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CASE FACTS ISSUE RULINGARCO METAL PRODUCTS CO., INC. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL – NAFLU (SAMARM-NAFLU), 554 SCRA 111

Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s rank and file employees.

Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months.

Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months.

According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB).

The parties submitted the case for voluntary arbitration. The voluntary arbitrator, ruled in favor of petitioner. The giving of the contested benefits in full, irrespective of the actual service rendered within one year has not ripened into a practice.

CA ruled in favor of the respondents. The Court of Appeals ruled that the CBA did not intend to foreclose the application of prorated payments of leave benefits to covered employees.

The appellate court found that petitioner, however, had an existing voluntary practice of paying the aforesaid benefits in full to its employees, thereby rejecting the claim that petitioner erred in paying full benefits to its seven employees.

Petitioner moved for the reconsideration of the decision but its motion was denied, hence this petition

W/N the payment in full of the 13th month benefit was an isolated case?

Petition Denied.

According to petitioner, there is a one-year cutoff in the entitlement to the benefits provided in the CBA which is evident from the wording of its pertinent provisions as well as of the existing law.

Petitioner claims that its full payment of benefits regardless of the length of service to the company does not constitute voluntary employer practice. It points out that the payments had been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. According to petitioner, it was only in 2003 that the accounting department discovered the error "when there were already three (3) employees involved with prolonged absences and the error was corrected by implementing the pro-rata payment of benefits pursuant to law and their existing CBA."12

Petitioner describes the situation as a "clear oversight" which should not be taken against it.

We disagree.

Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer.14 The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare,"15 and "to afford labor full protection."16 Said mandate in turn is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor".

PLDT vs. NLRC, 164 SCRA 671 Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company (PLDT), was accused by two (2) complainants of having demanded and received from the the total amount of P3,800 in consideration of her promise to facilitate approval of their applications for telephone installation. Investigated and heard, she was found guilty as charged and accordingly separated from the service. She went tot he Ministry of Labor and Employment claiming she had been illegally removed. After the evidence and arguments of the parties were considered, the company was sustained and the complaint was dismissed for lack of merit. The Labor Arbiter’s decision, however, awarded financial assistance to Abucay equivalent to one month of pay for every year of service. Both Abucay and PLDT appealed to the National Labor Relations Borad, which upheld the

Whether Abucay is entitled to financial assistance / separation pay even if she was removed from employment for just case, on the basis of equity and compassion and due to previous decisions of the Supreme Court.

The rule embodied in the Labor Code is that a person dismissed for cause (as defined therein) is not entitled to separation pay. The case of Firestone Tire vs. Lariosa, Soco vs. Mercantile Corporation of Davao, Filipino Inc. vs. NLRC, and others, constitute the exception, based upon considertations of equity. Equity has been defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. Hence, it cannot prevail against the expressed provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay. Still, where the exception has been applied,

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decision in toto. PLDT filed a petition for certiorari before the Supreme Court. The Supreme Court granted the petition, affirming the decision of the Board except for the grant of separtation pay in the form of financial assistance, which was disallowed.

the justification for the grant of separation pay and the amount or rate of such award. has not been consistent. The Court, thus, made distinctions. Where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. Under such circumstances, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause. Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. A contrary rule would have the effect of rewarding rather than punishing the erring employee for his offense. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged.

Toyota Motors Philippines, Corp. Workers Association v. NLRC

On February 14, 1999, the Union filed a petition for certification election among the Toyota rank and file employees with the National Conciliation and Mediation Board (NCMB). Med-Arbiter Ma. Zosima C. Lameyra denied the petition, but, on appeal, the DOLE Secretary granted the Union’s prayer and directed the immediate holding of the certification election. Med-Arbiter Lameyra’s Order certified the Union as the sole and exclusive bargaining agent of all the Toyota rank and file employees. Toyota challenged said Order via an appeal to the DOLE Secretary.

Meanwhile, the Union submitted its Collective Bargaining Agreement (CBA) proposals to Toyota, but the latter refused to negotiate in view of its pending appeal. The Union filed a notice of strike on Jan. 16, 2001 with the NCMB based on Toyota’s refusal to bargain. The NCMB-NCR converted the notice of strike into a preventive mediation since whether the Union is the exclusive bargaining agent is still being questioned. Both parties were required to attend hearing on Feb. 21, 2001, which was reset to Feb 22. On Feb. 21, 135 Union officers and members failed to render the required overtime work, and instead marched to and staged a picket in front of the BLR office in Intramuros, Manila. The Union also requested that its members be allowed to be absent on Feb. 22 to attend the hearing and instead work on their next scheduled rest day, which was denied by Toyota. Despite the denial, more than 200 employees staged mass actions on Feb 22 and 23.

On Feb. 27, 2001, Toyota sent individual letters to some 360 employees requiring them to explain why they should not be dismissed for their defiance of the company’s directive, for their failure to report for work, and for their participation in the concerted actions. Meanwhile, a Feb. 27, 2001 Manifesto was circulated by the Union which urged its members to participate in a strike/picket and to abandon their posts. The next day, the Union filed with the NCBM another notice of strike for unfair labor practice. The Union nonetheless submitted an explanation

(1) Whether the mass actions committed by the Union on different occasions are illegal strikes; and

(2) Whether separation pay should be awarded to the Union members who participated in the illegal strikes.

1. YES.When is a strike illegal?Ludwig Teller, lists six (6) categories of an illegal strike:

(1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing governmental functions; or(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the requisites of a valid strike]; or(3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause.

Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not strikes since they were legitimate exercises of their right to peaceably assemble and petition the government for redress of grievances. They relied on the doctrine of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc. While the

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in compliance of the notice sent by Toyota claiming that their refusal to work was simply an exercise of their constitutional right to peaceably assemble and petition the government for redress of grievances.

On March 2 and 5, 2001, Toyota issued 2 memoranda to the concerned employees to clarify whether or not they are adopting the March 1, 2001 Union’s explanation as their own and to attend an investigative review but they refused to do so. On March 16, 2001, Toyota terminated the employment of 227 employees for participation in concerted actions in violation of its Code of Conduct and for misconduct under Article 282 of the Labor Code. In reaction to the dismissal, employees staged strikes once more wherein they prevented other workers who reported for work to enter the plants.

DOLE Secretary issued an April 10 Order directing all workers to return to work by April 16 and Toyota to place the workers under payroll reinstatement and enjoining both parties from committing further damage. The Union ended the strike on April 12, 2001. The union members and officers tried to return to work on April 16, 2001 but were told that Toyota opted for payroll-reinstatement authorized by the Order of the DOLE Secretary.

Despite DOLE Secretary’s certification Order, several payroll-reinstated members of the Union staged a protest rally in front of Toyota’s Bicutan and Sta. Rosa Plant on May 28, 2001 bearing placards and streamers in defiance of the April 10 Order.

The NLRC ordered both parties to submit their respective position papers on June 8, 2001. The Union, however, requested for abeyance of the proceedings considering that there is a pending petition for certiorari with the CA assailing the validity of the DOLE Secretary’s April 10 Order.

The NLRC reiterated its previous order for both parties to submit their respective position papers. Despite several accommodations, the Union still failed to submit its position paper but later on claimed it filed its position paper by registered mail. Subsequently, the NLRC declared the strikes staged by the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as illegal, failing to comply with the procedural requirements of a valid strike under Art. 263 of the Labor Code and violating Art. 264 of the Labor Code which proscribes any strike or lockout after jurisdiction is assumed over the dispute by the President or the DOLE Secretary. The NLRC held that both parties must have maintained the status quo after the DOLE Secretary issued Order.

Both parties question the NLRC Decision and Resolution before the CA. CA considered the participation in illegal strikes as serious misconduct – 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. Later on, CA modified its decision reinstating severance compensation based on social justice.

facts in Philippine Blooming Mills Employees Organization are similar in some respects, the Union fails to that there was no labor dispute in Philippine Blooming Mills Employees Organization.

A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment.

The protest actions undertaken by the Union on Feb 21-23 were not valid and proper exercises of their right but are illegal strikes in breach of the Labor Code. The Union’s position is weakened by the lack of permit to hold “rallies.” They were in reality temporary stoppages of work on the convenient excuse that they will hold a rally at the BLR and DOLE offices. However, the Union failed to convince the SC that the med-arbiter was biased against them. The acts of the med-arbiter in the performance of his duties are presumed regular.

The decision not to work for two days was designed and calculated to cripple the manufacturing arm of Toyota. The real and ultimate goal is to coerce Toyota to finally acknowledge the Union as the sole bargaining agent of the company. This is not a legal and valid exercise of the right of assembly and to demand redress of grievance.

The strikes were undertaken without satisfying the prerequisites for a valid strike under Art. 263 of the Labor Code. The Union failed to comply with the following requirements: (1) a notice of strike filed with the DOLE 30 days before the intended date of strike, or 15 days in case of unfair labor practice; (2) strike vote 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 (3) notice given to the DOLE of the results of the voting at least seven days before the intended strike.

The Feb 2001 strikes are also in blatant violation of Sec. D, par. 6 of Toyota’s Code of Conduct which prohibits “inciting or participating in riots, disorders, alleged strikes or concerted actions detrimental to Toyota’s interest.” The penalty for the offense is dismissal. In sum, the February 2001 strikes and walk-outs were illegal as these were in violation of specific

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requirements of the Labor Code and a company rule against illegal strikes or concerted actions.

The March 28-April 12 strikes were also illegal because unlawful means were employed. The acts of the Union officers and members are in palpable violation of Art. 264(e), which proscribes acts of violence, coercion, or intimidation, or which obstruct the free ingress to and egress from the company premises.

2. NO.Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful strike.

The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the illegal strikes. The members’ liability depends on their participation in illegal acts.

Art. 264(a) of the Labor Code provides that a member is liable when he knowingly participates in an illegal act “during a strike.” While the provision is silent on whether the strike is legal or illegal, as long as the members commit illegal acts, in a legal or illegal strike, then they can be terminated. However, when union members merely participate in an illegal strike without committing any illegal act, they cannot be terminated.

Rule of vicarious liability: mere membership in a labor union serves as basis of liability for acts of individuals, or for a labor activity, done on behalf of the union. All the members are engaged in a general conspiracy, and the unlawful acts of the particular members are viewed as necessary incidents of the conspiracy.

But the rule of vicarious liability has been abandoned thus it is only when a striking worker “knowingly participates in the commission of illegal acts during a strike” that he will be penalized with dismissal.

The 227 employees indeed joined the February 21, 22, and 23, 2001 rallies and refused to render overtime work or report for work. These rallies are in reality illegal strikes and said strikes were in violation of the company rule prohibiting acts “in citing or participating in riots, disorders, alleged strikes or concerted action detrimental.”

Evidence is ample to show commission of illegal acts like acts

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of coercion or intimidation and obstructing free ingress to or egress from the company premises. These were patent violations of Art. 264(e) of the Labor Code, and may even constitute crimes under the Revised Penal Code such as threats or coercion. Also, these workers’ acts in participating in the May 23 and 28, 2001 rallies were patent violations of the April 10 Order of the DOLE Secretary, which proscribed the commission of acts that might lead to the “worsening of an already deteriorated situation.” Art. 263(g) is clear that strikers who violate the assumption/certification Order may suffer dismissal from work.

The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor Code exist, the employee is not entitled to separation pay. The dismissed employee, however, is entitled to “whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective bargaining agreement with the employer or voluntary employer policy or practice” or under the Labor Code and other existing laws. The employee still retains the right to receive from the employer benefits provided by law. One exception where separation pay is given even though an employee is validly dismissed is when the court finds justification in applying the principle of social justice well entrenched in the 1987 Constitution.

“Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character… The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged… Social justice cannot be permitted to be refuge of scoundrels. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. “ PLDT v. NLRC

In the instant case, the CA concluded that the illegal strikes committed by the Union members constituted serious misconduct.

There can be no good faith in intentionally incurring absences in a collective fashion just to attend the DOLE hearings. The Union’s strategy was plainly to cripple the operations and bring Toyota to its knees by inflicting substantial financial damage to the latter to compel union recognition. Further damage was experienced by Toyota when the Union again resorted to illegal strikes once more. Moreover, they were fully aware of the

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company rule on prohibition against concerted action inimical to the interests of the company.

Reno Foods Inc. vs. Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan

Petitioner RENO FOODS (RENO) is a manufacturer of canned meat products of which Vicente Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor) was an employee of Reno Foods until her dismissal on October 27, 1998. It is a standard operating procedure of petitioner-company to subject all its employees to reasonable search of their belongings upon leaving the company premises.On October 19, 1998, the guard on duty found six Reno canned goods wrapped in nylon leggingsinside Capor’s fabric clutch bag. Reno accorded Capor several opportunities to explain her side oftenwith the assistance of the union officers of NLM-Katipunan. Unfortunately, Reno terminated Capor.(NLM)– Katipunan filed on behalf of Capor a complaint for illegal dismissal and money claimsagainst petitioners. The complaint prayed that Capor be paid her full backwages as well as moraland exemplary damages. Labor Arbiter found Capor guilty of serious misconduct which is a just cause for termination (Art 232of the Labor Code). he Labor Arbiter found that theft of company property is tantamount to serious misconduct; as such, Capor is not entitled to reinstatement and backwages, as well as moral andexemplary damages. Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who commits theft of company property may be validly terminated and consequently, the said employee is not entitled to separation pay. On appeal, NLRC affirmed the Labor Arbiter’s decision but with modification granting an award of financial assistance in the form of separation pay equivalent to one-half month pay for every year of service. (Both filed MFRs and both were denied). The CA affirmed the NLRC’s award of financial assistance to Capor.

Whether the grant of financial assistance to an employee, who was validly dismissed for theft of company property, is correct.

NO. SC upheld Labor Arbiter’s decision. The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct. Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring employee. We see no reason why the same should not be similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For committing such misconduct, she is definitely not entitled to an award of separation pay. Length of service and a previously clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer.On the date that the appellate court issued its Decision, Capor filed a Manifestation informing the CA of her acquittal in the charge of qualified theft. We held that a criminal conviction is not necessary to find just cause for employment termination. Otherwise stated, an employee’s acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the employer’s interests.

Magallanes vs. Sun Yat SenG.R. No. 160876 January 18, 2008

Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs), petitioners, Grace Gonzales, and Bella Gonzales were all employed as teachers in the Sun Yat Sen Elementary School in Surigao City. Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng and Benito Ang are its directors, while Teotimo Tan is the school treasurer. They are all respondents herein.

On May 22, 1994, respondents terminated the services of petitioners. Thus, on August 3, 1994, they filed with the Sub-Regional Arbitration Branch No. X, National Labor Relations Commission (NLRC), Butuan City, complaints against respondents for illegal dismissal, underpayment of wages, payment of backwages, 13th month pay, ECOLA, separation pay, moral damages, and attorney’s fees. Likewise, on August 22, 1994, petitioner Cotecson filed a

(1) Whether or not the Court of Appeals erred in holding that affixing a wrong docket number on a motion renders it "non-existent;"

(2) Whether OR not the issuance by the NLRC of the Order dated March 30, 2001, amending the amounts of separation pay and backwages, awarded

Petition Granted. The challenged Resolutions dated October 29, 2001, May 8, 2003, and October 10, 2003 in CA-G.R. SP No. 67068 are REVERSED. The Order of the NLRC dated March 30, 2001 in NLRC Case No. M-006176-2001 is SET ASIDE. The Order of the Labor Arbiter dated January 8, 2001 is REINSTATED.

1. Court of Appeals is correct when it ruled that petitioners’ motion for reconsideration of its Resolution dated October 29, 2001 in CA-G.R. SP No. 67068 is "non-existent." Petitioners’ counsel placed a wrong case number in their motion. Where a pleading bears an erroneous docket number and thus "could not be attached to the correct case," the said pleading is, for all

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separate complaint praying for the same reliefs.

by the Court of Appeals to petitioners and computed by the Labor Arbiter, is tantamount to grave abuse of discretion amounting to lack or excess of jurisdiction.

intents and purposes, "non-existent." It has neither the duty nor the obligation to correct the error or to transfer the case to the Seventh Division. However, we opt for liberality in the application of the rules to the instant case in light of the following considerations. First, the rule that negligence of counsel binds the client may be relaxed where adherence thereto would result in outright deprivation of the client’s liberty or property or where the interests of justice so require. Second, this Court is not a slave of technical rules, shorn of judicial discretion in rendering justice; it is guided by the norm that on the balance, technicalities take a backseat against substantive rights. Thus, if the application of the rules would tend to frustrate rather than promote justice, it is always within this Court’s power to suspend the rules or except a particular case from its application.

2. We sustain petitioners’ contention that the NLRC, in modifying the award of the Court of Appeals, committed grave abuse of discretion amounting to lack or excess of jurisdiction. Quasi-judicial agencies have neither business nor power to modify or amend the final and executory Decisions of the appellate courts. Under the principle of immutability of judgments, any alteration or amendment which substantially affects a final and executory judgment is void for lack of jurisdiction.8 We thus rule that the Order dated March 30, 2001 of the NLRC directing that the monetary award should be computed from June 1994, the date petitioners were dismissed from the service, up to June 20, 1995 only, is void.

This case involving a labor dispute has dragged on for over a decade now. Petitioners have waited too long for what is due them under the law. One of the original petitioners, Judith Cotecson, died last September 28, 2003 and has been substituted by her heirs. It is time to write finis to this controversy. The Labor Code was promulgated to promote the welfare and well-being of the working man. Its spirit and intent mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process.

TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA vs ROBERTO C. SERVAÑA

Servaña started out as a security for the Agro-Commercial Security Agency (ACSA) since 1987. The agency had a contract with TV network RPN 9.

On the other hand, Television and Production Exponents, Inc (TAPE). is a company in charge of TV programming and was handling shows like Eat Bulaga! Eat Bulaga! was then with RPN 9.

Whether or not there is an employee-employer relationship existing between TAPE and Servaña.

YES. Servaña is a regular employee.

In determining Servaña’s nature of employment, the Supreme Court employed the Four Fold Test:

1. Whether or not employer conducted the selection and

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In 1995, RPN 9 severed its relations with ACSA. TAPE retained the services of Servaña as a security guard and absorbed him.

In 2000, TAPE contracted the services of Sun Shield Security Agency. It then notified Servaña that he is being terminated because he is now a redundant employee.

Servaña then filed a case for illegal Dismissal. The Labor Arbiter ruled that Servaña’s dismissal is valid on the ground of redundancy but though he was not illegally dismissed he is still entitled to be paid a separation pay which is amounting to one month pay for every year of service which totals to P78,000.00.

TAPE appealed and argued that Servaña is not entitled to receive separation pay for he is considered as a talent and not as a regular employee; that as such, there is no employee-employer relationship between TAPE and Servaña. The National Labor Relations Commission ruled in favor of TAPE. It ruled that Servaña is a program employee. Servaña appealed before the Court of Appeals.

The Court of Appeals reversed the NLRC and affirmed the LA. The CA further ruled that TAPE and its president Tuviera should pay for nominal damages amounting to P10,000.00.

engagement of the employee.

Servaña was selected and engaged by TAPE when he was absorbed as a “talent” in 1995. He is not really a talent, as termed by TAPE, because he performs an activity which is necessary and desirable to TAPE’s business and that is being a security guard. Further, the primary evidence of him being engaged as an employee is his employee identification card. An identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.

2. Whether or not there is payment of wages to the employee by the employer.

Servaña is definitely receiving a fixed amount as monthly compensation. He’s receiving P6,000.00 a month.

3. Whether or not employer has the power to dismiss employee.

The Memorandum of Discontinuance issued to Servaña to notify him that he is a redundant employee evidenced TAPE’s power to dismiss Servaña.

4. Whether or not the employer has the power of control over the employee.

The bundy cards which showed that Servaña was required to report to work at fixed hours of the day manifested the fact that TAPE does have control over him. Otherwise, Servaña could have reported at any time during the day as he may wish.

Therefore, Servaña is entitled to receive a separation pay.

On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, should not be held liable for nominal damages as there was no showing he acted in bad faith in terminating Servaña.

Regular Employee Defined: One having been engaged to perform an activity that is necessary and desirable to a company’s business.

Coca Cola Bottlers (Phils) Inc. v. Climaco

Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement for a period of 1 year with a

WON there exists an employer-employee

No employer-employee relationship exists between the parties.

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monthly salary of Three Thousand Eight Hundred (P3,800.00).

The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions as company doctor to Coca-Cola until he received a letter from petitioner company concluding their retainership agreement effective 30 days from receipt thereof.

Petitioner was already making inquiries regarding his status with the company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician, having served the company continuously for four (4) years. He likewise stated that respondent must receive all the benefits and privileges of an employee under Article 157 (b) of the Labor Code.

relationship between Coca-Cola and Dr. Climaco? The Court, in determining the existence of an employer-

employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called "control test," considered to be the most important element.

The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the respondent’s objectives, duties and obligations, does not tell respondent "how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees of Coca-Cola, in each case."

The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. It is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action.

Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at respondent company’s premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his private practice in the city, where he services his patients, bills them accordingly -- and if it is an employee of respondent company who is attended to by him for special treatment that needs hospitalization or operation, this is subject to a special billing. More often than not, an employee is required to stay in the employer’s workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose.

FRANCISCO vs. NLRC[GR. No.170087 Aug. 31, 2006]

Angelina Francisco has held several positions in Kasei Corporation, to wit: (1) Accountant and Corporate Secretary; (2) Liaison Officer to the City of Makati; (3)

Was Francisco an employee of Kasei Corporation?

In certain cases where the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several

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Corporate Secretary; and (4) Acting Manager.

She performed the work of Acting Manager for five years but later she was replaced by Liza R. Fuentes as Manager. Then, Kasei Corporation reduced her salary and was not paid her mid-year bonus allegedly because the company was not earning well. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. Ultimately, she did not report for work and filed an action for constructive dismissal before the labor arbiter.

positions have been held by the worker. There are instances when, aside from the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving:

(1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished; and

(2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latter’s employment.

Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as:

1. the extent to which the services performed are an integral part of the employer’s business;

2. the extent of the worker’s investment in equipment and facilities;

3. the nature and degree of control exercised by the employer;

4. the worker’s opportunity for profit and loss;5. the amount of initiative, skill, judgment or foresight

required for the success of the claimed independent enterprise;

6. the permanency and duration of the relationship between the worker and the employer; and

7. the degree of dependency of the worker upon the employer for his continued employment in that line of business.

The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his

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continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. She reported for work regularly and served in various capacities, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.

There can be no other conclusion that she is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to the corporation on a regular basis over an indefinite period of engagement. The corporation hired and engaged her for compensation, with the power to dismiss for cause. More importantly, the corporation had the power to control her with the means and methods by which the work is to be accomplished.

PEOPLE’S BROADCASTING (BOMBO RADYO PHILS.) VS. SECRETARY OF LABOR G.R. No. 179652, May 8, 2009

Jandeleon Juezan (“Juezan”) filed a complaint before the DOLE against Bombo Radyo Phils. (“Bombo Radyo”) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE conducted a plant level inspection. The Labor Inspector in his report wrote.

Management representative informed that (Juezan) complainant is a drama talent hired on a per drama ‘participation basis’ hence no employer-employer relationship existed between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking, etc. The management has no control of the talent if he ventures into another contract with other broadcasting industries.

The DOLE Regional Director issued an order ruling that Juezan is an employee of Bombo Radyo, and that Juezan is entitled to his money claims. Bombo Radyo sought reconsideration claiming that the Regional Director gave credence to the documents offered by Juezan without examining the originals, but at the same time the Regional Director missed or failed to consider Bombo Radyo’s evidence. The motion for reconsideration was denied. On appeal, the Acting DOLE Secretary dismissed the appeal on the ground that Bombo Radyo did not post a cash or surety bond and instead submitted a Deed of Assignment

Whether or not the Secretary of Labor has the power to determine the existence of an employer-employee relationship

NO. Art. 128 (b) of the Labor Code, as amended by R.A. 7730 reads:

Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection.

The provision is explicit that the visitorial and enforcement power of the DOLE comes into play only “in cases when the relationship of employer-employee still exists.” This clause signifies that the employer-employee relationship must have existed even before the emergence of the controversy. Necessarily, the DOLE’s power does not apply in two instances, namely: (i) where the employer-employee relationship has ceased; and (ii) where no such relationship has ever existed.

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of Bank Deposit.

Bombo Radyo elevated the case to the Court of Appeals, claiming that it was denied due process when the DOLE Secretary disregarded the evidence it presented and failed to give it the opportunity to refute the claims of Juezan. It maintained that no employer-employee relationship had ever existed between it and Juezan because it was the drama directors and producers who paid, supervised and disciplined him. It also added that the case was beyond the DOLE’s jurisdiction because Juezan’s claim exceeded P5,000.

The Court of Appeals held that the DOLE Secretary had the power to order and enforce compliance with labor standard laws irrespective of the amount of individual claims because the limitation imposed by Art. 29 of the Labor Code had been repealed by R.A. 7730.

Bombo Radyo argues that the NLRC (not the DOLE Secretary) has jurisdiction over Juezan’s claim, in view of Arts. 217 and 128 of the Labor Code. It adds that the Court of Appeals committed grave abuse of discretion when it dismissed their appeal without delving on the issue of employer-employee relationship.

The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of Labor Standards Cases issued by the DOLE Secretary. It reads:

Where employer-employee relationship no longer exists by reason of the fact that it has already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employer-employee relationship no longer exists, the case, whether accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the appropriate branch of the National Labor Relations Commission (NLRC).

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. However, such determination cannot be coextensive with the visitorial and enforcement power itself. Such 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).

Thus, before the DOLE may exercise its powers under Art. 128, two important questions must be resolved: (i) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (ii) Are there violations of the Labor Code or of any labor law?

The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, his office confers jurisdiction on itself which it cannot otherwise acquire.

Nevertheless, a mere assertion of absence of employer-employee relationship does not deprive the DOLE of jurisdiction over the claim. At least a prima facie showing of

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such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power. Without a doubt, Bombo Radyo, since the inception of this case had been consistent in maintaining that Juezan is not its employee. A preliminary determination, based on the evidence offered and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employeremployee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer Juezan to the NLRC for the proper dispensation of his claims. Furthermore, even the evidence relied on by the Regional Director in his order are mere self-serving declarations of Juezan, and hence cannot be relied upon as proof of employer-employee relationship.

SAN MIGUEL CORPORATION v. NLRC, 551 SCRA 410

Ernesto M. Ibias (respondent) was employed by petitioner SMC on 24 December 1978 initially as a CRO operator in its Metal Closure and Lithography Plant.

According to SMC’s Policy on Employee Conduct,absences without permission or AWOPs, which are absences not covered either by a certification of the plant doctor that the employee was absent due to sickness or by a duly approved application for leave of absence filed at least six (6) days prior to the intended leave, are subject to disciplinary action.

The same Policy on Employee Conduct also punishes falsification of company records or documents with discharge or termination for the first offense if the offender himself or somebody else benefits from falsification or would have benefited if falsification is not found on time.

It appears that per company records, respondent was AWOP on a number of dates. For his absences on 2, 4 and 11 January and 28 and 29 April, he was given a written warning dated 9 May 1997 that he had already incurred five (5) AWOPs and that further absences would be subject to disciplinary action . For his absences on 28 and 29 April and 7 and 8 May, respondent was alleged to have falsified his medical consultation card by stating therein that he was granted sick leave by the plant clinic on said dates when in truth he was not.

Respondent was required to explain his AWOPs. Respondent did not comply with these notices. He was again issued two Notices to Explain both dated 3 June 1997, one for his AWOPs from 26 May to 2 June 1997 and another for falsification of medical consultation card entries for 28 April and 8 May 1997.

On 5 June 1997, respondent submitted a handwritten explanation to the charges denying the falsification charge.

W/N the respondent was illegally dismissed?

Petition partly granted.

The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employer’s dismissal of an employee and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. Thus, substantial evidence is the least demanding in the hierarchy of evidence.

The Court agrees with the tribunals below that SMC was unable to prove the falsification charge against respondent. Respondent cannot be legally dismissed on the basis of the uncorroborated and self-serving testimonies of SMC’s employees. SMC merely relied on the testimonies of Marabe and Siwa, who both stated that respondent admitted to them that he falsified his medical consultation card to cover up his excessive AWOPs. For his part, respondent denied having had any knowledge of said falsification, both in his testimony during the company-level investigation and in his handwritten explanation. He did not even claim that he had requested for, nor had been granted any sick leave for the days that the falsified entries were made. Siwa, being responsible for the medical cards, should take the blame for the loss and alleged tampering thereof, and not respondent who had no control over the same.

The issue of the unauthorized absences, however, is another matter.

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Not satisfied with the explanation, SMC conducted an administrative investigation on 17 and 23 June 1997. After the completion of the investigation, SMC concluded that respondent committed the offenses of excessive AWOPs and falsification of company records or documents because of the testimony of the staff assistant and the plant doctor. SMC accordingly dismissed him.

On 30 March 1998, respondent filed a complaint for illegal dismissal against SMC.

The LA rendered his Decision, for the respondent. The labor arbiter believed that respondent had committed the absences pointed out by SMC but found the imposition of termination of employment based on his AWOPs to be disproportionate since SMC failed to show by clear and convincing evidence that it had strictly implemented its company policy on absences. It also noted that termination based on the alleged falsification of company records was unwarranted in view of SMC’s failure to establish respondent’s guilt.

The NLRC affirmed the decision of the LA.

On 28 June 2000, the Court of Appeals rendered its Decision affirming the findings of the LA and NLRC.

However, while respondent has admitted these absences, before the Court, he also seeks to belittle the plain by countering that SMC has not been too rigid in its application of company rules pertaining to leave availments. In the proceedings below he claimed that during the days that he was absent, he had attended to some family matters.

Respondent cannot feign surprise nor ignorance of the earlier AWOPs he had incurred. He was even given a warning.

Thus, even if he was not punished for his subsequent AWOPs, the same remained on record. He was aware of the number of AWOPs he incurred and should have known that these were punishable under company rules. The fact that he was spared from suspension cannot be used as a reason to incur further AWOPs and be absolved from the penalty therefor.

Respondent’s dismissal was well within the purview of SMC’s management prerogative.

Management also has its own rights, which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with [fewer] privileges in life, the Supreme Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine.

What the lower tribunals perceived as laxity, we consider as leniency.

It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition. Thus, in the implementation of its rules and policies, the employer has the choice to do so strictly or not, since this is inherent in its right to control and manage its business effectively . Consequently, management has the prerogative to impose sanctions lighter than those specifically prescribed by its rules, or to condone completely the violations of its erring employees. Of course, this prerogative must be exercised free of grave abuse of discretion, bearing in mind the requirements of justice and fair play.

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Areno, Jr. v. Skycable PCC-Baguio

Petitioner spreading false rumors against Hyacinth Soriano;disciplinary action is management prerogative

January 17, 1995: Petitioner was employed as a cable technician by respondent Skycable PCC-Baguio.

January 17, 2002: an accounting clerk of respondent, Hyacinth Soriano (Soriano), sent to the human resource manager a letter-complaint[5] against petitioner alleging that on two separate occasions, the latter spread false rumors about her (the first in the middle of 2001 and the second on December 22, 2001)

January 27, 2002: Soriano was again insulted by petitioner when the latter approached her and said that she was seen going out with Aldrin Estrada, their field service supervisor, at Central Park, Baguio City. During that incident, petitioner uttered, “Ikaw lang ang nakakaalam ng totoo” with malicious intent and in a provocative manner. Soriano averred that petitioner’s unscrupulous behavior constituted serious and grave offense in violation of the company’s Code of Discipline. Thereafter, respondent issued a Memorandum requiring petitioner to submit explanation. Petitioner submitted but denied the allegations.

January 31, 2002: an administrative investigation was conducted.

February 6, 2002: petitioner was found guilty by the investigating committee for having made malicious statements against Soriano, an offense under the Company Code of Discipline.

Petitioner was suspended but he still reported to office. Thus, respondent sent petitioner a letter denominated as 1st Notice of Termination requiring him to explain why he should not be terminated for insubordination. Petitioner later on requested for further investigation on his alleged violation but respondent denied reiterating that there has been substantial compliance with due process. Petitioner’s answer to respondent’s letter was that he still reported despite the suspension because the accusation against him is baseless and Soriano’s testimony is hearsay. An insubordination case was conducted and petitioner was dismissed thereafter.

Petitioner filed a complaint before the Labor Arbiter assailing the illegality of his suspension and eventual dismissal, which the Labor Arbiter denied for lack of merit. Petitioner appealed before the NLRC which held that the dismissal was illegal, claiming that the testimonies were mere hearsay and that the petitioner was deprived of due process. Respondent moved for reconsideration. NLRC reversed its Decision and affirmed the Labor Arbiter’s decision. Petitioner then filed a petition for certiorari and eventually a Motion for Reconsideration before the CA wherein the latter affirmed the NLRC’s decision and dismissed the MR.

W/N the CA erred in upholding the decision of the NLRC.

Disciplinary action against an erring employee is a management prerogative which, generally, is not subject to judicial interference. However, this policy can be justified only if the disciplinary action is dictated by legitimate business reasons and is not oppressive

1. Suspension validly meted out by respondent on petitioner.

The 3-day suspension of petitioner is not tainted with substantive or procedural infirmities. The CA and NLRC are in agreement with the findings of the investigation as they are supported by evidence on record. Petitioner was given enough opportunity to be heard and defend himself. It has already been held that the essence of due process is simply an opportunity to be heard, a formal or trial-type hearing is not essential.

The decision to suspend petitioner was rendered after investigation and a finding by respondent that petitioner has indeed made malicious statements against a co-employee. The suspension was imposed due to a repeated infraction within a deactivation period set by the company relating to a previous similar offense committed. It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition. Respondent then acted within its rights as an employer when it decided to exercise its management prerogative to impose disciplinary measure on its erring employee.

2. Petitioner was validly dismissed on the ground of willful disobedience in refusing to comply with the suspension order.

Petitioner was definitely aware of his suspension but only feigned ignorance of the same. 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.

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Both requisites are present in the instant case. Upon receipt of the notice of suspension, petitioner did not question such order. 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.

Pantoja vs SCA HYGIENE PRODUCTS

Respondent, a corporation engaged in the manufacture, sale and distribution of industrial paper and tissue products, employed petitioner as a utility man on March 15, 1987. Petitioner was eventually assigned at respondent’s Paper Mill No. 4, the section which manufactures the company’s industrial paper products, as a back tender in charge of the proper operation of the section’s machineries. In a Notice of Transfer dated March 27, 1999,[5] respondent informed petitioner of its reorganization plan and offered him a position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the eventual closure and permanent shutdown of Paper Mill No. 4 effective May 5, 1999. The closure and concomitant reorganization is in line with respondent’s decision to streamline and phase out the company’s industrial paper manufacturing operations due to financial difficulties brought about by the low volume of sales and orders for industrial paper products. However, petitioner rejected respondent’s offer for his transfer. Thus, a notice of termination[6] of employment effective May 5, 1999 was sent to petitioner as his position was declared redundant by the closure of Paper Mill No. 4. He then received his separation pay equivalent to two months pay for every year of service in the amount of P356,335.20 and thereafter executed a release and quitclaim[7] in favor of respondent. On April 5, 1999, respondent informed the Department of Labor and Employment (DOLE) of its reorganization and partial closure by submitting with the said office an Establishment Termination Report[8] together with the list[9] of 31 terminated employees.

On June 20, 2000, petitioner filed a complaint for illegal dismissal against respondent assailing his termination as without any valid cause. He averred that the alleged redundancy never occurred as there was no permanent shutdown of Paper Mill No. 4 due to its continuous operation since his termination

In its defense, respondent refuted petitioner’s claim of illegal dismissal. It argued that petitioner has voluntarily separated himself from service by opting to avail of the separation benefits of the company instead of accepting reassignment/transfer to another position of equal rank and pay. According to respondent, petitioner’s discussion on the alleged resumption of operation of Paper Mill No. 4 is rendered moot by the fact of petitioner’s voluntary separation.Labor Arbiter rendered a Decision[15]

Whether or not respondent is guilty of illegal dismissal.

The petition lacks merit.

Respondent’s right of management prerogative was exercised in good faith.

As held in International Harvester Macleod, Inc. v. Intermediate Appellate Court,[19] the determination of the need to phase out a particular department and consequent reduction of personnel and reorganization as a labor and cost saving device is a recognized management prerogative which the courts will not generally interfere with.

In this case, the abolishment of Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, however, did not outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to be transferred to posts of equal rank and pay.

Respondent did not proceed directly to retrench. This, to our mind, is an indication of good faith on respondent’s part as it exhausted other possible measures other than retrenchment.

Apparently, respondent implemented its streamlining or reorganization plan with good faith, not in an arbitrary manner and without prejudicing the tenurial rights of its employees.

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Labor Arbiter rendered a Decision dismissing petitioner’s complaint for lack of merit.

Upon appeal by petitioner, the NLRC reversed the Labor Arbiter’s Decision by finding petitioner’s separation from employment illegal. The CA reversed the NLRC’s Decision and reinstated the Labor Arbiter’s Decision dismissing the compliant

Ymbong v. ABSCBN ABS-CBN Broadcasting Corporation won a labor case involving a former news anchor who complained that he was illegally fired in 1998 after he went on leave to join a political campaign.

Ymbong co-anchored “Hoy Gising” and “TV Patrol Cebu” in 1993. His stint with ABS-CBN was extended to radio when ABS-CBN Cebu launched its AM station dyAB in 1995. In 1998, Ymbong went on leave saying he would join the campaign for a political group. ABS-CBN officials learned that Ymbong actually ran for councilor in Lapu-Lapu City, where he lost. Ymbong tried to return to ABS-CBN Cebu but his request was denied because of a station policy that considers an employee resigned if he or she runs for an elective post. Ymbong said he reported back to work after his leave ended and got a memo stating that his services were terminated immediately. Ymbong filed a complaint for illegal dismissal and got a favorable ruling. The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN and Ymbong and Patalinghug considering the stipulations in their appointment letters/talent contracts. The Labor Arbiter noted particularly that the appointment letters/talent contracts imposed conditions in the performance of their work, specifically on attendance and punctuality, which effectively placed them under the control of ABS-CBN. The Labor Arbiter likewise ruled that although the subject company policy is reasonable and not contrary to law, the same was not made known to Ymbong and Patalinghug and in fact was superseded by another one embodied in the March 25, 1998 Memorandum issued by Luzon. Thus, there is no valid or authorized cause in terminating Ymbong and Patalinghug from their employment. The NLRC ordered ABS-CBN to reinstate Ymbong and pay him full backwages. The Court of Appeals reversed the labor court’s ruling and declared Ymbong to have resigned from employment. The National Labor Relations Commission ordered ABS-CBN to reinstate Ymbong and pay him full backwages. The CA ruled that ABS-CBN is estopped from claiming that Ymbong was not its employee after applying the provisions of Policy No. HR-ER-016 to him. It noted that said

The Supreme Court (SC) denied the petition filed by Ernesto Ymbong against ABS-CBN, Visayas Cluster head Veneranda Sy and Dante Luzon, former assistant station manager of dyAB. The High Court upheld a ruling of the Court of Appeals, which found Ymbong to have resigned from work and was not illegally dismissed.

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policy is entitled "Policy on Employees Seeking Public Office" and the guidelines contained therein specifically pertain to employees and did not even mention talents or independent contractors. It held that it is a complete turnaround on ABS-CBN’s part to later argue that Ymbong is only a radio talent or independent contractor and not its employee. By applying the subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be an employee and not merely an independent contractor.

ALBERT O. TINIO vs Court of Appeals, SMART Co.

This petition for review on certiorari seeks to annul and set aside the Decision and Resolution of the Court of Appeals dated October 25, 2005 and March 2, 2006, respectively, in CA-G.R. SP No. 90677 which reversed and set aside the Decision of the National Labor Relations Commission (NLRC) dated July 30, 2004, and its Resolution dated April 20, 2005, for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. The appellate court reinstated the Decision of the Labor Arbiter dated December 9, 20035 which dismissed petitioner’s complaint for lack of merit.

On December 1, 2002, Smart Communications, Inc. (SMART) employed petitioner Albert O. Tinio as its General Manager for Visayas/Mindanao (VISMIN) Sales and Operations based in Cebu. On May 2003, private respondent Alex O. Caeg, Group Head, Sales and Distribution of SMART, under the supervision of co-respondent Anastacio Martirez, informed petitioner of his new assignment as Sales Manager for Corporate Sales in SMART’s Head Office in Makati City, effective June 1, 2003.

However, petitioner deferred action on his assignment until he had been apprised of the duties and responsibilities of his new position and the terms and conditions of his relocation. Financial assistance shall be provided for his physical transfer to Manila. Petitioner reported to SMART’s Head Office in Makati and discussed with Ann Margaret V. Santiago, HRD Group Head, his job description, functions, responsibilities, salary and benefits, as well as options for relocation/transfer of his family to Manila.

Petitioner did not report for work. He instead filed a complaint for constructive dismissal with claims for moral and exemplary damages and attorney’s fees against SMART and private respondents Caeg and Martirez.

The Labor Arbiter rendered judgment finding that petitioner was not constructively or illegally dismissed; hence, the complaint was ordered dismissed. But the Labor Arbiter awarded financial assistance to petitioner in the amount of P235,400.00.10

On appeal, the NLRC reversed the Labor Arbiter’s decision and declared that petitioner was illegally dismissed, awarded him full backwages, including the corresponding 13th month pay, moral and exemplary damages, as well as attorney’s fees. Private respondents’ motion for reconsideration was denied. The Court of Appeals reversed and set aside the Decision of the NLRC and

1. Whether or not private respondents’ act of transferring petitioner to its Head Office in Makati was a valid exercise of management prerogative.

2.Whether or not the petitioner was constructively dismissed.

Yes. Smart validly exercised their management prerogative. Court has consistently recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment, provided there is no demotion in rank or a diminution of salary, benefits and other privileges. As a rule, the Court will not interfere with an employer’s prerogative to regulate all aspects of employment which include among others, work assignment, working methods and place and manner of work.

The doctrine is well-settled that it is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications, aptitudes and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. This is a privilege inherent in the employer’s right to control and manage his enterprise effectively. The freedom of management to conduct its business operations to achieve its purpose cannot be denied. When his transfer is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal.

The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges, and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution of pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego his

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reinstated the Decision of the Labor Arbiter dismissing the complaint for lack of merit. Motion for reconsideration was denied.

continued employment.

Transfer from Cebu to Makati does not represent a demotion in rank or diminution of salaries, benefits and other privileges. It was a lateral transfer with the same salaries, benefits and privileges. The title of Corporate Sales Manager, as correctly pointed out by the appellate court, is not derogatory to the petitioner considering that he will still receive the same benefits and salary he received as Senior Manager

We find that petitioner was not demoted since his transfer from Cebu to Makati was being implemented due to a valid corporate reorganization to streamline management operations. The act of management in reorganizing as well as transferring its employees to achieve its stated objectives is a legitimate exercise of their management prerogatives, barring any showing of bad faith which is absent in the instant case. Despite the change of petitioner’s title from "Senior Manager" to "Corporate Sales Manager," he still enjoyed the same rank and salary. By the very nature of their employment, sales executives are expected to travel. They should anticipate re-assignment according to the demands of the employer’s business. In the instant case, petitioner premised his deliberate and unjustified refusal to return to work on the belief that he had been constructively dismissed, despite attempts by SMART to accommodate his demands. Petitioner’s deliberate and unjustified refusal to resume his employment, a form of neglect of duty, despite attempts by the company to hear out his grievances, constitutes abandonment. Petitioner’s failure to report for work, or absence without valid or justifiable reason, coupled with a clear intention to sever employer-employee relationship, leads us to no other conclusion than that he abandoned his work. As such, the award of financial assistance in the amount of P235,400 given by the Labor Arbiter and affirmed by the appellate court must be deleted for lack of basis.

Petition is DENIED. MODIFICATION that the award of financial assistance be DELETED for lack of basis.

Julie’s Bakeshop v. Arnaiz Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, 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 in salary and other benefits. “If the employer fails to overcome this burden of proof, the employee’s transfer is tantamount to unlawful

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constructive dismissal.” [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25, 2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners’ bare assertions of imminent threat from the respondents are mere accusations which are not substantiated by any proof. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of respondents amounted to a demotion.

It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.’s complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in favor of Julie’s bakeshop. Therefore, contrary to Reyes’s claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the Court of Appeals may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact.

Rivera v. Solid Bank Rolando Rivera had been working for the Solidbank since 1977. In Dec 1994, deciding to devote his time and attention to his poultry business in Cavite, Rivera applied for retirement. Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, Rivera acknowledged receipt of the net proceeds of his separation and retirement benefits and promised that "[he] would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers, directors, agents or employees, and their successors-in-interest and will not disclose any information concerning the business of Solidbank, its manner or operation, its plans, processes, or data of any kind."

On May 1995, the Equitable employed Rivera as Manager of its Credit Investigation and Appraisal Division of its Consumers’ Banking Group. Upon discovering this, Solidbank First Vice-President for HRD Celia Villarosa wrote a letter informing Rivera that he had violated the Undertaking. She likewise demanded the return of all the monetary benefits he received in consideration of the SRP within five (5) days from receipt; otherwise, appropriate legal action would be taken against him, when Rivera refused, Solidbank filed complaint.

WON the one year employment ban imposed by Solidbank upon Rivera is null and void for being unreasonable and oppressive and for constituting restraint of trade?

The post-retirement competitive employment ban is unreasonable because it has no geographical limits.

Article 1306 of the NCC provides that the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. On the face of the Undertaking, the post-retirement competitive employment ban is unreasonable because it has no geographical limits; respondent is barred from accepting any kind of employment in any competitive bank within the proscribed period. Although the period of one year may appear reasonable, the matter of whether the restriction is reasonable or unreasonable cannot be ascertained with finality solely from the terms and conditions of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim.

Employer is burdened to establish that a restrictive covenant

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barring an employee from accepting a competitive employment after retirement or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant to public policy. As the Court stated in Ferrazzini v. Gsell, cases involving contracts in restraint of trade are to be judged according to their circumstances, to wit: x x x There are two principal grounds on which the doctrine is founded that a contract in restraint of trade is void as against public policy. One is, the injury to the public by being deprived of the restricted party’s industry; and the other is, the injury to the party himself by being precluded from pursuing his occupation, and thus being prevented from supporting himself and his family.

In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive employment as against public policy, the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employer’s legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy.

United Kimberly-Clark Employees Union v. Kimberly-Clark Philippines

Pursuant to a collective bargaining agreement entered into by United Kimberly-Clark Employees Union and Kimberly-Clark Philippines, Inc. (KCPI), upon the employee's resignation, retirement, disability or death, the company agreed to employ immediate member of the family of an employee provided qualified1. However, KCPI did not set any other employment qualifying standards for the recommendees of retired, resigned, deceased or disabled employees and agreed to hire such recommendees who were high school graduates as an act of liberality and generosity. Through the years, several UKCEU members who resigned or were disabled availed of the said benefits and recommended their successors. Although such recommendees were merely high school graduates, KCPI nonetheless employed them.

On November 7, 1995, KCPI issued Guidelines on the Hiring of Replacements of Retired/Resigned Employee for the effective implementation of the existing CBA. The Guidelines require, among others, that: (a) such recommendees must be at

Whether or not the CA erred in ruling that, under the 1997 CBA, respondent is required to hire only those recommendees of retired/resigned, deceased or disabled members of petitioner who had completed at least a two-year technical/vocational course or a third-year level of college education?

NO. The CA did not err in upholding the validity of KCPI’s exercise of its management prerogative and impose the requirement that recommendees should have at least completed a two-year technical/vocational course or reached the third year of any college-level course.

The Court has recognized in numerous instances the undoubted right of the employer to regulate, according to his own discretion and best judgment, all aspects of employment, including but not limited to, work assignments and supervision, working methods and regulations, time, place and manner of work, processes to be followed, and hiring, supervision, transfer, discipline, lay off, dismissal and recall of workers. Encompassing though it could be, the exercise of this right is not absolute. Management prerogative must be exercised in

1 Article XX, Section 1 of the CBA reads: Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family of an employee  provided qualified, upon the employee's resignation, retirement, disability or death. In case of resignation, however, employment of an immediate member of the family of an employee may be allowed provided the employee has rendered a service of ten (10) years and above and the resignation is not a forced resignation. For the purpose of this section, the phrase “immediate member of the family of an employee” shall refer to the employee's legitimate children and in default thereof to the employee's collateral relative within the third civil degree. The recommendee of the retired/resigned employee shall, if qualified, be hired on probationary status.

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least 18 years of age but not more than 30 years old at the time of the hiring, and (b) have completed, after graduating from high school, at least a two-year technical/vocational course or a third year level of college education.

UKCEU requested for a grievance meeting. However, in the second half of 1998, KCPI started to suspend the implementation of the CBA. This was partly due to the depressed economic conditions then prevailing in the Philippines, and in compliance with the freeze hiring policy of its Asia-Pacific headquarters. It refused to hire, as regular employees, 80 recommendees of retiring employees. KCPI and UKCEU failed to settle the matter through the existing grievance machinery. The matter was brought to Voluntary Arbitration.

UKCEU explained that while KCPI, in general, had the discretion to raise the educational qualification of its applicants for employment, this did not apply to recommendees due to the manner by which the pertinent provisions of the CBA was implemented in the past. UKCEU emphasized that its benefits had already been institutionalized in the CBAs executed by the parties through the years. Thus, in refusing to hire the 80 recommendees as regular employees, KCPI violated its CBA with the union, equivalent to breach of contract and unfair labor practice.

KCPI maintained that pursuant to its management prerogative, it had the right to determine hiring standards under the CBA without the consent or approval of UKCEU. It argued that like applicants for regular positions, recommendees of retiring employees must also be college graduates, in accordance with its November 7, 1995 Guidelines. It explained that such recommendees are applying for regular positions and not as casual, who are hired on a temporary basis.

The Voluntary Arbitrator ruled that since the CBA is the law between the parties, KCPI could not just unilaterally change or suspend the implementation of the existing employment requirements, even in the light of the business situation then prevailing in the Philippines. Voluntary Arbitrator found that the Company cannot suspend implementation of the existing CBA unilaterally by upgrading the educational qualifications of “applicants-replacements” than are required previously.

KCPI assailed the decision of the VA via petition for review before the Court of Appeals (CA). The CA ruled that KCPI may validly exercise its management prerogative and impose the requirement that recommendees should have at least completed a two-year technical/ vocational course or reached the third year of any college-level course. While the right of KCPI to set hiring standards for recommendees under the disputed provision of the CBA, the CA concluded that the right of retired, resigned, disabled or deceased employees to recommend their replacements is not absolute. UKCEU moved for a partial reconsideration of the CA Decision with respect to its ruling on the upgraded educational qualification of the recommendees. The CA denied the motion in a Resolution. UKCEU, sought relief from the Supreme Court.

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, valid agreements such as the individual contract of employment and the collective bargaining agreement, and general principles of justice and fair play.

A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system. The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties.

If, in a CBA, the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties.

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STAR PAPER CORPORATION vs RONALDO D. SIMBOL

Petitioner Star Paper Corporation (the company) is a corporation engaged in trading – principally of paper products. Josephine Ongsitco is its Manager of the Personnel and Administration Department while Sebastian Chua is its Managing Director.

Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. Simbol met Alma Dayrit, also an employee of the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy, viz.:

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company.

2. In case of two of our employees developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above.

Simbol resigned pursuant to the company policy.

Comia was hired by the company. She met Howard Comia, a co-employee, whom she married.

Ongsitco likewise reminded them that pursuant to company policy, one must resign should they decide to get married. Comia resigned.

Estrella was hired. She met Luisito Zuñiga (Zuñiga), also a co-worker. Petitioners stated that Zuñiga, a married man, got Estrella pregnant.

The company allegedly could have terminated her services due to immorality but she opted to resign.

The respondents each signed a Release and Confirmation Agreement. They stated therein that they have no money and property accountabilities in the company and that they release the latter of any claim or demand of whatever nature.

Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not resign voluntarily; they were compelled to resign in view of an illegal company policy.

As to respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who misrepresented himself as a married but separated man. After he got her pregnant, she discovered that he was not separated. Thus, she severed her

Whether the subject 1995 policy/regulation is violative of the constitutional rights towards marriage and the family of employees and of Article 136 of the Labor Code.

ES.These courts find the no-spouse employment policy invalid for failure of the employer to present any evidence of business necessity.

They hold that the absence of such a bona fide occupational qualification invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office. Thus, they rule that unless the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an employer may not discriminate against an employee based on the identity of the employee’s spouse.

This is known as the bona fide occupational qualification exception. To justify a bona fide occupational qualification, the employer must prove two factors:(1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.

We do not find a reasonable business necessity in the case at bar.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee.

The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure.

The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.

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relationship with him to avoid dismissal due to the company policy. she met an accident and was advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work but she found out that her name was on-hold at the gate. She was denied entry. She was directed to proceed to the personnel office where one of the staff handed her a memorandum. The memorandum stated that she was being dismissed for immoral conduct. She refused to sign the memorandum because she was on leave for twenty-one (21) days and has not been given a chance to explain.

The management asked her to write an explanation. However after submission of the explanation, she was nonetheless dismissed by the company. Due to her urgent need for money, she later submitted a letter of resignation in exchange for her thirteenth month pay. Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorney’s fees.

They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code. They also contended that they were dismissed due to their union membership.

Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of merit.

On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter.

Respondents filed a Motion for Reconsideration but was denied by the NLRC

They appealed to respondent court via Petition for Certiorari. the Court of Appeals reversed the NLRC decision.

Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid exercise of management prerogative. Corollarily, the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact that her resignation letter was written in her own handwriting. Both ruled that her resignation was voluntary and thus valid. The respondent court failed to categorically rule whether Estrella voluntarily resigned but ordered that she be reinstated along with Simbol and Comia. Estrella avers that she went back to work but was dismissed due to her alleged immoral conduct., it is illogical for Estrella to resign and then file a complaint for illegal dismissal. Given the lack of sufficient evidence on the part of petitioners that the resignation was voluntary, Estrella’s dismissal is declared illegal.

PEPSI COLA PRODUCTS PHILIPPINES, INC. AND ERNESTO F. GOCHUICO, PETITIONERS, VS. EMMANUEL V. SANTOS, RESPONDENT.

Respondent Emmanuel V. Santos was employed by Pepsi Cola products and was promoted to acting regional sales manager at the libis sales office in 1996. In 1997 respondent received from petitioner memorandum charging him of fraud and acts of dishonesty out of alleged artificial sales by the sales personnel of the libis sales office in March 1996 allegedly upon instruction of respondent resulting to damages amounting to P795, 454.54. also apprised respondent of preventive suspension and hearings of the administrative investigation. Respondent found guilty and was dismissed.

Respondent filed for illegal dismissal which the labor arbiter dismissed. On appeal the NLRC remanded the case to the labor arbiter. The decision is that petitioners failed to satisfactorily prove the serious charges against respondent and ordered petitioners separation pay of 165,000 for 11 yrs of service, 180,000 1yr backwage, 345,000 and atty fees equivalent to 10%of the monetary award.

In addition for the illegal dismissal apparentlytainted with malice and bad faith, an award of 1000,000 as moral damagesand 50,000 as exemplary damages.

Whether respondent was validly dismissed; whether trial on merits was necessary; whether award of atty’s fees was proper?

First issue involves question of fact not an error of law, however the records were still reviewed carefully and petitioner failed to present evidence to justify respondents dismissal.

Second issue, it is not legally objectionable, for being violative of due process, for the LA to resolve acase based solely on the position papers, affidavits or documentaryevidence submitted by the parties. third issue, we have ruled that atty’sfees may be awarded only in case of an illegal dismissal.

In this case there is an absence of evidence that respondents suspension and eventual dismissal were tainted with malice and bad faith hence, the NLRC deletedthe award for moral and exemplary damages. Although the labor arbiterawarded atty’s fees, the basis for the same was not discussed in the decision.

There must always be a factual basis for the award of atty’s

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Petitioners appealed to NLRC whichaffirmed LA’s decision but deleted the award of moral and exemplarydamages in the absence of evidence of malice and bad faith. Petitioners elevated matter to CA which affirmed the NLRC decision.

fees,consistent with the policy that no premium should be placed on the right tolitigate. Atty’s fees award should be deleted.

EDI-STAFFBUILDERS INTERNATIONAL, INC., vs.NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN

Petitioner EDI is a corporation engaged in recruitment and placement of OFWs. ESI is another recruitment agency, which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia. OAB asked EDI for curricula vitae of qualified applicants for the position of "Computer Specialist.” OAB informed EDI that it selected Gran for the position. The letter also stated that if Gran agrees to the terms and conditions of employment (monthly salary of SR (Saudi Riyal) 2,250.00 (USD 600.00)), EDI may arrange for Gran's immediate dispatch.

Gran accepted the offer and signed the contract with a monthly salary of USD 850.00 for a period of 2 years. Gran was then deployed to Riyadh, Saudi Arabia. Upon arrival, Gran questioned the discrepancy in his monthly salary—his employment contract stated USD 850.00; while his POEA Information Sheet indicated USD 600.00 only. However, through the assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month.

After 5 months his employment was terminated on the grounds of: (1) Non-compliance to contract requirements by the recruitment agency; (2) Non-compliance to pre-qualification requirements by the recruitment agency; (3) Insubordination or disobedience to Top Management Order and/or instructions.

Gran received SR 2,948.000 as his final pay and on the same day executed a Declaration releasing OAB from any financial obligation towards him. When he arrived in the Philippines, he instituted a complaint against ESI, OAB, Country Bankers Insurance Corporation, and Western Guaranty Corporation with the NLRC for underpayment of salary and illegal dismissal.

Ruling of the Labor Arbiter: There was neither underpayment nor illegal dismissal. His pay was equivalent to that stipulated in the contract. He failed to refute EDI’s allegations. He was validly dismissed due to insubordination, disobedience and his failure to submit daily activities.

Ruling of the NLRC: Reversed the Labor Arbiter’s Decision. EDI's harmless transfer of Gran's contract to ESI is actually "reprocessing," a prohibited transaction under Article 34 (b) of the Labor Code. This scheme constituted misrepresentation through the conspiracy between EDI and ESI in misleading Gran and even POEA of the actual terms and conditions of the OFW's employment. ‘

Ruling of CA: EDI failed to prove that private respondent was terminated for a valid cause and in accordance with due process; and that Gran's Declaration releasing OAB from any monetary obligation had no force and effect. EDI failed to show that the submission of the "Daily Activity Report" was a part of Gran's duty or the company's policy. The court also held that even if Gran was guilty of insubordination, he should have just been suspended or reprimanded, but not

W/N Gran should be entitled to backwages.

As enunciated in R.A. No. 8042 (Migrant Workers and Overseas Filipinos Act), when the contract is for a fixed term and the employees are dismissed without just cause, they are entitled to the payment of their salaries corresponding to the unexpired portion of their contract. For cases arising after the effectivity of R.A. No. 8042, when the termination of employment is without just cause, the worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term whichever is less.

In the present case, the employment contract shall be valid for a period of 2 years. Gran arrived in Riyadh and started to work on February 7, 1994; hence, his employment contract is until February 7, 1996. Since he was illegally dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled to backwages corresponding to the unexpired portion of his contract, which was equivalent to USD 16,150.

Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more particularly those executed by employees.

Parameters for valid compromise agreements, waivers and quitclaims:If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind…Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, it will be valid.

Gran’s quitclaim is void. The salary paid to Gran upon his termination is unreasonably low, even lower than his monthly salary of SR 3,190.00. If the Declaration is a quitclaim, then the consideration should be more than the monthly salary. A quitclaim will understandably be lower than the sum total of the amounts and benefits that can possibly be awarded to employees or to be earned for the remainder of the contract period since it is a compromise where the employees will have to forfeit a certain portion of the amounts they are claiming in exchange for the early payment of a compromise amount. The court may however step in when such amount is

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dismissed. The Declaration signed by Gran did not bar him from demanding benefits to which he was entitled. The appellate court found that the Declaration was in the form of a quitclaim, and as such is frowned upon.

unconscionably low or unreasonable although the employee voluntarily agreed to it.

Factual circumstances would also show that Gran did not voluntarily execute the quitclaim. Gran was forced to sign the Declaration and constrained to receive the small amount even if it was against his will. He needed the amount to pay for his ticket to Saudi.

Contents of a valid quitclaim/waiver:

1. A fixed amount as full and final compromise settlement;2. The benefits of the employees if possible with the corresponding amounts, which the employees are giving up in consideration of the fixed compromise amount;3. A statement that the employer has clearly explained to the employee in English, Filipino, or in the dialect known to the employees—that by signing the waiver or quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are due them under the law; and4. A statement that the employees signed and executed the document voluntarily, and had fully understood the contents of the document and that their consent was freely given without any threat, violence, duress, intimidation, or undue influence exerted on their person.

It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the employee. There should be two (2) witnesses to the execution of the quitclaim who must also sign the quitclaim. The document should be subscribed and sworn to under oath preferably before any administering official of the Department of Labor and Employment or its regional office, the Bureau of Labor Relations, the NLRC or a labor attaché in a foreign country. Such official shall assist the parties regarding the execution of the quitclaim and waiver. The compromise settlement becomes final and binding under Article 227 of the Labor Code which provides that:

[A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of Labor Relations or the regional office of the DOLE, shall

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be final and binding upon the parties and the NLRC or any court "shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

The foregoing rules on quitclaim or waiver shall apply only to labor contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said contracts. Otherwise, the foreign laws shall apply.

AUJERO vs. VS. PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION

It was in 1967 that the petitioner started working for respondent Philippine Communications Satellite Corporation (Philcomsat) as an accountant in the latter's Finance Department. On August 15, 2001 or after thirty-four (34) years of service, the petitioner applied for early retirement. His application for retirement was approved, effective September 15, 2001, entitling him to receive retirement benefits at a rate equivalent to one and a half of his monthly salary for every year of service. At that time, the petitioner was Philcomsat's Senior Vice-President with a monthly salary of Two Hundred Seventy-Four Thousand Eight Hundred Five Pesos (P274,805.00).

On September 12, 2001, the petitioner executed a Deed of Release and Quitclaim[5] in Philcomsat’s favor, following his receipt from the latter of a check in the amount of Nine Million Four Hundred Thirty-Nine Thousand Three Hundred Twenty-Seven and 91/100 Pesos (P9,439,327.91).[6]

Almost three (3) years thereafter, the petitioner filed a complaint for unpaid retirement benefits, claiming that the actual amount of his retirement pay is Fourteen Million Fifteen Thousand and Fifty-Five Pesos (P14,015,055.00) and the P9,439,327.91 he received from Philcomsat as supposed settlement for all his claims is unconscionable, which is more than enough reason to declare his quitclaim as null and void.

According to the petitioner, he had no choice but to accept a lesser amount as he was in dire need thereof and was all set to return to his hometown and he signed the quitclaim despite the considerable deficiency as no single centavo would be released to him if he did not execute a release and waiver in Philcomsat's favor.

The petitioner claims that Philcomsat has no right to withhold any portion of his retirementto the Retirement Plan is for the exclusive benefit of Philcomsat employees and Philcomsat had expressly recognized that it has no right or claim

Whether the quitclaim executed by the petitioner in Philcomsat’s favor is valid, thereby foreclosing his right to institute any claim against Philcomsat.

Absent any evidence that any of the vices of consent is present and considering the petitioner’s position and education, the quitclaim executed by the petitioner constitutes a valid and binding agreement.It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.While the petitioner bewailed as having been coerced or pressured into signing the release and waiver, his failure to present evidence renders his allegation self-serving and inutile to invalidate the same. That no portion of his retirement pay will be released to him or his urgent need for funds does not constitute the pressure or coercion contemplated by law.

That the petitioner was all set to return to his hometown and was in dire need of money would likewise not qualify as undue pressure sufficient to invalidate the quitclaim. "Dire necessity" may be an acceptable ground to annul quitclaims if the consideration is unconscionably low and the employee was tricked into accepting it, but is not an acceptable ground for annulling the release when it is not shown that the employee has been forced to execute it.[

The petitioner is not an ordinary laborer. He is mature, intelligent and educated with a college degree, who cannot be easily duped or tricked into performing an act against his will. As no proof was presented that the said quitclaim was entered into through fraud, deception, misrepresentation, the same is valid and binding.

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over the trust fund even on the portion pertaining to its contributions.

Labor Arbiter Joel S. Lustria (LA Lustria) issued a Decision[13] in the petitioner’s favor, directing Philcomsat to pay him the amount of P4,575,727.09 and P274,805.00, representing the balance of his retirement benefits and salary for the period from August 15 to September 15, 2001, respectively.

He found the consideration supporting the subject quitclaim unconscionable and ruled that the respondent failed to substantiate its claim that the amount received by the petitioner was a product of negotiations between the parties.

The NLRC granted Philcomsat’s appeal and reversed and set aside LA Lustria’s May 31, 2006 Decision. According to the NLRC, the petitioner failed to allege, much less, adduce evidence that Philcomsat employed means to vitiate his consent to the quitclaim.

The CA found no merit in the petitioner’s claims, holding that the NLRC did not act with grave abuse of discretion in giving due course to the respondent’s appeal

Land and Housing Development Corporation v. Esquillo

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