finally, petitioners alleged that they were not paid their rest days, sick and vacation
leaves, night shift differentials, subsistence allowance, and fixed overtime pay.

For willful disobedience to be considered as just cause for dismissal, the employees conduct must be
willful or intentional, the willfulness being characterized by a wrongful and perverse attitude and the
order violated must have been reasonable, lawful, made known to the employee and must pertain to the
duties which he has been engaged to discharge.
In the instant case, it was actually not petitioners duty to prepare the victualling statement. The
allegation that this was part of his duty as chief cook and the fact that he was aware of such duty when
he was interviewed for the post is only self-serving and without basis. The employment contract does not
mention anything that this was part of his duty as chief cook. Even assuming that petitioner refused to
obey the order of his superior to prepare a corrected victualling cost statement for December, although
he maintained that he just asked for time to do it, as he was then busy performing his usual duty, which
we believe to be the case, his refusal cannot be considered as one being characterized by a wrongful
and perverse attitude. From the beginning, petitioner already intimated that he did not know how to
accomplish the victual cost statement since it entailed some mathematical skills which he admittedly did
not have.
Petitioners dismissal without a valid cause constitute a breach of contract. Consequently, he should only
be paid the unexpired portion of his employment contract. In the same vein, the claim for the days leave
pay for the unexpired portion of the contract is unwarranted since the same is given during the actual
service of the seamen.
The claim for moral and exemplary damages are deleted for lack of sufficient basis. Considering that
petitioner was forced to litigate, we hold that the amount of P10,000.00 is a reasonable and fair
compensation for the legal services rendered by counsel. The petition is GRANTED.
G.R. No. 169434, March 28, 2008 | Dacut v. CA | QUISUMBING, J.
Facts: Petitioners Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala, Lowel Z. Zubista, and
Orlando P. Taboy were crew members of the LCT "BASILISA", an inter-island cargo vessel owned by
private respondent Sta. Clara International Transport and Equipment Corporation.
On November 29, 1998, Dacut discovered a hole in the vessel's engine room. The company had the
hole patched up with a piece of iron and cement. Despite the repair, Dacut and Tungala resigned in July
1999 due to the vessel's alleged unseaworthiness.
On the other hand, Cajote went on leave from April 12-28, 1999 to undergo eye treatment. Since then,
he has incurred several unauthorized absences. Fearing that he will be charged as Absent Without
Leave (AWOL), Cajote resigned in June 1999.
On September 22, 1999, petitioners filed a complaint for constructive dismissal amounting to illegal
dismissal (except for Zubista and Taboy); underpayment of wages, special and regular holidays; non-

After the Labor Arbiter declared the case submitted for decision, the company filed its reply to petitioners'
position paper. It countered that Dacut and Tungala voluntarily resigned due to the vessel's alleged
unseaworthiness while Cajote resigned to avoid being charged as AWOL. It also claimed that petitioners'
monetary claims had no basis.
On August 2, 2000, the Labor Arbiter dismissed petitioners' complaint. The Labor Arbiter ruled that there
was sufficient evidence to prove that the vessel was seaworthy. The Labor Arbiter noted that except for
the holiday pay, accrued sick and vacation leaves, and wage differential, petitioners failed to substantiate
their monetary claims.
Petitioners appealed to the NLRC alleging that the Labor Arbiter erred: (1) in entertaining the company's
reply after the case had been submitted for decision; (2) in not finding that Dacut, Cajote and Tungala
were constructively dismissed; (3) in not finding that petitioners were entitled to their monetary claims;
and (4) in not finding that petitioners were entitled to actual, moral and exemplary damages as well as
litigation costs and attorney's fees. At this point, Dacut and Tungala further contended that they resigned
because they were being harassed by the company due to a complaint for violation of labor standards
they had filed earlier against it.
On May 20, 2002, the NLRC affirmed the Labor Arbiter's decision.
Issues: WON petitioners voluntarily resigned from employment and WON they are entitled to money
claims
Held: The fact that the Labor Arbiter admitted the company's reply after the case had been submitted for
decision did not make the proceedings before him irregular. Petitioners were given adequate opportunity
in the NLRC and the Court of Appeals to rebut the company's evidence against them.
A petition for review on certiorari shall only raise questions of law considering that the findings of fact of
the Court of Appeals are, as a general rule, conclusive upon and binding on this Court. This doctrine
applies with greater force in labor cases where the factual findings of the labor tribunals are affirmed by
the Court of Appeals. The reason is that labor officials are deemed to have acquired expertise in matters
within their jurisdiction and therefore, their factual findings are generally accorded not only respect but
also finality.
Here, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in finding that the primary
reason why Dacut and Tungala resigned was the vessel's alleged unseaworthiness as borne by their
pleadings before the Labor Arbiter. Dacut and Tungala never mentioned that they resigned because they
were being harassed by the company due to a complaint for violation of labor standards they had filed
against it. This ground was alleged only before the NLRC and not a single act or incident was cited to

prove this point. Even the alleged assurance by Orlina, that they would be given separation pay, served
merely as a secondary reason why they resigned. In fact, we doubt that such assurance was even made
considering that as secretary of the Personnel Manager, it was not shown under what authority Orlina
acted when she told Dacut and Tungala to resign.
Likewise deserving scant consideration is Cajote's claim that the Operations Manager told him that he
will be paid separation pay if he resigned voluntarily; otherwise, he would be charged as AWOL.
Although the company already hired a replacement, Cajote admitted that he was still employed at the
time he resigned. In fact, the company tried to give him another assignment but he refused it. Thus, the
only reason why Cajote resigned was his long unauthorized absences which would have warranted his
dismissal in any case.
We find no reason to disturb all these factual findings because they are amply supported by substantial
evidence.
Apropos the monetary claims, there is insufficient evidence to prove petitioners' entitlement thereto. As
crew members, petitioners were required to stay on board the vessel by the very nature of their duties,
and it is for this reason that, in addition to their regular compensation, they are given free living quarters
and subsistence allowances when required to be on board. It could not have been the purpose of our
law to require their employers to give them overtime pay or night shift differential, even when they are
not actually working. Thus, the correct criterion in determining whether they are entitled to overtime pay
or night shift differential is not whether they were on board and cannot leave ship beyond the regular
eight working hours a day, but whether they actually rendered service in excess of said number of hours.
In this case, petitioners failed to submit sufficient proof that overtime and night shift work were actually
performed to entitle them to the corresponding pay. Petition is denied.
SAN MIGUEL CORPORATION v. CAROLINE C. DEL ROSARIO | G.R. Nos. 168194 & 168603 | J.
Ynares-Santiago
Facts: Respondent was hired by the petitioner as an account specialist, allegedly as a probationary
employee, but was dismissed because of a reconstruction scheme and over employment in the
company. Labor arbiter (her employment exceeded six months and holding that she was illegally
dismissed as there was no authorized cause to terminate her employment. The Arbiter further ruled that
petitioner's failure to rebut respondent's claim that it hired additional employees after she was dismissed
belie the company's alleged redundancy), NLRC (respondent is a regular employee whose termination
from employment was valid but ineffectual for petitioner's failure to comply with the 30-day notice to the
employee and the Department of Labor and Employment (DOLE), ) and CA ruled that she is a regular
employee and was illegally dismissed thus entitled to payment for damages and back wages.
Issues: (1) Whether or not respondent is a regular employee of petitioner; and (2) whether or not
respondent was illegally dismissed; and (3) if so, whether or not respondent is entitled to any monetary
benefit.
Held:

In termination cases, like the present controversy, the burden of proving the circumstances
that would justify the employee's dismissal rests with the employer.[18] The best proof that
petitioner should have presented to prove the probationary status of respondent is her
employment contract.
Having ruled that respondent is a regular employee, her termination from employment must
be for a just or authorized cause, otherwise, her dismissal would be illegal.

The Court finds that petitioner was not able to discharge the burden of proving that the dismissal of
respondent was valid.
ARTICLE 279. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.
(Emphasis, supplied)
Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to
payment of full back wages, computed from the time her compensation was actually withheld from her
on March 13, 2001, up to her actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly
paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor
Code, employees who are uniformly paid by the month, irrespective of the number of working days
therein, shall be presumed to be paid for all the days in the month whether worked or not. Hence, the
Court of Appeals correctly deleted said award.
G.R. No. 144664 | March 15, 2004 | ASIAN TRANSMISSION CORPORATION, petitioner, vs. The Hon.
COURT OF APPEALS | J. Carpio-Morales
Facts: The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B.
Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that
employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which, apart
from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a
legal holiday]. Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy
Thursday and Araw ng Kagitingan.
Petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only 100% of their
basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested,
saying:
ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall
be paid a compensation equivalent to twice his regular rate; and
(c) As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good
Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and thirtieth of December and the day designated by law for
holding a general election, which was amended by Executive Order No. 203 issued on June
30, 1987
The Court of Appeals upheld the findings of the Voluntary Arbitrator, holding that the Collective
Bargaining Agreement (CBA) between petitioner and BATLU, the law governing the relations between
them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on whatever
date they may fall in any calendar year, as paid legal holidays during the effectivity of the CBA and that

"[t]here is no condition, qualification or exception for any variance from the clear intent that all holidays
shall be compensated."
Issue: WON the CA committed grave abuse of discretion in its decision

if a regular week day is declared a holiday, the school calendar is extended to compensate for that day.
Thus petitioner argues that the advent of any of the legal holidays within the semester will not affect the
faculty's salary because this day is not included in their schedule while the calendar is extended to
compensate for special holidays.

Held: Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State
shall afford protection to labor.7 Its purpose is not merely "to prevent diminution of the monthly income of
the workers on account of work interruptions. In other words, although the worker is forced to take a rest,
he earns what he should earn, that is, his holiday pay."

Regular holidays specified as such by law are known to both school and faculty members as no class
days;" certainly the latter do not expect payment for said unworked days, and this was clearly in their
minds when they entered into the teaching contracts.

It is also intended to enable the worker to participate in the national celebrations held during the days
identified as with great historical and cultural significance.

On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to
payment on Special Public Holidays.

As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid
regular holidays. The provision is mandatory, regardless of whether an employee is paid on a monthly or
daily basis.
Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable
under the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two
holidays fall on the same date should not operate to reduce to nine the ten holiday pay benefits a worker
is entitled to receive.
In Wellington, the issue was whether monthly-paid employees are entitled to an additional days pay if a
holiday falls on a Sunday. This Court, in answering the issue in the negative, observed that in fixing the
monthly salary of its employees, Wellington took into account "every working day of the year including
the holidays specified by law and excluding only Sunday." In the instant case, the issue is whether dailypaid employees are entitled to be paid for two regular holidays which fall on the same day.
Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its
provisions, including its implementing rules and regulations, shall be resolved in favor of labor.
G.R. No. L-65482 December 1, 1987 | JOSE RIZAL COLLEGE, petitioner vs. NATIONAL LABOR
RELATIONS COMMISSION AND NATIONAL ALLIANCE OF TEACHERS/OFFICE WORKERS,
respondents | J. Paras
Facts: Petitioner is a non-stock, non-profit educational institution duly organized and existing under the
laws of the Philippines. It has three groups of employees categorized as follows: (a) personnel on
monthly basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual
number of working days in a month without deduction for holidays; (b) personnel on daily basis who are
paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are
paid on the basis of student contract hour. Before the start of the semester they sign contracts with the
college undertaking to meet their classes as per schedule. Unable to receive their corresponding holiday
pay, as claimed, from 1975 to 1977.
Issue: The sole issue in this case is whether or not the school faculty who according to their contracts
are paid per lecture hour are entitled to unworked holiday pay.
Held: Petitioner maintains the position among others, that it is not covered by Book V of the Labor Code
on Labor Relations considering that it is a non- profit institution and that its hourly paid faculty members
are paid on a "contract" basis because they are required to hold classes for a particular number of hours.

Declared purpose of the holiday pay which is the prevention of diminution of the monthly income of the
employees on account of work interruptions is defeated when a regular class day is cancelled on
account of a special public holiday and class hours are held on another working day to make up for time
lost in the school calendar.
PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission is hereby
set aside, and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether
the same be during the regular semesters of the school year or during semestral, Christmas, or Holy
Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as
special holidays or for some reason classes are called off or shortened for the hours they are supposed
to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty
members shall likewise be paid their hourly rates should they teach during said extensions.
JOSE RIZAL COLLEGE V NLRC | 156 SCRA 27 | PARAS; 1987
NATURE
- Petition for certiorari with preliminary injunction to review the decision of the National Labor Relations
Commission
FACTS
- Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws of
the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly basis,
who receive their monthly salary uniformly throughout the year, irrespective of the actual number of
working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on
actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the
basis of student contract hour. Before the start of the semester they sign contracts with the college
undertaking to meet their classes as per schedule.
- Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private respondent
National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of
Jose Rizal College filed with the Ministry of Labor a complaint against the college for said alleged nonpayment of holiday pay

- After the parties had submitted their respective position papers, the Labor Arbiter rendered a decision
on February 5, 1979:
1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the
month uniformly in a school year, irrespective of the number of working days in a month, without
deduction for holidays, are presumed to be already paid the 10 paid legal holidays and are no longer
entitled to separate payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled to
be paid the 10 unworked regular holidays according to the pertinent provisions of the Rules and
Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation per
student contract hour are not entitled to unworked regular holiday pay considering that these regular
holidays have been excluded in the programming of the student contact hours.
- On appeal, respondent National Labor Relations Commission in a decision promulgated on June 2,
1982, modified the decision appealed from, in the sense that teaching personnel paid by the hour are
declared to be entitled to holiday pay
ISSUE
WON the school faculty who according to their contracts are paid per lecture hour are entitled to
unworked holiday pay
HELD
NO (for regular holidays)/YES(for special holidays)
- Labor Arbiter sustains the view that said instructors and professors are not entitled to holiday pay, his
decision was modified by the National Labor Relations Commission holding the contrary. Petitioner
maintains the position among others, that it is not covered by Book V of the Labor Code on Labor
Relations considering that it is a non-profit institution and that its hourly paid faculty members are paid
on a "contract" basis because they are required to hold classes for a particular number of hours. In the
programming of these student contract hours, legal holidays are excluded and labelled in the schedule
as "no class day." On the other hand, if a regular week day is declared a holiday, the school calendar is
extended to compensate for that day. Thus petitioner argues that the advent of any of the legal holidays
within the semester will not affect the faculty's salary because this day is not included in their schedule
while the calendar is extended to compensate for special holidays. Thus the programmed number of
lecture hours is not diminished.
- The Solicitor General on the other hand, argues that under Article 94 of the Labor Code, holiday pay
applies to all employees except those in retail and service establishments. To deprive therefore
employees paid at an hourly rate of unworked holiday pay is contrary to the policy considerations
underlying such presidential enactment, apart from the constitutional mandate to grant greater rights to
labor. And under Article 94 of the Labor Code, the petitioner, although a nonprofit institution is under
obligation to give pay even on unworked regular holidays to hourly paid faculty members subject to the
terms and conditions provided for therein.
- The Court held that the aforementioned implementing rule is not justified by the provisions of the law
which after all is silent with respect to faculty members paid by the hour who because of their teaching
contracts are obliged to work and consent to be paid only for work actually done.
- On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to
payment on Special Public Holidays.
- It is readily apparent that the declared purpose of the holiday pay which is the prevention of diminution
of the monthly income of the employees on account of work interruptions is defeated when a regular
class day is cancelled on account of a special public holiday and class hours are held on another
working day to make up for time lost in the school calendar. Otherwise stated, the faculty member,
although forced to take a rest, does not earn what he should earn on that day. Be it noted that when a
special public holiday is declared, the faculty member paid by the hour is deprived of expected income,
and it does not matter that the school calendar is extended in view of the days or hours lost, for their

income that could be earned from other sources is lost during the extended days. Similarly, when
classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty
members must likewise be paid, whether or not extensions are ordered.
Disposition Decisions set aside. New decision rendered:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether
the same be during the regular semesters of the school year or during semestral, Christmas, or Holy
Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as
special holidays or for some reason classes are called off or shortened for the hours they are supposed
to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty
members shall likewise be paid their hourly rates should they teach during said extensions.
SAN MIGUEL V CA | 375 SCRA 311 | KAPUNAN; January 30, 2002
NATURE
Petition for a review of the decision of the Court of Appeals
FACTS
- 17 October 1992: the Department of Labor and Employment (DOLE), Iligan District Office, conducted
a routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City. In
the course of the inspection, it was discovered that there was underpayment of regular Muslim holiday
pay to its employees.
- SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. Alan M.
Macaraya, Director IV of DOLE Iligan District Office issued a compliance order directing SMC to
consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees
holiday pay within thirty (30) days from the receipt of the order.
ISSUES
1. WON CA erred in granting non-Muslim employees Muslim holiday pay
2. WON Macaraya and Espaol have jurisdiction in issuing compliance orders over said labor standard
case
HELD
1. NO
Ratio Wages and other emoluments granted by law to the working man are determined on the basis of
the criteria laid down by laws and certainly not on the basis of the workers faith or religion.
Reasoning
- Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No.
1083, otherwise known as the Code of Muslim Personal Laws. The aforementioned provisions should be
read in conjunction with Art. 94 of the Labor Code:
Art. 94. Right to holiday pay:
(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; x x x.
- There should be no distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays. Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that (t)he
provisions of this Code shall be applicable only to Muslims x x x. However, said article also declares
that x x x nothing herein shall be construed to operate to the prejudice of a non-Muslim.
1999 Handbook on Workers Statutory Benefits:

Considering that all private corporations, offices, agencies, and entities or establishments operating
within the designated Muslim provinces and cities are required to observe Muslim holidays, both Muslim
and Christians working within the Muslim areas may not report for work on the days designated by law
as Muslim holidays.
- As regards the allegation that the issue on Muslim holiday pay was already resolved in Napoleon E.
Fernan vs. San Miguel Corporation Beer Division and Leopoldo Zaldarriaga, the Court notes that the
case was primarily for illegal dismissal and the claim for benefits was only incidental to the main case.
2. YES
- Regional Director Macaraya acted as the duly authorized representative of the Secretary of Labor and
Employment and it was within his power to issue the compliance order to SMC.
Reasoning
- Article 128. Visitorial and enforcement power.
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of the
inspection.
- Petitioner merely contends that its non-Muslim employees are not entitled to Muslim holiday pay. The
issue could be resolved even without documentary proofs. In any case, there was no indication that
Regional Director Macaraya failed to consider any documentary proof presented by SMC in the course
of the inspection.
Disposition The petition is dismissed.
WELLINGTON INVESTMENT V TRAJANO | 245 SCRA 561 | NARVASA; July 3, 1995
NATURE
Special Civil Action for Certiorari
FACTS
- A labor Enforcement Officer conducted a routine inspection of the Wellington Flour Mills, owned and
operated by Wellington Investment and Manufacturing Corporation, and reported the non-payment of
regular holidays falling on a Sunday for monthly-paid employees. A copy of the report was explained to
and received by Wellingtons personnel manager.
- Wellington sought reconsideration and argued that "the monthly salary of the company's monthlysalaried employees already includes holiday pay for all regular holidays and hence there is no legal
basis for the finding of alleged non-payment of regular holidays falling on a Sunday." In a position paper
subsequently submitted to the Regional Director, it asserted that it pays its monthly-paid employees a
fixed monthly compensation "using the 314 factor which undeniably covers and already includes
payment for all the working days in a month as well as all the 10 unworked regular holidays within a
year."
- July 28, 1992: the Regional Director ruled that "when a regular holiday falls on a Sunday, an extra or
additional working day is created and the employer has the obligation to pay the employees for the extra
day except the last Sunday of August since the payment for the said holiday is already included in the
314 factor," and accordingly directed Wellington to pay its employees compensation corresponding 4
extra working days.
- September 22: the Undersecretary affirmed the challenged order, holding that "the divisor being used
by Wellington does not reliably reflect the actual working days in a year," and consequently commanded
Wellington to pay its employees the "six additional working days resulting from regular holidays falling on
Sundays in 1988, 1989 and 1990." He said that whenever a regular holiday coincides with a Sunday, an
additional working day is created and left unpaid. In other words, while the said divisor may be utilized as
proof evidencing payment of 302 working days, 2 special days and the ten regular holidays in a calendar

year, the same does not cover or include payment of additional working days created as a result of some
regular holidays falling on Sundays.
ISSUE
WON a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an additional pay
aside from his usual holiday pay, whenever a regular holiday falls on a Sunday
HELD
NO
- Wellington simply deducts 51 Sundays from the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually
covers payment for 314 days of the year, including regular and special holidays, as well as days when
no work is done by reason of fortuitous cause, as above specified, or causes not attributable to the
employees.
- The monthly salary in Wellington for all 365 days of a year. The respondents' theory would make each
of the years in question, a year of 368 days. Pursuant to this theory, no employer opting to pay his
employees by the month would have any definite basis to determine the number of days in a year for
which compensation should be given to his work force.
- There is no provision of law requiring any employer to make such adjustments in the monthly salary
rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to the
legal provisions bearing on the point, otherwise to reckon a year at more than 365 days. What the law
requires of employers opting to pay by the month is to assure that "the monthly minimum wage shall not
be less than the statutory minimum wage multiplied by 365 days divided by twelve," and to pay that
salary "for all days in the month whether worked or not," and "irrespective of the number of working days
therein." That salary is due and payable regardless of the declaration of any special holiday in the entire
country or a particular place therein, or any fortuitous cause precluding work on any particular day or
days (such as transportation strikes, riots, or typhoons or other natural calamities), or cause not
imputable to the worker. The legal provisions governing monthly compensation are evidently intended
precisely to avoid re-computations and alterations in salary on account of the contingencies just
mentioned, which, by the way, are routinely made between employer and employees when the wages
are paid on daily basis.
Disposition The orders complained of, namely: that of the respondent Undersecretary dated September
22, 1993, and that of the Regional Director dated July 30, 1992, are NULLIFIED AND SET ASIDE, and
the proceeding against petitioner DISMISSED.
G.R. No. 114698 July 3, 1995, WELLINGTON INVESTMENT AND MANUFACTURING
CORPORATION, petitioner, vs.CRESENCIANO B. TRAJANO, Under-Secretary of Labor and
Employment, ELMER ABADILLA, and 34 others, respondents, (Holiday and Holiday Pays)
Facts:The case arose from a routine inspection conducted by a Labor Enforcement Officer on August 6,
1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner Wellington
Investment and Manufacturing Corporation (hereafter, simply Wellington). The officer thereafter drew up
a report, a copy of which was "explained to and received by" Wellington's personnel manager, in which
he set forth his finding of "non-payment of regular holidays falling on a Sunday for monthly-paid
employees."
Wellington sought reconsideration of the Labor Inspector's report, by letter dated August 10, 1991. It
argued that "the monthly salary of the company's monthly-salaried employees already includes holiday
pay for all regular holidays . . . (and hence) there is no legal basis for the finding of alleged non-payment
of regular holidays falling on a Sunday."

It expounded on this thesis in a position paper subsequently submitted to the Regional Director,
asserting that it pays its monthly-paid employees a fixed monthly compensation "using the 314 factor
which undeniably covers and already includes payment for all the working days in a month as well as all
the 10 unworked regular holidays within a year."

MHR alleged business losses as the reason for not reinstating the respondents. On various dates,
respondents filed complaints for underpayment of wages, money claims and illegal dismissal.

Wellington's arguments failed to persuade the Regional Director who, in an Order issued on July 28,
1992, ruled that "when a regular holiday falls on a Sunday, an extra or additional working day is created
and the employer has the obligation to pay the employees for the extra day except the last Sunday of
August since the payment for the said holiday is already included in the 314 factor," and accordingly
directed Wellington to pay its employees compensation corresponding to four (4) extra working days.

ISSUES:1. Whether or not respondents were illegally dismissed by petitioner;

Issue: Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is entitled to
an additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday.
Ruling: Every worker should, according to the Labor Code, "be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;"
this, of course, even if the worker does no work on these holidays. The regular holidays include: "New
Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the
fourth of July, the thirtieth of November, the twenty-fifth of December, and the day designated by law for
holding a general election (or national referendum or plebiscite).
Particularly as regards employees "who are uniformly paid by the month, "the monthly minimum wage
shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve." 12 This
monthly salary shall serve as compensation "for all days in the month whether worked or not," and
"irrespective of the number of working days therein." 13 In other words, whether the month is of thirty
(30) or thirty-one (31) days' duration, or twenty-eight (28) or twenty-nine (29) (as in February), the
employee is entitled to receive the entire monthly salary. So, too, in the event of the declaration of any
special holiday, or any fortuitous cause precluding work on any particular day or days (such as
transportation strikes, riots, or typhoons or other natural calamities), the employee is entitled to the
salary for the entire month and the employer has no right to deduct the proportionate amount
corresponding to the days when no work was done. The monthly compensation is evidently intended
precisely to avoid computations and adjustments resulting from the contingencies just mentioned which
are routinely made in the case of workers paid on daily basis.
WHEREFORE, the orders complained of, namely: that of the respondent Undersecretary dated
September 22, 1993, and that of the Regional Director dated July 30, 1992, are NULLIFIED AND SET
ASIDE, and the proceeding against petitioner DISMISSED

2. Whether or not respondents are entitled to their money claims due to underpayment of wages, and
nonpayment of holiday pay, rest day premium, SILP, COLA, overtime pay, and night shift differential pay.

HELD: 1. Illegal Dismissal: claim for separation pay

Since April 1997 until the time the Labor Arbiter rendered its decision in July 2000, or more than three (3)
years after the supposed temporary lay-off, the employment of all the respondents with petitioner had
ceased, notwithstanding that the new premises had been completed and the same resumed its
operation. This is clearly dismissal or the permanent severance or complete separation of the worker
from the service on the initiative of the employer regardless of the reasons therefor.
Article 286 of the Labor Code is clear there is termination of employment when an otherwise bona
fide suspension of work exceeds six (6) months. The cessation of employment for more than six months
was patent and the employer has the burden of proving that the termination was for a just or authorized
cause.
While we recognize the right of the employer to terminate the services of an employee for a just or
authorized cause, the dismissal of employees must be made within the parameters of law and pursuant
to the tenets of fair play. And in termination disputes, the burden of proof is always on the employer to
prove that the dismissal was for a just or authorized cause. Where there is no showing of a clear, valid
and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.
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 the employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause. 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.
2. Money claims

MAYON HOTEL & RESTAURANT vs. ROLANDO ADANA, et al. G.R. No. 157634, May 16, 2005

FACTS: Petitioner Mayon Hotel & Restaurant (MHR) hired herein 16 respondents as employees in its
business in Legaspi City. Its operation was suspended on March 31, 1997 due to the expiration and
non-renewal of the lease contract for the space it rented. While waiting for the completion of the
construction of its new site, MHR continued its operation in another site with 9 of the 16 employees.
When the new site constructed and MHR resumed its business operation, none of the 16 employees
was recalled to work.

The Supreme Court reinstated the award of monetary claims granted by the Labor Arbiter.
The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of
respondents minimum wage. As stated in the Labor Arbiters decision.
Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could
not be deducted without compliance with certain legal requirements. As stated in Mabeza v. NLRC, the
employer simply cannot deduct the value from the employees wages without satisfying the following: (a)
proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is
voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable
value. The law is clear that mere availment is not sufficient to allow deductions from employees wages.

As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense
to payment of labor standard benefits. The employer cannot exempt himself from liability to pay
minimum wages because of poor financial condition of the company. The payment of minimum wages is
not dependent on the employers ability to pay.

Conclusion: There is no denying that the actuations of petitioners in this case have been reprehensible.
They have terminated the respondents employment in an underhanded manner, and have used and
abused the quasi-judicial and judicial processes to resist payment of their employees rightful claims,
thereby protracting this case and causing the unnecessary clogging of dockets of the Court. They have
also forced respondents to unnecessary hardship and financial expense. Indeed, the circumstances of
this case would have called for exemplary damages, as the dismissal was effected in a wanton,
oppressive or malevolent manner,[95] and public policy requires that these acts must be suppressed and
discouraged.[96]
Nevertheless, we cannot agree with the Labor Arbiter in granting exemplary damages
of P10,000.00 each to all respondents. While it is true that other forms of damages under the Civil Code
may be awarded to illegally dismissed employees,[97] any award of moral damages by the Labor Arbiter
cannot be based on the Labor Code but should be grounded on the Civil Code.[98] And the law is clear
that exemplary damages can only be awarded if plaintiff shows proof that he is entitled to moral,
temperate or compensatory damages.[99]
As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broola
specifically claimed damages from petitioners, then only they are entitled to exemplary damage.
Finally, we rule that attorneys fees in the amount to P10,000.00 should be granted to each
respondent. It is settled that in actions for recovery of wages or where an employee was forced to
litigate and incur expenses to protect his rights and interest, he is entitled to an award of attorney's fees.
[100]
This case undoubtedly falls within this rule.
The petition is hereby DENIED. The Decision of January 17, 2003 of the Court of Appeals in CAG.R. SP No. 68642 upholding the Joint Decision of July 14, 2000 of the Labor Arbiter in RAB V Case
Nos. 04-00079-97 and 04-00080-97 is AFFIRMED, with the following MODIFICATIONS:
(1) Granting separation pay of one-half (1/2) month for every year of service to respondents Loveres,
Macandog and Llarena; (2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;
(3) Removing the deductions for food facility from the amounts due to all respondents; (4) Awarding
moral damages of P20,000.00 each for respondents Loveres, Macandog, Llarena, Guades, Nicerio,
Atractivo, and Broola; (5) Deleting the award of exemplary damages of P10,000.00 from all
respondents except Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broola; and (6)
Granting attorneys fees of P10,000.00 each to all respondents.
The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the total monetary
benefits awarded and due to the employees concerned in accordance with the decision. The Labor
Arbiter is ORDERED to submit his compliance thereon within thirty (30) days from notice of this decision,
with copies furnished to the parties.
G.R. No. 156367: AUTO BUS TRANSPORT SYSTEMS, INC. vs ANTONIO BAUTISTA, 16 May 2005
(Service Incentive Leave Pay)

FACTS: Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May 1995. He was
assigned to the Isabela-Manila route and he was paid by commission (7% of gross income per travel for
twice a month).
In January 2000, while he was driving his bus he bumped another bus owned by Auto Bus. He claimed
that he bumped the he accidentally bumped the bus as he was so tired and that he has not slept for
more than 24 hours because Auto Bus required him to return to Isabela immediately after arriving at
Manila. Damages were computed and 30% or P75,551.50 of it was being charged to Bautista. Bautista
refused payment.
Auto Bus terminated Bautista after due hearing as part of Auto Bus management prerogative. Bautista
sued Auto Bus for Illegal Dismissal. The Labor Arbiter Monroe Tabingan dismissed Bautistas petition but
ruled that Bautista is entitled to P78,1117.87 13th month pay payments and P13,788.05 for his unpaid
service incentive leave pay.
The case was appealed before the National Labor Relations Commission. NLRC modified the LAs
ruling. It deleted the award for 13th Month pay. The court of Appeals affirmed the NLRC.
Auto Bus averred that Bautista is a commissioned employee and if that is not reason enough that
Bautista is also a field personnel hence he is not entitled to a service incentive leave. They invoke:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE: (a) Every employee who has rendered at least one
year of service shall be entitled to a yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid in a
fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .
ISSUE: Whether or not Bautista is entitled to Service Incentive Leave. If he is, Whether or not the three
(3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to
respondents claim of service incentive leave pay.
HELD: Yes, Bautista is entitled to Service Incentive Leave. The Supreme Court emphasized that it does
not mean that just because an employee is paid on commission basis he is already barred to receive
service incentive leave pay.
The question actually boils down to whether or not Bautista is a field employee.
According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty.
As a general rule, field personnel are those whose performance of their job/service is not supervised by
the employer or his representative, the workplace being away from the principal office and whose hours
and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount
for rendering specific service or performing specific work. If required to be at specific places at specific

times, employees including drivers cannot be said to be field personnel despite the fact that they are
performing work away from the principal office of the employee.
Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus driver and that is
a specific place that he needs to be at work. There are inspectors hired by Auto Bus to constantly check
him. There are inspectors in bus stops who inspects the passengers, the punched tickets, and the driver.
Therefore he is definitely supervised though he is away from the Auto Bus main office.
On the other hand, the 3 year prescriptive period ran but Bautista was able to file his suit in time before
the prescriptive period expired. It was only upon his filing of a complaint for illegal dismissal, one month
from the time of his dismissal, that Bautista demanded from his former employer commutation of his
accumulated leave credits. His cause of action to claim the payment of his accumulated service
incentive leave thus accrued from the time when his employer dismissed him and failed to pay his
accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only
commenced from the time the employer failed to compensate his accumulated service incentive leave
pay at the time of his dismissal. Since Bautista had filed his money claim after only one month from the
time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by
Article 291 of the Labor Code.
Definition of Service Incentive Leave: Service incentive leave is a right which accrues to every
employee who has served within 12 months, whether continuous or broken reckoned from the date the
employee started working, including authorized absences and paid regular holidays unless the working
days in the establishment as a matter of practice or policy, or that provided in the employment contracts,
is less than 12 months, in which case said period shall be considered as one year. It is also commutable
to its money equivalent if not used or exhausted at the end of the year. In other words, an employee who
has served for one year is entitled to it. He may use it as leave days or he may collect its monetary
value.
JPL MARKETING PROMOTIONS, Petitioner v. AUSTRIA-MARTINEZ, CALLEJO, SR.,TINGA, and COURT
OF APPEALS, NATIONAL CHICO-NAZARIO, JJ. LABOR RELATIONS COMMISSION, NOEL GONZALES,
RAMON ABESA III and FAUSTINO ANINIPOT, Respondents. July 8, 2005.

FACTS: JPL Marketing and Promotions (hereinafter referred to as 'JPL') 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 (CMC), one of
petitioner's 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.[3] They were advised
to wait for further notice as they would be transferred to other clients. However, on 17 October 1996,
[4] 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.[5] Aninipot filed a similar
case thereafter.

After the submission of pertinent pleadings by all of the parties and after some clarificatory hearings, the
complaints were consolidated and submitted for resolution. Executive Labor Arbiter Gelacio L. Rivera, Jr.
dismissed the complaints for lack of merit.[6] 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.[7]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.[8] 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.[9]

Private respondents appealed to the NLRC-agreed. JPL appealed-CA dismissed petition.

ISSUE: whether or not private respondents are entitled to separation pay, 13th month pay and service
incentive leave pay, and granting that they are so entitled, what should be the reckoning point for
computing said awards.

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.[32] 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.[33] 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 CMC's 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.[34]

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.[35] JPL did not terminate their employment; they themselves severed their
relations with JPL. Thus, they are not entitled to separation pay.
The Court is not inclined in this case to award separation pay even on the ground of compassionate
justice. The Court of Appeals relied on the cases[36] wherein the Court awarded separation pay to
legally dismissed employees on the grounds of equity and social consideration. Said cases involved
employees who were actually dismissed by their employers, whether for cause or not. Clearly, the
principle applies only when the employee is dismissed by the employer, which is not the case in this
instance. In seeking and obtaining employment elsewhere, private respondents effectively terminated
their employment with JPL.

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.

Presidential Decree No. 851, as amended, requires an employer to pay its rank and file employees a
13thmonth pay not later than 24 December of every year. However, employers not paying their
employees a 13th month pay or its equivalent are not covered by said law.[39] The term 'its equivalent
was defined by the law's implementing guidelines as including Christmas bonus, mid-year bonus, cash
bonuses and other payment amounting to not less than 1/12 of the basic salary but shall not include
cash and stock dividends, cost-of-living-allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits.[40]

On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly leave
benefit of five (5) days with pay, enjoyed by an employee who has rendered at least one year of service.
Unless specifically excepted, all establishments are required to grant service incentive leave to their
employees. The term 'at least one year of service shall mean service within twelve (12) months, whether
continuous or broken reckoned from the date the employee started working.[41] The Court has held in
several instances that 'service incentive leave is clearly demandable after one year of service.[42]

Admittedly, private respondents were not given their 13th month pay and service incentive leave pay
while they were under the employ of JPL. Instead, JPL provided salaries which were over and above the
minimum wage. The Court rules that the difference between the minimum wage and the actual salary
received by private respondents cannot be deemed as their 13th month pay and service incentive leave
pay as such difference is not equivalent to or of the same import as the said benefits contemplated by
law. Thus, as properly held by the Court of Appeals and by the NLRC, private respondents are entitled to
the 13th month pay and service incentive leave pay.

However, the Court disagrees with the Court of Appeals' ruling that the 13th month pay and service
incentive leave pay should be computed from the start of employment up to the finality of the NLRC
resolution. While computation for the 13th month pay should properly begin from the first day of
employment, the service incentive leave pay should start a year after commencement of service, for it is
only then that the employee is entitled to said benefit. On the other hand, the computation for both
benefits should only be up to 15 August 1996, or the last day that private respondents worked for JPL.
To extend the period to the date of finality of the NLRC resolution would negate the absence of illegal
dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be unfair to require
JPL to pay private respondents the said benefits beyond 15 August 1996 when they did not render any
service to JPL beyond that date. These benefits are given by law on the basis of the service actually
rendered by the employee, and in the particular case of the service incentive leave, is granted as a
motivation for the employee to stay longer with the employer. There is no cause for granting said
incentive to one who has already terminated his relationship with the employer.

The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of
the employer. 'It should be made clear that when the law tilts the scale of justice in favor of labor, it is but
recognition of the inherent economic inequality between labor and management. The intent is to balance
the scale of justice; to put the two parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of management but never should the scale be so
tilted if the result is an injustice to the employer. Justitia nemini neganda est (Justice is to be denied to
none).[43]

WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of Appeals
in CA-G.R. SP No. 62631 are hereby MODIFIED. The award of separation pay is deleted. Petitioner is
ordered to pay private respondents their 13th month pay commencing from the date of employment up to
15 August 1996, as well as service incentive leave pay from the second year of employment up to 15
August 1996. No pronouncement as to costs.
G.R. No. 117460 January 6, 1997, REPUBLIC PLANTERS BANK now known as PNB-REPUBLIC
BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ANTONIO G.
SANTOS, respondents.
FACTS: ANTONIO G. SANTOS was employed by Republic Planters Bank, now known as PNB-Republic
Bank (PNB-RB), for thirty-one (31) years and fifteen (15) days occupying various positions. At the time of
his retirement on 31 May 1990 he was a Department Manager with a monthly salary of P8,965.00 and
accumulated leave credits of two hundred and seventy-two (272) days. He received a gratuity pay of
P434,468.52 out of which P20,615.62 was deducted for taxes due.

Santos filed the instant suit for underpayment of gratuity pay, non-payment of accumulated sick and
vacation leaves, mid-year and year-end bonuses, financial assistance, at the same time claiming
damages and attorney's fees.
The Labor Arbiter found for complainant Santos and this finding was affirmed by the National Labor
Relations Commission (NLRC) on appeal.
PNB-RB alleges in this petition that the resolution of NLRC is contrary to the evidence and existing
jurisprudence; that NLRC gravely abused its discretion when it upheld the order of the Labor Arbiter
awarding P661,210.63 to Santos; and, that the award to Santos of mid-year and year-end bonuses,
moral and exemplary damages and attorney's fees has no legal basis. Petitioner argues that Santos is
not entitled to the award as he signed aRelease, Waiver and Quitclaim therefor when he received his
gratuity pay of P434,468.52.
ISSUE: WON private respondent is entitled to gratuity pay, accumulated sick and vacation leaves, award
for exemplary damages, etc?
HELD: We are not unaware that a quitclaim by an employee in favor of his employer amounts to a valid
and binding compromise agreement between them. 1 An agreement voluntarily entered into which
represents a reasonable settlement is binding on the parties and may not later be disowned simply
because of a change of mind. 2
On the other hand, we are not also unmindful of the principle that quitclaims are ineffective to bar
recovery for the full measure of the worker's rights 3 and that acceptance thereof does not amount to
estoppel. 4 Generally, quitclaims by laborers are frowned upon as contrary to public policy. 5 And the fact
that the consideration given in exchange thereof was very much less than the amount claimed renders
the quitclaim null and void. 6 In the instant case, the total amount claimed by Santos is P908,022.65 of
which only P434,468.52 was received by him. Considering that the Release, Waiver and Quitclaim was
signed by Santos under protest as found by the Labor Arbiter and the NLRC, and the difference between
the amount claimed and that paid cannot in any way be considered negligible, we deem it proper to
recompute and determine the exact amount of the retirement benefits due private respondent. We
perceive the waiver under the facts of the case to dangerously encroach on the entrenched domain of
public policy.
PNB-RB avers that the NLRC gravely abused its discretion when it computed the gratuity pay of Santos
at P661,210.63 based on the salary rate of the next higher rank on the theory that he acquired a vested
right over it pursuant to the 1971-1973 Collective Bargaining Agreement (CBA). Petitioner posits that as
the CBA had long expired it could no longer be used as basis in computing the gratuity pay of its retiring
officers; instead, the computation should be based on the practice and policy of the bank effective at the
time of the employee's retirement.
We cannot agree. Not so long ago we resolved exactly the same issues in Republic Planters Bank
v. National Labor Relations Commissions 8 which, coincidentally, emanated from a similar set of facts. In
that case, Macario de Guzman resigned from PNB-RB on 3 June 1985. The following day he filed a
complaint with the Department of Labor and Employment for underpayment of gratuity pay,
underpayment of unused leaves and non-payment of accrued leave credits. De Guzman bewailed the
erroneous computation of his gratuity pay and the cash value of his accumulated leave credits, and
maintained that it should have been based on the provisions of the 1971-1973 CBA instead of the 19821985 CBA entered into between PNB-RB and its rank-and-file employees.

PNB-RB insists on disowning any practice or policy of granting gratuity pay to its retiring officers based
on the salary rate of the next higher rank. It admitted however that it granted gratuity pay on the basis of
the salary rate of the next higher rank but only in the case of Simplicio Manalo. As to other instances
when it granted gratuity pay based on the salary rate of the next higher rank, PNB-RB explains that
those were not voluntarily done but were in lawful compliance with court orders.
computing the gratuity pay based on the performance rating of the retiring officer is a practice that is very
likely susceptible to abuse as he will be placed at the mercy of the members of the performance
appraisal committee.
Petitioner argues that the claim of Santos for bonuses corresponding to the years 1985, 1986 and midyear of 1987 has already prescribed. This is correct. Article 291 of the Labor Code states in part 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.
Since Santos filed his complaint only on 12 July 1990, his claim for 1985 (mid-year and year-end), 1986
(mid-year and year-end), and 1987 (mid-year) bonuses already prescribed. As regards bonuses for 1987
(year-end), 1988 (mid-year and year-end), 1989 (mid-year and year-end), and 1990 (mid-year), we
agree with petitioner that these should be based on the existing salary rate at the time of their accrual.
The record shows however that in 1988 Santos was found guilty of an administrative charge. Hence, in
consonance with existing company policy, the 1988 (mid-year and year-end) bonus should be forfeited in
favor of the Bank. 17
As regards the award of moral and exemplary damages, as well as attorney's fees, we quote with
approval the Comment of private respondent thus On the matter of moral and exemplary damages,
the same is a must considering that petitioner is guilty of bad faith by its continued refusal to pay his
claims despite the final rulings of the Supreme Court in similar other cases earlier cited. By refusing to
abide by the doctrinal pronouncements of the Highest Tribunal, petitioner has shown to be anti-labor.
This stubborn attitude is not only contemptible but also contrary to morals, good customs and public
policy. Regardless of its own thinking on the issues presented vis-a-vis the judicial pronouncements
already made, petitioner is duty-bound to respect the Supreme Court decisions which have become part
of the law of the land.Consequently, private respondent had suffered mental anguish and sleepless
nights and therefore, should be entitled to moral damages. And to serve as example for the public good
so that others similarly inclined could be dissuaded from adopting the same detestable practice,
petitioner should also be sanctioned in the form of exemplary damages.
ACCORDINGLY, the 30 June 1993 Decision of the Labor Arbiter and the 30 August 1994 Resolution of
the National Labor Relations Commission are AFFIRMED with the modification that petitioner PNBREPUBLIC BANK is ordered to pay private respondent Antonio G. Santos the amount of P423,661.00,
less the applicable taxes
ACE NAVIGATION CO., INC. and/or CONNING SHIPPING LTD., petitioners, vs. COURT OF
APPEALS (THIRTEENTH DIVISION), NATIONAL LABOR RELATIONS COMMISSION (FIRST
DIVISION) and ORLANDO ALONSAGAY, respondents.
Ace Navigation Co., Inc. (Ace Nav) recruited private respondent Orlando Alonsagay to work as a
bartender on board the vessel M/V "Orient Express" owned by its principal, Conning Shipping Ltd.
(Conning). Under their POEA approved contract of employment, Orlando shall receive a monthly
basic salary of four hundred fifty U.S. dollars (U.S. $450.00), flat rate, including overtime pay for

12 hours of work daily plus tips of two U.S. dollars (U.S. $2.00) per passenger per day. He, was
also entitled to 2.5 days of vacation leave with pay each month. The contract was to last for one
(1) year.
Petitioners alleged that on June 13, 1994, Orlando was deployed and boarded M/V "Orient
Express" at the seaport of Hong Kong. After the expiration of the contract on June 13, 1995,
Orlando returned to the Philippines and demanded from Ace Nav his vacation leave pay. Ace Nav
did not pay him immediately. It told him that he should have been paid prior to his disembarkation
and repatriation to the Philippines. Moreover, Conning did not remit any amount for his vacation
leave pay. Ace Nav, however, promised to verify the matter and asked Orlando to return after a
few days. Orlando never returned.
On November 25, 1995, Orlando filed a complaint[3] before the labor arbiter for vacation leave pay
of four hundred fifty U.S. dollars (U.S. $450.00) and unpaid tips amounting to thirty six, thousand
U.S. dollars (U.S. $36,000.00).[4] On November 15, 1996, Labor Arbiter Felipe P. Pati ordered Ace
Nav and Conning to pay jointly and severally Orlando his vacation leave pay of US$450.00. The
claim for tips of Orlando was dismissed for lack of merit.[5]
Orlando appealed[6] to the National Labor Relations Commission (NLRC) on February 3, 1997. In
a decision[7] promulgated on November 26, 1997, the NLRC ordered Ace Nav and Conning to pay
the unpaid tips of Orlando which amounted to US$36,000.00 in addition to his vacation leave pay.
Ace Nav and Conning filed a motion for reconsideration on February 2, 1998 which was denied on
May 20, 1999.[8]
On July 2, 1999, Ace Nav and Conning filed a petition for certiorari before the Court of Appeals to
annul the decision of the NLRC. On July 28, 1999, the Court of Appeals promulgated a three-page
resolution[9] dismissing the petition. Their motion for reconsideration filed on September 8, 1999
was denied on October 8, 1999. Hence this appeal.
ISSUE: Whether petitioners are liable to pay the tips to Orlando.
HELD: The word [tip] has several meanings, with origins more or less obscure, connected with
"tap" and with "top." In the sense of a sum of money given for good service, other languages are
more specific, e.g., Fr. pourboire, for drink. It is suggested that [the word] is formed from the
practice, in early 18th c. London coffeehouses, of having a box in which persons in a hurry would
drop a small coin, to gain immediate attention. The box was labelled To Insure Promptness; then
just with the initials T.I.P.
Tipping is done to get the attention and secure the immediate services of a waiter, porter or others
for their services. Since a tip is considered a pure gift out of benevolence or friendship, it can not
be demanded from the customer. Whether or not tips will be given is dependent on the will and
generosity of the giver. Although a customer may give a tip as a consideration for services
rendered, its value still depends on the giver. They are given in addition to the compensation by
the employer. A gratuity given by an employer in order to inspire the employee to exert more effort
in his work is more appropriately called a bonus.
The NLRC and the Court of Appeals held that petitioners were liable to pay tips to Orlando
because of the contract of employment.
"It was thus a serious error on the part of the Labor Arbiter to rule that the tips were already paid, much
less to rule that said tips were directly paid to the crew of M/V "ORIENT PRINCESS." With Article 4 of
the Labor Code reminding us that doubts should be resolved in favor of labor, we all the more find it
compelling to rule that the complainant is still entitled to the contractually covenanted sum of
US$36,000.00. xxx."

We disagree. The contract of employment between petitioners and Orlando is

categorical that the monthly salary of Orlando is US$450.00 flat rate. This already included
his overtime pay which is integrated in his 12 hours of work. The words "plus tips of
US$2.00 per passenger per day" were written at the line for overtime. Since payment for
overtime was included in the monthly salary of Orlando, the supposed tips mentioned in the
contract should be deemed included thereat.
The actuations of Orlando during his employment also show that he was aware his
monthly salary is only US$450.00, no more no less. He did not raise any complaint about
the non-payment of his tips during the entire duration of his employment. After the
expiration of his contract, he demanded payment only of his vacation leave pay. He did not
immediately seek the payment of tips. He only asked for the payment of tips when he filed
this case before the labor arbiter. This shows that the alleged non-payment of tips was a
mere afterthought to bloat up his claim. The records of the case do not show that Orlando
was deprived of any monthly salary. It will now be unjust to impose a burden on the
employer who performed the contract in good faith.
Furthermore, it is presumed that the parties were aware of the plain, ordinary and
common meaning of the word "tip." As a bartender, Orlando can not feign ignorance on the
practice of tipping and that tips are normally paid by customers and not by the employer.
It is also absurd that petitioners intended to give Orlando a salary higher than that of
the ship captain. As petitioners point out, the captain of M/V "Orient Princess" receives
US$3,000.00 per month while Orlando will receive US$3,450.00 per month if the tip of
US$2.00 per passenger per day will be given in addition to his US$450.00 monthly salary. It
will be against common sense for an employer to give a lower ranked employee a higher
compensation than an employee who holds the highest position in an enterprise.
However, Orlando should be paid his vacation leave pay. Petitioners denied this
liability by raising the defense that the usual practice is that vacation leave pay is given
before repatriation. But as the labor arbiter correctly observed, petitioners did not present
any evidence to prove that they already paid the amount. The burden of proving payment
was not discharged by the petitioners.
IN VIEW WHEREOF, the resolutions of the Court of Appeals in CA G.R. SP No.
53508 are reversed and set aside. The decision of the labor arbiter ordering petitioners to
pay jointly and severally the unpaid vacation leave pay of private respondent, Orlando
Alonsagay, in the amount of US$450.00 and dismissing his other claim for lack of merit is
reinstated.
[G.R. No. 123880. February 23, 1999], MARANAW HOTELS AND RESORT CORPORATION, (Owner
of Century Park Sheraton Manila), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
and EDDIE DAMALERIO, respondents.
FACTS: Eddie Damalerio (Damalerio), a room attendant of the Century Park Sheraton Hotel, operated
by Maranaw Hotel and Resort Corporation, was seen by hotel guest Jamie Glaser (Glaser) with left hand
inside the latter's suitcase. Confronted with what he was doing, Damalerio explained that he was trying
to tidy up the room. Not satisfied with the explanation of Damalerio, Glaser lodged a written complaint
before William D. Despuig, shift-in-charge of security of the hotel. Glaser also reported that Damalerio
had previously asked from him souvenirs, cassettes, and other giveaways. The complaint was later
brought by Despuig to the attention of Major Eddie Buluran, chief of Security of the hotel. On April 3,
1992, Damalerio was given a Disciplinary Action Notice (DAN). The next day, an administrative hearing
was conducted on the matter.

Among those present at the hearing were: 1) Lourdes Ricardo (room attendant), 2) Angelito
Torres (floor supervisor), 3) Major Eddie Buluran (chief of security), 4) Susan
Dino (Personnel representative), 5) Alfredo San Gabriel (senior floor supervisor)and 6) Ben Hur
Amador (union representative). Taking the witness stand on his own behalf, Damalerio denied the
accusation against him, theorizing that when he found the room of Glaser in disarray, and was about to
make the bed, he noticed some belongings, such as socks and T-shirts of the said hotel guest scattered
around, so much so that he thought of placing the same in his luggage. While doing so, Glaser
arrived. When asked by the latter if something was wrong, he (Damalerio) said "I'm just cleaning your
room," and Glaser remarked, "Good work," and then, the two of them chatted about Glaser's concert at
the Araneta Coliseum.
Damalerio received a memorandum[3] issued by Alfredo San Gabriel, Sr., Floor Supervisor, bearing the
approval of Nicolas R. Kirit, Executive Housekeeper, stating that he (Damalerio) was found to have
committed qualified theft in violation of House Rule No. 1, Section 3 of Hotel Rules and
Regulations. The same memorandum served as a notice of termination of his employment.Damalerio
filed with the Labor Arbiter a Complaint for illegal dismissal against the petitioner. After the parties had
sent in their position papers, Labor Arbiter Ceferina J. Diosana decided the case.

As regards the share of Damalerio in the service charges collected during the period of his
preventive suspension, the same form part of his earnings, and his dismissal having been adjudged to
be illegal, he is entitled not only to full backwages but also to other benefits, including a just share in the
service charges, to be computed from the start of his preventive suspension until his reinstatement.

ISSUE: 1. WHETHER OR NOT RESPONDENT NLRC COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT PETITIONER
FAILED TO ADDUCE CONCLUSIVE EVIDENCE IN SUPPORT OF ITS VERSION OF THE
INCIDENT, CONSIDERING THE FACT THAT THE EVIDENCE ON RECORD INELUCTABLY
SHOWS THAT PRIVATE RESPONDENT WAS CAUGHT IN FLAGRANTE DELICTO.

Facts: The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and
women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items,
through its various outlets nationwide. In the pursuit of its business, the petitioner engages and
contracts with dealers to sell the aforementioned merchandise. These dealers, known either as
Independent Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on
whether they sell individually or through their own group, would obtain at discounted rates the
merchandise from the petitioner on credit or then sell the same products to their own customers at fixed
prices also determined by the petitioner.
In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the
volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner
the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or
52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner.
To discourage late remittances, the petitioner imposes a Credit Administration Charge, or simply, a
penalty charge, on the value of the unremitted payment.

2. WHETHER OR NOT RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN NOT REVERSING THAT PORTION OF THE
DECISION OF THE LABOR ARBITER ORDERING HEREIN PETITIONER TO PAY PRIVATE
RESPONDENT HIS SHARE IN THE SERVICE CHARGE WHICH WAS COLLECTED DURING
THE TIME HE WAS NOT WORKING IN THE HOTEL.
HELD: The petition is barren of merit.
Petitioner's theory that Damalerio was caught committing qualified theft in flagrante delicto is
anemic of evidentiary support. Records disclose petitioner's failure to substantiate such imputation
against him. During the investigation presided over by the Labor Arbiter, Damalerio narrated a plausible
and satisfactory explanation for his behavior complained of. According to him, he was then cleaning the
hotel room of Glaser, and while in the process of placing inside the luggage the personal belongings of
Glaser scattered near the bed, the latter entered the room. Glaser did not bother to testify as all his
things were intact.
Although it was not completely proper for Damalerio to be touching the things of a hotel guest
while cleaning the hotel rooms, personal belongings of hotel guests being off-limits to roomboys, under
the attendant facts and circumstances, we believe that the dismissal of Damalerio was unwarranted. To
be sure, the investigation held by the hotel security people did not unearth enough evidence of
culpability. It bears repeating that subject hotel guest lost nothing. Albeit petitioner may have reasons to
doubt the honesty and trustworthiness of Damalerio, as a result of what happened, absent sufficient
proof of guilt, he (Damalerio), who is a rank-and-file employee, cannot be legally dismissed.
[4]
Unsubstantiated suspicions and baseless conclusions by employers are not legal justification for
dismissing employees. The burden of proving the existence of a valid and authorized cause of
termination is on the employer.[5] Any doubt should be resolved in favor of the employee, in keeping with
the principle of social justice enshrined in the Constitution.[6]
All things studiedly considered and viewed in proper perspective, the dismissal of Damalerio,
under the premises, cannot be countenanced.

However, mindful of the animosity and strained relations between the parties, emanating from this
litigation, we uphold the ruling a quo that in lieu of reinstatement, separation pay may be given to the
private respondent, at the rate of one (1) month pay for every year of service. Should petitioner opt in
favor of separation pay, the private respondent shall no longer be entitled to share in the service charges
collected during his preventive suspension.
WHEREFORE, the petition is hereby DISMISSED and the Court affirms the questioned Decision
of the National Labor Relations Commission, to be implemented according to law and this
disposition. No pronouncement as to costs.
House of Sara Lee vs Rey (2006) G.R. 149013

The dealers under this system earn income through a profit margin between the discounted purchase
price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On
top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of
sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the
petitioner has found the need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs
and IGSs through the employment of Credit Administration Supervisors (CAS) for each branch. The
primary duty of the CAS is to strictly monitor each of these 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).
Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration
Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the
petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent
was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994,
respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM
of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent
was temporarily assigned to the Butuan City branch.

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 to change the credit term of one of the IBMs of
the petitioner 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 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 Rey-Petilla 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.
Issue: WON the respondent is entitled to 13th month pay.
Held: The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and is,
therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to
award 14th and 15th month pay as well as the monthly salary increase of 10 percent per year for two
years based on her latest salary rate. The respondent must show that these benefits are due to her as
a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting
the same. With respect to salary increases in particular, the respondent must likewise show that she has
a vested right to the same, such that her salary increases can be made a component in the computation
of backwages. What is evident is that salary increases are a mere expectancy. They are by nature
volatile and dependent on numerous variables, including the companys fiscal situation, the employees
future performance on the job, or the employees continued stay in a position. In short, absent any
proof, there is no vested right to salary increases.
Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561
Facts: The case stems from the collective bargaining agreement between Honda and the respondent
union that it granted the computation of 14th month pay as the same as 13th month pay. Honda continues
the practice of granting financial assistance covered every December each year of not less than 100% of
the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years
of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The
striking employees were ordered to return to work and management to accept them back under the
same terms prior to the strike staged. Honda issued a memorandum of the new computation of the 13th
month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be
considered unworked days for purpose of computing the said benefits. The amount equivalent to of
the employees basic salary shall be deducted from these bonuses, with a commitment that in the event
that the strike is declared legal, Honda shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to
voluntary arbitration where it ruled that the companys implementation of the pro-rated computation is
invalid.
th

th

Issue: WON the pro-rated computation of the 13 and 14 month pays and other bonuses in question is
valid and lawful.
Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy has not ripened into a company practice and it
was the first time they implemented such practice.

The payment of the 13th month pay in full month payment by Honda has become an established practice.
The length of time where it should be considered in practice is not being laid down by jurisprudence. The
voluntary act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor
Code.
The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay
shall constitute a violation of Article 100 of the Labor Code.
Producers Bank v. NLRC
Facts:
The employee of the producer bank file a petition to the NLRC that the PBP not complied the
wage#6 and non payment of holiday pay.
The petitioner contends that the NLRC gravely abused its discretion in ruling as it did for the
succeeding reasons:
1. It contravened the SC decision in traders Royal bank vs NLRC
2. Its ruling is not justified by law and Art. 100 of the labor code
3. Its ruling is contrary to the BA
4. The so called company practice invoked by its has no legal and moral bases
Petitioner under conservatorship and distressed is exempted under wage#6.
Issues:
Alleged diminution of benefits, - Christmas and 13th bonus
Non compliance with the wage order#6
Non payment of legal holiday pay
Held:
The granting of a bonus is a management prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.
Section 28 A Appointment of conservator whenever, on the basis of a report submitted b
appropraiate supervising and examining department, the MB fins that a bank is in a state of
continuing in ability or unwillingness to maintain a condition of solvency and liquidity deemed
adequate to protect the depositors and creditors, the MB may appoint a conservator to take
charge of the asses, liabilities and the management of that banking institution all monies and
debs due said bank exercise all powers necessary to preserve the assets of the bank
reorganize the management thereof and resorted.
He shall have the power to overrule or revoke the actions of the previous management and
board of directors of the bank, any provision of law to the notwithstanding, and such other
powers as the monetary board shall deemed necessary.
Doctrine: An employer cannot be forced to distribute bonuses which it can no longer afford to pay, a
bonus is an amount granted and paid to anemployee for his industry and loyalty which contributed to the
success of the employers business and made possible the realization of profile. It is an act of generosity
and is a management prerogative, given in addition to what is ordinarily received by or strictly due the
recipient. Thus, it is not a demandable and enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.
The conservator was justified in reducing the mid-year and Christmas bonuses of
petitioners employees. Ultimately, it is to the employees advantage that the conservatorship achieve its
purposes otherwise, the closure of the company would result in the employees losing their jobs.
PD 851 requires all employees to pay their employees a basic salary of not more than P1, 000 at 13th
monthly pay. However, employeesalready paying their employees a 13th month pay are not covered by
the law. The term equivalent shall be constructed to include Christmas bonus, mid year bonus, cash
bonuses and other payments amounting to not less than 1 /12 of the basic salary. The intention was to

grant relief to those not actually paid a bonus, by whatevername called. Thus, petitioner is justified in
crediting the mid year bonus and Christmas bones as part of the 13th month pay.
The divisor used by petitioner in arriving at the employees daily ratefor the purpose of computing salary
related benefits is 314 days. This finding was not disputed by the NLRC. However, the divisor was for
the sole purpose of increasing the employees overtime pay and was not meant to replace the use of
314 as the divisor in the computation of the daily rate for salary related benefits.
UNITED CMC TEXTILE WORKERS UNION v. VALENZUELA
Facts: Sometime in 1979, petitioner filed a complaint against Central Textile Mills, Inc. (CTMI, for brevity)
at the Ministry of Labor and Employment for non-payment of Christmas bonus of the rank and file
employees of said company as provided in Art. XI of the then existing collective bargaining agreement
between petitioner and CTMI. Among the provisions of the said collective agreement is the payment of
Christmas bonus based on a schedule. To be paid to all employees on or before the beginning of the
Christmas vacation. Respondent CTMI appealed said decision to the NLRC which affirmed the Labor
Arbiter's decision with the modification that the complainant (petitioner herein) was ordered to furnish a
copy of the computation list in order that respondents may verify the correctness and/or validity of the
individual claims and for the latter to present their objection, if any, to the Labor Arbiter of origin, prior to
the execution of the decision. Petitioner filed with the NLRC a motion for execution of the decision in
October, 1984. Due to the appeal of CTMI, respondent Labor Arbiter refused to continue with the
execution of the final order or decision in G.R. No. 58666 contending that it has become moot and
academic.
Issue: WON the case has been moot and academic
Held: We find the contentions of petitioner more meritorious than the contentions of respondents. When
We dismissed the petition for review of private respondents in G.R. No. 58666 on January 20,1982, for
lack of merit, We did so upon the doctrine laid down in the Marcopper Case which was promulgated on
June 11, 1981. Before the dismissal of said case became final and executory, We decided the La Carlota
case on May 31, 1982 wherein We ruled that employees are no longer entitled to an additional
Christmas bonus or other Christmas benefits if they are already entitled to a 13th month pay. Meanwhile
in Case No. 58666 the company filed their motion for reconsideration of the dismissal of their petition
which We denied as per Our resolution on August 18, 1982.Subsequently, said dismissal became final
and executory as per Entry of Judgment dated September 22, 1982.Thus, it can be seen that despite the
La Carlota ruling We denied the company's Motion for reconsideration and We reiterated Our previous
dismissal of the petition for review for lack of merit. This only goes to show that We refused to apply or
did not choose to apply the La Carlota doctrine to the case at bar. And We have consistently held in a
number of Our decisions that judgments which had long become final and executory can no longer be
amended or modified by the courts. Such is the doctrine known as "the law of the case."
Furthermore, the findings of the NLRC as stated in its decision 4 show that the claim is for Christmas
bonus for the year 1978 only. It appears from the records that the employees of the respondent company
had been paid their bonuses in accordance with the collective bargaining agreement, in addition to the
13th month pay, for the years 1979 and 1980. The Page 431 collective bargaining agreement in question
took effect on November 1, 1978, 3 years after the promulgation of P.D. No. 851. If the Christmas bonus
was included in the 13th month pay, then there would be no need for having a specific provision on
Christmas bonus in the CBA. But it did provide for a bonus in graduated amounts depending on the
length of service of the employee. The intention is clear therefore that the bonus provided in the CBA
was meant to be in addition to the legal requirement. Moreover, why exclude the payment of the 1978
Christmas bonus and pay only the 1979-1980 bonus. The classification of the company's workers in the

CBA according to their years of service supports the allegation that the reason for the payment of bonus
was to give bigger reward to the senior employees a purpose which is not found in P.D. 851. A bonus
under the CBA is an obligation created by the contract between the management and workers while the
13th month pay is mandated by the law (P.D. 851).
Likewise We find no merit in respondent's allegations that the applicability of the said La Carlota ruling to
the case at bar is explicitly recognized by herein petitioner. A cursory reading of the CBA signed on
November 2, 1983 5shows that petitioner Union recognizes only the application of the La Carlota
doctrine in so far as it had agreed to the deletion of the provision on payment of Christmas bonus in the
new CBA of 1983 without necessarily giving up their claim for their 1978 bonus under their former
collective bargaining agreement. Petition granted.
ESCARIO v. NLRC
Facts: The petitioners were among the regular employees of respondent Pinakamasarap Corporation
(PINA), a corporation engaged in manufacturing and selling food seasoning. They were members of
petitioner Malayang Samahan ng mga Manggagawa sa Balanced Foods (Union).
In the morning of March 1993, all the officers and some 200 members of the Union walked out of PINAs
premises and proceeded to the barangay office to show support for Juanito Caete, an officer of the
Union charged with oral defamation by PINAs personnel manager Manors secretary. It appears that the
proceedings in the barangay resulted in a settlement, and the officers and members of the Union all
returned to work thereafter. As a result of the walkout, PINA preventively suspended all officers of the
Union because of the March 13, 1993 incident. PINA terminated the officers of the Union after a month.
PINA filed a complaint for unfair labor practice (ULP) and damages. The complaint was assigned to then
Labor Arbiter Raul Aquino, who ruled in his decision that the incident was an illegal walkout constituting
ULP; and that all the Unions officers, except Caete, had thereby lost their employment.
The Union filed a notice of strike, claiming that PINA was guilty of union busting through the constructive
dismissal of its officers. The Union held a strike vote, at which a majority of 190 members of the Union
voted to strike.
PINA retaliated by charging the petitioners with ULP and abandonment of work, stating that they had
violated provisions on strike of the collective bargaining agreement (CBA), such as: (a) sabotage by the
insertion of foreign matter in the bottling of company products; (b) decreased production output by
slowdown; (c) serious misconduct, and willful disobedience and insubordination to the orders of the
Management and its representatives; (d) disruption of the work place by invading the premises and
perpetrating commotion and disorder, and by causing fear and apprehension; (e) abandonment of work
since June 28, 1993 despite notices to return to work individually sent to them; and (f) picketing within
the company premises on June 15, 1993 that effectively barred with the use of threat and intimidation
the ingress and egress of PINAs officials, employees, suppliers, and customers.
The Third Division of the National Labor Relations Commission (NLRC) issued a temporary restraining
order (TRO), enjoining the Unions officers and members to cease and desist from barricading and
obstructing the entrance to and exit from PINAs premises, to refrain from committing any and all forms
of violence, and to remove all forms of obstructions such as streamers, placards, or human barricade.
NLRC granted the writ of preliminary injunction.[10]

Labor Arbiter Jose G. de Vera (LA) rendered a decision: The complainants prayer for decertification of
the respondent union being outside of the jurisdiction of this Arbitration Branch may not be given due
course.
On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LAs ruling that
there was abandonment.
However, we disagree with the conclusion that respondents union members should be considered to
have abandoned their employment. The CA affirmed the NLRC in denying the petitioners claim for full
backwages.
Issue: WON petitioners are entitled to full backwages from the date of dismissal until the date of actual
reinstatement due to their not being found to have abandoned their jobs
Ruling: CAs decision affirmed but the decision on the amount of the backwages in order to accord with
equity and jurisprudence is modified. The petitioners were terminated for joining a strike that was later
declared to be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the payment of
their separation pay, because they were mere rank-and-file workers whom the Unions officers had
misled into joining the illegal strike. They were not unjustly dismissed from work. Based on the text and
intent of the two aforequoted provisions of theLabor Code, therefore, it is plain that Article 264(a) is the
applicable one.
Petitioners not entitled to backwages despite their reinstatement. The petitioners participation in the
illegal strike was precisely what prompted PINA to file a complaint to declare them, as striking
employees, to have lost their employment status. However, the NLRC ultimately ordered their
reinstatement after finding that they had not abandoned their work by joining the illegal strike. They were
thus entitled only to reinstatement, regardless of whether or not the strike was the consequence of the
employers ULP. As a general rule, backwages are granted to indemnify a dismissed employee for his
loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed
employee is not deemed to have left his employment, he is entitled to all the rights and privileges that
accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation of
the public objectives of theLabor Code, and is in the nature of a command to the employer to make a
public reparation for his illegal dismissal of the employee in violation of the Labor Code. That backwages
are not granted to employees participating in an illegal strike simply accords with the reality that they do
not render work for the employer during the period of the illegal strike. Under the principle of a fair days
wage for a fair days labor, the petitioners were not entitled to the wages during the period of the strike
(even if the strike might be legal), because they performed no work during the strike. Verily, it was
neither fair nor just that the dismissed employees should litigate against their employer on the latters
time.[25]
Appropriate Amount for Separation Pay is One Month per Year of Service. The petitioners were ordered
reinstated because they were union members merely instigated or induced to participate in the illegal
strike. By joining the strike, they did not renounce their employment relation with PINA but remained as
its employees.
The absence from an order of reinstatement of an alternative relief should the employer or a
supervening event not within the control of the employee prevent reinstatement negates the very
purpose of the order. The judgment favorable to the employee is thereby reduced to a mere paper
victory, for it is all too easy for the employer to simply refuse to have the employee back. To safeguard
the spirit of social justice that the Court has advocated in favor of the working man, therefore, the right to
reinstatement is to be considered renounced or waived only when the employee unjustifiably or

unreasonably refuses to return to work upon being so ordered or after the employer has offered to
reinstate him.
Philippine Duplicators Inc. vs. NLRC
GR 110068 February, 15, 1995
Ponente: Feliciano
FACTS: Productivity bonuses are generally tied to the productivity or profit generation of the employer
corporation. Productivity bonuses are not directly dependent on the extent an individual employee exerts
himself. A productivity bonus is something extra for which no specific additional services are rendered by
any particular employee and hence not legally demandable, absent a contractual undertaking to pay it.
Sales commissions are intimately related to or directly proportional to the extent or energy of an
employee's endeavours. Commissions are paid upon the specific results achieved by a salesmanemployee. It is a percentage of the sales closed by a salesman and operates as an integral part of such
salesman's basic pay.
ISSUE:
1.
2.
HELD:
1.
2.

WON The commissions received by the salesmen were part of the

wages to be considered for their 13th month pay. - Yes
WON Productivity bonus shall be considered as part of wages in 13th month pay - No
The commissions were an integral part of the pay of the workers, considering that the fixed
wage was only 30% of what they were normally receiving.
Productivity bonuses are generally tied to the productivity, or capacity for revenue production,
of a corporation; such bonuses closely resemble profit-sharing payments and have no clear
director necessary relation to the amount of work actually done by each individual employee.
More generally, a bonus is an amount granted and paid ex gratia to the employee; its
payment constitutes an act of enlightened generosity and self-interest on the part of the
employer, rather than as a demandable or enforceable obligation. Since productivity bonus is
not demandable, then it cannot be considered part of basic salary when time comes to
compute 13th month pay.
Additional payments made to employees, to the extent they partake of the nature of profitsharing payments, are properly excluded from the ambit of the term "basic salary" for
purposes of computing the 13th month pay due to employees. Such additional payments are
not "commissions" within the meaning of the second paragraph of Section 5 (a) of the
Revised Guidelines Implementing 13th Month Pay.
The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently issued
by former Labor Minister Ople sought to clarify the scope of items excluded in the
computation of the 13th month pay; viz.:
Sec. 4. Overtime pay, earnings and other remunerations which are not part of the
basic salary shall not be included in the computation of the 13th month pay.

Rosario Bros v. Ople

FACTS: Private respondents are tailors, pressers, stitchers and similar workers hired by the petitioner in
its tailoring department (Modes Suburbia). Some had worked there since 1969 until their separation on

January 2, 1978. For their services, they were paid weekly wages on piece-work basis, minus the
withholding tax per Bureau of Internal Revenue (BIR) rules. Further, they were registered with the Social
Security System (SSS) as employees of petitioner and premiums were deducted from their wages; they
were also members of the Avenida-Cubao Manila COD Department Store Labor Union which has a
Collective Bargaining Agreement with the company and; they were required to report for work from
Monday through Saturday and to stay in the tailoring shop for no less than eight (8) hours a day, unless
no job order was given them after waiting for two to three hours, in which case, they may leave and may
come back in the afternoon. Their attendance was recorded through a bundy clock just like the other
employees of petitioner. A master cutter distributes job orders equally, supervises the work and sees to it
that they were finished as soon as possible.

Wherefore, petition is dismissed.

PETROLEUM SHIPPING LTD. V. NLRC
Facts: Esso International Shipping (Bahamas) Co., Ltd., ("Esso") through Trans-Global Maritime Agency,
Inc. ("Trans-Global") hired Florello W. Tanchico ("Tanchico") as First Assistant Engineer. In 1981,
Tanchico became Chief Engineer. On 13 October 1992, Tanchico returned to the Philippines for a twomonth vacation after completing his eight-month deployment.

On September 7, 1977, the private respondents filed with the Regional Office of the Department (now
Ministry) of Labor a complaint for violation of Presidential Decree 851 (13th month pay) and Presidential
Decree 525, as amended by Presidential Decree 1123 (Emergency Living Allowance) against herein
petitioner.

Tanchico underwent the required standard medical examination prior to boarding the vessel. The
medical examination revealed that Tanchico was suffering from "Ischemic Heart Disease, Hypertensive
Cardio-Muscular Disease and Diabetes Mellitus." Tanchico took medications for two months and a
subsequent stress test showed a negative result. Esso no longer deployed Tanchico. Instead, Esso
offered to pay him benefits under the Career Employment Incentive Plan. Tanchico accepted the offer.

After petitioner had filed its answer, the case was certified for compulsory arbitration to the Labor Arbiter
who, after due hearing, rendered a decision on December 29, 1977 dismissing "private respondents"
claims for unpaid emergency living allowance and 13th month pay, for lack of merit, upon finding that the
complainants (herein private respondents) are not employees of the respondent (herein
petitioner) within the meaning of Article 267(b)of the Labor Code. As a consequence, the private
respondents were dismissed on January 2, 1978 and this prompted them to file a complaint for illegal
dismissal with the Ministry of Labor. Meanwhile, the National Labor Relations Commission (NLRC)
affirmed the decision of the Labor Arbiter and dismissed private respondents' appeal for lack of merit.

Tanchico filed a complaint against Esso, Trans-Global and Malayan Insurance Co., Inc. ("Malayan")
before the Philippine Overseas Employment Administration (POEA) for illegal dismissal with claims for
backwages, separation pay, disability and medical benefits and 13th month pay. In view of the
enactment of Republic Act No. 8042 ("RA 8042")4 transferring to the National Labor Relations
Commission (NLRC) the jurisdiction over money claims of overseas workers, the case was indorsed to
the Arbitration Branch of the National Capital Region. In a Decision5 dated 16 October 1996, Labor
Arbiter Jose G. De Vera ("Labor Arbiter De Vera") dismissed the complaint for lack of merit. Tanchico
appealed to the NLRC.

Labor Arbiter, issued an order directing the Chief of the Research and Information Department of the
Commission to designate a Socio-Economic Analyst to compute the balance of private respondents'
claims for the 13th month pay and emergency living allowance in accordance with respondent Minister's
decision of March 27, 1979. Pursuant thereto, a report, dated March 4, 1980, was submitted computing
the balance of private respondents' claims for emergency living allowance and 13th month pay up to
February 29,1980 in the total amount of P71,131.14. A writ of execution was issued for the satisfaction of
said amount.

The Ruling of the NLRC : NLRC affirmed the Decision of Labor Arbiter De Vera. Tanchico filed a motion
for reconsideration. On the claim of illegal dismissal, the same is unavailing as complainant had been
declared as one with partial permanent disability. Thus, he should be entitled to disability benefit of 18
days for every year of credited service of fourteen (14) years less the amount he already received under
the Companys Disability Plan.

ISSUE: WON an employer-employee relationship exists between petitioner and private respondents
HELD: Yes. The existence of ER-EE relationship is determined by: the selection and engagement of
employee, payment of wages, power of dismissal, power to control employees conduct.
An independent contractor is the one who exercises independent employment and contracts to do a
piece of work according to his own methods without being subjected to control of his employer except as
to the result of his work.
In the case at bar, the selection and hiring of respondents was done by petitioner through the master
cutter. Respondents received their weekly wages from petitioner on piece-work basis within the meaning
of the term wage under the Labor Code, which defined as the remuneration or earnings. However,
designated, whether fixed on a time, task, piece or commission basis, payable by an employer to an
employee under a written or unwritten contact for work done or to be done or for services rendered or to
be rendered.
Petitioner also had the power to dismiss respondents, thus, the latters conduct was controlled by
petitioner. Respondents were allowed to register with SSS and withholding taxes were also deducted
from their wages.

On the claim of 13th month pay, the respondent Agency not falling under the enumerated exempted
employers under P.D. 851 and in the absence of any proof that respondent is already paying its
employees a 13th month pay or more in a calendar year, perforce, respondent agency should pay
complainant his monthly pay computed at the actual month worked, which is 8 months. Since
complainant was forced to litigate his case, he is hereby awarded 10% of the total award as attorneys
fees.
The Ruling of the Court of Appeals: The Court of Appeals ruled that Tanchico was a regular employee
of Petroleum Shipping. The Court of Appeals held that petitioners are not exempt from the coverage of
Presidential Decree No. 851, as amended ("PD 851") which mandates the payment of 13th month pay to
all employees. The Court of Appeals further ruled that Tanchico is entitled to disability benefits based on
his 14 years of tenure with petitioners. The Court of Appeals stated that the employer-employee
relationship subsisted even during the period of Tanchicos vacation. The Court of Appeals noted that
petitioners were aware of Tanchicos medical history yet they still deployed him for 14 years. Finally, the
Court of Appeals sustained the award of attorneys fees.
Issues:
1. Whether Tanchico is a regular employee of petitioners; and
2. Whether Tanchico is entitled to 13th month pay, disability benefits and attorneys fees.

Held: The petition is partly meritorious. Seafarers are considered contractual employees. They can not
be considered as regular employees under Article 280 of the Labor Code. Their employment is governed
by the contracts they sign everytime they are rehired and their employment is terminated when the
contract 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 or undertaking the
completion or termination of which has been determined at the time of 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. We need not depart from the rulings of the Court in the two aforementioned cases which
indeed constitute stare decisis with respect to the employment status of seafarers. In this jurisdiction and
as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and Regulations of the
POEA. The Standard Employment Contract governing the employment of All Filipino Seamen on Board
Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of
seamen shall be for a fixed period.
Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period
only. Constrained by the nature of their employment which is quite peculiar and unique in itself, it is for
the mutual interest of both the seafarer and the employer why the employment status must be
contractual only or for a certain period of time. Seafarers spend most of their time at sea and
understandably, they can not stay for a long and an indefinite period of time at sea. Limited access to
shore society during the employment will have an adverse impact on the seafarer. The national, cultural
and lingual diversity among the crew during the COE is a reality that necessitates the limitation of its
period. Court of Appeals erred in ruling that Tanchico was a regular employee of Petroleum Shipping.
On 13th month pay: Tanchico was a contractual, not a regular, employee. Further, PD 851 does not apply
to seafarers. Tanchicos employment is governed by his Contract of Enlistment ("Contract"). The
Contract has been approved by the POEA in accordance with Title I, Book One of the Labor Code and
the POEA Rules Governing Employment. The coverage of the Contract includes Compensation,
Overtime, Sundays and Holidays, Vacations, Living Allowance, Sickness, Injury and Death,
Transportation and Travel Expense, Subsistence and Living Quarters. It does not provide for the
payment of 13th month pay. The Contract of Employment, which is the standard employment contract of
the POEA, likewise does not provide for the payment of 13th month pay.
International School Alliance of Educators vs. Quisumbing
Facts: International School, Inc., pursuant to PD 732, is a domestic educational institution established
primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the
School to continue carrying out its educational program and improve its standard of instruction, Section
2(c) of the same decree authorizes the School to employ its own teaching and management personnel
selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt
from otherwise applicable laws and regulations attending their employment, except laws that have been
or will be enacted for the protection of employees.
The School hires both foreign and local teachers as members of its faculty, classifying the same into two:
(1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty
member should be classified as a foreign-hire or a local hire: (a) What is one's domicile? (b) Where is
one's home economy? (c) To which country does one owe economic allegiance? (d) Was the individual
hired abroad specifically to work in the School and was the School responsible for bringing that
individual to the Philippines? Should the answer to any of these queries point to the Philippines, the
faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local- hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor"
and (b) limited tenure. The compensation scheme is simply the School's adaptive measure to remain
competitive on an international level in terms of attracting competent professionals in the field of
international education.
Issue: WON local hire teachers shall enjoy same salary as foreign hire teachers where they perform the
same work.
Held: Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof,
provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
just and favorable conditions of work, which ensure, in particular: ( a) Remuneration which provides all
workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work; The foregoing provisions impregnably institutionalize in
this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with
substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries. This rule applies to the School.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to
that of foreign-hires. The Court finds this argument a little inconsiderate. If an employer accords
employees the same position and rank, the presumption is that these employees perform equal work. If
the employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. The employer has discriminated against that employee; it
is for the employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence here that foreignhires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions
and responsibilities, which they perform under similar working conditions.
STATES MARINE CORPORATION V. CEBU SEAMAEN'S ASSOCIATION
Facts: Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of
marine coastwise transportation, employing therein several steamships of Philippine registry. They had a
collective bargaining contract with the respondent Cebu Seamen's Association, Inc. The respondent
union filed with the CIR a petition against the States Marine Corporation alleging that the officers and
men working on board the petitioners' vessels have not been paid their sick leave, vacation leave and
overtime pay; that the petitioners threatened or coerced them to accept a reduction of salaries, observed
by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their
employees on board their vessels, to pay the sum of P.40 for every meal, while the masters and officers
were not required to pay their meals and that because Captain Carlos Asensi had refused to yield to the
general reduction of salaries, the petitioners dismissed said captain who now claims for reinstatement
and the payment of back wages from December 25, 1952, at the rate of P540.00, monthly.
The petitioners' shipping companies, answering, averred that very much below 30 of the men and
officers in their employ were members of the respondent union; that the work on board a vessel is one of
comparative ease; that petitioners have suffered financial losses in the operation of their vessels and

that there is no law which provides for the payment of sick leave or vacation leave to employees or
workers of private firms; that as regards the claim for overtime pay, the petitioners have always observed
the provisions of Comm. Act No. 444, (Eight-Hour Labor Law), notwithstanding the fact that it does not
apply to those who provide means of transportation; that the shipowners and operators in Cebu were
paying the salaries of their officers and men, depending upon the margin of profits they could realize and
other factors or circumstances of the business; that in enacting Rep. Act No. 602 (Minimum Wage Law),
the Congress had in mind that the amount of P.40 per meal, furnished the employees should be
deducted from the daily wages; that Captain Asensi was not dismissed for alleged union activities, but
with the expiration of the terms of the contract between said officer and the petitioners, his services were
terminated.
A decision was rendered in favor of the respondent union. The companies filed the present writ of
certiorari, bearing in mind the deep-rooted principle that the factual findings of the Court of Industrial
Relations should not be disturbed, if supported by substantial evidence, the different issues are taken
up, in the order they are raised in the brief for the petitioners.
Issue: WON the cost of said meals may not be legally deducted from the wages or salaries of the
aforesaid crew members by the herein petitioners.
Held: It was shown by substantial evidence, that since the beginning of the operation of the petitioner's
business, all the crew of their vessels have been signing "shipping articles" in which are stated opposite
their names, the salaries or wages they would receive. All seamen, whether members of the crew or
deck officers or engineers, have been furnished free meals by the ship owners or operators. It is,
therefore, apparent that, aside from the payment of the respective salaries or wages, set opposite the
names of the crew members, the petitioners bound themselves to supply the crew with ship's provisions,
daily subsistence or daily rations, which include food.
We hold that such deductions are not authorized. In the coastwise business of transportation of
passengers and freight, the men who compose the complement of a vessel are provided with free meals
by the shipowners, operators or agents, because they hold on to their work and duties, regardless of
"the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk ahead in the
midst of the high seas."
It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew
members in question, were mere "facilities" which should be deducted from wages, and not
"supplements" which, according to said section 19, should not be deducted from such wages, because it
is provided therein: "Nothing in this Act shall deprive an employee of the right to such fair wage ... or in
reducing supplements furnished on the date of enactment."
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above
and over his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part
of the laborers' basic wages, it is a facility.
The order CIR to the company to continue granting this privilege, was upheld by this Court.
Millares et al., vs NLRC 305 SCRA 501
Facts: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit
Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of
respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.

In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners
received separation pay computed at the rate of one (1) month basic pay for every year of service.
Believing however that the allowances they allegedly regularly received on a monthly basis during their
employment should have been included in the computation thereof they lodged a complaint for
separation pay differentials.
Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor
Code, being necessary and indispensable for their existence and subsistence.
Held: The allowances are not part of the wages of the employees. Wage is defined in letter (f) as the
remuneration or earnings, however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be rendered and includes the fair
and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee.
When an employer customarily furnishes his employee board, lodging or other facilities, the fair and
reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in
"wage." Customary is founded on long-established and constant practice connoting regularity. The
receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part
of salary because the nature of the grant is a factor worth considering. The court agrees with the
observation of the Office of the Solicitor General that the subject allowances were temporarily, not
regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not
so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives
meaning to the term as including articles or services for the benefit of the employee or his family but
excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to
the conduct of the employer's business.
In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose.
Revenue Audit Memo Order No. 1-87 pertinently provides 3.2 transportation, representation or
entertainment expenses shall not constitute taxable compensation if: (a)
It is for necessary travelling
and representation or entertainment expenses paid or incurred by the employee in the pursuit of the
trade or business of the employer, and (b) The employee is required to, and does, make an
accounting/liquidation for such expense in accordance with the specific requirements of substantiation
for such category or expense.Board and lodging allowances furnished to an employee not in excess of
the latter's needs and given free of charge, constitute income to the latter except if such allowances or
benefits are furnished to the employee for the convenience of the employer and as necessary incident to
proper performance of his duties in which case such benefits or allowances do not constitute taxable
income.
The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the
Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board,
lodging and other facilities customarily furnished by an employer to his employees." Petitioners'
allowances do not represent such fair and reasonable value as determined by the proper authority
simply because the Staff/Manager's allowance and transportation allowance were amounts given by
respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig
allowance was given in consideration of being assigned to the hostile environment then prevailing in
Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

SHS PERFORATED MATERIALS, INC vs. MANUEL F. DIAZ

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing
under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone
Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in
which capacity he determines the administration and direction of the day-to-day business affairs of SHS.
Petitioner Hinrich Johann Schumacher, also a German national, is the treasurer and one of the board
directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever
nature upon maturity. Schumacher is also the Executive Vice-President of the European Chamber of
Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities have an
arrangement where ECCP handles the payroll requirements of SHS to simplify business operations and
minimize operational expenses. Thus, the wages of SHS employees are paid out by ECCP, through its
Accounting Services Department headed by Juliet Taguiang (Taguiang).
Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on
probationary status from July 18, 2005 to January 18, 2006, with a monthly salary of P100,000.00.
Respondents duties, responsibilities, and work hours were described in the Contract of Probationary
Employment. Respondent was also instructed by Hartmannshenn to report to the SHS office and plant at
least two (2) days every work week to observe technical processes involved in the manufacturing of
perforated materials, and to learn about the products of the company, which respondent was hired to
market and sell.
During respondents employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed through
telephone or mobile phone. When he would be in the Philippines, he and the respondent held meetings.
As to respondents work, there was no close supervision by him. Hartmannshenn expressed his
dissatisfaction over respondents poor performance. In numerous electronic mail messages, respondent
acknowledged his poor performance and offered to resign from the company.
Respondent, however, denied sending such messages but admitted that he had reported to the SHS
office and plant only eight (8) times from July 18, 2005 to November 30, 2005. In preparation for his trip
to the Philippines, Hartmannshenn tried to call respondent on his mobile phone, but the latter failed to
answer. Respondent claimed that he never received the messages.
Hartmannshenn instructed Taguiang not to release respondents salary. Later that afternoon, respondent
called and inquired about his salary. Taguiang informed him that it was being withheld and that he had to
immediately communicate with Hartmannshenn. Again, respondent denied having received such
directive. The next day, respondent served on SHS a demand letter and a resignation letter and
demanded salary for the period covering November 16 to 30, 2005, which has yet been unpaid and is
still currently being withheld albeit illegally. It is precisely because of illegal and unfair labor
practices such as these that I offer my resignation with neither regret nor remorse.6
Diaz met with Hartmannshenn in Alabang. The latter told him that he was extremely disappointed for the
following reasons: his poor work performance; his unauthorized leave and malingering from November
16 to November 30, 2005; and failure to immediately meet Hartmannshenn upon his arrival from
Germany.
Petitioners averred that respondent was unable to give a proper explanation for his behavior.
Hartmannshenn then accepted respondents resignation and informed him that his salary would be
released upon explanation of his failure to report to work, and proof that he did, in fact, work for the

period in question. He demanded that respondent surrender all company property and information in his
possession. Respondent agreed to these "exit" conditions through electronic mail. Instead of complying
with the said conditions, however, respondent sent another electronic mail message to Hartmannshenn
and Schumacher on December 1, 2005, appealing for the release of his salary.
Respondent, on the other hand, claimed that the meeting with Hartmannshenn took place in the evening
of December 1, 2005, at which meeting the latter insulted him and rudely demanded that he
accept P25,000.00 instead of his accrued wage and stop working for SHS, which demands he refused.
Later that same night, he sent an electronic mail message appealing for the release of his salary.
Another demand letter for respondents accrued salary for November 16 to November 30, 2005, 13th
month pay, moral and exemplary damages, and attorneys fees were sent on December 2, 2005.
To settle the issue amicably, petitioners counsel advised respondents counsel by telephone that a
check had been prepared in the amount of P50,000.00, and was ready for pick-up on December 5,
2005. Respondent countered that his counsel received petitioners formal reply letter only on December
20, 2005, stating that his salary would be released subsequent to the turn-over of all materials owned by
the company in his possession. Respondent filed a Complaint7 against the petitioners for illegal
dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full
backwages; exemplary damages, and attorneys fees, costs of suit, and legal interest.
THE RULING OF THE LABOR ARBITER: Declared complainant as having been illegally dismissed and
further ordering his immediate reinstatement without loss of seniority rights and benefits. It is also
ordered that complainant be deemed as a regular employee. The LA found that respondent was
constructively dismissed because the withholding of his salary was contrary to Article 116 of the Labor
Code as it was not one of the exceptions for allowable wage deduction by the employer under Article 113
of the Labor Code. He had no other alternative but to resign because he could not be expected to
continue working for an employer who withheld wages without valid cause. The LA also held that
respondents probationary employment was deemed regularized because petitioners failed to conduct a
prior evaluation of his performance and to give notice two days prior to his termination as required by the
Probationary Contract of Employment and Article 281 of the Labor Code. Petitioners contention that
they lost trust and confidence in respondent as a managerial employee was not given credence for lack
of notice to explain the supposed loss of trust and confidence and absence of an evaluation of
respondents performance. The LA believed that the respondent complied with the obligations in his
contract as evidenced by his electronic mail messages to petitioners.
THE RULING OF THE NLRC: On appeal, the NLRC reversed the decision of the LA.
The Decision dated June 15, 2006 is hereby REVERSED and SET ASIDE and a new one is hereby
entered. The NLRC explained that the withholding of respondents salary was a valid exercise of
management prerogative. The act was deemed justified as it was reasonable to demand an explanation
for failure to report to work and to account for his work accomplishments. The NLRC held that the
respondent voluntarily resigned as evidenced by the language used in his resignation letter and demand
letters. Given his professional and educational background, the letters showed respondents resolve to
sever the employer-employee relationship, and his understanding of the import of his words and their
consequences. Consequently, respondent could not have been regularized having voluntarily resigned
prior to the completion of the probationary period. The NLRC further noted that respondents 13th month
pay was already integrated in his salary in accordance with his Probationary Contract of Employment
and, therefore, no additional amount should be due him.
THE RULING OF THE COURT OF APPEALS

The CA reversed the NLRC resolutions in its December 23, 2008 Decision, the dispositive portion of said
decision reads. CA held that withholding respondents salary was not a valid exercise of management
prerogative as there is no such thing as a management prerogative to withhold wages temporarily.
Petitioners averments of respondents failure to report to work were found to be unsubstantiated
allegations not corroborated by any other evidence, insufficient to justify said withholding and lacking in
probative value. The malicious withholding of respondents salary made it impossible or unacceptable for
respondent to continue working, thus, compelling him to resign. The respondents immediate filing of a
complaint for illegal dismissal could only mean that his resignation was not voluntary. As a probationary
employee entitled to security of tenure, respondent was illegally dismissed. The CA ruled out actual
reinstatement, however, reasoning out that antagonism had caused a severe strain in their relationship.
It was of the view that separation pay equivalent to at least one month pay would be a more equitable
disposition.
Issue: WON respondent was constructively dismissed by petitioners, which determination is, in turn,
hinged on finding out (i) whether or not the temporary withholding of respondents salary/wages by
petitioners was a valid exercise of management prerogative; and (ii) whether or not respondent
voluntarily resigned.
Held: The factual findings of the CA and the LA are contradictory to that of the NLRC. Thus, a review of
the records is necessary to resolve the factual issues involved and render substantial justice to the
parties. Although management prerogative refers to "the right to regulate all aspects of employment," it
cannot be understood to include the right to temporarily withhold salary/wages without the consent of the
employee. To sanction such an interpretation would be contrary to Article 116 of the Labor Code. Any
withholding of an employees wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code
The Court finds petitioners evidence insufficient to prove that respondent did not work from November
16 to November 30, 2005. The nature of respondents job did not allow close supervision and monitoring
by petitioners. Neither was there any prescribed daily monitoring procedure established by petitioners to
ensure that respondent was doing his job. Therefore, granting that respondent failed to answer
Hartmannshenns mobile calls and to reply to two electronic mail messages and given the fact that he
admittedly failed to report to work at the SHS plant twice each week during the subject period, such
cannot be taken to signify that he did not work from November 16 to November 30, 2005.
Furthermore, the electronic mail reports sent to Hartmannshenn and the receipt presented by
respondent as evidence of his having worked during the subject period were not controverted by
petitioners. The eight notarized letters of prospective clients vouching for meetings they had with
respondent during the subject period may also be given credence.
The Court agrees with the LA and the CA that respondent was forced to resign and was, thus,
constructively dismissed.
It is of no moment that he served his resignation letter on November 30, 2005, the last day of the payroll
period and a non-working holiday, since his salary was already due him on November 29, 2005, being
the last working day of said period. In fact, he was then informed that the wages of all the other SHS
employees were already released, and only his was being withheld. What is significant is that the
respondent prepared and served his resignation letter right after he was informed that his salary was
being withheld. It is worthy to note that in his resignation letter, respondent cited petitioners "illegal and
unfair labor practice"26 as his cause for resignation. As correctly noted by the CA, respondent lost no
time in submitting his resignation letter and eventually filing a complaint for illegal dismissal just a few

days after his salary was withheld. These circumstances are inconsistent with voluntary resignation and
bolster the finding of constructive dismissal.
Respondent was constructively dismissed and, therefore, illegally dismissed.1avvphi1 Although
respondent was a probationary employee, he was still entitled to security of tenure. This Court has held
that probationary employees who are unjustly dismissed during the probationary period are entitled to
reinstatement and payment of full backwages and other benefits and privileges from the time they were
dismissed up to their actual reinstatement.29 Respondent is, thus, entitled to reinstatement without loss
of seniority rights and other privileges as well as to full backwages, inclusive of allowances, and other
benefits or their monetary equivalent computed from the time his compensation was withheld up to the
time of actual reinstatement. Respondent, however, is not entitled to the additional amount for 13th
month pay, as it is clearly provided in respondents Probationary Contract of Employment that such is
deemed included in his salary.
Respondents reinstatement, however, is no longer feasible as antagonism has caused a severe strain in
their working relationship. Under the doctrine of strained relations, the payment of separation pay is
considered an acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. Payment liberates the employee from what could be a highly oppressive work environment, and
at the same time releases the employer from the obligation of keeping in its employ a worker it no longer
trusts. Therefore, a more equitable disposition would be an award of separation pay equivalent to at
least one month pay, in addition to his full backwages, allowances and other benefits.
With respect to the personal liability of Hartmannshenn and Schumacher, this Court has held that
corporate directors and officers are only solidarily liable with the corporation for termination of
employment of corporate employees if effected with malice or in bad faith.32 Bad faith does not connote
bad judgment or negligence; it imports dishonest purpose or some moral obliquity and conscious doing
of wrong; it means breach of unknown duty through some motive or interest or ill will; it partakes of the
nature of fraud.33 To sustain such a finding, there should be evidence on record that an officer or director
acted maliciously or in bad faith in terminating the employee.34
Petitioners withheld respondents salary in the sincere belief that respondent did not work for the period
in question and was, therefore, not entitled to it. There was no dishonest purpose or ill will involved as
they believed there was a justifiable reason to withhold his salary. Thus, although they unlawfully
withheld respondents salary, it cannot be concluded that such was made in bad faith. Accordingly,
corporate officers, Hartmannshenn and Schumacher, cannot be held personally liable for the corporate
obligations of SHS.
Rosario Bros v. Ople
FACTS: Private respondents are tailors, pressers, stitchers and similar workers hired by the petitioner in
its tailoring department (Modes Suburbia). Some had worked there since 1969 until their separation on
January 2, 1978. For their services, they were paid weekly wages on piece-work basis, minus the
withholding tax per Bureau of Internal Revenue (BIR) rules. Further, they were registered with the Social
Security System (SSS) as employees of petitioner and premiums were deducted from their wages; they
were also members of the Avenida-Cubao Manila COD Department Store Labor Union which has a
Collective Bargaining Agreement with the company and; they were required to report for work from
Monday through Saturday and to stay in the tailoring shop for no less than eight (8) hours a day, unless
no job order was given them after waiting for two to three hours, in which case, they may leave and may
come back in the afternoon. Their attendance was recorded through a bundy clock just like the other

employees of petitioner. A master cutter distributes job orders equally, supervises the work and sees to it
that they were finished as soon as possible.
On September 7, 1977, the private respondents filed with the Regional Office of the Department (now
Ministry) of Labor a complaint for violation of Presidential Decree 851 (13th month pay) and Presidential
Decree 525, as amended by Presidential Decree 1123 (Emergency Living Allowance) against herein
petitioner.
After petitioner had filed its answer, the case was certified for compulsory arbitration to the Labor Arbiter
who, after due hearing, rendered a decision on December 29, 1977 dismissing "private respondents"
claims for unpaid emergency living allowance and 13th month pay, for lack of merit, upon finding that the
complainants (herein private respondents) are not employees of the respondent (herein
petitioner) within the meaning of Article 267(b)of the Labor Code. As a consequence, the private
respondents were dismissed on January 2, 1978 and this prompted them to file a complaint for illegal
dismissal with the Ministry of Labor. Meanwhile, the National Labor Relations Commission (NLRC)
affirmed the decision of the Labor Arbiter and dismissed private respondents' appeal for lack of merit.
Labor Arbiter, issued an order directing the Chief of the Research and Information Department of the
Commission to designate a Socio-Economic Analyst to compute the balance of private respondents'
claims for the 13th month pay and emergency living allowance in accordance with respondent Minister's
decision of March 27, 1979. Pursuant thereto, a report, dated March 4, 1980, was submitted computing
the balance of private respondents' claims for emergency living allowance and 13th month pay up to
February 29,1980 in the total amount of P71,131.14. A writ of execution was issued for the satisfaction of
said amount.
ISSUE: WON an employer-employee relationship exists between petitioner and private respondents
HELD: Yes. The existence of ER-EE relationship is determined by: the selection and engagement of
employee, payment of wages, power of dismissal, power to control employees conduct.
An independent contractor is the one who exercises independent employment and contracts to do a
piece of work according to his own methods without being subjected to control of his employer except as
to the result of his work.
In the case at bar, the selection and hiring of respondents was done by petitioner through the master
cutter. Respondents received their weekly wages from petitioner on piece-work basis within the meaning
of the term wage under the Labor Code, which defined as the remuneration or earnings. However,
designated, whether fixed on a time, task, piece or commission basis, payable by an employer to an
employee under a written or unwritten contact for work done or to be done or for services rendered or to
be rendered.
Petitioner also had the power to dismiss respondents, thus, the latters conduct was controlled by
petitioner. Respondents were allowed to register with SSS and withholding taxes were also deducted
from their wages.
Wherefore, petition is dismissed.
TRADERS ROYAL BANK, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION & TRADERS
ROYAL BANK EMPLOYEES UNION, respondents.

FACTS: On November 18, 1986, the Union, through its president, filed a letter-complaint against TRB
with the Conciliation Division of the Bureau of Labor Relations and on March 24, 1987, the Secretary of
Labor certified the complaint to the NLRC for resolution of the following issues raised by the
complainants:

l) The Management of TRB per memo dated October 10, 1986 paid the employees their holiday pay but
has withheld from the union the basis of their computation.
2) The computation in question has allegedly decreased the daily salary rate of the employees. This
diminution of existing benefits has decreased our overtime rate and has affected the employees' take
home pay.
3) The diminution of benefits being enjoyed by the employees since the (sic) immemorial, e.g. mid-year
bonus, from two (2) months gross pay to two (2) months basic and year-end bonus from three (3)
months gross to only two (2) months.
4) The refusal by management to recall active union members from the branches which were being
transferred without prior notice, solely at the instance of the branch, manager.

On September 2, 1988, the NLRC rendered a decision in favor of the employees, the dispositive portion
of whichreads:1. Holiday differential for the period covering l983-1986 as embodied in Resolution No.
4984-1986 of respondent's Board of Directors but to start from November 11, 1983 and using the Divisor
251 days in determining the daily rate of the employees; 2. Mid-year bonus differential representing the
difference between two (2) months gross pay and two (2) months basic pay and end-year bonus
differential of one (1) month gross pay for 1986.The claim for holiday differential for the period earlier
than November 11, 1983 is hereby dismissed, the same having prescribed. Likewise, the charge
of unfair labor practice against the respondent company is hereby dismissed for lack of merit.

ISSUE: Whether or not the bonus is demandable?

DECISION: No. From 1979-1985, the bonuses were less because the income of the Bank had
decreased. In 1986, the income of the Bank was only 20.2 million pesos, but the Bank still gave out the
usual two (2) months basic mid-year and two months gross year-end bonuses. The petitioner pointed
out, however, that the Bank weakened considerably after 1986 on account of political developments in
the country. Suspected to be a Marcos-owned or controlled bank, it was placed under sequestration by
the present administration and is now managed by the PCGG. In the light of these submissions of
the petitioner, the contention of the Union that the granting of bonuses to the employees had ripened into
a company practice that may not be adjusted to the prevailing financial condition of the Bank has
no legal and moral bases. Its fiscal condition having declined, the Bank may not be forced to distribute
bonuses which it can no longer afford to pay and, in effect, be penalized for its past generosity to its
employees. Private respondent's contention, that the decrease in the midyear and year-end bonuses
constituted a diminution of the employees' salaries, is not correct, for bonuses are not part of labor
standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which
are provided by the Labor Code. NLRC reversed.

*not sure which is the real assigned case, heres another case

TRADERS ROYAL BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and
ROGELIO ESPAOLA, respondent.
FACTS: Agro-Commercial Security Services Agency Inc. (AGRO) assigned Rogelio Espaola to work as
a janitor at the Iloilo Branch of petitioner Traders Royal Bank (TRB). This assignment was covered by
Mission Order No. 29 dated 26 June 1974 which was duly issued by the Administrative Officer of AGRO,
Alberto G. Espinosa.[1] Sometime in 1982 Espaola was informed that he would be absorbed by a new
agency, Royal Protective and Janitorial Services Inc. (ROYAL), and that he would perform the same
functions.[2] However, since ROYAL was also managed and owned by the same people who previously
handled AGRO, it did not give him separation pay or any other benefits. ROYAL also appointed Alberto
G. Espinosa, AGROs former Administrative Officer, as its General Manager.

TRB and ROYAL executed a new service agreement whereby ROYAL would continue supplying
janitorial services TRB for one year, beginning 23 March 1988.[4] The contract also stated that if there
was no notice to terminate at the end of the one (1) year period it would remain in force on a monthly
basis.
When the service agreement expired on 23 March 1989 TRB did not issue a termination notice. Instead,
it continued to avail of ROYALs services on a monthly basis as stated in the contract. It was only on 4
February 1994 that TRB sent a letter to ROYAL apprising the latter of its desire to terminate the service
agreement effective 16 March 1994.[5] In turn, ROYAL sent a notice to private respondent Espaola
informing him that due to TRB's decision to end their contract his services were no longer needed.
[6] After being dismissed ROYAL declined to give him any further assignment since his job was allegedly
coterminus with its contract with TRB.
Espaola filed a case against ROYAL, TRB and Alberto Espinosa for illegal dismissal, illegal deduction,
underpayment of wages, non-payment of overtime pay, premium pay for rest day, service incentive leave
pay, 13th month pay and night shift differentials with a prayer for reinstatement and back wages. He
also claimed moral and
exemplary damages as well as attorneys fees.

Labor Arbiter ruled in favor of TRB holding that Espaola had no cause of action against it as there was
no employer-employee relationship between them. National Labor Relations Commission (NLRC)
reversed the decision of the Labor Arbiter and ruled that Espaola was not an employee of ROYAL but of
TRB. NLRC then ordered TRB to reinstate him and to pay him the total amount of P110,829.78 broken
down as follows: P81,265.90 for back wages, P736.92 for ERA, P15,698.08 for salary
differentials, P3,143.45 for 13th month pay and P10,075.00 for attorneys fees.

After its motion for reconsideration was denied TRB filed this special civil action for certiorari contending
that the NLRC gravely abused its discretion in reversing the Labor Arbiters decision and declaring
Espaola to be its employee.

ISSUE and RULING: 1) Who was Espaolas real employer? To prove that Espaola was not its
employee TRB cites Mission Order No. 29 signed by AGRO Administrative Officer Alberto G.
Espinosa. The order stated that Rogelio Espaola would be assigned as janitor to TRBs Iloilo
Branch. It also provided that his employment would be from 26 January 1974 until revoked.[11] TRB
argues that this proves that AGRO was Espaolas employer from 1974 to 1982. And when he agreed
to be absorbed by ROYAL he became its employee from 1982 to 1994. Hence, he was never employed
by TRB. To bolster its contention TRB refers to the provisions of its service agreement with ROYAL.
TRB asserts that aside from the agreement itself which reveals that it was ROYAL which provided the
janitors salary, par. 2 thereof also states that the janitors were its own employees. Thus, Espaolas
dismissal was the result of a valid termination of its service agreement with ROYAL.
We are not convinced. This Court has ruled that the existence of employer-employee relationship
cannot be proved by merely showing the agreement of the parties.[12] It is a question of fact which
should be supported by substantial evidence.[13] And in determining the existence of such relationship
the elements usually considered are: (a) the selection of the employee; (b) the payment of wages; (c)
the power of dismissal; and, (d) the power to control the employees conduct, with the "control test"
generally assuming primacy in the overall consideration.[14]
2) Who then had control over Espaola's conduct? Was it ROYAL or TRB? We believe it was TRB. The
allegations contained in the position paper of Espaola were never refuted. TRB could have easily
presented affidavits, written explanations or any other pleadings to defend itself and disprove Espaolas
claims.[16] However, the only evidence it ever presented was its service agreement with ROYAL. From
the time TRB submitted its position paper to the Labor Arbiter up to the time it submitted its
memorandum to the Supreme Court, not once did it deny that it designated Espaola as its driver. On
the other hand, Espaola constantly reiterated in his pleadings that TRB supervised and controlled his
work as its janitor-driver. The fact that Espaolas allegations were never controverted at any stage of
the proceedings affirms that such averments were true.[17] Furthermore, Rule 9, Sec. 11, of the Rules of
Court, which supplements the NLRC rules, also provides that an allegation which is not specifically
denied is deemed admitted.[18]
The NLRC therefore did not abuse its discretion in ruling that Espaola was not the employee of
ROYAL. On the contrary, it was the Labor Arbiter who came up with the erroneous conclusion. He
disregarded the uncontroverted allegations of Espaola and hastily concluded that since ROYAL was an
independent contractor, it was Espaolas direct employer. While it may be that ROYAL could very well
be an independent contractor - although it did not establish this fact with competent evidence to qualify it
as such - and that Espaolas name appeared in its payroll,[22] nevertheless, whatever role ROYAL had
in this case, it was certainly not as the employer of Espaola. For the fact remains that it was TRB
which had control and supervision over Espaolas work. Consequently, it should be considered as his
employer.
Since Espaola was illegally dismissed he is entitled to reinstatement with full back wages.[23] The
NLRC erred in ruling that he was only entitled to back wages from 16 March 1994 to 30 September
1996. An illegally dismissed employee is entitled to back wages from the time he was dismissed to the
time of his actual reinstatement.[24] However, the NLRCs ruling with regard to the salary differentials
and 13th month pay differentials must be sustained.

WHEREFORE, the petition is DISMISSED. The assailed Decision of public respondent National Labor
Relations Commission reversing that of the Labor Arbiter and ordering petitioner Traders Royal Bank to
reinstate private respondent Rogelio Espanola and to pay him salary differentials of P15,698.00, 13th
month pay differentials of P3,143.45 and attorney's fees of P10,075.43 is AFFIRMED, but with the
modification that petitioner should pay private respondent full back wages from 16 March 1994 up to his
actual reinstatement. Costs again
G.R. No. 167217, February 4, 2008, P.I. MANUFACTURING, INCORPORATED, petitioner, vs.
P.I. MANUFACTURING SUPERVISORS AND FOREMAN ASSOCIATION and the NATIONAL LABOR
UNION,respondents.

FACTS: RA 6640 was signed into law on 10 December 1987, providing, among others, an increase
in the statutory minimum wage and salary rates of employees and workers in the private sector. It
provides that the minimum wage of workers and employees in the private sector shall be increased by
P10, except those outside Manila who shall receive an increase of P11, provided those that are already
receiving above the minimum wage shall receive an increase of P10. PI Manufacturing Supervisors and
Foremen Association (PIMASUFA) entered into a new CBA whereby the supervisors were granted an
increase of P625 per month and the foremen, P475 per month. The increases were made to retroact to
12 May 1987, or prior to the passage of RA 6640. The application of said CBA resulted in a wage
distortion, which prompted the PIMASUFA together with the National Labor Union to file a case against
PIMA for violation of RA 6640. PIMA asseverates that the Company and Supervisors and Foremen
Contract absolves, quitclaims, and releases the company for any monetary claim that the supervisors
and the foremen may have previous to the signing of the agreement on 17 December 1987The Labor
Arbiter ruled in favor of PIMASUFA and ordered PIMA to give the PIMASUFA members wage increases
equivalent to 13.5% of their basic pay. The CA affirmed, but raised the wage increase to 18.5%.

Issues: 1 W/N the PIMASUFA, by signing The Company and Supervisors and Foremen Contract, has
waived any benefit it may have under RA 6640. 2 W/N the 13.5% increase in the supervisors and
foremens basic salary should be increased to 18.5% to correct the wage distortion brought about by the
implementation of RA 6640.

Ruling: 1 NO. The increase resulting from any wage distortion brought about by the implementation of
the new minimum wage law is not waivable. 2 NO. Although there was a wage distortion, the same was
cured or remedied when PIMASUFA entered into the1987 CBA with PIMA after the effectivity of RA
6640. The 1987 CBA increased the monthly salaries of the supervisors by P626 and P475, which reestablishes the gap not only between supervisors and foremen but also between them and the rank-andfile employees. Such gap as re-established by virtue of the CBA is more than a substantial compliance
with RA 6640. Moreover, requiring PIMA to pay 18.5%, over and above the negotiated wage increases
provided under the 1987 CBA, is highly unfair and oppressive to the former.
A CBA constitutes the law between the parties when freely and voluntarily entered into. It was not shown
that PIMASUFA was coerced or forced by PIMA to sign the 1987 CBA. All of its 13 officers signed the
CBA with the assistance of NLU. They signed it fully aware of the passage of RA 6640. The duty to
bargain requires that the parties deal with each other with open and fair minds. PIMASUFA cannot
invoke the beneficial provisions of the1987 CBA but disregard the concessions it voluntarily extends to
PIMA.

Doctrine: Quitclaims by laborers are generally frowned upon as contrary to public policy and are held
to be ineffective to bar recovery for the full measure of the workers rights. The reason for the rule is that
the employer and the employee do not stand on the same footing. Article 1149 of the Civil Code states
that: When the law sets, or authorizes the setting of a minimum wage for laborers, and a contract is
agreed upon by which a laborer accepts a lower wage, he shall be entitled to recover the deficiency.

According to RA 6727, wage distortion is a situation where an increase in prescribed wage results in the
elimination or severe contraction of intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of differentiation. Otherwise
stated, wage distortion means the disappearance or virtual disappearance of pay differentials between
lower and higher positions in an enterprise because of compliance with a wage order. The goal
of collective bargaining is the making of agreements that will stabilize business conditions and fix fair
standards of working conditions.
At this juncture, it must be stressed that a CBA constitutes the law between the
parties when freely andvoluntarily entered into.13 Here, it has not been shown that respondent
PIMASUFA was coerced or forced by petitioner to sign the 1987 CBA. All of its thirteen (13) officers
signed the CBA with the assistance of respondent NLU. They signed it fully aware of the passage of R.A.
No. 6640. The duty to bargain requires that the parties deal with each other with open and fair minds. A
sincere endeavor to overcome obstacles and difficulties that may arise, so that employer-employee
relations may be stabilized and industrial strife eliminated, must be apparent.14Respondents cannot
invoke the beneficial provisions of the 1987 CBA but disregard the concessions it voluntary extended to
petitioner. The goal of collective bargaining is the making of agreements that will stabilize business
conditions and fix fair standards of working conditions.15 Definitely, respondents posture contravenes
this goal.
In fine, it must be emphasized that in the resolution of labor cases, this Court has always been guided by
the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare
shall be protected. However, consistent with such policy, the Court cannot favor one party, be it labor or
management, in arriving at a just solution to a controversy if the party concerned has no valid support to
its claim, like respondents here. WHEREFORE, we GRANT petitioners motion for reconsideration
and REINSTATE the petition we likewise GRANT.
G.R. No. 162411, June 30, 2008, NASIPIT INTEGRATED ARRASTRE AND STEVEDORING
SERVICES, INC. (NIASSI), represented by RAMON M. CALO, petitioner, vs.NASIPIT EMPLOYEES
LABOR UNION (NELU)-ALU-TUCP, represented by DONELL P. DAGANI, respondent.
FACTS: NIASSI is a domestic corporation with office at Talisay, Nasipit, Agusan del Norte. Respondent
Nasipit EmployeesLabor Union (Union) was and may still be the collective bargaining agent of the rankand-file employees of NIASSI and is a local chapter of the Associated Labor Union. The dispute started
when, in October 1999, the Regional Tripartite Wages and Productivity Board (Wage Board) of Caraga
Region in Northeastern Mindanao issued Wage Order No. (WO) RXIII-02 which granted an additional
PhP12 per day cost of living allowance to the minimum wage earners in that region. Owing allegedly
to NIASSIs failure to implement the wage order, the Union filed a complaint before the DOLE Caraga
Regional Office for the inspection of NIASSIs records and the enforcement of WO RXIII-02. A DOLE
inspection team was accordingly dispatched and reported that WO RXIII-02 was not applicable to

NIASSIs employees since they were already receiving a wage rate higher than the prescribed minimum
wage. Upon motion by the Union, the DOLE Regional Director indorsed the case to the NLRC Regional
Arbitration Branch for further hearing, which in turn referred the case to the NCMB for voluntary
arbitration. On February 22, 2002, Voluntary Arbitrator Jesus G. Chavez rendered a decision granting
the Unions prayer for the implementation of WO RXIII-02 on the rationale that WO RXIII-02 did not
specifically prohibit the grant of wage increase to employees earning above the minimum wage. On the
contrary, Chavez said, the wage order specifically enumerated those who are outside its coverage, but
did not include in the enumeration those earning above the minimum wage. He also held that the
Collective Bargaining Agreement (CBA) between NIASSI and the Union provides that wage increases
granted by the company within one year from CBA signing shall not be creditable to future legally
mandated wage increases. Following the denial of its motion for reconsideration, NIASSI filed with the
CA a petition for review, which affirmed the decision of the voluntary arbitrator.

every case, justice is to be granted to the deserving and dispensed in the light of established facts and
the applicable law and doctrine, DISMISSED for lack of merit.

ISSUE: WON the wage order may be made to apply and cover Nasipits employees who, at the time of
the issuance and effectivity of the wage order, were already receiving a wage rate higher than the
prevailing minimum wage.

On February 9 and 14, 1995, the Office of Regional Director Young conducted inspection visits at
petitioners establishment. Senior Labor Enforcement Officer Eduvigis A. Acero issued a Notice of
Inspection Results. (the above computed wage differentials form part of the legal remunerations of the
complainants, respondent ALLIED INVESTIGATION BUREAU, INC., is hereby ordered to pay to the
ninety-two employees the total amount of EIGHT HUNDRED SEVEN THOUSAND FIVE HUNDRED
SEVENTY PESOS AND THIRTY-SIX CENTAVOS (P807.570.36) to be distributed to the individual
employees in accordance with the schedule mentioned above, within ten (10) days from receipt hereof.
Otherwise, Writ of execution shall issue to enforce this Order.The issue on the non-remittance of SSS
premiums is hereby indorsed to the Social Security System, the same being within its jurisdiction to
properly pass upon.)

DECISION: No. It is abundantly clear from the above quoted provisions of WO RXIII-02 and its IRR that
only minimum wage earners are entitled to the prescribed wage increase. Expressio unius est exclusio
alterius.6 The express mention of one person, thing, act, or consequence excludes all others. The
beneficent, operative provision of WO RXIII-02 is specific enough to cover only minimum wage earners.
Necessarily excluded are those receiving rates above the prescribed minimum wage. The only situation
when employees receiving a wage rate higher than that prescribed by the WO RXIII-02 may still benefit
from the order is, as indicated in Sec. 1 (c) of the IRRs, through the correction of wage distortions.
Clearly then, only employees receiving salaries below the prescribed minimum wage are entitled to the
wage increase set forth under WO RXIII-02, without prejudice, of course, to the grant of increase to
correct wage distortions consequent to the implementation of such wage order. Considering that
NIASSIs employees are undisputedly already receiving a wage rate higher than that prescribed by the
wage order, NIASSI is not legally obliged to grant them wage increase.CA reversed.

** Petitioners reliance on the above quoted CBA provision and on the flawed arbitrators case
disposition is really misplaced. Consider that in his decision, Chavez, after admitting that NIASSIs
employees were receiving a wage rate higher than the prescribed minimum wage, proceeded to fault
NIASSI for not presenting evidence to show that the overage or excess resulted from general wage
increases granted by the company itself within one year from the effectivity of the CBA in 1997. By
simplistically utilizing the adage "doubt is resolved in labor," instead of relying on the case records and
the evidence adduced, the voluntary arbitrator extended the coverage of WO RXIII-02 to include those
who, by the terms of the order, are not supposed to receive the benefit. If only the voluntary arbitrator
was circumspect enough to consider the facts on hand, he would have seen that the CBA provision on
non-creditability finds no application in the present case, because creditability is not the real issue in this
case. And neither is the interpretation of the CBA provision. The real issue in this case, as discussed
above, is the coverage and application of WO RXIII-02.
While it behooves the Court to accord protection to the working class, tilting the balance of justice in its
favor whenever appropriate, it is not possible to resolve every dispute to further the cause of labor. In

ALLIED INVESTIGATION BUREAU, INC., Petitioner, v. HON. SECRETARY OF LABOR &

EMPLOYMENT, acting through Undersecretary CRESENCIANO B. TRAJANO, Respondents.
FACTS: Petitioner Allied Investigation Bureau, Inc. is a security agency. On January 11, 1994, it entered
into a security contract with Novelty Philippines, Inc. (NPI, for brevity) whereby it obligated itself to
provide security services to the latter. Private respondents Melvin T. Pelayo and Samuel Sucanel, two of
the security guards assigned by petitioner to NPI, filed a complaint with the Office of respondent
Regional Director Romeo A. Young charging petitioner with non-compliance with Wage Order No. NCR03,[2 which increased the minimum daily pay of workers by P17.00, or from P118.00 toP135.00 effective
December 16, 1993; and further, by P10.00, or from P135.00 to P145.00 daily beginning April 1, 1994.
Private respondents, likewise, sought the recovery of wage differentials.

Petitioner appealed the Order to respondent Secretary of Labor and Employment, without however,
posting a cash or surety bond equivalent to the monetary award in the said Order appealed from.
On September 19, 1995, the Secretary of Labor, thru Undersecretary Cresenciano B. Trajano issued an
Order dismissing petitioners appeal for failure to perfect said appeal.
ISSUES: a. Whether or not respondent Regional Director acted without jurisdiction in adjudicating the
private respondents money claims where the aggregate money claim of each of them
exceeds P5,000.00.
b. Whether or not respondent Secretary of Labor & Employment, acting through Undersecretary
Cresenciano B. Trajano, acted with grave abuse of discretion in dismissing herein petitioners appeal
attacking the jurisdiction of respondent Regional Director in adjudicating subject money claims of private
respondents.
HELD: Petitioner argues that the power to adjudicate money claims belongs to the Labor Arbiter who has
exclusive jurisdiction over employees claims where the aggregate amount of the claims of each
employee exceeds P5,000.00.[10
Petitioners cites Articles 129 and 217 of the Labor Code of the Philippines which provide, respectively,
that the power of the Regional Director to adjudicate employees money claims is subject to the condition
that the aggregate money claims of each employee does not exceed P5,000.00; and, that the Labor
Arbiter has jurisdiction over all other claims arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand pesos
(P5,000.00), whether or not accompanied with a claim for reinstatement.

Petitioner further contends that since the Order appealed from is void and without legal effect, said Order
never assumed finality and, therefore, it was improper for the respondent Secretary of Labor to outrightly
dismiss the appeal on the ground that petitioner failed to post a cash/surety bond.

2) The issue of whether or not the respondent Secretary of Labor acted with grave abuse of discretion in
dismissing petitioners appeal on the ground that petitioner failed to post the required cash or surety
bond, we rule in the negative.

Petitioner alleges that respondent Secretary of Labor acted with grave abuse of discretion in evading its
duty to entertain the appeal on a technical ground.

Article 128 of the Labor Code likewise explicitly provides that in case an order issued by the duly
authorized representative of the Secretary of Labor and Employment involves a monetary award, an
appeal by the employer may be perfected only upon posting of a cash or surety bond in an amount
equivalent to the monetary award in the order appealed from.

Finally, petitioner prays for the issuance of a temporary restraining order or a writ of preliminary
injunction as the enforcement of the alleged void orders would cause them great prejudice if not
irreparable damage.
Petitioners arguments are untenable.While it is true that under Articles 129[14 and 217[15 of the Labor
Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of
each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial
and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said
powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus:
Art. 128. Visitorial and enforcement power. - (a) The Secretary of Labor or his duly authorized
representatives, including labor regulation officers, shall have access to employers records and
premises at any time of the day or night whenever work is being undertaken therein, and the right to
copy therefrom, to question any employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of this Code and of any labor law,
wage order or rules and regulations issued pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary
or his duly authorized representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were
not considered in the course of inspection.
An order issued by the duly authorized representatives of the Secretary of Labor and Employment under
this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent
to the monetary award in the order appealed from.
In the case at bar, the Office of respondent Regional Director conducted inspection visits at petitioners
establishment on February 9 and 14, 1995 in accordance with the above-mentioned provision of law. In
the course of said inspection, several violations of the labor standard provisions of the Labor Code were
discovered and reported by Senior Labor Enforcement Officer Eduvigis A. Acero in his Notice of
Inspection Results. It was on the bases of the aforesaid findings (which petitioner did not contest), that
respondent Regional Director issued the assailed Order for petitioner to pay private respondents the
respective wage differentials due them.
Clearly, as the duly authorized representative of respondent Secretary of Labor, and in the lawful
exercise of the Secretarys visitorial and enforcement powers under Article 128 of the Labor Code,
respondent Regional Director had jurisdiction to issue his impugned Order.

The Office of the Solicitor General: since the Order appealed from involves a monetary award, an appeal
by petitioner may be perfected only upon posting of a cash or surety bond issued by a reputable bonding
company duly accredited by respondent Secretary of Labor in the amount equivalent to the monetary
award in the Order appealed from.
It is undisputed that petitioner herein did not post a cash or surety bond when it filed its appeal with the
Office of respondent Secretary of Labor. Consequently, petitioner failed to perfect its appeal on time and
the Order of respondent Regional Director became final and executory. The Secretary of Labor and
Employment thru Undersecretary Cresenciano B. Trajano correctly dismissed petitioners appeal. The
instant petition is hereby DENIED for lack of merit.
CIRINEO BOWLING PLAZA, INC., Petitioner, vs. GERRY SENSING, BELEN FERNANDEZ, et. al.,
DEPARTMENT OF LABOR AND EMPLOYMENT and COURT of APPEALS, Respondents.
FACTS: Eligio Paolo, Jr., an employee of petitioner, filed a letter complaint with the Department of Labor
and Employment (DOLE for short), Dagupan District Office, Dagupan City, requesting for the
inspection/investigation of petitioner for various labor law violations like underpayment of wages,
13thmonth pay, non-payment of rest day pay, overtime pay, holiday pay and service incentive leave pay.
[3]Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment, his duly
authorized representative under Article 128 of the Labor Code, as amended, conducted inspections on
petitioner's establishment the following day. In his inspection report,[4] Labor and Employment Officer III,
Crisanto Rey Dingle, found that petitioner has thirteen[5] employees and had committed the following
violations: underpayment of minimum wage, 13th month pay, holiday premiums, overtime premiums, and
non-payment of rest day. The findings in the inspection report were explained to petitioner's officer-incharge, Ma. Fe Boquiren, who signed the same.
The first hearing of the case was scheduled on December 27, 1995, but petitioner failed to appear, thus,
the hearing was reset to January 10, 1996. On the date set, Boquiren, as petitioner's representative,
appeared with the information that petitioner's President/General Manager Luisito Cirineo was sick and
confined in a hospital.
On the January 19, 1996 hearing, Cirineo appeared and asked for more time to settle with his
employees. The case was again set on January 26, 1996 but Cirineo failed to appear.
On April 22, 1996, an Order[6] was issued by the DOLE Regional Office, the dispositive portion of which
reads:
WHEREFORE, premises considered and considering further that the amount computed constitutes part
of the lawful remunerations of thirteen affected employees, respondent is hereby ordered to pay them
the total amount of THREE HUNDRED SEVENTY SEVEN THOUSAND FIVE HUNDRED PESOS AND
58/100. (P377,500.58), representing their unpaid/underpaid wages, 13thmonth pay, holiday premiums,
rest day pay and overtime premiums distributed.

petitioner's representative, Carmen Zapata, appeared before the DOLE Regional Office and submitted
the quitclaims, waivers and releases of employees-awardees, Lamberto Solano, Jovelyn Quinto, Manuel
Benitez, Edgar Dizon, Ronillo Tandoc, Eligio Paolo, Jr., and Dario Benitez. Later, however, Benitez,
Tandoc, Quinto and Dizon wrote DOLE a letter denying having received any amount from petitioner.
Thus, DOLE's inspector Dingle went to petitioner's establishment to confirm the authenticity of the
quitclaims and releases and talked to the employees concerned who stated that they signed the
document without knowing its contents but they are willing to settle if they will be given the amount
computed by DOLE.
On June 19, 1996, Luisito Cirineo and a certain Fe Cirineo Octaviano, owner of Esperanza Seafoods
Kitchenette stationed in petitioner's establishment, wrote DOLE a letter requesting that the case be
endorsed to the National Labor Relations Commission since the resolution of the case required
evidentiary matters not disclosed or verified in the normal course of inspection. They also submitted
documents to show that petitioner and Esperanza Seafoods Kitchenette are separate and distinct
business entities and that some of the employees-awardees are actually employees of the Esperanza
Seafoods Kitchenette.
Petitioner filed its Memorandum of Appeal to the Secretary of Labor and Employment[14] who dismissed
the appeal on the ground that same was filed out of time.[15] On motion for reconsideration, the appeal
was granted and the appeal was given due course.
However, on March 30, 1999, DOLE Undersecretary Jose Espaol dismissed the appeal and affirmed the
order.
ISSUE: PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT DISMISSED THE INSTANT PETITION AND
OUTRIGHT DISMISSAL OF PETITIONER'S MOTION FOR RECONSIDERATION DUE TO MERE
TECHNICALITIES.
RULING: We dismiss the petition. We find no grave abuse of discretion committed by the CA in issuing
the assailed resolutions. The CA dismissed the petition for certiorari for failure of petitioner to attach
certain documents and to state the material date. While petitioner filed its motion for reconsideration,
attaching the required documents, the CA correctly found that it still did not state the material date when
it received the DOLE's Resolution dated April 18, 2000 denying its motion for reconsideration. Thus,
without the date of receipt of the denial of such motion, the CA could not determine whether the petition
was filed within the reglementary period of sixty days for filing the petition for certiorari under Rule 65 of
the Rules of Court.
While there are exceptional cases where we set aside procedural defects to correct a patent injustice,
there should be an effort on the part of the party invoking liberality to at least explain its failure to comply
with the rules.[20] It appears that petitioner's new counsel failed to state the material date twice, first in
its petition filed with the CA and, second, in its motion for reconsideration. Petitioner's explanation
focused on the fact that its President, Luisito Cirineo, only learned of the DOLE's denial of its motion for
reconsideration on August 1, 2000 when he came back from a trip from Europe; that efforts to
communicate with its former counsel remained futile. We find such explanation unsatisfactory since the
material dates can easily be verified from the files of the DOLE office.
Even if we disregard technicality, we find the arguments raised by petitioner without merit. As correctly
held by the DOLE Regional Director and sustained by the DOLE Undersecretary, records show that
petitioner never refuted the findings of the labor inspector as to the identity of the thirteen employees nor
raised the issue of separate juridical personalities of petitioner Cirineo and Esperanza Seafoods
Kitchenette during the investigation and on the hearings conducted.

Likewise, we sustain the jurisdiction of the DOLE Regional Director. The visitorial and enforcement
powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be
exercised even where the individual claim exceeds P5,000.00. DISMISSED.
G.R. No. 78909, June 30, 1989, MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L.
DORADO, President, petitioner, vs.THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL
DlRECTOR OF LABOR, REGION X,respondents.
Facts: Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de
Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover President. The
hospital derives its finances from the club itself as well as from paying patients, averaging 130 per
month. It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro
City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are
given food, but the amount spent therefor is deducted from their respective salaries (pp. 77-78, Rollo).
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a
complaint with the Office of the Regional Director of Labor and Employment, Region X, for
underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.
The Regional Director issued and order based on the reports of the Labor Standard and Welfare
Officers, directing payment of P723, 888.58 representing underpayment of wages and ECOLAs to all the
petitioners employees. Petitioner appealed to the Minister of Labor and Employment which modified the
decision as to the period for the payment ECOLAs only. A motion for reconsideration was filed by
petitioner and was denied by the Secretary of Labor.
ISSUE and RULING: 1) Whether or not the Regional Director had jurisdiction over the case and if so, the
extent of coverage of any award that should be forthcoming, arising from his visitorial and enforcement
powers under Article 128 of the Labor Code.
Labor standards refer to the minimum requirements prescribed by existing laws, rules, and regulations
relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits,
including occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition of Labor
Standards Cases in the Regional Office, dated September 16, 1987). 1 Under the present rules, a
Regional Director exercises both visitorial and enforcement power over labor standards cases, and is
therefore empowered to adjudicate money claims, provided there still exists an employer-employee
relationship, and the findings of the regional office is not contested by the employer concerned.
Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director's authority over
money claims was unclear. The complaint in the present case was filed on May 23, 1986 when E.O. No.
111 was not yet in effect, and the prevailing view was that stated in the case of Antonio Ong, Sr. vs.
Henry M. Parel, et al., G.R. No. 76710, dated December 21, 1987, thus:
. . . the Regional Director, in the exercise of his visitorial and enforcement powers under Article 128 of
the Labor Code, has no authority to award money claims, properly falling within the jurisdiction of the
labor arbiter. . . .. . . If the inspection results in a finding that the employer has violated certain labor
standard laws, then the regional director must order the necessary rectifications. However, this does not
include adjudication of money claims, clearly within the ambit of the labor arbiter's authority under Article
217 of the Code.

We believe, however, that even in the absence of E. O. No. 111, Regional Directors already had
enforcement powers over money claims, effective under P.D. No. 850, issued on December 16, 1975,
which transferred labor standards cases from the arbitration system to the enforcement system.
EO 111 authorizes a Regional Director to order compliance by an employer with labor standards
provisions of the Labor Code and other legislation. It is Our considered opinion however, that the
inclusion of the phrase, " The provisions of Article 217 of this Code to the contrary notwithstanding and in
cases where the relationship of employer-employee still exists" ... in Article 128(b), as amended, abovecited, merelyconfirms/reiterates the enforcement adjudication authority of the Regional Director
over uncontested money claimsin cases where an employer-employee relationship still exists. 6
Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and 37, it
is clear that it has always been the intention of our labor authorities to provide our workers immediate
access (when still feasible, as where an employer-employee relationship still exists) to their rights and
benefits, without being inconvenienced by arbitration/litigation processes that prove to be not only nervewracking, but financially burdensome in the long run.
E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the
Secretary of Labor's decision upholding private respondents' salary differentials and ECOLAs on
September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director
(Article 128-b) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to
empower the Regional Directors to resolve uncontested money claims in cases where an employeremployee relationship still exists. This intention must be given weight and entitled to great respect.
2) Whether or not the Regional Director erred in extending the award to all hospital employees. We
answer in the affirmative.
The Regional Director correctly applied the award with respect to those employees who signed the
complaint, as well as those who did not sign the complaint, but were still connected with the hospital at
the time the complaint was filed (See Order, p. 33 dated August 4, 1986 of the Regional Director, Pedrito
de Susi, p. 33, Rollo).
The justification for the award to this group of employees who were not signatories to the complaint is
that the visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable
over establishments, not over the individual members/employees, because what is sought to be
achieved by its exercise is the observance of, and/or compliance by, such firm/establishment with the
labor standards regulations. Necessarily, in case of an award resulting from a violation of labor
legislation by such establishment, the entire members/employees should benefit therefrom.
ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons
still employed in the Hospital at the time of the filing of the complaint, but GRANTED as regards those
employees no longer employed at that time.
G.R. No. 74621 February 7, 1990, BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner, vs.THE
HONORABLE MINISTER OF LABOR & EMPLOYMENT AND BROKENSHIRE MEMORIAL HOSPITAL
EMPLOYEES AND WORKER'S UNION-FFW Represented by EDUARDO A. AFUAN, respondents.
FACTS: This case originated from a complaint filed by private respondents against petitioner on
September 21, 1984 with the Regional Office of the MOLE, Region XI, Davao City for non-compliance
with the provisions of Wage Order No. 5. After due healing the Regional Director rendered a decision
dated November 16, 1984 in favor of private respondents. Judgment having become final and executory,
the Regional Director issued a Writ of Execution whereby some movable properties of the hospital

(petitioner herein) were levied upon and its operating expenses kept with the bank were garnished. The
levy and garnishment were lifted when petitioner hospital paid the claim of the private respondents (281
hospital employees) directly, in the total amount of P163,047.50 covering the period from June 16 to
October 15, 1984.
After making said payment, petitioner hospital failed to continue to comply with Wage Order No. 5 and
likewise, failed to comply with the new Wage Order No. 6 which took effect on November 1, 1984,
prompting private respondents to file against petitioner another complaint docketed as ROXI-LSED-1485, which is now the case at bar.
ISSUE: Whether or not the Regional Director has jurisdiction over money claims of workers concurrent
with the Labor Arbiter.
RULING: It will be observed that what in fact conferred upon Regional Directors and other hearing
officers of the Department of Labor (aside from the Labor Arbiters) adjudicative powers, i.e., the power to
try and decide, or hear and determine any claim brought before them for recovery of wages, simple
money claims, and other benefits, is Republic Act 6715, provided that the following requisites concur, to
wit:
1) The claim is presented by an employee or person employed in domestic or household service, or
househelper under the code; 2) The claimant, no longer being employed, does not seek reinstatement;
and 3) The aggregate money claim of the employee or househelper does not exceed five thousand
pesos (P5,000.00).
In the absence of any of the three (3) requisites, the Labor Arbiters have exclusive original jurisdiction
over all claims arising from employer-employee relations, other than claims for employee's
compensation, social security, medicare and maternity benefits.
Petitioner's contention that the constitutionality of Wage Order Nos. 5 and 6 should be passed upon by
the National Labor Relations Commission, lacks merit. The Supreme Court is vested by the Constitution
with the power to ultimately declare a law unconstitutional. Without such declaration, the assailed
legislation remains operative and can be the source of rights and duties especially so in the case at bar
when petitioner complied with Wage Order No. 5 by paying the claimants the total amount of
P163,047.50, representing the latter's minimum wage increases up to October 16, 1984, instead of
questioning immediately at that stage before paying the amount due, the validity of the order on grounds
of constitutionality. The Regional Director is plainly ,without the authority to declare an order or law
unconstitutional and his duty is merely to enforce the law which stands valid, unless otherwise declared
by this Tribunal to be unconstitutional. On our part, We hereby declare the assailed Wage Orders as
constitutional, there being no provision of the 1973 Constitution (or even of both the Freedom
Constitution and the 1987 Constitution) violated by said Wage Orders, which Orders are without doubt
for the benefit of labor.
The labor regulations officers may not be deemed uncontested as to bring the case at bar within the
competence of the Regional Director, as duly authorized representative of the Secretary of Labor,
pursuant to Article 128 of the Labor Code, as amended. Considering further that the aggregate claims
involve an amount in excess of P5,000.00, We find it more appropriate that the issue of petitioner
hospital's liability therefor, including the proposal of petitioner that the obligation of private respondents
to the former in the aggregate amount of P507,237.57 be used to offset its obligations to them, be
ventilated and resolved, not in a summary proceeding before the Regional Director under Article 128 of
the Labor Code, as amended, but in accordance With the more formal and extensive proceeding before
the Labor Arbiter. Nevertheless, it should be emphasized that the amount of the employer's liability is not
quite a factor in determining the jurisdiction of the Regional Director. However, the power to order

compliance with labor standards provisions may not be exercised where the employer contends or
questions the findings of the labor regulation officers and raises issues which cannot be determined
without taking into account evidentiary matters not verifiable in the normal course of inspection, as in the
case at bar.
Viewed in the light of RA 6715 and read in consonance with the case of Briad Agro Development Corp.,
as reconsidered, The instant case falls under the exclusive original jurisdiction of the Labor Arbiter RA
6715 is in the nature of a curative statute. Curative statutes have long been considered valid in our
jurisdiction, as long as they do not affect vested rights. In this case, We do not see any vested right that
will be impaired by the application of RA 6715. Inasmuch as petitioner had already paid the claims of
private respondents in the amount of P163,047.50 pursuant to the decision rendered in the first
complaint, the only claim that should be deliberated upon by the Labor Arbiter should be limited to the
second amount given by the Regional Director in the second complaint together with the proposal to
offset the obligations. SET ASIDE. The case is REFERRED, if the respondents are so minded, to the
Labor Arbiter for proper proceedings.
PT&T v. NLRC
FACTS: PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman specifically
as Supernumerary Project Worker, for a fixed period from November 21, 1990 until April 20, 1991 as
reliever for C.F. Tenorio who went on maternity leave. She was again invited for employment as
replacement of Erlina F. Dizon who went on leave on 2 periods, from June 10, 1991 to July 1, 1991 and
July 19, 1991 to August 8, 1991.
On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employee where
probationary period will cover 150 days. She indicated in the portion of the job application form under
civil status that she was single although she had contracted marriage a few months earlier. When
petitioner learned later about the marriage, its branch supervisor, Delia M. Oficial, sent de Guzman a
memorandum requiring her to explain the discrepancy. Included in the memorandum, was a reminder
about the companys policy of not accepting married women for employment. She was dismissed from
the company effective January 29, 1992. Labor Arbiter handed down decision on November 23, 1993
declaring that petitioner illegally dismissed De Guzman, who had already gained the status of a regular
employee. Furthermore, it was apparent that she had been discriminated on account of her having
contracted marriage in violation of company policies.
ISSUE: Whether the alleged concealment of civil status can be grounds to terminate the services of an
employee.
HELD: Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits
discrimination merely by reason of marriage of a female employee. It is recognized that company is free
to regulate manpower and employment from hiring to firing, according to their discretion and best
business judgment, except in those cases of unlawful discrimination or those provided by law.
PT&Ts policy of not accepting or disqualifying from work any woman worker who contracts marriage is
afoul of the right against discrimination provided to all women workers by our labor laws and by our
Constitution. The record discloses clearly that de Guzmans ties with PT&T were dissolved principally
because of the companys policy that married women are not qualified for employment in the company,
and not merely because of her supposed acts of dishonesty.
The government abhors any stipulation or policy in the nature adopted by PT&T. As stated in the labor
code:

ART. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman 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 marriage.
The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code on the right of a
woman to be free from any kind of stipulation against marriage in connection with her employment and it
likewise is contrary to good morals and public policy, depriving a woman of her freedom to choose her
status, a privilege that is inherent in an individual as an intangible and inalienable right. The kind of
policy followed by PT&T strikes at the very essence, ideals and purpose of marriage as an inviolable
social institution and ultimately, family as the foundation of the nation. Such policy must be prohibited in
all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the
land not only for order but also imperatively required.
APEX MINING CO V NLRC
NATURE: Special civil action for certiorari to annul NLRC decision
FACTS
- Sinclita Candida was employed by Apex Mining Company, Inc. to perform laundry services at its staff
house. At first, she was paid on a piece rate basis. Later, she was paid on a monthly basis.
- While she was hanging her laundry, she accidentally slipped and hit her back on a stone. She reported
the accident to her immediate supervisor and to the personnel officer. As a result of the accident she was
not able to continue with her work.
- She was permitted to go on leave for medication and was offered P2k which was eventually increased
to P5k to persuade her to quit her job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed her.
- Labor arbiter ordered Apex Mining Company to pay the complainant Salary Differential, Emergency
Living Allowance, 13th Month Pay Differential and separation pay of one month for every year of service
NLRC affirmed.
ISSUE
WON the househelper in the staff houses of an industrial company is a domestic helper
HELD
NO
- Petitioner is a regular employee
- Rule XIII, Section l(b), Book 3 of the Labor Code:
The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer
to any person, whether male or female, who renders services in and about the employer's home and
which services are usually necessary or desirable for the maintenance and enjoyment thereof, and
ministers exclusively to the personal comfort and enjoyment of the employer's family.
- The foregoing definition clearly contemplates such househelper or domestic servant who is employed
in the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's
family. The definition cannot be interpreted to include househelp or laundrywomen working in
staffhouses of a company
- The criteria is the personal comfort and enjoyment of the family of the employer in the home of said
employer.
- While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in
a home or in a company staffhouse may be similar in nature, the difference in their circumstances is that
in the former instance they are actually serving the family while in the latter case, whether it is a

corporation or a single proprietorship engaged in business or industry or any other agricultural or similar
pursuit, service is being rendered in the staffhouses or within the premises of the business of the
employer. In such instance, they are employees of the company or employer in the business concerned
entitled to the privileges of a regular employee.
Disposition Petition dismissed
BARCENAS V NLRC (REV SIM DEE)
FACTS
- In 1978, Chua Se Su (Su, for short) in his capacity as the Head Monk of the Buddhist Temple of Manila
and Baguio City and as President and Chairman of the Board of Directors of the Poh Toh Buddhist
Association of the Phils. Inc. hired the petitioner, Filomena Barcenas, who speaks the Chinese language
as secretary and interpreter.
- Her position required her to receive and assist Chinese visitors to the temple, act as tourist guide for
foreign Chinese visitors, attend to the callers of the Head Monk as well as to the food for the temple
visitors, run errands for the Head Monk such as paying the Meralco, PLDT, MWSS bills and act as
liaison in some government offices. Aside from her pay and allowances under the law, she received an
amount of P500 per month plus free board and lodging in the temple.
- In December, 1979, Su assumed the responsibility of paying for the education of Barcenas nephew. In
1981, Su and Barcenas had amorous relations. In May, 1982, or five months before giving birth to the
alleged son of Su on October 12, 1982, she was sent home to Bicol. Upon the death of Su in July, 1983,
she remained and continued in her job.
- . In 1985, Manuel Chua (Chua, for short) was elected President and Chairman of the Board of the Poh
Toh Buddhist Association of the Philippines, Inc. and Rev. Sim Dee (Dee, for short) was elected Head
Buddhist Priest. Thereafter, Chua and Dee discontinued payment of her monthly allowance and the
additional P500 effective 1983. In addition, Barcenas and her son were evicted forcibly from their
quarters in the temple by six police officers. She was brought first to the Police precinct in Tondo and
then brought to Aloha Hotel where she was compelled to sign a written undertaking not to return to the
Buddhist temple in consideration of the sum of P10,000. She refused and Chua shouted threats against
her and her son. Her personal belongings including assorted jewelries were never returned.
- The Labor Arbiter ruled for Barcenas but the NLRC reversed.
ISSUES
1. WON Barcenas was a regular employee of the Manila Buddhist Temple
2. WON Barcenas was illegally dismissed
HELD
1. YES
Reasoning
- We agree with the petitioner's claim that she was a regular employee of the Manila Buddhist Temple as
secretary and interpreter of its Head Monk, Su. As Head Monk, President and Chairman of the Board of
Directors of the Poh Toh Buddhist Association of the Philippines, Su was empowered to hire the
petitioner under Article V of the By-laws of the Association which states:

"The President or in his absence, the Vice President shall represent the Association in all its dealings
with the public, subject to the Board, shall have the power to enter into any contract or agreement in
the name of the Association, shall manage the active business operation of the Association, shall deal
with the bank or banks."
- Chua and Dee, on the other hand, claimed that Barcenas was never an employee of the Poh Toh
Temple but a servant who confined herself to the temple and to the personal needs of the late Chua Se
Su and thus, her position is co-terminus with that of her master. However, the work that she performed in
the temple could not be categorized as mere domestic work. Barcenas, being proficient in the Chinese
language, attended to the visitors, mostly Chinese, who came to pray or seek advice before Buddha for
personal or business problems; arranged meetings between these visitors and Su and supervised the
preparation of the food for the temple visitors; acted as tourist guide of foreign visitors; acted as liaison
with some government offices; and made the payment for the temple, Meralco, MWSS and PLDT bills.
Indeed, these tasks may not be deemed activities of a household helper. They were essential and
important to the operation and religious functions of the temple.
2. NO
Reasoning
- Her status as a regular employee ended upon her return to Bicol in May, 1982 to await the birth of her
lovechild allegedly by Su. The records do not show that she filed any leave from work or that a leave
was granted her. Neither did she return to work after the birth of her child on October 12,1982, whom
she named Robert Chua alias Chua Sim Tiong [Whoa, wait a minute! If youre alert youll realize that Sim
is the NEW Head Monks name! Hmmm dont you think something elses going on here? ]. The
NLRC found that it was only in July, 1983 after Su died that she went back to the Manila Buddhist
Temple.
- She herself supplied the reason for her return. She stated:
"It was the death-bed instruction to her by Chua Se So to stay at the temple and to take care of the two
boys and to see to it that they finish their studies to become monks and when they are monks to
eventually take over the two temples as their inheritance from their father."
- Thus, her return to the temple was no longer as an employee but rather as Su's mistress who is bent
on protecting the proprietary and hereditary rights of her son and nephew. In her pleadings, the petitioner
claims that they were forcefully evicted from the temple, harassed and threatened by respondents and
that the Poh Toh Buddhist Association is a trustee corporation with the children as cestui que trust.
These claims are not proper in this labor case. They should be appropriately threshed out in the
complaints already filed by the petitioner before the civil courts. Due to these claims, we view the
respondents' offer of P10,000 as indicative more of their desire to evict the petitioner and her son from
the temple rather than an admission of an employer-employee relation.
- The petitioner's claim for unpaid wages since May, 1982 which she filed only in 1986, has already
prescribed. Under Article 292 of the Labor Code, all money claims arising from employer-employee
relations must be filed within three years from the time the cause of action accrued, otherwise they shall
forever be barred.
- Finally, while petitioner contends that she continued to work in the temple after Su died, there is,
however, no proof that she was re-hired by the new Head Monk. In fact, she herself manifested that
respondents made it clear to her in no uncertain terms that her services as well as her presence and that
of her son were no longer needed. However, she persisted and continued to work in the temple without

receiving her salary because she expected Chua and Dee to relent and permit the studies of the two
boys. Consequently, under these circumstances, no employer-employee relationship could have arisen.
Disposition Decision of the NLRC is AFFIRMED.
GR No. 146053 (April 30, 2008)
This case deals with the sexual harassment of a young girl by her elementary school teacher. The case
highlights the vulnerability of female students.
Facts: Petitioner is a public school teacher of Pandan Elementary School, Pandan, Mambajao, Camiguin
Province. Respondent is the father of AAA, an elementary school student of the petitioner.
AAA claimed that on August 16, 1995, petitioner asked her to be at his office to do an errand. Once
inside, she saw him get a folder from one of the cartons on the floor near his table, and place it on his
table. He then asked her to come closer, and when she did, held her hand, then touched and fondled her
breast. She stated that he fondled her breast five times, and that she felt afraid. A classmate of hers,
claiming to have witnessed the incident, testified that the fondling incident did happen just as AAA
related it.
Petitioner was charged with Misconduct in a Formal Charge dated February 12, 1996 by Regional
Director Vivencio N. Muego, Jr. of the CSC.
In his defense, petitioner claimed that the touching incident happened by accident, just as he was
handing AAA a lesson book. He further stated that the incident happened in about two or three seconds,
and that the girl left his office without any complaint.
Held: The act of petitioner of fondling one of his students is against a law, RA 7877, and is doubtless
inexcusable. The particular act of petitioner cannot in any way be construed as a case of simple
misconduct. Sexually molesting a child is, by any norm, a revolting act that it cannot but be categorized
as a grave offense. Parents entrust the care and molding of their children to teachers, and expect them
to be their guardians while in school. Petitioner has violated that trust.
A teacher who perverts his position by sexually harassing a student should not be allowed, under any
circumstance, to practice this noble profession. So it must be here.
Bacsin vs. Wahiman
FACTS
-Bacsin, a public elementary school teacher, was charged with Misconduct for fondling the breast of his
student, as was witnessed by another student. In his defense, Bacsin claimed that the touching
happened by accident.
*CSC: GUILTY of Grave Misconduct (Acts of Sexual Harassment), DISMISSED. Act contained in the
Anti-Sexual Harassment Act of 1995. MR Denied. Appealed to CA
*CA: Affirm. Even if Bacsin was formally charged with disgraceful and immoral conduct and
misconduct, CSC found that the allegations and evidence sufficiently proved petitioners guilt of grave
misconduct, which is punishable by dismissal from service.
ISSUE: WON MISCONDUCT (which was the charge against him) includes Grave Misconduct, thus, he
can be convicted of such even if that was not charged
HELD: YES

*Dadubo v. Civil Service Commission: The charge against the respondent in an administrative case need
not be drafted with the precision of an information in a criminal prosecution. It is sufficient that he is
apprised of the substance of the charge against him; what is controlling is the allegation of the acts
complained of, not the designation of the offense.
>>>It is clear that petitioner was sufficiently informed of the basis of the charge against him, which was
his act of improperly touching one of his students. Thus informed, he defended himself from such
charge. The failure to designate the offense specifically and with precision is of no moment in this
administrative case.
>>>Charges against him imputes acts covered and penalized under Anti-sexual harassment act of 1995
*Domingo v. Rayala: it is not necessary that the demand, request, or requirement of a sexual favor be
articulated in a categorical oral or written statement. It may be discerned, with equal certitude, from the
acts of the offender.
>>>act of mashing the breast, in an education environment, upon a student, who felt fear at the time
Bacsin touched her, are sufficient grounds for grave misconduct
*there is grave misconduct! The act of petitioner of fondling one of his students is against a law, RA
7877, and is doubtless inexcusable. The particular act of petitioner cannot in any way be construed as a
case of simple misconduct. Sexually molesting a child is, by any norm, a revolting act that it cannot but
be categorized as a grave offense. Parents entrust the care and molding of their children to teachers,
and expect them to be their guardians while in school. Petitioner has violated that trust. The charge of
grave misconduct proven against petitioner demonstrates his unfitness to remain as a teacher and
continue to discharge the functions of his office.
*no denial of due process: The essence of due process is simply an opportunity to be heard, or, as
applied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek for a
reconsideration of the action or ruling complained of. These elements are present in this case, where
petitioner was properly informed of the charge and had a chance to refute it, but failed.
A teacher who perverts his position by sexually harassing a student should not be allowed, under any
circumstance, to practice this noble profession. So it must be here.
Disposition: DISMISS Petition
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. PUNO, J.:
FACTS: Petitioner Star Paper Corporation (the company) is a corporation engaged in trading
principally of paper products. Josephine Ongsitco is its Manager of the Personnel and Administration
Department while Sebastian Chua is its Managing Director.
The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia
(Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company.1
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee of
the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the couple
that should they decide to get married, one of them should resign pursuant to a company policy
promulgated in 1995. Simbol resigned on June 20, 1998 pursuant to the company policy.4
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee, whom
she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company policy, one
must resign should they decide to get married. Comia resigned on June 30, 2000.

Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-worker. Petitioners
stated that Zuiga, a married man, got Estrella pregnant. The company allegedly could have terminated
her services due to immorality but she opted to resign on December 21, 1999.6
The respondents each signed a Release and Confirmation Agreement. They stated therein that they
have no money and property accountabilities in the company and that they release the latter of any claim
or demand of whatever nature.7
Respondents offer a different version of their dismissal. 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 twentyone (21) days. She returned to work on December 21, 1999 but she found out that her name was onhold 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 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. They also contended that they were dismissed due to their union membership.
Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of merit.
On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on January 11, 2002.
Respondents filed a Motion for Reconsideration but was denied by the NLRC in a Resolution dated
August 8, 2002. They appealed to respondent court via Petition for Certiorari. Court of Appeals reversed
the NLRC.
ISSUE: Whether the policy of the employer banning spouses from working in the same company violates
the rights of the employee under the Constitution and the Labor Code or is a valid exercise of
management prerogative.
HELD:
The 1987 Constitution states our policy towards the protection of labor. The Civil Code likewise protects
labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. Therefore, such contracts are subject
to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.
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.
Respondents submit that their dismissal violates the above provision. Petitioners allege that its policy
"may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if read
together with the first paragraph of the rule. The rule does not require the woman employee to resign.
The employee spouses have the right to choose who between them should resign. Further, they are free
to marry persons other than co-employees. Hence, it is not the marital status of the employee, per se,
that is being discriminated. It is only intended to carry out its no-employment-for-relatives-within-thethird-degree-policy which is within the ambit of the prerogatives of management. 16
It is true that the policy of petitioners prohibiting close relatives from working in the same company takes
the nature of an anti-nepotism employment policy. Companies adopt these policies to prevent the hiring
of unqualified persons based on their status as a relative, rather than upon their ability. 17 These policies
focus upon the potential employment problems arising from the perception of favoritism exhibited
towards relatives.
With more women entering the workforce, employers are also enacting employment policies specifically
prohibiting spouses from working for the same company. We note that two types of employment policies
involve spouses: policies banning only spouses from working in the same company (no-spouse
employment policies), and those banning all immediate family members, including spouses, from
working in the same company (anti-nepotism employment policies).18
Unlike in our jurisdiction where there is no express prohibition on marital discrimination, 19 there are
twenty state statutes20 in the United States prohibiting marital discrimination. Some state courts21 have
been confronted with the issue of whether no-spouse policies violate their laws prohibiting both marital
status and sex discrimination.
In challenging the anti-nepotism employment policies in the United States, complainants utilize two
theories of employment discrimination: the disparate treatment and the disparate impact. Under
the disparate treatment analysis, the plaintiff must prove that an employment policy is discriminatory
on its face. No-spouse employment policies requiring an employee of a particular sex to either quit,
transfer, or be fired are facially discriminatory. For example, an employment policy prohibiting the
employer from hiring wives of male employees, but not husbands of female employees, is discriminatory
on its face.
On the other hand, to establish disparate impact, the complainants must prove that a facially neutral
policy has a disproportionate effect on a particular class. For example, although most employment
policies do not expressly indicate which spouse will be required to transfer or leave the company, the
policy often disproportionately affects one sex.

The state courts rulings on the issue depend on their interpretation of the scope of marital status
discrimination within the meaning of their respective civil rights acts. Though they agree that the term
"marital status" encompasses discrimination based on a person's status as either married, single,
divorced, or widowed, they are divided on whether the term has a broader meaning. Thus, their
decisions vary.
The courts narrowly interpreting marital status to refer only to a person's status as married, single,
divorced, or widowed reason that if the legislature intended a broader definition it would have either
chosen different language or specified its intent. They hold that the relevant inquiry is if one is married
rather than to whom one is married. They construe marital status discrimination to include only whether
a person is single, married, divorced, or widowed and not the "identity, occupation, and place of
employment of one's spouse." These courts have upheld the questioned policies and ruled that they did
not violate the marital status discrimination provision of their respective state statutes.
The courts that have broadly26 construed the term "marital status" rule that it encompassed the identity,
occupation and employment of one's spouse. They strike down the no-spouse employment policies
based on the broad legislative intent of the state statute. They reason that the no-spouse employment
policy violate the marital status provision because it arbitrarily discriminates against all spouses of
present employees without regard to the actual effect on the individual's qualifications or work
performance.27 These courts also find the no-spouse employment policy invalid for failure of the
employer to present any evidence of business necessity other than the general perception that
spouses in the same workplace might adversely affect the business.28 They hold that the absence of
such a bona fide occupational qualification29 invalidates a rule denying employment to one spouse
due to the current employment of the other spouse in the same office.30 Thus, they rule that unless the
employer can prove that the reasonable demands of the business require a distinction based on marital
status and there is no better available or acceptable policy which would better accomplish the business
purpose, an employer may not discriminate against an employee based on the identity of the employees
spouse.31 This is known as the bona fide occupational qualification exception.
We note that since the finding of a bona fide occupational qualification justifies an employers no-spouse
rule, the exception is interpreted strictly and narrowly by these state courts. There must be a compelling
business necessity for which no alternative exists other than the discriminatory practice. 32 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.33
The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ the
standard ofreasonableness of the company policy which is parallel to the bona fide occupational
qualification requirement. In the recent case of Duncan Association of Detailman-PTGWO and Pedro
Tecson v. Glaxo Wellcome Philippines, Inc.,34 we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor
company. We held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors. We considered the
prohibition against personal or marital relationships with employees of competitor companies upon
Glaxos employeesreasonable under the circumstances because relationships of that nature might
compromise the interests of Glaxo. In laying down the assailed company policy, we recognized that
Glaxo only aims to protect its interests against the possibility that a competitor company will gain access
to its secrets and procedures.35

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.36 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.37 (Emphases supplied.)
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.
We 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"38 is lame. That the second paragraph
was meant to give teeth to the first paragraph of the questioned rule39 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 co-employee. 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 cutter-machine. 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. 40
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot
benefit the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we
cannot prudently draw inferences from the legislatures silence41 that married persons are not protected
under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus, for failure of
petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned

policy is an invalid exercise of management prerogative. Corollarily, the issue as to whether respondents
Simbol and Comia resigned voluntarily has become moot and academic.
As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact that her
resignation letter was written in her own handwriting. Both ruled that her resignation was voluntary and
thus valid. The respondent court failed to categorically rule whether Estrella voluntarily resigned but
ordered that she be reinstated along with Simbol and Comia.

the first order. The order, however, stated that the DOLE had jurisdiction over the case, pursuant to the
Labor Code. The next hearing was set wherein the petitioners showed payroll sheets and waivers of
quitclaims which were signed by the respondents. However, the latter denied of the amount stated in the
payroll as they contend they receive lesser that what is stated there and also they were forced to sign
the quitclaims. The DOLE issues an order holding the petitioners liable to the respondents. The case
was elevated to the CA. The CA ruled in dismissing the petition, ruling that the DOLE had jurisdiction
over the labor standards case and that petitioners did not present enough evidence to refute the claims
made by respondents.

Estrella claims that she was pressured to submit a resignation letter because she was in dire need of
money. We examined the records of the case and find Estrellas contention to be more in accord with the
evidence. While findings of fact by administrative tribunals like the NLRC are generally given not only
respect but, at times, finality, this rule admits of exceptions,42 as in the case at bar.

Issues:

Estrella avers that she went back to work on December 21, 1999 but was dismissed due to her alleged
immoral conduct. At first, she did not want to sign the termination papers but she was forced to tender
her resignation letter in exchange for her thirteenth month pay.

2) whether the DOLE-NCR, as upheld by the DOLE Secretary and the CA committed an error in
awarding the claims of respondents.

The contention of petitioners that Estrella was pressured to resign because she got impregnated by a
married man and she could not stand being looked upon or talked about as immoral43 is incredulous. If
she really wanted to avoid embarrassment and humiliation, she would not have gone back to work at all.
Nor would she have filed a suit for illegal dismissal and pleaded for reinstatement. We have held that in
voluntary resignation, the employee is compelled by personal reason(s) to dissociate himself from
employment. It is done with the intention of relinquishing an office, accompanied by the act of
abandonment. 44 Thus, it is illogical for Estrella to resign and then file a complaint for illegal dismissal.
Given the lack of sufficient evidence on the part of petitioners that the resignation was voluntary,
Estrellas dismissal is declared illegal. CA decision affirmed.
Bay Haven v. Abuan
Facts:
This is a petition for certiorari on the decision of the CA, who denied their petition to annul the resolution
of the DOLE .
Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the exercise of its
visitorial, inspection and enforcement powers, through its Regional Director for the National Capital
Region (NCR), issued an Order commanding petitioners to pay respondents a total of P638,187.15
corresponding to the latter's claims for underpayment as petitioners' workers. The Regional Director
based his Order on the results of the inspection conducted on April 23, 1997 by one of its inspectors who
found that petitioner New Bay Haven Restaurant, committed the following violations under the labor
standards law which are Underpayment of minimum wage, Underpayment of thirteenth month pay,
Underpayment of regular holiday pay, Underpayment of special holiday pay, Non-payment of night shift
differential pay and Non-registration of the firm under Rule of Occupational Safety and Health Standards.
The petitioners filed with the DOLE-NCR Regional Office a Motion for Reconsideration, alleging that the
office had no jurisdiction over the case and that the order was issued in denial of petitioners' right to due
process, and the jurisdiction rest on the NLRC. they added that their right to due process was also
denied because the order was issued without them being furnished copies of the complaint and the
inspection report and without being notified of the hearings held in the case. The DOLE-NCR Assistant
Regional Director, acting for the Regional Director, issued an Order granting petitioners' motion for
reconsideration as he found merit in petitioners' allegation of absence of due process in the issuance of

1) whether the DOLE Secretary and her authorized representatives have jurisdiction to impose the
monetary liability against petitioners; and

Ruling:

1. The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional

2.

Director, have jurisdiction to enforce compliance with labor standards laws under the broad
visitorial and enforcement powers. The Court has held that the visitorial and enforcement
powers of the Secretary, exercised through his representatives, encompass compliance with
all labor standards laws and other labor legislation, regardless of the amount of the claims
filed by workers.
The mere disagreement by the employer with the findings of the labor officer, or the simple
act of presenting controverting evidence, does not automatically divest the DOLE Secretary
or any of his authorized representatives such as the regional directors, of jurisdiction to
exercise their visitorial and enforcement powers under the Labor Code. Thus, the key
requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is
that the evidentiary matters are not verifiable in the course of inspection. Where the evidence
presented was verifiable in the normal course of inspection, even if presented belatedly by
the employer, the Regional Director, and later the DOLE Secretary, may still examine them;
and these officers are not divested of jurisdiction to decide the case.
In the present case, petitioners' pieces of evidence of the alleged contract of lease, payroll
sheets, and quitclaims were all verifiable in the normal course of inspection and, granting that
they were not examined by the labor inspector, they have nevertheless been thoroughly
examined by the Regional Director and the DOLE Secretary. For these reasons, the
exclusion clause of Art. 128(b) does not apply.

G.R. No. 186091 | December 15, 2010 | EMMANUEL BABAS v. LORENZO SHIPPING
CORPORATION
F: Respondent Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged
in the shipping industry; it owns several equipment necessary for its business. On September 29, 1997,
LSC entered into a General Equipment Maintenance Repair and Management Services
Agreement3 (Agreement) with Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI
undertook to provide maintenance and repair services to LSCs container vans, heavy equipment, trailer
chassis, and generator sets. BMSI further undertook to provide checkers to inspect all containers
received for loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to
BMSI.4 The period of lease was coterminous with the Agreement.
BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks,
forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics. Six
years later, or on May 1, 2003, LSC entered into another contract with BMSI, this time, a service
contract.5
In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against
LSC and BMSI. On October 1, 2003, LSC terminated the Agreement, effective October 31, 2003.
Consequently, petitioners lost their employment.
BMSI asserted that it is an independent contractor. It averred that it was willing to regularize petitioners;
however, some of them lacked the requisite qualifications for the job. BMSI was willing to reassign
petitioners who were willing to accept reassignment. BMSI denied petitioners claim for underpayment of
wages and non-payment of 13th month pay and other benefits.
LSC, on the other hand, averred that petitioners were employees of BMSI and were assigned to LSC by
virtue of the Agreement. BMSI is an independent job contractor with substantial capital or investment in
the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement
between LSC and BMSI constituted legitimate job contracting. Thus, petitioners were employees of
BMSI and not of LSC.
After due proceedings, the LA rendered a decision6 dismissing petitioners complaint. The LA found that
petitioners were employees of BMSI. It was BMSI which hired petitioners, paid their wages, and
exercised control over them.
Petitioners appealed to the National Labor Relations Commission (NLRC), arguing that BMSI was
engaged in labor-only contracting. They insisted that their employer was LSC. On January 16, 2008, the
NLRC promulgated its decision. NLRC reversed the LAs decision.
NLRCs finding: BMSI is not engaged in legitimate job contracting. BMSI has no equipment, no office
premises, no capital and no investments as shown in the Agreement itself.
BMSI has no independent business or activity or job to perform in respondent LSC free from the control
of respondent LSC except as to the results thereof. In view of the absence of such independent business
or activity or job to be performed by respondent BMSI in respondent LSC [petitioners] performed work
that was necessary and desirable to the main business of respondent LSC. Respondents were not able
to refute the allegations of [petitioners] that they performed the same work that the regular workers of
LSC performed and they stood side by side with regular employees of respondent LSC performing the
same work. Necessarily, the control on the manner and method of doing the work was exercised by
respondent LSC and not by respondent BMSI since the latter had no business of its own to perform in
respondent LSC.
LSC went to the CA via certiorari. On October 10, 2008, the CA rendered the now challenged Decision,
reversing the NLRC. In holding that BMSI was an independent contractor, the CA relied on the
provisions of the Agreement, wherein BMSI warranted that it is an independent contractor, with adequate
capital, expertise, knowledge, equipment, and personnel necessary for the services rendered to LSC.
According to the CA, the fact that BMSI entered into a contract of lease with LSC did not ipso facto make

BMSI a labor-only contractor; on the contrary, it proved that BMSI had substantial capital. The CA was of
the view that the law only required substantial capital or investment. Since BMSI had substantial capital,
as shown by its ability to pay rents to LSC, then it qualified as an independent contractor. It added that
even under the control test, BMSI would be the real employer of petitioners, since it had assumed the
entire charge and control of petitioners services. The CA further held that BMSIs Certificate of
Registration as an independent contractor was sufficient proof that it was an independent contractor.
Hence, the CA absolved LSC from liability and instead held BMSI as employer of petitioners. Petitioners
filed a motion for reconsideration, but the CA denied it on January 21, 2009. Hence, this appeal by
petitioners.
I: WON CA ERRED IN IGNORING THE CLEAR EVIDENCE OF RECORD THAT RESPONDENT WAS
ENGAGED IN LABOR-ONLY CONTRACTING TO DEFEAT PETITIONERS RIGHT TO SECURITY OF
TENURE.
H: We dismiss the petition insofar as petitioners Soriano and Anajao are concerned. In declaring BMSI
as an independent contractor, the CA, in the challenged Decision, heavily relied on the provisions of the
Agreement, wherein BMSI declared that it was an independent contractor, with substantial capital and
investment.
De Los Santos v. NLRC instructed us that the character of the business, i.e., whether as labor-only
contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by
statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the
character of their business.
Despite the fact that the service contracts contain stipulations which are earmarks of independent
contractorship, they do not make it legally so. The language of a contract is neither determinative nor
conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a
declaration in a contract, the character of AMPCO's business, that is, whether as labor-only contractor,
or job contractor. AMPCO's character should be measured in terms of, and determined by, the criteria
set by statute.
Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, the
totality of the facts and the surrounding circumstances of the case are to be considered.
Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely
recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only
contracting, the following elements are present: (a) the contractor or subcontractor does not have
substantial capital or investment to actually perform the job, work, or service under its own account and
responsibility; and (b) the employees recruited, supplied, or placed by such contractor or subcontractor
perform activities which are directly related to the main business of the principal. 20
On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a
principal agrees to put out or farm out with the contractor or subcontractor the performance or
completion of a specific job, work, or service within a definite or predetermined period, regardless of
whether such job, work, or service is to be performed or completed within or outside the premises of the
principal.
A person is considered engaged in legitimate job contracting or subcontracting if the following conditions
concur:

(a) The contractor carries on a distinct and independent business and undertakes the
contract work on his account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of his work except as to the results thereof;

latter. Having gained regular status, petitioners were entitled to security of tenure and could only be
dismissed for just or authorized causes and after they had been accorded due process.
Accordingly, we hold that the NLRC committed no grave abuse of discretion in its decision. Conversely,
the CA committed a reversible error when it set aside the NLRC ruling. Petition granted.

(b) The contractor has substantial capital or investment; and

HANJIN HEAVY INDUSTRIES vs. IBANEZ| GR 170181 | June 26 2008
(c) The agreement between the principal and the contractor or subcontractor assures the
contractual employees' entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social welfare benefits. 22
Given the above standards, we sustain the petitioners contention that BMSI is engaged in labor-only
contracting.
First, petitioners worked at LSCs premises, and nowhere else. Other than the provisions of the
Agreement, there was no showing that it was BMSI which established petitioners working procedure
and methods, which supervised petitioners in their work, or which evaluated the same. There was
absolute lack of evidence that BMSI exercised control over them or their work, except for the fact that
petitioners were hired by BMSI.
Second, LSC was unable to present proof that BMSI had substantial capital. The record before us is
bereft of any proof pertaining to the contractors capitalization, nor to its investment in tools, equipment,
or implements actually used in the performance or completion of the job, work, or service that it was
contracted to render. What is clear was that the equipment used by BMSI were owned by, and merely
rented from, LSC.
The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc.
Employees, on the other hand, need not prove that the contractor does not have substantial capital,
investment, and tools to engage in job-contracting.
Third, petitioners performed activities which were directly related to the main business of LSC. The work
of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as
part of, or at least clearly related to, and in the pursuit of, LSCs business. Logically, when petitioners
were assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor.
Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC
refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.
The CA erred in considering BMSIs Certificate of Registration as sufficient proof that it is an
independent contractor. In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito
Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio, we held that a Certificate of
Registration issued by the Department of Labor and Employment is not conclusive evidence of such
status. The fact of registration simply prevents the legal presumption of being a mere labor-only
contractor from arising.
Indubitably, BMSI can only be classified as a labor-only contractor. The CA, therefore, erred when it
ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular employees of the

FACTS: Felicito Ibanez (tireman), Elmer Gacula (Crane Operator), Elmer Dagotdot (Welder), Aligwas
Carolino (Welder), Ruel Calda (Warehouseman) filed a complaint at the NLRC for illegal dismissal with
prayer for reinstatement and payment of backwages. The group alleged that the contract they have is
good for three months, subject to automatic renewal if there is no notice of termination from Hanjin, and
that the contract would automatically terminate upon the completion of the project. They further averred
that during the time they were dismissed, the project was still ongoing and Hanjin hired people for the
positions that they had vacated. Lastly, they also allege that they are entitled to a completion bonus as
part of the industry practice and this was substantiated by past payroll payments. Hanjin failed to furnish
a copy of the contract agreements with the dismissed group. Instead it showed the quitclaims that had
been executed by the group that released Hanjin and its representatives from any claims with their
employment. It contained clearance certificates that show that respondents are free from accountability.
ISSUE: WON the members of the dismissed group are project employees?
HELD: No, Hanjin was unable to prove they were not regular employees The rehiring of construction
workers on a project to project basis does not confer upon them regular employment status, since their
re-hiring is only a natural consequence of the fact that experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct from the other undertakings of the
company, the scope and duration of which has been determined and made known to the employees at
the time of the employment, are properly treated as project employees and their services may be lawfully
terminated upon the completion of a project. Should the terms of their employment fail to comply with
this standard, they cannot be considered project employees. Hanjin was unable to show the written
contracts it had with the workers. White the absence of the contract does not grant permanent status it is
the burden of the employer to prove that the employees were aware that their contract with the company
is for per project only. While Hanjin submitted a termination report including the workers names to prove
that the services of their services were only contracted for a per project basis, Hanjin only submitted one
report. It was unable to disprove the allegation of the workers that they were part of a pool that Hanjin
contacts once a project is to be completed. Employers cannot mislead their employees, whose work is
necessary and desirable in the former's line of business, by treating them as though they are part of a
work pool from which workers could be continually drawn and then assigned to various projects and
thereafter denied regular status at any time by the expedient act of filing a Termination Report. This
would constitute a practice in which an employee is unjustly precluded from acquiring security of tenure,
contrary to public policy, morals, good customs and public order.
Hanjin alleged that per Department Order 19, Series of 1993 of DOLE, the payment of completion bonus
is further proof that the workers were only project employees as Hanjin is mandated by law to pay it to
the temporary workers whose contracts are about to end upon the completion of the project. SC views
the completion bonus terminology here reflects the fact that the project has already been completed and
that is the premium they wished to pay. Quitclaims are viewed with disfavor, especially when
a. There is clear proof that the waiver was wangled from an unsuspecting or gullible person
b. Where the terms are unconscionable in its face. For quitclaims to be valid, it must constitute a
reasonable settlement commensurate to their legal rights. It does not preclude them from seeking
benefits they were entitled to such as back wages. The respondents were also not granted the twin

requirements of notice and hearing.

COCA-COLA BOTTLERS PHILS., INC. vs. ALAN M. AGITO, et al | GR No. 179546 | February 13,
2009

of specified pieces of work; the control and supervision of the workers; the power of the employer with
respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the
duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of
payment.

FACTS: Petitioner (Coke) is a domestic corporation engaged in manufacturing, bottling and distributing
soft drink beverages and other allied products. Respondents were salesmen assigned at Coke Lagro
Sales Office for years but were not regularized. Coke averred that respondents were employees of
Interserve who were tasked to perform contracted services in accordance with the provisions of the
Contract of Services executed between Coke and Interserve on 23 March 2002. Said Contract
constituted legitimate job contracting, given that the latter was a bona fideindependent contractor with
substantial capital or investment in the form of tools, equipment, and machinery necessary in the
conduct of its business.

In sum, Interserve did not have substantial capital or investment in the form of tools, equipment,
machineries, and work premises; and respondents, its supposed employees, performed work which was
directly related to the principal business of petitioner. It is, thus, evident that Interserve falls under the
definition of a labor-only contractor, under Article 106 of the Labor Code; as well as Section 5(i) of the
Rules Implementing Articles 106-109 of the Labor Code, as amended. It is also apparent that Interserve
is a labor-only contractor under Section 5(ii) of the Rules Implementing Articles 106-109 of the Labor
Code, as amended, since it did not exercise the right to control the performance of the work of
respondents.

To prove the status of Interserve as an independent contractor, petitioner presented the following pieces
of evidence: (1) the Articles of Incorporation of Interserve; (2) the Certificate of Registration of Interserve
with the Bureau of Internal Revenue; (3) the Income Tax Return, with Audited Financial Statements, of
Interserve for 2001; and (4) the Certificate of Registration of Interserve as an independent job contractor,
issued by the Department of Labor and Employment (DOLE).

The lack of control of Interserve over the respondents can be gleaned from the Contract of Services
between Interserve (as the CONTRACTOR) and petitioner (as the CLIENT). The Contract of Services
between Interserve and petitioner did not identify the work needed to be performed and the final result
required to be accomplished. Instead, the Contract specified the type of workers Interserve must provide
petitioner (Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD) and their qualifications
(technical/vocational course graduates, physically fit, of good moral character, and have not been
convicted of any crime). The Contract also states that, to carry out the undertakings specified in the
immediately preceding paragraph, the CONTRACTOR shall employ the necessary personnel, thus,
acknowledging that Interserve did not yet have in its employ the personnel needed by petitioner and
would still pick out such personnel based on the criteria provided by petitioner. In other words, Interserve
did not obligate itself to perform an identifiable job, work, or service for petitioner, but merely bound itself
to provide the latter with specific types of employees. These contractual provisions strongly indicated
that Interserve was merely a recruiting and manpower agency providing petitioner with workers
performing tasks directly related to the latters principal business.

As a result, petitioner asserted that respondents were employees of Interserve, since it was the latter
which hired them, paid their wages, and supervised their work, as proven by: (1) respondents Personal
Data Files in the records of Interserve; (2) respondents Contract of Temporary Employment with
Interserve; and (3) the payroll records of Interserve.
ISSUES:
1. Whether or not Inteserve is a labor-only contractor;
2. Whether or not an employer-employee relationship exists between petitioner Coca-Cola Bottlers Phils.
Inc. and respondents.
RULING: At the outset, the Court clarifies that although Interserve has an authorized capital stock
amounting to P2,000,000.00, only P625,000.00 thereof was paid up as of 31 December 2001. The Court
does not set an absolute figure for what it considers substantial capital for an independent job contractor,
but it measures the same against the type of work which the contractor is obligated to perform for the
principal. However, this is rendered impossible in this case since the Contract between petitioner and
Interserve does not even specify the work or the project that needs to be performed or completed by the
latters employees, and uses the dubious phrase tasks and activities that are considered contractible
under existing laws and regulations. Even in its pleadings, petitioner carefully sidesteps identifying or
describing the exact nature of the services that Interserve was obligated to render to petitioner. The
importance of identifying with particularity the work or task which Interserve was supposed to accomplish
for petitioner becomes even more evident, considering that the Articles of Incorporation of Interserve
states that its primary purpose is to operate, conduct, and maintain the business of janitorial and allied
services. But respondents were hired as salesmen and leadman for petitioner. The Court cannot, under
such ambiguous circumstances, make a reasonable determination if Interserve had substantial capital or
investment to undertake the job it was contracting with petitioner.
[In] Vinoya v. NLRC, we clarified that it was not enough to show substantial capitalization or investment
in the form of tools, equipment, machinery and work premises, etc., to be considered an independent
contractor. In fact, jurisprudential holdings were to the effect that in determining the existence of an
independent contractor relationship, several factors may be considered, such as, but not necessarily
confined to, whether the contractor was carrying on an independent business; the nature and extent of
the work; the skill required; the term and duration of the relationship; the right to assign the performance

The certification issued by the DOLE stating that Interserve is an independent job contractor does not
sway this Court to take it at face value, since the primary purpose stated in the Articles of Incorporation
of Interserve is misleading. According to its Articles of Incorporation, the principal business of Interserve
is to provide janitorial and allied services. The delivery and distribution of Coca-Cola products, the work
for which respondents were employed and assigned to petitioner, were in no way allied to janitorial
services. While the DOLE may have found that the capital and/or investments in tools and equipment of
Interserve were sufficient for an independent contractor for janitorial services, this does not mean that
such capital and/or investments were likewise sufficient to maintain an independent contracting business
for the delivery and distribution of Coca-Cola products.
With the finding that Interserve was engaged in prohibited labor-only contracting, petitioner shall be
deemed the true employer of respondents. As regular employees of petitioner, respondents cannot be
dismissed except for just or authorized causes, none of which were alleged or proven to exist in this
case, the only defense of petitioner against the charge of illegal dismissal being that respondents were
not its employees. Records also failed to show that petitioner afforded respondents the twin
requirements of procedural due process, i.e., notice and hearing, prior to their dismissal. Respondents
were not served notices informing them of the particular acts for which their dismissal was sought. Nor
were they required to give their side regarding the charges made against them. Certainly, the
respondents dismissal was not carried out in accordance with law and, therefore, illegal.
TAN v. LAGRAMA, 387 SCRA 393

Facts: Petitioner Rolando tan is the president of supreme theater corporation and the general manager
of crown and Empire Theater in Butuan city. Private respondent Leovildo Lagrama is a painter, making
ad billboards and murals for the motion pictures shown at the empress, supreme and crown theaters for
more than 10 years from September 1, 1988 to October 17 1998.
On October 17, 1998 Lagrama was summoned and was scolded for urinating on his work area and was
asked not to draw anymore.
Lagrama denied the charged against him. He claimed that he was not the only one who entered the
drawing are and that even if the charge was true, it was a minor infraction to warrant his dismissal.
However everytime he spoke. Tan showed at him to get out, leaving him no choice but to leave the
premises.
Lagrama filed a complaint with the sub-regional arbitration branch no. x of the NLRC in Butuan city. He
alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay,
service incentive leave pay, salary differential, and damages.
Tan denied that Lagrama was his employee. He asserted that Lagrama was an independent contractor.
On June 1999, labor arbiter found tan guilty of illegal dismissal and grand petition.
Upon appeal to the NLRC fifth division, Cagayan de Oro city which rendered a decision finding Lagrama
to b an independent contractor, and for this reason reversing the decision of the labor arbiter. NLRC
denied motion for reconsideration
A. Petition for certiorari was filed before the court of appeals which found that tan exercises control over
Lagramas it is a method of computing compensation, not a basis for determining the existence or
absence of employer-employee relationship. In the case at bar petitioner did not present the payroll to
support his claim that Lagrama was not his employee
B. 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 or business of the employer.
In this case there is such a connection between the job of Lagrama painting billboards and murals and
the business of the petitioned.
C. The fact the Lagrama was not reported as an employee to the SSS is not conclusive on the question
of whether he was an employee of petitioner. Otherwise an employer would be rewarded for his failure or
even neglect to perform his obligation.
D. Neither does the fact that Lagrama painted for other persons affect or alter his employment
relationship with petitioner. That he did 50 only during weekends has not been denied by petitioner.
E. Lagrama had been employed by petitioner since 1988.under the law, therefore, he is deemed a
regular employee and is thus entitled to security of tenure, as provided in art. 279 of labor code.
This court has held that if the employee has been performing the job for at least one year, even if he not
continuously but intermittently, the repeated and continuing need for its performance is sufficient
evidence of the necessity, if not indispensability, of that activity to the business of his employer hence the
employment is also considered regular although with respect only to such activity and while such activity
exists.
Issues and Ruling:

I. Whether or not Lagrama abandoned his work. There is no evidence to show this abandonment.
Requires two elements: 1. the failure to report for work or absence without valid or justifiable reason and
2. A clear intention to server the employer-employee relationship, with the second element as the more
determinative factor and being manifested by some overacts. Mere absence is not sufficient, and the
burden is on the part of the employer to show a deliberate and unjustified refusal on the part of the
employee to resume his employment without any intention of returning the court affirmed the court of
appeals ruling that, private respondent (herein petitioner) has not established clear proof of the intention
of the petitioner to abandon his job or to sever the employment relationship between him and the private
respondent. On the contrary, it was the private respondent who told that he did not want the latter to
draw for him and thereafter refused to give him work to do or any mural or billboard to paint or drawn on.
II. Whether or not private respondent Lagrama was illegally dismissed. to begin, the employer has the
burden of proving the lawfulness of his employees dismissal. Labor code provides that no worker shall
be dismissed except for a just or authorized cause provided by law and after due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as
the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a
work place other than the one designated for the purpose constitutes valid g___ for dismissal. However,
there is no evidence that Lagrama did urinate in a place other than the rest room in the premises of his
work.
III. The grant of separation pay in LIEU of reinstatement is appropriate because the relationship between
the employer and employee has been so strained that reinstatement would no longer serve any purpose.
IV. The bureau of working conditions classifies workers paid by results into two groups, namely 1. Those
whose time and performance is supervised by the employer and 2. those whose time or performance is
unsupervised by the employer. The first involves an element of control and supervision over the manner
the work is to be performed, while the second does not. If a piece worker is supervised, there is an
employer-employee relationship. As in this case, however such an employee is not entitled to service
incentive leave pay since he is paid a fixed amount for work done. Regardless of the time he spent in
accomplishing such work.
Disposition: Petition is denied. Decision of labor arbiter is affirmed with modification that the back
wages and other benefits awarded to private respondent should be computed from the time of his
dismissal up to the time of the finality of this decision, without any deduction and qualification. However,
the service incentive leave pay awarded to him is deleted.
PAL v. LIGAN | GR 146408 | February 29, 2008
FACTS: PAL and Synergy Services Corp entered into an agreement whereby Synergy undertook to
provide loading, unloading, delivery of baggage and cargo and other related services from PALs aircraft
at the Mactan station.
1.
2.
3.

It was expressly stipulated in the contract that Synergy was an independent contractor and
there would be no employer-employee relationship between the Contractor (Synergy) and/or
its employees and PAL.
It was also specified that should PAL find the services provided by Synergy to be
unsatisfactory, Synergy has 15 days to improve its services otherwise PAL has the right the
terminate its agreement immediately and without notice
Respondents filed a complaint for underpayment, nonpayment of premium pay for holidays,
service incentive leave pay, 13 th month pay and allowances and for regularization of
employment status with PAL

4.
5.
6.

7.

LA found Synergy an independent contractor and dismissed the respondents complaint for
regularization against petitioner but granted their money claims
NLRC reversed LA decision and declared Synergy to be a labor-only contractor and ordered
PAL to accept as regular employees, all complainants and give each of the salaries and
benefits provided for in the CBA
PAL argued that the law does not prohibit an employer from engaging an independent
contractor like Synergy, which has substantial capital in carrying on an independent business
of contracting, to perform specific jobs. Petitioner also maintained that its contracting out to
Synergy services like janitorial, baggage-handling etc, which are directly related to its
business, does not make respodents its employees
PAL also averred that none of the 4 elements of an employer-employee relationship between
petitioner and respondents, i.e., selection and engagement of an employee, payment of
wages, power of dismissal, and the power to control employees conduct, were present in the
case.

ISSUE: WON SYNERGY IS A MERE JOB-ONLY CONTRACTOR OR A LEGITIMATE CONTRACTOR

HELD: Synergy is a mere labor-only contractor.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, AND the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
One who claims to be an independent contractor has to prove that he contracted to do the work
according to his own methods and without being subject to the employer's control except only as to the
results.
While petitioner claimed that it was Synergy's supervisors who actually supervised respondents, it failed
to present evidence thereon. It did not even identify who were the Synergy supervisors assigned at the
workplace.

petitioners were entitled to regularization, Dusit immediately terminated their services due to "end of
contract."
On 3/6/2001, Labor Arbiter Potenciano S. Canizares, Jr. dismissed the complaint for lack of merit.
Petitioners failed to prove that they were employees of Dusit. Petitioners admitted that they transferred
to FVA after their previous placement agencies terminated their contracts of services with Dusit. Labor
Arbiter Canizares also noted that petitioners signed application and employment contracts with FVA and
were under its payrolls and accounts. Thus, FVA was petitioners' employer. Finally, he ruled that
petitioners were merely recalled and not dismissed from the service by FVA.
On appeal, the NLRC issued a Resolution dated August 25, 2003, modifying the decision of Labor
Arbiter. The NLRC observed that the four-fold test in determining the existence of an employer-employee
relationship is present in petitioners' relationship with FVA. On the matter of selection and engagement,
records showed that petitioners applied with and were employed by FVA. Although they were required to
test drive by Dusit, it was done only to verify if they had the necessary skills and competence required by
the job. On the matter of control, it was established that petitioners maintained their daily time records
with FVA. On the matter of dismissal, FVA exercised its power to dismiss when it recalled petitioners
from Dusit. Finally, on the matter of payment of wages, it is undisputed that petitioners were under the
payrolls and accounts of FVA. Nevertheless, the NLRC noted that after petitioners' recall, they were no
longer given new assignments. Since more than six months have already lapsed, petitioners were
deemed to have been constructively dismissed and therefore entitled to separation pay of one-half
month pay for every year of service.
Petitioners elevated the case to the CA which affirmed the NLRC resolution. Reconsideration having
been denied, petitioners raises the instant petition.
ISSUES
WON Respondent FVA is an independent contractor
WON there an EMPLOYER-EMPLOYEE RELATIONSHIP exists between Petitioners and Respondent
Hotel
HELD
1.

Respondents having performed tasks which are usually necessary and desirable in the air transportation
business of petitioner, they should be deemed its regular employees and Synergy as a labor-only
contractor.
OREGAS v. NLRC, 559 SCRA 153
FACTS: Petitioners Rommel C. Oregas, Darwin R. Hilario and Sherwin A. Arboleda worked as valet
parking and door attendants in respondent Dusit Hotel Nikko. They have employment contracts with
respondent FVA. In 2000, FVA recalled petitioners from Dusit. Petitioners then instituted a complaint for
illegal dismissal, regularization, premium pay for holiday and rest day, holiday pay, service incentive
leave pay, 13th month pay and attorney's fees against respondents Dusit, Philippine Hotelier's, Inc. and
FVA.
Petitioners alleged that despite the length of their service, Dusit never granted them the status and
benefits of a regular employee. Thus, when the rank and file employees' union of Dusit learned that

2.

YES. the Labor Arbiter, NLRC and the CA were unanimous in finding that FVA was a
legitimate job contractor. Among the circumstances that established the status of FVA
as a legitimate job contractor are: (1) FVA is registered with the DOLE and the DTI; (2)
FVA has a Contract for Services with Dusit for the supply of valet parking and door attendant
services; (3) FVA has an independent business and provides valet parking and door attendant
services to other clients like Mandarin Oriental, Manila Hotel, Peninsula Manila Hotel, Westin
Philippine Plaza, Golden B Hotel, Pan Pacific Manila Hotel, and Strikezone Bowling Lane;
and (4) FVA's total assets from 1997 to 1999 amount to P1,502,597.70 to P9,021,335.13. In
addition, it provides the uniforms and lockers of its employees.
NO. By applying the four-fold test used in determining an employer-employee
relationship, the status of FVA as the employer of petitioners is indubitably
established.
a. Petitioners applied and signed employment contracts with FVA. They were merely
assigned to Dusit conformably with the Contract for Services between FVA and
Dusit.
b. FVA assigned a supervisor in Dusit to monitor petitioners' attendance, leaves of
absence, performance and conduct. Petitioners also maintained their daily time
records with FVA.
c. Petitioners were duly notified by FVA that they would be assigned to Dusit for five
months only. Thereafter, they may either be recalled for transfer to other clients or

d.

be reassigned to Dusit depending on the result of FVA's evaluation of their

performance. In this case, FVA opted to recall petitioners from Dusit.
While FVA billed Dusit for the services rendered, it was actually FVA which paid
petitioners' salaries. Worthy of note, FVA registered petitioners with the Bureau of
Internal Revenue and the Social Security System as its employees.

dismissal of the petitioners by D.L. Admark, it ordered their reinstatement. The dispositive portion of the
decision reads:

In summary, this Court accepts as established the fact that FVA is a legitimate job contractor and, in
contemplation of law, the employer of petitioners.

WHEREFORE, premises considered, the appealed judgment is modified. Intervenor DL ADMARK is

ordered to reinstate the eighty one (81) complainants mentioned in the appealed decision to their former
positions with backwages from March 16, 1992 until they are actually reinstated. The award of attorneys
fees equivalent to ten (10%) of the award is deleted for lack of basis. Petitioners filed a motion for
reconsideration but the same was denied by the NLRC for lack of merit. Hence, this petition.

DISPOSITION: The instant petition is DENIED for lack of merit. CAs decision is AFFIRMED.

ISSUE: Whether or not the petitioners are employees of the company.

ESCARIO v. NLRC | GR No 124055 | June 8, 2000

HELD: The court ruled that there is no employer-employee relationship and that petitioners are
employees of the agent. The agent is a legitimate independent contractor. Labor-only contractor occurs
only when the contractor merely recruits, supplies or places workers to perform a job for a principal. The
labor-only contractor doesnt have substantial capital or investment and the workers recruited perform
activities directly related to the principal business of the employer. There is permissible contracting only
when the contractor carries an independent business and undertakes the contract in his won manner
and method, free from the control of the principal and the contractor has substantial capital or
investment. The agent, and not the company, also exercises control over the petitioners. No documents
were submitted to prove that the company exercised control over them. The agent hired the petitioners.
The agent also pays the petitioners, no evidence was submitted showing that it was the company paying
them and not the agent. It was also the agent who terminated their services. By petitioning for
regularization, the petitioners concede that they are not regular employees.

FACTS: Petitioners allege that they were employed by CMC as merchandisers. Among the tasks
assigned to them were the withdrawing of stocks from the warehouse, the fixing of prices, price-tagging,
displaying of merchandise, and the inventory of stocks. These were done under the control,
management and supervision of CMC. The materials and equipment necessary in the performance of
their job, such as price markers, gun taggers, toys, pentel pen, streamers and posters were provided by
CMC. Their salaries were being paid by CMC. According to petitioners, the hiring, control and
supervision of the workers and the payment of salaries, were all coursed by CMC through its agent D.L.
Admark in order for CMC to avoid its liability under the law.
On 7 February 1992, petitioners filed a case against CMC before the Labor Arbiter for the regularization
of their employment status. During the pendency of the case before the Labor Arbiter, D.L. Admark sent
to petitioners notice of termination of their employment effective 16 March 1992. Hence, their complaint
was amended so as to include illegal dismissal as cause of action. Thereafter, twenty-seven more
persons joined as complainants. CMC filed a motion to implead as party-defendant D. L. Admark and at
the same time the latter filed a motion to intervene. Both motions were granted.

ALIVIADO v. PROCTER and GAMBLE PHILS

F: Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982
or as late as June 1991, to either May 5, 1992 or March 11, 1993.

CMC, on the other hand, denied the existence of an employer-employee relationship between petitioner
and itself. Rather, CMC contended that it is D.L. Admark who is the employer of the petitioners. While
CMC is engaged in the manufacturing of food products and distribution of such to wholesalers and
retailers, it is not allowed by law to engage in retail or direct sales to end consumers. It, however, hired
independent job contractors such as D.L. Admark, to provide the necessary promotional activities for its
product lines.

They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more
or less five months at a time. They were assigned at different outlets, supermarkets and stores where
they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.

For its part, D.L. Admark asserted that it is the employer of the petitioners. Its primary purpose is to carry
on the business of advertising, promotion and publicity, the sales and merchandising of goods and
services and conduct survey and opinion polls. As an independent contractor it serves several clients
among which include Purefoods, Corona Supply, Firstbrand, Splash Cosmetics and herein private
respondent California Marketing.

P&G is principally engaged in the manufacture and production of different consumer and health
products, which it sells on a wholesale basis to various supermarkets and distributors.[8] To enhance
consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and
SAPS for the promotion and merchandising of its products.

On 29 July 1994, the Labor Arbiter rendered a decision finding that petitioners are the employees of
CMC as they were engaged in activities that are necessary and desirable in the usual business or trade
of CMC.1 In justifying its ruling, the Labor Arbiter cited the case of Tabas vs. CMC which, likewise,
involved private respondent CMC.
On appeal, the NLRC set aside the decision of the Labor Arbiter. It ruled that no employer-employee
relationship existed between the petitioners and CMC. It, likewise, held that D.L. Admark is a legitimate
independent contractor, hence, the employer of the petitioners. Finding no valid grounds existed for the

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as
habitual absenteeism, dishonesty or changing day-off without prior notice.

In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave
pay and other benefits with damages. The complaint was later amended to include the matter of their
subsequent dismissal.
Ruling of the Labor Arbiter: Labor Arbiter dismissed the complaint for lack of merit and ruled that there
was no employer-employee relationship between petitioners and P&G. He found that the selection and
engagement of the petitioners, the payment of their wages, the power of dismissal and control with
respect to the means and methods by which their work was accomplished, were all done and exercised
by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job
contractors.

Ruling of the NLRC: The appeal of complainants is hereby DISMISSED and the decision appealed
from AFFIRMED.
Ruling of the Court of Appeals: CA likewise denied the petition.
Hence, this petition.
Petitioners Arguments: Petitioners insist that they are employees of P&G. They claim that they were
recruited by the salesmen of P&G and were engaged to undertake merchandising chores for P&G long
before the existence of Promm-Gem and/or SAPS. They further claim that when the latter had its socalled re-alignment program, petitioners were instructed to fill up application forms and report to the
agencies which P&G created.
Respondents Arguments: On the other hand, P&G points out that the instant petition raises only
questions of fact and should thus be thrown out as the Court is not a trier of facts. It argues that findings
of facts of the NLRC, particularly where the NLRC and the Labor Arbiter are in agreement, are deemed
binding and conclusive on the Supreme Court.
Issues: (1) whether P&G is the employer of petitioners; (2) whether petitioners were illegally dismissed;
and (3) whether petitioners are entitled for payment of actual, moral and exemplary damages as well as
litigation costs and attorneys fees.
H: The petition has merit. As a rule, the Court refrains from reviewing factual assessments of lower
courts and agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the
Court is constrained to wade into factual matters when there is insufficient or insubstantial evidence on
record to support those factual findings; or when too much is concluded, inferred or deduced from the
bare or incomplete facts appearing on record.[23] In the present case, we find the need to review the
records to ascertain the facts. In order to resolve the issue of whether P&G is the employer of
petitioners, it is necessary to first determine whether Promm-Gem and SAPS are labor-only contractors
or legitimate job contractors.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
There is labor-only contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Clearly, the law and its implementing rules allow contracting arrangements for the performance of
specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature. However, in order for such
outsourcing to be valid, it must be made to an independent contractor because the current labor rules
expressly prohibit labor-only contracting.
In the instant case, the financial statements of Promm-Gem show that it
has authorized capital stock of P1 million and a paid-in capital, or capital available for operations,
of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets

ofP719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space
with a floor area of 870 square meters. It also had under its name three registered vehicles which were
used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G.
Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work
to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE
Department Order No. 18-02.
The records also show that Promm-Gem supplied its complainant-workers with the relevant materials,
such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also
issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the
complainants working under it as its regular, not merely contractual or project, employees. This
circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order
No. 18-02, which speaks of contractual employees. This, furthermore, negates on the part of PrommGem bad faith and intent to circumvent labor laws which factors have often been tipping points that
lead the Court to strike down the employment practice or agreement concerned as contrary to public
policy, morals, good customs or public order. Under the circumstances, Promm-Gem cannot be
considered as a labor-only contractor. We find that it is a legitimate independent contractor.
Furthermore, the petitioners have been charged with the merchandising and promotion of the products
of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the
manufacturing business, which is the principal business of P&G. Considering that SAPS has no
substantial capital or investment and the workers it recruited are performing activities which are directly
related to the principal business of P&G, we find that the former is engaged in labor-only contracting.
WHEREFORE, the petition is GRANTED. The case be REMANDED to the Labor Arbiter for the
computation.
Sonza vs. ABS-CBN Broadcasting Corporation | GR 138051 | June 10, 2004
FACTS: ABS-CBN and MJMDC entered into a contract on may 1994. ABS-CBN was represented by its
officers while MJMDC was represented by Sonza, as president and general manager and Mel Tiangco,
as EVP and treasurer referred to in the agreement as agent, MJDC agreed to provide Sonzas services
exclusively ABS-CBN as talent for radio and television. The agreement listed the services Sonza would
render.
On April 1996, Sonza wrote a letter to ABS-CBNs president in regard to his resignation in view of the
events concerning his programs and career.
April 30, 1996, Sonza filed a complaint against the ABS-CBN before the DOLE. Sonza complained that
the ABS-CBN did not pay his salaries, separation pay, and service incentive, leave pay, signing bonus,
travel allowances and amounts due under the employee stock option plan (ESOP).
On July 10 1996, ABS-CBN filed a motion to dismiss on the ground that there is no employer-employee
relationship. Sonza filed an opposition to the motion on July 19, 1996.
Meanwhile, ABS-CBN opened a account to continually remit Sonza fees under the agreement.
Labor arbiter denied the motion to dismiss; however in his decision labor arbiter dismissed the complaint
for lack of jurisdiction and that there is not employer-employee relationship.
On appeal, the NLRC affirmed the decision of the labor arbiter. The same was also denied upon the
motion for reconsideration.

ISSUES and RULING:

I.

Whether or not Sonza is an employee or independent contractor

> The existence of an employer-employee relationship is a question of fact. Appellate courts accord the
factual findings of the labor arbiter and the NLRC not only respect but also finality when supported by
substantial evidence. Court does not substitute its own judgment for that of the tribunal in determining
where the weight of evidence lies or what evidence is credible.
II.

Essential elements of employer-employee relationship

A.

B,

Selection and engagement of employer. The specific selection and hiring of

Sonza, because of his unique skills, talent and celebrity status not possessed by
ordinary employees. Is a circumstance indicative but not conclusive of
independent contractual relationship.
Payment of wages whatever benefits Sonza enjoyed arose from contract and
not because of an employer-employee relationship. The power to bargain the
talent fees way above the salary scales of ordinary employees is a circumstance
indicative, but not conclusive of independent contractual relationship.

C.
Power of dismissal. Sonza failed to show that ABS-CBN could terminate his
service on grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws.
D.
power of control applying the control test the court held that Sonza is not an
employee but an independent contractor. The control test being the most important test our
courts apply in distinguishing an employee from an independent contactor.
ABS-CBN did not exercise control over the means and methods of performance of Sonzas work.
Moreover a radio broadcast specialist who works under minimal supervision is an independent
contractor lastly, in broadcast industry exclusively is not necessarily the same as control.
I.

Nature of Sonzas claim

Sonzas claims are all based on the may agreement and stock option plan and not in
the 1994 labor code. Clearly the present case does not call for an application of the
labor code. In effect Sonzas cause of action is for breach of contract which is
intrinsically a civil dispute cognizable by the court. Petition is denied.

SONZA V ABS-CBN BROADCASTING CORPORATION

FACTS

ABS-CBN signed Agreement with Mel and Jay Management and Devt Corp (MJMDC), which
agreed to provide Sonzas services exclusively to the network as talent for radio and TV.

Sonza resigned and filed a complaint against ABS-CBN before the DOLE that the said
network didnt pay his salaries, separation pay, service incentive leave pay, etc.

ABS filed Motion to Dismiss because there was no employer-employee relationship.

Labor Arbiter dismissed complaint because of lack of jurisdiction. It stands to reason

that a "talent" cannot be considered as an employee. NLRC affirmed Arbiters decision.
Sonza filed certiorari action with CA, which dismissed the case. Hence this petition.

ISSUE: WON there was an employer-employee relationship between ABS-CBN and Sonza?
HELD: No employer-employee relationship.
SONZA maintains that all essential elements of an employer-employee relationship are present in this
case. The last element, the so-called control test, is the most important element
Power of Control
The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and
post-production staff meetings. ABS-CBN could not dictate the contents of SONZAs script. However, the
Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear
implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not
attack ABS-CBN or its interests.
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 any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former. 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. We
have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the other party in
relation to the services being rendered may be accorded the effect of establishing an employeremployee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co.,
Ltd. vs. NLRC. In said case, we held that:
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.
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. Being an exclusive talent does not by itself mean that SONZA is an employee of
ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not necessarily the same as control.
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service
incentive leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option
Plan. These claims are all based on the May 1994 Agreement and stock option plan, and not on the
Labor Code. This case call for an interpretation and implementation of the May 1994 Agreement. In
effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable
by the regular courts.
DELA CRUZ v. MAERSK FILIPINAS CREWING, INC., 551 SCRA 284

FACTS: Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third engineer for the
vessel M/S Arktis Morning through its local agency in the Philippines, co-respondent Maersk Filipinas
Crewing Inc. Dela Cruz was deployed to Jebel Ali, United Arab Emirates and boarded M/S Arktis
Morning. In a logbook entry, chief engineer Normann Per Nielsen expressed his dissatisfaction over Dela
Cruz 's performance: he has been informed that if he does not improve his Job/Working performance
within [a] short time he will be signed off according to CBA Article 1 (7)1. Entry was followed by another
one which was similar in content
And then, Dela Cruz was finally informed of his discharge through a notice captioned "Notice according
to CBA Article 1 (7): Reason for the decision is The chief engineer has made 2 entries in the engine
logbook, regarding your insufficient job/working, which you are well aware of. Dela Cruz was then made
to disembark at the port of Houston, Texas and was repatriated to Manila Dela Cruz thereafter filed a
complaint for illegal dismissal
Labor Arbiter: ruled that Dela Cruz was dismissed without just cause and due process as the logbook
entry (which respondents claimed to be the first notice to petitioner) was vague.
NLRC: upheld LA decision
CA: reversed the decision. CA deemed the logbook entries to be sufficient compliance with the first
notice requirement of the law Issues
ISSUES:
1.
2.

WON Dela Cruz was illegally dismissed

WON Dela Cruz was a regular employer fee Held and Ratio

HELD: 1. Yes. An employer has the burden of proving that an employee's dismissal was for a just cause
and that it complied with the rudimentary requirements of due process, that is, the opportunity to be
heard and to defend oneself
Procedural due process requires that a seaman must be given a written notice of the charges against
him and afforded a formal investigation where he can defend himself personally or through a
representative before he can be dismissed and disembarked from the vessel
The employer is bound to furnish him two notices: (1) the written charge and (2) the written notice of
dismissal (in case that is the penalty imposed) in accordance with the POEA Revised Standard
Employment Terms and Conditions Governing the Employment of Filipino Seafarers on Board OceanGoing Vessels (POEA Revised Standard Employment Terms and Conditions)
The notice must state with particularity the acts or omissions for which his dismissal is being sought
In this case, the logbook entries did not substantially comply with the first notice, or the written notice of
charge(s)
Respondents should have indicated the grounds for the threatened termination, the specific acts or
omissions illustrating the same, along with the date and the approximate time of their occurrence
The same thing may be said of the written notice of dismissal. It sorely lacked the necessary details that
should accompany it. The records were devoid of any proof indicating that petitioner was ever given an
opportunity to present his side. Respondents dismally failed to prove that petitioner's termination from
employment was for cause Hence, not only was Dela Cruz's dismissal procedurally flawed, it was also
without just cause. The first sixty (60) days of service is to be considered a probationary period which

entitles a shipowner or his representative to terminate the contract by giving fourteen (14) days of written
notice.
1. No. Seafarers are not covered by the term regular employment, as defined under Article 280 of the
Labor Code
Instead, they are considered contractual employees whose rights and obligations are governed primarily
by the POEA Standard Employment Contract for Filipino Seamen, the Rules and Regulations Governing
Overseas Employment, and, more importantly, by Republic Act No. 8042, otherwise known as The
Migrant Workers and Overseas Filipinos Act of 1995.
It is an accepted maritime industry practice that the employment of seafarers is for a fixed period only.
The Court acknowledges this to be for the mutual interest of both the seafarer and the employer.
Seafarers cannot stay for a long and indefinite period of time at sea as limited access to shore activity
during their employment has been shown to adversely affect them. Furthermore, the diversity in
nationality, culture and language among the crew necessitates the limitation of the period of employment
While the court recognizes that petitioner was a member of Seamen's Union of the Philippines which
had a CBA with respondent Elite Shipping A.S. providing for a probationary period of employment, the
CBA cannot override the provisions of the POEA Standard Employment Contract. The law is read into,
and forms part of, contracts. And provisions in a contract are valid only if they are not contrary to law,
morals, good customs, public order or public policy.
This is the only logical explanation possible as the parties cannot and should not violate the POEA's
directive that a contract of enlistment must not exceed 12 months.
BIENVENIDO D. GOMA v. PAMPLONA PLANTATION INCORPORATED, 557 SCRA 124
F: Petitioner commenced the instant suit by filing a complaint for illegal dismissal, underpayment of
wages, non-payment of premium pay for holiday and rest day, five (5) days incentive leave pay,
damages and attorney's fees, against the respondent. The case was filed with the Sub-Regional
Arbitration Branch No. VII of Dumaguete City. Petitioner claimed that he worked as a carpenter at the
Hacienda Pamplona since 1995; that he worked from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to
5:00 p.m. daily with a salary rate of P90.00 a day paid weekly; and that he worked continuously until
1997 when he was not given any work assignment.[4] On a claim that he was a regular employee,
petitioner alleged to have been illegally dismissed when the respondent refused without just cause to
give him work assignment. Thus, he prayed for backwages, salary differential, service incentive leave
pay, damages and attorney's fees.
On the other hand, respondent denied having hired the petitioner as its regular employee. It instead
argued that petitioner was hired by a certain Antoy Caaveral, the manager of the hacienda at the time
it was owned by Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari known as
"Ybarra."[6] Respondent added that it was not obliged to absorb the employees of the former owner.
In 1995, Pamplona Plantation Leisure Corporation (PPLC) was created for the operation of tourist
resorts, hotels and bars. Petitioner, thus, rendered service in the construction of the facilities of PPLC. If
at all, petitioner was a project but not a regular employee.[7]
On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed the case for lack of merit. [8] The
Labor Arbiter concluded that petitioner was hired by the former owner, hence, was not an employee of
the respondent. Consequently, his money claims were denied.[9]

On appeal to the National Labor Relations Commission (NLRC), the petitioner obtained favorable
judgment when the tribunal reversed and set aside the Labor Arbiter's decision.
The NLRC upheld the existence of an employer-employee relationship, ratiocinating that it was difficult
to believe that a simple carpenter from far away Pamplona would go to Dumaguete City to hire a
competent lawyer to help him secure justice if he did not believe that his right as a laborer had been
violated.
Contrary to the NLRC's finding, the CA concluded that there was no employer-employee relationship.
The CA stressed that petitioner having raised a positive averment, had the burden of proving the
existence of an employer-employee relationship.
I: 1) Is the petitioner a regular employee of the respondent? 2) If so, was he illegally dismissed from
employment? and 3) Is he entitled to his monetary claims?
H: A thorough examination of the records compels this Court to reach a conclusion different from that of
the CA. It is true that petitioner admitted having been employed by the former owner prior to 1993 or
before the respondent took over the ownership and management of the plantation, however, he likewise
alleged having been hired by the respondent as a carpenter in 1995 and having worked as such for two
years until 1997.
He is a project employee as he was hired - 1) for a specific project or undertaking, and 2) the completion
or termination of such project or undertaking has been determined at the time of engagement of the
employee.

undertaking, the duration or scope of which was specified at the time the employees were engaged for
that project.[31] In this case, apart from respondent's bare allegation that petitioner was a project
employee, it had not shown that petitioner was informed that he would be assigned to a specific project
or undertaking. Neither was it established that he was informed of the duration and scope of such project
or undertaking at the time of his engagement.
Most important of all, based on the records, respondent did not report the termination of petitioner's
supposed project employment to the Department of Labor and Employment (DOLE). Department Order
No. 19 (as well as the old Policy Instructions No. 20) requires employers to submit a report of an
employee's termination to the nearest public employment office every time the employment is terminated
due to a completion of a project. Respondent's failure to file termination reports, particularly on the
cessation of petitioner's employment, was an indication that the petitioner was not a project but a regular
employee.[32]
We stress herein that the law overrides such conditions which are prejudicial to the interest of the worker
whose weak bargaining position necessitates the succor of the State. What determines whether a
certain employment is regular or otherwise is not the will or word of the employer, to which the worker
oftentimes acquiesces. Neither is it the procedure of hiring the employee nor the manner of paying the
salary or the actual time spent at work. It is the character of the activities performed by the employer in
relation to the particular trade or business of the employer, taking into account all the circumstances,
including the length of time of its performance and its continued existence. Given the attendant
circumstances in the case at bar, it is obvious that one year after he was employed by the respondent,
petitioner became a regular employee by operation of law.[33]
As to the question of whether petitioner was illegally dismissed, we answer in the affirmative.

In other words, as regards those workers who worked in 1995 specifically in connection with the
construction of the facilities of Pamplona Plantation Leisure Corporation, their employment was definitely
"temporary" in character and not regular employment. Their employment was deemed terminated by
operation of law the moment they had finished the job or activity under which they were employed. [22]
Thus, departing from its initial stand that it never hired petitioner, the respondent eventually admitted the
existence of employer-employee relationship before the CA. It, however, qualified such admission by
claiming that it was PPLC that hired the petitioner and that the nature of his employment therein was that
of a "project" and not "regular" employee.
The employment relationship having been established, the next question we must answer is: Is the
petitioner a regular or project employee?
We find the petitioner to be a regular employee provided in Article 280 of the Labor Code, as amended.
Respondent is engaged in the management of the Pamplona Plantation as well as in the operation of
tourist resorts, hotels, inns, restaurants, etc. Petitioner, on the other hand, was engaged to perform
carpentry work. His services were needed for a period of two years until such time that the respondent
decided not to give him work assignment anymore. Owing to his length of service, petitioner became a
regular employee, by operation of law.
A 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 usual or regular undertakings of the company. A
project employee is assigned to a project which begins and ends at determined or determinable times.[30]
The principal test used to determine whether employees are project employees as distinguished from
regular employees, is whether or not the employees were assigned to carry out a specific project or

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, i.e., after notice and hearing. In cases involving an
employee's dismissal, the burden is on the employer to prove that the dismissal was legal. This burden
was not amply discharged by the respondent in this case.
Obviously, petitioner's dismissal was not based on any of the just or authorized causes enumerated
under Articles 282, 283 and 284 of the Labor Code, as amended. After working for the respondent for a
period of two years, petitioner was shocked to find out that he was not given any work assignment
anymore. Hence, the requirement of substantive due process was not complied with.
Apart from the requirement that the dismissal of an employee be based on any of the just or authorized
causes, the procedure laid down in Book VI, Rule I, Section 2 (d) of the Omnibus Rules Implementing
the Labor Code, must be followed. Failure to observe the rules is a violation of the employee's right to
procedural due process.
Having shown that petitioner is a regular employee and that his dismissal was illegal, we now discuss
the propriety of the monetary claims of the petitioner. An illegally dismissed employee is entitled to: (1)
either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) backwages.
In the instant case, we are prepared to concede the impossibility of the reinstatement of petitioner
considering that his position or any equivalent position may no longer be available in view of the length
of time that this case has been pending. Moreover, the protracted litigation may have seriously abraded
the relationship of the parties so as to render reinstatement impractical. Accordingly, petitioner may be
awarded separation pay in lieu of reinstatement.
Petitioner's separation pay is pegged at the amount equivalent to petitioner's one (1) month pay, or one-

half (1/2) month pay for every year of service, whichever is higher, reckoned from his first day of
employment up to finality of this decision. Full backwages, on the other hand, should be computed from
the date of his illegal dismissal until the finality of this decision.

H: In the case at bar, petitioner, which has the onus of proving that the dismissal of
respondent on account of loss of confidence arose from particular facts, failed to discharge
the same.

On petitioner's entitlement to attorney's fees, we must take into account the fact that petitioner was
illegally dismissed from his employment and that his wages and other benefits were withheld from him
without any valid and legal basis. As a consequence, he was compelled to file an action for the recovery
of his lawful wages and other benefits and, in the process, incurred expenses. On these bases, the
Court finds that he is entitled to attorney's fees equivalent to ten percent (10%) of the monetary award. [42]

On respondents claim that his salary was increased effective January 15, 2000, petitioner argues that
other than respondents self-serving claim, no evidence was presented to show that indeed the salary
increase took effect on January 15, 2000.

Lastly, we affirm the NLRC's award of salary differential. In light of our foregoing disquisition on the
illegality of petitioner's dismissal, and our adoption of the NLRC's findings, suffice it to state that such
issue is a question of fact, and we find no cogent reason to disturb the findings of the labor tribunal.
Petition granted.

This Court notes that in its Position Paper before the Labor Arbiter, petitioner stated that respondent was
hired in December 1998 at a monthly salary ofP9,540.00 more or less. If respondent was hired at
such amount, contrary to respondents claim that his initial salary was P9,000.00 but that it was increased
toP9,450 on January 15, 2000 or twelve days after he was alleged to have committed an infraction on
January 3, 2000, it would have been easy for petitioner to present documentary proof of its claim. But
none was produced.

Wah Yuen Restaurant v. Jayona | GR 159448 | Dec. 16, 2005 | J. Carpio-Morales

F: Primo Jayona (respondent) was hired in December 1998 as Assistant Manager of Wah Yuen
Restaurant (petitioner). By respondents claim, his initial monthly salary was P9,000.00, which was
increased to P9,450.00 effective January 15, 2000.
By letter-memorandum dated January 5, 2000. Betty Chua, the President of petitioner, directed
respondent to explain within 72 hours why he should not be dismissed from the service for grave
dishonesty and loss of confidence for billing a customer in an amount considerably less than the cost of
the actual stuff ordered. And Betty warned respondent that a repetition of the same act would cause his
automatic dismissal from the service. A handwritten note with an unidentified initial at the lower portion
of the letter-memorandum indicates that respondent refused to acknowledge receipt thereof.
Subsequently, petitioner through counsel, by letter of April 5, 2000 which was served upon respondent
on even date, terminated his services effective that same date, upon the ground that he was found for
the second time on April 3, 2000 (the first was on January 3, 2000) to have charged/billed a customer an
amount, which was considerably less than the actual order, [which] is certainly prejudicial to the interests
of [his] employer, a practice which can bring about the collapse of the business in the long run; that is if
the practice is not checked immediately.

Under Article 277 (b) of the Labor Code, as well as Section 2, Rule XXIII, Book V and Section 2, Rule
I, Book VI, of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee
must be for a just or authorized cause and after due process.
Procedural due process requires the employer to give the employee two notices. The first is to apprise
him of the particular acts or omissions for which his dismissal is sought, and the second is to inform him
of the decision to terminate him.
Failure to comply with these mandatory procedural requirements taints the dismissal with illegality and
any judgment rendered by the employer without compliance therewith can be considered void and
inexistent.
For petitioner to consider the letter-memorandum of January 5, 2000 as the first notice, and the letter of
April 5, 2000 as the second notice of termination of employment is erroneous. For albeit the two letters
dealt with infractions of the same nature, they were separate and distinct.
The April 5, 2000 termination letter itself clearly stated that respondent was being terminated for
committing a second infraction. As such he should have been given the chance to give his side
thereon. But he was not.

Respondent thus filed a complaint for illegal dismissal, recovery of overtime pay, service incentive leave
pay and 13th month pay.

In any event, not only did petitioner fail to observe the due process requirements. It also failed to
establish by substantial evidence that the alleged second infraction was committed.

The Labor Arbiter dismissed respondents complaint on the ground that as an assistant manager, he
works for as long as he enjoys the trust and confidence of his employer, but once the trust and
confidence are lost, he has no more reason to stay as such.

Loss of confidence then, which is the usual ground for the removal of a managerial employee, not
having been established, like any other lawful cause, the petition must fail.

On appeal, the National Labor Relations Commission (NLRC), by Resolution of December 14, 2001,
affirmed the dismissal. On respondents Petition for Certiorari, the Court of Appeals reversed and set
aside the NLRC Resolution. The CA gave the petition due course.

Although the loss of confidence on petitioners part is unfounded, reinstating respondent to his former
position would not be advisable given the souring of their relationship. This Court now, therefore, directs
petitioner to just afford respondent his right to separation pay, backwages, and other benefits under the
law.

Hence, the present petition for review. Petitioner harps on the unwarranted stress on
respondents rather self-serving claim that he was granted a salary increase barely two (2)
weeks after he committed his first infraction.

Since the records do not provide a basis for the determination of the amount of separation pay plus
backwages and other benefits to which respondent is entitled, a remand of the case to the Labor Arbiter
is thus in order.

I: WON the respondent was illegally dismissed

The decision is AFFIRMEDwith MODIFICATION. The records of this case are REMANDED to the
Labor Arbiter, through the National Labor Relations Commission, only for the determination of the
amount of separation pay plus backwages and other benefits to which respondent is entitled.
Austria v. NLRC, 310 SCRA 293
F: PHILIPPINE STEEL COATING CORPORATION (PHILSTEEL), private respondent, is engaged in the
manufacture of prefabricated steel, galvanized iron and other metal products. On 19 December 1985 it
hired petitioner Nazario C. Austria as its Credit and Collection Manager. On 11 August 1987 petitioner
and private respondent PHILSTEEL entered into a "Confidentiality Agreement" whereby he agreed not to
disclose to anyone outside the company any technical, operational and other such information acquired
in the course of his employment, unless otherwise duly authorized by private respondent, on pain of
immediate dismissal.
A smooth and satisfactory employee-employer relationship ensued between the two (2) parties until 17
August 1989 when petitioner was unceremoniously terminated by private respondent company on the
ground that he allegedly disclosed confidential information to prospective competitors and had
undertaken activities far beyond his official duties and responsibilities.
On 30 August 1989 Austria filed a case for illegal dismissal against PHILSTEEL. He alleged that on 5
August 1989 the President of PHILSTEEL, Abeto Uy, demanded his resignation purportedly due to loss
of confidence but refused to shed light on the reasons therefor. Austria further alleged that on 17 August
1989, without any prior written notice, he was summoned to a meeting with the Vice-President for
Finance, Primo Valerio, and Vice-President for Legal and Personnel, Gregorio Vega. Therein he was
questioned about a certain 13 July 1989 telefax message sent by one Felix Lukban to PHILSTEEL's
Australian supplier of equipment and machinery, Bliss Fox Manufacturing Corporation (BLISS
FOX). The telefax showed that, on behalf of an unnamed client, Lukban was asking for the purchase
price of a complete line of machinery and equipment for a steel galvanizing plant. Austria denied any
knowledge of the telex.
Petitioner was also asked about his close relationship with Lukban, which the former admitted, Lukban
being the godfather of his child. Immediately after the meeting Austria was given his notice of termination
and required to surrender the keys to his company car and to his room which were in his
possession. When he returned to his room it was already padlocked; when he passed by his car it was
barricaded.
Austria submitted in support of his complaint the affidavit of Felix Lukban executed on 13 December
1989 disclaiming any participation of petitioner in the sending of the telefax message. In addition, Lukban
testified to the same effect and denied hearing any answer from BLISS FOX on his telefax.
PHILSTEEL, on the other hand, contended that any information as to the sources of its supply was
highly confidential as the steel industry was very competitive, and the information was disclosed by
Austria to Lukban. The basis for this contention was the incident of 5 August 1989 when a
representative of BLISS FOX named Charles Villa informed Abeto Uy, in the presence of Primo Valerio
and Gregorio Vega, of the fax message sent by Lukban to BLISS FOX. Charles Villa was said to have
stated that Lukban represented himself to be acting for PHILSTEEL so he verified the representation
from Uy who however denied it. Forthwith, Villa dialed a certain number from the telefax message.
[9]
After a brief exchange with the person on the other end of the phone, during which time Villa scribbled
a name at the back of the telex, he informed Uy that he just talked with Lukban who informed him that
his contact with PHILSTEEL was Rudy Austria whose name he had just written.
After Villa left, Austria was immediately investigated on the matter. Petitioner admitted having a close
relationship with Lukban. Austria also volunteered to disclose secret meetings at Manila Garden Hotel
with Lukban and the latter's son-in-law regarding plans to put up a rival galvanizing business either here

in the Philippines or in Singapore, as well as meetings at company premises with a group of Australians
on the same subject. A second investigation held on 17 August 1989 yielded the same result.
Testimonies of Vega and Valerio, as well as the latter's 29 November 1989 affidavit, the confidentiality
agreement and the termination letter were presented to buttress private respondents' evidence.
The Labor Arbiter found the evidence of private respondents credible on the ground that no other
inference other than Austria's guilt could be drawn from these established circumstances: the Australian
representative of BLISS FOX did not know Austria nor the latter's nickname (Rudy) when he called
Lukban and inquired who Lukban's contact person was at PHILSTEEL; Lukban was not only known to
Austria, he was close to him; and, Austria signified his intention to join the rival company which Lukban
planned to form.
The Labor Arbiter pointed out that petitioner failed to establish any motive on the part of private
respondents and of Valerio and Vega in terminating his employment or in testifying against him since his
services were still highly satisfactory as of July 1989. Thus, the Labor Arbiter declared the dismissal to
be legal but ordered private respondents to pay petitioner P24,000.00 separation pay considering that
the company suffered no loss and that there was no proof of a rival company later established by
petitioner.
On appeal the NLRC agreed with the thesis of the Labor Arbiter that petitioner failed to prove any other
motive by private respondents for his termination considering his excellent job performance. The
Commission however modified the Labor Arbiter's decision by directing PHILSTEEL to pay petitioner an
indemnity of P1,000.00 for non-observance of due process in failing to provide petitioner with a prior
written notice of the investigation and for not giving him time to answer charges and to seek assistance
of counsel.
Basic is the rule that judicial review of labor cases does not go so far as to evaluate the sufficiency of
evidence on which the labor officials' findings rest, more so when both the Labor Arbiter and the NLRC
share the same findings. This, notwithstanding, we cannot affirm the decision of the NLRC especially
when its findings of fact on which the conclusion was based are not supported by substantial
evidence. By substantial evidence, we mean the amount of relevant evidence which a reasonable mind
might accept as adequate to justify the conclusion.
The NLRC grounded its findings on the following postulates: (a) the witnesses of PHILSTEEL are
credible for petitioner failed to show any ground for them to falsely testify, especially in the light of his
excellent job performance; and, (b) respondents' witnesses are more credible than petitioner's - Lukban
who, insofar as the source of the information is concerned, impressed the NLRC as evasive. The NLRC
however entertained a patent misapprehension of the burden of proof rule in labor termination
cases. Unlike in other cases where the complainant has the burden of proof to discharge, in labor cases
concerning illegal dismissals, the burden of proving that the employee was dismissed with just cause
rests upon the employer. Such is the mandate of Art. 278 of the Labor Code.
In brief, the evidence of PHILSTEEL rests upon the following bases: (a) the allegation of Charles Villa,
representative of BLISS FOX, that Lukban named petitioner Austria as his contact in PHILSTEEL; (b) the
close relationship of Lukban and Austria; and, (c) the admissions of Austria during the investigation
relative to both the close relationship with Lukban and their plans to set up a rival business.
I: WON NLRC committed grave abuse of discretion for its misappreciation of the evidence and giving it
undue weight
H: Like a house of cards, the evidence of private respondents collapses when we take into account the
fact that its foundation is made of hearsay evidence or mere speculations. It must be noted that the
testimonies of Valerio and Vega relied mainly on the veracity of the assertions of Villa. They did not say
that they actually heard or observed Lukban admit to Villa that the former's client was PHILSTEEL and

that his contact with PHILSTEEL was Austria. What they seemingly saw was Villa scribbling a name on
the telefax purportedly dictated by Lukban. In short, what they appear to have observed was what Villa
wanted them to observe, no matter whether it was the truth or not. Thus, their testimony was clearly
hearsay and must not be given weight. Moreover, the veracity of Villa's assertions, even as to his being
a representative of BLISS FOX, is suspect. The reliance both by the Labor Arbiter and the NLRC on the
hearsay testimonies in assessing the evidence of private respondents reflects a dangerous propensity
for baseless conclusions amounting to grave abuse of discretion. Such propensity is further shown when
public respondent gave imprimatur to PHILSTEEL's conclusion that Austria was the one who divulged
the so-called confidential information due mainly to his close affinity with Lukban.
Of significance here is the fact that nowhere in all the allegations of PHILSTEEL was there proof of any
concrete action by Austria of divulging confidential information and of setting up a rival
business. Everything was according to what Villa said or what Lukban supposedly said. Thus,
PHILSTEEL's resort to Austria's "admissions." The admission of close relationship is certainly true as it
was affirmed by both Austria and Lukban. The "admission" however, of their setting up a rival business
strikes this Court as somewhat forced like squeezing a stone for water. The reality of such admission is
negated by subsequent events. At no time did such an envisioned "rival" company come to
being. Indeed, after his dismissal, petitioner had to languish for several months in uncertainty while
looking for employment, instead of just joining the alleged company. Until he died on 15 March 1997,
petitioner never went into partnership with Lukban nor joined any other company.
Accusation cannot take the place of proof. A suspicion or belief no matter how sincerely felt cannot be a
substitute for factual findings carefully established through an orderly procedure. Such orderly procedure
was denied petitioner by PHILSTEEL, as correctly found by the NLRC, thus
In the instant case, there was at least a partial denial of the complainant's right to due process because
there was no showing: (1) that he was given the required first written notice; (2) that he was given
sufficient time to answer the charges against him; and, (3) that he had the chance to obtain the
assistance of counsel.
As there is a finding of illegal dismissal, an award of back wages, instead of indemnity, computed from
the time of dismissal up to the time of his death, with legal interest plus attorney's fees, might properly
assuage the hurt and damages caused by such illegal dismissal. The petition is GRANTED.
General Bank & Trust Co. v. CA, 135 SCRA 569
F: This case starts with the employment of plantiff-appellee with the Cebu Branch of the First National
City Bank of New York for 18 years, where he rose to the position of Chief Clerk, Accounting Department
(Exhibit 0); that on January 11, 1965, plaintiff-appellee joined the defendant bank in its Cebu branch as
accountant with an annual compensation of P6,000.00 (Exhibit A); that on April 26, 1965, the Cebu
Branch of defendant bank began operating and doing business with the public; that on January 1, 1966,
plaintiff received an increase of P50.00 bringing his monthly salary to P550.00 (Exhibit D); that on April
11, 1967 defendant bank appointed the plaintiff to the position of Acting Manager of its Cebu Branch,
with the corresponding increase of sale to P700.00 a month (Exhibit E); that effective September 1,
1967, defendant bank granted plantiff a monthly housing allowance of P200.00 in addition to his monthly
salary (Exhibit F); that on October 3, 1967 defendant bank appointed plaintiff as the regular Manager of
its Cebu Branch (Exhibit G) effective May 1, 1968; that defendant bank increased plaintiff's salary to
P1800.00 a month (Exhibit H); that on May 16, 1969 while the plaintiff was on vacation leave, he
happened to visit the bank and learned that three tellers of defendant bank's branch in Cebu City,
namely, Miss Crystal Enriquez, Miss Yolanda Chu, and Miss Sonia Chiu, had been transferred to the
head office in Manila by defendant Jose D. Santos; that the plantiff went to Manila on May 18, 1969 to
make personal representation with the head office for the retention of the said tellers in Cebu; that on

May 26, 1969 the plaintiff reported back for duty with defendant bank's branch in Cebu and reinstated
immediately the three tellers to their respective positions in the Cebu branch of defendant bank; that on
May 28, 1969 defendant Jose D. Santos submitted a report to defendant Salvador D. Tenorio alleging
that there was excess personnel in the Cebu Branch; that on the same date defendant Jose D. Santos
submitted a supplementary report to defendant Salvador D. Tenorio charging the plaintiff of over
appraising the real estate offered by Domingo Chua as collateral for his credit accommodation (Exhibit
34); that defendant Salvador D. Tenorio immediately dispatched a letter to the plaintiff dated May 30,
1969 requiring him to explain within twenty-four hours why no disciplinary action should be taken against
him for alleged repeated violation of defendant bank's policies and directives regarding credit
accommodations and for over-appraisal of the real estate collateral for Domingo Chua's account, among
others (Exhibit 8); that on June 6, 1969, the plaintiff received the said letter of defendant Salvador D.
Tenorio but found it impossible to render the required explanation in 24 hours; that on June 19, 1969
defendant Jose D. Santos went to Cebu City and served plaintiff with the letter of defendant Salvador D.
Tenorio, dated June 18, 1969, suspending the plaintiff; and that on July 22, 1969 plantiff was served with
the order of his termination signed by defendant Clarencio S. Yujuico, dated July 18, 1969.
The Court of First Instance of Cebu rendered a decision, finding the dismissal of plantiff as without just
cause or otherwise illegal arbitrary, oppressive and malicious, and ordering defendants to pay to the
plaintiff, jointly and severally. The Court of Appeals, affirmed the decision of the lower court.
I: WON the dismissal of Manuel E. Batucan was justified on the ground that he repeatedly failed to
uphold the interests of the bank thus leading to his employer's loss of confidence on him.
H: After a careful review of the case, we find no error in the finding of the Court of Appeals that Mr.
Batucan was indeed illegally dismissed. The petitioners' claim that "undisputed documentary evidence
show that prior to his dismissal, specifically from March 1968 to January 1969, respondent Batucan had
been repeatedly cited, warned and finally threatened with dismissal by his superior, petitioner Tenorio,
for his practice of granting credit accommodations without authority during his tenure." They support
such claim with six memoranda addressed to Mr. Batucan, to wit: Exh. "22" dated April 17, 1968 by
Tenorio; Exh. "23" dated March 12, 1968 by Tenorio; Exh. "24" dated March 14, 1968 by Tenorio; Exh.
"29" dated December 9, 1968 by Tenorio; Exh. "30" dated December 27, 1968 by Tenorio; Exh. "34"
dated January 28, 1969 by Tenorio.
Petitioners' argument is devoid of merit. We agree with the respondent that these communications are
"nothing more than routinary acts and/or privileged acts of top management officials which could not in
any way affect or erode petitioners' confidence in respondent Batucan."
After the first three aforecited exhibits were dispatched to Cebu on March 12, 1968, March 14, 1968, and
April 17, 1968, petitioner San Luis cleared Mr. Batucan from an exceptions reported by the Central Bank
examiners in connection with their examination conducted in March, 1968. In his report to the President
of the bank in about the first week of March 1968, San Luis commended Mr. Batucan for the good image
enjoyed by the bank in the locality because clients, customers, and depositors spoke well and highly of
Mr. Batucan for his dedication, sincere and upright dealing with people. Because of such commendation,
the president of the bank, the late Senator Quintin Paredes gave Mr. Batucan an increase of P100.00 in
his monthly salary effective May 1, 1968. Mr. Batucan was also asked to speak at the manager's
meeting on October 19, 1968 on his "Techniques in Effective solicitation of Deposits or New Accounts."
Batucan was also given a free hand in the prosecution of a defalcating head teller relying on his good
judgment to protect the interests of the bank.

With the foregoing circumstances, we cannot reconcile the management's alleged loss of confidence in
Mr. Batucan with the latter's commendations for efficient performance, his having been given an increase
in salary and his being asked to speak to other colleagues on effective banking techniques shortly after
the supposed loss of confidence.
We agree with the Court of Appeals in its finding that preponderance of the evidence, however, shows
that the alleged unauthorized extension of temporary over-draft or credit accommodations referred to
credit accommodations which were granted by and already existing during the term of the previous
management.
Not only did the Court of Appeals establish that there were no improper credit accommodations granted
during Mr. Batucan's term as manager but his competence at being able to regularize these accounts
and his contributions to the improvement of the bank were clearly ascertained.
There is no question that managerial employees should enjoy the confidence of top management. This
is especially true in banks where officials handle big sums of money and engage in confidential or
fiduciary transactions. However, loss of confidence should not be simulated. It should not be used as a
subterfuge for causes which are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere
afterthought to justify earlier action taken in bad faith.
We now come to the issue of damages. Petitioners question the propriety of awarding moral and
exemplary damages to the respondent. Under Article 2217 of the Civil Code:
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or commission.
Mr. Batucan left a stable job with a reputable bank to join the petitioner bank. He had been an employee
of the First National City Bank of New York for eighteen (18) years. Undoubtedly, before he accepted
petitioner Tenorio's invitation, he must have thought the matter over several times. And from the time he
joined the petitioner bank, the records show that Mr. Batucan has indeed worked his way up from
accountant to permanent branch manager of the bank. During his term as manager, he was able to
increase the income and resources of the bank. He raised the image of petitioner bank in the business
and banking community and placed its operations on a good and competitive basis. His peremptory
dismissal from the bank was certainly a shock to him and damaged his moral feelings and personal pride
after all the loyalty and hard work he had dedicated to the bank.
The only reason for his dismissal found in the records is his failure to follow top-management orders with
regards to the transfer of the three tellers. Petitioners alleged it to be insubordination. Nevertheless,
insubordination must be proven to justify dismissal (St. Luke's Hospital v. Ministry of Labor and
Employment, 116 SCRA 240). And we do not think that his earnest efforts in making representations to
retain the three tellers warrant his dimissal. A manager or supervisor must stand up for his subordinates
unless the latter are guilty of wrongdoing or some conduct prejudicial to the employer. Only after as
representations was Mr. Batucan questioned on the several "unauthorized credit accommodations." His
failure to explain within 24 hours which, in the light of the circumstances, was too short, caused his
suspension and later, his dismissal retroactive to the date of suspension. There was no valid reason for
his dismissal, much less for all the charges and accusations made against him. The dismissal followed

by the efforts to justify it was tainted by bad faith or malice on the part of the petitioners who wanted Mr.
Batucan removed from his post.
The employer's right to dismiss his employee, however, differs from, and should not be confused with the
manner in which the right is exercised. The manner in which the company exercised its right to dismiss
in the case at bar was abusive; hence, it is liable for moral damages, as previously discussed.
A review of the records, however, indicates that the moral and exemplary damages awarded may be
somewhat excessive. Hence, in the exercise of our discretion and after considering all factors, we have
decided to reduce to P20,000.00 the award for moral and exemplary damages and to P5,000.00 the
award for attorney's fees.
The award of P1,000.00 a month from the time Mr. Batucan's employment was terminated up to the date
this case becomes final and executory is likewise excessive. At the same time, pursuant to Republic Act
1052 as amended by Republic Act 1787, which provides that in case of employment without a definite
period, an employer may terminate an employee's services without just cause by serving to the
employee a written notice at least one month in advance or by granting him pay equivalent to one-half
month salary for every year of service, whichever is longer.
Considering the facts and equities of this case, however, we have decided to limit compensatory
damages to only P12,000.00, as explained above.chanroblesvirtualawlibrary chanrobles virtual law
library
Lastly, petitioners raise the issue that "individual petitioners, having acted in their official capacities as
bank officers, did not incur any personal liability in favor of Batucan. We quote with favor the finding of
the respondent Court: The evidence shows that the individual defendants acted jointly in causing the
illegal and unjustifiable dimissal of the plaintiff-appellee. Hence, the trial court is correct in holding the
individual defendants jointly and severally liable to the plaintiff-appellee. "
Clearly, the petitioners acted beyond their authority and against what the law provides. WHEREFORE,
the decision appealed from is MODIFIED.
Sy v. Metrobank, 506 SCRA 580
F: 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 Metropolitan Bank and
Trust Company.
Under the banks Retirement Plan, an employee must retire upon reaching the age of 55 years or after
rendering 30 years of service, whichever comes first. Sy would have rendered 30 years of service by
August 18, 1999. However, on February 5, 1999, he was reappointed as branch manager for a term of
one year starting August 18, 1999 until August 18, 2000. His monthly compensation was accordingly
increased from P50,400 to P54,500, effective August 16, 1999.
Meanwhile, on November 10 and 15, 1999, the bank released the results of the audit conducted in its
Bajada branch. On November 15, 1999, Sy tendered an irrevocable letter of retirement. In his letter, he
requested the timely release of his retirement pay and other benefits. His request was denied.

The bank alleged that Sy allowed spouses Gorgonio and Elizabeth Ong to conduct "kiting" activities in
their account with the bank. Thus, 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.
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 on December 15, 1999.
Sy filed against the bank a complaint for illegal suspension, illegal dismissal and money claims,
docketed as RAB-11-01-00024-0. However, the Labor Arbiter dismissed the case for lack of merit.
On appeal, the National Labor Relations Commission (NLRC) deemed Sy compulsorily retired. Thus, the
NLRC awarded him retirement benefits, unpaid salary, monetary value of unused leave credits,
13th month pay, Christmas bonus, and refund of provident fund.
The parties sought reconsideration, which were both denied for lack of merit. Respondent bank elevated
the matter to the Court of Appeals, which set aside the ruling of the NLRC and reinstated the Decision of
the Labor Arbiter. On motion for reconsideration, however, the Court of Appeals modified its ruling and
ordered the bank to reimburse Sys contribution to the provident fund.
I: (1) Was petitioner illegally terminated? (2) If his dismissal was valid, would he still be entitled to
retirement benefits?
H: 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. 19 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 amanagerial employee.
Petitioners conduct betrays his culpability. Shortly after the audit conducted in the Bajada branch, he
tendered an "irrevocable letter of retirement." In the said letter, he requested that his retirement be made
effective December 1, 1999. Said request arouses suspicion considering that he had previously agreed
to the extension of his employment as branch manager until August 18, 2000. Petitioners evident failure
to offer any reasonable explanation for such sudden shift in his plans is prejudicial to his cause.
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.

Petitioner, however, theorizes that having been compulsorily retired, he could no longer be dismissed by
the bank. His premise is absurd. Indeed, he would have qualified for compulsory retirement under the
banks Retirement Plan. However, he opted to accept the banks offer of extending his employment for
another year with a corresponding salary increase. Thus, in effect, he had never retired. Unfortunately
for him, while serving such extended term, the bank discovered his unauthorized grant of
accommodation to accounts engaged in "kiting" activity. Such act is a clear breach of the trust reposed in
him by the bank. He cannot now elude dismissal for a just cause by claiming he was already retired
compulsorily.
Is petitioner nevertheless entitled to retirement benefits? Under the Labor Code, only unjustly dismissed
employees are entitled to retirement benefits and other privileges including reinstatement and
backwages. Since petitioners dismissal was for a just cause, he is not entitled to any retirement benefit.
To hold otherwise would be to reward acts of willful breach of trust by the employee. It would also open
the floodgate to potential anomalous banking transactions by bank employees whose employments have
been extended. Since a banks operation is essentially imbued with public interest, it owes great fidelity
to the public it deals with. In turn, it cannot be compelled to continue in its employ a person in whom it
has lost trust and confidence and whose continued employment would patently be inimical to the banks
interest.24 While the scale of justice is tilted in favor of workers, the law does not authorize blind
submission to the claim of labor regardless of merit.
While the Court commiserates with petitioner who has spent with the bank the best three decades of his
employable life, we find no room to accord him compassionate justice. Records showed that he violated
the bank policies prior to his compulsory retirement. Thus, there can be no earned retirement benefits to
speak of. No such provision is provided for by the Labor Code. In fact, even the Civil Service Law
imposes forfeiture of retirement benefits in valid dismissal cases.
Notably, the Court has also disallowed claims for retirement benefits in valid dismissal cases because
the retirement plan itself precluded employees dismissed for cause from availing it. Although no such
prohibition in the retirement plan was alleged or proved in this case, we nevertheless deny petitioners
claims because his offenses, vis--vis his long years of service with the bank, reflect a regrettable lack of
loyalty which he should have strengthened instead of betrayed. The petition is hereby DENIED.
Jardine Davies v. NLRC, 311 SCRA 289
F: Petitioner is a domestic corporation engaged in general trading, including the exclusive distribution in
the country of the world-renowned Union 76 lubricating oil manufactured by Unoco Philippines, Inc.
Private respondent was a former sales representative of petitioner.
A review of the records of this case reveals that petitioner engaged the services of a private investigation
agency to conduct surveillance and investigation pertinent to reports that some of petitioners products,
particularly the Union 76 lubricating oil, were being illegally manufactured, blended, packed and
distributed. Consequently, a private investigator of the said investigation agency, confirmed that there
were really fake Union 76 lubricating oil in the market and reported further that the same were indeed
being illegally manufactured, blended, packed and distributed by private respondent Virgilio Reyes.
Petitioner then secured a search warrant which led to the seizure of some of the alleged fake items
found in the apartment complex reportedly occupied by said private respondent.
Thereafter, a criminal complaint for violation of Article 189 on unfair competition of the Revised Penal
Code [2] was filed against private respondent and others. Subsequently, private respondent was likewise
charged administratively for having committed serious misconduct inimical to the interest of petitioner

company. Accordingly, he was advised to go on an indefinite leave. This eventually led to his termination
from employment on February 23, 1983.
Meanwhile, all the materials seized by virtue of the search warrant issued were released by order of the
same court in view of a petition filed by private respondents younger brother, Donato Reyes. Apparently,
the younger Reyes convinced the court that he was the legal tenant of the apartment complex searched
and that all the materials seized are legally owned by him. He further proved that he was legally
engaged in the business of general merchandising, operating under the trade name of Lubrix
Conglomerate, a single proprietorship duly licensed by the government in dealing with oil and lubricant
products. Furthermore, he presented the receipts covering the purchases of the seized Unoco products
purposely for packing the same in small containers to be resold to the public.
Relying on the foregoing facts, private respondent sued petitioner for illegal dismissal. But the Labor
Arbiter, Manuel R. Caday, dismissed his complaint.
In a Decision dated September 24, 1985, the labor arbiter stated that the apartment complex allegedly
occupied by private respondent was indeed the situs of the illegal manufacture, blending and packaging
of Union 76 oil and lubricating products. Convinced that private respondent was personally involved in
the aforementioned illegal activity, the labor arbiter ruled that the private respondent committed an act of
serious misconduct, fraud or willful breach of trust reposed in him by petitioner, a just cause for
terminating employment.
Private respondent appealed to the NLRC. In its Decision dated March 17, 1986, the NLRC reversed the
labor arbiters judgment on the ground that there is no cogent reason for petitioner to lose its trust and
confidence on private respondent.
I: WON public respondent committed grave abuse of discretion in reversing the labor arbiters judgment
which found a just and valid cause for dismissal of private respondent by petitioner.
H: Petitioners attack on the alleged misappreciation of facts and distorted evaluation of evidence by
public respondent stands, in our view, on hollow ground. Resort to judicial review of the decisions of the
National Labor Relations Commission by way of a special civil action for certiorari under Rule 65 of the
Rules of Court is confined only to issues of want or excess of jurisdiction and grave abuse of discretion
on the part of the labor tribunal. It does not include an inquiry as to the correctness of the evaluation of
evidence which was the basis of the labor agency in reaching its conclusion. Neither is it for this Court to
re-examine conflicting evidence, re-evaluate the credibility of the witnesses nor substitute findings of fact
for those of an administrative body which has gained expertise in its specialized field. Arguably, there
may even be an error in judgment. This, however, is not within the ambit of the extraordinary remedy of
certiorari.
It is beyond dispute that loss of trust and confidence constitutes a valid ground for dismissing an
employee. It is settled that loss of confidence as a just cause for terminating employment must be
premised on the fact that an employee concerned holds a position of trust and confidence. This situation
obtains where a person is entrusted with confidence on delicate matters, such as care and protection,
handling or custody of the employers property as in this case. But, in order to constitute a just cause for
dismissal, the act complained of must be work-related such as would show the employee concerned to
be unfit to continue working for the employer. Likewise, it must be noted that proof beyond reasonable
doubt is not required to dismiss an employee on the ground of loss of confidence. It is 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 of his position.

This Court, however, has repeatedly stressed that the right of an employer to dismiss employees on
account of loss of trust and confidence must not be exercised arbitrarily and without showing just cause,
so as not to render the employees constitutional right to security of tenure nugatory. Thus, although the
dropping of a criminal charge for an employees alleged misconduct does not bar his dismissal, and
proof beyond reasonable doubt is not necessary to justify the same, still the basis thereof must be
clearly and convincingly established. Besides, for loss of confidence to be a valid ground for dismissal,
such loss of confidence must arise from particular proven facts. In other words, this ground must be
founded on facts established by the employer who must clearly and convincingly prove by substantial
evidence the facts and incidents upon which loss of confidence in the employee may be fairly made to
rest; otherwise the dismissal will be rendered illegal.
In the case at bar, private respondent was suspended and eventually dismissed for allegedly committing
fraudulent acts and unfairly competing with petitioner. To justify its administrative action, petitioner
somehow grave credence to the surveillance report implicating private respondent in the illegal
manufacture, blending, packing and distribution of petitioners products. Petitioner likewise relied on the
result of the search on the apartment reportedly leased by private respondent from which alleged
counterfeit Union 76 oil products were seized. Unfortunately, these could not be deemed sufficient
basis for petitioner to lose its trust and confidence on private respondent so as to justify the latters
dismissal.
For evidently, the surveillance report is unreliable. As found by the NLRC, the conclusions therein were
mere deductions not supported by any substantial corroborating evidence. Public respondent also
observed that the petitioner failed to show concrete evidence to controvert the proof presented by private
respondent that the packing of genuine Union 76 oil in small containers was in support of the marketing
policy of petitioner. Furthermore, as the Solicitor General points out, petitioners agents surprisingly did
not submit to laboratory test the alleged fake merchandise seized during the search, to determine its
genuineness. This deficiency could be attributed to the misstep of the private detectives who were
specifically instructed to investigate precisely the reported counterfeiting of petitioners products.
Another virtual confirmation that petitioner lacks factual basis for its distrust of private respondent was
the subsequent judicial order releasing the articles seized during the search. As it appears on record, the
court believed the explanation of Donato Reyes, brother of private respondent, that he was the lessee of
the aforesaid apartment.
In sum, we hold that public respondent did not gravely abuse its discretion in ruling that petitioner failed
to duly prove that the dismissal of private respondent was justified on account of loss of trust and
confidence. Hence, private respondents dismissal was found illegal.
With the finding that private respondent was illegally dismissed, an award of backwages is proper. It
must be emphasized, though, that jurisprudence distinguishes between employees illegally dismissed
prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals
were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled
to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after
are granted 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.
Considering that private respondent was terminated from the service on February 23, 1983, he is entitled
to backwages up to three years only, computed on the basis of his last monthly salary or pay.
In addition to backwages, illegally dismissed employees are entitled to either reinstatement, if feasible,
or separation pay, if reinstatement is no longer viable. Petition is DENIED for lack of merit.
Central Pangasinan Electric Cooperative c. Macaraeg | GR 145800 | Jan. 22, 2003

F: Petitioner is an electric cooperative duly organized and existing under Philippine laws. Respondent
Geronima Macaraeg and Maribeth de Vera are employees of petitioner at its office in Area V,
Bayambang, Pangasinan. Respondent de Vera was employed as teller whose primary duty was to
accept payments from petitioners consumers in Bayambang and remit her collections to the cashier,
herein co-respondent Geronima Macaraeg. Respondent Macaraegs duty was to deposit the daily
collections of the office to petitioners account at the Rural Bank of Central Pangasinan in Bayambang.
From January 1998 to January 1999, respondent de Vera accommodated and encashed the crossed
checks of her sister, Evelyn Joy Estrada. Evelyn issued two hundred eleven (211) crossed checks
amounting to P6, 945,128.95 payable to petitioner cooperative despite the absence of any transaction or
any outstanding obligation with petitioner. In turn, respondent de Vera, with the knowledge and consent
of respondent Macaraeg, paid the full value of these checks from the cash collections of petitioner. At
the end of the day, respondents credited the checks as part of their collection and deposited the same
together with their cash collection to the account of petitioner at the Rural Bank of Central Pangasinan.
Sometime in January 1999, petitioner, through its Finance Department, noticed that several checks
payable to petitioner from the collections in the Area V office were returned due to insufficiency of funds.
On January 19, 1999, Josefina Mandapat, Sandra Frias and Marites Radac, petitioners Finance
Manager, Chief Accountant and Legal Assistant, respectively, confronted respondents with their
discovery. Respondent de Vera admitted that the checks were issued by her sister and that she
encashed them from the money collected from petitioners customers. On January 21, 1999, Mrs.
Josefina Mandapat submitted a memorandum to petitioners General Manager, Salvador M. de Guzman,
detailing their findings about the bounced checks. On February 2, 1999, she submitted an addendum to
her memorandum. On February 4, 1999, petitioner, through de Guzman, issued a memorandum to
respondents placing them under preventive suspension and requiring them to explain in writing within
forty-eight (48) hours why they misappropriated cooperative funds. In the same communication, a
hearing was set on February 13, 1999 at 9:30 a.m. at the Board Room of petitioner before Atty. Teodoro
Fernandez.
In their respective Answers/Explanations, respondents denied having misappropriated the funds of
petitioner cooperative. They alleged that: (1) the checks that bounced were redeposited with the Rural
Bank of Central Pangasinan; (2) the amount representing the face value of the checks had been used by
petitioner as of December 15, 1998; (3) there was never any shortage in the cooperative money or funds
in their possession; and (4) they never violated any policy of the cooperative and on the contrary, they
have been very religious in remitting the funds and money of petitioner.
At the scheduled hearing on February 13, 1999, respondents, with assistance of counsel, appeared
before Atty. Teodoro Fernandez. Respondent de Vera testified and admitted that she encashed the
checks of Evelyn Joy Estrada because the latter is her older sister and that she has a soft spot for her;
that Mrs. Estrada owns a sash factory and that she merely wanted to help her sister meet her business
obligations; that sometime in November 1998, Mrs. Marites Radoc, Chief Accountant of petitioner, called
her attention to one check which bounced thrice; that this check was eventually replaced by her sister
with cash; that despite the bouncing of some other checks, all checks were eventually funded and paid
to petitioner, hence, petitioner incurred no losses in its collections; that she has worked for petitioner for
nineteen (19) years and this is the first time she has been charged administratively by petitioner.
Respondent Macaraeg admitted that she knew of the accommodations given by respondent de Vera to
her sister; that she allowed her subordinate to do it because respondent de Vera is her kumare, and that
she knew that Mrs. Estradas checks were sufficiently funded. She worked for petitioner for twenty-two
(22) years and has never had an administrative charge.
Mrs. Josefina Mandapat, Finance Manager of petitioner, testified as petitioners witness. She stated that
she prepared a report on the findings of their accountant regarding the encashment of Evelyn Joy
Estradas checks, and that the encashment of said checks is prohibited under an office memorandum.

On March 10, 1999, Atty. Fernandez submitted his findings to the General Manager of petitioner. On
March 19, 1999, on the basis of said findings and recommendation, the General Manager issued to
respondents separate notices of termination, effective April 9, 1999, for serious misconduct, and breach
of trust and confidence reposed on them by management.
Respondents, with the help of the President and representative of the Union, Central Pangasinan
Electric Cooperative (CENPELCO) Employees Association-Tupas Local Chapter No. R01-0012,
questioned their dismissal before the National Conciliation and Mediation Board (NCMB). They claimed
that their dismissal was without just cause and in violation of the Collective Bargaining Agreement
(CBA), which requires that the case should first be brought before a grievance committee. Eventually,
the parties agreed to submit the case to a voluntary arbitrator for arbitration.
On August 12, 1999, the voluntary arbitrator rendered a decision in favor of respondents. Petitioner
appealed to the Court of Appeals via a petition for review. On August 17, 2000, the Court of Appeals
rendered a decision dismissing the petition and affirming the decision of the voluntary arbitrator. Hence,
the present course of action.
I: WON the CA gravely abused its discretion in holding that petitioner illegally terminated the services of
herein private respondents.
H: The petition is impressed with merit. At the outset, we hold that the first issue raised in the petition
pertaining to the alleged violation of the CBA grievance procedure is moot and academic. The parties
active participation in the voluntary arbitration proceedings, and their failure to insist that the case be
remanded to the grievance machinery, shows a clear intention on their part to have the issue of
respondents illegal dismissal directly resolved by the voluntary arbitrator. We therefore find it
unnecessary to rule on the matter in light of their preference to bring the illegal dismissal dispute to
voluntary arbitration without passing through the grievance machinery.
This leads us to the next issue of whether respondents were 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.
We hold that there exists a valid reason to dismiss both employees. Article 282(c) of the Labor Code
allows an employer to dismiss employees for willful breach of trust or loss of confidence. Proof beyond
reasonable doubt of their misconduct is not required, it being sufficient that there is some basis for the
same or that the employer has reasonable ground to believe that they are responsible for the
misconduct and their participation therein rendered them unworthy of the trust and confidence
demanded of their position.
To be sure, the acts of the respondents were clearly inimical to the financial interest of the
petitioner. During the investigation, they admitted accommodating Evelyn Joy Estrada by encashing her
checks from its funds. They did so without petitioners knowledge, much less its permission. These
inimical acts lasted for more than a year, and probably would have continued had it not been discovered
in time. All along, they were aware that these acts were prohibited by the Coop Checks Policy. Clearly,
there was willful breach of trust on the respondents part, as they took advantage of their highly sensitive
positions to violate their duties.
Moreover, the acts of the respondents caused damage to the petitioner. During those times the checks
were illegally encashed, petitioner was not able to fully utilize the collections, primarily in servicing its
debts. In her memorandum dated January 21, 1999, Finance Manager Josefina Mandapat reported how
petitioner is prejudiced.

It is not material that they did not misappropriate any amount of money, nor incur any shortage relative
to the funds in their possession. The basic premise for dismissal on the ground of loss of confidence is
that the employees concerned hold positions of trust. The betrayal of this trust is the essence of the
offence for which an employee is penalized. In the case at bar, the respondents held positions of utmost
trust and confidence. As teller and cashier, respectively, they are expected to possess a high degree of
fidelity. They are entrusted with a considerable amount of cash. Respondent de Vera accepted
payments from petitioners consumers while respondent Macaraeg received remittances for deposit at
petitioners bank. They did not live up to their duties and obligations.
Nor is there any doubt that petitioner observed procedural due process in dismissing the
respondents. In separate memoranda dated February 4, 1999 and signed by the General Manager ( de
Guzman), the respondents were both appraised of the particular acts or omissions constituting the
charges against them. They gave their own answer/explanation to the charges. They participated in
the investigation conducted at petitioners board room. We are aware that the respondents Macaraeg
and de Vera have been employed with the petitioner for 22 and 19 years of continuous service,
respectively, and this is the first time that either of them has been administratively
charged. Nonetheless, it is our considered view that their dismissal is justified considering the breach of
trust they have committed. Well to emphasize, the longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms of conduct and
the code of discipline in the company. Considering that they have mishandled the funds of the
cooperative and the danger they have posed to its members, their reinstatement is neither sound in
reason nor just in principle. It is irreconcilable with trust and confidence that has been irretrievably lost.
The petition is GRANTED.
Mcleod v. NLRC, 512 SCRA 222
F: John F. McLeod filed a complaint for retirement benefits, vacation and sick leave benefits, nonpayment of unused airline tickets, holiday pay, underpayment of salary and 13th month pay, moral and
exemplary damages, attorneys fees plus interest against Filipinas Synthetic Corporation (Filsyn), Far
Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu. He alleges that at the time of
his retirement complainant was receiving P60, 000.00 monthly with vacation and sick leave benefits;
13th month pay, holiday pay and two round trip business class tickets on a Manila-London-Manila
itinerary every three years which is convertible to cash if unused. Respondents accordingly failed to pay
vacation and leave credits and requested complainant to wait as it was short of funds but the same
remain unpaid at present. Respondents likewise failed to pay complainants holiday pay up to the
present. There were more benefits which were not honored.
The Labor Arbiter, held all respondents jointly and severally liable for the money claims of Mcleod.
However, the NLRC reversed and made Peggy Mills as the sole entity liable for the retirement pay of
Mcleod. This was affirmed by the CA.
I: WON an employer-employee relationship exists between the private respondents and the petitioner for
purposes of determining employer liability to the petitioner.
H: No employer-employee relationship, McLeod was a managerial employee of PMI from 20 June 1980
to 31 December 1992. McLeod could have presented evidence to support his allegation of employeremployee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment
letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as
testimony of co-employees, may serve as evidence of employee status. It is a basic rule in evidence that
parties must prove their affirmative allegations. While technical rules are not strictly followed in the

NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are
not enough. They must be supported by substantial evidence at the very least.
McLeods reliance on Annex M can hardly carry the day for him. Annex M, which is McLeods letter
addressed to "Philip Lim, VP Administration," merely contains McLeods proposals for the grant of some
benefits to supervisory and confidential employees. Contrary to McLeods allegation, Patricio did not sign
the letter. Hence, the letter does not embody any agreement between McLeod and the management that
would entitle McLeod to his money claims. Neither can McLeods assertions find support in Annex U.
Annex U is the Agreement which McLeod and Universal Textile Mills, Inc. executed in 1959. The
Agreement merely contains the renewal of the service agreement which the parties signed in 1956.
John Hancock Life Insurance Corp. v. Davis | GR 169549 | Sept. 3, 2008
F: Respondent Joanna Cantre Davis was agency administration officer of petitioner John Hancock Life
Insurance Corporation. On October 18, 2000, Patricia Yuseco, petitioner's corporate affairs manager,
discovered that her wallet was missing. She immediately reported the loss of her credit cards to AIG and
BPI Express. To her surprise, she was informed that "Patricia Yuseco" had just made substantial
purchases using her credit cards in various stores in the City of Manila. She was also told that a
proposed transaction in Abenson's-Robinsons Place was disapproved because "she" gave the wrong
information upon verification.
Because loss of personal property among its employees had become rampant in its office, petitioner
sought the assistance of the National Bureau of Investigation (NBI). The NBI, in the course of its
investigation, obtained a security video from Abenson's showing the person who used Yuseco's credit
cards. Yuseco and other witnesses positively identified the person in the video as respondent.
Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in the office of
the Manila city prosecutor. But because the affidavits presented by the NBI (identifying respondent as
the culprit) were not properly verified, the city prosecutor dismissed the complaint due to insufficiency of
evidence.
Meanwhile, petitioner placed respondent under preventive suspension and instructed her to cooperate
with its ongoing investigation. Instead of doing so, however, respondent filed a complaint for illegal
dismissal alleging that petitioner terminated her employment without cause.
The labor arbiter, in a decision dated May 21, 2002, found that respondent committed serious
misconduct (she was the principal suspect for qualified theft committed inside petitioner's office during
work hours). There was a valid cause for her dismissal. Thus, the complaint was dismissed for lack of
merit.
Respondent appealed the labor arbiter's decision to the National Labor Relations Commission (NLRC)
which affirmed the assailed decision on July 31, 2003. Respondent moved for reconsideration but it was
denied in a resolution dated October 30, 2003.
Aggrieved, respondent filed a petition for certiorari in the Court of Appeals (CA) claiming that the NLRC
committed grave abuse of discretion in affirming the decision of the labor arbiter. She claimed there was
no valid cause for her termination because the city prosecutor of Manila "did not find probable cause for
qualified theft against her." The dismissal of the complaint proved that the charges against her were
based on suspicion.
The CA, in its July 4, 2005 decision found that the labor arbiter and NLRC merely adopted the findings of
the NBI regarding respondent's culpability. Because the affidavits of the witnesses were not verified, they

did not constitute substantial evidence. The labor arbiter and NLRC should have assessed evidence
independently as "unsubstantiated suspicions, accusations and conclusions of employers (did) not
provide legal justification for dismissing an employee." Thus, the CA granted the petition. Petitioner
moved for reconsideration but it was denied. Hence, this petition.

The next day, March 23, 1990, Mercado and Somosot filed a complaint for illegal dismissal and
underpayment of wages, overtime pay, legal holiday pay, premium pay for holiday and rest day, 13th
month pay, service incentive leave benefits and night differential against petitioner. The case was
docketed as NLRC-NCR Case No. 00-03-01791-90.

I: WON petitioner substantially proved the presence of valid cause for respondent's termination.

Like Mercado and Somosot, respondent Oliver asseverated that on March 27, 1990 he went to
petitioners office to reiterate his money claims and was forced by Mr. Reynaldo Dino, petitioners
operations manager, to sign a Release and Quitclaim. Because of his refusal to sign the same, he was
not given any new assignment by petitioner. He was thus surprised to receive on March 29, 1990 a
telegram from petitioner requiring him to explain his absence from work without leave from March 27,
1990. Subsequently, Oliver filed a complaint for illegal dismissal and underpayment of backwages
against petitioner, which case was docketed as NLRC-NCR Case No. 00-03-01886-90.

H: We grant the petition. Misconduct involves "the transgression of some established and definite rule of
action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment."
In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used
Yuseco's credit cards. But since the theft was not committed against petitioner itself but against one of
its employees, respondent's misconduct was not work-related and therefore, she could not be dismissed
for serious misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are
susceptible of comparison to another in general or in specific detail. For an employee to be validly
dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary
and/or willful act or omission of the employee.
A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an
employee's moral depravity. Theft committed by an employee against a person other than his employer,
if proven by substantial evidence, is a cause analogous to serious misconduct.
Did petitioner substantially prove the existence of valid cause for respondent's separation? Yes. The
labor arbiter and the NLRC relied not only on the affidavits of the NBI's witnesses but also on that of
respondent. They likewise considered petitioner's own investigative findings. Clearly, they did not merely
adopt the findings of the NBI but independently assessed evidence presented by the parties. Their
conclusion (that there was valid cause for respondent's separation from employment) was therefore
supported by substantial evidence. All things considered, petitioner validly dismissed respondent for
cause analogous to serious misconduct. Petition is hereby GRANTED.
Security and Credit Investigation v. NLRC, 350 SCRA 357
F: Private respondents Mercado, Somosot and Oliver were employed as security guards by petitioner
and assigned to the CHR which was petitioners client. Sometime in February 1990, about eighteen (18)
of petitioners security guards detailed at the CHR, including Mercado, Somosot and Oliver, filed a
complaint for money claims against petitioner. However, upon petitioners request that the security
guards withdraw the complaint, each of the complainants, except for Mercado, Somosot and Oliver,
signed a Release and Quitclaim in favor of petitioner.
Mercado averred that he was being pressured by petitioner to sign a Release and Quitclaim, so he went
on leave from work on March 22, 1990. When he called petitioners office on the afternoon of the same
day to inquire about his work assignment, petitioners officer-in-charge, Rogelio Vecido, informed him
that he was not assigned anywhere because he was suspended from work.
Somosot likewise claimed that on March 22, 1990, Mr. Igmedio Tomenio, petitioners shift-in-charge at
the CHR, tried to pressure him to sign a Release and Quitclaim but he refused. That afternoon,
Somosot learned that he had been suspended from work. When he attempted to report for work the
next day, he was informed verbally that his employment was already terminated.

Upon motion of petitioner, the two cases were consolidated. Petitioner, on the other hand, denied that it
dismissed Mercado, Somosot and Oliver and alleged that the latter abandoned their employment.
Meanwhile, on February 18, 1991, petitioner filed a third-party complaint against the CHR, claiming that
its failure to effect the increase in the minimum wage of respondent security guards from July 1, 1989 to
March 31, 1990, was due to the failure of the CHR to promptly pay the increases in the wage rates of
said guards pursuant to Section 6 of Republic Act No. 6727 (R.A. 6727). The CHR approved payment of
increased wage rates only from April 16, 1990. Petitioner claimed that under R.A. 6727, the CHR was
mandated to pay increased wages to the security guards commencing from July 1, 1989.
The CHR denied that it was obliged to pay the increase in the wage rates of the respondent guards. It
averred that R.A. 6727 is not applicable to it, because it had already been paying the respondent
security guards more than P100.00 a day even before the effectivity of said law. Its decision to increase
the salaries of respondent guards effective August 16, 1990 was due only to humanitarian reasons.
In his Decision dated November 18, 1991 the Labor Arbiter found that there was neither dismissal by
petitioner of the respondent security guards nor abandonment of employment by the latter, and that the
controversy resulted from miscommunication and misapprehension of facts by the parties. The Labor
Arbiter, however, ruled that there was underpayment of respondent guards salaries, holiday pay,
premium pay for holidays and rest days, overtime pay, 13th month pay and service incentive leave
benefits.
All parties filed their respective appeals with the National Labor Relations Commission. In their partial
appeal, respondents Mercado and Somosot argued that the Labor Arbiter erred in not finding that they
were illegally dismissed and in not awarding backwages in their favor.
Petitioner, on the other hand, claimed that the Labor Arbiter erred in not finding that respondent security
guards abandoned their employment, and that it is the CHR which should be held liable for the monetary
award given to respondent security guards.
The CHR for its part contended that the Labor Arbiter erred in not finding that R.A. 6727 does not apply
to it, and in failing to appreciate the CHRs Letter dated April 16, 1990 which stated that it was increasing
the wage rates of the security guards beginning April 16, 1990.
I: WON NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it ruled that
private respondents did not abandon their posts
H: The Court finds that the NLRC committed no grave abuse of discretion in affirming the finding that
petitioner did not dismiss respondent security guards, and that the latter did not abandon their
employment.

Both the NLRC and the Labor Arbiter found no clear proof that petitioner had in fact dismissed
respondent security guards. Mercado based his claim of illegal dismissal only on the statement of officerin-charge Mr. Vecido that he had not been assigned to any post. Similarly, Somosot relied merely on
the verbal information relayed to him that he had been terminated. Olivers belief that he had been
illegally dismissed was founded on the telegram from petitioner requiring him to explain his absence
without leave which he received on March 29, 1990. None of them exerted efforts to confirm from
petitioners office whether they had in fact been dismissed.
Furthermore, petitioner denied the allegation that it terminated respondent security guards employment
without just cause and even alleged that respondent guards abandoned their employment. Thus,
absent any showing of an overt or positive act proving that petitioner had dismissed Mercado,
Somosot and Oliver, their claim of illegal dismissal cannot be sustained.
There being no finding that respondent security guards were illegally dismissed, there is no basis for an
award of backwages in their favor. It is axiomatic that before backwages may be granted, there must be
unjust or illegal dismissal from work.
Neither did the NLRC find evidence to support petitioners allegation that Mercado, Somosot and Oliver
abandoned their employment. The records reveal that their failure to report for duty was not caused by a
willful and deliberate intent to abandon their employment. Rather, such failure resulted from their belief,
though mistaken, that they had been suspended or terminated from work. The rule is that for
abandonment to exist, two elements must concur: first, the employee must have failed to report for work
or must have been absent without justifiable reason; and second, there must have been a clear intention
to sever the employer-employee relationship manifested by some overt acts. The filing by Mercado,
Somosot and Oliver of their complaints for illegal dismissal negates the existence of any intention on
their part to abandon their employment.
On the other hand, there is merit in petitioners argument that there was an error in the computation of
the amounts constituting underpayment of overtime pay, 13th month pay and service incentive leave
benefits to respondent security guards by the Labor Arbiter, which in turn was affirmed by the NLRC.
However, in computing the underpayment for overtime, 13th month and service incentive leave benefits,
the Labor Arbiter erroneously included the period from September 1, 1988 to June 30, 1989 in spite of
his finding that there was no underpayment in wages during said period.
The Court also finds merit in petitioners argument that the NLRC should not have reversed the Labor
Arbiters finding that the CHR is liable for the payment of P28,500.00 representing the differentials of
respondent security guards wage, overtime, 13th month and service incentive leave benefits for the
period July 1, 1989 to April 15, 1990.
The record shows that petitioner informed the CHR regarding the increase in the wages of the security
guards effective July 1, 1989, pursuant to R.A. 6727 which mandated a Twenty Five Peso (P25.00)
increase in the daily wage rate in a Letter dated August 7, 1989. In its reply letter dated April 16, 1990,
the CHR stated that it had approved the increase in the wages effective April 16, 1990.
The CHR, however, maintains that it is not liable to pay increased wages to the security guards and
claims that there is a proviso in Section 4 of R.A. 6727 which exempts employees already receiving
more than P100.00 daily from receiving the P25.00 increase required under said law. The CHR argues
that since the security guards were receiving P103.56 daily for the year 1989, it was not required to pay
them the P25.00 per day increase under R.A. 6727. The CHR further asserts that its approved increase
in the security guards wages from April 16, 1990 was due only to humanitarian reasons and was not an
admission of any obligation to increase the same under R.A. 6727.

It must be noted that both the Labor Arbiter and the NLRC found that there were discrepancies in the
minimum wage prescribed under R.A. 6727 and what were actually received by respondent security
guards from July 1, 1989. The rule is that the factual findings of the Labor Arbiter, when affirmed by the
NLRC are accorded to great weight and respect when supported by substantial evidence, and devoid of
any unfairness and arbitrariness.
It is clear that the CHR is the party liable for payment of the wage increase due to respondent security
guards. While petitioner, as the contractor, is held solidarily liable for the payment of wages, including
wage increases, as prescribed under the Labor Code, the obligation ultimately belongs to the CHR as
principal. The Labor Arbiter was therefore correct in requiring the CHR to reimburse petitioner the
amount of P28, 500.00 representing the unpaid wage increases of respondent security guards for the
period July 1, 1989 to April 15, 1990. The assailed decision of the affirmed with the MODIFICATION
CALS Poultry Supply v. Roco, 385 SCRA 479
F: CALS Poultry Supply Corporation is engaged in the business of selling dressed chicken and other
related products and managed by Danilo Yap. On March 15, 1984, CALS hired Alfredo Roco as its
driver. On the same date, CALS hired Edna Roco, Alfredos sister, as a helper in the dressing room of
CALS. On May 16, 1995, it hired Candelaria Roco, another sister, as helper, also at its chicken dressing
plant on a probationary basis.
On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint for illegal dismissal against
CALS and Danilo Yap alleging that Alfredo and Candelaria were illegally dismissed on January 20, 1996
and November 5, 1996, respectively. Both also claimed that they were underpaid of their wages. Edna
Roco, likewise, filed a complaint for illegal dismissal, alleging that on June 26, 1996, she was reassigned
to the task of washing dirty sacks and for this reason, in addition to her being transferred from night shift
to day time duties, which she considered as management act of harassment, she did not report for work.
According to Alfredo Roco, he was dismissed on January 20, 1996 when he refused to accept
P30,000.00 being offered to him by CALS lawyer, Atty. Myra Cristela A. Yngcong, in exchange for his
executing a letter of voluntary resignation. On the part of Candelaria Roco, she averred that she was
terminated without cause from her job as helper after serving more than six (6) months as probationary
employee.red
The Labor Arbiter on April 16, 1998, issued a decision dismissing the complaints for illegal dismissal for
lack of merit. The Labor Arbiter found that Alfredo Roco applied for and was granted a leave of absence
for the period from January 4 to 18, 1996. He did not report back for work after the expiration of his
leave of absence, prompting CALS, through its Chief Maintenance Officer to send him a letter on March
12, 1996 inquiring if he still had intentions of resuming his work. Alfredo Roco did not respond to the
letter despite receipt thereof, thus, Alfredo was not dismissed; it was he who unilaterally severed his
relation with his employer.
In the case of Candelaria Roco, the Labor Arbiter upheld CALS decision not to continue with her
probationary employment having been found her unsuited for the work for which her services were
engaged. She was hired on May 16, 1995 and her services were terminated on November 15, 1995.
Edna Roco, according to the Labor Arbiter, began absenting herself on June 25, 1996. She was sent a
memo on July 1, 1996 requiring her to report for work immediately, but she did not respond. In their
position papers, the complainants claimed that they were not given their overtime pay, premium pay for
holidays, premium pay for rest days, 13th month pay, allowances. They were also not given their
separation pay after their dismissal. The Labor Arbiter, however, denied their claims, stating that they
had not substantiated the same; on the other hand, CALS presented evidence showing that

complainants received the correct salaries and related benefits.

The National Labor Relations Commission (NLRC), in a decision promulgated on January 17, 2000,
affirmed the judgment of the Labor Arbiter.

one entered REVERSING the decision of the Court of Appeals insofar as it ruled in favor of herein
respondents and the decisions of the Labor Arbiter and the National Labor Relations Commission
REINSTATED.
Jardine Davies v. NLRC, 225 SCRA 757

On appeal by Alfredo, Candelaria and Edna Roco to the Court of Appeals, the appellate court set aside
the NLRCs decision and ordered reinstatement of Alfredo and Candelaria Roco to their former positions
without loss of seniority of rights and benefits, with full payment of backwages. However, in the case of
Edna Roco, the Court of Appeals found that her appeal cannot be favorably considered as she actually
abandoned her work without justification.
In considering that Alfredo Roco was illegally dismissed, the Court of Appeals relied on his allegation
that on January 20, 1996 when he reported for work, following his leave of absence from January 10 to
18, 1996, he learned from Elvie Acantelado, a secretary of Danilo Yap that he was already separated
from his employment.
I: WON there was illegal dismissal by CALS
H: From the facts established, we are of the view that Alfredo Roco has not established convincingly that
he was dismissed. No notice of termination was given to him by CALS. There is no proof at all, except
his self-serving assertion, that he was prevented from working after the end of his leave of absence on
January 18, 1996. In fact, CALS notified him in a letter dated March 12, 1996 to resume his work. Both
the Labor Arbiter and the NLRC found that Alfredo, as well as Candelaria Roco, was not dismissed.
Their findings of fact are entitled to great weight.
With respect to Candelaria Roco, there is no dispute that she was employed on probationary basis. She
was hired on May 16, 1995 and her services were terminated on November 15, 1995 due to poor work
performance. She did not measure up to the work standards on the dressing of chicken. The Labor
Arbiter sustained CALS in terminating her employment. The NLRC affirmed the Labor Arbiters ruling.
The Court of Appeals did not disagree with the NLRCs finding that Candelaria was dismissed because
she did not qualify as a regular employee in accordance with the reasonable standards made known by
the company to her at the time of her employment.
CALS argues that the Court of Appeals computation of the 6-month probationary period is erroneous as
the termination of Candelarias services on November 15, 1995 was exactly on the last day of the 6month period.
We agree with CALS contention as upheld by both the Labor Arbiter and the NLRC that Candelarias
services was terminated within and not beyond the 6-month probationary period.
As there is no mention of the basis of the above order, we may assume it was the temporary payroll
authority submitted by the petitioner showing that the private respondent was employed on probation on
February 16, 1978. Even supposing that it is not self-serving, we find nevertheless that it is selfdefeating. The six-month period of probation started from the said date of appointment and so ended on
August 17, 1978, but it is not shown that the private respondents employment also ended then; on the
contrary, he continued working as usual. Under Article 282 of the Labor Code, an employee who is
allowed to work after a probationary period shall be considered a regular employee.' Hence, Pilones
was already on permanent status when he was dismissed on August 21, 1978, or four days after he
ceased to be a probationer.
WHEREFORE, our Resolution of April 1, 2002 denying the petition is hereby SET ASIDE and another

Nature: The instant Petition for Certiorari seeks the reversal of the resolution of respondent National
Labor Relations Commission, dated 22 July 1992, which declared private respondent Salvador Salutin
as not having abandoned his work by his alleged failure to report for work during the pendency of the
petitioner's appeal before the respondent Commission.
F: Respondent Salvador Salutin ["Salutin"] was employed by petitioner Jardine Davies, Inc. ["JDI"] on 15
July 1985, as a demonstrator/agronomist to provide services relating to, and to give advice on, the
promotion and use of JDI's pesticides and other products. The controversy that spawned two [2] special
civil actions for certiorari [this instance included] with this Court, began when respondent Salutin filed a
complaint against petitioner JDI for illegal dismissal, with prayer for reinstatement and backwages or, in
the alternative, separation pay plus wage differential, service incentive leave pay, thirteenth [13th] month
pay, holiday pay, moral and exemplary damages, and attorney's fees. The complaint was decided by the
Labor Arbiter in favor of respondent Salutin.
JDI appealed the case to the National Labor Relations Commission [NLRC], and it posted a
supersedeas bond to answer for the monetary awards. It also reinstated Salutin, "on payroll only",
beginning 26 August 1991, in compliance with the writ of execution issued by the Labor Arbiter pursuant
to Article 223, paragraph 3, of the Labor Code. In a Decision dated 17 October 1991, NLRC dismissed
JDI's appeal for lack of merit but modified the decision by eliminating the awards given for holiday pay,
service incentive leave pay, moral and exemplary damages. A motion for reconsideration was filed which
was denied in NLRC's resolution of 13 January 1992.
On 14 February 1992, JDI filed its first petition for certiorari with this Court, docketed as G. R. No.
103720, assailing the 17 October 1991 decision and the resolution of 13 January 1992 of respondent
Commission. In Our Resolution dated 26 February 1992, the petition was dismissed for failure to comply
with this Court's Circular No. 28-91 on forum-shopping. Its subsequent motion for reconsideration was
itself denied on 20 May 1992. The Resolution of 26 February 1992 became final and executory on 19
June 1992, and an entry of judgment was accordingly made on 20 August 1992.
At the time when the above narrated events were still unfolding, some material facts occured beginning
with JDI's appeal to the NLRC on the 08 August 1991 decision of the Labor Arbiter. Shortly after the
reinstatement of Salutin "on payroll only", JDI sent a letter dated 21 September 1991, to Salutin directing
him to report for work to their Bacolod Branch Manager. Salutin, as directed, reported on the 24th of
September 1991 at around 9:20 a.m. He did not stay long, however, since after fifteen minutes or so, he
left and was reported not to have thereafter returned for work. JDI forthwith stopped further payment of
salary to Salutin.
On 17 October 1991, JDI filed a "Manisfestation and Motion" with the respondent Commission stating
that Salutin be considered as having abandoned his work considering his continuous absence of more
than three (3) weeks since he was required to report for work and that any award for reinstatement to
his former position, without loss of seniority and other rights, in the Arbiter's decision subject of this
appeal be considered and held as waived or lost. Salutin opposed the motion, claiming that he was
forced to leave in haste because he was then suffering from a serious ailment. He submitted a medical
certificate to support his claim.

On 13 January 1992, respondent Commission denied JDI's "Manifestation & Motion" stating, among
other things as to the issue of whether the complaint-appellee Salvador Salutin is guilty of work
abandonment, this is a new and factual matter which has to be determined and resolved in appropriate
proceedings before the Arbitration Branch, more especially in the present case, where the charge of
abandonment is seriously controverted.

F: Respondent Paulina Cabanban worked with petitioner GSP Manufacturing Corporation (GSP) as a
sewer from February 7, 1985 until her alleged termination on March 1, 1992. On June 16, 1992,
respondent filed with the National Labor Relations Commission (NLRC), National Capital Region
Arbitration Branch, a complaint against petitioners for illegal dismissal, non-payment of holiday pay,
service incentive leave pay and 13th month pay.

I: Is Salutin, who was then on payroll reinstatement since 26 August 1991, not guilty of abandonment
when his failure to report for work was because he was also working for another entity from 01
September 1991 to 31 December 1991? Correlatively, did respondent Commission not gravely abuse its
discretion when it did not take into consideration such other employment?

Respondent claimed she was terminated by petitioners because she failed to dissuade her daughter
from continuing her employment at the Sylvia Santos Company, a business competitor of petitioners. In
their defense, petitioners argued that respondent abandoned her work on March 14, 1992 and that they
reported this to the Department of Labor and Employment on May 15, 1992.

H: The answer is in the negative. The records show that at the time JDI filed its Manifestation and Motion
dated 17 October 1991, the sole basis of its prayer for a declaration that Salutin abandoned his work
was his alleged unauthorized absences from the date he was notified to report for work. A shift to a new
focus took place when, on 30 January 1992, JDI, at its request, received a letter-certification issued by
the Officer-in-Charge of King's Enterprises of Iloilo City that Salutin was employed by Monsato
Philippines, Inc., from 01 September to 31 December 1991, as Aggressive Crop Technician, for which he
was paid P5,146.00 per month. Thus, this was the reason given by JDI in its ex parte motion dated 16
June 1992, to set for hearing the Manifestation and Motion of 17 October 1991. NLRC denied the
said ex parte motion in the now assailed resolution of 22 July 1992.
When JDI filed its first petition for certiorari [in G. R. No. 103720] with this Court on 14 February 1992,
assailing the 17 October 1991 decision of NLRC, it also raised, as an added argument on the alleged
abandonment of work by Salutin, the fact that he was gainfully employed elsewhere. Considering that
this matter was thus already taken up by the petitioner in its first petition for certiorari, which this Court
dismissed with finality, the petitioner should really now be barred from invoking anew that issue in this
present [second] petition.
Be that as it may, the same fate of dismissal is still inevitable. Although this Court is not a trier of facts, it
may still wade through the records of a case if only to prevent any possible misgiving in its ultimate
disposition. The petitioner's evidence to establish Salutin's supposed abandonment of work is the
certification of employment issued by King's Enterprises at the request of herein petitioner to the effect
that Salutin had indeed been employed by Monsato Philippines, Inc., during the period from 01
September to 31 December 1991. For abandonment to constitute a valid cause for termination of
employment there must be a deliberate unjustified refusal of the employee to resume his employment.
This refusal must be clearly shown. Mere absence is not sufficient; it must be accompanied by overt acts
pointing to the fact that the employee simply does not want to work anymore.
Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts. In
this instance, however, certain uncontroverted facts show just exactly the opposite. Hence, Salutin did
report, as directed, on 24 September 1991, but that he could not stay long because he was ailing at that
time; he, although perhaps belatedly made, did seek medical consultation on 7 November 1991, at the
Corazon Locsin Montelibano Memorial Regional Hospital, for "peptic ulcer"; and on 11 December 1991,
he did, in fact, manifest his desire to assume his work with the petitioner.
This Court's Resolution of 26 February 1992, denying the petition in G. R. No. 103720, became final and
executory on 19 June 1992. Respondent Salutin's interim employment, stressed by the petitioner, did not
stain the picture at all. The petition is hereby dismissed.
GSP Manufacturing Corp. v. Cabanban | GR 150454 | July 14, 2006

On May 7, 1993, labor arbiter Melquiades Sol D. del Rosario found petitioners guilty of illegal dismissal.
Petitioners appealed to the NLRC. On August 10, 1995, the NLRC issued a resolution affirming in
toto the decision of the labor arbiter. Hence, this petition.
I: WON the findings of fact of the Court of Appeals were arrived at arbitrarily
H: The petition is without merit. As petitioners are well aware of, factual findings of the NLRC, particularly
when they are in agreement with those of the labor arbiter, are deemed binding and conclusive on this
Court. As long as their decisions are devoid of any unfairness or arbitrariness in their evaluation of the
evidence all that is left for us to do is stamp our affirmation and declare its finality. Having perused the
records, we find no such arbitrariness here.
We would like to reiterate some salient points laid down in our prior pronouncements concerning
abandonment of employment. Abandonment as a just ground for dismissal requires the deliberate,
unjustified refusal of the employee to perform his employment responsibilities. Mere absence or failure to
work, even after notice to return, is not tantamount to abandonment. The records are bereft of proof that
petitioners even furnished respondent such notice.
Furthermore, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with
abandonment of employment. An employee who takes steps to protest his dismissal cannot logically be
said to have abandoned his work. The filing of such complaint is proof enough of his desire to return to
work, thus negating any suggestion of abandonment.
Clearly, petitioners claim that respondents complaint was "an afterthought," having been filed a long
time after the date of the supposed abandonment, was utterly without merit. As the Court of Appeals
correctly pointed out, citing the case of Pare v. NLRC, respondent had four years within which to institute
her action for illegal dismissal. Compared to the six months it took the aggrieved employee in that case
to file his complaint for illegal dismissal, respondents 84 days was not unreasonably long at all. The
petition is hereby DENIED.
Shie Jie Corp. v. NFL, GR 153148, July 15, 2005
F: Respondents, in their complaint, alleged that they were employed as fish processors by petitioners.
On July 20, 1998, Sammy Yang and Michael Yang, petitioners, confronted them about their union
activities. Immediately, they were ordered to go home. The next day, petitioners suspended them for
one week effective July 22 to 28, 1998 (except respondent Wilfredo Toribio). Upon their return, they were
served with a notice of petitioners memorandum terminating their services for abandonment of
work.

Petitioners, in their answer, denied respondents allegations. They claimed that on July 20, 1998, about
2:45 oclock in the afternoon, 13 rank-and-file employees staged a walk-out and abandoned their work.
Among them were respondents Wilfredo Toribio, Nida Toribio, Yolanda Lorenzo, Sorraya Amping, Vivian
Mendoza, Merylene Delos Reyes, Arnold Francisco, and Manuel Francisco. As a consequence,
petitioners business operations were interrupted and paralyzed, prompting them to issue a
memorandum suspending respondents for one week or from July 22 to 28, 1998. However, on July 24,
1998, petitioners, in another memorandum, directed them to report for work on July 27, 1998. Instead,
respondents Ernesto Etrata, Sorraya Amping, Yasher Taning, Yolanda Lorenzo, Merylene Delos Reyes,
and Wilfredo Toribio submitted their resignation letters and quitclaims. Subsequently or on July 28,
1998, petitioners sent respondents Arnold Francisco, Nida Toribio, Vivian Mendoza, and Manuel
Francisco a notice terminating their services for abandonment of work.
On August 20, 1999, the Labor Arbiter rendered a Decision finding respondents guilty of unfair labor
practice (for dismissing petitioners illegally); and ordering them, jointly and severally, to pay
petitioners P843, 960.62.
On appeal, the National Labor Relations Commission (NLRC) promulgated its Decision dated April 27,
2000 reversing the Labor Arbiters Decision and dismissing respondents complaint. Respondents then
filed a motion for reconsideration but were denied by the NLRC in a Resolution dated June 29, 2000.
Hence, they filed with the Court of Appeals a petition for certiorari. On November 29, 2001, the Appellate
Court rendered a Decision reversing and setting aside the NLRCs Decision and reinstating the Labor
Arbiters Decision. On December 21, 2001, petitioners filed a motion for reconsideration, but were
denied by the Appellate Court in a Resolution dated April 9, 2002.
I: WON the CA erred in holding that petitioners failed to prove by substantial evidence that respondents
voluntarily resigned and/or abandoned their work.
H: Voluntary resignation is defined as the act of an employee, who finds himself in a situation in which he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has
no other choice but to disassociate himself from his employment. Acceptance of a resignation tendered
by an employee is necessary to make the resignation effective. No such acceptance, however, was
shown in the instant case.
Moreover, the fact that respondents immediately filed a complaint for illegal dismissal against petitioners
and repudiated their alleged resignation completely negated petitioners claim that they voluntarily
resigned.
In Molave Tours Corporation vs. National Labor Relations Commission, it was held: By vigorously
pursuing the litigation of his action against petitioner, private respondent clearly manifested that he has
no intention of relinquishing his employment, which act is wholly incompatible to petitioners assertion
that he voluntarily resigned.
Neither do we find any indication that respondents have shown by some overt acts their intention to
sever their employment in petitioner company.
In this case, respondents did not report back for work on July 27, 1998 because they were suspended by
petitioners for one week effective July 22 to 28, 1998. Verily, their absence cannot be considered
abandonment of work, a just cause for termination of employment.
In fine, considering that respondents did not abandon their work, their dismissal from the service is
illegal. The petition is DENIED.

MANUEL C. FELIX, petitioner, vs. ENERTECH SYSTEMS INDUSTRIES, INC. and COURT OF
APPEALS, respondents. | G.R. No. 142007. March 28, 2001

F: Enertech System Industries, Incorporated is engaged in the manufacture of boilers and

tanks. Petitioner Manuel C. Felix worked as a welder/fabricator in respondent company. On August 5,
1994, petitioner and three other employees, namely, Dante Tunglapan, Hilario Lamog, and Emerson
Yanos, were assigned to install a smokestack at the Big J Feedmills in Sta. Monica, Bulacan. During the
entire period they were working at the Big J Feedmills, petitioner and his companions accomplished daily
time records (DTRs). Petitioner wrote in his DTR that he had worked eight hours a day on the basis of
which his wages were computed.
The work was estimated to be completed within seven days, but it actually took the workers until August
17, 1994, or about two weeks, before it was finished. On that day, petitioner and his three co-employees
were each given notice by respondent.

Reynaldo Tapiru, petitioners co-employee and neighbor in Sitio Kabanatuan, Valenzuela, also stated in
an affidavit that he had seen petitioner either in his house or within their compound on August 6, 7, 8,
and 14, 1994, between 3 and 4 oclock in the afternoon, when he was supposed to be working at the Big
J Feedmills in Bulacan at that time.

On September 9, 1994, respondent required petitioner to report to the company lawyer on September
13, 1994 for investigation. Then, on October 17, 1994, it issued a memorandum placing petitioner under
preventive suspension for 30 days. Finally, on November 21, 1994, respondent sent petitioner a
memorandum terminating his employment.
Respondent appealed to the NLRC. Pending appeal, a writ of execution was issued on September 23,
1997 directing respondent to reinstate petitioner either physically or in the payroll.

NLRC rendered a decision reversing the labor arbiters decision and dismissing petitioners complaint for
illegal dismissal for lack of merit. The NLRC found sufficient evidence to prove that petitioner put in less
than the required eight hours daily work during his detail at the Big J Feedmills and, therefore, held that
his dismissal was in accordance with the Company Code of Discipline and the Labor Code. Petitioner
filed a motion for reconsideration, but the same was denied. CA affirmed.

ISSUE and RULING: First. Petitioner prays that the CA reinstate the labor arbiters decision finding
Respondent Corporation guilty of illegal dismissal. The labor arbiter held as doubtful the statement of
Johnny Legaspi and petitioners two co-employees to the effect that petitioner and his co-workers put in
only four hours; that the statements of Legaspi and Yanos were inaccurate as there was no timekeeper
at the job site to monitor the arrivals and departures of employees; and that the delay in the completion
of the project could be due to an erroneous estimate on duration of work, lack of materials, or lack of
work coordination.

No merit. CA, taking into account the findings of the NLRC, the interview with Johnny Legaspi and his
engineer, and the affidavits of Yanos and Tapiru, correctly concluded that there was substantial evidence
presented showing that petitioner did not really work eight hours a day, as he had stated in his time
cards

Indeed, the validity of petitioners dismissal is a factual question. It is not for the reviewing court to weigh
the conflicting evidence, determine the credibility of witnesses, or otherwise substitute its own judgment
for that of the administrative agency. Well-settled is the rule that the findings of fact of quasi-judicial
agencies, like the NLRC, are accorded not only respect but at times even finality if such findings are
supported by substantial evidence.This is especially so in this case, in which the findings of the NLRC
were affirmed by the Court of Appeals. The findings of fact made therein can only be set aside upon a
showing of grave abuse of discretion, fraud, or error of law. There is no such showing of grave abuse of
discretion in this case. Falsification of time cards constitutes serious misconduct and dishonesty or fraud,
which are just causes for the termination of employment under Art. 282(a) and (c) of the Labor Code
which provides:
ART. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;. .(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized representative;
Second. Petitioner contends that the omnibus motion filed by respondent on October 10, 1997 during
the pendency of the appeal is an admission that it is liable for reinstatement or, in lieu thereof, for
separation pay.
No such inference can be derived from a reading of the omnibus motion filed by respondent. To the
contrary, respondent in fact vehemently opposed the implementation of the writ of execution issued by
the labor arbiter.20 Thus, respondent said:
2. That reinstatement can no longer be made or is no longer possible considering the nature of the
offense or violation (although an issue under appeal) which the complainant committed. This offense or
violation has caused serious and severe strained relationship between the complainant and the
respondent employer;

longer be effected, as when the position previously held by the employee no longer exists or when
strained relations result in the loss of trust and confidence.
If at all, therefore, respondent should have reinstated petitioner in the payroll, instead of offering him
separation pay. Be that as it may, the omnibus motion filed by respondent cannot be construed as an
admission of its liability for reinstatement.

Third. Anent petitioners claim that he is entitled to backwages from the time the labor arbiter rendered a
decision in his favor until said decision was reversed by the NLRC, this issue should have been raised
earlier in the Court of Appeals and not only now in the present petition. Hence, this matter cannot be
considered by the Court. AFFIRMED for lack of showing that it committed a reversible error.

JOSE S. SANTOS, JR., Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HAGONOY
INSTITUTE INC., ITS DIRECTRESS, MARTA B. ZUNIGA and PRINCIPAL B. BANAG, Respondent.
G.R. No. 115795. March 6, 1998

FACTS: Petitioner, a married man, was employed as a teacher by the private respondent Hagonoy
Institute Inc. from June 1980 until his dismissal on June 1, 1991. Likewise working as a teacher for the
private respondent was Mrs. Arlene T. Martin, also married. In the course of their employment, the
couple fell in love. Thereafter, rumors regarding the couples relationship spread, especially among the
faculty members and school officials.
Concerned about the rumors, private respondent advised Mrs. Martin to take a leave of absence which
she ignored, as she continued to report for work. Consequently, on November 9, 1990, she was barred
from reporting for work and was not allowed to enter the private respondents premises, effectively
dismissing her from her employment.
In view of her termination from the service, Mrs. Martin filed a case for illegal dismissal before the NLRC
Regional Arbitration Branch No. III, San Fernando, Pampanga2 against the private respondent. After the
parties had submitted their respective evidence and position paper, Labor Arbiter Ariel Santos rendered
a decision dismissing the complaint. NLRC reversed LA.

3. That it must be recalled, and as the records of the case will confirm, complainant committed a virtual
criminal act of falsifying his daily time records based on which he collected his salary. Due to the
seriousness of this offense, there is no way by which respondent employer can trust complainant again
and place the future and welfare of the company to shenanigans who try to defraud it.

The reversal was anchored on the failure by the private respondent, in dismissing Mrs. Martin, to accord
her the necessary procedural due process. Private respondent set up a committee to investigate the
veracity of the rumors. After two weeks of inquiry, the committee rendered its report confirming the illicit
relationship between the petitioner and Mrs. Martin.

Respondent appears merely to have been mistaken about the options open to it upon promulgation of
the labor arbiters decision. As to the question of whether separation pay in lieu of his reinstatement
may be awarded to petitioner, it is settled that such can be done only upon finality of judgment, that is,
when the judgment is no longer appealable, hence final and executory, and where reinstatement can no

In view of the committees finding, on December 19, 1990, petitioner was charged administratively for
immorality and was required to present his side on the controversy. Five months later or in May 1991,
petitioner was informed by the private respondents Board of Directors of his dismissal effective June 1,
1991.6 Unable to accept such verdict, petitioner filed a complaint for illegal dismissal on August 12, 1991
before the NLRC Regional Arbitration Branch No. III, San Fernando, Pampanga. After a full blown trial

was conducted, Labor Arbiter Quintin C. Mendoza rendered a decision dated January 12, 1993,
dismissing petitioners complaint but at the same time awarding monetary sums as financial assistance.

Having concluded that immorality is a just cause for dismissing petitioner, it is imperative that the private
respondent prove the same. Since the burden of proof rests upon the employer to show that the
dismissal was for a just and valid cause, the same must be supported by substantial evidence.

ISSUE: WON petitioner should be dismissed.

RULING: We have consistently held that in order to constitute a valid dismissal, two requisites must
concur: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and (b)
the employee must be accorded due process, basic of which are the opportunity to be heard and defend
himself.9
Private respondent, in justifying the termination of the petitioner, contends that being a teacher, he must
live up to the high moral standards required of his position. In other words, it asserts that its purpose in
dismissing the petitioner was to preserve the respect of the community towards the teachers and to
strengthen the educational system.11
On the other hand, petitioner merely argues that the alleged illicit relationship was not substantially
proven by convincing evidence by the private respondent as to justify his dismissal.
On the outset, it must be stressed that to constitute immorality, the circumstances of each particular case
must be holistically considered and evaluated in light of the prevailing norms of conduct and applicable
laws.12 American jurisprudence has defined immorality as a course of conduct which offends the morals
of the community and is a bad example to the youth whose ideals a teacher is supposed to foster and to
elevate,13 the same including sexual misconduct. Thus, in petitioners case, the gravity and seriousness
of the charges against him stem from his being a married man and at the same time a teacher.

We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of marriage,
which is a basic institution of society. Even our Family Code provides that husband and wife must live
together, observe mutual love, respect and fidelity. This is rooted in the fact that both our Constitution
and our laws cherish the validity of marriage and unity of the family. Our laws, in implementing this
constitutional edict on marriage and the family underscore their permanence, inviolability and solidarity.
As a teacher, petitioner serves as an example to his pupils, especially during their formative years and
stands in loco parentis to them. To stress their importance in our society, teachers are given substitute
and special parental authority under our laws.

Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards
of morality and decency. There is no dichotomy of morality. A teacher, both in his official and personal
conduct, must display exemplary behavior. He must freely and willingly accept restrictions on his conduct
that might be viewed irksome by ordinary citizens. In other words, the personal behavior of teachers, in
and outside the classroom, must be beyond reproach. It seems obvious that when a teacher engages in
extra-marital relationship, especially when the parties are both married, such behavior amounts to
immorality, justifying his termination from employment.

Undoubtedly, the question of immorality by the petitioner is factual in nature. Thus, we reiterate the wellsettled rule that factual findings by the NLRC, particularly when it coincides with those by the Labor
Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are
supported by substantial evidence. A scrutiny of the records of the instant petition leads us to concur
with the NLRCs finding that petitioner indeed entered into an illicit relationship with his co-teacher. This
fact was attested to by the testimonies of nine witnesses (a fourth year student, a security guard, a
janitor and six co-teachers) which petitioner failed to rebut.

We hold henceforth separation pay shall be as a measure of social justice only in these instances where
the employee is validly dismissed for cause other than serious misconduct or those reflecting his moral
character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relationship with a fellow worker, the employer may not
be required to give the dismissed employee separation pay, or financial assistance, or whatever other
name it is called, on the ground of social justice. DISMISSED.

RUFINO NORBERTO F. SAMSON vs. NLRC [G.R. No. 121035. April 12, 2000]
FACTS: This pertains to the case (NCR-00-01-00652-94) filed by the complainant Rufino Norberto F.
Samson against the respondents Schering Plough Corp. (SPC for brevity) and Mr. Leo C. Riconalla,
National Sales Manager, for money equivalent of rice subsidy for the period April 1990 to December
1992 and holiday pay, now deemed submitted for resolution based on records available.

On February 1, 1994, said complainant filed another case (NCR-00-02-00887-94) for illegal preventive
suspension raffled to the Honorable Labor Arbiter Donato G. Quinto, Jr. and consolidated to the above
case number. Likewise, on February 4, 1994, complainant filed a Motion to Amend Complaint and
averred pertinently that x x x complainant was placed under an indefinite preventive suspension on 25
January 1994; and x x x was arbitrarily and summarily terminated from employment on 03 February
1994 on ground of loss of confidence.

In a letter dated 25 January 1994 (Annex A) addressed to the complainant Mr. Samson signed by one
J.L. Estingor, the latter called the attention of (sic) the complainants conduct x x x in a manner inimical
to the interests of SPC
(made utterances of obscene, insulting, and offensive words, referring to or directed against SPCs
Management Committee, in the presence of several co-employees, threats to some co-employees,
advising them to watch out for some disruptive actions to happen during the National Sales Conference.)

Complainant was given two (2) days from receipt of the foregoing letter and to explain x x x why no
disciplinary action, including termination, should be taken against the complainant and in the meantime
was placed on preventive suspension effective immediately, until further notice.

On the basis of the pleadings filed by the parties and evidence on record, the labor arbiter rendered his
Decision, dated 25 August 1994, declaring the dismissal of petitioner illegal. The labor arbiter ruled that
petitioners conduct is not so serious as to warrant his dismissal because: 1) the alleged offensive words
were uttered during an informal and unofficial get-together of employees where there was social drinking
and petitioner was already tipsy; 2) the words were uttered to show disapproval over managements
decision on the "Cua Lim" case; 3) the penalty for the offense is only "verbal reminder" under respondent
companys rules and regulations; and 4) petitioner was already admonished during a meeting on 4
January 1994. Accordingly, respondent company was ordered to reinstate petitioner as District Sales
Manager and to pay him backwages.

Both parties appealed said decision to the NLRC. Petitioner filed a partial appeal of the denial of his
claim for holiday pay and the cash equivalent of the rice subsidy. For its part, respondent company
sought the reversal of the decision of the labor arbiter alleging that the latter erred in ruling that
petitioners employment was terminated without valid cause and in ordering his reinstatement. In
reversing the labor arbiters decision, the NLRC found that there was just cause, i.e., gross misconduct,
for petitioners dismissal.

ISSUE: WON petitioner is validly dismissed

RULING: Factual findings of the NLRC are accorded respect. In this case, however, there is compelling
reason to deviate from this salutary principle because the findings of facts of the NLRC are in conflict
with that of the labor arbiter. Accordingly, this Court must of necessity review the records to determine
which findings should be preferred as more conformable to the evidentiary facts.

As borne by the records, petitioners dismissal was brought about by the utterances he made during an
informal Christmas gathering of respondent companys Sales and Marketing Division on 17 December
1993. Petitioner was heard to have uttered, "Si EDT (referring to Epitacio D. Titong, General Manager
and President of respondent company), bullshit yan," "sabihin mo kay EDT yan" and "sabihin mo kay
EDT, bullshit yan," while making the "dirty finger" gesture. Petitioner likewise told his co-employees that
the forthcoming national sales conference of respondent company would be a "very bloody one."

The NLRC ruled that the foregoing actuation of petitioner constituted gross misconduct warranting his
dismissal. Citing jurisprudence, the NLRC held that "in terminating the employment of managerial
employees, the employer is allowed a wider latitude of discretion than in the case of ordinary rank-andfile." We do not agree with the findings of the NLRC.

Misconduct is 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 in judgment. The misconduct to be serious must be of such grave and aggravated character and
not merely trivial and unimportant. Such misconduct, however serious, must, nevertheless, be in
connection with the employees work to constitute just cause for his separation.

In this case, the alleged misconduct of petitioner, when viewed in its context, is not of such serious and
grave character as to warrant his dismissal. First, petitioner made the alleged offensive utterances and
obscene gesture during an informal Christmas gathering of respondent companys district sales
managers and marketing staff. The gathering was just a casual get-together of employees. It is to be
expected during this kind of gatherings, where tongues are more often than not loosened by liquor or
other alcoholic beverages, that employees freely express their grievances and gripes against their
employers. Employees should be allowed wider latitude to freely express their sentiments during these
kinds of occasions which are beyond the disciplinary authority of the employer. Significantly, it does not
appear in the records that petitioner possessed any ascendancy over the employees who heard his
utterances as to cause demoralization in the ranks.

Second, petitioners outburst was in reaction to the decision of the management in the "Cua Lim" case.
Admittedly, using the words "bullshit" and "putang ina" and making lewd gesture to express his
dissatisfaction over said management decision were clearly in bad taste but these acts were not
intended to malign or cast aspersion on the person of respondent companys president and general
manager.

Third, respondent company itself did not seem to consider the offense of petitioner serious and grave
enough to warrant an immediate investigation on the matter. It must be recalled that petitioner uttered
the alleged offensive language at an informal gathering on 17 December 1993. He then allegedly made
threatening remarks about the forthcoming sales conference on 3 January 1994. During a meeting on 4
January 1994, Mr. Titong, Jr., the president and general manager of respondent company and allegedly
to whom the offensive words were directed, merely admonished petitioner stating that, "when there is a
disagreement, act in a professional and civilized manner." Respondent company allowed several weeks
to pass before it deemed it necessary to require petitioner to explain why no disciplinary action should be
taken against him for his behavior. This seeming lack of urgency on the part of respondent company in
taking any disciplinary action against petitioner negates its charge that the latters misbehavior
constituted serious misconduct. There being no just cause for petitioners dismissal, the same is
consequently unlawful. Petitioner is thus entitled to reinstatement to his position as District Sales
Manager, unless such position no longer exists, in which case he shall be given a substantially
equivalent position without loss of seniority rights. He is likewise entitled to the payment of his full
backwages. With respect to petitioners other monetary claims, however, we agree with the findings of
the labor arbiter that he failed to establish his entitlement thereto. GRANTED.

Villar v NLRC (High tech manufacturing Corp.) May 11, 2000

NATURE: Petitioners, in this petition forcertiorari, assail for having beenrendered with grave abuse of
discretion the 30 May 1997Decision of the National Labor Relations Commission (NLRC)vacating and
setting aside the Decision of the Labor Arbiter, aswell as its 31 July 1997 Resolution denying
reconsideration.
FACTS
- HI-TECH MANUFACTURING CORPORATION (HI-TECH), a corporation duly organized and existing
under Philippine laws, isengaged in the business of manufacturing cartons forcommercial purposes. On
different dates, HI-TECH hiredpetitioners to perform various jobs for the company such asslitter machine
operator, inkman, silk screen printer, truckhelper, rubber dye setter, forklift operator and stitchingmachine
operator.
- Sometime in March 1994 petitioners, who were members ofthe Federation of Free Workers Union, filed
before theDepartment of Labor a petition for certification election amongthe rank-and-file employees of
HI-TECH. The petition wasgranted and a certification election was conducted inside thecompany
premises on 31 July 1994. However, petitioners lost inthe election as the HI-TECH employees voted for
"No Union."
- On 1 August 1994 and the succeeding days thereafter,petitioners failed to report for work. They alleged
that they werebarred from entering the premises of HI-TECH; hence, theyimmediately filed before the
Labor Arbiter separate complaintsfor illegal dismissal and labor standards claims against HITECH,Herman T. Go, owner, and Carmen Belano, general manager.

that the NLRC needed to do was to refer to theprevailing minimum wage to ascertain the correctness
ofpetitioners claims. And most importantly, the burden of proving payment of monetary claims rests on
the employer.
- 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 incentiveleave and other claims
of workers have been paid are not inthe possession of the worker but in the custody and
absolutecontrol of the employer. Thus, in choosing not to presentevidence to prove that it had paid all
the monetary claims ofpetitioners, HI-TECH failed once again to discharge theon u sprobandi.
Consequently, we have no choice but to award those claims to petitioners.

SANTIAGO ALCANTARA, JR., petitioner, vs. THE COURT OF APPEALS and THE PENINSULA
MANILA, INC., respondents.

FACTS: Petitioner Santiago Alcantara, Jr., an employee of respondent The Peninsula Manila, Inc., seeks
the reversal of the decision and resolution of the Court of Appeals upholding his dismissal for willful
disobedience. At the time of his dismissal, petitioner worked as Commis II of the Food and Beverage
Department of the Peninsula Manila Hotel, Inc. He was also a Director of the National Union of Workers
in Hotels Restaurants and Allied Industries (NUWHRAIN)-Manila Peninsula Chapter.

- Petitioners claimed that they were summarily dismissed from employment by the management of HITECH in retaliation for organizing a labor union in the work premises as well as in filingthe petition for
certification election before the Department ofLabor. They further averred that they were paid daily
wagesranging from P81.00 to P145.00 which were below the minimumfixed by law and that they were
required to work six (6) days aweek from 8 oclock in the morning to 7 oclock in the eveningwithout
being paid for the overtime. Neither were they paidtheir service incentive leave pay and 13th month pay.

The controversy stems from a Memorandum dated August 7, 1998 issued by respondent Hotel
prohibiting the union from using the union office from midnight until 6:00 in the morning.

- The Labor Arbiter ruled for the petitioners. On appeal by HI-TECH, the NLRC in its Decision of 30 May
1997 vacated and setaside the Labor Arbiters Decision and ordered petitioners toreport back to work, or
if no longer feasible, directed HI-TECH topay petitioners their separation benefits.

On August 20, 1998, petitioner and a male companion were seen entering the union office. Later that
evening, petitioner was again seen in the office, seated with both legs resting on a table. His male
companion, who turned out to be Mr. Salanguit, was lying on the bench. The office lights were
off. DPO Lt. Caronan approached petitioner and reminded him of the Memorandum dated August 7,
1998. Petitioner and Mr. Salanguit refused to leave, however, and replied, Consult that to our President
because we gave a reply to that memorandum. Both petitioner and Mr. Salanguit stayed in the office
until 3:30 in the morning of August 21, 1998.

ISSUE: WON petitioners are entitled to back wages and other monetary benefits

HELD: Ratio: The burden of proving payment of monetary claims rests on the employer. In Jimenez v.
National Labor Relations Commission we held - As a general rule, one who pleads payment has the
burden ofproving it. Even where the plaintiff must allege non-payment,the general rule is that the burden
rests on the defendant toprove payment, rather than on the plaintiff to prove non-payment. The debtor
has the burden of showing with legalcertainty that the obligation has been discharged with payment.
-The petitioners claims for underpayment of wages, 13th month pay and service incentive leave pay
should be upheld.
- Petitioners executed a JOINT AFFIDAVIT specifying their dailywages, positions and periods of
employment, which was madethe basis of the Labor Arbiters computation of the monetaryawards. All

On August 18, 1998, at about 1:30 in the morning, petitioner was seen inside the union office with
Conrad Salanguit and a certain Ma. Theresa Cruz. They left the office at about 2:20 in the morning of
the same day.

On August 28, 1998, Arsenio Olmedilla, Sous Chef-Production, sent a memorandum to petitioner
informing him about the Security Department Report dated August 21, 1998. The memorandum stated
that he was seen inside the union office between midnight until the morning of the following day and
directed him to submit his written explanation within 24 hours from receipt thereof.
Petitioner submitted his letter-explanation dated August 28, 1998 intimating that the Memorandum
prohibiting the use of the union office was inconsistent with the CBA and was necessarily
ineffective. Petitioner argued that inasmuch as the Hotel operated 24 hours a day, the union office
should be available whenever the union found it necessary. This was how the CBA had always been
applied. Petitioner also pointed out that the charge against him did not pertain to his duties in the
Hotel. He claimed he used the union office only during his breaks or when he was off duty.

On November 26, 1998, at around 12:50 until 5:50 in the morning, petitioner was again seen lying on the
bench inside the union office. DPO Lt. Caronan politely informed him again about the existing
Memorandum and asked him to leave. Petitioner refused and left the union office only at around 5:50 in
the morning of November 26, 1998.

Whether the Memorandum in question is reasonable and lawful is beside the point. Company policies
and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and
valid on the parties and must be complied with until finally revised or amended unilaterally or preferably
through negotiation or by competent authority.

In a Memorandum to petitioner dated December 7, 1998, Mr. Noel Silva, Assistant Food and Beverage
Manager informed petitioner that Security had reportedly seen him lying on the bench at the basement
rank-and-file union office on November 26, 1998 in violation of the Memorandum dated August 7,
1998. Petitioner was required to explain in writing why no disciplinary action should be taken against
him.

The subject Memorandum is not grossly oppressive. It is not patently contrary to law. While petitioner
argues that its application was discriminatory the two employees found with him in the union room
were not at all subjected to disciplinary action the Memorandum was not discriminatory on its
face. Petitioners violation of his employers order, prior to its revocation, was therefore inexcusable.

On December 9, 1998, petitioner sent a letter to Mr. Silva explaining that the union had contested the
Memorandum dated August 7, 1998. He reiterated that the Memorandum was unreasonable and
unlawful. Petitioner invoked Section 4, Article IV of the Collective Bargaining Agreement (CBA) between
the Union and the Hotel, stating that the hotel shall provide the Union with an office for its exclusive
use. He further argued that the Memorandum constituted unlawful interference with the employees right
to self-organization.
On January 4, 1999, private respondent sent petitioner a Notice of Termination for alleged willful and
blatant refusal to comply with a lawful and valid order (HRD Memorandum dated August 7, 1998) issued
by his employer.
Meanwhile, the Union threatened to go on strike unless the memorandum in question was lifted and
petitioner reinstated. Respondent requested the National Conciliation and Mediation Board to intervene
and conduct preventive mediation proceedings.

ISSUE: WON dismissal is valid

RULING: 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.[9]
Petitioner avers that his dismissal for willful disobedience is unwarranted because: (1) the Memorandum
dated August 7, 1998 is not in connection with the duties which the employee had been engaged to
discharge; (2) the same Memorandum is not reasonable and lawful; and (3) petitioner did not exhibit a
wrongful and perverse attitude in disobeying said Memorandum.
Petitioner further posits that the use of the union office has no connection whatsoever with petitioners
duties as Commis II, one of the kitchen personnel. However, as respondent points out, every employee
is charged with the implicit duty of caring for the employers property; consequently, he is bound to obey
the reasonable and lawful orders of the employer regulating the use and preservation thereof. Thus,
this Court has upheld the dismissal of an employee for violation of a rule prohibiting employees from
using company vehicles for private purpose without authority from management.[10] This is not only to
prevent loss on the part of the employer but also to prevent injury to the employees as well as the
customers of the employer.

We agree with petitioner that his behavior did not constitute the wrongful and perverse attitude that
would sanction his dismissal. The surrounding circumstances indicate that petitioner was motivated by
his honest belief that the Memorandum was indeed unlawful and unreasonable. Previous practice
allowed the use of the union office 24 hours a day. Section 1, Article III of the Collective Bargaining
Agreement for 1996-2001 provided that, All practices not expressly provided for in this Agreement
which are presently being enjoyed by the employees shall be continued by the HOTEL. Moreover,
the Memorandum regulated the use of the union office and petitioner, a union officer, interpreted such
regulation as an unlawful interference with legitimate union activities. Viewed in this light, petitioners
attitude can hardly be characterized as wrongful and perverse. While these circumstances do not
justify his violation of the regulation, they do not justify his dismissal either.
The Hotel cites previous infractions committed by petitioner as additional grounds for his dismissal. The
Court finds these to be nothing more than belated rationalizations; the Hotel did not refer to these
violations in its Notice of Termination to petitioner.
The subject Memorandum purports to [secure] the hotel against damage to property in consonance
with the hotels concern to keep the premises peaceful, orderly and safe. In short, it is a safety
regulation. Under respondents House Code of Discipline, the failure to observe safety
rules/requirements of the hotel is a Class A Offense, the third violation of which the same Code
imposes a three-day suspension. Petition is GIVEN DUE COURSE and GRANTED.

The formal challenge brought by employee of the reasonableness or the motives of a companys policy
is not an excuse for the employee not to obey said policy. (GTE Directories Corp. vs. Sanchez, May
27, 1991.) GTE DIRECTORIES CORP V. SANCHEZ, 197 SCRA 452 (1991)

SUMMARY: GTE through the years adopted several Sales evaluation policies. Pursuant to the latest
sales policy, GTE issued 6 memoranda to its employees which required the Premise Sales Reps (PSRs)
to submit individual reports reflecting target revenues as of deadlines set. None of these memoranda
were followed by the employees, arguing that they were not consulted. As a result, 14 employees (some
of them Union officers) were dismissed. Union also filed notice of strike before the 4th memo was
issued. Court held that GTEs sales policy was pursuant to the valid exercise of management
prerogatives and that its implementation is not suspended merely because of pending negotiations
initiated by the Union.

ROSARIO V VICTORY RICEMILL 397 SCRA 760 CALLEJO; February 19, 2003

NATURE: Petition for review on certiorari seeking to reverse CA decision

FACTS- Emilio Uy owned Victory Ricemill. He employed Rosario astruck driver. Petitioner was tasked to,
among others, haul palayfrom various points and bring them to respondents ricemill. Inaddition,
petitioner acted as personal driver to the family of Mr.Uy during their trips to Manila.
- Uy dismissed Rosario. According to respondent, petitioner wasguilty of insubordination when he
refused to serve as driver ofMr. Uys son when the latter needed a driver. Also, petitionerwas instructed
to deliver 600 bags of cement to Felix Hardware.Instead, petitioner delivered the same to one Eduardo
Interior,who had not since then paid for P60k. Because of petitionerstendency to disobey the orders to
him, Uy was constrained toengage the services of another driver. Petitioner resented thenew driver and
became uncooperative, disrespectful andquarrelsome. Petitioner, armed with a dagger, fought with
theother driver and inflicted an injury on the latter. Petitionerlikewise inflicted injuries on the head of a coemployee, whenhe intervened in the fight and tried to pacify petitioner.
- A complaint for illegal dismissal with money claims was filed by petitioner
- Labor arbiter found that there were valid causes for the termination of petitioners employment.
- The NLRC found that petitioner was denied due process duringthe proceedings with the regional labor
arbiter as petitioner wasnot given the opportunity to present his additional rebuttalevidence. On the other
hand, respondent was allowed to submitin evidence various exhibits to discredit the rebuttal testimonyof
petitioner. Case was remanded.
- Petitioner submitted the affidavit ofRoque, who averred thatthe 600 bags of cement delivered to
Eduardo Interior had beenpaid as evidenced by in the sum of P58,950.00 payable torespondent.
- Regional labor arbiter promulgated his decision stating that he
found no reason to deviate from his previous decision.
- NLRC affirmed the ruling of the regional labor arbiter
- CA found that respondent had justifiable cause to dismisspetitioner. CA also observed that although
there was no strictcompliance with the two-notice rule, it could be gleaned fromthe records that petitioner
was given ample opportunity toexplain his side. Moreover, even granting that respondent fellshort of the
two-notice requirement, such irregularity, accordingto the CA, does not militate against the legality of the
dismissal.

ISSUES 1. WON petitioners termination was for a just and lawful cause
2. WON petitioners dismissal from his employment was in
accordance with the due process requirement of the law
3. WON petitioner is entitled to backwages

HELD 1. YES - Petitioners actuations clearly constituted willful disobedienceand serious misconduct
justifying his dismissal under Article282(a) of the Labor Code which provides:
Art. 282. Termination by employer. An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by theemployee of the lawful orders of his employer
orrepresentative in connection with his work;
- Willful disobedience of the employers lawful orders, as a justcause for the dismissal of an employee,
envisages theconcurrence of at least two requisites: (1) the employeesassailed conduct must have been
willful or intentional, thewillfulness being characterized by a "wrongful and perverseattitude;" and (2) the
order violated must have beenreasonable, lawful, made known to the employee and mustpertain to the
duties which he had been engaged to discharge.
2. NO- To effect the dismissal of an employee the law requires notonly that there be just and valid cause
as provided under Article282. It likewise enjoins the employer to afford the employee theopportunity to
be heard and to defend himself. The employer ismandated to furnish the employee with two written
notices: (a)a written notice containing a statement of the cause for thetermination to afford the employee
ample opportunity to beheard and defend himself with the assistance of hisrepresentative, if he so
desires; (b) if the employer decides toterminate the services of the employee, the employer mustnotify
him in writing of the decision to dismiss him, statingclearly the reason therefore
- While respondent furnished petitioner the written noticeinforming him of his dismissal, respondent failed
to furnishpetitioner the written notice apprising him of the charge orcharges against him. Consequently,
petitioner was deprived ofthe opportunity to respond thereto
- When the dismissal is effected for a just and valid cause, the
failure to observe procedural requirements does not invalidatenor nullify the dismissal of an employee.
The consequence ofthe failure either of the employer or the employee to live up tothis precept is to make
him liable in damages, not to render hisact void. The measure of damages is the amount of wages
theemployee should have received were it not for the terminationof his employment without prior notice.
If warranted, nominaland moral damages may also be awarded.
3. YES- Under the Labor Code, only the absence of a just cause for thetermination of employment can
make the dismissal of anemployee illegal.
Art. 279. Security of Tenure. In cases of regularemployment, the employer shall not terminate the
services ofan employee except for a just cause or when authorized bythis Title. An employee who is
unjustly dismissed from workshall be entitled to reinstatement without loss of seniorityrights and other
privileges and to his full backwages,inclusive of allowances, and to his other benefits or theirmonetary
equivalent computed from the time hiscompensation was withheld from him up to the time of hisactual
reinstatement.
- Thus, only if the termination of employment is not for any ofthe causes provided by law is it illegal and,
therefore, theemployee should be reinstated and paid backwages.
- On the other hand, if it is shown that the employee wasdismissed for any of the just causes mentioned
in said Art. 282,then, in accordance with that article, he should not bereinstated. However, he must be
paid backwages from the timehis employment was terminated until it is determined that thetermination of

employment is for a just cause because thefailure to hear him before he is dismissed renders
thetermination of his employment without legal effect. .

confidence could be based. Privaterespondents were thus illegally dismissed. Petition is DENIED for
lack of merit.

NATIONAL BOOKSTORE INC V CA (YMASA,GABRIEL) 378 SCRA 194 BELLOSILLO; February 27,
2002

WORLDWIDE PAPERMILLS, INC. and/or HONORIO POBLADOR, III, Petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and EDWIN P. SABUYA, Respondents.chanrobles virtual law
library

FACTS- Petitioner National Bookstore employed private respondentsYmasa and Gabriel as Cash
Custodian and Head Cashier. Theywere routinely tasked with counting the previous days salesand
placing them in separate plastic bags to be deposited inINTERBANK and PCIB. The bags were held for
safekeeping in theBranch vault but upon retrieval to deposit the money withroving tellers, the money was
counted again but the amount forPCIB was short of P42,758.
- Private respondents were asked by Management to explain inwriting why they should not be dismissed
for the loss ofcompany funds and were placed under preventive suspension.Private respondents in turn
denied responsibility, emphasizingthey had no access to the vault and that they were
thoroughlysearched by the guard before leaving. They also asserted theirloyalty and sincerity in their
work as they had been employedthere over 13 years.
- Petitioner found their explanation unsatisfactory and
terminated them for gross neglect of duty and loss of
confidence. Private respondents filed a complaint for illegaldismissal. The Labor Arbiter found in their
favor, stating that thedismissal was not founded on valid and justifiable grounds.Petitioners appeal with
the NLRC was denied, as was theirpetition for certiorari with the CA for lack of merit.

ISSUE: WON private respondents were illegally dismissed

HELD: YES - The onus of proving that the dismissal of the employee was fora valid and authorized
cause rests on the employer. Failure todischarge the same would mean the dismissal was not
justifiedand therefore illegal.
- The requisites for a valid dismissal are (a) the employee mustbe afforded due process (b) the dismissal
must be for a validcause. Petitioner complied with the first requisite by furnishingthe employees with
written notices stating cause fortermination, and having decided to do so, the reasons therefor.Petitioner accused private respondents of gross neglect ofduty and loss of confidence. Gross negligence
is defined as thefailure to exercise slight care or diligence. A perusal of therecords show they werent
even remotely negligent of theirduties. They were able to illustrate with candor and sinceritythe
procedure they took prior to the losspetitionersallegations on the other hand, were not supported by
anysubstantive evidence. Assuming arguendo they were negligent,a single act cannot be categorized as
habitual and thus cannotbe a just cause for dismissal.
- Loss of confidence on the other hand must be based on thewillful breach of trust and founded on
clearly established facts.Petitioner failed to establish with certainty the facts upon whichsuch a breach of

FACTS: Private respondent was employed by petitioner as a packer on July 8, 1982 until his services
were terminated on September 28, 1991. It appears that private respondent incurred excessive
unexcused absences from 1986 to 1989, as summarized in a memorandum dated January 22, 1990
prepared and signed by the personnel/administrative officer of petitioner thus:
In 1986, he incurred a total of 46 days without pay including AWOL but excluding 30 days VL & SL given
to him. The following year, 1987, he accumulated about 17. 5 days leave without pay including AWOL
after exhausting the 30 days VL/SL with pay. Followed by 1988, in which after exhausting the 30 days
leave with pay, he again accumulated 60 days leave without pay, 12 days of which AWOL. Finally, 1989
he acquired a total of 26 days leave without pay including 3 days AWOL after exhausting the 30 days
leave with pay. (Please refer to attached breakdown of absences.) Disciplined for unofficial leaves, in
1986, he was admonished, (1) month. In 1987, he was admonished, warned sternly, and suspended for
one (1) week. While in 1988 for AWOL he was admonished, warned sternly and suspended for one (1)
month. On Nov. 11, he was warned sternly for excessive leave without pay. Finally in 1989, he got an
admonition and consequently warned sternly for AWOL. (Please refer to attached breakdown of DAM.)

Sabuya was counselled several times to improve his attendance. He promised not to absent himself, yet,
no compliance. Due to having incurred 12 days AWOL in 1988, he was supposed to be terminated
based on our rule, but due to his asking reconsideration and intervention of R. Brusola, Union President
he was only suspended for one (1) month. A promissory note to this effect was executed by Sabuya and
witnessed by R. Brusola, stressing among others to improve his attendance in 1989; once he exceeds
the VL & SL granted by the company, he accepts to be terminated; and the next time he is declared
AWOL he accepts the DA of termination.(Please see attached notes for reference.)

Private respondent, however again incurred absences without official leave. A week after he had served
his latest suspension, private respondent applied for sick leave covering the period August 12-18, 1991.
Ms. Belinda Luna, the Company nurse, paid private respondent a home visit. However, he was not there.
Neither was anybody at home, though the radio was on. Ms. Luna learned from private respondent's son
that his father was moonlighting as a pedicab driver at Bayanan, Muntinlupa, market.

After petitioner was informed of the incident, private respondent's application for sick leave was
disapproved. Then, on Aug. 29, 1991, petitioner issued a memorandum to private respondent requiring
him to explain within twenty-four (24) hours from receipt why no disciplinary action should be imposed
upon him for his excessive absences without official leave. Petitioner terminated the employment of

private respondent. Thus, the latter filed a complaint for illegal dismissal, praying for reinstatement and
payment of backwages. LA: illegal dismissal. NLRC: the is just cause for the dismissal.

ISSUE: WON dismissal is illegal.

RULING: In the case at bench, it is undisputed that respondent Edwin P. Sabuya had within a span of
almost six (6) years been repeatedly admonished, warned and suspended for incurring excessive
unauthorized absences. Worse, he was not at home but was out driving a pedicab to earn extra income
when the company nurse visited his residence after he filed an application for sick leave. Such conduct
of respondent Edwin P. Sabuya undoubtedly constitutes gross and habitual neglect of duties.c

M/V Sulpicio Container XI after leaving the port of Cebu for Manila was forced to return due to the death
of the purser on board. Upon reaching port, the crew members were instructed not to leave the vessel as
it would pursue its voyage immediately after turning over the body to the proper authorities. The ship's
cook however was granted permission upon his request to leave the vessel to buy additional foodstuff
for their provisions. The petitioner on the other hand, without seeking permission, left the vessel
purportedly to settle a marital problem. Before leaving he disconnected the ship's steering line cable so
that the vessel could not leave port without him. His explanation was that he wanted to prevent
pranksters from toying around with the steering wheel as what had happened in the past.

Sabuya was given notice that the next time he again exceeds his allowed vacation and sick leaves or
goes on absence without official leave, he would be terminated from employment. Private respondent
did not heed the warning. His dismissal from employment is, therefore, justified.

According to petitioner, when he returned to the port thirty (30) minutes later, the ship was only a few
inches away from the wharf but was prevented by a representative of respondent corporation from
boarding the vessel. It turned out that the vessel had hired another electrician to reconnect the steering
line cable. The consequence of petitioner's actuation was that the departure of the vessel was further
delayed.

On the issue of separation pay, we ruled also in Philippine Geothermal, Inc. 12 that separation pay of
one-half (1/2) month salary for every year of service is equitable, even if the employee's termination of
employment is justified.

Petitioner was investigated the following day by Atty. Sixto Orig, private respondent and personnel officer
of respondent shipping lines. Petitioner was assisted by a representative of the Philippine Labor
Federation. In that investigation he admitted having disconnected the steering line cable.

Finally, on the issue of violation of private respondent's right to procedural due process, it is clear that
the right was violated when no hearing was conducted prior to dismissal.
After evaluation of the evidence he was found guilty of intentionally sabotaging the operation of the
vessel, a serious misconduct, compounded by willful disobedience justifying the penalty of dismissal.
WHEREFORE, the decision of respondent NLRC is MODIFIED to read as follows: The dismissal of
private respondent Edwin P. Sabuya is, under the circumstances of this case, declared valid and
justified.

Petitioners are hereby ordered, for humanitarian reasons, to pay respondent Edwin P. Sabuya
separation pay equivalent to one-half (1/2) month salary for every year of service and to indemnify him
the amount of Five Thousand Pesos (P5,000.00) for failure of petitioners to fully comply with the
requirements of procedural due process.

Labor Arbiter ruled that petitioner was indeed guilty of misconduct but found the penalty of dismissal
harsh considering that there was no evidence showing that petitioner intended to sabotage the voyage of
the vessel.
(NLRC) held that the circumstances that petitioner had been employed by respondent corporation for a
long period of time and that it was his first offense were not by themselves sufficient to warrant mitigation
of the consequences of his serious misconduct. NLRC reversed the decision of the Labor Arbiter and
dismissed the complaint. 2

ISSUE: whether petitioner's dismissal from the service is justified under the law.
JUAN P. VILLENO, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FOURTH
DIVISION, SULPICIO LINES, INC., and/or SIXTO ORIG and CARLOS GO, Respondents. G.R. No.
108153 December 26, 1995

FACTS: Petitioner Juan P. Villeno was employed on 29 December 1961 as electrician in one of the
vessels of private respondent Sulpicio Lines, Inc. Twenty-seven (27) years later he was separated from
the service.

RULING: The crux of the controversy now is whether petitioner's act of disconnecting the steering line
cable and disembarking from the vessel without permission constitute serious misconduct and willful
disobedience justifying his dismissal.

Petitioner argues that although his reason for disconnecting the steering line cable was personal yet it
was highly commendable since he was concerned with family unity. In addition, the disconnection was
done to protect the vessel from pranksters who in the past would play with the steering wheel. By
terminating his services respondent corporation thus set to naught his twenty-seven (27) years of
service, completely ignoring the fact that it was his first offense. He claims that the delay he caused to
the vessel was almost nil considering that it took him only thirty (30) minutes to return as compared to
the delay that the voyage had already incurred.

We find these propositions of petitioner unacceptable. Among the basic duties of an employee are to
conduct himself properly and to yield obedience to lawful orders of his employer. It is in this regard that
serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work is a just cause for his termination. This is explicitly provided
under Art. 282, par. (a), of the Labor Code. The misconduct must be related to the performance of his
duties and of such grave character rendering him unfit to continue working for the employer. As regards
willful disobedience, we stated in San Miguel Corporation v. Ubaldo 3that at least two (2) requisites must
concur: (1) the employee's 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.

The number of violations and length of service became relevant because the infractions were minor.
Consequently, these have no bearing to the case at bench where the infractions involved wereserious. In
other words, considerations of first offense and length of service are overshadowed by the seriousness
of the offense. As to whether an offense is minor or serious will have to be determined according to the
peculiar facts of each case. And to a shipping company engaged in the transportation of passengers and
cargoes any delay of its vessels may greatly affect its business and reputation and expose the company
to unmitigated lawsuits for breach of contract and damages. AFFIRMED.

company'stable of discipline provided the penalty of dismissal for the offenses he hadcommitted.
The extension, however, was granted, and even extended for amonth.Claiming termination without
cause, Salas filed with the Labor Arbiter a complaintagainst Aboitiz and its president Sabin Aboitiz for
illegal dismissal with prayer forreinstatement, and for payment of full backwages, moral and
exemplarydamages, as well as attorneys fees. Aboitiz responded that there
was validtermination, asserting that Salas was dismissed for just cause and with dueprocess, Salas
having willfully breached his duty when he ran out of LargeQuickbox , justifying the termination of his
employment.The Labor Arbiter sustained Salas' dismissal. On appeal, the NLRC reversed.Gross
negligence being characterized by want of even slight care acting oromitting to act in a situation
where there is a duty to act, willfully andintentionally with a conscious indifference to consequence,
Salas could not beheld guilty, having done his duty to make proper requisition in advance. Failureto
follow-up is not an indicator of remission of duty. Salas can only be guilty of negligence, for failing
to properly monitor and document the stocks in hiscustody. As he admitted during the
administrative hearing, there were thosewhich were even missing. Worst, he tampered the records to
show that the stockon 31 May 2003 is for 02 June 2003. While there was no intention to defraud
thecompany. The NLRC thus denied his prayer for backwages, and ordered thepayment of separation
pay instead of reinstatementAboitiz filed a motion for reconsideration, while Salas sought
partialreconsideration of the decision, both of which were denied by the NLRC. Salasand Aboitiz filed
petitions for certiorari with the CA. Salas questioned the denialof his prayer for backwages and other
monetary benefits, ad the order directingpayment of separation pay instead of reinstatement. Aboitiz
questioned NLRC'sreversal. The CA sustained Salas' dismissal, holding that Salas was guilty of serious
misconduct under Art. 282(a) for tampering the records to show that thestock on May 31 2003 was for
June 2 2003, gross and habitual neglect under Art.282(b), and willful breach of the trust (Art. 282 (c))
reposed on Salas by Aboitiz, because as "warehouseman", and therefore a confidential employee,
Salasconcededly tampered company records to hide his gross and habitual neglect,and worse, sold the
companys eight units of used airconditioners withoutauthority.

ISSUE: Whether simple negligence can be a basis for dismissal on ground of loss of trust and
confidence.

SALAS V ABOITIZ ONE 556 SCRA 376

RULING: Salas was terminated for neglect of duty and willful breach of trust. Grossnegligence connotes
want or absence of or failure to exercise slight care ordiligence, or the entire absence of care. To warrant
removal from service, thenegligence should not merely be gross , but also habitual

FACTS: Salas was a material controller of Aboitiz, and was tasked with monitoring andmaintaining the
availability and supply of Quickbox needed by Aboitiz in its day-to-day operations. At one point, Salas
had run out of Large Quickbox, hamperingAboitiz business operation. Aboitiz then wrote Salas
a memorandum requiringhim to explain in writing within seventy-two hours why he should
not bedisciplinarily dealt with for his (i) failure to monitor the stock level of LargeQuickbox which led
to inventory stock out; and (ii) failure to report to [his]immediate superior the Large Quickbox problem
when the stock level wasalready critical, when the Large Quickbox level was near stock out, and the
stocklevel had a stock out. Five days after, an administrative hearing was conductedto give Salas
opportunity to explain his side. Twenty-two days after, Aboitiz senthim a decision notice, terminating him
for loss of trust and confidence, effectivemid-month. Salas then sent a letter to Mr. Hamoy requesting
reconsideration of the decision, asking if he could avail of the early retirement plan, having workedfor
Aboitiz for ten years already. He also asked to be allowed to tender hisresignation instead of being
terminated. Lastly, he asked to be employed untilthe end of the month, so as to have enough time to
look for another job. Mr.Hamoy denied the request for early retirement plan, stating that the

. Although it was Salas'duty to monitor and maintain the availability and supply of Quickbox,
recordsshow that Salas had made a requisition as early as May 21, 2003, even makingseveral followups. If there is anything that Salas can be faulted for, it is hisfailure to promptly inform his immediate
supervisor of the non-delivery of therequisitioned items. Nevertheless, such failure did not amount to
gross neglectof duty or to willful breach of trust, which would justify his dismissal fromservice.Moreover,
there appears nothing to suggest that Salas position was a highly oreven primarily confidential position,
so that he can be removed for loss of trustand confidence by the employer. A "position of trust and
confidence is onewhere a person is "entrusted with confidence on delicate matters," or with thecustody,
handling, or care and protection of the employers property. In therecords of the case, there is no
semblance of willful breach of trust on the partof Salas. It is true that there was erasure or alteration on
the bin card. Aboitiz,however, failed to demonstrate that it was done to cover up Salas
allegednegligence. Other than the bin card and Aboitizs barefaced assertion, no otherevidence was
offered to prove the alleged cover-up. The CA, therefore, erred inadopting Aboitizs unsubstantiated
assertion to justify Salas dismissal. The lossof trust must be based not on ordinary breach but, in the

language of Article282(c) of the Labor Code, on willful breach. A breach is willful if it is doneintentionally,
knowingly and purposely, without justifiable excuse, asdistinguished from an act done carelessly,
thoughtlessly, heedlessly orinadvertently. In this case, Aboitiz utterly failed to establish the
requirementsprescribed by law and jurisprudence for a valid dismissal on the ground of breach of trust
and confidence.Neither can Aboitiz validate Salas dismissal on the ground of seriousmisconduct
for his alleged failure to account for unused accountable forms. Thecharge came only after Salas
dismissal. The subject accountable forms wereissued to Salas in 2001. Inexplicably, this alleged
infraction was never includedas ground in the notice of termination. It was only three (3) months after
thefiling of the complaint for illegal dismissal that Aboitiz asserted that Salas failedto account for these
unused accountable forms. It is clear that such assertion of serious misconduct was a mere
afterthought to justify the illegal dismissal.Aboitizs reliance on the past offenses of Salas for his eventual
dismissal islikewise unavailing. The correct rule has always been that such previousoffenses may be
used as valid justification for dismissal from work only if theinfractions are related to the subsequent
offense upon which the basis of termination is decreed. While it is true that Salas had been suspended
on for failure to meet the security requirements of the company, and for his failure toassist in the loading
at the fuel depot , such offenses are not related to Salaslatest infraction, hence, cannot be used as
added justification for the dismissal.Undoubtedly, no just cause exists to warrant Salas dismissal.
Consequently, heis entitled to reinstatement to his former position without loss of seniorityrights, and to
payment of backwages. However, the award of backwages is modified because Salas was not
entirelyfaultless.

***As stated in the decision notice, Salas was terminated for neglect of duty and willful breach of trust.
Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or the entire
absence of case. IT evinces a thoughtless disregard of consequences without exerting any effort to
avoid them. To warrant removal from service, the negligence should not merely be gross, but also
habitual.
If there is anything that Salas can be faulted for, it is his failure to promptly inform his immediate
supervisor of the non-delivery of the requisitioned items. Nevertheless, such failure did not amount to
gross neglect of duty or to willful breach of trust, which would justify his dismissal from service.
The CA also justified Salas' dismissal on ground of willful breach of trust. It lent credence to Aboitiz's
posture that Salas was a warehouseman holding a position of trust and confidence. We disagree.
Salas, as material controller was tasked with monitoring and maintaining the availability and supply of
Quickbox. There appears nothing to suggest that Salas' position was a highly or even primarily
confidential position, so that he can be removed for loss of trust and confidence by the employer.
Indeed, an employer has the right, under the law, to dismiss an employee based on fraud or willful
breach of the trust bestowed upon him by his employer or the latter's authorized representative.
However, the loss of trust must be based not on ordinary breach but, in the language of Article 282(c) of
the Labor Code, on willful breach. a breach is willful if it is done intentionally, knowingly, and purposely,
withouth justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently. It must rest on substantial grounds and not on the employer's arbitrariness, whims,
caprices, or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It
should be genuine and not simulated; now should it appear as a mere afterthought to justify an earlier
action taken in bad faith or a subterfuge for causes which are improper, illegal, or unjustified. It has never
been intended to afford an occasion for abuse because of its subjective nature. There must, therefore,
be an actual breach of duty committed by the employee which must be established by substantial
evidence. In this case, Aboitiz utterly failed to establish the requirements prescribed by law and

jurisprudence for a valid dismissal on the ground of breach of trust and confidence.
Undoubtedly, no just cause exists to warrant Salas' dismissal. Consequently, he is entitled to
reinstatement to his former position without loss of seniority rights, and to payment of backwages.
However, as Salas was not entirely faultless, and although such negligence would not justify Salas'
termination from employment in view of the stringent condition imposed by the Labor Code on
termination of employment due to gross and habitual neglect, the same cannot be condoned, much less
tolerated.
Wah Yuen Restaurant v. Jayona | GR 159448 | Dec. 16, 2005 | J. Carpio-Morales

F: Primo Jayona (respondent) was hired in December 1998 as Assistant Manager of Wah Yuen
Restaurant (petitioner). By respondents claim, his initial monthly salary was P9,000.00, which was
increased to P9,450.00 effective January 15, 2000.

By letter-memorandum dated January 5, 2000. Betty Chua, the President of petitioner, directed
respondent to explain within 72 hours why he should not be dismissed from the service for grave
dishonesty and loss of confidence for billing a customer in an amount considerably less than the cost of
the actual stuff ordered. And Betty warned respondent that a repetition of the same act would cause his
automatic dismissal from the service. A handwritten note with an unidentified initial at the lower portion
of the letter-memorandum indicates that respondent refused to acknowledge receipt thereof.

Subsequently, petitioner through counsel, by letter of April 5, 2000 which was served upon respondent
on even date, terminated his services effective that same date, upon the ground that he was found for
the second time on April 3, 2000 (the first was on January 3, 2000) to have charged/billed a customer an
amount, which was considerably less than the actual order, [which] is certainly prejudicial to the interests
of [his] employer, a practice which can bring about the collapse of the business in the long run; that is if
the practice is not checked immediately.

Respondent thus filed a complaint for illegal dismissal, recovery of overtime pay, service incentive leave
pay and 13th month pay.

The Labor Arbiter dismissed respondents complaint on the ground that as an assistant manager, he
works for as long as he enjoys the trust and confidence of his employer, but once the trust and
confidence are lost, he has no more reason to stay as such.

On appeal, the National Labor Relations Commission (NLRC), by Resolution of December 14, 2001,
affirmed the dismissal. On respondents Petition for Certiorari, the Court of Appeals reversed and set
aside the NLRC Resolution. The CA gave the petition due course.

Hence, the present petition for review. Petitioner harps on the unwarranted stress on
respondents rather self-serving claim that he was granted a salary increase barely two (2)
weeks after he committed his first infraction.

I: WON the respondent was illegally dismissed

H: In the case at bar, petitioner, which has the onus of proving that the dismissal of
respondent on account of loss of confidence arose from particular facts, failed to discharge
the same.

On respondents claim that his salary was increased effective January 15, 2000, petitioner argues that
other than respondents self-serving claim, no evidence was presented to show that indeed the salary
increase took effect on January 15, 2000.

This Court notes that in its Position Paper before the Labor Arbiter, petitioner stated that respondent was
hired in December 1998 at a monthly salary ofP9,540.00 more or less. If respondent was hired at
such amount, contrary to respondents claim that his initial salary was P9,000.00 but that it was increased
toP9,450 on January 15, 2000 or twelve days after he was alleged to have committed an infraction on
January 3, 2000, it would have been easy for petitioner to present documentary proof of its claim. But
none was produced.

Under Article 277 (b) of the Labor Code, as well as Section 2, Rule XXIII, Book V and Section 2, Rule
I, Book VI, of the Implementing Rules and Regulations of the Labor Code, the dismissal of an employee
must be for a just or authorized cause and after due process.

Procedural due process requires the employer to give the employee two notices. The first is to apprise
him of the particular acts or omissions for which his dismissal is sought, and the second is to inform him
of the decision to terminate him.

Failure to comply with these mandatory procedural requirements taints the dismissal with illegality and
any judgment rendered by the employer without compliance therewith can be considered void and
inexistent.

For petitioner to consider the letter-memorandum of January 5, 2000 as the first notice, and the letter of
April 5, 2000 as the second notice of termination of employment is erroneous. For albeit the two letters
dealt with infractions of the same nature, they were separate and distinct.

The April 5, 2000 termination letter itself clearly stated that respondent was being terminated for
committing a second infraction. As such he should have been given the chance to give his side
thereon. But he was not.

In any event, not only did petitioner fail to observe the due process requirements. It also failed to
establish by substantial evidence that the alleged second infraction was committed.

Loss of confidence then, which is the usual ground for the removal of a managerial employee, not
having been established, like any other lawful cause, the petition must fail.

Although the loss of confidence on petitioners part is unfounded, reinstating respondent to his former
position would not be advisable given the souring of their relationship. This Court now, therefore, directs
petitioner to just afford respondent his right to separation pay, backwages, and other benefits under the
law.

Since the records do not provide a basis for the determination of the amount of separation pay plus
backwages and other benefits to which respondent is entitled, a remand of the case to the Labor Arbiter
is thus in order.

The decision is AFFIRMEDwith MODIFICATION. The records of this case are REMANDED to the
Labor Arbiter, through the National Labor Relations Commission, only for the determination of the
amount of separation pay plus backwages and other benefits to which respondent is entitled.

Austria v. NLRC, 310 SCRA 293

F: PHILIPPINE STEEL COATING CORPORATION (PHILSTEEL), private respondent, is engaged in the
manufacture of prefabricated steel, galvanized iron and other metal products. On 19 December 1985 it
hired petitioner Nazario C. Austria as its Credit and Collection Manager. On 11 August 1987 petitioner
and private respondent PHILSTEEL entered into a "Confidentiality Agreement" whereby he agreed not to
disclose to anyone outside the company any technical, operational and other such information acquired
in the course of his employment, unless otherwise duly authorized by private respondent, on pain of
immediate dismissal.

A smooth and satisfactory employee-employer relationship ensued between the two (2) parties until 17
August 1989 when petitioner was unceremoniously terminated by private respondent company on the
ground that he allegedly disclosed confidential information to prospective competitors and had
undertaken activities far beyond his official duties and responsibilities.

services were still highly satisfactory as of July 1989. Thus, the Labor Arbiter declared the dismissal to
be legal but ordered private respondents to pay petitioner P24,000.00 separation pay considering that
the company suffered no loss and that there was no proof of a rival company later established by
petitioner.

On 30 August 1989 Austria filed a case for illegal dismissal against PHILSTEEL. He alleged that on 5
August 1989 the President of PHILSTEEL, Abeto Uy, demanded his resignation purportedly due to loss
of confidence but refused to shed light on the reasons therefor. Austria further alleged that on 17 August
1989, without any prior written notice, he was summoned to a meeting with the Vice-President for
Finance, Primo Valerio, and Vice-President for Legal and Personnel, Gregorio Vega. Therein he was
questioned about a certain 13 July 1989 telefax message sent by one Felix Lukban to PHILSTEEL's
Australian supplier of equipment and machinery, Bliss Fox Manufacturing Corporation (BLISS
FOX). The telefax showed that, on behalf of an unnamed client, Lukban was asking for the purchase
price of a complete line of machinery and equipment for a steel galvanizing plant. Austria denied any
knowledge of the telex.

On appeal the NLRC agreed with the thesis of the Labor Arbiter that petitioner failed to prove any other
motive by private respondents for his termination considering his excellent job performance. The
Commission however modified the Labor Arbiter's decision by directing PHILSTEEL to pay petitioner an
indemnity of P1,000.00 for non-observance of due process in failing to provide petitioner with a prior
written notice of the investigation and for not giving him time to answer charges and to seek assistance
of counsel.

Petitioner was also asked about his close relationship with Lukban, which the former admitted, Lukban
being the godfather of his child. Immediately after the meeting Austria was given his notice of termination
and required to surrender the keys to his company car and to his room which were in his
possession. When he returned to his room it was already padlocked; when he passed by his car it was
barricaded.
Austria submitted in support of his complaint the affidavit of Felix Lukban executed on 13 December
1989 disclaiming any participation of petitioner in the sending of the telefax message. In addition, Lukban
testified to the same effect and denied hearing any answer from BLISS FOX on his telefax.
PHILSTEEL, on the other hand, contended that any information as to the sources of its supply was
highly confidential as the steel industry was very competitive, and the information was disclosed by
Austria to Lukban. The basis for this contention was the incident of 5 August 1989 when a
representative of BLISS FOX named Charles Villa informed Abeto Uy, in the presence of Primo Valerio
and Gregorio Vega, of the fax message sent by Lukban to BLISS FOX. Charles Villa was said to have
stated that Lukban represented himself to be acting for PHILSTEEL so he verified the representation
from Uy who however denied it. Forthwith, Villa dialed a certain number from the telefax message.
[9]
After a brief exchange with the person on the other end of the phone, during which time Villa scribbled
a name at the back of the telex, he informed Uy that he just talked with Lukban who informed him that
his contact with PHILSTEEL was Rudy Austria whose name he had just written.
After Villa left, Austria was immediately investigated on the matter. Petitioner admitted having a close
relationship with Lukban. Austria also volunteered to disclose secret meetings at Manila Garden Hotel
with Lukban and the latter's son-in-law regarding plans to put up a rival galvanizing business either here
in the Philippines or in Singapore, as well as meetings at company premises with a group of Australians
on the same subject. A second investigation held on 17 August 1989 yielded the same result.
Testimonies of Vega and Valerio, as well as the latter's 29 November 1989 affidavit, the confidentiality
agreement and the termination letter were presented to buttress private respondents' evidence.
The Labor Arbiter found the evidence of private respondents credible on the ground that no other
inference other than Austria's guilt could be drawn from these established circumstances: the Australian
representative of BLISS FOX did not know Austria nor the latter's nickname (Rudy) when he called
Lukban and inquired who Lukban's contact person was at PHILSTEEL; Lukban was not only known to
Austria, he was close to him; and, Austria signified his intention to join the rival company which Lukban
planned to form.
The Labor Arbiter pointed out that petitioner failed to establish any motive on the part of private
respondents and of Valerio and Vega in terminating his employment or in testifying against him since his

Basic is the rule that judicial review of labor cases does not go so far as to evaluate the sufficiency of
evidence on which the labor officials' findings rest, more so when both the Labor Arbiter and the NLRC
share the same findings. This, notwithstanding, we cannot affirm the decision of the NLRC especially
when its findings of fact on which the conclusion was based are not supported by substantial
evidence. By substantial evidence, we mean the amount of relevant evidence which a reasonable mind
might accept as adequate to justify the conclusion.
The NLRC grounded its findings on the following postulates: (a) the witnesses of PHILSTEEL are
credible for petitioner failed to show any ground for them to falsely testify, especially in the light of his
excellent job performance; and, (b) respondents' witnesses are more credible than petitioner's - Lukban
who, insofar as the source of the information is concerned, impressed the NLRC as evasive. The NLRC
however entertained a patent misapprehension of the burden of proof rule in labor termination
cases. Unlike in other cases where the complainant has the burden of proof to discharge, in labor cases
concerning illegal dismissals, the burden of proving that the employee was dismissed with just cause
rests upon the employer. Such is the mandate of Art. 278 of the Labor Code.
In brief, the evidence of PHILSTEEL rests upon the following bases: (a) the allegation of Charles Villa,
representative of BLISS FOX, that Lukban named petitioner Austria as his contact in PHILSTEEL; (b) the
close relationship of Lukban and Austria; and, (c) the admissions of Austria during the investigation
relative to both the close relationship with Lukban and their plans to set up a rival business.
I: WON NLRC committed grave abuse of discretion for its misappreciation of the evidence and giving it
undue weight
H: Like a house of cards, the evidence of private respondents collapses when we take into account the
fact that its foundation is made of hearsay evidence or mere speculations. It must be noted that the
testimonies of Valerio and Vega relied mainly on the veracity of the assertions of Villa. They did not say
that they actually heard or observed Lukban admit to Villa that the former's client was PHILSTEEL and
that his contact with PHILSTEEL was Austria. What they seemingly saw was Villa scribbling a name on
the telefax purportedly dictated by Lukban. In short, what they appear to have observed was what Villa
wanted them to observe, no matter whether it was the truth or not. Thus, their testimony was clearly
hearsay and must not be given weight. Moreover, the veracity of Villa's assertions, even as to his being
a representative of BLISS FOX, is suspect. The reliance both by the Labor Arbiter and the NLRC on the
hearsay testimonies in assessing the evidence of private respondents reflects a dangerous propensity
for baseless conclusions amounting to grave abuse of discretion. Such propensity is further shown when
public respondent gave imprimatur to PHILSTEEL's conclusion that Austria was the one who divulged
the so-called confidential information due mainly to his close affinity with Lukban.
Of significance here is the fact that nowhere in all the allegations of PHILSTEEL was there proof of any
concrete action by Austria of divulging confidential information and of setting up a rival
business. Everything was according to what Villa said or what Lukban supposedly said. Thus,
PHILSTEEL's resort to Austria's "admissions." The admission of close relationship is certainly true as it

was affirmed by both Austria and Lukban. The "admission" however, of their setting up a rival business
strikes this Court as somewhat forced like squeezing a stone for water. The reality of such admission is
negated by subsequent events. At no time did such an envisioned "rival" company come to
being. Indeed, after his dismissal, petitioner had to languish for several months in uncertainty while
looking for employment, instead of just joining the alleged company. Until he died on 15 March 1997,
petitioner never went into partnership with Lukban nor joined any other company.
Accusation cannot take the place of proof. A suspicion or belief no matter how sincerely felt cannot be a
substitute for factual findings carefully established through an orderly procedure. Such orderly procedure
was denied petitioner by PHILSTEEL, as correctly found by the NLRC, thus
In the instant case, there was at least a partial denial of the complainant's right to due process because
there was no showing: (1) that he was given the required first written notice; (2) that he was given
sufficient time to answer the charges against him; and, (3) that he had the chance to obtain the
assistance of counsel.
As there is a finding of illegal dismissal, an award of back wages, instead of indemnity, computed from
the time of dismissal up to the time of his death, with legal interest plus attorney's fees, might properly
assuage the hurt and damages caused by such illegal dismissal. The petition is GRANTED.
General Bank & Trust Co. v. CA, 135 SCRA 569
F: This case starts with the employment of plantiff-appellee with the Cebu Branch of the First National
City Bank of New York for 18 years, where he rose to the position of Chief Clerk, Accounting Department
(Exhibit 0); that on January 11, 1965, plaintiff-appellee joined the defendant bank in its Cebu branch as
accountant with an annual compensation of P6,000.00 (Exhibit A); that on April 26, 1965, the Cebu
Branch of defendant bank began operating and doing business with the public; that on January 1, 1966,
plaintiff received an increase of P50.00 bringing his monthly salary to P550.00 (Exhibit D); that on April
11, 1967 defendant bank appointed the plaintiff to the position of Acting Manager of its Cebu Branch,
with the corresponding increase of sale to P700.00 a month (Exhibit E); that effective September 1,
1967, defendant bank granted plantiff a monthly housing allowance of P200.00 in addition to his monthly
salary (Exhibit F); that on October 3, 1967 defendant bank appointed plaintiff as the regular Manager of
its Cebu Branch (Exhibit G) effective May 1, 1968; that defendant bank increased plaintiff's salary to
P1800.00 a month (Exhibit H); that on May 16, 1969 while the plaintiff was on vacation leave, he
happened to visit the bank and learned that three tellers of defendant bank's branch in Cebu City,
namely, Miss Crystal Enriquez, Miss Yolanda Chu, and Miss Sonia Chiu, had been transferred to the
head office in Manila by defendant Jose D. Santos; that the plantiff went to Manila on May 18, 1969 to
make personal representation with the head office for the retention of the said tellers in Cebu; that on
May 26, 1969 the plaintiff reported back for duty with defendant bank's branch in Cebu and reinstated
immediately the three tellers to their respective positions in the Cebu branch of defendant bank; that on
May 28, 1969 defendant Jose D. Santos submitted a report to defendant Salvador D. Tenorio alleging
that there was excess personnel in the Cebu Branch; that on the same date defendant Jose D. Santos
submitted a supplementary report to defendant Salvador D. Tenorio charging the plaintiff of over
appraising the real estate offered by Domingo Chua as collateral for his credit accommodation (Exhibit
34); that defendant Salvador D. Tenorio immediately dispatched a letter to the plaintiff dated May 30,
1969 requiring him to explain within twenty-four hours why no disciplinary action should be taken against
him for alleged repeated violation of defendant bank's policies and directives regarding credit
accommodations and for over-appraisal of the real estate collateral for Domingo Chua's account, among
others (Exhibit 8); that on June 6, 1969, the plaintiff received the said letter of defendant Salvador D.
Tenorio but found it impossible to render the required explanation in 24 hours; that on June 19, 1969
defendant Jose D. Santos went to Cebu City and served plaintiff with the letter of defendant Salvador D.

Tenorio, dated June 18, 1969, suspending the plaintiff; and that on July 22, 1969 plantiff was served with
the order of his termination signed by defendant Clarencio S. Yujuico, dated July 18, 1969.
The Court of First Instance of Cebu rendered a decision, finding the dismissal of plantiff as without just
cause or otherwise illegal arbitrary, oppressive and malicious, and ordering defendants to pay to the
plaintiff, jointly and severally. The Court of Appeals, affirmed the decision of the lower court.
I: WON the dismissal of Manuel E. Batucan was justified on the ground that he repeatedly failed to
uphold the interests of the bank thus leading to his employer's loss of confidence on him.
H: After a careful review of the case, we find no error in the finding of the Court of Appeals that Mr.
Batucan was indeed illegally dismissed. The petitioners' claim that "undisputed documentary evidence
show that prior to his dismissal, specifically from March 1968 to January 1969, respondent Batucan had
been repeatedly cited, warned and finally threatened with dismissal by his superior, petitioner Tenorio,
for his practice of granting credit accommodations without authority during his tenure." They support
such claim with six memoranda addressed to Mr. Batucan, to wit: Exh. "22" dated April 17, 1968 by
Tenorio; Exh. "23" dated March 12, 1968 by Tenorio; Exh. "24" dated March 14, 1968 by Tenorio; Exh.
"29" dated December 9, 1968 by Tenorio; Exh. "30" dated December 27, 1968 by Tenorio; Exh. "34"
dated January 28, 1969 by Tenorio.
Petitioners' argument is devoid of merit. We agree with the respondent that these communications are
"nothing more than routinary acts and/or privileged acts of top management officials which could not in
any way affect or erode petitioners' confidence in respondent Batucan."
After the first three aforecited exhibits were dispatched to Cebu on March 12, 1968, March 14, 1968, and
April 17, 1968, petitioner San Luis cleared Mr. Batucan from an exceptions reported by the Central Bank
examiners in connection with their examination conducted in March, 1968. In his report to the President
of the bank in about the first week of March 1968, San Luis commended Mr. Batucan for the good image
enjoyed by the bank in the locality because clients, customers, and depositors spoke well and highly of
Mr. Batucan for his dedication, sincere and upright dealing with people. Because of such commendation,
the president of the bank, the late Senator Quintin Paredes gave Mr. Batucan an increase of P100.00 in
his monthly salary effective May 1, 1968. Mr. Batucan was also asked to speak at the manager's
meeting on October 19, 1968 on his "Techniques in Effective solicitation of Deposits or New Accounts."
Batucan was also given a free hand in the prosecution of a defalcating head teller relying on his good
judgment to protect the interests of the bank.
With the foregoing circumstances, we cannot reconcile the management's alleged loss of confidence in
Mr. Batucan with the latter's commendations for efficient performance, his having been given an increase
in salary and his being asked to speak to other colleagues on effective banking techniques shortly after
the supposed loss of confidence.
We agree with the Court of Appeals in its finding that preponderance of the evidence, however, shows
that the alleged unauthorized extension of temporary over-draft or credit accommodations referred to
credit accommodations which were granted by and already existing during the term of the previous
management.
Not only did the Court of Appeals establish that there were no improper credit accommodations granted
during Mr. Batucan's term as manager but his competence at being able to regularize these accounts
and his contributions to the improvement of the bank were clearly ascertained.

There is no question that managerial employees should enjoy the confidence of top management. This
is especially true in banks where officials handle big sums of money and engage in confidential or
fiduciary transactions. However, loss of confidence should not be simulated. It should not be used as a
subterfuge for causes which are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere
afterthought to justify earlier action taken in bad faith.
We now come to the issue of damages. Petitioners question the propriety of awarding moral and
exemplary damages to the respondent. Under Article 2217 of the Civil Code:
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or commission.
Mr. Batucan left a stable job with a reputable bank to join the petitioner bank. He had been an employee
of the First National City Bank of New York for eighteen (18) years. Undoubtedly, before he accepted
petitioner Tenorio's invitation, he must have thought the matter over several times. And from the time he
joined the petitioner bank, the records show that Mr. Batucan has indeed worked his way up from
accountant to permanent branch manager of the bank. During his term as manager, he was able to
increase the income and resources of the bank. He raised the image of petitioner bank in the business
and banking community and placed its operations on a good and competitive basis. His peremptory
dismissal from the bank was certainly a shock to him and damaged his moral feelings and personal pride
after all the loyalty and hard work he had dedicated to the bank.
The only reason for his dismissal found in the records is his failure to follow top-management orders with
regards to the transfer of the three tellers. Petitioners alleged it to be insubordination. Nevertheless,
insubordination must be proven to justify dismissal (St. Luke's Hospital v. Ministry of Labor and
Employment, 116 SCRA 240). And we do not think that his earnest efforts in making representations to
retain the three tellers warrant his dimissal. A manager or supervisor must stand up for his subordinates
unless the latter are guilty of wrongdoing or some conduct prejudicial to the employer. Only after as
representations was Mr. Batucan questioned on the several "unauthorized credit accommodations." His
failure to explain within 24 hours which, in the light of the circumstances, was too short, caused his
suspension and later, his dismissal retroactive to the date of suspension. There was no valid reason for
his dismissal, much less for all the charges and accusations made against him. The dismissal followed
by the efforts to justify it was tainted by bad faith or malice on the part of the petitioners who wanted Mr.
Batucan removed from his post.
The employer's right to dismiss his employee, however, differs from, and should not be confused with the
manner in which the right is exercised. The manner in which the company exercised its right to dismiss
in the case at bar was abusive; hence, it is liable for moral damages, as previously discussed.
A review of the records, however, indicates that the moral and exemplary damages awarded may be
somewhat excessive. Hence, in the exercise of our discretion and after considering all factors, we have
decided to reduce to P20,000.00 the award for moral and exemplary damages and to P5,000.00 the
award for attorney's fees.
The award of P1,000.00 a month from the time Mr. Batucan's employment was terminated up to the date
this case becomes final and executory is likewise excessive. At the same time, pursuant to Republic Act

1052 as amended by Republic Act 1787, which provides that in case of employment without a definite
period, an employer may terminate an employee's services without just cause by serving to the
employee a written notice at least one month in advance or by granting him pay equivalent to one-half
month salary for every year of service, whichever is longer.
Considering the facts and equities of this case, however, we have decided to limit compensatory
damages to only P12,000.00, as explained above.chanroblesvirtualawlibrary chanrobles virtual law
library
Lastly, petitioners raise the issue that "individual petitioners, having acted in their official capacities as
bank officers, did not incur any personal liability in favor of Batucan. We quote with favor the finding of
the respondent Court: The evidence shows that the individual defendants acted jointly in causing the
illegal and unjustifiable dimissal of the plaintiff-appellee. Hence, the trial court is correct in holding the
individual defendants jointly and severally liable to the plaintiff-appellee. "
Clearly, the petitioners acted beyond their authority and against what the law provides. WHEREFORE,
the decision appealed from is MODIFIED.
Sy v. Metrobank, 506 SCRA 580

F: 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 Metropolitan Bank and
Trust Company.
Under the banks Retirement Plan, an employee must retire upon reaching the age of 55 years or after
rendering 30 years of service, whichever comes first. Sy would have rendered 30 years of service by
August 18, 1999. However, on February 5, 1999, he was reappointed as branch manager for a term of
one year starting August 18, 1999 until August 18, 2000. His monthly compensation was accordingly
increased from P50,400 to P54,500, effective August 16, 1999.
Meanwhile, on November 10 and 15, 1999, the bank released the results of the audit conducted in its
Bajada branch. On November 15, 1999, Sy tendered an irrevocable letter of retirement. In his letter, he
requested the timely release of his retirement pay and other benefits. His request was denied.
The bank alleged that Sy allowed spouses Gorgonio and Elizabeth Ong to conduct "kiting" activities in
their account with the bank. Thus, 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.
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 on December 15, 1999.

Sy filed against the bank a complaint for illegal suspension, illegal dismissal and money claims,
docketed as RAB-11-01-00024-0. However, the Labor Arbiter dismissed the case for lack of merit.
On appeal, the National Labor Relations Commission (NLRC) deemed Sy compulsorily retired. Thus, the
NLRC awarded him retirement benefits, unpaid salary, monetary value of unused leave credits,
13th month pay, Christmas bonus, and refund of provident fund.
The parties sought reconsideration, which were both denied for lack of merit. Respondent bank elevated
the matter to the Court of Appeals, which set aside the ruling of the NLRC and reinstated the Decision of
the Labor Arbiter. On motion for reconsideration, however, the Court of Appeals modified its ruling and
ordered the bank to reimburse Sys contribution to the provident fund.
I: (1) Was petitioner illegally terminated? (2) If his dismissal was valid, would he still be entitled to
retirement benefits?
H: 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. 19 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 amanagerial employee.
Petitioners conduct betrays his culpability. Shortly after the audit conducted in the Bajada branch, he
tendered an "irrevocable letter of retirement." In the said letter, he requested that his retirement be made
effective December 1, 1999. Said request arouses suspicion considering that he had previously agreed
to the extension of his employment as branch manager until August 18, 2000. Petitioners evident failure
to offer any reasonable explanation for such sudden shift in his plans is prejudicial to his cause.
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.
Petitioner, however, theorizes that having been compulsorily retired, he could no longer be dismissed by
the bank. His premise is absurd. Indeed, he would have qualified for compulsory retirement under the
banks Retirement Plan. However, he opted to accept the banks offer of extending his employment for
another year with a corresponding salary increase. Thus, in effect, he had never retired. Unfortunately
for him, while serving such extended term, the bank discovered his unauthorized grant of
accommodation to accounts engaged in "kiting" activity. Such act is a clear breach of the trust reposed in
him by the bank. He cannot now elude dismissal for a just cause by claiming he was already retired
compulsorily.
Is petitioner nevertheless entitled to retirement benefits? Under the Labor Code, only unjustly dismissed
employees are entitled to retirement benefits and other privileges including reinstatement and
backwages. Since petitioners dismissal was for a just cause, he is not entitled to any retirement benefit.

To hold otherwise would be to reward acts of willful breach of trust by the employee. It would also open
the floodgate to potential anomalous banking transactions by bank employees whose employments have
been extended. Since a banks operation is essentially imbued with public interest, it owes great fidelity
to the public it deals with. In turn, it cannot be compelled to continue in its employ a person in whom it
has lost trust and confidence and whose continued employment would patently be inimical to the banks
interest. While the scale of justice is tilted in favor of workers, the law does not authorize blind
submission to the claim of labor regardless of merit.
While the Court commiserates with petitioner who has spent with the bank the best three decades of his
employable life, we find no room to accord him compassionate justice. Records showed that he violated
the bank policies prior to his compulsory retirement. Thus, there can be no earned retirement benefits to
speak of. No such provision is provided for by the Labor Code. In fact, even the Civil Service Law
imposes forfeiture of retirement benefits in valid dismissal cases.
Notably, the Court has also disallowed claims for retirement benefits in valid dismissal cases because
the retirement plan itself precluded employees dismissed for cause from availing it. Although no such
prohibition in the retirement plan was alleged or proved in this case, we nevertheless deny petitioners
claims because his offenses, vis--vis his long years of service with the bank, reflect a regrettable lack of
loyalty which he should have strengthened instead of betrayed. The petition is hereby DENIED.
Jardine Davies v. NLRC, 311 SCRA 289
F: Petitioner is a domestic corporation engaged in general trading, including the exclusive distribution in
the country of the world-renowned Union 76 lubricating oil manufactured by Unoco Philippines, Inc.
Private respondent was a former sales representative of petitioner.

A review of the records of this case reveals that petitioner engaged the services of a private investigation
agency to conduct surveillance and investigation pertinent to reports that some of petitioners products,
particularly the Union 76 lubricating oil, were being illegally manufactured, blended, packed and
distributed. Consequently, a private investigator of the said investigation agency, confirmed that there
were really fake Union 76 lubricating oil in the market and reported further that the same were indeed
being illegally manufactured, blended, packed and distributed by private respondent Virgilio Reyes.
Petitioner then secured a search warrant which led to the seizure of some of the alleged fake items
found in the apartment complex reportedly occupied by said private respondent.

Thereafter, a criminal complaint for violation of Article 189 on unfair competition of the Revised Penal
Code [2] was filed against private respondent and others. Subsequently, private respondent was likewise
charged administratively for having committed serious misconduct inimical to the interest of petitioner
company. Accordingly, he was advised to go on an indefinite leave. This eventually led to his termination
from employment on February 23, 1983.

Meanwhile, all the materials seized by virtue of the search warrant issued were released by order of the
same court in view of a petition filed by private respondents younger brother, Donato Reyes. Apparently,
the younger Reyes convinced the court that he was the legal tenant of the apartment complex searched
and that all the materials seized are legally owned by him. He further proved that he was legally

engaged in the business of general merchandising, operating under the trade name of Lubrix
Conglomerate, a single proprietorship duly licensed by the government in dealing with oil and lubricant
products. Furthermore, he presented the receipts covering the purchases of the seized Unoco products
purposely for packing the same in small containers to be resold to the public.

Relying on the foregoing facts, private respondent sued petitioner for illegal dismissal. But the Labor
Arbiter, Manuel R. Caday, dismissed his complaint. In a Decision dated September 24, 1985, the labor
arbiter stated that the apartment complex allegedly occupied by private respondent was indeed the situs
of the illegal manufacture, blending and packaging of Union 76 oil and lubricating products. Convinced
that private respondent was personally involved in the aforementioned illegal activity, the labor arbiter
ruled that the private respondent committed an act of serious misconduct, fraud or willful breach of trust
reposed in him by petitioner, a just cause for terminating employment.
Private respondent appealed to the NLRC. In its Decision dated March 17, 1986, the NLRC reversed the
labor arbiters judgment on the ground that there is no cogent reason for petitioner to lose its trust and
confidence on private respondent.

I: WON public respondent committed grave abuse of discretion in reversing the labor arbiters judgment
which found a just and valid cause for dismissal of private respondent by petitioner.

H: Petitioners attack on the alleged misappreciation of facts and distorted evaluation of evidence by
public respondent stands, in our view, on hollow ground. Resort to judicial review of the decisions of the
National Labor Relations Commission by way of a special civil action for certiorari under Rule 65 of the
Rules of Court is confined only to issues of want or excess of jurisdiction and grave abuse of discretion
on the part of the labor tribunal. It does not include an inquiry as to the correctness of the evaluation of
evidence which was the basis of the labor agency in reaching its conclusion. Neither is it for this Court to
re-examine conflicting evidence, re-evaluate the credibility of the witnesses nor substitute findings of fact
for those of an administrative body which has gained expertise in its specialized field. Arguably, there
may even be an error in judgment. This, however, is not within the ambit of the extraordinary remedy of
certiorari.

It is beyond dispute that loss of trust and confidence constitutes a valid ground for dismissing an
employee. It is settled that loss of confidence as a just cause for terminating employment must be
premised on the fact that an employee concerned holds a position of trust and confidence. This situation
obtains where a person is entrusted with confidence on delicate matters, such as care and protection,
handling or custody of the employers property as in this case. But, in order to constitute a just cause for
dismissal, the act complained of must be work-related such as would show the employee concerned to
be unfit to continue working for the employer. Likewise, it must be noted that proof beyond reasonable
doubt is not required to dismiss an employee on the ground of loss of confidence. It is 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 of his position.

This Court, however, has repeatedly stressed that the right of an employer to dismiss employees on
account of loss of trust and confidence must not be exercised arbitrarily and without showing just cause,
so as not to render the employees constitutional right to security of tenure nugatory. Thus, although the
dropping of a criminal charge for an employees alleged misconduct does not bar his dismissal, and
proof beyond reasonable doubt is not necessary to justify the same, still the basis thereof must be
clearly and convincingly established. Besides, for loss of confidence to be a valid ground for dismissal,
such loss of confidence must arise from particular proven facts. In other words, this ground must be
founded on facts established by the employer who must clearly and convincingly prove by substantial
evidence the facts and incidents upon which loss of confidence in the employee may be fairly made to
rest; otherwise the dismissal will be rendered illegal.

In the case at bar, private respondent was suspended and eventually dismissed for allegedly committing
fraudulent acts and unfairly competing with petitioner. To justify its administrative action, petitioner
somehow grave credence to the surveillance report implicating private respondent in the illegal
manufacture, blending, packing and distribution of petitioners products. Petitioner likewise relied on the
result of the search on the apartment reportedly leased by private respondent from which alleged
counterfeit Union 76 oil products were seized. Unfortunately, these could not be deemed sufficient
basis for petitioner to lose its trust and confidence on private respondent so as to justify the latters
dismissal.

For evidently, the surveillance report is unreliable. As found by the NLRC, the conclusions therein were
mere deductions not supported by any substantial corroborating evidence. Public respondent also
observed that the petitioner failed to show concrete evidence to controvert the proof presented by private
respondent that the packing of genuine Union 76 oil in small containers was in support of the marketing
policy of petitioner. Furthermore, as the Solicitor General points out, petitioners agents surprisingly did
not submit to laboratory test the alleged fake merchandise seized during the search, to determine its
genuineness. This deficiency could be attributed to the misstep of the private detectives who were
specifically instructed to investigate precisely the reported counterfeiting of petitioners products.

Another virtual confirmation that petitioner lacks factual basis for its distrust of private respondent was
the subsequent judicial order releasing the articles seized during the search. As it appears on record, the
court believed the explanation of Donato Reyes, brother of private respondent, that he was the lessee of
the aforesaid apartment.
In sum, we hold that public respondent did not gravely abuse its discretion in ruling that petitioner failed
to duly prove that the dismissal of private respondent was justified on account of loss of trust and
confidence. Hence, private respondents dismissal was found illegal.

With the finding that private respondent was illegally dismissed, an award of backwages is proper. It
must be emphasized, though, that jurisprudence distinguishes between employees illegally dismissed
prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals
were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled
to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after
are granted 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.
Considering that private respondent was terminated from the service on February 23, 1983, he is entitled
to backwages up to three years only, computed on the basis of his last monthly salary or pay.

with cash; that despite the bouncing of some other checks, all checks were eventually funded and paid
to petitioner, hence, petitioner incurred no losses in its collections; that she has worked for petitioner for
nineteen (19) years and this is the first time she has been charged administratively by petitioner.

In addition to backwages, illegally dismissed employees are entitled to either reinstatement, if feasible,
or separation pay, if reinstatement is no longer viable. Petition is DENIED for lack of merit.

Respondent Macaraeg admitted that she knew of the accommodations given by respondent de Vera to
her sister; that she allowed her subordinate to do it because respondent de Vera is her kumare, and that
she knew that Mrs. Estradas checks were sufficiently funded. She worked for petitioner for twenty-two
(22) years and has never had an administrative charge.

Central Pangasinan Electric Cooperative c. Macaraeg | GR 145800 | Jan. 22, 2003

F: Petitioner is an electric cooperative duly organized and existing under Philippine laws. Respondent
Geronima Macaraeg and Maribeth de Vera are employees of petitioner at its office in Area V,
Bayambang, Pangasinan. Respondent de Vera was employed as teller whose primary duty was to
accept payments from petitioners consumers in Bayambang and remit her collections to the cashier,
herein co-respondent Geronima Macaraeg. Respondent Macaraegs duty was to deposit the daily
collections of the office to petitioners account at the Rural Bank of Central Pangasinan in Bayambang.
From January 1998 to January 1999, respondent de Vera accommodated and encashed the crossed
checks of her sister, Evelyn Joy Estrada. Evelyn issued two hundred eleven (211) crossed checks
amounting to P6, 945,128.95 payable to petitioner cooperative despite the absence of any transaction or
any outstanding obligation with petitioner. In turn, respondent de Vera, with the knowledge and consent
of respondent Macaraeg, paid the full value of these checks from the cash collections of petitioner. At
the end of the day, respondents credited the checks as part of their collection and deposited the same
together with their cash collection to the account of petitioner at the Rural Bank of Central Pangasinan.
Sometime in January 1999, petitioner, through its Finance Department, noticed that several checks
payable to petitioner from the collections in the Area V office were returned due to insufficiency of funds.
On January 19, 1999, Josefina Mandapat, Sandra Frias and Marites Radac, petitioners Finance
Manager, Chief Accountant and Legal Assistant, respectively, confronted respondents with their
discovery. Respondent de Vera admitted that the checks were issued by her sister and that she
encashed them from the money collected from petitioners customers. On January 21, 1999, Mrs.
Josefina Mandapat submitted a memorandum to petitioners General Manager, Salvador M. de Guzman,
detailing their findings about the bounced checks. On February 2, 1999, she submitted an addendum to
her memorandum. On February 4, 1999, petitioner, through de Guzman, issued a memorandum to
respondents placing them under preventive suspension and requiring them to explain in writing within
forty-eight (48) hours why they misappropriated cooperative funds. In the same communication, a
hearing was set on February 13, 1999 at 9:30 a.m. at the Board Room of petitioner before Atty. Teodoro
Fernandez.
In their respective Answers/Explanations, respondents denied having misappropriated the funds of
petitioner cooperative. They alleged that: (1) the checks that bounced were redeposited with the Rural
Bank of Central Pangasinan; (2) the amount representing the face value of the checks had been used by
petitioner as of December 15, 1998; (3) there was never any shortage in the cooperative money or funds
in their possession; and (4) they never violated any policy of the cooperative and on the contrary, they
have been very religious in remitting the funds and money of petitioner.
At the scheduled hearing on February 13, 1999, respondents, with assistance of counsel, appeared
before Atty. Teodoro Fernandez. Respondent de Vera testified and admitted that she encashed the
checks of Evelyn Joy Estrada because the latter is her older sister and that she has a soft spot for her;
that Mrs. Estrada owns a sash factory and that she merely wanted to help her sister meet her business
obligations; that sometime in November 1998, Mrs. Marites Radoc, Chief Accountant of petitioner, called
her attention to one check which bounced thrice; that this check was eventually replaced by her sister

Mrs. Josefina Mandapat, Finance Manager of petitioner, testified as petitioners witness. She stated that
she prepared a report on the findings of their accountant regarding the encashment of Evelyn Joy
Estradas checks, and that the encashment of said checks is prohibited under an office memorandum.
On March 10, 1999, Atty. Fernandez submitted his findings to the General Manager of petitioner. On
March 19, 1999, on the basis of said findings and recommendation, the General Manager issued to
respondents separate notices of termination, effective April 9, 1999, for serious misconduct, and breach
of trust and confidence reposed on them by management.
Respondents, with the help of the President and representative of the Union, Central Pangasinan
Electric Cooperative (CENPELCO) Employees Association-Tupas Local Chapter No. R01-0012,
questioned their dismissal before the National Conciliation and Mediation Board (NCMB). They claimed
that their dismissal was without just cause and in violation of the Collective Bargaining Agreement
(CBA), which requires that the case should first be brought before a grievance committee. Eventually,
the parties agreed to submit the case to a voluntary arbitrator for arbitration.
On August 12, 1999, the voluntary arbitrator rendered a decision in favor of respondents. Petitioner
appealed to the Court of Appeals via a petition for review. On August 17, 2000, the Court of Appeals
rendered a decision dismissing the petition and affirming the decision of the voluntary arbitrator. Hence,
the present course of action.
I: WON the CA gravely abused its discretion in holding that petitioner illegally terminated the services of
herein private respondents.
H: The petition is impressed with merit. At the outset, we hold that the first issue raised in the petition
pertaining to the alleged violation of the CBA grievance procedure is moot and academic. The parties
active participation in the voluntary arbitration proceedings, and their failure to insist that the case be
remanded to the grievance machinery, shows a clear intention on their part to have the issue of
respondents illegal dismissal directly resolved by the voluntary arbitrator. We therefore find it
unnecessary to rule on the matter in light of their preference to bring the illegal dismissal dispute to
voluntary arbitration without passing through the grievance machinery.
This leads us to the next issue of whether respondents were 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.
We hold that there exists a valid reason to dismiss both employees. Article 282(c) of the Labor Code
allows an employer to dismiss employees for willful breach of trust or loss of confidence. Proof beyond
reasonable doubt of their misconduct is not required, it being sufficient that there is some basis for the
same or that the employer has reasonable ground to believe that they are responsible for the
misconduct and their participation therein rendered them unworthy of the trust and confidence
demanded of their position.

To be sure, the acts of the respondents were clearly inimical to the financial interest of the
petitioner. During the investigation, they admitted accommodating Evelyn Joy Estrada by encashing her
checks from its funds. They did so without petitioners knowledge, much less its permission. These
inimical acts lasted for more than a year, and probably would have continued had it not been discovered
in time. All along, they were aware that these acts were prohibited by the Coop Checks Policy. Clearly,
there was willful breach of trust on the respondents part, as they took advantage of their highly sensitive
positions to violate their duties.

The Labor Arbiter, held all respondents jointly and severally liable for the money claims of Mcleod.
However, the NLRC reversed and made Peggy Mills as the sole entity liable for the retirement pay of
Mcleod. This was affirmed by the CA.

Moreover, the acts of the respondents caused damage to the petitioner. During those times the checks
were illegally encashed, petitioner was not able to fully utilize the collections, primarily in servicing its
debts. In her memorandum dated January 21, 1999, Finance Manager Josefina Mandapat reported how
petitioner is prejudiced.

H: No employer-employee relationship, McLeod was a managerial employee of PMI from 20 June 1980
to 31 December 1992. McLeod could have presented evidence to support his allegation of employeremployee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment
letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as
testimony of co-employees, may serve as evidence of employee status. It is a basic rule in evidence that
parties must prove their affirmative allegations. While technical rules are not strictly followed in the
NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are
not enough. They must be supported by substantial evidence at the very least.

It is not material that they did not misappropriate any amount of money, nor incur any shortage relative
to the funds in their possession. The basic premise for dismissal on the ground of loss of confidence is
that the employees concerned hold positions of trust. The betrayal of this trust is the essence of the
offence for which an employee is penalized. In the case at bar, the respondents held positions of utmost
trust and confidence. As teller and cashier, respectively, they are expected to possess a high degree of
fidelity. They are entrusted with a considerable amount of cash. Respondent de Vera accepted
payments from petitioners consumers while respondent Macaraeg received remittances for deposit at
petitioners bank. They did not live up to their duties and obligations.
Nor is there any doubt that petitioner observed procedural due process in dismissing the
respondents. In separate memoranda dated February 4, 1999 and signed by the General Manager ( de
Guzman), the respondents were both appraised of the particular acts or omissions constituting the
charges against them. They gave their own answer/explanation to the charges. They participated in
the investigation conducted at petitioners board room. We are aware that the respondents Macaraeg
and de Vera have been employed with the petitioner for 22 and 19 years of continuous service,
respectively, and this is the first time that either of them has been administratively
charged. Nonetheless, it is our considered view that their dismissal is justified considering the breach of
trust they have committed. Well to emphasize, the longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms of conduct and
the code of discipline in the company. Considering that they have mishandled the funds of the
cooperative and the danger they have posed to its members, their reinstatement is neither sound in
reason nor just in principle. It is irreconcilable with trust and confidence that has been irretrievably lost.
The petition is GRANTED.
Mcleod v. NLRC, 512 SCRA 222
F: John F. McLeod filed a complaint for retirement benefits, vacation and sick leave benefits, nonpayment of unused airline tickets, holiday pay, underpayment of salary and 13th month pay, moral and
exemplary damages, attorneys fees plus interest against Filipinas Synthetic Corporation (Filsyn), Far
Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu. He alleges that at the time of
his retirement complainant was receiving P60, 000.00 monthly with vacation and sick leave benefits;
13th month pay, holiday pay and two round trip business class tickets on a Manila-London-Manila
itinerary every three years which is convertible to cash if unused. Respondents accordingly failed to pay
vacation and leave credits and requested complainant to wait as it was short of funds but the same
remain unpaid at present. Respondents likewise failed to pay complainants holiday pay up to the
present. There were more benefits which were not honored.

I: WON an employer-employee relationship exists between the private respondents and the petitioner for
purposes of determining employer liability to the petitioner.

McLeods reliance on Annex M can hardly carry the day for him. Annex M, which is McLeods letter
addressed to "Philip Lim, VP Administration," merely contains McLeods proposals for the grant of some
benefits to supervisory and confidential employees. Contrary to McLeods allegation, Patricio did not sign
the letter. Hence, the letter does not embody any agreement between McLeod and the management that
would entitle McLeod to his money claims. Neither can McLeods assertions find support in Annex U.
Annex U is the Agreement which McLeod and Universal Textile Mills, Inc. executed in 1959. The
Agreement merely contains the renewal of the service agreement which the parties signed in 1956.

John Hancock Life Insurance Corp. v. Davis | GR 169549 | Sept. 3, 2008

F: Respondent Joanna Cantre Davis was agency administration officer of petitioner John Hancock Life
Insurance Corporation. On October 18, 2000, Patricia Yuseco, petitioner's corporate affairs manager,
discovered that her wallet was missing. She immediately reported the loss of her credit cards to AIG and
BPI Express. To her surprise, she was informed that "Patricia Yuseco" had just made substantial
purchases using her credit cards in various stores in the City of Manila. She was also told that a
proposed transaction in Abenson's-Robinsons Place was disapproved because "she" gave the wrong
information upon verification.
Because loss of personal property among its employees had become rampant in its office, petitioner
sought the assistance of the National Bureau of Investigation (NBI). The NBI, in the course of its
investigation, obtained a security video from Abenson's showing the person who used Yuseco's credit
cards. Yuseco and other witnesses positively identified the person in the video as respondent.
Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in the office of
the Manila city prosecutor. But because the affidavits presented by the NBI (identifying respondent as
the culprit) were not properly verified, the city prosecutor dismissed the complaint due to insufficiency of
evidence.
Meanwhile, petitioner placed respondent under preventive suspension and instructed her to cooperate
with its ongoing investigation. Instead of doing so, however, respondent filed a complaint for illegal
dismissal alleging that petitioner terminated her employment without cause.

The labor arbiter, in a decision dated May 21, 2002, found that respondent committed serious
misconduct (she was the principal suspect for qualified theft committed inside petitioner's office during
work hours). There was a valid cause for her dismissal. Thus, the complaint was dismissed for lack of
merit.
Respondent appealed the labor arbiter's decision to the National Labor Relations Commission (NLRC)
which affirmed the assailed decision on July 31, 2003. Respondent moved for reconsideration but it was
denied in a resolution dated October 30, 2003.
Aggrieved, respondent filed a petition for certiorari in the Court of Appeals (CA) claiming that the NLRC
committed grave abuse of discretion in affirming the decision of the labor arbiter. She claimed there was
no valid cause for her termination because the city prosecutor of Manila "did not find probable cause for
qualified theft against her." The dismissal of the complaint proved that the charges against her were
based on suspicion.
The CA, in its July 4, 2005 decision found that the labor arbiter and NLRC merely adopted the findings of
the NBI regarding respondent's culpability. Because the affidavits of the witnesses were not verified, they
did not constitute substantial evidence. The labor arbiter and NLRC should have assessed evidence
independently as "unsubstantiated suspicions, accusations and conclusions of employers (did) not
provide legal justification for dismissing an employee." Thus, the CA granted the petition. Petitioner
moved for reconsideration but it was denied. Hence, this petition.
I: WON petitioner substantially proved the presence of valid cause for respondent's termination.
H: We grant the petition. Misconduct involves "the transgression of some established and definite rule of
action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment."

In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used
Yuseco's credit cards. But since the theft was not committed against petitioner itself but against one of
its employees, respondent's misconduct was not work-related and therefore, she could not be dismissed
for serious misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are
susceptible of comparison to another in general or in specific detail. For an employee to be validly
dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary
and/or willful act or omission of the employee.
A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an
employee's moral depravity. Theft committed by an employee against a person other than his employer,
if proven by substantial evidence, is a cause analogous to serious misconduct.
Did petitioner substantially prove the existence of valid cause for respondent's separation? Yes. The
labor arbiter and the NLRC relied not only on the affidavits of the NBI's witnesses but also on that of
respondent. They likewise considered petitioner's own investigative findings. Clearly, they did not merely
adopt the findings of the NBI but independently assessed evidence presented by the parties. Their
conclusion (that there was valid cause for respondent's separation from employment) was therefore
supported by substantial evidence. All things considered, petitioner validly dismissed respondent for
cause analogous to serious misconduct. Petition is hereby GRANTED.

Security and Credit Investigation v. NLRC, 350 SCRA 357

F: Private respondents Mercado, Somosot and Oliver were employed as security guards by petitioner
and assigned to the CHR which was petitioners client. Sometime in February 1990, about eighteen (18)
of petitioners security guards detailed at the CHR, including Mercado, Somosot and Oliver, filed a
complaint for money claims against petitioner. However, upon petitioners request that the security
guards withdraw the complaint, each of the complainants, except for Mercado, Somosot and Oliver,
signed a Release and Quitclaim in favor of petitioner.
Mercado averred that he was being pressured by petitioner to sign a Release and Quitclaim, so he went
on leave from work on March 22, 1990. When he called petitioners office on the afternoon of the same
day to inquire about his work assignment, petitioners officer-in-charge, Rogelio Vecido, informed him
that he was not assigned anywhere because he was suspended from work.
Somosot likewise claimed that on March 22, 1990, Mr. Igmedio Tomenio, petitioners shift-in-charge at
the CHR, tried to pressure him to sign a Release and Quitclaim but he refused. That afternoon,
Somosot learned that he had been suspended from work. When he attempted to report for work the
next day, he was informed verbally that his employment was already terminated.
The next day, March 23, 1990, Mercado and Somosot filed a complaint for illegal dismissal and
underpayment of wages, overtime pay, legal holiday pay, premium pay for holiday and rest day, 13th
month pay, service incentive leave benefits and night differential against petitioner. The case was
docketed as NLRC-NCR Case No. 00-03-01791-90.
Like Mercado and Somosot, respondent Oliver asseverated that on March 27, 1990 he went to
petitioners office to reiterate his money claims and was forced by Mr. Reynaldo Dino, petitioners
operations manager, to sign a Release and Quitclaim. Because of his refusal to sign the same, he was
not given any new assignment by petitioner. He was thus surprised to receive on March 29, 1990 a
telegram from petitioner requiring him to explain his absence from work without leave from March 27,
1990. Subsequently, Oliver filed a complaint for illegal dismissal and underpayment of backwages
against petitioner, which case was docketed as NLRC-NCR Case No. 00-03-01886-90.
Upon motion of petitioner, the two cases were consolidated. Petitioner, on the other hand, denied that it
dismissed Mercado, Somosot and Oliver and alleged that the latter abandoned their employment.
Meanwhile, on February 18, 1991, petitioner filed a third-party complaint against the CHR, claiming that
its failure to effect the increase in the minimum wage of respondent security guards from July 1, 1989 to
March 31, 1990, was due to the failure of the CHR to promptly pay the increases in the wage rates of
said guards pursuant to Section 6 of Republic Act No. 6727 (R.A. 6727). The CHR approved payment of
increased wage rates only from April 16, 1990. Petitioner claimed that under R.A. 6727, the CHR was
mandated to pay increased wages to the security guards commencing from July 1, 1989.
The CHR denied that it was obliged to pay the increase in the wage rates of the respondent guards. It
averred that R.A. 6727 is not applicable to it, because it had already been paying the respondent
security guards more than P100.00 a day even before the effectivity of said law. Its decision to increase
the salaries of respondent guards effective August 16, 1990 was due only to humanitarian reasons.
In his Decision dated November 18, 1991 the Labor Arbiter found that there was neither dismissal by
petitioner of the respondent security guards nor abandonment of employment by the latter, and that the
controversy resulted from miscommunication and misapprehension of facts by the parties. The Labor
Arbiter, however, ruled that there was underpayment of respondent guards salaries, holiday pay,

premium pay for holidays and rest days, overtime pay, 13th month pay and service incentive leave
benefits.
All parties filed their respective appeals with the National Labor Relations Commission. In their partial
appeal, respondents Mercado and Somosot argued that the Labor Arbiter erred in not finding that they
were illegally dismissed and in not awarding backwages in their favor.
Petitioner, on the other hand, claimed that the Labor Arbiter erred in not finding that respondent security
guards abandoned their employment, and that it is the CHR which should be held liable for the monetary
award given to respondent security guards.
The CHR for its part contended that the Labor Arbiter erred in not finding that R.A. 6727 does not apply
to it, and in failing to appreciate the CHRs Letter dated April 16, 1990 which stated that it was increasing
the wage rates of the security guards beginning April 16, 1990.
I: WON NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it ruled that
private respondents did not abandon their posts
H: The Court finds that the NLRC committed no grave abuse of discretion in affirming the finding that
petitioner did not dismiss respondent security guards, and that the latter did not abandon their
employment.
Both the NLRC and the Labor Arbiter found no clear proof that petitioner had in fact dismissed
respondent security guards. Mercado based his claim of illegal dismissal only on the statement of officerin-charge Mr. Vecido that he had not been assigned to any post. Similarly, Somosot relied merely on
the verbal information relayed to him that he had been terminated. Olivers belief that he had been
illegally dismissed was founded on the telegram from petitioner requiring him to explain his absence
without leave which he received on March 29, 1990. None of them exerted efforts to confirm from
petitioners office whether they had in fact been dismissed.
Furthermore, petitioner denied the allegation that it terminated respondent security guards employment
without just cause and even alleged that respondent guards abandoned their employment. Thus,
absent any showing of an overt or positive act proving that petitioner had dismissed Mercado,
Somosot and Oliver, their claim of illegal dismissal cannot be sustained.
There being no finding that respondent security guards were illegally dismissed, there is no basis for an
award of backwages in their favor. It is axiomatic that before backwages may be granted, there must be
unjust or illegal dismissal from work.
Neither did the NLRC find evidence to support petitioners allegation that Mercado, Somosot and Oliver
abandoned their employment. The records reveal that their failure to report for duty was not caused by a
willful and deliberate intent to abandon their employment. Rather, such failure resulted from their belief,
though mistaken, that they had been suspended or terminated from work. The rule is that for
abandonment to exist, two elements must concur: first, the employee must have failed to report for work
or must have been absent without justifiable reason; and second, there must have been a clear intention
to sever the employer-employee relationship manifested by some overt acts. The filing by Mercado,
Somosot and Oliver of their complaints for illegal dismissal negates the existence of any intention on
their part to abandon their employment.
On the other hand, there is merit in petitioners argument that there was an error in the computation of
the amounts constituting underpayment of overtime pay, 13th month pay and service incentive leave
benefits to respondent security guards by the Labor Arbiter, which in turn was affirmed by the NLRC.

However, in computing the underpayment for overtime, 13th month and service incentive leave benefits,
the Labor Arbiter erroneously included the period from September 1, 1988 to June 30, 1989 in spite of
his finding that there was no underpayment in wages during said period.
The Court also finds merit in petitioners argument that the NLRC should not have reversed the Labor
Arbiters finding that the CHR is liable for the payment of P28,500.00 representing the differentials of
respondent security guards wage, overtime, 13th month and service incentive leave benefits for the
period July 1, 1989 to April 15, 1990.
The record shows that petitioner informed the CHR regarding the increase in the wages of the security
guards effective July 1, 1989, pursuant to R.A. 6727 which mandated a Twenty Five Peso (P25.00)
increase in the daily wage rate in a Letter dated August 7, 1989. In its reply letter dated April 16, 1990,
the CHR stated that it had approved the increase in the wages effective April 16, 1990.
The CHR, however, maintains that it is not liable to pay increased wages to the security guards and
claims that there is a proviso in Section 4 of R.A. 6727 which exempts employees already receiving
more than P100.00 daily from receiving the P25.00 increase required under said law. The CHR argues
that since the security guards were receiving P103.56 daily for the year 1989, it was not required to pay
them the P25.00 per day increase under R.A. 6727. The CHR further asserts that its approved increase
in the security guards wages from April 16, 1990 was due only to humanitarian reasons and was not an
admission of any obligation to increase the same under R.A. 6727.
It must be noted that both the Labor Arbiter and the NLRC found that there were discrepancies in the
minimum wage prescribed under R.A. 6727 and what were actually received by respondent security
guards from July 1, 1989. The rule is that the factual findings of the Labor Arbiter, when affirmed by the
NLRC are accorded to great weight and respect when supported by substantial evidence, and devoid of
any unfairness and arbitrariness.
It is clear that the CHR is the party liable for payment of the wage increase due to respondent security
guards. While petitioner, as the contractor, is held solidarily liable for the payment of wages, including
wage increases, as prescribed under the Labor Code, the obligation ultimately belongs to the CHR as
principal. The Labor Arbiter was therefore correct in requiring the CHR to reimburse petitioner the
amount of P28, 500.00 representing the unpaid wage increases of respondent security guards for the
period July 1, 1989 to April 15, 1990. The assailed decision of the affirmed with the MODIFICATION
CALS Poultry Supply v. Roco, 385 SCRA 479

F: CALS Poultry Supply Corporation is engaged in the business of selling dressed chicken and other
related products and managed by Danilo Yap. On March 15, 1984, CALS hired Alfredo Roco as its
driver. On the same date, CALS hired Edna Roco, Alfredos sister, as a helper in the dressing room of
CALS. On May 16, 1995, it hired Candelaria Roco, another sister, as helper, also at its chicken dressing
plant on a probationary basis.
On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint for illegal dismissal against
CALS and Danilo Yap alleging that Alfredo and Candelaria were illegally dismissed on January 20, 1996
and November 5, 1996, respectively. Both also claimed that they were underpaid of their wages. Edna
Roco, likewise, filed a complaint for illegal dismissal, alleging that on June 26, 1996, she was reassigned
to the task of washing dirty sacks and for this reason, in addition to her being transferred from night shift
to day time duties, which she considered as management act of harassment, she did not report for work.
According to Alfredo Roco, he was dismissed on January 20, 1996 when he refused to accept
P30,000.00 being offered to him by CALS lawyer, Atty. Myra Cristela A. Yngcong, in exchange for his

executing a letter of voluntary resignation. On the part of Candelaria Roco, she averred that she was
terminated without cause from her job as helper after serving more than six (6) months as probationary
employee.red

was hired on May 16, 1995 and her services were terminated on November 15, 1995 due to poor work
performance. She did not measure up to the work standards on the dressing of chicken. The Labor
Arbiter sustained CALS in terminating her employment. The NLRC affirmed the Labor Arbiters ruling.

The Labor Arbiter on April 16, 1998, issued a decision dismissing the complaints for illegal dismissal for
lack of merit. The Labor Arbiter found that Alfredo Roco applied for and was granted a leave of absence
for the period from January 4 to 18, 1996. He did not report back for work after the expiration of his
leave of absence, prompting CALS, through its Chief Maintenance Officer to send him a letter on March
12, 1996 inquiring if he still had intentions of resuming his work. Alfredo Roco did not respond to the
letter despite receipt thereof, thus, Alfredo was not dismissed; it was he who unilaterally severed his
relation with his employer.

The Court of Appeals did not disagree with the NLRCs finding that Candelaria was dismissed because
she did not qualify as a regular employee in accordance with the reasonable standards made known by
the company to her at the time of her employment.

In the case of Candelaria Roco, the Labor Arbiter upheld CALS decision not to continue with her
probationary employment having been found her unsuited for the work for which her services were
engaged. She was hired on May 16, 1995 and her services were terminated on November 15, 1995.

We agree with CALS contention as upheld by both the Labor Arbiter and the NLRC that Candelarias
services was terminated within and not beyond the 6-month probationary period.

Edna Roco, according to the Labor Arbiter, began absenting herself on June 25, 1996. She was sent a
memo on July 1, 1996 requiring her to report for work immediately, but she did not respond. In their
position papers, the complainants claimed that they were not given their overtime pay, premium pay for
holidays, premium pay for rest days, 13th month pay, allowances. They were also not given their
separation pay after their dismissal. The Labor Arbiter, however, denied their claims, stating that they
had not substantiated the same; on the other hand, CALS presented evidence showing that
complainants received the correct salaries and related benefits.
The National Labor Relations Commission (NLRC), in a decision promulgated on January 17, 2000,
affirmed the judgment of the Labor Arbiter.
On appeal by Alfredo, Candelaria and Edna Roco to the Court of Appeals, the appellate court set aside
the NLRCs decision and ordered reinstatement of Alfredo and Candelaria Roco to their former positions
without loss of seniority of rights and benefits, with full payment of backwages. However, in the case of
Edna Roco, the Court of Appeals found that her appeal cannot be favorably considered as she actually
abandoned her work without justification.
In considering that Alfredo Roco was illegally dismissed, the Court of Appeals relied on his allegation
that on January 20, 1996 when he reported for work, following his leave of absence from January 10 to
18, 1996, he learned from Elvie Acantelado, a secretary of Danilo Yap that he was already separated
from his employment.

CALS argues that the Court of Appeals computation of the 6-month probationary period is erroneous as
the termination of Candelarias services on November 15, 1995 was exactly on the last day of the 6month period.

As there is no mention of the basis of the above order, we may assume it was the temporary payroll
authority submitted by the petitioner showing that the private respondent was employed on probation on
February 16, 1978. Even supposing that it is not self-serving, we find nevertheless that it is selfdefeating. The six-month period of probation started from the said date of appointment and so ended on
August 17, 1978, but it is not shown that the private respondents employment also ended then; on the
contrary, he continued working as usual. Under Article 282 of the Labor Code, an employee who is
allowed to work after a probationary period shall be considered a regular employee.' Hence, Pilones
was already on permanent status when he was dismissed on August 21, 1978, or four days after he
ceased to be a probationer.
WHEREFORE, our Resolution of April 1, 2002 denying the petition is hereby SET ASIDE and another
one entered REVERSING the decision of the Court of Appeals insofar as it ruled in favor of herein
respondents and the decisions of the Labor Arbiter and the National Labor Relations Commission
REINSTATED.
Jardine Davies v. NLRC, 225 SCRA 757

Nature: The instant Petition for Certiorari seeks the reversal of the resolution of respondent National
Labor Relations Commission, dated 22 July 1992, which declared private respondent Salvador Salutin
as not having abandoned his work by his alleged failure to report for work during the pendency of the
petitioner's appeal before the respondent Commission.

I: WON there was illegal dismissal by CALS

H: From the facts established, we are of the view that Alfredo Roco has not established convincingly that
he was dismissed. No notice of termination was given to him by CALS. There is no proof at all, except
his self-serving assertion, that he was prevented from working after the end of his leave of absence on
January 18, 1996. In fact, CALS notified him in a letter dated March 12, 1996 to resume his work. Both
the Labor Arbiter and the NLRC found that Alfredo, as well as Candelaria Roco, was not dismissed.
Their findings of fact are entitled to great weight.
With respect to Candelaria Roco, there is no dispute that she was employed on probationary basis. She

F: Respondent Salvador Salutin ["Salutin"] was employed by petitioner Jardine Davies, Inc. ["JDI"] on 15
July 1985, as a demonstrator/agronomist to provide services relating to, and to give advice on, the
promotion and use of JDI's pesticides and other products. The controversy that spawned two [2] special
civil actions for certiorari [this instance included] with this Court, began when respondent Salutin filed a
complaint against petitioner JDI for illegal dismissal, with prayer for reinstatement and backwages or, in
the alternative, separation pay plus wage differential, service incentive leave pay, thirteenth [13th] month
pay, holiday pay, moral and exemplary damages, and attorney's fees. The complaint was decided by the
Labor Arbiter in favor of respondent Salutin.

JDI appealed the case to the National Labor Relations Commission [NLRC], and it posted a
supersedeas bond to answer for the monetary awards. It also reinstated Salutin, "on payroll only",
beginning 26 August 1991, in compliance with the writ of execution issued by the Labor Arbiter pursuant
to Article 223, paragraph 3, of the Labor Code. In a Decision dated 17 October 1991, NLRC dismissed
JDI's appeal for lack of merit but modified the decision by eliminating the awards given for holiday pay,
service incentive leave pay, moral and exemplary damages. A motion for reconsideration was filed which
was denied in NLRC's resolution of 13 January 1992.

On 14 February 1992, JDI filed its first petition for certiorari with this Court, docketed as G. R. No.
103720, assailing the 17 October 1991 decision and the resolution of 13 January 1992 of respondent
Commission. In Our Resolution dated 26 February 1992, the petition was dismissed for failure to comply
with this Court's Circular No. 28-91 on forum-shopping. Its subsequent motion for reconsideration was
itself denied on 20 May 1992. The Resolution of 26 February 1992 became final and executory on 19
June 1992, and an entry of judgment was accordingly made on 20 August 1992.

At the time when the above narrated events were still unfolding, some material facts occured beginning
with JDI's appeal to the NLRC on the 08 August 1991 decision of the Labor Arbiter. Shortly after the
reinstatement of Salutin "on payroll only", JDI sent a letter dated 21 September 1991, to Salutin directing
him to report for work to their Bacolod Branch Manager. Salutin, as directed, reported on the 24th of
September 1991 at around 9:20 a.m. He did not stay long, however, since after fifteen minutes or so, he
left and was reported not to have thereafter returned for work. JDI forthwith stopped further payment of
salary to Salutin.

On 17 October 1991, JDI filed a "Manisfestation and Motion" with the respondent Commission stating
that Salutin be considered as having abandoned his work considering his continuous absence of more
than three (3) weeks since he was required to report for work and that any award for reinstatement to
his former position, without loss of seniority and other rights, in the Arbiter's decision subject of this
appeal be considered and held as waived or lost. Salutin opposed the motion, claiming that he was
forced to leave in haste because he was then suffering from a serious ailment. He submitted a medical
certificate to support his claim.

On 13 January 1992, respondent Commission denied JDI's "Manifestation & Motion" stating, among
other things as to the issue of whether the complaint-appellee Salvador Salutin is guilty of work
abandonment, this is a new and factual matter which has to be determined and resolved in appropriate
proceedings before the Arbitration Branch, more especially in the present case, where the charge of
abandonment is seriously controverted.

I: Is Salutin, who was then on payroll reinstatement since 26 August 1991, not guilty of abandonment
when his failure to report for work was because he was also working for another entity from 01
September 1991 to 31 December 1991? Correlatively, did respondent Commission not gravely abuse its
discretion when it did not take into consideration such other employment?

H: The answer is in the negative. The records show that at the time JDI filed its Manifestation and Motion
dated 17 October 1991, the sole basis of its prayer for a declaration that Salutin abandoned his work
was his alleged unauthorized absences from the date he was notified to report for work. A shift to a new
focus took place when, on 30 January 1992, JDI, at its request, received a letter-certification issued by
the Officer-in-Charge of King's Enterprises of Iloilo City that Salutin was employed by Monsato
Philippines, Inc., from 01 September to 31 December 1991, as Aggressive Crop Technician, for which he
was paid P5,146.00 per month. Thus, this was the reason given by JDI in its ex parte motion dated 16
June 1992, to set for hearing the Manifestation and Motion of 17 October 1991. NLRC denied the
said ex parte motion in the now assailed resolution of 22 July 1992.

When JDI filed its first petition for certiorari [in G. R. No. 103720] with this Court on 14 February 1992,
assailing the 17 October 1991 decision of NLRC, it also raised, as an added argument on the alleged
abandonment of work by Salutin, the fact that he was gainfully employed elsewhere. Considering that
this matter was thus already taken up by the petitioner in its first petition for certiorari, which this Court
dismissed with finality, the petitioner should really now be barred from invoking anew that issue in this
present [second] petition.

Be that as it may, the same fate of dismissal is still inevitable. Although this Court is not a trier of facts, it
may still wade through the records of a case if only to prevent any possible misgiving in its ultimate
disposition. The petitioner's evidence to establish Salutin's supposed abandonment of work is the
certification of employment issued by King's Enterprises at the request of herein petitioner to the effect
that Salutin had indeed been employed by Monsato Philippines, Inc., during the period from 01
September to 31 December 1991. For abandonment to constitute a valid cause for termination of
employment there must be a deliberate unjustified refusal of the employee to resume his employment.
This refusal must be clearly shown. Mere absence is not sufficient; it must be accompanied by overt acts
pointing to the fact that the employee simply does not want to work anymore.
Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts. In
this instance, however, certain uncontroverted facts show just exactly the opposite. Hence, Salutin did
report, as directed, on 24 September 1991, but that he could not stay long because he was ailing at that
time; he, although perhaps belatedly made, did seek medical consultation on 7 November 1991, at the
Corazon Locsin Montelibano Memorial Regional Hospital, for "peptic ulcer"; and on 11 December 1991,
he did, in fact, manifest his desire to assume his work with the petitioner.

This Court's Resolution of 26 February 1992, denying the petition in G. R. No. 103720, became final and
executory on 19 June 1992. Respondent Salutin's interim employment, stressed by the petitioner, did not
stain the picture at all. The petition is hereby dismissed.

GSP Manufacturing Corp. v. Cabanban | GR 150454 | July 14, 2006

F: Respondent Paulina Cabanban worked with petitioner GSP Manufacturing Corporation (GSP) as a
sewer from February 7, 1985 until her alleged termination on March 1, 1992. On June 16, 1992,
respondent filed with the National Labor Relations Commission (NLRC), National Capital Region
Arbitration Branch, a complaint against petitioners for illegal dismissal, non-payment of holiday pay,
service incentive leave pay and 13th month pay.
Respondent claimed she was terminated by petitioners because she failed to dissuade her daughter
from continuing her employment at the Sylvia Santos Company, a business competitor of petitioners. In
their defense, petitioners argued that respondent abandoned her work on March 14, 1992 and that they
reported this to the Department of Labor and Employment on May 15, 1992.
On May 7, 1993, labor arbiter Melquiades Sol D. del Rosario found petitioners guilty of illegal dismissal.
Petitioners appealed to the NLRC. On August 10, 1995, the NLRC issued a resolution affirming in
toto the decision of the labor arbiter. Hence, this petition.

served with a notice of petitioners memorandum terminating their services for abandonment of
work.

Petitioners, in their answer, denied respondents allegations. They claimed that on July 20, 1998, about
2:45 oclock in the afternoon, 13 rank-and-file employees staged a walk-out and abandoned their work.
Among them were respondents Wilfredo Toribio, Nida Toribio, Yolanda Lorenzo, Sorraya Amping, Vivian
Mendoza, Merylene Delos Reyes, Arnold Francisco, and Manuel Francisco. As a consequence,
petitioners business operations were interrupted and paralyzed, prompting them to issue a
memorandum suspending respondents for one week or from July 22 to 28, 1998. However, on July 24,
1998, petitioners, in another memorandum, directed them to report for work on July 27, 1998. Instead,
respondents Ernesto Etrata, Sorraya Amping, Yasher Taning, Yolanda Lorenzo, Merylene Delos Reyes,
and Wilfredo Toribio submitted their resignation letters and quitclaims. Subsequently or on July 28,
1998, petitioners sent respondents Arnold Francisco, Nida Toribio, Vivian Mendoza, and Manuel
Francisco a notice terminating their services for abandonment of work.

I: WON the findings of fact of the Court of Appeals were arrived at arbitrarily
H: The petition is without merit. As petitioners are well aware of, factual findings of the NLRC, particularly
when they are in agreement with those of the labor arbiter, are deemed binding and conclusive on this
Court. As long as their decisions are devoid of any unfairness or arbitrariness in their evaluation of the
evidence all that is left for us to do is stamp our affirmation and declare its finality. Having perused the
records, we find no such arbitrariness here.

On August 20, 1999, the Labor Arbiter rendered a Decision finding respondents guilty of unfair labor
practice (for dismissing petitioners illegally); and ordering them, jointly and severally, to pay
petitioners P843, 960.62.

We would like to reiterate some salient points laid down in our prior pronouncements concerning
abandonment of employment. Abandonment as a just ground for dismissal requires the deliberate,
unjustified refusal of the employee to perform his employment responsibilities. Mere absence or failure to
work, even after notice to return, is not tantamount to abandonment. The records are bereft of proof that
petitioners even furnished respondent such notice.

On appeal, the National Labor Relations Commission (NLRC) promulgated its Decision dated April 27,
2000 reversing the Labor Arbiters Decision and dismissing respondents complaint. Respondents then
filed a motion for reconsideration but were denied by the NLRC in a Resolution dated June 29, 2000.
Hence, they filed with the Court of Appeals a petition for certiorari. On November 29, 2001, the Appellate
Court rendered a Decision reversing and setting aside the NLRCs Decision and reinstating the Labor
Arbiters Decision. On December 21, 2001, petitioners filed a motion for reconsideration, but were
denied by the Appellate Court in a Resolution dated April 9, 2002.

Furthermore, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with
abandonment of employment. An employee who takes steps to protest his dismissal cannot logically be
said to have abandoned his work. The filing of such complaint is proof enough of his desire to return to
work, thus negating any suggestion of abandonment.

I: WON the CA erred in holding that petitioners failed to prove by substantial evidence that respondents
voluntarily resigned and/or abandoned their work.

Clearly, petitioners claim that respondents complaint was "an afterthought," having been filed a long
time after the date of the supposed abandonment, was utterly without merit. As the Court of Appeals
correctly pointed out, citing the case of Pare v. NLRC, respondent had four years within which to institute
her action for illegal dismissal. Compared to the six months it took the aggrieved employee in that case
to file his complaint for illegal dismissal, respondents 84 days was not unreasonably long at all. The
petition is hereby DENIED.

H: Voluntary resignation is defined as the act of an employee, who finds himself in a situation in which he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has
no other choice but to disassociate himself from his employment. Acceptance of a resignation tendered
by an employee is necessary to make the resignation effective. No such acceptance, however, was
shown in the instant case.

Shie Jie Corp. v. NFL, GR 153148, July 15, 2005

F: Respondents, in their complaint, alleged that they were employed as fish processors by petitioners.
On July 20, 1998, Sammy Yang and Michael Yang, petitioners, confronted them about their union
activities. Immediately, they were ordered to go home. The next day, petitioners suspended them for
one week effective July 22 to 28, 1998 (except respondent Wilfredo Toribio). Upon their return, they were

Moreover, the fact that respondents immediately filed a complaint for illegal dismissal against petitioners
and repudiated their alleged resignation completely negated petitioners claim that they voluntarily
resigned.

In Molave Tours Corporation vs. National Labor Relations Commission, it was held: By vigorously
pursuing the litigation of his action against petitioner, private respondent clearly manifested that he has
no intention of relinquishing his employment, which act is wholly incompatible to petitioners assertion
that he voluntarily resigned.

Neither do we find any indication that respondents have shown by some overt acts their intention to
sever their employment in petitioner company.

In this case, respondents did not report back for work on July 27, 1998 because they were suspended by
petitioners for one week effective July 22 to 28, 1998. Verily, their absence cannot be considered
abandonment of work, a just cause for termination of employment.

In fine, considering that respondents did not abandon their work, their dismissal from the service is
illegal. The petition is DENIED.
MARK ROCHE V NLRC 313 SCRA 356 BELLOSILLO; August 31, 1999
FACTS - On different dates, private respondents filed separatecomplaints for underpayment of wages
and non-payment ofovertime pay against petitioners Mark Roche International(MRI), Eduardo Dayot and
Susan Dayot. Private respondentssought the assistance of a labor organization which helpedthem
organize the Mark Roche Workers Union (MRWU).Apparently irked by the idea of a union within the
company,petitioners ordered private respondents to withdraw the petitionand further threatened them
that should they insist in theorganization of a union they would be dismissed. Unfazed,private
respondents refused. As expected, private respondentswere discharged from work. Petitioners
disclaimed knowledgeof any deficiency owing to private respondents since all thebenefits due them as
required by law were fully paid, exceptovertime pay which they were not entitled to on account oftheir
being piece-rate workers. The Labor Arbiter rendered hisdecision declaring as illegal the constructive
dismissal of privaterespondents and ordered their reinstatement, payment ofbackwages, salary
differentials and proportionate 13th monthpay and service incentive leave pay. On appeal, the
NationalLabor Relations Commission (NLRC) affirmed the decision of theLabor Arbiter, but set aside the
award of service incentive leave on the ground that private respondents were not entitledthereto as they
were piece-rate workers. Petitioners moved forreconsideration, but it was denied. Hence, the present
petition.
ISSUE: WON the dismissal of private respondents was a constructive dismissal or an illegal dismissal
HELD - Constructive dismissal or a constructive discharge has beendefined as a quitting because
continued employment isrendered impossible, unreasonable or unlikely, as an offerinvolving a demotion
in rank and a diminution in pay. In theinstant case, private respondents were not demoted in rank
northeir pay diminished considerably.They were simply toldwithout prior warning or notice that there was
no more work forthem.After receiving the notice of hearing of the petition forcertification election on 27
October 1992, petitioners immediately told private respondents that they were no longer employed.
Evidently it was the filing of the petition forcertification election and organization of a union within
thecompany which led petitioners to dismiss private respondentsand not petitioners' allegations of
absence or abandonment byprivate respondents.The formation of a labor union has never been a

ground for valid termination, and where there is anabsence of clear, valid and legal cause, the law
considers the termination illegal.
*** In case of employees money claims, the employer bears the burden to prove that employees have
received their wages and benefits and that the same were paid in accordance with law. It is incumbent
upon the employer to present the necessary documents to prove such claims. In their position paper,
petitioners failed to present necessary documentary evidence to substantiate their allegation that private
respondents money claims were fully paid. They cannot use the absence of trial as an excuse for their
failure as they could have presented documentary evidence at any time before the Labor Arbiter and, on
appeal, before the NLRC. Hence, they cannot at this late stage bewail that they were not afforded due
process.
As correctly held by the NLRC, private respondents as piece-rate employees are not entitled to service
incentive leave pay as well as holiday pay even if they are entitled to other benefits like COLA and 13th
month pay. Service incentive leave pay shall not apply to employees whose performance is
unsupervised by the employer, including those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof.[7]
This Court finds that private respondents Eileen Rufon, Lilia Briones, Beatriz Managaytay, Delia
Arellano, Anita Marcelo, Rio Mariano, Marissa Sadili, Wilma Patacay, Estrella Mallari, Delia Laroya and
Divina Villarba were illegally dismissed - not merely illegally constructively dismissed - by petitioners
Mark Roche International and/or Eduardo Dayot and Susan Dayot, and to this extent, the assailed
Decision of public respondent National Labor Relations Commission affirming that of the Labor Arbiter, is
MODIFIED. However, it is AFFIRMED insofar as it ordered the reinstatement of private respondents
with back wages, salary differentials and 13th month pay. The service incentive leave pay awarded by
the Labor Arbier but deleted by the National Labor Relations Commission is likewise DELETED.
E. RAZON, INC. [formerly known as Metro Services, Inc.], vs. THE HONORABLE SECRETARY OF
LABOR AND EMPLOYMENT (DOLE) and MARINA PORT SERVICES, INC. (MARINA), G.R. No.
85867 May 13, 1993
FACTS: ERI became Metro Port Services, Inc. (MPSI) in 1978 when parties close to then Presient
Marcos, specifically his brother-in-law, Alfredo "Bejo" Romualdez, allegedly coerced Enrique Razon, who
owned 93% of ERI's equity, into endorsing in blank stock certificates covering 60% of such equity. Upon
the expiration of the management contract in 1978, it was extented to June 30, 1980. The PPA then
executed a new contract with ERI/MPSI for a term of eight (8) years beginning July 1, 1980 two years
before the expiration of the eight-year term, the PPA cancelled the management contract for alleged
violations thereof. PPA took over the cargo-handling operations as well as all the equipment of MPSI.
PPA issued a Permit. The permit, which was to take effect for one-year period or until July 20,
1987, 1 contained the following pertinent paragraph as part of the additional terms and conditions: Labor
and personnel of previous operator, except those positions of trust and confidence, shall be absorbed by
grantee. Labor or employees benefits provided for under existing CBA shall likewise be honored.
MARINA began the arrastre services and required all workers of ERI/MPSI to accomplish individual
information sheets. Weeks later, the bulk of the 2,700 employees concerned discovered that they had
been hired by MARINA as new employees effective July 21, 1986. Hence, they clamored for the
payment of their separation pay but both the MARINA and ERI/MPSI refused to be liable therefor. In a
bid to prevent disruption of work, PPA authorized MARINA to deduct P2,000,000.00 from the amount
due the MPSI as MARINA's rentals for MPSI equipment, as partial payment of the employees'
separation pay

The employees who were members of the Associated Workers Union (AWU) filed a notice of strike on
October 12, 1987. This move prompted the PPA, MARINA, ERI, and representatives of the AWU,
Associated Port Checkers Workers Union (ASTEU), and Marina Management Employees (MARINE ME)
to meet and forge an Agreement on November 3, 1987 for the "immediate and reasonable resolution of
the long standing claim of separation benefits which resulted in impending labor strikes". The agreement
provided that the separation benefits would be computed at "one (1) month for every year of service".
MPSI then requested the Secretary of Labor and Employment to immediately assume jurisdiction over
the dispute to prevent paralyzation of the vital operations of the Port of Manila. Invoking Article 263(g) of
the Labor Code, then Secretary of Labor Franklin M. Drilon issued the order of December 23, 1987
holding that the labor dispute was "imbued with national interest" and ordering the striking workers to
return to work within 24 hours and the management to accept them back. He also directed the parties to
comply faithfully with the Agreement of November 3, 1987 and, pending the appraisal of the reasonable
rental and market value of the MPSI equipment, the amount of P5 million which the Presidential
Commission on Good Government (PCGG) had committed to unfreeze from the account of MPSI was
made available. He also directed the National Conciliation and Mediation Board to form a committee to
monitor and assist in the implementation of the November 3, 1987 Agreement.
The separation pay of the workers was later taken from the proceeds of the sale to PPA of ERI cargohandling equipment and the rentals from July 21, 1986 to January 29,1988 of MARINA for the said
equipment.
ISSUE: whether or not separation pay should be paid to the workers of ERI/MPSI. The controversy
actually is: which of the contending corporations, petitioner ERI/MPSI or private respondent MARINA,
should pay such benefit to the employees concerned.
RULING: Separation or severance pay is an allowance usually based on length or service that is
payable to an employee on severance except usually in case of disciplinary discharge, or as
compensation due an employee upon the severance of his employment status with the employer
(Marcopper Mining Corporation vs. NLRC, 200 SCRA 167 [1991]). Under Article 283 of the Labor Code,
separation pay is required where the termination of employment relationship is occasioned by the
"cessation of operations" of an establishment. The said article, therefore, puts the burden of paying
separation pay on ERI/MPSI, the employer for whom services had been rendered by the employees who
were separated from employment in view of the cessation of its business operations by the cancellation
of its management contract with the PPA. Petitioner, however, argues otherwise and would shift liability
for separation pay to MARINA on the strength of Paragraph 7 of the additional terms and conditions
appended to the permit to operate granted to MARINA.
By absorbing ERI/MPSI employees and honoring the terms and conditions in the collective bargaining
agreement between ERI/MPSI and the employees, MARINA did not assume the responsibility of
ERI/MPSI to pay separation pay to its employees. As correctly put by public respondent, Paragraph 7,
insofar as it refers to employees' benefits, should be applied prospectively with respect to MARINA. This
conclusion is supported by Paragraph 14 of Permit No. 104286 granted to MARINA which states: 14.
Grantee shall be responsible for all obligations, liabilities or claims arising out of any transactions or
undertakings in connections with their cargo handling operations as of the actual date of transfer thereof
to grantee.
MARINA might have been impelled not only by compassion for the employees but also by their tested
skills in hiring them back upon their separation from the employment of ERI/MPSI.

The situation in this case is completely different from that obtaining in Filipinas Port Services, Inc. vs.
NLRC (200 SCRA 773 [1991]), where the petitioner was obligated "not only to absorb the workers of the
dissolved companies but also to include the length of service earned by the absorbed employees with
their former employers as well" because said case involved a merger of different companies into a single
company as a result of the PPA's integration of stevedoring/arastre services. On the other hand, in the
case at bar, there is no privity of contract between ERI/MPSI and MARINA so as to make the latter a
common or even substitute employer that it should be burdened with the obligations of the former.
DISMISSED.
CENTRAL PHILIPPINES BANDAG RETREADERS, INC., VS. PRUDENCIO J. DIASNES. [G.R. No.
163607, July 14, 2008]
FACTS: Respondent Prudencio J. Diasnes was initially hired by petitioner Central Philippines Bandag
Retreaders, Inc. (Bandag) as technical service representative for the Visayas and Bicol areas. In the
course of his employment with Bandag, Diasnes was able to show his strengths and received numerous
awards and citations. In 1995, Diasnes received a promotional appointment as sales manager/officer-incharge and was assigned to manage Eastern Visayas Retreaders, Inc. based in Tacloban City, with a
service area covering the whole of Region VIII.
It was at this latest posting that Diasnes' work performance started to deteriorate. From July to
September in 1995, six (6) company-issued checks were dishonored for causes attributable to Diasnes
and for which he was suspended for six (6) days. It was also during this two-month stretch that his
absences and tardiness became more frequent.

Diasnes received a memorandum from his supervisor, Loreto C. Rico, relieving him from his duties as
sales manager of Region VIII. Two days after, Diasnes received a notice to appear before the Employee
Adjudication Committee on January 9, 1996 to resolve the matter of his relief. After the meeting, the
committee issued the following report and recommendations: The committee unanimously agreed that
SM-OIC Prudencio Diasnes be: Relieved for three (3) months. This will give him enough time to help his
wife's problem; After the period lapsed he may return to work, but with another position or function; if he
desire[s] to retire from the company separation/retirement pay may be granted to him.
Diasnes, however, did not avail himself of any of the options set forth in the committee's report and
recommendations, but requested a Cebu City assignment which his employer granted. In Cebu City,
Diasnes' performance as sales supervisor was far from encouraging. His attendance and punctuality
were likewise very poor. To top it all, Diasnes did not at all report for work from October 12, 1996 to
November 11, 1996. Bandag, through supervisor Rico, addressed a show-cause letter-memorandum to
Diasnes: SUBJECT: Habitual tardiness and Absenteeism. Then, he was terminated.
ISSUE: WHETHER OR NOT A VALIDLY AND LEGALLY SEPARATED EMPLOYEE MAY BE ENTITLED
TO SEPARATION PAY.
RULING: The petition has merit. We agree with Bandag that the report of its Employee Adjudication
Committee recommending the grant to Diasnes of separation pay in case he opts to retire or voluntarily
leave the company was merely in the nature of an offer. Contrary to the perception of the labor arbiter
and the CA, the offer was not an open-ended arrangement which Diasnes was free to accept or reject
when convenient.
We also agree with the NLRC's October 29, 1999 Decision where it held that Diasnes failed to prove that
Bandag regularly grants separation pay to dismissed employees, as a policy, and without regard as to
the cause of dismissal. Absent substantial proof to the contrary, we refuse to disturb the factual findings
of the NLRC. LA erred in awarding separation pay based on social justice.

The only cases when separation pay shall be paid, although the employee was lawfully dismissed, are
when the cause of termination was not attributable to the employee's fault but due to: (1) the installation
of labor saving devices, (2) redundancy, (3) retrenchment, (4) cessation of employer's business, or (5)
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 (Articles 283 and 284, Labor Code.) Other
than these cases, an employee who is dismissed for a just and lawful cause is not entitled to separation
pay even if the award were to be called by another name.[10]
Separation pay is likewise awarded in lieu of reinstatement if reinstatement is no longer feasible, as
when the relationship between the employer and employee has become strained.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law
must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if
he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his
offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really
sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation
is changed completely. This is not only inefficiency but immorality and the grant of separation pay would
be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.
The attendant circumstances in the present case considered, we are constrained to deny Diasnes
separation pay since the cause for the termination of his employment amounts to gross and habitual
neglect of his duties. His repeated and continuous absences without prior leave and his frequent
tardiness within the last two months prior to his dismissal exemplify his utter disregard for his
employment and his employer's interest. Diasnes' character is also put into question if we take into
consideration that he should have been dismissed as early as January 1996, if not for Bandag's
benevolence and goodwill. It is unthinkable to award separation pay or financial assistance to an
unworthy employee who exploited and took advantage of his employer's past generosity and
accommodation. REVERSED and SET ASIDE.
CENTRAL PHILIPPINES BANDAG RETREADERS, INC. vs.PRUDENCIO J. DIASNES (G.R. No.
163607, July 14, 2008) which deals with Separation Pay.
The issue in this case was WHETHER OR NOT A VALIDLY AND LEGALLY SEPARATED EMPLOYEE
MAY BE ENTITLED TO SEPARATION PAY. In resolving said issue the Supreme Court gave a very
helpful discussion of the topic, the main points of which I shall try to outline below:
1. Definition of separation pay. Separation pay is defined as the amount that an employee receives at
the time of his severance and is designed to provide an employee with the wherewithal during the period
he is looking for another employment.
2. When is separation pay authorized? a) In situations dealt with in Art. 283 (Closure of Establishment
and Reduction of Personnel) and 284 (Disease as Ground for Termination) of the Labor Code, but not in
terminations of employment based on instances enumerated in Art. 282 (Just Causes for Termination by
Employer). As held by the Court in Eastern Paper Mills, Inc. v. NLRC (February 24, 1989)

The only cases when separation pay shall be paid, although the employee was lawfully dismissed, are
when the cause of termination was not attributable to the employees fault but due to:
(1) the installation of labor saving devices, (2) redundancy, (3) retrenchment, (4) cessation of employers
business, or (5) 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 (Articles 283 and
284, Labor Code.) Other than these cases, an employee who is dismissed for a just and lawful cause is
not entitled to separation pay even if the award were to be called by another name.
b) In lieu of reinstatement if reinstatement is no longer possible, as when the relationship between the
employer and employee has become strained.
c) In some cases, as a measure of social justice. As held by the Court in PLDT vs. NLRC (August 23,
1988)
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social justice.
In the above-mentioned case the SC concluded its discussion of separation pay with these strong words:
It is unthinkable to award separation pay or financial assistance to any unworthy employee who
exploited and took advantage of his employers past generosity and accomodation. Thus, it denied
Diasnes separation pay since the cause for the termination of his employment amounts to gross and
habitual neglect of his duties.*
PHILIPPINE DAILY INQUIRER, INC., v. LEON M. MAGTIBAY, JR. and PHILIPPINE DAILY INQUIRER
EMPLOYEES UNION (PDIEU), July 24, 2007
FACTS: PDI hired Magtibay, on contractual basis, to assist, for a period of five months from February 17,
1995, the regular phone operator. Before the expiration of Magtibays contractual employment, he and
PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July 31, 1995, under the
same conditions as the existing contract.
After the expiration of Magtibays contractual employment, as extended, PDI announced the creation
and availability of a new position for a second telephone operator who would undergo probationary
employment. Apparently, it was PDIs policy to accord regular employees preference for new vacancies
in the company. Thus, Ms. Regina M. Layague, a PDI employee and member of respondent PDI
Employees Union (PDIEU), filed her application for the new position. However, she later withdrew her
application, paving the way for outsiders or non-PDI employees, like Magtibay in this case, to apply.
After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a
probationary basis for a period of six (6) months. The signing of a written contract of employment
followed. A week before the end the agreed 6-month probationary period, PDI officer Benita del
Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet company
standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and damages before
the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for unfair labor practice.
Magtibay anchored his case principally on the postulate that he had become a regular employee by
operation of law, considering that he had been employed by and had worked for PDI for a total period of
ten months, i.e., four months more than the maximum six-month period provided for by law on

probationary employment. He also claimed that he was not apprised at the beginning of his employment
of the performance standards of the company, hence, there was no basis for his dismissal. Finally, he
described his dismissal as tainted with bad faith and effected without due process.
PDI, denied all the factual allegations of Magtibay, adding that his previous contractual employment was
validly terminated upon the expiration of the period stated therein. Pressing the point, PDI alleged that
the period covered by the contractual employment cannot be counted with or tacked to the period for
probation, inasmuch as there is no basis to consider Magtibay a regular employee. PDI additionally
claimed that Magtibay was dismissed for violation of company rules and policies, such as allowing his
lover to enter and linger inside the telephone operators booth and for failure to meet prescribed
company standards which were allegedly made known to him at the start through an orientation seminar
conducted by the company.
LA found for PDI and accordingly dismissed Magtibays complaint for illegal dismissal. LA further
ruled that Magtibays dismissal from his probationary employment was for a valid reason.
ISSUE: THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A
PROBATIONARY EMPLOYEES FAILURE TO FOLLOW AN EMPLOYERS RULES AND
REGULATIONS CANNOT BE DEEMED FAILURE BY SAID EMPLOYEE TO MEET THE
STANDARDS OF HIS EMPLOYER THUS EMASCULATING PETITIONERS RIGHT TO
CHOOSE ITS EMPLOYEES.
RULING: We GRANT the petition. This Court, to be sure, has for a reason, consistently tended to be
partial in favor of workers or employees in labor cases whenever social legislations are involved.
Management and labor, or the employer and the employee are more often not situated on the same
level playing field, so to speak. Recognizing this reality, the State has seen fit to adopt measures
envisaged to give those who have less in life more in law. Article 279 of LC which gives employees the
security of tenure is one playing field leveling measure: Security of Tenure. In cases of regular
employment, the employer shall not terminate the services of an employee except for a just cause or
when authorized by this Title. x x x.
Within the limited legal six-month probationary period, probationary employees are still entitled
to security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary
employee may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement.
Magtibay had previously worked for PDI as telephone operator from February 7, 1995 to July 31,
1995 as a contractual employee. Thus, the Court entertains no doubt that when PDI took him in on
September 21, 1995, Magtibay was already very much aware of the level of competency and
professionalism PDI wanted out of him for the entire duration of his probationary employment.
PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a permanent
basis upon the expiration of the six-month probationary period. This was established during the
proceedings before the labor arbiter and borne out by the records and the pleadings before the
Court. When the NLRC disregarded the substantial evidence establishing the legal termination of
Magtibays probationary employment and rendered judgment grossly and directly contradicting such
clear evidence, the NLRC commits grave abuse of discretion amounting to lack or excess of
jurisdiction. It was, therefore, reversible error on the part of the appellate court not to annul and set
aside such void judgment of the NLRC. REVISED and SET ASIDE.
KAMS INTERNATIONAL INC., ESVEE APPAREL MFG. INC., and/or THANWARDASH JESWANI and
KAMLESH JESWANI, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, FIRST
DIVISION, and MERCEDITA T. TORREJOS, respondents. [G.R. No. 128806. September 28, 1999]

FACTS: KAMS and ESVEE are sister companies engaged in garments manufacturing located at 201-E
De La Paz Street, Mandaluyong City. Both are managed by petitioner Thanwardash Jeswani and his
son, his co-petitioner Kamlesh Jeswani.
ESVEE hired private respondent Mercedita T. Torrejos as a utility worker in the factory. Torrejos
performed her assigned task dutifully, and the Jeswanis were very much pleased with her work. The
management discovered a shortage in the inventory of KAMS. Consequently, stricter security measures
were implemented and each employee was thoroughly inspected before leaving company premises.
Private respondent's personal travails started in August of 1994 when she bought six (6) yards of fabric
from petitioners. In order to bring the purchased fabric out of the factory she had to secure a gate pass
and present it to the security guard on duty at the gate. When security guard Nena Blancaflor inspected
the fabric and measured it using her arms, she estimated the length to be eight (8) yards instead of six
(6) yards as indicated in the gate pass.[2] Torrejos was then made to sign the security logbook which
stated that Mercy Torrejos tried to bring-out two (2) yards of tela.[3] However, both parties gave
conflicting versions of the events that happened after.
According to petitioners, Torrejos admitted to Thanwardash Jeswani that she had made a mistake in
measuring the fabric and promised to pay for the difference. Thereafter, Thanwardash Jeswani
accompanied Torrejos to the gate and instructed the security guard to permit her to leave the premises.
Torrejos asseverated that there was really no excess yardage in the fabric she bought. According to her,
after the fabric was re-measured, it was confirmed that it was only six (6) yards. Thus, Thanwardash
Jeswani eventually allowed her to go home.[5]
Nonetheless, what stands out in the records of the case is the fact that security guard Nena Blancaflor
admitted before the Labor Arbiter that her measurement of the fabric was inaccurate considering that
she used only her arms, instead of an actual yardstick.[6] Moreover, no disciplinary action was ever taken
by management against Torrejos with regard to the purported pilferage. Thus, Torrejos continued
performing her duties and responsibilities even after the alleged misdemeanor. But on 3 October 1994
she failed to report for work because she had sore eyes. She instructed her sister Antonia, who also
worked for petitioners, to inform the Jeswanis that she would be absent that day. When Antonia arrived
from work later that day, she told private respondent that management had decided to terminate her
services. To verify this, Torrejos called up Kamlesh Jeswani at his office. The latter instructed her to talk
to his father instead. It was Thanwardash Jeswani who later confirmed through the telephone that she
had indeed been terminated because of abandonment of work.
Torrejos decided to go to petitioners office, but she was barred by the security guard from entering the
company premises. The Jeswanis refused to talk to her personally; they only informed her through the
telephone that she had been terminated effective 3 October 1994 for abandonment of work. Torrejos
filed a complaint for illegal dismissal against petitioners with the arbitration branch of the (NLRC)
Manila. She prayed for the payment of salary differential, service incentive leave pay, 13th month pay
for 1994, moral and exemplary damages, and attorneys fees. = ILLEGALLY DISMISSED.
ISSUE: whether Torrejos was illegally dismissed and whether the monetary award for salary differential
was correctly computed by the NLRC.
RULING: It cannot be overly emphasized that the dismissal of an employee should be for any of the just
and authorized causes enumerated in the Labor Code.[18] And since petitioners utterly failed to justify
Torrejos discharge on the basis of abandonment of work, we do not hesitate to strike it down as
illegal. Furthermore, it must be stressed that abandonment of work does not per se sever the employeremployee relationship. It is merely a form of neglect of duty, which is in turn a just cause for termination
of employment. The operative act that will ultimately put an end to this relationship is the dismissal of
the employee after complying with the procedure prescribed by law.[19]

As frequently held by the Court, the termination of an employee must be effected in accordance with
law. Therefore the employer must furnish the worker or employee sought to be dismissed with two (2)
written notices, i.e., (a) notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and, (b) subsequent notice which informs the employee of the employers
decision to dismiss him.[20] Rule XIV, Sec. 2, of the Omnibus Rules Implementing the Labor
Code provides - Sec. 2. Any employer who seeks to dismiss a worker shall furnish him a written notice
stating the particular acts or omission constituting the grounds for his dismissal. In case of
abandonment of work, the notice shall be served at the workers last known address (emphasis
supplied).
However, it must be mentioned that no written notice was ever sent by petitioners informing Torrejos that
she had been terminated due to abandonment of work. This failure on the part of petitioners to comply
with the twin-notice requirement indeed underscored the irregularity surrounding Mercedita T. Torrejos
dismissal.
As to the issue of salary differential, petitioners plead that the underpayment (salary differential) was
computed when Torrejos was then a housemaid and not an industrial worker. Consequently, the NLRC
gravely abused its discretion when it ruled that Torrejos was an industrial worker when she was still a
housemaid.[21] Petitioners cite the resolution of the NLRC dated 7 February 1997 where it held that anent
the amount of salary differential due Torrejos, there being evidence that she worked as an alternate from
January to May 1993, salaries received being in accord with the rates prescribed by law corresponding
to that period, a reduction of the claim was thus justified under such circumstances.[22] This indicates that
before January 1993 Torrejos was indeed hired as a domestic employee and not an industrial employee,
as she pretended to be. Thus, according to petitioner, the minimum wage law cannot be applied to
Torrejos before January 1993 since at that time she was still a domestic employee.
We do not agree. Contrary to what petitioners claim, the only conclusions that can be gleaned from the
NLRC Resolution of 7 February 1997 are: (a) that Torrejos only worked two (2) to four (4) days a week
from January 1993 to May 1993; (b) that during this period she was paid the legal minimum wage; and,
(c) that, consequently, the earlier award of salary differential of P23,075.00 must accordingly be reduced
to P18,603.00. Indeed, there is nothing in the Resolution from which we can logically infer that Torrejos
was truly a domestic helper prior to January of 1993.
As the employer of private respondent, petitioner ESVEE had the burden of proving that Torrejos was
hired only as a domestic helper on 21 July 1991 and that it was only on 21 January 1993 that she was
absorbed by petitioner ESVEE as an industrial employee. However, petitioners failed to discharge such
burden. The records are bereft of any evidence showing that Torrejos was initially hired by petitioners as
a domestic helper so as to preclude the application of the minimum wage law. DISMISSED.

Jo vs. NLRC 324 SCRA 437 February 2, 2000

FACTS: Peter Mejila was a barber employed by a barbershop. Peter Mejila worked as barber on a piece
rate basis at Dinas Barber Shop. In 1970, the owner, Dina Tan, sold the barbershop to petitioners Paz
Martin Jo and Cesar Jo. All the employees, including private respondent, were absorbed by the new
owners. The name of the barbershop was changed to Windfield Barber Shop. The owners and the
barbers shared in the earnings of the barber shop. The barbers got two-thirds (2/3) of the fee paid for
every haircut or shaving job done, while one-third (1/3) went to the owners of the shop.
The owners of the shop attempted to mediate in the incessant squabbling between Mejila and a fellow
employee. Mejila then unilaterally demanded his separation pay and other benefits, despite his
employers'assurances that he was not being dismissed. He then turned over the duplicate keys of the

shop(which he held as caretaker) to the cashier and took all his personal belongings from his work
place, and found similar employment in another shop. He then filed a complaint for illegal dismissal.
ISSUE: 1. Whether or not there exists an employer-employee relationship between petitioners and
private respondent. 2. Whether or not private respondent was dismissed from or had abandoned his
employment.

HELD: (1) Absent a clear showing that petitioners and private respondent had intended to pursue a
relationship of industrial partnership, we entertain no doubt that private respondent was employed by
petitioners as caretaker-barber. Initially, petitioners, as new owners of the barbershop, hired private
respondent as barber by absorbing the latter in their employ. Undoubtedly, the services performed by
private respondent as barber is related to, and in the pursuit of the principal business activity of
petitioners. Later on, petitioners tapped private respondent to serve concurrently as caretaker of the
shop. Certainly, petitioners had the power to dismiss private respondent being the ones who engaged
the services of the latter.
(2) He abandoned his work. This was manifested by: His having bragged to fellow workers his intention
to quit his work in the shop; his surrender of the shop's keys and his taking all of his personal belongings
from the said place; his failure to report for work and not giving any valid reason for such; he acquired
employment in another shop immediately, despite reassurance that he could stay in his old place of
work; and finally, his complaint for illegal dismissal did not include a prayer for reinstatement. All of these
show concurrence of the intent to abandon his work and overt acts that show his lack of interest in
continuing his work. GRANTED.
HANTEX TRADING CO., INC., and/or MARIANO CHUA, vs. CA, Special Former Tenth Division, and
BERNARDO SINGSON.
FACTS: Private respondent Bernardo Singson was employed by petitioner Hantex Trading Co., Inc.
(HANTEX) on 8 November 1994 as sales representative. HANTEX was engaged in selling laminating
machines and ID supplies. He was paid a regular salary of P165.00/day in addition to P500.00 travelling
allowance and a 3% - 5% commission from his sales. Sometime in February 1996 the management of
HANTEX called the attention of Singson regarding his deteriorating sales performance. Despite thereof,
Singson's performance showed no sign of improvement as it remained inadequate and
unsatisfactory. Thus, HANTEX, through its president, petitioner Mariano Chua, held a "one-onone" conference with him on 5 August 1996.
The parties presented conflicting versions of what actually transpired during the conference. Singson
alleged that petitioner Mariano Chua asked for his resignation from the company, and required him to
submit a resignation letter otherwise his separation pay, 13th month pay and other monetary benefits
would not be paid. When he refused, petitioner Mariano Chua ejected him from the premises of
HANTEX and left instructions to the guards on-duty to refuse him admittance.
Petitioners denied that they dismissed Singson and maintained that the conference was merely intended
to motivate him "to exert more effort in his job and mend his work attitude;" and that Singson apparently
resented petitioner Chua for it that he never reported back for work after the conference.
Singson filed a complaint with the Labor Arbiter for illegal dismissal with prayer for reinstatement
asserting that he was dismissed from his employment without prior notice and hearing.[2] On the contrary,
HANTEX averred that Singson was not dismissed but abandoned his job after he was reprimanded. LA:
illegally dismissed. NLRC: affirmed. CA: denied.

ISSUE: whether private respondent Bernardo Singson deliberately abandoned his employment, or was
illegally dismissed by the management of petitioner HANTEX.
RULING: DENIED. Considering the hard times in which we are in, it is incongruous for respondent to
simply give up his work after receiving a mere reprimand from his employer. No employee would
recklessly abandon his job knowing fully well the acute unemployment problem and the difficulty of
looking for a means of livelihood nowadays. With a family to support, we doubt very much
that respondent would so easily sacrifice his only source of income and unduly expose his family to
hunger and untold hardships. Certainly, no man in his right mind would do such thing.
What is more telling is that on 8 June 1996, or three (3) days after his employment was terminated,
respondent immediately instituted the instant case for illegal dismissal with a prayer for reinstatement
against his employer. An employee who loses no time in protesting his layoff cannot by any reasoning
be said to have abandoned his work, for it is already a well-settled doctrine that the filing by an employee
of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of his desire to return
to work, thus negating the employer's charge of abandonment. Verily, it would be illogical for respondent
Singson to have left his job and thereafter file the complaint against his employer.
Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. For
abandonment to exist, it is essential (a) that the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and, (b) that there must have been a clear intention
to sever the employer-employee relationship manifested by some overt acts - the second element is the
more determinative factor. Mere absence of the employee is not sufficient. The burden of proof is on
the employer to show a clear and deliberate intent on the part of the employee to discontinue
employment without any intention of returning.
PANTRANCO NORTH EXPRESS, INC. vs. (NLRC) and ALFONSO AYENTO, SR. G.R. No. 106516
September 21, 1999
FACTS: Pantranco implemented a job classification program for purposes of manpower reduction.
Under the old job classification of employees, salaries ranged from salary grades 1 to 23. In the new
program, the salary grades were reclassified. Private respondent, Ayento, was an employee of petitioner.
He started as a filing clerk and promoted to Head Registration Section on April 1, 1982. Private
respondent's position as Head of the Registration Section had a Salary Grade of 11-R-5 with a basic
salary of P1,320.00. Based on his Salary Grade of 11, private respondent's ranking was that of a
Technical Assistant. With the company's reorganization, positions were reclassified and restructured.
Private respondent's position was abolished. Consequently, he was appointed as Registration Assistant
with a Salary Grade of 9-R-2. The basic salary was increased from P1,320.00 to P1,855.00. As a
Registration Assistant, he actually was relieved of his supervisory function, no longer had any field work,
nor entitled to overtime pay averaging from P700.00 to P800.00. His representation expenses and
discretionary funds of P1,000.00 were also cancelled. He received instead a fixed amelioration
allowance of P350.00.
Private respondent filed a Complaint against petitioner for unfair labor practice. It specifically alleged
demotion of position and diminution of salary and benefits. Respondent company, on the other hand,
argued that there was no demotion but a job-reclassification where petitioner's position was abolished
due to the company's financial problems. LA ruled in favor of private respondent. NLRC affirmed.
ISSUE: Right or prerogative of management to abolish a position no longer necessary as a result of a
valid reorganization.

RULING: (OSG) contends that private respondent's position was not truly abolished and the
reorganization was a mere ploy to accommodate petitioner's own protege. We are unable to agree with
both the Labor Arbiter and the Commission. The State affords the constitutional blanket of rendering
protection to labor, but it must also protect the right of employers to exercise what are clearly
management prerogatives, so long as the exercise is without abuse of discretion. It is a well-settled rule
that labor laws discourage interference with an employer's judgment in the conduct of his
business. 17 Absent any unfair or oppressive act against private respondent, the Court cannot and should
not interfere with management decisions validly undertaken by petitioner. To do so would be meddling
with the control and management of the corporation without legal justification.
Private respondent has not shown concretely any arbitrary act and bad faith on the part of the petitioner.
Neither could he show persuasively that the reorganization was effected to remove unwanted employees
and replace them with favored ones, rather than purposely to show up its devastated finances through
reorganization, retrenchment and cost-cutting. GRANTED.
Hyatt Taxi Services, Inc. v. Catinoy June 26, 2001
FACTS: Catinoy was a taxi driver of Hyatt Taxi Services, Inc. He is also a member and officer ofHyatt
Taxi Employees Association, a legitimate labor organization registered with the DOLE andis the
exclusive bargaining representative of all taxi drivers of the company. One day he foundout that his desk
was forcibly opened and he found out that it was the acting union presidentwho opened it so an
argument began that ended in blows where he was injured so he filed acriminal complaint against the
president. The union asked the company to suspend them bothfor fighting and a memo was issued. It
said that company rules and the unions by-laws hadbeen violated so they were put on indefinite
suspension. Catinoy then filed a complaint for illegalsuspension. After 30 days of suspension, he
reported for work but he was not allowed to bec ofthe 2 cases he filed. He then amended his complaint
to constructive dismissal. The LA ruled thatthere was illegal dismissal and the NLRC affirmed it but did
not award backwages bec therewas no concrete showing of illegal dismissal and it was only constructive
illegal dismissal. TheCA reversed it and ruled that there was illegal dismissal and awarded full
backwages.
ISSUE: W/N there was illegal dismissal or constructive dismissal.
HELD: The SC ruled that there was illegal dismissal, not merely constructive dismissal. Therewas no
justification for the deletion of the award of backwages. The factual findings of the LA,which the NLRC
initially adopted, show that respondent was not taken back after the 30-daysuspension. The LA
appreciated the events as badges of constructive dismissal. Constructivedismissal is when the employee
wants to work but cannot due to the prevailing conditions. Buthere, what made it impossible or
unacceptable for respondent to resume work was aninsistence that he first desist from filing his
complaints before he be allowed to return. Herefused and amended his complaint to include constructive
dismissal. His refusal to yield isunderstandable for he has every right not to bargain away his right to
prosecute his complaintsin exchange for the employment to which he was in the first place rightfully
entitled.
Jo Cinema v. NLRC June 28, 2001
FACTS: Petitioner is in the movie business. Respondent was a theater porter. A memo wasissued saying
that no checks should be encashed but respondent, for her friend, encashedwithout permission 4 checks
with the ticket seller. The checks bounced so she was asked toshow cause why she shouldnt be
disciplined but she didnt answer so she was preventivelysuspended. An investigation was held where
she participated in. During the investigation shefiled a case for illegal dismissal bec when she was
suspended, she was allegedly terminatedalso. The LA and NLRC ruled that there was illegal dismissal or

at least constructive dismissaland ordered separation pay and full backwages. The LA ruled that since
the company insisted on making her pay the amount she couldnt come back to work even if she wanted
to. The NLRC ruled that even though respondent had no cause of action against the company as
shewas merely placed on preventive suspension she was still illegally dismissed.
ISSUE: W/N respondent was illegally dismissed
HELD: It is clear that respondent was not dismissed but merely placed under preventivesuspension. It
cannot be construed as dismissal since the cessation from work is onlytemporary. She could not have
been dismissed because a formal investigation was still beingconducted. She even attended the
investigation admitted the allegations. If she was indeeddismissed the investigation wouldnt have
continued. There was also no constructive dismissal.
Constructive discharge is quitting because continued employment is rendered impossible,unreasonable
or unlikely. This does not hold. The demand for payment out of her own pocketswas reasonable as it
was attributed to her. As she was not illegally dismissed, separation payand backwages are not in order.
TEMPORARY RETRENCHMENT: SEBUGERO V NLRC (GTI SPORTSWEAR) 248 SCRA 532 DAVIDE
JR; September 27, 1995. NATURE: Special civil action for certiorari
FACTS: Petitioners were among the thirty-eight (38) regular employees of private respondent GTI
Sportswear who were given "temporary lay-off"notices due to alleged lack of work andheavy losses
caused by the cancellation of orders from abroad and by the garments embargo. Believing that their
"temporary lay-off" was a ploy to dismiss them, resorted to because of theirunion activities and was in
violation of their right to security of tenure, laid-off employees filed complaint with Labor Arbiter.
-GTI denied the claim of illegal dismissal and asserted that itwas its prerogative to lay-off its employees
temporarily for a period not exceeding six months to prevent losses, and that thelay-off affected both
union and non-union members. It justified its failure to recall the 38 laid-off employees after the lapse
ofsix months because of the subsequent cancellations of job orders made by its foreign principals.
-22 of the 38 complainants accepted the separation pay.The petitioners herein did not.
- LA said there was justification to lay-off temporarily some employees.That their principals transferred
their orders were proven by correspondence. Although, as a general rule,Respondent company has the
prerogative and right to resort totemporary lay-off, such right is likewise limited to a period of six(6)
months applying Art. 286.However, Respondent companyshould have recalled them after the end of the
six month periodor at the least reasonably informed them (complainants) thatthe Respondent company
is still not 'in a position to recall them,and if the same cannot be met, then the company shouldimplement
retrenchment and pay its employees separation pay.Hence, there is in this complaint a clear case of
constructivedismissal.Reinstatement is not prudent, separation pay is inorder.
- GTI appealed to NLRC.NLRC concurred with the findings ofthe Labor Arbiter that there was a valid layoff of the petitionersdue to lack of work, but disagreed with the latter's rulinggranting back wages.NLRC
said that having established lack of work, it follows that retrenchment took place and notconstructive
dismissal. - Petitioners filed this action.
ISSUES: 1. WON the ground for termination of employment was redundancy 2.WON termination was
legal
HELD 1.NO, the ground in this case is retrenchment.
- Redundancy exists where the services of an employee are inexcess of what is reasonably demanded
by the actualrequirements of the enterprise.
- Retrenchment on the other hand, is used interchangeably withthe term "lay-off." It is the termination of
employment initiatedby the employer through no fault of the employee's and withoutprejudice to the
latter, resorted to by management duringperiods of business recession, industrial depression, or
seasonalfluctuations, or during lulls

2.YES, it is legal, but it is defective. - Six months is the period set by law that the operation of abusiness
or undertaking may be suspended thereby suspendingthe employment of the employees concerned.
The temporarylay-off wherein the employees likewise cease to work shouldalso not last longer than six
months. After six months, theemployees should either be recalled to work or permanentlyretrenched.
- Failing to comply with this would be tantamount to dismissingthe employees and the employer would
thus be liable for suchdismissal.
- We must determine whether there was compliance with thelaw regarding a valid retrenchment at
anytime within the sixmonth-period that they were temporarily laid-off.Three basicrequisites for valid
retrenchment:
- it is necessary to prevent losses and losses are proven - written notice to employees and DOLE at
least 1 mo prior to intended date of retrenchment - separation pay
- Here, both the Labor Arbiter and the NLRC found that theprivate respondent was suffering and would
continue to sufferserious losses.
- In this case, it is undisputed that the petitioners were givennotice of the temporary lay-off. There is,
however, no evidencethat any written notice to permanently retrench them was givenat least one month
prior. There is also nothing in the records toprove that a written notice was ever given to the DOLE.
- With respect to the payment of separation pay, the NLRCfound that GTI offered to give the petitioners
their separation pay but that the latter rejected such offer which was accepted only by 22 out of the 38
original complainants.
-CONCLUSION:RETRENCHMENT IS DEFECTIVE IN THE FACE OFFINDING THAT REQUIRED
NOTICES TO PETITIONERS AND DOLEARE NOT GIVEN.But this doesnt make the
retrenchment illegal. -Where the dismissal of employee is for just cause and isproven to be but he is not
accorded right to due process, dismissal is upheld but employer must be sanctioned for non-compliance.
ORIGINAL DISCUSSION OF RULING: Under the aforequoted Article 283 of the Labor Code, there are
three basic requisites for a valid retrenchment: (1) the retrenchment is necessary to prevent losses and
such losses are proven; (2) written notice to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment; and (3) payment of
separation pay equivalent to one month pay or at least 1/2 month pay for every year of service,
whichever is higher.
As for the first requisite, whether or not an employer would imminently suffer serious or substantial
losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to
determine. 14 Both LA and the NLRC found that the private respondent was suffering and would continue
to suffer serious losses, thereby justifying the retrenchment of some of its employees, including the
petitioners. In the instant case, no claim was made by any of the parties that such a finding was not
supported by substantial evidence. Furthermore, the petitioners did not appeal the finding of the Labor
Arbiter that their temporary lay-off to prevent losses was amply justified. They cannot now question this
finding that there is a valid ground to lay-off or retrench them.
The requirement of notice to both the employees concerned and the (DOLE) is mandatory and must be
written and given at least one month before the intended date of retrenchment. In this case, it is
undisputed that the petitioners were given notice of the temporary lay-off. There is, however, no
evidence that any written notice to permanently retrench them was given at least one month prior to the
date of the intended retrenchment. The NLRC found that GTI conveyed to the petitioners the
impossibility of recalling them due to the continued unavailability of work. 17 But what the law requires is
a written notice to the employees concerned and that requirement is mandatory. 18 The notice must also
be given at least one month in advance of the intended date of retrenchment to enable the employees to
look for other means of employment and therefore to ease the impact of the loss of their jobs and the
corresponding income. 19 That they were already on temporary lay-off at the time notice should have

been given to them is not an excuse to forego the one-month written notice because by this time, their
lay-off is to become permanent and they were definitely losing their employment.

ISSUE: whether there was constructive dismissal that would entitle Domingo to his monetary claims.
RULING: We believe, and so hold, that Domingo was constructively dismissed from employment.

There is also nothing in the records to prove that a written notice was ever given to the DOLE as
required by law. The lack of written notice to the petitioners and to the DOLE does not, however, make
the petitioners' retrenchment illegal such that they are entitled to the payment of back wages and
separation pay in lieu of reinstatement as they contend. Their retrenchment, for not having been effected
with the required notices, is merely defective. In those cases where we found the retrenchment to be
illegal and ordered the employees' reinstatement and the payment of back wages, the validity of the
cause for retrenchment, that is the existence of imminent or actual serious or substantial losses, was not
proven. 26 But here, such a cause is present as found by both the Labor Arbiter and the NLRC. There is
only a violation by GTI of the procedure prescribed in Article 283 of the Labor Code in effecting the
retrenchment of the petitioners.
GRANTED and the challenged decision of public respondent National Labor Relations Commission in
NLRC NCR CA Case No. 004673-93 is modified by reversing and setting aside its deletion of the awards
in the Labor Arbiter's decision of proportionate 13th month pay for 1991 and attorney's fees, the latter
being reduced to P25,000.00. Separation pay equivalent to one-half (1/2) month pay for every year of
service shall be computed from the dates of the commencement of the petitioners' respective
employment until the end of their six-month temporary lay-off which is 22 July 1991. In addition, private
respondent G.T.I. Sportswear Corporation is ordered to pay each of the petitioners the sum of P2,000.00
as indemnification for its failure to observe due process in effecting the retrenchment.
SIEMENS PHILIPPINES, INC. AND MR. ERNST H. BEHRENS, VS. ENRICO A. DOMINGO. [G.R. No.
150488, July 28, 2008]
FACTS: Domingo signed an Employment Contract with Maschinen & Technik, Inc. (MATEC) as a
consultant, with a compensation package of Php8,000.00/month salary and an allowance of
Php400.00/month. MATEC is a subsidiary of Siemens Philippines.[4] Thereafter, Domingo was given
additional work by MATEC, in which he was paid DM1,800.00/month on top of his original salary. The
extra work was the result of a contract entered into by MATEC and Siemens
Aktiengesellschaft[5] (Siemens Germany), whereby MATEC, at the request of Siemens Germany, hired
Domingo to handle the operation of OEN OEV TD.[6] Siemens Germany is a German company which has
an investment in Siemens Philippines.[7]
Electronic Telephone System Industries, Inc. (ETSI) availed of Domingo's services as assistant manager.
ETSI, like MATEC is a subsidiary of Siemens Philippines. [8] The Contract of Employment[9] of Domingo
with ETSI provides that the latter shall have the right to assign the said contract in favor of Siemens
Philippines, which is a corporation to be incorporated under the laws of the Philippines. While still an
assistant manager of ETSI, Domingo was hired as a consultant by Siemens Germany in the field of text
and data networks for a period of twelve (12) months.[11] As compensation, he received DM20,000.00,
payable once for every twelve-month period. Siemens Germany sent a letter to ETSI guaranteeing the
consultancy agreement between Siemens Germany and Domingo.
th

Domingo filed a complaint for illegal dismissal and prayed for the payment of salaries, 13 month pay,
backwages, damages, separation pay and attorney's fees.[22] Domingo alleged that he was forced to
resign because of the act of Siemens Philippines of not renewing the consultancy agreement.
[23]
Siemens Philippines countered that Domingo's resignation was voluntary and that they were not privy
to the consultancy agreement between Domingo and Siemens Germany. LA: illegal dismissal. NLRC:
affirmed.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. [35] The gauge
for constructive dismissal is whether a reasonable person in the employee's position would feel
compelled to give up his employment under the prevailing circumstances. Constructive dismissal is
defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the
offer of employment involves a demotion in rank or diminution in pay.[36] It exists when the resignation on
the part of the employee was involuntary due to the harsh, hostile and unfavorable conditions set by the
employer. It is brought about by the clear discrimination, insensibility or disdain shown by an employer
which becomes unbearable to the employee. An employee who is forced to surrender his position
through the employer's unfair or unreasonable acts is deemed to have been illegally terminated and
such termination is deemed to be involuntary.[37]
We have, under the law's mandate, consistently resolved this situation in favor of the employee in order
to protect his rights and interests from the coercive acts of the employer.

While admittedly, Siemens Philippines is not a party to the arrangement between Siemens Germany,
ETSI and Domingo, knowledge of and acquiescence to - if not actual concurrence in - the arrangement
can be imputed to Siemens Philippines as to bind it to the arrangement. This conclusion finds support in
the following:
First, based on the findings of facts of the LA, NLRC and CA MATEC, ETSI, Siemens Philippines
and Siemens Germany are related companies, the first three being subsidiaries of the parent company,
and the fourth, Siemens Germany, having an investment in Siemens Philippines. Short of piercing the
veil of corporate fiction, we note the intimate corporate relationship of Siemens Germany and Siemens
Philippines, including the practice of the two companies of integrating their workforce.
Second, in Domingo's contract of employment with Siemens Philippines, it is provided that Domingo
shall not be connected in any other work capacity or employment or be otherwise involved, directly or
indirectly, with any other business or concern without first having obtained the written consent of the
company. Yet, Siemens Philippines never questioned the continued consultancy work of Domingo with
Siemens Germany, not even when the consultancy agreement was renewed twice during the lifetime of
Domingo's contract of employment with Siemens Philippines.
Third, the guarantee letter issued by Siemens Germany in favor of Domingo was never questioned,
much less revoked by Siemens Philippines when it assumed the employment of Domingo. The
Guarantee Letter was a security given to Domingo by Siemens Germany assuring Domingo that
Siemens Philippines would ensure that Siemens Germany would extend the consultancy agreement as
long as Domingo was under its employ.
Fourth, the consultancy agreement was a form of benefit or privilege given to Domingo by ETSI, a
privilege that was allowed by Siemens Philippines to continue when it took over the majority of the
business activities of ETSI and, consequently, became Domingo's employer. The outright removal of the
privilege contravenes the law, because it resulted in the effective diminution of Domingo's salary.

Domingo's constructive dismissal entitles him to his monetary claims, subject to the following
modifications:
First, we are not in accord with the Decision of the LA finding Behrens, the President and Chief
Executive Officer of Siemens Philippines, solidarily liable with the company. A corporation, being a
juridical entity, may act only through its directors, officers and employees. Obligations incurred by them,
while acting as corporate agents, are not their personal liability but the direct accountability of the
corporation they represent. As a rule, they are only solidarily liable with the corporation for the
termination of employees if they acted with malice or bad faith.[38] In the case at bar, malice or bad faith
on the part of Behrens in the constructive dismissal of Domingo was not sufficiently proven to justify a
ruling holding him solidarily liable with Siemens Philippines.
Second, an illegally or constructively dismissed employee is entitled to: (1) either reinstatement, if viable,
or separation pay if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate
and distinct from each other and are awarded conjunctively.[39]
As a rule, separation pay is awarded to an illegally dismissed employee, computed at the rate of one
month pay per year of service. Accordingly, the LA decision granting separation pay equivalent to two
months salary per year of service must be modified. There is nothing on record that even remotely
suggests that it is the company policy of Siemens Philippines to grant its employees separation pay of
two months' salary for every year of service. Thus, in consonance with our previous rulings, [40] Domingo
shall be awarded separation pay in the amount of one month pay for every year of service, but
consultancy fees shall not be included in the computation of his separation pay. As discussed above, the
evidence presented by Domingo is not sufficient to pierce the veil of corporate fiction between Siemens
Philippines and Siemens AG, which would make Siemens Philippines liable for the monetary obligations
of Siemens AG.
Third, the backwages that should be awarded to Domingo shall be reckoned from the time his
constructive dismissal took effect until the finality of this decision. This is in conformity with Article 279 of
the Labor Code which provides that an employee who is unjustly dismissed from work shall be entitled to
full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent, computed
from the time his compensation was withheld from him up to the time of his actual reinstatement. Since
reinstatement of Domingo is no longer possible due to his strained relations with the management of
Siemens Philippines, and considering the position he held in the company, he is lawfully entitled to
receive backwages. For the same reason cited above, consultancy fees shall be excluded in the
computation of Domingo's backwages.
Finally, moral damages may be recovered when the dismissal of the employee was tainted by bad faith
or fraud; or when it constituted an act oppressive to labor or done in a manner contrary to morals, good
customs or public policy. Exemplary damages are recoverable if the dismissal was done in a wanton,
oppressive, or malevolent manner.[41] In this case, we have found that there was bad faith in the failure or
refusal of Siemens Philippines to work for the renewal of Domingo's consultancy contract with Siemens
Germany. But while we affirm Domingo's entitlement to these damages, they are not intended to enrich
the dismissed employee. Consequently, we find the amount of P50,000.00 for moral damages and
P50,000.00 for exemplary damages sufficient to allay the sufferings experienced by Domingo and by
way of example or correction for public good, respectively.
William Endeliseo Barroga v Data Center College of the Philippines. June 27, 2011.
FACTS: petitioner was employed as an Instructor in DataCenterCollegeLaoagCitybranch in Ilocos
Norte. In a Memorandum dated June 6, 1992, respondents transferred him to University of Northern

Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up program. Petitioner was informed
through a letter dated June 6, 1992 that he would be receiving, in addition to his monthly salary,
a P1,200.00 allowance for board and lodging during his stint as instructor in UNP-Vigan. In 1994, he
was recalled to Laoag campus. On October 3, 2003, petitioner received a Memorandum transferring him
to Data Center College Bangued, Abra branch as Head for Education/Instructor due to an urgent need
for an experienced officer and computer instructor thereat.
Petitioner declined to accept his transfer to Abra citing the deteriorating health condition of his father
and the absence of additional remuneration to defray expenses for board and lodging which constitutes
implicit diminution of his salary. He filed a Complaint for constructive dismissal against respondents.
Petitioner alleged that his proposed transfer to Abra constitutes a demotion in rank and diminution in pay
and would cause personal inconvenience and hardship. He argued that although he was being
transferred to Abra branch supposedly with the same position he was then holding in Laoag branch as
Head for Education, he later learned through a Memorandum from the administrator of Abra branch that
he will be re-assigned merely as an instructor, thereby relegating him from an administrative officer to a
rank-and-file employee. Moreover, the elimination of his allowance for board and lodging will result to an
indirect reduction of his salary which is prohibited by labor laws. Petitioner also claimed that when he
questioned the indefinite suspension of the scholarship for post-graduate studies extended to him by
respondents, the latter became indifferent to his legitimate grievances which eventually led to his
prejudicial re-assignment. He averred that his transfer is not indispensable to the schools operation
considering that respondents even suggested that he take an indefinite leave of absence in the
meantime if only to address his personal difficulties. Petitioner thus prayed for his reinstatement and
backwages.
Respondents claimed that they were merely exercising their management prerogative to transfer
employees for the purpose of advancing the schools interests. They argued that petitioners refusal to
be transferred to Abra constitutes insubordination. LA: dismiss for lack of merit. NLRC affirmed. CA
dismissed petition.
ISSUE: Petitioner imputes grave abuse of discretion on the CA in not giving due course to his petition
despite substantial compliance with the requisite formalities as well as on the NLRC in not ruling that he
was constructively dismissed by respondents.
RULING: Petitioners substantial compliance calls for the relaxation of the rules. Therefore, the CA
should have given due course to the petition.
Petitioners transfer is not tantamount to constructive dismissal. Nevertheless, the instant petition
merits dismissal on substantial grounds. After a careful review of the records and the arguments of the
parties, we do not find any sufficient basis to conclude that petitioners re-assignment amounted to
constructive dismissal.
Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable
or unlikely, or because of a demotion in rank or a diminution of pay. It exists when there is a clear act of
discrimination, insensibility or disdain by an employer which becomes unbearable for the employee to
continue his employment. Petitioner alleges that the real purpose of his transfer is to demote him to the
rank of an instructor from being the Head for Education performing administrative functions. Petitioner
further argues that his re-assignment will entail an indirect reduction of his salary or diminution of pay
considering that no additional allowance will be given to cover for board and lodging expenses. He
claims that such additional allowance was given in the past and therefore cannot be discontinued and
withdrawn without violating the prohibition against non-diminution of benefits.

These allegations are bereft of merit. Petitioner was originally appointed as instructor in 1991 and was
given additional administrative functions as Head for Education during his stint in Laoag branch. He did
not deny having been designated as Head for Education in a temporary capacity for which he cannot
invoke any tenurial security. Hence, being temporary in character, such designation is terminable at the
pleasure of respondents who made such appointment. Moreover, respondents right to transfer petitioner
rests not only on contractual stipulation but also on jurisprudential authorities. The Labor Arbiter and the
NLRC both relied on the condition laid down in petitioners employment contract that respondents have
the prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands. In
any event, it is management prerogative for employers to transfer employees on just and valid grounds
such as genuine business necessity. It is also important to stress at this point that respondents have
shown that it was experiencing some financial constraints. Because of this, respondents opted to
temporarily suspend the post-graduate studies of petitioner and some other employees who were given
scholarship grants in order to prioritize more important expenditures.
Indeed, we cannot fully subscribe to petitioners contention that his re-assignment was tainted with bad
faith. As a matter of fact, respondents displayed commiseration over the health condition of petitioners
father when they suggested that he take an indefinite leave of absence to attend to this personal
difficulty. Also, during the time when respondents directed all its administrative officers to submit
courtesy resignations, petitioners letter of resignation was not accepted. This bolsters the fact that
respondents never intended to get rid of petitioner. In fine, petitioners assertions of bad faith on the part
of respondents are purely unsubstantiated conjectures.
The Court agrees with LA that there was no violation of the prohibition on diminution of benefits. Indeed,
any benefit and perks being enjoyed by employees cannot be reduced and discontinued, otherwise, the
constitutional mandate to afford full protection to labor shall be offended. But the rule against diminution
of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a
practice over a long period which is consistent and deliberate. Petitioner failed to present any other
evidence that respondents committed to provide the additional allowance or that they were consistently
granting such benefit as to have ripened into a practice which cannot be peremptorily withdrawn.
Moreover, there is no conclusive proof that petitioners basic salary will be reduced as it was not shown
that such allowance is part of petitioners basic salary. Hence, there will be no violation of the rule
against diminution of pay enunciated under Article 100 of the Labor Code.
CHENIVER DECO PRINT TECHNICS CORP v. NLRC | 325 SCRA 758 | February 17, 2000

FACTS
- Cheniver is a corporation operating its printing business in Makati. The respondents are members of
the labor union and former employees of Cheniver.
- June 5, 1992 Cheniver informed its employees that it will transfer its operations to Batangas.
Reasons for the transfer are expiration of lease contract on the premises of the Makati palnt, and local
authorities action to force out Chenivers operations from Makati because of alleged hazards to
residents nearby.
- Cheniver gave its employees until the end of June to inform management if they wanted with Cheniver
in its transfer, otherwise it would hire replacements. Aug1 was the scheduled start of operations in the
new plant in Batangas.

- Aug 4, 1992 Cheniver wrote its employees to report to the new location within 7days, otherwise they
will be deemed to have lost interest in the job and would be replaced. However, no one reported for work
in batangas, even after extension of period of time to report to work.
- Respondents filed a complaint for unfair labor practice and illegal dismissal, and demanded separation
pay (among others).
- LA ruled that the transfer of operations was valid and absolved cheniver of charges for unfair labor
practice and illegal dismissal. It however ordered payment of separation pay. NLRC affirmed.
cheniver contends that the transfer of its business is neither closure nor retrenchment, thus separation
pay should not be awarded. Also, employees were not terminated but they resigned because they find
the new site to far from their residences

ISSUE: WON employees are entitled to separation pay considering that the transfer of the plant was
valid

HELD: YES
Ratio Art. 283 of the Labor Code provides (in part):
ART. 283. Closure of establishment and reduction of personnel. - The employer may 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
xxx
- In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. xxx
Reasoning
- there appears no complete dissolution of Chenivers business undertaking but the relocation of its plant
to Batangas, in our view, amounts to cessation of petitioner's business operations in Makati. It must be
stressed that the phrase closure or cessation of operation of an establishment or undertaking not due to
serious business losses or reverses under Art. 283 includes both complete cessation of all business
operations and the cessation of only part of a company's business
- There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of
the lease contract on the premises it occupied. That is its prerogative. But even though the transfer was

due to a reason beyond its control, Cheniver has to accord its employees some relief in the form of
severance pay.

That same day, Bayao and Castillo promptly filed a complaint for illegal dismissal with the NLRC,
Regional Arbitration Branch, Cordillera Administrative Region, against PT&T and Delia Oficial in her
capacity as manager for Baguio City.

- Since the closure of the plant is not on account of serious business losses, Cheniver shall give
respondents separation pay equivalent to at least 1 month or month pay for every year of service

Labor Arbiter Monroe C. Tabingan rendered a Decision in favor of Bayao and Castillo. PT&T and Oficial
interposed their appeal to the NLRC. On October 12, 1999, the NLRC issued its Resolution dismissing
the appeal and affirmed the decision of the Labor Arbiter, deleting, however, the award of legal interest,
exemplary damages, indemnity and attorneys fees for lack of merit.

- that the employees resigned is not convincing. The transfer of Cheniver to another place hardly
accessible to its workers resulted in the latter's untimely separation from the service not to their own
liking, hence, not construable as resignation
Disposition: petition denied. NLRC resolutions AFFIRMED.

On July 31, 2000, the CA issued its Decision dismissing the petition and affirmed the findings of the
NLRC. The CA declared that there was no valid ground for retrenchment, considering that when Bayao
and Castillo returned, their positions were already filled up; at the same time, PT&T did not inform its
employees and the Department of Labor and Employment (DOLE) of the scheduled retrenchment at
least one month before its implementation. A motion for reconsideration was filed, but the same was
denied by the CA. Hence this petition.

PT&T v. NLRC | 456 SCRA 264 | G.R. No. 147002. April 15, 2005

I: WON the retrenchment program implemented by petitioner PT&T is valid.

F: Agnes Bayao and Mildred Castillo were hired by the Philippine Telegraph & Telephone Corporation
(PT&T) in November 1991 and August 1995, respectively, both as account executives stationed in
Baguio City.

H: Retrenchment has been defined as the termination of employment initiated by the employer through
no fault of the employees and without prejudice to the latter, resorted by management during periods of
business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production program or the introduction of
new methods or more efficient machinery, or of automation. It is a management prerogative resorted to
by an employer to avoid or minimize business losses which is consistently recognized by the Court.

Both Bayao and Castillo received a Memorandum dated May 21, 1998 coming from Ma. Elenita V. Del
Rosario, Vice-President of the Commercial Operations Group (COG) of PT&T, inviting them to consider
a two to three-month assignment to the provinces of Rizal and Laguna in view of PT&Ts expansion in
the aforesaid area. Bayao and Castillo refused the offer, on the ground that the transfer would entail
additional expense on their part and there were no clear guidelines and procedures for its
implementation.
Meanwhile, the expansion project of PT&T failed to materialize due to lack of capital. PT&T realized that
it needed to undertake measures against losses to prevent the company from going bankrupt,
particularly by reducing its workforce from 2,500 to 900 employees. Pursuant thereto, it implemented a
Voluntary Staff Reduction Program (VSRP) which was availed of by 478 employees. Failing to attain its
target, PT&T implemented an extended VSRP, but still not enough employees availed of the program.
PT&T decided to implement a temporary retrenchment of some employees dubbed as Temporary Staff
Reduction Program (TSRP) lasting for not more than five and a half (5) months, to commence from
September 1, 1998 to February 15, 1999. Pursuant to the program, affected employees would receive
financial assistance equivalent to 15 days salary and a loan equivalent to two months salary chargeable
to the account of the employee concerned.
Bayao and Castillo received a Letter from Del Rosario, dated August 21, 1998, informing them that the
cumulative net losses of PT&T for the last four years had reached P293.4 million and that they were
among the employees affected by the TSRP.
When Bayao and Castillo reported for work on September 2, 1998, they were informed that the position
of account executive no longer existed; in its stead, the positions of Service Account Representatives
(SAR) and Service Account Specialists (SAS) were created per COG Bulletin Order No. 98-014 effective
August 21, 1998, and had already been filled up.

The Court has previously ruled that financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss performance of a company. In this case, to
prove that the company incurred losses, the petitioners presented its audited financial statements for the
corporate fiscal years 1996 to 1998 and emphasized that, in the October 20, 1998 Audit Report prepared
by SGV & Co., the auditing firm declared that petitioner PT&T incurred a substantial loss of about P558
million for the fiscal year ending June 30, 1998, resulting to a total deficit of about P574 million as of the
same date; and that petitioner PT&T even negotiated with its creditors for the suspension of payments of
its outstanding balances until the completion of an acceptable restructuring plan. The foregoing clearly
indicates that the petitioner PT&T sufficiently complied with its burden to prove that it incurred substantial
losses as to warrant the exercise of the extreme measure of retrenchment to prevent the company from
totally going under.
While an employer may have a valid ground for implementing a retrenchment program, it is not excused
from complying with the required written notice served both to the employee concerned and the DOLE at
least one month prior to the intended date of retrenchment. The purpose of this requirement is not only
to give employees some time to prepare for the eventual loss of their jobs and their corresponding
income, look for other employment and ease the impact of the loss of their jobs but also to give the
DOLE the opportunity to ascertain the verity of the alleged cause of termination.
In the case at bar, the memorandum of Del Rosario, the vice-president of the COG, to respondents
Bayao and Castillo informing the latter that they were included in the TSRP to be implemented effective
September 1, 1998 was dated August 21, 1998. The said memorandum was received by Castillo on
August 24, 1998 and Bayao on August 26, 1998. The respondents had barely two weeks notice of the
intended retrenchment program. Clearly then, the one-month notice rule was not complied with. At the
same time, the petitioners never showed that any notice of the retrenchment was sent to the DOLE.
The petitioners adherence to the above pronouncement of the Court is misplaced. The particular issue
involved in the said decision was the duration of the period of temporary lay-off, and not the compliance
with the one month notice requirement.

The requirement of notice to both the employees concerned and the Department of Labor and
Employment (DOLE) is mandatory and must be written and given at least one month before the intended
date of retrenchment. In this case, it is undisputed that the petitioners were given notice of the
temporary lay-off. There is, however, no evidence that any written notice to permanently retrench them
was given at least one month prior to the date of the intended retrenchment. The NLRC found that GTI
conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of work.
But what the law requires is a written notice to the employees concerned and that requirement is
mandatory. The notice must also be given at least one month in advance of the intended date of
retrenchment to enable the employees to look for other means of employment and therefore to ease the
impact of the loss of their jobs and the corresponding income. That they were already on temporary layoff at the time notice should have been given to them is not an excuse to forego the one-month written
notice because by this time, their lay-off is to become permanent and they were definitely losing their
employment.
There is also nothing in the records to prove that a written notice was ever given to the DOLE as
required by law. Interestingly enough, the evidence on record indicates that respondents Bayao and
Castillo were not merely temporarily laid-off. The October 26, 1998 Letter of Del Rosario addressed to
the respondents clearly stated that the latter were to be considered separated from the company
effective August 31, 1998 and that they were each being extended a separation package.
It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of
whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not
speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. Ubi lex non
distinguit nec nos distinguere debemus (when the law does not distinguish, we must not distinguish).
However, the employers failure to comply with the one month notice requirement prior to retrenchment
does not render the termination illegal; it merely renders the same defective, entitling the dismissed
employee to payment of indemnity in the form of nominal damages. Based on prevailing jurisprudence,
the amount of indemnity is pegged at P30,000.00.
Finally, since petitioner PT&T was able to establish that it incurred serious business losses, justifying the
retrenchment, the final requisite is the payment of separation pay. Pursuant to Section 283 of the Labor
Code, as amended, the retrenchment having been effected due to serious business losses, respondents
Bayao and Castillo are each entitled to one month pay or to at least one-half month pay for every year of
service, whichever is higher. A fraction of at least six months shall be considered one whole year.
Petition partially granted.
WILTSHIRE FILE CO INC v. NLRC | 193 SCRA 665 | February 7, 1991

FACTS
- Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc.
("Wiltshire") from 16 March 1981 up to 18 June 1985. On 13 June 1985, upon private respondent's
return from a business and pleasure trip abroad, he was informed by the President of petitioner Wiltshire
that his services were being terminated. Private respondent maintains that he tried to get an explanation
from management of his dismissal but to no avail. On 18 June 1985, when private respondent again
tried to speak with the President of Wiltshire, the company's security guard handed him a letter which
formally informed him that his services were being terminated upon the ground of redundancy.
- Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal
alleging that his position could not possibly be redundant because nobody (save himself) in the company
was then performing the same duties. Private respondent further contended that retrenching him could

not prevent further losses because it was in fact through his remarkable performance as Sales Manager
that the Company had an unprecedented increase in domestic market share the preceding year. For that
accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the
President to hire four (4) Sales Executives five (5) months prior to his termination.
- In its answer, petitioner company alleged that the termination of respondent's services was a costcutting measure: that in December 1984, the company had experienced an unusually low volume of
orders: and that it was in fact forced to rotate its employees in order to save the company. Despite the
rotation of employees, petitioner alleged; it continued to experience financial losses and private
respondent's position, Sales Manager of the company, became redundant.
- On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter 1
addressed to the Regional Director of the then Ministry of Labor and Employment, notified that official
that effective 2 January 1987, petitioner would close its doors permanently due to substantial business
losses.
- In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's
services illegal and ordered petitioner to pay private respondent backwages, unpaid salaries in the
amount of, accumulated sick and vacation leaves in the amount of, hospitalization benefit package in the
amount, unpaid commission in the amount of, moral damages in the amount of and attorney's fees in the
amount of. On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC")
affirmed in toto on 9 February 1988 the decision of the Labor Arbiter.
- In this Petition for Certiorari, it is submitted that private respondent's dismissal was justified and not
illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was
compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause
for termination does not necessarily mean duplication of work but a "situation where the services of an
employee are in excess of what is demanded by the needs of an undertaking
ISSUE: WON private respondents dismissal was justified on the ground of retrenchment
HELD: YES
- The Court resolved to grant due course to the Petition for Certiorari. The Resolutions of the National
Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and
NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March 1988 is hereby made
PERMANENT.
Ratio. Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had
serious financial difficulties before, during and after the termination of the services of private respondent.
For one thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985
prepared by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a
total deficit or capital impairment at the end of year of P6,776,493.00. 2 In the preceding fiscal year
(1983-1984), while the company showed a net after tax income of P843,506.00, it actually suffered a
deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its
doors and terminated all operations in the Philippines on January 1987, barely two (2) years after the
termination of private respondent's employment. We consider that finally shutting down business
operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court
finds it very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of
closing down its operations in the Philippines simply for the sole purpose of easing out a particular officer
or employee, such as the private respondent.
- Turning to the legality of the termination of private respondent's employment, we find merit in
petitioner's basic argument. The Court was unable to sustain public respondent NLRC's holding that
private respondent's dismissal was not justified by redundancy and hence illegal. In the first place, while
the letter informing private respondent of the termination of his services used the word "redundant", that
letter also referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to
resort to retrenchment to prevent further losses". 3 Thus, what the letter was in effect saying was that

because of financial losses, retrenchment was necessary, which retrenchment in turn resulted in the
redundancy of private respondent's position.
- In the second place, the Court does not believe that redundancy in an employer's personnel force
necessarily or even ordinarily refers to duplication of work. That no other person was holding the same
position that private respondent held prior to the termination of his services, does not show that his
position had not become redundant. Indeed, in any well-organized business enterprise, it would be
surprising to find duplication of work and two (2) or more people doing the work of one person.
Redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is
redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a
number of factors, such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the enterprise. 4 The
employer has no legal obligation to keep in its payroll more employees than are necessarily for the
operation of its business.
- In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales
and in order to cut down its operating expenses, effected some changes in its organization by abolishing
some positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager
was abolished and the duties previously discharged by the Sales Manager simply added to the duties of
the General Manager, to whom the Sales Manager used to report.
- It is of no legal moment that the financial troubles of the company were not of private respondent's
making. Private respondent cannot insist on the retention of his position upon the ground that he had not
contributed to the financial problems of Wiltshire. The characterization of private respondent's services
as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business
judgment on the part of Petitioner Company. The wisdom or soundness of such characterization or
decision was 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. It should also be
noted that the position held by private respondent, Sales Manager, was clearly managerial in character.

On January 13, 1990, the company issued a notice of termination to three (3) employees or union
members, namely, Cecile de Ocampo, Rene Villanueva and Marcelo dela Cruz, of the machinery
department, allegedly to effect cost reduction and redundancy. The members of the union conducted a
picket at the main gate of the company on January 18, 1990. On the same day, the company filed a
petition to declare the strike illegal with prayer for injunction against the union, Cecile de Ocampo,
Wilfredo San Pedro and Rene Aguilar. An election of officers was conducted by the union on January 19,
1990. Consequently, Cecile de Ocampo was elected as president.
During the conciliation meeting held at National Conciliation and Mediation Board (NCMB) on January
22, 1990 relative to the notice of strike filed by the union on January 3, 1990, the issue pertaining to the
legality of the termination of three (3) union members was raised by the union. However, both parties
agreed to discuss it separately. Subsequently, in a letter dated January 28, 1990, the union requested for
the presence of a NCMB representative during a strike vote held by the union. The strike vote resulted to
388 votes out of 415 total votes in favor of the strike. Consequently, the union staged a strike on
February 6, 1990.
On February 7, 1990, the company filed a petition to assume jurisdiction with the Department of Labor
and Employment. On February 16, 1990, the company filed an amended petition, praying among other
things, that the strike staged by the union on February 6, 1990 be declared illegal, there being no
genuine strikeable issue and the violation of the no-strike clause of the existing CBA between the
parties.
The Secretary of Labor in an order dated February 15, 1990, certified the entire labor dispute to the
respondent Commission for compulsory arbitration and directed all striking workers including the
dismissed employees to return to work and the management to accept them back.
The company filed an urgent motion for assignment of a sheriff to enforce the order of the Secretary.
In an order dated February 22, 1990, the Secretary of Labor directed Sheriff Alfredo Antonio, Jr., to
implement the order.

De Ocampo v. NLRC, 213 SCRA 652

F: Petitioners Cecile de Ocampo, et. al. are employees of private respondent Baliwag Mahogany
Corporation. They are either officers or members of the Baliwag Mahogany Corporation Union-CFW, the
existing collective bargaining agent of the rank and file employees in the company. Private respondent
Baliwag Mahogany Corporation is an enterprise engaged in the production of wooden doors and
furniture and has a total workforce of about 900 employees.
In 1988, private respondent Baliwag Mahogany Corporation (company) and Baliwag Mahogany
Corporation Union-CFW (union) entered into a collective bargaining agreement containing, among other
things, provisions on conversion into cash of unused vacation and sick leaves; grievance machinery
procedure; and the right of the company to schedule work on Sundays and holidays.
In November, 1989, the union made several requests from the company, one of which was the cash
conversion of unused vacation and sick leave for 1987-1988 and 1988-1989. Acting on the matter, the
company ruled to allow payment of unused vacation and sick leaves for the period of 1987-1988 but
disallowed cash conversion of the 1988-1989 unused leaves.
The company issued suspension orders affecting twenty (20) employees for failure to render overtime
work on December 30, 1989. The suspension was for a period of three (3) days effective January 3,
1996 to January 5, 1990. On the same day, the union filed a notice of strike on the grounds of unfair
labor practice particularly the violation of the CBA provisions on non-payment of unused leaves and
illegal dismissal of seven (7) employees in November, 1989.

On February 23, 1990, the sheriff, with the assistance of the PC/INP of San Rafael, removed the
barricades and opened the main gate of the company.
Criminal complaints for illegal assembly, grave threats, and grave coercion were filed against Cecile de
Ocampo, Timoteo Mijares, Modesto Mamesia and Domingo Silarde by the local police authorities on
February 24, 1990.
On February 25, 1990, the company caused the publication of his return to work order in two (2)
newspapers, namely NGAYON and ABANTE. In its letter dated February 27, 1990, the union, through its
President Cecile de Ocampo, requested the Regional Director of DOLE, Region III to intervene in the
existing dispute with management. Meanwhile, the company extended the February 26, 1990 deadline
for the workers to return to work until March 15, 1990.
The respondent Commission rendered a decision on October 23, 1990, declaring the strikes staged on
January 18, 1990 and February 6, 1990 illegal. Such decision prompted the company to file a motion for
reconsideration substantially on the ground that public respondent seriously erred in not dismissing the
employees particularly the union officers, who participated in the illegal strike. Petitioners filed an
opposition to the company's motion for reconsideration and subsequently a supplemental
comment/opposition to motion for reconsideration.
I: Whether or not there is legal basis for declaring the loss of employment status by petitioners on
account of the strike in respondent Company.

H: Court finds the petition devoid of merit. The Solicitor General claims that it is undisputed that the
union resorted to illegal acts during the strike arguing that private respondent's personnel manager
specifically identified the union officers and members who committed the prohibited acts and actively
participated therein. Moreover, the Solicitor General maintains that the illegality of the strike likewise
stems from the failure of the petitioners to honor the certification order and heed the return-to-work order
issued by the Secretary of Labor.
Unrebutted evidence shows that the individual petitioners defied the return-to-work order of the
Secretary of Labor issued on February 15, 1990. As a matter of fact, it was only on February 23, 1990
when the barricades were removed and the main gate of the company was opened. Hence, the
termination of the services of the individual petitioners is justified on this ground alone.
Anent the contention that the respondent Commission gravely abused its discretion when it allowed the
presentation of additional evidence to prove the loss suffered by the company despite the fact that they
were mere afterthoughts and just concocted by the company, time and again, We emphasize that
"technical rules of evidence are not binding in labor cases. Labor officials should use every and
reasonable means to ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, all in the interest of due process" (Philippine Telegraph and Telephone
Corporation v. National Labor Relations Commission, G.R. No. 80600, March 21, 1990, 183 SCRA 451,
457).
We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee
are in excess of what is reasonably demanded by the actual requirement of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as over hiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or undertaken by the
enterprise. The employer had no legal obligation to keep in its payroll more employees, than are
necessary for the operation of its business. (Wiltshire File Co., Inc. v. National Labor Relations
Commission, G.R. No. 82249, February 7, 1991; 193 SCRA 665,672).
The reduction of the number of workers in a company made necessary by the introduction of the
services of Gemac Machineries in the maintenance and repair of its industrial machinery is justified.
There can be no question as to the right of the company to contract the services of Gemac Machineries
to replace the services rendered by the terminated mechanics with a view to effecting more economic
and efficient methods of production.
In the same case, We ruled that "(t)he characterization of (petitioners') services as no longer necessary
or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of
(private respondent) company. The wisdom or soundness of such characterization or decision was 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". In contracting the services of
Gemac Machineries, as part of the company's cost-saving program, the services rendered by the
mechanics became redundant and superfluous, and therefore properly terminable. The company merely
exercised its business judgment or management prerogative. Petition dismissed.
Maya Farms Employees Organization v. NLRC, 239 SCRA 508
F: Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation belong to the
Liberty Mills group of companies whose undertakings include the operation of a meat processing plant
which produces ham, bacon, cold cuts, sausages and other meat and poultry products.

Petitioners, on the other hand, are the exclusive bargaining agents of the employees of Maya Farms,
Inc. and the Maya Realty and Livestock Corporation.
On April 12, 1991, private respondents announced the adoption of an early retirement program as a
cost-cutting measure considering that their business operations suffered major setbacks over the years.
The program was voluntary and could be availed of only by employees with at least eight (8) years of
service. Dialogues were thereafter conducted to give the parties an opportunity to discuss the details of
the program. Accordingly, the program was amended to reduce the minimum requirement of eight (8)
years of service to only five (5) years.
However, the response to the program was nil. There were only a few takers. To avert further losses,
private respondents were constrained to look into the companies' organizational set-up in order to
streamline operations. Consequently, the early retirement program was converted into a special
redundancy program intended to reduce the work force to an optimum number so as to make operations
more viable.
In December 1991, a total of sixty-nine (69) employees from the two companies availed of the special
redundancy program. On January 17, 1992, the two companies sent letters to sixty-six (66) employees
informing them that their respective positions had been declared redundant. The notices likewise stated
that their services would be terminated effective thirty (30) days from receipt thereof. Separation
benefits, including the conversion of all earned leave credits and other benefits due under existing CBAs
were thereafter paid to those affected.
On January 24, 1992, a notice of strike was filed by the petitioners which accused private respondents,
among others, of unfair labor practice, violation of CBA and discrimination. Conciliation proceedings
were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to arrive at a
settlement.
On February 6, 1992, the two companies filed a petition with the Secretary of Labor and Employment
asking the latter to assume jurisdiction over the case and/or certify the same for compulsory arbitration.
Thus, on February 12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor certified
the case to herein public respondent for compulsory arbitration.
On March 4, 1992, the parties were called to a hearing to identify the issues involved in the case.
Thereafter, they were ordered to submit their respective position papers.
In their position paper, petitioners averred that in the dismissal of sixty-six (66) union officers and
members on the ground of redundancy, private respondents circumvented the provisions in their CBA.
Petitioners also alleged that the companies' claim that they were in economic crisis was fabricated
because in 1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of
Companies. Invoking the workers' constitutional right to security of tenure, petitioners prayed for the
reinstatement of the sixty-six (66) employees and the payment of attorney's fees as they were
constrained to hire the services of counsel in order to protect the workers' rights.
On their part, private respondents contend that their decision to implement a special redundancy
program was an exercise of management prerogative which could not be interfered with unless it is
shown to be tainted with bad faith and ill motive. Private respondents explained that they had no choice
but to reduce their work force, otherwise, they would suffer more losses. Furthermore, they denied that
the program violated CBA provisions. NLRC favored the company.

I: WON there was grave abuse of discretion amounting to lack or in excess of jurisdiction with the factual
findings of public respondent

- The labor arbiter ruled partially in favor of GTK. He said that there was no showing that the dismissals
were in retaliation for establishing a union. He, however, awarded separation pay to some employees.

H: The termination of the sixty-six employees was done in accordance with Article 283 of the Labor
Code. The basis for this was the companies' study to streamline operations so as to make them more
viable. Positions which overlapped each other, or which are in excess of the requirements of the service,
were declared redundant. We fully agree with the findings and conclusions of the public respondent on
the issue of termination.

- NLRC, however, appreciated the evidence differently. It held that there was illegal dismissal and
ordered reinstatement.

ISSUE: WON there was illegal dismissal

A close examination of the positions retained by management show that said positions such as egg
sorter, debonner were but the minimal positions required to sustain the limited functions/operations of
the meat processing department. In the absence of any evidence to prove bad faith on the part of
management in arriving at such decision, which records on hand failed to show in instant case, the
rationality of the act of management in this regard must be sustained.
The rule is well-settled that labor laws discourage interference with an employer's judgment in the
conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. As long as the
company's exercise of the same is in good faith to advance its interest and not for the purpose of
defeating or circumventing the rights of employees under the laws or valid agreements, such exercise
will be upheld.
Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day notice of
termination to the workers was disregarded and that the same substituted with separation pay by private
respondents. As found by public respondent, written notices of separation were sent to the employees
on January 17, 1992. The notices expressly stated that the termination of employment was to take effect
one month from receipt thereof. Therefore, the allegation that separation pay was given in lieu of the 30day notice required by law is baseless. Petition dismissed.
GOLDEN THREAD KNITTING INDUSTIRES v. NLRC | 304 SCRA 720 | March 11, 1999

FACTS
- several employees of Golden Thread Knitting Industries (GTK) were dismissed for different reasons. 2
employees were allegedly for slashing the companys products (towels), 2 for redundancy, 1 for
threatening the personnel manager and violating the company rules, and 1 for abandonment of work.
- The laborers filed complaints for illegal dismissal. They allege that the company dismissed them in
retaliation for establishing and being members of the Labor Union.
GTK, on the other hand, contend that there were valid causes for the terminations. The dismissals were
allegedly a result of the slashing of their products, rotation of work, which in turn was caused by the low
demand for their products, and abandonment of work. WRT to the cases involving the slashing of their
products and threats to the personnel manager, the dismissals were in effect a form of punishment.

HELD: YES
Ratio Dismissal is the ultimate penalty that can be meted to an employee. It must therefore be based on
a clear and not on an ambiguous or ambivalent ground.
Reasoning
- WRT to the case involving slashing of towels, the employees were not given procedural due process.
There was no notice and hearing, only outright denial of their entry to the work premises by the security
guards. The charges of serious misconduct were not sufficiently proved.
- WRT to the employees dismissed for redundancy, there was also denial of procedural due process.
Hearing and notice were not observed. Thus, although the characterization of an employees services is
a management function, it must first be proved with evidence, which was not done in this case. the
company cannot merely declare that it was overmanned.
- WRT to the employee dismissed for disrespect, the SC believed the story version of the company
(which essentially said that the personnel manager was threatened upon mere service of a suspension
order to the employee), but ruled that the dismissal could not be upheld.
the dismissal will not be upheld where it appears that the employees act of disrespect was provoked
by the employer. xxx the employee hurled incentives at the personnel manager because she was
provoked by the baseless suspension imposed on her. The penalty of dismissal must be
commensurate with the act, conduct, or omission to the employee.
- The dismissal was too harsh a penalty; a suspension of 1 week would have sufficed.
GTK exercised their authority to dismiss without due regard to the provisions of the Labor Code. The
right to terminate should be utilized with extreme caution because its immediate effect is to put an end
to an employee's present means of livelihood while its distant effect, upon a subsequent finding of
illegal dismissal, is just as pernicious to the employer who will most likely be required to reinstate the
subject employee and grant him full back wages and other benefits.
Disposition Decision AFFIRMED
LOPEZ SUGAR CORP v. FED OF FREE WORKERS PHILIPPINE LABOR UNION ASSOCIATION
(PLUA NACUSIP) | 189 SCRA 179 | August 30, 1990
FACTS
- Lopez Sugar Corporation (LPC), allegedly, to prevent losses due to major economic problems, and
exercising its privilege under the 1975-1977 CBA entered into with PLUA-NACUSIP, caused the
retrenchment and retirement of a number of its employees.

- LPC filed with the MOLE a combined report on retirement and application for clearance to retrench
affecting eighty six (86) of its employees. Of these 86 employees, 59 were retired and 27 were to be
retrenched in order to prevent losses.
- Federation of Free Workers (FFW), as the certified bargaining agent of the rank-and-file employees of
LPC, also filed with the MOLE a complaint for unfair labor practices and recovery of union dues.
- In said complainant, FFW claimed that the terminations undertaken by LPC were violative of the
security of tenure of its members and were intended to "bust" the union and hence constituted an unfair
labor practice.
- FFW claimed that after the termination of the services of its members, LPC advised 110 casuals to
report to its personnel office.
- FFW further argued that to justify retrenchment, serious business reverses must be "actual, real and
amply supported by sufficient and convincing evidence." FFW prayed for reinstatement of its members
who had been retired or retrenched.
- LPC denied having hired casuals to replace those it had retired or retrenched. It explained that the
announcement calling for 110 workers to report to its personnel office was only for the purpose of
organizing a pool of extra workers which could be tapped whenever there were temporary vacancies by
reason of leaves of absence of regular workers.
- LA: denied LPC s application for clearance to retrench its employees on the ground that for
retrenchment to be valid, the employer's losses must be serious, actual and real and must be amply
supported by sufficient and convincing evidence. The application to retire was also denied on the ground
that LPC's prerogative to so retire its employees was granted by the 1975-77 CBA had long ago expired.
LPC was, therefore, ordered to reinstate 27 retired or retrenched employees represented by PLUAand
FFW and to pay them full backwages from the time of termination until actual reinstatement.
- On appeal, the NLRC, finding no justifiable reason for disturbing the decision of the Labor Arbiter,
affirmed that decision
ISSUE: WON NLRC acted with GAD in denying LPCs combined report on retirement and application for
clearance to retrench
HELD
NO - A283 of the LC provides:
Article 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 Employer 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 se pay equivalent to at least his one
(1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and in cases, of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole
year.
- In ordinary connotation, the phrase "to prevent losses" means that retrenchment or termination of the
services of some employees is authorized to be undertaken by the employer sometime before the losses
anticipated are actually sustained or realized. It is not, in other words, the intention of the lawmaker to
compel the employer to stay his hand and keep all his employees until sometime after losses shall have
in fact materialized ; if such an intent were expressly written into the law, that law may well be vulnerable
to constitutional attack as taking property from one man to give to another
- When, or under what circumstances does the employer becomes legally privileged to retrench and
reduce the number of his employees?

- The general standards in terms of which the acts of petitioner employer must be appraised:
1) 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.
2) 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 recourse with serious
consequences for the livelihood of the employees retired or otherwise laid-off.
3) 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 costs than labor costs. To impart operational
meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to
bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after
less drastic means e.g., reduction of both management and rank-and-file bonuses and salaries,
going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising
costs, etc. have been tried and found wanting.
4) If already realized, and the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence. The reason for requiring this quantum of proof is readily
apparent: any less exacting standard of proof would render too easy the abuse of this ground for
termination of services of employees.
-Garcia v. National Labor Relations Commissions:
. . . But it is essentially required that the alleged losses in business operations must be prove[n]
(NAFLU vs. Ople, [1986]). Otherwise, said ground for termination would be susceptible to abuse by
scheming employers who might be merely feigning business losses or reverses in their business
ventures in order to ease out employees.
- WON an employer would imminently suffer serious or substantial losses for economic reasons is
essentially a question of fact for the Labor Arbiter and the NLRC to determine.
- In the instant case, the LA found no sufficient and convincing evidence to sustain petitioner's essential
contention that it was acting in order to prevent substantial and serious losses.
- The principal difficulty with LPC' s case as above presented was that no proof of actual declining gross
and net revenues was submitted. No audited financial statements showing the financial condition of
petitioner corporation during the above mentioned crop years were submitted.
- LPC conspicuous failed to specify the cost-reduction measures actually undertaken in good faith before
resorting to retrenchment. Upon the other hand, it appears from the record that petitioner, after reducing
its work force, advised 110 casual workers to register with the company personnel officer as extra
workers.
- LPC argued that it did not actually hire casual workers but that it merely organized a pool of "extra
workers" from which workers could be drawn whenever vacancies occurred by reason of regular workers
going on leave of absence but the LA and the NLRC did not accord much credit to LPC's explanation.
*AS REGARDS the RETIREMENTS effected by LPC
- On this point, SC finds for LPC saying that although the CBA expired on 31 December 1977, it
continued to have legal effects as between the parties until a new CBA had been negotiated and entered
into. This proposition finds legal support in Article 253 of the Labor Code, which provides:
Article 253 Duty to bargain collectively when there exists a collective bargaining agreement.
When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties. (Emphasis supplied)

- Accordingly, in the instant case, despite the lapse of the formal effectivity of the CBA by virtue of its own
provisions, the law considered the same as continuing in force and effect until a new CBA shall have
been validly executed.
- Hence, LPC acted within legal bounds when it decided to retire several employees in accordance with
the CBA. That the employees themselves similarly acted in accordance with the CBA is plain from the
record.
- Even after the expiration of the CBA, LPC's employees continued to receive the benefits and enjoy the
privileges granted therein. If the workers chose to avail of the CBA despite its expiration, equity if not
the lawdictates that the employer should likewise be able to invoke the CBA.
- The fact that several workers signed quitclaims will not by itself bar them from joining in the complaint.
Quitclaims executed by laborers are commonly frowned upon as contrary to public policy and ineffective
to bar claims for the full measure of the worker's legal rights.
- AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU:
In labor jurisprudence, it is well establish that quitclaims and/or complete releases executed by the
employees do not estop them from pursuing their claims arising from the unfair labor practice of the
employer. The basic reason for this is that such quitclaimants and/or complete releases are against
public policy and, therefore, null and void. The acceptance of termination pay does not divest a
laborer of the right to prosecute his employer for unfair labor practice acts.
- Cario vs. ACCFA, (1966) ~ Justice Sanchez, said:
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and
employee, obviously, do not stand on the same footing The employer drove the employee to the wall.
The latter must have to get hold of money. Because, out of job, he had to face the harsh necessities
of life. He thus found himself in no position to resist money proffered. His, then, is a case of
adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim. They
pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur
Disposition Petition for Certiorari is partially GRANTED and NLRC s decision affirming that portion of
the Decision of the Labor Arbiter ordering the reinstatement judgment of employees who had been
retired by LPC under the applicable provisions of the CBA is AFFIRMED.
(*all illegally retrenched were ordered to be reinstated and given backwages; those who executed
quitclaims-said amount shall be deducted from their backwages and where reinstatement is no longer
possible, backwages + separation pay na lang. BUT those who were retired by LPC were found to be
valid as per the CBA.

retrenchment shall be based on the individual employee's efficiency rating and seniority.
PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin
crew member's overall performance for the year 1997 alone. The factors taken into account on whether
the cabin crew member would be retrenched, demoted or retained were: 1) the existence of excess sick
leaves; 2) the crew member's being physically overweight; 3) seniority; and 4) previous suspensions or
warnings imposed.
While consultations between FASAP and PAL were ongoing, the latter began implementing its
retrenchment program by initially terminating the services of 140 probationary cabin attendants only to
rehire them in April 1998. Moreover, their employment was made permanent and regular. On July 15,
1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel.
Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was
approved per Securities and Exchange Commission (SEC) Order dated June 23, 1998 in SEC Case No.
06-98-6004.
On September 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan, made
an offer to transfer shares of stock to its employees and three seats in its Board of Directors, on the
condition that all the existing Collective Bargaining Agreements (CBAs) with its employees would be
suspended for 10 years, but it was rejected by the employees. On September 17, 1998, PAL informed its
employees that it was shutting down its operations effective September 23, 1998 despite the previous
approval on June 23, 1998 of its rehabilitation plan.
On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees.
Two days later, PAL employees, through the Philippine Airlines Employees Association (PALEA) board,
sought the intervention of then President Joseph E. Estrada. PALEA offered a 10-year moratorium on
strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. Lucio Tan,
however, rejected this counter-offer.

Flight Attendants and Stewards Association of the Philippines v. PAL, 559 SCRA 252

F: On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew
personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme allegedly to cut costs
and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the
Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its
assets stood at P85 billion.
In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14" whereby PAL's fleet of
aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel.
Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a
series of consultations and meetings and explored all possibilities of cushioning the impact of the
impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme
would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the
PAL-FASAP Collective Bargaining Agreement (CBA) in retrenching cabin crew personnel: that is, that

In a referendum conducted on October 2, 1998, PAL employees ratified the proposal. On October 7,
1998, PAL resumed domestic operations and, soon after, international flights as well. Meanwhile, in
November 1998, or five months after the June 15, 1998 mass dismissal of its cabin crew personnel, PAL
began recalling to service those it had previously retrenched. Several of those retrenched were called
back to service.

In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by which it undertook a
recovery on its own while keeping its options open for the entry of a strategic partner in the future.
Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposed revised business
and financial restructuring plan, which required the infusion of US$200 million in new equity into the
airline.
On May 17, 1999, the SEC approved the proposed "Amended and Restated Rehabilitation Plan" of PAL
and appointed a permanent rehabilitation receiver for the latter. On June 7, 1999, the SEC issued an

Order confirming its approval of the "Amended and Restated Rehabilitation Plan" of PAL. In said order,
the cash infusion of US$200 million made by Lucio Tan on June 4, 1999 was acknowledged.
Respondent PAL is ordered to pay the separation benefits to those complainants who have not received
their separation pay and to pay the balance to those who have received partial separation pay.

I: WON CA decided the case a quo in a way contrary to law and/or jurisprudence and WON PALs
retrenchment scheme was justified.

H: It is a settled rule that in the exercise of the Supreme Court's power of review, the Court is not a trier
of facts and does not normally undertake the re-examination of the evidence presented by the
contending parties during trial. However, there are several exceptions to this rule such as when the
factual findings of the Labor Arbiter differ from those of the NLRC, as in the instant case, which opens
the door to a review by this Court.

The law recognizes the right of every business entity to reduce its work force if the same is made
necessary by compelling economic factors which would endanger its existence or stability. Where
appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized
valid reductions in the work force to forestall business losses, the hemorrhaging of capital, or even to
recognize an obvious reduction in the volume of business which has rendered certain employees
redundant.
The burden clearly falls upon the employer to prove economic or business losses with sufficient
supporting evidence. Its failure to prove these reverses or losses necessarily means that the employee's
dismissal was not justified. Any claim of actual or potential business losses must satisfy certain
established standards, all of which must concur, before any reduction of personnel becomes legal

FIRST ELEMENT: That retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer.

The law speaks of serious business losses or financial reverses. Sliding incomes or decreasing gross
revenues are not necessarily losses, much less serious business losses within the meaning of the law.
The fact that an employer may have sustained a net loss, such loss, per se, absent any other evidence
on its impact on the business, nor on expected losses that would have been incurred had operations
been continued, may not amount to serious business losses mentioned in the law. The employer must
show that its losses increased through a period of time and that the condition of the company will not
likely improve in the near future or that it expected no abatement of its losses in the coming years. The
employer must also exhaust all other means to avoid further losses without retrenching its employees.

Retrenchment is a means of last resort; it is justified only when all other less drastic means have been
tried and found insufficient.

In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which
would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine
economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has
likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate
rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.
Records show that PAL was not even aware of its actual financial position when it implemented its
retrenchment program. It embarked on the mass dismissal without first undertaking a well-considered
study on the proposed retrenchment scheme. This view is underscored by the fact that previously, PAL
terminated the services of 140 probationary cabin attendants, but rehired them almost immediately and
even converted their employment into permanent and regular, even as a massive retrenchment was
already looming in the horizon.

Also, the claim that PAL saved P24 million monthly due to the implementation of the retrenchment
program does not prove anything; it has not been shown to what extent or degree such savings
benefited PAL, vis-a-vis its total expenditures or its overall financial position. Likewise, its claim that its
liabilities reached P90 billion, while its assets amounted to P85 billion only - or a debt to asset ratio of
more than 1:1 - may not readily be believed, considering that it did not submit its audited financial
statements. All these allegations are self-serving evidence.
FOURTH ELEMENT: That the employer exercises its prerogative to retrench employees in good faith for
the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure.
Concededly, retrenchment to prevent losses is an authorized cause for terminating employment and the
decision whether to resort to such move or not is a management prerogative. However, the right of an
employer to dismiss an employee differs from and should not be confused with the manner in which
such right is exercised. It must not be oppressive and abusive since it affects one's person and property.
On the requirement that the prerogative to retrench must be exercised in good faith, we have ruled that
the hiring of new employees and subsequent rehiring of "retrenched" employees constitute bad faith;
that the failure of the employer to resort to other less drastic measures than retrenchment seriously
belies its claim that retrenchment was done in good faith to avoid losses; and that the demonstrated
arbitrariness in the selection of which of its employees to retrench is further proof of the illegality of the
employer's retrenchment program, not to mention its bad faith.
When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its
employees, it could not be said that it acted in a manner compatible with good faith. It offered no
satisfactory explanation why it abandoned Plan 14; instead, it justified its actions of subsequently
recalling to duty retrenched employees by making it appear that it was a show of good faith; that it was
due to its good corporate nature that the decision to consider recalling employees was made.

FIFTH ELEMENT: That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain workers. In selecting employees to be dismissed,
fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status (e.g.,
temporary employee), (b) efficiency and (c) seniority.

The appellate court held that there was no need for PAL to consult with FASAP regarding standards or
criteria that the airline would utilize in the implementation of the retrenchment program; and that the
criteria actually used which was unilaterally formulated by PAL using its Performance Evaluation Form in
its Grooming and Appearance Handbook was reasonable and fair. Indeed, PAL was not obligated to
consult FASAP regarding the standards it would use in evaluating the performance of the each cabin
crew. However, we do not agree with the findings of the appellate court that the criteria utilized by PAL in
the actual retrenchment were reasonable and fair.
SC has repeatedly enjoined employers to adopt and observe fair and reasonable standards to effect
retrenchment. This is of paramount importance because an employer's retrenchment program could be
easily justified considering the subjective nature of this requirement. The adoption and implementation
of unfair and unreasonable criteria could not easily be detected especially in the retrenchment of large
numbers of employees, and in this aspect, abuse is a very distinct and real possibility. This is where
labor tribunals should exercise more diligence; this aspect is where they should concentrate when
placed in a position of having to judge an employer's retrenchment program.
Moreover, in assessing the overall performance of each cabin crew personnel, PAL only considered the
year 1997. This makes the evaluation of each cabin attendant's efficiency rating capricious and
prejudicial to PAL employees covered by it. In sum, PAL's retrenchment program is illegal because it was
based on wrongful premise (Plan 14, which in reality turned out to be Plan 22, resulting in retrenchment
of more cabin attendants than was necessary) and in a set of criteria or rating variables that is unfair and
unreasonable when implemented. It failed to take into account each cabin attendant's respective service
record, thereby disregarding seniority and loyalty in the evaluation of overall employee performance.
Quitclaims executed as a result of PAL's illegal retrenchment program are likewise annulled and set
aside because they were not voluntarily entered into by the retrenched employees; their consent was
obtained by fraud or mistake, as volition was clouded by a retrenchment program that was, at its
inception, made without basis. The law looks with disfavor upon quitclaims and releases by employees
pressured into signing by unscrupulous employers minded to evade legal responsibilities. As a rule,
deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally
entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not
amount to estoppel. The amounts already received by the retrenched employees as consideration for
signing the quitclaims should, however, be deducted from their respective monetary awards. As to PAL's
recall and rehire process (of retrenched cabin crew employees), the same is likewise defective.
Considering the illegality of the retrenchment, it follows that the subsequent recall and rehire process is
likewise invalid and without effect.
A corporate officer is not personally liable for the money claims of discharged corporate employees

unless he acted with evident malice and bad faith in terminating their employment. We do not see how
respondent Patria Chiong may be held personally liable together with PAL, it appearing that she was
merely acting in accordance with what her duties required under the circumstances. Being an Assistant
Vice President for Cabin Services of PAL, she takes direct orders from superiors, or those who are
charged with the formulation of the policies to be implemented. Petition granted.

Manatad v. PT&T, 548 SCRA 64

F: In September 1988, petitioner was employed by respondent Philippine Telegraph and Telephone
Corporation (PT&T) as junior clerk with a monthly salary of P3, 839.74. She was later promoted as
Account Executive, the position she held until she was temporarily laid off from employment on 1
September 1998.
Petitioner temporary separation from employment was pursuant to the Temporary Staff Reduction
Program adopted by respondent due to serious business reverses. On 16 November 1998, petitioner
received a letter from respondent inviting her to avail herself of its Staff Reduction Program Package
equivalent to one-month salary for every year of service, one and one-half month salary, pro-rated 13th
month pay, conversion to cash of unused vacation and sick leave credits, and Health Maintenance
Organization and group life insurance coverage until full payment of the separation package. Petitioner,
however, did not opt to avail herself of the said package. On 26 February 1999, petitioner received a
Notice of Retrenchment from respondent permanently dismissing her from employment effective 16
February 1999.
Petitioner filed illegal dismissal before the Labor Arbiter. Petitioner submitted evidence that the
respondents have no grounds for retrenchment and that the company is not suffering from serious
losses. However, the respondent also submitted financial reports to sustain its ground of a valid
retrenchment. The Labor Arbiter held in favor of the petitioner which was affirmed by the NLRC. It further
noted that the Department of Labor and Employment (DOLE) was not notified by the respondent of its
retrenchment program as required by law.
On appeal to CA, the decision of the NLRC was reversed. It held that the company is suffering serious
financial losses as reflected on its financial statements submitted and prepared by independent auditors
of the company. Hence, this petition.
I: Whether there is a valid retrenchment by the respondent company
H: Pertinent provision is Article 283 of the Labor Code. For a valid retrenchment, the following requisites
must be complied with: (a) the retrenchment is necessary to prevent losses and such losses are proven;
(b) written notice to the employees and to the DOLE at least one month prior to the intended date of
retrenchment; and (c) payment of separation pay equivalent to one-month pay or at least one- half
month pay for every year of service, whichever is higher.

The financial statements reflect that respondent suffered substantial loss in the amount of P558 Million
by 30 June 1998. The Report of SGV & Co. substantiates the alleged precarious financial condition of
the respondent. The financial statements audited by independent external auditors constitute the normal
method of proving the profit and loss performance of a company.
The respondent complied with the requisite notices to the employee and the DOLE to effect a valid
retrenchment. Petitioner failed to refute that she received the written notice of retrenchment from
respondent on 16 November 1998. Although respondent failed to furnish DOLE with a formal letter
notifying it of the retrenchment, it still substantially complied with the requirement. Since the National
Conciliation and Mediation Board, the reconciliatory arm of DOLE, supervised the negotiation for
separation package, we agree with the Court of Appeals that it would be superfluous to still require
respondent to serve notice of the retrenchment to DOLE.
In fact, even granting arguendo that respondent was not experiencing losses, it is still authorized by
Article 283[26] of the Labor Code to cease its business operations. Explicit in the said provision is that
closure or cessation of business operations is allowed even if the business is not undergoing economic
losses. The owner, for any bona fide reason, can lawfully close shop anyone. Just as no law forces
anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching
the intent and spirit of the law if we were to unjustly interfere with the management prerogative to close
or cease its business operations, just because said business operations are not suffering any loss or
simply to provide the workers continued employment.

Held: Hours spent by complainants in collecting salaries shall be considered compensable hours
worked.
It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC
maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the
workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not
official. Records also show that on February 12,1992, when an inspection was conducted by the
Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del
Norte, it was found out that petitioners had violated labor standards law, one of which is the place of
payment of wages.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:
Place of payment. - (a) As a general rule, the place of payment shall be at or near the place
of undertaking. Payment in a place other than the workplace shall be permissible only under
the following circumstances: (1) When payment cannot be effected at or near the place of
work by reason of the deterioration of peace and order conditions, or by reason of actual or
impending emergencies caused by fire, flood, epidemic or other calamity rendering payment
thereat impossible; (2) When the employer provides free transportation to the employees
back and forth; and (3) Under any analogous circumstances; provided that the time spent by
the employees in collecting their wages shall be considered as compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and the
risks in commuting all the time in collecting complainants salaries, would justify the granting of
backwages equivalent to 2 days in a month.

North Davao Mining v. NLRC (1996) 254 SCRA 721

ESCAREAL v. NLRC (PHILIPPINE REFINING CO INC) | 213 SCRA 472 | September 2, 1992

Facts: Respondent Wilfredo Guillema is one among several employees of North Davao who were
separated by reason of the companys closure on May 31, 1992, and who were the complainants in the
cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased
operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered
net losses averaging three billion pesos per year, for each of the five years prior to its closure. All told
five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos. When
it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days
pay for every year of service, computed on their basic monthly pay, in addition to the commutation to
cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner
corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving
separation pay equivalent to thirty days pay for every year of service. Moreover, the employees had to
collect their salaries at a bank in Tagum, Davao del Norte, and some 58 kilometers from their workplace
and about 2 hours travel time by public transportation; this arrangement lasted from 1981 up to 1990.

FACTS

Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and
271 other separated employees for additional separation pay; back wages; transportation allowance;
hazard pay; etc., amounting to P58, 022,878.31.
Issue: WON the time spent in collecting wages in a place other than the place of employment is
compensable notwithstanding that the same is done during official time.

- Escareal was hired by the PRC for the position of Pollution Control Manager effective on 16 September
1977 with a starting monthly pay of P4,230 00; the employment was made permanent effective on 16
March 1978. The contract of employment provides, inter alia, that his "retirement date will be the day you
reach your 60th birthday, but there is provision (sic) for voluntary retirement when you reach your 50th
birthday. Bases for the hiring of Escareal are LOI No. 588 implementing the National Pollution Control
Decree, P.D No. 984, and Memorandum Circular No. 02, implementing LOI No. 588, which amended
Memorandum Circular No. 007, Series of 1977, issued by the National Pollution Control Commission
(NPCC).
- 1 April 1979: Escareal was also designated as Safety Manager pursuant to Article 162 of the Labor
Code (P.D. 442, as amended) and the pertinent implementing rule thereon. At the time of such
designation, Escareal was duly accredited as a Safety Practitioner by the Bureau of Labor Standards,
Department of Labor and Employment (DOLE) and the Safety Organization of the Philippines.
- In addition, the pertinent rules on Occupational Health and Safety implementing the Labor Code
provide for the designation of full-time safety men to ensure compliance with the safety requirements

prescribed by the Bureau of Labor Standards. Consequently, Escareal's designation was changed to
Pollution Control and Safety Manager.

Miguelito S. Navarro, PRC's Industrial Engineering Manager, was designated as the Pollution Control
and Safety Officer.

- In the course of his employment, Escareal's salary was regularly upgraded; the last pay hike was
granted on 28 March 1988 when he was officially informed that his salary was being increased to
P23,100.00 per month effective 1 April 1988. This last increase is indisputably a far cry from his starting
monthly salary of P4,230.00.

- In view of all this, Escareal filed a complaint for illegal dismissal with damages against the private
respondent PRC before the NLRC. Labor Arbiter Manuel P. Asuncion rendered a decision ordering PRC
to pay Escareal his redundancy pay in accordance with existing company policy on the matter, without
prejudice to the grant of additional benefits offered by PRC during the negotiation stage of the case,
though it never materialized for failure of the parties to reach an agreement.

- Sometime in the first week of November 1987, PRC's Personnel Administration Manager George B.
Ditching informed Escareal about the company's plan to declare the position of Pollution Control and
Safety Manager redundant. Ditching attempted to convince Escareal to accept the redundancy offer or
avail of the company's early retirement plan. Escareal refused and instead insisted on completing his
contract as he still had about three and a half (3 1/2) years left before reaching the mandatory retirement
age of sixty (60).
- 15 June 1988: Escareal's immediate superior, PRC's Engg Dept Manager Jesus P. Javelona, formally
informed Escareal that the position of "Safety and Pollution Control Manager will be declared redundant
effective at the close of work hours on 15th July 1988." Escareal was also notified that the functions and
duties of the position to be declared redundant will be absorbed and integrated with the duties of the
Industrial Engineering Manager; as a result thereof, Escareal "will receive full separation benefits
provided under the PRC Retirement Plan and additional redundancy payment under the scheme
applying to employees who are 50 years old and above and whose jobs have been declared redundant
by Management."
- Escareal protested his dismissal via his 22 June 1988 letter to Javelona. This notwithstanding, the PRC
unilaterally circulated a clearance dated 12 July 1988, to take effect on 15 July 1988, indicating therein
that its purpose is for Escareal's "early retirement" and not redundancy. Escareal confronted Javelona;
the latter, in his letter dated 13 July 1988, advised the former that the employment would be extended for
another month, or up to 15 August 1988. Escareal responded with a letter dated 25 July 1988
threatening legal action.

- On appeal, NLRC affirmed the Labor Arbiter's decision, with modification ordering PRC to pay Escareal
his retirement pay in accordance with the company policy and other benefits granted to him thereunder,
less outstanding obligations of the complainant with the company at the time of his dismissal. Separate
MFRs of PRC and Escareal were both dismissed. Hence, this petition.

ISSUES
1. WON PRC had valid and acceptable basis to declare the position of Pollution Control and Safety
Manager redundant
2. WON Escareal's right to security of tenure was violated by PRC
3. WON Escareal's employment was for a fixed definite period to end at his 60th birthday because of the
stipulation as to the retirement age of sixty (60) years
4. WON Escareal is entitled to backwages and retirement benefits
5. WON Escareal is entitled to damages and attorney's fees

- 14 July 1988: PRC's Industrial Relations Manager Bernardo N. Jambalos III sent a Notice of
Termination to the DOLE informing the latter that Escareal was being terminated on the ground of
redundancy effective 16 August 1988.

HELD

- 5 August 1988:Escareal had a meeting with Cesar Bautista and Dr. Reynaldo Alejandro, PRC's
President and Corporate Affairs Director, respectively. To his plea that he be allowed to finish his contract
of employment as he only had three (3) years left before reaching the mandatory retirement age,
Bautista retorted that the termination was final.

- Wiltshire File Co., Inc. vs. NLRC: Redundancy, for purposes of the Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual requirements of
the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as 257the overhiring of workers, a decreased volume
of business or the dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise.

- 8 August 1988: Escareal presented to Javelona a computation showing the amount of P2,436,534.50
due him (Escareal) by way of employee compensation and benefits.
- On the date of the effectivity of his termination, Escareal was only fifty-seven (57) years of age. He had
until 21 July 1991, his sixtieth (60th) birth anniversary, before he would have been compulsorily retired.
Also, on the date of effectivity of Escareal's termination, 16 August 1988, (UP Chemical Engg graduate)

1. NO

- Redundancy in an employer's personnel force, however, does not necessarily or even ordinarily refer to
duplication of work. That no other person was holding the same position which the dismissed employee
held prior to the termination of his services does not show that his position had not become redundant.

- PRC had no valid and acceptable basis to declare the position of Pollution Control and Safety Manager
redundant as the same may not be considered as superfluous; said positions are required by law. Thus,
it cannot be gainsaid that the services of Escareal are in excess of what is reasonably required by the
enterprise. Otherwise, PRC would not have allowed ten (10) long years to pass before opening its eyes
to that fact; neither would it have increased the Escareal's salary to P23,100.00 a month effective 1 April
1988. That Escareal's positions were not duplicitous is best evidenced by PRC's recognition of their
imperative need thereof, this is underscored by the fact that Miguelito S. Navarro, the company's
Industrial Engineering Manager, was designated as Pollution Control and Safety Manager on the very
same day of Escareal's termination.
- Indeed, the proposition that a department manned by a number of engineers presumably because of
the heavy workload, could still take on the additional responsibilities which were originally reposed in an
altogether separate section headed by Escareal, is difficult to accept.
- If PRC felt that either Escareal was incompetent or that the task could be performed by someone more
qualified, then why is it that the person designated to the position hardly had any experience in the field
concerned? And why reward Escareal, barely five (5) months before the dismissal, with an increase in
salary?
- If based on the ground of redundancy, such a move would be invalid as the creation of said position is
mandated by the law; the same cannot therefore be declared redundant.

- In this regard, it could be concluded that the respondent PRC was merely in a hurry to terminate the
services of Escareal as soon as possible in view of the latter's impending retirement; it appears that said
company was merely trying to avoid paying the retirement benefits Escareal stood to receive upon
reaching the age of sixty (60). PRC acted in bad faith.
3. NO
- There is no indication that PRC intended to offer uninterrupted employment until Escareal reached the
mandatory retirement age, the contract of employement merely informs Escareal of the compulsory
retirement age and the terms pertaining to the retirement.
- The letter to Escareal confirming his appointment does not categorically state when the period of
employment would end. It stands to reason then that Escareal's employment was not one with a specific
period.
4. YES
- Article 279, LC: an "employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement."

- There would seem to be no compelling reason to save money by removing such an important position.
As shown by their recent financial statements, PRC's year-end net profits had steadily increased from
1987 to 1990.

- Torillo vs. Leagardo, Jr. / Santos vs. NLRC: "The normal consequences of a finding that an employee
has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his
former position without loss of seniority rights and, secondly, the payment of backwages corresponding
to the period from his illegal dismissal up to actual reinstatement. xxx Though the grant of reinstatement
commonly carries with it an award of backwages, the inappropriateness or non-availability of one does
not carry with it the inappropriateness or non-availability of the other. xxx Put a little differently, payment
of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal,
separation pay, in contrast, is oriented towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement job."

- While concededly, Article 283 of the Labor Code does not require that the employer should be suffering
financial losses before he can terminate the services of the employee on the ground of redundancy, it
does not mean either that a company which is doing well can effect such a dismissal whimsically or
capriciously. The fact that a company is suffering from business losses merely provides stronger
justification for the termination.

- Reinstatement of Escareal would have been proper. However, since he reached the mandatory
retirement age on 21 July 1991, reinstatement is no longer feasible. He should thus be awarded his
backwages from 16 August 1988 to 21 July 1991, inclusive of allowances and the monetary equivalent of
the other benefits due him for that period, plus retirement benefits under the PRC's compulsory
retirement scheme which he would have been entitled to had he not been illegally dismissed.

2. YES

5. NO

- It is evident that Escareal's right to security of tenure was violated by the private respondent PRC. Both
the Constitution (Section 3, Article XIII) and the Labor Code (Article 279, P.D. 442, as amended)
enunciate this right as available to an employee.

- In his complaint and the attached Affidavit-Complaint, Escareal does not mention any claim for
damages and attorney s fees; furthermore, no evidence was offered to prove them. An award therefor
would not be justified.

- Security of tenure is a right which may not be denied on mere speculation of any unclear and nebulous
basis.

Disposition Petition granted.

- If the aim was to generate savings in terms of the salaries that PRC would not be paying Escareal any
more as a result of the streamlining of operations for improved efficiency, such a move could hardly be
justified in the face of PRC's hiring of ten (10) fresh graduates for the position of Management Trainee
and advertising for vacant positions in the Engineering/Technical Division at around the time of the
termination.

SY v. CA | 398 SCRA 301 | February 27, 2003

FACTS
- Respondent Jaime Sahot started working as a truck helper for the petitioner when he was 23. Later on
the company were renamed several times until it became SBT Trucking Corporation. For 36 years
before his dismissal, respondent continuously served the trucking business of the petitioners.
- in 1994, Sahot was 59 years old, he had been incurring absences as he was suffering from various
ailments, particularly the pain in his left thigh. He filed a week-long leave when he was treated for his
various ailments. He filed a formal request for extension of his leave, and during this time he was
threatened that if he refused to go back to work he would be terminated. He could not retire on pension
because petitioners never paid his correct SSS premiums. He could no longer work as his left thigh hurt
abominably. Eventually petitioners dismissed him from work on June 30.

control of the employees conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it.
Reasoning
- Private respondent actually engaged in work as an employee: he did not have the freedom to
determine where he would go, what he would do, and how he would do it; merely followed instructions of
petitioners as long as he was paid his wages.
- ON PARTNERSHIP: A1767, NCC- contract of partnership is where 2 or more persons bind themselves
to contribute money, property or industry to a common fund, with the intention of dividing the profits
among themselves.
as applied in this case: no written agreement exist to prove partnership; no proof respondent was
receiving a share in the profits, no proof that he actively participated in the management,
administration and adoption of policies of the business.

- Sahot filed a complaint for illegal dismissal. Petitioners claim that Sahot was their industrial partner;
that respondent only became their employee in 1994; that Sahot went on leave and never reported back
to work nor did he file an extension of his leave (therefore, should be deemed to have voluntarily
resigned)

- if doubt exists between the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter

- LA: pro-petitioners (no illegal dismissal, they were industrial partners, but still pay financial assistance)

- CA: affirmed with modification (employee, with separation pay for 36 years)

Ratio In termination cases, the burden is upon the employer to show by substantial evidence that the
termination was for lawful cause and validly made. A277, LC puts the burden of proving that the
dismissal of an employee was for a valid or authorized cause on the employer, without distinction
whether the employer admits or does not admit the dismissal. For an employees dismissal to be valid,
(a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process.

ISSUES

Reasoning

1. WON there was an employer-employee relationship between petitioners and respondent Sahot (or
WON Sahot is an industrial partner of the petitioners)

- ON VALID CAUSE: if disease as a ground for termination, refer to A284, LC and Sec8, Book VI, Rule I of
the Omnibus Implementing Rules of the Labor Code where 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 6
months even with proper medical treatment. If curable, then employee would be required to take a leave,
then reinstate to formal position upon restoration of his normal health. The requirement for a medical
certificate 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.

- NLRC: pro-respondent (employee, no abandonment of job, entitled to separation pay for 29 years)

2. WON there was a valid dismissal

3. WON Sahot is entitled to separation pay

HELD
1. YES. No partnership, Sahot was employee.
Ratio: The elements to determine the existence of an employment 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 employees conduct. The most important element is the employers

2. NO

as applied in the case: petitioners did not comply with the medical certificate requirement before
Sahots dismissal was effected
- ON DUE PROCESS: The employer is required to furnish an employee with 2 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.
as applied in the case: No notice given, but instead what they did to threaten the employee with
dismissal, then actually implement the threat when the occasion presented itself because of private
respondents painful left thigh
3. YES
Ratio. An employee who is terminated because of disease is entitled to separation pay equivalent to at
least one month salary or to one-half month salary for every year of service, whichever is greater.
as applied in the case: entitled to separation pay computed at P2,080 times 36 years or P74, 880.
Disposition petition is DENIED and the decision of the Court of Appeals dated February 29, 2000 is
AFFIRMED. Petitioners must pay private respondent Jaime Sahot his separation pay for 36 years of
service at the rate of one-half monthly pay for every year of service, amounting to P74, 880.00, with
interest of six per centum (6%) per annum from finality f this decision until fully paid.

Assailed in the present petition are the Decision[1] and Resolution[2] of the Court of Appeals (CA) dated
February 16, 2005 and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision
modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC
NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration.
Villaruel v. Yeo Han Guan | GR 169191 | June 1, 2011
F: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a
Complaint[3] for payment of separation pay against Yuhans Enterprises.
Subsequently, in his Amended Complaint and Position Paper dated December 6, 1999, petitioner
alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing
Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned
and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the
company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's
complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the
changes in the company's name, petitioner remained in the employ of respondent. Petitioner further
alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he
reported for work but was no longer permitted to go back because of his illness; he asked that
respondent allow him to continue working but be assigned a lighter kind of work but his request was
denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount
corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation
pay computed from his first day of employment in June 1963, but respondent refused. Aside from
separation pay, petitioner prayed for the payment of service incentive leave for three years as well as
attorney's fees.

On the other hand, respondent averred in his Position Paper[5] that petitioner was hired as machine
operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he
was suffering from illness; after his recovery, petitioner was directed to report for work, but he never
showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery
of separation pay. Respondent claimed that he never terminated the services of petitioner and that
during their mandatory conference, he even told the latter that he could go back to work anytime but
petitioner clearly manifested that he was no longer interested in returning to work and instead asked for
separation pay.
On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner.
Aggrieved, respondent filed an appeal with the NLRC which also dismissed the petition.
On March 31, 2003, the Third Division of the NLRC rendered its Decision dismissing respondent's
appeal and affirming the Labor Arbiter's Decision. In the CA, petition was partially granted.
I: WON respondent, in fact, dismissed petitioner from his employment.
H: The Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is
entitled to such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist
thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter.
On the other hand, the Court agrees with the CA in its observation of the following circumstances as
proof that respondent did not terminate petitioner's employment:first, the only cause of action in
petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no
allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper;
and, third, there was no prayer for reinstatement.
In consonance with the above findings, the Court finds that petitioner was the one who initiated the
severance of his employment relations with respondent. It is evident from the various pleadings filed by
petitioner that he never intended to return to his employment with respondent on the ground that his
health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for
him to return to work. This is tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no
other choice but to disassociate himself from his employment.
By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social
justice" where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. However, there is no provision in the Labor Code which grants
separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily
resigns from employment is not entitled to separation pay, except when it is stipulated in the employment
contract or CBA, or it is sanctioned by established employer practice or policy.

In the present case, neither the abovementioned provisions of the Labor Code and its implementing
rules and regulations nor the exceptions apply because petitioner was not dismissed from his
employment and there is no evidence to show that payment of separation pay is stipulated in his
employment contract or sanctioned by established practice or policy of herein respondent, his employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned there
from, he is not entitled to separation pay under the provisions of the Labor Code. But we must stress that
this Court did allow, in several instances, the grant of financial assistance as a measure of social justice
and exceptional circumstances, and as an equitable concession. The instant case equally calls for
balancing the interests of the employer with those of the worker, if only to approximate what Justice
Laurel calls justice in its secular sense.
In the present case, respondent had been employed with the petitioner for almost twelve (12) years. On
February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while
their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a
month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to
continue his work. When he reported for work, petitioner refused to employ him despite the assurance of
its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as
2nd Engineer, but the position was not given to him, as it was occupied by another person known to one
of the stockholders. Consequently, for having been deprived of continued employment with petitioner's
vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's
seaman's book, as duly noted and signed by the captain of the vessel was marked "Very
Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his
long years of service with the petitioner.
Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice
would be served best if respondent will be given some equitable relief. Thus, the award of P100, 000.00
to respondent as financial assistance is deemed equitable under the circumstances. Petition denied.

petitioners filed a complaint for illegal dismissal and payment of money claims against respondent
company.
- On December 28, 1999, the Labor Arbiter held that the dismissal of petitioners was illegal and ordered
respondent company to pay them backwages, holidy and service incentive leave pay, and separation
pay in lieu of reinstatement. On appeal, the NLRC reversed the decision of the Labor Arbiter and ruled
that the latter erred in awarding backwages and separation pay to petitioners who deliberately
abandoned their work. On certiorari, the Court of Appeals affirmed the findings of the NLRC but ordered
respondent company to pay petitioners their money claims.

ISSUES
1. WON petitioners were illegally dismissed from the service
2. WON private respondent should be held liable for non-compliance with the procedural requirements
of due process

HELD
1. NO. Ratio: 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 latters
representative in connection with the employees work; (b) gross and habitual neglect by the employee
of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his
duly authorized representative; (d) commission of a crime or offense by the employee against the person
of his employer or any immediate member of his family or his duly authorized representative; and (e)
other causes analogous to the foregoing.

AGABON v. NATIONAL LABOR RELATIONS | 442 SCRA 573 | November 17, 2004
FACTS
- On January 2, 1992, petitioners Jenny Agabon and Virgilio Agabon were hired as gypsum board and
cornice installers by respondent Riviera Home Improvements, Inc., a corporation engaged in the
business of selling and installing ornamental and construction materials. Seven (7) years later, on
February 23, 1999, their services were terminated on the ground of abandonment of work. Apparently,
petitioners were subcontracting installation jobs for another company and were frequently absent from
work. Thus, when petitioners reported for work on February 23, 1999, respondent company refused to
reemploy them unless they agree to work on a pakyaw basis. Petitioners demurred since this would
mean losing their benefits. They were given their walking papers without according them the twin
requirements of notice and hearing. Respondent company stated that they abandon their jobs. Hence,

- In this case, Agabon abandoned their job. 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.
2. YES
- 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.

* It is worth noting that this ruling has evolved through times.

> Prior to 1989 - the rule was that a dismissal or termination is illegal if the employee was not given any
notice.

Issue: What are the legal implications when an employee is dismissed without complying with the notice
requirement under the Labor Code?

> In the 1989 case of Wenphil Corp. v. National Labor Relations Commission - 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. This became known
as the Wenphil or Belated Due Process Rule.

Held:

> On January 27, 2000, in Serrano - violation by the employer of the notice requirement in termination
for just or authorized causes was not a denial of due process that will nullify the termination. However,
the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it
is judicially declared that the dismissal was for a just or authorized cause.
Reasoning
a. Constitutional due process is different from statutory due process. The former protects the individual
from the government and assures him of his rights in criminal, civil or administrative proceedings; while
statutory due process found in the Labor Code and Implementing Rules protects employees from being
unjustly terminated without just cause after notice and hearing.
b. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the
employer when it is in the right, as in this case.

- The difference between this case and the case of Agabon vs. NLRC is that this case involves an
authorized cause (particularly retrenchment) under Art. 283 while the Agabon case involves a just
cause under Art. 282. The difference between the two is that in a just cause, the employee is the
direct cause of the termination, while in an authorized cause, the main actor is usually the employer.
- Because of the distinction, the SC held that if the dismissal is based on a just cause under 282 and
the employer failed to comply with the notice requirement, the sanction on the employer should be
tempered because the dismissal was initiated by an act imputable to the employee. On the other
hand, if the cause of the dismissal is one of the authorized causes under 283, failure of the employer
to comply with the notice requirement should merit a stiffer sanction because the dismissal process
was initiated by the employers exercise of management prerogative.
In this case, the dismissal of the respondents was indeed caused by retrenchment due to financial
losses of the company (one of the authorized causes). Therefore, Jaka is ordered to pay P50,000 as
indemnity (this is greater than the P30,000 indemnity for failure to comply with the notice requirement if
the dismissal is due to a just cause as held in the case of Agabon).

Disposition DENIED. But the private respondent is ORDERED to pay each of the petitioners the
amount of P30,000.00 as nominal damages for non-compliance with statutory due process.

Perez v. PT&T, GR 152048, April 7, 2009

Jaka Food Processing Corp. v. Pacot, GR 151378, March 28, 2005

Facts:

Facts:
- Respondents were employees of Jaka because the company was in dire financial straits.
- However, the termination was effected without Jaka complying with the requirement regarding the
service of written notice upon the employees and the DOLE at least one month before the intended
date of termination.
- The respondents filed a complaint with the Labor Arbiter who ruled in favor of the respondents.
- The NLRC initially affirmed the decision of the Labor Arbiter but subsequently reversed it decision
upon the filing of a Motion for Reconsideration.
On appeal, the Court of Appeals reversed the decision of the NLRC based on the ruling of the SC in the
case of Serrano vs. NLRC.

- Perez and Doria were employed by PT&T as shipping clerk and supervisor, respectively. Pursuant to
an unsigned letter, investigations were commenced by the company, yielding findings that hipping
Section jacked up the value of the freight costs for goods shipped and that the duplicates of the
shipping documents allegedly showed traces of tampering, alteration and superimposition. Petitioners
were placed on preventive suspension for 30 days. The 15-day suspension was extended twice. A
memorandum was issued charging criminal charges against petitioners and mandating their
dismissal for falsification of documents. Thus, petitioners filed a complaint for illegal suspension and
illegal dismissal.
- Labor Arbiter: found that the 30-day extension of petitioners suspension and their subsequent
dismissal were both illegal.
- NLRC: Reversed. CA: Affirmed NLRC
Issues:
1. Was there just cause for dismissal?

2. Was due process observed?

3. Is a hearing (or conference) mandatory in cases involving the dismissal of an employee?
4. Were petitioners illegally suspended?

Held:
-No. Without undermining the importance of a shipping order or request, we find respondents evidence
insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted.
Other than their bare allegations and the fact that such documents came into petitioners hands at some
point, respondents should have provided evidence of petitioners functions, the extent of their duties, the
procedure in the handling and approval of shipping requests and the fact that no personnel other than
petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the
alleged tampering of shipping documents.

The alterations on the shipping documents could not reasonably be attributed to petitioners because it
was never proven that petitioners alone had control of or access to these documents. Unless duly
proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of
the employer that it has lost confidence in its employee.

-No. Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due
process. To meet the requirements of due process in the dismissal of an employee, an employer must
furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and
giving to said employee a reasonable opportunity to explain his side and (2) another written notice
indicating that, upon due consideration of all circumstances, grounds have been established to justify the
employer's decision to dismiss the employee.

Petitioners were neither apprised of the charges against them nor given a chance to defend
themselves. They were simply and arbitrarily separated from work and served notices of
termination in total disregard of their rights to due process and security of tenure.
- Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the
so-called standards of due process outlined therein shall be observed "substantially," not strictly. This
is recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or
exclusive avenue of due process.
-

An employee may be validly suspended by the employer for just cause provided by law. Such
suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or
paid his wages during the extended period.

In this case, petitioners contended that they were not paid during the two 15-day extensions, or a total of
30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary.
Where the dismissal was without just or authorized cause and there was no due process, Article 279 of
the Labor Code, as amended, 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 this case, however, reinstatement is no longer possible because of the length of
time that has passed from the date of the incident to final resolution. Fourteen years have transpired
from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer
serve any prudent or practical purpose.

GLAXO WELLCOME PHILIPPINES INC v. NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA,

453 SCRA 256 | March 11, 2005

FACTS
- Union NAGKAKAISANG EMPLEYADO NG WELLCOME-DFA (NEW-DFA) filed a Petition for
Certification Election with the DOLE-NCR seeking to represent the bargaining unit comprised of all the
regular rank-and-file employees of [petitioner] company GLAXO-WELLCOME.
- Several days before the election GLAXO-WELLCOME issued a circular relative to the improvement of
the companys retirement policy bringing different employees to different resorts.
- In the meantime, GLAXO-WELLCOME 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 reassessed 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.
- Accordingly, a memorandum was sent by the company to [Respondent] de Guzman advising her that
she would have to surrender the vehicle assigned to her in light of the new car policy. De Guzman
refused to turn over said car and instead sought reconsideration from the companys National Sales
Manager. The latter did not accede to de Guzmans request. 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 was of the same case.
- The Union alleged undue interference due to a massive electioneering and manipulative acts of
GLAXO-WELLCOME prior to and during the certification election and that the new Car Allocation Policy
adopted by the company was intended to harass, retaliate and discriminate against union officers and
members. 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 (Which was the only sticking issue in this case).
- Labor Arbiter dismissed the charges of unfair labor practice, illegal dismissal and illegal suspension
filed against GLAXO-WELLCOME by union. NLRC affirmed the dismissal of the complaint. NLRC
likewise denied the motion for reconsideration.The CA affirmed the ruling of the National Labor Relations
Commission (NLRC) adopted the findings of the labor arbiter. It held that respondents had failed to
proffer convincing evidence to prove that petitioners assailed acts were ill-motivated and deliberately
orchestrated to interfere with or otherwise influence the conduct of the certification elections.
- Moreover, the CA ruled that there was nothing objectionable per se about the programs or incentive
schemes that the company had provided for the employees. The appellate court said that the grant of
benefits to the employees, as well as the adoption of the Car Allocation Policy, constituted a proper
exercise of the companys management prerogatives. This plain company practice had been set up to
make petitioners employee benefits competitive with those of other pharmaceutical corporations. De
Guzman and Cerezo were among those adversely affected by the policy, because they had failed to
meet the sales performance required thereunder, not because they were officers of the union.
- However, the CA held that the dismissal of De Guzman and the suspension of Cerezo had not been
validly effected. Opining that their defiant actuation toward management constituted willful
disobedience, which was a just cause for the termination of their employment, the appellate court
conceded the validity of the dismissal and suspension. Nonetheless, the CA said that those actions
(dismissal and suspension) effected by petitioner could not be deemed legal, because it had failed to
comply with procedural due process mandated by the Labor Code and with the two-notice requirement
under the Implementing Rules. According to the CA, petitioner did not accord private respondents the
benefit of a proper charge, an opportunity to defend themselves, and a formal investigation.
- The appellate court opined that the Memoranda were merely demands for respondents to comply with
the order to turn over their assigned cars. Those Memoranda merely intimated the possibility that De
Guzman and Cerezo might be charged and dismissed if they continued to disobey the order.

ISSUE: WON the Court of Appeals erred in ruling that petitioner did not observe procedural due process
in terminating and suspending the employment of de Guzman and Cerezo, respectively

HELD: YES, since there was substantial compliance through the memoranda.

- 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. The December 5, 1990 Memorandum sent to
Respondent De Guzman specified her acts that constituted gross insubordination.
- To each Memorandum, respondents were able to reply and expla sincein, 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 require 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. Respondents were amply informed of
the cause of their dismissal. Their correspondence with petitioner took almost a month, which was
sufficient cooling time within which the parties could have, and in fact had, tried to settle the problem
amicably. Moreover, petitioners Memoranda amply gave them a distinct, different and effective first
level of remedy (which was to surrender the vehicles) to protect their jobs. Furthermore, they were still
able to file a Complaint with the labor arbiter, with better knowledge of the cause of their dismissal, with
longer time to prepare their case, and with greater opportunity to take care of the financial needs of their
family pendente lite.
- Agabon v. NLRC effectively reverted to Wenphil and ruled that a dismissal due to abandonment -- a just
cause -- was not illegal or ineffectual, even if done without due process; but that the employer should
indemnify the employee with nominal damages for non-compliance with statutory due process.
- 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.

unintentional. He explained that during that days trip, the windshield of the bus assigned to them was
smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a
result of the incident, he got confused in making the trip report.

- 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.

On November 26, 2001, respondent received a letter terminating his employment effective November
29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against
the company. On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal
deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay. He denied
committing any infraction and alleged that his dismissal was intended to bust union activities. Moreover,
he claimed that his dismissal was effected without due process.

Disposition Petition is GRANTED and the challenged Decision REVERSED. The Decision of the
NLRC dated August 28, 1998, affirming that of the labor arbiter dated August 15, 1995, is REINSTATED.

King of Kings v. Mamac, G.R. No. 166208, June 29, 2007

Facts: Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela
Fuente and Melissa Lim. Respondent Mamac was hired as bus conductor of Don Mariano Transit
Corporation (DMTC) on April 29, 1999. The DMTC employees including respondent formed
the Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with
the Department of Labor and Employment. Pending the holding of a certification election in DMTC,
petitioner KKTI was incorporated with the Securities and Exchange Commission which acquired new
buses. Many DMTC employees were subsequently transferred to KKTI and excluded from the election.
The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was
registered with DOLE. Respondent was elected KKKK president.

Respondent was required to accomplish a Conductors Trip Report and submit it to the company after
each trip. As a background, this report indicates the ticket opening and closing for the particular day of
duty. After submission, the company audits the reports. Once an irregularity is discovered, the company
issues an Irregularity Report against the employee, indicating the nature and details of the
irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written
statement or counter-affidavit at the back of the same Irregularity Report. After considering the
explanation of the employee, the company then makes a determination of whether to accept the
explanation or impose upon the employee a penalty for committing an infraction. That decision shall be
stated on said Irregularity Report and will be furnished to the employee.

In its April 3, 2002 Position Paper, KKTI contended that respondent was legally dismissed after his
commission of a series of misconducts and misdeeds. It claimed that respondent had violated the trust
and confidence reposed upon him by KKTI. Also, it averred that it had observed due process in
dismissing respondent and maintained that respondent was not entitled to his money claims such as
service incentive leave and 13th-month pay because he was paid on commission or percentage basis.

On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing
respondents Complaint for lack of merit. Aggrieved, respondent appealed to the National Labor
Relations Commission (NLRC). On August 29, 2003, the NLRC rendered a Decision, respondent King
of Kings Transport Inc. is hereby ordered to indemnify complainant in the amount of ten thousand pesos
(P10, 000) for failure to comply with due process prior to termination.

CA: held that there was just cause for respondents dismissal. Moreover, the CA held that
respondent is entitled to the 13th-month pay benefit.

Issue: WON CA erred in ruling that KKTI did not comply with the requirements of procedural due
process before dismissing the services of the complainant/private respondent.

Held: The petition is partly meritorious.

Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an irregularity. It
discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an
income of eight hundred and ninety pesos. While no irregularity report was prepared on the October 28,
2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter,
[3] respondent said that the erroneous declaration in his October 28, 2001 Trip Report was

Non-compliance with the Due Process Requirements: Due process under the Labor Code involves
two aspects: first, substantivethe valid and authorized causes of termination of employment under the
Labor Code; and second, proceduralthe manner of dismissal. In the present case, the CA affirmed
the findings of the labor arbiter and the NLRC that the termination of employment of respondent was

based on a just cause. This ruling is not at issue in this case. The question to be determined is
whether the procedural requirements were complied with.

To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. Reasonable opportunity under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense.[15] This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the
facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which company
rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the
employees.

(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have been established to justify the
severance of their employment.

Respondent was not issued a written notice charging him of committing an infraction. The law is clear
on the matter. A verbal appraisal of the charges against an employee does not comply with the first
notice requirement.

Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report
notifying him of his offense, such would not comply with the requirements of the law. We observe from
the irregularity reports against respondent for his other offenses that such contained merely a general
description of the charges against him. The reports did not even state a company rule or policy that the
employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of
employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge sheet is not sufficient
notice to the employee. Third, no hearing was conducted.

Sanction for Non-compliance with Due Process Requirements: After a finding that petitioners failed
to comply with the due process requirements, the CA awarded full backwages in favor of respondent in
accordance with the doctrine in Serrano v. NLRC. However, the doctrine in Serrano had already been
abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer
should indemnify the employee with nominal damages. Thus, for non-compliance with the due process
requirements in the termination of respondents employment, petitioner KKTI is sanctioned to pay
respondent the amount of thirty thousand pesos (PhP 30,000) as damages.

Thirteenth (13th)-Month Pay: Court held that bus drivers and conductors who are paid a fixed or
guaranteed minimum wage in case their commission be less than the statutory minimum, and
commissions only in case where they are over and above the statutory minimum, are entitled to a 13thmonth pay equivalent to one-twelfth of their total earnings during the calendar year. Petition partly
granted.

Uniwide Sales Warehouse Club v. NLRC, 547 SCRA 222

Facts: Amalia P. Kawada is an employee of Uniwide. Sometime in 1998, Uniwide received reports from
the other employees regarding some problems in the departments managed by the private respondent.
Thus, on March 15, 1998, Uniwide, through Store Manager Apduhan, issued a Memorandum addressed
to the private respondent summarizing the various reported incidents signifying unsatisfactory
performance on the latters part which include the commingling of good and damaged items, sale of a
voluminous quantity of damaged toys and ready-to-wear items at unreasonable prices, and failure to
submit inventory reports. Uniwide asked private respondent for concrete plans on how she can
effectively perform her job.

She was constantly being bombarded with memorandum seeking to explain the reports of incidents. She
was unable to answer them. It got to a point that she was being shouted at because of her unsatisfactory
performance.

On August 2, 1998, Apduhan issued a Memorandum received on the same day by Edgardo Kawada, the
husband of private respondent, advising the latter of a hearing scheduled on August 12, 1998 to be held
at the Uniwide Office in Quirino Highway, and warning her that failure to appear shall constitute as
waiver and the case shall be submitted for decision based on available papers and evidence.

Respondent did not attend the hearing and was terminated. She then filed for an illegal dismissal
because she constructively dismissed which is the reason for her failure to attend the hearing.

Issue: Was there constructive dismissal? Respondent argues that since the investigation was conducted
after she was constructively dismissed. Therefore, according to her, there was no point to still attend the
investigation set on August 12, 1998. Hence there was denial of due process.

Held:
- Case law defines constructive dismissal as a cessation of work because continued employment is
rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay
or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable
to the employee.
- The test of constructive dismissal is whether a reasonable person in the employees position would
have felt compelled to give up his position under the circumstances. It is an act amounting to
dismissal but made to appear as if it were not. In fact, the employee who is constructively dismissed
may be allowed to keep on coming to work. Constructive dismissal is therefore a dismissal in
disguise. The law recognizes and resolves this situation in favor of employees in order to protect
their rights and interests from the coercive acts of the employer.
- In the present case, private respondent claims that from the months of February to June 1998, she
had been subjected to constant harassment, ridicule and inhumane treatment by Apduhan, with the
hope that the latter can get the private respondent to resign] The harassment allegedly came in the
form of successive memoranda which private respondent would receive almost every week,
enumerating a litany of offenses and maligning her reputation and spreading rumors among the
employees that private respondent shall be dismissed soon. The last straw of the imputed
harassment was the July 31, 1998 incident wherein private respondents life was put in danger when
she lost consciousness due to hypertension as a result of Apduhans alleged hostility and shouting.
The Court finds that private respondents allegation of harassment is a specious statement which
contains nothing but empty imputation of a fact that could hardly be given any evidentiary weight by
this Court. Private respondents bare allegations of constructive dismissal, when uncorroborated by
the evidence on record, cannot be given credence.
- 2.) The termination of private respondent was grounded on the existence of just cause under Article
282 (c) of the Labor Code or willful breach by the employee of the trust reposed on him by his
employer or a duly authorized representative.

Private respondent occupies a managerial position. As a managerial employee, mere existence of a

basis for believing that such employee has breached the trust of his employer would suffice for his
dismissal.

Wallem Maritime Services Inc. v. NLRC | G.R. No. 108433 | October 15, 1996

F: Private respondent Joselito V. Macatuno was hired by Wallem Shipmanagement Limited thru its local
manning agent, Wallem Maritime Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a
vessel of Liberian registry. Pursuant to the contract of employment, private respondent was employed
for ten (10) months covering the period February 26, 1989 until December 26, 1989 with a monthly
salary of two hundred seventy-six US dollars (US $276); hourly overtime rate of one dollar and seventytwo cents (US $1.72), and a monthly tanker allowance of one hundred twenty-seven dollars and sixty
cents (US $127.60), with six (6) days leave with pay for each month.
On June 24, 1989, while the vessel was berthed at the port of Kawasaki, Japan, an altercation took
place between private respondent and fellow Filipino crew member, Julius E. Gurimbao, on the one
hand, and a cadet/apprentice officer of the same nationality as the captain of the vessel on the other
hand. The master entered the incident in the tankers logbook.
As a consequence, private respondent and Gurimbao were repatriated to the Philippines where they lost
no time in lodging separate complaints for illegal dismissal with the POEA. According to the affidavit
private respondent executed before a POEA administering officer, the following facts led to the filing of
the complaint.
At about 5:50 a.m. of June 24, 1989, private respondent was on duty along with Gurimbao, checking the
manifold of the vessel and looking for oil leakages, when a cadet/apprentice who was of the same
nationality as the vessels captain (Singh), approached them. He ordered Gurimbao to use a shovel in
draining the water which, mixed with oil and dirt, had accumulated at the rear portion of the upper deck
of the vessel.
Gurimbao explained to the cadet/apprentice that throwing dirty and oily water overboard was prohibited
by the laws of Japan; in fact, port authorities were roaming and checking the sanitary conditions of the
port. The cadet/apprentice got mad and, shouting, ordered Gurimbao to get a hose and siphon off the
water. To avoid trouble, Gurimbao used a shovel in throwing the dirty water into the sea.
Having finished his job, Gurimbao complained to private respondent about the improper and
unauthorized act of the cadet/apprentice. The two went to the cadet/apprentice who was idly standing
in a corner. They reminded him that as a mere apprentice and not an officer of the vessel, he had no
right whatsoever to order around any member of the crew. However, the cadet/apprentice reacted
violently - shouting invectives and gesturing as if challenging the two to a fight. To prevent him from
intimidating them, private respondent pushed twice the cadet/apprentices chest while Gurimbao mildly
hit his arm. Frantic and shouting, the cadet/apprentice ran to the captain who happened to witness the
incident from the cabins window.
The captain summoned private respondent and Gurimbao. With their bosun (head of the deck crew),
they went to the captains cabin. The captain told them to pack up their things as their services were
being terminated. They would disembark at the next port, the Port of Ube, from where they would be
flown home to the Philippines, the repatriation expenses to be shouldered by them. The two attempted
to explain their side of the incident but the captain ignored them and firmly told them to go home.

Before disembarking, they were entrusted by the bosun with a letter of their fellow crew members,
addressed to Capt. Dio, attesting to their innocence. At the Port of Ube, an agent of the company
handed them their plane tickets and accompanied them the following day to the Fukoka Airport where
they boarded a Cathay Pacific airplane bound for Manila.
A few days after their arrival in Manila or on July 1, 1989, the two gave the letter to Capt. Dio and
conferred with him and Mr. James Nichols. The latter told private respondent that they could not secure
a reimbursement of their repatriation expenses nor could they get their salaries for the month of
June. Private respondent, in a letter addressed to Capt. Dio, asked for a reconsideration of their
dismissal but the latter did not respond. Frustrated, private respondent sought the assistance of a
lawyer who wrote Wallem a demand letter dated August 28, 1989 but the same was ignored.[4]
Petitioners, defending their position, alleged that the incident was not the first infraction committed by the
two. In his aforementioned decision of September 14, 1990 finding private respondents dismissal to be
illegal.
Granting that the entries in the logbook are true, a perusal thereof will readily show that complainant was
not afforded due process. The warnings allegedly given to complainant were not submitted in
evidence. Likewise, no investigation report was presented to prove that complainant was given the
opportunity to air his side of the incident.
It is also noteworthy to mention that complainant was able to describe with particularity the
circumstances which led to his misunderstanding with the cadet/apprentice and which we believe is not
sufficient to warrant his dismissal. NLRC affirmed the decision of the POEA, adopting as its own the
latters findings and conclusions.
I: WON private respondent was validly dismissed. No.
H: An employer may dismiss or lay off an employee only for just and authorized causes enumerated in
Articles 282 and 283 of the Labor Code. However, this basic and normal prerogative of an employer is
subject to regulation by the State in the exercise of its paramount police power inasmuch as the
preservation of lives of citizens, as well as their means of livelihood, is a basic duty of the State more
vital them the preservation of corporate profits. Ones employment, profession, trade or calling is a
property right within the protection of the constitutional guaranty of due process of law.
The ship captains logbook is vital evidence as Article 612 of the Code of Commerce requires him to
keep a record of the decisions he had adopted as the vessels head.
Under the Table of Offenses and Corresponding Administrative Penalties appended to the contract of
employment entered into by petitioners and private respondent, the offense described by the logbook
entry may well fall under insubordination and may constitute assaulting a superior officer with the use of
deadly weapon punishable with dismissal if the victim is indeed a superior officer. However, an
apprentice officer cannot be considered a superior officer. An apprentice is a person bound in the
form of law to a master, to learn from him his art, trade, or business, and to serve him during the time of
his apprenticeship.
Physical violence against anyone at any time and any place is reprehensible. However, in cases such as
this, where a persons livelihood is at stake, strict interpretation of the contract of employment in favor of
the worker must be observed to affirm the constitutional provision on protection to labor. Moreover, the
aforequoted entry in the logbook is so sketchy that, unsupported by other evidence, it leaves so many
questions unanswered. Although private respondent candidly admitted in his affidavit having hit Sason
on the chest twice, he did not admit using a spanner.

Hence, as the typewritten excerpts from the logbook were the only pieces of evidence presented by
petitioners to support the dismissal of private respondent, have no probative value at all, petitioners
cause must fail. Petitioners failure to substantiate the grounds for a valid dismissal was aggravated by
the manner by which the employment of private respondent was terminated. It must be borne in mind
that the right of an employer to dismiss an employee is to be distinguished from and should not be
confused with the manner in which such right is exercised. Dismissal from employment must not be
effected abusively and oppressively as it affects ones person and property.
Neither is the ship captains having witnessed the altercation an excuse for dispensing with the notice
and hearing requirements. Serving notice to private respondent under the circumstances cannot be
regarded as an absurdity and superfluity. The petition at bar is DISMISSED.
Lopez v. Alturas Group of Companies, GR 191008, April 11, 2011
F: Quirico Lopez was hired by respondent Alturas Group of Companies in 1997 as truck driver. Ten
years later or sometime in November 2007, he was dismissed after he was allegedly caught by
respondents security guard in the act of attempting to smuggle out of the company premises 60 kilos of
scrap iron worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271 that
was then assigned to him. When questioned, petitioner allegedly admitted to the security guard that he
was taking out the scrap iron consisting of lift springs out of which he would make axes.
Petitioner, in compliance with the Show Cause Notice dated December 5, 2007 issued by respondent
companys Human Resource Department Manager, denied the allegations by a handwritten explanation
written in the Visayan dialect.
Finding petitioners explanation unsatisfactory, respondent company terminated his employment by
Notice of Termination effective December 14, 2007 on the grounds of loss of trust and confidence, and of
violation of company rules and regulations. In issuing the Notice, respondent company also took into
account the result of an investigation showing that petitioner had been smuggling out its cartons which
he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus prompt it to file a criminal
case for Qualified Theft against him before the Regional Trial Court (RTC) of Bohol. It had in fact earlier
filed another criminal case for Qualified Theft against petitioner arising from the theft of the scrap iron.
Petitioner thereupon filed a complaint against respondent company for illegal dismissal and
underpayment of wages. Labor Arbiter held that petitioners dismissal was justified, for he, a truck driver,
held a position of trust and confidence, and his act of stealing company property was a violation of the
trust reposed upon him. NLRC set aside said decision.

I: WON there were invalid dismissal and underpayment of wages

H: Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due
process, and the legality of the manner of dismissal which constitutes procedural due process. [12]
As to substantive due process, the Court finds that respondent companys loss of trust and confidence

arising from petitioners smuggling out of the scrap iron, confounded by his past acts of unauthorized
selling cartons belonging to respondent company, constituted just cause for terminating his services.
Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a
position of trust who are proven to have breached the trust and confidence reposed on them. Petitioner,
a driver assigned with a specific vehicle, was entrusted with the transportation of respondent company
goods and property, and consequently with its handling and protection, hence, even if he did not occupy
a managerial position, he can be said to be holding a position of responsibility.

Procedural due process has been defined as giving an opportunity to be heard before judgment is
rendered. Important: After receiving the first notice apprising him of the charges against him, the
employee may submit a written explanation(which may be in the form of a letter, memorandum, affidavit
or position paper) and offer evidence in support thereof, like relevant company records (such as his 201
file and daily time records) and the sworn statements of his witnesses. For this purpose, he may
prepare his explanation personally or with the assistance of a representative or counsel. He may also
ask the employer to provide him copy of records material to his defense. His written explanation may
also include a request that a formal hearing or conference be held. In such a case, the conduct of a
formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary
disputes or where company rules or practice requires an actual hearing as part of employment
pretermination procedure.

Petitioner was given the opportunity to explain his side when he was informed of the charge against him
and required to submit his written explanation with which he complied. Parenthetically, the Court finds
that it was error for the NLRC to opine that petitioner should have been afforded counsel or advised of
the right to counsel. In petitioners case, there is no showing that he requested for a formal hearing to
be conducted or that he be assisted by counsel. An employees acquittal in a criminal case does not
automatically preclude a determination that he has been guilty of acts inimical to the employers interest
resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an employee does
not require proof beyond reasonable doubt; as noted earlier, the quantum of proof required is merely
substantial evidence. Petition is denied.

Aurelio v. NLRC, 221 SCRA 432

F: Petitioner started as clinical instructor of the College of Nursing of Northwestern College (NWC) in
June 1917 with a basic salary of P600.00 a month. In October 1979, petitioner was appointed Dean of
the College of Nursing with a starting salary of P3, 000.00 a month. In September 1981, petitioner was
promoted to College Administrator or Vice-President for Administration, retaining concurrently her
position of Dean of the College of Nursing, with an increased salary of P3, 500.00 per month. She was
later promoted to Executive Vice-President with the corresponding salary of P7, 500.00.

On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of respondent NWC, was elected
Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over the management
of respondent NWC. This new management unleashed a series of reorganization affecting the petitioner
and her husband, Oscar Aurelio. On May 30, 1988, petitioner's husband, then in the United States, was
removed as Auditor of the college. Without prior notice, petitioner's office was stripped of its facilities.
Petitioner's salary was reduced from P7, 500.00 to P5,000.00 then to P2,500.00 a month, among others.
Because of the indignities and humiliation suffered by the petitioner, she wrote a letter on September 20,
1988 informing the President of Northwestern College that she was going on an indefinite leave,
Petitioner sent a copy of the above letter to the Secretary of Education, Culture and Sports praying for
assistance. The representatives of the Regional Director submitted their official findings and
recommendations confirming the truth of the allegations of petitioner in her September 20, 1988 letter.
The DECS also confirmed the willingness of petitioner to withdraw her indefinite leave of absence. The
matter of petitioner's resumption of her position as Dean of the College of Nursing was addressed by the
DECS to the attention of respondents but Private respondents did not answer. They refused to accept
petitioner. On November 16, 1988, petitioner filed her complaint for illegal dismissal against private
respondents and prayed for reinstatement plus backwages, moral and exemplary damages, and
attorney's fees. At the arbitration level, petitioner and private respondents submitted their respective
position papers. On December 29, 1989, the labor arbiter issued a decision dismissing the complaint.
On April 30, 1988, the annual regular meeting of stockholders was held at the principal office of the
corporation in Laoag City. Since their election into office, the Board members have taken effective
control of the management of the college and have regularly exercised their corporate powers. The new
Board conducted a preliminary audit which revealed that the college was financially distressed, unable to
meet its maturing obligations with its creditor bank. The new management headed by its President, Ben
Nicolas, embarked on a realignment of positions and functions of the different department in order to
minimize expenditures.
As a result of the audit, NWC was compelled to abolish the administrative positions held by petitioner,
which she did not contest.
I: WON the dismissal of the petitioner was for a just and valid cause
H: Respondent had alleged and submitted evidence of irregularities of complainant during her tenure at
the college. The complainant instead of refuting the charges cited alleged irregularities committed by the
respondents in their respective offices. It must be emphasized that the rules of dismissal for managerial
employees are different from those governing ordinary employees for it would be unjust and inequitable
to compel an employer to continue with the employment of a person who occupies a managerial and
sensitive position despite loss of trust and confidence. At the very least, the relationship must be
considered seriously strained, foreclosing the remedy of reinstatement. We find that the allegations of
irregularities were sufficiently substantiated thus justifying petitioner's separation.
Moreover, and still on the issue of dismissal, the records disclose that in holding on to the two positions,
petitioner violated the Administrative Manual for Private Schools. Thus, the respondent had no other
recourse but to take away one of the positions from her or abolish the same. Undoubtedly, the College
Board of Directors has the authority to reorganize and streamline the operations of the college with the
end in view of minimizing expenditures.

The NLRC found that complainant was a managerial employee who has to have the complete trust and
confidence of respondents. However, we find that complainant was not accorded notice and
investigation prior to termination. Except for the allegation on constructive dismissal, this petition is a
repetition of what petitioner had already alleged below and which the labor arbiter and the NLRC
dismissed for lack of merit.
Petitioner's claim of constructive dismissal stems from her alleged removal from the positions of
Administrator, Vice President for Administration and Executive Vice President. The management of NWC
rests on its Board of Directors including the selection of members of the faculty who may be allowed to
assume other positions in the college aside from that of teacher or instructor. In 1988, when the then
new Board of Directors abolished the additional positions held by the petitioner, it was merely exercising
its right.
The Board abolished the positions not because the petitioner was the occupant thereof but because the
positions had become redundant with functions overlapping those of the President of the college. The
Board realized that the college was violating the Administrative Manual for Private School which requires
that all collegiate departments should have a full-time head.
The Board of Directors of NWC merely exercised rights vested in it by the Articles of Incorporation.
Petitioner failed to refute the evidence proffered by NWC before the labor arbiter. In her appeal to the
NLRC, petitioner also failed to rebut the findings of the labor arbiter. In the instant petition, she has again
failed to overturn private respondents' evidence as well as the findings of the labor arbiter which were
affirmed by the NLRC.
Petitioner's application for an indefinite leave of absence was not approved by the college authorities,
but this notwithstanding, she failed to follow-up her application and did not report for work. Believing she
was dismissed, petitioner filed the complaint for illegal dismissal, illegal deductions, underpayment,
unpaid wages or commissions and for moral damages and attorney's fees on November 16, 1988.

The prerogative of management to conduct its own business affairs to achieve its purposes cannot be
denied. When petitioner was stripped by the Board of her positions as Executive Vice President and Vice
President for Administration, with a corresponding reduction in salary, the Board did not act in a
capricious, whimsical, and arbitrary manner, thus negating malice and bad faith.
WHEREFORE, the decision under review is hereby AFFIRMED with the MODIFICATION that the award
of separation pay is DELETED
Golden Donuts, Inc. v. NLRC, G.R. Nos. 113666-68, January 19, 2000
FACTS: Private respondents were the complainants in three consolidated cases submitted with the
Labor Arbiter. Complainants were members of the KMDD-CFW whose CBA with the corporation expired.
During the negotiations, the management panel arrived late causing the union panel to walk out. The
management addressed a letter of apology to the union and requested for negotiations to resume. The
union panel did not show up despite letters from management advising the former of the CBA meetings.
The union struck. A compliant was filed by Golden Donuts to declare the strike illegal. Counsel for the
union and strikers pleaded for a compromise whereupon both parties would desist from continuing their
cases against each other. The Labor Arbiter rendered a decision upholding the dismissal of private
respondents and ruling that they were bound by the compromise agreement entered into by the union
with petitioners. Private respondents appealed to the NLRC, claiming that the union had no authority to
waive or compromise their individual rights and they were not bound by the compromise agreement
entered into by the union with petitioners.
ISSUE: Whether or not a union may compromise or waive the right to security of tenure and money
claims of its minority members, without the latters consent.

The dismissal of the petitioner was for a just and valid cause. It appears on record that the investigation
of petitioner's alleged irregularities was conducted after the filing of the complaint for illegal dismissal.

HELD: No. Absent a showing of the unions special authority to compromise the individual claims of
private respondents for reinstatement and backwages, there is no valid waiver of the aforesaid rights.
The judgment of the Labor Arbiter based on the compromise agreement does not have the effect of res
judicata upon private respondents who did not agree thereto since the requirement of identity of parties
is not satisfied. A judgment upon a compromise agreement has all the force and effect of any other
judgment and is conclusive only upon parties thereto and their privies. Private respondents have not
waived their right to security of tenure nor can they be barred from entitlement of their individual claims.
Since there was no evidence that private respondents committed any illegal act, petitioners failure to
reinstate them after the settlement of the strike amounts to illegal dismissal.

Public respondent's finding that petitioner was not afforded due process is correct but the Commission
erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil
cases, this Court merely awarded P1,000.00 as penalty for non-observance of due process.

Cabigting v. San Miguel Foods, GR 167706, Nov. 5, 2009

As pointed out earlier, the rules on termination of employment, penalties for infractions, and resort to
concerted actions, insofar as managerial employees are concerned, are not necessarily the same as
those applicable to termination of employment of ordinary employees.
Both the labor arbiter and the public respondent NLRC found that there is some basis for respondent
NWC's loss of trust and confidence on petitioner.

The Board of Directors, composed of the individual private respondents herein, has the power granted
by the Corporation Code to implement a reorganization of respondent college's offices, including the
abolition of various positions, since it is implied or incidental to its power to conduct the regular business
affairs of the corporation.

F: Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San Miguel Corporation,
Feeds and Livestock Division (B-Meg) on February 16, 1984 and after years of service, he was
promoted as inventory controller.

On June 26, 2000, respondent San Miguel Foods, Inc., through its President, Mr. Arnaldo Africa, sent
petitioner a letter informing him that his position as sales office coordinator under its logistic department
has been declared redundant. Simultaneously, respondent terminated the services of petitioner
effective July 31, 2000, and offered him an early retirement package. Thereafter, petitioner was included
in the list of retrenched employees (for reason of redundancy) submitted by respondent to the
Department of Labor and Employment.

Petitioner was surprised upon receipt of the letter because he was not a sales office coordinator, and yet
he was being terminated as such. Accordingly, petitioner refused to avail of the early retirement package.
Prior to petitioners termination on July 31, 2000, he was an inventory controller, performing at the same
time the function of a warehouseman. Furthermore, petitioner was an active union officer of respondents
union but upon his termination, was only a member thereof.

With the support of his union, petitioner filed a Complaint questioning his termination primarily because
he was not a sales office coordinator, but an inventory controller, performing the functions of both an
inventory controller and a warehouseman. In reply, respondent reiterated its declaration that petitioners
position as sales office coordinator was redundant as a result of respondents effort to streamline its
operations.

Labor Arbiter (LA) rendered a Decision, where it ruled that petitioner was illegally dismissed. Accordingly,
the LA ordered respondent to pay petitioner backwages, separation pay in lieu of reinstatement and
attorneys fees. NLRC rendered a Decision affirming the LAs finding that petitioner was illegally
dismissed by respondent. CA rendered a Decision partially granting respondents petition

I: WON strained relations bar petitioners reinstatement.

H: Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to
reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship between the employer and the
employee has been unduly strained by reason of their irreconcilable differences, particularly where the
illegally dismissed employee held a managerial or key position in the company, it would be more prudent
to order payment of separation pay instead of reinstatement.

In Globe-Mackay Cable and Radio Corporation v. National Labor Relations Commission,

this Court discussed the limitations and qualifications for the application of the strained relations
principle, in this wise:
x x x If, in the wisdom of the Court, there may be a ground or grounds for nonapplication of the above-cited provision, this should be by way of exception, such
as when the reinstatement may be inadmissible due to ensuing strained relations
between the employer and the employee.
In such cases, it should be proved that the employee concerned
occupies a position where he enjoys the trust and confidence of his employer; and
that it is likely that if reinstated, an atmosphere of antipathy and antagonism may
be generated as to adversely affect the efficiency and productivity of the employee
concerned.
In order for the doctrine of strained relations to apply, it should be proved that the employee concerned
occupies a position where he enjoys the trust and confidence of his employer and that it is likely that if
reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the
efficiency and productivity of the employee concerned.

After a perusal of the LA Decision, this Court finds that the LA had no hard facts upon which to base the
application of the doctrine of strained relations, as the same was not squarely discussed nor elaborated
on. Also, it is of notice that said issue was addressed by the LA in just one sentence without indicating
factual circumstances why strained relations exist. The same is also true for the CA Decision which
disposed of the issue in just one sentence without any elaboration. Accordingly, this Court is of the
opinion that both the LA and the CA based their conclusions on impression alone.

Finally, it is noted that the position of warehouseman and inventory controller still exists up to date. The
nature of the controversy where the parties to this case were engaged is not of such nature that would
spawn a situation where the relations are severely strained between them as would bar the complainant
to his continued employment. Neither may it be said that his position entails a constant communion with
the respondent such that hostilities may bar smooth interactions between them. There is no basis for an
award of separation pay in lieu of reinstatement.

The claim of respondent is not meritorious. This Court shares petitioners view that the words allegedly
imputing malice and bad faith towards the respondent cannot be made a basis for denying his
reinstatement.

The doctrine of strained relations has been made applicable to cases where the employee decides
not to be reinstated and demands for separation pay. The same, however, does not apply to herein
petition, as petitioner is asking for his reinstatement despite his illegal dismissal.

In conclusion, it bears to stress that it is human nature that some hostility will inevitably arise between
parties as a result of litigation, but the same does not always constitute strained relations in the absence
of proof or explanation that such indeed exists. Petition is granted.

BUSTAMANTE v. NLRC | 265 SCRA 1 | March 15, 1996

FACTS
- Petitioners Bustamante, Bantayan, Sumunod and Lamaran were employed as laborers, harvesters and
sprayers in private respondent companys banana plantation in Davao del Norte. They all signed
contracts of employment for 6 months from Jan.2, 1990 to July 2, 1990 but they had started working in
Sept. 1989. They were previously hired to do the same work for periods lasting a month or more, from
1985 to 1989. Before the employment contracts expired on July 2, 1990, petitioners employments were
terminated on the ground of poor performance due to age, as none of them was allegedly below 40
years old.
- Petitioners then filed a complaint for illegal dismissal which the Labor Arbiter decided in their favor. The
judgment declared the dismissal illegal, and ordered Evergreen Farms to reinstate them immediately
with 6 months backwages. Private respondent company appealed to the NLRC but the appeal was
dismissed for lack of merit. A subsequent MFR filed by respondent company was similarly disposed of
with the modification that the award for backwages was deleted, as there was no bad faith on the part of
Evergreen Farms.
- The removal of the award of backwages prompted petitioners to file this case, alleging that public
respondent NLRC gravely abused its discretion.

Reasoning
- Petitioners were employed at various periods from 1985-1989 for the same work they were hired to
perform. They were engaged to perform activities which are necessary in the usual business of the
employer. The contract for probationary employment was utilized by respondent company as a chicanery
to deny petitioners their status as regular employees and to evade paying them the benefits attached to
such status. They were hired and re-hired in a span of from 2-4 years to do the same type of work which
conclusively shows the necessity of petitioners services to the respondent.
- The act of hiring and re-hiring the petitioners over a period of time without considering them as regular
employees evidences bad faith on the part of private respondent. The public respondent made a finding
to this effect when it stated that the subsequent rehiring of petitioners on a probationary status clearly
appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners)
from becoming regular employees.
Disposition Resolution of NLRC is modified, the deletion of the award for backwages is set aside. LA
decision is AFFIRMED, with modification that backwages shall be paid to petitioners from the time of
their illegal dismissal up to the date of their reinstatement.

Palteng v. UCPB, GR 172199, February 27, 2009

F: Palteng was the Senior Assistant Manager/Branch Operations Officer of UCPB. After conducting a
diligence audit, the Internal Audit and Credit Review Division reported that Palteng committed several
offenses under the Employee Discipline Code in connection with Mercados (a client) Past Due Domestic
Bills Purchased (BP). Palteng explained that at the time the BP accommodation was extended, she was
not aware that Mercados Omnibus Line has been reduced to P50 Million and that it contained a P5
Million sublimit on BP. Nevertheless, she accepted full responsibility for granting the BP accommodation
against Mercados personal checks beyond her authority. While she admitted committing a major offense
that may cause her dismissal, she claimed that it was an honest mistake. Palteng was dismissed with
forfeiture of all benefits. Palteng filed a complaint for illegal dismissal.
The Labor Arbiter declared her dismissal illegal, entitling her to, among others, full backwages from the
time of her dismissal until finality of judgment. The CA modified the decision, declaring that backwages
should be computed until the labor arbiters decision.
I: Is Palteng entitled to backwages?

ISSUE: WON petitioners are entitled to backwages

HELD: YES, because petitioners are regular employees.

Ratio Regular employees dismissed for no valid cause are entitled to full backwages and other benefits
from the time their compensation was withheld from them up to the time of their actual reinstatement.

H: No. An employee who is illegally dismissed from work 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. However, in the event that reinstatement is no longer possible,
the employee may be given separation pay instead.
Reinstatement and payment of backwages are distinct and separate reliefs given to alleviate the
economic setback brought about by the employees dismissal. The award of one does not bar the other.
Backwages may be awarded without reinstatement, and reinstatement may be ordered without awarding
backwages.

In a number of cases, the Court, despite ordering reinstatement or payment of separation pay in lieu of
reinstatement, has not awarded backwages as penalty for the misconduct or infraction committed by the
employee.
In the case at bar, petitioner admitted that she granted the BP accommodation against Mercados
personal checks beyond and outside her authority. The Labor Arbiter, the NLRC and the Court of
Appeals all found her to have committed an "error of judgment," "honest mistake," vis--vis a "major
offense." Since petitioner was not faultless in regard to the offenses imputed against her, she is entitled
to separation pay only, without backwages.

Phil Tobacco Flue Curing v. NLRC, 300 SCRA 37

These refer to the consolidated cases for payment of separation pay lodged by [the] Lubat Group, and
for illegal dismissal and underpayment of separation pay by [the] Luris group, with prayers for damages
and attorneys fees against the above respondents.
F: There are two groups of employees, namely, the Lubat group and the Luris group. The Lubat group is
composed of petitioners seasonal employees who were not rehired for the 1994 tobacco season. At the
start of that season, they were merely informed that their employment had been terminated at the end of
the 1993 season. They claimed that petitioners refusal to allow them to report for work without mention
of any just or authorized cause constituted illegal dismissal. In their Complaint, they prayed for
separation pay, back wages, attorneys fees and moral damages.
On the other hand, the Luris group is made up of seasonal employees who worked during the 1994
season. On August 3, 1994, they received a notice informing them that, due to serious business losses,
petitioner planned to close its Balintawak plant and transfer its tobacco processing and redrying
operations to Ilocos Sur. Although the closure was to be effective September 15, 1994, they were no
longer allowed to work starting August 4, 1994. Instead, petitioner awarded them separation pay
computed according to the following formula:
total no. of days actually worked
----------------------------------------------------- x daily rate x 15 days
total no. of working days in one year
In their Complaint, they claimed that the computation should be based not on the above mathematical
equation, but on the actual number of years served. In addition, they contended that they were illegally
dismissed, and thus they prayed for back wages.
Against these factual antecedents, the labor arbiter ordered the petitioner to pay complainants
separation pay differential plus attorneys fees in the total amount of P3,092,896.76. Dissatisfied with
said Decision, Philippine Tobacco and the complainants filed their respective appeals before the NLRC.
As noted earlier, the NLRC affirmed the labor arbiters Decision. Before this Court, only Philippine
Tobacco filed the present recourse, as the complainants did not question the NLRC Decision.

Issues: In the Courts view, three issues must be tackled: First, did petitioner prove serious business
losses, its justification for the nonpayment of separation pay? Second, was the dismissal of the
employees valid? Third, how should the separation pay of illegally dismissed seasonal employees be
computed?
Held:
First Issue: Serious Business Losses Not Proven
Article 283 of the Labor Code prescribes the requisites and the procedure for an employees dismissal
arising from the closure or cessation of operation of the establishment.
It must be noted that the present case involves the closure of merely a unit or division, not the whole
business of an otherwise viable enterprise. Although Article 283 uses the phrase closure or cessation
of operation of an establishment or undertaking, this Court previously ruled in Coca-Cola Bottlers
(Phils.), Inc. v. NLRC that said statutory provision applies in cases of both complete and partial cessation
of the business operation.
Petitioner did not actually close its entire business. It merely transferred or relocated its tobacco
processing and redrying operations. Moreover, it was also engaged in, among others, corn and rental
operations, which were unaffected by the closure of its Balintawak plant.
Tested against the aforecited standards, we hold that herein petitioner was not able to prove serious
financial losses arising from its tobacco operations. A close examination of its Statement of Income and
Expenses and its recasted version thereof, which were presented in support of its contention, suggests
its failure to show business losses.
On the contrary, the Statement of Income and Expenses shows that the selling and administrative
expenses pertain not only to the tobacco business of petitioner, but also to its corn and rental operations,
and that the interest expenses pertain to all of its business operations. In fact, the aforementioned
Statement shows that there was a net gain from operations in each year covered by the report. In other
words, the recasted financial statement effectively modified the Statement of Income and Expenses by
deducting from the tobacco operations alone the operating costs pertaining to all businesses of
petitioner. The contention of petitioner that tobacco was its main business does not justify the devious
contents of the recasted financial statement. It is difficult to accept that it could not have incurred any
expense in its other operations. Common sense revolts against such proposition.
Second Issue: Lubat Group Illegally Dismissed
Petitioner illegally dismissed the members of the Lubat group when it refused to allow them to work
during the 1994 season. It follows that the employer-employee relationship between herein petitioner
and members of the Lubat group was not terminated at the end of the 1993 season. From the end of the
1993 season until the beginning of the 1994 season, they were considered only on leave but
nevertheless still in the employ of petitioner.
Petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the Lubat group
and the payment of their back wages. However, since reinstatement is no longer possible as petitioner
has already closed its Balintawak plant, respondent members of the said group should instead be
awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month pay, or
one month pay for every year of service, whichever is higher. It must be stressed that the separation
pay being awarded to the Lubat group is due to illegal dismissal; hence, it is different from the amount of
separation pay provided for in Article 283 in case of retrenchment to prevent losses or in case of closure
or cessation of the employers business, in either of which the separation pay is equivalent to at least
one (1) month or one-half (1/2) month pay for every year of service, whichever is higher.

Third Issue: Amount of Separation Pay

The amount of separation pay is based on two factors: the amount of monthly salary and the number of
years of service. Although the Labor Code provides different definitions as to what constitutes one year
of service, Book Six does not specifically define one year of service for purposes of computing
separation pay. However, Articles 283 and 284 both state in connection with separation pay that a
fraction of at least six months shall be considered one whole year. Applying this to the case at bar, we
hold that the amount of separation pay which respondent members of the Lubat and Luris groups should
receive is one-half (1/2) their respective average monthly pay during the last season they worked
multiplied by the number of years they actually rendered service, provided that they worked for at least
six months during a given year.
The formula that petitioner proposes, wherein a year of work is equivalent to actual work rendered for
303 days, is both unfair and inapplicable, considering that Articles 283 and 284 provide that in
connection with separation pay, a fraction of at least six months shall be considered one whole
year. Under these provisions, an employee who worked for only six months in a given year -- which is
certainly less than 303 days -- is considered to have worked for one whole year. NLRC Decision is
affirmed with modifications.
National Federation of Labor vs. NLRC | G.R. No. 127718 (March 2, 2000)
Facts: Petitioners are employees of the Patalon Coconut Estate in Zamboanga. With the advent of the
RA No. 6657 or the Comprehensive Agrarian Reform Law, the government sought the compulsory
acquisition of the land for agrarian reform. Because of this, the private respondents who are owners of
the estate decided to shut down its operation. Petitioners did not receive any separation pay. Now, the
petitioners pray, with the representation of their labor group, claiming that they were illegally dismissed.
They cite Article 283 of the Labor code where an employer may terminate the employment of any
employee due to the installation of labor saving devices, redundancy, and retrenchment to prevent
losses or the closing or cessation of operation. Petitioners became co-owners of the land and
subsequently filed complaints for illegal dismissal. The Regional Arbitration Branch of the NLRC
dismissed the charge for illegal dismissal but ordered the payment of separation pay. The NLRC
reversed the decision.
Issues:
a. Whether or not the Court should apply the legal maxim verbal legis in construing Article 283 of the
Labor Code as regards its applicability to the case at bar.
b. W/N an employer that was compelled to cease its operation because of compulsory acquisition by
the government of its land purposes of agrarian reform is liable to pay separation pay its affected
employees.
Held:
a. Yes, the legal maxim is applicable in this case. The use of the word May, in its plain meaning,
denotes that it is directory in nature and generally permissive only. Also, Article 283 of the Labor Code
does not contemplate a situation where the closure of the business establishment is forced upon the
employer and ultimately for the benefit of the employees. The Patalon Coconut Estate was closed down
because a large portion of the said estate was acquired by the DAR pursuant to the CARP. The
severance of employer-employee relationship between the parties came about involuntarily, as a result
of an act of the State. Consequently, complainants are not entitled to any separation pay. Reasoning:
Where the words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning
and applied without attempted interpretation.

Policy: Article 283 of the Labor Code applies in cases of closures of establishment and reduction of
personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an
establishment nor a reduction of personnel as contemplated under the article.
b. No. The peculiar circumstance in the case at bar involves neither the closure of an establishment nor
a reduction in personnel as contemplated in Article 283. The closure contemplated in 283 is a voluntary
act on the part of the employer as may be gleaned for the wording, the employer MAY also terminate,
denoting that it is directory in nature. The Labor Code does not contemplate a situation where the
closure is forced upon the employer. As such, petitioners are not entitled to separation pay as private
respondents did not voluntary shut down operation as they even sought to be exempted from the
coverage of RA 6657.
Universal Robina v. Caballeda
F: FACTS: Agripino Caballeda was a welder for URSUMCO from March
1989 until June 23, 1997
with a salary of P124 per day while Alejandro Cadalin was a crane operator from 1976 to June 15, 1997,
with a salary of P209.30 per day. John Gokongwei Jr., President of URSUMCO, issued a
Memorandum establishing the age of compulsory retirement at 60. Subsequently, RA 7641 set the
compulsory retirement age, in the absence of a retirement plan or agreement, at 65and that an
employee may retire upon reaching 60.
The National Labor Federation, the labor union of the workers of URSUMCO, of which Alejandro Cadalin
was a member entered into a CBA with URSUMCO. Article XV of said CBA particularly provided that the
retirement benefits of the members of the collective bargaining unit shall be in accordance with law.
Agripino and Alejandro subsequently reached the age of 60 and were allegedly forced to retire. They
accepted their separation pays and applied for retirement benefits with the SSS. Alejandro also executed
a quitclaim in favor of URSUMCO. They subsequently filed Complaints for illegal dismissal with the LA of
Dumaguete City.
URSUMCO claimed that Agripino and Alejandro voluntarily retired, that the Memorandum was no longer
in effect when they did so, and that RA 7641 cannot be given retroactive effect since there was an
existing CBA that covered the retirement benefits of the employees.
It further alleged that Agripino was merely a seasonal or project worker and not a casual worker since
the sugar millingbusiness is seasonal in nature. Thus, he was not actually forced to retire. The
termination of his employment was essentially based on the fact that the period in his contract had
expired.
I&R: WON RA 7641 has retroactive effect: Yes. The issue of the retroactive effect of RA 7641 has long
been settled. It is a curative statute. It is evident from the records that when respondents were
compulsorily retired from the service, R.A. 7641 was already in full force and effect. The petitioners failed
to prove that the respondents did not comply with the requirements for eligibility under the law for such
retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting
the retroactive application of R.A. 7641 in this case.
WON Agripino is a seasonal or project employee: No. He is a regular employee.
WON the Agripino and Alejandro voluntarily retired: No. 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.[29] 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 Art. 287 of the Labor
Code as amended; the legally mandated age for compulsory retirement is 65 years, while the set
minimum age for optional retirement is 60 years. The law generally looks with disfavor on quitclaims and
releases of employees who have been inveigled or pressured into signing them by unscrupulous
employers seeking to evade their responsibilities.
Ratio: (On nature of issue to the best of my understanding)
Whether or not Agripino was a seasonal/project employee or a regular employee is a question of fact.
Time and again, we have held that the Court is not a trier of facts. In this case, it is noteworthy that the
LA, the NLRC and the CA are one in ruling that Agripino was not a casual employee, much less a
seasonal or project employee. In their findings, Agripino was considered a regular employee of
URSUMCO. Consequently, such uniform finding of the LA, the NLRC, and the CA binds this Court.
Petition DENIED.
CAINTA CATHOLIC SCHOOL V. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION
F: On March 6, 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta
Catholic School and the Cainta Catholic Employees Union effective January 1, 1986 to May 31, 1989.
This CBA provided, among others that: This CBA shall become effective and binding upon the parties
from January 1, 1986 up to May 31, 1989. At least 60 days before the expiration of this agreement, the
parties hereto shall submit written proposals which shall be made the basis of negotiations for the
execution of new agreement.
If no new agreement is reached by the parties at the expiration of this agreement, all the provisions of
this agreement shall remain full force and in effect, up to the time a new agreement shall be executed.
Msgr. Mariano Balbago was appointed School Director in April 1987. The Union became inactive.
September 10, 1993, the union held an election of officers and Mrs. RosalindaLlagas was elected as
President; Paz Javier, VicePresident; Fe Villegas,Treasurer; and Maria Luisa Santos, Secretary. The
other elected officers wereRizalina Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer;
GuildaGalange and Jimmy del Rosario, auditors; Filomeno Dacanay and AdelinaAndres, P.R.O.s; and
Danilo Amigo and Arturo Guevarra, business managers.
Llagas was the Dean of of Student Affairs while Villegas and Santos were Year- Level Chairmen.
October 15, 1993, the school retired Llagas and Javier who had rendered more than twenty years of
continous service. Three days later, the Union filed a notice of strike with the National Concillation and
Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93. On November 8, 1993, the Union
struck and picketed the schools entrances. On November 11, 1993, the Secretary of Labor Ma. Nieves
R. Confesor issued an order certifying the labor dispute to the NLRC.
I: Whether the forced retirement of Llagas and Javier was a valid exercise of management prerogative.
Whether the strike was legal is highly dependent on whether the retirement was valid.
R: We are impelled to reverse the CA and affirm the validity of the termination of employment of Llagas
and Javier, arising as it did from a management prerogative granted by the mutually-negotiated 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 species 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.
The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged
that either Javier or Llagas had reached the compulsory retirement age of 60 years, but instead that they
had rendered at least 20 years of service in the School, the last three (3) years continuous. Clearly, the
CBA provision allows the employee to be retired by the School even before reaching the age of 60,
provided that he/she had rendered 20 years of service. Would such a stipulation be valid? Jurisprudence
affirms the position of the School.
Llagas and Javier were indeed managerial and supervisory employees. Having established that Llagas
is a managerial employee, she is proscribed from joining a labor union,38 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.39 Finding both union officers to be employees not belonging to the rank-and-file,
their membership in the Union has become questionable, rendering the Union inutile to represent their
cause.
Since the strike has been declared as illegal based on the foregoing discussion, we need not dwell on its
legality with respect to the means employed by the Union. There is neither legal nor factual justification
in awarding backwages to some union officers who have lost their employment status, in light of our
finding that the strike is illegal. The ruling of the NLRC is thus upheld on this point. We are also satisfied
with the disposition of the NLRC that mandates that Llagas and Javier (or her heirs) receive their
retirement benefits.
Dy Caico v SSS, G.R. No. 161357, Nov. 30, 2009
F:Elena Dycaico seeks to reverse the Decision of the Court of Appeals that affirmed the decision of
Social Security Commission denying her claim for survivors pension which accrues from the death of
her husband, Bonifacio Dycaico.
Bonifacio Dycaico became a member of SSS and designated Elena Dycaico and their eight children as
beneficiaries therein. At that time, Bonifacio and Elena lived together as husband and wife without the
benefit of marriage.
Nine years after, Bonifacio was considered retired and began receiving his monthly pension from the
SSS. He continued to receive the monthly pension until he passed away. A few months prior to his
death, however, Bonifacio married the petitioner.
Shortly after Bonifacios death, the petitioner filed with the SSS an application for survivors pension.
Her application, however, was denied on the ground that they were not living under the benefit of
marriage when Bonifacio became a member of SSS. The basis was Section 12-B(d) of Republic Act
(Rep. Act) No. 8282 which reads:
Sec. 12-B. Retirement Benefits. (d) Upon the death of the retired member, his primary beneficiaries as
of the date of his retirement shall be entitled to receive the monthly pension.

An appeal was made to the Court of Appeals but it was, likewise, denied. The same Court ruled that that
since the petitioner was merely the common-law wife of Bonifacio at the time of his retirement, his
designation of the petitioner as one of his beneficiaries is void.
The petitioner claims that there is no merit to the decision of Court of Appeals as the SSS law does is
silent denying the beneficiarys claim for survivor pension.
I: Whether or not there is a violation to equal protection clause of the Constitution.
H: The Supreme Court ruled in the positive. There is a violation of due process and equal protection. The
Court holds that the proviso as of the date of his retirement in Section 12-B(d) of Rep. Act No. 8282,
which qualifies the term primary beneficiaries, is unconstitutional for it violates the due process and
equal protection clauses of the Constitution.
If the said provision will be sustained, there will be an outright confiscation of benefits due to the
surviving spouse without giving her opportunity to be heard. There is, therefore, a violation of due
process.
There is also a violation of equal protection of the Constitution. A statute, to be valid and reasonable,
must satisfy the following requirements: must satisfy the following requirements: (1) it must rest on
substantial distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited to
existing conditions only; and (4) it must apply equally to all members of the same class.
Classifying dependent spouses and determining their entitlement to survivors pension based on
whether the marriage was contracted before or after the retirement of the other spouse bears no relation
to the achievement of the policy objective of the law
Indeed, the SC does not find substantial distinction between spouses whose assignment as a
beneficiary was made after the marriage and spouses whose assignment as a beneficiary was made
before the marriage. The statute violates equal protection clause when it grants surviving pensions only
to the spouses belonging to the former case and not to than the latter.
SOCIAL SECURITY COMMISSION VS. FAR S. ALBA
F: (Lamboso) filed a claim for retirement benefit before (SSS). However, his claim was denied on the
ground that he could not qualify for monthly pension under Republic Act (R.A.) No. 1161[5] (the Social
Security Act of 1954) as he then had only (39) paid contributions. Lamboso appealed the denial of his
claim by filing a petition before the Commission wherein he alleged that he should be entitled to monthly
retirement pension. He prayed for the adjustment of the date of his (SS) coverage&for the remittance of
his delinquent monthly contribution.
Lamboso averred that he received from Far Alba a monthly salary of P45.00 from 1960 to 1965 and
P180.00 from 1965 to 1973 and from employer Ramon S. Benedicto, a monthly salary of P500.00 from
1973 to 1984; and that he was reported to the SSS from coverage in 1973 and only a total of 39 monthly
contributions were remitted in his name.
SSS avers that Apolonio Lamboso, was reported for SS coverage, effective April 1, 1970 by employer
Far Alba; that he was, likewise, reported for SSS coverage by employer Kamandag Agri & Dev. Corp.;
and that Lamboso has only 39 monthly contributions (remitted in his favor by Far alba) but none under
Kamandag Agri. Dev. Corp.
The failure on the part of respondent Far Alba to file his responsive pleading to the petition filed by

petitioner Lamboso strongly indicates lack or absence of evidence, by way of rebuttal, to the positive
assertion of the petitioner regarding his employment with the former. Besides, defrauding respondent
Alba reported Lamboso to the SSS for coverage and this act of reporting is already an incontrovertible
proof of employment.
CA reversed and set aside both the resolution and the order of the Commission. It held that Far Alba
cannot be considered as an employer of Lamboso prior to 1970 because as administrator of the familyowned hacienda, he is not an employer under Section 8 (c) of the Social Security Act of 1954.
I: (1) whether Far Alba had been Lamboso's employer
R: Section 8 (c), Social Security Act of 1954 (as amended by Presidential Decree [P.D.] No. 1202 and
P.D. No. 1636) defines an employer as "any person, natural or juridical, domestic or foreign, who carries
on in the Philippines any trade or business, industry, undertaking, or activity of any kind and uses the
services of another person who is under his orders as regards the employment, except the Government
and any of its political subdivisions, branches or instrumentalities, including corporations owned or
controlled by the Government." Section 8 (d) defines an employee as "any person who performs
services for an employer in which either or both mental and physical efforts are used and who receives
compensation for such services where there is an employer-employee relationship."
Based on the testimonies, Far Alba had indeed served as Lamboso's employer, at the very least, he had
served as the hacienda's administrator before 1970.
(2) whether an administrator could be considered an employer within the scope of the Social Security Act
of 1954.
Yes. Alba was no ordinary administrator. He was no less than the son of the hacienda's owner and as
such he was an owner-in-waiting prior to his father's death. He was a member of the owner's family
assigned to actively manage the operations of the hacienda. Applying the control test which is used to
determine the existence of employer-employee relationship for purposes of compulsory coverage under
the SSS law, Far Alba is technically Lamboso's employer. Lamboso testified that he was selected and
his services were engaged by Far Alba himself. Corollarily, Far Alba held the prerogative of terminating
Lamboso's employment. Lamboso also testified in a direct manner that he had been paid his wages by
Far Alba. This testimony was seconded by Lamboso's co-worker, Rodolfo Sales. Anent the power of
control with regard to the work of the employee, the element refers merely to the existence of the power
and not the actual exercise thereof. It is not essential for the employer to actually supervise the
performance of duties of the employee; it is sufficient that the former has a right to wield the power.
Article 167(f) of the Labor Code which deals with employees' compensation and state insurance fund.
The said provision of the law defines and employer as " any person, natural or juridical, employing the
services of the employee." It also defines a person as "any individual, partnership, firm, association,
trust, corporation or legal representative thereof." Plainly, Far Alba, as the hacienda administrator, acts
as the legal representative of the employer and is thus an employer within the meaning of the law liable
to pay the SS contributions. Petition GRANTED.
SSS VS. ATLANTIC GULF AND PACIFIC COMP. OF MLA., INC.
F: AG&P and Semirara filed a complaint for specific performance and damages against SSS before
RTC of Batangas. Plaintiff informed SSS in writing of its premiums and loan amortization delinquencies
covering the period from January 2000 to May 2000 amounting to P7.3 Million. AG&P proposed to pay
its said arrears by end of 2000, but requested for the condonation of all penalties; defendant suggested

two (2) options to AG&P, either to pay by installment or through "dacion en pago"; AG&P chose to
settle its obligation with the SS through dacion en pago of its 5,999 sq. m. property situated in Baguio
with an appraised value of about P80.0 Million. SSS proposes to carve-out from the said property an
area sufficient to cover plaintiffs' delinquencies. AG&P, however, is not amenable to subdivide its Baguio
property;
AG&P then made another proposal to SSS offering as payment a portion of its 58,153 square meter-lot,
situated in Batangas. SSS informed AG&P of its decision to include other companies within the umbrella
of DMCI group with arrearages with the SSS. In the process of elimination of the companies belonging to
the DMCI group with possible outstanding obligation with the SSS, it was only SEMIRARA which was left
with outstanding delinquencies with the SSS. Thus, SEMIRARA's inclusion in the proposed settlement
through dacion en pago;
AG&P was directed by the defendant to submit certain docus, such as Transfer Certificate of Title, Tax
Declaration covering the subject lot, and the proposed subdivision plan, AG&P immediately complied.
As a result of the approval of the dacion en pago, posting of contributions and loan amortization to
individual member accounts, both for AG&P and SEMIRARA employees, was effected immediately. The
benefits of the member-employees of both companies were restored;
From the time of the approval of AG&P's proposal up to the present, AG&P is (sic) religiously remitting
the premium contributions and loan amortization of its member-employees to the defendant;
Defendant failed to take any action on said Deed of Assignment causing AG&P to re-submit it to the
same office of the Vice-President - NCR in December 2001. From its original submission of the Deed of
Assignment in July 2001 to its re-submission in December 2001, and SSS returning of the revised draft
in February 28, 2003 AG&P was consistent in its regular follow ups with SSS as to the status of its
submitted Deed of Assignment;
More than a year after the approval of AG&P's proposal, defendant sent the revised copy of the Deed of
Assignment to AG&P. However, the amount of the plaintiffs' obligation appearing in the approved Deed
of Assignment has ballooned from P29,261,902.45 to P40,846,610.64 allegedly because of the
additional interests and penalty charges assessed on plaintiffs' outstanding obligation from April 2001,
the date of approval of the proposal, up to January 2003;
AG&P and SEMIRARA maintain their willingness to settle their alleged obligation of P29,261,902.45 to
SSS. Defendant, however, refused to accept the payment through dacion en pago, unless plaintiffs also
pay the additional interests and penalties being charged;
I: which body has jurisdiction to entertain a controversy arising from the non-implementation of a dacion
en pago agreed upon by the parties as a means of settlement of private respondents' liabilities.
R: The pertinent provision of law detailing the jurisdiction of the Commission is Section 5(a) of R.A. No.
1161, as amended by R.A. No. 8282, otherwise known as the Social Security Act of 1997, to wit:
SEC. 5. Settlement of Disputes.- (a) Any dispute arising under this Act with respect to coverage,
benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by
the Commission, and any case filed with respect thereto shall be heard by the Commission, or any of its
members, or by hearing officers duly authorized by the Commission and decided within the mandatory
period of twenty (20) days after the submission of the evidence. The filing, determination and settlement
of disputes shall be governed by the rules and regulations promulgated by the Commission.

The law clearly vests upon the Commission jurisdiction over "disputes arising under this Act with respect
to coverage, benefits, contributions and penalties thereon or any matter related thereto..." Dispute is
defined as "a conflict or controversy."
The essential elements of a contract of sale, namely, consent, object certain, and cause or consideration
must be present. In its modern concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted equivalent of the performance of an
obligation is considered as the object of the contract of sale, while the debt is considered as the
purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have
the effect of totally extinguishing the debt or obligation.
The controversy, instead, lies in the non-implementation of the approved and agreeddacion en pago on
the part of the SSS. As such, respondents filed a suit to obtain its enforcement which is, doubtless, a suit
for specific performance and one incapable of pecuniary estimation beyond the competence of the
Commission.
In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the
principal relief sought, this Court has considered such actions as cases where the subject of the litigation
may not be estimated in terms of money, and are cognizable exclusively by courts of first instance (now
Regional Trial Courts).DENIED.
IBARRA P. ORTEGA, VS. SS Commission and SSS
F: Petitioner, a member of SSS, filed claims for partial permanent disability benefits on account of his
condition of Generalized Arthritis and Partial Ankylosis, [3] which claims the SSS granted for a total
monthly pension of 23 months.[4]
After the expiration of his disability pension, petitioner filed with the SSS a claim for total permanent
disability benefits w/c was denied, however, on the ground that he was already granted disability benefits
for the same illness and physical examination showed no progression of illness.
Aggrieved, petitioner filed before the SSC alleging that the SSS denied his application despite the fact
that his attending physician, diagnosed him to be suffering from Trigger finger 4th (L) and thumb
(L) while another private medical practitioner diagnosed him to be also suffering from Bronchial
Asthma, Hypertension and Gastro-Esophageal Reflux Disease.
Before taking cognizance of his appeal, SSC directed the exhaustion of administrative remedies. The
matter was thus referred to the SSS Office of the Medical Program Director for review of petitioner's
disability claim.
SSS Legal Department denied a reconsideration of the denial of his claim.
Upon referral of the SSC, the SSS Medical Program Department confirmed that, upon examination of
petitioner, there was no progression of his illness, prompting petitioner to submit a letter-opposition
charging the SSS medical officers of issuing fraudulent medical findings. SSS Medical Program
Department stood its ground and denied with finality petitioner's claim.

SSC denied petitioner's claim for entitlement to total permanent disability for lack of merit. Petitioner's
motion for reconsideration having been denied by Order appealed to CA.
I: whether he is entitled to total permanent disability benefits from the SSS given his "angioplasty
operation of the heart, coronary artery disease, ischemic heart disease, severe hypertension and a host
of other serious illnesses filed with the SSS
R: It bears stressing that Rule 45 and Rule 65 pertain to different remedies and have distinct
applications.[35] It is axiomatic that the remedy of certiorari is not available where the petitioner has the
remedy of appeal or some other plain, speedy and adequate remedy in the course of law. [36] The petition
for review under Rule 45 covers the mode of appeal from a judgment, final order, resolution or one which
completely disposes of the case, like the herein assailed Decision and Resolution of the appellate court.
There being already a final judgment at the time of the filing of the petition, a petition for review under
Rule 45 is the appropriate remedy.
Petitioner failed to carve out an exception to this rule, as he did not- and could not- illustrate the
inadequacy of an appeal as a remedy that could promptly relieve him from the injurious effects of the
assailed judgment.
While the Court may dismiss a petition outright for being an improper remedy, it may, in certain
instances where a petition was filed on time both under Rules 45 and 65 and in the interest of justice,
proceed to review the substance of the petition and treat it as having been filed under Rule 45. Either
way, however, the present petition just the same merits dismissal since it puts to issue questions of fact
rather than questions of law which are appropriate for review under a Rule 45 petition.

disability is total and permanent under the Labor Code if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a continuous period exceeding 120 days
regardless of whether he loses the use of any of his body parts.
SSS medical examiners are tasked by law to analyze the extent of personal incapacity resulting from
disease or injury. Oftentimes, a physician who is adequately versed in the knowledge of anatomy and
physiology will find himself deficient when called upon to express an opinion on the permanent changes
resulting from a disability. Unlike the general practitioner who merely concerns himself with the
examination of his patient for purposes of diagnosis and treatment, the medical examiner has to
consider varied factors and ascertain the claimant's related history and subjective complaints. DENIED.
SSC v. RIZAL POULTRY and LIVESTOCK ASSOCIATION, INC.
F: Alberto Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its owner,
Benjamin San Diego (San Diego). LA initially found that Angeles was an employee and that he was
illegally dismissed. On appeal, NLRC reversed LAs Decision and held that no employer-employee
relationship existed between Angeles and respondents. The ruling was anchored on the finding that the
duties performed by Angeles, such as carpentry, plumbing, painting and electrical works, were not
independent and integral steps in the essential operations of the company, which is engaged in the
poultry business.[4] Angeles elevated the case to the Court of Appeals via petition for certiorari. The
appellate court affirmed NLRC ruling and upheld the absence of employer-employee relationship.
Angeles moved for reconsideration but it was denied by the Court of Appeals. No further appeal was
undertaken, hence, an entry of judgment was made on 26 May 2001.[7]

The requisite quantum of proof in cases filed before administrative or quasi-judicial bodies is neither
proof beyond reasonable doubt nor preponderance of evidence. In this type of cases, a fact may be
deemed established if it is supported by substantial evidence, or that amount of relevant evidence which
a reasonable mind might accept as adequate to justify a conclusion. In this case, substantial evidence
abounds.

At any rate, the SSC did not take into consideration the decision of the NLRC. It denied respondents
motion to dismiss in an Order.

The conclusion that petitioner is not entitled to total permanent disability benefits under the Social
Security Law was reached after petitioner was examined not just by one but four SSS physicians.SSC
did not ignore the certifications of petitioner's attending physicians as, in fact, it ordered the SSS to
conduct an investigation as to the medical findings and final diagnosis by his attending physicians.

R: Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section
47(b) of the Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c). [14]

The member was requested to submit recent ECG, x-rays and other laboratory work-up results but he
could not locate them during visit and would still look for the said medical documents and mail them to
SSS. He was then advised to come to SSS, Diliman Branch for ECG and x-ray, however he refused. He
also refused to affix his signature on the medical field service form to confirm the visit of our Medical
Officer.
Petitioner's reliance on jurisprudence on work-connected disability claims insofar as it relates to a
demonstration of disability to perform his trade and profession[54] is misplaced.
Claims under the Labor Code for compensation and under the Social Security Law for benefits are not
the same as to their nature and purpose. On the one hand, the pertinent provisions of the Labor Code
govern compensability of work-related disabilities or when there is loss of income due to work-connected
or work-aggravated injury or illness. On the other hand, the benefits under the Social Security Law are
intended to provide insurance or protection against the hazards or risks of disability, sickness, old age or
death, inter alia, irrespective of whether they arose from or in the course of the employment. And unlike
under the Social Security Law, a

I: WON res judicata applies so as to preclude the SSC from resolving anew the existence of employeremployee relationship, which issue was previously determined in the NLRC case.

There is bar by prior judgment when, as between the first case where the judgment was rendered and
the second case that is sought to be barred, there is identity of parties, subject matter, and causes of
action. In this instance, the judgment in the first case constitutes an absolute bar to the second action.
But where there is identity of parties in the first and second cases, but no identity of causes of action, the
first judgment is conclusive only as to those matters actually and directly controverted and determined
and not as to matters merely involved therein. This is the concept of res judicata known as
conclusiveness of judgment. Stated differently, any right, fact or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies, whether or not the claim, demand, purpose, or subject matter of
the two actions is the same.
The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the
decision must have been rendered by a court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the
first and second action, identity of parties, subject matter, and causes of action. Should identity of
parties, subject matter, and causes of action be shown in the two cases, thenres judicata in its aspect as

a bar by prior judgment would apply. If as between the two cases, only identity of parties can be
shown, but not identical causes of action, then res judicata as conclusiveness of judgment applies.
The first element is present in this case. The NLRC ruling was affirmed by the Court of Appeals. It was a
judicial affirmation through a decision duly promulgated and rendered final and executory when no
appeal was undertaken within the reglementary period. The jurisdiction of the NLRC, which is a quasijudicial body, was undisputed. Neither can the jurisdiction of the Court of Appeals over the NLRC
decision be the subject of a dispute. The NLRC case was clearly decided on its merits; likewise on the
merits was the affirmance of the NLRC by CA. With respect to the fourth element of identity of parties,
we hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional
respondent in the SSC case. Jurisprudence however does not dictate absolute identity but only
substantial identity. There is substantial identity of parties when there is a community of interest between
a party in the first case and a party in the second case, even if the latter was not impleaded in the first
case.[20]
BSD Agro, Rizal Poultry and San Diego were litigating under one and the same entity both before the
NLRC and the SSC. Although Rizal Poultry is not a party in the NLRC case, there are numerous
indications that all the while, Rizal Poultry was also an employer of Angeles together with BSD Agro and
San Diego. Angeles admitted before the NLRC that he was employed by BSD Agro and San Diego from
1985 until 1997.[21] He made a similar claim in his Petition before the SSC including as employer Rizal
Poultry as respondent.[22] Angeles presented as evidence before the SSC his Identification Card and a
Job Order to prove his employment in Rizal Poultry. He clarified in his Opposition to the Motion to
Dismiss[23] filed before SSC that he failed to adduce these as evidence before the NLRC even if it would
have proven his employment with BSD Agro. Most significantly, the three respondents, BSD Agro, Rizal
Poultry and San Diego, litigated as one entity before the SSC. They were represented by one counsel
and they submitted their pleadings as such one entity. Certainly, and at the very least, a community of
interest exists among them. We therefore rule that there is substantial if not actual identity of parties
both in the NLRC and SSC cases. As previously stated, an identity in the cause of action need not obtain
in order to apply res judicata by conclusiveness of judgment. An identity of issues would suffice.
The NLRC decision on the absence of employer-employee relationship being binding in the SSC case,
we affirm the dismissal by Court of Appeals of the SSC case. DENIED.
CIRIACO HINOGUIN vs.EMPLOYEES' COMPENSATION COMMISSION and GSIS
F: Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog left Carranglan, Nueva Ecija, about noon on 1 August
1985 and arrived in Aritao, Nueva Viscaya, about 1:30 o'clock P.M. on the same day. 3 They proceeded
to the home of Dft. Alibuyog's parents where they had lunch. About 4:00 o'clock P.M., the three (3)
soldiers with a fourth man, a civilian and relative of Dft. Alibuyog, had some gin and beer, finishing a
bottle of gin and two (2) large bottles of beer. Three hours later, at about 7:00 o'clock P.M., the soldiers
left the Alibuyog home to return to their Company Headquarters. They boarded a tricycle, presumably a
motor-driven one, Sgt. Hinoguin and Cpl. Clavo seating themselves in the tricycle cab while Dft. Alibuyog
occupied the seat behind the driver. Upon reaching the poblacionof Aritao, Dft. Alibuyog dismounted,
walked towards and in front of the tricycle cab, holding his M-16 rifle in his right hand, not noticing that
the rifle's safety lever was on semi automatic (and not on "safety"). He accidentally touched the trigger,
firing a single shot in the process and hitting Sgt. Hinoguin, then still sitting in the cab, in the left lower
abdomen. The Sergeant did not apparently realize immediately that he had been hit; he took three (3)
steps forward, cried that he had been hit and fell to the ground.

His companions rushed Sgt. Hinoguin to a hospital in Bayombong, Nueva Viscaya, for treatment. Their
Company Commander, Capt. Besas, hurried to the hospital upon being notified of the shooting and there
talked with the wounded Sergeant. The latter confirmed to Capt. Besas that he had indeed been
accidentally shot by Dft. Alibuyog Sgt. Hinoguin was later moved to the AFP Medical Center in Quezon
City and there he died. The Death Certificate lists "septic shock" as immediate cause of death, and
"generalized septicemia of peritonitis" as antecedent cause, following his sustaining a gunshot wound.
An investigation conducted by H.Q., 14th Infantry Battalion concluded that the shooting of Sgt. Hinoguin
was "purely accidental in nature."
Petitioner filed his claim for compensation benefits under P.D. No. 626 (as amended), claiming that the
death of his son was work-connected and therefore compensable. This was denied 6 by the GSIS on the
ground that petitioner's son was not at his work place nor performing his duty as a soldier of the
Philippine Army at the time of his death.
Petitioner filed a Motion for Reconsideration which Motion was, however, denied by the GSIS. This
denial was confirmed by the Workmen's Compensation Commission ("WCC").
I: whether or not the death of Sgt. Lemick Hinoguin is compensable under the applicable statute and
regulations.
R: Considering that Sgt. Hinoguin died on 7 August 1985, the applicable law is to be found in Book Four,
Title III of the Labor Code, as amended. It may be noted at the outset that under Article 167 (g) of the
Labor Code, as amended and Section 4 (b) (1) of Rule I of the Amended (Implementing) Rules on
Employees' Compensation, the term "employee" includes a "member of the Armed Forces of the
Philippines." Rule XIII entitled "Death", of the Amended (Implementing) Rules provides in part as follows:
SECTION 1. Conditions to Entitlement. (a) The beneficiaries of a deceased employee shall be entitled
to an income benefit if all of the following conditions are satisfied:
(1) The employee had been duly reported to the System; (2) He died as a result of injury or sickness;
and (3) The System has been duly notified of his death, as well as the injury or sickness which caused
his death. His employer shall be liable for the benefit if such death occurred before the employee is duly
reported for coverage of the System.xxx
Article 167 (k) of the Labor Code as amended defines a compensable "injury" quite simply as "any
harmful change in the human organism from any accident arising out of and in the course of the
employment." The Amended (Implementing) Rules have, however, elaborated considerably on the
simple and succinct statutory provision. Rule III, Section 1 (a) reads:
SECTION 1. Grounds. (a) For the injury and the resulting disability or death to be compensable, the
injury must be the result of an employment accident satisfying all of the following grounds:
(1) The employee must have been injured at the place work requires him to be; (2) The employee must
have been performing his official functions; and (3) If the injury is sustained elsewhere, the employee
must have been executing an order for the employer.

It will be seen that because the Amended (Implementing) Rules are intended to apply to all kinds of
employment, such rules must be read and applied with reasonable flexibility and comprehensiveness.
The concept of a "work place" referred to in Ground 1, for instance, cannot always be literally applied to
a soldier on active duty status, as if he were a machine operator or a worker in an assembly line in a
factory or a clerk in a particular fixed office. Obviously, a soldier must go where his company is stationed.
In the instant case, Aritao, Nueva Viscaya was not, of course, Carranglan, Nueva Ecija. Aritao being
approximately 1-1/2 hours away from the latter by public transportation. But Sgt. Hinoguin, Cpl. Clavo
and Dft. Alibuyog had permission from their Commanding Officer to proceed to Aritao, and it appears to
us that a place which soldiers have secured lawful permission to be at cannot be very different, legally
speaking, from a place where they are required to go by their commanding officer.

Petitioner's foreman at the premises immediately notified the latter of the fatal incident, and petitioner
shouldered all the funeral expenses. A claim for compensation for the death of Gutana was filed by the
widow of the deceased and their children. After hearing, the Regional Office of DOLE, Bacolod City,
rendered a decision awarding death compensation to the claimants in the total amount of P4,000.00,
plus attorneys' fees and costs. Petitioner appealed to the Workmen's Compensation Commission which,
in turn, affirmed the decision just mentioned in its resolution of October 15, 1963, the latter being now
the subject of appeal.

Turning to the question of whether Sgt. Hinoguin was performing official functions at the time he
sustained the gunshot wound, it has already been pointed out above that the Line of Duty Board of
Officers of the 14th Infantry Battalion Headquarters had already determined that the death of Sgt.
Hinoguin had occurred "in line of duty." It may be noted in this connection that a soldier on active duty
status is really on 24 hours a day official duty status and is subject to military discipline and military law
24 hours a day. He is subject to call and to the orders of his superior officers at all times, 7 days a week,
except, of course, when he is on vacation leave status (which Sgt. Hinoguin was not). 'Thus, we think
that the work-connected character of Sgt. Hinoguins injury and death was not effectively precluded by
the simple circumstance that he was on an overnight pass to go to the home of Dft. Alibuyog, a soldier
under his own command. Sgt. Hinoguin did not effectively cease performing "official functions" because
he was granted a pass. More generally, a soldier in the Armed Forces must accept certain risks, for
instance, that he will be fired upon by forces hostile to the State or the Government. That is not, of
course, the only ask that he is compelled to accept by the very nature of his occupation or profession as
a soldier. Most of the persons around him are necessarily also members of the Armed Forces who carry
firearms, too. In other words, a soldier must also assume the risk of being accidentally fired upon by his
fellow soldiers. This is reasonably regarded as a hazard or risk inherent in his employment as a soldier.

The case is covered by the provisions of Section 24, Workmen's Compensation Act No. 3428, as
amended, which dispenses with the requirement of filing a claim for compensation if the employer had
voluntarily made compensation payments. Under Section 8 of the same act, burial expenses are
considered as part of the death benefits due to the heirs of a deceased laborer. It appears in this case
that petitioner had voluntarily paid the burial expenses in connection with the burial of Gutana.
Consequently, the late filing of the claim for compensation is not fatal.

We hold, therefore, that the death of Sgt. Hinoguin that resulted from his being hit by an accidental
discharge of the M-16 of Dft. Alibuyog, in the circumstances of this case, arose out of and in the course
of his employment as a soldier on active duty status in the Armed Forces of the Philippines and hence
compensable. REVERSED and the GSIS is hereby DIRECTED to award all applicable benefits in
respect of the death of Sgt. Lemick G. Hinoguin, to petitioner.
VISAYAN STEVEDORE ., vs. THE WORKMEN'S COMPENSATION COMMISSION
F: It appears that Graciano Gutana was a laborer of petitioner in its stevedoring business at the
Pulupandan wharf in Occidental Negros, at a daily salary of P4.60. Petitioner undertook the loading of
sugar on the Japanese ship "Hiyeharu Maru" then anchored about two miles from the coast of
Pulupandan, and Gutana was one of the more than seventy of its laborers assigned to do the loading.
After having rendered the usual 8hours of work, the laborers were given time off to take their evening
meal before working over time, as it was the purpose of the employer to finish the loading of the sugar
as soon as possible. After taking their meal on board the ship, Gutana and some of the laborers had to
answer the call of nature by the left side of a barge tied along the right side of the Japanese ship, in view
of the insufficiency of the sanitary facilities board. After relieving himself, and as he was standing and
buttoning up his pants, the raft "Narwhal" came along the right side of the barge and bumped it, causing
it to hit the right side of the Japanese vessel. As a result, Gutana was pinned by the end of the hatch
cover of the barge against the side of the vessel, thereby suffering physical injuries which resulted in his
death.

I&R: (1) the claim for compensation had prescribed having been filed more than three months after
Gutana's death.

(2) the death of Gutana was due to his notorious negligence.

Facts established by the evidence do not support petitioner's contention. Due to the number of laborers
engaged in the loading work, the sanitary facilities on board the "Hiyeharu Maru" were rendered
inadequate, thus compelling some of the laborers to answer the call of nature by going down a barge
tied along the right side of the ship. The deceased Gutana was among those who was forced, to resort
to this uncomfortable way of relieving himself. Moreover, in the circumstances of this case, it is but
logical to consider the barge as an extension of the premises where the laborers were working. As
already stated, they took their evening meal on board the ship and were supposed to resume their work
(overtime work) a reasonable time thereafter. As, because of this, they were not free to leave the vessel,
the accident must be deemed to be one arising out of, or in the course of employment. DISMISSED.
ALANO vs. EMPLOYEES' COMPENSATION COMMISSION
F: Dedicacion de Vera, a government employee during her lifetime, worked as principal of Salinap
Community School in San Carlos City, Pangasinan. Her tour of duty was from 7:30 a.m. to 5:30p.m. On
November 29, 1976, at 7:00 A.M., while she was waiting for a ride at Plaza Jaycee in San Carlos City on
her way to the school, she was bumped and run over by a speeding Toyotamini-bus which resulted in
her instantaneous death. She is survived by her four sons and a daughter. On June 27, 1977, Generoso
C. Alano, brother of the deceased, filed the instant claim for income benefit with the GSIS for and in
behalf of the decedent's children. The claim was,however, denied on the same date on the ground that
the "injury upon which compensation isbeing claimed is not an employment accident satisfying all the
conditions prescribed by law." OnJuly 19, 1977 appellant requested for a reconsideration of the system's
decision, but the samewas denied and the records of the case were elevated to this Commission for
review.
I: Whether or not the death of Dedicacion de Vera can be compensable.
H: In this case, it is not disputed that the deceased died while going to her place of work.She was at the
place where, as the petitioner puts it, her job necessarily required her to be if she was to reach her place
of work on time. There was nothing private or personal about theschool principal's being at the place of
the accident. She was there because her employmentrequired her to be there.As to the Government
Service Insurance System's manifestation, we hold that it is not fatal tothis case that it was not

impleaded as a party respondent. As early as the case of La O v.Employees' Compensation

Commission, (97 SCRA 782) up to Cabanero v. Employees' Compensation Commission (111 SCRA 413)
and recently,Clemente v. GSIS(G.R. No. L-47521, August 31,1987), this Court has ruled that the GSIS is
a proper party in employees' compensation cases as the ultimate implementing agency of
the Employees' Compensation Commission. We held in the cited cases that "the law and the rules refer
to the said System in all aspects of employee compensation including enforcement of decisions
(Article 182 of ImplementingRules)."
SALVADOR LAZO vs. EMPLOYEES' COMPENSATION COMMISSION
F: Salvador Lazo, is a security guard of the Central Bank of the Philippinesassigned to its main office in
Malate, Manila. His regular tour of duty is from 2:00 o'clock in theafternoon to 10:00 o'clock in the
evening. On 18 June 1986, the petitioner rendered duty from2:00 o'clock in the afternoon to 10:00
o'clock in the evening. But, as the security guard who was to relieve him failed to arrive, the petitioner
rendered overtime duty up to 5:00 o'clock in the morning, when he asked permission from his superior to
leave early in order totake home to Binangonan, Rizal, his sack of rice. On his way home, at about 6:00
o'clock in the morning, the passenger jeepney the petitioner was riding on turned turtle due to slippery
road. As a result, he sustained injuries and was taken to the Angono Emergency Hospital for treatment.
He was later transferred to the National Orthopedic Hospital where he was confined until 25 July
1986.For the injuries he sustained, petitioner filed a claim for disability benefits under PD 626, as
amended. His claim, however, was denied by the GSIS for the reason that It appears that after
performing your regular duties as Security Guard from 2:00 P.M. to 10:00P.M. on June 18, 1986, you
rendered overtime duty from 10:00 P.M. to 5:06 A.M. of the following day; that at about 5:06 A.M. after
asking permission from your superior you were allowed to leave the Office to do certain personal matter
that of bringing home a sack of rice and that, while on your way home, you met a vehicular accident
that resulted to (sic) your injuries. From the foregoing informations, it is evident that you were not at your
work place performing your duties when the incident occurred. 1It was held that the condition for
compensability had not been satisfied. Upon review of the case, the respondent Employees
Compensation Commission affirmed the decision since the accident which involved the petitioner
occurred far from his work place and while he was attending to a personal matter. Hence, the present
recourse.
I: Whether petitioner's injury comes within the meaning of and intendment of the phrase 'arising out of
and in the course of employment?
H: We held that 'where an employee, after working hours, attempted to ride on the platform of a service
truck of the company near his place of work, and, while thus attempting, slipped and fell to the ground
and was run over by the truck, resulting in his death, the accident may be said to have arisen out of or in
the course of employment, for which reason his death is compensable. The fact standing alone, that
the truck was in motion when the employee boarded, is insufficient to justify the conclusion that he had
been notoriously negligent, where it does not appear that the truck was running at a great speed.' And, in
a later case, Iloilo Dock &Engineering Co. vs. Workmen's Compensation Commission, 26 SCRA
102, 103, We ruled that' employment includes not only the actual doing of the work, but a reasonable
margin of timeand space necessary to be used in passing to and from the place where the work is to be
done.If the employee be injured while passing, with the express or implied consent of the employer, to or
from his work by a way over the employer's premises, or over those of another in such proximity and
relation as to be in practical effect a part of the employer's premises, the injury is one arising out of and
in the course of the employment as much as though it had happened while the employee was engaged
in his work at the place of its performance. In the case at bar, it can be seen that petitioner left his station
at the Central Bank several hours after his regular time off, because the reliever did not arrive, and so
petitioner was asked to goon overtime. After permission to leave was given, he went home. There is no
evidence on record that petitioner deviated from his usual, regular homeward route or that interruptions

occurred in the journey. There is no reason, in principle, why employees should not be protected for a
reasonable period of time prior to or after working hours and for a reasonable distance before reaching
or after leaving the employer's premises. The decision appealed from is REVERSED and SET ASIDE.
Let the case be remanded to the ECC and the GSIS for disposition in accordance with this decision.
(GSIS), vs CA and FELONILA ALEGRE
F: Private respondent Felonila Alegres deceased husband, SPO2 Florencio A. Alegre, was a police
officer assigned to the PNP station in the town of Vigan, Ilocos Sur.On December 6, 1994, he was
driving his tricycle and ferrying passengers within the vicinity of Imelda Commercial Complex when
SPO4 Alejandro Tenorio, Jr., Team/Desk Officer of the Police Assistance Center located at said complex,
confronted him regarding his tour of duty.SPO2 Alegre allegedly snubbed SPO4 Tenorio and even
directed curse words upon the latter. A verbal tussle then ensued between the two which led to the fatal
shooting of the deceased police officer. On account of her husbands death, private respondent
seasonably filed a claim for death benefits with petitioner (GSIS) pursuant to PD No. 626. In its decision
on August 7, 1995, the GSIS, denied the claim on the groundthat at the time of SPO2 Alegres death, he
was performing a personal activity which was notwork-connected which was later on affirmed by the
Employees Compensation Commission(ECC). Private respondent finally obtained a favorable ruling in
the Court of Appeals when itreversed the ECCs decision and ruled that SPO2 Alegres death was workconnected and,therefore, compensable. Hence; GSIS filed a petition for review on certiorari to the SC;
reiterating its position that SPO2 Alegres death lacks the requisite element of compensability which
is, that the activity being performed at the time of death must be work-connected.
I: Whether or not the SPO2 Alegres death is compensable pursuant to the applicable laws and
regulations.
H:Taking together existing jurisprudence and the pertinent guidelines of the ECC with respect to claims
for death benefits, namely: (a) that the employee must be at the place where his work requires him to be;
(b) that the employee must have been performing his official functions; and(c) that if the injury is
sustained elsewhere, the employee must have been executing an order for the employer, it is not difficult
to understand then why SPO2 Alegres widow should bedenied the claims otherwise due her. Obviously,
the matter SPO2 Alegre was attending to atthe time he met his death, that of ferrying passengers for a
fee, was intrinsically private andunofficial in nature proceeding as it did from no particular directive or
permission of his superior officer. That he may be called upon at any time to render police work as he is
considered to beon a round-the-clock duty and was not on an approved vacation leave will not change
theconclusion arrived at considering that he was not placed in a situation where he was required to
exercise his authority and duty as a policeman. In fact, he was refusing to render one pointingout that
he already complied with the duty detail. At any rate, the 24-hour duty doctrine, as applied to policemen
and soldiers, serves more as an after-the-fact validation of their acts to place them within the scope of
the guidelines rather than a blanket license to benefit them in all situations that may give rise to their
deaths.
In other words, the 24-hour duty doctrine should not be sweepingly applied to all acts and circumstances
causing the death of a police officer but only to those which, although not on official line of duty, are
nonetheless basically police service in character.
CELERINO VALERIANO,,vs.ECC and GSIS
F: Celerino S. Valeriano was employed as a fire truck driver assigned at the San Juan Fire
Station.Sometime on the evening of July 3, 1985, petitioner was standing along Santolan Road,Quezon
City, when he met a friend by the name of Alexander Agawin. They decided to proceed to Bonanza
Restaurant in EDSA, Quezon City, for dinner. On their way home at around 9:30PM, the owner-type

jeepney they were riding in figured in a head-on collision with another vehicle at the intersection of N.
Domingo and Broadway streets in Quezon City. Due to thestrong impact of the collision, petitioner was
thrown out of the vehicle and was severely injured.As a result of the mishap, petitioner was brought to
several hospitals for
treatment.On September 16, 1985, he filed a claim for income benefits under PD 626, with theGSIS. His
claim for benefits was opposed on the ground that the injuries he sustained did not directly arise or result
from the nature of his work. Under the present compensation law, injury and the resulting disability or
death is compensable if the injury resulted from an accident arising out of and in the course of
employment. It means that the injury or death must be sustained while the employee is in the
performance of hisofficial duty; that the injury is sustained at the place where his work requires him to
be; and if the injury is sustained elsewhere, that the employee is executing an order for the employer.
The aforementioned conditions are found wanting in the instant case. The accident that the appellant
met in the instant case occurred outside of his time and place of work. Neither was appellant performing
his official duties as a fireman at the time of the accident. In fact, appellant just left the Bonanza
Restaurant where he and his friends had dinner. Apparently, the injuries appellant sustainedfrom
the accidentdid not
arise out of [and] in the course of his employment. Considering therefore the absence of a causal link
between the contingency for which income benefits [are] being claimed and
his occupation as fireman, his claim under PD 626, asamended, cannot be given due course.
I: WHETHER PETITIONER'S INJURIES ARE WORK-CONNECTED.
H: Injuries and Resulting Disability. Disability benefits are granted an employee who sustains an injury or
contracts a sickness resulting in temporary total, permanent total, or permanent partial, disability.
For the injury and the resulting disability to be compensable, they must have necessarily resulted from
an accident arising out of and in the course of employment. Were Petitioner's Injuries Work Connected?
The two components of the coverage formula "arising out of" and "in the course of employment" are said
to be separate tests which must be independently satisfied; however, it should not be forgotten that the
basic concept of compensation coverage is unitary, not dual, and is best expressed in the word, "workconnection, because an
Uncompromising insistence on an independent application of each of the two portions of the test can, in
certain cases, exclude clearly work-connected injuries. The words "arising out of" refer to the origin or
cause of the accident, and are descriptive of its character, while the words "in the course of" refer to the
time, place and circumstances under which the accident takes place. As a matter of general proposition,
an injury or accident is said to arise "in the course of employment" when it takes place within the period
of the employment, at a place where the employee may reasonably be, and while he is fulfilling his
duties or is engaged in doing something incidental thereto.
Thus, for injury to be compensable, the standard of "work connection" must be substantially satisfied.
The injury and the resulting disability sustained by reason of employment are compensable regardless of
the place where the injured occurred, if it can be proven that at the time of the injury, the employee was
acting within the purview of his or her employment and performing an act reasonably necessary or
incidental. Petitioner Valeriano was not able to demonstrate solidly how his job as a fire truck driver was
related to the injuries he had suffered. That he sustained the injuries after pursuing a purely personal
and social function having dinner with some friends is clear from the records of the case. His injuries
were not acquired at his work place; nor were they sustained while he was performing an act within the
scope of his employment or in pursuit of an order of his superior. Thus, we agree with the

conclusion reached by the appellate court that his injuries and consequent disability were not workconnected and thus not compensable. DENIED.
Clemente vs. Government Service Insurance System
FACTS: Petitioner -Wife of late pedro clemente
-10 years janitor of doh, assignedin ilocos norte skin clinic Nov 3-14
-1976 hospitalized due to nephritis
-Later found out also suffering from portal cirrhosisand leprosy, AKA Hansens disease
-Nov. 14, 1976, died of uremia due to nephritis.
-Wife / PET. Filed for employees compensation under labor code to GSIS
GSIS -Denied Bec. Ailment is not occupational disease and not the least causally
related to his duties and condi of work.
-Motion for reco. Denied
GSIS - forwarded claim to ECC
ECC Rulings: 1.not listed in occupational diseases, 2.no evidence of casual connection
3. had acquired the disease prior employment
art 167 labor code: For sickness and the resulting disability and death be compensable : 1.) Sickness
must be listed in the occupational diseases. 2.) Proof that risk of contracting the disease is increased by
working conditions.
PET. Invokes theory of increased risk
ECC: - disease was caused by his employment
-it was only a recurrence of an existing disease aggravated by nature of work
GSIS: prayed to be dropped as party respondent in this case
ISSUES: 1. Whether or not there is sufficient evidence to sustain theory of increased risk.
-exposed as janitor diseased was to diff. carriers of viral and bacterial diseases , the EE most exposed to
dangerous concentration of infected materials and the least likely to know how to avoid infection.
-it is unreasonable to not conclude that the working conditions definitely increased the risk of contract f
the disease.
- Resps posture is against / inconsistent with the liberal of the labor code which favor the workers.
2. there have been aggravation of existing ailment but such aggravation is not in the present law.
- no evidence deceased was hired in state of having an existing disease_____ to become worse.
3. GSIS, to be dropped as party in the case
- no merit, the fact that the court required GSIS to comment is an indication that it is a necessary party
DISPO: Decision appealed is set aside. respondentGSIS ordered to pay.
1.P12,000 death benefits; 2.P1,200 Attys fee
RUBEN T. LIMBO, v. ECC and SSS.
F: Limbo was confined for one week at (PGH) because of joint pains. His work-up revealed that he had
elevated BUN, creatinine and anemia. When Limbo was subjected to a renal ultrasound, it was further
discovered that he had chronic renal disease and he was forthwith referred to a nephrologist and was
advised to undergo a kidney transplant. Limbo underwent a renal transplant at the PGH and was
discharged.
Limbo filed a claim for compensation benefits before (SSS), invoking (P.D.) No. 626, as amended.
However, the claim was denied on the ground that Limbos illness, end-stage renal disease secondary to
uric acid nephropathy, had no causal relationship to his job as Area Sales Supervisor. Limbo promptly
appealed to (ECC). ECC affirmed the decision of the SSS and dismissed the appeal for lack of merit. CA
dismissed, motion also denied.

I: whether or not end-stage renal disease secondary to uric acid nephropathy is compensable under P.D.
626, as amended.
R: Yes. Under the Amended Rules on Employees Compensation, (f)or the sickness and the resulting
disability to be compensable, the sickness must be the result of an occupational disease listed under
Annex A of these Rules with the conditions set therein satisfied; otherwise, proof must be shown that the
risk of contracting the disease is increased by the working conditions. Concededly, end-stage renal
disease secondary to uric acid nephropathy is not among the Occupational Diseases under Annex A of
the Amended Rules on Employees Compensation. This, however, would not automatically bar
petitioners claim for as long as he could prove that the risk of contracting the illness was increased by
his working conditions.
Petitioners job description showed that he was responsible for the Territorys collection, merchandising,
market hygiene and promotion goals; Principal Liason of the territory with the National Sales Manager,
etc. Considering the workload and areas of responsibility of petitioner in this case, it is not unlikely for
him to develop hypertension, which in turn led to uremia. It should be stressed that in determining
whether a disease is compensable, it is enough that there exists a reasonable work connection. It is
sufficient that the hypothesis on which the workmens claim is based is probable since probability, not
certainty, is the touchstone.
As correctly pointed out by the OSG, a physicians report is the best evidence of work-connection of
workmens ailments and can be the basis of an award even if the physician was not presented as a
witness.[6 We have no reason to doubt the findings of Dr. Mejia who is an expert in her field of work.
Verily, petitioner was able to show that his ailment was work-related.