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FRANCISCO V. NLRC (G.R. NO. 170087)
Facts:
Petitioner Angelina Francisco was hired by respondent Kasei Corporation during its
incorporation stage as Accountant and Corporate Secretary and later as Liaison
Officer. Subsequently she was also designated Acting Manager until replaced, but was
assured by the company that she was still connected as Technical Consultant.
Thereafter, Kasei Corporation reduced petitioner’s salary until it was later withheld
despite repeated follow-ups. Petitioner once again asked for her salary but was
informed that she is no longer connected with the company. Petitioner thus filed an
action for constructive dismissal before the Labor Arbiter. Respondent Kasei
Corporation averred that petitioner is not their employee as she performed her work at
her own discretion without their control and supervision. Both the Labor Arbiter and
NLRC tribunal found for petitioner. CA reversed the decision.
Issue:
Whether or not there was employer-employee relationship between the parties.
Ruling: YES.
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. The better approach would therefore
be to adopt a two-tiered test involving: (1) the putative employer’s 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.
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 corporation’s 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. Petitioner’s 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 latter’s line of business.
JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION
G.R. No. 138051 June 10, 2004
FACTS:
In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate
officers while MJMDC was represented by Sonza, as President and general manager,
and Tiangco as its EVP and treasurer. Referred to in the agreement as agent, MJMDC
agreed to provide Sonza’s services exclusively to ABS-CBN as talent for radio and
television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310, 000 for the
first year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN's President, Eugenio Lopez III,
where he irrevocably resigned in view of the recent events concerning his program and
career. The acts of the station are violative of the Agreement and said letter will serve
as notice of rescission of said contract. The letter also contained the waiver and
renunciation for recovery of the remaining amount stipulated but reserves the right to
seek recovery of the other benefits under said Agreement.
After the said letter, Sonza filed with the Department of Labor and Employment a
complaint alleging that ABS-CBN did not pay his salaries, separation pay, service
incentive pay,13th month pay, signing bonus, travel allowance and amounts under the
Employees Stock Option Plan (ESOP). ABS-CBN contended that no employee-
employer relationship existed between the parties. However, ABS-CBN continued to
remit Sonza’s monthly talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no employee-
employer relationship. The LA ruled that he is not an employee by reason of his
peculiar skill and talent as a TV host and a radio broadcaster. Unlike an ordinary
employee, he was free to perform his services in accordance with his own style. NLRC
and CA affirmed the LA. Should there be any complaint, it does not arise from an
employer-employee relationship but from a breach of contract.
ISSUE: Whether or not there was employer-employee relationship between the parties.
HELD:
There is no employer-employee relationship between Sonza and ABS-CBN. Petition
denied. Judgment decision affirmed.
Case law has consistently held that the elements of an employee-employer relationship
are selection and engagement of the employee, the payment of wages, the power of
dismissal and the employer’s power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called "control test", is
the most important element.

A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and radio programs
because of SONZA’s peculiar skills, talent and celebrity status. SONZA contends that
the “discretion used by respondent in specifically selecting and hiring complainant
over other broadcasters of possibly similar experience and qualification as
complainant belies respondent’s claim of independent contractorship.”
However, independent contractors often present themselves to possess unique skills,
expertise or talent to distinguish them from ordinary employees. 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 an independent contractual relationship. If SONZA did not possess such unique
skills, talent and celebrity status, ABS-CBN would not have entered into the
Agreement with SONZA but would have hired him through its personnel department
just like any other employee.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going
to MJMDC. SONZA asserts that this mode of fee payment shows that he was an
employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits
and privileges “which he would not have enjoyed if he were truly the subject of a valid
job contract.”
All the talent fees and benefits paid to SONZA were the result of negotiations that led
to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for
the parties to stipulate on benefits such as “SSS, Medicare, x x x and 13th month pay”
which the law automatically incorporates into every employer-employee contract.
Whatever benefits SONZA enjoyed arose from contract and not because of an
employer-employee relationship. In addition, SONZA’s talent fees are so huge and out
of the ordinary that they indicate more an independent contractual relationship rather
than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZA’s unique skills, talent and celebrity status not
possessed by ordinary employees.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on
grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws.
During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent fees as
long as “AGENT and Jay Sonza shall faithfully and completely perform each
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condition of this Agreement.” Even if it suffered severe business losses, ABS-CBN
could not retrench SONZA because ABS-CBN remained obligated to pay SONZA’s
talent fees during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-
CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in
the Agreement to continue paying SONZA’s talent fees during the remaining life of
the Agreement even if ABS-CBN cancelled SONZA’s programs through no fault of
SONZA.
D. Power of Control
First, SONZA contends that ABS-CBN exercised control over the means and methods
of his work. SONZA’s argument is misplaced. ABS-CBN engaged SONZA’s services
specifically to co-host the “Mel & Jay” programs. ABS-CBN did not assign any other
work to SONZA. To perform his work, SONZA only needed his skills and talent.
How SONZA delivered his lines, appeared on television, and sounded on radio were
outside ABS-CBN’s control. SONZA did not have to render eight hours of work per
day. 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 SONZA’s 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.
Second, SONZA urges us to rule that he was ABS-CBN’s employee because ABS-
CBN subjected him to its rules and standards of performance. SONZA claims that this
indicates ABS-CBN’s control “not only [over] his manner of work but also the quality
of his work." 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. The code of conduct imposed on SONZA under the
Agreement refers to the “Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-
CBN) as its Code of Ethics.” The KBP code applies to broadcasters, not to employees
of radio and television stations. Broadcasters are not necessarily employees of radio
and television stations. Clearly, the rules and standards of performance referred to in
the Agreement are those applicable to talents and not to 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.

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.
The hiring of exclusive talents is a widespread and accepted practice in the
entertainment industry. This practice is not designed to control the means and methods
of work of the talent, but simply to protect the investment of the broadcast station. The
broadcast station normally spends substantial amounts of money, time and effort “in
building up its talents as well as the programs they appear in and thus expects that said
talents remain exclusive with the station for a commensurate period of time.”
Normally, a much higher fee is paid to talents who agree to work exclusively for a
particular radio or television station. In short, the huge talent fees partially
compensates for exclusivity, as in the present case
De Leon vs NLRC
Facts:
Petitioner De Leon was employed by respondent company La Tondeña as maintenance
man whose work consisted mainly of painting company building and equipment, and
other odd jobs relating to maintenance. After having worked for respondent for more
than a year, petitioner requested that he be included in the payroll of regular
employees, to which the former responded by dismissing petitioner from his
employment. Petitioner having been refused reinstatement filed a complaint before the
Labor Arbiter. Petitioner asserts that he is a regular employee performing similar
functions as of a regular maintenance and was rehired by respondent company’s labor
agency to perform the same tasks. Respondent company meanwhile claims petitioner
was a casual worker hired only to paint a certain building in the premises and that his
work as painter terminated upon completion of the job. The Labor Arbiter ruled in
favor of petitioner but was reversed on appeal by the NLRC tribunal.
Issue:
Whether or not petitioner De Leon is a regular employee of respondent.
Ruling: YES.
The primary standard, therefore, of determining a 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 test is whether the former
is usually necessary or desirable in the usual business or trade of the employer.
It is not tenable to argue that the painting and maintenance work of petitioner are not
necessary in respondent’s business of manufacturing liquors and wines, just as it
cannot be said that only those who are directly involved in the process of producing
wines and liquors may be considered as necessary employees. Otherwise, there would
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have been no need for the regular Maintenance Section of respondent company’s
Engineering Department, manned by regular employees whom petitioner often worked
with.
The law demands that the nature and entirety of the activities performed by the
employee be considered. In the case of petitioner, the painting and maintenance work
given him manifest a treatment consistent with a maintenance man and not just a
painter, for if his job was truly only to paint a building there would have been no basis
for giving him other work assignments in between painting activities.
Furthermore, the petitioner performed his work of painting and maintenance activities
during his employment in respondent’s business which lasted for more than one year.
Certainly, by this fact alone he is entitled by law to be considered a regular employee.
And considering further that weeks after his dismissal, petitioner was rehired by the
company through a labor agency and was returned to his post in the Maintenance
Section and made to perform the same activities that he used to do, it cannot be denied
that as activities as a regular painter and maintenance man still exist.
Philippine Geothermal vs NLRC
FACTS:
Alvarez having recovered from a work-
related accident, failed to report to work for a total of eighteen (18) working days wit
h three (3) days off. Under petitioner’s company rules, employees who incur unautho
rized absences of six (6) days or more are subject to dismissal. After the fourth warni
ng, he was then terminated. Private respondent filed his complaint for illegal dismiss
al and the labor arbiter rendered a decision holding private respondent’s termination f
rom employment as valid and justified.On appeal, NLRC, reserved and set aside the
decision of the Labor Arbiter. Petitioner was ordered to reinstate Edilberto M. Alvare
z to his former position without loss of seniority rights but without backwages.
ISSUE:
Whether or not NLRC abused its discretion and acted beyond its jurisdiction by enter
taining an appeal that was filed out of time.
HELD:
On the issue of whether or not the appeal from the decision of the labor arbiter to the
NLRC was filed within the ten (10) day reglementary period, it is undisputed that pri
vate respondent received a copy of the labor arbiter’s decision on 5 September 1991.
Alvarez thus had up to 15 September 1991 to perfect his appeal. Since this last menti
oned date was a Sunday, private respondent had to file his appeal on the next busines
s day, 16 September 1991. Petitioner contends that the appeal was filed only on 20 S
eptember 1991. Respondent NLRC however found that private respondent filed his a
ppeal by registered mail on 16 September 1991, the same day that petitioner’s counse
l was furnished copies of said appeal.
The contention that even assuming arguendo that the appeal was filed on time, the ap
peal fee was paid four (4) days late (and, therefore, the appeal to the NLRC should b
e dismissed) likewise fails to entirely empress us. In C.W. Tan Manufacturing v. NL

RC, we held that “the broader interest of justice and the desired objective of deciding
the case on the merits demand that the appeal be given due course.”
Hacienda Fatima v. National Federation of Sugarcane Workers
Facts:
The petitioner disfavored the fact that the private respondent employees have formed
a union. When the union became the collective bargaining representative in the
certification election, the petitioner refused to sit down to negotiate a CBA. Moreover,
the respondents were not given work for a month amounting to unjustified dismissal.
As a result, the complainants staged a strike to protest but was settled through a
memorandum of agreement which contained a list of those considered as regular
employees for the payroll.
The NLRC held that there was illegal dismissal and this was affirmed by the Court of
Appeals.
Issue: W/N the employees are regular workers
RULING: Yes, they are regular and not seasonal employees. For them to be excluded
as regulars, it is not enough that they perform work that is seasonal in nature but they
also are employed for the duration of one season. The evidence only proved the first
but not the second requirement.
The ruling in Mercado v. NLRC is not applicable since in that case, the workers were
merely required to perform phases of agricultural work for a definite period of time,
after which, their services are available to other employers. The management's sudden
change of assignment reeks of bad faith, it is likewise guilty of ULP.
Brent School, Inc. v. Zamora
BRENT SCHOOL V ZAMORA
FACTS:
Alegre was an athletic director at Brent, at a yearly compensation of P20,000. His
contract fixed a specific term of 5 years for its existence, from July, 1971, to July,
1976. Subsequent subsidiary agreements in March 1973, August 1973, and Sept. 1974
reiterated the same terms and conditions, including the expiry date, as those contained
in the original contract of July, 1971.- 3 months before the expiration of the stipulated
period, in April 1976, Alegre was given a copy of the report filed by Brent with the
Dep. of Labor advising of the termination of his services, effective July 16, 1976. The
stated ground for termination was “completion of contract, expiration of the definite
period of employment.”
Alegre protested the announced termination of his employment. He argued that
although his contract did stipulate that the same would terminate on July 17, 1976,
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since his services were necessary and desirable in the usual business of his employer,
and his employment had lasted for five years, he had acquired the status of regular
employee and could not be removed except for valid cause.
The employment contract of 1971 was executed when the Labor Code of the
Philippines had not yet been promulgated, which came into effect some 3 years after
the perfection of the contract.
ISSUE: Whether or not the provisions of the Labor Code as amended (regarding
probationary/regular employees), have anathematized "fixed period employment" or
employment for a term.
HELD:
No. Before the Labor Code, there was no doubt about the validity of term employment.
It was impliedly but clearly recognized by the Termination Pay law, RA 1052.
The employment contract between Brent School and Alegre was executed on July 18,
1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been
promulgated. Indeed, the Code did not come into effect until November 1, 1974, some
three years after the perfection of the employment contract, and rights and obligations
there under had arisen and been mutually observed and enforced.
At that time, i.e., before the advent of the Labor Code, there was no doubt whatever
about the validity of term employment. It was impliedly but nonetheless clearly
recognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12
Basically, this statute provided that—
In cases of employment, without a definite period, in a commercial, industrial, or
agricultural establishment or enterprise, the employer or the employee may terminate
at any time the employment with just cause; or without just cause in the case of an
employee by serving written notice on the employer at least one month in advance, or
in the case of an employer, by serving such notice to the employee at least one month
in advance or one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of termination of
employment without just cause, may hold the employee liable for damages.
The employee, upon whom no such notice was served in case of termination of
employment without just cause, shall be entitled to compensation from the date of
termination of his employment in an amount equivalent to his salaries or wages
corresponding to the required period of notice.
There was, to repeat, clear albeit implied recognition of the licitness of term
employment. RA 1787 also enumerated what it considered to be just causes for
terminating an employment without a definite period, either by the employer or by the
employee without incurring any liability therefor.
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of the employee's right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code itself

has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was
agreed upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter. Unless thus limited
in its purview, the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and
apt to lead to absurd and unintended consequences.
INTERNATIONAL CATHOLIC MIGRATION COMMISSION vs NLRC
(Definition of Probation)
FACTS
Petitioner ICMC is a non-profit organization dedicated to refugee service at the
Philippine Refugee Processing Center in Morong, Bataan. It engaged the services of
private respondent Bernadette Galang on 1/24/1983 as a probationary cultural
orientation teacher. After 3 months, she was informed orally and in writing that her
services were being terminated because she failed in the performance evaluation of her
supervisors during the teacher evaluation program.
On 8/22/1983, Galang filed a complaint for illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the then Ministry of Labor and Employment,
praying for reinstatement with backwages, exemplary and moral damages.
On 10/8/1983, Labor Arbiter dismissed the complaint for illegal dismissal as well as
the complaint for moral and exemplary damages but ordering the ICMC to pay Galang
the sum of P6,000.00 as payment for the last 3 months of the agreed employment
period pursuant to her verbal contract of employment.
Both parties appealed the decision to the NLRC. On 8/22/1985, the NLRC, by a
majority vote of Commissioners Guillermo C. Medina and Gabriel M. Gatchalian,
sustained the decision of the Labor Arbiter and dismissed both appeals for lack of
merit. Dissatisfied, petitioner filed the instant petition.
ISSUE
Whether or not an employee who was terminated during the probationary period of
her employment is entitled to her salary for the unexpired portion of her six-month
probationary employment
RULING
NO. Galang was terminated during her probationary period of employment for failure
to qualify as a regular member of petitioner’s teaching staff in accordance with its
reasonable standards. Galang was found by petitioner to be deficient in classroom
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management, teacher-student relationship and teaching techniques. Failure to qualify
as a regular employee in accordance with the reasonable standards of the employer is
a just cause for terminating a probationary employee specifically recognized under
Article 282 (now Article 281) of the Labor Code.
The labor arbiter’s decision is erroneous. The award of salary for the unexpired
portion of the probationary employment on the ground that a probationary employment
for 6 months is an employment for a "definite period" which requires the employer to
exhaust the entire probationary period to give the employee the opportunity to meet
the required standards.
A probationary employee is one who is on trial by an employer during which the
employer determines whether or not he is qualified for permanent employment. A
probationary appointment is made to afford the employer an opportunity to observe
the fitness of a probationer while at work, and to ascertain whether he will become a
proper and efficient employee. The word “probationary,” as used to describe the period
of employment, implies the purpose of the term or period, but not its length.
Being in the nature of a “trial period” the essence of a probationary period of
employment fundamentally lies in the purpose or objective sought to be attained by
both the employer and the employee during said period. The length of time is
immaterial in determining the correlative rights of both in dealing with each other
during said period.
It is within the exercise of the right to select his employees that the employer may set
or fix a probationary period within which the latter may test and observe the conduct
of the former before hiring him permanently. As the law now stands, Article 281 of
the Labor Code gives ample authority to the employer to terminate a probationary
employee for a just cause or 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. Nothing would preclude the employer from extending
a regular or a permanent appointment to an employee once the employer finds that the
employee is qualified for regular employment even before the expiration of the
probationary period.
There was no showing, as borne out by the records, that there was circumvention of
the rights of Galang when she was informed of her termination. Her dismissal does not
appear to us as arbitrary, fanciful or whimsical. She was duly notified, orally and in
writing, that her services were terminated for failure to meet the prescribed standards
of petitioner as reflected in the performance evaluation conducted by her supervisors
during the teacher evaluating program. The dissatisfaction of petitioner over the
performance of private respondent in this regard is a legitimate exercise of its
prerogative to select whom to hire or refuse employment for the success of its program
or undertaking.

The lower court abused its discretion when it ordered ICMC to Galang her salary for
the unexpired three-month portion of her six-month probationary employment when
she was validly terminated during her probationary employment. To sanction such
action would not only be unjust, but oppressive on the part of the employer.
DISPOSITION: The petition is GRANTED. The Resolution of the NLRC is
REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent
her P6,000.00 salary for the unexpired portion of her six-month probationary
employment. No cost.
Phil. Federation of Credit Cooperatives Inc vs NLRC (1998)
Facts:
- Victoria Abril was employed by PFCCI in different capacities from 1982 to 1988,
when she went on leave until she gave birth. When she went back in 1989, after 8
months, another employee had been permanently appointed to her former position of
office secretary. She accepted a position of Regional Field Officer. The contract reads:
"That the employer hires the employee on contractual basis to the position of Regional
Field Officer of Region 4 under FCCI/WOCCU/Aid Project No. 8175 and to do the
function as stipulated in the job description assigned to him (her): on probationary
status effective February 17/90 for a period not to exceed six (6) months from said
effectivity, subject to renewal of this contract should the employee's performance be
satisfactory."
- Said period having elapsed, respondent was allowed to work until PFCCI presented
to her another employment contract for a period of one year commencing on January
2, 1991 until December 31, 1991, after which period, her employment was terminated.
- LA dismissed her complaint for illegal dismissal against PFCCI.
- NLRC set aside LA’s decision and ordered her reinstated to her last position held
(RFO) or to an equivalent position, with full backwages from Jan 1, 1992 until she is
reinstated.
Issue: WON Abril was a probationary employee.
Held: No. Abril is a regular employee.
It is an elementary rule in the law on labor relations that a probationary employee who
is engaged to work beyond the probationary period of six months, as provided under
Art. 281 of the Labor Code, as amended, or for any length of time set forth by the
employer, shall be considered a regular employee.
Article 281 of the Labor Code, as amended, allows the employer to secure the services
of an employee on a probationary basis which allows him to terminate the latter for
just cause or upon failure to qualify in accordance with reasonable standards set forth
by the employer at the time of his engagement. As defined in the case of International
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Catholic Migration v. NLRC, “a probationary employee is one who is on trial by an
employer during which the employer determines whether or not he is qualified for
permanent employment. A probationary employment is made to afford the employer
an opportunity to observe the fitness of a probationer while at work, and to ascertain
whether he will become a proper and efficient employee.”
International Catholic Migration Commission vs NLRC (1989)
Facts:
- Petitioner International Catholic Migration Commission (ICMC), a non-profit
organization dedicated to refugee service at the Philippine Refugee Processing Center
in Morong, Bataan engaged the services of private respondent Bernadette Galang as a
probationary cultural orientation teacher with a monthly salary of P2,000.00.
- Three (3) months thereafter, private respondent was informed, orally and in writing,
that her services were being terminated for her failure to meet the prescribed standards
of petitioner as reflected in the performance evaluation of her supervisors
- Private respondent filed a complaint for illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the then Ministry of Labor and Employment,
praying for reinstatement with backwages, exemplary and moral damages.
- Labor Arbiter rendered his decision dismissing the complaint for illegal dismissal as
well as the complaint for moral and exemplary damages but ordering the petitioner to
pay private respondent the sum of P6,000.00 as payment for the last three (3) months
of the agreed employment period pursuant to her verbal contract of employment.
- Both parties appealed the decision to the National Labor Relations Commission.
- The NLRC, by a majority vote, sustained the decision of the Labor Arbiter and thus
dismissed both appeals for lack of merit.
- Dissatisfied, petitioner filed the instant petition.
Issue: Whether or not an employee who was terminated during the probationary period
of her employment is entitled to salary for the unexpired portion of her 6-month
probationary employment.
Held: There is justifiable basis for the reversal of public respondent’s award of salary
for the unexpired three-month portion of private respondent’s six-month probationary
employment in the light of its express finding that there was no illegal dismissal. There
is no dispute that private respondent was terminated during her probationary period of
employment for failure to qualify as a regular member of petitioner’s teaching staff in
accordance with its reasonable standards. Records show that private respondent was
found by petitioner to be deficient in classroom management, teacher-student
relationship and teaching techniques.[8] Failure to qualify as a regular employee in
accordance with the reasonable standards of the employer is a just cause for
terminating a probationary employee specifically recognized under Article 282 (now
Article 281) of the Labor Code.

A probationary employee, as understood under Article 282 (now Article 281) of the
Labor Code, is one who is on trial by an employer during which the employer
determines whether or not he is qualified for permanent employment. A probationary
appointment is made to afford the employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he will become a proper and
efficient employee. The word “probationary”, as used to describe the period of
employment, implies the purpose of the term or period, but not its length.
Being in the nature of a “trial period” the essence of a probationary period of
employment fundamentally lies in the purpose or objective sought to be attained by
both the employer and the employee during said period. The length of time is
immaterial in determining the correlative rights of both in dealing with each other
during said period. While the employer, as stated earlier, observes the fitness, propriety
and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other, seeks to prove to the employer, that he has
the qualifications to meet the reasonable standards for permanent employment.
It is well settled that the employer has the right or is at liberty to choose who will be
hired and who will be denied employment. In that sense, it is within the exercise of the
right to select his employees that the employer may set or fix a probationary period
within which the latter may test and observe the conduct of the former before hiring
him permanently.
As the law now stands, Article 281 of the Labor Code gives ample authority to the
employer to terminate a probationary employee for a just cause or 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. There is nothing under
Article 281 of the Labor Code that would preclude the employer from extending a
regular or a permanent appointment to an employee once the employer finds that the
employee is qualified for regular employment even before the expiration of the
probationary period. Conversely, if the purpose sought by the employer is neither
attained nor attainable within the said period, Article 281 of the Labor Code does not
likewise preclude the employer from terminating the probationary employment on
justifiable causes as in the instant case.
INTERNATIONAL CATHOLIC MIGRATION COMMISSION vs NLRC
(Duration / Exception)
FACTS
Petitioner ICMC is a non-profit organization dedicated to refugee service at the
Philippine Refugee Processing Center in Morong, Bataan. It engaged the services of
private respondent Bernadette Galang on 1/24/1983 as a probationary cultural
orientation teacher. After 3 months, she was informed orally and in writing that her
7
services were being terminated because she failed in the performance evaluation of her
supervisors during the teacher evaluation program.
On 8/22/1983, Galang filed a complaint for illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the then Ministry of Labor and Employment,
praying for reinstatement with backwages, exemplary and moral damages.
On 10/8/1983, Labor Arbiter dismissed the complaint for illegal dismissal as well as
the complaint for moral and exemplary damages but ordering the ICMC to pay Galang
the sum of P6,000.00 as payment for the last 3 months of the agreed employment
period pursuant to her verbal contract of employment.
Both parties appealed the decision to the NLRC. On 8/22/1985, the NLRC, by a
majority vote of Commissioners Guillermo C. Medina and Gabriel M. Gatchalian,
sustained the decision of the Labor Arbiter and dismissed both appeals for lack of
merit. Dissatisfied, petitioner filed the instant petition.
ISSUE
Whether or not an employee who was terminated during the probationary period of
her employment is entitled to her salary for the unexpired portion of her six-month
probationary employment
RULING
NO. Galang was terminated during her probationary period of employment for failure
to qualify as a regular member of petitioner’s teaching staff in accordance with its
reasonable standards. Galang was found by petitioner to be deficient in classroom
management, teacher-student relationship and teaching techniques. Failure to qualify
as a regular employee in accordance with the reasonable standards of the employer is
a just cause for terminating a probationary employee specifically recognized under
Article 282 (now Article 281) of the Labor Code.
The labor arbiter’s decision is erroneous. The award of salary for the unexpired
portion of the probationary employment on the ground that a probationary employment
for 6 months is an employment for a "definite period" which requires the employer to
exhaust the entire probationary period to give the employee the opportunity to meet
the required standards.
A probationary employee is one who is on trial by an employer during which the
employer determines whether or not he is qualified for permanent employment. A
probationary appointment is made to afford the employer an opportunity to observe
the fitness of a probationer while at work, and to ascertain whether he will become a
proper and efficient employee. The word “probationary,” as used to describe the period
of employment, implies the purpose of the term or period, but not its length.

Being in the nature of a “trial period” the essence of a probationary period of
employment fundamentally lies in the purpose or objective sought to be attained by
both the employer and the employee during said period. The length of time is
immaterial in determining the correlative rights of both in dealing with each other
during said period. While the employer observes the fitness, propriety and efficiency
of a probationer to ascertain whether he is qualified for permanent employment, the
probationer, on the other, seeks to prove to the employer, that he has the qualifications
to meet the reasonable standards for permanent employment. Nothing would preclude
the employer from extending a regular or a permanent appointment to an employee
once the employer finds that the employee is qualified for regular employment even
before the expiration of the probationary period.
There was no showing, as borne out by the records, that there was circumvention of
the rights of Galang when she was informed of her termination. Her dismissal does not
appear to us as arbitrary, fanciful or whimsical. She was duly notified, orally and in
writing, that her services were terminated for failure to meet the prescribed standards
of petitioner as reflected in the performance evaluation conducted by her supervisors
during the teacher evaluating program. The dissatisfaction of petitioner over the
performance of private respondent in this regard is a legitimate exercise of its
prerogative to select whom to hire or refuse employment for the success of its program
or undertaking.
The lower court abused its discretion when it ordered ICMC to Galang her salary for
the unexpired three-month portion of her six-month probationary employment when
she was validly terminated during her probationary employment. To sanction such
action would not only be unjust, but oppressive on the part of the employer.
DISPOSITION: The petition is GRANTED. The Resolution of the NLRC is
REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent
her P6,000.00 salary for the unexpired portion of her six-month probationary
employment. No cost.
INTERNATIONAL CATHOLIC MIGRATION COMMISSION vs NLRC
(Termination and Salary)
FACTS
Petitioner ICMC is a non-profit organization dedicated to refugee service at the
Philippine Refugee Processing Center in Morong, Bataan. It engaged the services of
private respondent Bernadette Galang on 1/24/1983 as a probationary cultural
orientation teacher. After 3 months, she was informed orally and in writing that her
services were being terminated because she failed in the performance evaluation of her
supervisors during the teacher evaluation program.
8
On 8/22/1983, Galang filed a complaint for illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the then Ministry of Labor and Employment,
praying for reinstatement with backwages, exemplary and moral damages.
On 10/8/1983, Labor Arbiter dismissed the complaint for illegal dismissal as well as
the complaint for moral and exemplary damages but ordering the ICMC to pay Galang
the sum of P6,000.00 as payment for the last 3 months of the agreed employment
period pursuant to her verbal contract of employment.
Both parties appealed the decision to the NLRC. On 8/22/1985, the NLRC, by a
majority vote of Commissioners Guillermo C. Medina and Gabriel M. Gatchalian,
sustained the decision of the Labor Arbiter and dismissed both appeals for lack of
merit. Dissatisfied, petitioner filed the instant petition.
ISSUE
Whether or not an employee who was terminated during the probationary period of
her employment is entitled to her salary for the unexpired portion of her six-month
probationary employment
RULING
NO. Galang was terminated during her probationary period of employment for failure
to qualify as a regular member of petitioner’s teaching staff in accordance with its
reasonable standards. Galang was found by petitioner to be deficient in classroom
management, teacher-student relationship and teaching techniques. Failure to qualify
as a regular employee in accordance with the reasonable standards of the employer is
a just cause for terminating a probationary employee specifically recognized under
Article 282 (now Article 281) of the Labor Code.
The labor arbiter’s decision is erroneous. The award of salary for the unexpired
portion of the probationary employment on the ground that a probationary employment
for 6 months is an employment for a "definite period" which requires the employer to
exhaust the entire probationary period to give the employee the opportunity to meet
the required standards.
We find unmeritorious public respondent’s argument that the security of tenure of
probationary employees within the period of their probation justified the award of
salary for the unexpired portion of her probationary employment. The termination of
private respondent predicated on a just cause negates the application in this case of the
pronouncement in the case of Biboso vs. Victorias Milling Co., Inc., on the right of
security of tenure of probationary employees.
Upon inquiry by the then Ministry of Labor and Employment as a consequence of the
illegal dismissal case filed by private respondent before it, it was found that there was
no illegal dismissal involved in the case, hence, the circumvention of the rights of the

probationary employees sought to be regulated as pointed out in Biboso vs. Victorias
Milling Co., Inc., is wanting.
There was no showing, as borne out by the records, that there was circumvention of
the rights of private respondent when she was informed of her termination. Her
dismissal does not appear to us as arbitrary, fanciful or whimsical. Private respondent
was duly notified, orally and in writing, that her services as cultural orientation teacher
were terminated for failure to meet the prescribed standards of petitioner as reflected
in the performance evaluation conducted by her supervisors during the teacher
evaluating program. The dissatisfaction of petitioner over the performance of private
respondent is a legitimate exercise of its prerogative to select whom to hire or refuse
employment for the success of its program or undertaking.
It was thus a grave abuse of discretion on the part of public respondent to order
petitioner to pay private respondent her salary for the unexpired three-month portion
of her six-month probationary employment when she was validly terminated during
her probationary employment. To sanction such action would not only be unjust, but
oppressive on the part of the employer as emphasized in Pampanga Bus Co., Inc., vs.
Pambusco Employer Union, Inc.
DISPOSITION: The petition is GRANTED. The Resolution of the NLRC is
REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent
her P6,000.00 salary for the unexpired portion of her six-month probationary
employment. No cost.
Dela Cruz vs. NLRC
Facts:
On May 27, 1996, petitioner Florencio de la Cruz, Jr. was hired by private respondent
Shemberg Marketing Corporation as senior sales manager, a newly created position in
line with the company’s objective of product positioning in the consumer market.
9
However, on Sept. 14, 1996, petitioner was informed that his services were terminated.
His request for a meeting with Shemberg’s VP and to be furnished a 30-day written
notice was denied by management.
Hence, petitioner filed a complaint for illegal dismissal., non-payment of salary,
backwages, 13th month pay and damages.
Private respondent answered that petitioner’s dismissal was premised, among others,
on his unauthorized reimbursement of the plane tickets of his wife and child, resulting
to loss of trust and confidence of the company.
Labor arbiter ruled that petitioner was illegally dismissed and granted his claim for
separation pay, backwages and unpaid wages. Upon appeal, NLRC modified the
decision, deleting the award for separation pay and backwages. Hence, this petition.
ISSUE:
WON petitioner was legally dismissed, as he was a probationary employee.
HELD: YES
Petitioner was hired by Shemberg on May 27, 1996 and was terminated on Sept. 14,
1996. A281 LC provides:
Probationary employment shall not exceed six (6) months from the date the employee
started working , unless it is covered in apprenticeship[ agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis
may be terminated for a just cause or 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. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
The evidence on record clearly shows that petitioner was well informed of the
standards to be met before he could qualify as a regular employee. Attached to his
appointment papers was a job description of sales manager.
A probationary employee is one who, for a given period of time, is under observation
or evaluation to determine whether or not he is qualified for permanent employment.
During the probationary period, the employer is given the opportunity to observe the
skill, competence and attitude of the employee while the latter seeks to prove to the
employer that he has the qualifications to meet the reasonable standards for permanent
employment. The length of time is immaterial in determining the correlative rights of
both the employer and the employee in dealing with each other during this period.
There is no dispute that petitioner, as a probationary employee enjoyed only a
temporary employment status.
This not having been attained in the mean time. The employer could well decide he no
longer needed the probationary employee’s service or hi performance fell short of
expectation. As long as the termination was made before the expiration of the 6-month
probationary period, the employer was well within his rights to sever the employer-

employee relationship. A contrary interpretation would defect the clear meaning of the
term probationary. In this case, Shemberg had good reason to terminate petitioner’s
employment. Petitioner was holding a managerial position in which he was tasked to
perform key functions in accordance with an exacting work ethic. His position required
the full trust and confidence of his employer.
While petitioner could exercise some discretion, this obviously did not cover acts for
his own personal benefit. He committed a transgression which betrayed the trust and
confidence of his employer – reimbursing his family’s personal travel expenses out of
company funds.
GOLD CITY INTEGRATED PORT SERVICE, INC v. NLRC
 The employees of Gold City Integrated Port Service, Inc. (INPORT) stopped
working and gathered in a mass action to express their grievances regarding
wages, 13th month pay and hazard pay.
o The employees were members of the Macajalar Labor Union-Federation of
Free Workers (MLU-FFW) with whom INPORT had an existing CBA.
 On that same morning, the strikers filed individual notices of strike with the then
Ministry of Labor and Employment.
 With the failure of conciliation conference, INPORT filed a complaint before the
LA for Illegal Strike with prayer for a restraining order/preliminary injunction.
 NLRC issued a TRO.
 Majority of the strikers returned to work leaving respondents, who continued their
protest. Counsel for respondents filed a manifestation that INPORT required prior
screening conducted by the MLU-FFW before the remaining strikers could be
accepted back to work.
 Counsel for MLU-FFW filed a Motion to Drop Most of the Party Respondents
From the Case.
o The 278 employees on whose behalf the motion was field, claimed that they
were duped or tricked into signing the individual notices of strike.
o After discovering this deception and verifying that the strike was staged by a
minority of the union officers and members and without the approval of, or
consultation with, majority of the union members, they immediately
withdrew their notice of strike and returned to work.
 LA granted their prayer to be excluded as respondents.
 INPORT’s complaint was directed against the 31 respondents who did not return
to work and continued with the strike.
 LA found the strike illegal for not having complied with the formal requirements
in Art. 264 of the Labor Code.
o The workers who participated in the illegal strike did not, however, lose their
employment, since there was no evidence that they participated in illegal acts.
o After noting that INPORT accepted the other striking employees back to
work, LA held that the respondents should similarly be allowed to return to
work without having to undergo the required screening.
o As regards the respondents who were union officers, they could not have
possibly been duped or tricked into signing the strike notice for they were
10
active participants in the conciliation meetings and were thus fully aware of
what was going on.
 NLRC affirmed with modification.
o The concerted activity was more of a protest action than a strike.
o Respondents, including the 6 union officers, should also be allowed to work
unconditionally to avoid discrimination.
o In view of the strained relations between the parties, separation pay was
awarded in lieu of reinstatement.
 Upon INPORT’s MR, NLRC modified:
o Since respondents were not actually terminated from service, there was no
basis for reinstatement.
o It awarded 6 months’ salary as separation pay or financial assistance in the
nature of equitable relief.
o The award for backwages was deleted. In lieu of backwages, compensation
equivalent to P1,000 was given.
 INPORT filed a petition for certiorari alleging that NLRC committed grave abuse
of discretion in awarding respondents separation pay and backwages despite the
declaration that the strike was illegal.
ISSUE: Whether the strike was illegal. – YES.
RULING:
Respondents and their co-workers stopped working and held the mass action to press
for their wages and other benefits. What transpired then was clearly a strike, for the
cessation of work by concerted action resulted from a labor dispute.
The Arbiter correctly ruled that the strike was illegal for failure to comply with the
requirements of Art. 264 (now Art. 263) pars. (c) and (f) of the Labor Code.
The individual notices of strike filed by the workers did not conform to the notice
required by the law to be filed since they were represented by a union which even had
an existing CBA with INPORT. Neither did the striking workers observe the strike
vote by secret ballot, cooling-off period and reporting requirements. The cooling-off
period and the 7-day strike ban after the strike-vote report were intended to be
mandatory.
The effects of such illegal strikes, outlined in Art. 265 (now Art. 264) make a
distinction between workers and union officers who participate therein. A union
officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost their employment status. An ordinary striking worker cannot be
terminated for mere participation in an illegal strike. There must be proof that he
committed illegal acts during a strike. A union officer, on the other hand, may be
terminated from work when he knowingly participates in an illegal strike, and like
other workers, when he commits an illegal act during a strike.

INPORT accepted the majority of the striking workers, including union officers, back
to work. Respondents were left to continue with the strike after they refused to submit
to the screening required by the company. The question to be resolved now is what
these remaining strikers, considering the circumstances of the case, are entitled to
receive under the law, if any.
The striking union members among respondents are entitled to reinstatement, there
being no just cause for their dismissal. However, considering that a decade has already
lapsed from the time the disputed strike occurred, it would be more practical and
appropriate to award separation pay in lieu of reinstatement. No backwages will be
awarded to private respondent-union members as a penalty for their participation in
the illegal strike. Their continued participation in said strike, even after most of their
co-workers had returned to work, can hardly be rewarded by such an award.
The fate of private respondent-union officers is different. Their insistence on
unconditional reinstatement or separation pay and backwages is unwarranted and
unjustified. For knowingly participating in an illegal strike, the law mandates that a
union officer may be terminated from employment.
Acesite Corp. vs. NLRC
G.R. NO. 152308, January 26, 2005
Facts:
Gonzales was hired on October 18, 1993 as Chief of Security of Manila Pavillion
Hotel. On January 1, 1995, Acesite took over the operations of Manila Pavillion and
renamed it Holiday Inn Manila (the hotel). Acesite retained Gonzales as Chief of
Security of the hotel.
On March 25, 1998, Gonzales took a 4-day sick leave and took emergency leave
on March 30, 1998. On April 16-29, 1998, he again took a 12-day vacation leave,
thereby using up all leaves that he was entitled for the year.
Gonzales did not report for work on April 30, 1998. On even date, he received a
telegram from Acesite advising him that he was on unauthorized leave and asking him
to provide a written explanation within the next 24 hours why he was not reporting for
work. At the same time, he was required to report for work the following day or on
May 1, 1998.
On May 2, 1998, Gonzales father Anacleto sent a telegram to Acesite stating that
he was still recovering from severe stomach disorder and would report back for work
on May 4, 1998. A medical certificate dated May 3, 1998 issued by a Dr. Gonzales,
Jr. stating that Gonzales was under his care from April 30 May 3, 1998 was presented
to prove that he indeed was treated from such sickness.
11
On May 4, 1998, around lunchtime, Gonzales reported for work and presented
himself to Johann Angerbauer, then Resident Manager of the hotel. Angerbauer claims
that when Gonzales went to him, he asked him to explain why he had been absent
despite orders for him to report back for work to which he replied that it was necessary
for him to go home to his province in Abra.
Gonzales, on the other hand, claims that when he conferred with Angerbauer, he
requested for leave without pay from May 5-9, 1998 which was provisionally approved
on condition that he (Gonzales) would be sending his explanation through e-mail
behind his absences on April 30, 1998 and May 2, 1998 so that Angerbauer could send
it to the hotel General Manager Phil Kennedy who was then out of the country.
Gonzales, who claims to have received the May 5, 1998 telegram only in the
afternoon of May 7, 1998, immediately repaired back to Manila on May 8, 1998 only
to be humiliatingly and ignominiously barred by the guard (a subordinate of
[Gonzales]) from entering the premises.
Gonzales thus filed on May 27, 1998 a complaint against Acesite, for illegal
dismissal with prayer for, moral and exemplary damages.
Issue:
Whether or not Gonzales can claim damages against the corporation.
Held:
Moral damages are recoverable only where the dismissal of the employees
was attended by bad faith or fraud or constituted an act oppressive to labor or was done
in a manner contrary to morals, good customs or public policy. Exemplary damages
on the other hand may be awarded only if the dismissal was effected in a wanton,
oppressive or malevolent manner. Though these grounds have been alleged by
Gonzales, they were not sufficiently proven.
In one case of the Court ruled:Unless they have exceeded their authority,
corporate officers are, as a general rule, not personally liable for their official acts,
because a corporation, by legal fiction, has a personality separate and distinct from its
officers, stockholders and members. However, this fictional veil may be pierced
whenever the corporate personality is used as a means of perpetuating fraud or an
illegal act, evading an existing obligation, or confusing a legitimate issue. In cases of
illegal dismissal, corporate directors and officers are solidarily liable with the
corporation, where terminations of employment are done with malice or in bad faith.
In holding the corporation solidarily liable, the NLRC intended “to deter
other foreign employer[s] from repeating the inhuman treatment of their Filipino
employees who should be treated with equal respect especially in their own land and
 12
prevent further violation of their human rights as employees.”
On motion for reconsideration, the CA issued the Amended Decision[13] dated May 18,
2010, modifying its earlier decision. Citing Section 6.5 (4) of Department Order No.
14 of the Department of Labor and Employment (DOLE D.O. No. 14), otherwise
known as Guidelines Governing the Employment and Working Conditions of Security
The Facts: Guards and Similar Personnel in the Private Security Industry, the CA reduced the
computation of the separation pay from one month pay per year of service to one-half
Petitioners Venancio S. Reyes, Edgardo C. Dabbay, Walter A. Vigilia, Nemesio M. month pay for every year of service; reduced the refund of trust fund contribution from
Calanno, Rogelio A. Supe, Jr., Roland R. Trinidad, and Aurelio A. Duldulao Sixty (P60.00) Pesos to Thirty (P30.00)Pesos; and deleted the award of backwages
(petitioners) were hired by respondent RP Guardians Security Agency, Inc. and attorney's fees.
(respondent) as security guards. They were deployed to various clients of respondent,
the last of which were the different branches of Banco Filipino Savings and Mortgage Hence, this petition anchored on the following:
Bank (Banco Filipino).

In September 2006, respondent's security contract with Banco Filipino was
terminated. In separate letters,[4]petitioners were individually informed of the
termination of the security contract with Banco de Oro. In two (2) memoranda, dated
September 21, 2006[5] and September 29, 2006,[6] petitioners were directed to turnover
their duties and responsibilities to the incoming security agency and were advised that
they would be placed on floating status while waiting for available post. Petitioners
waited for their next assignment, but several months lapsed and they were not given
new assignments.
Consequently, on April 10, 2007, petitioners filed a complaint[7] for constructive
dismissal.
In its position paper,[8] respondent claimed that there was no dismissal, of petitioners,
constructive or otherwise, and asserted that their termination was due to the expiration
of the service contract which was coterminus with their contract of employment.
GROUNDS FOR THE PETITION
The Court of Appeals has decided a question of substance in a way that is not
in accord with law and with applicable decisions of the Supreme Court
8.0 concerning the Petitioner's basic right to fair play, justice and due process,
with more reason that a conclusion of law cannot be made in the motion for
reconsideration.
The first decision promulgated by the Court of Appeals on February 26, 2010
affirming the decision of the NLRC awarding both backwages and separation
8.1
pay of one month pay for every year of service can only be set aside upon
proof of grave abuse of discretion, fraud or error of law.
Petitioners are entitled to backwages for the period covered from the time the
Labor Arbiter rendered the decision in their favor on August 20, 2007 until
8.2
said decision was reversed by the Court of Appeals in its Amended Decision
promulgated on May 18, 2010.[14]

On August 20, 2007, the Labor Arbiter (LA) rendered a decision[9] in favor of There is no doubt that petitioners were constructively dismissed. The LA, the NLRC
petitioners ordering respondent to pay petitioners separation pay, backwages, refund and the CA were one in their conclusion that respondent was guilty of illegal dismissal
of trust fund, moral and exemplary damages, and attorneys fees. when it placed petitioners on floating status beyond the reasonable six-month period
after the termination of their service contract with Banco de Oro. Temporary
Aggrieved, respondent appealed to the NLRC. displacement or temporary off-detail of security guard is, generally, allowed in a
situation where a security agency's client decided not to renew their service contract
On April 9, 2008, the NLRC promulgated its decision[10] sustaining the finding of with the agency and no post is available for the relieved security guard. [15] Such
constructive dismissal by the LA, and the awards she made in the decision. The award situation does not normally result in a constructive dismissal. Nonetheless, when the
of moral and exemplary damages, however, were deleted. floating status lasts for more than six (6) months, the employee may be considered to
have been constructively dismissed.[16] No less than the Constitution[17] guarantees the
Upon denial of its motion for reconsideration,[11] respondent filed a petition for right of workers to security of tenure, thus, employees can only be dismissed for just
certiorari before the CA. or authorized causes and after they have been afforded the due process of law. [18]

On February 26, 2010, the CA rendered a decision[12] dismissing the petition and Settled is the rule that that an employee who is unjustly dismissed from work shall be
affirming the assailed NLRC decision and resolution. entitled to reinstatement without loss of seniority rights and other privileges, and to his
 13
full backwages, inclusive of allowances and to his other benefits or their monetary by law and as enumerated below:
equivalent computed from the time his compensation was withheld up to the time of
actual reinstatement.[19] If reinstatement is not possible, however, the award of Half-Month Pay Per Year of Service, but in no case less than One Month Pay, if
separation pay is proper.[20] separation is due to:

Backwages and reinstatement are separate and distinct reliefs given to an illegally 1. Retrenchment or reduction of personnel effected by management to prevent serious
dismissed employee in order to alleviate the economic damage brought about by the losses;
employee's dismissal.[21] "Reinstatement is a restoration to a state from which one has
been removed or separated" while "the payment of backwages is a form of relief that 2. Closure or cessation of operation of an establishment not due to serious losses or
restores the income that was lost by reason of the unlawful dismissal." Therefore, the financial reverses;
award of one does not bar the other.[22]
3. Illness or disease not curable within a period of 6 months and continued employment
In the case of Aliling v. Feliciano,[23] citing Golden Ace Builders v. Talde,[24] the Court is prohibited by law or prejudicial to the employee's health or that of co-employees; or
explained:
4. Lack of service assignment for a continuous period of 6 months.

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and The said provision contemplates a situation where a security guard is removed for
reinstatement. The two reliefs provided are separate and distinct. In instances where authorized causes such as when the security agency experiences a surplus of security
reinstatement is no longer feasible because of strained relations between the employee guards brought about by lack of clients. In such a case, the security agency has the
and the employer, separation pay is granted. In effect, an illegally dismissed employee option to resort to retrenchment upon compliance with the procedural requirements of
is entitled to either reinstatement, if viable, or separation pay if reinstatement is no "two-notice rule" set forth in the Labor Code and to pay separation pay of one-half
longer viable, and backwages. month for every year of service.

The normal consequences of respondents' illegal dismissal, then, are In this case, respondent would have been liable for reinstatement and payment of
reinstatement without loss of seniority rights, and payment of backwages backwages. Reinstatement, however, was no longer feasible because, as found by the
computed from the time compensation was withheld up to the date of actual LA, respondent had already ceased operation of its business. [25] Thus, backwages and
reinstatement. Where reinstatement is no longer viable as an option, separation separation pay, in the amount of one month for every year of service, should be paid
pay equivalent to one (1) month salary for every year of service should be in lieu of reinstatement.
awarded as an alternative. The payment of separation pay is in addition to
payment of backwages. [Emphasis Supplied] As to their claim of attorney's fees, petitioners were compelled to file an action for the
recovery of their lawful wages and other benefits and, in the process, incurred
Furthermore, the entitlement of the dismissed employee to separation pay of one expenses. Hence, petitioners are entitled to attorney's fees equivalent to ten percent
month for every year of service should not be confused with Section 6.5 (4) of DOLE (10%) of the monetary award.[26]
D.O. No. 14 which grants a separation pay of one-half month for every year service,
to wit: Finally, as to the refund of the trust fund contribution, a perusal of the records shows
that the amount deducted for the trust fund contribution from each petitioner
varies. Some petitioners were deducted the amount of P15.00 every payday while
6.5 Other Mandatory Benefits. In appropriate cases, security guards/similar personnel others were deducted P30.00 every payday. Thus, the Court deems it proper to refer
are entitled to the mandatory benefits as listed below, although the same may not be the computation of the same to the LA.
included in the monthly cost distribution in the contracts, except the required
premiums for their coverage: WHEREFORE, the petition is GRANTED. The May 18, 2010 Amended Decision
and the September 13, 2010 Resolution of the Court of Appeals in CA-G.R. SP No.
a. Maternity benefit as provided under the SSS Law; 106643 are REVERSED and SET ASIDE. The April 9, 2008 Decision of the
National Labor Relations Commission, modifying the August 20, 2007 Decision of
b. Separation pay if the termination of employment is for authorized cause as provided the Labor Arbiter, is REINSTATED.
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The case is REMANDED to the Labor Arbiter for further proceedings to make a
detailed computation of the exact amount of monetary benefits due petitioners.

SO ORDERED.