Table of Contents

Abandonment 4

Absenteeism 5

Attorney’s Fees 5

Appeal 5

Perfection of Appeal 6

Rule on Technicality 7

Appearance of a Non-Lawyer 7

Bond 8

Burden of Proof 8

Business Judgment Rule 10

Collective Bargaining Agreement 10

Certificate of Non-Forum Shopping 11

Certification Election 11

Compensability of a Non-occupational Disease 12

Construction Industry 12

Constructive Dismissal 13

Withholding of Salary amounts to Constructive Dismissal 14

Contempt 14

Control Test 14

Damages 15

Date of Filing of Pleadings 16

Dismissal of Corporate Officer 16

Dole Certification 16

Due Process 17

• Hearing 18

• Notice 19

• Notice and Hearing 20

Effect of the Dismissal of Criminal Complaint 20

Employment Contracts 21

Equality 21

Evidence 21

• Bad Faith 23

• Union Fraud/Misrepresentation 23

Execution 24

• Family Home 24

Finality of Factual Findings 24

Finality of Judgment 25

• Exception 25

Forum Shopping 26

Grave Abuse of Discretion 26

Illegal Dismissal 26

• Drug Test 29

Intimidation 29

Involuntary Servitude 30

Jurisdiction 30

Job contracting/Labor-Only Contracting 32

• Test to determine Independent Contractorship 33

Liability 33

• Liability of Corporate Officers 33

• Liability of GSIS as Indirect Employer 34

• Liability of Indirect Employer 35

• Solidary Liability 35

Liberal Application of the Rules 36

Management Prerogative 37

Money Claims 39

• Interest 39

• Prescription 39

Moral Damages 40

NLRC Rules of procedure 40

• Proof and Completeness of Service 40

• Reduction of Bond 40

Piercing the Veil of Corporate Fiction 41

Preventive Suspension 41

Principle of Non-Diminution of Benefits 42

Protection to Labor 43

Reassignment 43

Re-computation of Awards as against 44

Principle of Immutability of Final Judgment 44

Retirement 44

• Retirement Plans 45

Seafarer 45

• Death Benefits 45

• Occupational Disease 47

• Disability Benefits 47

• Permanent Total Disability 48

• Prescription of Seafarer Money Claims 49

Security of Tenure of Probationary Employee 49

Separation Pay 50

• Separation Pay/Backwages 52

Social Justice 53

Strained Relationship 54

Strike 55

• Dismissal of Union Officers 55

• Consequence of Illegal Strike 55

• Requisites of a Valid Strike 56

• Picketing 56

• Prohibited Activities 57

Termination of Employment 57

Just Causes 57

• Serious Misconduct 57

• Willful Disobedience 59

• Gross and Habitual Neglect of Duty 60

• Loss of Trust and Confidence 60

Authorized Causes 62

• Cessation of Business Operation 62

• Redundancy 62

• Retrenchment 63

Types of Employees 63

Field Personnel 63

Project Employee 65

Regular Employee 65

Quitclaims 66

Teachers’ Employment on Probationary Status 67

• Rule on Probationary Status 67

and Fixed-term Employment of Teachers 67

Thirteenth Month Pay 68

Transfer 68

Transfer of Ownership 68

Unfair Labor Practice 69

Unionism 69

• Union Security and Closed Shop 70

• Employees not covered by Union Shop Clause 70

• Termination of Union Officers 71

Withholding of Salary 71

2010 CASE INDEX

January-June

Abandonment

Although under normal circumstances, an employee’s act of filing an illegal dismissal

complaint against his employer is inconsistent with abandonment; in the present case, we

simply cannot use that one act to conclude that Pulgar did not terminate his employment with

PRRM, and in the process ignore the clear, substantial evidence presented by PRRM that

proves otherwise. Our ruling on this point in Leopard Integrated Services, Inc. v. Macalinao is

very relevant. We said:

The fact that respondent filed a complaint for illegal dismissal, as noted by the CA, is not by

itself sufficient indicator that respondent had no intention of deserting his employment since

the totality of respondent’s antecedent acts palpably display the contrary. In Abad v. Roselle

Cinema, the Court ruled that:

The filing of a complaint for illegal dismissal should be taken into account together with the

surrounding circumstances of a certain case. In Arc-Men Food Industries Inc. v. NLRC, the Court

ruled that the substantial evidence proffered by the employer that it had not, in the first place,

terminated the employee, should not simply be ignored on the pretext that the employee

would not have filed the complaint for illegal dismissal if he had not really been dismissed.

“This is clearly a non-sequitur reasoning that can never validly take the place of the evidence

of both the employer and the employee.” [Emphasis supplied.](PHILIPPINE RURAL

RECONSTRUCTION MOVEMENT( RRM)v.VIRGILIO E. PULGAR, G.R. No. 169227, July 5, 2010)

Jurisprudence has held time and again that abandonment is totally inconsistent with the

immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a

prayer for reinstatement. In the present case, however, petitioner filed his complaint more

than one year after his alleged termination from employment. Moreover, petitioner and the

other complainants’ inconsistency in their stand is also shown by the fact that in the complaint

form which they personally filled up and filed with the NLRC, they only asked for payment of

separation pay and other monetary claims. They did not ask for reinstatement. It is only in

their Position Paper later prepared by their counsel that they asked for reinstatement. This is

an indication that petitioner and the other complainants never had the intention or desire to

return to their jobs. In fact, there is no evidence to prove that petitioner and his former co-

employees ever attempted to return to work after they were dismissed from employment.

(ELPIDIO CALIPAY v. NATIONAL LABOR RELATIONS COMMISSION, TRIANGLE ACE CORPORATION

and JOSE LEE, G.R. No. 166411, August 3, 2010)

Absenteeism

Even assuming that respondent’s absenteeism constitutes willful disobedience, such offense

does not warrant respondent’s dismissal. Not every case of insubordination or willful

disobedience by an employee reasonably deserves the penalty of dismissal. There must be a

reasonable proportionality between the offense and the penalty. (PHILIPPINE LONG DISTANCE

TELEPHONE COMPANY v. JOEY B. TEVES, G.R. No. 143511, November 15, 2010)

Attorney’s Fees

This case involves the propriety of the award of disability compensation under the CBA to

respondent, who worked as a seaman in the foreign vessel of petitioner Barber Ship

Management Ltd. The award of attorney’s fees is justified under Article 2208 (2) of the Civil

Code. Even if petitioners did not withhold payment of a smaller disability benefit, respondent

was compelled to litigate to be entitled to a higher disability benefit. Moreover, in HFS

Philippines, Inc. v. Pilar [11] and Iloreta v. Philippine Transmarine Carriers, Inc., [12] the Court

sustained the NLRC’s award of attorney’s fees, in addition to disability benefits to which the

concerned seamen-claimants were entitled. It is no different in this case wherein respondent

has been awarded disability benefit and attorney’s fees by the Labor Arbiter and the Court of

Appeals. It is only just that respondent be also entitled to the award of attorney’s fees. In

Iloreta v. Philippine Transmarine Carriers, Inc., [13] the Court found the amount of

US$1,000.00 as reasonable award of attorney’s fees. (NFD INTERNATIONAL MANNING AGENTS,

INC./BARBER SHIP MANAGEMENT LTD v. ESMERALDO C. ILLESCAS, G.R. No. 183054,

September 29, 2010)

Appeal

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for

Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National

Labor Relations Commission. This Court held that the proper vehicle for such review was a

Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action

should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of

courts. Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as

amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of

Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended,

known as the Judiciary Reorganization Act of 1980), the Court of Appeals – pursuant to the

exercise of its original jurisdiction over Petitions for Certiorari – is specifically given the power

to pass upon the evidence, if and when necessary, to resolve factual issues. (PICOP

RESOURCES, INCORPORATED (PRI), v. ANACLETO L. TAÑECA, G.R. No. 160828, August 9, 2010)

Respondent alleged in his position paper that after preparing the CAPEX form on March 3,

1999, he endorsed it to Marivic Villanueva for the signature of the Executive Vice-President

Ricardo T. Po. The next day, March 4, 1999, respondent received the CAPEX form containing

the signature of Po. Petitioner never controverted these allegations in the proceedings before

the NLRC and the CA despite its opportunity to do so. Petitioner’s belated allegations in its

reply filed before this Court that Marivic Villanueva denied having seen the CAPEX form cannot

be given credit. Points of law, theories, issues and arguments not brought to the attention of

the lower court, administrative agency or quasi-judicial body need not be considered by a

reviewing court, as they cannot be raised for the first time at that late stage. When a party

deliberately adopts a certain theory and the case is decided upon that theory in the court

below, he will not be permitted to change the same on appeal, because to permit him to do so

would be unfair to the adverse party. (CENTURY CANNING CORPORATION, RICARDO T. PO, JR.

and AMANCIO C. RONQUILLO v. VICENTE RANDY R. RAMIL, G.R. No. 171630, August 8, 2010)

Perfection of Appeal

Clearly, an appeal from a judgment as that involved in the present case is perfected “only”

upon the posting of a cash or surety bond. Accessories Specialist, Inc. v. Alabanza enlightens:

The posting of a bond is indispensable to the perfection of an appeal in cases involving

monetary awards from the decision of the LA. The intention of the lawmakers to make the

bond a mandatory requisite for the perfection of an appeal by the employer is clearly limned in

the provision that an appeal by the employer may be perfected “only upon the posting of a

cash or surety bond.” The word “only” makes it perfectly plain that the lawmakers intended

the posting of a cash or surety bond by the employer to be the essential and exclusive means

by which an employer’s appeal may be perfected. The word “may” refers to the perfection of

an appeal as optional on the part of the defeated party, but not to the compulsory posting of

an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in

enacting a statute must be determined from the language employed; and where there is no

ambiguity in the words used, then there is no room for construction.

The filing of the bond is not only mandatory but also a jurisdictional requirement that must be

complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders

the decision of the LA final and executory. This requirement is intended to assure the workers

that if they prevail in the case, they will receive the money judgment in their favor upon the

dismissal of the employer’s appeal. It is intended to discourage employers from using an

appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.

(citations omitted, italics in the original; emphasis and underscoring supplied)

(MINDANAO TIMES CORPORATION v. MITCHEL R. CONFESOR, G.R. No. 183417, February 5,

2010)

Rule on Technicality

In any case, even if the appeal was filed one day late, the same should have been entertained

by the NLRC. Indeed, the appeal must be perfected within the statutory or reglementary

period. This is not only mandatory, but also jurisdictional. Failure to perfect the appeal on time

renders the assailed decision final and executory and deprives the appellate court or body of

the legal authority to alter the final judgment, much less entertain the appeal. However, this

Court has, time and again, ruled that, in exceptional cases, a belated appeal may be given due

course if greater injustice will be visited upon the party should the appeal be denied. The Court

has allowed this extraordinary measure even at the expense of sacrificing order and efficiency

if only to serve the greater principles of substantial justice and equity. (GOVERNMENT SERVICE

INSURANCE SYSTEM v. NATIONAL LABOR RELATIONS COMMISSION (NLRC), ET. Al., G.R. No.

180045, November 17, 2010 )

Appearance of a Non-Lawyer

1. SNS submits that the CA committed a serious error in ruling that the respondents’

representative’s non-membership in the bar is sufficient justification for their failure to comply

with the requirements of the law. SNS argues that this ruling excuses the employment of a

non-lawyer and places the acts of the latter on the same level as those of a member of the

Bar. Our Labor Code allows a non-lawyer to represent a party before the Labor Arbiter and the

Commission, but provides limitations: Non-lawyers may appear before the Commission or any

Labor Arbiter only: (1) If they represent themselves; or (2) If they represent their organization

or members thereof. Thus, SNS concludes that the respondents’ representative had no

personality to appear before the Labor Arbiter or the NLRC, and his representation for the

respondents should produce no legal effect. (SPIC N’ SPAN SERVICES CORPORATION v. GLORIA

PAJE et. al, G.R. No. 174084, August 25, 2010)

Bond

In the present case, the Deed of Assignment, as well as the passbook, which petitioner

submitted to the NLRC is neither a cash nor a surety bond. Petitioner’s appeal to the NLRC was

thus not duly perfected, thereby rendering the Labor Arbiter’s Decision final and executory.

(MINDANAO TIMES CORPORATION v. MITCHEL R. CONFESOR, G.R. No. 183417, February 5,

2010)

Burden of Proof

In termination cases, the employer has the burden of proving, by substantial evidence, that

the dismissal is for just cause. If the employer fails to discharge the burden of proof, the

dismissal is deemed illegal. In AMA Computer College — East Rizal v. Ignacio, the Court held

that:

In termination cases, the burden of proof rests on the employer to show that the dismissal is

for just cause. When there is no showing of a clear, valid and legal cause for the termination of

employment, the law considers the matter a case of illegal dismissal and the burden is on the

employer to prove that the termination was for a valid or authorized cause. And the quantum

of proof which the employer must discharge is substantial evidence. An employee’s dismissal

due to serious misconduct must be supported by substantial evidence. Substantial evidence is

that amount of relevant evidence as a reasonable mind might accept as adequate to support a

conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.

(ALEX GURANGO v.BEST CHEMICALS AND PLASTICS INC. and MOON PYO HONG, G.R. No.

174593, August 25, 2010)

Nothing on record indicates the reason for the respondents’ termination from employment,

although the fact of termination was never disputed. Swift denied liability on the basis of its

contract with SNS. The contract was not presented before the Labor Arbiter, although Swift

averred that under the contract, SNS would supply promo girls, merchandisers and other

promotional personnel to handle all promotional aspects and merchandising strategy of Swift.

We can assume, for lack of proof to the contrary, that the respondents’ termination from

employment was illegal since neither SNS nor Swift, as employers, presented any proof that

their termination from employment was legal. Upon proof of termination of employment, the

employer has the burden of proof that the dismissal was valid; absent this proof, the

termination from employment is deemed illegal, as alleged by the dismissed employees. (SPIC

N’ SPAN SERVICES CORPORATION v. GLORIA PAJE et. al, G.R. No. 174084, August 25, 2010)

As to the second issue, the law mandates that the burden of proving the validity of the

termination of employment rests with the employer. Failure to discharge this evidentiary

burden would necessarily mean that the dismissal was not justified and, therefore, illegal.

Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal

justification for dismissing employees. In case of doubt, such cases should be resolved in favor

of labor, pursuant to the social justice policy of labor laws and the Constitution. (CENTURY

CANNING CORPORATION, RICARDO T. PO, JR. and AMANCIO C. RONQUILLO v. VICENTE RANDY

R. RAMIL, G.R. No. 171630, August 8, 2010)

In this regard, petitioners claim that Abueva has worked with respondents for more than a year

already and was allowed to stay inside the hacienda. As such, he is a regular employee

entitled to monetary claims. However, petitioners have not presented competent proof that

respondents engaged the services of Abueva; that respondents paid his wages or that

respondents could dictate what his conduct should be while at work. In other words, Abueva’s

allegations did not establish that his relationship with respondents has the attributes of

employer-employee on the basis of the above-mentioned four-fold test. Therefore, Abueva was

not able to discharge the burden of proving the existence of an employer-employee

relationship. Moreover, Abueva was not able to refute respondents’ assertions that he hires

other men to perform weeding job in the hacienda and that he is not exclusively working for

respondents. (Romeo Basay, et al v. Hacienda Consolacion, et al., G.R. No. 175532, April 19,

2010)

The fact of filing a resignation letter alone does not shift the burden of proving that the

employee’s dismissal was for a just and valid cause from the employer to the employee. In

Mora v. Avesco, we ruled that should the employer interpose the defense of resignation, it is

still incumbent upon the employer to prove that the employee voluntarily resigned. To our

mind, Outdoor Clothing did not discharge this burden by belatedly presenting the three

memoranda it relied on. If these memoranda were authentic, they would have shown that

Peñaflor’s resignation preceded the appointment of Buenaobra. Thus, they would be evidence

supporting the claim of voluntariness of Peñaflor’s resignation and should have been presented

early on in the case – any lawyer or layman by simple logic can be expected to know this.

Outdoor Clothing however raised them only before the NLRC when they had lost the case

before the labor arbiter and now conveniently attributes the failure to do so to its former

counsel. Outddor Clothing’s belated explanation as expressed in its motion for reconsideration,

to our mind, is a submission we cannot accept for serious consideration. We find it significant

that Peñaflor attacked the belated presentation of these memoranda in his Answer to Outdoor

Clothing’s Memoranda of Appeal with the NLRC, but records do not show that Outdoor Clothing

ever satisfactorily countered Peñaflor’s arguments. It was not until we pointed out Outdoor

Clothing’s failure to explain its belated presentation of the memoranda in our January 21, 2010

decision that Outdoor Clothing offered a justification. (MANOLO A. PEÑAFLOR V. OUTDOOR

CLOTHING MANUFACTURING CORPORATION, G.R. No. 177114, April 13, 2010)

Business Judgment Rule

The determination that the employee’s services are no longer necessary or sustainable and,

therefore, properly terminable for being redundant is an exercise of business judgment of the

employer. The wisdom or soundness of this judgment is not subject to discretionary review of

the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it

was prompted by an arbitrary or malicious act. In other words, it is not enough for a company

to merely declare that it has become overmanned. It must produce adequate proof of such

redundancy to justify the dismissal of the affected employees. (COCA-COLA BOTTLERS

PHILIPPINES, INC v. ANGEL U. DEL VILLAR, G.R. No. 163091,October 6, 2010)

Petitioner harps on the fact that there was no actual shutdown of Paper Mill No. 4 but that it

continued to be operational. No evidence, however, was presented to prove that there was

continuous operation after the shutdown in the year 1999. What the records reveal is that

Paper Mill No. 4 resumed its operation in 2000 due to a more favorable business climate. The

resumption of its industrial paper manufacturing operations does not, however, make

respondent’s streamlining/reorganization plan illegal because, again, the abolishment of Paper

Mill No. 4 in 1999 was a business judgment arrived at to prevent a possible financial drain at

that time. As long as no arbitrary or malicious action on the part of an employer is shown, the

wisdom of a business judgment to implement a cost saving device is beyond this court’s

determination. After all, the free will of management to conduct its own business affairs to

achieve its purpose cannot be denied. (DANNIE M. PANTOJA v. SCA HYGIENE

PRODUCTSCORPORATION, G.R. No. 163554, April 23, 2010)

Collective Bargaining Agreement

While a contract constitutes the law between the parties, this is so in the present case with

respect to the CBA, not to the MOA in which even the union’s signatories had expressed

reservations thereto. But even assuming arguendo that the MOA is treated as a new CBA, since

it is imbued with public interest, it must be construed liberally and yield to the common good.

While the terms and conditions of a CBA constitute the law between the parties, it is not,

however, an ordinary contract to which is applied the principles of law governing ordinary

contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code

of the Philippines which governs the relations between labor and capital, is not merely

contractual in nature but impressed with public interest, thus, it must yield to the common

good. As such, it must be construed liberally rather than narrowly and technically, and the

courts must place a practical and realistic construction upon it, giving due consideration to the

context in which it is negotiated and purpose which it is intended to serve. (emphasis and

underscoring supplied)

(IRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS v. CIRTEK ELECTRONICS,

INC, G.R. No. 190515, November 15, 2010)

Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only

to the economic provisions of the CBA, and does not include representational aspect of the

CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election.

When there is a representational issue, the status quo provision in so far as the need to await

the creation of a new agreement will not apply. Otherwise, it will create an absurd situation

where the union members will be forced to maintain membership by virtue of the union

security clause existing under the CBA and, thereafter, support another union when filing a

petition for certification election. If we apply it, there will always be an issue of disloyalty

whenever the employees exercise their right to self-organization. The holding of a certification

election is a statutory policy that should not be circumvented, or compromised. (PICOP

RESOURCES, INCORPORATED (PRI), v. ANACLETO L. TAÑECA, G.R. No. 160828, August 9, 2010)

Certificate of Non-Forum Shopping

The filing of a certificate of non-forum shopping is mandatory in initiatory pleadings. The

subsequent compliance with the requirement does not excuse a party’s failure to comply

therewith in the first instance. In those cases where the Court excused non-compliance with

the requirement to submit a certificate of non-forum shopping, it found special circumstances

or compelling reasons which made the strict application of the Circular clearly unjustified or

inequitable. In this case, however, the petitioners offered no valid justification for their failure

to comply with the Circular. (MANDAUE GALLEON TRADE, INC. and GAMALLOSONS TRADERS,

INC., represented by FAUSTO B. GAMALLO v. BIENVENIDO ISIDTO et.al., G.R. No. 181051,July 5,

2010)

Certification Election

Applying the same provision, it can be said that while it is incumbent for the employer to

continue to recognize the majority status of the incumbent bargaining agent even after the

expiration of the freedom period, they could only do so when no petition for certification

election was filed. The reason is, with a pending petition for certification, any such agreement

entered into by management with a labor organization is fraught with the risk that such a labor

union may not be chosen thereafter as the collective bargaining representative. The provision

for status quo is conditioned on the fact that no certification election was filed during the

freedom period. Any other view would render nugatory the clear statutory policy to favor

certification election as the means of ascertaining the true expression of the will of the workers

as to which labor organization would represent them. (PICOP RESOURCES, INCORPORATED

(PRI), v. ANACLETO L. TAÑECA, G.R. No. 160828, August 9, 2010)

Compensability of a Non-occupational Disease

On these points, we sustain the Labor Arbiter and the NLRC in granting total and permanent

disability benefits in favor of Villamater, as it was sufficiently shown that his having contracted

colon cancer was, at the very least, aggravated by his working conditions, taking into

consideration his dietary provisions on board, his age, and his job as Chief Engineer, who was

primarily in charge of the technical and mechanical operations of the vessels to ensure voyage

safety. Jurisprudence provides that to establish compensability of a non-occupational disease,

reasonable proof of work-connection and not direct causal relation is required. Probability, not

the ultimate degree of certainty, is the test of proof in compensation proceedings. (LEONIS

NAVIGATION CO., INC. and WORLD MARINE PANAMA, S.A v. CATALINO U. VILLAMATER and/or

The Heirs of the Late Catalino U. Villamater, represented herein by Sonia Mayuyu Villamater;

and NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 179169, March 3, 2010)

Construction Industry

• Length of Service

Generally, length of service provides a fair yardstick for determining when an employee

initially hired on a temporary basis becomes a permanent one, entitled to the security and

benefits of regularization. But this standard will not be fair, if applied to the construction

industry, simply because construction firms cannot guarantee work and funding for its payrolls

beyond the life of each project. And getting projects is not a matter of course. Construction

companies have no control over the decisions and resources of project proponents or owners.

There is no construction company that does not wish it has such control but the reality,

understood by construction workers, is that work depended on decisions and developments

over which construction companies have no say. (DANIEL P. JAVELLANA , JR.,V. ALBINO BELEN,

G.R. No. 181913, ALBINO BELEN V. DANIEL P. JAVELLANA, JR. and JAVELLANA FARMS, INC., G.R.

No. 182158, March 5, 2010)

Constructive Dismissal

Accordingly, petitioners are liable for constructive dismissal for placing respondents on shifts

of a few days per month and in eventually denying them workplace access, rendering

respondents’ employment impossible, unreasonable or unlikely, leaving them no choice but to

quit. (PASIG CYLINDER MFG., CORP.,et. al v. DANILO ROLLO, et. al., G.R. No. 173631 September

8, 2010)

While we recognize the rule that in illegal dismissal cases, the employer bears the burden of

proving that the termination was for a valid or authorized cause, in the present case, however,

the facts and the evidence do not establish a prima facie case that the employee was

dismissed from employment. Before the employer must bear the burden of proving that the

dismissal was legal, the employee must first establish by substantial evidence the fact of his

dismissal from service. Logically, if there is no dismissal, then there can be no question as to

its legality or illegality. Bare allegations of constructive dismissal, when uncorroborated by the

evidence on record, cannot be given credence.

As we said in Machica v. Roosevelt Services Center, Inc.:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were

burdened to prove their allegation that respondents dismissed them from their employment. It

must be stressed that the evidence to prove this fact must be clear, positive and convincing.

The rule that the employer bears the burden of proof in illegal dismissal cases finds no

application here because the respondents deny having dismissed the petitioners. [Emphasis

supplied.]

(PHILIPPINE RURAL RECONSTRUCTION MOVEMENT( RRM)v.VIRGILIO E. PULGAR, G.R. No.

169227, July 5, 2010)

Another basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the

interpretation and implementation of the Labor Code should be interpreted in favor of the

workingman. This principle has been extended by jurisprudence to cover doubts in the

evidence presented by the employer and the employee. As shown above, Peñaflor has, at very

least, shown serious doubts about the merits of the company’s case, particularly in the

appreciation of the clinching evidence on which the NLRC and CA decisions were based. In

such contest of evidence, the cited Article 4 compels us to rule in Peñaflor’s favor. Thus, we

find that Peñaflor was constructively dismissed given the hostile and discriminatory working

environment he found himself in, particularly evidenced by the escalating acts of unfairness

against him that culminated in the appointment of another HRD manager without any prior

notice to him. Where no less than the company’s chief corporate officer was against him,

Peñaflor had no alternative but to resign from his employment. (MANOLO A. PEÑAFLOR v.

OUTDOOR CLOTHING MANUFACTURING CORPORATION, G.R. No. 177114, January 21, 2010)

While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily

signify that it was also voluntarily executed. Precisely because of the attendant hostile and

discriminatory working environment, Peñaflor decided to permanently sever his ties with

Outdoor Clothing. This falls squarely within the concept of constructive dismissal that

jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and

unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility,

or disdain by an employer exists and has become unbearable to the employee. 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. With the

appointment of Buenaobra to the position he then still occupied, Peñaflor felt that he was

being eased out and this perception made him decide to leave the company. (MANOLO A.

PEÑAFLOR V. OUTDOOR CLOTHING MANUFACTURING CORPORATION, G.R. No. 177114, April

13, 2010)

Withholding of Salary amounts to Constructive Dismissal

In this case, the withholding of respondent’s salary does not fall under any of the

circumstances provided under Article 113. Neither was it established with certainty that

respondent did not work from November 16 to November 30, 2005. Hence, the Court agrees

with the LA and the CA that the unlawful withholding of respondent’s salary amounts to

constructive dismissal. (SHS PERFORATED MATERIALS, INC., WINFRIED HARTMANNSHENN, and

HINRICH JOHANN SCHUMACHER v. MANUEL F. DIAZ, G.R. No. 185814, October 13, 2010)

Contempt

To be considered contemptuous, an act must be clearly contrary to or prohibited by the order

of the court or tribunal. A person cannot, for disobedience, be punished for contempt unless

the act which is forbidden or required to be done is clearly and exactly defined, so that there

can be no reasonable doubt or uncertainty as to what specific act or thing is forbidden or

required. (BANK OF THE PHILIPPINE ISLANDS v. LABOR ARBITER RODERICK JOSEPH CALANZA et

al., G.R. No. 180699, October 13, 2010)

Control Test

It should be remembered that the control test merely calls for the existence of the right to

control, and not necessarily the exercise thereof. It is not essential that the employer actually

supervises the performance of duties of the employee. It is enough that the former has a right

to wield the power. (MANILA WATER COMPANY, INC, v. JOSE J. DALUMPINES, ET. Al., G.R. No.

175501, October 4, 2010)

CBA Coverage

Under these terms, the petitioners are members of the appropriate bargaining unit because

they are regular rank-and-file employees and do not belong to any of the excluded categories.

Specifically, nothing in the records shows that they are supervisory or confidential employees;

neither are they casual nor probationary employees. Most importantly, the labor arbiter’s

decision of January 17, 2002 – affirmed all the way up to the CA level – ruled against ABS-

CBN’s submission that they are independent contractors. Thus, as regular rank-and-file

employees, they fall within CBA coverage under the CBA’s express terms and are entitled to its

benefits. (FARLEY FULACHE et. al., v. ABS-CBN BROADCASTING CORPORATION, G.R. No.

183810, January 21, 2010)

Damages

Because of his unjustified dismissal, we likewise award in Del Villar’s favor moral and

exemplary damages. Award of moral and exemplary damages for an illegally dismissed

employee is proper where the employee had been harrassed and arbitrarily terminated by the

employer. Moral damages may be awarded to compensate one for diverse injuries such as

mental anguish, besmirched reputation, wounded feelings, and social humiliation occasioned

by the employer’s unreasonable dismissal of the employee. We have consistently accorded the

working class a right to recover damages for unjust dismissals tainted with bad faith; where

the motive of the employer in dismissing the employee is far from noble. The award of such

damages is based not on the Labor Code but on Article 220 of the Civil Code. These damages,

however, are not intended to enrich the illegally dismissed employee, such that, after

deliberations, we find the amount of P100,000.00 for moral damages and P50,000.00 for

exemplary damages sufficient to assuage the sufferings experienced by Del Villar and by way

of example or correction for the public good. (COCA-COLA BOTTLERS PHILIPPINES, INC v.

ANGEL U. DEL VILLAR, G.R. No. 163091, October 6, 2010)

On the matter of damages prayed for by the petitioners, we have held that as a general rule, a

corporation cannot suffer nor be entitled to moral damages. A corporation, and by analogy a

labor organization, being an artificial person and having existence only in legal contemplation,

has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and

mental anguish. Mental suffering can be experienced only by one having a nervous system and

it flows from real ills, sorrows, and griefs of life – all of which cannot be suffered by an artificial,

juridical person. A fortiori, the prayer for exemplary damages must also be denied.

Nevertheless, we find it in order to award (1) nominal damages in the amount of P250,000.00

on the basis of our ruling in De La Salle University v. De La Salle University Employees

Association (DLSUEA-NAFTEU) and Article 2221, and (2) attorney’s fees equivalent to 10% of

the monetary award. The remittance to petitioners of the collected union dues previously

turned over to Remigio and Villareal is likewise in order. ( EMPLOYEES UNION OF BAYER

PHILS.,v. BAYER PHILIPPINES, INC., G.R. No. 162943, December 6, 2010)

Date of Filing of Pleadings

Thus, the date of filing is determinable from two sources: from the post office stamp on the

envelope or from the registry receipt, either of which may suffice to prove the timeliness of the

filing of the pleadings. If the date stamped on one is earlier than the other, the former may be

accepted as the date of filing. This presupposes, however, that the envelope or registry receipt

and the dates appearing thereon are duly authenticated before the tribunal where they are

presented. (GOVERNMENT SERVICE INSURANCE SYSTEM v. NATIONAL LABOR RELATIONS

COMMISSION (NLRC), ET. Al., G.R. No. 180045, November 17, 2010 )

Dismissal of Corporate Officer

The criteria for distinguishing between corporate officers who may be ousted from office at

will, on one hand, and ordinary corporate employees who may only be terminated for just

cause, on the other hand, do not depend on the nature of the services performed, but on the

manner of creation of the office. In the respondent’s case, he was supposedly at once an

employee, a stockholder, and a Director of Matling. The circumstances surrounding his

appointment to office must be fully considered to determine whether the dismissal constituted

an intra-corporate controversy or a labor termination dispute. We must also consider whether

his status as Director and stockholder had any relation at all to his appointment and

subsequent dismissal as Vice President for Finance and Administration. (ATLING INDUSTRIAL

AND COMMERCIAL CORPORATION,RICHARD K. SPENCER,CATHERINE SPENCER, AND ALEX

MANCILLA v. RICARDO R. COROS, G.R. No. 157802, October 13, 2010)

Dole Certification

In this case, petitioners failed to discharge such burden of proof. The Certifications from the

DOLE stated that there are no pending labor cases against petitioners filed before said office,

but said certifications “do not cover cases filed before the National Labor Relations

Commission and the National Conciliation and Mediation Board.” The Order dated January 17,

2001 issued by the DOLE, in fact, showed that in the year 2000, petitioner security agency was

found to have committed the following violations: underpayment of overtime pay,

underpayment of 13th month pay, underpayment of 5 days Service Incentive Leave Pay, and

underpayment of night shift differential pay. Then, said Order stated that, since petitioner

security agency had submitted “[p]ayrolls showing backwages of the above-noted violations

amounting to x x x (P443,512.51) benefitting 279 guards” to show compliance with labor laws,

“the DOLE considered the inspection closed and terminated.” For the years 2001and 2002, the

DOLE Reports stated only that based on records submitted by petitioners, it had no violations.

Verily, such documents from the DOLE do not conclusively prove that respondent, in particular,

has been paid all her salaries and other benefits in full. In fact, the Order dated January 17,

2001 even bolsters respondent’s claim that she had not been paid overtime pay, 13th month

pay, and Service Incentive Leave Pay. The statement in said Order, that backwages for 279

guards had been paid, does not in any way prove that respondent is one of those 279 guards,

since petitioners failed to present personnel files, payrolls, remittances, and other similar

documents which would have proven payment of respondent’s money claims. It was entirely

within petitioners’ power to present such employment records that should necessarily be in

their possession; hence, failure to present such evidence must be taken against them.

(DANSART SECURITY FORCE & ALLIED SERVICES COMPANY and DANILO A. SARTE v. JEAN O.

BAGOY, G.R. No. 168495, July 2, 2010)

Due Process

The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the

veracity of the cause of termination. Non-compliance with this rule clearly violates the

employee’s right to statutory due process. (SHIMIZU PHILS. CONTRACTORS, INC. v. VIRGILIO P.

CALLANTA, G.R. No. 165923, September 29, 2010)

With regard to the requirement of a hearing, the essence of due process lies in an opportunity

to be heard. Such opportunity was afforded the petitioner when she was asked to explain her

side of the story. In Metropolitan Bank and Trust Company v. Barrientos, we held that, “the

essence of due process lies simply in an opportunity to be heard, and not that an actual

hearing should always and indispensably be held.” Similarly in Philippine Pasay Chung Hua

Academy v. Edpan, we held that, “[e]ven if no hearing or conference was conducted, the

requirement of due process had been met since he was accorded a chance to explain his side

of the controversy.” (NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN(NLMK-OLALIA-KMU)

andHELEN VALENZUELA v. KEIHIN PHILIPPINES CORPORATION, G.R. No. 171115, August 9,

2010)

Significantly, Artificio regrettably chose not to present his side at the administrative hearing

scheduled to look into the factual issues that accompanied the accusation against him. In fact,

he avoided the investigation into the charges by filing his illegal dismissal complaint ahead of

the scheduled investigation. He, on his own decided that his preventive suspension was in fact

illegal dismissal and that he is entitled to backwages and separation pay. Indeed, Artificio

would even reject reinstatement revealing his bent to have his own way through his own

means. As aptly noted by the NLRC, Artificio preempted the investigation that could have

afforded him the due process of which he would then say he was denied. (JOSE P. ARTIFICIO v.

NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 172988, July 26, 2010)

The essence of due process is the opportunity to be heard; it is the denial of this opportunity

that constitutes violation of due process of law. The respondent was given the opportunity to

be heard when a proper notice of investigation was sent to him, although the notice did not

reach him for reasons outside the petitioner’s control. He was not also totally unheard on the

matter as he was able to explain his side through the two (2) explanation letters he submitted.

These letters are clear indications that he intimately knew of the matter for which he was

being investigated. If he was denied due process at all, the denial was with respect to the

charges of extortion, tardiness and absenteeism, which are grounds invoked separately from

loss of trust and confidence and which were not serious considerations in the dismissal that

followed. We need not therefore consider these grounds as material to the present case.

(BIBIANA FARMS AND MILLS, INC v. ARTURO LADO, G.R. No. 157861, February 2, 2010)

Petitioners should thus indemnify Dy for their failure to observe the requirements of due

process. Dy is not entitled to reinstatement, backwages and attorney’s fees because Dy’s

dismissal is for just cause but without due process. In light of this Court’s ruling in Agabon v.

National Labor Relations Commission, the violation of Dy’s right to statutory due process by

petitioners, even if the dismissal was for a just cause, warrants the payment of indemnity in

the form of nominal damages. This indemnity is intended not to penalize the employer but to

vindicate or recognize the employee’s right to statutory due process which was violated by the

employer. Considering that both the Labor Arbiter and the NLRC found that petitioners already

gave Dy P120,000 of their own free will, this amount should thus constitute the nominal

damages due to Dy. (HILTON HEAVY EQUIPMENT CORPORATION v. ANANIAS P. DY, G.R. No.

164860, February 2, 2010)

• Hearing

While no actual hearing was conducted before petitioners dismissed respondent, the same is

not fatal as only an “ample opportunity to be heard” is what is required in order to satisfy the

requirements of due process. Accordingly, this Court is guided by Solid Development

Corporation Workers Association v. Solid Development Corporation (Solid), where the validity

of the dismissal of two employees was upheld notwithstanding that no hearing was conducted,

to wit:

[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the

essential elements of due process in the dismissal of employees. It is a cardinal rule in our

jurisdiction that the employer must furnish the employee with two written notices before the

termination of employment can be effected: (1) the first apprises the employee of the

particular acts or omissions for which his dismissal is sought; and (2) the second informs the

employee of the employer’s decision to dismiss him. The requirement of a hearing, on the

other hand, is complied with as long as there was an opportunity to be heard, and not

necessarily that an actual hearing was conducted.

In separate infraction reports, petitioners were both apprised of the particular acts or

omissions constituting the charges against them. They were also required to submit their

written explanation within 12 hours from receipt of the reports. Yet, neither of them complied.

Had they found the 12-hour period too short, they should have requested for an extension of

time. Further, notices of termination were also sent to them informing them of the basis of

their dismissal. In fine, petitioners were given due process before they were dismissed. Even if

no hearing was conducted, the requirement of due process had been met since they were

accorded a chance to explain their side of the controversy. (PHARMACIA and UPJOHN, INC.

(now PFIZER PHILIPPINES, INC.) v. RICARDO P. ALBAYDA, JR., G.R. No. 172724 August 23, 2010)

• Notice

More importantly, the records are bereft of evidence that Loreta was duly informed of the

charges against her and that she was given the opportunity to respond to those charges prior

to her dismissal. If there were indeed charges against Loreta that Wensha had to investigate,

then it should have informed her of those charges and required her to explain her side.

Wensha should also have kept records of the investigation conducted while Loreta was on

leave. The law requires that two notices be given to an employee prior to a valid termination:

the first notice is to inform the employee of the charges against her with a warning that she

may be terminated from her employment and giving her reasonable opportunity within which

to explain her side, and the second notice is the notice to the employee that upon due

consideration of all the circumstances, she is being terminated from her employment. This is a

requirement of due process and clearly, Loreta did not receive any of those required notices.

(WENSHA SPA CENTER, INC. v. LORETA T. YUNG, G.R. No. 185122,

August 16, 2010)

In this case, the Labor Arbiter, the NLRC and the Court of Appeals all found that respondents

were validly terminated due to the completion of the phases of work for which respondents’

services were engaged. The above rule clearly states, “If the termination is brought about by

the completion of the contract or phase thereof, no prior notice is required.” Cioco, Jr. v. C.E.

Construction Corporation explained that this is because completion of the work or project

automatically terminates the employment, in which case, the employer is, under the law, only

obliged to render a report to the DOLE on the termination of the employment. (D.M. CONSUNJI,

INC. v. ANTONIO GOBRES et. al., G.R. No. 169170, August 8, 2010)

• Notice and Hearing

As can be seen, under the peculiar circumstances of this case, it cannot be concluded that the

sending of the notices and setting of hearings were a mere afterthought because petitioners

were still awaiting the report from Bagasala when respondents pre-empted the results of the

ongoing investigation by filing the subject labor complaint. For this reason, there was sufficient

compliance with the twin requirements of notice and hearing even if the notices were sent and

the hearing conducted after the filing of the labor complaint. Thus, the award of nominal

damages by the appellate court is improper. (New Puerto Commercial and Richard Lim v. Rodel

Lopez and Felix Gavan G.R. No. 169999, July 26, 2010) Dismissal due to closed shop CBA

provision

Irrefragably, GMC cannot dispense with the requirements of notice and hearing before

dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in

the CBA. The rights of an employee to be informed of the charges against him and to

reasonable opportunity to present his side in a controversy with either the company or his own

union are not wiped away by a union security clause or a union shop clause in a collective

bargaining agreement. An employee is entitled to be protected not only from a company which

disregards his rights but also from his own union the leadership of which could yield to the

temptation of swift and arbitrary expulsion from membership and hence dismissal from his job.

(GENERALMILLING CORPORATION, v. ERNESTO CASIO, et al., G.R. No. 149552, March 10, 2010)

Effect of the Dismissal of Criminal Complaint

The mere fact that the criminal complaints against the terminated Union members were

subsequently dismissed for one reason or another does not extinguish their liability under the

Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and

photos presented to establish their identity and guilt during the hearing of the petition to

declare the strike illegal. The technical grounds that the Union interposed for denying

admission of the photos are also not binding on the NLRC. (C. ALCANTARA & SONS, INC. v.

COURT OF APPEALS, et al.,G.R. No. 155109, G.R. No. 155135, G.R. No. 179220, September 29,

2010)

Employment Contracts

Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000 did not contain

any specific stipulation with respect to the employment contracts of existing personnel of the

non-surviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this Court cannot uphold

the reasoning that the general stipulation regarding transfer of FEBTC assets and liabilities to

BPI as set forth in the Articles of Merger necessarily includes the transfer of all FEBTC

employees into the employ of BPI and neither BPI nor the FEBTC employees allegedly could do

anything about it. Even if it is so, it does not follow that the absorbed employees should not be

subject to the terms and conditions of employment obtaining in the surviving corporation.

The rule is that unless expressly assumed, labor contracts such as employment contracts and

collective bargaining agreements are not enforceable against a transferee of an enterprise,

labor contracts being in personam, thus binding only between the parties. A labor contract

merely creates an action in personam and does not create any real right which should be

respected by third parties. This conclusion draws its force from the right of an employer to

select his employees and to decide when to engage them as protected under our Constitution,

and the same can only be restricted by law through the exercise of the police power.(BANK OF

THE PHILIPPINE ISLANDS v. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS

IN BPI UNIBANK, G.R. No. 164301, August 10, 2010)

Equality

We find these guidelines complied with in the present case. To reiterate, Lado held a position

of trust and confidence and was given access to and authority over company property with

clear tasks and guidelines laid down very early in his employment. Like any business entity,

the petitioner has every right to protect itself from actual threats to the viability of its

operations. Lado, given what happened on September 7, 1998, not only violated the

company’s trust and confidence; he had become a threat to the viability of company

operations and to rule that he should be reinstated would be oppressive to the petitioner. The

law, in protecting the rights of the employee, authorizes neither the oppression nor the self-

destruction of the employer. (BIBIANA FARMS AND MILLS, INC v. ARTURO LADO, G.R. No.

157861, February 2, 2010)

Evidence

Even if we assume that under the above provision of the contract, Dacuital was informed of the

nature of his employment and the duration of the project, that same contract is not sufficient

evidence to show that the other employees were so informed. It is undisputed that petitioners

had individual employment contracts, yet respondents opted not to present them on the lame

excuse that they were similarly situated as Dacuital. The non-presentation of these contracts

gives rise to the presumption that the employees were not informed of the nature and duration

of their employment. It is doctrinally entrenched that in illegal dismissal cases, the employer

has the burden of proving with clear, accurate, consistent, and convincing evidence that the

dismissal was valid. Absent any other proof that the project employees were informed of their

status as such, it will be presumed that they are regular employees. (JUDY O. DACUITAL , et. al.

v. L.M. CAMUS ENGINEERING CORPORATION and/or LUIS M. CAMUS, G.R. No. 176748,

September 1, 2010)

While the Court adheres to the principle of liberality in favor of the seafarer in construing the

Standard Employment Contract, we cannot allow claims for compensation based on surmises.

When the evidence presented negates compensability, we have no choice but to deny the

claim, lest we cause injustice to the employer. (SOUTHEASTERN SHIPPING,SOUTHEASTERN

SHIPPING GROUP, LTD., G.R. No. 167678, June 22, 2010

As a final note, the Court is wont to reiterate that while an employer has its own interest to

protect, and pursuant thereto, it may terminate a managerial employee for a just cause, such

prerogative to dismiss or lay off an employee must be exercised without abuse of discretion.

Its implementation should be tempered with compassion and understanding. The employer

should bear in mind that, in the execution of the said prerogative, what is at stake is not only

the employee’s position, but his very livelihood, his very breadbasket. Indeed, the consistent

rule is that if doubts exist between the evidence presented by the employer and the employee,

the scales of justice must be tilted in favor of the latter. The employer must affirmatively show

rationally adequate evidence that the dismissal was for justifiable cause. Thus, when the

breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this

case, such dismissal on the cited grounds cannot be allowed. (Lima land, inc. v. MARLYN

CUEVAS, G.R. No. 169523, June 16, 2010)

While we can grant that the standards were duly communicated to the petitioners and could

be applied beginning the 1st trimester of the school year 2000-2001, glaring and very basic

gaps in the school’s evidence still exist. The exact terms of the standards were never

introduced as evidence; neither does the evidence show how these standards were applied to

the petitioners. Without these pieces of evidence (effectively, the finding of just cause for the

non-renewal of the petitioners’ contracts), we have nothing to consider and pass upon as valid

or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the

termination of employment of employees on probationary status) lacks the supporting finding

of just cause that the law requires and, hence, is illegal. (YOLANDA M. MERCADO et al. v. AMA

COMPUTER COLLEGE, G.R. No. 183572, April 13, 2010)

• Bad Faith

This finding lacks basis. Based on the records, respondent failed to allege either in his

complaint or position paper that petitioner, as Vice-President of VIPS Coffee Shop and

Restaurant, acted in bad faith. Neither did respondent clearly and convincingly prove that

petitioner, as Vice-President of VIPS Coffee Shop and Restaurant, acted in bad faith. In fact,

there was no evidence whatsoever to show petitioner’s participation in respondent’s alleged

illegal dismissal. Clearly, the twin requisites of allegation and proof of bad faith, necessary to

hold petitioner personally liable for the monetary awards to respondent, are lacking. (IRENE

MARTEL FRANCISCO v. NUMERIANO MALLEN, JR, G.R. No. 173169, September 22, 2010)

• Union Fraud/Misrepresentation

In Heritage Hotel Manila v. Pinag-Isang Galing at Lakas ng mga Manggagawa sa Heritage

Manila, the employer filed a petition to revoke the registration of its rank-and-file employees’

union, accusing it of committing fraud and misrepresentation. The Court held that the petition

was rightfully denied because the employer failed to prove that the labor union committed

fraud and misrepresentation. The Court held that:

Did respondent PIGLAS union commit fraud and misrepresentation in its application for union

registration? We agree with the DOLE-NCR and the BLR that it did not. Except for the evident

discrepancies as to the number of union members involved as these appeared on the

documents that supported the union’s application for registration, petitioner company has no

other evidence of the alleged misrepresentation. But those discrepancies alone cannot be

taken as an indication that respondent misrepresented the information contained in these

documents.

The charge that a labor organization committed fraud and misrepresentation in securing its

registration is a serious charge and deserves close scrutiny. It is serious because once such

charge is proved, the labor union acquires none of the rights accorded to registered

organizations. Consequently, charges of this nature should be clearly established by evidence

and the surrounding circumstances. (Emphasis supplied)

(YOKOHAMA TIRE PHILIPPINES, INC., v. YOKOHAMA EMPLOYEES UNION, G.R. No. 163532, March

10, 2010 )

Execution

• Family Home

If the family home was constructed before the effectivity of the Family Code or before August

3, 1988, then it must have been constituted either judicially or extra-judicially as provided

under Articles 225, 229-231 and 233 of the Civil Code. Judicial constitution of the family home

requires the filing of a verified petition before the courts and the registration of the court’s

order with the Registry of Deeds of the area where the property is located. Meanwhile,

extrajudicial constitution is governed by Articles 240 to242 of the Civil Code and involves the

execution of a public instrument which must also be registered with the Registry of Property.

Failure to comply with either one of these two modes of constitution will bar a judgment debtor

from availing of the privilege.

On the other hand, for family homes constructed after the effectivity of the Family Code on

August 3, 1988, there is no need to constitute extrajudicially or judicially, and the exemption is

effective from the time it was constituted and lasts as lo=g as any of its beneficiaries under

Art. 154 actually resides therein. Moreover, the family home should belong to the absolute

community or conjugal partnership or if exclusively by one spouse, its constitution must have

been with consent of the other, and its value must not prior to August 3, 1988, or as early as

1944, they must comply with the procedure mandated by the Civil Code. Pandacan property

was judicially or extrajudicially constituted as the Ramos’ family home, the law’s protective

mantle cannot be availed of by petitioners. Parenthetically, the records show that the sheriff

exhausted all means to execute the judgment but failed because Ramos’ bank accounts were

already closed while other properties in him or the company’s name had already been

transferred, and the only property left was the Pandacan property. (JUANITA TRINIDAD

RAMOS,et al. v. DANILO PANGILINAN et. al.,G.R. No. 185920, July 20, 20100)

Finality of Factual Findings

Accordingly, for want of substantial basis, in fact or in law, factual findings of an administrative

agency, such as the NLRC, cannot be given the stamp of finality and conclusiveness normally

accorded to it, as even decisions of administrative agencies which are declared “final” by law

are not exempt from judicial review when so warranted. Contrary to petitioner’s assertion,

therefore, this Court sees no error on the part of the CA when it made a new determination of

the case and, upon this, reversed the ruling of the NLRC. (CENTURY CANNING CORPORATION,

RICARDO T. PO, JR. and AMANCIO C. RONQUILLO v. VICENTE RANDY R. RAMIL, G.R. No. 171630,

August 8, 2010)

Finally, it bears to point out that the Decision of the Labor Arbiter was affirmed by the NLRC

and the CA. The settled rule is that the factual findings of the Labor Arbiter and the NLRC,

especially when affirmed by the CA, are accorded not only great respect but also finality, and

are deemed binding upon this Court so long as they are supported by substantial evidence. In

the present case, the Court finds no cogent reason to depart from this rule. (ELPIDIO CALIPAY

v. NATIONAL LABOR RELATIONS COMMISSION, TRIANGLE ACE CORPORATION and JOSE LEE,

G.R. No. 166411, August 3, 2010)

Finality of Judgment

It is no longer legally feasible to modify the final ruling in this case through the expediency of a

petition questioning the order of execution. This late in the day, petitioner Victor Morales is

barred, by the fact of a final judgment, from advancing the argument that his real property

cannot be made liable for the monetary award in favor of respondent. For a reason greater

than protection from personal liability, petitioner Victor Morales, as president of his

corporation, cannot rely on our previous ruling that “to hold a director personally liable for

debts of a corporation and thus pierce the veil of corporate fiction, the bad faith or wrongdoing

of the director must be established clearly and convincingly.” Judgments of courts should

attain finality at some point lest there be no end in litigation. The final judgment in this case

may no longer be reviewed, or in any way modified directly or indirectly, by a higher court, not

even by the Supreme Court. The reason for this is that, a litigation must end and terminate

sometime and somewhere, and it is essential to an effective and efficient administration of

justice that, once a judgment has become final, the winning party be not deprived of the fruits

of the verdict. Courts must guard against any scheme calculated to bring about that result and

must frown upon any attempt to prolong controversies. (MARMOSY TRADING, INC. and VICTOR

MORALES v. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 170515,

May 6, 2010)

• Exception

The company insists that the Court should reinstate the original CA decision, given the findings

of the Labor Arbiter and the NLRC that it had not dismissed Siazar. Ordinarily, the Court will

not, on petition for review on certiorari, reexamine the facts of the case. Here, however, since

the CA overturned its earlier ruling and its factual findings now differ from those of the Labor

Arbiter and the NLRC, the Court is making an exception. (AGRICULTURAL AND INDUSTRIAL

SUPPLIES CORPORATION,et. al., v. JUEBER P. SIAZAR G.R. No. 177970, August 25, 2010)

Forum Shopping

All these go to show that ABS-CBN acted with patent bad faith. A close parallel we can draw to

characterize this bad faith is the prohibition against forum-shopping under the Rules of Court.

In forum-shopping, the Rules characterize as bad faith the act of filing similar and repetitive

actions for the same cause with the intent of somehow finding a favorable ruling in one of the

actions filed. ABS-CBN’s actions in the two cases, as described above, are of the same

character, since its obvious intent was to defeat and render useless, in a roundabout way and

other than through the appeal it had taken, the labor arbiter’s decision in the regularization

case. Forum-shopping is penalized by the dismissal of the actions involved. The penalty

against ABS-CBN for its bad faith in the present case should be no less. (FARLEY FULACHE et.

al., v. ABS-CBN BROADCASTING CORPORATION, G.R. No. 183810, January 21, 2010)

Grave Abuse of Discretion

Despite all these clear pieces of evidence of illegal obstruction, the NLRC looked the other way

and chose not to see the unmistakable violations of the law on strikes by the union and its

respondent officers and members. Needless to say, while the law protects the rights of the

laborer, it authorizes neither the oppression nor the destruction of the employer. For grossly

ignoring the evidence before it, the NLRC committed grave abuse of discretion; for supporting

these gross NLRC errors, the CA committed its own reversible error. (PHIMCO INDUSTRIES, INC.

v. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et al,G.R. No. 170830, August 11, 2010)

Illegal Dismissal

The respondent worker’s allegation that Teng summarily dismissed them on suspicion that

they were not reporting to him the correct volume of the fish caught in each fishing voyage

was never denied by Teng. Unsubstantiated suspicion is not a just cause to terminate one’s

employment under Article 282 of the Labor Code. To allow an employer to dismiss an

employee based on mere allegations and generalities would place the employee at the mercy

of his employer, and would emasculate the right to security of tenure. For his failure to comply

with the Labor Code’s substantive requirement on termination of employment, we declare that

Teng illegally dismissed the respondent workers. (ALBERT TENG, doing business under the firm

name ALBERT TENG FISH TRADING, and EMILIA TENG-CHUA v. ALFREDO S. PAHAGAC, G.R. No.

169704, November 17, 2010)

It is likewise evident that, even in the petition before this Court, Bonifacio Bryan Cu signed the

Verification and Certification of Non-Forum Shopping and Antonio Cu signed the Secretary’s

Certificate. The fact remains that the Cu family continues to operate petitioner’s business.

Despite the alleged recent sale to SCBC, represented by Willy Deterala, petitioner failed to

refute the allegations of respondents that the Cu family still continues to own and operate

petitioner, or even to show that Willy Deterala is actually in charge of petitioner’s business.

Petitioner did not confront this issue head-on, and its failure to do so is fatal to its cause.

Petitioner having failed to discharge its burden of submitting sufficient and convincing

evidence required by law, we hold that respondents were illegally dismissed. (PEÑAFRANCIA

TOURS AND TRAVEL TRANSPORT, INC., v. JOSELITO P. SARMIENTO and RICARDO S.

CATIMBANG, G.R. No. 178397, October 20, 2010)

Petitioners’ lack of just cause and non-compliance with the procedural requisites in terminating

respondent’s employment renders them guilty of illegal dismissal. Consequently, respondent is

entitled to reinstatement to his former position without loss of seniority rights and payment of

backwages. However, if such reinstatement proves impracticable, and hardly in the best

interest of the parties, perhaps due to the lapse of time since his dismissal, or if he decides not

to be reinstated, respondent should be awarded separation pay in lieu of reinstatement. (ST.

LUKE’S MEDICAL CENTER, INC v. ESTRELITO NOTARIO, G.R. No. 152166, October 20, 2010)

Hence, consistent with the Court’s ruling in Jaculbe, having terminated petitioner merely on the

basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is

guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority

rights and to full backwages computed from the time of her illegal dismissal in February 16,

2001 until the actual date of her reinstatement. If reinstatement is no longer possible because

the position that petitioner held no longer exists, UNIPROM shall pay backwages as computed

above, plus, in lieu of reinstatement, separation pay equivalent to one-month pay for every

year of service. This is consistent with the preponderance of jurisprudence relative to the

award of separation pay in case reinstatement is no longer feasible. LOURDES A. CERCADO v.

UNIPROM, INC.,G.R. No. 188154, October 13, 2010)

To reiterate, this Court will not hesitate to defend respondents’ right to security of tenure. The

premature dismissal from the service of respondents Palacio, Calibod, Laquio, Santander and

Montederamos is unwarranted. However, we take exception to the case of respondent Saile

who, as alleged by petitioner, was not qualified to take the LET as she only had three out of the

minimum 10 required educational units to be admitted to take the LET pursuant to Section 15

of RA 7836, which fact respondent Saile did not refute. Not being qualified to take the

examination to become a duly licensed professional teacher, petitioner cannot be compelled to

retain her services as she cannot possibly obtain the needed prerequisite to allow her to

continue practicing the teaching profession. Thus, we find her termination just and legal. (St.

Mary’s Academy of Dipolog City v. Teresita Palacio et. al., September 8, 2010,G.R. No. 164913)

Here, the company did not adduce any evidence to prove that Siazar’s dismissal had been for

a just or authorized cause as in fact it had been its consistent stand that it did not terminate

him and that he quit on his own. But given that the company dismissed Siazar and that such

dismissal had remained unexplained, there can be no other conclusion but that his dismissal

was illegal. (AGRICULTURAL AND INDUSTRIAL SUPPLIES CORPORATION,et. al., v. JUEBER P.

SIAZAR G.R. No. 177970, August 25, 2010)

Verily, there was a dearth of evidence directly linking respondent Mongcal to the commission

of the crime of theft, as his mere act of loading the dump truck with aggregates did not show

that he knew of Rasote’s plan to deliver the load to a place other than petitioner’s construction

site. The only conclusion, therefore, is that petitioner illegally dismissed respondent Mongcal.

(SARGASSO CONSTRUCTION and DEVELOPMENT CORPORATION v. NATIONAL LABOR

The absurdity of petitioner’s defense highlights the fact that respondent’s claim, that she was

dismissed without any notice and hearing, rings with truth. This Court views with approval the

observation of the CA and the NLRC, to wit:

x x x the petitioners cannot justify their defense of abandonment as they failed to prove that

indeed private respondent had abandoned her work. It did not even bother to send a letter to

her last known address requiring her to report for work and explain her alleged continued

absences. The ratiocination of public respondent [NLRC] on this score merits our imprimatur,

viz:

The law clearly spells out the manner with which an unjustified refusal to return to work by an

employee may be established. Thusly, respondent should have given complainant a notice

with warning concerning her alleged absences (Section 2, Rule XIV, Book V, Implementing

Rules and Regulations of the Labor Code). The notice requirement actually consists of two

parts to be separately served on the employee to wit: (1) notice to apprise the employee of his

absences with a warning concerning a possible severance of employment in the event of an

unjustified excuse therefor, and (2) subsequent notice of the decision to dismiss in the event of

an employee’s refusal to pay heed to such warning. Only after compliance had been effected

with those requirements can it be reasonably concluded that the employee had actually

abandoned his job. In respondent’s case, it is noted that more than two (2) months had already

lapsed since complainant allegedly started to absent herself when the latter instituted her

action for illegal dismissal. During the said period of time, no action was taken by the

respondents regarding complainant’s alleged absences, something which is quite peculiar had

complainant’s employment not been severed at all. Accordingly, we do not find respondents

defense of abandonment to be impressed with merit in view of an utter lack of evidence to

support the same. Hence, complainant’s charge of illegal dismissal stands uncontroverted x x

x .

(DIVERSIFIED SECURITY, INC v. ALICIA V. BAUTISTA, G.R. No. 152234, April 15, 2010)

While Promm-Gem had complied with the procedural aspect of due process in terminating the

employment of petitioners-employees, i.e., giving two notices and in between such notices, an

opportunity for the employees to answer and rebut the charges against them, it failed to

comply with the substantive aspect of due process as the acts complained of neither constitute

serious misconduct nor breach of trust. Hence, the dismissal is illegal. (JOEB M. ALIVIADO, et al.

v. PROCTER & GAMBLE PHILS., INC.,and PROMM-GEM INC., G.R. No. 160506, March 9, 2010)

The injustice committed on the petitioners/drivers requires rectification. Their dismissal was

not only unjust and in bad faith as the above discussions abundantly show. The bad faith in

ABS-CBN’s move toward its illegitimate goal was not even hidden; it dismissed the petitioners –

already recognized as regular employees – for refusing to sign up with its service contractor.

Thus, from every perspective, the petitioners were illegally dismissed. (FARLEY FULACHE et.

al., v. ABS-CBN BROADCASTING CORPORATION, G.R. No. 183810, January 21, 2010)

• Drug Test

The law is clear that drug tests shall be performed only by authorized drug testing centers. In

this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing

center. Sulpicio Lines did not even deny Nacague’s allegation that S.M. Lazo Clinic was not

accredited. Also, only a screening test was conducted to determine if Nacague was guilty of

using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a

confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using

illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines

failed to clearly show that it had a valid and legal cause for terminating Nacague’s

employment. When the alleged valid cause for the termination of employment is not clearly

proven, as in this case, the law considers the matter a case of illegal dismissal. (JEFFREY

NACAGUE v. SULPICIO LINES, INC., G.R. No. 172589, August 8, 2010)

Intimidation

None of these requisites was proven by petitioner. No demand was made on petitioner to

resign. At most, she was merely given the option to either resign or face disciplinary

investigation, which respondent had every right to conduct in light of the numerous infractions

committed by petitioner. There is nothing irregular in providing an option to petitioner.

Ultimately, the final decision on whether to resign or face disciplinary action rests on petitioner

alone. (MA. SOCORRO MANDAPAT v. ADD FORCE PERSONNEL SERVICES, INC. and COURT OF

APPEALS, G.R. No. 180285, July 6, 2010)

Involuntary Servitude

Employment is a personal consensual contract and absorption by BPI of a former FEBTC

employee without the consent of the employee is in violation of an individual’s freedom to

contract. It would have been a different matter if there was an express provision in the articles

of merger that as a condition for the merger, BPI was being required to assume all the

employment contracts of all existing FEBTC employees with the conformity of the employees.

In the absence of such a provision in the articles of merger, then BPI clearly had the business

management decision as to whether or not employ FEBTC’s employees. FEBTC employees

likewise retained the prerogative to allow themselves to be absorbed or not; otherwise, that

would be tantamount to involuntary servitude. (BANK OF THE PHILIPPINE ISLANDS v. BPI

EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, G.R. No.

164301, August 10, 2010)

Jurisdiction

Respecting Ikdal’s joint and solidary liability as a corporate officer, the same is in order too

following the express provision of R.A. 8042 on money claims, viz:

SEC. 10. Money Claims.—Notwithstanding any provision of law to the contrary, the Labor

Arbiters of the National Labor Relations Commission (NLRC) shall have the original and

exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the

complaint, the claims arising out of an employer-employee relationship or by virtue of any law

or contract involving Filipino workers for overseas deployment including claims for actual

moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all

claims under this section shall be joint and several. This provision shall be incorporated in the

contract for overseas employment and shall be a condition precedent for its approval. The

performance bond to be filed by the recruitment/placement agency, as provided by law, shall

be answerable for all money claims or damages that may be awarded to the workers. If the

recruitment/placement agency is a juridical being, the corporate officers and directors and

partners as the case may be, shall themselves be jointly and solidarily liable with the

corporation or partnership for the aforesaid claims and damages. (emphasis and underscoring

supplied)

(ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-KUWAIT v.

MA. JOSEFA ECHIN, G.R. No. 178551, October 11, 2010)

Prudential Bank and Trust Company v. Reyes, a case involving a lady bank manager who had

risen from the ranks but was dismissed, the Court held that her complaint for illegal dismissal

was correctly brought to the NLRC, because she was deemed a regular employee of the bank.

The Court observed thus:

It appears that private respondent was appointed Accounting Clerk by the Bank on July 14,

1963. From that position she rose to become supervisor. Then in 1982, she was appointed

Assistant Vice-President which she occupied until her illegal dismissal on July 19, 1991. The

bank’s contention that she merely holds an elective position and that in effect she is not a

regular employee is belied by the nature of her work and her length of service with the Bank.

As earlier stated, she rose from the ranks and has been employed with the Bank since 1963

until the termination of her employment in 1991. As Assistant Vice President of the Foreign

Department of the Bank, she is tasked, among others, to collect checks drawn against

overseas banks payable in foreign currency and to ensure the collection of foreign bills or

checks purchased, including the signing of transmittal letters covering the same. It has been

stated that “the primary standard of determining regular employment is the reasonable

connection between the particular activity performed by the employee in relation to the usual

trade or business of the employer. Additionally, “an employee is regular because of the nature

of work and the length of service, not because of the mode or even the reason for hiring

them.” As Assistant Vice-President of the Foreign Department of the Bank she performs tasks

integral to the operations of the bank and her length of service with the bank totaling 28 years

speaks volumes of her status as a regular employee of the bank. In fine, as a regular

employee, she is entitled to security of tenure; that is, her services may be terminated only for

a just or authorized cause. This being in truth a case of illegal dismissal, it is no wonder then

that the Bank endeavored to the very end to establish loss of trust and confidence and serious

misconduct on the part of private respondent but, as will be discussed later, to no avail.

(ATLING INDUSTRIAL AND COMMERCIAL CORPORATION,RICHARD K. SPENCER,CATHERINE

SPENCER, AND ALEX MANCILLA v. RICARDO R. COROS, G.R. No. 157802, October 13, 2010)

One. The NLRC acquires jurisdiction over parties in cases before it either by summons served

on them or by their voluntary appearance before its Labor Arbiter. Here, while the Union insists

that summons were not properly served on the impleaded Union members with respect to the

Company’s amended petition that sought to declare the strike illegal, the records show that

they were so served. The Return of Service of Summons indicated that 74 out of the 81

impleaded Union members were served with summons. But they refused either to accept the

summons or to acknowledge receipt of the same. Such refusal cannot of course frustrate the

NLRC’s acquisition of jurisdiction over them. Besides, the affected Union members voluntarily

entered their appearance in the case when they sought affirmative relief in the course of the

proceedings like an award of damages in their favor. (C. ALCANTARA & SONS, INC. v. COURT

OF APPEALS, et al.,G.R. No. 155109, G.R. No. 155135, G.R. No. 179220, September 29, 2010)

Job contracting/Labor-Only Contracting

In the present case, the maestros did not have any substantial capital or investment. Teng

admitted that he solely provided the capital and equipment, while the maestros supplied the

workers. The power of control over the respondent workers was lodged not with the maestros

but with Teng. As checkers, the respondent workers’ main tasks were to count and classify the

fish caught and report them to Teng. They performed tasks that were necessary and desirable

in Teng’s fishing business. Taken together, these incidents confirm the existence of a labor-

only contracting which is prohibited in our jurisdiction, as it is considered to be the employer’s

attempt to evade obligations afforded by law to employees. (ALBERT TENG, doing business

under the firm name ALBERT TENG FISH TRADING, and EMILIA TENG-CHUA v. ALFREDO S.

PAHAGAC, G.R. No. 169704, November 17, 2010)

In order that a labor relationship can be categorized as legitimate/permissible job contracting

or as prohibited labor-only contracting, the totality of the facts and the surrounding

circumstances of the relationship ought to be considered. Every case is unique and has to be

assessed on the basis of its facts and of the features of the relationship in question. In

permissible job contracting, the principal agrees to put out or farm out with a contractor or

subcontractor the performance or completion of a specific job, work or service within a definite

or predetermined period, regardless of whether such job, work or service is to be performed or

completed within or outside the premises of the principal. The test is whether the independent

contractor has contracted to do the work according to his own methods and without being

subject to the principal’s control except only as to the results, he has substantial capital, and

he has assured 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

and welfare benefits. (SPIC N’ SPAN SERVICES CORPORATION v. GLORIA PAJE et. al, G.R. No.

174084, August 25, 2010)

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”. (JOEB M. ALIVIADO, et al. v. PROCTER

&GAMBLE PHILS., INC.,and PROMM-GEM INC., G.R. No. 160506, March 9, 2010)

• Test to Determine Independent Contractorship

Petitioner cannot rely either on AMPCO’s Certificate of Registration as an Independent

Contractor issued by the proper Regional Office of the DOLE to prove its claim. It 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. In distinguishing between

permissible job contracting and prohibited labor-only contracting, the totality of the facts and

the surrounding circumstances of the case are to be considered.=(SAN MIGUEL CORPORATION

v. VICENTE B. SEMILLANO, ET. al., G.R. No. 164257, July 5, 2010)

Liability

• Liability of Corporate Officers

Petitioners withheld respondent’s 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 respondent’s 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. (SHS PERFORATED MATERIALS, INC.,

WINFRIED HARTMANNSHENN, and HINRICH JOHANN SCHUMACHER v. MANUEL F. DIAZ, G.R. No.

185814, October 13, 2010)

As to respondent Camus’ liability as LMCEC president, it is settled that in the absence of

malice, bad faith, or specific provision of law, a director or officer of a corporation cannot be

made personally liable for corporate liabilities.

As held in Lowe, Inc. v. Court of Appeals, citing McLeod v. NLRC:

Personal liability of corporate directors, trustees or officers attaches only when (1) they assent

to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross

negligence in directing its affairs, or when there is a conflict of interest resulting in damages to

the corporation, its stockholders or other persons; (2) they consent to the issuance of watered

down stocks or when, having knowledge of such issuance, do not forthwith file with the

corporate secretary their written objection; (3) they agree to hold themselves personally and

solidarily liable with the corporation; or (4) they are made by specific provision of law

personally answerable for their corporate action.

(JUDY O. DACUITAL , et. al. v. L.M. CAMUS ENGINEERING CORPORATION and/or LUIS M. CAMUS,

G.R. No. 176748, September 1, 2010)

In the subject decision, the CA concluded that petitioner Xu and Wensha are jointly and

severally liable to Loreta. We have read the decision in its entirety but simply failed to come

across any finding of bad faith or malice on the part of Xu. There is, therefore, no justification

for such a ruling. To sustain such a finding, there should be an evidence on record that an

officer or director acted maliciously or in bad faith in terminating the services of an employee.

Moreover, the finding or indication that the dismissal was effected with malice or bad faith

should be stated in the decision itself. (WENSHA SPA CENTER, INC. v. LORETA T. YUNG, G.R.

No. 185122, August 16, 2010)

• Liability of GSIS as Indirect Employer

Lastly, we do not agree with petitioner that the enforcement of the decision is impossible

because its charter unequivocally exempts it from execution. As held in Government Service

Insurance System v. Regional Trial Court of Pasig City, Branch 71, citing Rubia v. GSIS:

The processual exemption of the GSIS funds and properties under Section 39 of the GSIS

Charter, in our view, should be read consistently with its avowed principal purpose: to maintain

actuarial solvency of the GSIS in the protection of assets which are to be used to finance the

retirement, disability and life insurance benefits of its members. Clearly, the exemption should

be limited to the purposes and objects covered. Any interpretation that would give it an

expansive construction to exempt all GSIS assets from legal processes absolutely would be

unwarranted.

Furthermore, the declared policy of the State in Section 39 of the GSIS Charter granting GSIS

an exemption from tax, lien, attachment, levy, execution, and other legal processes should be

read together with the grant of power to the GSIS to invest its “excess funds” under Section 36

of the same Act. Under Section 36, the GSIS is granted the ancillary power to invest in business

and other ventures for the benefit of the employees, by using its excess funds for investment

purposes. In the exercise of such function and power, the GSIS is allowed to assume a

character similar to a private corporation. Thus, it may sue and be sued, as also, explicitly

granted by its charter x x x.

To be sure, petitioner’s charter should not be used to evade its liabilities to its employees,

even to its indirect employees, as mandated by the Labor Code. (GOVERNMENT SERVICE

INSURANCE SYSTEM v. NATIONAL LABOR RELATIONS COMMISSION (NLRC), ET. Al., G.R. No.

180045, November 17, 2010 )

• Liability of Indirect Employer

Petitioner’s liability covers the payment of respondents’ salary differential and 13th month pay

during the time they worked for petitioner. In addition, petitioner is solidarily liable with DNL

Security for respondents’ unpaid wages from February 1993 until April 20, 1993. While it is

true that respondents continued working for petitioner after the expiration of their contract,

based on the instruction of DNL Security, petitioner did not object to such assignment and

allowed respondents to render service. Thus, petitioner impliedly approved the extension of

respondents’ services. Accordingly, petitioner is bound by the provisions of the Labor Code on

indirect employment. Petitioner cannot be allowed to deny its obligation to respondents after it

had benefited from their services. So long as the work, task, job, or project has been

performed for petitioner’s benefit or on its behalf, the liability accrues for such services. The

principal is made liable to its indirect employees because, after all, it can protect itself from

irresponsible contractors by withholding payment of such sums that are due the employees

and by paying the employees directly, or by requiring a bond from the contractor or

subcontractor for this purpose. (GOVERNMENT SERVICE INSURANCE SYSTEM v. NATIONAL

LABOR RELATIONS COMMISSION (NLRC), ET. Al., G.R. No. 180045, November 17, 2010 )

• Solidary Liability

Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only

contractor, for all the rightful claims of respondent. Under this set-up, AMPCO, as the “labor-

only” contractor, is deemed an agent of the principal (SMC). The law makes the principal

responsible over the employees of the “labor-only” contractor as if the principal itself directly

hired=the employees. (SAN MIGUEL CORPORATION v. VICENTE B. SEMILLANO, ET. Al., G.R. No.

164257, July 5, 2010)

We modify, however, our ruling on the extent of liability of Outdoor Clothing and its co-

respondents. A corporation, as a juridical entity, may act only through its directors, officers and

employees. Obligations incurred as a result of the directors’ and officers’ acts as corporate

agents, are not their personal liability but the direct responsibility of the corporation they

represent. As a rule, they are only solidarily liable with the corporation for the illegal

termination of services of employees if they acted with malice or bad faith. In the present case,

malice or bad faith on the part of the Syfu, Demogena, and Lee, as corporate officers of

Outdoor Clothing, was not sufficiently proven to justify a ruling holding them solidarily liable

with Outdoor Clothing. (MANOLO A. PEÑAFLOR V. OUTDOOR CLOTHING MANUFACTURING

CORPORATION, G.R. No. 177114, April 13, 2010)

Liberal Application of the Rules

The appellate court’s brushing aside of the “Paliwanag” and the minutes of the meeting that

resulted in the conclusion of the MOA because they were not verified and notarized, thus

violating, so the appellate court reasoned, the rules on parol evidence, does not lie. Like any

other rule on evidence, parol evidence should not be strictly applied in labor cases.

The reliance on the parol evidence rule is misplaced. In labor cases pending before the

Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are

not controlling. Rules of procedure and evidence are not applied in a very rigid and technical

sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating

evidence other than, and even contrary to, what is stated in the CBA. (emphasis supplied)

(IRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS v. CIRTEK ELECTRONICS,

INC, G.R. No. 190515, November 15, 2010)

“While the Court adheres to the principle of liberality in favor of the seafarer in construing the

Standard Employment Contract, we cannot allow claims for compensation based on surmises.

When the evidence presented negates compensability, this Court has no choice but to deny

the claim, lest we cause injustice to the employer.” (MEDLINE MANAGEMENT, INC. and

GRECOMAR SHIPPING AGENCY v. GLICERIA ROSLINDA and ARIEL ROSLINDA, G.R. No. 168715,

September 15, 2010)

It is well-settled that the application of technical rules of procedure may be relaxed to serve

the demands of substantial justice, particularly in labor cases. Labor cases must be decided

according to justice and equity and the substantial merits of the controversy. Procedural

niceties should be avoided in labor cases in which the provisions of the Rules of Court are

applied only in suppletory manner. Indeed, rules of procedure may be relaxed to relieve a part

of an injustice not commensurate with the degree of non-compliance with the process

required.(ARNOLD F. ANIB v. COCA-COLA BOTTLERS PHILS., INC. and/or RHOGIE

FELICIANO,G.R. No. 190216, August 16, 2010)

Finally, it bears stressing that while it is true that litigation is not a game of technicalities and

that rules of procedure shall not be strictly enforced at the cost of substantial justice, it does

not mean that the Rules of Court may be ignored at will and at random to the prejudice of the

orderly presentation and assessment of the issues and their just resolution. It must be

emphasized that procedural rules should not be belittled or dismissed simply because their

non-observance might have resulted in prejudice to a party’s substantial rights. Like all rules,

they are required to be followed, except only for the most persuasive of reasons. (MANDAUE

GALLEON TRADE, INC. and GAMALLOSONS TRADERS, INC., represented by FAUSTO B.

GAMALLO v. BIENVENIDO ISIDTO et.al., G.R. No. 181051,July 5, 2010)

Management Prerogative

While management has the prerogative to discipline its employees and to impose appropriate

penalties on erring workers, pursuant to company rules and regulations, however, such

management prerogatives must be exercised in good faith for the advancement of the

employer’s interest and not for the purpose of defeating or circumventing the rights of the

employees under special laws and valid agreements. The Court is wont to reiterate that while

an employer has its own interest to protect, and pursuant thereto, it may terminate an

employee for a just cause, such prerogative to dismiss or lay off an employee must be

exercised without abuse of discretion. Its implementation should be tempered with compassion

and understanding. The employer should bear in mind that, in the execution of said

prerogative, what is at stake is not only the employee’s position, but his very livelihood, his

very breadbasket. (PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. JOEY B. TEVES, G.R.

No. 143511, November 15, 2010)

The foregoing illustrates why it is dangerous for this Court and even the CA to look into the

wisdom of a management prerogative. Certainly, one can argue for or against the pros and

cons of transferring respondent to another territory. Absent a definite finding that such

exercise of prerogative was tainted with arbitrariness and unreasonableness, the CA should

have left the same to petitioners’ better judgment. 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. (PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.) v. RICARDO P.

ALBAYDA, JR., G.R. No. 172724 August 23, 2010)

In the absence of arbitrariness, the CA should not have looked into the wisdom of a

management prerogative. It is the employer’s prerogative, based on its assessment and

perception of its employee’s qualifications, aptitudes, and competence, to move them around

in the various areas of its business operations in order to ascertain where they will function

with maximum benefit to the company. (PHARMACIA and UPJOHN, INC. (now PFIZER

PHILIPPINES, INC.) v. RICARDO P. ALBAYDA, JR., G.R. No. 172724 August 23, 2010)

We held that work reassignment of an employee as a genuine business necessity is a valid

management prerogative. After being given an option to be transferred, petitioner rejected the

offer for reassignment to Paper Mill No. 5 even though such transfer would not involve any

diminution of rank and pay. Instead, he opted and preferred to be separated by executing a

release and quitclaim in consideration of which he received separation pay in the amount of

P356,335.20 equal to two months pay for every year of service plus other accrued benefits.

Clearly, petitioner freely and voluntarily consented to the execution of the release and

quitclaim. Having done so apart from the fact that the consideration for the quitclaim is

credible and reasonable, the waiver represents a valid and binding undertaking. As aptly

concluded by the CA, the quitclaim was not executed under force or duress and that petitioner

was given a separation pay more than what the law requires from respondent. (DANNIE M.

PANTOJA v. SCA HYGIENE PRODUCTSCORPORATION, G.R. No. 163554, April 23, 2010)

Approval of applications for the ERP is within Korean Air’s management prerogatives. The

exercise of management prerogative is valid as long as it is not done in a malicious, harsh,

oppressive, vindictive, or wanton manner. In the present case, the Court sees no bad faith on

Korean Air’s part. The 21 August 2001 memorandum clearly states that Korean Air, on its

discretion, was offering ERP to its employees. The memorandum also states that the reason for

the ERP was to prevent further losses. Korean Air did not abuse its discretion when it excluded

Yuson in the ERP. To allow Yuson to avail of the ERP would have been contrary to the purpose

of the ERP. (KOREAN AIR CO., LTD v. ADELINA A.S. YUSON, G.R. No. 170369, June 16, 2010)

We will emphasize anew that the power to dismiss is a normal prerogative of the employer.

This, however, is not without limitations. The employer is bound to exercise caution in

terminating the services of his employees especially so when it is made upon the request of a

labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary

and capricious. Due process must be observed in dismissing an employee, because it affects

not only his position but also his means of livelihood. Employers should, therefore, respect and

protect the rights of their employees, which include the right to labor. (PICOP RESOURCES,

INCORPORATED (PRI), v. ANACLETO L. TAÑECA, G.R. No. 160828, August 9, 2010)

Besides, as the employer, respondent has the right to regulate, according to its discretion and

best judgment, all aspects of employment, including work assignment, working methods,

processes to be followed, working regulations, transfer of employees, work supervision, lay-off

of workers and the discipline, dismissal and recall of workers. Management has the prerogative

to discipline its employees and to impose appropriate penalties on erring workers pursuant to

company rules and regulations. (JOSE P. ARTIFICIO v. NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 172988 , July 26, 2010)

Here, there was no diminution of petitioner’s salary and other benefits. There was no evidence

that she was harassed or discriminated upon, or that respondents made it difficult for her to

continue with her other duties. Absent any evidence of bad faith, it is within the exercise of

respondents’ management prerogative to transfer some of petitioner’s duties if in their

judgment, it would be more beneficial to the corporation. There was no basis for the NLRC’s

finding that from performing managerial functions, petitioner was reduced to performing

clerical tasks. (ESTRELLA VELASCO v. TRANSIT AUTOMOTIVE SUPPLY, INC., G.R. No. 171327,

June 18, 2010)

Money Claims

• Interest

Further, since the monetary awards remained unpaid even after it became final on September

22, 2008 because of issues raised respecting the correct computation of such awards, it is but

fair that respondent Javellana be required to pay 12% interest per annum on those awards

from September 22, 2008 until they are paid. The 12% interest is proper because the Court

treats monetary claims in labor cases the equivalent of a forbearance of credit. It matters not

that the amounts of the claims were still in question on September 22, 2008. What is decisive

is that the issue of illegal dismissal from which the order to pay monetary awards to petitioner

Belen stemmed had been long terminated. (DANIEL P. JAVELLANA , JR.,V. ALBINO BELEN, G.R.

No. 181913, ALBINO BELEN V. DANIEL P. JAVELLANA, JR. and JAVELLANA FARMS, INC., G.R. No.

182158, March 5, 2010)

• Prescription

In Southeastern Shipping v. Navarra, Jr., we ruled that “Article 291 is the law governing the

prescription of money claims of seafarers, a class of overseas contract workers. This law

prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for

claims to be brought only within one year from the date of the seafarer’s return to the point of

hire.” We further declared that “for the guidance of all, Section 28 of the Standard

Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the

seafarers may file their money claims, is hereby declared null and void. The applicable

provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in

accord with the State’s declared policy to afford full protection to labor. The prescriptive period

in the present case is thus three years from the time the cause of action accrues.” (MEDLINE

MANAGEMENT, INC. and GRECOMAR SHIPPING AGENCY v. GLICERIA ROSLINDA and ARIEL

ROSLINDA, G.R. No. 168715, September 15, 2010)

Moral Damages

As for P&G, the records show that it dismissed its employees through SAPS in a manner

oppressive to labor. The sudden and peremptory barring of the concerned petitioners from

work, and from admission to the work place, after just a one-day verbal notice, and for no valid

cause bellows oppression and utter disregard of the right to due process of the concerned

petitioners. Hence, an award of moral damages is called for. (JOEB M. ALIVIADO, et al. v.

PROCTER & GAMBLE PHILS., INC.,and PROMM-GEM INC., G.R. No. 160506, March 9, 2010)

NLRC Rules of procedure

• Proof and Completeness of Service

It cannot be determined from the records who hired Naronio; but it is also undisputed that

petitioners are not his employers. Indeed, Naronio serviced all the businesses operating within

the compound where the arbiter’s ruling was mailed. Thus, it is not even necessary to

determine whether Naronio’s “duties are not so integrated to the business that [his] absence

or presence will not toll the entire operation” of petitioners’ business. This test presupposes

that the recipient of the legal document is employed by the addressee. For remedial law

purposes, Naronio’s receipt of any processes intended for petitioners was receipt by a

stranger, without legal significance to petitioners. (PASIG CYLINDER MFG., CORP.,et. al v.

DANILO ROLLO, et. al., G.R. No. 173631 September 8, 2010)

• Reduction of Bond

Nor was petitioners’ filing of a reduced appeal bond fatal to their appeal. True, Article 223 of

the Labor Code requires the filing of appeal bond “in the amount equivalent to the monetary

award in the judgment appealed from.” However, both the Labor Code and this Court’s

jurisprudence abhor rigid application of procedural rules at the expense of delivering just

settlement of labor cases. Petitioners’ reasons for their filing of the reduced appeal bond – the

downscaling of their operations coupled with the amount of the monetary award appealed –

are not unreasonable. Thus, the recourse petitioners adopted constitutes substantial

compliance with Article 223 consistent with our ruling in Rosewood Processing, Inc. v. NLRC,

where we allowed the appellant to file a reduced bond of P50,000 (accompanied by the

corresponding motion) in its appeal of an arbiter’s ruling in an illegal termination case

awarding P789,154.39 to the private respondents. (PASIG CYLINDER MFG., CORP.,et. al v.

DANILO ROLLO, et. al., G.R. No. 173631 September 8, 2010)

Piercing the Veil of Corporate Fiction

Applying the doctrine to the case at bar, we find no reason to pierce the corporate veil of

respondent and go beyond its legal personality. Control, by itself, does not mean that the

controlled corporation is a mere instrumentality or a business conduit of the mother company.

Even control over the financial and operational concerns of a subsidiary company does not by

itself call for disregarding its corporate fiction. There must be a perpetuation of fraud behind

the control or at least a fraudulent or illegal purpose behind the control in order to justify

piercing the veil of corporate fiction. Such fraudulent intent is lacking in this case. (NASECO

GUARDS ASSOCIATION-PEMA (NAGA-PEMA) v. NATIONAL SERVICE CORPORATION (NASECO),

G.R. No. 165442, August 25, 2010)

Preventive Suspension

In this case, Artificio’s preventive suspension was justified since he was employed as a security

guard tasked precisely to safeguard respondents’ client. His continued presence in

respondents’ or its client’s premises poses a serious threat to respondents, its employees and

client in light of the serious allegation of conduct unbecoming a security guard such as

abandonment of post during night shift duty, light threats and irregularities in the observance

of proper relieving time. (JOSE P. ARTIFICIO v. NATIONAL LABOR RELATIONS COMMISSION, G.R.

No. 172988, July 26, 2010)

In this case, Artificio’s preventive suspension was justified since he was employed as a security

guard tasked precisely to safeguard respondents’ client. His continued presence in

respondents’ or its client’s premises poses a serious threat to respondents, its employees and

client in light of the serious allegation of conduct unbecoming=g a security guard such as

abandonment of post during night shift duty, light threats and irregularities in the observance

of proper relieving time. (JOSE P. ARTIFICIO v. NATIONAL LABOR RELATIONS COMMISSION, G.R.

No. 172988, July 26, 2010)

Principle of Non-Diminution of Benefits

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that

benefits given to employees cannot be taken back or reduced unilaterally by the employer

because the benefit has become part of the employment contract, written or unwritten. The

rule against diminution of benefits applies if it is shown that the grant of the benefit is based

on an express policy or has ripened into a practice over a long period of time and that the

practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due

to error in the construction or application of a doubtful or difficult question of law. But even in

cases of error, it should be shown that the correction is done soon after discovery of the error.

The argument of petitioner that the grant of the benefit was not voluntary and was due to error

in the interpretation of what is included in the basic salary deserves scant consideration. No

doubtful or difficult question of law is involved in this case. The guidelines set by the law are

not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the

number of years the employer had paid the benefit to its employees. Petitioner only changed

the formula in the computation of=the 13th-month pay after almost 30 years and only after

the dispute between the management and employees erupted. This act of petitioner in

changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith.

(CENTRAL AZUCARERA DE TARLAC DECISION v. CENTRAL AZUCARERA DE TARLAC LABOR

UNION-NLU, G.R. No. 188949,July 26, 2010)

All given, business losses are a feeble ground for petitioner to repudiate its obligation under

the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees

cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of

non-diminution of benefits is founded on the constitutional mandate to protect the rights of

workers and to promote their welfare and to afford labor full protection. (LEPANTO CERAMICS,

INC.V. LEPANTO CERAMICS EMPLOYEES ASSOCIATION, G.R. No. 180866, March 2, 2010)

Albeit the amounts representing tollgate fees were deducted from gross revenues and not

directly from Taroy’s commissions, the labor tribunal and the appellate court correctly held

that the withholding of those amounts reduced the amount from which Taroy’s 9% commission

would be computed. Such a computation not only marks a change in the method of payment of

wages, resulting in a diminution of Taroy’s wages in violation of Article 113 vis-à-vis Article 100

of the Labor Code, as amended. It need not be underlined that without Taroy’s written consent

or authorization, the deduction is considered illegal.

Besides, the invocation of the rule on “company practice” is generally used with respect to the

grant of additional benefits to employees, not on issues involving diminution of benefits.

(GENESIS TRANSPORT SERVICE, INC. v. UNYON NG MALAYANG MANGGAGAWA NG GENESIS

TRANSPORT (UMMGT), G.R. No. 182114, April 5, 2010)

Protection to Labor

Although it cannot be determined with certainty whether respondent worked for the entire

period from November 16 to November 30, 2005, the consistent rule is that if doubt exists

between the evidence presented by the employer and that by the employee, the scales of

justice must be tilted in favor of the latter in line with the policy mandated by Articles 2 and 3

of the Labor Code to afford protection to labor and construe doubts in favor of labor. For

petitioners’ failure to satisfy their burden of proof, respondent is presumed to have worked

during the period in question and is, accordingly, entitled to his salary. Therefore, the

withholding of respondent’s salary by petitioners is contrary to Article 116 of the Labor Code

and, thus, unlawful. (SHS PERFORATED MATERIALS, INC., WINFRIED HARTMANNSHENN, and

HINRICH JOHANN SCHUMACHER v. MANUEL F. DIAZ, G.R. No. 185814, October 13, 2010)

Reassignment

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission, which involved a

complaint filed by a medical representative against his employer drug company for illegal

dismissal for allegedly terminating his employment when he refused to accept his

reassignment to a new area, the Court upheld the right of the drug company to transfer or

reassign its employee in accordance with its operational demands and requirements. The

ruling of the Court therein, quoted hereunder, also finds application in the instant case:

Therefore, Bobadilla had no valid reason to disobey the order of transfer. He had tacitly given

his consent thereto when he acceded to the petitioners’ policy of hiring sales staff who are

willing to be assigned anywhere in the Philippines which is demanded by petitioners’ business.

By the very nature of his employment, a drug salesman or medical representative is expected

to travel. He should anticipate reassignment according to the demands of their business. It

would be a poor drug corporation which cannot even assign its representatives or detail men

to new markets calling for opening or expansion or to areas where the need for pushing its

products is great. More so if such reassignments are part of the employment contract.

(PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.) v. RICARDO P. ALBAYDA, JR.,

G.R. No. 172724 August 23, 2010)

Re-computation of Awards as against

Principle of Immutability of Final Judgment

Consistent with what we discussed above, we hold that under the terms of the decision under

execution, no essential change is made by a re-computation as this step is a necessary

consequence that flows from the nature of the illegality of dismissal declared in that decision.

A re-computation (or an original computation, if no previous computation has been made) is a

part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence

on this provision – that is read into the decision. By the nature of an illegal dismissal case, the

reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor

Code. The re-computation of the consequences of illegal dismissal upon execution of the

decision does not constitute an alteration or amendment of the final decision being

implemented. The illegal dismissal ruling stands; only the computation of monetary

consequences of this dismissal is affected and this is not a violation of the principle of

immutability of final judgments. (SESSION DELIGHTS ICE CREAM AND FAST FOODS v. THE HON.

COURT OF APPEALS (Sixth Division), HON. NATIONAL LABOR RELATIONS COMMISSION, G.R. No.

172149, February 8, 2010)

Retirement

At the risk of stating the obvious, private respondent was not separated from petitioner’s

employ due to mandatory or optional retirement but, rather, by termination of employment for

a just cause. Thus, any retirement pay provided by PAL’s “Special Retirement & Separation

Program” dated February 15, 1988 or, in the absence or legal inadequacy thereof, by Article

287 of the Labor Code does not operate nor can be made to operate for the benefit of private

respondent. Even private respondent’s assertion that, at the time of her lawful dismissal, she

was already qualified for retirement does not aid her case because the fact remains that

private respondent was already terminated for cause thereby rendering nugatory any

entitlement to mandatory or optional retirement pay that she might have previously

possessed. (NATIONAL LABOR RELATIONS COMMISSION and AIDA M. QUIJANO v. PHILIPPINE

AIRLINES, INC. G.R. No. 123294,October 20, 2010)

Admittedly, petitioner worked for 14 years for the bus company which did not adopt any

retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he

falls within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the

Labor Arbiter, petitioner’s retirement pay should include the cash equivalent of the 5-day SIL

and 1/12 of the 13th month pay. (RODOLFO J. SERRANO v. SEVERINO SANTOS TRANSIT G.R.

No. 187698, August 9, 2010)

Undoubtedly, under this provision, the retirement age is primarily determined by the existing

agreement or employment contract. Absent such an agreement, the retirement age shall be

fixed by law. The above-cited law mandates that the compulsory retirement age is at 65 years,

while the minimum age for optional retirement is set at 60 years. Moreover, Article 287 of the

Labor Code, as amended, applies only to a situation where (1) there is no CBA or other

applicable employment contract providing for retirement benefits for an employee; or (2) there

is a collective bargaining agreement or other applicable employment contract providing for

retirement benefits for an employee, but it is below the requirement set by law. The rationale

for the first situation is to prevent the absurd situation where an employee, deserving to

receive retirement benefits, is denied them through the nefarious scheme of employers to

deprive employees of the benefits due them under existing labor laws. The rationale for the

second situation is to prevent private contracts from derogating from the public law. (AMELIA

R. OBUSAN v. PHILIPPINE NATIONAL BANK, G.R. No. 181178, July 26, 2010)

• Retirement Plans

Retirement plans allowing employers to retire employees who have not yet reached the

compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty

of security of tenure. By its express language, the Labor Code permits employers and

employees to fix the applicable retirement age at 60 years or below, provided that the

employees’ retirement benefits under any CBA and other agreements shall not be less than

those provided therein. By this yardstick, the PNB-RP complies. (AMELIA R. OBUSAN v.

PHILIPPINE NATIONAL BANK, G.R. No. 181178, July 26, 2010)

Seafarer

• Death Benefits

In the present case, Eduardo was repatriated for medical reasons; he arrived in the Philippines

on June 17, 1999, to undergo further evaluation and treatment after being diagnosed with

advanced mycobacterium tuberculosis, advanced HIV disease, cardiac dysrhythmias, and

anemia. Eduardo’s employment was therefore terminated upon his repatriation on June 17,

1999. Thus, when Eduardo died on June 9, 2001, approximately two (2) years after his

repatriation, his employment with the respondents had long been terminated. As we held in

Prudential Shipping and Management Corporation v. Sta. Rita:

The death of a seaman during the term of employment makes the employer liable to his heirs

for death compensation benefits. Once it is established that the seaman died during the

effectivity of his employment contract, the employer is liable. However, if the seaman dies

after the termination of his contract of employment, his beneficiaries are not entitled to the

death benefits enumerated above. [Emphasis supplied.]

(LYDIA ESCARCHA v. LEONIS NAVIGATION CO., INC. and/or WORLD MARINE PANAMA, S.A., G.R.

No. 182740, July 5, 2010)

Moreover, there is no evidence to show that Juliano’s illness was acquired during the term of

his employment with petitioners. In respondents’ Position Paper, they admitted that Juliano

was discharged not because of any illness but due to the expiration of his employment

contract. Although they stated that Juliano was hospitalized on August 28, 1999, or five months

before his contract expired, they presented no proof to support this allegation. Instead, what

respondents presented were the Medical Certificates issued by Dr. Lloren attesting to the fact

that on March 6, 2000, Juliano consulted her complaining of abdominal distention. We find this

not substantial evidence to prove that Juliano’s illness which caused his death was contracted

during the term of his contract. “Indeed, the death of a seaman several months after his

repatriation for illness does not necessarily mean that: a) the seaman died of the same illness;

b) his working conditions increased the risk of contracting the illness which caused his death;

and c) the death is compensable, unless there is some reasonable basis to support otherwise.”

In the instant case, Juliano was repatriated not because of any illness but because his contract

of employment expired. There is likewise no proof that he contracted his illness during the

term of his employment or that his working conditions increased the risk of contracting the

illness which caused his death. (MEDLINE MANAGEMENT, INC. and GRECOMAR SHIPPING

AGENCY v. GLICERIA ROSLINDA and ARIEL ROSLINDA, G.R. No. 168715, September 15, 2010)

Thus, as we declared in Gau Sheng Phils., Inc. v. Joaquin, Hermogenes v. Oseo Shipping

Services, Inc., Prudential Shipping and Management Corporation v. Sta. Rita, Klaveness

Maritime Agency, Inc. v. Beneficiaries of Allas, in order to avail of death benefits, the death of

the employee should occur during the effectivity of the employment contract. For emphasis,

we reiterate that the death of a seaman during the term of employment makes the employer

liable to his heirs for death compensation benefits, but if the seaman dies after the termination

of his contract of employment, his beneficiaries are not entitled to the death benefits. Federico

did not die while he was under the employ of petitioners. His contract of employment ceased

when he arrived in the Philippines on March 30, 1998, whereas he died on April 29, 2000. Thus,

his beneficiaries are not entitled to the death benefits under the Standard Employment

Contract for Seafarers. (SOUTHEASTERN SHIPPING,SOUTHEASTERN SHIPPING GROUP, LTD.,

G.R. No. 167678, June 22, 2010)

• Occupational Disease

The wording of the section cited above clearly states that for an injury or illness to be

compensable under the POEA Standard Employment Contract, it must be work-related.

Petitioner has failed to convince this Court that the illness he suffered can be reasonably linked

to the performance of his work as 2nd Assistant Engineer on board M/V Chaiten or to prove

that it was aggravated during his stint in the vessel. We therefore find that the Court of

Appeals correctly affirmed the findings of the NLRC dismissing his appeal for lack of merit.

(ARNALDO G. GABUNAS, SR.,v. SCANMAR MARITIME SERVICESSERENO, JJ.INC., G.R. No.

188637, December 15, 2010)

AIDS is not listed as an occupational disease both under the POEA-SEC and the ECC Rules.

Thus, the claimant bears the burden of reasonably proving the relationship between the work

of the deceased and AIDS, or that the risk of contracting AIDS was increased by the working

conditions of the deceased. (LYDIA ESCARCHA v. LEONIS NAVIGATION CO., INC. and/or WORLD

MARINE PANAMA, S.A., G.R. No. 182740, July 5, 2010)

• Disability Benefits

Although strict rules of evidence are not applicable in claims for compensation and disability

benefits, the Court cannot just disregard the provisions of the POEA SEC. Significantly, a

seaman is a contractual and not a regular employee. His employment is contractually fixed for

a certain period of time. Petitioner and respondents entered into a contract of employment. It

was approved by the POEA on October 25, 2005 and, thus, served as the law between the

parties. Undisputedly, Section 20-B of the POEA Amended Standard Terms and Conditions

Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA-SEC)

provides for compensation and benefits for injury or illness suffered by a seafarer. It says that,

in order to claim disability benefits under the Standard Employment Contract, it is the

‘company-designated’ physician who must proclaim that the seaman suffered a permanent

disability, whether total or partial, due to either injury or illness, during the term of the latter’s

employment. In German Marine Agencies, Inc. v. NLRC, the Court’s discussion on the seafarer’s

claim for disability benefits is enlightening. Thus:

[In] order to claim disability benefits under the Standard Employment Contract, it is the

“company-designated” physician who must proclaim that the seaman suffered a permanent

disability, whether total or partial, due to either injury or illness, during the term of the latter’s

employment. There is no provision requiring accreditation by the POEA of such physician. In

fact, aside from their own gratuitous allegations, petitioners are unable to cite a single

provision in the said contract in support of their assertions or to offer any credible evidence to

substantiate their claim. If accreditation of the company-designated physician was

contemplated by the POEA, it would have expressly provided for such a qualification, by

specifically using the term “accreditation” in the Standard Employment Contract, to denote its

intention. For instance, under the Labor Code, it is expressly provided that physicians and

hospitals providing medical care to an injured or sick employee covered by the Social Security

System or the Government Service Insurance System must be accredited by the Employees

Compensation Commission. It is a cardinal rule in the interpretation of contracts that if the

terms of a contract are clear and leave no doubt upon the intention of the contracting parties,

the literal meaning of its stipulation shall control. There is no ambiguity in the wording of the

Standard Employment Contract – the only qualification prescribed for the physician entrusted

with the task of assessing the seaman’s disability is that he be ‘company-designated.’ When

the language of the contract is explicit, as in the case at bar, leaving no doubt as to the

intention of the drafters thereof, the courts may not read into it any other intention that would

contradict its plain import. [Emphasis supplied]

In this case, the findings of respondents’ designated physician that petitioner has been

suffering from brief psychotic disorder and that it is not work-related must be respected.

(EDGARDO M. PANGANIBAN v. TARA TRADING SHIPMANAGEMENT INC.AND SHINLINE SDN BHD,

G.R. No. 187032, October 18, 2010)

Specifically with respect to mental diseases, for the same to be compensable, the POEA-SEC

requires that it must be due to traumatic injury to the head which did not occur in this case.

While disability should be understood less on its medical significance but more on the loss of

earning capacity, the appellate court’s sweeping observations that “the hostile working

environment and the emotional turmoil suffered by [herein] respondent from his employers

caused him mental and emotional stress that led to severe mental disorder and rendered him

permanently unable to perform any work,” and that “his working condition increased the risk

of sustaining” the illness complained of do not lie. (PHILIPPINE TRANSMARINE CARRIERS, INC.,

GLOBAL NAVIGATION, LTD., v. SILVINO A. NAZAM G.R. No. 190804,October 11, 2010)

• Permanent Total Disability

In accordance with the avowed policy of the State to give maximum aid and full protection to

labor, the Court has applied the Labor Code concept of permanent total disability to Filipino

seafarers, it holding that the notion of disability is intimately related to the worker’s capacity to

earn, what is compensated being not his injury or illness but his inability to work resulting in

the impairment of his earning capacity; hence, disability should be understood less on its

medical significance but more on the loss of earning capacity. (RIZALDY M. QUITORIANO v.

JEBSENS MARITIME, INC., G.R. No. 179868, January 21, 2010)

• Prescription of Seafarer Money Claims

Based on the foregoing, it is therefore clear that Article 291 is the law governing the

prescription of money claims of seafarers, a class of overseas contract workers. This law

prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for

claims to be brought only within one year from the date of the seafarer’s return to the point of

hire. Thus, for the guidance of all, Section 28 of the Standard Employment Contract for

Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their

money claims, is hereby declared null and void. The applicable provision is Article 291 of the

Labor Code, it being more favorable to the seafarers and more in accord with the State’s

declared policy to afford full protection to labor. The prescriptive period in the present case is

thus three years from the time the cause of action accrues. (SOUTHEASTERN

SHIPPING,SOUTHEASTERN SHIPPING GROUP, LTD., G.R. No. 167678, June 22, 2010)

Thus, when petitioner signed his contract with respondent on 22 December 2001, it was the

2000 POEA Standard Employment Contract that was already in effect. Consequently, his

action, which was filed on 10 June 2004, was filed within the three year prescription period

under the 2000 POEA Standard Employment Contract. Despite having filed his action within

the prescriptive period, his action must fail. (ARNALDO G. GABUNAS, SR.,v. SCANMAR

MARITIME SERVICES SERENO, JJ.INC., G.R. No. 188637, December 15, 2010)

Security of Tenure of Probationary Employee

Respondent was constructively dismissed and, therefore, illegally dismissed. Although

respondent was a probationary employee, he was still entitled to security of tenure. Section 3

(2) Article 13 of the Constitution guarantees the right of all workers to security of tenure. In

using the expression “all workers,” the Constitution puts no distinction between a probationary

and a permanent or regular employee. This means that probationary employees cannot be

dismissed except for cause or for failure to qualify as regular employees. (SHS PERFORATED

MATERIALS, INC., WINFRIED HARTMANNSHENN, and HINRICH JOHANN SCHUMACHER v.

MANUEL F. DIAZ, G.R. No. 185814, October 13, 2010)

Separation Pay

We are aware that in several instances this Court has awarded separation pay as a measure of

social justice. However, the matter of the award of separation pay based on social justice has

been clarified in Philippine Long Distance Telephone Company v. National Labor Relations

Commission where the Court categorically declared that “separation pay shall be allowed as a

measure of social justice only in those instances where the employee is validly dismissed for

cause other than serious misconduct x x x.” Likewise, we ruled in Toyota Motor Philippines

Corp. Workers Association (TMPCWA) v. National Labor Relations Commission that in addition

to serious misconduct, separation pay should not be conceded to an employee who was

dismissed based on willful disobedience. (Equitable PCI Bank (Now Banco De Oro Unibank,

Inc.), v. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010)

Petitioner’s liability, however, cannot extend to the payment of separation pay. An order to pay

separation pay is invested with a punitive character, such that an indirect employer should not

be made liable without a finding that it had conspired in the illegal dismissal of the employees.

(GOVERNMENT SERVICE INSURANCE SYSTEM v. NATIONAL LABOR RELATIONS COMMISSION

(NLRC), ET. Al., G.R. No. 180045, November 17, 2010 )

In other words, under the present jurisprudential framework, the grant of separation pay as a

matter of equity to a validly dismissed employee is not contingent on whether the ground for

dismissal is expressly under Article 282(a) but whether the ground relied upon is akin to

serious misconduct or involves willful or wrongful intent on the part of the employee.

(NATIONAL LABOR RELATIONS COMMISSION and AIDA M. QUIJANO v. PHILIPPINE AIRLINES, INC.

G.R. No. 123294,October 20, 2010)

Under the circumstances, the grant of separation pay in lieu of reinstatement of the petitioners

was proper. It is not disputable that the grant of separation pay or some other financial

assistance to an employee is based on equity, which has been defined as justice outside law,

or as being ethical rather than jural and as belonging to the sphere of morals than of law. [21]

This Court has granted separation pay as a measure of social justice even when an employee

has been validly dismissed, as long as the dismissal has not been due to serious misconduct or

reflective of personal integrity or morality. (DANILO ESCARIO v. NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 160302, September 27, 2010)

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and

reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In

awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the

amount to be awarded shall be equivalent to one month salary for every year of service. Under

Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages,

inclusive of allowances and other benefits, or their monetary equivalent, computed from the

time their actual compensation was withheld from them up to the time of their actual

reinstatement. But if reinstatement is no longer possible, the backwages shall be computed

from the time of their illegal termination up to the finality of the decision. Moreover,

respondents, having been compelled to litigate in order to seek redress for their illegal

dismissal, are entitled to the award of attorney’s fees equivalent to 10% of the total monetary

award. (PICOP RESOURCES, INCORPORATED (PRI), v. ANACLETO L. TAÑECA, G.R. No. 160828,

August 9, 2010)

In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the

amount to be awarded shall be equivalent to one month salary for every year of service

reckoned from the first day of employment until the finality of the decision. Payment of

separation pay is in addition to payment of backwages. And if separation pay is awarded

instead of reinstatement, backwages shall be computed from the time of illegal termination up

to the finality of the decision. (AGRICULTURAL AND INDUSTRIAL SUPPLIES CORPORATION,et.

al., v. JUEBER P. SIAZAR G.R. No. 177970, August 25, 2010)

In the instant case, this Court rules that an award to respondent of separation pay by way of

financial assistance, equivalent to one-half (1/2) month’s pay for every year of service, is

equitable. Although respondent’s actions constituted a valid ground to terminate his services,

the same is to this Court’s mind not so reprehensible as to warrant complete disregard of his

long years of service. It also appears that the same is respondent’s first offense. While it may

be expected that petitioners will argue that respondent has only been in their service for four

years since the merger of Pharmacia and Upjohn took place in 1996, equity considerations

dictate that respondent’s tenure be computed from 1978, the year when respondent started

working for Upjohn. (PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.) v. RICARDO

P. ALBAYDA, JR., G.R. No. 172724 August 23, 2010)

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and

reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In

awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the

amount to be awarded shall be equivalent to one month salary for every year of service. Under

Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages,

inclusive of allowances and other benefits or their monetary equivalent, computed from the

time their actual compensation was withheld from them up to the time of their actual

reinstatement but if reinstatement is no longer possible, the backwages shall be computed

from the time of their illegal termination up to the finality of the decision. Thus, Casio, et al.

are entitled to backwages and separation pay considering that reinstatement is no longer

possible because the positions they previously occupied are no longer existing, as declared by

GMC. (GENERALMILLING CORPORATION, v. ERNESTO CASIO, et al., G.R. No. 149552, March 10,

2010)

Separation pay, on the other hand, is equivalent to one month pay for every year of service, a

fraction of six months to be considered as one whole year. Here that would begin from January

31, 1994 when petitioner Belen began his service. Technically the computation of his

separation pay would end on the day he was dismissed on August 20, 1999 when he

supposedly ceased to render service and his wages ended. But, since Belen was entitled to

collect backwages until the judgment for illegal dismissal in his favor became final, here on

September 22, 2008, the computation of his separation pay should also end on that date.

(DANIEL P. JAVELLANA , JR.,V. ALBINO BELEN, G.R. No. 181913, ALBINO BELEN V. DANIEL P.

JAVELLANA, JR. and JAVELLANA FARMS, INC., G.R. No. 182158, March 5, 2010)

• Separation Pay/Backwages

The awards of separation pay and backwages are not mutually exclusive and both may be

given to the respondent. In Nissan North Edsa Balintawak, Quezon City v. Serrano, Jr., the

Court held that:

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. The statutory intent on this matter is clearly

discernible. Reinstatement restores the employee who was unjustly dismissed to the position

from which he was removed, that is, to his status quo ante dismissal, while the grant of

backwages allows the same employee to recover from the employer that which he had lost by

way of wages as a result of his dismissal. These twin remedies —reinstatement and payment

of backwages — make the dismissed employee whole who can then look forward to continued

employment. Thus, do these two remedies give meaning and substance to the constitutional

right of labor to security of tenure. The two forms of relief are distinct and separate, one from

the other. 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. x x x As the term suggests, separation pay is the amount that an

employee receives at the time of his severance from the service and x x x is designed to

provide the employee with “the wherewithal during the period that he is looking for another

employment.” In the instant case, the grant of separation pay was a substitute for immediate

and continued re-employment with the private respondent Bank. The grant of separation pay

did not redress the injury that is intended to be relieved by the second remedy of backwages,

that is, the loss of earnings that would have accrued to the dismissed employee during the

period between dismissal and reinstatement. 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. x x x The grant of

separation pay was a proper substitute only for reinstatement; it could not be an adequate

substitute both for reinstatement and for backwages. (Emphasis supplied.)

The case is, therefore, remanded to the Labor Arbiter for the purpose of computing the proper

monetary award due to the respondent. (CENTURY CANNING CORPORATION, RICARDO T. PO,

JR. and AMANCIO C. RONQUILLO v. VICENTE RANDY R. RAMIL, G.R. No. 171630, August 8,

2010)

The basis for the payment of backwages is different from that for the award of separation pay.

Separation pay is granted where reinstatement is no longer advisable because of strained

relations between the employee and the employer. Backwages represent compensation that

should have been earned but were not collected because of the unjust dismissal. The basis for

computing backwages is usually the length of the employee’s service while that for separation

pay is the actual period when the employee was unlawfully prevented from working. (GOLDEN

ACE BUILDERS v. JOSE A. TALDE, G.R. No. 187200 May 5, 2010)

Social Justice

Bitter labor disputes, especially strikes, always generate a throng of odium and abhorrence

that sometimes result in unpleasant, although unwanted, consequences. Considering this, the

striking employees’ breach of certain restrictions imposed on their concerted actions at their

employer’s doorsteps cannot be regarded as so inherently wicked that the employer can

totally disregard their long years of service prior to such breach. The records also fail to

disclose any past infractions committed by the dismissed Union members. Taking these

circumstances in consideration, the Court regards the award of financial assistance to these

Union members in the form of one-half month salary for every year of service to the company

up to the date of their termination as equitable and reasonable. (C. ALCANTARA & SONS, INC.

v. COURT OF APPEALS, et al.,G.R. No. 155109, G.R. No. 155135, G.R. No. 179220, September

29, 2010)

While the Constitution is committed to the policy of social justice and the protection of the

working class, it should not be supposed that every labor dispute will be automatically decided

in favor of labor. Management also has its rights which are entitled to respect and enforcement

in the interest of simple fair play. Out of its concern for those with less 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 the rule

that justice is in every case for the deserving, to be dispensed in the light of the established

facts and the applicable law and doctrine. (PHILIPPINE RURAL RECONSTRUCTION

MOVEMENT( RRM)v.VIRGILIO E. PULGAR, G.R. No. 169227, July 5, 2010)

Nonetheless, given the attendant circumstances in this case, namely, that Artificio had been

working with the company for a period of sixteen (16) years and without any previous

derogatory record, the ends of social and compassionate justice would be served if Artificio be

given same equitable relief in the form of separation pay. (JOSE P. ARTIFICIO v. NATIONAL

LABOR RELATIONS COMMISSION, G.R. No. 172988, July 26, 2010

Strained Relationship

We are in accord with the pronouncement of the CA that the reinstatement of Loreta to her

former position is no longer feasible in the light of the strained relations between the parties.

Reinstatement, under the circumstances, would no longer be practical as it would not be in the

interest of both parties. Under the law and jurisprudence, an illegally dismissed employee is

entitled to two reliefs – backwages and reinstatement, which are separate and distinct. If

reinstatement would only exacerbate the tension and further ruin the relations of the employer

and the employee, or if their relationship has been unduly strained due to irreconcilable

differences, particularly where the illegally dismissed employee held a managerial or key

position in the company, it would be prudent to order payment of separation pay instead of

reinstatement. In the case of Golden Ace Builders v. Talde, We wrote:

Under the doctrine of strained relations, the payment of separation pay has been considered

an acceptable alternative to reinstatement when the latter option is no longer desirable or

viable. On the one hand, such payment liberates the employee from what could be a highly

oppressive work environment. On the other, the payment releases the employer from the

grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

(WENSHA SPA CENTER, INC. v. LORETA T. YUNG, G.R. No. 185122,

August 16, 2010)

The Court has held that, under Article 279 of the Labor Code, separation pay may be awarded

to an illegally dismissed employee in lieu of reinstatement when continued employment is no

longer possible where, as in this case, the continued relationship between the employer and

the employee is no longer viable due to strained relations between them and reinstatement

appears no longer practical due to the length of time that had since passed. (AGRICULTURAL

AND INDUSTRIAL SUPPLIES CORPORATION,et. al., v. JUEBER P. SIAZAR G.R. No. 177970, August

25, 2010)

Strike

• Dismissal of Union Officers

In the present case, respondents Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan, Maximo

Pedro, Nathaniela Dimaculangan, Rodolfo Mojico, Romeo Caramanza, Reynaldo Ganitano,

Alberto Basconcillo, and Ramon Falcis stand to be dismissed as participating union officers,

pursuant to Article 264(a), paragraph 3, of the Labor Code. This provision imposes the penalty

of dismissal on “any union officer who knowingly participates in an illegal strike.” The law

grants the employer the option of declaring a union officer who participated in an illegal strike

as having lost his employment. (PHIMCO INDUSTRIES, INC. v. PHIMCO INDUSTRIES LABOR

ASSOCIATION (PILA), et al,G.R. No. 170830, August 11, 2010)

• Consequence of Illegal Strike

Contemplating two causes for the dismissal of an employee, that is: (a) unlawful lockout; and

(b) participation in an illegal strike, the third paragraph of Article 264(a) authorizes the award

of full backwages only when the termination of employment is a consequence of an unlawful

lockout. On the consequences of an illegal strike, the provision distinguishes between a union

officer and a union member participating in an illegal strike. A union officer who knowingly

participates in an illegal strike is deemed to have lost his employment status, but a union

member who is merely instigated or induced to participate in the illegal strike is more benignly

treated. Part of the explanation for the benign consideration for the union member is the policy

of reinstating rank-and-file workers who are misled into supporting illegal strikes, absent any

finding that such workers committed illegal acts during the period of the illegal strikes.

(DANILO ESCARIO v. NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 160302, September

27, 2010)

As regards the rank and file Union members, Article 264 of the Labor Code provides that

termination from employment is not warranted by the mere fact that a union member has

taken part in an illegal strike. It must be shown that such a union member, clearly identified,

performed an illegal act or acts during the strike. (C. ALCANTARA & SONS, INC. v. COURT OF

APPEALS, et al.,G.R. No. 155109, G.R. No. 155135, G.R. No. 179220, September 29, 2010)

We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc.

that the effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction

between participating workers and union officers. The services of an ordinary striking worker

cannot be terminated for mere participation in an illegal strike; proof must be adduced

showing that he or she committed illegal acts during the strike. The services of a participating

union officer, on the other hand, may be terminated, not only when he actually commits an

illegal act during a strike, but also if he knowingly participates in an illegal strike. (PHIMCO

INDUSTRIES, INC. v. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et al,G.R. No. 170830,

August 11, 2010)

• Requisites of a Valid Strike

Since strikes affect not only the relationship between labor and management but also the

general peace and progress of the community, the law has provided limitations on the right to

strike. Procedurally, for a strike to be valid, it must comply with Article 263 of the Labor Code,

which requires that: (a) a notice of strike be filed with the Department of Labor and

Employment (DOLE) 30 days before the intended date thereof, or 15 days in case of unfair

labor practice; (b) a strike vote be approved by a majority of the total union membership in the

bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and

(c) a notice be given to the DOLE of the results of the voting at least seven days before the

intended strike. (PHIMCO INDUSTRIES, INC. v. PHIMCO INDUSTRIES LABOR ASSOCIATION

(PILA), et al,G.R. No. 170830, August 11, 2010)

• Picketing

To strike is to withhold or to stop work by the concerted action of employees as a result of an

industrial or labor dispute. The work stoppage may be accompanied by picketing by the

striking employees outside of the company compound. While a strike focuses on stoppage of

work, picketing focuses on publicizing the labor dispute and its incidents to inform the public of

what is happening in the company struck against. A picket simply means to march to and from

the employer’s premises, usually accompanied by the display of placards and other signs

making known the facts involved in a labor dispute. It is a strike activity separate and different

from the actual stoppage of work. (PHIMCO INDUSTRIES, INC. v. PHIMCO INDUSTRIES LABOR

ASSOCIATION (PILA), et al,G.R. No. 170830, August 11, 2010)

• Prohibited Activities

With a virtual human blockade and real physical obstructions (benches and makeshift

structures both outside and inside the gates), it was pure conjecture on the part of the NLRC to

say that “[t]he non-strikers and their vehicles were x x x free to get in and out of the company

compound undisturbed by the picket line.” Notably, aside from non-strikers who wished to

report for work, company vehicles likewise could not enter and get out of the factory because

of the picket and the physical obstructions the respondents installed. The blockade went to the

point of causing the build up of traffic in the immediate vicinity of the strike area, as shown by

photographs. This, by itself, renders the picket a prohibited activity. Pickets may not

aggressively interfere with the right of peaceful ingress to and egress from the employer’s

shop or obstruct public thoroughfares; picketing is not peaceful where the sidewalk or entrance

to a place of business is obstructed by picketers parading around in a circle or lying on the

sidewalk. (PHIMCO INDUSTRIES, INC. v. PHIMCO INDUSTRIES LABOR ASSOCIATION (PILA), et

al,G.R. No. 170830, August 11, 2010)

Termination of Employment

Just Causes

• Serious Misconduct

It is noteworthy that prior to this incident, there had been several cases of theft and vandalism

involving both respondent company’s property and personal belongings of other employees. In

order to address this issue of losses, respondent company issued two memoranda

implementing an intensive inspection procedure and reminding all employees that those who

will be caught stealing and performing acts of vandalism will be dealt with in accordance with

the company’s Code of Conduct. Despite these reminders, Helen took the packing tape and

was caught during the routine inspection. All these circumstances point to the conclusion that

it was not just an error of judgment on the part of Helen, but a deliberate act of theft of

company property. (NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN (NLMK-OLALIA-KMU)

and HELEN VALENZUELA v. KEIHIN PHILIPPINES CORPORATION, G.R. No. 171115, August 9,

2010)

Respondent’s acts constitute serious misconduct which is a just cause for termination under

the law. Theft committed by an employee is a valid reason for his dismissal by the employer.

Although as a rule this Court leans over backwards to help workers and employees continue

with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the

handling of company property, petitioner’s income in this case, are a different matter.

(MARIBAGO BLUEWATER BEACH RESORT, INC. v. NITO DUAL, G.R. No. 180660, July 20, 2010)

Withal, the law, in protecting the rights of the laborers, authorizes neither oppression nor self-

destruction of the employer. While the Constitution is committed to the policy of social justice

and the protection of the working class, it should not be supposed that every labor dispute will

be automatically decided in favor of labor. The management also has its own rights, as such,

are entitled to respect and enforcement in the interest of simple fair play. Out of its concern

for those with less 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 the 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. (MARIBAGO

BLUEWATER BEACH RESORT, INC. v. NITO DUAL, G.R. No. 180660, July 20, 2010)

In other words, in order to constitute serious misconduct which will warrant the dismissal of an

employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act

or conduct complained of has violated some established rules or policies. It is equally

important and required that the act or conduct must have been performed with wrongful

intent. In the instant case, petitioners-employees of Promm-Gem may have committed an error

of judgment in claiming to be employees of P&G, but it cannot be said that they were

motivated by any wrongful intent in doing so. As such, we find them guilty of only simple

misconduct for assailing the integrity of Promm-Gem as a legitimate and independent

promotion firm. A misconduct which is not serious or grave, as that existing in the instant case,

cannot be a valid basis for dismissing an employee. (JOEB M. ALIVIADO, et al. v. PROCTER &

GAMBLE PHILS., INC.,and PROMM-GEM INC., G.R. No. 160506, March 9, 2010)

Based on these considerations, we can only conclude that Lado has become unfit to remain in

employment with the petitioner. When he disregarded Manalo’s note, Lado violated company

procedures, laying the company open to the possibility of loss. This is already serious

misconduct for which he should be held accountable. When he failed to unload despite the

clear obligation to do so, he consummated his end of the deal that would have led to the loss

of company property and thereby violated his fiduciary duty as custodian of company

property. (BIBIANA FARMS AND MILLS, INC v. ARTURO LADO, G.R. No. 157861, February 2,

2010)

Considering these findings, it is clear that Agad committed a serious infraction amounting to

theft of company property. This act is akin to a or willful disobedience by the employee of the

lawful orders of his employer in connection with his work, a just cause for termination of

employment recognized under Article 282(a) of the Labor Code.

Misconduct has been defined 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. To be serious, the misconduct must be of such grave and

aggravated character. (CALTEX (PHILIPPINES), INC., v. HERMIE G. AGAD, G.R. No. 162017, April

23, 2010)

• Willful Disobedience

As a just cause for dismissal of an employee under Article 282 of the Labor Code, willful

disobedience of the employer’s lawful orders requires the concurrence of two elements: (1) the

employee’s assailed conduct must have been willful, i.e., characterized by a wrongful and

perverse attitude; and (2) the order violated must have been reasonable, lawful, made known

to the employee, and must pertain to the duties which he had been engaged to discharge.

Both requisites are present in the instant case. It is noteworthy that upon receipt of the notice

of suspension, petitioner did not question such order at the first instance. He immediately

defied the order by reporting on the first day of his suspension. Deliberate disregard or

disobedience of rules by the employee cannot be countenanced. It may encourage him to do

even worse and will render a mockery of the rules of discipline that employees are required to

observe. (JIMMY ARENO, JR., v. SKYCABLE PCC-BAGUIO, G.R. No. 180302, February 5, 2010)

As a just cause for dismissal of an employee under Article 282 of the Labor Code, willful

disobedience of the employer’s lawful orders requires the concurrence of two elements: (1) the

employee’s assailed conduct must have been willful, i.e., characterized by a wrongful and

perverse attitude; and (2) the order violated must have been reasonable, lawful, made known

to the employee, and must pertain to the duties which he had been engaged to discharge.

Both requisites are present in the instant case. It is noteworthy that upon receipt of the notice

of suspension, petitioner did not question such order at the first instance. He immediately

defied the order by reporting on the first day of his suspension. Deliberate disregard or

disobedience of rules by the employee cannot be countenanced. It may encourage him to do

even worse and will render a mockery of the rules of discipline that employees are required to

observe. (JIMMY ARENO, JR., v. SKYCABLE PCC-BAGUIO, G.R. No. 180302, February 5, 2010)

• Gross and Habitual Neglect of Duty

It is significant that petitioner did not even deny that it was he who signed, approved and

facilitated the subject transactions relating to the various abstractions committed by a bank

employee. It was an implied admission that he was the one who opened the door for the

commission of the unlawful abstractions by failing to ensure that all requirements for the

opening of accounts were complied with. This constituted gross negligence. (JESUS E. DYCOCO,

JR. v. EQUITABLE PCI BANK (NOW BANCO DE ORO) , G.R. No. 188271,August 16, 2010)

Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross

and habitual neglect of duties. Neglect of duty, to be a ground for dismissal, must be both

gross and habitual. Gross negligence connotes want of care in the performance of one’s duties.

Habitual neglect implies repeated failure to perform one’s duties for a period of time,

depending upon the circumstances. A single or isolated act of negligence does not constitute a

just cause for the dismissal of the employee. Under the prevailing circumstances, respondent

exercised his best judgment in monitoring the CCTV cameras so as to ensure the security

within the hospital premises. Verily, assuming arguendo that respondent was negligent,

although this Court finds otherwise, the lapse or inaction could only be regarded as a single or

isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause

for his dismissal. (ST. LUKE’S MEDICAL CENTER, INC v. ESTRELITO NOTARIO, G.R. No. 152166,

October 20, 2010)

• Loss of Trust and Confidence

With respect to the third issue, while We have previously held that employers are allowed a

wider latitude of discretion in terminating the services of employees who perform functions

which by their nature require the employers’ full trust and confidence and the mere existence

of basis for believing that the employee has breached the trust of the employer is sufficient,

this does not mean that the said basis may be arbitrary and unfounded. (CENTURY CANNING

CORPORATION, RICARDO T. PO, JR. and AMANCIO C. RONQUILLO v. VICENTE RANDY R. RAMIL,

G.R. No. 171630, August 8, 2010)

We cannot give credence to petitioner’s claim that the Labor Arbiter and the NLRC decided his

case purely on the basis of respondent’s evidence. A perusal of petitioner’s own pleadings and

evidence readily showed his admission that he personally processed the two Certificates of

Time Deposit (CTDs) at issue, despite his knowledge that they were unfunded. In fact, he

admittedly issued them even before he received the purported manager’s checks that would

fund the time deposits and, again by his own allegation, he had to cancel the CTDs when the

promised checks were not delivered to him at the appointed time. To be sure, it is

incomprehensible why petitioner was so eager to issue the CTDs (which may be used as

evidence of the existence of time deposits in the names of petitioner’s clients for the total

amount of P538,360,000.00) on the mere verbal representations of the clients and the

expedient of being shown a passbook from a different bank. We hardly find it believable that

petitioner was, as he averred, motivated by a noble desire to generate more business for the

respondent bank. If he truly had the bank’s best interests at heart, with more reason that he

would exercise caution before issuing CTDs for enormous amounts by waiting for the funds to

be actually deposited instead of exposing his employer to great risk. The fact that petitioner

had the unfunded CTDs eventually cancelled is of no moment. He should have never issued

those CTDs in the first place since, through those documents, he was in effect certifying the

existence of time deposits in his branch that were actually fictitious. Thus, it can be said that

his obvious laxity or negligence in the issuance of the said CTDs was even tainted with

dishonesty. We can come to no other conclusion but that respondent bank was justified in

terminating petitioner’s employment on the ground of loss of trust and confidence. (LEANDRO

M. ALCANTARA v. THE PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK ,G.R. No. 151349,

October 20, 2010)

After committing gross negligence, petitioner surprisingly still expects respondent bank to

retain him. Nothing can compel an employer to continue availing of the services of an

employee guilty of acts inimical to its interests as this is a ground for loss of confidence.

Petitioner’s breach of respondent bank’s policies intended to safeguard the bank and its

clients’ funds was clearly inimical to the interests of his employer. Loss of confidence and

dismissal from employment were therefore justified. (JESUS E. DYCOCO, JR. v. EQUITABLE PCI

BANK (NOW BANCO DE ORO), G.R. No. 188271, August 16, 2010)

Further, Agad’s conduct constitutes willful breach of the trust reposed in him, another just

cause for termination of employment recognized under Article 282(c) of the Labor Code. Loss

of trust and confidence, as a just cause for termination of employment, is premised on the fact

that the employee concerned holds a position of responsibility, trust and confidence. The

employee must be invested with confidence on delicate matters, such as the custody,

handling, care and protection of the employer’s property and funds.

As a superintendent, Agad occupied a position tasked to perform key and sensitive functions

which necessarily involved the custody and protection of Caltex’s properties. Consequently,

Agad comes within the purview of the trust and confidence rule. (CALTEX (PHILIPPINES), INC.,

v. HERMIE G. AGAD, G.R. No. 162017, April 23, 2010)

Authorized Causes

• Cessation of Business Operation

The Court is not impressed with the claim that actual severe financial losses exempt MMC from

paying separation benefits to complainants. In the first place, MMC did not appeal the decision

of the Court of Appeals which affirmed the NLRC’s award of separation pay to complainants.

MMC’s failure had the effect of making the awards final so that MMC could no longer seek any

other affirmative relief. In the second place, the non-issuance of a permit forced MMC to

permanently cease its business operations, as confirmed by the Court of Appeals. Under Article

283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from

business operations is bona fide in character and not impelled by a motive to defeat or

circumvent the tenurial rights of employees, and as long as he pays his employees their

termination pay in the amount corresponding to their length of service. The cessation of

operations, in the case at bar is of such nature. It was proven that MMC stopped its operations

precisely due to failure to secure permit to operate a tailings pond. Separation pay must

nonetheless be given to the separated employees. (MANILA MINING CORP. EMPLOYEES

ASSOCIATION-FEDERATION OF FREE WORKERS CHAPTER, SAMUEL G. ZUÑIGA, in his capacity

as President v. MANILA MINING CORP., et. al., G.R. Nos. 178222-23, September 29, 2010)

Furthermore, petitioner cannot use the argument that it is suffering from financial losses to

claim exemption from the coverage of the law on 13th-month pay, or to spare it from its

erroneous unilateral computation of the 13th (CENTRAL AZUCARERA DE TARLAC DECISION v.

CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU, G.R. No. 188949, July 26, 2010)

• Redundancy

Del Villar’s poor employee performance is irrelevant as regards the issue on redundancy.

Redundancy arises because there is no more need for the employee’s position in relation to

the whole business organization, and not because the employee unsatisfactorily performed the

duties and responsibilities required by his position. (COCA-COLA BOTTLERS PHILIPPINES, INC v.

ANGEL U. DEL VILLAR, G.R. No. 163091, October 6, 2010)

In this case, there is no proof that the essential requisites for a valid redundancy program as a

ground for the termination of the employment of respondent are present. There was no

showing that the function of respondent is superfluous or that the business was suffering from

a serious downturn that would warrant redundancy considering that such serious business

downturn was the ground cited by petitioners in the termination letter sent to respondent.

(LAMBERT PAWNBROKERS and JEWELRY CORPORATION and LAMBERT LIM v. HELEN BINAMIRA,

G.R. No. 170464, July 12, 2010)

• Retrenchment

Respondent, in any of the pleadings filed by him, never refuted the foregoing facts.

Respondent’s argument that he was singled out for termination as allegedly shown in

petitioner’s monthly termination report for the month of July 1997 filed with the DOLE does not

persuade this Court. Standing alone, this document is not proof of the total number of

retrenched employees or that respondent was the only one retrenched. It merely serves as

notice to DOLE of the names of employees terminated/ retrenched only for the month of July.

In other words, it cannot be deemed as an evidence of the number of employees affected by

the retrenchment program. Thus we cannot conclude that no other employees were previously

retrenched. (SHIMIZU PHILS. CONTRACTORS, INC. v. VIRGILIO P. CALLANTA, G.R. No. 165923,

September 29, 2010)

Fourth. TSFI resorted to other measures to abate its losses. It claimed that during the crises

period, it used as an office a small-room (a mere cubicle) with only a two-person support staff

in the persons of Grapilon and Hermle; it reduced the salaries of its employees by as much as

30%. This submission by the company is substantiated by the schedule of Operating Expenses

for the year ended December 31, 2002 and September 30, 2002. A quick glance at the

schedule readily shows a reduction of TSFI’s operating expenses across the board. The

schedule indicates a substantial decrease in the operating expenses, from P5,733,735.00 in

September 2002 to P1,698,552.36 as of the end of December 2002.

On the whole, we find that TSFI satisfied the requisites for a valid retrenchment. (FRANCIS RAY

TALAM V. NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 175040, April 6, 2010)

Types of Employees

• Field Personnel

It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its coverage of

workers who are paid on a purely commission basis is only with respect to field personnel. The

more recent case of Auto Bus Transport Systems, Inc., v. Bautista clarifies that an employee

who is paid on purely commission basis is entitled to SIL:

A careful perusal of said provisions of law will result in the conclusion that the grant of service

incentive leave has been delimited by the Implementing Rules and Regulations of the Labor

Code to apply only to those employees not explicitly excluded by Section 1 of Rule V.

According to the Implementing Rules, Service Incentive Leave shall not apply to employees

classified as “field personnel.” The phrase “other employees whose performance is

unsupervised by the employer” must not be understood as a separate classification of

employees to which service incentive leave shall not be granted. Rather, it serves as an

amplification of the interpretation of the definition of field personnel under the Labor Code as

those “whose actual hours of work in the field cannot be determined with reasonable

certainty.”

The same is true with respect to the phrase “those who are engaged on task or contract basis,

purely commission basis.” Said phrase should be related with “field personnel,” applying the

rule on ejusdem generis that general and unlimited terms are restrained and limited by the

particular terms that they follow. Hence, employees engaged on task or contract basis or paid

on purely commission basis are not automatically exempted from the grant of service

incentive leave, unless, they fall under the classification of field personnel.

x x x x

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. This definition is further elaborated in the Bureau of

Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial

Employees Association which states that:

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.

x x x x (emphasis, italics and underscoring supplied)

(RODOLFO J. SERRANO v. SEVERINO SANTOS TRANSIT G.R. No. 187698, August 9, 2010)

• Project Employee

A project employee is assigned to a project which begins and ends at determined or

determinable times. Employees who work under different project employment contracts for

several years do not automatically become regular employees; they can remain as project

employees regardless of the number of years they work. Length of service is not a controlling

factor in determining the nature of one’s employment. Their rehiring is only a natural

consequence of the fact that experienced construction workers are preferred. In fact,

employees who are members of a “work pool” from which a company draws workers for

deployment to its different projects do not become regular employees by reason of that fact

alone. The Court has consistently held that members of a “work pool” can either be project

employees or regular employees. (JUDY O. DACUITAL , et. al. v. L.M. CAMUS ENGINEERING

CORPORATION and/or LUIS M. CAMUS, G.R. No. 176748, September 1, 2010)

But the test for distinguishing a “project employee” from a “regular employee” is whether or

not he has been assigned to carry out a “specific project or undertaking,” with the duration

and scope of his engagement specified at the time his service is contracted. Here, it is not

disputed that petitioner company contracted respondent Trinidad’s service by specific projects

with the duration of his work clearly set out in his employment contracts. He remained a

project employee regardless of the number of years and the various projects he worked for the

company. (WILLIAM UY CONSTRUCTION CORP. and/or TERESITA UY and WILLIAM UY V. JORGE

R. TRINIDAD, G.R. No. 183250, March 10, 2010)

• Regular Employee

Assuming arguendo that petitioner hired respondent initially on a per project basis, his

continued rehiring, as shown by the sample payrolls converted his status to that of a regular

employee. Following Cocomangas Beach Hotel Resort v. Visca, the repeated and continuing

need for respondent’s services is sufficient evidence of the necessity, if not indispensability, of

his services to petitioner’s business and, as a regular employee, he could only be dismissed

from employment for a just or authorized cause. (MILLENNIUM ERECTORS CORPORATION v.

VIRGILIO MAGALLANES, G.R. No. 184362, November 15, 2010)

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. In this case, the connection is obvious when we consider the nature of

the work performed and its relation to the scheme of the particular business or trade in its

entirety. Finally, the repeated and continuing need for the performance of the job is sufficient

evidence of the necessity, if not indispensability of the activity to the business. (MANILA

WATER COMPANY, INC. v. JOSE J. DALUMPINES, G.R. No. 175501, October 4, 2010)

Quitclaims

The Receipt and Quitclaim executed by respondent lacks the elements of voluntariness and

free will and, therefore, does not absolve petitioners from liability in paying him the sickness

wages and other monetary claims. (VARORIENT SHIPPING CO., INC., and.,d ARIA MARITIME CO.,

LTD v. GIL A. FLORES, G.R. No. 161934, October 6, 2010)

A perusal of the provisions of the Receipt and Quitclaim shows that respondent would be

releasing and discharging petitioners from all claims, demands, causes of action, and the like

in an all-encompassing manner, including the fact that he had not contracted or suffered any

illness or injury in the course of his employment and that he was discharged in good and

perfect health. These stipulations clearly placed respondent in a disadvantageous position vis-

á-vis the petitioners. (VARORIENT SHIPPING CO., INC., and.,d ARIA MARITIME CO., LTD v. GIL A.

FLORES, G.R. No. 161934, October 6, 2010)

First, the contents of the quitclaim documents that have been signed by the respondents are

simple, clear and unequivocal. The records of the case are bereft of any substantial evidence

to show that respondents did not know that they were relinquishing their right short of what

they had expected to receive and contrary to what they have so declared. Put differently, at

the time they were signing their quitclaims, respondents honestly believed that the amounts

received by them were fair and reasonable settlements of the amounts which they would have

received had they refused to voluntarily resign from the said company. (GOODRICH

MANUFACTURING CORPORATION & MR. NILO CHUA GOY v. EMERLINA ATIVO ET. Al, G.R. No.

188002, February 1, 2010)

Given the release and quitclaim, we do not see how TSFI can be made to answer for failure to

afford Talam procedural due process. The release and quitclaim, to our mind, erased whatever

infirmities there might have been in the notice of termination as Talam had already voluntarily

accepted his dismissal through the release and quitclaim. With this acceptance, the written

notice became academic; the notice, after all, is merely a protective measure put in place by

law and serves no useful purpose after protection has been assured. We thus find no basis for

the conclusion that TSFI violated procedural due process and should pay nominal damages.

(FRANCIS RAY TALAM V. NATIONAL LABOR RELATIONS COMMISSION, G.R. No.175040, April 6,

2010)

Teachers’ Employment on Probationary Status

A reality we have to face in the consideration of employment on probationary status of

teaching personnel is that they are not governed purely by the Labor Code. The Labor Code is

supplemented with respect to the period of probation by special rules found in the Manual of

Regulations for Private Schools. On the matter of probationary period, Section 92 of these

regulations provides:

Section 92. Probationary Period. – Subject in all instances to compliance with the Department

and school requirements, the probationary period for academic personnel shall not be more

than three (3) consecutive years of satisfactory service for those in the elementary and

secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the

tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the

tertiary level where collegiate courses are offered on a trimester basis. [Emphasis supplied]

(YOLANDA M. MERCADO et al. v. AMA COMPUTER COLLEGE, G.R. No. 183572, April 13, 2010)

• Rule on Probationary Status

and Fixed-term Employment of Teachers

Given the clear constitutional and statutory intents, we cannot but conclude that in a situation

where the probationary status overlaps with a fixed-term contract not specifically used for the

fixed term it offers, Article 281 should assume primacy and the fixed-period character of the

contract must give way. This conclusion is immeasurably strengthened by the petitioners’ and

the AMACC’s hardly concealed expectation that the employment on probation could lead to

permanent status, and that the contracts are renewable unless the petitioners fail to pass the

school’s standards.

To highlight what we mean by a fixed-term contract specifically used for the fixed term it

offers, a replacement teacher, for example, may be contracted for a period of one year to

temporarily take the place of a permanent teacher on a one-year study leave. The expiration

of the replacement teacher’s contracted term, under the circumstances, leads to no

probationary status implications as she was never employed on probationary basis; her

employment is for a specific purpose with particular focus on the term and with every intent to

end her teaching relationship with the school upon expiration of this term.

If the school were to apply the probationary standards (as in fact it says it did in the present

case), these standards must not only be reasonable but must have also been communicated to

the teachers at the start of the probationary period, or at the very least, at the start of the

period when they were to be applied. These terms, in addition to those expressly provided by

the Labor Code, would serve as the just cause for the termination of the probationary contract.

As explained above, the details of this finding of just cause must be communicated to the

affected teachers as a matter of due process. (YOLANDA M. MERCADO et al. v. AMA COMPUTER

COLLEGE, G.R. No. 183572, April 13, 2010)

Thirteenth Month Pay

The argument of petitioner that the grant of the benefit was not voluntary and was due to error

in the interpretation of what is included in the basic salary deserves scant consideration. No

doubtful or difficult question of law is involved in this case. The guidelines set by the law are

not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the

number of years the employer had paid the benefit to its employees. Petitioner only changed

the formula in the computation of the 13th-month pay after almost 30 years and only after the

dispute between the management and employees erupted. This act of petitioner in changing

the formula at this time cannot be sanctioned, as it indicates a badge of bad faith. (CENTRAL

AZUCARERA DE TARLAC DECISION v. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU,

G.R. No. 188949, July 26, 2010)

Transfer

This Court has long stated that the objection to the transfer being grounded solely upon the

personal inconvenience or hardship that will be caused to the employee by reason of the

transfer is not a valid reason to disobey an order of transfer. Such being the case, respondent

cannot adamantly refuse to abide by the order of transfer without exposing himself to the risk

of being dismissed. Hence, his dismissal was for just cause in accordance with Article 282(a) of

the Labor Code. (PHARMACIA and UPJOHN, INC. (now PFIZER PHILIPPINES, INC.) V. RICARDO P.

ALBAYDA, JR., G.R. No. 172724 August 23, 2010)

Transfer of Ownership

On this ground, petitioner terminated the employment of respondents. However, what

petitioner apparently made was a transfer of ownership. It is true that, as invoked by

petitioner, in Manlimos, et al. v. NLRC, et al., we held that a change of ownership in a business

concern is not proscribed by law. Lest petitioner forget, however, we also held therein that the

sale or disposition must be motivated by good faith as a condition for exemption from liability.

Thus, where the charge of ownership is done in bad faith, or is used to defeat the rights of

labor, the successor-employer is deemed to have absorbed the employees and is held liable

for the transgressions of his or her predecessor. (PEÑAFRANCIA TOURS AND TRAVEL

TRANSPORT, INC., v. JOSELITO P. SARMIENTO and RICARDO S. CATIMBANG, G.R. No. 178397,

October 20, 2010)

Unfair Labor Practice

This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate

labor organization that has been duly certified as the exclusive bargaining representative and

the employer becomes the law between them. Additionally, in the Certificate of Registration

issued by the DOLE, it is specified that the registered CBA serves as the covenant between the

parties and has the force and effect of law between them during the period of its duration.

Compliance with the terms and conditions of the CBA is mandated by express policy of the law

primarily to afford protection to labor and to promote industrial peace. Thus, when a valid and

binding CBA had been entered into by the workers and the employer, the latter is behooved to

observe the terms and conditions thereof bearing on union dues and representation. If the

employer grossly violates its CBA with the duly recognized union, the former may be held

administratively and criminally liable for unfair labor practice. ( EMPLOYEES UNION OF BAYER

PHILS.,v. BAYER PHILIPPINES, INC., G.R. No. 162943, December 6, 2010)

For a charge of unfair labor practice to prosper, it must be shown that CAB was motivated by ill

will, “bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals,

good customs, or public policy, and, of course, that social humiliation, wounded feelings or

grave anxiety resulted x x x” in suspending negotiations with CABEU-NFL. Notably, CAB

believed that CABEU-NFL was no longer the representative of the workers. It just wanted to

foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and

file workers and by negotiating and concluding in good faith a CBA with CABELA.” Such actions

of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of

unfair labor practices. (CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEU-NFL] v.

CENTRAL AZUCARERA DE BAIS, INC. [CAB], G.R. No. 186605, November 17, 2010)

Unionism

In the case at bar, since the former FEBTC employees are deemed covered by the Union Shop

Clause, they are required to join the certified bargaining agent, which supposedly has gathered

the support of the majority of workers within the bargaining unit in the appropriate certification

proceeding. Their joining the certified union would, in fact, be in the best interests of the

former FEBTC employees for it unites their interests with the majority of employees in the

bargaining unit. It encourages employee solidarity and affords sufficient protection to the

majority status of the union during the life of the CBA which are the precisely the objectives of

union security clauses, such as the Union Shop Clause involved herein. We are indeed not

being called to balance the interests of individual employees as against the State policy of

promoting unionism, since the employees, who were parties in the court below, no longer

contested the adverse Court of Appeals’ decision. Nonetheless, settled jurisprudence has

already swung the balance in favor of unionism, in recognition that ultimately the individual

employee will be benefited by that policy. In the hierarchy of constitutional values, this Court

has repeatedly held that the right to abstain from joining a labor organization is subordinate to

the policy of encouraging unionism as an instrument of social justice. (BANK OF THE PHILIPPINE

ISLANDS v. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK,

G.R. No. 164301, August 10, 2010)

• Union Security and Closed Shop

“Union security” is a generic term which is applied to and comprehends “closed shop,” “union

shop,” “maintenance of membership” or any other form of agreement which imposes upon

employees the obligation to acquire or retain union membership as a condition affecting

employment. There is union shop when all new regular employees are required to join the

union within a certain period for their continued employment. There is maintenance of

membership shop when employees, who are union members as of the effective date of the

agreement, or who thereafter become members, must maintain union membership as a

condition for continued employment until they are promoted or transferred out of the

bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be

defined as an enterprise in which, by agreement between the employer and his employees or

their representatives, no person may be employed in any or certain agreed departments of the

enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a

member in good standing of a union entirely comprised of or of which the employees in

interest are a part. (BANK OF THE PHILIPPINE ISLANDS v. BPI EMPLOYEES UNION-DAVAO

CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, G.R. No. 164301, August 10, 2010)

• Employees not covered by Union Shop Clause

All employees in the bargaining unit covered by a Union Shop Clause in their CBA with

management are subject to its terms. However, under law and jurisprudence, the following

kinds of employees are exempted from its coverage, namely, employees who at the time the

union shop agreement takes effect are bona fide members of a religious organization which

prohibits its members from joining labor unions on religious grounds; employees already in the

service and already members of a union other than the majority at the time the union shop

agreement took effect; confidential employees who are excluded from the rank and file

bargaining unit; and employees excluded from the union shop by express terms of the

agreement. (BANK OF THE PHILIPPINE ISLANDS v. BPI EMPLOYEES UNION-DAVAO CHAPTER-

FEDERATION OF UNIONS IN BPI UNIBANK, G.R. No. 164301, August 10, 2010)

• Termination of Union Officers

Three. Since the Union’s strike has been declared illegal, the Union officers can, in accordance

with law be terminated from employment for their actions. This includes the shop stewards.

They cannot be shielded from the coverage of Article 264 of the Labor Code since the Union

appointed them as such and placed them in positions of leadership and power over the men in

their respective work units. (C. ALCANTARA & SONS, INC. v. COURT OF APPEALS, et al.,G.R. No.

155109, G.R. No. 155135, G.R. No. 179220, September 29, 2010)

Withholding of Salary

Management prerogative refers “to the right of an employer to regulate all aspects of

employment, such as the freedom to prescribe work assignments, working methods, processes

to be followed, regulation regarding transfer of employees, supervision of their work, lay-off

and discipline, and dismissal and recall of work.” 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, which provides:

ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any person,

directly or indirectly, to withhold any amount from the wages of a worker or induce him to give

up any part of his wages by force, stealth, intimidation, threat or by any other means

whatsoever without the worker’s consent.

(SHS PERFORATED MATERIALS, INC., WINFRIED HARTMANNSHENN, and HINRICH JOHANN

SCHUMACHER v. MANUEL F. DIAZ, G.R. No. 185814, October 13, 2010)

 February 16, 2011   whengmanalo    Leave a comment

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Supreme Court 2009 Labor Case   Digest Appeal

As a rule, a party who does not appeal from the decision may not obtain any affirmative relief

from the appellate court other than what he has obtained from the lower tribunal, if any,

whose decision is brought up on appeal. Due process prevents the grant of additional awards

to parties who did not appeal. As an exception, he may assign an error where the purpose is to

maintain the judgment on other grounds, but he cannot seek modification or reversal of the

judgment or affirmative relief unless he has also appealed or filed a separate petition. (AKLAN

COLLEGE, INC. vs. PERPETUO ENERO, ARLYN CASTIGADOR, NUENA SERMON and JOCELYN

ZOLINA, G.R. No. 178309, January 27, 2009)

Likewise, by availing of a wrong or inappropriate mode of appeal, the petition merits an

outright dismissal pursuant to Circular No. 2-90 which provides that, “an appeal taken to either

Supreme Court or the Court of Appeals by the wrong or inappropriate mode shall be

dismissed.”( HANJIN HEAVY INDUSTRIES AND CONSTRUCTION COMPANY LTD. (FORMERLY

HANJIN ENGINEERING AND CONSTRUCTION CO. LTD.) v. HONORABLE COURT OF APPEALS, G.R.

No. 167938, February 19, 2009)

At the outset, it must be stated that petitioners adopted the wrong mode of remedy in bringing

the case before this Court. It is well-settled that the proper recourse of an aggrieved party to

assail the decision of the Court of Appeals is to file a petition for review on certiorari under

Rule 45 of the Rules of Court. The Rules precludes recourse to the special civil action of

certiorari if appeal, by way of a petition for review is available, as the remedies of appeal and

certiorari are mutually exclusive and not alternative or successive. (TACLOBAN FAR EAST

MARKETING CORPORATION and FRANCISCO Y. ROMUALDEZ v. THE COURT OF APPEALS,

NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 182320, September 11, 2009)

Time and again, it has been held that the right to appeal is not a constitutional right, but a

mere statutory privilege. Hence, parties who seek to avail themselves of it must comply with

the statutes or rules allowing it. To reiterate, perfection of an appeal in the manner and within

the period permitted by law is mandatory and jurisdictional. The requirements for perfecting

an appeal must, as a rule, be strictly followed. Such requirements are considered

indispensable interdictions against needless delays and are necessary for the orderly

discharge of the judicial business. Failure to perfect the appeal renders the judgment of the

court final and executory. Just as a losing party has the privilege to file an appeal within the

prescribed period, so does the winner also have the correlative right to enjoy the finality of the

decision. Thus, the propriety of the monetary awards of the Labor Arbiter is already binding

upon this Court, much more with the Court of Appeals. (ANDREW JAMES MCBURNIE v. EULALIO

GANZON, EGI-MANAGERS,INC. and E. GANZON, INC. G.R. Nos. 178034 & 178117, G.R. Nos.

186984-85, September 18, 2009)

From the immediately quoted pronouncement of the Court in Sy, petitioner’s mere filing of the

Motion for Reduction of Bond did not suffice to perfect his appeal. As correctly found by the

appellate court, petitioner filed a Motion for Reduction of Bond dated June 24, 1999 (which was

received by the appellate court on June 28, 1999) alleging financial constraints without

showing “substantial compliance with the Rules” or demonstrating a willingness to abide by

the [R]ules by posting a partial bond.” That petitioner questioned the computation of the

monetary award ─ basis of the computation of the amount of appeal bond did not excuse it

from posting a bond in a reasonable amount or what it believed to be the correct amount. (THE

HERITAGE HOTEL MANILA v. NATIONAL LABOR RELATIONS COMMISSION, RUFINO C. RAÑON II,

AND ISMAEL C. VILLA, G.R. Nos. 180478-79, September 3, 2009)

• Certiorari

Respondent may have a point in asserting that in this case a Rule 65 petition is a wrong mode

of appeal, as indeed the writ of certiorari is an extraordinary remedy, and certiorari jurisdiction

is not to be equated with appellate jurisdiction. Nevertheless, it is settled, as a general

proposition, that the availability of an appeal does not foreclose recourse to the extraordinary

remedies, such as certiorari and prohibition, where appeal is not adequate or equally

beneficial, speedy and sufficient, as where the orders of the trial court were issued in excess of

or without jurisdiction, or there is need to promptly relieve the aggrieved party from the

injurious effects of the acts of an inferior court or tribunal, e.g., the court has authorized

execution of the judgment. This Court has even recognized that a recourse to certiorari is

proper not only where there is a clear deprivation of petitioner’s fundamental right to due

process, but so also where other special circumstances warrant immediate and more direct

action. (PEOPLE’S BROADCASTING(BOMBO RADYO PHILS., INC.) vs. THE SECRETARY OF THE

DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and

JANDELEON JUEZAN, G.R. No. 179652, May 8, 2009)

• Strict Application of the Rules

As to the other ground cited by private respondents’ counsel, suffice it to say that it was a bare

allegation unsubstantiated by any proof or affidavit of merit. Besides, they could have filed the

petition on time with a motion to be allowed to litigate in forma pauperis. While social justice

requires that the law look tenderly on the disadvantaged sectors of society, neither the rich

nor the poor has a license to disregard rules of procedure. The fundamental rule of human

relations enjoins everyone, regardless of standing in life, to duly observe procedural rules as

an aspect of acting with justice, giving everyone his due and observing honesty and good faith.

For indeed, while technicalities should not unduly hamper our quest for justice, orderly

procedure is essential to the success of that quest to which all courts are devoted. (LAGUNA

METTS CORPORATION v. ARIES C. CAALAM and GERALDINE ESGUERRA, G.R. No. 185220, July

27, 2009)

• Date of Filing

In this case, petitioner availed of the services of LBC, a private carrier, to deliver its notice of

appeal to the NLRC. Had petitioner sent its notice of appeal by registered mail, the date of

mailing would have been deemed the date of filing with the NLRC. But petitioner, for reasons

of its own, chose to send its notice of appeal through a private letter-forwarding agency.

Therefore, the date of actual receipt by the NLRC of the notice of appeal, and not the date of

delivery to LBC, is deemed to be the date of the filing of the notice of appeal. Since the NLRC

received petitioner’s notice of appeal on 26 February 2001, the appeal was clearly filed out of

time. Petitioner had thus lost its right to appeal from the decision of the Labor Arbiter and the

NLRC should have dismissed its notice of appeal. (CHARTER CHEMICAL AND COATING

CORPORATION vs. HERBERT TAN and AMALIA SONSING, G.R. No. 163891, May 21, 2009)

• Delayed Filing

We agree with the Court of Appeals that since no intent to delay the administration of justice

could be attributed to Guinmapang, a one day delay does not justify the appeal’s denial. More

importantly, the Court of Appeals declared that Guinmapang’s appeal, on its face, appears to

be impressed with merit. The constitutional mandate to accord full protection to labor and to

safeguard the employee’s means of livelihood should be given proper attention and sanction.

A greater injustice may occur if said appeal is not given due course than if the reglementary

period to appeal were strictly followed. In this case, we are inclined to excuse the one day

delay in order to fully settle the merits of the case. This is in line with our policy to encourage

full adjudication of the merits of an appeal. (REPUBLIC CEMENT CORPORATION v. PETER I.

GUINMAPANG, G.R. No. 168910, August 24, 2009)

• Appeal Bond

At the time of the filing of the surety bond by PJI on January 2, 2003, PPAC was still an

accredited bonding company. Thus, it was but proper to honor the appeal bond issued by a

bonding company duly accredited by this Court at the time of its issuance. The subsequent

revocation of the authority of a bonding company should not prejudice parties who relied on its

authority. The revocation of authority of a bonding company is prospective in application.

(CESARIO L. DEL ROSARIO v. PHILIPPINE JOURNALISTS, INC., G.R. No. 181516, August 19, 2009)

While the bond may be reduced upon motion by the employer, this is subject to the conditions

that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a

reasonable amount in relation to the monetary award is posted by the appellant, otherwise the

filing of the motion to reduce bond shall not stop the running of the period to perfect an

appeal. The qualification effectively requires that unless the NLRC grants the reduction of the

cash bond within the 10 day reglementary period, the employer is still expected to post the

cash or surety bond securing the full amount within the said 10-day period. If the NLRC does

eventually grant the motion for reduction after the reglementary period has elapsed, the

correct relief would be to reduce the cash or surety bond already posted by the employer

within the 10-day period. (ANDREW JAMES MCBURNIE v. EULALIO GANZON, EGI-

MANAGERS,INC. and E. GANZON, INC. G.R. Nos. 178034 & 178117, G.R. Nos. 186984-85,

September 18, 2009)

In addition, while the bond requirement on appeals involving a monetary award has been

relaxed in certain cases, this can only be done where there was substantial compliance with

the Rules; or where the appellants, at the very least, exhibited willingness to pay by posting a

partial bond. ( LOLITA A. LOPEZ, ET. al., vs. QUEZON CITY SPORTS CLUB, INC.,G.R. No. 164032,

January 19, 2009)

The decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to

the NLRC by any parties within ten (10) calendar days from receipt thereof, with proof of

payment of the required appeal fee accompanied by a memorandum of appeal. And where, as

here, the judgment involves monetary award, an appeal therefrom by the employer may be

“perfected only upon the posting of a cash or surety bond.” A mere notice of appeal without

complying with the other requisites mentioned does not stop the running of the period for

perfecting an appeal as in fact no motion for extension of said period is allowed. (WALLEM

MARITIME SERVICES, INC. and SCANDIC SHIPMANAGEMENT LIMITED v. ERIBERTO S. BULTRON,

G.R. No. 185261, October 2, 2009)

The purpose of an appeal bond is to ensure, during the period of appeal, against any

occurrence that would defeat or diminish recovery by the aggrieved employees under the

judgment if subsequently affirmed. The Deed of Assignment in the instant case, like a cash or

surety bond, serves the same purpose. First, the Deed of Assignment constitutes not just a

partial amount, but rather the entire award in the appealed Order. Second, it is clear from the

Deed of Assignment that the entire amount is under the full control of the bank, and not of

petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the same

office after it had issued a writ of execution. For all intents and purposes, the Deed of

Assignment in tandem with the Letter Agreement and Cash Voucher is as good as cash. Third,

the Court finds that the execution of the Deed of Assignment, the Letter Agreement and the

Cash Voucher were made in good faith, and constituted clear manifestation of petitioner’s

willingness to pay the judgment amount. (PEOPLE’S BROADCASTING(BOMBO RADYO PHILS.,

INC.) vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL

DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, G.R. No. 179652, May 8, 2009)

Attorney’s Fees

Finally, the Court overrules the deletion by the NLRC of the Labor Arbiter’s award for attorney’s

fees to petitioner. Petitioner is evidently entitled to attorney’s fees, since h3e was compelled to

litigate to protect his interest by reason of unjustified and unlawful termination of his

employment by respondents CCBP and Taguibao. (ERWIN H. REYES v. NATIONAL LABOR

RELATIONS COMMISSION, G.R. No. 180551, February 10, 2009)

Considering that Atty. Go successfully represented his client, it is only proper that he should

receive adequate compensation for his efforts. Even as we agree with the reduction of the

award of attorney’s fees by the CA, the fact that a lawyer plays a vital role in the

administration of justice emphasizes the need to secure to him his honorarium lawfully earned

as a means to preserve the decorum and respectability of the legal profession. A lawyer is as

much entitled to judicial protection against injustice or imposition of fraud on the part of his

client as the client is against abuse on the part of his counsel. The duty of the court is not

alone to ensure that a lawyer acts in a proper and lawful manner, but also to see that a lawyer

is paid his just fees. With his capital consisting of his brains and with his skill acquired at

tremendous cost not only in money but in expenditure of time and energy, he is entitled to the

protection of any judicial tribunal against any attempt on the part of his client to escape

payment of his just compensation. It would be ironic if after putting forth the best in him to

secure justice for his client, he himself would not get his due. (EVANGELINA MASMUD (as

substitute complainant for ALEXANDER J. MASMUD) v. NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 183385, February 13, 2009)

Moreover, in cases for recovery of wages, the award of attorney’s fees is proper and there

need not be any showing that the employer acted maliciously or in bad faith when it withheld

the wages. There need only be a showing that the lawful wages were not paid accordingly.

(BARON REPUBLIC THEATRICAL V. NORMITA P. PERALTA et al, G.R. No. 170525, October 2,

2009)

In the case at bar, we find that the flight attendants were represented by respondent union

which, in turn, engaged the services of its own counsel. The flight attendants had a common

cause of action. While the work performed by respondent’s counsel was by no means simple,

seeing as it spanned the whole litigation from the Labor Arbiter stage all the way to this Court,

nevertheless, the issues involved in this case are simple, and the legal strategies, theories and

arguments advanced were common for all the affected crew members. Hence, it may not be

reasonable to award said counsel an amount equivalent to 10% of all monetary awards to be

received by each individual flight attendant. Based on the length of time that this case has

been litigated, however, we find that the amount of P2,000,000.00 is reasonable as attorney’s

fees. This amount should include all expenses of litigation that were incurred by respondent

union. (FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES (FASAP), v.

PHILIPPINE AIRLINES, INC.,PATRIA CHIONG and COURT OF APPEALS,G.R. No. 178083, October

2, 2009)

The claim for attorney’s fees is granted following Article 2208 of the New Civil Code which

allows its recovery in actions for recovery of wages of laborers and actions for indemnity under

the employer’s liability laws. The same fees are also recoverable when the defendant’s act or

omission has compelled the plaintiff to incur expenses to protect his interest as in the present

case following the refusal by respondent to settle his claims. Pursuant to prevailing

jurisprudence, petitioner is entitled to attorney’s fees of ten percent (10%) of the monetary

award. (LEOPOLDO ABANTE v. KJGS FLEET MANAGEMENT MANILA G.R. No. 182430, December

4, 2009)

Backwages

One of the natural consequences of a finding that an employee has been illegally dismissed is

the payment of backwages corresponding to the period from his dismissal up to actual

reinstatement. The statutory intent of this matter is clearly discernible. The payment of

backwages allows the employee to recover from the employer that which he has lost by way of

wages as a result of his dismissal. Logically, it must be computed from the date of petitioner’s

illegal dismissal up to the time of actual reinstatement. There can be no gap or interruption,

lest we defeat the very reason of the law in granting the same. That petitioner did not

immediately file his Complaint should not affect or diminish his right to backwages, for it is a

right clearly granted to him by law — should he be found to have been illegally dismissed —

and for as long as his cause of action has not been barred by prescription. (ERWIN H. REYES v.

NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 180551, February 10, 2009)

He never bothered to redeem his license at the soonest possible time when there was no

showing that he was unlawfully prevented by respondent from doing so. Thus, petitioner

should not be paid for the time he was not working. The Court has held that where the failure

of employees to work was not due to the employer’s fault, the burden of economic loss

suffered by the employees should not be shifted to the employer. Each party must bear his

own loss. It would be unfair to allow petitioner to recover something he has not earned and

could not have earned, since he could not discharge his work as a driver without his driver’s

license. Respondent should be exempted from the burden of paying backwages. (BERNARDINO

V. NAVARRO v. P.V. PAJARILLO LINER, INC., G.R. No. 164681, April 24, 2009)

Burden of Proof

In termination cases, the employer bears the burden of proving that the dismissal of the

employee is for a just or an authorized cause. Failure to dispose of the burden would imply that

the dismissal is not lawful, and that the employee is entitled to reinstatement, back wages and

accruing benefits. Moreover, dismissed employees are not required to prove their innocence of

the employer’s accusations against them. (SAN MIGUEL CORPORATION vs. NATIONAL LABOR

RELATIONS COMMISSION AND WILLIAM L. FRIEND, JR., G.R. No. 153983, May 26, 2009)

As a general rule, one who pleads payment has the burden of proving it. Even where the

employee must allege nonpayment, the general rule is that the burden rests on the employer

to prove payment, rather than on the employee to prove nonpayment. The reason for the rule

is that the pertinent personnel files, payrolls, records, remittances and other similar documents

— which will show that overtime, differentials, service incentive leave and other claims of

workers have been paid — are not in the possession of the employee but in the custody and

absolute control of the employer. Since in the case at bar petitioner company has not shown

any proof of payment of the correct amount of salary, holiday pay and 13th month pay, we

affirm the award of Madriaga’s monetary claims. (MANTLE TRADING SERVICES, INCORPORATED

AND/OR BOBBY DEL ROSARIO v. NATIONAL LABOR RELATIONS COMMISSION and PABLO S.

MADRIAGA,G.R. No. 166705,July 28,2009)

Respecting the issue of illegal dismissal, the Court appreciates no evidence that petitioner was

dismissed. What it finds is that petitioner unilaterally stopped reporting for work before filing a

complaint for illegal dismissal, based on his belief that Guillermo and Bergonia had spread

rumors that his transactions on behalf of BAYER would no longer be honored as of April 30,

2002. This belief remains just that – it is unsubstantiated. While in cases of illegal dismissal,

the employer bears the burden of proving that the dismissal is for a valid or authorized cause,

the employee must first establish by substantial evidence the fact of dismissal. (RAMY

GALLEGO v. BAYER PHILIPPINES, INC., DANPIN GUILLERMO, PRODUCT IMAGE MARKETING, INC.,

and EDGARDO BERGONIA, G.R. No. 179807, July 31, 2009)

The burden of proving the validity of retrenchment is on the petitioner. Evidence does not

sufficiently establish that petitioner had incurred losses that would justify retrenchment to

prevent further losses. The Comparative Income Statement for the year 1996 and for the

months of February to June 1997 which petitioner submitted did not conclusively show that

petitioner had suffered financial losses. In fact, records show that from January to July 1997,

petitioner hired a total of 114 new employees assigned in the petitioner’s stores located in the

different places of the country. (EMCOR INCORPORATED v. MA. LOURDES D. SIENES, G.R. No.

152101, September 8, 2009)

It is well-settled that in termination cases, the burden of proof rests upon the employer to show

that the dismissal was for a just and valid cause and failure to discharge the same would mean

that the dismissal is not justified and therefore illegal. Hence, in arguing that Sabulao

abandoned his work, it is incumbent upon the petitioners to prove: (1) that the employee failed

to report for work or had been absent without valid or justifiable reason; and (2) that there

must have been a clear intention to sever the employer-employee relationship as manifested

by some overt acts. Clearly, jurisprudence dictates that the burden of proof to show that there

was unjustified refusal to go back to work rests on the employer. (TACLOBAN FAR EAST

MARKETING CORPORATION and FRANCISCO Y. ROMUALDEZ v. THE COURT OF APPEALS,

NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 182320, September 11, 2009)

Cause of Action

The Secretary of Labor and Employment dismissed the first petition as it was filed outside the

60-day freedom period. At that time therefore, the union has no cause of action since they are

not yet legally allowed to challenge openly and formally the status of SMCGC-SUPER as the

exclusive bargaining representative of the bargaining unit. Such dismissal, however, has no

bearing in the instant case since the third petition for certification election was filed well within

the 60-day freedom period. Otherwise stated, there is no identity of causes of action to speak

of since in the first petition, the union has no cause of action while in the third, a cause of

action already exists for the union as they are now legally allowed to challenge the status of

SMCGC-SUPER as exclusive bargaining representative. (CHRIS GARMENTS CORPORATION vs

HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS WORKERS UNION-PTGWO LOCAL

CHAPTER No. 832, G.R. No. 167426, January 12, 2009)

Circumvention of the Law

Notably, private respondent’s purported employment with MANRED commenced only in 1996,

way after she was hired by the petitioner as extra beverage attendant on April 24, 1995. There

is thus much credence in the private respondent’s claim that the service agreement executed

between the petitioner and MANRED is a mere ploy to circumvent the law on employment, in

particular that which pertains on regularization. (MARANAW HOTELS AND RESORT CORP vs

COURT OF APPEALS, SHERYL OABEL AND MANILA RESOURCE DEVELOPMENT CORP., G.R. No.

149660, January 20, 2009)

Collective Bargaining Agreement (CBA)

If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties,

as in the herein questioned provision, the literal meaning thereof shall prevail. That is settled.

As such, the daily-paid employees must be paid their regular salaries on the holidays which are

so declared by the national government, regardless of whether they fall on rest days.

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the

State shall afford protection to labor. 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.”

(Emphasis and underscoring supplied) (RFM CORPORATION-FLOUR DIVISION and SFI FEEDS

DIVISION v. KASAPIAN NG MANGGA-GAWANG PINAGKAISA-RFM (KAMPI-NAFLU-KMU) and

SANDIGAN AT UGNAYAN NG MANGGAGAWANG PINAGKAISA-SFI (SUMAPI-NAFLU-KMU), G.R. No.

162324, February 4, 2009)

Company Policy

As respondents creditably explained, and as admitted by petitioner herself, respondents have

standing policies that an employee must be single at the time of employment and must be

willing to be assigned to any of its branches in the country. Petitioner’s contention that upon

getting married, she no longer bound herself to be assigned to any of respondents’ branches in

the country is preposterous. Just because an employee gets married does not mean she can

already renege on a commitment she willingly made at the time of her employment

particularly if such commitment does not appear to be unreasonable, inconvenient, or

prejudicial to her. Respondents claimed that travel time from the Bacolod City Branch to the

Iloilo City Branch will only take about an hour by boat and that they were even willing to defray

petitioner’s transportation and lodging expenses. Petitioner never disputed these matters.

There is no showing either that petitioner’s transfer was only being used by respondents to

camouflage a sinister scheme of management to rid itself of an undesirable worker in the

person of petitioner. (AILEEN G. HERIDA v. F & C PAWNSHOP and JEWELRY STORE/MARCELINO

FLORETE, JR., G.R. No. 172601, April 16, 2009)

Computation of Award

Finally, on the increase in the computation of the monetary award to respondents, the decision

of the Labor Arbiter specified that for purposes of putting up a bond should petitioner appeal,

the backwages were computed only for a certain period. Otherwise, the actual backwages to

be paid to respondents are computed from the date of dismissal until the finality of the

decision. In addition, because petitioner continues to refuse and accord regular status to

respondents and to pay them their corresponding wages even after the lapse of two (2) years

from the finality of the Labor Arbiter’s decision, the Labor Arbiter correctly included that in its

order of execution. Thus, the Labor Arbiter’s order of execution simply covered the correct

computation of wages and other payments enjoyed by petitioner’s regular employees.

(PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. RIZALINA RAUT, LEILA EMNACE and

GINA CAPISTRANO, G.R. No. 174209, August 25, 2009)

This Court notes that the NLRC awarded backwages, 13th month pay, and service incentive

leave pay from July 10, 2005 to January 23, 2007 only. It is evident that these should not be

limited to said period. These should be computed from the date of her illegal dismissal until

this decision attains finality. Though Bolanos did not appeal the computation of the NLRC’s

award as affirmed by the Court of Appeals, we are not barred from ordering its modification.

This Court is imbued with sufficient authority and discretion to review matters, not otherwise

assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a

complete and just resolution of the case or to serve the interests of justice or to avoid

dispensing piecemeal justice. Besides, substantive rights like the award of backwages, 13th

month pay and service incentive leave pay resulting from illegal dismissal must not be

prejudiced by a rigid and technical application of the rules. The computation of the award for

backwages and other benefits from the time the compensation was withheld up to the time of

actual reinstatement is a mere legal consequence of the finding that respondent was illegally

dismissed by petitioners. (HENLIN PANAY COMPANY v. NATIONAL LABOR RELATIONS

COMMISSION , G.R. No. 180718, October 23, 2009)

Conclusiveness of Judgment

Third. The matter of employer-employee relationship has been resolved with finality by the

Secretary of Labor and Employment in the Resolution dated December 27, 2002. Since

petitioner did not appeal this factual finding, then, it may be considered as the final resolution

of such issue. To reiterate, “conclusiveness of judgment” has the effect of preclusion of issues.

(CHRIS GARMENTS CORPORATION vs HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS

WORKERS UNION-PTGWO LOCAL CHAPTER No. 832, G.R. No. 167426, January 12, 2009)

Contingent Fee

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order

that clients may be protected from unjust charges. The amount of contingent fees agreed upon

by the parties is subject to the stipulation that counsel will be paid for his legal services only if

the suit or litigation prospers. A much higher compensation is allowed as contingent fees

because of the risk that the lawyer may get nothing if the suit fails. The Court finds nothing

illegal in the contingent fee contract between Atty. Go and Evangelina’s husband. The CA

committed no error of law when it awarded the attorney’s fees of Atty. Go and allowed him to

receive an equivalent of 39% of the monetary award. (EVANGELINA MASMUD (as substitute

complainant for ALEXANDER J. MASMUD) v. NATIONAL LABOR RELATIONS COMMISSION, G.R.

No. 183385, February 13, 2009)

Contract of Adhesion

In addition, the employment agreement may be likened into a contract of adhesion considering

that it is petitioner who insists that there existed an express period of one year from April 1,

2002 to March 31, 2003, using as proof its own copy of the agreement. While contracts of

adhesion are valid and binding, in cases of doubt which will cause a great imbalance of rights

against one of the parties, the contract shall be construed against the party who drafted the

same. Hence, in this case, where the very employment of respondent is at stake, the doubt as

to the period of employment must be construed in her favor. (MAGIS YOUNG ACHIEVERS’

LEARNING CENTER and MRS. VIOLETA T. CARIÑO v. ADELAIDA . MANALO, G.R. No. 178835,

February 13, 2009)

Contract of Employment

Since respondent was already a regular employee months before the execution of the

Employment with a Fixed Period contract, its execution was merely a ploy on SMC’s part to

deprive respondent of his tenurial security. Hence, no valid fixed-term contract was executed.

The employment status of a person is defined and prescribed by law and not by what the

parties say it should be. Equally important to consider is that a contract of employment is

impressed with public interest such that labor contracts must yield to the common good.

Provisions of applicable statutes are deemed written into the contract, and the parties are not

at liberty to insulate themselves and their relationships from the impact of labor laws and

regulations by simply contracting with each other. (SAN MIGUEL CORPORATION v. EDUARDO L.

TEODOSIO, G.R. No. 163033, October 2, 2009)

Corporate Rehabilitation

Given these premises, it is not difficult to understand why actions for claims against the ailing

enterprise have to be suspended. It then becomes easy to accept the hypothesis that the date

when the claim arose, or when the action is filed, is of no moment. As long as the corporation

is under a management committee or a rehabilitation receiver, all actions for claims against it

— for money or otherwise — must yield to the greater imperative of corporate rehabilitation,

excepting only, as already mentioned, claims for payment of obligations incurred by the

corporation in the ordinary course of business. Enforcement of writs of execution issued by

judicial or quasi-judicial tribunals, since such writs emanate from “actions for claims,” must,

likewise, be suspended. (MALAYAN INSURANCE COMPANY, INC. v. VICTORIAS MILLING

COMPANY, INC., G.R. No. 167768, April 17, 2009)

Damages

Petitioner’s reliance on Viernes v. National Labor Relations Commission to support its claim for

the reduction of the award of nominal damages is misplaced. The factual circumstances are

different. Viernes is an illegal dismissal case, since there was no authorized cause for the

dismissal of the employees; and the employer was ordered to pay backwages inclusive of

allowances and other benefits, computed from the time the compensation was withheld up to

the actual reinstatement. In addition, since the dismissal was done without due process, the

nominal damages awarded was only P2,590.00 equivalent to one-month salary of the

employee. In this case, the dismissal was valid, as it was due to an authorized cause, but

without the observance of procedural due process, and the only award given was nominal

damages. (CELEBES JAPAN FOODS CORPORATION V. SUSAN YERMO G.R. No. 175855 October

2, 2009)

In previous cases where moral damages and attorney’s fees were awarded, the manner of

termination was done in a humiliating and insulting manner, such as in the case of Balayan

Colleges v. National Labor Relations Commission where the employer posted copies of its

letters of termination to the teachers inside the school campus and it also furnished copies to

the town mayor and Parish Priest of their community for the purpose of maligning the

teachers’ reputation. So also in the case of Chiang Kai Shek School v. Court of Appeals, this

Court awarded moral damages to a teacher who was flatly, and without warning or a formal

notice, told that she was dismissed. (M+W ZANDER PHILIPPINES, INC. and ROLF WILTSCHEK v.

TRINIDAD M. ENRIQUEZ, G.R. No. 169173, June 5, 2009)

Disability Benefits

Under paragraph 20.1.5 of the parties’ CBA, it is stipulated that “[a] seafarer whose disability is

assessed at 50% or more under the POEA Employment Contract shall x x x be regarded as

permanently unfit for further sea service in any capacity and entitled to 100% compensation,

i.e., x x x US$60,000.00 for ratings.” Petitioner’s disability rating being 68.66%, he is entitled

to a 100% disability compensation of US$60,000, as correctly found by the Labor Arbiter and

the NLRC. So Philimare, Inc./Marlow Navigation Co., Ltd. v. Suganob, enlightens, thus:

Apropos the appropriate disability benefits that respondent is entitled to, we find that Suganob

is entitled to Grade 1 disability benefits which corresponds to total and permanent disability. . .

x x x To be entitled to Grade 1 disability benefits, the employee’s disability must not only be

total but also permanent.

Permanent disability is the inability of a worker to perform his job for more than 120 days,

regardless of whether or not he loses the use of any of his body. Clearly, Suganob’s disability is

permanent since he was unable to work from the time he was medically repatriated on

September 17, 2001 up to the time the complaint was filed on April 25, 2002, or more than 7

months. Moreover, if in fact Suganob is clear and fit to work on October 29, 2001, he would

have been taken back by petitioners to continue his work as a Chief Cook, but he was not. His

disability is undoubtedly permanent.

Total disability, on the other hand, does not mean absolute helplessness. In disability

compensation, it is not the injury which is compensated, but rather the incapacity to work

resulting in the impairment of one’s earning capacity. Total disability does not require that the

employee be absolutely disabled, or totally paralyzed. What is necessary is that the injury

must be such that the employee cannot pursue his usual work and earn therefrom. Both the

company-designated physician and Suganob’s physician found that Suganob is unfit to

continue his duties as a Chief Cook since his illness prevented him from continuing his duties

as such. Due to his illness, he can no longer perform work which is part of his daily routine as

Chief Cook like lifting heavy loads of frozen meat, fish, water, etc. when preparing meals for

the crew members. Hence, Suganob’s disability is also total. (Emphasis supplied) (JOELSON O.

ILORETA v. PHILIPPINE TRANSMARINE CARRIERS, INC., G.R. NO. 183908, December 4, 2009)

As with all other kinds of worker, the terms and conditions of a seafarer’s employment is

governed by the provisions of the contract he signs at the time he is hired. But unlike that of

others, deemed written in the seafarer’s contract is a set of standard provisions set and

implemented by the POEA, called the Standard Terms and Conditions Governing the

Employment of Filipino Seafarers on Board Ocean-Going Vessels, which are considered to be

the minimum requirements acceptable to the government for the employment of Filipino

seafarers on board foreign ocean-going vessels. Thus, the issue of whether petitioner Nisda

can legally demand and claim disability benefits from respondents Sea Serve and ADAMS for

an illness suffered is best addressed by the provisions of his POEA-SEC, which incorporated the

Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board

Ocean-Going Vessels. When petitioner Nisda was employed on 7 August 2001, it was the 2000

Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on

Board Ocean-Going Vessels (hereinafter referred to simply as Amended Standard Terms and

Conditions for brevity) that applied and were deemed written in or appended to his POEA-SEC.

(CARLOS N. NISDA v. SEA SERVE MARITIME AGENCY and KHALIFA A. ALGOSAIBI DIVING AND

MARINE SERVICES, G. R. No. 179177, July 23, 2009)

Given a seafarer’s entitlement to permanent disability benefits when he is unable to work for

more than 120 days, the failure of the company-designated physician to pronounce petitioner

fit to work within the 120-day period entitles him to permanent total disability benefit in the

amount of US$60,000.00. (LEOPOLDO ABANTE v. KJGS FLEET MANAGEMENT MANILA G.R. No.

182430, December 4, 2009)

Dismissal

In the present case, we significantly note that petitioner, after filing her explanation in

response to the employer’s July 1, 1997 memo, never asked for any clarificatory hearing

during the plant-level proceedings. She also had ample opportunity to explain her side vis-à-vis

the principal charge against her — her involvement in the incident of June 30, 1997 . It is a

matter of record that the petitioner lost no time in submitting the required explanation, as she

submitted it on the very same day that the memo was served on her. The explanation, in

Filipino, narrated among others the indifferent and discriminatory treatment she had been

receiving from the group of Nilo Echavez, which she also told her husband who got mad. Taken

together with the testimonies of other witnesses who gave their statements on how the

petitioner encouraged her husband to attack Echavez (all of which were duly and seasonably

disclosed), the petitioner cannot claim that the respondent company did not give her ample

opportunity to be heard. All told, we are convinced that the respondent company acted based

on a valid cause for dismissal and observed the required procedures in so acting. (ROSARIO A.

GATUS v. QUALITY HOUSE, INC. and CHRISTOPHER CHUA, G.R. No. 156766, April 16, 2009)

• Constructive Dismissal

Case law holds that constructive dismissal occurs when there is 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. Respondent’s sudden, arbitrary

and unfounded adoption of the two-day work scheme which greatly reduced petitioners’

salaries renders it liable for constructive dismissal. (FE LA ROSA et. al., v. AMBASSADOR

HOTEL,G.R. No. 177059, March 13, 2009)

What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might

have occurred in the sense that petitioner was not served with a notice of termination, but

there was constructive dismissal, petitioner having been placed in a position where continued

employment was rendered impossible and unreasonable by the circumstances indicated

above. (ODILON L. MARTINEZ v. B&B FISH BROKER/NORBERTO M. LUCINARIO, G.R. No. 179985,

September 18, 2009)

Time and again we have ruled that in constructive dismissal cases, the employer has the

burden of proving that the transfer of an employee is for just and valid grounds, such as

genuine business necessity. The employer must demonstrate that the transfer is not

unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not

involve a demotion in rank or a diminution of salary and other benefits. If the employer fails to

overcome this burden of proof, the employee’s transfer is tantamount to unlawful constructive

dismissal. (MERCK SHARP AND DOHME (PHILIPPINES) v. JONAR P. ROBLES, et al., G.R. No.

176506, November 25, 2009)

These discriminatory acts were calculated to make petitioner feel that he is no longer welcome

nor needed in respondent company − short of sending him an actual notice of termination.

We, therefore, hold that respondent constructively dismissed petitioner from the service.

(RAMON B. FORMANTES v. DUNCAN PHARMACEUTICALS, PHILS., INC., G.R. No. 170661,

December 4, 2009)

In the present case, the petitioners ceased verbally communicating with the respondent and

giving him work assignment after suspecting that he had forged purchase receipts. Under this

situation, the respondent was forced to leave the petitioners’ compound with his family and to

transfer to a nearby place. Thus, the respondent’s act of leaving the petitioners’ premises was

in reality not his choice but a situation the petitioners created. (CRC AGRICULTURAL TRADING

and ROLANDO B. CATINDIG v. NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 177664,

December 23, 2009)

• Dismissal of Managerial Employees

In view of the lack of proper investigation into the charges against respondent, petitioners

failed to show that they have a just cause for terminating his employment. Respondents’

alleged infractions amount to nothing more than bare accusations and unilateral conclusions

that do not provide legal justification for his termination from employment. Although

petitioners have wider latitude of discretion in terminating respondent, who was a managerial

employee, it is nonetheless settled that confidential and managerial employees cannot be

arbitrarily dismissed at any time, and without cause as reasonably established in an

appropriate investigation. Such employees, too, are entitled to security of tenure, fair

standards of employment and the protection of labor laws. Managerial employees, no less than

rank-and-file laborers are entitled to due process. (CASA CEBUANA INCORPORADA and ANGELA

FIGUEROA PAULIN v. IRENEO P. LEUTERIO, G.R. No. 176040, September 4, 2009)

• Dismissal due to Union Security Clauses

Nonetheless, while We uphold dismissal pursuant to a union security clause, the same is not

without a condition or restriction. For to allow its untrammeled enforcement would encourage

arbitrary dismissal and abuse by the employer, to the detriment of the employees. Thus, to

safeguard the rights of the employees, We have said time and again that dismissals pursuant

to union security clauses are valid and legal, subject only to the requirement of due process,

that is, notice and hearing prior to dismissal. In like manner, We emphasized that the

enforcement of union security clauses is authorized by law, provided such enforcement is not

characterized by arbitrariness, and always with due process. (Herminigildo Inguillo and

Zenaida Bergante v. First Philippine Scales, Inc. and/or Amparo Policarpio, Manager, G.R. No.

165407, June 5, 2009)

• Dismissal of Union Officer

Note that the verb “participates” is preceded by the adverb “knowingly.” This reflects the

intent of the legislature to require “knowledge” as a condition sine qua non before a union

officer can be dismissed from employment for participating in an illegal strike. The provision is

worded in such a way as to make it very difficult for employers to circumvent the law by

arbitrarily dismissing employees in the guise of exercising management prerogative. This is

but one aspect of the State’s constitutional and statutory mandate to protect the rights of

employees to self-organization. (CLUB FILIPINO, INC. and ATTY. ROBERTO F. DE LEON v.

benjamin bautista, et. al., G.R. No. 168406, July 13, 2009)

• Illegal Dismissal

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. (COCA-COLA BOTTLERS PHILS.,

INC v. ALAN M. AGITO, et al., G.R. No. 179546, February 13, 2009)

As the employer, petitioner has the burden of proving that the dismissal of petitioner was for a

cause allowed under the law and that petitioner was afforded procedural due process.

Petitioner failed to discharge this burden. Indeed, it failed to show any valid or authorized

cause under the Labor Code which allowed it to terminate the services of individual

respondents. Neither did petitioner show that individual respondents were given ample

opportunity to contest the legality of their dismissal. No notice of such impending termination

was ever given to them. Individual respondents were definitely denied due process. Having

failed to establish compliance with the requirements on termination of employment under the

Labor Code, the dismissal of individual respondents was tainted with illegality. (ILIGAN CEMENT

CORPORATION v. ILIASCOR EMPLOYEES AND WORKERS UNION – SOUTHERN PHILIPPINES

FEDERATION OF LABOR (IEWU-SPFL), AND ITS OFFICERS AND MEMBERS, et. al, G.R. No.

158956, April 24, 2009)

In this case, we find no overt act on the part of petitioner that he was ready to sever his

employment ties. The alleged resignation was actually premised by respondents only on the

filing of the complaint for separation pay, but this alone is not sufficient proof that petitioner

intended to resign from the company. What strongly negates the claim of resignation is the

fact that petitioner filed the amended complaint for illegal dismissal immediately after he was

not allowed to report for work on June 3, 2000. Resignation is inconsistent with the filing of the

complaint for illegal dismissal. It would have been illogical for petitioner to resign and then file

a complaint for illegal dismissal later on. If petitioner was determined to resign, as respondents

posited, he would not have commenced the action for illegal dismissal. Undeniably, petitioner

was unceremoniously dismissed in this case. (BALTAZAR L. PAYNO v. ORIZON TRADING CORP. /

ORATA TRADING and FLORDELIZA LEGASPI, G.R. No. 175345, August 19, 2009)

Therefore, this Court finds no reason to disturb its finding that the retrenchment of the flight

attendants was illegally executed. As held in the Decision sought to be reconsidered, PAL failed

to observe the procedure and requirements for a valid retrenchment. Assuming that PAL was

indeed suffering financial losses, the requisite proof therefor was not presented before the

NLRC which was the proper forum. More importantly, the manner of the retrenchment was not

in accordance with the procedure required by law. Hence, the retrenchment of the flight

attendants amounted to illegal dismissal. Consequently, the flight attendants affected are

entitled to the reliefs provided by law, which include backwages and reinstatement or

separation pay, as the case may be. (FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF

THE PHILIPPINES (FASAP), v. PHILIPPINE AIRLINES, INC.,PATRIA CHIONG and COURT OF

APPEALS,G.R. No. 178083, October 2, 2009)

Clearly, Bolanos’s case is one of illegal dismissal. First, there is no just or authorized cause for

petitioners to terminate her employment. Her alleged act of dishonesty of “passing out” food

for free was not proven. Neither was there incompetence on her part when some food items

were not punched in the cash register as she was not the cashier manning it when the food

items were ordered. In fact, the other cashier even owned up to said mistake. Second, Bolanos

was not afforded due process by petitioners before she was dismissed. A day after the

incident, she was verbally dismissed from her employment without being given the chance to

be heard and defend herself. (HENLIN PANAY COMPANY v. NATIONAL LABOR RELATIONS

COMMISSION , G.R. No. 180718, October 23, 2009)

In fine, as petitioners failed to indubitably prove that respondents were guilty of drug use in

contravention of its drug-free workplace policy amounting to serious misconduct, respondents

are deemed to have been illegally dismissed. (PLANTATION BAY RESORT and SPA v. ROMEL S.

DUBRICO, et al., G.R. No. 182216, December 4, 2009)

Docket Fees

Anent petitioner’s claim regarding respondent’s failure to pay the full amount of docket fees at

the time of the filing of the petition with the CA, we find that it is estopped from questioning

the jurisdiction of the CA on this ground, because such issue had never been raised in any of

the pleadings filed before the CA. Notably, the CA issued a minute resolution dated June 7,

1999 requiring respondent to remit the amount of P510.00 to complete the docket and other

fees. Respondent complied, but due to inadvertence, the amount remitted lacked the amount

of P10.00, thus, the CA in a Resolution dated November 22, 1999, considered the appeal

abandoned pursuant to Section 1(c), Rule 50 of the 1997 Rules of Court. Upon respondent’s

motion for reconsideration, the appeal was reinstated on February 22, 2000. Petitioner was

copy-furnished all the resolutions issued by the CA, but petitioner never raised the issue of

incomplete payment of docket fees. In fact, such issue was only raised for the first time in its

Reply filed with us. (EMCOR INCORPORATED v. MA. LOURDES D. SIENES, G.R. No. 152101,

September 8, 2009)

Doctrine of Strained Relationship

To protect the employee’s security of tenure, the Court has emphasized that the doctrine of

“strained relations” should be strictly applied so as not to deprive an illegally dismissed

employee of his right to reinstatement. Every labor dispute almost always results in “strained

relations,” and the phrase cannot be given an overarching interpretation; otherwise, an

unjustly dismissed employee can never be reinstated. The assumption of strained relations

was already debunked by the fact that as early as March 2006 petitioner returned to work for

respondent CCBP, without any antagonism having been reported thus far by any of the parties.

Neither can we sustain the NLRC’s conclusion that petitioner’s position is confidential in

nature. Receipt of proceeds from sales of respondent CCBP’s products does not make

petitioner a confidential employee. A confidential employee is one who (1) assists or acts in a

confidential capacity, in regard to (2) persons who formulate, determine, and effectuate

management policies specifically in the field of labor relations. Verily, petitioner’s job as a

salesman does not fall under this qualification. (ERWIN H. REYES v. NATIONAL LABOR

RELATIONS COMMISSION, G.R. No. 180551, February 10, 2009)

In the present case, reinstatement is no longer feasible because of the strained relations

between the petitioners and the respondent. Time and again, this Court has recognized that

strained relations between the employer and employee is an exception to the rule requiring

actual reinstatement for illegally dismissed employees for the practical reason that the already

existing antagonism will only fester and deteriorate, and will only worsen with possible adverse

effects on the parties, if we shall compel reinstatement; thus, the use of a viable substitute

that protects the interests of both parties while ensuring that the law is respected. (CRC

AGRICULTURAL TRADING and ROLANDO B. CATINDIG v. NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 177664, December 23, 2009)

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. (REYNALDO G.

CABIGTING v. SAN MIGUEL FOODS, INC, G.R. No. 167706, November 5, 2009)

Downsizing Scheme

This, in turn, gives rise to another question: Does the implementation of the downsizing

scheme preclude petitioner from availing the services of contractual and agency-hired

employees?

In Asian Alcohol Corporation v. National Labor Relations Commission, we answered in the

negative. We said:

In any event, we have held that an employer’s good faith in implementing a redundancy

program is not necessarily destroyed by availment of the services of an independent

contractor to replace the services of the terminated employees. We have previously ruled that

the reduction of the number of workers in a company made necessary by the introduction of

the services of an independent contractor is justified when the latter is undertaken in order to

effectuate more economic and efficient methods of production. In the case at bar, private

respondent failed to proffer any proof that the management acted in a malicious or arbitrary

manner in engaging the services of an independent contractor to operate the Laura wells.

Absent such proof, the Court has no basis to interfere with the bona fide decision of

management to effect more economic and efficient methods of production.

With petitioner’s downsizing scheme being valid, and the availment of contractual and agency-

hired employees legal, the strike staged by officers and members of respondent Union is,

perforce, illegal. (HOTEL ENTERPRISES OF THE PHILIPPINES, INC. (HEPI), owner of Hyatt

Regency Manila, v. SAMAHAN NG MGA MANGGAGAWA SA HYATT-NATIONAL UNION OF

WORKERS IN THE HOTEL AND RESTAURANT AND ALLIED INDUSTRIES (SAMASAH-NUWHRAIN),

G.R. No. 165756, June 5, 2009)

Due Process

It is well settled that the basic requirement of notice and hearing in termination cases is for the

employer to inform the employee of the specific charges against him and to hear his side and

defenses. This does not, however, mean a full adversarial proceeding. The parties may be

heard through pleadings, written explanations, position papers, memorandum or oral

argument. In all of these instances, the employer plays an active role by providing the

employee with the opportunity to present his side and answer the charges in substantial

compliance with due process.( ROMEO N. VENTURA, vs. COURT OF APPEALS, NATIONAL LABOR

RELATIONS COMMISSION, GENUINO ICE CO., INC., and HECTOR GENUINO, G.R. No. 182570,

January 27, 2009)

In the dismissal of employees, it has been consistently held that the twin requirements of

notice and hearing are essential elements of due process. Article 277 (b) of the Labor Code

and Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code require the

employer to furnish the employee with two written notices, to wit: (1) a written notice served

on the employee specifying the ground or grounds for termination, and giving to said

employee reasonable opportunity within which to explain his side; and (2) a written notice of

termination served on the employee indicating that upon due consideration of all the

circumstances, grounds have been established to justify his termination. The first notice which

may be considered as the proper charge, serves to apprise the employee of the particular acts

or omissions for which his dismissal is sought. The second notice on the other hand seeks to

inform the employee of the employer’s decision to dismiss him. With regard to the requirement

of a hearing, it should be stressed that the essence of due process lies simply in an opportunity

to be heard, and not that an actual hearing should always and indispensably be held.

(PHILIPPINE PASAY CHUNG HUA ACADEMY and EMILIO CHING v. SERVANDO L. EDPAN, G.R. No.

168876, SERVANDO L. EDPAN v. PHILIPPINE PASAY CHUNG HUA ACADEMY and EMILIO CHING)

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code

should not be taken to mean that holding an actual hearing or conference is a condition sine

qua non for compliance with the due process requirement in termination of employment. The

test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been

a formal pretermination confrontation between the employer and the employee. The “ample

opportunity to be heard” standard is neither synonymous nor similar to a formal hearing. To

confine the employee’s right to be heard to a solitary form narrows down that right. It deprives

him of other equally effective forms of adducing evidence in his defense. Certainly, such an

exclusivist and absolutist interpretation is overly restrictive. The “very nature of due process

negates any concept of inflexible procedures universally applicable to every imaginable

situation.” (FELIX B. PEREZ and AMANTE G. DORIA vs. PHILIPPINE TELEGRAPH AND TELEPHONE

COMPANY and JOSE LUIS SANTIAGO, G.R. No. 152048, April 7, 2009)

Also, to effectively dismiss an employee for abandonment, the employer must comply with the

due process requirement of sending notices to the employee. In Brahm Industries, Inc. v.

NLRC, we ruled that this requirement is not a mere formality that may be dispensed with at

will. Its disregard is a matter of serious concern since it constitutes a safeguard of the highest

order in response to man’s innate sense of justice. Petitioner was not able to send the

necessary notice requirement to Eleonor. Petitioner’s belated claim that it was not able to send

the notice of infraction prior to the filing of the illegal dismissal case cannot simply

unacceptable. Based on the foregoing, Eleonor did not abandon her work. (SOUTH DAVAO

DEVELOPMENT COMPANY, INC. (NOW SODACO AGRICULTURAL CORPORATION) AND/OR

MALONE PACQUIAO AND VICTOR A. CONSUNJI, v. SERGIO L. GAMO, et. al., G.R. No. 171814,

May 8, 2009)

The case of Agabon v. NLRC, et al. applies to the case at bar. In Agabon, the dismissal was

found by the Court to be based on a just cause because the employee abandoned his work.

But it also found that the employer did not follow the notice requirement demanded by due

process. It ruled that this violation of due process on the part of the employer did not nullify

the dismissal, or render it illegal, or ineffectual. Nonetheless, the employer was ordered to

indemnify the employee for the violation of his right to due process. It further held that the

penalty should be in the nature of indemnification, in the form of nominal damages and should

depend on the facts of each case, taking into special consideration the gravity of the due

process violation of the employer. The amount of such damages is addressed to the sound

discretion of the court, considering the relevant circumstances. Thus, in Agabon, the Court

ordered the employer to pay the employee nominal damages in the amount of P30,000.00.

(MANTLE TRADING SERVICES, INCORPORATED AND/OR BOBBY DEL ROSARIO v. NATIONAL

LABOR RELATIONS COMMISSION and PABLO S. MADRIAGA,G.R. No. 166705,July 28,2009)

Had Metro’s cause for terminating Aman rested on a just or authorized cause yet failed to

observe procedural requirements, then Metro will only be liable for nominal damages worth

P30,000. However, such is not the case here. We hold that Aman’s dismissal not only failed to

observe procedural requirements, it also lacked an authorized cause. Article 279 of the Labor

Code mandates that the employee who is illegally dismissed and not given due process 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. (METRO

CONSTRUCTION, INC. V. ROGELIO AMAN, G.R. No. 168324, October 12, 2009)

In the present case, Jose, Jr. was not given any written notice about his dismissal. However, the

propriety of Jose, Jr.’s dismissal is not affected by the lack of written notices. When the

dismissal is for just cause, the lack of due process does not render the dismissal ineffectual but

merely gives rise to the payment of P30,000 in nominal damages. (BERNARDO B. JOSE, JR. v.

MICHAELMAR PHILS., INC., G.R. No. 169606, November 27, 2009)

In cases of abandonment of work, the ground alleged by respondents, notice shall be served at

the worker’s last known address. Here, no such notice was served to petitioner. Hence, for

breach of the due process requirements, respondents shall also be liable in the amount of

P30,000 as indemnity in the form of nominal damages. (CONCEPCION FAELDONIA v. TONG YAK

GROCERIES,JAYME GO and MERLITA GO,G.R. No. 182499, October 2, 2009)

The petitioners clearly failed to comply with the two-notice requirement. Nothing in the records

shows that the petitioners ever sent the respondent a written notice informing him of the

ground for which his dismissal was sought. It does not also appear that the petitioners held a

hearing where the respondent was given the opportunity to answer the charges of

abandonment. Neither did the petitioners send a written notice to the respondent informing

the latter that his service had been terminated and the reasons for the termination of

employment. Under these facts, the respondent’s dismissal was illegal. (CRC AGRICULTURAL

TRADING and ROLANDO B. CATINDIG v. NATIONAL LABOR RELATIONS COMMISSION, G.R. No.

177664, December 23, 2009)

Employer-Employee Relationship

In order to determine the existence of an employer-employee relationship, the Court has

frequently applied the four-fold test: (1) the selection and engagement of the employee; (2)

the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s

conduct, or the so called “control test,” which is considered the most important element. From

the time they were hired by petitioner corporation up to the time that they were reassigned to

work under Gamo’s supervision, their status as petitioner corporation’s employees did not

cease. Likewise, payment of their wages was merely coursed through Gamo. As to the most

determinative test―the power of control, it is sufficient that the power to control the manner

of doing the work exists, it does not require the actual exercise of such power. In this case, it

was in the exercise of its power of control when petitioner corporation transferred the copra

workers from their previous assignments to work as copraceros. It was also in the exercise of

the same power that petitioner corporation put Gamo in charge of the copra workers although

under a different payment scheme. Thus, it is clear that an employer-employee relationship

has existed between petitioner corporation and respondents since the beginning and such

relationship did not cease despite their reassignments and the change of payment scheme.

(SOUTH DAVAO DEVELOPMENT COMPANY, INC. (NOW SODACO AGRICULTURAL CORPORATION)

AND/OR MALONE PACQUIAO AND VICTOR A. CONSUNJI, v. SERGIO L. GAMO, et. al., G.R. No.

171814, May 8, 2009)

What is more, respondent PDMC enrolled petitioner Gomez with the Social Security System,

the Medicare, and the Pag-Ibig Fund. It even issued certifications dated October 10, 2008,

stating that Gomez was a permanent employee and that the company had remitted combined

contributions during her tenure. The company also made her a member of the PDMC’s savings

and provident plan and its retirement plan. It grouped her with the managers covered by the

company’s group hospitalization insurance. Likewise, she underwent regular employee

performance appraisals, purchased stocks through the employee stock option plan, and was

entitled to vacation and emergency leaves. PDMC even withheld taxes on her salary and

declared her as an employee in the official Bureau of Internal Revenue forms. These are all

indicia of an employer-employee relationship which respondent PDMC failed to refute. (GLORIA

V. GOMEZ v. PNOC DEVELOPMENT AND MANAGEMENT CORPORATION, G.R. No. 174044,

November 27, 2009)

• Control Test

In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that

respondents were not independent contractors, but employees of petitioner. In determining

the existence of an employer-employee relationship between the parties, both the Labor

Arbiter and the NLRC examined and weighed the circumstances against the four-fold test

which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the

power to dismiss, and (4) the power to control the employees’ conduct, or the so-called

“control test.” Of the four, the power of control is the most important element. More

importantly, the control test merely calls for the existence of the right to control, and not

necessarily the exercise thereof. (DEALCO FARMS, INC., vs. NATIONAL LABOR RELATIONS

COMMISSION (5th DIVISION), G.R. No. 153192 January 30, 2009)

In this regard, it has not escaped the notice of the Court that the operations of the hotel itself

do not cease with the end of each event or function and that there is an ever present need for

individuals to perform certain tasks necessary in the petitioner’s business. Thus, although the

tasks themselves may vary, the need for sufficient manpower to carry them out does not. In

any event, as borne out by the findings of the NLRC, the petitioner determines the nature of

the tasks to be performed by the private respondent, in the process exercising control.

(MARANAW HOTELS AND RESORT CORP vs COURT OF APPEALS, SHERYL OABEL AND MANILA

RESOURCE DEVELOPMENT CORP., G.R. No. 149660, January 20, 2009)

Contrary to petitioners’ contention, the various office directives issued by Shangri-la’s officers

do not imply that it is Shangri-la’s management and not respondent doctor who exercises

control over them or that Shangri-la has control over how the doctor and the nurses perform

their work. The letter addressed to respondent doctor dated February 7, 2003 from a certain

Tata L. Reyes giving instructions regarding the replenishment of emergency kits is, at most,

administrative in nature, related as it is to safety matters; while the letter dated May 17, 2004

from Shangri-la’s Assistant Financial Controller, Lotlot Dagat, forbidding the clinic from

receiving cash payments from the resort’s guests is a matter of financial policy in order to

ensure proper sharing of the proceeds, considering that Shangri-la and respondent doctor

share in the guests’ payments for medical services rendered. In fine, as Shangri-la does not

control how the work should be performed by petitioners, it is not petitioners’ employer.

(JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO v. SHANGRI-LA’S MACTAN ISLAND RESORT

and DR. JESSICA J.R. PEPITO, G.R. No. 178827, March 4, 2009)

To reiterate, while respondent and SSCP no longer had any legal relationship with the

termination of the Agreement, petitioners remained at their post securing the premises of

respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes

no sense, and the denials proffered by respondent do not shed any light to the situation. It is

but reasonable to conclude that, with the behest and, presumably, directive of respondent,

petitioners continued with their services. Evidently, such are indicia of control that respondent

exercised over petitioners. (RAUL G. LOCSIN and EDDIE B. TOMAQUIN v. PHILIPPINE LONG

DISTANCE TELEPHONE COMPANY, G.R. No. 185251, October 2, 2009)

Equity

While the Court commiserates with the plight of Tirazona, who has recently manifested that

she has since been suffering from her poor health condition, the Court cannot grant her plea

for the award of financial benefits based solely on this unfortunate circumstance. For all its

conceded merit, equity is available only in the absence of law and not as its replacement.

Equity as an exceptional extenuating circumstance does not favor, nor may it be used to

reward, the indolent or the wrongdoer, for that matter. This Court will not allow a party, in the

guise of equity, to benefit from its own fault. (MA. WENELITA S. TIRAZONA, vs. PHILIPPINE EDS

TECHNO- SERVICE INC. (PET INC.) AND/OR KEN KUBOTA, MAMORU ONO and JUNICHI HIROSE,

G.R. No. 169712, January 20, 2009)

Estoppel

Estoppel, an equitable principle rooted on natural justice, prevents a person from rejecting his

previous acts and representations to the prejudice of others who have relied on them. This

principle of law applies to corporations as well. The PDMC in this case is estopped from

claiming that despite all the appearances of regular employment that it weaved around

petitioner Gomez’s position it must have technically hired her only as a corporate officer. The

board and its officers made her stay on and work with the company for years under the belief

that she held a regular managerial position. (GLORIA V. GOMEZ v. PNOC DEVELOPMENT AND

MANAGEMENT CORPORATION, G.R. No. 174044, November 27, 2009)

Evidence

It may be true that the NBI agents’ affidavit did not directly implicate petitioners in the

scheme. However, their co-employees Gimena, Welsh and Derupe, who had personal

knowledge of petitioners’ activities, narrated in their affidavits the nature, dates and time of

their (petitioners’) participation. Petitioners did not refute these sworn statements. Neither did

they explain why their former colleagues would unjustly and falsely testify against them even

if they had the opportunity to defend themselves during the administrative investigations

conducted by respondent. These pieces of evidence, when taken together, constituted

substantial evidence to prove petitioners’ culpability. It is of no moment that they were

acquitted in the criminal case. Petitioners’ infractions were willful and serious, thus their

dismissal was proper under the circumstances. (RENITA DEL ROSARIO, et al., v. MAKATI

CINEMA SQUARE CORPORATION, G.R. No. 170014, July 3, 2009)

It is common practice for companies to provide identification cards to individuals not only as a

security measure, but more importantly to identify the bearers thereof as bona fide employees

of the firm or institution that issued them. The provision of company-issued identification cards

and uniforms to respondents, aside from their inclusion in MCI’s summary payroll, indubitably

constitutes substantial evidence sufficient to support only one conclusion: that respondents

were indeed employees of MCI. (MASONIC CONTRACTOR, INC. v. MAGDALENA MADJOS , et al.,

G.R. No. 185094, November 25, 2009)

• Proof of Mailing

In this case and in like manner, while a postmaster’s certification is usually sufficient proof of

mailing, its evidentiary value must be differentiated from the situation presently before us

where the postmaster’s certification is intended to prove that the post office had committed a

mistake in placing the date of receipt on the registry return card. In other words, the

Postmaster’s certification is offered to overcome the presumption that the Malate Post Office

regularly performed its official duties when the registry return card was filled up by the

recipient of the labor arbiter’s decision with November 21, 1999 as the date of receipt. We find

it significant that both the petitioner and the postmaster’s certification failed to show that the

Malate Post Office committed an inadvertence in handling the registry return card so that a

corrective certification from the Postmaster was necessary. In the absence of such justification

for the certification, we are compelled to deny it of any evidentiary value for the purpose it was

submitted. (EUREKA PERSONNEL & MANAGEMENT SERVICES, INC. v. EDUARDO VALENCIA, G.R.

No. 159358, July 15, 2009)

Execution

We would like to stress the settled rule that the power of the court in executing judgments

extends only to properties unquestionably belonging to the judgment debtor alone. To be sure,

one man’s goods shall not be sold for another man’s debts. A sheriff is not authorized to attach

or levy on property not belonging to the judgment debtor, and even incurs liability if he

wrongfully levies upon the property of a third person. (PANTRANCO EMPLOYEES ASSOCIATION

(PEA-PTGWO) and PANTRANCO RETRENCHED EMPLOYEES ASSOCIATION (PANREA) v.

NATIONAL LABOR RELATIONS COMMISSION (NLRC), G.R. No. 170689, G.R. No. 170705)

Finality of Factual Findings

The well-entrenched rule is that factual findings of administrative or quasi-judicial bodies,

which are deemed to have acquired expertise in matters within their respective jurisdictions,

are generally accorded not only respect but even finality, and bind the Court when supported

by substantial evidence. Section 5, Rule 133 defines substantial evidence as “that amount of

relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.”

(DEALCO FARMS, INC., vs. NATIONAL LABOR RELATIONS COMMISSION (5th DIVISION), G.R. No.

153192 January 30, 2009)

Lastly, in its assailed decision, the CA affirmed the ruling of the NLRC and adopted as its own

the latter’s factual findings. Long-established is the doctrine that findings of fact of quasi-

judicial bodies like the NLRC are accorded respect, even finality, if supported by substantial

evidence. When passed upon and upheld by the CA, they are binding and conclusive upon the

Supreme Court and will not normally be disturbed. Though this doctrine is not without

exceptions, the Court finds that none are applicable to the present case. ROMEO N. VENTURA,

vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, GENUINO ICE CO., INC.,

and HECTOR GENUINO, G.R. No. 182570, January 27, 2009)

• Exception

The appellate court predicated its reversal of the NLRC decision that petitioners were illegally

dismissed on petitioners’ supposed abandonment of their jobs, and justified the work

rotation/reduction scheme adopted by respondent as a valid exercise of management

prerogative in light of respondent’s business losses. (FE LA ROSA et. al., v. AMBASSADOR

HOTEL,G.R. No. 177059, March 13, 2009)

The issue of the reasonableness of attorney’s fees is a question of fact. Well-settled is the rule

that conclusions and findings of fact of the CA are entitled to great weight on appeal and will

not be disturbed except for strong and cogent reasons which are absent in the case at bench.

The findings of the CA, which are supported by substantial evidence, are almost beyond the

power of review by the Supreme Court. (EVANGELINA MASMUD (as substitute complainant for

ALEXANDER J. MASMUD) v. NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 183385,

February 13, 2009)

Petitioner’s argument that the CA erred and abused its discretion in reversing the findings of

the Labor Arbiter and the NLRC, as it is the court’s policy of non-interference in the exercise of

the adjudicatory functions of the administrative bodies, is devoid of merit. We agree with

petitioner that factual findings of quasi-judicial and administrative bodies are accorded great

respect and even finality by the courts. However, this rule is not absolute. When there is a

showing that the factual findings of administrative bodies were arrived at arbitrarily or in

disregard of the evidence on record, they may be examined by the courts. The CA can grant

the petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a

factual finding not supported by substantial evidence. It is within the jurisdiction of the CA,

whose jurisdiction over labor cases has been expanded to review the findings of the NLRC. In R

& E Transport, Inc. v. Latag, we held:

The power of the CA to review NLRC decisions via a Rule 65 petition is now a settled issue. As

early as St. Martin Funeral Homes v. NLRC, we have definitively ruled that the proper remedy

to ask for the review of a decision of the NLRC is a special civil action for certiorari under Rule

65 of the Rules of Court, and that such petition should be filed with the CA in strict observance

of the doctrine on the hierarchy of courts. Moreover, it has already been explained that under

Section 9 of Batas Pambansa (BP) 129, as amended by Republic Act 7902, the CA – pursuant to

the exercise of its original jurisdiction over petitions for certiorari – was specifically given the

power to pass upon the evidence, if and when necessary, to resolve factual issues.(EMCOR

INCORPORATED v. MA. LOURDES D. SIENES, G.R. No. 152101, September 8, 2009)

Forum Shopping

On the part of Mr. Gumarang, knowing fully well that he was no longer the representative of

the NCTEA, why did he not inform both the Court of Appeals and the Supreme Court of such

fact when he filed the petitions? Instead, he claimed to be the duly authorized representative

of the NCTEA which he was not. His omission and misrepresentation are clear indications of

bad faith of which this Court does not approve. He should have known that by including NCTEA

as petitioner and signing as its representative, he should have had the authority to do so. This,

he did not possess. When he alone signed on his behalf and that of the NCTEA, not once but

twice, he flagrantly violated the rule on the filing of a certificate of non-forum shopping.

(NORTHEASTERN COLLEGE TEACHERS AND EMPLOYEES ASSOCIATION vs. NORTHEASTERN

COLLEGE, INC., G.R. No. 152923, January 19, 2009)

Without the required authority from the NCTEA, Mr. Gumarang cannot represent the NCTEA. As

explained above, if there are several petitioners, the failure of one to sign the certificate of

non-forum shopping is a deficiency which is a ground for the dismissal of the petition. In the

case before us, there being two petitioners – NCTEA and Mr. Gumarang – both of them should

sign the certificate against forum shopping. Since there was only one signatory, the

requirement on the filing of the certificate against forum shopping has not been complied with.

As in the Court of Appeals, Mr. Gumarang failed to show why the duly authorized

representative of the NCTEA was unable to sign the certification, and to convince this Court

that the outright dismissal of the petition would defeat the administration of justice.

(NORTHEASTERN COLLEGE TEACHERS AND EMPLOYEES ASSOCIATION vs. NORTHEASTERN

COLLEGE, INC., G.R. No. 152923, January 19, 2009)

Fuentebella and Rolling Hills Memorial Park v. Castro, on the requirement of a certification

against forum shopping, explains:

The reason for this is that the principal party has actual knowledge whether a petition has

previously been filed involving the same case or substantially the same issues. If, for any

reason, the principal party cannot sign the petition, the one signing on his behalf must have

been duly authorized.

. . . Where the petitioner is a corporation, the certification against forum shopping should be

signed by its duly authorized director or representative …[I]f the real party-in-interest is a

corporate body, an officer of the corporation can sign the certification against forum shopping

as long as he is authorized by a resolution of its board of directors.

x x x x

A certification without the proper authorization is defective and constitutes a valid cause for

the dismissal of the petition. (Citations omitted; emphasis, italics and underscoring supplied)

Petitioner’s discourse on relaxation of technical rules of procedure in the interest of substantial

justice does not impress. While there have been instances when the Court dispensed with

technicalities on the basis of special circumstances or compelling reasons, there is no such

circumstance or reason in the present case which warrants the liberal application of technical

rules. (EAGLE STAR SECURITY SERVICES, INC. v. BONIFACIO L. MIRANDO, G.R. No. 179512, July

30, 2009)

Grave Abuse of Discretion

The Regional Director fully relied on the self-serving allegations of respondent and

misinterpreted the documents presented as evidence by respondent. To make matters worse,

DOLE denied petitioner’s appeal based solely on petitioner’s alleged failure to file a cash or

surety bond, without any discussion on the merits of the case. Since the petition for certiorari

before the Court of Appeals sought the reversal of the two aforesaid orders, the appellate court

necessarily had to examine the evidence anew to determine whether the conclusions of the

DOLE were supported by the evidence presented. It appears, however, that the Court of

Appeals did not even review the assailed orders and focused instead on a general discussion of

due process and the jurisdiction of the Regional Director. Had the appellate court truly

reviewed the records of the case, it would have seen that there existed valid and sufficient

grounds for finding grave abuse of discretion on the part of the DOLE Secretary as well the

Regional Director. In ruling and acting as it did, the Court finds that the Court of Appeals may

be properly subjected to its certiorari jurisdiction. After all, this Court has previously ruled that

the extraordinary writ of certiorari will lie if it is satisfactorily established that the tribunal had

acted capriciously and whimsically in total disregard of evidence material to or even decisive

of the controversy. (PEOPLE’S BROADCASTING(BOMBO RADYO PHILS., INC.) vs. THE

SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR,

DOLE REGION VII, and JANDELEON JUEZAN, G.R. No. 179652, May 8, 2009)

Hearing

A hearing means that a party should be given a chance to adduce his evidence to support his

side of the case and that the evidence should be taken into account in the adjudication of the

controversy. To be heard” does not mean verbal argumentation alone inasmuch as one may

be heard just as effectively through written explanations, submissions or pleadings. Therefore,

while the phrase “ample opportunity to be heard” may in fact include an actual hearing, it is

not limited to a formal hearing only. In other words, the existence of an actual, formal “trial-

type” hearing, although preferred, is not absolutely necessary to satisfy the employee’s right

to be heard. (FELIX B. PEREZ and AMANTE G. DORIA vs. PHILIPPINE TELEGRAPH AND

TELEPHONE COMPANY and JOSE LUIS SANTIAGO, G.R. No. 152048, April 7, 2009)

• Dialogue not Tantamount to Hearing

Policarpio’s allegations are self-serving. Except for her claim as stated in the respondent’s

Position Paper, nowhere from the records can We find that Bergante and Inguillo were

accorded the opportunity to present evidence in support of their defenses. Policarpio relied

heavily on the “Petisyon” of FPSILU. She failed to convince Us that during the dialogue, she

was able to ascertain the validity of the charges mentioned in the “Petisyon.” In her futile

attempt to prove compliance with the procedural requirement, she reiterated that the

objective of the dialogue was to provide the employees “the opportunity to receive the act of

grace of FPSI by giving them an amount equivalent to one-half (½) month of their salary for

every year of service.” We are not convinced. We cannot even consider the demand and

counter-offer for the payment of the employees as an amicable settlement between the parties

because what took place was merely a discussion only of the amount which the employees are

willing to accept and the amount which the respondents are willing to give. Such non-

compliance is also corroborated by Bergante and Inguillo in their pleadings denouncing their

unjustified dismissal. In fine, We hold that the dialogue is not tantamount to the hearing or

conference prescribed by law. (Herminigildo Inguillo and Zenaida Bergante v. First Philippine

Scales, Inc. and/or Amparo Policarpio, Manager, G.R. No. 165407, June 5, 2009

Inchoate Right

Again, the contention is bereft of merit. While PNB has an apparent interest in Mega Prime’s

assets being the creditor of the latter for a substantial amount, its interest remains inchoate

and has not yet ripened into a present substantial interest, which would give it the standing to

maintain an action involving the subject properties. As aptly observed by the Labor Arbiter,

PNB only has an inchoate right to the properties of Mega Prime in case the latter would not be

able to pay its indebtedness. This is especially true in the instant case, as the debt being

claimed by PNB is secured by the accessory contract of pledge of the entire stockholdings of

Mega Prime to PNB-Madecor. (PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) and

PANTRANCO RETRENCHED EMPLOYEES ASSOCIATION (PANREA) v. NATIONAL LABOR

RELATIONS COMMISSION (NLRC), G.R. No. 170689, G.R. No. 170705)

Independent Contractor

The existence of an independent and permissible contractor relationship is generally

established by considering the following determinants: whether the contractor is 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 of a specified piece of work;

the control and supervision of the work to another; the employer’s power with respect to the

hiring, firing and payment of the contractor’s workers; the control of the premises; the duty to

supply the premises, tools, appliances, materials and labor; and the mode, manner and terms

of payment. (JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO v. SHANGRI-LA’S

In sum, there existed no employer-employee relationship between the parties. De Raedt is an

independent contractor, who was engaged by SGV to render services to SGV’s client TMI, and

ultimately to DA on the CECAP project, regarding matters in the field of her special knowledge

and training for a specific period of time. Unlike an ordinary employee, De Raedt received

retainer fees and benefits such as housing and subsistence allowances and medical insurance.

De Raedt’s services could be terminated on the ground of end of contract between the DA and

TMI, and not on grounds under labor laws. Though the end of the contract between the DA and

TMI was not the ground for the withdrawal of De Raedt from the CECAP, De Raedt was

disengaged from the project upon the instruction of SGV’s client, TMI. Most important of all,

SGV did not exercise control over the means and methods by which De Raedt performed her

duties as Sociologist. SGV did impose rules on De Raedt, but these were necessary to ensure

SGV’s faithful compliance with the terms and conditions of the Sub-Consultancy Agreement it

entered into with TMI. (SYCIP, GORRES, VELAYO & COMPANY, v. CAROL DE RAEDT, G.R. No.

161366, June 16, 2009)

Insubordination

Aside from the findings of sexual abuse, petitioner is also guilty of insubordination. Records

show that after filing a case for constructive dismissal on April 13, 1994 against the

respondent, petitioner continued working and performing his functions with the respondent

company until his termination on May 19, 1994. However, despite receipt of the various

notices sent by respondent to him to report to the office and to submit written explanations

relative to his failure to follow instructions, the records of the case are bereft of showing that

he filed any written explanation to any of these notices. His continued failure to carry out the

reasonable oral or written instructions of his supervisor is punishable by insubordination, which

is provided under Rule IV.5.a of the Operational Instruction OI-A-AP25, Work Rules. While

petitioner cannot be faulted in believing that respondent constructively dismissed him from

work, he was still, strictly speaking, respondent’s employee when he received the written

notices. As an employee, he should have at least responded thereto, as instructed. (RAMON B.

FORMANTES v. DUNCAN PHARMACEUTICALS, PHILS., INC., G.R. No. 170661, December 4, 2009)

Interpretation of Doubt

We reject petitioner’s self-serving contention. Having failed to substantiate its allegation on the

relationship between the parties, we stick to the settled rule in controversies between a

laborer and his master that doubts reasonably arising from the evidence should be resolved in

the former’s favor. The policy is reflected in no less than the Constitution, Labor Code and Civil

Code. (DEALCO FARMS, INC., vs. NATIONAL LABOR RELATIONS COMMISSION (5th DIVISION),

G.R. No. 153192 January 30, 2009)

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. (BECMEN SERVICE EXPORTER v. SPOUSES SIMPLICIO and

MILA CUARESMA (for and in behalf oftheir daughter, Jasmin G. Cuaresma), WHITE FALCON

SERVICES, INC. and JAIME ORTIZ (President,White Falcon Services, Inc.) AND PROMOTION,

INC.,G.R. Nos. 182978-79, G.R. Nos. 184298-99, April 7, 2009)

Job contracting or Subcontracting

Permissible job contracting or subcontracting refers to an arrangement whereby a principal

agrees to farm out with a contractor or subcontractor the performance 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. Under

this arrangement, the following conditions must be met: (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; (b) the contractor has substantial capital or investment; and (c) the

agreement between the principal and contractor or subcontractor assures the contractual

employees’ entitlement to all labor and occupational safety and health standards, free

exercise of the right to self-organization, security of tenure, and social welfare benefits. (RAMY

GALLEGO v. BAYER PHILIPPINES, INC., DANPIN GUILLERMO, PRODUCT IMAGE MARKETING, INC.,

and EDGARDO BERGONIA, G.R. No. 179807, July 31, 2009)

Joint Venture

To the Court, the Contract between the Cooperative and DFI, far from being a job contracting

arrangement, is in essence a business partnership that partakes of the nature of a joint

venture. The rules on job contracting are, therefore, inapposite. The Court may not alter the

intention of the contracting parties as gleaned from their stipulations without violating the

autonomy of contracts principle under Article 1306 of the Civil Code which gives the

contracting parties the utmost liberality and freedom to establish such stipulations, clauses,

terms and conditions as they may deem convenient, provided they are not contrary to law,

morals, good custom, public order or public policy. (OLDARICO S. TRAVEÑO, et al v.

BOBONGON BANANA GROWERS MULTI-PURPOSE COOPERATIVE, TIMOG AGRICULTURAL

CORPORATION, DIAMOND FARMS, INC., and DOLE ASIA PHILIPPINES, G.R. No. 164205,

September 3, 2009)

Judgment

We disfavor delay in the enforcement of the labor arbiter’s decision. Once a judgment

becomes final and executory, the prevailing party should not be denied the fruits of his victory

by some subterfuge devised by the losing party. Final and executory judgments can neither be

amended nor altered except for correction of clerical errors, even if the purpose is to correct

erroneous conclusions of fact or of law. Trial and execution proceedings constitute one whole

action or suit such that a case in which execution has been issued is regarded as still pending

so that all proceedings in the execution are proceedings in the suit. (C-E CONSTRUCTION

CORPORATION v. NATIONAL LABOR RELATIONS, G.R. No. 180188, March 25, 2009)

Jurisdiction

It is a settled rule that jurisdiction over the subject matter is conferred by law. The

determination of the rights of a director and corporate officer dismissed from his employment

as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute

subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it

is not the NLRC but the regular courts which have jurisdiction over the present case. (LESLIE

OKOL v. SLIMMERS WORLD INTERNATIONAL, BEHAVIOR MODIFICATIONS, INC., G.R. No.

160146, December 11, 2009)

In sum, when the labor arbiter proceeded with the consolidated cases despite the SEC

suspension order, he exceeded his jurisdiction to hear and decide illegal dismissal cases and

the CA correctly reversed his June 16, 2004 order. (GINA M. TIANGCO, et al, v. UNIWIDE SALES

WAREHOUSE CLUB, INC., G.R. No. 168697, December 14, 2009)

• Intra-Corporate Dispute

Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he argues that

the Labor Arbiter has jurisdiction over the case. One of the corporate officers provided for in

the by-laws of ETPI is the Vice-President. It can be gathered from Atty. Garcia’s complaint-

affidavit that he was Vice President for Business Support Services and Human Resource

Departments of ETPI when his employment was terminated effective 16 April 2000 . It is

therefore clear from the by-laws and from Atty. Garcia himself that he is a corporate officer.

One who is included in the by-laws of a corporation in its roster of corporate officers is an

officer of said corporation and not a mere employee. Being a corporate officer, his removal is

deemed to be an intra-corporate dispute cognizable by the SEC and not by the Labor Arbiter.

(ATTY. VIRGILIO R. GARCIA v. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and ATTY.

SALVADOR C. HIZON, G.R. No. 173115, EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and

ATTY. SALVADOR C. HIZON v. ATTY. VIRGILIO R. GARCIA, G.R. Nos. 173163-64, April 16, 2009)

• Demarcation line Between DOLE’s Prerogative

and NLRC’s Jurisdiction

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 DOLE’s 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). (PEOPLE’S BROADCASTING(BOMBO RADYO PHILS., INC.)

vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL

DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, G.R. No. 179652, May 8, 2009)

In sum, respondent contested the findings of the labor inspector during and after the

inspection and raised issues the resolution of which necessitated the examination of

evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional

Director was divested of jurisdiction and should have endorsed the case to the appropriate

Arbitration Branch of the NLRC. Considering, however, that an illegal dismissal case had been

filed by petitioners wherein the existence or absence of an employer-employee relationship

was also raised, the CA correctly ruled that such endorsement was no longer necessary.

(VICTOR METEORO, et al v. CREATIVE CREATURES, INC., G.R. No. 171275, July 13, 2009)

Labor-only Contractor

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. (COCA-COLA BOTTLERS PHILS., INC v. ALAN M. AGITO, et al., G.R. No.

179546, February 13, 2009)

In a labor-only contract, there are three parties involved: (1) the “labor-only” contractor; (2)

the employee who is ostensibly under the employ of the “labor-only” contractor; and (3) the

principal who is deemed the real employer. Under this scheme, the “labor-only” contractor is

the agent of the principal. Here, Vedali is the “labor-only” contractor; individual respondents

are the employees and petitioner is the principal. The law makes the principal responsible to

the employees of the “labor-only contractor” as if the principal itself directly hired or employed

the employees. (ILIGAN CEMENT CORPORATION v. ILIASCOR EMPLOYEES AND WORKERS

UNION – SOUTHERN PHILIPPINES FEDERATION OF LABOR (IEWU-SPFL), AND ITS OFFICERS AND

MEMBERS, et. al, G.R. No. 158956, April 24, 2009)

Length of Service

Although his nearly two decades of service might generally be considered for some form of

financial assistance to shield him from the effects of his termination, Tomada’s acts reflect a

regrettable lack of concern for his employer. If length of service justifies the mitigation of the

penalty of dismissal, then this Court would be awarding disloyalty, distorting in the process the

meaning of social justice and undermining the efforts of labor to cleanse its ranks of

undesirables. (EDUARDO M. TOMADA, SR. v. RFM CORPORATION-BAKERY FLOUR DIVISION and

JOSE MARIA CONCEPCION III, G.R. No. 163270, September 11, 2009)

Liability of Corporate Officers

However, Article 212(e) of the Labor Code, by itself, does not make a corporate officer

personally liable for the debts of the corporation because Section 31 of the Corporation Code is

still the governing law on personal liability of officers for the debts of the corporation. Section

31 of the Corporation Code provides:

Liability of directors, trustees or officers. — Directors or trustees who willfully and knowingly

vote for or assent to patently unlawful acts of the corporation or who are guilty of gross

negligence or bad faith in directing the affairs of the corporation or acquire any personal or

pecuniary interest in conflict with their duty as such directors, or trustees shall be liable jointly

and severally for all damages resulting therefrom suffered by the corporation, its stockholders

or members and other persons. x x x

There was no showing of David willingly and knowingly voting for or assenting to patently

unlawful acts of the corporation, or that David was guilty of gross negligence or bad faith.

(ARMANDO DAVID v. NATIONAL FEDERATION OF LABOR UNION and MARIVELES APPAREL

CORPORATION, G.R. Nos. 148263 and 148271-72, April 21, 2009)

Liability of General Manager

Lastly, we come to the issue of whether Wiltschek, as the General Manager, should be

personally liable together with M+W Zander. We agree with petitioners that he should not be

made personally liable. The general manager of a corporation should not be made personally

answerable for the payment of an illegally dismissed employee’s monetary claims arising from

the dismissal unless he had acted maliciously or in bad faith in terminating the services of the

employee. The employer corporation has a separate and distinct personality from its officers

who merely act as its agents. (M+W ZANDER PHILIPPINES, INC. and ROLF WILTSCHEK v.

TRINIDAD M. ENRIQUEZ, G.R. No. 169173, June 5, 2009)

Liability of Recruitment Agencies and Foreign-Based Employer

Private employment agencies are held jointly and severally liable with the foreign-based

employer for any violation of the recruitment agreement or contract of employment. This joint

and solidary liability imposed by law against recruitment agencies and foreign employers is

meant to assure the aggrieved worker of immediate and sufficient payment of what is due him.

If the recruitment/placement agency is a juridical being, the corporate officers and directors

and partners as the case may be, shall themselves be jointly and solidarily liable with the

corporation or partnership for the aforesaid claims and damages. (BECMEN SERVICE EXPORTER

v. SPOUSES SIMPLICIO and MILA CUARESMA (for and in behalf oftheir daughter, Jasmin G.

Cuaresma), WHITE FALCON SERVICES, INC. and JAIME ORTIZ (President,White Falcon Services,

Inc.) AND PROMOTION, INC.,G.R. Nos. 182978-79, G.R. Nos. 184298-99, April 7, 2009)

Management Prerogative

As aptly cited by the CA:

The general rule is that the characterization by an employer of an employee’s services as no

longer necessary or sustainable is an exercise of business judgment on the part of the

employer. The wisdom or soundness of such a characterization or decision is not, as a general

rule, subject to discretionary review on the part of the Labor Arbiter, the NLRC and the CA.

Such characterization may, however, be rejected if the same is found to be in violation of the

law or is arbitrary or malicious.

We find no violations of law in the respondent’s actions against the petitioner, nor was the

respondent arbitrary or influenced by malice in terminating the petitioner’s employment for

redundancy. This ground for termination is a legitimate exercise of management prerogative

unless attended to by arbitrariness or by the failure to follow statutory requirements. No

arbitrariness or any violations took place in the present case. (MIRIAM B. ELLECCION VDA. DE

LECCIONES v. NATIONAL LABOR RELATIONS COMMISSION, NNA PHILIPPINES CO., INC. and MS.

KIMI KIMUR A, G.R. No. 184735, September 17, 2009)

• Transfer

In this case, we find no reason to disturb the conclusion of the Court of Appeals that there was

no constructive dismissal. Reassignments made by management pending investigation of

violations of company policies and procedures allegedly committed by an employee fall within

the ambit of management prerogative. The decision of Quantum Foods to transfer Endico

pending investigation was a valid exercise of management prerogative to discipline its

employees. The transfer, while incidental to the charges against Endico, was not meant as a

penalty, but rather as a preventive measure to avoid further loss of sales and the destruction

of Quantum Foods’ image and goodwill. It was not designed to be the culmination of the then

on-going administrative investigation against Endico. (ARNULFO O. ENDICO vs. QUANTUM

FOODS DISTRIBUTION CENTER, G.R. No. 161615, January 30, 2009)

ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s

assertions, a valid exercise of management prerogative. The transfer of employees has been

traditionally among the acts identified as a management prerogative subject only to limitations

found in law, collective bargaining agreement, and general principles of fair play and justice.

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. The free will of management

to conduct its own business affairs to achieve its purpose cannot be denied. (GUALBERTO

AGUANZA v. ASIAN TERMINAL, INC., KEITH JAMES, RICHARD BARCLAY, and ATTY. RODOLFO

CORVITE, G.R. No. 163505, August 14, 2009)

Money Claims

An employee should be compensated for the work he has rendered in accordance with the

minimum wage, and must be appropriately remunerated when he was suffered to work on a

regular holiday during the time he was employed by the petitioner company. As regards the

13th month pay, an employee who was terminated at any time before the time for payment of

the 13th month pay is entitled to this monetary benefit in proportion to the length of time he

worked during the year, reckoned from the time he started working during the calendar year

up to the time of his termination from the service. (MANTLE TRADING SERVICES,

INCORPORATED AND/OR BOBBY DEL ROSARIO v. NATIONAL LABOR RELATIONS COMMISSION

and PABLO S. MADRIAGA,G.R. No. 166705,July 28,2009)

Motion for Reconsideration

In this case, the Decision dated January 18, 2005 of the Secretary of Labor and Employment

was received by petitioner on January 25, 2005. It would have become final and executory on

February 4, 2005, the tenth day from petitioner’s receipt of the decision. However, petitioner

filed a petition for certiorari with the Court of Appeals on even date. Clearly, petitioner availed

of the proper remedy since Department Order No. 40-03 explicitly prohibits the filing of a

motion for reconsideration. Such motion becomes dispensable and not at all necessary. (CHRIS

GARMENTS CORPORATION vs HON. PATRICIA A. STO. TOMAS and CHRIS GARMENTS WORKERS

UNION-PTGWO LOCAL CHAPTER No. 832, G.R. No. 167426, January 12, 2009)

NLRC Rules of Procedure

• Reinstatement Compliance Report

The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the

employer to submit a report of compliance within 10 calendar days from receipt of the Labor

Arbiter’s decision, disobedience to which clearly denotes a refusal to reinstate. The employee

need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall

thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty

in determining the employer’s intransigence in immediately complying with the order.

(JUANITO A. GARCIA and ALBERTO J. DUMAGO vs. PHILIPPINE AIRLINES, INC., G.R. No. 164856,

January 20, 2009)

• Liberal Application of the Rules of Procedure

The Court is unimpressed. The gravity of Maralit’s infraction demands the relaxation of strict

rules of procedure. Strict rules of procedure may be set aside to serve the demands of

substantial justice. Labor cases must be decided according to justice, equity, and the

substantial merits of the controversy. In Azul v. Banco Filipino Savings and Mortgage Bank, the

Court held:

The seriousness of petitioner’s infraction demanded the setting aside of strict rules of

procedure as to allow the determination on the merits of whether he was lawfully dismissed.

As held by the Court, the application of technical rules of procedure may be relaxed to serve

the demands of substantial justice, particularly in labor cases, because they must be decided

according to justice and equity and the substantial merits of the controversy.

There is substantial evidence showing that there was valid cause for the bank to dismiss

petitioner’s employment for loss of trust and confidence. Petitioner was a bank accountant,

which is a position of trust and confidence. The amount involved is significant, almost P4.5

million. (ESTER B. MARALIT v. PHILIPPINE NATIONAL BANK, G.R. No. 163788, August 24, 2009)

Notice of Change of Address

PAL’s argument that its chaotic situation due to its rehabilitation rendered the filing of a notice

of change of address impractical does not merit consideration. Since moving out from its office

at Allied Bank Center, where the NLRC decision was sent, PAL occupied four different office

addresses. Yet these office addresses could be found in the same building, the PAL Center

Building in Makati City. PAL merely moved from one floor to another. To our mind, it would

have been more prudent had PAL informed the NLRC that it has moved from one floor to

another rather than allowed its old address at Allied Bank Center to remain as its official

address. To rule in favor of PAL considering the circumstances in the instant case would negate

the purpose of the rules on completeness of service and the notice of change of address, which

is to place the date of receipt of pleadings, judgments and processes beyond the power of the

party being served to determine at his pleasure. (PHILIPPINE AIRLINES, INC. v. HEIRS OF

BERNARDIN J. ZAMORA, G.R. No. 164267, G.R. No. 166996)

Overseas Employment Contracts

Respondent’s service award for the sixth contract is equivalent only to half-month’s pay plus

the proportionate amount for the additional nine days of service he rendered after one year.

Respondent’s employment contracts expressly stated that his employment ended upon his

departure from work. Each year he departed from work and successively new contracts were

executed before he reported for work anew. His service was not cumulative. Pertinently, in

Brent School, Inc. v. Zamora, we said that “a fixed term is an essential and natural

appurtenance” of overseas employment contracts, as in this case. We also said in that case

that under American law, “[w]here a contract specifies the period of its duration, it terminates

on the expiration of such period. A contract of employment for a definite period terminates by

its own terms at the end of such period.” As it is, Article 72 of the Saudi Labor Law is also of

similar import. It reads:

A labor contract concluded for a specified period shall terminate upon the expiry of its term. If

both parties continue to enforce the contract, thereafter, it shall be considered renewed for an

unspecified period. (LWV CONSTRUCTION CORPORATION v. MARCELO B. DUPO, G.R. No.

172342, July 13, 2009

In Placewell International Services Corporation v. Camote, we held that the subsequently

executed side agreement of an overseas contract worker with the foreign employer is void,

simply because it is against our existing laws, morals and public policy. The subsequent

agreement cannot supersede the terms of the standard employment contract approved by the

POEA. Republic Act No. 8042, commonly known as the Migrant Workers Act of 1995, expressly

prohibits the substitution or alteration, to the prejudice of the worker, of employment contracts

already approved and verified by the Department of Labor and Employment (DOLE) from the

time of the actual signing thereof by the parties up to and including the period of the

expiration of the same, without the approval of DOLE. Since the second employment contract

petitioner Nisda signed with respondent ADAMS was void for not having been sanctioned by

the POEA, then petitioner Nisda’s employment with respondent ADAMS was still governed by

his POEA-SEC until his repatriation to the Philippines on 17 July 2002. (CARLOS N. NISDA v. SEA

SERVE MARITIME AGENCY and KHALIFA A. ALGOSAIBI DIVING AND MARINE SERVICES, G. R. No.

179177, July 23, 2009)

Payment of Wages Pending Appeal

In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter

is entitled to receive wages pending appeal upon reinstatement, which is immediately

executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to

implement the order of reinstatement and it is mandatory on the employer to comply

therewith. (JUANITO A. GARCIA and ALBERTO J. DUMAGO vs. PHILIPPINE AIRLINES, INC., G.R.

No. 164856, January 20, 2009)

Prescriptive Period for Illegal Dismissal

The law fixes the period of time within which petitioner could seek remedy for his illegal

dismissal and for as long as he filed his Complaint within the prescriptive period, he shall be

entitled to the full protection of his right to backwages. In illegal dismissal cases, the employee

concerned is given a period of four years from the time of his illegal dismissal within which to

institute the complaint. This is based on Article 1146 of the New Civil Code which states that

actions based upon an injury to the rights of the plaintiff must be brought within four years.

The four-year prescriptive period shall commence to run only upon the accrual of a cause of

action of the worker. Here, petitioner was dismissed from service on 15 September 2001. He

filed his complaint for illegal dismissal on 14 June 2004. Clearly, then, the instant case was

filed within the prescriptive period. (ERWIN H. REYES v. NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 180551, February 10, 2009)

Prescriptive Period for Money Claims

In the present case, the earliest incident covered by Article 1155 is the extrajudicial demand

which came on January 7, 1995 . As the CA correctly computed, the period for prescription

started to run on January 15, 1993 , and was interrupted on January 7, 1995 . UNILAB only

answered the petitioner’s January 7, 1995 letter on February 26, 1996 , with a categorical

denial of the petitioner’s demand; the running of the prescription period re-started on the date

of this denial, but again stopped again on August 9, 1996 , when the complaint before the

NLRC was filed. Adding all the running periods yields a total of less than three (3) years; hence,

the petitioner seasonably filed her monetary claim when she filed her complaint before the

NLRC. (JANUARIA A. RIVERA v. UNITED LABORATORIES, INC.,G.R. No. 155639 April 22, 2009)

• Money Claims – OFWs

In Cadalin v. POEA’s Administrator, we held that Article 291 covers all money claims from

employer-employee relationship and is broader in scope than claims arising from a specific

law. It is not limited to money claims recoverable under the Labor Code, but applies also to

claims of overseas contract workers. The following ruling in Cadalin v. POEA’s Administrator is

instructive:

First to be determined is whether it is the Bahrain law on prescription of action based on the

Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law.

Article 156 of the Amiri Decree No. 23 of 1976 provides:

“A claim arising out of a contract of employment shall not be actionable after the lapse of one

year from the date of the expiry of the contract” x x x.

As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters,

such as service of process, joinder of actions, period and requisites for appeal, and so forth,

are governed by the laws of the forum. This is true even if the action is based upon a foreign

substantive law (Restatement of the Conflict of Laws, Sec. 685; Salonga, Private International

Law, 131 [1979]).

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be

viewed either as procedural or substantive, depending on the characterization given such a

law.

x x x x

However, the characterization of a statute into a procedural or substantive law becomes

irrelevant when the country of the forum has a “borrowing statute.” Said statute has the

practical effect of treating the foreign statute of limitation as one of substance (Goodrich,

Conflict of Laws, 152-153 [1938]). A “borrowing statute” directs the state of the forum to apply

the foreign statute of limitations to the pending claims based on a foreign law (Siegel,

Conflicts, 183 [1975]). While there are several kinds of “borrowing statutes,” one form

provides that an action barred by the laws of the place where it accrued, will not be enforced

in the forum even though the local statute has not run against it (Goodrich and Scoles, Conflict

of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind. Said Section

provides:

“If by the laws of the state or country where the cause of action arose, the action is barred, it

is also barred in the Philippine Islands.”

Section 48 has not been repealed or amended by the Civil Code of the Philippines. Article 2270

of said Code repealed only those provisions of the Code of Civil Procedure as to which were

inconsistent with it. There is no provision in the Civil Code of the Philippines, which is

inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras, Philippine

Conflict of Laws, 104 [7th ed.]).

In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure]

cannot be enforced ex proprio vigore insofar as it ordains the application in this jurisdiction of

[Article] 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the forum’s public

policy x x x. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as

regards the claims in question would contravene the public policy on the protection to labor.

x x x x

Thus, in our considered view, respondent’s complaint was filed well within the three-year

prescriptive period under Article 291 of our Labor Code. This point, however, has already been

mooted by our finding that respondent’s service award had been paid, albeit the payroll

termed such payment as severance pay. (LWV CONSTRUCTION CORPORATION v. MARCELO B.

DUPO, G.R. No. 172342, July 13, 2009)

Probationary Employee

A probationary employee or probationer is one who is on trial for an employer, during which

the latter determines whether or not he is qualified for permanent employment. The

probationary employment is intended to afford the employer an opportunity to observe the

fitness of a probationary employee while at work, and to ascertain whether he will become an

efficient and productive employee. While the employer observes the fitness, propriety and

efficiency of a probationer to ascertain whether he is qualified for permanent employment, the

probationer, on the other hand, seeks to prove to the employer that he has the qualifications

to meet the reasonable standards for permanent employment. Thus, the word probationary, as

used to describe the period of employment, implies the purpose of the term or period, not its

length. (MAGIS YOUNG ACHIEVERS’ LEARNING CENTER and MRS. VIOLETA T. CARIÑO v.

ADELAIDA . MANALO, G.R. No. 178835, February 13, 2009 )

• Probationary Employment for Academic Personnel

For “academic personnel” in private schools, colleges and universities, probationary

employment is governed by Section 92 of the 1992 Manual of Regulations for Private Schools

(Manual), which reads:

Section 92. Probationary Period. – Subject in all instances to compliance with the Department

and school requirements, the probationary period for academic personnel shall not be more

than three (3) consecutive years of satisfactory service for those in the elementary and

secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the

tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the

tertiary level where collegiate courses are offered on a trimester basis.

(MAGIS YOUNG ACHIEVERS’ LEARNING CENTER and MRS. VIOLETA T. CARIÑO v. ADELAIDA .

MANALO, G.R. No. 178835, February 13, 2009 )

• Security of Tenure of Probationary Employees

As above discussed, probationary employees enjoy security of tenure during the term of their

probationary employment such that they may only be terminated for cause as provided for by

law, or if at the end of the probationary period, the employee failed to meet the reasonable

standards set by the employer at the time of the employee’s engagement. Undeniably,

respondent was hired as a probationary teacher and, as such, it was incumbent upon

petitioner to show by competent evidence that she did not meet the standards set by the

school. This requirement, petitioner failed to discharge. To note, the termination of respondent

was effected by that letter stating that she was being relieved from employment because the

school authorities allegedly decided, as a cost-cutting measure, that the position of “Principal”

was to be abolished. Nowhere in that letter was respondent informed that her performance as

a school teacher was less than satisfactory. (MAGIS YOUNG ACHIEVERS’ LEARNING CENTER

and MRS. VIOLETA T. CARIÑO v. ADELAIDA . MANALO, G.R. No. 178835, February 13, 2009 )

• Termination of Probationary Employee

Under Article 281 of the Labor Code, a probationary employee can be legally dismissed either:

(1) for a just cause; or (2) when he fails to qualify as a regular employee in accordance with

the reasonable standards made known to him by the employer at the start of the employment.

Nonetheless, the power of the employer to terminate the services of an employee on probation

is not without limitations. First, this power must be exercised in accordance with the specific

requirements of the contract. Second, the dissatisfaction on the part of the employer must be

real and in good faith, not feigned so as to circumvent the contract or the law. Third, there

must be no unlawful discrimination in the dismissal. In termination cases, the burden of

proving just or valid cause for dismissing an employee rests on the employer. (DAVAO

CONTRACTORS DEVELOPMENT COOPERATIVE (DACODECO) v. MARILYN A. PASAWA,G.R. No.

172174,July 9, 2009)

Project Employee

While respondent performed tasks that were clearly vital, necessary and indispensable to the

usual business or trade of Alcatel, respondent was not continuously rehired by Alcatel after the

cessation of every project. Records show that respondent was hired by Alcatel from 1988 to

1995 for three projects, namely the PLDT X-5 project, the PLDT X-4 IOT project and the PLDT

1342 project. On 30 April 1988, upon the expiration of respondent’s contract for the PLDT X-4

IOT project, Alcatel did not rehire respondent until 1 February 1991, or after a lapse of 33

months, for the PLDT 1342 project. Alcatel’s continuous rehiring of respondent in various

capacities from February 1991 to December 1995 was done entirely within the framework of

one and the same project ― the PLDT 1342 project. This did not make respondent a regular

employee of Alcatel as respondent was not continuously rehired after the cessation of a

project. Respondent remained a project employee of Alcatel working on the PLDT 1342 project.

(ALCATEL PHILIPPINES, INC., v. RENE R. RELOS, G.R. No. 164315, July 3, 2009)

Protection to Labor

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. (BECMEN SERVICE EXPORTER v. SPOUSES SIMPLICIO and MILA CUARESMA (for and in

behalf oftheir daughter, Jasmin G. Cuaresma), WHITE FALCON SERVICES, INC. and JAIME ORTIZ

(President,White Falcon Services, Inc.) AND PROMOTION, INC.,G.R. Nos. 182978-79, G.R. Nos.

184298-99, April 7, 2009)

Thus, as held in that case, “the right of an employee to be informed of the charges against him

and to reasonable opportunity to present his side in a controversy with either the company or

his own Union is not wiped away by a Union Security Clause or a Union Shop Clause in a

collective bargaining agreement. An employee is entitled to be protected not only from a

company which disregards his rights but also from his own Union, the leadership of which

could yield to the temptation of swift and arbitrary expulsion from membership and mere

dismissal from his job.” (HERMINIGILDO INGUILLO AND ZENAIDA BERGANTE V. FIRST

PHILIPPINE SCALES, INC. and/or AMPARO POLICARPIO, MANAGER, G.R. No. 165407, June 5,

2009)

Question of Law / Fact

There is a question of law if the issue raised is capable of being resolved without need of

reviewing the probative value of the evidence. The resolution of the issue must rest solely on

what the law provides on a given set of circumstances. Once it is clear that the issue invites a

review of the evidence presented, the question posed is one of fact. If the query requires a re-

evaluation of the credibility of witnesses, or the existence or relevance of surrounding

circumstances and their relation to one another, the issue in that query is factual. (GENERAL

SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS vs. COCA-COLA BOTTLERS PHILS.,

INC. (GENERAL SANTOS CITY), THE COURT OF APPEALS and THE NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 178647)

Quitclaim

However, with respect to the second batch of quitclaims signed by 85 of the remaining 160

employees who were terminated following Hyatt’s permanent closure, we hold that these are

valid and binding undertakings. The said documents indicate that the amount received by each

of the employees represents a reasonable settlement of their monetary claims against

petitioner and were even signed in the presence of a DOLE representative. A quitclaim, with

clear and unambiguous contents and executed for a valid consideration received in full by the

employee who signed the same, cannot be later invalidated because its signatory claims that

he was pressured into signing it on account of his dire financial need. When it is shown that the

person executing the waiver did so voluntarily, with full understanding of what he was doing,

and the consideration for the quitclaim is credible and reasonable, the transaction must be

recognized as a valid and binding undertaking. (HOTEL ENTERPRISES OF THE PHILIPPINES, INC.

(HEPI), owner of Hyatt Regency Manila, v. SAMAHAN NG MGA MANGGAGAWA SA HYATT-

NATIONAL UNION OF WORKERS IN THE HOTEL AND RESTAURANT AND ALLIED INDUSTRIES

(SAMASAH-NUWHRAIN), G.R. No. 165756, June 5, 2009)

To excuse petitioners from complying with the terms of their waivers, they must locate their

case within any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the

waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the

terms of the waiver are contrary to law, public order, public policy, morals or good customs or

prejudicial to a third person with a right recognized by law. The preceding discussion on the

voluntariness of petitioners’ retirement from service effectively removes these grounds beyond

petitioners’ argumentative reach. Accordingly, petitioners, by the terms of their waivers, are

barred from filing this suit. (ARSENIO F. QUEVEDO, et al., v. BENGUET ELECTRIC

COOPERATIVE,INCORPORATED (BENECO) and GERARDO P. VERZOSA, G.R. No. 168927,

September 11, 2009)

• Invalid Quitclaims

Significantly, the Manifestations filed by petitioner with respect to the quitclaims executed by

members of respondent Union state that 34 of the 48 employees terminated on account of the

downsizing program have already executed quitclaims on various dates. We, however, take

judicial notice that 33 of these quitclaims failed to indicate the amounts received by the

terminated employees. Because of this, petitioner leaves us no choice but to invalidate and set

aside these quitclaims. However, the actual amount received by the employees upon signing

the said documents shall be deducted from whatever remaining amount is due them to avoid

double recovery of separation pay and other monetary benefits. We hereby order the Labor

Arbiter to effect the necessary computation on this matter. (HOTEL ENTERPRISES OF THE

PHILIPPINES, INC. (HEPI), owner of Hyatt Regency Manila, v. SAMAHAN NG MGA MANGGAGAWA

SA HYATT-NATIONAL UNION OF WORKERS IN THE HOTEL AND RESTAURANT AND ALLIED

INDUSTRIES (SAMASAH-NUWHRAIN), G.R. No. 165756, June 5, 2009)

Also, SMC cannot take refuge in the Receipt and Release document signed by the respondent.

Generally, deeds of release, waivers, or quitclaims cannot bar employees from demanding

benefits to which they are legally entitled or from contesting the legality of their dismissal,

since quitclaims are looked upon with disfavor and are frowned upon as contrary to public

policy. Where, however, the person making the waiver has done so voluntarily, with a full

understanding thereof, and the consideration for the quitclaim is credible and reasonable, the

transaction must be recognized as a valid and binding undertaking. The burden of proving that

the quitclaim or waiver was voluntarily entered into rests on the employer. (SAN MIGUEL

CORPORATION v. EDUARDO L. TEODOSIO, G.R. No. 163033, October 2, 2009)

Real Party in Interest

To qualify a person to be a real party in interest in whose name an action must be prosecuted,

he must appear to be the present real holder of the right sought to be enforced. “Interest”

within the meaning of the rule means material interest, an interest in essence to be affected

by the judgment as distinguished from mere interest in the question involved, or a mere

incidental interest. By real interest is meant a present substantial interest, as distinguished

from a mere expentancy or a future, contingent, subordinate or consequential interest.

(NORTHEASTERN COLLEGE TEACHERS AND EMPLOYEES ASSOCIATION vs. NORTHEASTERN

COLLEGE, INC., G.R. No. 152923, January 19, 2009)

It has been repeatedly stated that the Pantranco properties which were the subject of

execution sale were owned by Macris and later, the PNB-Madecor. They were never owned by

PNEI or PNB. Following our earlier discussion on the separate personalities of the different

corporations involved in the instant case, the only entity which has the right and interest to

question the execution sale and the eventual right to annul the same, if any, is PNB-Madecor

or its successor-in-interest. Settled is the rule that proceedings in court must be instituted by

the real party in interest. (PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) and

PANTRANCO RETRENCHED EMPLOYEES ASSOCIATION (PANREA) v. NATIONAL LABOR

RELATIONS COMMISSION (NLRC), G.R. No. 170689, G.R. No. 170705)

Re-computation of Awards

Furthermore, the CA sufficiently explained the need to increase the award of 13th month pay

and SIL pay. It modified the award after finding that the computation of the amount given by

the NLRC in its Decision dated March 25, 2002 does not conform to the dismissed employees’

employment history. The CA aptly explained, viz.:

A cursory reading of the assailed Decision of the NLRC dated March 25, 2002 readily reveals

that the labor tribunal awarded private respondents their unpaid 13th Month Pay and Service

Incentive Leave (SIL) Pay without regard to their employment history with the petitioner. There

was even no explanation or adequate showing on the face of the questioned judgment why the

award of the unpaid 13th Month and SIL Pay differs from one private respondent to another.

This Court, therefore, after determining that indeed the petitioner had not paid the private

respondents these special benefits for the whole period of their employment therewith,

modified the award by painstakingly basing it to each of the dismissed employee’s

employment history with petitioner.

x x x x

The procedural lapse on the part of the NLRC in this case in failing to take into account the

number of years when the private respondents did not receive their 13th Month and SIL Pay

cannot defeat their right to receive these benefits as granted under substantive law. This Court

simply could not uphold an erroneous computation of the said unpaid benefits. Hence, it had to

re-compute, and as a consequence, increased it.

(AKLAN COLLEGE, INC. vs. PERPETUO ENERO, ARLYN CASTIGADOR, NUENA SERMON and

JOCELYN ZOLINA, G.R. No. 178309, January 27, 2009)

Recruitment Agency

As the Court previously observed, 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 latter’s principal business. (COCA-COLA BOTTLERS

PHILS., INC v. ALAN M. AGITO, et al., G.R. No. 179546, February 13, 2009)

Refusal to Return to Work

Therefore, the complaint for illegal dismissal filed by respondents was premature, since even

after the expiration of their suspension period, they refused, despite due notice, to report to

work. In fact, in their Memorandum of Appeal, respondents admitted having received

petitioners’ return-to-work memorandum which, however, became futile because they hastily

filed the complaint for illegal dismissal. (INDUSTRIAL & TRANSPORT EQUIPMENT, INC.

RAYMOND JARINA, vs. TOMAS TUGADE and CRESENCIO TUGADE, G.R. No. 158539, January 15,

2009)

Regular Employment

Undoubtedly, respondents were regular employees of petitioner with respect to the escort or

“comboy” activity for which they had been engaged since 1993 and 1994, respectively,

without regard to continuity or brokenness of the service. (DEALCO FARMS, INC., vs. NATIONAL

LABOR RELATIONS COMMISSION (5th DIVISION), G.R. No. 153192 January 30, 2009)

Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform

activities which are usually necessary or desirable in the usual business or trade of the

employer; and (2) those who have rendered at least one year of service, whether continuous

or broken, with respect to the activity in which they are employed. Simply stated, regular

employees are classified into (1) regular employees – by nature of work and (2) regular

employees – by years of service. The former refers to those employees who perform a

particular activity which is necessary or desirable in the usual business or trade of the

employer, regardless of their length of service; while the latter refers to those employees who

have been performing the job, regardless of the nature thereof, for at least a year. If the

employee has been performing the job for at least one year, even if the performance is not

continuous or merely intermittent, the law deems the repeated and continuing need for its

performance as sufficient evidence of the necessity, if not indispensability, of that activity to

the business. (SAN MIGUEL CORPORATION v. EDUARDO L. TEODOSIO, G.R. No. 163033,

October 2, 2009)

Reinstatement

The spirit of the rule on reinstatement pending appeal animates the proceedings once the

Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its

execution needs no further elaboration. Reinstatement pending appeal necessitates its

immediate execution during the pendency of the appeal, if the law is to serve its noble

purpose. At the same time, any attempt on the part of the employer to evade or delay its

execution, as observed in Panuncillo and as what actually transpired in Kimberly, Composite,

Air Philippines, and Roquero, should not be countenanced.

After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred

from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement

pending appeal was without fault on the part of the employer. (JUANITO A. GARCIA and

ALBERTO J. DUMAGO vs. PHILIPPINE AIRLINES, INC., G.R. No. 164856, January 20, 2009)

• Reinstatement during Corporate Rehabilitation

Case law recognizes that unless there is a restraining order, the implementation of the order of

reinstatement is ministerial and mandatory. This injunction or suspension of claims by

legislative fiat partakes of the nature of a restraining order that constitutes a legal justification

for respondent’s non-compliance with the reinstatement order. Respondent’s failure to

exercise the alternative options of actual reinstatement and payroll reinstatement was thus

justified. Such being the case, respondent’s obligation to pay the salaries pending appeal, as

the normal effect of the non-exercise of the options, did not attach. (JUANITO A. GARCIA and

ALBERTO J. DUMAGO vs. PHILIPPINE AIRLINES, INC., G.R. No. 164856, January 20, 2009)

Republic Act No. 8042

• Fifth Paragraph of Section 10; Unconstitutional

The argument of the Solicitor General, that the actual purpose of the subject clause of limiting

the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give them

a better chance of getting hired by foreign employers. This is plain speculation. As earlier

discussed, there is nothing in the text of the law or the records of the deliberations leading to

its enactment or the pleadings of respondent that would indicate that there is an existing

governmental purpose for the subject clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for

that precise reason that the clause violates not just petitioner’s right to equal protection, but

also her right to substantivedue process under Section 1, Article III of the Constitution.

(ANTONIO M. SERRANO v. GALLANT MARITIME SERVICES,INC. and MARLOW NAVIGATION CO.,

INC., G.R. No. 167614, March 24, 2009)

Retirement Coverage

A twist in Rivera’s case is that she continued working beyond the compulsory separation from

service that resulted from her retirement. Whether she could or could not resume working with

the company is, as a rule, a consensual matter for the parties to agree upon, limited only by

company policies and the applicable terms of the retirement plan. To be sure, there is no

limitation by law that barred her from continuing her work with UNILAB; even the above-

quoted Implementing Rules, in setting the retirement age at 60, deferred to the parties’

agreement. Her employment terms under this renewed employment are based on what she

and the company agreed upon. Whether these terms included renewed coverage in the

retirement plan is an evidentiary gap that could have been conclusively shown by evidence of

deductions of contributions to the plan after 1988. Two indicators, however, tell us that no

such coverage took place. The first is that the terms of the retirement plan, before and after its

1992 amendment, continued to exclude those who have rendered 30 years of service or have

reached 60 years of age. Therefore, the plan could not have covered her. The second is the

absence of evidence of, or of any demand for, any reimbursement of what Rivera would have

paid as contributions to the plan had her coverage and deductions continued after 1988. Thus,

we conclude that her renewed service did not have the benefit of any retirement plan

coverage. (JANUARIA A. RIVERA v. UNITED LABORATORIES, INC.,G.R. No. 155639 April 22,

2009)

Seafarer

• Death Benefits

The general rule is that the employer is liable to pay the heirs of the deceased seafarer for

death benefits once it is established that he died during the effectivity of his employment

contract. However, the employer may be exempted from liability if he can successfully prove

that the seafarer’s death was caused by an injury directly attributable to his deliberate or

willful act. In sum, respondents’ entitlement to any death benefits depends on whether the

evidence of the petitioners suffices to prove that the deceased committed suicide; the burden

of proof rests on his employer. (GREAT SOUTHERN MARITIME SERVICES CORP. and IMC

SHIPPING CO., PTE. LTD. v. LEONILA SURIGAO for Herself and In Behalf of Her Minor

Children,Namely KAYE ANGELI and MIRIAM,Both Surnamed SURIGAO G.R. No. 183646)

• Post-Employment Medical Examination

But even assuming that petitioner was repatriated for medical reasons, he failed to submit

himself to the company-designated doctor in accordance with the post-employment medical

examination requirement under the above-quoted paragraph 3 of Section 20(B) of the POEA

Standard Employment Contract. Failure to comply with this requirement which is a sine qua

non bars the filing of claim for disability benefits. (DIONISIO M. MUSNIT v. SEA STAR SHIPPING

CORPORATION , G.R. No. 182623, December 4, 2009)

Security Guard

“Temporary off–detail”

Petitioner’s citation of Article 286 of the Labor Code reading:

ART. 286. When employment not deemed terminated. ─ The bona fide suspension of the

operation of a business or undertaking for a period not exceeding six (6) months, or the

fulfillment by the employee of a military or civic duty shall not terminate employment. In all

such cases, the employer shall reinstate the employee to his former position without loss of

seniority rights if he indicates his desire to resume his work not later than one (1) month from

the resumption of operations of his employer or from his relief from the military or civic duty.

(Emphasis in the original; underscoring supplied)

is misplaced. Philippine Industrial Security Agency v. Dapiton teaches:

We stress that Article 286 applies only when there is a bonafide suspension of the employer’s

operation of a business or undertaking for a period not exceeding six (6) months. In such a

case, there is no termination of employment but only a temporary displacement of employees,

albeit the displacement should not exceed six (6) months. The paramount consideration should

be the dire exigency of the business of the employer that compels it to put some of its

employees temporarily out of work. In security services, the temporary “off-detail” of guards

takes place when the security agency’s clients decide not to renew their contracts with the

security agency, resulting in a situation where the available posts under its existing contracts

are less than the number of guards in its roster. (Underscoring supplied)

In the present case, there is no showing that there was lack of available posts at petitioner’s

clients or that there was a request from the client-bank, where respondent was last posted and

which continued to hire petitioner’s services, to replace respondent with another. Petitioner

suddenly prevented him from reporting on his tour of duty at the bank on December 15, 2001

and had not thereafter asked him to report for duty. (EAGLE STAR SECURITY SERVICES, INC. v.

BONIFACIO L. MIRANDO, G.R. No. 179512, July 30, 2009)

Separate Corporate Personality

Assuming, for the sake of argument, that PNB may be held liable for the debts of PNEI,

petitioners still cannot proceed against the Pantranco properties, the same being owned by

PNB-Madecor, notwithstanding the fact that PNB-Madecor was a subsidiary of PNB. The general

rule remains that PNB-Madecor has a personality separate and distinct from PNB. The mere

fact that a corporation owns all of the stocks of another corporation, taken alone, is not

sufficient to justify their being treated as one entity. If used to perform legitimate functions, a

subsidiary’s separate existence shall be respected, and the liability of the parent corporation

as well as the subsidiary will be confined to those arising in their respective businesses.

(PANTRANCO EMPLOYEES ASSOCIATION (PEA-PTGWO) and PANTRANCO RETRENCHED

EMPLOYEES ASSOCIATION (PANREA) v. NATIONAL LABOR RELATIONS COMMISSION (NLRC),

G.R. No. 170689, G.R. No. 170705)

Separation Pay

Since petitioner was not faultless in regard to the offenses imputed against her, we hold that

the award of separation pay only, without backwages, is proper. (ELIZABETH D. PALTENG v.

UNITED COCONUT PLANTERS BANK, G.R. No. 172199, February 27, 2009)

We thus find the dismissal to be illegal. Consequently, respondent is entitled to reinstatement

without loss of seniority rights and other privileges, and to full backwages, inclusive of

allowances, and other benefits or their monetary equivalent, computed from the time of the

withholding of the employee’s compensation up to the time of actual reinstatement. If

reinstatement is not possible due to the strained relations between the employer and the

employee, separation pay should instead be paid the employee equivalent to one month salary

for every year of service, computed from the time of engagement up to the finality of this

decision. (M+W ZANDER PHILIPPINES, INC. and ROLF WILTSCHEK v. TRINIDAD M. ENRIQUEZ,

G.R. No. 169173, June 5, 2009)

Article 279 of the Labor Code provides that “[a]n 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.” Since, in the present case, reinstatement is no longer practicable or

feasible, separation pay may be awarded in lieu of reinstatement. Moreover, the awards of

separation pay and backwages are not mutually exclusive and both may be given to Tagulao

and Serrano.

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. The statutory intent on this matter is clearly

discernible. Reinstatement restores the employee who was unjustly dismissed to the position

from which he was removed, that is, to his status quo ante dismissal, while the grant of

backwages allows the same employee to recover from the employer that which he had lost by

way of wages as a result of his dismissal. These twin remedies —reinstatement and payment

of backwages — make the dismissed employee whole who can then look forward to continued

employment. Thus do these two remedies give meaning and substance to the constitutional

right of labor to security of tenure. The two forms of relief are distinct and separate, one from

the other. 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. x x x As the term suggests, separation pay is the amount that an

employee receives at the time of his severance from the service and x x x is designed to

provide the employee with “the wherewithal during the period that he is looking for another

employment.” In the instant case, the grant of separation pay was a substitute for immediate

and continued re-employment with the private respondent Bank. The grant of separation pay

did not redress the injury that is intended to be relieved by the second remedy of backwages,

that is, the loss of earnings that would have accrued to the dismissed employee during the

period between dismissal and reinstatement. 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. x x x The grant of

separation pay was a proper substitute only for reinstatement; it could not be an adequate

substitute both for reinstatement and for backwages. (Emphasis added) (NISSAN NORTH EDSA

BALINTAWAK, QUEZON CITY v. ANGELITO SERRANO, JR. and EDWIN TAGULAO, G.R. No.

162538, June 4, 2009)

Above all, the intention to sever the employer-employee relationship was not duly established

by respondents. The prior submission of a medical certificate that petitioner is fit to resume

work negates the claim of respondents that the former demanded for separation pay on

account of her failing health. Certainly, petitioner cannot demand for separation benefits on

the ground of illness while at the same time presenting a certification that she is fit to work.

Respondents could have denied petitioner’s demand at that instance and ordered her to return

to work had it not been their intention to sever petitioner from their employ. Hence, we find

the allegation that petitioner presented herself for work but was refused by respondents more

credible. (CONCEPCION FAELDONIA v. TONG YAK GROCERIES,JAYME GO and MERLITA GO,G.R.

No. 182499, October 2, 2009)

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its

employees and management their respective shares in the service charges collected, the hotel

cannot claim that payment thereof to its 82 employees constitute substantial compliance with

the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees’ right to their

shares in the service charges collected by Dusit Hotel is distinct and separate from their right

to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other.

(PHILIPPINE HOTELIERS, INC., DUSIT HOTEL NIKKO-MANILA v. NATIONAL UNION OF WORKERS

IN HOTEL, RESTAURANT, AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF)- DUSIT HOTEL NIKKO

CHAPTER, G.R. No. 181972, August 25, 2009)

Social Justice

The Court is not unmindful of the equally important right of respondent as employer under the

Constitution to be protected in its property and interest. The particular circumstances

attendant in this case, however, convince the Court that the supreme penalty of dismissal

upon petitioner is not justified. The law regards the workers with compassion. Even where a

worker has committed an infraction of company rules and regulations, a penalty less punitive

than dismissal may suffice. This is not only because of the law’s concern for the workingman.

There is, in addition, his family to consider. Unemployment brings untold hardships and

sorrows on those dependent upon the wage-earner. (ABELARDO P. ABEL v. PHILEX MINING

CORPORATION, G.R. No. 178976, July 31, 2009)

While the Court commiserates with petitioners on their loss of employment, especially now

that the Cooperative is no longer a going concern, it cannot simply, by default, hold the

Cooperative’s co-respondents liable for their claims without any factual and legal justification

therefor. The social justice policy of labor laws and the Constitution is not meant to be

oppressive of capital. (OLDARICO S. TRAVEÑO, et al v. BOBONGON BANANA GROWERS MULTI-

PURPOSE COOPERATIVE, TIMOG AGRICULTURAL CORPORATION, DIAMOND FARMS, INC., and

DOLE ASIA PHILIPPINES, G.R. No. 164205, September 3, 2009)

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 2rd 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.( EASTERN SHIPPING LINES, INC V. FERRER D. ANTONIO G.R. No. 171587,

October 13, 2009)

Petitioners’ bare invocation of “the interest of substantial justice” does not lie.” Only under

exceptionally meritorious cases may a relaxation from an otherwise stringent rule be allowed

“to relieve a litigant of an injustice not commensurate with the degree of thoughtlessness in

not complying with the procedure prescribed”– the existence of which petitioners failed to

demonstrate. (WALLEM MARITIME SERVICES, INC. and SCANDIC SHIPMANAGEMENT LIMITED v.

ERIBERTO S. BULTRON, G.R. No. 185261, October 2, 2009)

Strike

• Illegal Strike

The use of unlawful means in the course of a strike renders such strike illegal. Therefore,

pursuant to the principle of conclusiveness of judgment, the March 9, 1998 strike was ipso

facto illegal. The filing of a petition to declare the strike illegal was thus unnecessary.

(JACKBILT INDUSTRIES, INC.v. JACKBILT EMPLOYEESWORKERS UNION-NAFLU-KMU,G.R. Nos.

171618-19, March 20, 2009)

• Dinopol and Lustria Decision

There is no conflict between the Dinopol and the Lustria decisions. While both rulings involve

the same parties and same issues, there is a distinction between the remedies sought by the

parties in these two cases. In the Dinopol decision, it was QCSC which filed a petition to

declare the illegality of the 12 August 1997 strike by the union. The consequence of the

declaration of an illegal strike is termination from employment, which the Labor Arbiter did so

rule in said case. However, not all union members were terminated. In fact, only a few union

officers were validly dismissed in accordance with Article 264 of the Labor Code. Corollarily,

the other union members who had merely participated in the strike but had not committed any

illegal acts were not dismissed from employment. Hence, the NLRC erred in declaring the

employment status of all employees as having been lost or forfeited by virtue of the Dinopol

decision.

On the other hand, the Lustria decision involved the unfair labor practices alleged by the union

with particularity. In said case, Labor Arbiter Lustria sided with the Union and found QCSC

guilty of such practices. As a consequence, the affected employees were granted backwages

and separation pay. The grant of backwages and separation pay however was not premised on

the declaration of the illegality of the strike but on the finding that these affected employees

were constructively dismissed from work, as evidenced by the layoffs effected by the

company. As explained in the Lustria decision:

Considering that the temporary lay-off of listed employees effected by the respondents on 16

August 1997 was without documentary evidence to determine its validity, it is our considered

view and we so hold that said employees were constructively dismissed without just or

authorized cause and observance of due process. This opinion finds support from the hard and

cold fact of absence of prior notice, report with the regional office of the Department of Labor

and Employment having jurisdiction over the area and they remain under lay-off status of

employment. In conclusion, they are entitled to backwages and separation pay in lieu of

reinstatement as prayed.

Clearly, there are two separate decisions issued by two different labor arbiters involving the

same parties and interests. Considering that the remedies sought by the parties in each case

differ, these two rulings may co-exist. (LOLITA A. LOPEZ, ET. al., vs. QUEZON CITY SPORTS

CLUB, INC.,G.R. No. 164032, January 19, 2009)

Substitution of Parties

Finally, as to the prayer of the counsel of Mr. Gumarang to allow the latter to be substituted by

his wife, and by his former co-employees whom he had allegedly represented before the

Regional Arbitration Branch of the NLRC, we grant the same insofar as the wife is concerned,

she being his heir, but not as to the other co-employees. We cannot allow petitioner

Gumarang’s co-employees to take his place because, if we do, we would be allowing them to

become parties to the instant petition when they are not. It would have been different if they

presented evidence showing that they had authorized Mr. Gumarang to file the petition on

their behalf before this Court and even before the Court of Appeals. This, they had not done.

(NORTHEASTERN COLLEGE TEACHERS AND EMPLOYEES ASSOCIATION vs. NORTHEASTERN

COLLEGE, INC., G.R. No. 152923, January 19, 2009)

Suspension

Thus, the CA and the NLRC correctly observed that the worst that respondent committed was

an inadvertent infraction. For that, the extreme penalty of dismissal imposed on him by

petitioners was grossly disproportionate. Taking into account the managerial position he held

and the prior warning issued to him for failing to communicate with his superiors, the penalty

commensurate to the violation he committed should be suspension for three months. The

period of his suspension is to be deducted from the period for which he is entitled to

backwages as awarded by the NLRC and affirmed by the CA. (GULF AIR, JASSIM HINDRI

ABDULLAH and RESTY AREVALO v. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO

J.C. REYES, G.R. No. 159687, April 24, 2009)

Teachers

• Employment Status

The common practice is for the employer and the teacher to enter into a contract, effective for

one school year. At the end of the school year, the employer has the option not to renew the

contract, particularly considering the teacher’s performance. If the contract is not renewed, the

employment relationship terminates. If the contract is renewed, usually for another school

year, the probationary employment continues. Again, at the end of that period, the parties

may opt to renew or not to renew the contract. If renewed, this second renewal of the contract

for another school year would then be the last year – since it would be the third school year –

of probationary employment. At the end of this third year, the employer may now decide

whether to extend a permanent appointment to the employee, primarily on the basis of the

employee having met the reasonable standards of competence and efficiency set by the

employer. For the entire duration of this three-year period, the teacher remains under

probation. Upon the expiration of his contract of employment, being simply on probation, he

cannot automatically claim security of tenure and compel the employer to renew his

employment contract. It is when the yearly contract is renewed for the third time that Section

93 of the Manual becomes operative, and the teacher then is entitled to regular or permanent

employment status. (MAGIS YOUNG ACHIEVERS’ LEARNING CENTER and MRS. VIOLETA T.

CARIÑO v. ADELAIDA MANALO, G.R. No. 178835, February 13, 2009 )

• Probationary Period for Teachers

Thus, in light of our ruling of Espiritu Santo Parochial School v. NLRC that, in the absence of an

express period of probation for private school teachers, the three-year probationary period

provided by the Manual of Regulations for Private Schools must apply likewise to the case of

respondent. In other words, absent any concrete and competent proof that her performance as

a teacher was unsatisfactory from her hiring on April 18, 2002 up to March 31, 2003,

respondent is entitled to continue her three-year period of probationary period, such that from

March 31, 2003, her probationary employment is deemed renewed for the following two school

years. (MAGIS YOUNG ACHIEVERS’ LEARNING CENTER and MRS. VIOLETA T. CARIÑO v.

ADELAIDA . MANALO, G.R. No. 178835, February 13, 2009 )

Termination of Employment

Just Causes

• Neglect of Duty/Abandonment

Hence, we find it hard to believe that he will just abandon his job after petitioners gave him a

chance to continue working for them. We uphold the following findings of the Court of Appeals

that respondent did not abandon his job:

In the case at bar, the charge of abandonment is belied by the following circumstances: First,

the high improbability of private respondent to intentionally abandon his work considering that

he had already served a penalty of suspension for his infractions and violations as well as the

petitioner’s tacit condonation of the infractions he committed, by permitting him to go back to

work and by asking him to execute a promissory note. It is incongruent to human nature, that

after having ironed things out with his employer, an employee would just not report for work

for no apparent reason. Secondly, there was no proof that petitioner sent private respondent a

notice of termination on the ground of abandonment, if indeed it is true that he really failed to

go back to work. Section 2, Rule XVI, Book V, Rules and regulations implementing the Labor

Code provides that any employer who seeks to dismiss a worker shall furnish him a written

notice stating the particular act or omission constituting the ground for his dismissal. In cases

of abandonment of work, the notice shall be served at the worker’s last known address (Icawat

vs. National Labor Relations Commission, 334 SCRA 75, 81 [2000]). For this reason, We are

constrained to give credence to private respondent’s assertion that he attempted to report

back to work but he was just asked to leave as he was considered terminated. And lastly,

private respondent’s filing of a case for illegal dismissal with the labor arbiter negates

abandonment. As held by the Supreme Court, a charge of abandonment is totally inconsistent

with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer

for reinstatement (Globe Telecom, Inc. vs Florendo-Flores, 390 SCRA 201, 2002[sic]-203

[2002]). (BC CABLE MASTER SYSTEM AND/OR EVELYN CINENSE vs. MARCIAL BALUYOT, G.R. No.

172670,January 20, 2009)

In the instant case, respondent was informed by no less than his immediate superior, the chief

cook and by his brother that he was being terminated. Like the Court of Appeals, the Court

finds no reason why these two would give respondent the false impression that he was being

dismissed, and in turn, the Court, like the appellate court again, is inclined to believe that they

were given prior instruction, or they at least had prior knowledge of the termination. Moreover,

as previously discussed, the charge of abandonment does not square with the fact that a week

after respondent’s alleged dismissal, he filed a complaint with the NLRC. (HARBORVIEW

RESTAURANT v. REYNALDO LABRO, G.R. No. 168273, April 30, 2009)

To constitute abandonment, there must be clear proof of deliberate and unjustified intent to

sever the employer-employee relationship. Clearly, the operative act is still the employee’s

ultimate act of putting an end to his employment. However, an employee who takes steps to

protest her layoff cannot be said to have abandoned her work because a charge of

abandonment is totally inconsistent with the immediate filing of a complaint for illegal

dismissal, more so when it includes a prayer for reinstatement. When Eleonor filed the illegal

dismissal complaint, it totally negated petitioner’s theory of abandonment. (SOUTH DAVAO

DEVELOPMENT COMPANY, INC. (NOW SODACO AGRICULTURAL CORPORATION) AND/OR

MALONE PACQUIAO AND VICTOR A. CONSUNJI, v. SERGIO L. GAMO, et. al., G.R. No. 171814,

May 8, 2009)

In petitioners’ case, despite the directive cum caveat of CASI for them to report back for work

within two days from receipt thereof, they failed to comply therewith. After three years, as

reflected above, they offered to return to work. Their intention to sever the employer-

employee relationship with CASI is manifested, however, by the length of time they refused to

return to work, for they had, in the interim, been looking for other jobs. (MIGUEL A. PILAPIL, et

al. v. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 178229 October 23, 2009)

Respondents failed to discharge this burden. Mere absence of petitioner is not sufficient to

establish the allegation of abandonment. The prolonged absence of petitioner was not without

justifiable reason because it was established that her failure to report for work was due to the

injury she suffered in the course of her employment and with sufficient notice to respondents.

Petitioner also presented herself for work on the date stated in the medical certificate which

stated that she is fit to resume work. (CONCEPCION FAELDONIA v. TONG YAK

GROCERIES,JAYME GO and MERLITA GO,G.R. No. 182499, October 2, 2009)

Furthermore, the Court agrees with respondents when they argued in their petition filed with

the CA that if an employee’s aim is to secure the benefits due him from his employer,

abandonment would surely be an illogical and impractical recourse, especially for simple

laborers such as respondent Aguilar. Considering the difficult times in which our country is in it

is illogical and even suicidal for an employee like Aguilar to abandon his work, knowing fully

well of the widespread unemployment and underemployment problems as well as the difficulty

of looking for a means of livelihood, simply because his employer rejected his demand for

salary increase. Under the given facts, no basis in reason exists for the petitioners’ theory that

Aguilar abandoned his job. (BARON REPUBLIC THEATRICAL V. NORMITA P. PERALTA et al, G.R.

No. 170525, October 2, 2009)

• Gross Negligence

An employer cannot legally be compelled to continue with the employment of a person

admittedly guilty of gross negligence in the performance of his duties. This holds true specially

if the employee’s continued tenure is patently inimical to the employer’s interest. What

happened was not a simple case of oversight and could not be attributed to a simple lapse of

judgment. No amount of good intent, or previous conscientious performance of duty, can

assuage the damage Mateo caused LBC when he failed to exercise the requisite degree of

diligence required of him under the circumstances.( LBC EXPRESS – METRO MANILA, INC. and

LORENZO A. NIÑO v. JAMES MATEO, G.R. No. 168215, June 9, 2009)

To warrant removal from service, the negligence should not merely be gross but also habitual.

Gross negligence implies a want or absence of or failure to exercise even slight care or

diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences

without exerting any effort to avoid them. Habitual neglect implies repeated failure to perform

one’s duties for a period of time, depending upon the circumstances. The single or isolated act

of negligence does not constitute a just cause for the dismissal of the employee. (ABELARDO P.

ABEL v. PHILEX MINING CORPORATION, G.R. No. 178976, July 31, 2009)

• Serious Misconduct

PNB may rightfully terminate Maralit’s services for a just cause, including serious misconduct.

Serious misconduct is improper conduct, a transgression of some established and definite rule

of action, a forbidden act, or a dereliction of duty. Having been dismissed for a just cause,

Maralit is not entitled to her retirement benefits. (ESTER B. MARALIT v. PHILIPPINE NATIONAL

BANK, G.R. No. 163788, August 24, 2009)

By sleeping on the job and leaving his work area without prior authorization, Tomada did not

merely disregard company rules. Tomada, in effect, issued an open invitation for others to

violate those same company rules. Indeed, considering the presence of trainees in the building

and Tomada’s acts, Tomada failed to live up to his company’s reasonable expectations.

Tomada’s offenses cannot be excused upon a plea of being a “first offense,” or have not

resulted in prejudice to the company in any way. No employer may rationally be expected to

continue in employment a person whose lack of morals, respect and loyalty to his employer,

regard for his employer’s rules, and appreciation of the dignity and responsibility of his office,

has so plainly and completely been bared. (EDUARDO M. TOMADA, SR. v. RFM CORPORATION-

BAKERY FLOUR DIVISION and JOSE MARIA CONCEPCION III, G.R. No. 163270, September 11,

2009)

Moreover, the peculiar nature of Espadero’s position aggravates her misconduct. Misconduct

has been defined as improper or wrong conduct; the transgression of some established or

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 a grave character and not merely trivial or unimportant. To constitute just cause for

termination, it must be in connection with the employee’s work. With the degree of trust

expected of Espadero, such infraction can hardly be classified as one that is trivial or

unimportant. Her failure to promptly report the incident reflects a cavalier regard for the

responsibility required of her in the discharge of the duties of her position. (EATS-CETERA

FOOD SERVICES OUTLET and/or SERAFIN RAMIREZ v. MYRNA B. LETRAN and MARY GRACE

ESPADERO, G.R. No. 179507, October 2, 2009)

An employee who fails to account for and deliver the funds entrusted to him is liable for

misappropriating the same and is consequently guilty of serious misconduct. Petitioner

therefore validly dismissed respondent.( SUPERLINES TRANSPORTATION COMPANY, INC. v.

EDUARDO PINERA G.R. No. 188742, October 13, 2009)

o Simple Misconduct

Based on the foregoing, we consider respondent’s offense to be a simple misconduct which

does not merit termination of his employment. The penalty of dismissal from service is not

commensurate to respondent’s offense. Although petitioner, as an employer, has the right to

discipline its erring employees, exercise of such right should be tempered with compassion

and understanding. The magnitude of the infraction committed by an employee must be

weighed and equated with the penalty prescribed and must be commensurate thereto, in view

of the gravity of the penalty of dismissal or termination from the service. The employer should

bear in mind that in termination cases, what is at stake is not simply the employee’s job or

position but his very livelihood. (PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v.

INOCENCIO B. BERBANO, JR., G.R. No. 165199, November 27, 2009)

• Loss of Trust and Confidence

Petitioner, in his Position Paper filed before the LA and in his Sagot na Sinumpaang Salaysay,

averred that sometime in August 2004, Alido informed him of the illegal activities in the

company premises. But this fact was not reflected in his Partial Audit Report; instead,

petitioner made it appear therein that it was upon the initiative of Lejos that he discovered the

illegal activities only on October 28, 2004, after Lejos already resigned from the company. The

basis for terminating the employment of petitioner actually came from petitioner himself due

to the substantial and irreconcilable inconsistencies in the narration of facts in his Audit Report

and his Sagot na Sinumpaang Salaysay filed before the company, and his pleadings before the

lower tribunals and before this Court. In sum, it cannot be denied that he withheld this

information from his immediate supervisor and from the company – a clear breach of the trust

and confidence the company had reposed in him as one of its Auditors.( ROMEO N. VENTURA,

vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, GENUINO ICE CO., INC.,

and HECTOR GENUINO, G.R. No. 182570, January 27, 2009

Indeed, by obtaining an altered police report and medical certificate, petitioners deliberately

attempted to cover up the fact that Sales was under the influence of liquor at the time the

accident took place. In so doing, they committed acts inimical to respondent’s interests. They

thus committed a work-related willfull breach of the trust and confidence reposed in them.

(ERIC DELA CRUZ and RAUL M. LACUATA v. COCA-COLA BOTTLERS PHILS. INC., G.R. No.

180465, July 31, 2009)

The amount misappropriated by petitioner Manliclic is irrelevant. More than the resulting

material damage or prejudice, it is petitioner Manliclic’s very act of misappropriation that is

offensive to respondent PELCO I. If taxes are the lifeblood of the state, then, by analogy, the

payment collection is the lifeblood of the cooperative. The collection provides respondent

PELCO I with the financial resources to continue its operations. Respondent PELCO I cannot

afford to continue in its employ dishonest bill collectors.

By his own admission, petitioner Manliclic committed a breach of the trust reposed in him by

his employer, respondent PELCO I. This constitutes valid cause for his dismissal from service.

(CHONA ESTACIO and LEOPOLDO MANLICLIC v. PAMPANGA I ELECTRIC COOPERATIVE, INC.,

and LOLIANO E. ALLAS, G.R. No. 183196, August 19, 2009)

We are not unmindful of the employer’s right to dismiss an employee based on fraud or willful

breach of trust. However, the loss of confidence must be based not on an ordinary breach by

the employee of the trust reposed in him by the employer, but, in the language of Article

282(c) of the Labor Code, on a willful breach. A breach is willful if it is done intentionally,

knowingly and purposely, without justifiable excuse, as distinguished from an act done

carelessly, thoughtlessly, heedlessly, or inadvertently. 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;

nor should it appear as a mere afterthought to justify an earlier action taken in bad faith or as

a subterfuge for causes that 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, SLMC utterly failed to establish the requirements prescribed by law and

jurisprudence for a valid dismissal on the ground of breach of trust and confidence. (ST. LUKE’S

MEDICAL CENTER, INCORPORATED v. JENNIFER LYNNE C. FADRIGO, G.R. No. 185933,

November 25, 2009)

Verily, the actions of Tirazona reflected an obdurate character that is arrogant,

uncompromising, and hostile. By immediately and unreasonably adopting an adverse stance

against PET, she sought to impose her will on the company and placed her own interests above

those of her employer. Her motive for her actions was rendered even more questionable by

her exorbitant and arbitrary demand for P2,000,000.00 payable within five days from demand.

Her attitude towards her employer was clearly inconsistent with her position of trust and

confidence. Her poor character became even more evident when she read what was supposed

to be a confidential letter of the legal counsel of PET to PET officers/directors expressing his

legal opinion on Tirazona’s administrative case. PET was, therefore, fully justified in

terminating Tirazona’s employment for loss of trust and confidence. (MA. WENELITA S.

TIRAZONA, vs. PHILIPPINE EDS TECHNO- SERVICE INC. (PET INC.) AND/OR KEN KUBOTA,

MAMORU ONO and JUNICHI HIROSE, G.R. No. 169712, January 20, 2009)

To recapitulate, the right of an employer to dismiss an employee on account of loss of trust

and confidence must not be exercised whimsically. To countenance an arbitrary exercise of

that prerogative is to negate the employee’s constitutional right to security of tenure. In other

words, the employer 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 latter’s dismissal will be rendered illegal. (SAN MIGUEL CORPORATION vs. NATIONAL

LABOR RELATIONS COMMISSION AND WILLIAM L. FRIEND, JR., G.R. No. 153983, May 26, 2009)

Loss of confidence must not be indiscriminately used as a shield by the employer against a

claim that the dismissal of an employee was arbitrary. Loss of confidence as a just cause for

termination of employment is premised on the fact that the employee concerned holds a

position of responsibility or trust and confidence. He must be invested with confidence on

delicate matters, such as custody handling or care and protection of the property and assets of

the employer. And, in order to constitute a just cause for dismissal, the act complained of must

be work-related and shows that the employee concerned is unfit to continue to work for the

employer. (ADAM B. GARCIA v. NATIONAL LABOR RELATIONS COMMISSION (SECOND

DIVISION), LEGAZPI OIL COMPANY, INC., ROMEO F. MERCADO and GUS ZULUAGA G.R. No.

172854, April 16, 2009)

Considering the foregoing, we find that respondents Apostol and Opulencia were dismissed by

TIPI for a valid and just cause. The relationship of employer and employee, specially where the

employee has access to the employer’s property, necessarily involves trust and confidence.

Where the rules laid down by the employer to protect its property are violated by the very

employee who is entrusted and expected to follow and implement the rules, the employee

may be validly dismissed from service. (TRIUMPH INTERNATIONAL(PHILS.), INC.FIRST DIVISION

v. RAMON L. APOSTOL and BEN M. OPULENCIA, G.R. No. 164423, June 16, 2009)

As Airport Manager, respondent occupies a position of such extreme sensitivity that the

existence of some basis or reasonable ground for his involvement in any irregularity is enough

to destroy the trust and confidence which petitioner Gulf Air had reposed in him. However, it is

settled that for breach of trust to constitute a valid cause for dismissal, the same must be

willful. Ordinary breach of trust will not suffice. (GULF AIR, JASSIM HINDRI ABDULLAH and

RESTY AREVALO v. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO J.C. REYES, G.R.

No. 159687, April 24, 2009)

The second requisite is that there must be an act that would justify the loss of trust and

confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a

willful breach of trust and founded on clearly established facts. The basis for the dismissal

must be clearly and convincingly established but proof beyond reasonable doubt is not

necessary. Respondent’s evidence against petitioner fails to meet this standard. Its lone

witness, Lupega, did not support his affidavit and testimony during the company investigation

with any piece of evidence at all. No other employee working at respondent’s mine site

attested to the truth of any of his statements. Standing alone, Lupega’s account of the

subsidence area anomaly could hardly be considered substantial evidence. And while there is

no concrete showing of any ill motive on the part of Lupega to falsely accuse petitioner, that

Lupega himself was under investigation when he implicated petitioner in the subsidence area

anomaly makes his uncorroborated version suspect. (ABELARDO P. ABEL v. PHILEX MINING

CORPORATION, G.R. No. 178976, July 31, 2009)

o Application of the Doctrine of Loss of Trust and Confidence

Recent decisions of this Court have distinguished the treatment of managerial employees from

that of the rank-and-file personnel, insofar as the application of the doctrine of loss of trust and

confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and

confidence, as ground for valid dismissal, requires proof of involvement in the alleged events

in question, and that mere uncorroborated assertions and accusations by the employer will not

be sufficient. But as regards a managerial employee, the mere existence of a basis for

believing that such employee has breached the trust of his employer would suffice for his

dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not

required. It is sufficient that there is some basis for the employer’s loss of trust and 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. Nonetheless, the evidence

must be substantial and must establish clearly and convincingly the facts on which the loss of

confidence rests and not on the employer’s arbitrariness, whims, and caprices or suspicion.

(TRIUMPH INTERNATIONAL(PHILS.), INC.FIRST DIVISION v. RAMON L. APOSTOL and BEN M.

OPULENCIA, G.R. No. 164423, June 16, 2009)

o Positions of Trust

There are two classes of positions of trust. The first class consists of managerial employees.

They are defined as those vested with the powers or prerogatives to lay down management

policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees

or effectively recommend such managerial actions. The second class consists of cashiers,

auditors, property custodians, etc. They are defined as those who, in the normal and routine

exercise of their functions, regularly handle significant amounts of money or property.

(ABELARDO P. ABEL v. PHILEX MINING CORPORATION, G.R. No. 178976, July 31, 2009)

Authorized Causes

• Retrenchment

The proper view, therefore, is that the Sec. 1 criteria qualify the factors of “seniority and needs

of the company” in Sec. 5(c). Stated a bit differently, Sec. 5(c) should be understood in the

light of Sec. 1 which, to stress, provides seniority, efficiency and attitude, job knowledge and

potential, and attendance as among the factors that should guide the company in choosing the

employees to be laid-off or kept. All other things being equal, a company would necessarily

need to retain those who had rendered dedicated and highly efficient service and whose

knowledge, attendance, and potential hew with company standards. Any other measure would

be senseless in the business viewpoint. Accordingly, the merit rating used by MMPC based on

Sec. 5 in conjunction with and as qualified by the factors provided under Sec. 1 is fair and

reasonable, and, to be sure, well within the contemplation of the parties’ CBA. In fact, Alfredo,

shorn of the contention that the merit rating is against the CBA, has not shown any

arbitrariness on the part of MMPC in the evaluation, selection, and retrenchment of employees.

(ALFREDO A. MENDROS, JR v. MITSUBISHI MOTORS PHILS. CORPORATION (MMPC), G.R. No.

169780, February 16, 2009)

Records do not show any criterion adopted or used by petitioner in dismissing respondent.

Respondent was terminated without considering her seniority. Retrenchment scheme without

taking seniority into account rendered the retrenchment invalid. While respondent was the

third most senior employee among the 7 employees in petitioner’s personnel department, she

was retrenched while her other co-employees junior than her were either retained in the

Personnel Department or were transferred to other positions in the company. There was no

showing that respondent was offered to be transferred to other positions.(EMCOR

INCORPORATED v. MA. LOURDES D. SIENES, G.R. No. 152101, September 8, 2009)

At all events, even if the comparative report were to be considered, the Court is not persuaded

on the necessity of resorting to retrenchment to prevent or minimize actual or imminent

business losses on the part of petitioner. For retrenchment should only be resorted to when

other less drastic means have been tried and found to be inadequate. So Polymart Paper

Industries, Inc. v. NLRC instructs:

. . . [E]ven if business losses were indeed sufficiently proven, the employer must still prove

that retrenchment was resorted to only after less drastic measures such as the reduction of

both management and rank-and-file bonuses and salaries, going on reduced time, improving

manufacturing efficiency, reduction of marketing and advertising costs, faster collection of

customer accounts, reduction of raw materials investment and others, have been tried and

found wanting. (Emphasis supplied)

In the case at bar, petitioner did not adduce evidence to prove that retrenchment was resorted

to because other measures were undertaken to abate actual or future business losses but thus

failed. (BIO QUEST MARKETING INC. and/or JOSE L. CO v. EDMUND REY, G.R. No.

181503,September 18, 2009)

• Requirement for Retrenchment

For a valid termination due to retrenchment, the law also requires that written notices of the

intended retrenchment be served by the employer on the worker and on the DOLE at least one

month before the actual date of the retrenchment. The purpose of this requirement is to give

employees time to prepare for the eventual loss of their jobs, as well as to give DOLE the

opportunity to ascertain the veracity of the alleged cause of termination. In this case,

petitioner insists that the payment of 30 days salary to respondents in place of notice was

sufficient compliance with the 30-day notice rule. We cannot agree. Nothing in the law gives

petitioner the option to substitute the required prior written notice with payment of 30 days

salary. Indeed, a job is more than the salary it carries. Payment of 30 days salary cannot

compensate for the psychological effect or the stigma of immediately finding one’s self laid off

from work. It cannot be a fully effective substitute for the 30 days’ written notice requirement

by law, especially when, as in this case, no notice was given to the DOLE. Even as the letters of

voluntary acceptance were dated July 25, 1998, the notices of termination given on July 23,

1998 were effective the following day. In essence, respondents had already been dismissed

before they signed the letters of voluntary acceptance. Clearly, petitioner deprived

respondents of their right to statutory due process. For this, we affirm the appellate court’s

award of nominal damages to respondents. But, consistent with our ruling in Agabon v.

National Labor Relations Commission, the amount of nominal damages should be P30,000. We

also sustain the award of attorney’s fees as it is sanctioned by law. (MOBILIA PRODUCTS, INC.

v. ALAN G. DEMECILLO, et al., G.R. No. 170669, February 4, 2009)

• Losses

Third, it bears to state that the aforequoted Art. 283 of the Code uses the phrase

“retrenchment to prevent losses.” The phrase necessarily implies that retrenchment may be

effected even in the event only of imminent, impending, or expected losses. The employer

need not wait for substantial losses to materialize before exercising ultimate and drastic option

to prevent such losses. In the case at bench, MMPC was already financially hemorrhaging

before finally resorting to retrenchment. (ALFREDO A. MENDROS, JR v. MITSUBISHI MOTORS

PHILS. CORPORATION (MMPC), G.R. No. 169780, February 16, 2009)

However, apart from petitioner’s bare assertion of reduced orders from Japan, the only

evidence it presented were the letters of voluntary acceptance of retrenchment, and waivers

and quitclaims signed by respondents. To our mind, these were insufficient to show that

petitioner indeed suffered business losses so serious as to necessitate the reduction of

personnel. We have constantly ruled that financial statements audited by independent

external auditors constitute the normal method of proof of the profit and loss performance of a

company. Any less exacting standard of proof would render too easy the abuse of this ground

for termination of services of employees. Petitioner submitted none. Further, let it be clarified

that our ruling in International Hardware, Inc. v. NLRC did not dispense with the responsibility

of the employer to substantiate losses. It merely exempts the latter from giving notice of

retrenchment to its employees and DOLE. (MOBILIA PRODUCTS, INC. v. ALAN G. DEMECILLO, et

al., G.R. No. 170669, February 4, 2009)

Unfair Labor Practice

• Totality of the Conduct Doctrine

Then came the Lustria decision, issued two (2) months later, finding that QCSC had committed

unfair labor practices against the union and accordingly granting backwages and separation

pay in favor of 112 employees. The Lustria decision emanated from a complaint for unfair labor

practice against QCSC. Culled from the union’s pleadings were the specific acts committed by

QCSC, such as:

1. Insulting of the Union President as evidenced by the Salaysay of Ma. Cecilia Pangan;

2. Cuddling and treating the minority union with favor, such as paying their salaries/wages

fully and ahead of the incumbent union and as if it were the incumbent bargaining agents;

3. Discouraging the members of the incumbent union from continuing their membership with

the incumbent union as evidenced by the Pinagsamang Salaysay of Ramiro Espinosa and

Ronaldo Q. Lim;

4. Bribing union member and promising promotion if he will not join the strike as evidenced by

the Salaysay of Bernard Delta;

5. Transferring union members to another job description;

6. Replacing them with members of minority union evidenced by Leslie Tamayo’s Salaysay;

7. Subjecting one union member to a very tense confrontation in the General Manager’s Office

after she commented during the NCMB conference that the 201 file of the employees are

intact, resulting to her being taken to the hospital for nervous breakdown; and

8. Requiring the union members to submit another information sheet, and failure to do so

would mean no payment of their June 16-30, 1997 salary.

Applying the totality of the conduct doctrine, Labor Arbiter Lustria held that QCSC had

committed unfair labor practices. (LOLITA A. LOPEZ, ET. al., vs. QUEZON CITY SPORTS CLUB,

INC.,G.R. No. 164032, January 19, 2009)

Unfair labor practice refers to “acts that violate the workers’ right to organize.” The prohibited

acts are related to the workers’ right to self-organization and to the observance of a CBA.

Without that element, the acts, even if unfair, are not unfair labor practices. (GENERAL

SANTOS COCA-COLA PLANT FREE WORKERS UNION-TUPAS vs. COCA-COLA BOTTLERS PHILS.,

INC. (GENERAL SANTOS CITY), THE COURT OF APPEALS and THE NATIONAL LABOR RELATIONS

COMMISSION, G.R. No. 178647)

Here, respondent Union went on strike in the honest belief that petitioner was committing ULP

after the latter decided to downsize its workforce contrary to the staffing/manning standards

adopted by both parties under a CBA forged only four (4) short months earlier. The belief was

bolstered when the management hired 100 contractual workers to replace the 48 terminated

regular rank-and-file employees who were all Union members. Indeed, those circumstances

showed prima facie that the hotel committed ULP. Thus, even if technically there was no legal

ground to stage a strike based on ULP, since the attendant circumstances support the belief in

good faith that petitioner’s retrenchment scheme was structured to weaken the bargaining

power of the Union, the strike, by exception, may be considered legal. (HOTEL ENTERPRISES

OF THE PHILIPPINES, INC. (HEPI), owner of Hyatt Regency Manila, v. SAMAHAN NG MGA

MANGGAGAWA SA HYATT-NATIONAL UNION OF WORKERS IN THE HOTEL AND RESTAURANT

AND ALLIED INDUSTRIES (SAMASAH-NUWHRAIN), G.R. No. 165756, June 5, 2009)

Petitioners never substantiated their allegations. In a similar case, Schering Employees Labor

Union (SELU) et al. v. Schering Plough Corporation, petitioner Sereneo, the president of SELU,

charged respondent with ULP and illegal dismissal because she was in the process of

renegotiating the CBA with respondent when she was dismissed on the ground of loss of trust

and confidence. We said:

Petitioners’ accusation of union busting is bereft of any proof. We scanned the records very

carefully and failed to discern any evidence to sustain such charge.

In Tiu vs. NLRC, we held:

. . . . It is the union, therefore, who had the burden of proof to present substantial evidence to

support its allegations (of unfair labor practices committed by management).

xxx xxx xxx.

. . ., but in the case at bar the facts and the evidence did not establish even at least a rational

basis why the union would wield a strike based on alleged unfair labor practices it did not even

bother to substantiate during the conciliation proceedings. It is not enough that the union

believed that the employer committed acts of unfair labor practice when the circumstances

clearly negate even a prima facie showing to warrant such a belief. (RENITA DEL ROSARIO, et

al., v. MAKATI CINEMA SQUARE CORPORATION, G.R. No. 170014, July 3, 2009)

Voluntary Resignation

Finally, respondent claims that in light of the opinion of the physician in Korea that he had

“suspected ischemic heart,” petitioners affirmed his medical repatriation. As reflected in the

immediately preceding paragraph, however, ischemic heart disease cannot develop in a short

span of time that respondent served as chief cook for petitioners. In fact, as indicated above,

the Gleneagles Maritime Medical Centre doctor who treated respondent in May 2000 for

abscess in his left hand had noted respondent’s “[h]istory of hypertension for 3 years.”

Moreover, the Korean physician did not make any recommendation as to respondent’s bill of

health for petitioners to assume that he was fit for repatriation.

IN FINE, respondent’s actions show that he voluntarily resigned. (VIRGEN SHIPPING

CORPORATION, CAPT. RENATO MORENTE & ODYSSEY MARITIME PTE. LTD., NATIONAL LABOR

RELATIONS COMMISSION v. JESUS B. BARRAQUIO, G.R. No. 178127, April 16, 2009)

Work-related Disease

If we found in Seagull Shipmanagement that the different climates and unpredictable weather,

as well as the stress of the job, had a correlation with the heart disease of a seafarer working

as a radioman on a vessel, then what more in the heart disease of a seafarer serving as a ship

master, a position involving more strain and pressure? A Tug (boat) Master is primarily tasked

to operate tug boats, a powerful marine vessel that meets large ships out at sea and attach a

line to guide/steer the same into and out of berths. In operating such a powerful vessel, a Tug

Master requires not just a thorough knowledge of the port environment in which he is

operating, but a high level of skill as well. In fact, in the case at bar, respondent ADAMS

recognized how grueling petitioner Nisda’s job was, according the latter a month of paid

vacation every three months of straight service. Thus, more than a reasonable connection

between the nature of petitioner Nisda’s job and his Coronary Artery Disease has been

established. Petitioner Nisda was able to sufficiently prove, by substantial evidence, that his

Coronary Artery Disease was work-related, given the arduous nature of his job that caused his

disease or, at least, aggravated any pre-existing condition he might have had. Respondents

Sea Serve and ADAMS, on the other hand, utterly failed to refute the said connection. (CARLOS

N. NISDA v. SEA SERVE MARITIME AGENCY and KHALIFA A. ALGOSAIBI DIVING AND MARINE

SERVICES, G. R. No. 179177, July 23, 2009)