LABOR LAWREVIEWCase Digests – Atty. Marlon Manuel

AmsherylSAN BEDA COLLEGE OF LAW | 4B 2015-2016

BAHILLO. BARRUGA. BAUTISTA. BORLAGDAN. CABOCHAN. CABRERA. CALIPAY. CAMBRI. CHIONG. DATUIN.DIAZ. DIOLA. ENCARNACION. FERNANDEZ, L. FERNANDEZ, R. FERNANDO. GONZALES. GRATUITO. ILAGAN.JUANICO. MACALOS. MADAMBA. MANCENIDO. MANZANO. ONG. PANGILINAN. PERALTA. RAGAZA. RIVERA.SENORAN. SEPACIO. SURTIDA. TAN. TANDAAN. TUMANG. YUMANG-MEDINA.

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PART I

RIGHT TO SELF-ORGANIZATION

Concept and ScopeArts. 243, 246, 277 (c), 212 (e, f)Omnibus Rules, Book V, Rule I-Rule II, as amended by D.O. 40, series of 2001

NUWHRAIN-MPHC v Secretary of Labor and Employment, July 31, 2009

Labor Organizations and Registration of Unions

Labor Code: Arts. 212 (g, h), 231, 234-242, 277 (a)Omnibus Rules, Book V, Rule I, Sec. I (a, h-p, w, cc, ee, ff, jj, kk, zz, ccc), Rule III-V, XIV-XV, as amended by

D.O. 40-03, as further amended by D.O. 40-B.

R.A. No. 9481, Sec. 1-9Department Order No. 40-F-03, series of 2008.

(Implementing Rules for R.A. 9481 amendments)

San Miguel Corporation Employees Union-Philippine Transport and General Workers Organization (SMCEU-PTGWO) v. San Miguel Packaging Products Employees Union-Pambansang Diwa Ng Manggagawang Pilipino(SMPPEU-PDMP), September 12, 2007The Heritage Hotel Manila (Owned and Operated By Grand Plaza Hotel Corporation) v. Pinag-Isang Galing at LakasNg Mga Manggagawa sa Heritage Manila (Piglas-Heritage), October 30, 2009Eagle Ridge Golf and Country Club v. CA, March 18, 2010Samahang Manggagawa sa Charter Chemical (SMCC-SUPER) v. Charter Chemical and Coating Corp, March 16,2011Yokohama Tire Phils. v. Yokohama Employees Union, March 10, 2010

Eligibility for Membership; Special Groups of Employees

Labor Code: Arts. 245, 212 (m)R.A. No. 9481, Sec. 8-9Department Order No. 40-F-03, series of 2008Omnibus Rules, Book V, Rule I, Sec. I (hh), (nn), (xx), as amended by D.O. 40

Cathay Pacific Steel Corp. v. CA, August 2006San Miguel Corp. Supervisors and Exempt Union v. Laguesma, August 15, 1997Standard Chartered Bank Employees Union (SCBEU-NUBE) v. Standard Chartered Bank, April 22, 2008Coastal Subic Bay Terminal v. DOLE, November 20, 2006Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery v. Asia Brewery, August 3, 2010San Miguel Foods v SMC supervisors and Exempt Union, August 1, 2011

Union Security Clause

BPI v BPI Employees Union, August 10, 2010 (Main Decision and Dissenting Opinion), October 19, 2011General Milling Corp v Casio, March 10, 2010PICOP Resources v Taneca, August 9, 2010Victoriano v Elizalde Rope Workers Union, 59 SCRA 54Kapatiran sa Meat and Canning Division v Ferrer-Calleja, 162 SCRA 367

Conditions of Membership and Rights of Members

Labor Code: Arts. 241, 274, 222 (b)Omnibus Rules, Book V, Rule XI, XII, XIII, XVIII, XX, as amended by D.O. 40

NOTE: Compare the original provisions of the Labor Code with the amended provisions of R.A. No. 9481.

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For reference:Atlas Litographic Services v. Laguesma, 205 SCRA 12De La Salle University Medical Center v. Laguesma, 294 SCRA 141Tagaytay Highlands v. Tagaytay Highlands Employees Union- PTGWO, January 22, 2003

PART IIBARGAINING UNIT

Omnibus Rules, Book V, Rule I, Sec. 1 (d, t), as amended by D.O. 40-03

De La Salle v. De La Salle University Employees’ Association, 330 SCRA 363San Miguel Foods v. San Miguel Corp. Supervisors and Exempt Union, August 1, 2011Holy Child Catholic School v. HCCS-TELU-PIGLAS, July 23, 2013

BARGAINING AGENT, CERTIFICATION ELECTION PROCEEDINGSLabor Code: Arts. 255-259, 258-A (Note: Arts. 256 & 257 had been amended by R.A. 9481)

Omnibus Rules, Book V , Rule I, Sec. 1 (d, h, j, o, p, q, t, ll, ss, bbb),Rules VI-X, as amended by D.O. 40, and further amended by D.O. 40-F-03, series of 2008

Republic of the Philippines, represented by DOLE, v. Kawashima Textile, July23, 2008

St. James School of Quezon City v. Samahang Manggagawa sa St. James, November 23, 2005DHL Phils. United Rank and File Association v. Buklod ng Manggagawa ng

DHL Phils., July 22, 2004Sta. Lucia East Commercial Corporation v. Hon. Secretary Of Labor, August 14,

2009Samahan Ng Mga Manggagawa Sa Samma–Lakas Sa Industriya Ng

Kapatirang Haligi Ng Alyansa (Samma–Likha) v. Samma Corporation, March 13, 2009Chris Garments Corporation v. Hon. Patricia A. Sto. Tomas and Chris Garments Workers Union-

PTGWO, January 12, 2009National Union Of Workers In Hotels, Restaurants And Allied Industries- Manila

Pavilion Hotel Chapter v. Secretary of Labor, July 31, 2009Eagle Ridge Golf and Country Club v. CA, March 18, 2010PICOP Resources, Inc. v. Tañeca, August 9, 2010Legend International Resorts v. Kilusang Manggagawa ng Legend, February 23, 2011Samahang Manggagawa Sa Charter Chemical (SMCC-SUPER) v. Charter Chemical and Coating Corp., March 16,

2011

Voluntary Recognition

Sta. Lucia East Commercial Corporation v. Hon. Secretary Of Labor, August 14, 2009

For reference: Coastal Subic Bay Terminal v. DOLE, November 20, 2006

PART IIICOLLECTIVE BARGAINING

Labor Code: Arts. 250-254, 247-249, 261Omnibus Rules, Book V, Rule I, Sec. 1 (d, h, j, t, bbb), Rules XVI-XVII, as amended by D.O. 40-03

Art. 231, 212 (n), 260-262 (b), 277 (f,g,h)Omnibus Rules, Book V, Rule XIX, XXI, as amended by D.O. 40-03

Union of Filipro Employees v. Nestle Phils., March 3, 2008PAL v. PALEA, March 12, 2008San Miguel Foods v. San Miguel Corporation Employees Union, October 5, 2007Capitol Medical Center v. Trajano, June 30, 2005Standard Chartered Bank Employees Union v. Confesor, June 16, 2004General Milling Corporation v. CA, February 11, 2004

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FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO) v. Sama-SamangNagkakaisang Manggagawa Sa FVC-Solidarity Of Independent And General Labor Organizations (SANAMA-FVC-SIGLO), November 27, 2009RFM Corporation v. KAMPI-NAFLU-KMU, February 4, 2009Fulache v. ABS-CBN, GR No. 183810, January 21, 2010Employees Union of Bayer v. Bayer Phils., December 6, 2010General Milling Corp. Independent Labor Union v. General Milling, June 15, 2011Malayan Employees Association v. Malayan Insurance Co., February 2, 2010Santuyo v. Remerco Garments, March 22, 2010Insular Hotel Employees Union v. Waterfront Insular Hotel, September 22, 2010Cirtek Employees Labor Union v. Cirtek Electronics, November 15, 2010Eastern Telecoms v. Eastern Telecoms Employees Union, February 8, 2012PNCC Skyway Traffic Management & Security Division Workers Organization v. PNCC Skyway Corp., February17, 2010Supreme Steel v. Nagkakaisang Manggagawa sa Supreme, March 28, 2011

For reference:

Halagueña, et al., and other flight attendants of Philippine Airlines v PhilippineAirlines, October 2, 2009

PASSI v. Boclot, September 28, 2007

PART IVUNFAIR LABOR PRACTICES

Labor Code: Arts. 247-249, 261

Employees Union of Bayer Phils. v. Bayer Phils., December 6, 2010Prince Transport v. Garcia, January 12, 2011Manila Mining Employees Corp. v. Manila Mining, September 29, 2010Central Azucarera de Bais Employees Union v. Central Azucarera de Bais, Nov. 17, 2010BPI Employees Union-Davao v. BPI, July 24, 2013Pepsi Cola Products v. Molon et al., February 18, 2013Royal Plant Workers Union v. Coca Cola Bottlers, April 15, 2013Goya v. Goya Employees Union, January 21, 2013

STRIKES, LOCKOUTS AND CONCERTED ACTIONS

Arts. 212 (o-s), 263-266, 254; Rules, Book V, Rule XXII, as amended by D.O. 40-03, and further amended by D.O. 40-A and D.O. 40-G-03 (2010)

Bukluran ng Manggagawa sa Clothman Knitting v. CA, January 17, 2005Steel Corporation v. SCP Employees Union, April 16, 2008Biflex Phils. v. Filflex Industrial & Manufacturing Corp., Dec. 19, 2006Bascon & Cole v. CA, February 5, 2004Toyota Motor Phils. Corp. Workers Association v. Toyota Motor Phils, Oct. 19, 2007NUWHRAIN Dusit Hotel Nikko Chapter v. CA, November 11, 2008Capitol Medical Center v. NLRC, GR 147080, April 26, 2005Trans-Asia Shipping Lines-Unlicensed Crews Employees Union v. CA, July 7, 2004Manila Diamond Hotel Employees Union v. CA, Secretary, December 16, 2004Philcom Employees Union v. Phil. Global Communications, July 17, 2006Nissan Motors v. Secretary, June 21, 2006FEU-NRMF v. FEU-NRMFEA-AFW, October 16, 2006Pilipino Telephone Corporation v. PILTEA, June 22, 2007Club Filipino v. Bautista, July 13, 2009A. Soriano Aviation v. Employees Association of A. Soriano Aviation, August 14, 2009Jackbilt Industries v. Jackbilt Employees Union, March 20, 2009Alcantara & Sons v. CA, GR G.R. No. 155109, September 29, 2010PHIMCO Industries, Inc. v. PILA, August 11, 2010Solidbank Corporation v. Gamier, November 15, 2010

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Escario v. NLRC, September 27, 2010Bagong Pagkakaisa ng Manggagawa sa Triumph v. Secretary, July 5, 2010Fadriquelan v. Monterey Foods, June 8, 2011Magdala Multipurpose & Livelihood v. KMLMS, October 19, 2011Automotive Engine Rebuilders v. Progresibong Unyon, July 13, 2011; January 16, 2013Naranjo v. Biomedica Heath Care, September 19, 2012VCMC v. Yballe, January 15, 2014

PART VEMPLOYER-EMPLOYEE RELATIONSHIP

A. Elements of Relationship

Labor Code: Article 97 (a), (b), (c), (e); 167 (f), (g); 212 (e) & (f)Cases:

Television and Production Exponents v. Servaña (GR 167648, January 28,2008)ABS-CBN Broadcasting Corp. v. Nazareno (GR 164156, Sept. 26, 2006)Fulache v. ABS-CBN (January 21, 2010)

(These three cases should be read in relation to Sonza v. ABS-CBNBroadcasting Corporation [GR 138051, June 10, 2004])

Bernante v. PBA (September 14, 2011)Abella v. PLDT (GR 159469, June 8, 2005)Consulta v. CA (GR 145443, March 18, 2005)Villamaria v. CA (GR 165881, April 19, 2006)Republic of the Philippines v. ASIAPRO Cooperative (GR 172101, November

23, 2007)Phil. Global Communications v. De Vera (GR 157214, June 7, 2005)Coca Cola Bottlers v. Climaco (GR 146881, February 5, 2007)Chavez v. NLRC (GR 146530, January 17, 2005)Angelina Francisco v. NLRC (GR 170087, August 31, 2006)Tongko v. Manufacturers Life Insurance (GR 167622, June 29, 2010 & January

25, 2011)Intel Technology v. NLRC & Cabiles, February 5, 2014Matling Industrial v. Coros (October 13, 2010)Cosare v. Broadcom Asia, February 5, 2014Atlanta Industries v. Sebolino (January 26, 2011)Republic v. Asiapro Cooperative (November 23, 2007)

B. Independent Contractors and Labor-Only Contractors

Labor Code: Art. 106-109Department Order No. 18-A, series of 2011 (which amended D.O. No. 18, s. 2002)Cases:

Philippine Airlines v. Ligan (GR 146408, February 29, 2008)San Miguel Corporation v. Aballa (GR 149011, June 28, 2005)Meralco Industrial Engineering Services v. NLRC (GR 145402, March 14, 2008)Manila Electric Company v. Benamira (GR 145271, July 14, 2005)Dole Phils. v. Esteva (GR No. 161115, November 30, 2006)Aliviado v. Procter and Gamble (GR 160506, March 9, 2010)Temic Automotive v. Temic Automotive Phils. Employees Union (GR 186965,

December 23, 2009)Smart Communications v. Astorga (GR 148132, January 28, 2008)Coca-Cola Bottlers v. Agito (GR 179546, February 13, 2009)Manila Water v. Dalumpines (GR 175501, October 4, 2010)Babas v. Lorenzo Shipping (GR 186091, December 15, 2010)Teng v. Pahagac (GR 169704, November 17, 2010)

PART VICLASSES OF EMPLOYEES

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Arts. 278, 280-281; Rules, Book VI, Secs. 5-6

Magis Young Achievers’ Learning Center v. Manalo, February 13, 2009Pier 8 Arrastre & Stevedoring Services v. Boclot, September 28, 2007The Peninsula Manila v. Alipio, June 17, 2008Rowell Industrial Corporation v. CA, March 7, 2007ABS-CBN Broadcasting Corp. v. Nazareno, September 26, 2006Kimberly Clark Phils. v. Secretary, November 23, 2007Benares v. Pancho, April 29, 2005Hacienda Bino/Hortencia Starke v. Cuenca, April 15, 2005Gapayao v. Fulo, June 13, 2013Universal Robina Sugar Milling Corp. v. Acibo, January 15, 2014Filipinas Pre-fabricated Building Systems (FilSystems) v. Puente, March 18, 2005St. Mary’s University v. CA, March 8, 2005Poseidon Fishing v. NLRC, February 20, 2006PLDT v. Arceo, May 5, 2006Fulache v. ABS CBN, January 21, 2010Leyte Geothermal Power Progressive Employees Union v. PNOC, March30, 2011Asos v. PNCC, July 3, 2013Malicdem v. Marulas Industrial Corp., February 26, 2014Exodus International Construction v. Biscocho, February 23, 2011DM Consunji v. Gobres, August 8, 2010Mercado v. AMA Computer College, April 13, 2010Colegio del Santisimo Rosario v. Rojo, September 4, 2013University of the East v. Pepanio, January 23, 2013Herrera-Manaois v. St. Scholastica’s College, December 11, 2013

PART VIISECURITY OF TENURE

Arts. 277 (b), 279, 282-287; Rules, Book VI, Secs. 2, 5, 6, Book V, Rule XXIII

Just Causes

Salas v. Aboitiz One, June 27, 2008RB Michael Press v. Galit, February 13, 2008San Miguel Corporation v. NLRC, April 16, 2008LBC Express v. Mateo, June 9, 2009Genuino v. NLRC, December 4, 2007Bughaw v. Treasure Island, March 28, 2008Moreno v. San Sebastian College, March 28, 2008Janssen Pharmaceutica v. Silayro, February 26, 2008Suico v. NLRC, January 30, 2007Perez & Doria v. PT&T, April 7, 2009Bacolod-Talisay Realty v. Dela Cruz, April 30, 2009Prudential Guarantee & Assurance Labor Union v. NLRC, June 13, 2012Cosmos Bottling Co. v. Fermin, June 20, 2012Sampaguita Auto Transport v. NLRC & Sagad, January 30, 2013Dongon v. Rapid Movers, Augsut 28, 2013Alilem Credit Cooperative v. Bandiola, February 25, 2013Cavite Apparel v. Marquez, February 6, 2013Esguerra v. Valle Verde, June 13, 2012

Authorized Causes

Andrada v. NLRC, December 28, 2007Manatad v. PT&T, March 7, 2008Linton Commercial v. Hellera, October 10, 2007AMA Computer College v. Garcia, April 14, 2008GSWU-NAFLU-KMU v. NLRC, October 17, 2006Dickinson Philippines v. NLRC, November 15, 2005

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PT & T v. NLRC, April 15, 2005Oriental Petroleum v. Fuentes, October 14, 2005FASAP v. PAL, July 22, 2008 and October 2, 2009General Milling Corp. v. Viajar, January 30, 2013

Constructive Dismissal/Preventive Suspension

Maricalum v. Decorion, April 12 2006Uniwide Sales v. NLRC, February 29, 2008Norkis Trading v. Genilo, February 11, 2008Fungo v. Lourdes School, July 27, 2007The University of the Immaculate Conception v. NLRC, January 26, 2011Robinsons Galleria/Robinsons Supermarket Corp. v. Ranchez, January 19, 2011Dreamland Hotel v. Johnson, March 12, 2014

Union Security Clause

Alabang Country Club v. NLRC, February 14, 2008Inguillo v. First Philippine Scales, June 5, 2009General Milling Corp. v. Casio, March 10, 2010

Disease

Crayons Processing v. Pula, July 30, 2007Villaruel v. Yeo Han Guan, June 1, 2011Padillo v. Rural bank of Nabunturan, January 21, 2013

Temporary Suspension of Operations/Floating Status

Manila Mining Corp. Employees Association v. Manila Mining Corp., September 29, 2010Nippon Housing v. Leynes, August 3, 2011SKM Art Corp. v. Bauca, November 27, 2013

Illegal Strike

Jackbilt Industries v. Jackbilt Employees Union, March 20, 2009Escario v. NLRC, September 27, 2010Abaria v. NLRC, December 7, 2011 (relate to Bascon v. CA, February 5, 2004)PHIMCO Industries v. PHIMCO Industries Labor Association, August 11, 2010

Suspension

Caong v. Regualos, January 26, 2011

Consequences of Dismissal

Composite Enterprises v. Caparoso, August 8, 2007Sagum v. CA, May 26, 2005Agabon v. NLRC, November 17, 2004Jaka Food Processing v. Pacot, March 28, 2005Industrial Timber v. Ababon, March 30, 2006Sangwoo Phil. v. Sangwoo Phils. Employees Union, December 9, 2013Equitable Banking v. Sadac, June 8, 2006Carlos v. CA, August 28, 2007Tomas Claudio Memorial College v. CA, February 16, 2004Chronicle Securities v. NLRC, November 25, 2004Intercontinental Broadcasting v. Benedicto, July 20, 2006Velasco v. NLRC, June 26, 2006PCIB v. Abad, February 28, 2005Bago v. NLRC, April 4, 2007Panuncillo v. CAP Phils., February 9, 2007

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Garcia v. Philippine Airlines, January 20, 2009Islriz v.Capada, January 31, 2011Lansangan v. Amkor Technology Philippines, January 30, 2009Palteng v. UCPB, February 27, 2009Alcantara & Sons v. CA, September 29, 2010Aboc v. Metrobank, December 13, 2010Prince Transport v. Garcia, January 12, 2011Robinsons Galleria/Robinsons Supermarket Corp. v. Ranchez, January 19, 2011Pfizer v. Velasco, March 9, 2011Luna v. Allado Construction, May 30, 2011Villaruel v. Yeo Han Guan, June 1, 2011Nacar V. Gallery Frames, August 13, 2013Integrated Microelectronics V. Pionilla, August 28, 2013United Tourist Promotion V. Kemplin, February 5, 2014

PART VIIIDISPUTE SETTLEMENT

Labor Code: Arts. 128-129, 213-226, 254, 260-262-B, 263 (g-i), 273-275, 277(b), 290-292, note the amendments introduced by R.A. 9347

Executive Order No. 126 & 251

People’s Broadcasting v. Secretary, May 8, 2009Diokno v. Cacdac, July 4, 2007Jaguar Security v. Sales, April 22, 2008Pioneer Concrete Philippines v. Todaro, June 8, 2007Tegimenta Chemical Phils. v. Buensalida, June 17, 2008Metro Transit Organization v. PIGLAS NFWU-KMU, April 14, 2008Hacienda Valentin-Balabag v. Secretary, February 11, 2008Pentagon Steel Corp. v. CA, June 26, 2009Masmud v. NLRC, February 13, 2009Negros Metal Corp. v. Lamayo, August 25, 2010Albert Teng Fish Trading v. Pahagac, November 17, 2010Sarona v. NLRC, January 18, 2012.McBurnie v. Ganzon, EGI-Managers, Inc., October 17, 2013Prince Transport v. Garcia, January 12, 2011.Manila Pavillion v. Delada, January 25, 2012Unilever v. Rivera, June 3, 2013.Phil. Carpet Manufacturing Corp. v. Tagyamon, December 11, 2013Nacar v. Gallery Frames, August 13, 2013

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RIGHT TO SELF ORGANIZATION

NATIONAL UNION OF WORKERS IN HOTELS,RESTAURANTS AND ALLIED INDUSTRIES ­MANILA PAVILION HOTEL CHAPTER vs.SECRETARY OF LABOR AND EMPLOYMENTG.R. No. 181531. July 31, 2009.

FACTSIn a certification election conducted among the rankand file employees of respondent Holiday Inn ManilaPavilion Hotel (the Hotel), the following results wereobtained:

EMPLOYEES IN VOTERS LIST = 353TOTAL VOTES CAST = 346NUWHRAIN­MPHC = 151HIMPHLU = 169NO UNION = 1SPOILED = 3SEGREGATED = 22

Among the segregated were five votes on theon the ground that they were cast byprobationary employees and, pursuant to theexisting Collective Bargaining Agreement (CBA),such employees cannot vote. It bears noting earlyon, however, that the vote of one JoseGatbonton (Gatbonton), aprobationary employee, was counted.

Med­Arbiter Calabocal ruled for the opening of 17 outof the 22 segregated votes, except the five votes of theprobationary employees. Petitioner, which garnered151 votes, appealed to the Secretaryof Labor and Employment (SOLE), arguing that thevotes of the probationary employees should have beenopened considering that probationary employeeGatbonton’s vote was tallied. And petitioner averredthat respondent HIMPHLU, which garnered 169votes, should not be immediately certified as thebargaining agent, as the opening of the 17segregated ballots would push the number of validvotes cast to 338 (151 + 169 + 1 + 17), hence, the 169votes which HIMPHLUgarnered would be one vote shortof the majority whichwould then become 69.

The Secretary of Labor and Employment (SOLE),through then Acting Secretary Luzviminda Padilla,affirmed the Med­Arbiters Order.

ISSUES:1. Whether or not the five votes of the probationary

employees should be opened.2. Whether HIMPHLU should be certified as the

exclusive bargaining unit.

HELD:

1. YES. The inclusion of Gatbonton’s vote wasproper not because it was not questioned butbecause probationary employees have the rightto vote in a certification election. The votesof the five other probationary employees shouldthus also have been counted. Rule II, Sec. 2 ofDepartment Order No. 40­03, series of 2003,which amended Rule XI of the Omnibus RulesImplementing the Labor Code, provides:

For purposes of this section, any employee,whether employed for a definite period or not, shallbeginning on the first day of his/her service, beeligible for membership in any labor organization.

The period of reckoning in determining who shallbe included in the list of eligible voters is in caseswhere a timely appeal has been filed from theOrder of the Med­Arbiter, the date when theOrder of the Secretary of Labor andEmployment, whether affirming or denying theappeal, becomes final and executory. Theprovision in the CBA disqualifying probationaryemployees from voting cannot override theConstitutionally­protected right of workers toself­organization, as well as the provisions ofthe Labor Code and itsImplementing Rules on certification elections and jurisprudence thereon.

2. NO. under the so­called double majority rule,for there to be a valid certification election,majority of the bargaining unit must havevoted AND the winning union must havegarnered majority of the valid votes cast.Prescinding from the Courts ruling that all theprobationary employees votesshould be deemed valid votes while that of thesupervisory employees should be excluded, itfollows that the number of valid votes castwould increase from 321 to 337. Under Art.256 of the Labor Code, the union obtainingthe majority of the valid votes cast by theeligible voters shall be certified as the soleand exclusive bargaining agent of all theworkers in the appropriate bargaining unit. Thismajority is 50% + 1. Hence, 50% of 337 is 168.5 +1 or at least 170. HIMPHLUobtained 169 while petitioner received 151 votes.Clearly, HIMPHLU was not able to obtain amajority vote.

SAN MIGUEL CORPORATION EMPLOYEESUNION–PHILIPPINE TRANSPORT AND GENERALWORKERS ORGANIZATION (SMCEU–PTGWO),petitioner, vs. SAN MIGUEL PACKAGINGPRODUCTS EMPLOYEES UNION–PAMBANSANGDIWA NG MANGGAGAWANG PILIPINO (SMPPEU–PDMP), respondentG.R. No. 171153, September 12, 2007

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FACTS:San Miguel Corporation Employees Union-PhilippineTransport and General Workers Organization(SMCEU-PTGWO) is the incumbent bargaining agentfor the bargaining unit comprised of the regularmonthly-paid rank and file employees of the threedivisions of San Miguel Corporation (SMC), namely,the San Miguel Corporate Staff Unit (SMCSU), SanMiguel Brewing Philippines (SMBP), and the SanMiguel Packaging Products (SMPP), in all offices andplants of SMC while San Miguel Packaging ProductsEmployees Union–Pambansang Diwa ngManggagawang Pilipino (SMPPEU–PDMP) isregistered as a chapter of Pambansang Diwa ngManggagawang Pilipino (PDMP). SMCEU-PTGWOfiled a petition for the cancellation of SMPPEU’sregistration and its dropping from the rolls of legitimatelabor organizations alleging that SMPPEU committedfraud and falsification in obtaining its certificate ofregistration and that PDMP does not have the power tocreate a local or a chapter since it is a trade unioncenter. It was also found by the regional director thatSMPPEU failed to comply with the 20% %membership requirement under the Labor Code.

ISSUES:(1) Is SMPPEU, a chapter, required to comply

with the 20% membership requirement underthe Labor Code?

(2) May PDMP, a trade union center, validlycreate local and chapters?

HELD:(1) No. The creation of a branch, local or chapter

is treated differently. The Court, in thelandmark case of Progressive DevelopmentCorporation v. Secretary, Department of Laborand Employment, declared that when anunregistered union becomes a branch, local orchapter, some of the aforementionedrequirements for registration are no longernecessary or compulsory. Whereas anapplicant for registration of an independentunion is mandated to submit, among otherthings, the number of employees and namesof all its members comprising at least 20% ofthe employees in the bargaining unit where itseeks to operate, as provided under Article234 of the Labor Code and Section 2 of RuleIII, Book V of the Implementing Rules, thesame is no longer required of a branch, localor chapter. The intent of the law in imposingless requirements in the case of a branch orlocal of a registered federation or nationalunion is to encourage the affiliation of a localunion with a federation or national union inorder to increase the local union's bargainingpowers respecting terms and conditions oflabor.

(2) No. After an exhaustive study of the governinglabor law provisions, both statutory andregulatory, the court finds no legal justificationto support the conclusion that a trade unioncenter is allowed to directly create a local orchapter through chartering. Department OrderNo. 9 mentions two labor organizations eitherof which is allowed to directly create a local orchapter through chartering – a dulyregistered federation or a national union.Department Order No. 9 defines a "charteredlocal" as a labor organization in the privatesector operating at the enterprise level thatacquired legal personality through a chartercertificate, issued by a dulyregistered federation or national union andreported to the Regional Office in accordancewith Rule III, Section 2-E of these Rules.

Article 234 now includes the term trade unioncenter, but interestingly, the provisionindicating the procedure for chartering orcreating a local or chapter, namely Article 234-A, still makes no mention of a "trade unioncenter. Also worth emphasizing is that even inthe most recent amendment of theimplementing rules,there was no mention of atrade union center as being among the labororganizations allowed to charter.

The Court deems it proper to apply the Latinmaxim expressio unius est exclusio alterius.Under this maxim of statutory interpretation,the expression of one thing is the exclusion ofanother. When certain persons or things arespecified in a law, contract, or will, an intentionto exclude all others from its operation may beinferred. If a statute specifies one exception toa general rule or assumes to specify theeffects of a certain provision, other exceptionsor effects are excluded.

*A trade union center is any group of registerednational unions or federations organized for the mutualaid and protection of its members; for assisting suchmembers in collective bargaining; or for participating inthe formulation of social and employment policies,standards, and programs, and is duly registered withthe DOLE in accordance with Rule III, Section 2 of theImplementing Rules.

THE HERITAGE HOTEL MANILA (OWNED ANDOPERATED BY GRAND PLAZA HOTELCORPORATION) V. PINAG-ISANG GALING ATLAKASNG MGA MANGGAGAWA SA HERITAGE MANILA(PIGLAS-HERITAGE),G.R. No. 177024, Oct. 30, 2009

FACTS

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Sometime in 2000, certain rank and file employees ofpetitioner Heritage Hotel Manila formed the HeritageHotel Employees Union (the HHE union). DOLE-NCRissued a certificate of registration to this union. theHHE union filed a petition for certificationelection. petitioner company opposed, alleging that theHHE union misrepresented itself to be an independentunion, when it was, in truth, a local chapter ofthe NUWHRAIN. the company also filed a petition forthe cancellation of the HHE unions registrationcertificate.

the Med-Arbiter granted the HHE unions petition forcertification election. Petitioner appealed to theSecretary of Labor but the latter denied the appeal andthe motion for reconsideration, prompting the companyto file a petition for certiorari with the Court ofAppeals. the CA issued a writ of injunction against theholding of the HHE unions certification election,effective until the petition for cancellation of that unionsregistration shall have been resolved with finality. Thedecision of the CA became final when the HHE unionwithdrew the petition for review that it filed with thisCourt.

On December 10, 2003 certain rank and fileemployees of petitioner company formed anotherunion, the respondent Pinag-Isang Galing at Lakas ngmga Manggagawa sa Heritage Manila (the PIGLASunion). This union applied for registration with theDOLE-NCR and got its registration certificate. later,the members of the first union, the HHE union,adopted a resolution for its dissolution. The HHE unionthen filed a petition for cancellation of its unionregistration.

On September 4, 2004 respondent PIGLAS union fileda petition for certification election, that petitionercompany also opposed, alleging that the new unionsofficers and members were also those who comprisedthe old union. According to the company, theemployees involved formed the PIGLAS union tocircumvent the Court of Appeals injunction against theholding of the certification election sought by theformer union. Despite the companys opposition,however, the Med-Arbiter granted the petition forcertification election. petitioner company filed a petitionto cancel the union registration of respondent PIGLASunion. The company claimed that the documentssubmitted with the unions application for registrationbore false information.

Petitioner company alleged that the misrepresentationwas evidenced by the discrepancy in the number ofunion members appearing in the application and thelist as well as in the number of signatories to theattendance and signature sheets. The company furtheralleged that 33 members of respondent PIGLAS unionwere members of the defunct HHE union. This,according to the company, violated the policy against

dual unionism and showed that the new union wasmerely an alter ego of the old.

ISSUE:Whether or not the respondent union committedmisrepresentation in its application for unionregistration?

HELD:No. The Labor Code and its implementing rules do notrequire that the number of members appearing on thedocuments in question should completely dovetail. Foras long as the documents and signatures are shown tobe genuine and regular and the constitution and by-laws democratically ratified, the union is deemed tohave complied with registration requirements.

Petitioner company claims that respondent PIGLASunion was required to submit the names of all itsmembers comprising at least 20 percent of theemployees in the bargaining unit. Yet the list itsubmitted named only 100 members notwithstandingthat the signature and attendance sheets reflected amembership of 127 or 128 employees. This omission,said the company, amounted to materialmisrepresentation that warranted the cancellation ofthe unions registration.

But, as the labor authorities held, this discrepancy isimmaterial. A comparison of the documents showsthat, except for six members, the names found in thesubject list are also in the attendance and signaturesheets. Notably, the bargaining unit that respondentPIGLAS union sought to represent consisted of 250employees. Only 20 percent of this number or 50employees were required to unionize. Here, the unionmore than complied with such requirement.

Labor laws are liberally construed in favor of laborespecially if doing so would affirm its constitutionallyguaranteed right to self-organization. Here, thePIGLAS unions supporting documents reveal theunmistakable yearning of petitioner companys rankand file employees to organize. This yearning shouldnot be frustrated by inconsequential technicalities.

EAGLE RIDGE GOLF AND COUNTRY CLUB VS.COURT OF APPEALSGR. No. 178989, March 18, 2010

Doctrine: Art. 234[c] requires the list of names of allthe union members of an INDEPENDENT UNIONcomprising at least 20% of the bargaining unit. Thisshould not be equated with the list of workers whoparticipated in the organizational meetings (Art.234[b]). Subsequent affidavits of retraction (withdrawal ofmembership) will not retroact to the time of applicationfor registration or even way back to the organizationalmeeting.

FACTS

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Eagle Ridge Employees Union (EREU or Union) filed apetition for certification election in Eagle Ridge Golf &Country Club. Eagle Ridge opposed thispetition, followed by its filing of a petition for thecancellation of certificate of registration claimingmisrepresentation, false statement, or fraud to EREUin connection with the adoption of its constitution andby-laws, the numerical composition of the Union, andthe election of its officers.

Eagle Ridge alleged that the EREU declared in itsapplication for registration having 30 members, whenthe minutes of its December 6, 2005 organizationalmeeting showed it only had 26 members. Also, EagleRidge contended that five employees who attendedthe organizational meeting had manifested the desireto withdraw from the union. The five executedindividual affidavits or Sinumpaang Salaysay.

ISSUEWhether or not the separation of members from theUnion can detrimentally affect the registration of theUnion.

HELDNo. The fact that six union members, indeed,expressed the desire to withdraw their membershipthrough their affidavits of retraction will not cause thecancellation of registration on the ground of violation ofArt. 234(c) of the Labor Code requiring the mandatoryminimum 20% membership of rank-and-file employeesin the employees' union.

Twenty percent (20%) of 112 rank-and-file employeesin Eagle Ridge would require a union membership of atleast 22 employees (112 x 205 = 22.4). When theEREU filed its application for registration on December19, 2005, there were clearly 30 union members. Thus,when the certificate of registration was granted, thereis no dispute that the Union complied with themandatory 20% membership requirement.

Besides, it cannot be argued that the six affidavitsof retraction retroact to the time of the applicationof registration or even way back to theorganizational meeting. Prior to their withdrawal, thesix employees in question were bona fide unionmembers.

With the withdrawal of six union members, there is stillcompliance with the mandatory membershiprequirement under Art. 234(c), for the remaining 24union members constitute more than the 20%membership requirement of 22 employees.

SAMAHANG MANGGAGAWA SA CHARTERCHEMICAL v. CHARTER CHEMICAL and COATINGCORPORATIONG.R. No. 169717, March 16, 2011

The inclusion of supervisory employees in a labor

organization seeking to represent the bargaining unitof rank-and-file employees does not divest it of itsstatus as a legitimate labor organization.

FACTS:Samahang Manggagawa sa Charter ChemicalSolidarity of Unions in the Philippines forEmpowerment and Reforms (petitioner union) filed apetition for certification election among the regularrank-and-file employees of Charter Chemical andCoating Corporation (respondent company) with theMediation Arbitration Unit of the DOLE, NationalCapital Region.

Med-Arbiter’s RulingDismissed the petition for certification election. It heldthat the list of membership of petitioner unionconsisted of 12 batchman, mill operator and leadmanwho performed supervisory functions. Under Article245 of the Labor Code, said supervisory employeesare prohibited from joining petitioner union whichseeks to represent the rank-and-file employees ofrespondent company. As a result, not being alegitimate labor organization, petitioner union has noright to file a petition for certification election for thepurpose of collective bargaining.

Department of Labor and Employment’s RulingAllowed the certification election among the regularrank-and-file employees. There was no independentevidence presented to establish respondentcompany’s claim that some members of petitionerunion were holding supervisory position.

Court of Appeal’s RulingIt upheld the Med-Arbiter’s finding that petitioner unionconsisted of both rank-and-file and supervisoryemployees.

ISSUEWON the alleged mixture of rank-and-file andsupervisory employees of petitioner union’smembership is a ground for the cancellation ofpetitioner union’s legal personality.

RULINGNo. The CA found that petitioner union has for itsmembership both rank-and-file and supervisoryemployees. However, petitioner union sought torepresent the bargaining unit consisting of rank-and-file employees. Under Article 245 of the Labor Code,supervisory employees are not eligible for membershipin a labor organization of rank-and-file employees.Thus, the appellate court ruled that petitioner unioncannot be considered a legitimate labor organizationpursuant to Toyota Motor Philippines v. Toyota MotorPhilippines Corporation Labor Union (hereinafterToyota).

Preliminarily, we note that petitioner union questionsthe factual findings of the Med-Arbiter, as upheld by

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the appellate court, that 12 of its members, consistingof batchman, mill operator and leadman, aresupervisory employees. However, petitioner unionfailed to present any rebuttal evidence in theproceedings below after respondent companysubmitted in evidence the job descriptions of theaforesaid employees. The job descriptions indicatethat the aforesaid employees exerciserecommendatory managerial actions which are notmerely routinary but require the use of independentjudgment, hence, falling within the definition ofsupervisory employees under Article 212(m) of theLabor Code. For this reason, we are constrained toagree with the Med-Arbiter, as upheld by the appellatecourt, that petitioner union consisted of both rank-and-file and supervisory employees.

Nonetheless, the inclusion of the aforesaid supervisoryemployees in petitioner union does not divest it of itsstatus as a legitimate labor organization. The Courtheld that while there is a prohibition against themingling of supervisory and rank-and-file employees inone labor organization, the Labor Code does notprovide for the effects thereof. Thus, the Court heldthat after a labor organization has been registered, itmay exercise all the rights and privileges of alegitimate labor organization. Any mingling betweensupervisory and rank-and-file employees in itsmembership cannot affect its legitimacy for that is notamong the grounds for cancellation of its registration,unless such mingling was brought about bymisrepresentation, false statement or fraud underArticle 239 of the Labor Code.

YOKOHAMA TIRE PHILIPPINES, INC. v.YOKOHAMA EMPLOYEES UNIONG.R. No. 159553, December 10, 2007

FACTSOn October 7, 1999, respondent YokohamaEmployees Union (Union) filed a petition forcertification election among the rank-and-fileemployees of Yokohama. Upon appeal from the Med-Arbiters order dismissing the petition, the Secretary ofthe Department of Labor and Employment (DOLE)ordered an election with (1) Yokohama EmployeesUnion and (2) No Union as choices.[3] The electionheld on November 23, 2001 yielded the followingresult:

YOKOHAMA EMPLOYEES UNION – 131NO UNION – 117SPOILED – 2-----250

VOTES CHALLENGED BY [YOKOHAMA] – 78VOTES CHALLENGED BY [UNION] – 73------TOTAL CHALLENGED VOTES – 151TOTAL VOTES CAST - 401

Yokohama challenged 78 votes cast by dismissedemployees. On the other hand, the Union challenged68 votes cast by newly regularized rank-and-fileemployees and another five (5) votes by allegedsupervisor-trainees. Yokohama formalized its protestand raised as an issue the eligibility to vote of the 78dismissed employees,[5] while the Union submittedonly a handwritten manifestation during the election.

Petitioner argues that the Court of Appeals erred inruling that the votes of the dismissed employeesshould be appreciated. Petitioner posits thatemployees who have quit or have been dismissed forjust cause prior to the date of the certification electionare excluded from participating in the certificationelection. Petitioner had questioned the eligibility to voteof the 78 dismissed employees.

Respondent counters that Section 2, Rule XII[16] ofthe rules implementing Book V of the Labor Codeallows a dismissed employee to vote in the certificationelection if the case contesting the dismissal is stillpending.Section 2, Rule XII, the rule in force during theNovember 23, 2001 certification election clearly,unequivocally and unambiguously allows dismissedemployees to vote during the certification election if thecase they filed contesting their dismissal is stillpending at the time of the election.

ISSUESI.WHETHER OR NOT THE COURT OF APPEALSSERIOUSLY ERRED IN DISALLOWING THEAPPRECIATION OF THE VOTES OF SIXTY-EIGHTREGULAR RANK-AND-FILE.

II.WHETHER OR NOT THE COURT OF APPEALSSERIOUSLY ERRED IN ALLOWING THEAPPRECIATION OF VOTES OF ALL OF ITSEMPLOYEES WHO WERE PREVIOUSLYDISMISSED FOR SERIOUS MISCONDUCT ANDABANDONMENT OF WORK WHICH ARE CAUSESUNRELATED TO THE CERTIFICATION ELECTION.

Was it proper to appreciate the votes of the dismissedemployeesThe new rule has explicitly stated that without a finaljudgment declaring the legality of dismissal, dismissedemployees are eligible or qualified voters. Thus,

RULE IX CONDUCT OF CERTIFICATION ELECTIONSection 5. Qualification of voters; inclusion-exclusion. .. . An employee who has been dismissed from workbut has contested the legality of the dismissal in aforum of appropriate jurisdiction at the time of theissuance of the order for the conduct of a certificationelection shall be considered a qualified voter, unless

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his/her dismissal was declared valid in a final judgmentat the time of the conduct of the certification election.

x x x xThus, we find no reversible error on the part of theDOLE Acting Secretary and the Court of Appeals inordering the appreciation of the votes of the dismissedemployees.

Finally, we need not resolve the other issues for beingmoot. The 68 votes of the newly regularized rank-and-file employees, even if counted in favor of No Union,will not materially alter the result. There would still be208 votes in favor of respondent and 189 votes infavor of No Union.We also note that the certification election is already afait accompli, and clearly petitioners rank-and-fileemployees had chosen respondent as their bargainingrepresentative.

CATHAY PACIFIC STEEL CORPORATION VSCOURT OF APPEALSG.R. No. 18065116456, August 30, 2006Chico-Nazario, J.

FACTS:Enrique Tamandong III was a PersonnelSuperintendent in Cathay Pacific. His position hasfixed daily working hours or 8am to 12nn an 1pm to5pm. Among his functions was issuing memos oncompany rules and regulations, imposing disciplinarysanctions such as warnings (with irregular attendanceand unauthorized leave of absences) andsuspensions, and executing the same which was“noted by” the company Vice President.

ISSUE:Is Enrique Tamandong III a supervisory employeeeligible to join a union of supervisory employees?

HELD:Yes.

Tamondong does not possess the power to hire,transfer, terminate, or discipline erring employees ofthe company. At the most, the record merely showedthat he informed and warned rank-and-file employeeswith respect to their violations of Cathay Pacific's rulesand regulations. Also, the functions performed byTamandong such as issuance of warning toemployees with irregular attendance and unauthorizedleave of absences and requiring employees to explainregarding charges of abandonment of work, arenormally performed by a mere supervisor, and not by amanager.

Likewise the imposition upon Tamandong’s requiredfixed daily working hours is very uncharacteristic of amanagerial employee. A managerial rank is that he isnot subjected to the rigid observance of regular officehours or maximum hours of work.

Case cited - Engineering Equipment, Inc. v. NLRC(1984)“Among the characteristics of the managerial rank are:(1) he is not subject to the rigid observance of regularoffice hours;(2) his work requires the consistent exercise ofdiscretion and judgment in its performance;(3) the output produced or the result accomplishedcannot be standardized in relation to a given period oftime;(4) he manages a customarily recognized departmentor subdivision of the establishment, customarily andregularly directing the work of other employees therein;(5) he either has the authority to hire or dischargeother employees or his suggestions andrecommendations as to hiring and discharging,advancement and promotion or other change of statusof other employees are given particular weight; and(6) as a rule, he is not paid hourly wages nor subjectedto maximum hours of work.”

SAN MIGUEL CORPORATION SUPERVISORS ANDEXEMPT UNION VS. HON. LAGUESMAG.R. No. 110399. August 15, 1997.

FACTS:Petitioner Union filed before the DOLE a Petition forDistrict Certification or Certification Election among thesupervisors and exempt employees of the SMCMagnolia Poultry Products Plants of Cabuyao, SanFernando and Otis. The Med-Arbiter issued an Orderto conduct certification among the supervisors andexempt employees of the SMC Magnolia PoultryPlants of Cabuyao, San Fernando and Otis as onebargaining unit.

Respondent SMC filed a Notice of Appeal withMemorandum of Appeal, pointing out, among others,the Med-Arbiter’s error in grouping together all three(3) separate plants into one bargaining unit, and inincluding supervisory levels 3 and above whosepositions are confidential in nature since they haveaccess to information which is regarded by theemployer to be confidential from the businessstandpoint. Laguesma granted respondent company’sappeal and ordered the remand of the case to theMed-Arbiter of origin for determination of the trueclassification of each of the employees sought to beincluded in the appropriate bargaining unit.

Laguesma granted respondent company’s appeal andordered the remand of the case to the Med-Arbiter oforigin for determination of the true classification ofeach employees sought to be included in theappropriate bargaining unit. Upon petitioner’s motion,Laguesma granted the reconsideration and directedthe conduct of separate certification elections amongthe supervisors ranked as supervisory levels 1 to 4and the exempt employees in each of the three plants.

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ISSUE:1. Are supervisory employees and exempt

employees of the company consideredconfidential employees, hence ineligible to joina union?

2. If they are not confidential employees, do theemployees of the three plants constitute anappropriate bargaining unit?

HELD:1. NO. It is the contention of SMC that

supervisory employees 3 and 4 and theexempt employees come within the meaningof the term confidential employees primarilybecause they answered in the affirmativewhen asked “Do you handle confidential dataor documents?” in Position Questionnairessubmitted by the Union. In the samequestionnaire, however, it was also stated thatthe confidential information handled byquestioned employees relate to productformulation, product standards and productspecification which by no means relate to laborrelations. Granting arguendo that an employeehas access to confidential labor relationsinformation but such is merely incidental to hisduties and knowledge thereof is not necessaryin the performance of such duties, said accessdoes not render the employee a confidentialemployee. If access to confidential laborrelations information is to be a factor in thedetermination of an employee’s confidentialstatus, such information must relate to theemployers labor relations policies.

2. YES. An appropriate bargaining unit may bedefined as a group of employees of a givenemployer, comprised of all or less than all ofthe entire body of employees, which thecollective interest of all the employees,consistent with equity to the employer, indicateto be best suited to serve the reciprocal rightsand duties of the parties under the collectivebargaining provisions of the law.

It is readily seen that the employees in theinstant case have community or mutuality ofinterest, which is the standard in determiningthe proper constituency of a collectivebargaining unit. It is undisputed that they allbelong to the Magnolia Poultry Division of SanMiguel Corporation. This means that, althoughthey belong to three different plants, theyperform work of the same nature, receive thesame wages and compensation, and mostimportantly, share a common stake inconcerted activities.

The fact that the three plants are located inthree different places, namely, in Cabuyao,Laguna, in Otis, Pandacan, Metro Manila, and

in San Fernando, Pampanga is immaterial.Geographical location can be completelydisregarded if the communal or mutualinterests of the employees are not sacrificed.We rule that the distance among the threeplants is not productive of insurmountabledifficulties in the administration of union affairs.Neither are there regional differences that arelikely to impede the operations of a singlebargaining representative.

COASTAL SUBIC BAY V. DOLENovember 20, 2006

FACTSPrivate respondents Coastal Subic Bay Terminal, Inc.Rank-and-File Union (CSBTI-RFU) and Coastal SubicBay Terminal, Inc. Supervisory Union (CSBTI-SU) filedseparate petitions for certification election before Med-Arbiter Eladio de Jesus of the Regional Office No. III.The rank-and-file union insists that it is a legitimatelabor organization having been issued a chartercertificate by the Associated Labor Union (ALU), andthe supervisory union by the Associated Professional,Supervisory, Office and Technical Employees Union(APSOTEU). Private respondents also alleged that theestablishment in which they sought to operate wasunorganized.

The Med-Arbiter dismissed the petitions, holding thatthe ALU and APSOTEU are one and the samefederation having a common set of officers. Thus, thesupervisory and the rank-and-file unions were in effectaffiliated with only one federation. Secretary of Laborand Employment reversed it. CA affirmed the decisionof the Secretary.

ISSUEAre ALU, a rank-and-file union and APSOTEU, asupervisory union one and the same because of thecommonalities between them? Are they commingled?

HELDYes. First, as earlier discoursed, once a labor unionattains the status of a legitimate labor organization, itcontinues as such until its certificate of registration iscancelled or revoked in an independent action forcancellation.23 In addition, the legal personality of alabor organization cannot be collaterally attacked.24Thus, when the personality of the labor organization isquestioned in the same manner the veil of corporatefiction is pierced, the action partakes the nature of acollateral attack. Hence, in the absence of anyindependent action for cancellation of registrationagainst either APSOTEU or ALU, and unless and untiltheir registrations are cancelled, each continues topossess a separate legal personality. The CSBTI-RFUand CSBTI-SU are therefore affiliated with distinct andseparate federations, despite the commonalities ofAPSOTEU and ALU.

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In the instant case, the national federations that existas separate entities to which the rank-and-file andsupervisory unions are separately affiliated with, dohave a common set of officers. In addition, APSOTEU,the supervisory federation, actively participates in theCSBTI-SU while ALU, the rank-and-file federation,actively participates in the CSBTI-RFU, givingoccasion to possible conflicts of interest among thecommon officers of the federation of rank-and-file andthe federation of supervisory unions. For as long asthey are affiliated with the APSOTEU and ALU, thesupervisory and rank-and-file unions both do not meetthe criteria to attain the status of legitimate labororganizations, and thus could not separately petitionfor certification elections.

The purpose of affiliation of the local unions into acommon enterprise is to increase the collectivebargaining power in respect of the terms andconditions of labor. When there is commingling ofofficers of a rank-and-file union with a supervisoryunion, the constitutional policy on labor iscircumvented. Labor organizations should ensure thefreedom of employees to organize themselves for thepurpose of leveling the bargaining process but also toensure the freedom of workingmen and to keep openthe corridor of opportunity to enable them to do it forthemselves.

WHEREFORE, the petition is GRANTED.

TUNAY NA PAGKAKAISA NG MANGGAGAWA SAASIA BREWERY VS ASIA BREWERYG.R. No. 162025, August 3, 2010

FACTSRespondent Asia Brewery Inc (ABI) is engaged in themanufacture, sale and distribution of beer, shandy,bottled water and glass products, it entered into a cba,effective for five years with Lakas ng mgaManggagagawa sa Asia-Independent (BLMA), theexclusive bargaining representative of the former’srank and file employees. Under the cba, twelve jobswere excluded from the bargaining agreement.Subsequently, a dispute arose when ABI’smanagement stopped deducting union dues fromeighty one employees, believing that their membershipin BLMA violated the CBA. Respondent insisted thatthey fall under the “Confidential and ExecutiveSecrtaries” expressly excluded by the CBA from therank and file bargaining unit. BLMA claimed that ABI’sactions restrained the employees’ rights to selforganization and brought the matter to the grievancemachinery. As the parties failed to settle thecontroversy, BLMA lodged a complaint before theNCMB. The parties eventually agreed to submit thecase for arbitration to resolve the issue with respect tothe right of self organization. VA ruled in favor ofBLMA. Accordingly, the subject employees weredeclared eligible for inclusion within the bargaining unitrepresented by BLMA. On appeal to the CA, it

reversed the VA, ruling that eighty one employees areexcluded from and not eligible for inclusion in thebargaining unit as defined in section two, article one ofthe cba; the eighty one employees cannot be validlymembers of respondent and/or if already members,that their membership is violative of the cba and thatthey should disaffiliate from respondent; and petitionerhas not committed any act that restrained or tended torestrain its employees in the exercise of their right toself organization. A certification election was held onAugust 10, 2002 wherein petitioner won. As theincumbent bargaining representative of ABI’s rank andfile employees claiming interest in the outcome of thecase, petitioner filed with the CA an omnibus motionfor reconsideration of the decision and intervention,with attached petition signed by the union officers.Both motions were denied by CA.

ISSUEWhether or not workers were confidential employees

RULINGNo. Secretaries or clerks, numbering about forty, arerank and file employees and confidential employees.Although Article 245 of the Labor Code limits theineligibility to join, form and assist any labororganization to managerial employees, jurisprudencehas extended this prohibition to confidential employeesor those who by reason of their positions or nature ofwork are required to assist or act in a fiduciary mannerto managerial employees and hence, are likewise privyto sensitive and highly confidential records.Confidential employees are thus excluded from therank-and-file bargaining unit. The rationale for theirseparate category and disqualification to join any labororganization is similar to the inhibition for managerialemployees because if allowed to be affiliated with aUnion, the latter might not be assured of their loyalty inview of evident conflict of interests and the Union canalso become company-denominated with the presenceof managerial employees in the Union membership.Having access to confidential information, confidentialemployees may also become the source of undueadvantage. Said employees may act as a spy or spiesof either party to a collective bargaining agreement. Inthe present case, the CBA expressly excludedConfidential and Executive Secretaries from the rank-and-file bargaining unit, for which reason ABI seekstheir disaffiliation from petitioner. As can be gleanedfrom the above listing, it is rather curious that therewould be several secretaries/clerks for just one (1)department/division performing tasks which are mostlyroutine and clerical. Respondent insisted they fallunder the Confidential and Executive Secretariesexpressly excluded by the CBA from the rank-and-filebargaining unit. However, perusal of the jobdescriptions of these secretaries/clerks reveals thattheir assigned duties and responsibilities involveroutine activities of recording and monitoring, andother paper works for their respective departmentswhile secretarial tasks such as receiving telephone

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calls and filing of office correspondence appear tohave been commonly imposed as additional duties.Respondent failed to indicate who among thesenumerous secretaries/clerks have access toconfidential data relating to management policies thatcould give rise to potential conflict of interest with theirUnion membership. Clearly, the rationale under ourprevious rulings for the exclusion of executivesecretaries or division secretaries would have little orno significance considering the lack of or very limitedaccess to confidential information of thesesecretaries/clerks. It is not even farfetched that the jobcategory may exist only on paper since they are alldaily-paid workers. Quite understandably, petitionerhad earlier expressed the view that the positions werejust being reclassified as these employees actuallydischarged routine functions.

SAN MIGUEL FOODS, INCORPORATED vs. SANMIGUEL CORPORATION SUPERVISORS andEXEMPT UNIONG.R. No. 146206 August 1, 2011

Under: Eligibility for Membership – Special Groups ofEmployeesFACTS: On the date of an ordered certificationelection, petitioner San Miguel Foods, Inc. filed anobjection thereto questioning the eligibility to vote bysome of its employees on the grounds that someemployees do not belong to the bargaining unit whichrespondent seeks to represent. Specifically, it argued,among others, that certain employees (Note: whichincludes, among others, Payroll Master, HumanResource Assistant, and Personnel Assistant) shouldnot be allowed to vote as they are confidentialemployees. The then Acting DOLE Undersecretary, ina resolution affirmed the order of the Med-Arbiterstating that respondent is certified to be the exclusivebargaining agent of the supervisors and exemptemployees of petitioner's Magnolia Poultry ProductsPlants, with modification that some of the challengedemployees be excluded from the bargaining unit whichrespondent seeks to represent. The Court of Appeals(CA) affirmed with modification the Resolution of theDOLE Undersecretary, stating that those holding thepositions of Human Resource Assistant and PersonnelAssistant are excluded from the bargaining unit.

ISSUES:1. Whether the CA erred in not excluding the positionof Payroll Master in the definition of a confidentialemployee2. Whether the CA erred in ruling that the positions ofHuman Resource Assistant and Personnel Assistantbelong to the category of confidential employees

RULING:1. Confidential employees are defined as those who(1) assist or act in a confidential capacity, in regard (2)to persons who formulate, determine, and effectuate

management policies in the field of labor relations. Thetwo criteria are cumulative, and both must be met if anemployee is to be considered a confidential employee- that is, the confidential relationship must existbetween the employee and his supervisor, and thesupervisor must handle the prescribed responsibilitiesrelating to labor relations. The exclusion frombargaining units of employees who, in the normalcourse of their duties, become aware of managementpolicies relating to labor relations is a principalobjective sought to be accomplished by the"confidential employee rule."

A confidential employee is one entrusted withconfidence on delicate, or with the custody, handling orcare and protection of the employer’sproperty. Confidential employees, such as accountingpersonnel, should be excluded from the bargainingunit, as their access to confidential information maybecome the source of undue advantage. However,such fact does not apply to the position of PayrollMaster and the whole gamut of employees who, asperceived by petitioner, has access to salary andcompensation data. The CA correctly held that theposition of Payroll Master does not involve dealing withconfidential labor relations information in the course ofthe performance of his functions. Since the nature ofhis work does not pertain to company rules andregulations and confidential labor relations, it followsthat he cannot be excluded from the subject bargainingunit.

2. Corollarily, although Article 245 of the Labor Codelimits the ineligibility to join, form and assist any labororganization to managerial employees, jurisprudencehas extended this prohibition to confidential employeesor those who by reason of their positions or nature ofwork are required to assist or act in a fiduciary mannerto managerial employees and, hence, are likewiseprivy to sensitive and highly confidentialrecords. Confidential employees are thus excludedfrom the rank-and-file bargaining unit. The rationale fortheir separate category and disqualification to join anylabor organization is similar to the inhibition formanagerial employees, because if allowed to beaffiliated with a union, the latter might not be assuredof their loyalty in view of evident conflict of interestsand the union can also become company-denominatedwith the presence of managerial employees in theunion membership. Having access to confidentialinformation, confidential employees may also becomethe source of undue advantage. Said employees mayact as a spy or spies of either party to a collectivebargaining agreement.

In this regard, the CA correctly ruled that the positionsof Human Resource Assistant and Personnel Assistantbelong to the category of confidential employees and,hence, are excluded from the bargaining unit,considering their respective positions and jobdescriptions. As Human Resource Assistant, the scope

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of one’s work necessarily involves labor relations,recruitment and selection of employees, access toemployees' personal files and compensation package,and human resource management. As regards aPersonnel Assistant, one's work includes the recordingof minutes for management during collectivebargaining negotiations, assistance to managementduring grievance meetings and administrativeinvestigations, and securing legal advice for laborissues from the petitioner’s team of lawyers, andimplementation of company programs. Therefore, inthe discharge of their functions, both gain access tovital labor relations information which outrightlydisqualifies them from union membership.

BANK OF THE PHILIPPINE ISLANDS vs. BPIEMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK

FACTS: The Bangko Sentral ng Pilipinas andSecurities and Exchange Commission approved theArticles of Merger executed by and between BPI,herein petitioner, and FEBTC. Pursuant to the Articleand Plan of Merger, all the assets and liabilities ofFEBTC were transferred to and absorbed by BPI asthe surviving corporation. FEBTC employees, includingthose in its different branches across the country, werehired by petitioner as its own employees, with theirstatus and tenure recognized and salaries and benefitsmaintained.

Respondent BPI Employees Union is the exclusivebargaining agent of BPI's rank and file employees. Theformer FEBTC rank-and-file employees did not belongto any labor union at the time of the merger.Respondent Union then sent notices to the formerFEBTC employees who refused to join the Union, aswell as those who retracted their membership, andcalled them to a hearing regarding the matter. Whenthese former FEBTC employees refused to attend thehearing, the president of the Union requested BPI toimplement the Union Shop Clause of the CBA and toterminate their employment pursuant thereto.Petitioner refused to do so.

ISSUE: WON the employees absorbed by the BPI dueto the merger are considered as "New Employees",thus covered by the Union Shop Clause in the CBA

RULING: Yes.

The Union Shop Clause in the CBA simply states that"new employees" who during the effectivity of the CBA"may be regularly employed" by the Bank must join theunion within thirty (30) days from their regularization.There is nothing in the said clause that limits itsapplication to only new employees who possessnonregular status, meaning probationary status, at thestart of their employment. Petitioner likewise failed topoint to any provision in the CBA expressly excludingfrom the Union Shop Clause new employees who are

"absorbed" as regular employees from the beginningof their employment. What is indubitable from theUnion Shop Clause is that upon the effectivity of theCBA, petitioner's new regular employees (regardlessof the manner by which they became employees ofBPI) are required to join the Union as a condition oftheir continued employment.

There are no substantial differences between a newlyhired non-regular employee who was regularizedweeks or months after his hiring and a new employeewho was absorbed from another bank as a regularemployee pursuant to a merger, for purposes ofapplying the Union Shop Clause.

The effect or consequence of BPI's so-called"absorption" of former FEBTC employees should belimited to what they actually agreed to, i.e., recognitionof the FEBTC employees' years of service, salary rateand other benefits with their previous employer. Theeffect should not be stretched so far as to exemptformer FEBTC employees from the existing CBAterms, company policies and rules which apply toemployees similarly situated. If the Union Shop Clauseis valid as to other new regular BPI employees, thereis no reason why the same clause would be a violationof the "absorbed" employees' freedom of association.

Carpio (Dissenting Opinion):

The former FEBTC employees should not beconsidered as "new employees" of BPI. The formerFEBTC employees were absorbed by BPI immediatelyupon merger, leaving no gap in their employment. Theemployees retained their previous employment status,tenure, salary and benefits. This clearly indicates theintention of BPI to assume and continue the employer-employee relations of FEBTC and its employees. TheFEBTC employees' employment remained continuousand unchanged, except that their employer, FEBTC,merged with BPI which, as the surviving entity,continued the combined business of the two banks.Thus, the former FEBTC employees are immediatelyregularized and made permanent employees of BPI.They are not subject to any probationary period as inthe case of "new employees" of BPI. The 30-dayperiod within which regularized "new employees" ofBPI must join the Union does not apply to formerFEBTC employees who are not probationaryemployees but are immediately regularized aspermanent employees of BPI. In short, the formerFEBTC employees are immediately given the samepermanent status as old employees of BPI.

Brion (Dissenting Opinion):

An intrinsic distinction exists between the absorbedemployees and those who are hired as immediate

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regulars, which distinction cannot simply bedisregarded because it establishes how the absorbedemployees came to work for BPI. Those who areimmediately hired as regulars acquire their statusthrough the voluntary act of hiring done within theeffective term or period of the CBA. The absorbedemployees, on the other hand, merely continued theemployment they started with FEBTC; they came to beBPI employees by reason of a corporate merger thatchanged the personality of their employer but did notat all give them any new employment. Thus, they areneither "new" employees nor employees who becameregular only during the term of the CBA in the way thatnewly regularized employees become so. They wereregular employees under their present employmentlong before BPI succeeded to FEBTC's role asemployer.

Ultimately, the absorbed employees are bestrecognized for what they really are — a sui generisgroup of employees whose classification will not beduplicated until BPI has another merger where it wouldbe the surviving corporation and no provision would bemade to define the situation of the employees of themerged constituent corporation. Significantly, thisclassification — obviously, not within the contemplationof the CBA parties when they executed their CBA — isnot contrary to, nor governed by, any of the agreedterms of the existing CBA on union security, and thusoccupies a gap that BPI, in the exercise of itsmanagement prerogative, can fill.

GMC vs. CasioDoctrine: Enforcement of CBA union security clause inconnection with the right to due process of theemployees. (HINDI PO AKO SURE. )

The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was the sole andexclusive bargaining agent of the rank and fileemployees of GMC in Lapu-Lapu City.

Casio, et al. were regular employees of GMC with dailyearnings ranging from P173.75 to P201.50, and lengthof service varying from eight to 25 years.[7] Casio waselected IBM-Local 31 President for a three-year term inJune 1991, while his co-respondents were union shopstewards.

Subsequently, on February 29, 1992, Pino, et al., asofficers and members of the IBM-Local 31, issued aResolution expelling Casio, et al. from the union.Gabiana then wrote a letter dated March 10, 1992,addressed to Eduardo Cabahug (Cabahug), GMCVice-President for Engineering and PlantAdministration, informing the company of the expulsionof Casio, et al. from the union pursuant to theResolution dated February 29, 1992 of IBM-Local 31officers and board members. Gabiana likewiserequested that Casio, et al. be immediately dismissed

from their work for the interest of industrial peace inthe plant

ISSUE: Is the dismissal illegal?

HELD:YES.There is no question that in the present case, the CBAbetween GMC and IBM-Local 31 included amaintenance of membership and closed shop clauseas can be gleaned from Sections 3 and 6 of Article II.IBM-Local 31, by written request, can ask GMC toterminate the employment of the employee/worker whofailed to maintain its good standing as a unionmember.Union security clauses are recognized and explicitlyallowed under Article 248(e) of the Labor Code

It is State policy to promote unionism to enableworkers to negotiate with management on an evenplaying field and with more persuasiveness than if theywere to individually and separately bargain with theemployer. For this reason, the law has allowedstipulations for union shop and closed shop as meansof encouraging workers to join and support the unionof their choice in the protection of their rights andinterest vis--vis the employerIn terminating the employment of an employee byenforcing the union security clause, the employerneeds only to determine and prove that: (1) the unionsecurity clause is applicable; (2) the union isrequesting for the enforcement of the union securityprovision in the CBA; and (3) there is sufficientevidence to support the decision of the union to expelthe employee from the union. These requisitesconstitute just cause for terminating an employeebased on the union security provision of the CBA.

There is no question that in the present case, the CBAbetween GMC and IBM-Local 31 included amaintenance of membership and closed shop clauseas can be gleaned from Sections 3 and 6 of Article II.IBM-Local 31, by written request, can ask GMC toterminate the employment of the employee/worker whofailed to maintain its good standing as a unionmember.It is similarly undisputed that IBM-Local 31, throughGabiana, the IBM Regional Director for Visayas andMindanao, twice requested GMC, in the letters datedMarch 10 and 19, 1992, to terminate the employmentof Casio, et al. as a necessary consequence of theirexpulsion from the union.It is the third requisite that there is sufficient evidenceto support the decision of IBM-Local 31 to expel Casio,et al. which appears to be lacking in this case.Irrefragably, GMC cannot dispense with therequirements of notice and hearing before dismissingCasio, et al. even when said dismissal is pursuant tothe closed shop provision in the CBA. The rights of anemployee to be informed of the charges against himand to reasonable opportunity to present his side in a

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controversy with either the company or his own unionare not wiped away by a union security clause or aunion shop clause in a collective bargainingagreement.

PICOP RESOURCES v. TANECAAugust 9, 2010

FACTS:Respondents filed a Complaint for unfair laborpractice, illegal dismissal and money claims againstpetitioner PICOP Resources, Incorporated (PRI) andits officers. They were regular rank-and-file employeesof PRI and bona fide members of NagkahiusangMamumuo sa PRI Southern Philippines Federation ofLabor (NAMAPRI-SPFL), which is the collectivebargaining agent for the rank-and-file employees ofpetitioner PRI. PRI has a collective bargainingagreement (CBA) with NAMAPRI-SPFL. It contained aunion security clause, to wit: All employees within theappropriate bargaining unit who are members of theUNION at the time of the signing of this AGREEMENTshall, as a condition of continued employment by theCOMPANY, maintain their membership in the UNIONin good standing

PRI sent a letter to the management of PRI demandingthe termination of employees who allegedlycampaigned for, supported and signed the Petition forCertification Election of the Federation of FreeWorkers Union (FFW) during the effectivity of the CBA.NAMAPRI-SPFL contended that it is an act ofdisloyalty and a valid basis for termination for a causein accordance with its Constitution and By-Laws andCBA terms. After investigation, they weresubsequently sent termination notices on the ground of"acts of disloyalty". Respondents then accused PRI ofUnfair Labor Practice. They alleged that none of themever withdrew their membership from NAMAPRI-SPFLor submitted to PRI any union dues and check-offdisauthorizations against NAMAPRI-SPFL. Theyclaimed that they continue to remain on recordas bona fide members of NAMAPRI-SPFL. They alsoclaimed that there was lack of procedural dueprocess. The Labor Arbiter declared the respondents’dismissal to be illegal.

ISSUE: Whether or not respondents are validlyterminated pursuant to union security clause providedin the CBA

HELD: No.In terminating the employment of an employee byenforcing the union security clause, the employerneeds to determine and prove that: (1) the unionsecurity clause is applicable; (2) the union isrequesting for the enforcement of the unionsecurity provision in the CBA; and (3) there issufficient evidence to support the decision of theunion to expel the employee from the union. Theserequisites constitute just cause for terminating an

employee based on the union security provision ofthe CBA.

As to the first requisite, there is no question that theCBA between PRI and respondents included a unionsecurity clause, specifically, a maintenance ofmembership as stipulated in Sections 6 of Article II,Union Security and Check-Off. Following the sameprovision, PRI, upon written request from the Union,can indeed terminate the employment of the employeewho failed to maintain its good standing as a unionmember. Secondly, it is likewise undisputed thatNAMAPRI-SPFL, in two (2) occasions demanded fromPRI to terminate the employment of respondents dueto their acts of disloyalty to the Union. However, as tothe third requisite, we find that there is no sufficientevidence to support the decision of PRI to terminatethe employment of the respondents.

The mere signing of the authorization in support of thePetition for Certification Election of FFW before the"freedom period," is not sufficient ground to terminatethe employment of respondents. Nothing in the recordswould show that respondents failed to maintain theirmembership in good standing in the Union.Respondents did not resign or withdraw theirmembership from the Union to which they belong.Respondents continued to pay their union dues andnever joined the FFW. Hence, the third requisite islacking.

VICTORIANO V ELIZALDE ROPE WORKERSUNION59 SCRA 54

Benjamin Victoriano is a member of the religious sectknown as the "Iglesia ni Cristo" and had been in theemploy of the Elizalde Rope Factory, Inc. He was alsoa member of the EPWU (Elizalde Rope Workers’Union). The Company has a collective bargainingagreement containing a closed shop provision.Victoriano tendered his resignation from EPWUclaiming that as per RA 3350 he is an exemption to theclosed shop agreement by virtue of his being amember of the INC because apparently in the INC,one is forbidden from being a member of any laborunion. The company moved to terminate Victorianodue to his non-membership from the EPWU. EPWUand ERF reiterated that he is not exempt from theclose shop agreement because RA 3350, whichprovides that closed shop agreements shall not covermembers of any religious sects which prohibitaffiliation of their members in any such labororganization, is unconstitutional and that said lawviolates the EPWU’s and ERF’s legal/contractualrights. Appellant Union, furthermore, asserted that a"closed shop provision" in a collective bargainingagreement cannot be considered violative of religiousfreedom.

ISSUE: Whether or not RA 3350 is unconstitutional.

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HELD: NoRepublic Act No. 3350 is constitutional. The Actclassifies employees and workers, as to the effect andcoverage of union shop security agreements, intothose who by reason of their religious beliefs andconvictions cannot sign up with a labor union, andthose whose religion does not prohibit membership inlabor unions. The classification introduced by said Actis also germane to its purpose. The purpose of the lawis precisely to avoid those who cannot, because oftheir religious belief, join labor unions, from beingdeprived of their right to work and from beingdismissed from their work because of union shopsecurity agreements. The act also applies equally toall members of said religious sects; this is evident fromits provision. The fact that the law grants a privilege tomembers of said religious sects cannot by itself renderthe Act unconstitutional.

The right to religion prevails over contractual or legalrights. As such, an INC member may refuse to join alabor union and despite the fact that there is a closedshop agreement in the factory where he wasemployed, his employment could not be validlyterminated for his non-membership in the majoritytherein. Further, the right to join a union includes theright not to join a union. The law is not unconstitutional.It recognizes both the rights of unions and employersto enforce terms of contracts and at the same time itrecognizes the workers’ right to join or not to joinunion. RA 3550 recognizes as well the primacy of aconstitutional right over a contractual right.

For Reference:

ATLAS V. LAGUESMADoctrine: Union of supervisory employees cannot bemerged and represented with the union of the rank andfile employees even through a national federation.

FACTSRespondent is a supervisory union of petitioner and anaffiliate of the national federation representing the rankand file employees of the same petitioner. Saidnational federation sough for certification election forthe supervisors unit. However, petitioner opposed thecertification election on the ground that conflict ofinterest would arise since same federation wouldrepresent two adverse and distinct units, that of therank and file and supersisors.

ISSUEwhether or not the union of rank and file employeesand union of supervisory employees can be membersof the same federation.

RULINGNO. We agree with the petitioner's contention that aconflict of interest may arise in the areas of discipline,collective bargaining and strikes.

Members of the supervisory union might refuse tocarry out disciplinary measures against their co-member rank-and-file employees.In the area of bargaining, their interests cannot beconsidered identical. The needs of one are differentfrom those of the other. Moreover, in the event of astrike, the national federation might influence thesupervisors' union to conduct a sympathy strike on thesole basis of affiliation.(NOTE! THIS RULING IS NOW REPEALED.)

KAPATIRAN SA MEAT AT CANNING V. BLRCALLEJA

FACTS: Petitioner was an exclusive bargainingrepresentative. Prior to its expiration as such, it stageda strike to pressure the employer to extend its contract.Now, within the freedom period, another unionbelonging to the same unit filed for certificationelection. The same was challenged by hereinpetitioner on the ground that the union petitioning forcertification election is mostly composed of Iglesia niCristo members who once refused to affiliate with it. Itthen contends that, by virtue of their prior religiousobjection, the said union(mostly composed of INCmembers) are not eligible to file for certificationelection.

ISSUEWhether or not INC members, who deliberately andpreviously refused to affiliate with a union, mayorganize by themselves.

RULINGYes! This Court's decision inVictoriano vs. ElizaldeRope Workers' Union, 59 SCRA 54, upholding theright of members of the IGLESIA NI KRISTO sect notto join a labor union for being contrary to their religiousbeliefs, does not bar the members of that sect fromforming their own union. The public respondentcorrectly observed that the "recognition of the tenets ofthe sect ... should not infringe on the basic right of self-organization granted by the constitution to workers,regardless of religious affiliation."

BARGAINING UNIT

DE LA SALLE UNIVERSITY MEDICAL CENTERAND COLLEGE OF MEDICINE VS. LAGUESMAG.R. No. 102084, August 12, 1998

FACTS:Petitioner De La Salle University Medical Center andCollege of Medicine (DLSUMCCM) is a hospital andmedical school at Dasmariñas, Cavite. Privaterespondent Federation of Free Workers-De La SalleUniversity Medical Center and College of MedicineSupervisory Union Chapter (FFW-DLSUMCCMSUC),

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on the other hand, is a labor organization composed ofthe supervisory employees of petitioner DLSUMCCM.On April 17, 1991, the Federation of Free Workers(FFW), a national federation of labor unions, issued acertificate to private respondent FFW-DLSUMCCMSUC recognizing it as a local chapter. Onthe same day, it filed on behalf of private respondentFFW-DLSUMCCMSUC a petition for certificationelection among the supervisory employees ofpetitioner DLSUMCCM. Its petition was opposed bypetitioner DLSUMCCM on the grounds that severalemployees who signed the petition for certificationelection were managerial employees and that theFFW-DLSUMCCMSUC was composed of bothsupervisory and rank-and-file employees in thecompany. The respondent however denied thepetitioner’s allegations and contended that It is not truethat supervisory employees are joining the rank-and-file employees' union. While it is true that both regularrank-and-file employees and supervisory employees ofherein respondent have affiliated with FFW, yet thereare two separate unions organized by FFW. Thesupervisory employees have a separate chartercertificate issued by FFW.

ISSUE:Whether or not supervisory union and rank-and-fileunion can affiliate in the same federation

RULING:YES. Supervisory employees have the right to self-organization as do other classes of employees saveonly managerial ones. Conformably with theconstitutional mandate, Art. 245 of the Labor Codenow provides for the right of supervisory employees toself-organization, subject to the limitation that theycannot join an organization of rank-and-file employees.The reason for the segregation of supervisory andrank-and-file employees of a company with respect tothe exercise of the right to self-organization is thedifference in their interests. Supervisory employeesare more closely identified with the employer than withthe rank-and-file employees. If supervisory and rank-and-file employees in a company are allowed to form asingle union, the conflicting interests of these groupsimpair their relationship and adversely affect discipline,collective bargaining and strikes. 10 Theseconsequences can obtain not only in cases wheresupervisory and rank-and-file employees in the samecompany belong to a single union but also whereunions formed independently by supervisory and rank-and-file employees of a company are allowed toaffiliate with the same national federation. As weexplained in the case of Atlas vs. Laguesma, however,such a situation would obtain only where twoconditions concur: First, the rank-and-file employeesare directly under the authority of supervisoryemployees and second, the national federation isactively involved in union activities in the company.Although private respondent FFW-DLSUMCCMSUCand another union composed of rank-and-file

employees of petitioner DLSUMCCM are indeedaffiliated with the same national federation, the FFW,petitioner DLSUMCCM has not presented anyevidence showing that the rank-and-file employeescomposing the other union are directly under theauthority of the supervisory employees.

TAGAYTAY HIGHLANDS INTERNATIONAL GOLFCLUB INCORPORATED vs. TAGAYTAYHIGHLANDS EMPLOYEES UNION-PGTWOG.R. No. 142000, January 22, 2003

FACTS:On October 16, 1997, the Tagaytay HighlandsEmployees Union (THEU)–Philippine Transport andGeneral Workers Organization (PTGWO), a legitimatelabor organization said to represent majority of therank-and-file employees of THIGCI, filed a petition forcertification election. THIGCI, in its Comment, opposedTHEU’s petition for certification election on the groundthat the list of union members submitted by it wasdefective and fatally flawed as it included the namesand signatures of supervisors, resigned, terminatedand absent without leave (AWOL) employees, as wellas employees of The Country Club, Inc., a corporationdistinct and separate from THIGCI; and that out of the192 signatories to the petition, only 71 were actualrank-and-file employees of THIGCI. THIGCI alsoalleged that some of the signatures in the list of unionmembers were secured through fraudulent anddeceitful means, and submitted copies of thehandwritten denial and withdrawal of some of itsemployees from participating in the petition. Replyingto THIGCI’s Comment, THEU asserted that it hadcomplied with all the requirements for valid affiliationand inclusion in the roster of legitimate labororganizations pursuant to DOLE Department OrderNo. 9, series of 1997, on account of which it was dulygranted a Certification of Affiliation by DOLE onOctober 10, 1997; and that Section 5, Rule V of saidDepartment Order provides that the legitimacy of itsregistration cannot be subject to collateral attack, andfor as long as there is no final order of cancellation, itcontinues to enjoy the rights accorded to a legitimateorganization.

ISSUE:Whether the certificate of registration of the unionshould be cancelled

RULING:After a certificate of registration is issued to a union,the legal personality cannot be subject to collateralattack. it may be questioned only in an independentpetition for cancellation. the inclusion in a union ofdisqualified employees is not among the grounds forcancellation unless such inclusion is due tomisrepresentation, false statement or fraud under thecircumstances mentioned in sections a and c Article239 of the Labor Code. THEU, having been validlyissued a certificate of registration, should be

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considered to have already acquired juridicalpersonality which may not be assailed collaterally. Asfor petitioner’s allegation that some of the signatures inthe petition for certification election were obtainedthrough fraud, false statement and misrepresentation,the proper procedure is, as reflected above, for it to filea petition for cancellation of the certificate ofregistration, and not to intervene in a petition forcertification election.

DE LA SALLE V. DE LA SALLE UNIVERSITYEMPLOYEES’ ASSOCIATION330 SCRA 363

FACTS:DLSU and the UNION (composed of regular non-academic R&F) entered into a CBA. 60 days before itsexpiration, the union initiated negotiations which wereunsuccessful. The Union filed a Notice of Strike withthe NCMB. During conciliation, 5 out of 11 issues wereresolved by parties.

ISSUE:Are computer operators and discipline officers (whichwere previously excluded) confidential employees?NO.

RULING:

The express exclusion of the computer operators anddiscipline officers from the bargaining unit of rank-and-file employees in the 1986 collective bargainingagreement does not bar any re-negotiation for thefuture inclusion of the said employees in thebargaining unit. During the freedom period, the partiesmay not only renew the existing collective bargainingagreement but may also propose and discussmodifications or amendments thereto.

We rule that the said computer operators anddiscipline officers are not confidential employees.As carefully examined by the Solicitor General, theservice record of a computer operator reveals that hisduties are basically clerical and non-confidential innature. As to the discipline officers, we agree with thevoluntary arbitrator that based on the nature of theirduties, they are not confidential employees and shouldtherefore be included in the bargaining unit of rank-and-file employees.

------------------The Court also affirms the findings of the voluntaryarbitrator that the employees of the College of St.Benilde should be excluded from the bargaining unit ofthe rank-and-file employees of Dela Salle University,because the two educational institutions have theirown separate juridical personality and no sufficientevidence was shown to justify the piercing of the veil ofcorporate fiction.

SAN MIGUEL FOODS V. SAN MIGUEL CORP.SUPERVISORS AND EXEMPT UNIONAugust 1, 2011

FACTS:Petitioner is questioning the eligibility to vote by someof its employees on the ground that some employeesdo not belong to the bargaining unit.

ISSUES:1. Should there be a separate bargaining unit for thoseengaged in dressed chicken processing, i.e.,handling and packaging of chicken meat and thoseengaged in live chicken operations, i.e., those whobreed chicks and grow chickens? NO.2. Are payroll masters confidential employees andmust be excluded from the bargaining unit? NO.3. Are those holding the positions of HumanResource Assistant and Personnel Assistantexcluded from the bargaining unit? YES.

RULING:1. There should be only one bargaining unit for theemployees involved in dressed chicken processingand those engaged in live chicken operations. Certainfactors, such as specific line of work, workingconditions, location of work, mode of compensation,and other relevant conditions do not affect or impedetheir commonality of interest. Although they seemseparate and distinct from each other, the specifictasks of each division are actually interrelated andthere exists mutuality of interests which warrants theformation of a single bargaining unit.

2. The CA correctly held that the position of PayrollMaster does not involve dealing with confidential laborrelations information in the course of the performanceof his functions. Since the nature of his work does notpertain to company rules and regulations andconfidential labor relations, it follows that he cannot beexcluded from the subject bargaining unit.

3. Human Resource Assistant and Personnel Assistantbelong to the category of confidential employees and,hence, are excluded from the bargaining unit,considering their respective positions and jobdescriptions. As Human Resource Assistant, the scopeof ones work necessarily involves labor relations,recruitment and selection of employees, access toemployees' personal files and compensation package,and human resource management. As regards aPersonnel Assistant, one's work includes the recordingof minutes for management during collectivebargaining negotiations, assistance to managementduring grievance meetings and administrativeinvestigations, and securing legal advice for laborissues from the petitioners team of lawyers, andimplementation of company programs. Therefore, inthe discharge of their functions, both gain access tovital labor relations information which outrightlydisqualifies them from union membership.

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HOLY CHILD CATHOLIC SCHOOL vs. HON.PATRICIA STO. TOMAS, in her official capacity asSecretary of the Department of Labor andEmployment, and PINAG-ISANG TINIG AT LAKASNG ANAKPAWIS – HOLY CHILD CATHOLICSCHOOL TEACHERS AND EMPLOYEES LABORUNION (HCCS-TELU-PIGLAS), Respondents.G.R. No. 179146, July 23, 2013

SUMMARY: This case is a Petition for Review onCertiorari under Rule 45 assailing the Decision of theCourt of Appeals affirming the Resolution of theSecretary of the Department of Labor and Employment(SOLE) allowing private respondent’s petition forcertification election. The Resolution of SOLE directedthe conduct of two separate certification elections forthe teaching and the non-teaching personnel.Corollary, it ruled that [private respondent] cancontinue to exist as a legitimate labor organizationwith the combined teaching and non-teachingpersonnel in its membership and representingboth classes of employees in separate bargainingnegotiations and agreements.

The Supreme Court ruled that the CA did not act withgrave abuse of discretion. The ruling of SOLE isAFFIRMED.

DOCTRINE:1. The legal personality of the Union, cannot be

collaterally attacked in certification electionproceedings by petitioner school which, asemployer, is generally a by stander in theproceedings.

2. The commingling of non-academic andacademic rank-and-file employees in one labororganization does not affect the latter'slegitimacy and its right to file a petition forcertification election.

FACTS:Petitioner (School) has 98 teaching personnel, 25 non-teaching academic employees and 33 non-teachingand non-academic employees. These 156 employeessupported the petition for certification election filed byPrivate Respondent (Union). The School assails thelegitimacy of the Union and its right to file a petition forcertificate election due to the commingling of academicand non-academic rank-and-file employees.

PETITIONER’S ARGUMENT:The SOLE erred in interpreting the decision of theSupreme Court in U.P. v. Ferrer-Calleja1. According toPetitioner, the Court (in U.P. v. Ferrer-Calleja) soughtthe creation of separate bargaining units, namely: (1)

1 The Supreme Court stated that the non-academic rank-andfile employees of the University of the Philippines shallconstitute a bargaining unit to the exclusion of the academicemployees of the institution.

[petitioner]’s teaching personnel to the exclusion ofnon-teaching personnel; and (2) [petitioner]’s non-teaching personnel to the exclusion of teachingpersonnel.

ISSUE:WON the commingling of non-academic and academicrank-and-file employees in one labor organizationaffect the latter's legitimacy and its right to file apetition for certification election.

HELD:[Petitioner] appears to have confused the concepts ofmembership in a bargaining unit and membership in aunion. In emphasizing the phrase “to the exclusion ofacademic employees” stated in U.P. v. Ferrer-Calleja,[petitioner] believed that the petitioning union could notadmit academic employees of the university to itsmembership. But such was not the intention of theSupreme Court.

The Supreme Court ordered the “non-academic rank-and-file employees of U.P. to constitute a bargainingunit to the exclusion of the academic employees of theinstitution”, but did not order them to organize aseparate labor organization.

In the same manner, the teaching and non-teachingpersonnel of [petitioner] school must form separatebargaining units. Thus, the order for the conduct of twoseparate certification elections, one involving teachingpersonnel and the other involving non-teachingpersonnel. It should be stressed that in the subjectpetition, [private respondent] union sought the conductof a certification election among all the rank-and-filepersonnel of [petitioner] school. Since the decision ofthe Supreme Court in the U.P. case prohibits us fromcommingling teaching and non-teaching personnel inone bargaining unit, they have to be separated into twoseparate bargaining units with two separatecertification elections to determine whether theemployees in the respective bargaining units desiredto be represented by [private respondent].

REPUBLIC OF THE PHILIPPINES, represented byDepartment of Labor and Employment(DOLE), Petitioner,vs. KAWASHIMA TEXTILE MFG., PHILIPPINES,INC., Respondent.G.R. No. 160352, July 23, 2008

FACTS:KFWU filed with DOLE Regional Office No. IV, aPetition for Certification Election to be conducted in thebargaining unit composed of 145 rank-and-fileemployees of respondent.

Respondent-company filed a Motion to Dismiss thepetition on the ground that KFWU did not acquire anylegal personality because its membership of mixedrank-and-file and supervisory employees violated

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Article 245 of the Labor Code, and its failure to submitits books of account contravened the ruling of theCourt in Progressive Development Corporation v.Secretary, Department of Labor and Employment.

ISSUE:(1) whether a mixed membership of rank-and-file andsupervisory employees in a union is a ground for thedismissal of a petition for certification election in viewof the amendment brought about by D.O. 9, series of1997, which deleted the phraseology in the old rulethat “[t]he appropriate bargaining unit of the rank-and-file employee shall not include the supervisoryemployees and/or security guards;” and

(2) whether the legitimacy of a duly registered labororganization can be collaterally attacked in a petitionfor a certification election through a motion to dismissfiled by an employer such as Kawashima TextileManufacturing Phils., Inc.

HELD:

The petition is imbued with merit.

The key to the closure that petitioner seeks could havebeen Republic Act (R.A.) No. 9481 [AN ACTSTRENGTHENING THE WORKERS’CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, AMENDING FOR THE PURPOSEPRESIDENTIAL DECREE NO. 442, AS AMENDED,OTHERWISE KNOWN AS THE LABOR CODE OFTHE PHILIPPINES] Sections 8 and 9.However, R.A. No. 9481 took effect only on June 14,2007; hence, it applies only to labor representationcases filed on or after said date. As the petition forcertification election subject matter of the presentpetition was filed by KFWU on January 24, 2000,28R.A. No. 9481 cannot apply to it. There may havebeen curative labor legislations that were givenretrospective effect, but not the aforecited provisions ofR.A. No. 9481, for otherwise, substantive rights andinterests already vested would be impaired in theprocess.

Instead, the law and rules in force at the time of thefiling by KFWU of the petition for certification electionon January 24, 2000 are R.A. No. 6715, amendingBook V of Presidential Decree (P.D.) No. 442 (LaborCode),as amended, and the Rules and RegulationsImplementing R.A. No. 6715,34 as amended byDepartment Order No. 9, series of 1997.

One area of contention has been the composition ofthe membership of a labor organization, specificallywhether there is a mingling of supervisory and rank-and-file employees and how such questioned minglingaffects its legitimacy.

Effective 1989, R.A. No. 6715 restored the prohibitionagainst the questioned mingling in one labororganization, viz:

Sec. 18. Article 245 of the same Code, as amended, ishereby further amended to read as follows

“Art. 245. Ineligibility of managerial employees to joinany labor organization; right of supervisory employees.Managerial employees are not eligible to join, assist orform any labor organization. Supervisory employeesshall not be eligible for membership in a labororganization of the rank-and-file employees but mayjoin, assist or form separate labor organizations of theirown.” (Emphasis supplied)

Unfortunately, just like R.A. No. 875, R.A. No. 6715omitted specifying the exact effect any violation of theprohibition would bring about on the legitimacy of alabor organization.

Thus, when the issue of the effect of mingling wasbrought to the fore in Toyota, the Court, citing Article245 of the Labor Code, as amended by R.A. No. 6715,held:

Clearly, based on this provision, a labor organizationcomposed of both rank-and-file and supervisoryemployees is no labor organization at all. It cannot, forany guise or purpose, be a legitimate labororganization. Not being one, an organization whichcarries a mixture of rank-and-file and supervisoryemployees cannot possess any of the rights of alegitimate labor organization, including the right to filea petition for certification election for the purpose ofcollective bargaining. It becomes necessary, therefore,anterior to the granting of an order allowing acertification election, to inquire into the composition ofany labor organization whenever the status of the labororganization is challenged on the basis of Article 245of the Labor Code xxxx

In the case at bar, as respondent union’s membershiplist contains the names of at least twenty-seven (27)supervisory employees in Level Five positions, theunion could not, prior to purging itself of its supervisoryemployee members, attain the status of a legitimatelabor organization. Not being one, it cannot possessthe requisite personality to file a petition for certificationelection.

But then, on June 21, 1997, the 1989 AmendedOmnibus Rules was further amended by DepartmentOrder No. 9, series of 1997 (1997 Amended OmnibusRules). Specifically, the requirement under Sec. 2(c) ofthe 1989 Amended Omnibus Rules – that the petitionfor certification election indicate that the bargainingunit of rank-and-file employees has not been mingledwith supervisory employees – was removed.

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Consequently, the Court reinstates that of the DOLEgranting the petition for certification election of KFWU.

II. Now to the second issue of whether an employerlike respondent may collaterally attack thelegitimacy of a labor organization by filing amotion to dismiss the latter’s petition forcertification election.

Except when it is requested to bargain collectively, anemployer is a mere bystander to any petition forcertification election; such proceeding is non-adversarial and merely investigative, for the purposethereof is to determine which organization willrepresent the employees in their collective bargainingwith the employer. The choice of their representative isthe exclusive concern of the employees; the employercannot have any partisan interest therein; it cannotinterfere with, much less oppose, the process by filinga motion to dismiss or an appeal from it; not even amere allegation that some employees participating in apetition for certification election are actually managerialemployees will lend an employer legal personality toblock the certification election. The employer’s onlyright in the proceeding is to be notified or informedthereof.

The amendments to the Labor Code and itsimplementing rules have buttressed that policy evenmore.

Petition is GRANTED.

G.R. No. 151326; November 23, 2005ST. JAMES SCHOOL OF QUEZONCITY, Petitioner, vs. SAMAHANG MANGGAGAWASA ST. JAMES SCHOOL OF QUEZONCITY, Respondent.CARPIO, J.

Facts:A petition for certification election was file by theSamahang Manggagawa sa St. James School ofQuezon City ("Samahang Manggagawa") on behalf ofthe motor pool, construction and transportationemployees of St. James School of Quezon City ("St.James"). On 26 June 1999, the certification electionwas held at the DOLE office in Intramuros, Manila. 84out of the 149 eligible voters cast their votes. A protestwas filed by petitioners on the grounds that the totalnumber of rank and file employees was 179, and thatthose who voted were mere construction workers of anindependent contractor, Architect Conrado Bacoy("Architect Bacoy").

In 6 January 2000, the Med-Arbiter, Tomas F.Falconitin, using the list of rank and file employeessubmitted by St. James, ruled that at the time of thecertification election, the 84 voters were no longerworking at St. James. This decision was reversed bythe DOLE which ruled that what Samahang

Manggagawa seeks to represent is the non-academicpersonnel or the rank and file employees from themotor pool, construction and transportationdepartments, and not all the rank and file employees ofSt. James. A subsequent motion for reconsiderationwas denied by the DOLE. The ruling of the DOLE wassustained by the Court of Appeals.

Issue:Are the formation of the labor union and thecertification election valid?

Ruling:

The petition has no merit.

The Validity of the Formation of the Labor UnionThe issue on the employer-employee relationshipbetween St. James and majority of the members ofSamahang Manggagawa has already been resolved ina previous case.

Prior to the holding of the certification election, St.James filed a petition for cancellation of SamahangManggagawa’s union registration for lack of employer-employee relationship between St. James andSamahang Manggagawa’s members. This casereached the Court of Appeals, which held that theconstruction workers are actually St. James’ regularemployees in its motor pool, construction andtransportation departments, and eventually theSupreme Court which, in a Resolution dated 10October 2001, closed any issue on the validity of theformation of the labor union.

The Validity of the Certification ElectionPetitioner alleges that it has 179 rank and fileemployees in its Quezon City Campus, all of whichwere never able to vote during the certification electionsince they were on duty. Even if the 84 votes shouldbe counted, it does not fall within the majority of totalnumber of employees of the five St. James campuses– 570.

The argument is untenable. According to the Court,“the members of Samahang Manggagawa areemployees in the Tandang Sora campus. Under itsconstitution and by-laws, Samahang Manggagawaseeks to represent the motor pool, construction andtransportation employees of the Tandang Soracampus. Thus, the computation of the quorum shouldbe based on the rank and file motor pool, constructionand transportation employees of the Tandang Soracampus and not on all the employees in St. James’five campuses.”

In determining whether there was a quorum, thenumber to be used is 149. A quorum existed in thecertification election when the 84 votes were cast.

Petition denied.

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G.R. No. 152094; July 22, 2004DHL PHILIPPINES CORPORATION UNITED RANKAND FILE ASSOCIATION-FEDERATION OF FREEWORKERS (DHL-URFA-FFW), petitioner, vs.BUKLOD NG MANGGAGAWA NG DHLPHILIPPINES CORPORATION, respondent.PANGANIBAN, J.

Facts:A certification election was conducted among theregular rank and file employees in the main office andthe regional branches of DHL Philippines Corporationon November 25, 1997. The contending choices werepetitioner and "no union."

However, on December 19, 1997, a petition for thenullification for the certification election was filed by therespondent Buklod ng Manggagawa ng DHLPhilippines Corporation (BUKLOD) with the IndustrialRelations Division of the Department of Labor andEmployment (DOLE) on the ground of fraud anddeceit, particularly by misrepresenting to theemployees that it was an independent union even if itwas an affiliate of the Federation of Free Workers(FFW).

Those who found out withdrew their membership andformed BUKLOD, whose Certificate of Registrationwas issued by DOLE on December 23, 1997.

Come January 19, 1998, petitioner received 546 votesand "no union" garnering 348 votes, and was certifiedby the election officer as the sole and exclusivebargaining agent of the rank and file employees of thecorporation.

The Med-Arbiter Tomas F. Falconitin nullified theNovember 25, 1997 certification election and orderedthe conduct of a new one with respondent as one ofthe choices, alongside petitioner and “no choice.” Thisdecision was reversed by DOLE UndersecretaryRosalinda Dimapilis-Baldoz.

Upon reaching the Court of Appeals, it held that thewithdrawal of 704 out of 894 members of the petitionerunion was a valid impetus to hold a new certificationelection.

Issue:Is the certification election valid?

Ruling:The Petition lacks merit.

The petitioner hinges the validity of the decision of theelection officer on the fact that no protest for themisrepresentation was filed during the election orwithin 5 days from the close thereof. However, theCourt held that “when the med-arbiter admitted andgave due course to respondent’s Petition for

nullification of the election proceedings, the electionofficer should have deferred issuing the Certification ofthe results thereof. Section 13 of the ImplementingRules cannot strictly be applied to the present case.”

Respondents voted in favor of the petitioner because itwas their desire to have an independent union.However, this misrepresentation caused them todisaffiliate and form a new union. Upon filing theapplication but prior the issuance of a certificate ofregistration, the respondent already filed its petition tonullify the certification election. This was opposed bypetitioner on the ground that there was no certificateissued to respondent yet. However, the court held that“because such certificate was issued in favor of thelatter [respondent] four days after the filing of thePetition, on December 23, 1997, the misgivings of theformer were brushed aside by the med-arbiter. Indeed,the fact that respondent was not yet a duly registeredlabor organization when the Petition was filed is of nomoment, absent any fatal defect in its application forregistration.”

Moreover, the respondents did not sleep on theirrights. “Hence, their failure to follow strictly theprocedural technicalities regarding the period for filingtheir protest should not be taken against them. Meretechnicalities should not be allowed to prevail over thewelfare of the workers. What is essential is that theybe accorded an opportunity to determine freely andintelligently which labor organization shall act on theirbehalf. Having been denied this opportunity by thebetrayal committed by petitioner’s officers in thepresent case, the employees were prevented frommaking an intelligent and independent choice.”

Lastly, the Court held that “a certification election maybe set aside for misstatements made during thecampaign, where 1) a material fact has beenmisrepresented in the campaign; 2) an opportunity forreply has been lacking; and 3) the misrepresentationhas had an impact on the free choice of the employeesparticipating in the election.” The misrepresentationwas committed by the officers of the petitioner, andpetitioner cannot claim that there was sufficient timebetween the said misrepresentation and election toascertain the truth of petitioner’s statements.

Petition denied.

STA. LUCIA EAST COMMERCIAL CORPORATIONvs. HON. SECRETARY OF LABOR ANDEMPLOYMENT and STA. LUCIA EASTCOMMERCIAL CORPORATION WORKERSASSOCIATION (CLUP LOCAL CHAPTER),G.R. No. 162355 August 14, 2009CARPIO, J.:

Facts:On 2001, Confederated Labor Union of the Philippines(CLUP) instituted a petition for certification election

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among the regular rank- and-file employees of Sta.Lucia East Commercial Corporation (THECORPORATION) and its Affiliates. The affiliatecompanies included in the petition were SLECommercial, SLE Department Store, SLE Cinema,Robsan East Trading, Bowling Center, Planet Toys,Home Gallery and Essentials.

On August 2001, Med-Arbiter Bactin ordered thedismissal of the petition due to inappropriateness ofthe bargaining unit.

Later CLUP in its local chapter under THECORPORATION reorganized itself and re-registeredas CLUP-Sta. Lucia East Commercial CorporationWorkers Association (herein THE UNION), limiting itsmembership to the rank-and-file employees of Sta.Lucia East Commercial Corporation.

On the same date, THE UNION or THE UNION filedthe instant petition for certification election. It claimedthat no certification election has been held amongthem within the last 12 months prior to the filing of thepetition, and while there is another union registeredcovering the same employees, namely SamahangManggawa sa SLEC [SMSLEC], it has not beenrecognized as the exclusive bargaining agent of [THECORPORATION’s] employees.

On November 2001, THE CORPORATION or THECORPORATION filed a motion to dismiss the petition.It averred that it has voluntarily recognized SMSLECas the exclusive bargaining agent of its regular rank-and-file employees, and that collective bargainingnegotiations already commenced between them. THECORPORATION argued that the petition should bedismissed for violating the one year and negotiationbar rules under the Omnibus Rules Implementing theLabor Code.

The CBA between SMSLEC and the corporation wasratified by its rank-and-file employees and registeredwith DOLE.

In the meantime, on December 2001, the union filed itsOpposition to THE CORPORATION’SMotion to Dismiss questioning the validity of thevoluntary recognition of [SMSLEC] by [THECORPORATION] and their consequent negotiationsand execution of a CBA. According to [THE UNION],the voluntary recognition of [SMSLEC] by [THECORPORATION] violated the requirements forvoluntary recognition, i.e., non-existence of anotherlabor organization in the same bargaining unit. Itpointed out that the time of the voluntary recognitionon 20 July 2001, appellant’s registration which coversthe same group of employees covered by SamahangManggagawa sa Sta. Lucia East Commercial, wasexisting and has neither been cancelled or abandoned.

The Med-Arbiter’s Ruling

Med-Arbiter Bactin dismissed THE UNION’s petitionfor direct certification on the ground of contract barrule. The prior voluntary recognition of SMSLEC andthe CBA between THE CORPORATION and SMSLECbars the filing of THE UNION’s petition for directcertification. THE UNION raised the matter to theSecretary.

The Ruling of the Secretary of Labor andEmployment.The Secretary held that the subsequent negotiationsand registration of a CBA executed by THECORPORATION with SMSLEC could not bar THEUNION’s petition. THE UNION constituted a registeredlabor organization at the time of THECORPORATION’s voluntary recognition of SMSLEC.THE CORPORATION then filed a petition for certioraribefore the appellate court.

The Ruling of the Appellate CourtThe appellate court affirmed the ruling of the Secretary

Issue:Whether THE CORPORATION’s voluntary recognitionof SMSLEC was validly done while a legitimate labororganization was in existence in the bargaining unit.

Held:NO. The fundamental factors in determining theappropriate collective bargaining unit are: (1) the will ofthe employees (Globe Doctrine); (2) affinity and unityof the employees’ interest, such as substantialsimilarity of work and duties, or similarity ofcompensation and working conditions (SubstantialMutual Interests Rule); (3) prior collective bargaininghistory; and (4) similarity of employment status.

(eto yung important)The UNION’S initial problem was that they constituteda legitimate labor organization representing a non-appropriate bargaining unit. However, The unionsubsequently re-registered as THE UNION, limiting itsmembers to the rank-and-file of THE CORPORATION.THE CORPORATION cannot ignore the union was alegitimate labor organization at the time of THECORPORATION’s voluntary recognition of SMSLEC.

THE CORPORATION and SMSLEC cannot, bythemselves, decide whether CLUP-THECORPORATION and its Affiliates Workers Unionrepresented an appropriate bargaining unit. Theinclusion in the union of disqualified employees is notamong the grounds for cancellation of registration,unless such inclusion is due to misrepresentation,false statement or fraud under the circumstances.

The union having been validly issued a certificate ofregistration, should be considered as having acquiredjuridical personality which may not be attackedcollaterally. The proper procedure for THECORPORATION is to file a petition for cancellation of

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certificate of registration of CLUP-THECORPORATION and its Affiliates Workers Union andnot to immediately commence voluntary recognitionproceedings with SMSLEC.

SAMAHAN NG MGA MANGGAGAWA SA SAMMA–LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGING ALYANSA (SAMMA–LIKHA) V. SAMMACORPORATIONMarch 13, 2009

Samahan ng mga Manggagawa sa Samma Lakas saIndustriya ng Kapatirang Haligi ng Alyansa (SAMMA-LIKHA) filed a petition for certification election on July24, 2001. It claimed that: (1) it was a local chapter ofthe LIKHA Federation, a legitimate labor organizationregistered with the DOLE; (2) it sought to represent allthe rank-and-file employees of respondent SammaCorporation; (3) there was no other legitimate labororganization representing these rank-and-fileemployees; (4) respondent was not a party to anycollective bargaining agreement and (5) no certificationor consent election had been conducted within theemployer unit for the last 12 months prior to the filingof the petition.

Samma Corp. moved for the dismissal of the petitionarguing that (1) LIKHA Federation failed to establish itslegal personality; (2) petitioner failed to prove itsexistence as a local chapter; (3) it failed to attach thecertificate of non-forum shopping and (4) it had aprohibited mixture of supervisory and rank-and-fileemployees.

Med-Arbiter’s RulingMed-Arbiter dismissed the petition on the followinggrounds: (1) lack of legal personality for failure toattach the certificate of registration purporting to showits legal personality; (2) prohibited mixture of rank-and-file and supervisory employees and (3) failure tosubmit a certificate of non-forum shopping.

Petitioner moved for MR. The Regional Director ofDOLE forwarded the case to the Secretary of Labor.During pendency of the petition, Samma Corp. filed apetition for cancellation of petitioners union registrationin the DOLE Regional Office IV.

Sec. of Labor’s RulingReversed the order of the med-arbiter. SOL ruled thatthe legal personality of a union cannot becollaterally attacked but may only be questioned inan independent petition for cancellation ofregistration. Thus, he directed the holding of acertification election among the rank-and-fileemployees of respondent, subject to the usual pre-election conference and inclusion-exclusionproceedings.

Meanwhile, Director of DOLE revoked the chartercertificate of SAMMA-LIKHA as local chapter of LIKHA

Federation on the ground of prohibited mixture ofsupervisory and rank-and-file employees and non-compliance with the attestation clause underparagraph 2 of Article 235 of the Labor Code.

CA’s RulingCA reversed SOL’s decision. CA held thatAdministrative Circular No. 04-94 which required thefiling of a certificate of non-forum shopping applied topetitions for certification election. It also ruled that theSecretary of Labor erred in granting the appeal despitethe lack of proof of service on respondent. Lastly, itfound that petitioner had no legal standing to file thepetition for certification election because its memberswere a mixture of supervisory and rank-and-fileemployees.

Issues:1. Whether a certificate for non-forum shopping

is required in a petition for certificationelection. – NO

2. Whether SAMMA LIKHA had the legalpersonality to file the petition for certificationelection. – NO.

1. REQUIREMENT OF CERTIFICATE OF NON-FORUM SHOPPING IS NOT REQUIRED IN APETITION FOR CERTIFICATION ELECTION.

The requirement for a certificate of non-forumshopping refers to complaints, counter-claims, cross-claims, petitions or applications where contendingparties litigate their respective positions regarding theclaim for relief of the complainant, claimant, petitioneror applicant. A certification proceeding, even thoughinitiated by a petition, is not a litigation but aninvestigation of a non-adversarial and fact-findingcharacter.

Such proceedings are not predicated upon anallegation of misconduct requiring relief, but,rather, are merely of an inquisitorial nature. TheBoard's functions are not judicial in nature, but aremerely of an investigative character. The object of theproceedings is not the decision of any allegedcommission of wrongs nor asserted deprivation ofrights but is merely the determination of properbargaining units and the ascertainment of the will andchoice of the employees in respect of the selection of abargaining representative.

Under the omnibus rules implementing the Labor Codeas amended by D.O. No. 9, the PCE is supposed to befiled in the Regional Office which has jurisdiction overthe principal office of the employer or where thebargaining unit is principally situated. The rules furtherprovide that where two or more petitions involving thesame bargaining unit are filed in one Regional Office,the same shall be automatically consolidated. Hence,the filing of multiple suits and the possibility ofconflicting decisions will rarely happen in this

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proceeding and, if it does, will be easy to discover.

2. LEGAL PERSONALITY OF PETITIONERThe erroneous inclusion of one supervisory employeein the union of rank-and-file employees was not aground to impugn its legitimacy as a legitimate labororganization which had the right to file a petition forcertification election.

LIKHA was granted legal personality as a federation.With certificates of registration issued in their favor,they are clothed with legal personality as legitimatelabor organizations.

Such legal personality cannot thereafter be subject tocollateral attack, but may be questioned only in anindependent petition for cancellation of certificate ofregistration. Unless petitioners union registration iscancelled in independent proceedings, it shall continueto have all the rights of a legitimate labor organization,including the right to petition for certification election.

Samma Corp. filed a petition for cancellation of theregistration of petitioner on December 14, 2002. In aresolution dated April 14, 2003, petitioners chartercertificate was revoked by the DOLE. But on May 6,2003, petitioner moved for the reconsideration of thisresolution. Neither of the parties alleged that thisresolution revoking petitioners charter certificate hadattained finality. However, in this petition, petitionerprayed that its charter certificate be reinstated in theroster of active legitimate labor [organizations]. Theproceedings on a petition for cancellation ofregistration are independent of those of a petition forcertification election. This case originated from thelatter. If it is shown that petitioners legal personalityhad already been revoked or cancelled with finality inaccordance with the rules, then it is no longer alegitimate labor organization with the right to petitionfor a certification election.

A FINAL NOTERespondent, as employer, had been the one opposingthe holding of a certification election among its rank-and-file employees. This should not be the case. Wehave already declared that, in certification elections,the employer is a bystander; it has no right or materialinterest to assail the certification election.

CHRIS GARMENTS CORPORATION, petitioner, vs.HON. PATRICIA A. STO. TOMAS and CHRISGARMENTS WORKERS UNION-PTGWO LOCALCHAPTER No. 832, respondents.G.R. No. 167426 January 12, 2009QUISUMBING, J.:FACTS: Respondent Chris Garments Workers Union–PTGWO, Local Chapter No. 832 (Union) filed a petitionfor certification election. Med-Arbiter dismissed saidpetition finding that there was no employer-employeerelationship; that even if such relationship existed, thepetition will still fail due to the contract bar rule. Hence,

it could only be filed during the 60-day freedom periodof the current CBA. The Secretary of Labor andEmployment affirmed said decision, observing thecontract bar rule.A second petition for certification election was filed.The same was dismissed by the Med-Arbiter and theSecretary of Labor based on the abovementionedgrounds. A third petition for certification election, nowwithin the freedom period, was filed. Med-Arbiterdismissed for non-existence of employer-employeerelationship and res judicata having set in.

ISSUE: Is the case barred by res judicata orconclusiveness of judgment?

HELD: NO.“The doctrine of res judicata provides that a finaljudgment or decree on the merits by a court ofcompetent jurisdiction is conclusive of the rights of theparties or their privies in all later suits on points andmatters determined in the former suit. The elementsof res judicata are: (1) the judgment sought to bar thenew action must be final; (2) the decision must havebeen rendered by a court having jurisdiction over thesubject matter and the parties; (3) the disposition ofthe case must be a judgment on the merits; and (4)there must be as between the first and second action,identity of parties, subject matter, and causes ofaction.”

Here, the first three requisites are present. However,the fourth element is not. The third petition forcertification election was filed well within the 60-dayfreedom period.

“There is no identity of causes of action to speak ofsince in the first petition, the union has no cause ofaction while in the third, a cause of action alreadyexists for the union as they are now legally allowed tochallenge the status of SMCGC-SUPER as exclusivebargaining representative.”

NATIONAL UNION OF WORKERS IN HOTELS,RESTAURANTS AND ALLIED INDUSTRIES-MANILA PAVILION HOTELCHAPTER, Petitioner, vs. SECRETARY OF LABORAND EMPLOYMENT, BUREAU OF LABORRELATIONS, HOLIDAY INN MANILA PAVILIONHOTEL LABOR UNION AND ACESITE PHILIPPINESHOTEL CORPORATION, Respondents.G.R. No. 181531 July 31, 2009CARPIO MORALES, J.:

FACTS: Certification election was conducted amongthe rank-and-file employees of Respondent HolidayInn Manila Pavilion Hotel. Out of the 346 votes cast, 22were segregated. Contending unions referred the caseto the Med-Arbiter to determine which among saidvotes should be opened and tallied. 11 of said voteswere segregated since they were cast by dismissedemployees, whose dismissal was pending before the

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CA. 6 votes were cast by employees alreadyoccupying supervisory positions. The last 5 votes werecast by probationary employees. Med-Arbiter ruled forthe opening of 17 votes, particularly, those cast by 11dismissed employees and the 6 supposedlysupervisory employees.

ISSUE: May employees on probationary status atthe time of the certification election be allowed tovote, notwithstanding the pendency of an appealwith the Secretary of Labor and Employment?

HELD: YES.In light of the pertinent provisions of D.O. No. 40-03,and the principle that all employees are, from the firstday of their employment, eligible for membership in alabor organization, “it is evident that the period ofreckoning in determining who shall be included in thelist of eligible voters is, in cases where a timely appealhas been filed from the Order of the Med-Arbiter, thedate when the Order of the Secretary of Labor andEmployment, whether affirming or denying the appeal,becomes final and executory.”“The filing of an appeal to the SOLE from the Med-Arbiter’s Order stays its execution, in accordance withSec. 21, and rationally, the Med-Arbiter cannot directthe employer to furnish him/her with the list of eligiblevoters pending the resolution of the appeal.”

“During the pendency of the appeal, the employer mayhire additional employees. To exclude the employeeshired after the issuance of the Med-Arbiter’s Order butbefore the appeal has been resolved would violate theguarantee that every employee has the right to be partof a labor organization from the first day of theirservice. Even if the Implementing Rules gives theSOLE 20 days to decide the appeal from the Order ofthe Med-Arbiter, experience shows that it sometimestakes months to be resolved. To rule then that onlythose employees hired as of the date of the issuanceof the Med-Arbiter’s Order are qualified to vote wouldeffectively disenfranchise employees hired during thependency of the appeal. More importantly, reckoningthe date of the issuance of the Med-Arbiter’s Order asthe cut-off date would render inutile the remedy ofappeal to the SOLE.”

EAGLE RIDGE GOLF & COUNTRY CLUB V. CA, ET.AL.G.R. No. 178989, March 18, 2010

Facts:The Eagle Ridge Employees Union (EREU) filed apetition for certification election in Eagle Ridge Golf &Country Club, docketed as Case No. RO400-0601-RU-002. Eagle Ridge opposed this petition,11 followed byits filing of a petition for the cancellation of EREU'scertificate of registration ascribing misrepresentation,false statement, or fraud to EREU in connection withthe adoption of its constitution and by-laws, the

numerical composition of the Union, and the election ofits officers.

Going into specifics, Eagle Ridge alleged that theEREU declared in its application for registration having30 members, when the minutes of its December 6,2005 organizational meeting showed it only had 26members. The misrepresentation was exacerbated bythe discrepancy between the certification issued by theUnion secretary and president that 25 membersactually ratified the constitution and by-laws onDecember 6, 2005 and the fact that 26 membersaffixed their signatures on the documents, making onesignature a forgery.

Finally, Eagle Ridge contended that five employeeswho attended the organizational meeting hadmanifested the desire to withdraw from the union. Thefive executed individual affidavits or SinumpaangSalaysay on February 15, 2006, attesting that theyarrived late at said meeting which they claimed to bedrinking spree; that they did not know that thedocuments they signed on that occasion pertained tothe organization of a union; and that they now wantedto be excluded from the Union. The withdrawal of thefive, Eagle Ridge maintained, effectively reduced theunion membership to 20 or 21, either of which is belowthe mandatory minimum 20% membershiprequirement under Art. 234(c) of the Labor Code.Reckoned from 112 rank-and-file employees of EagleRidge, the required number would be 22 or 23employees.

The Union presented the duly accomplished unionmembership forms of four additional members. And torebut the allegations in the affidavits of retraction of thefive union members, it presented the Sama-SamangSinumpaang Salaysay of eight union members;another Sama-Samang Sinumpaang Salaysay, of fourother union members; and the Sworn Statement of theUnion’s legal counsel. These affidavits attested to theorderly and proper proceedings of the organizationalmeeting on December 6, 2005.

Issue:

Did EREU commit fraud, misrepresentation and falsestatement when it filed for its registration and did it failto comply with the membership requirement for theregistration as a labor organization?

Ruling:

No. A scrutiny of the records fails to show anymisrepresentation, false statement, or fraud committedby EREU to merit cancellation of its registration. TheUnion submitted the required documents attesting tothe facts of the organizational meeting on December 6,2005, the election of its officers, and the adoption ofthe Union’s constitution and by-laws. EREU compliedwith the mandatory minimum 20% membership

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requirement under Art. 234(c) when it had 30employees as member when it registered. Anyseeming infirmity in the application and admission ofunion membership, most especially in cases ofindependent labor unions, must be viewed in favor ofvalid membership.

In the issue of the affidavits of retraction executed bysix union members, the probative value of theseaffidavits cannot overcome those of the supportingaffidavits of 12 union members and their counsel as tothe proceedings and the conduct of the organizationalmeeting on December 6, 2005. The DOLE RegionalDirector and the BLR OIC Director obviously erred ingiving credence to the affidavits of retraction, but notaccording the same treatment to the supportingaffidavits. It is settled that affidavits partake the natureof hearsay evidence, since they are not generallyprepared by the affiant but by another who uses hisown language in writing the affiant’s statement, whichmay thus be either omitted or misunderstood by theone writing them. It is required for affiants to re-affirmthe contents of their affidavits during the hearing of theinstant case for them to be examined by the opposingparty, i.e., the Union. For their non-presentation, thesix affidavits of retraction are inadmissible as evidenceagainst the Union in the instant case. Twenty percent(20%) of 112 rank-and-file employees in Eagle Ridgewould require a union membership of at least 22employees. When the EREU filed its application forregistration on December 19, 2005, there were clearly30 union members. Thus, when the certificate ofregistration was granted, there is no dispute that theUnion complied with the mandatory 20% membershiprequirement. Prior to their withdrawal, the sixemployees who retracted were bona fide unionmembers. With the withdrawal of six union members,there is still compliance with the mandatorymembership requirement under Art. 234(c), for theremaining 24 union members constitute more than the20% membership requirement of 22 employees.

PICOP RESOURCES, INC. V. TAÑECAAugust 9, 2010

FACTS: On February 13, 2001, respondents filed aComplaint for unfair labor practice, illegal dismissaland money claims against petitioner PICOPResources, Inc. Respondents were regular rank-and-file employees of PRI and bona fide membersof Nagkahiusang Mamumuo sa PRI SouthernPhilippines Federation of Labor (NAMAPRI-SPFL),which is the collective bargaining agent for the rank-and-file employees of petitioner PRI. PRI has acollective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from May 22, 1995until May 22, 2000. The CBA contained union securityprovisions on maintenance of membership whichprovides that all employees within the appropriatebargaining unit who are members of the UNION at thetime of the signing of this AGREEMENT shall, as a

condition of continued employment by the COMPANY,maintain their membership in the UNION in goodstanding during the effectivity of the agreement. OnMay 16, 2000, (Atty. Fuentes) sent a letter to themanagement of PRI demanding the termination ofemployees who allegedly campaigned for, supportedand signed the Petition for Certification Election of theFederation of Free Workers Union (FFW) during theeffectivity of the CBA. NAMAPRI-SPFL consideredsaid act of campaigning for and signing the petition forcertification election of FFW as an act of disloyalty anda valid basis for termination for a cause in accordancewith its Constitution and By-Laws, and the terms andconditions of the CBA, specifically Article II, Sections6.1 and 6.2 on Union Security Clause. Eventually, therespondents were terminated.

ISSUE: Whether or not an existing CBA can be givenits full force and effect in all its terms and conditionsincluding its union security clause, even beyond the 5-year period when no new CBA has yet been enteredinto?

HELD: PRI anchored their decision to terminaterespondents’ employment on Article 253 of the LaborCode which states that "it shall be the duty of bothparties to keep the status quo and to continue in fullforce and effect the terms and conditions of theexisting agreement during the 60-day period and/oruntil a new agreement is reached by the parties." Itclaimed that they are still bound by the Union SecurityClause of the CBA even after the expiration of theCBA; hence, the need to terminate the employment ofrespondents. Petitioner's reliance on Article 253 ismisplaced. At the expiration of the freedom period, theemployer shall continue to recognize the majoritystatus of the incumbent bargaining agent where nopetition for certification election is filed. Applying theprovision of Article 256 of the Labor Code, it can besaid that while it is incumbent for the employer tocontinue to recognize the majority status of theincumbent bargaining agent even after the expirationof the freedom period, they could only do so when nopetition for certification election was filed. The reasonis, with a pending petition for certification, any suchagreement entered into by management with a labororganization is fraught with the risk that such a laborunion may not be chosen thereafter as the collectivebargaining representative. The provision for statusquo is conditioned on the fact that no certificationelection was filed during the freedom period. Any otherview would render nugatory the clear statutory policyto favor certification election as the means ofascertaining the true expression of the will of theworkers as to which labor organization wouldrepresent them.

LEGEND INTERNATIONAL RESORTS V.KILUSANG MANGGAGAWA NG LEGENDFebruary 23, 2011

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FACTS: On June 6, 2001, KML filed with the Med-Arbitratera Petition for Certification Election. KML alleged that it is alegitimate labor organization of the rank and file employeesof Legend International Resorts Limited(LEGEND). LEGEND moved to dismiss the petition allegingthat KML is not a legitimate labor organization because itsmembership is a mixture of rank and file and supervisoryemployees in violation of Article 245 of the LaborCode. LEGEND also claimed that KML committed acts offraud and misrepresentation when it made it appear thatcertain employees attended its general membershipmeeting on April 5, 2001 when in reality some of them wereeither at work; have already resigned as of March 2001; orwere abroad. In its Comment, KML argued that even if 41 ofits members are indeed supervisory employees andtherefore excluded from its membership, the certificationelection could still proceed because the required number ofthe total rank and file employees necessary for certificationpurposes is still sustained. KML also claimed that itslegitimacy as a labor union could not be collaterally attackedin the certification election proceedings but only through aseparate and independent action for cancellation of unionregistration. Finally, as to the alleged acts ofmisrepresentation, KML asserted that LEGEND failed tosubstantiate its claim.

ISSUE: Whether or not the legitimacy of the legalpersonality of KML may be collaterally attacked in a petitionfor certification election?

HELD: No. the legitimacy of the legal personality of KMLcannot be collaterally attacked in a petition for certificationelection proceeding. This is in consonance with our rulingin Laguna Autoparts Manufacturing Corporation v. Office ofthe Secretary, Department of Labor and Employment thatsuch legal personality may not be subject to a collateralattack but only through a separate action institutedparticularly for the purpose of assailing it. The Court furtherheld therein that to raise the issue of the respondent unionslegal personality is not proper in this case. Thepronouncement of the Labor Relations Division Chief, thatthe respondent union acquired a legal personality x x xcannot be challenged in a petition for certification election.The discussion of the Secretary of Labor and Employmenton this point is also enlightening. Section 5, Rule V of D.O. 9is instructive on the matter. It provides that the legalpersonality of a union cannot be the subject of collateralattack in a petition for certification election, but may bequestioned only in an independent petition for cancellationof union registration. This has been the rule since NUBE v.Minister of Labor, 110 SCRA 274 (1981). What applies inthis case is the principle that once a union acquires alegitimate status as a labor organization, it continues assuch until its certificate of registration is cancelled or revokedin an independent action for cancellation. The legalpersonality of a legitimate labor organization x x xcannot be subject to a collateral attack. The law is veryclear on this matter. x x x The Implementing Rulesstipulate that a labor organization shall be deemedregistered and vested with legal personality on thedate of issuance of its certificate of registration. Once a

certificate of registration is issued to a union, its legalpersonality cannot be subject to a collateral attack. Inmay be questioned only in an independent petition forcancellation in accordance with Section 5 of Rule V,Book V of the Implementing Rules.

SAMAHANG MANGGAGAWA SA CHARTERCHEMICAL SOLIDARITY OF UNIONS IN THEPHILIPPINES FOR EMPOWERMENT ANDREFORMS (SMCC-SUPER), ZACARRIAS JERRYVICTORIO-Union President, Petitioner,vs.CHARTER CHEMICAL and COATINGCORPORATION, Respondent.G.R. No. 169717, March 16, 2011

Facts: On February 19, 1999, petitioner SMCC-SUPER filed a petition for certification election amongthe regular rank-and-file employees of respondentcompany. Respondent company filed an Answer withMotion to Dismiss because of the inclusion ofsupervisory employees within petitioner union.TheMed-Arbiter dismissed the petition for certificationelection.On appeal, the Department of Labor andEmployment (DOLE) reversed the Med-Arbiter’s ruling.The Court of Appeals (CA) nullified the CA’s ruling.Issue: Whether or not the alleged mixture of rank-and-file and supervisory employees of petitioner union’smembership is a ground for the cancellation ofpetitioner union’s legal personality and dismissal of thepetition for certification election?Held: No. While there is a prohibition against themingling of supervisory and rank-and-file employees inone labor organization, the Labor Code does notprovide for the effects thereof. Thus, the Court heldthat after a labor organization has been registered, itmay exercise all the rights and privileges of alegitimate labor organization. Any mingling betweensupervisory and rank-and-file employees in itsmembership cannot affect its legitimacy for that is notamong the grounds for cancellation of its registration,unless such mingling was brought about bymisrepresentation, false statement or fraud underArticle 239 of the Labor Code.

STA. LUCIA EAST COMMERCIAL CORPORATION(SLECC), Petitioner,vs.HON. SECRETARY OF LABOR AND EMPLOYMENTand STA. LUCIA EAST COMMERCIALCORPORATION WORKERS ASSOCIATION (CLUP-SLECCWA), Respondents.G.R. No. 162355 August 14, 2009

Facts: On 27 February 2001, Confederated LaborUnion of the Philippines (CLUP), in behalf of itschartered local, instituted a petition for certificationelection among the regular rank-and-file employees ofSta. Lucia East Commercial Corporation and itsAffiliates. The Med-Arbiter ordered the dismissal of thepetition due to inappropriateness of the bargaining

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unit. CLUP-SLECC and its Affiliates Workers Unionreorganized itself and re-registered as CLUP-Sta.Lucia East Commercial Corporation WorkersAssociation (CLUP-SLECCWA) limiting itsmembership to the rank-and-file employees of Sta.Lucia East Commercial Corporation. It was issuedCertificate of Creation of a Local Chapter. It thereafterfiled a petition for certification election. PetitionerSLECC filed a motion to dismiss. It averred that it hasvoluntarily recognized Samahang Manggagawa saSta. Lucia East Commercial (SMSLEC) on 20 July2001 as the exclusive bargaining agent of its regularrank-and-file employees, and that collective bargainingnegotiations already commenced between them.SLECC argued that the petition should be dismissedfor violating the one year and negotiation bar. TheMed-Arbiter ruled dismissed the petition forcertification election. The Secretary of Labor andEmployment, on appeal, reversed the decision of theMed-Arbiter. The Court of Appeals (CA) affirmed theruling of the Secretary.Issue: Whether or not SLECCs voluntary recognition ofSMSLEC was done while a legitimate labororganization was in existence in the bargaining unit?Held: Yes. Any applicant labor organization shallacquire legal personality and shall be entitled to therights and privileges granted by law to legitimate labororganizations upon issuance of the certificate ofregistration.CLUP-SLECC and its Affiliates WorkersUnions initial problem was that they constituted alegitimate labor organization representing a non-appropriate bargaining unit. However, CLUP-SLECCand its Affiliates Workers Union subsequently re-registered as CLUP-SLECCWA, limiting its membersto the rank-and-file of SLECC. SLECC cannot ignorethat CLUP-SLECC and its Affiliates Workers Unionwas a legitimate labor organization at the time ofSLECCs voluntary recognition of SMSLEC. SLECCand SMSLEC cannot, by themselves, decide whetherCLUP-SLECC and its Affiliates Workers Unionrepresented an appropriate bargaining unit.Theinclusion in the union of disqualified employees is notamong the grounds for cancellation of registration,unless such inclusion is due to misrepresentation,false statement or fraud under the circumstancesenumerated in Article 239 of the Labor Code.THUS,CLUP-SLECC AND ITS AFFILIATES WORKERSUNION, HAVING BEEN VALIDLY ISSUED ACERTIFICATE OF REGISTRATION, SHOULD BECONSIDERED AS HAVING ACQUIRED JURIDICALPERSONALITY WHICH MAY NOT BE ATTACKEDCOLLATERALLY. THE PROPER PROCEDURE FORSLECC IS TO FILE A PETITION FORCANCELLATION OF CERTIFICATE OFREGISTRATION2 OF CLUP-SLECC AND ITSAFFILIATES WORKERS UNION AND NOT TOIMMEDIATELY COMMENCE VOLUNTARYRECOGNITION PROCEEDINGS WITH SMSLEC.The

employer may voluntarily recognize the representationstatus of a union in unorganizedestablishments.SLECC WAS NOT ANUNORGANIZED ESTABLISHMENT WHEN ITVOLUNTARILY RECOGNIZED SMSLEC AS ITSEXCLUSIVE BARGAINING REPRESENTATIVE ON20 JULY 2001. CLUP-SLECC AND ITS AFFILIATESWORKERS UNION FILED A PETITION FORCERTIFICATION ELECTION ON 27 FEBRUARY 2001AND THIS PETITION REMAINED PENDING AS OF20 JULY 2001. THUS, SLECCS VOLUNTARYRECOGNITION OF SMSLEC ON 20 JULY 2001, THESUBSEQUENT NEGOTIATIONS AND RESULTINGREGISTRATION OF A CBA EXECUTED BY SLECCAND SMSLEC ARE VOID AND CANNOT BAR CLUP-SLECCWAS PRESENT PETITION FORCERTIFICATION ELECTION.

COASTAL SUBIC BAY TERMINAL V. DOLENovember 20, 2006

FACTS: Coastal Bay Subic Terminal Inc. RANK-AND-FILE UNION (CSBTI-RFU) and Coastal Bay SubicTerminal Inc. SUPERVISORY UNION (CSBTI-SU)filed separate petitions for certification election. Theemployer opposed, citing that both were not legitimatelabor organizations and that the proposed BargainingUnits were not particularly described. The rank and fileunion insists that it has been issued a charteredcertificate by ALU and the supervisory union, by theAPSOTEU. The petition was dismissed by the MedArbiter, holding that ALU and APSOTEU are one andthe same federation and that in effect, the supervisoryand RNF unions were in effect, affiliated with only onefederation.

ISSUE: 1. Whether or not the rank and file andsupervisory unions were legitimate in a sense that theycould filepetitions for certification election.2. Can supervisory employees join Rank and Fileunions?

RULING: 1. Yes. A local union does not owe itsexistence to the federation with which it is affiliated. Itis a separate and distinct voluntary association owingits creation to the will of its members. Mere affiliationdoes not divest the local union of its own personality;neither does it give the mother federation the license toact independently of the local union. It only gives riseto a contract of agency, where the former acts inrepresentation of the latter. Hence, local unions areconsidered principals while the federation is deemed tobe merely their agent. As such principals, the unionsare entitled to exercise the rights and privileges of alegitimate labor organization, including the right toseek certification as the sole and exclusive bargainingagent in the appropriate employer unit.

2. No. Under Article 245 of the Labor Code,supervisory employees are not eligible for membership

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in a labor union of rank-and-file employees. Thesupervisory employees are allowed to form their ownunion but they are not allowed to join the rank-and-fileunion because of potential conflicts of interest. Further,to avoid a situation where supervisors would mergewith the rank-and-file or where the supervisors’ laborunion would represent conflicting interests, a localsupervisors’ union should not be allowed to affiliatewith the national federation of unions of rank-and-fileemployees where that federation actively participatesin the union activity within the company. Thus, thelimitation is not confined to a case of supervisorswanting to join a rank-and-file union. The prohibitionextends to a supervisors’ local union applying formembership in a national federation the members ofwhich include local unions of rank-and-file employees.

[med arbiter denial of PCE affirmed by CA, SC]

[note: Amendatory laws provide that supervisoryemployees MAY join RNF unions however forpurposes of determination of Bargaining Unitmembership, supervisory employees shall simply bedeemed not included.]

COLLECTIVE BARGAINING

UNION OF FILIPRO EMPLOYEES V. NESTLEPHILS.March 3, 2008

Union of Filipro Employees – Drug Food and AlliedIndustries Union – Kilusang Mayo Uno was the soleand exclusive bargaining agent of the rank-and-fileemployees of Nestle belonging to Alabang andCabuyao plants. Prior the expiration of the CBA, theysignified their intent to renegotiate a new CBA. Nestleinformed them about its counter proposal and that itimplemented rules to govern the conduct of CBAnegotiations. Due to a failure to reach an agreement,conciliation proceedings bargaining deadlock ensued.A notice of strike was filed by the union prediated onNestle’s alleged ULP (bargaining in bad faith – bysetting preconditions in the ground rules and/orrefusing to include the issue of the retirement plan inthe CBA negotiations. The Secretary assumedjurisdiction over the subject labor dispute.

Nestlé and UFE-DFA-KMU filed their respectiveposition papers. Nestlé addressed several issuesconcerning economic provisions of the CBA as well asthe non-inclusion of the issue of the Retirement Plan inthe collective bargaining negotiations. On the otherhand, UFE-DFA-KMU limited itself to the issue ofwhether or not the retirement plan was a mandatorysubject in its CBA negotiation.

ISSUE: Whether or not the Secretary of DOLE cantake cognizance of matters beyond the subject of thenotice of strike in CBA negotiations?

RULING:Yes. The Secretary of DOLE may. Based on theNotices of Strike filed by UFE-DFA-KMU, theSecretary of the DOLE rightly decided on matters ofsubstance. That the union later on changed its mind isof no moment because to give premium to such wouldmake the legally mandated discretionary power of theDole Secretary subservient to the whims of the parties.It was UFE-DFA-KMU which first alleged a bargainingdeadlock as the basis for the filing of its Notice ofStrike; and at the time of the filing of the first Notice ofStrike, several conciliation conferences had alreadybeen undertaken where both parties had alreadyexchanged with each other their respective CBAproposals. In fact, during the conciliation meetingsbefore the NCMB, but prior to the filing of the noticesof strike, the parties had already delved into mattersaffecting the meat of the collective bargainingagreement.

STANDARD CHARTERED BANK EMPLOYEESUNION V. CONFESOR

FACTS:Standard Chartered Bank (the Bank, for brevity) is aforeign banking corporation doing business in thePhilippines. The exclusive bargaining agent of the rankand file employees of the Bank is the StandardChartered Bank Employees Union (the Union, forbrevity).

Before the commencement of the negotiation, theUnion, through Divinagracia, suggested to the BanksHuman Resource Manager and head of thenegotiating panel, Cielito Diokno, that the banklawyers should be excluded from the negotiatingteam. The Bank acceded.[11] Meanwhile, Dioknosuggested to Divinagracia that Jose P. Umali, Jr., thePresident of the National Union of BankEmployees (NUBE), the federation to which theUnion was affiliated, be excluded from the Unionsnegotiating panel.[12] However, Umali was retainedas a member thereof.

On March 12, 1993, the parties met and set the groundrules for the negotiation. Diokno suggested that thenegotiation be kept a family affair. The proposed non-economic provisions of the CBA were discussedfirst.[13] Even during the final reading of the non-economic provisions on May 4, 1993, there were stillprovisions on which the Union and the Bank could notagree. Temporarily, the notation DEFERRED wasplaced therein. Towards the end of the meeting, theUnion manifested that the same should be changed toDEADLOCKED to indicate that such items remainedunresolved. Both parties agreed to place the notationDEFERRED/DEADLOCKED.

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The petitioner asserts that the private respondentcommitted ULP, i.e., interference in the selection of theUnions negotiating panel, when Cielito Diokno, theBanks Human Resource Manager, suggested to theUnions President Eddie L. Divinagracia that Jose P.Umali, Jr., President of the NUBE, be excluded fromthe Unions negotiating panel. In support of its claim,Divinagracia executed an affidavit, stating that prior tothe commencement of the negotiation, Dioknoapproached him and suggested the exclusion of Umalifrom the Unions negotiating panel, and that during thefirst meeting, Diokno stated that the negotiation bekept a family affair.

ISSUE(1): Whether or not the Union was able tosubstantiate its claim of unfair labor practice againstthe Bank arising from the latters alleged interferencewith its choice of negotiator; surface bargaining;making bad faith non-economic proposals; and refusalto furnish the Union with copies of the relevant data

RULING: NOThe circumstances that occurred during thenegotiation do not show that the suggestion made byDiokno to Divinagracia is an anti-union conduct fromwhich it can be inferred that the Bank consciouslyadopted such act to yield adverse effects on the freeexercise of the right to self-organization and collectivebargaining of the employees, especially consideringthat such was undertaken previous to thecommencement of the negotiation and simultaneouslywith Divinagracias suggestion that the bank lawyers beexcluded from its negotiating panel.

The records show that after the initiation of thecollective bargaining process, with the inclusion ofUmali in the Unions negotiating panel, the negotiationspushed through. The complaint was made only onAugust 16, 1993 after a deadlock was declared by theUnion on June 15, 1993.

It is clear that such ULP charge was merely anafterthought. The accusation occurred after thearguments and differences over the economicprovisions became heated and the parties had becomefrustrated. It happened after the parties started toinvolve personalities. As the public respondent noted,passions may rise, and as a result, suggestions givenunder less adversarial situations may be colored withunintended meanings. Such is what appears to havehappened in this case.

The Duty to Bargain CollectivelyIf at all, the suggestion made by Diokno toDivinagracia should be construed as part of the normalrelations and innocent communications, which are allpart of the friendly relations between the Union andBank.

The Union alleges that the Bank violated its duty tobargain; hence, committed ULP under Article 248(g)when it engaged in surface bargaining. It alleged thatthe Bank just went through the motions of bargainingwithout any intent of reaching an agreement, asevident in the Banks counter-proposals.

Surface bargaining is defined as going through themotions of negotiating without any legal intent to reachan agreement.[50] The resolution of surface bargainingallegations never presents an easy issue. Thedetermination of whether a party has engaged inunlawful surface bargaining is usually a difficult onebecause it involves, at bottom, a question of the intentof the party in question, and usually such intent canonly be inferred from the totality of the challengedpartys conduct both at and away from the bargainingtable. It involves the question of whether an employersconduct demonstrates an unwillingness to bargain ingood faith or is merely hard bargaining.

The minutes of meetings from March 12, 1993 to June15, 1993 do not show that the Bank had any intentionof violating its duty to bargain with the Union. Recordsshow that after the Union sent its proposal to the Bankon February 17, 1993, the latter replied with a list of itscounter-proposals on February 24, 1993. Thereafter,meetings were set for the settlement of theirdifferences. The minutes of the meetings show thatboth the Bank and the Union exchanged economic andnon-economic proposals and counter-proposals.

The Union has not been able to show that the Bankhad done acts, both at and away from the bargainingtable, which tend to show that it did not want to reachan agreement with the Union or to settle thedifferences between it and the Union. Admittedly, theparties were not able to agree and reached adeadlock. However, it is herein emphasized that theduty to bargain does not compel either party toagree to a proposal or require the making of aconcession.[53] Hence, the parties failure to agreedid not amount to ULP under Article 248(g) forviolation of the duty to bargain.

ISSUE(2): whether or not the petitioner is estoppedfrom filing the instant action.RULING: NOIn the case, however, the approval of the CBA and therelease of signing bonus do not necessarily mean thatthe Union waived its ULP claim against the Bankduring the past negotiations. After all, the conclusion ofthe CBA was included in the order of the SOLE, whilethe signing bonus was included in the CBA itself.Moreover, the Union twice filed a motion forreconsideration respecting its ULP charges against theBank before the SOLE.

The Union Did Not EngageIn Blue-Sky Bargaining

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We, likewise, do not agree that the Union is guilty ofULP for engaging in blue-sky bargaining or makingexaggerated or unreasonable proposals.[59] The Bankfailed to show that the economic demands made bythe Union were exaggerated or unreasonable. Theminutes of the meeting show that the Union based itseconomic proposals on data of rank and fileemployees and the prevailing economic benefitsreceived by bank employees from other foreign banksdoing business in the Philippines and other branchesof the Bank in the Asian region.

GENERAL MILLING CORPORATION VS CA FEB 11,2004

On April 28, 1989, GMC and the union concluded acollective bargaining agreement (CBA) which includedthe issue of representation effective for a term of threeyears. The day before the expiration of the CBA, theunion sent GMC a proposed CBA, with a request thata counter-proposal be submitted within ten (10) days.However, GMC had received collective and individualletters from workers who stated that they hadwithdrawn from their union membership, on grounds ofreligious affiliation and personal differences. Believingthat the union no longer had standing to negotiate aCBA, GMC did not send any counter-proposal.

Issue:W/N GMC is guilty for ULP for violating the duty tobargain

Ruling:YES. The law mandates that the representationprovision of a CBA should last for five years.Therelation between labor and management should beundisturbed until the last 60 days of the fifth year. It isindisputable that when the union requested for arenegotiation of the economic terms of the CBA onNovember 29, 1991, it was still the certified collectivebargaining agent of the workers. The withdrawal ofsome union members from the union will not affect themajority status of the union as the exclusive bargainingagent. GMC should have responded and kept its dutyto bargain collectively.

FVC LABOR UNION – PHIL. TRANSPORT ANDGENERAL WORKERS ASSOCIATION VS.SANAMA-FVC-SIGLO

Facts: On December 22, 1997, the petitioner FVCLU-PTGWO – the recognized bargaining agent of therank-and-file employees of the FVC Philippines, –signed a five-year collective bargaining agreement(CBA) with the company. The five-year CBA periodwas from February 1, 1998 to January 30, 2003. At theend of the 3rd year of the five-year term and pursuantto the CBA, FVCLU-PTGWO and the companyentered into the renegotiation of the CBA andmodified, among other provisions, the CBA’s duration.

They extended the original five-year period of the CBAby four (4) months.

On January 21, 2003, nine (9) days before the January30, 2003 expiration of the originally-agreed five-yearCBA term (and four months and nine days away fromthe expiration of the amended CBA period), therespondent (SANAMA-SIGLO) filed before theDepartment of Labor and Employment (DOLE) apetition for certification election for the same rank-and-file unit covered by the FVCLU-PTGWO CBA.

Issue:W/N the extension of the life of the CBA also extendedthe exclusive bargaining status as well

Ruling:NO. By express provision of Article 253-A, theexclusive bargaining status cannot go beyond 5 yearsand the representation status is a legal matter not forthe parties to agree upon. Despite the agreement toextend the life of the CBA beyond the 5-yr period, theexclusive bargaining status is effective only for fiveyears and hence, it can be challenged within the 60-day period prior to the expiration of the CBA’s first fiveyears.

RFM CORPORATION V. KAMPI-NAFLU-KMUG.R. No. 162324, February 4, 2009Carpio-Morales, J.

DOCTRINE:If the terms of a CBA are clear and have no doubtupon the intention of the contracting parties, as in theherein questioned provision, the literal meaning thereofshall prevail.

FACTS:Petitioner RFM Corporation (RFM) is a domesticcorporation engaged in flour-milling and animal feedsmanufacturing. Sometime in 2000, its Flour Divisionand SFI Feeds Division entered into collectivebargaining agreements (CBAs) with their respectivelabor unions, the Kasapian ng ManggagawangPinagkaisa-RFM (KAMPI-NAFLU-KMU) for the FlourDivision, and Sandigan at Ugnayan ngManggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU) for the Feeds Division (respondents). The CBAs,which contained similar provisions, were effective forfive years, from July 1, 2000 up to June 30, 2005. Asection of the CBAs provides that the company shouldmake payment if Black Saturday, November 1, andDecember 31 were declared as special holidays by theNational Government.

During the first year of the effectivity of the CBAs in2000, December 31 which fell on a Sunday wasdeclared by the national government as a specialholiday. Respondents thus claimed payment of theirmembers’ salaries, invoking the above-stated CBAprovision. Petitioner refused the claims for payment,

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averring that December 31, 2000 was notcompensable as it was a rest day. The controversyresulted in a deadlock, drawing the parties to submitthe same for voluntary arbitration. The voluntaryarbitrator ruled in favor of the respondents and uponappeal, the Court of Appeals affirmed the VA’sdecision.

ISSUE:Whether or not the employees are entitled to thequestioned salary according to the provision of theCBA.

HELD:Yes. If the terms of a CBA are clear and have no doubtupon the intention of the contracting parties, as in theherein questioned provision, the literal meaning thereofshall prevail. That is settled.5 As such, the daily-paidemployees must be paid their regular salaries on theholidays which are so declared by the nationalgovernment, regardless of whether they fall on restdays. The CBA is the law between the parties, hence,they are obliged to comply with its provisions.7 Indeed,if petitioner and respondents intended the provision inquestion to cover payment only during holidays fallingon work or weekdays, it should have been soincorporated therein.Petitioner maintains, however, that the parties failed toforesee a situation where the special holiday would fallon a rest day. The Court is not persuaded. The LaborCode specifically enjoins that in case of doubt in theinterpretation of any law or provision affecting labor, itshould be interpreted in favor of labor.

FULACHE V. ABS-CBN BROADCASTINGCORPORATIONG.R. No. 183810, January 21, 2010Brion, J.

DOCTRINE:CBA coverage is not only a question of fact, but of lawand contract.

FACTS:

Petitioners, who worked as drivers, cameramen, andeditors for respondent, filed several complaints againstthe latter for unfair labor practice, regularization, andmoney claims. The petitioners alleged that onDecember 17, 1999, ABS-CBN and the ABS-CBNRank-and-File Employees Union (Union) executed acollective bargaining agreement (CBA) effectiveDecember 11, 1999 to December 10, 2002; they onlybecame aware of the CBA when they obtained copiesof the agreement; they learned that they had beenexcluded from its coverage as ABS-CBN consideredthem temporary and not regular employees, inviolation of the Labor Code. They claimed they hadalready rendered more than a year of service in thecompany and, therefore, should have been recognizedas regular employees entitled to security of tenure and

to the privileges and benefits enjoyed by regularemployees. ABS-CBN alleged that the petitioners’services were contracted on various dates by its Cebustation as independent contractors/off camera talents,and they were not entitled to regularization in thesecapacities. Thus they are not entitled to the benefitsgranted under their collective bargaining agreement.

On January 17, 2002, Labor Arbiter Rendoquerendered his decision5 holding that the petitioners wereregular employees of ABS-CBN, not independentcontractors, and are entitled to the benefits andprivileges of regular employees. Upon appeal, theNLRC affirmed the Labor Arbiter’s Decision.

ISSUE:

Whether or not the petitioners are entitled to thebenefits under the CBA.

HELD:Yes. Under the terms of the CBA, the petitioners aremembers of the appropriate bargaining unit becausethey are regular rank-and-file employees and do notbelong to any of the excluded categories. Specifically,nothing in the records shows that they are supervisoryor confidential employees; neither are they casual norprobationary employees.

The Supreme Court sees no merit in ABS-CBN’sarguments that the petitioners are not entitled to CBAbenefits because: (1) they did not claim these benefitsin their position paper; (2) the NLRC did notcategorically rule that the petitioners were members ofthe bargaining unit; and (3) there was no evidence ofthis membership. CBA coverage is not only a questionof fact, but of law and contract. The factual issue iswhether the petitioners are regular rank-and-fileemployees of ABS-CBN. The tribunals below uniformlyanswered this question in the affirmative.

EMPLOYEES UNION OF BAYER V. BAYERPHILIPPINESDecember 6, 2010

FACTS:Employees Union of Bayer Philippines is the exclusivebargaining agent of all rank-and-file employees ofBayer Philippines (Bayer). In 1997, its presidentJuanito S. Facundo, negotiated with Bayer for thesigning of a CBA. During the negotiations, EUBPrejected Bayers wage-increase proposal resulting in abargaining deadlock.

Pending the resolution of the dispute, respondents,headed by Avelina Remigio without any authority fromtheir union leaders, accepted Bayers wage-increaseproposal. EUBPs grievance committee questionedRemigios action and reprimanded Remigio and herallies. Thereafter, the DOLE Secretary issued an

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arbitral award ordering EUBP and Bayer to execute aCBA.

Meanwhile, the rift between Facundos leadership andRemigios group broadened. Six months after the CBA,respondent sought to disaffiliate from the union. A tug-of-war then ensued between the two rival groups, withboth seeking recognition from Bayer and demandingremittance of the union dues collected from its rank-and-file members. Bayer refused to accede to thedemands of the 2 group but subsequently turn over thecollected union dues to herein respondent. Hence,petitioner filed this case.

ISSUE: Whether the act of the management of Bayerin dealing and negotiating with Remigios splinter groupdespite its validly existing CBA with EUBP can beconsidered unfair labor practice.

HELD: YES. Bayer committed ULP.Indeed, in Silva v. National Labor RelationsCommission, we explained the correlations of Article248 (1) and Article 261 of the Labor Code to mean thatfor a ULP case to be cognizable by the Labor Arbiter,and for the NLRC to exercise appellate jurisdictionthereon, the allegations in the complaint must showprima facie the concurrence of two things, namely: (1)gross violation of the CBA; and (2) the violationpertains to the economic provisions of the CBA.

This pronouncement in Silva, however, should not beconstrued to apply to violations of the CBA whichcan be considered as gross violations per se, suchas utter disregard of the very existence of the CBAitself, similar to what happened in this case. Whenan employer proceeds to negotiate with a splinterunion despite the existence of its valid CBA withthe duly certified and exclusive bargaining agent,the former indubitably abandons its recognition ofthe latter and terminates the entire CBA.

GENERAL MILLING CORPORATIONINDEPENDENT LABOR UNION V. GENERALMILLING CORPORATIONJune 15, 2011

FACTS:General Milling Corporation and the Union entered intoa collective bargaining agreement which provided,among other terms, the latters representation of thecollective bargaining unit for a three-year term made toretroact to 1 December 1988. On 29 November 1991or one day before the expiration of the subject CBA,the Union sent a draft CBA proposal to GMC, with arequest for counter-proposals from the latter, for thepurpose of renegotiating the existing CBA between theparties. In view of GMCs failure to comply with saidrequest, the Union commenced the complaint for unfairlabor practice.

ISSUE:

Whether an imposed CBA has the same effect as thatof a CBA duly agreed upon by the parties.

HELD: YESConsidering that no new CBA had been, in themeantime, agreed upon by GMC and the Union, wefind, pursuant to Article 253 of the Labor Code, theprovisions of the imposed CBA continues to have fullforce and effect until a new CBA has been entered intoby the parties. Article 253 mandates the parties tokeep the status quo and to continue in full forceand effect the terms and conditions of the existingagreement during the 60-day period prior to theexpiration of the old CBA and/or until a newagreement is reached by the parties. In the samemanner that it does not provide for any exceptionnor qualification on which economic provisions ofthe existing agreement are to retain its force andeffect, the law does not distinguish between a CBAduly agreed upon by the parties and an imposedCBA like the one under consideration.

While it is true that the provisions of the imposed CBAextend beyond said remaining two-year duration of theoriginal CBA in view of the parties admitted failure toconclude a new CBA, the corresponding computationof the benefits accruing in favor of GMCs coveredemployees after the term of the original CBA wascorrectly excluded in the aforesaid 27 October 2005order issued in RAB VII-06-0475-1992. Rather thanthe abbreviated pre-execution proceedings beforeExecutive Labor Arbiter Violeta Ortiz-Bantug, thecomputation of the same benefits beyond 30November 1993 should, instead, be threshed out byGMC and the Union in accordance with the GrievanceProcedure outlined as follows under Article XII of theimposed CBAAs for the benefits after the expiration of the term ofthe parties original CBA, we find that the extent thereofas well as identity of the employees entitled thereto willbe better and more thoroughly threshed out by theparties themselves in accordance with the grievanceprocedure outlined in Article XII of the imposed CBA.

MALAYAN EMPLOYEES ASSOCIATION V.MALAYAN INSURANCE CO.,G.R. No. 181357,February 2, 2010

Facts:Rodolfo Mangalino, who is a union member ofMalayan Employees Associations was suspended fortaking a union leave without the prior authority of hisdepartment head and despite a previous disapprovalof the requested leave. A provision in the unionscollective bargaining agreement (CBA) with thecompany allows union officials to avail of union leaveswith pay for a total of ninety-man days per year for thepurpose of attending grievance meetings, Labor-Management Committee meetings, annual NationalLabor Management Conferences, labor educationprograms and seminars, and other union activities.

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The company issued a rule in November 2002requiring not only the prior notice that the CBAexpressly requires, but prior approval by thedepartment head before the union and its memberscan avail of union leaves. The rule was placed intoeffect in November 2002 without any objection fromthe union until a union officer, Mangalino, filed unionleave applications in January and February, 2004. Hisdepartment head disapproved the applicationsbecause the department was undermanned at thattime.

Issue:Whether or not the suspension is invalid and violatedthe CBA?

Held:No. While it is true that the union and its membershave been granted union leave privileges under theCBA, the grant cannot be considered separately fromthe other provisions of the CBA, particularly theprovision on management prerogatives where the CBAreserved for the company the full and completeauthority in managing and running its business.The prior approval policy fully supported the validity ofthe suspensions the company imposed on Mangalino.We point out additionally that as an employee,Mangalino had the clear obligation to comply with themanagement disapproval of his requested leave whileat the same time registering his objection to thecompany regulation and action. That he still went onleave, in open disregard of his superiors orders,rendered Mangalino open to the charge ofinsubordination, separately from his absence withoutofficial leave.

SANTUYO VS. REMERCO GARMENTSG.R. No. 174420, March 22, 2010

Facts:Petitioners, who had been employed as sewers, wereamong those recalled due to the strike that wassubsequently declared illegal. Those who wererecalled are allowed to resume work on the conditionthat they would no longer be paid a daily rate but on apiece-rate basis. Without allowing RGMI to normalizeits operations, the union filed a notice of strike in theNational Conciliation and Mediation Board (NCMB) onAugust 8, 1995. According to the union, RGMIconducted a time and motion study and changed thesalary scheme from a daily rate to piece-rate basiswithout consulting it. RGMI therefore not only violatedthe existing collective bargaining agreement (CBA) butalso diminished the salaries agreed upon. It thereforecommitted an unfair labor practice. Later, petitionersfiled a complaint with the labor arbiter and amendedtheir complaint, stating that respondents suspendedthem for questioning their decision to pay salaries on apiece-rate basis. Respondents, on the other hand,moved to dismiss the complaint in view of the pendingconciliation proceedings (which involved the same

issue) in the NCMB. Moreover, alleged violations ofthe CBA should be resolved according to thegrievance procedure laid out therein. Thus, the laborarbiter had no jurisdiction over the complaint.

Issue:Is the contention that the labor arbiter lacks jurisdictionas the case involves interpretation of the provision ofCBA valid?

Held:Yes. Petitioners clearly and consistently questionedthe legality of RGMIs adoption of the new salaryscheme (i.e., piece-rate basis), asserting that suchaction, among others, violated the existing CBA.Indeed, the controversy was not a simple case ofillegal dismissal but a labor dispute involving themanner of ascertaining employees’ salaries, a matterwhich was governed by the existing CBA.

Under Article 261, voluntary arbitrators have originaland exclusive jurisdiction over matters which have notbeen resolved by the grievance machinery. Pursuantto Articles 217 in relation to Articles 260 and 261 of theLabor Code, the labor arbiter should have referred thematter to the grievance machinery provided in theCBA. Because the labor arbiter clearly did not havejurisdiction over the subject matter, his decision wasvoid.

CIRTEK EMPLOYEES LABOR UNION FEDERATIONOF FREE WORKERS vs CIRTEK

Facts:Amicable settlement of the CBA between petitionerunion and respondent company was deadlocked,petitioner went on strike. Secretary of Labor assumedjurisdiction over the controversy and issued a Returnto Work Order which was complied with. Before theSecretary of Labor could rule on the controversy,respondent created a Labor Management Council(LMC) through which it concluded with the officers ofpetitioner a Memorandum of Agreement (MOA)providing for daily wage increases of P6.00 per dayeffective January 1, 2004 and P9.00 per day effectiveJanuary 1, 2005. Petitioner submitted the MOA viaMotion and Manifestation to the Secretary of Labor,alleging that the remaining officers signed the MOAunder respondents assurance that should theSecretary order a higher award of wage increase,respondent would comply.

Secretary of Labor resolved the CBA deadlock byawarding a wage increase of from P6.00 to P10.00 perday effective January 1, 2004 and from P9.00 toP15.00 per day effective January 1, 2005, andadopting all other benefits as embodied in the MOA.

Respondent moved for a reconsideration of theDecision as petitioners vice-president submitted aMuling Pagpapatibay ng Pagsang-ayon sa Kasunduan

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na may Petsang ika-4 ng Agosto 2005, stating that theunion members were waiving their rights and benefitsunder the Secretary’s Decision. Court ruled in favor ofrespondent and accordingly set aside the Decision ofthe Secretary of Labor. It held that the Secretary ofLabor gravely abused his discretion in not respectingthe MOA. Petitioners filed the present petition,maintaining that the Secretary of Labors award is inorder, being in accord with the parties CBA history ─respondent having already granted P15.00 per day for2001, P10.00 per day for 2002, and P10.00 per day for2003, and that the Secretary has the power to grantawards higher than what are stated in the CBA.

Issue:Whether or not the MOA entered into by the petitionerand the respondent constitutes CBA between themand thus restricts the Secretary’s leeway in decidingmatters before it

Held:No. It is well-settled that the Secretary of Labor, in theexercise of his power to assume jurisdiction under Art.263 (g)[11] of the Labor Code, may resolve all issuesinvolved in the controversy including the award ofwage increases and benefits. While an arbitral awardcannot per se be categorized as an agreementvoluntarily entered into by the parties because itrequires the intervention and imposing power of theState thru the Secretary of Labor when he assumesjurisdiction, the arbitral award can be considered anapproximation of a collective bargainingagreement which would otherwise have been enteredinto by the parties, hence, it has the force and effect ofa valid contract obligation. Since the filing andsubmission of the MOA did not have the effect ofdivesting the Secretary of his jurisdiction, or ofautomatically disposing the controversy, then neithershould the provisions of the MOA restrict theSecretary’s leeway in deciding the matters before him.

While a contract constitutes the law between theparties, this is so in the present case with respect tothe CBA, not to the MOA in which even the unionssignatories had expressed reservations thereto. Buteven assuming arguendo that the MOA is treated as anew CBA, since it is imbued with public interest, itmust be construed liberally and yield to the commongood. While the terms and conditions of a CBAconstitute the law between the parties, it is not,however, an ordinary contract to which is applied theprinciples of law governing ordinary contracts. A CBA,as a labor contract within the contemplation of Article1700 of the Civil Code of the Philippines whichgoverns the relations between labor and capital, is notmerely contractual in nature but impressed with publicinterest, thus, it must yield to the common good. Assuch, it must be construed liberally rather thannarrowly and technically, and the courts must place apractical and realistic construction upon it, giving due

consideration to the context in which it is negotiatedand purpose which it is intended to serve.

EASTERN TELECOMMUNICATIONS, PHIL., INC. V.EASTERN TELECOMS UNIONG.R. No. 185665; February 8, 2012

FACTS: Eastern Telecommunications Phils., Inc.(ETPI) is a corporation engaged in the business ofproviding telecommunications facilities employingapproximately 400 employees. Eastern TelecomsEmployees Union (ETEU) is the certified exclusivebargaining agent of the company’s rank and fileemployees with a strong following of 147 regularmembers. It has an existing collecti[ve] bargainingagreement with the company to expire in the year2004 with a Side Agreement signed on September 3,2001. The labor dispute was a spin-off of thecompanys plan to defer payment of the 2003 14th, 15th

and 16th month bonuses sometime in April 2004. Thecompany’s main ground in postponing the payment ofbonuses is due to allege continuing deterioration ofcompany’s financial position which started in the year2000. However, ETPI while postponing payment ofbonuses sometime in April 2004, such payment wouldalso be subject to availability of funds.

Invoking the Side Agreement of the existing CollectiveBargaining Agreement for the period 2001-2004between ETPI and ETEU which stated as follows: “4.Employment Related Bonuses. The Company confirmsthat the 14th, 15th and 16th month bonuses (other than13th month pay) are granted.” The union stronglyopposed the deferment in payment of the bonuses byfiling a preventive mediation complaint with the NCMB.The company declared that until the matter is resolvedin a compulsory arbitration, the company cannot andwill not pay any bonuses to any and all unionmembers. ETEU filed a Notice of Strike on the groundof unfair labor practice for failure of ETPI to pay thebonuses in gross violation of the economic provision ofthe existing CBA. Secretary of Labor and Employment,finding that the company is engaged in an industryconsidered vital to the, certified the labor dispute forcompulsory arbitration.

ETEU theorized that the grant of the subject bonusesis not only a company practice but also a contractualobligation of ETPI to the union members. ETEUcontended that the unjustified and malicious refusal ofthe company to pay the subject bonuses was a clearviolation of the economic provision of the CBA andconstitutes unfair labor practice (ULP). On the otherhand, ETPI contends that NLRC had no jurisdictionover the issue which merely involved the interpretationof the economic provision of the 2001-2004 CBA SideAgreement. It averred that the subject bonuses werenot part of the legally demandable wage and the grantthereof to its employees was an act of pure gratuityand generosity on its part, involving the exercise ofmanagement prerogative and always dependent on

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the financial performance and realization of profits.ETPI emphasized that even if it had an unconditionalobligation to grant bonuses to its employees, thedrastic decline in its financial condition had alreadylegally released it therefrom pursuant to Article 1267 ofthe Civil Code.

NLRC dismissed ETEUs complaint and held that ETPIcould not be forced to pay the union members thebonuses as the payment of these additional benefitswas basically a management prerogative. ETEUmoved for reconsideration but the motion was denied.ETEU filed a petition for certiorari. The CA declaredthat the Side Agreements of the 1998 and 2001 CBAcreated a contractual obligation. However, the CAsustained the NLRC finding that the allegation of ULPwas devoid of merit. ETPI appealed via Rule 45 of theRules of Court.

ISSUES: (1) Whether or not petitioner ETPI is liable topay 14th, 15th and 16th month bonuses for the year2003 and 14th month bonus for the year 2004 to themembers of respondent union; and (2) Whether or notthe CA erred in not dismissing outright ETEUs petitionfor certiorari.

RULING: The Court finds no merit in the petition. Abonus, however, becomes a demandable orenforceable obligation when it is made part of thewage or salary or compensation of the employee. Areading of the [CBA Side Agreements] reveals that thesame provides for the giving of 14th, 15th and 16th

month bonuses without qualification. The records arealso bereft of any showing that the ETPI made it clearbefore or during the execution of the Side Agreementsthat the bonuses shall be subject to any condition. Inthe absence of any proof that ETPIs consent wasvitiated by fraud, mistake or duress, it is presumed thatit entered into the Side Agreements voluntarily, that ithad full knowledge of the contents thereof and that itwas aware of its commitment under the contract.Notwithstanding such huge losses, ETPI entered intothe 2001-2004 CBA Side Agreement. The parties tothe contract must be presumed to have assumed therisks of unfavorable developments. It is, therefore, onlyin absolutely exceptional changes of circumstancesthat equity demands assistance for the debtor. In thecase at bench, the Court determines that ETPIsclaimed depressed financial state will not release itfrom the binding effect of the 2001-2004 CBA SideAgreement. Considering that ETPI had beencontinuously suffering huge losses from 2000 to 2002,its business losses in the year 2003 were not exactlyunforeseen or unexpected.

Granting arguendo that the CBA SideAgreement does not contractually bind petitioner ETPIto give the subject bonuses, nevertheless, the Courtfinds that its act of granting the same has become anestablished company practice such that it has virtuallybecome part of the employee’s salary or wage. Abonus may be granted on equitable consideration

when the giving of such bonus has been thecompany’s long and regular practice. The giving of thesubject bonuses cannot be peremptorily withdrawn byETPI without violating Article 100 of the Labor Code.

PNCC SKYWAY TRAFFIC MANAGEMENT ANDSECURITY DIVISION WORKERS ORGANIZATION(PSTMSDWO) V. PNCC SKYWAY CORPORATIONG.R. No. 171231; February 17, 2010

FACTS: Petitioner PSTMSDWO is a duly registeredlabor union. Respondent PNCC Skyway Corporation isa corporation duly organized and operating under andby virtue of the laws of the Philippines. On November15, 2002, petitioner and respondent entered into aCollective Bargaining Agreement (CBA) incorporatingthe terms and conditions of their agreement whichincluded vacation leave and expenses for securitylicense provisions.

The pertinent provisions of the CBA relative tovacation leave and sick leave are as follows: “[b] Thecompany shall schedule the vacation leave ofemployees during the year taking intoconsideration the request of preference of theemployees. [c] Any unused vacation leave shall beconverted to cash and shall be paid to the

employees on the first week of Decembereach year.”

The Head of the TMSD issued a Memorandum datedJanuary 9, 2004 to all TMSD personnel. In the saidmemorandum, it was provided that:

“SCHEDULED VACATION LEAVE WITH PAY.The 17 days (15 days SVL

plus 2-day-off) scheduled vacationleave (SVL) with pay for the year 2004had been published for everyone totake a vacation with pay which will beour opportunity to enjoy quality timewith our families and perform ourother activities requiring our personalattention and supervision. Swappingof SVL schedule is allowed on a one-on-one basis by submitting a writtenrequest at least 30 days before theactual schedule of SVL duly signed bythe concerned parties. However, theundersigned may consider the re-scheduling of the SVL upon thewritten request of concerned TMSDpersonnel at least 30 days before thescheduled SVL. Re-scheduling will beevaluated taking into considerationthe TMSDs operational requirement.”

Petitioner objected to the implementation of the saidmemorandum. It insisted that the individual membersof the union have the right to schedule their vacationleave. It opined that the unilateral scheduling of the

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employees' vacation leave was done to avoid themonetization of their vacation leave in December2004. Petitioner also demanded that the expenses forthe required in-service training of its member securityguards, as a requirement for the renewal of theirlicense, be shouldered by the respondent.

Due to the disagreement between the parties,petitioner elevated the matter to the DOLE-NCMB forpreventive mediation. The voluntary arbitrator ruledthat the scheduling of all vacation leaves shall beunder the discretion of the union members, and themanagement to convert them into cash all the leaveswhich the management compelled them to use. It alsoruled that the in-service-training of the companysecurity guards, as a requirement for renewal oflicenses, shall not be their personal account but that ofthe company. All other claims were dismissed for lackof merit. Respondent filed a motion for reconsideration,which the voluntary arbitrator denied. Respondent fileda Petition for Certiorari with Prayer for TemporaryRestraining Order and/or Writ of Preliminary Injunctionwith the CA, and the CA annulled and set aside thedecision and order of the voluntary arbitrator. The CAruled that since the provisions of the CBA were clear,the voluntary arbitrator has no authority to interpret thesame beyond what was expressly written. Petitionerfiled a motion for reconsideration. Hence, the instantpetition.

ISSUES: (1) Whether the management has the solediscretion to schedule the vacation leave; (2) Whetherthe management is not liable for the in-service-trainingof the security guard.

RULING:(1) As to the issue on vacation leaves, the

same has no merit.The rule is that where the language of a contract isplain and unambiguous, its meaning should bedetermined without reference to extrinsic facts or aids.The intention of the parties must be gathered from thatlanguage, and from that language alone. Stateddifferently, where the language of a written contract isclear and unambiguous, the contract must be taken tomean that which, on its face, it purports to mean,unless some good reason can be assigned to showthat the words used should be understood in adifferent sense.

In the case at bar, the contested provision of the CBAis clear and unequivocal. Article VIII, Section 1 (b) ofthe CBA categorically provides that the scheduling ofvacation leave shall be under the option of theemployer. The preference requested by the employeesis not controlling because respondent retains its powerand prerogative to consider or to ignore said request.

Thus, if the terms of a CBA are clear and leave nodoubt upon the intention of the contracting parties, theliteral meaning of its stipulation shall prevail. In fine, the

CBA must be strictly adhered to and respected if itsends have to be achieved, being the law between theparties. In Faculty Association of Mapua Institute ofTechnology (FAMIT) v. Court of Appeals, this Courtheld that the CBA during its lifetime binds all theparties. The provisions of the CBA must be respectedsince its terms and conditions constitute the lawbetween the parties. The parties cannot be allowed tochange the terms they agreed upon on the ground thatthe same are not favorable to them.

In the grant of vacation leave privileges to anemployee, the employer is given the leeway to imposeconditions on the entitlement to and commutation ofthe same, as the grant of vacation leave is not astandard of law, but a prerogative of management.Along that line, since the grant of vacation leave is aprerogative of the employer, the latter can compel itsemployees to exhaust all their vacation leave credits.Of course, any vacation leave credits left unscheduledby the employer, or any scheduled vacation leave thatwas not enjoyed by the employee upon the employer'sdirective, due to exigencies of the service, must beconverted to cash, as provided in the CBA. However, itis incorrect to award payment of the cash equivalent ofvacation leaves that were already used and enjoyed bythe employee. Accordingly, the vacation leave privilegewas not intended to serve as additional salary, but as anon-monetary benefit. To give the employees theoption not to consume it with the aim of converting it tocash at the end of the year would defeat the verypurpose of vacation leave. Petitioner's contention thatlabor contracts should be construed in favor of thelaborer is without basis and, therefore, inapplicable tothe present case. This rule of construction does notbenefit petitioners because, as stated, there is here noroom for interpretation. Since the CBA is clear andunambiguous, its terms should be implemented asthey are written.

(2) This brings Us to the issue of who isaccountable for the in-service training of the securityguards. On this point, We find the petition meritorious.

Although it is a rule that a contract freely entered intobetween the parties should be respected, since acontract is the law between the parties, there are,however, certain exceptions to the rule, specificallyArticle 1306 of the Civil Code. Moreover, the relationsbetween capital and labor are not merely contractual.They are so impressed with public interest that laborcontracts must yield to the common good. If theprovisions in the CBA run contrary to law, publicmorals, or public policy, such provisions may very wellbe voided.

In the present case, Article XXI, Section 6 of the CBAprovides that All expenses of security guards insecuring /renewing their licenses shall be for theirpersonal account. A reading of the provision wouldreveal that it encompasses all possible expenses a

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security guard would pay or incur in order to secure orrenew his license.

Since it is the primary responsibility of operators ofcompany security forces to maintain and upgrade thestandards of efficiency, discipline, performance andcompetence of their personnel, it follows that theexpenses to be incurred therein shall be for thepersonal account of the company. Further, the intent ofthe law to impose upon the employer the obligation topay for the cost of its employees training is manifestedin the aforementioned laws provision that Where thequality of training is better served by centralization, theCFSD Directors may activate a training staff from localtalents to assist. The cost of training shall be pro-ratedamong the participating agencies/private companies. Itcan be gleaned from the said provision that cost oftraining shall be pro-rated among participatingagencies and companies if the training is best servedby centralization. The law mandates pro-rating ofexpenses because it would be impracticable and unfairto impose the burden of expenses suffered by allparticipants on only one participating agency orcompany. Thus, it follows that if there is nocentralization, there can be no pro-rating, and thecompany that has its own security forces shallshoulder the entire cost for such training. If the intentof the law were to impose upon individual employeesthe cost of training, the provision on the pro-rating ofexpenses would not have found print in the law.

HALAGUEÑA, et al v. PHILIPPINE AIRLINESINCORPORATEDG.R. No. 172013, October 2, 2009, Peralta

FACTSPetitioners are members of the Flight Attendants andStewards Association of the Philippines (FASAP), alabor organization certified as the sole and exclusivebargaining representative of the flight attendants, flightstewards and pursers of PAL. In 2011, PAL andFASAP entered into a CBA, a provision of whichprovides that compulsory retirement for cabinattendants hired before November 1996 shall be 55(years old) for females and 60 for males. Petitionersmanifested that the aforementioned CBA provision isdiscriminatory, and demanded for an equal treatmentwith their male counterparts. Petitioners filed a SpecialCivil Action for Declaratory Relief with the Makati RTCseeking to invalidate the said CBA provision. The RTCupheld its jurisdiction over the case, reasoning that theallegations do not make out a labor dispute arisingfrom employer-employee relationship nor does itinvolve a claim against PAL.

ISSUEDoes the RTC have jurisdiction over the petitioners’action challenging the legality or constitutionality of theprovisions on the compulsory retirement age containedin the CBA?

RULINGYes. The subject of litigation is incapable of pecuniaryestimation, exclusively cognizable by the RTC,pursuant to Section 19 (1) of BP 129, as amended.Being an ordinary civil action, the same is beyond thejurisdiction of labor tribunals. The said issue cannot beresolved solely by applying the Labor Code. Rather, itrequires the application of the Constitution, laborstatutes, law on contracts and the Convention on theElimination of All Forms of Discrimination AgainstWomen, and the power to apply and interpret theconstitution and CEDAW is within the jurisdiction oftrial courts, a court of general jurisdiction. Here, theemployer-employee relationship between the parties ismerely incidental and the cause of action ultimatelyarose from different sources of obligation, i.e., theConstitution and CEDAW.

Thus, where the principal relief sought is to beresolved not by reference to the Labor Code or otherlabor relations statute or a collective bargainingagreement but by the general civil law, the jurisdictionover the dispute belongs to the regular courts of justiceand not to the labor arbiter and the NLRC. In suchsituations, resolution of the dispute requires expertise,not in labor management relations nor in wagestructures and other terms and conditions ofemployment, but rather in the application of thegeneral civil law. Clearly, such claims fall outside thearea of competence or expertise ordinarily ascribed tolabor arbiters and the NLRC and the rationale forgranting jurisdiction over such claims to theseagencies disappears.

If We divest the regular courts of jurisdiction over thecase, then which tribunal or forum shall determine theconstitutionality or legality of the assailed CBAprovision? This Court holds that the grievancemachinery and voluntary arbitrators do not have thepower to determine and settle the issues at hand. Theyhave no jurisdiction and competence to decideconstitutional issues relative to the questionedcompulsory retirement age. Their exercise ofjurisdiction is futile, as it is like vesting power tosomeone who cannot wield it.

The change in the terms and conditions ofemployment, should Section 144 of the CBA be heldinvalid, is but a necessary and unavoidableconsequence of the principal relief sought, i.e.,nullification of the alleged discriminatory provision inthe CBA. Thus, it does not necessarily follow that aresolution of controversy that would bring about achange in the terms and conditions of employment is alabor dispute, cognizable by labor tribunals. It is unfairto preclude petitioners from invoking the trial court'sjurisdiction merely because it may eventually resultinto a change of the terms and conditions ofemployment. Along that line, the trial court is not askedto set and fix the terms and conditions of employment,

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but is called upon to determine whether CBA isconsistent with the laws.

Although the CBA provides for a procedure for theadjustment of grievances, such referral to thegrievance machinery and thereafter to voluntaryarbitration would be inappropriate to the petitioners,because the union and the management haveunanimously agreed to the terms of the CBA and theirinterest is unified.

The he dispute in the case at bar is not betweenFASAP and respondent PAL, who have bothpreviously agreed upon the provision on thecompulsory retirement of female flight attendants asembodied in the CBA. The dispute is betweenrespondent PAL and several female flight attendantswho questioned the provision on compulsoryretirement of female flight attendants. Thus, applyingthe principle in the aforementioned case cited, referralto the grievance machinery and voluntary arbitrationwould not serve the interest of the petitioners. #

PASSI (STEVEDORING AND ARASTRE COMPANY)V. BACOLOTDoctrine: when the scales are tilted towards labor itmust not be so tilted as to cause injustice to theemployer

If a reliever is allowed to work for at least 365accumulated days.. He may become a regularemployee under article 280(2).

FACTSBacolot was hired by PASSI to work as a stevedore foran accumulated 36 months (but only worked for 228.5days - average is 1 week of work per month), thenature of his work is that of a reliever, he will only workif the regular steverdore is absent.

On the CBA:1) there is a stipulation that casual/probationaryemployees shall become regular employees after theaccumulation of 6 months of employment from theirhiring.;

2) and the adoption of a "union shop" as a condition foremployment- there must be a certain time upon which theemployee must become a member of a union upon hishiring

Contention of the respondent:1) he worked for beyond 6 months, thus, following theCBA he should already be a regular employee

Contention of the petitioner:1) CBA will not apply to you, you are neither a regular,casual nor a probationary employee.. You are just amere reliever whose work depends on the absence of

the regular worker.. Because a reliever is treated as ifmere project employee

Issue:1) WON respondent in this case is a casual employee2) WON the nature of the work of a reliever in this caseis covered by the CBA2.1) WON respondent became a regular employee

Ruling:1) Yes, he is a casual employee but the basis of this isnot because of the 1st paragraph of article 280.. Butunder the 2nd paragraph because he does not fallunder any kinds of employee in article 280, however,to be a regular employee under the 2nd paragraph theemployee must have rendered at least 1 year ofservice whether or not it is continous or broken, thetotal work time of the respondent is only 228.5 days.Therefore he is not a regular employee UNDER THELABOR CODE ALONE.

(to justify as to why didn't the court consider the 36months to be beyond 1 year despite the fact that thelaw allows "broken"... Because when the law tilts thescale to labor, it must not be so tilted as to causeinjustice to the employer.. Plus, it is a commonindustrial practice in stevedoring to get relievers incases where the regular stevedores could not make itto work so that the business could continue for 24hours or to finish without any interruptions, and the factthat there was no prohibition imposed to therespondent that he can freely offer his service to otherpersons)

2) Because of the "union shop" clause under theexisting CBA, the respondent being seen by the law asa "casual employee" is deemed to have been amember of a union within a certain time as aprecondition to employment (to clarify, even non-unionmembers may be hired but subject to this condition),became a regular employee by virtue of the provisionsof the CBA because 228.5 days is equivalent to 8months of work which is beyond the agreed 6 monthsunder the CBA.

UNFAIR LABOR PRACTICE

EMPLOYEES UNION OF BAYER PHILS (EUBP) VS.BAYER PHILIPPINES, INC.G.R. No. 162943, December 6, 2010, Villarama

Petitioner EUBP is the exclusive bargaining agent ofrespondent Bayer. The parties figured in a bargainingdeadlock in 1997 for failure to agree on Bayer’s offer of9.9% wage increase. Pending the resolution of thedispute, AvelinaRemigio (Remigio) and 27 other unionmembers accepted said offer without authority fromthe union leaders.EUBP’s grievance committee questionedRemigios action and reprimanded Remigio and

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her allies. Later, the DOLE Secretary issued an arbitralaward ordering EUBPand Bayer to execute a CBA retroactive to January1, 1997 and to be made effective until December 31,2001.

Meanwhile, the rift between the Facundo’s leadershipand Remegio’s group broadened. Six months after thesigning of the 1997-2001 CBA, the latter group formedthe Reformed Employees Union of Bayer Philippines(REUBP). A tug-of-war then ensued between the tworival groups, with both seeking recognition from Bayerand demanding remittance of the union dues collectedfrom its rank-and files members. Bayer decided to putthe union dues in a trust account.

EUBP then filed a complaint for ULP against Bayer forthe non-remittance of dues. During its pendency,Bayer turned over the collected union dues toAnastacia Villareal, Treasurer of REUBP. Hereincomplaint was, however, dismissed and no appeal wastaken.

Petitioners filed a second ULP complaint againstherein respondents. Three days later,petitioners amended the complaint charging therespondents with unfair labor practicecommitted by organizing a company union, gross violation of the CBA and violation of their duty to bargain.On even date, REUBP and Bayer agreed to sign anew CBA. Remegio immediately informed her allies ofthe management decision. In response, petitionersimmediately filed an urgent motion for the issuance ofa restraining order/injunction. Said CBA was, however,eventually signed and ratified despite the BLR’s rulingand order that the management of Bayer shouldrespect the authority of the duly-elected officers ofEUBP in the administration of the prevailing CBA.

The second ULP was dismissed by the Labor Arbiterfor lack for jurisdiction for the issue involves an intra-union dispute. The NLRC likewise dismissed themotion for a restraining order and/or injunction statingthat the subject matter involved an intra-union dispute,over which the Commission has no jurisdiction. Onappeal, the CA sustained the two rulings hence, thispetition.

ISSUEWhether the act of the management of Bayer indealing and negotiating with Remigio’s splinter groupdespite its validly existing CBA with EUBP can beconsidered unfair labor practice.

HELDYES. It must be remembered that a CBA is enteredinto in order to foster stability and mutual cooperationbetween labor and capital. An employer should not beallowed to rescind unilaterally its CBA with the dulycertified bargaining agent it had previously contractedwith, and decide to bargain anew with a different group

if there is no legitimate reason for doing so and withoutfirst following the proper procedure. If such behaviorwould be tolerated, bargaining and negotiationsbetween the employer and the union will never betruthful and meaningful, and no CBA forged afterarduous negotiations will ever be honored or be reliedupon. A CBA entered into by a legitimate labororganization that has been duly certified as theexclusive bargaining representative and the employerbecomes the law between them.

When an employer proceeds to negotiate with asplinter union despite the existence of its valid CBAwith the duly certified and exclusive bargaining agent,the former indubitably abandons its recognition of thelatter and terminates the entire CBA.

Respondents cannot claim good faith to justify theiracts. They knew that Facundos group represented theduly-elected officers of EUBP. Moreover, they werecognizant of the fact that even the DOLE Secretaryhimself had recognized the legitimacy of EUBPsmandate by rendering an arbitral award ordering thesigning of the 1997-2001 CBA between Bayer andEUBP. Respondents were likewise well-aware of thependency of the intra-union dispute case, yet they stillproceeded to turn over the collected union dues toREUBP and to effusively deal with Remigio. Thetotality of respondents conduct, therefore, reeks withanti-EUBP animus.

PRINCE TRANSPORT, INC. and MR. RENATOCLAROS vs. DIOSDADO GARCIA, et alJanuary 12, 2011, G.R. No. 167291, Peralta

Petitioner PTI is a company engaged in the businessof transporting passengers by land, on the other hand,respondents were hired as drivers, conductors,mechanics and inspectors. In addition to their regularmonthly income, respondents also receivedcommissions equivalent to 8 to 10% of their wages;sometime in October 1997, the said commissions werereduced to 7 to 9%; this led respondents and otheremployees of PTI to hold a series of meetings todiscuss the protection of their interests as employees;these meetings led petitioner Claros, president of PTI,to suspect that respondents are about to form a union.In December 1997, PTI employees requested for acash advance, but the same was denied bymanagement, which resulted in demoralization on theemployees' ranks; later, the foregoing circumstancesled respondents to form a union for their mutual aidand protection. In order to block the continuedformation of the union, PTI caused the transfer of allunion members and sympathizers to one of its sub-companies, Lubas Transport (Lubas); despite suchtransfer, the schedule of drivers and conductors, aswell as their company identification cards, were issuedby PTI; the daily time records, tickets and reports ofthe respondents were also filed at the PTI office; and,all claims for salaries were transacted at the same

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office; later, the business of Lubas deterioratedbecause of the refusal of PTI to maintain and repairthe units being used therein, which resulted in thevirtual stoppage of its operations and respondents'loss of employment.

Petitioners, on the other hand, denied the materialallegations of the complaints contending that hereinrespondents were no longer their employees, sincethey all transferred to Lubas.

ISSUEWhether or not petitioner is guilty of unfair laborpractice

HELDYes. The respondents’ transfer of work assignments toLubas was designed by petitioners as a subterfuge tofoil the formers right to organize themselves into aunion. Under Article 248 (a) and (e) of the Labor Code,an employer is guilty of unfair labor practice if itinterferes with, restrains or coerces its employees inthe exercise of their right to self-organization or if itdiscriminates in regard to wages, hours of work andother terms and conditions of employment in order toencourage or discourage membership in any labororganization.

Indeed, evidence of petitioners' unfair labor practice isshown by the established fact that, after respondents'transfer to Lubas, petitioners left them high and dryinsofar as the operations of Lubas was concerned.Petitioners withheld the necessary financial andlogistic support such as spare parts, and repair andmaintenance of the transferred buses until only twounits remained in running condition. This leftrespondents virtually jobless.

MANILA MINING CORP. EMPLOYESS v. MANILAMINING CORP.G.R. Nos. 178222-23, September 20, 2010, Perez

Manila Mining Corp. (MMC), a corporation engaged inlarge-scale mining, constructed several tailings damsto treat and store its waste materials and one of thesetailings dams was operating under a permit issued byDENR-EMB. Petitioner Union, submitted letters toMMC relating its intention to bargain collectively andlikewise submitted its CBA proposal. However, uponexpiration of the tailings permit, DENR-EMB did notissue a permanent permit due to the inability of MMCto secure an Environmental Compliance Certificate.Hence, it was compelled to temporarily shut down itsmining operations, resulting in the temporary lay-off ofmore than 400 employees, including the complainants.MMC called for the suspension of negotiations on theCBA with the Union until resumption of miningoperations.

ISSUE

WON the suspension of CBA negotiations can beconsidered as unfair labor practice.

RULINGNo. Unfair labor practice cannot be imputed to MMCsince the call of MMC for a suspension of the CBAnegotiations cannot be equated to “refusal to bargain.”For a charge of unfair labor practice to prosper, it mustbe shown that the employer was motivated by ill-will,bad faith or fraud, or was oppressive to labor. Theemployer must have acted in a manner contrary tomorals, good customs, or public policy causing socialhumiliation, wounded feelings or grave anxiety. Whilethe law makes it an obligation for the employer and theemployees to bargain collectively with each other,such compulsion does not include the commitment toprecipitately accept or agree to the proposals of theother. All it contemplates is that both parties shouldapproach the negotiation with an open mind and makereasonable effort to reach a common ground ofagreement.

CENTRAL AZUCARERA DE BAIS EMPLOYEESUNION-NFL (CABEU-NFL) V. CENTRALAZUCARERA DE BAIS, INC. (CAB)G.R. No. 186605, November 17, 2010, Mendoza

As a result of a bargaining deadlock, the NCMBcommenced conciliation/mediation proceedingsinvolving CAB, employer, and CABEU-NFL, theexclusive bargaining agent. In a letter-response to theNCMB, CAB sought suspension of theconciliation/mediation proceedings on the followinggrounds:

1) CABEU-NFL lost its majority status by reasonof the disauthorization and withdrawal ofsupport thereto by more than 90% of the rankand file employees in the bargaining unit; and

2) the workers themselves, acting as principal,after disauthorizing the previous agentCABEU-NFL have organized themselves intoa new Union known as Central Azucarera deBais Employees Labor Association (CABELA)and after obtaining their registration certificateand making due representation that it is a dulyorganized union representing almost all therank and file workers of CAB, had concluded anew collective bargaining agreement withCAB.

The NCMB did not act on the letter-request. Neitherdid it conclude the conciliation/mediation proceedingsinvolving CABEU-NFL and CAB.

ISSUEIs CAB guilty of acts constituting unfair labor practice(ULP) by refusing to bargain collectively in good faith?

HELDNo. By imputing bad faith to the actuations of CAB,CABEU-NFL has the burden of proof to present

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substantial evidence to support the allegation of unfairlabor practice.The circumstances relied upon as proofof CAB’s bad faith are merely those mentioned in theletter-response, namely, the execution of the supposedCBA between CAB and CABELA and the request tosuspend the negotiations. In simply relying on the saidletter-response, CABEU-NFL failed to substantiate itsclaim of unfair labor practice to rebut the presumptionof good faith.

Moreover, the filing of the complaint for unfair laborpractice was premature inasmuch as the issue ofcollective bargaining is still pending before the NCMB.CAB cannot be faulted for the NCMB’s inaction.

BPI EMPLOYEES UNION-DAVAO V. BPIJuly 24, 2013, G.R. No. 174912, Mendoza

BOMC, which was created pursuant to Central BankCircular No. 1388, Series of 1993 (CBP Circular No.1388, 1993), and primarily engaged in providing and/orhandling support services for banks and other financialinstitutions, is a subsidiary of the Bank of PhilippineIslands (BPI) operating and functioning as an entirelyseparate and distinct entity. A service agreementbetween BPI and BOMC was initially implemented inBPI’s Metro Manila branches. In this agreement,BOMC undertook to provide services such as checkclearing, delivery of bank statements, fund transfers,card production, operations accounting and control,and cash servicing Not a single BPI employee wasdisplaced and those performing the functions, whichwere transferred to BOMC, were given otherassignments. On January 1, 1996, the serviceagreement was likewise implemented in Davao City.Later, a merger between BPI and Far East Bank andTrust Company (FEBTC) took effect on April 10, 2000with BPI as the surviving corporation. Thereafter, BPI’scashiering function and FEBTC’s cashiering,distribution and bookkeeping functions were handledby BOMC. Consequently, twelve (12) former FEBTCemployees were transferred to BOMC to complete thelatter’s service complement.

BPI Employees Union-Davao City-FUBU (Union),objected to the transfer of the functions and the twelve(12) personnel to BOMC contending that the functionsrightfully belonged to the BPI employees and that theUnion was deprived of membership of former FEBTCpersonnel who, by virtue of the merger, would haveformed part of the bargaining unit represented by theUnion pursuant to its union shop provision in the CBA.BPI proposed a Labor Management Conference (LMC)between the parties. During the LMC, BPI invokedmanagement prerogative stating that the creation ofthe BOMC was to preserve more jobs and to designateit as an agency to place employees where they weremost needed. On the other hand, the Union chargedthat BOMC undermined the existence of the unionsince it reduced or divided the bargaining unit. WhileBOMC employees perform BPI functions, they were

beyond the bargaining unit’s coverage. In contractingout FEBTC functions to BOMC, BPI effectivelydeprived the union of the membership of employeeshandling said functions as well as curtailed the right ofthose employees to join the union.

Thereafter, the Union demanded that the matter besubmitted to the grievance machinery as the resort tothe LMC was unsuccessful. As BPI allegedly ignoredthe demand, the Union filed a notice of strike beforethe National Conciliation and Mediation Board (NCMB)on the following grounds:a) Contracting out services/functions performed byunion members that interfered with, restrained and/orcoerced the employees in the exercise of their right toself-organization;b) Violation of duty to bargain; andc) Union busting

BPI then filed a petition for assumption ofjurisdiction/certification with the Secretary of theDepartment of Labor and Employment (DOLE), whosubsequently issued an order certifying the labordispute to the NLRC for compulsory arbitration. TheDOLE Secretary directed the parties to cease anddesist from committing any act that might exacerbatethe situation. The NLRC came out with a resolutionupholding the validity of the service agreementbetween BPI and BOMC and dismissing the charge ofULP. It ruled that the engagement by BPI of BOMC toundertake some of its activities was clearly a validexercise of its management prerogative.11 It furtherstated that the spinning off by BPI to BOMC of certainservices and functions did not interfere with, restrain orcoerce employees in the exercise of their right to self-organization. The Union is of the position that theoutsourcing of jobs included in the existing bargainingunit to BOMC is a breach of the union-shop agreementin the CBA. In transferring the former employees ofFEBTC to BOMC instead of absorbing them in BPI asthe surviving corporation in the merger, the number ofpositions covered by the bargaining unit wasdecreased, resulting in the reduction of the Union’smembership.

ISSUEWhether or not the act of BPI to outsource thecashiering, distribution and bookkeeping functions toBOMC is in conformity with the law and the existingCBA

RULINGNo. The rule now is covered by Article 261 of theLabor Code, which took effect on November 1,1974.25 Article 261 provides: “Accordingly, violationsof a Collective Bargaining Agreement, except thosewhich are gross in character, shall no longer be treatedas unfair labor practice and shall be resolved asgrievances under the Collective BargainingAgreement. For purposes of this article, grossviolations of Collective Bargaining Agreement shall

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mean flagrant and/or malicious refusal to comply withthe economic provisions of such agreement.

Clearly, only gross violations of the economicprovisions of the CBA are treated as ULP. Otherwise,they are mere grievances.

In the present case, the alleged violation of the unionshop agreement in the CBA, even assuming it wasmalicious and flagrant, is not a violation of aneconomic provision in the agreement. The provisionsrelied upon by the Union were those articles referringto the recognition of the union as the sole andexclusive bargaining representative of all rank-and-fileemployees, as well as the articles on union security,specifically, the maintenance of membership in goodstanding as a condition for continued employment andthe union shop clause. It failed to take intoconsideration its recognition of the bank’s exclusiverights and prerogatives, likewise provided in the CBA,which included the hiring of employees, promotion,transfers, and dismissals for just cause and themaintenance of order, discipline and efficiency in itsoperations. It is incomprehensible how the "reductionof positions in the collective bargaining unit" interfereswith the employees’ right to self-organization becausethe employees themselves were neither transferrednor dismissed from the service. It is to be emphasizedthat contracting out of services is not illegal per se. It isan exercise of business judgment or managementprerogative. Absent proof that the management actedin a malicious or arbitrary manner, the Court will notinterfere with the exercise of judgment by anemployer.In this case, bad faith cannot be attributed toBPI because its actions were authorized by CBPCircular.

PEPSI-COLA PRODUCTS PHILIPPINES, INC. vs.MOLON, et. alG.R. No. 175002, February 18, 2013, Perlas-Bernabe

In 1999, Pepsi adopted a company-wide retrenchmentprogram denominated as Corporate RightsizingProgram. On July 13, 1999, Pepsi notified the DOLEof the initial batch of forty-seven (47) workers to beretrenched.Among these employees were six (6)elected officers and twenty-nine (29) active membersof the LEPCEU-ALU, including herein respondents.

On July 19, 1999, LEPCEU-ALU filed a Notice ofStrike before the National Conciliation and MediationBoard (NCMB) due to Pepsi’s alleged acts of unionbusting/ULP. It claimed that Pepsi’s adoption of theretrenchment program was designed solely to busttheir union so that come freedom period, Pepsi’scompany union, the Leyte Pepsi-Cola EmployeesUnion-Union de Obreros de Filipinas - would garnerthe majority vote to retain its exclusive bargainingstatus.

ISSUE

Whether Pepsi committed ULP in the form of unionbusting

HELDNO. Under Article 276(c) of the Labor Code, there isunion busting when the existence of the union isthreatened by the employer’s act of dismissing theformer’s officers who have been duly-elected inaccordance with its constitution and by-laws.

On the other hand, the term unfair labor practice refersto that gamut of offenses defined in the LaborCodewhich, at their core, violates the constitutionalright of workers and employees to self-organization, with the sole exception of Article 257(f)(previously Article 248[f]).

Unfair labor practice refers to acts that violate theworkers' right to organize. The prohibited acts arerelated to the workers' right to self-organization and tothe observance of a CBA. Without that element, theacts, no matter how unfair, are not unfair laborpractices. The only exception is Article 257(f).

ROYAL PLANT WORKERS UNION V. COCA COLABOTTLERSG.R. No. 198783, April 15, 2013

PETITIONER Royal Plant Workers Union is the unionof bottling operators employed with respondent Coca-Cola Bottlers Philippines, Inc.-Cebu Plant (CCBPI).

In 1974, the bottling operators were provided withchairs upon their request. Sometime in September2008, the chairs were removed pursuant to a nationaldirective of respondent. This directive is in line with the“I operate, I maintain, I clean” program of petitioner forbottling operators.

The CCBPI maintains that the removal of the subjectchairs is a valid exercise of management prerogative.Is there merit to this contention?

RULINGYes. The Supreme Court has held that management isfree to regulate, according to its own discretion andjudgment, all aspects of employment, including hiring,work assignments, working methods, time, place, andmanner of work, processes to be followed, supervisionof workers, working regulations, transfer of employees,work supervision, layoff of workers, and discipline,dismissal and recall of workers. The exercise ofmanagement prerogative, however, is not absolute asit must be exercised in good faith and with due regardto the rights of labor.

In the present controversy, it cannot be denied thatCCBPI removed the operators’ chairs pursuant to anational directive and in line with its “I Operate, IMaintain, I Clean” program, launched to enable theunion to perform their duties and responsibilities more

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efficiently. The chairs were not removedindiscriminately. They were carefully studied with dueregard to the welfare of the members of the Union. Theremoval of the chairs was compensated by a) areduction of the operating hours of the bottlingoperators from 2.5-hour rotation period to a 1.5-hourrotation period; and b) an increase of the break periodfrom 15 to 30 minutes between rotations.

Apparently, the decision to remove the chairs wasdone with good intentions, as CCBPI wanted to avoidinstances of operators sleeping on the job while in theperformance of their duties and responsibilities andbecause of the fact that the chairs were not necessary,considering that the operators constantly move aboutwhile working. In short, the removal of the chairs wasdesigned to increase work efficiency. Hence, CCBPI’sexercise of its management prerogative was made ingood faith without doing any harm to the workers’rights.

GOYA, INC. v. GOYA, INC. EMPLOYEES UNION-FFWG.R. No. 170054, January 21, 2013

Petitioner Goya, Inc. (Company), a domesticcorporation engaged in the manufacture, importation,and wholesale of top quality food products. It hiredcontractual employees from PESO ResourcesDevelopment Corporation (PESO) to performtemporary and occasional services in its factory inParang, Marikina City. This prompted respondentGoya, Inc. Employees Union–FFW (Union) to requestfor a grievance conference on the ground that thecontractual workers do not belong to the categories ofemployees stipulated in the existing CollectiveBargaining Agreement (CBA). The matter wasunresolved and referred to National Conciliation andMediation Board (NCMB) for voluntary arbitration. TheUnion asserted that the hiring of contractualemployees from PESO is not a managementprerogative and in gross violation of the CBAtantamount to unfair labor practice (ULP). It noted thatthe contractual workers engaged have been assignedto work in positions previously handled by regularworkers and Union members in effect violating CBA’sprovision on Categories of Employees which provideonly for Probationary, Regular, and Casual. With thehiring of contractual employees, the Union contendedthat it would no longer have probationary and casualemployees from which it could obtain additional Unionmembers. In countering the Union’s allegations, theCompany argued that: (a) the law expressly allowscontracting and subcontracting arrangements and thatthe CBA merely provides for the definition of thecategories of employees and does not put a limitationon the Company’s right to engage the services of jobcontractors or its management prerogative to addresstemporary/occasional needs in its operation. TheVoluntary Arbitrator ruled that the engagement ofPESO is not in keeping with the intent and spirit of the

CBA. The Company filed a petition for review in theCourt of Appeals.

ISSUEWhether or not the Company is guilty of violating theCBA in engaging the services of a third party serviceprovider.

HELDA careful reading of the above-enumerated categoriesof employees reveals that the PESO contractualemployees do not fall within the enumeratedcategories of employees stated in the CBA of theparties. Since the Company had admitted that itengaged the services of PESO to perform temporaryor occasional services which is akin to thoseperformed by casual employees, the Company shouldhave tapped the services of casual employees insteadof engaging PESO.

While contracting out services is a managementprerogative, however, is not without limitation. Incontracting out services, the management must bemotivated by good faith and the contracting out shouldnot be resorted to circumvent the law or must not havebeen the result of malicious arbitrary actions. In thecase at bench, the CBA of the parties has alreadyprovided for the categories of the employees in theCompany’s establishment. As stated earlier, the workto be performed by PESO was similar to that of thecasual employees. With the provision on casualemployees, the hiring of PESO contractual employees,therefore, is not in keeping with the spirit and intent oftheir CBA. It is familiar and fundamental doctrine inlabor law that the CBA is the law between the partiesand they are obliged to comply with its provisions.However, this cannot be considered unfair laborpractice, because it is not a gross violation of the CBA.

*** Definition under CBACasual Employee – One hired by the Company toperform occasional or seasonal work directlyconnected with the regular operations of the Company,or one hired for specific projects of limited duration notconnected directly with the regular operations of theCompany.

STRIKES AND LOCKOUTS

BUKLURAN NG MGA MANGGAGAWA SACLOTHMAN KNITTING V. CAG.R. No. 158158, January 17, 2005, Callejo

Petitioner is a legitimate labor union of the privaterespondent employer. It filed a petition for certificationelection. It incidentally resulted to respondentbecoming sour with its relation to the employees,prompting it to temporarily close a department in thecompany. As a result, members and officers of

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petitioner union stopped from working and staged apicket outside the employer’s building. LA, NLRC andCA said that there was strike despite the argument ofthe petitioner that there could not have been a strikeconsidering that most of those who participated in the“picket” belong to the temporarily closed department.

ISSUEWhether or not the so called “picket” of the petitionerunion constituted an illegal strike.

HELDYes. A strike is any temporary stoppage of work by theconcerted action of employees as a result of anindustrial or labor dispute. A labor dispute includes anycontroversy or matter concerning terms or conditionsof employment or the association or representation ofpersons in negotiating, fixing, maintaining, changing orarranging the terms and conditions of employment,regardless of whether the disputants stand in theproximate relation of employer and employee.

The allegation that there can be no work stoppagebecause the operation in the Dyeing and FinishingDivision had been shutdown is of no consequence. Itbears stressing that the other divisions were fullyoperational. There is nothing on record showing thatthe union members and the supporters who formed apicket line in front of the respondent’s compound wereassigned to the finishing department. As can be clearlyinferred from the spot reports, employees from theknitting department also joined in picket. The blockadeof the delivery of trucks and the attendance ofemployees from the other departments of therespondent meant work stoppage. The placards thatthe picketers caused to be displayed arose frommatters concerning terms or conditions of employmentas well as the association or representation of personsin negotiating, fixing, maintaining, changing orarranging the terms and conditions of employment.

Clearly, the petitioner union, its officers, members andsupporters staged a strike. In order for a strike to bevalid, the following requirements laid down inparagraphs (c) and (f) of Article 263 of the Labor Codemust be complied with: (a) a notice of strike must befiled; (b) a strike-vote must be taken; and (c) theresults of the strike-vote must be reported to theDOLE.41 It bears stressing that these requirements aremandatory, meaning, non-compliance therewith makesthe strike illegal. The evident intention of the law inrequiring the strike notice and strike-vote report is toreasonably regulate the right to strike, which isessential to the attainment of legitimate policyobjectives embodied in the law.

Considering that the petitioner union failed to complywith the aforesaid requirements, the strike staged onJune 11 to 18, 2001 is illegal. Consequently, theofficers of the union who participated therein aredeemed to have lost their employment status.

STEEL CORPORATION OF THE PHILIPPINES vs.SCP EMPLOYEES UNION-NATIONAL FEDERATIONOF LABOR UNIONSG.R. Nos. 169829-30, April 16, 2008

Petitioner Steel Corporation of the Philippines (SCP) isengaged in manufacturing construction materials,supplying approximately 50% of the domestic needsfor roofing materials. On August 17, 1998, SCP-Federated Union of the Energy Leaders – General andAllied Services (FUEL-GAS) filed a petition forCertification Election in its bid to represent the rank-and-file employees of the petitioner. Respondent SCPEmployees Union (SCPEU) – National Federation ofLabor Unions (NAFLU) intervened, seeking toparticipate and be voted for in such elect but the samewas denied for having been filed out of time. OnOctober 16, 2000, the Undersecretary rendered aDecision certifying respondent as the exclusivebargaining agent of petitioner's employees. As aconsequence of its certification as the exclusivebargaining agent, respondent sent to petitioner CBAproposals. Petitioner, however, held in abeyance anyaction on the proposals in view of its pending motionfor reconsideration. Finding no justification inpetitioner's refusal to bargain with it, respondent filed aNotice of Strike with the National Conciliation andMediation Board (NCMB) on December 11, 2000. Theunion raised the issue of unfair labor practice (ULP)allegedly committed by petitioner for the latter's refusalto bargain with it. Meanwhile, the NLRC issued aResolution dated April 17, 2002, declaring petitioner ashaving no obligation to recognize respondent as thecertified bargaining agent; dismissing the charge ofunfair labor practice; declaring as illegal the strike heldby the union; and declaring the loss of employment ofthe officers of the union.

ISSUEWhether or not the strike held by the respondents isillegal

RULINGYES. The strike is a legitimate weapon in the humanstruggle for a decent existence. It is considered as themost effective weapon in protecting the rights of theemployees to improve the terms and conditions of theiremployment. But to be valid, a strike must be pursuedwithin legal bounds. The right to strike as a means forthe attainment of social justice is never meant tooppress or destroy the employer. The law provideslimits for its exercise. In the instant case, the strikeundertaken by the officers of respondent union ispatently illegal for the following reasons: (1) it is aunion-recognition-strike which is not sanctioned bylabor laws; (2) it was undertaken after the dispute hadbeen certified for compulsory arbitration; and (3) it wasin violation of the Secretary's return-to-work order.Respondent's notices of strike were founded onpetitioner's continued refusal to bargain with it. It thus

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staged the strike to compel petitioner to recognize it asthe collective bargaining agent, making it a union-recognition-strike. As its legal designation implies, thiskind of strike is calculated to compel the employer torecognize one's union and not other contendinggroups, as the employees' bargaining representative towork out a collective bargaining agreement despite thestriking union's doubtful majority status to meritvoluntary recognition and lack of formal certification asthe exclusive representative in the bargaining unit

BIFLEX PHILS. V. FILFLEX INDUSTRIAL &MANUFACTURING CORP.G.R. NO. 155679, Dec. 19, 2006, Carpio Morales

The labor sector staged a welga ng bayan to protestthe accelerating prices of oil. Petitioner-unions, led bytheir officers, herein petitioners,staged a workstoppage which lasted for several days, promptingrespondents to file on October 31, 1990 a petition todeclare the work stoppage illegal for failure to complywith procedural requirements.

ISSUES:(1) Is “welga ng bayan” an illegal strike?(2) Was there an illegal lockout?(3) Are union officers liable for blocking the freeingress to and egress of the company premises?

HELD:(1) Yes. Stoppage of work due to welga ng bayan is inthe nature of a general strike, an extended sympathystrike. It affects numerous employers including thosewho do not have a dispute with their employeesregarding their terms and conditions of employment.

Employees who have no labor dispute with theiremployer but who, on a day they are scheduled towork, refuse to work and instead join a welga ng bayancommit an illegal work stoppage.

(2) No. If there was illegal lockout, why, indeed, did notpetitioners file a protest with the management or acomplaint therefor against respondents? As the LaborArbiter observed, [t]he inaction of [petitioners] betraysthe weakness of their contention for normally a locked-out union will immediately bring management beforethe bar of justice.

(3) Yes. They violated Article 264(e) of the Labor Codewhich provides that [n]o person engaged in picketingshall obstruct the free ingress to or egress from theemployers premises for lawful purposes, or obstructpublic thoroughfares.

Petitioners, being union officers, should thus bear theconsequences of their acts of knowingly participatingin an illegal strike, conformably with the thirdparagraph of Article 264 (a) of the Labor Code

BASCON v. CA, METRO CEBU COMMUNITYHOSPITAL, INC.G.R. No. 144899. February 5, 2004, Quisumbing

The petitioners in the instant case were employees ofprivate respondent Metro Cebu Community Hospital,Inc. (MCCH) and members of the NagkahiusangMamumuosa Metro Cebu Community Hospital (NAMA-MCCH), a labor union of MCCH employees. Believingthat their union was the certified collective bargainingagent, the members and officers of NAMA-MCCHstaged a series of mass actions inside MCCHspremises for alleged failure of MCCH to negotiate andrenew the CBA. They marched around the hospitalputting up streamers, placards andposters.Subsequently, the Department of Labor andEmployment (DOLE) office in Region 7 issued two (2)certifications stating that NAMA-MCCH was not aregistered labor organization.Meanwhile, the MCCHmanagement received reports that petitionersparticipated in NAMA-MCCHs mass actions.Consequently, notices were served on all unionmembers, petitioners included, asking them to explainin writing why they were wearing red and black ribbonsand roaming around the hospital with placards. In theircollective response dated March 18, 1996, the unionmembers, including petitioners, explained that wearingarmbands and putting up placards was their answer toMCCHs illegal refusal to negotiate with NAMA-MCCH.

Petitioner Bascon, at the time of her termination fromemployment, already held the position of Head Nurse.The other petitioner, Cole, had been working as anursing aide with MCCH. Both petitioners weredismissed by the respondent hospital for allegedlyparticipating in an illegal strike.Bascon and Cole filed acomplaint for illegal dismissal

ISSUEWhether or not petitioners were validly terminated for(1) allegedly participating in an illegal strike and/or (2)gross insubordination to the order to stop wearingarmbands and putting up placards.

HELD(1) NO. In this case, it was found that petitioners actualparticipation in the illegal strike was limited to wearingarmbands and putting up placards. There was nofinding that the armbands or the placards containedoffensive words or symbols. Thus, neither suchwearing of armbands nor said putting up of placardscan be construed as an illegal act. In fact, per se, theyare within the mantle of constitutional protection underfreedom of speech.

In Article 264 (a) of the Labor Code it could be gleanedthat while a union officer can be terminated for mereparticipation in an illegal strike, an ordinary strikingemployee, like petitioners herein, must haveparticipated in the commission of illegal acts during thestrike. There must be proof that they committed illegal

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acts during the strike. Substantial evidence, which mayjustify the imposition of the penalty of dismissal, maysuffice.

Evidence on record shows that various illegal actswere committed by unidentified union members in thecourse of the protracted mass action. And wecommiserate with MCCH, patients, and third parties forthe damage they suffered. But we cannot holdpetitioners responsible for acts they did not commit.The law, obviously solicitous of the welfare of thecommon worker, requires, before termination may beconsidered, that an ordinary union member must haveknowingly participated in the commission of illegal actsduring a strike.

(2) As regards the appellate courts finding thatpetitioners were justly terminated for grossinsubordination or willful disobedience, Article 282 ofthe Labor Code provides in part:

An employer may terminate an employment for any ofthe following causes:(a) Serious misconduct or willful disobedience by theemployee of the lawful orders of his employer orrepresentative in connection with his work.

However, willful disobedience of the employers lawfulorders, as a just cause for dismissal of an employee,envisages the concurrence of at least two requisites:(1) the employee's assailed conduct must have beenwillful, that is, characterized by a wrongful andperverse attitude; and (2) the order violated must havebeen reasonable, lawful, made known to the employeeand must pertain to the duties which he had beenengaged to discharge.

In this case, we find lacking the element of willfulnesscharacterized by a perverse mental attitude on the partof petitioners in disobeying their employers order as towarrant the ultimate penalty of dismissal. Wearingarmbands and putting up placards to express onesviews without violating the rights of third parties, arelegal per se and even constitutionally protected. Thus,MCCH could have done well to respect petitionersright to freedom of speech instead of threatening themwith disciplinary action and eventually terminatingthem.

TOYOTA MOTOR PHILS. CORP. WORKERSASSOCIATION (TMPCWA) v. NLRCG.R. Nos. 158786 & 158789, October 19, 2007,Velasco

The Union is a legitimate labor organization dulyregistered with the Department of Labor andEmployment (DOLE) and is the sole and exclusivebargaining agent of all Toyota rank and fileemployees.Toyota, on the other hand, is a domesticcorporation engaged in the assembly and sale ofvehicles and parts, and one of the largest motor

vehicle manufacturers in the country employing around1,400 workers for its plants in Bicutan and Sta. Rosa,Laguna.

On February 14, 1999, the Union filed a petition forcertification election among the Toyota rank and fileemployees with the National Conciliation andMediation Board (NCMB), but this was denied by Med-Arbiter Ma. Zosima C. Lameyra denied the petition.This order was reversed on appeal to the DOLESecretary.

On the other hand, Toyota filed for reconsideration butit was denied. Toyota challenged said Order via anappeal to the DOLE Secretary.

In the meantime, the Union submitted its CollectiveBargaining Agreement (CBA) proposals to Toyota, butthe latter refused to negotiate in view of its pendingappeal. Consequently, the Union filed a notice of strikeon January 16, 2001 with the NCMB based onToyota’s refusal to bargain. On February 5, 2001, theNCMB-NCR converted the notice of strike into apreventive mediation case on the ground that the issueof whether or not the Union is the exclusive bargainingagent of all Toyota rank and file employees was stillunresolved by the DOLE Secretary.

In connection with Toyota’s appeal, Toyota and theUnion were required to attend a hearing on February21, 2001 before the Bureau of Labor Relations (BLR).The hearing was cancelled and reset to February 22,2001. On February 21, 2001, 135 Union officers andmembers failed to render the required overtime work,and instead marched to and staged a picket in front ofthe BLR office in Intramuros, Manila. Mass actions onFebruary 22 and 23, 2001 in front of the BLR and theDOLE offices pushed through. Toyota experiencedacute lack of manpower in its manufacturing andproduction lines, and was unable to meet itsproduction goals resulting in huge losses of PhP53,849,991.

Soon thereafter, on February 27, 2001, Toyota sentindividual letters to some 360 employees requiringthem to explain within 24 hours why they should not bedismissed for their obstinate defiance of the company’sdirective to render overtime work on February 21,2001, for their failure to report for work on February 22and 23, 2001, and for their participation in theconcerted actions which severely disrupted andparalyzed the plant’s operations.Meanwhile, aFebruary 27, 2001 Manifesto was circulated by theUnion which urged its members to participate in astrike/picket and to abandon their posts.

On the next day, the Union filed with the NCMBanother notice of strike for union busting amounting tounfair labor practice.

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On March 1, 2001, the Union nonetheless submittedan explanation in compliance with the February 27,2001 notices sent by Toyota to the erring employees.The Union members explained that their refusal towork on their scheduled work time for two consecutivedays was simply an exercise of their constitutional rightto peaceably assemble and to petition the governmentfor redress of grievances. It further argued that thedemonstrations staged by the employees on February22 and 23, 2001 could not be classified as an illegalstrike or picket, and that Toyota had already condonedthe alleged acts when it accepted back the subjectemployees.

On March 16, 2001, Toyota terminated theemployment of 227 employees for participation inconcerted actions in violation of its Code of Conductand for misconduct under Article 282 of the LaborCode.

In reaction to the dismissal of its union members andofficers, the Union went on strike on March 17, 2001.Subsequently, from March 28, 2001 to April 12, 2001,the Union intensified its strike by barricading the gatesof Toyota’s Bicutan and Sta. Rosa plants. The strikersprevented workers who reported for work from enteringthe plants.

On March 29, 2001, Toyota filed a petition forinjunction with a prayer for the issuance of a temporaryrestraining order (TRO) with the NLRC to seek freeingress to and egress from its Bicutan and Sta. Rosamanufacturing plants, this was granted by theNLRC.Meanwhile, Toyota filed a petition to declare thestrike illegal with the NLRC arbitration branch, whichwas docketed as NLRC NCR (South) Case No. 30-04-01775-01, and prayed that the erring Union officers,directors, and members be dismissed.

On April 10, 2001, the DOLE Secretary assumedjurisdiction over the labor dispute and issued anOrdercertifying the labor dispute to the NLRC. In saidOrder, the DOLE Secretary directed all strikingworkers to return to work at their regular shifts by April16, 2001 and ordered Toyota to accept the returningemployees under the same terms and conditionsobtaining prior to the strike or at its option, put themunder payroll reinstatement. The Union ended thestrike on April 12, 2001. The union members andofficers tried to return to work on April 16, 2001 butwere told that Toyota opted for payroll-reinstatementauthorized by the Order of the DOLE Secretary.

In the meantime, the Union filed a motion forreconsideration of the DOLE Secretary’s April 10, 2001certification Order, which, however, was denied by theDOLE Secretary in her May 25, 2001 Resolution.Consequently, a petition for certiorari was filed beforethe CA, which was docketed as CA-G.R. SP No.64998.

Meanwhile, on May 23, 2001, at around 12:00 nn.,despite the issuance of the DOLE Secretary’scertification Order, several payroll-reinstated membersof the Union staged a protest rally in front of Toyota’sBicutan Plant. Then, on May 28, 2001, around forty-four (44) Union members staged another protest actionin front of the Bicutan Plant. At the same time, sometwenty-nine (29) payroll-reinstated employees picketedin front of the Santa Rosa Plant’s main entrance, andwere later joined by other Union members.

On June 5, 2001, notwithstanding the certificationOrder, the Union filed another notice of strike, whichwas docketed as NCMB-NCR-NS-06-150-01.

In the meantime, the NLRC ordered both parties tosubmit their respective position papers on June 8,2001. The union, however, requested for abeyance ofthe proceedings pending the petition for certiorari withthe CA. On June 19, 2001, the NLRC issued an Order,reiterating its previous order for both parties to submittheir respective position papers on or before June 2,2001. On June 27, 2001, the Union filed a Motion forReconsideration of the NLRC’s June 19, 2001 Order,praying for the deferment of the submission of positionpapers until its petition for certiorari is resolved by theCA.

On June 29, 2001, only Toyota submitted its positionpaper. On July 11, 2001, the NLRC again ordered theUnion to submit its position paper by July 19, 2001,with a warning that upon failure for it to do so, the caseshall be considered submitted for decision. Meanwhile,on July 17, 2001, the CA dismissed the Union’spetition for certiorari.

During the August 3, 2001 hearing, the Union, despiteseveral accommodations, still failed to submit itsposition paper. Later that day, the Union claimed itfiled its position paper by registered mail.

Subsequently, the NLRC, in its August 9, 2001Decision, declared the strikes staged by the Union onFebruary 21 to 23, 2001 and May 23 and 28, 2001 asillegal. Accordingly, both Toyota and the Union filedMotions for Reconsideration, which the NLRC deniedin its September 14, 2001 Resolution. The CA thenconsolidated the petitions.

In justifying the recall of the severance compensation,the CA considered the participation in illegal strikes asserious misconduct. However, in its June 20, 2003Resolution, the CA modified its February 27, 2003Decision by reinstating severance compensation to thedismissed employees based on social justice.

ISSUES(1) Whether the mass actions committed by the Unionon different occasions are illegal strikes; and(2) Whether separation pay should be awarded to theUnion members who participated in the illegal strikes.

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RULINGThe Union contends that the NLRC violated its right todue process when it disregarded its position paper indeciding Toyota’s petition to declare the strike illegal. Itis entirely the Union’s fault that its position paper wasnot considered by the NLRC. Records readily revealthat the NLRC was even too generous in affording dueprocess to the Union. It issued no less than three (3)orders for the parties to submit its position papers,which the Union ignored until the last minute. Nosufficient justification was offered why the Unionbelatedly filed its position paper.

Petitioner Union contends that the protests or ralliesconducted on February 21 and 23, 2001 are not withinthe ambit of strikes as defined in the Labor Code,since they were legitimate exercises of their right topeaceably assemble and petition the government forredress of grievances. The Union’s position fails toconvince us.

While the facts in Philippine Blooming Mills EmployeesOrganization are similar in some respects to that of thepresent case, the Union fails to realize one majordifference: there was no labor dispute in PhilippineBlooming Mills Employees Organization. In the presentcase, there was an on-going labor dispute arising fromToyota’s refusal to recognize and negotiate with theUnion, which was the subject of the notice of strikefiled by the Union on January 16, 2001.

A strike means any temporary stoppage of work by theconcerted action of employees as a result of anindustrial or labor dispute. A labor dispute, in turn,includes any controversy or matter concerning termsor conditions of employment or the association orrepresentation of persons in negotiating, fixing,maintaining, changing, or arranging the terms andconditions of employment, regardless of whether thedisputants stand in the proximate relation of theemployer and the employee.35

The protest actions undertaken by the Union officialsand members on February 21 to 23, 2001 are not validand proper exercises of their right to assemble and askgovernment for redress of their complaints, but areillegal strikes in breach of the Labor Code. The Union’sposition is weakened by the lack of permit from theCity of Manila to hold "rallies." Shrouded asdemonstrations, they were in reality temporarystoppages of work perpetrated through the concertedaction of the employees who deliberately failed toreport for work on the convenient excuse that they willhold a rally at the BLR and DOLE offices in Intramuros,Manila, on February 21 to 23, 2001. The purportedreason for these protest actions was to safeguard theirrights against any abuse which the med-arbiter maycommit against their cause. However, the Union failedto advance convincing proof that the med-arbiter wasbiased against them.

It is obvious that the February 21 to 23, 2001concerted actions were undertaken without satisfyingthe prerequisites for a valid strike under Art. 263 of theLabor Code. These requirements are mandatory andthe failure of a union to comply with them renders thestrike illegal.

Moreover, the aforementioned February 2001 strikesare in blatant violation of Sec. D, par. 6 of Toyota’sCode of Conduct which prohibits "inciting orparticipating in riots, disorders, alleged strikes orconcerted actions detrimental to [Toyota’s] interest."The penalty for the offense is dismissal. The Unionand its members are bound by the company rules, andthe February 2001 mass actions and deliberate refusalto render regular and overtime work on said daysviolated these rules. In sum, the February 2001 strikesand walk-outs were illegal as these were in violation ofspecific requirements of the Labor Code and acompany rule against illegal strikes or concertedactions.

With respect to the strikes committed from March 17 toApril 12, 2001, those were initially legal as the legalrequirements were met. However, on March 28 to April12, 2001, the Union barricaded the gates of theBicutan and Sta. Rosa plants and blocked the freeingress to and egress from the company premises.Toyota employees, customers, and other peoplehaving business with the company were intimidatedand were refused entry to the plants. As earlierexplained, these strikes were illegal because unlawfulmeans were employed.

Petitioner Union also posits that strikes were notcommitted on May 23 and 28, 2001. The Union assertsthat the rallies held on May 23 and 28, 2001 could notbe considered strikes, as the participants were thedismissed employees who were on payrollreinstatement. It concludes that there was no workstoppage. This contention has no basis.

It is clear that once the DOLE Secretary assumesjurisdiction over the labor dispute and certifies the casefor compulsory arbitration with the NLRC, the partieshave to revert to the status quo ante (the state ofthings as it was before). As provided under Article2634(g) of the Labor Code, all striking workers aredirected to return to work at their regular shifts by April16, 2001; the Company is in turn directed to acceptthem back to work under the same terms andconditions obtaining prior to the work stoppage,subject to the option of the company to merelyreinstate a worker or workers in the payroll in light ofthe negative emotions that the strike has generatedand the need to prevent the further deterioration of therelationship between the company and its workers.

While it may be conceded that there was no workdisruption in the two Toyota plants, the fact still

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remains that the Union and its members picketed andperformed concerted actions in front of the Companypremises. This is a patent violation of the assumptionof jurisdiction and certification Order of the DOLESecretary, which ordered the parties "to cease anddesist from committing any act that might lead to theworsening of an already deteriorated situation." Whilethere are no work stoppages, the pickets andconcerted actions outside the plants have ademoralizing and even chilling effect on the workersinside the plants and can be considered as veiledthreats of possible trouble to the workers when they goout of the company premises after work and ofimpending disruption of operations to company officialsand even to customers in the days to come.

From the foregoing discussion, we rule that theFebruary 21 to 23, 2001 concerted actions, the March17 to April 12, 2001 strikes, and the May 23 and 28,2001 mass actions were illegal strikes.

Union officers are liable for unlawful strikes or illegalacts during a strike. It is clear that the responsibility ofunion officials is greater than that of the members. TheUnion officials were in clear breach of Art. 264(a) whenthey knowingly participated in the illegal strikes heldfrom February 21 to 23, 2001, from March 17 to April12, 2001, and on May 23 and 28, 2001.

Member’s liability depends on participation in illegalacts. Art. 264(a) of the Labor Code provides that amember is liable when he knowingly participates in anillegal act "during a strike." While the provision is silenton whether the strike is legal or illegal, we find that thesame is irrelevant. As long as the members commitillegal acts, in a legal or illegal strike, then they can beterminated. However, when union members merelyparticipate in an illegal strike without committing anyillegal act, are they liable? This was squarelyanswered in Gold City Integrated Port Service, Inc. v.NLRC, where it was held that an ordinary strikingworker cannot be terminated for mere participation inan illegal strike. This was an affirmation of the rulingsin Bacus v. Ople and Progressive Workers Union v.Aguas, where it was held that though the strike isillegal, the ordinary member who merely participates inthe strike should not be meted loss of employment onthe considerations of compassion and good faith andin view of the security of tenure provisions under theConstitution. In Esso Philippines, Inc. v.MalayangManggagawasa Esso (MME), it wasexplained that a member is not responsible for theunion’s illegal strike even if he voted for the holding ofa strike which became illegal. Thus, the rule onvicarious liability of a union member was abandonedand it is only when a striking worker "knowinglyparticipates in the commission of illegal acts during astrike" that he will be penalized with dismissal.

In the cases at bench, the individual respondentsparticipated in several mass actions, viz:

(1) The rallies held at the DOLE and BLRoffices on February 21, 22, and 23, 2001;(2) The strikes held on March 17 to April 12,2001; and(3) The rallies and picketing on May 23 and28, 2001 in front of the Toyota Bicutan andSta. Rosa plants.

Did they commit illegal acts during the illegal strikes onFebruary 21 to 23, 2001, from March 17 to April 12,2001, and on May 23 and 28, 2001? The answer is inthe affirmative. As we have ruled that the strikes by theUnion on the three different occasions were illegal, wenow proceed to determine the individual liabilities ofthe affected union members for acts committed duringthese forbidden concerted actions.

After a scrutiny of the records, we find that the 227employees indeed joined the February 21, 22, and 23,2001 rallies and refused to render overtime work orreport for work. These rallies, as we earlier ruled, arein reality illegal strikes, as the procedural requirementsfor strikes under Art. 263 were not complied with.Worse, said strikes were in violation of the companyrule prohibiting acts "in citing or participating in riots,disorders, alleged strikes or concerted actiondetrimental to Toyota’s interest." Anent the March 28to April 12, 2001 strikes, evidence is ample to showcommission of illegal acts like acts of coercion orintimidation and obstructing free ingress to or egressfrom the company premises. Mr. Eduardo Nicolas III,Toyota’s Security Chief, attested in his affidavit that thestrikers "badmouthed people coming in and shoutedinvectives such as bakeru at Japanese officers of thecompany." The strikers even pounded the vehicles ofToyota officials. More importantly, they prevented theingress of Toyota employees, customers, suppliers,and other persons who wanted to transact businesswith the company. These were patent violations of Art.264(e) of the Labor Code, and may even constitutecrimes under the Revised Penal Code such as threatsor coercion among others.

Lastly, the strikers, though on payroll reinstatement,staged protest rallies on May 23, 2001 and May 28,2001 in front of the Bicutan and Sta. Rosa plants.These workers’ acts in joining and participating in theMay 23 and 28, 2001 rallies or pickets were patentviolations of the April 10, 2001 assumption ofjurisdiction/certification Order issued by the DOLESecretary, which proscribed the commission of actsthat might lead to the "worsening of an alreadydeteriorated situation." Art. 263(g) is clear that strikerswho violate the assumption/certification Order maysuffer dismissal from work. This was the situation inthe May 23 and 28, 2001 pickets and concertedactions, with the following employees who committedillegal acts:

Anent the grant of severance compensation to legallydismissed union members, Toyota assails the turn-

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around by the CA in granting separation pay in its June20, 2003 Resolution after initially denying it in itsFebruary 27, 2003 Decision. The general rule is thatwhen just causes for terminating the services of anemployee under Art. 282 of the Labor Code exist, theemployee is not entitled to separation pay. Theapparent reason behind the forfeiture of the right totermination pay is that lawbreakers should not benefitfrom their illegal acts. The dismissed employee,however, is entitled to "whatever rights, benefits andprivileges [s/he] may have under the applicableindividual or collective bargaining agreement with theemployer or voluntary employer policy or practice"65 orunder the Labor Code and other existing laws. Withrespect to benefits granted by the CBA provisions andvoluntary management policy or practice, theentitlement of the dismissed employees to the benefitsdepends on the stipulations of the CBA or thecompany rules and policies.

As in any rule, there are exceptions. One exceptionwhere separation pay is given even though anemployee is validly dismissed is when the court findsjustification in applying the principle of social justicewell entrenched in the 1987 Constitution.

We hold that henceforth separation pay shall beallowed as a measure of social justice only in thoseinstances where the employee is validly dismissed forcauses other than serious misconduct or thosereflecting on his moral character. Where the reason forthe valid dismissal is, for example, habitual intoxicationor an offense involving moral turpitude, like theft orillicit sexual relations with a fellow worker, theemployer may not be required to give the dismissedemployee separation pay, or financial assistance, orwhatever other name it is called, on the ground ofsocial justice.

A recall of recent cases decided bearing on the issuereveals that when the termination is legally justified onany of the grounds under Art. 282, separation pay wasnot allowed. In all of the foregoing situations, the Courtdeclined to grant termination pay because the causesfor dismissal recognized under Art. 282 of the LaborCode were serious or grave in nature and attended bywillful or wrongful intent or they reflected adversely onthe moral character of the employees. We thereforefind that in addition to serious misconduct, indismissals based on other grounds under Art. 282 likewillful disobedience, gross and habitual neglect ofduty, fraud or willful breach of trust, and commission ofa crime against the employer or his family, separationpay should not be conceded to the dismissedemployee.

In the case at bench, are the 227 striking employeesentitled to separation pay?In the instant case, the CA concluded that the illegalstrikes committed by the Union members constitutedserious misconduct.In disposing of the Union’s plea for

reconsideration of its February 27, 2003 Decision, theCA however performed a volte-face by reinstating theaward of separation pay. The CA’s grant of separationpay is an erroneous departure from our ruling in Phil.Long Distance Telephone Co. v. NLRC that seriousmisconduct forecloses the award of separation pay.

NUWHRAIN – Dusit Hotel Nikko Chapter v. CAG.R. No. 163942, November 11, 2008, Velasco

Quick Facts: This case is with regard to the shaving ofheads issue of Hotel Employees. Whether such act,among others, under certain circumstances amount toan illegal strike. The SC said, yes it is.

FACTSThe Union is the certified bargaining agent of theregular rank-and-file employees of Dusit Hotel Nikko(Hotel), a five star service establishment owned andoperated by Philippine Hoteliers, Inc. located in MakatiCity.

On October 24, 2000, the Union submitted its CBAnegotiation proposals to the Hotel. As negotiationsensued, the parties failed to arrive at mutuallyacceptable terms and conditions. Due to thebargaining deadlock, the Union, on December 20,2001, filed a Notice of Strike on the ground of thebargaining deadlock with the NCMB. Thereafter,conciliation hearings were conducted which provedunsuccessful.

Consequently, a Strike Vote was conducted by theUnion on January 14, 2002 on which it was decidedthat the Union would wage a strike.

Soon thereafter, in the afternoon of January 17, 2002,the Union held a general assembly at its office locatedin the Hotel's basement, where some memberssported closely cropped hair or cleanly shaven heads.The next day, or on January 18, 2002, more maleUnion members came to work sporting the same hairstyle. The Hotel prevented these workers from enteringthe premises claiming that they violated the Hotel'sGrooming Standards.

In view of the Hotel's action, the Union staged a picketoutside the Hotel premises. Later, other workers werealso prevented from entering the Hotel causing them tojoin the picket. For this reason the Hotel experienced asevere lack of manpower which forced them totemporarily cease operations in three restaurants.

Subsequently, on January 20, 2002, the Hotel issuednotices to Union members, preventively suspendingthem and charging them with the following offenses:(1) violation of the duty to bargain in good faith; (2)illegal picket; (3) unfair labor practice; (4) violation ofthe Hotel's Grooming Standards; (5) illegal strike; and(6) commission of illegal acts during the illegal strike.

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The next day, the Union filed with the NCMB a secondNotice of Strike on the ground of unfair labor practiceand violation of Article 248(a) of the Labor Code onillegal lockout, which was docketed as NCMB-NCR-NS-01-019-02. In the meantime, the Union officers andmembers submitted their explanations to the chargesalleged by the Hotel, while they continued to stage apicket just inside the Hotel's compound.

On January 26, 2002, the Hotel terminated theservices of 29 Union officers and 61 members; andsuspended 136 employees from 5-30 days. On thesame day, the Union declared a strike. Starting thatday, the Union engaged in picketing the premises ofthe Hotel. During the picket, the Union officials andmembers unlawfully blocked the ingress and egress ofthe Hotel premises.

Consequently, on January 31, 2002, the Union filed itsthird Notice of Strike with the NCMB which, this timeon the ground of unfair labor practice and union-busting.

On the same day, the Secretary, through her January31, 2002 Order, assumed jurisdiction over the labordispute and certified the case to the NLRC forcompulsory arbitration. The Hotel was ordered eitherto have actual or payroll reinstatement of dismissedemployees.

After due proceedings, the NLRC issued its October 9,2002 Decision in which it ordered the Hotel and theUnion to execute a CBA within 30 days from thereceipt of the decision. The NLRC also held that theJanuary 18, 2002 concerted action was an illegal strikein which illegal acts were committed by the Union; andthat the strike violated the "No Strike, No Lockout"provision of the CBA, which thereby caused thedismissal of 29 Union officers and 61 Union members.

The NLRC ordered the Hotel to grant the 61 dismissedUnion members financial assistance in the amount of½ month's pay for every year of service or theirretirement benefits under their retirement planwhichever was higher.

The NLRC explained that the strike which occurred onJanuary 18, 2002 was illegal because it failed tocomply with the mandatory 30-day cooling-off periodand the seven-day strike ban, as the strike occurredonly 29 days after the submission of the notice of strikeon December 20, 2001 and only four days after thesubmission of the strike vote on January 14, 2002. TheNLRC also ruled that even if the Union had compliedwith the temporal requirements mandated by law, thestrike would nonetheless be declared illegal because itwas attended by illegal acts committed by the Unionofficers and members.

The Union MR of the NLRC's Decision was denied.The Union filed a Petition for Certiorari under Rule 65

with the CA.

CA upheld NLRC’s Ruling. The CA ratiocinated thatthe Union failed to demonstrate that the NLRCcommitted grave abuse of discretion and capriciouslyexercised its judgment or exercised its power in anarbitrary and despotic manner. Union’s MR was againdenied.

ISSUES1. May the Secretary order payroll reinstatement ratherthan actual reinstatement? - YES2. Did the union stage an illegal strike? – YES

- May Hotel Nikko legally prevent employees fromreporting for work for alleged violation of the hotel'sgrooming standards? – YES- Was there an illegal lock-out committed by HotelNikko? - NO

RULING:1. YES. Article 263(g) of the Labor Code states that

all workers must immediately return to work andall employers must readmit all of them under thesame terms and conditions prevailing before thestrike or lockout. The phrase "under the sameterms and conditions" makes it clear that the normis actual reinstatement. This is consistent with theidea that any work stoppage or slowdown in thatparticular industry can be detrimental to thenational interest.

Thus, it was settled that in assumption ofjurisdiction cases, the Secretary should imposeactual reinstatement in accordance with the intentand spirit of Art. 263(g) of the Labor Code.However, this one is subject to exceptions. InManila Diamond Hotel Employees' Union v. Courtof Appeals that payroll reinstatement is adeparture from the rule, and specialcircumstances which make actual reinstatementimpracticable must be shown. In one case, payrollreinstatement was allowed where the employeespreviously occupied confidential positions,because their actual reinstatement, the Courtsaid, would be impracticable and would only serveto exacerbate the situation.

The peculiar circumstances in the present casevalidate the Secretary's decision to order payrollreinstatement instead of actual reinstatement. It isobviously impracticable for the Hotel to actuallyreinstate the employees who shaved their headsor cropped their hair because this was exactly thereason they were prevented from working in thefirst place. Further, as with most labor disputeswhich have resulted in strikes, there is mutualantagonism, enmity, and animosity between theunion and the management. Payrollreinstatement, most especially in this case, wouldhave been the only avenue where furtherincidents and damages could be avoided. Public

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officials entrusted with specific jurisdictions enjoygreat confidence from this Court. The Secretarysurely meant only to ensure industrial peace asshe assumed jurisdiction over the labor dispute. Inthis case, we are not ready to substitute our ownfindings in the absence of a clear showing ofgrave abuse of discretion on her part.

2. Art. 212(o) of the Labor Code defines a strike as"any temporary stoppage of work by theconcerted action of employees as a result of anindustrial or labor dispute."

Noted authority on labor law, Ludwig Teller, listssix (6) categories of an illegal strike, viz.:1. when it is contrary to a specific prohibition of

law, such as strike by employees performinggovernmental functions; or

2. when it violates a specific requirement of law[,such as Article 263 of the Labor Code on therequisites of a valid strike]; or

3. when it is declared for an unlawful purpose,such as inducing the employer to commit anunfair labor practice against non-unionemployees; or

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

5. when it is declared in violation of an existinginjunction[, such as injunction, prohibition, ororder issued by the DOLE Secretary and theNLRC under Art. 263 of the Labor Code]; or

6. when it is contrary to an existing agreement,such as a no-strike clause or conclusivearbitration clause.

The Union staged an illegal strike.First, the Union's violation of the Hotel's GroomingStandards was clearly a deliberate and concertedaction to undermine the authority of and toembarrass the Hotel and was, therefore, not aprotected action. The appearances of the Hotelemployees directly reflect the character and well-being of the Hotel, being a five-star hotel thatprovides service to top-notch clients. Being baldor having cropped hair per se does not evokenegative or unpleasant feelings. The reality that asubstantial number of employees assigned to thefood and beverage outlets of the Hotel with fullheads of hair suddenly decided to come to workbald-headed or with cropped hair, however,suggests that something is amiss and insinuatesa sense that something out of the ordinary isafoot. Obviously, the Hotel does not need toadvertise its labor problems with its clients. It canbe gleaned from the records before us that theUnion officers and members deliberately and inapparent concert shaved their heads or croppedtheir hair. This was shown by the fact that after

coming to work on January 18, 2002, some Unionmembers even had their heads shaved or theirhair cropped at the Union office in the Hotel'sbasement. Clearly, the decision to violate thecompany rule on grooming was designed andcalculated to place the Hotel management on itsheels and to force it to agree to the Union'sproposals.

In view of the Union's collaborative effort to violatethe Hotel's Grooming Standards, it succeeded inforcing the Hotel to choose between allowing itsinappropriately hair styled employees to continueworking, to the detriment of its reputation, or torefuse them work, even if it had to ceaseoperations in affected departments or serviceunits, which in either way would disrupt theoperations of the Hotel. This Court is of theopinion, therefore, that the act of the Union wasnot merely an expression of their grievance ordispleasure but, indeed, a calibrated andcalculated act designed to inflict serious damageto the Hotel's finances or its reputation. Thus, wehold that the Union's concerted violation of theHotel's Grooming Standards which resulted in thetemporary cessation and disruption of the Hotel'soperations is an unprotected act and should beconsidered as an illegal strike.Second, the Union's concerted action whichdisrupted the Hotel's operations clearly violatedthe CBA's "No Strike, No Lockout" Clause.

The facts are clear that the strike arose out of abargaining deadlock in the CBA negotiations withthe Hotel. The concerted action is an economicstrike upon which the afore-quoted "no strike/workstoppage and lockout" prohibition is squarelyapplicable and legally binding.

Third, the Union officers and members' concertedaction to shave their heads and crop their hair notonly violated the Hotel's Grooming Standards butalso violated the Union's duty and responsibility tobargain in good faith. By shaving their heads andcropping their hair, the Union officers andmembers violated then Section 6, Rule XIII of theImplementing Rules of Book V of the Labor Code.This rule prohibits the commission of any actwhich will disrupt or impede the early settlementof the labor disputes that are under conciliation.Since the bargaining deadlock is being conciliatedby the NCMB, the Union's action to have theirofficers and members' heads shaved wasmanifestly calculated to antagonize andembarrass the Hotel management and in doing soeffectively disrupted the operations of the Hoteland violated their duty to bargain collectively ingood faith.

Fourth, the Union failed to observe the mandatory30-day cooling-off period and the seven-day strike

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ban before it conducted the strike on January 18,2002. The NLRC correctly held that the Unionfailed to observe the mandatory periods beforeconducting or holding a strike. Records reveal thatthe Union filed its Notice of Strike on the groundof bargaining deadlock on December 20, 2001.The 30-day cooling-off period should have beenuntil January 19, 2002. On top of that, the strikevote was held on January 14, 2002 and wassubmitted to the NCMB only on January 18, 2002;therefore, the 7-day strike ban should haveprevented them from holding a strike until January25, 2002. The concerted action committed by theUnion on January 18, 2002 which resulted in thedisruption of the Hotel's operations clearlyviolated the above-stated mandatory periods.

CAPITOL MEDICAL CENTER, INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, etal.G.R. No. 147080. April 26, 2005, Callejo

Respondent Capitol Medical Center EmployeesAssociation-Alliance of Filipino Workers (Union)demanded to be certified as the exclusive bargainingagent of Petitioner Company’s rank-and-fileemployees. The Union had to contend with anotherunion the Capitol Medical Center Alliance ofConcerned Employees (CMC-ACE). Med-Arbitergranted the petition, but the Secretary of DOLEreversed the same. Because of the Union’s questionedmajority status, Petitioner refused to negotiate a CBA.This resulted in a union-led strike by the Union.

ISSUEIs the strike illegal?

HELDYES. Respondent Union failed to comply with themandatory twenty-four (24) hour notice to the NCMBfor the conduct of a strike vote.

“Unless the NCMB is notified of the date, place andtime of the meeting of the union members for theconduct of a strike vote, the NCMB would be unable tosupervise the holding of the same, if and when itdecides to exercise its power of supervision.”

“The requirement of giving notice of the conduct of astrike vote to the NCMB at least 24 hours before themeeting for the said purpose is designed to (a) informthe NCMB of the intent of the union to conduct a strikevote; (b) give the NCMB ample time to decide onwhether or not there is a need to supervise theconduct of the strike vote to prevent any acts ofviolence and/or irregularities attendant thereto; and (c)should the NCMB decide on its own initiative or uponthe request of an interested party including theemployer, to supervise the strike vote, to give it ampletime to prepare for the deployment of the requisitepersonnel, including peace officers if need be. Unless

and until the NCMB is notified at least 24 hours of theunions decision to conduct a strike vote, and the date,place, and time thereof, the NCMB cannot determinefor itself whether to supervise a strike vote meeting ornot and insure its peaceful and regular conduct. Thefailure of a union to comply with the requirement of thegiving of notice to the NCMB at least 24 hours prior tothe holding of a strike vote meeting will render thesubsequent strike staged by the union illegal.”

TRANS-ASIA SHIPPING LINES, INC. -UNLICENSED CREWS EMPLOYEES UNIONASSOCIATED LABOR UNIONS (TASLI-ALU) et. al.vs. COURT OF APPEALS and TRANS-ASIASHIPPING LINES, INC.G.R. No. 145428, July 7, 2004, Callejo

On July 6 and 7, 1999, the two unions filed separatenotices of strike with the NCMB-RB VII against therespondent on the ground of ULP. Then Secretary ofLabor Bienvenido E. Laguesma intervened and issuedthe Order dated July 20, 1999 certifying the labordispute to the NLRC for compulsory arbitration andenjoining any strike or lock-out.

Despite the aforesaid order, the petitioners went onstrike on July 23, paralyzing the respondentsoperations. The SOLE was thus constrained to issuethe Order dated July 23, 1999 directing all strikingworkers to return to work within twelve (12) hours fromreceipt of this Order and for the Company to acceptthem back under the same terms and conditionsprevailing before the strike.

On even date, twenty-one (21) of the striking workers,including the individual petitioners, were dismissedfrom employment by the respondent for allegedviolation of the cease-and-desist directive contained inthe Order of July 20, 1999 by waging an illegal strike.

The bone of contention between the parties hinged onthe proper interpretation of the phrase for the companyto accept them back under the same terms andconditions prevailing before the strike. The terminatedworkers asserted that said phrase must be construedto mean that they be reinstated to their formerassignments. The respondent posited that it refersonly to their salary grades, rank and seniority, butcannot encompass the usurpation of managementsprerogative to determine where its employees are tobe assigned nor to determine their job assignments.

ISSUEWhether or not the striking employees may bereinstated in their former assignments by virtue of thephrase "for the company to accept them back underthe same terms and conditions prevailing before thestrike" in the Order issued by the SOLE?

HELD

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Yes. The respondent cannot rightfully exercise itsmanagements prerogative to determine where itsemployees are to be assigned or to determine their jobassignments in view of the explicit directive containedin the Orders of the SOLE to accept the strikingworkers back under the same terms and conditionsprevailing prior to the strike. The order simply meansthat the employees should be returned to their shipassignments as before they staged their strike. Toreiterate, Article 263 (g) of the Labor Code constitutesan exception to the management prerogative of hiring,firing, transfer, demotion and promotion of employees.And to the extent that Article 263 (g) calls for theadmission of all workers under the same terms andconditions prevailing before the strike, the respondentis restricted from exercising its generally unboundedright to transfer or reassign its employees. Therespondent is mandated, under the said order, to issueembarkation orders to the employees to enable themto report to their ship assignments in compliance withthe Order of the Secretary of Labor.

PHILCOM EMPLOYEES UNION V. PHIL. GLOBALCOMMUNICATIONSG.R. No. 144315, July 17, 2006, Carpio

Upon the expiration of the Collective BargainingAgreement (CBA) between petitioner PhilcomEmployees Union (PEU or union, for brevity) andprivate respondent Philippine Global Communications,Inc. (Philcom, Inc.), the parties started negotiations forthe renewal of their CBA. While negotiations wereongoing, PEU filedwith the National Conciliation andMediation Board (NCMB) National Capital Region, aNotice of Strikedue to perceived unfair labor practicecommitted by the company, and another Notice ofStrikeon the ground of bargaining deadlock. While theunion and the company officers and representativeswere meeting, the remaining union officers andmembers staged a strike at the company premises,barricading the entrances and egresses thereof andsetting up a stationary picket at the main entrance ofthe building.Then Acting Labor Secretary CresencianoB. Trajano issued an Order assuming jurisdiction overthe dispute, enjoining any strike or lockout, whetherthreatened or actual, directing the parties to cease anddesist from committing any act that may exacerbatethe situation, directing the striking workers to return towork within twenty-four (24) hours from receipt of theSecretary’s Order and for management to resumenormal operations, as well as accept the workers backunder the same terms and conditions prior to thestrike.The Secretary of Labor adjudicated, amongother things, that the strike was illegal.

ISSUEWON the Secretary properly took cognizance of theissue on the alleged illegal strike even though it wasnot properly submitted to the Secretary for resolution?

HELD

Yes. The Secretary properly took cognizance of theissue on the legality of the strike. As the Court ofAppeals correctly pointed out, since the very reason ofthe Secretarys assumption of jurisdiction was PEUsdeclaration of the strike, any issue regarding the strikeis not merely incidental to, but is essentially involvedin, the labor dispute itself.The powers granted to theSecretary under Article 263(g) of the Labor Code havebeen characterized as an exercise of the police powerof the State, with the aim of promoting publicgood.When the Secretary exercises these powers, heis granted great breadth of discretion in order to find asolution to a labor dispute. The most obvious of thesepowers is the automatic enjoining of an impendingstrike or lockout or its lifting if one has already takenplace.In this case, the Secretary assumed jurisdictionover the dispute because it falls in an industryindispensable to the national interest. It is of nomoment that PEU never acquiesced to the submissionfor resolution of the issue on the legality of the strike.PEU cannot prevent resolution of the legality of thestrike by merely refusing to submit the issue forresolution. It is also immaterial that this issue, as PEUasserts, was not properly submitted for resolution ofthe Secretary. The authority of the Secretary toassume jurisdiction over a labor dispute causing orlikely to cause a strike or lockout in an industryindispensable to national interest includes and extendsto all questions and controversies arising from suchlabor dispute. The power is plenary and discretionaryin nature to enable him to effectively and efficientlydispose of the dispute.

NISSAN MOTORS VS. SECRETARY OF LABORG.R. Nos. 158190-91, June 21, 2006, Garcia

A bargaining deadlock prompted the filing of fournotices of strike by the labor union. The DOLE, uponNissan Motor’s petition, issued an order assumingjurisdiction over the dispute. Consequently, the DOLESecretary issued an order expressly enjoining anystrike or lockout and directed the parties to cease anddesist from committing any act that may exacerbatethe situation. Several Union Officers were dismisseddue to the continued conduct of a slowdown – unionmembers who participated in such were not.Petitioners fault the NLRC for dismissing only theunion officers for violation of the return to work order.

ISSUEIs liability for the violation of a RTWO solely aresponsibility of union officers?

RULINGYes. The public respondent Secretary of Labor andEmployment - and necessarily the CA - acted withinthe bounds of the law – and certainly rendered ajudicious solution to the dispute – when she spared thestriking workers or union members from the penalty ofdismissal. This disposition takes stock of the followingcircumstances justifying a less drastic penalty for

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ordinary striking workers: a) the employees whoengaged in slowdown actually reported for work andcontinued to occupy their respective posts, or, in fine,did not abandon their jobs; b) they were only followingorders of their leaders; and c) no evidence has beenpresented to prove their participation in thecommission of illegal activities during the strike. NissanMotor appeared to have also exacerbated, as earlierindicated, the emerging volatile atmosphere despitethe Secretary’s order veritably enjoining the parties torespect the status quo prevailing when she assumedjurisdiction over the dispute. Foremost of theseexacerbating acts is the en masse termination of mostof the Union members, albeit it may be conceded thatthe employer has the prerogative of imposingdisciplinary sanctions against assumption-order-defying employees.

FEU-NRMF v. FEU-NRMFEA-AFWG.R. No. 168362, October 16, 2006, Chico-Nazario

FEU-NRMF and respondent union (a legitimate labororganization and is the duly recognized representativeof the rank and file employees of petitioner), enteredinto a CBA that will expire on 30 April 1996. In view ofthe forthcoming expiry, respondent union sent a letterproposal to petitioner FEU-NRMF stating theireconomic and non-economic proposals for thenegotiation of the new CBA. FEU-NRMF rejectedrespondent union’s demands. Respondent union thenfiled a Notice of Strike before NCMB on the ground ofbargaining deadlock, then it staged a strike. FEU-NRMF filed a Petition for the Assumption ofJurisdiction (AJO) or for Certification of Labor Disputewith the NLRC, underscoring the fact that it is amedical institution engaged in the business ofproviding health care for its patients. Secretary ofLabor granted the petition and an Order assumingjurisdiction over the labor dispute was issued, therebyprohibiting any strike. The copy of the AJO was notserved to the respondent because there no unionofficer was around. Instead the copy was posted inseveral conspicuous places within the premises of thehospital. Striking employees continued to strikeclaiming that they did not know about the AJO order.FEU-NRMF filed a case before the NLRC, contendingthat respondent union staged the strike in defiance ofthe AJO, hence, it was illegal.

ISSUEWhether the service of the AJO was validly effected bythe process server so as to bindthe respondent unionand hold them liable for the acts committedsubsequent to the issuance ofthe said Order.

RULINGThe process server resorted to posting the Order whenpersonal service was renderedimpossible since thestriking employees were not present at the strike area.This mode ofservice, however, is not sanctioned byeither the NLRC Revised Rules of Procedure or the

Revised Rules of Court. Under the NLRC RevisedRules of Procedure, service of copies of orders shouldbe madeby the process server either personally orthrough registered mail.

The presumption of receipt of the copies of theAssumption of JurisdictionOrder AJO could not betaken for granted considering the adverse effect incase the parties failedto heed to the injunction directedby such Order. Defiance of the assumption and return-to-workorders of the Secretary of Labor after he hasassumed jurisdiction is a valid ground for the lossofemployment status of any striking union officer ormember. Employment is a property right ofwhich onecannot be deprived of without due process. Dueprocess here would demand that therespondent unionbe properly notified of the Assumption of JurisdictionOrder of the Secretaryof Labor enjoining the strike andrequiring its members to return to work. Thus, theremust be aclear and unmistakable proof that therequirements prescribed by the Rules in the mannerofeffecting personal or substituted service had beenfaithfully complied with.

Merely posting copies of the AJO does not satisfy therigid requirement for properservice outlined by theabove stated rules. Needless to say, the manner ofservice made by theprocess server was invalid andirregular. Respondent union could not therefore beadjudged tohave defied the said Order since it was notproperly apprised thereof. Accordingly, thestrikeconducted by the respondent union was validunder the circumstances.

PILIPINO TELEPHONE CORPORATION v. PILIPINOTELEPHONE EMPLOYEES ASSOCIATION (PILTEA)G.R. No. 160058, June 22, 2007, Puno

On July 13, 1998, the Union filed a Notice of Strikewith the NCMB for unfair labor practice due to thealleged acts of "restraint and coercion of unionmembers and interference with their right to self-organization" committed by the Company. TheCompany filed a petition for Consolidated Assumptionof Jurisdiction with the Office of the Secretary of Labor.On August 14, 1998, then Secretary Bienvenido E.Laguesma issued an Order assuming jurisdiction overthe entire labor dispute at Pilipino TelephoneCorporation. On September 4, 1998, the Union filed asecond Notice of Strike with the NCMB on the groundsof: a) Union busting, for the alleged refusal of theCompany to turn over union funds; and b) The masspromotion of union members during the CBAnegotiation, allegedly aimed at excluding them fromthe bargaining unit during the CBA negotiation. On thesame day, the Union went on strike. On December 7,1998, the Company filed with the NLRC a petition todeclare the Union's September 4, 1998 (second strike)strike illegal.

ISSUES:

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1. Whether or not the mass promotion of unionmembers constituted union busting2. Whether or not the dismissal of union officers as apenalty for illegal strike is correct

HELD:(1) NO. There was no union busting which wouldwarrant the non-observance of the cooling-off period.To constitute union busting under Article 263 of theLabor Code, there must be: 1) a dismissal fromemployment of union officers duly elected inaccordance with the union constitution and by-laws;and 2) the existence of the union must be threatenedby such dismissal. In the case at bar, the secondnotice of strike filed by the Union merely assailed the"mass promotion" of its officers and members duringthe CBA negotiations. Surely, promotion is differentfrom dismissal.

This is consistent with our ruling in Bulletin PublishingCorporation v. Sanchez27 that a promotion which ismanifestly beneficial to an employee should not giverise to a gratuitous speculation that it was made todeprive the union of the membership of the benefitedemployee.

(2) YES. It cannot be overemphasized that strike, asthe most preeminent economic weapon of the workersto force management to agree to an equitable sharingof the joint product of labor and capital, exert somedisquieting effects not only on the relationship betweenlabor and management, but also on the general peaceand progress of society and economic well-being ofthe State. This weapon is so critical that the lawimposes the supreme penalty of dismissal on unionofficers who irresponsibly participate in an illegal strikeand union members who commit unlawful acts duringa strike. The responsibility of the union officers, asmain players in an illegal strike, is greater than that ofthe members as the union officers have the duty toguide their members to respect the law. The policy ofthe state is not to tolerate actions directed at thedestabilization of the social order, where therelationship between labor and management has beenendangered by abuse of one party's bargainingprerogative, to the extent of disregarding not only thedirect order of the government to maintain the statusquo, but the welfare of the entire workforce thoughthey may not be involved in the dispute. The gravepenalty of dismissal imposed on the guilty parties is anatural consequence, considering the interest of publicwelfare.

CLUB FILIPINO vs. BAUTISTAG.R. No. 168406, January 14, 2015, Leonen

Doctrine: In cases of bargaining deadlocks, the noticeshall state theunresolved issues in the bargainingnegotiations and be accompanied by the writtenproposals of theunion, the counter-proposals of theemployer and the proof of a request for conference to

settledifferences. Noncompliance will illegalize thestrike. However, the union should not be prejudicedwhen there was no counter-proposal submitted by theemployer to begin with.

Petitioner and the union had a CBA which expired onMay 31, 2000. Within the freedomperiod, the unionmade several demands for negotiation but thecompany replied that it could notmuster a quorum,thus no CBA negotiations could be held. In order tocompel the company to negotiate, union filed a requestfor preventive mediation with NCMB but again failed.On April 2001,a notice of strike was filed by the unionand thereafter, a strike was held.

ISSUEWhether the strike staged by respondent is legal

RULINGYES. In cases of bargaining deadlocks, the noticeshall, as far as practicable, further state theunresolvedissues in the bargaining negotiations and beaccompanied by the written proposals of theunion, thecounter-proposals of the employer and the proof of arequest for conference to settledifferences. Any noticewhich does not conformwith the requirements of thisshall be deemed as not having been filed andthe partyconcerned shall be so informed by the regional branchof the Board.

The union cannot be faulted for its omission. The unioncould not have attached the counter-proposal of thecompany in the notice of strike it submitted to theNCMB as there was no such counter- proposal.Nowhere in the ruling of the LA can we find anydiscussion of how respondents, as unionofficers,knowingly participated in the alleged illegal strike.

A. SORIANO AVIATION v. EMPLOYEESASSOCIATION OF A. SORIANO AVIATIONG.R. No. 166879, August 14, 2009, Carpio-Morales

Petitioner, which is engaged in providing transportationof guests to and from Amanpulo and El Nido resorts inPalawan, and respondent, which is the duly certifiedbargaining agent of the rank and file employees of thepetitioner, entered into a CBA which included a “NoStrike-No Lock-out Clause.” On several dates,which were legal holidays and peak season, some ofthe members of the union refused to renderedovertime work. Petitioner treated the refusal asa concerted action which is a violation of the No-Strike,No-Lock-out Clause. Thus, it meted the workers 30-day suspension and filed an illegal strike againstthem. The attempted settlement having been futile, theunion filed a Notice of Strike. Despite the conciliationno amicable settlement of the dispute was arrived, theunion went on strike. The company filed a motion to re-open the case which was granted by LA. Inits decision, LA declared that the strike is illegal. Onappeal, the NLRC dismissed it in per curiam decision.

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In the interim, into the second strike, petitioner filed acomplaint before LA for illegal strike on the groundof alleged force and violence. Inits decision, LA declared the second strike illegal. Onappeal, the NLRC affirmed in toto the LA’sdecision. On appeal to CA, the CA reversed andset asidethe NLRC ruling. Hence, the present position.

ISSUEWhether or not the strike staged by the respondent isillegal.

HELDYES. The Union members’ repeated name-calling,harassment and threats of bodily harm directedagainst company officers and non-striking employeesand, more significantly, the putting up of placards,banners and streamers with vulgar statementsimputing criminal negligence to the company, whichput to doubt reliability of its operations, come within thepurview of illegal acts under Art. 264 andjurisprudence.

Specifically with respect to the putting up of thosebanners and placards, coupled with the name-callingand harassment, the same indicates that it wasresorted to coerce the resolution of the dispute – thevery evil which Art. 264 seeks to prevent. While thestrike is the most preeminent economic weapon ofworkers to force management to agree to an equitablesharing of the joint product of labor and capital, itexerts some disquieting effects not only on therelationship between labor and management, but alsoon the general peace and progress of society andeconomic well-being of the State. If such weapon hasto be used at all, it must be used sparingly and withinthe bounds of law in the interest of industrial peaceand public welfare.

JACKBILT INDUSTRIES v. JACKBILT EMPLOYEESWORKERS UNION-NAFLU-KMUG.R. Nos. 171618-19, March 20, 2009, Corobna

Due to the adverse effects of the Asian economic crisison the construction industry beginning 1997, JackbiltIndustries, Inc. decided to temporarily stop itsbusiness. Jackbilt Employees Workers Union-NAFLU-KMU immediately protested the temporary shutdownand contented that petitioner halted production toavoid its duty to bargain collectively. The shutdownwas allegedly motivated by anti-union sentiments.Accordingly, on March 9, 1998, respondent went onstrike. Its officers and members picketed petitioner’smain gates and deliberately prevented persons andvehicles from going into and out of the compound. Onits July 17, 1998 decision, the NLRC found out thatrespondent prevented the free entry into and exit ofvehicles from petitioner’s compound.

ISSUE

Whether or not the filing of a petition with the laborarbiter to declare a strike illegal is a condition sine quanon for the valid termination of employees who commitan illegal act in the course of such strike.

HELDNo. Article 264(e) of the Labor Code prohibits anyperson engaged in picketing from obstructing the freeingress to and egress from the employer’s premises.Since respondent was found in the July 17, 1998decision of the NLRC to have prevented the free entryinto and exit of vehicles from petitioner’s compound,respondents officers and employees clearly committedillegal acts in the course of the March 9, 1998 strike.The use of unlawful means in the course of a strikerenders such strike illegal. Therefore, pursuant to theprinciple of conclusiveness of judgment, the March 9,1998 strike was ipso facto illegal. The filing of apetition to declare the strike illegal was thusunnecessary.

C. ALCANTARA & SONS, INC VS. CAG.R. 155109, September 29, 2010

The Company and the Union entered into a CollectiveBargaining Agreement (CBA) that bound them to holdno strike and no lockout in the course of its life. Atsome point the parties began negotiating the economicprovisions of their CBA but this ended in a deadlock,prompting the Union to file a notice of strike. Afterefforts at conciliation by the Department of Labor andEmployment (DOLE) failed, the Union conducted astrike vote that resulted in an overwhelming majority ofits members favoring it. The Union reported the strikevote to the DOLE and, after the observance of themandatory cooling-off period, went on strike. Duringthe strike, the Company filed a petition for the issuanceof a writ of preliminary injunction with prayer for theissuance of a temporary restraining order (TRO) ExParte with the National Labor Relations Commission(NLRC) to enjoin the strikers from intimidating,threatening, molesting, and impeding by barricade theentry of non-striking employees at the Companyspremises. On June 29, 1999 the Labor Arbiterrendered a decision, declaring the Unions strike illegalfor violating the CBAs no strike, no lockout, provision.As a consequence, the Labor Arbiter held that theUnion officers should be deemed to have forfeited theiremployment with the Company and that they shouldpay actual damages. With respect to the striking Unionmembers, finding no proof that they actually committedillegal acts during the strike, the Labor Arbiter orderedtheir reinstatement without backwages.

ISSUES1. Whether or the strike conducted is illegal?2. Whether or not the union members should

also be terminated?

HELD

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1. Yes, a strike may be regarded as invalidalthough the labor union has complied with thestrict requirements for staging one as providedin Article 263 of the Labor Code when thesame is held contrary to an existingagreement, such as a no strike clause orconclusive arbitration clause. Here, the CBAbetween the parties contained a no strike, nolockout provision that enjoined both the Unionand the Company from resorting to the use ofeconomic weapons available to them underthe law and to instead take recourse tovoluntary arbitration in settling their disputes.No law or public policy prohibits the Union andthe Company from mutually waiving the strikeand lockout maces available to them to giveway to voluntary arbitration. The Court finds nocompelling reason to depart from the findingsof the Labor Arbiter, the NLRC, and the CAregarding the illegality of the strike. Socialjustice is not one-sided. It cannot be used as abadge for not complying with a lawfulagreement.

2. Yes, given that their illegal acts of threatening,coercing and intimidating non-strikers,obstructing the free ingress and egress fromthe company premises and resisted and defiedthe implementation of the writ of preliminaryinjunction issued against the strikers, theiremployment can no longer reinstated.However, the records also fail to disclose anypast infractions committed by the dismissedUnion members. Taking these circumstancesin consideration, the Court regards the awardof financial assistance to these Unionmembers in the form of one-half month salaryfor every year of service to the company up tothe date of their termination as equitable andreasonable.

PHIMCO INDUSTRIES VS. PILAG.R. NO. 170830, August 11, 2010, Brion

PHIMCO is a corporation engaged in the production ofmatches and respondent Phimco Industries LaborAssociation (PILA) is the duly authorized bargainingrepresentative of PHIMCOs daily-paid workers.Because of the deadlock on economic issues, mainlydue to disagreements on salary increases andbenefits, PILA staged a strike. PHIMCO filed with theNLRC a petition for preliminary injunction andtemporary restraining order (TRO), to enjoin thestrikers from preventing through force, intimidation andcoercion the ingress and egress of non-strikingemployees into and from the company premises.Several PILA members and officers were dismissed.

ISSUEWhether or not the members and officers of therespondent were validly dismissed

RULINGNo. Although the strike was illegal, PHIMCO violatedthe requirements of due process of the Labor Codewhen it dismissed the respondents.

Under Article 277b of the Labor Code, the employermust send the employee, who is about to beterminated, a written notice stating the cause/s fortermination and must give the employee theopportunity to be heard and to defend himself.

To meet the requirements of due process in thedismissal of an employee, an employer must furnishhim or her with two (2) written notices: (1) a writtennotice specifying the grounds for terminationand giving the employee a reasonable opportunity toexplain his side and (2) another written noticeindicating that, upon due consideration of allcircumstances, grounds have been established tojustify the employer's decision to dismiss theemployee.

In the present case, PHIMCO sent a letter, on June 23,1995, to thirty-six (36) union members, generallydirecting them to explain within twenty-four (24) hourswhy they should not be dismissed for the illegal actsthey committed during the strike; three days later, oron June 26, 1995, the thirty-six (36) union memberswere informed of their dismissal from employment.

SOLIDBANK CORPORATION V. GAMIERG.R. Nos. 159460 – 159461, November 15, 2010,Villarama

Petitioner Solidbank and respondent SolidbankEmployees Union (Union) were set to renegotiate theeconomic provisions of their 1997-2001 CBA to coverthe remaining two years thereof. Seeing that anagreement was unlikely, the Union declared adeadlock on and filed a Notice of Strike. In view of theimpending actual strike, then Secretary of Labor andEmployment BienvenidoE. Laguesma assumedjurisdiction. The assumption order dated directed theparties to cease and desist from committing any andall acts that might exacerbate the situation. SecretaryLaguesma resolved all economic and non-economicissues submitted by the parties. Dissatisfied with theSecretary’s ruling, the Union officers and membersdecided to protest the same by holding a rally infront ofthe Office of the Secretary of Labor and Employmentin Intramuros, Manila, simultaneous with the filing oftheir motion for reconsideration.The union membersalso picketed the banks Head Office in Binondo andPaseo de Roxas. As a result of the employeesconcerted actions, Solidbanks business operationswere paralyzed. The herein 129 individual respondentswere among the 199 employees who were terminatedfor their participation in the three-day work boycott andprotest action.

ISSUES

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(1) Whether the protest rally and concerted workabandonment/boycott staged by the respondentsviolated the Order of the Secretary of Labor; (2)whether the respondents were validly terminated; and(3) whether the respondents are entitled to separationpay or financial assistance.

RULING(1) The Court has consistently ruled that once theSecretary of Labor assumes jurisdiction over a labordispute, such jurisdiction should not be interfered withby the application of the coercive processes of a strikeor lockout. A strike that is undertaken despite theissuance by the Secretary of Labor of an assumptionorder and/or certification is a prohibited activity andthus illegal.

Article 264 (a) of the Labor Code, as amended, alsoconsiders it a prohibited activity to declare a strikeduring the pendency of cases involving the samegrounds for the same strike.There is no dispute thatwhen respondents conducted their mass actions onApril 3 to 6, 2000, the proceedings before theSecretary of Labor were still pending as both partiesfiled motions for reconsideration of the March 24, 2000Order. Clearly, respondents knowingly violated theaforesaid provision by holding a strike in the guise ofmass demonstration simultaneous with concerted workabandonment/boycott.

(2) However, a worker merely participating in an illegalstrike may not be terminated from employment. It isonly when he commits illegal acts during a strike thathe may be declared to have lost employment status.We have held that the responsibility of union officers,as main players in an illegal strike, is greater than thatof the members and, therefore, limiting the penalty ofdismissal only for the former for participation in anillegal strike is in order. Hence, with respect torespondents who are union officers, the validity of theirtermination by petitioners cannot be questioned. Beingfully aware that the proceedings before the Secretaryof Labor were still pending as in fact they filed a motionfor reconsideration of the March 24, 2000 Order, theycannot invoke good faith as a defense.

For the rest of the individual respondents who areunion members, the rule is that an ordinary strikingworker cannot be terminated for mere participation inan illegal strike. There must be proof that he or shecommitted illegal acts during a strike. In all cases, thestriker must be identified. But proof beyond reasonabledoubt is not required. Substantial evidence availableunder the attendant circumstances, which may justifythe imposition of the penalty of dismissal, may suffice.Liability for prohibited acts is to be determined on anindividual basis.Petitioners have not adduced evidenceon such illegal acts committed by each of the individualrespondents who are union members. Instead,petitioners simply point to their admitted participation inthe mass actions which they knew to be illegal, being

in violation of the Secretarys assumption order. Thedismissal of herein respondent-union members aretherefore unjustified in the absence of a clear showingthat they committed specific illegal acts during themass actions and concerted work boycott.

(3) Under the circumstances, respondentsreinstatement without backwages suffices for theappropriate relief. But since reinstatement is no longerpossible, given the lapse of considerable time from theoccurrence of the strike, not to mention the fact thatSolidbank had long ceased its banking operations, theaward of separation pay of one (1) month salary foreach year of service, in lieu of reinstatement, is inorder. For the twenty-one (21) individual respondentswho executed quitclaims in favor of the petitioners,whatever amount they have already received from theemployer shall be deducted from their respectiveseparation pay.

ESCARIO v. NLRCG.R. No. 160302, September 27, 2010, Bersamin

Officers and members of Malayang Samahan ng mgaManggagawasa Balanced Foods walked out of thepremises of Pinakamasarap Corporation (PINA) andproceeded to the barangay office to show support foran officer of the Union charged with oral defamation byPINA’s personnel manager. As a result of the walkout,PINA preventively suspended all officers of the Unionand terminated the officers of the Union after a month.The Union later conducted a strike but the same wasdeclared to be an illegal strike by the Labor Arbiter.The NLRC sustained the finding of the illegality of thestrike, but ruled that the union members should not beconsidered to have abandoned their employment onthe ground that mere participation of a union memberin an illegal strike does not mean loss of employment.

ISSUEAre the union members entitled to full backwages dueto their not being found to have abandoned their jobs?

RULINGNo. Conformably with the long honored principleof a fair days wage for a fair days labor, employeesdismissed for joining an illegal strike are not entitled tobackwages for the period of the strike even if they arereinstated by virtue of their being merely members ofthe striking union who did not commit any illegal actduring the strike.

Article 264(a) authorizes the award of full backwagesonly when the termination of employment is aconsequence of an unlawful lockout. Also, thatbackwages are not granted to employees participatingin an illegal strike simply accords with the reality thatthey do not render work for the employer during theperiod of the illegal strike. If there is no work performedby the employee, there can be no wage or pay unless,of course, the laborer was able, willing and ready to

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work but was illegally locked out, suspended ordismissed or otherwise illegally prevented fromworking.For this exception to apply, it is required thatthe strike be legal.

BAGONG PAGKAKAISA NG MANGGAGAWA NGTRIUMP VS SECRETARY OF LABORG.R. No. 167401

A bargaining deadlock arise between the parties, thusa notice of strike was filed by petitioner, a notice oflock-out was then filed by the respondent due to awork-slowdown. But the secretary of labor assumedjurisdiction and issued a RTW Order, but those whowant to return to work was prevented by the otherstriking members.

Due to the intervention of the Sec. of Labor, it wasagreed that all would return to work except the officersand the shop steward pending their investigation, theywere reinstated only in the payroll.

The Secretary of Labor refused to rule on the validityof the dismissal of the Union Officers and the shopstewardess because it believed that it is under thejurisdiction of the Labor Artbiter

ISSUEWON the Sec of Labor has jurisdiction to hear anddecide cases of illegal dismissal arising out from astrike/lock-out

RULINGYes. First: Jurisdiction of Secretary of Labor - As theterm assume jurisdiction connotes, the intent of the lawis to give the Labor Secretary full authority to resolveall matters within the dispute that gave rise to or whicharose out of the strike or lockout; it includes andextends to all questions and controversies arising fromor related to the dispute, including cases over whichthe labor arbiter has exclusive jurisdiction.

FADRIQUELAN V. MONTEREY FOODSCORPORATIONG.R. No. 178409, June 8, 2011, Abad

When the 3-year CBA between the union Bukluran ngManggagawasa Monterey-Ilaw at Buklod ngManggagawa and the company Monterey FoodsCorporation expired, and after reaching a deadlock inthe negotiation for a new CBA, the union filed a noticeof strike with the NCMB to which the DOLE Secretaryassumed jurisdiction on May 12, 2003.

On May 21, 2003, the union filed a second notice ofstrike on the alleged ground that the companycommitted ULPs. The company then sent notices tothe union officers, charging them with intentional actsof slowdown, and 6 days later, the company sentnotices of termination from work for defying the theassumption order.

On June 23, 2003, the DOLE Secretary included theunion’s second notice of strike but, on the same day,the union filed a third notice of strike based onallegations that the company had engaged in unionbusting and illegal dismissal of union officers. On July7, 2003, the company filed a petition for certififcation oftheir labor dispute to the NLRC for compulsoryarbitration but the DOLE Secretary denied the motionand subsumed the third notice of strike.

The DOLE upheld the termination of 17 union officersbut the CA only upheld the validity of termination of 10union officers and declared illegal that of the other 7,hence, this petition.

ISSUES1. Did slowdowns actually transpire at the company’s

farms?2. Did the union officers commit illegal acts that

warranted their dismissal from work?

HELD(1) Yes. No strike shall be declared after the Secretaryof Labor has assumed jurisdiction over a labor dispute.A strike conducted after such assumption is illegal andany union officer who knowingly participates in thesame may be declared as having lost his employment.Here, what is involved is a slowdown strike. Unlikeother forms of strike, the employees involved in aslowdown do not walk out of their jobs to hurt thecompany. They need only to stop work or reduce therate of their work while generally remaining in theirassigned post.

The union officers and members in this case held aslowdown strike at the company’s farms despite thefact that the DOLE Secretary had on May 12, 2003already assumed jurisdiction over their labor dispute.The evidence sufficiently shows that union officers andmembers simultaneously stopped work at thecompanys Batangas and Cavite farms at 7:00 a.m. onMay 26, 2003.

(2) Qualified yes. A distinction exists, however,between the ordinary workers liability for illegal strikeand that of the union officers who participated in it. Theordinary worker cannot be terminated for merelyparticipating in the strike. There must be proof that hecommitted illegal acts during its conduct. On the otherhand, a union officer can be terminated upon mereproof that he knowingly participated in the illegal strike.The participating union officers have to be properlyidentified.

Those who cannot be connected to the slowdownswere illegally dismissed. IN this case, only the identityand participations of Arturo Eguna, Armando Malaluan,Danilo Alonso, Romulo Dimaano, RoelMayuga,Wilfredo Rizaldo, Romeo Suico, Domingo Escamillas,and Domingo Bautro in the slowdowns were properly

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established. These officers simply refused to work orthey abandoned their work to join union assemblies.

MAGDALA MULTIPURPOSE & LIVELIHOOD V.KMLMSG.R. Nos. 191138-39, October 19, 2011, Velasco

KMLMS held a strike-vote one day before itsregistration was granted. It later staged a strike whereseveral illegal acts were committed. The companyargued that the strike was illegal, and all participatingunion members should be declared to have forfeitedtheir employment. SC ruled in favor of the company.

The mandatory notice of strike and the conduct of thestrike-vote report were ineffective for having been filedand conducted before KMLMS acquired legalpersonality as an LLO.

ISSUEWhether or not the strike was illegal.

RULINGYes. A strike conducted by a union which acquired itslegal personality AFTER the filing of its Notice of Strikeand the conduct of the Strike Vote is ILLEGAL.

There is no question that the May 6, 2002 strike wasillegal, first, because when KilusangManggagawa ngLGS, Magdala Multipurpose and LivelihoodCooperative (KMLMS) filed the notice of strike onMarch 5 or 14, 2002, it had not yet acquired legalpersonality and, thus, could not legally represent theeventual union and its members. And second,similarly, when KMLMS conducted the strike-vote onApril 8, 2002, there was still no union to speak of,since KMLMS only acquired legal personality as anindependent legitimate labor organization only on April9, 2002 or the day after it conducted the strike-vote.Consequently, the mandatory notice of strike and theconduct of the strike-vote report were ineffective forhaving been filed and conducted before KMLMSacquired legal personality as a legitimate labororganization, violating Art. 263(c), (d) and (f) of theLabor Code and Rule XXII, Book V of the OmnibusRules Implementing the Labor Code. It is, thus, clearthat KMLMS did not comply with the mandatoryrequirement of law and implementing rules onpossession of a legal personality as a legitimate labororganization.

AUTOMOTIVE ENGINE REBUILDERS, INC. (AER) v.PROGRESIBONG UNYON NG MGAMANGGAGAWA SA AERG.R. No. 16013, July 13, 2011, Mendoza

Records show that AER is a company engaged in theautomotive engine repair and rebuilding business andother precision and engineering works for more than35 years. Progresibong Unyon Ng MgaManggagawasa AER (Unyon) is the legitimate labor

union of the rank and file employees of AER whichwas formed in the year 1998. AER accused the Unyonof illegal concerted activities (illegal strike, illegalwalkout, illegal stoppage, and unfair labor practice)while Unyon accused AER of unfair r On December22, 1998, Unyon filed a petition for certification electionbefore the Department of Labor and Employment(DOLE) after organizing their employees union withinAER. Resenting what they did, AER forced all of itsemployees to submit their urine samples for drugtesting. Those who refused were threatened withdismissal. On January 12, 1999, AER issued amemorandum suspending seven employees from workfor violation of Article D, Item 2 of the Employeeshandbook which reads as follows: Coming to workunder the influence of intoxicating liquor or any drug ordrinking any alcoholic beverages on the premises oncompany time While they were in the process ofsecuring their respective medical certificates, however,they were shocked to receive a letter from AERcharging them with insubordination and absencewithout leave and directing them to explain their acts inwriting. Despite their written explanation, AER refusedto reinstate them. Meanwhile, Unyon found out thatAER was moving out machines from the main buildingto the AER-PSC compound located on another street.Sensing that management was going to engage in arunaway shop, Unyon tried to prevent the transfer ofthe machines which prompted AER to issue amemorandum accusing those involved of grossinsubordination, work stoppage and other offenses. OnFebruary 2, 1999, the affected workers were deniedentry into the AER premises by order of management.Because of this, the affected workers staged a picketin front of company premises hoping that managementwould accept them back to work. When their picketproved futile, they filed a complaint for unfair laborpractice, illegal suspension and illegal dismissal.

ISSUEWhether or not the drug testing was valid

RULINGAERs fault is obvious from the fact that a day after theunion filed a petition for certification election before theDOLE, it hit back by requiring all its employees toundergo a compulsory drug test. Although AER arguesthat the drug test was applied to all its employees, itwas silent as to whether the drug test was a regularcompany policy and practice in their 35 years in theautomotive engine repair and rebuilding business. Asthe Court sees it, it was AERs first ever drug test of itsemployees immediately implemented after the workersmanifested their desire to organize themselves into aunion. Indeed, the timing of the drug test wassuspicious. Moreover, AER failed to show proof thatthe drug test conducted on its employees wasperformed by an authorized drug testing center. It didnot mention how the tests were conducted andwhether the proper procedure was employed.

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Section 36 of R.A. No. 9165 provides that drug testsshall be performed only by authorized drug testingcenters. Moreover, Section 36 also prescribes thatdrug testing shall consist of both the screening testand the confirmatory test. Department Order No. 53-03further provides: Drug testing shall conform with theprocedures as prescribed by the Department of Health(DOH). Only drug testing centers accredited by theDOH shall be utilized. A list of accredited centers maybe accessed through the OSHC. Drug testing shallconsist of both the screening test and the confirmatorytest; the latter to be carried out should the screeningtest turn positive. The employee concerned must beinformed of the test results whether positive ornegative. Furthermore, AER engaged in a runawayshop when it began pulling out machines from themain AER building to the AER-PSC compound locatedon another street on the pretext that the main buildingwas undergoing renovation. Certainly, the strikingworkers would have no reason to run and enter theAER-PSC premises and to cause the return of themachines to the AER building if they were not alarmedthat AER was engaging in a runaway shop.

NARANJO v. BIOMEDICA HEALTH CARE, INC.G.R. No. 193789, September 19, 2012, Velasco

Petitioners Naranjo et al are all employees ofBiomedica. Carina Motol is the President of saidcompany. On November 7, 2006, during Motol’sbirthday, petitioners were all absent for variouspersonal reasons. The next day, petitioners came infor work but were not allowed to enter the premises.Motol, through foul language, told them to findemployment elsewhere.

Subsequently, Biomedica issued notices to petitionersaccusing them of having conducted an illegal strikeand were asked to explain within 24 hours why theyshould not be held guilty of and dismissed for violationof company policy against illegal strikes. Biomedica,however, did not furnish them with a copy of the saidcompany policy.

Petitioners failed to submit a written explanation, thus,Biomedica served Notices of Termination to them. Itstated that petitioners engaged in an illegal strike.Petitioners then filed a complaint for illegal dismissal.The Labor Arbiter dismissed the complaint. The NLRCreversed the LA. On appeal, the CA reinstated thedecision of the LA.

ISSUES1. Did the petitioners engage in an illegal strike?2. Were the petitioners illegal dismissed?

HELD1. NO. Petitioners did not go on strike. The Labor

Code defines a strike as “any temporarystoppage of work by the concerted action ofemployees as a result of any industrial or labor

dispute.” Concerted is defined as “mutuallycontrived or planned” or “performed in unison.”In this case, the petitioners were absent forvarious personal reasons. Petitioners were indifferent places on said date and attended totheir personal needs or affairs. They did not goto the company premises to petition Biomedicafor their grievance. This shows that there wasNO INTENT to go on strike.

2. YES. Petitioners were not afforded proceduraldue process. The period of 24 hours given topetitioners to answer the notice was severelyinsufficient. The law provides that anemployee should be given “reasonableopportunity” to file a response. The SC in Kingof Kings Transport vs. Mamac construed thisto be a period of at least five (5) calendar daysfrom receipt of notice to give the employees anopportunity to study the accusation againstthem, consult a union officer or lawyer, gatherevidence, and decide on the defense they willraise against the complaint.

Petitioners were also not afforded substantivedue process. To justify the dismissal of anemployee on the ground of seriousmisconduct, the employer must first establishthe existence of a valid company rule orregulation. In this case, Biomedica failed toestablish that petitioners violated companyrules since they did not present a copy of therules and they failed to prove that petitionerswere made aware of such regulations.

VISAYAS COMMUNITY MEDICAL CENTER (VCMC)v. YBALLEG.R. No. 196156, January 15, 2014

Respondents were hired as staff nurses (Ong andAngel) and midwives (Yballe and Cortez) by petitionerVisayas Community Medical Center (VCMC), formerlythe Metro Cebu Community Hospital, Inc. (MCCHI).The four workers were among the 100 rank-and-fileemployees whose services were terminated by theVCMC for participating in the strike and picket in April1996.

The dismissed workers had demanded for the hospitalmanagement to resume bargaining. These workerswere part of a series of mass actions spearheaded byNava where they wore black and red armbands andmarched around the hospital premises, then put upplacards and streamers in the vicinity. Consequently,VCMC sent termination letters to union leaders andother members who participated in the strike andpicket. In the Decision dated December 7, 2011, SCruled that the mass termination of complainants wasillegal, notwithstanding the illegality of the strike inwhich they participated.

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ISSUEW/N union members who were illegally dismissed formere participation in an illegal strike are entitled toseparation pay?

HELDYES, they are entitled to separation pay but notbackwages.

With respect to backwages, the principle of a "fairday’s wage for a fair day’s labor" remains as the basicfactor in determining the award thereof. If there is nowork performed by the employee there can be nowage or pay unless, of course, the laborer was able,willing and ready to work but was illegally locked out,suspended or dismissed or otherwise illegallyprevented from working.

The alternative relief for union members who weredismissed for having participated in an illegal strike isthe payment of separation pay in lieu of reinstatementunder the following circumstances: (a) whenreinstatement can no longer be effected in view of thepassage of a long period of time or because of therealities of the situation; (b) reinstatement is inimical tothe employer’s interest; (c) reinstatement is no longerfeasible; (d) reinstatement does not serve the bestinterests of the parties involved; (e) the employer isprejudiced by the workers’ continued employment; (f)facts that make execution unjust or inequitable havesupervened; or (g) strained relations between theemployer and employee.

In the Decision dated December 7, 2011, we held thatthe grant of separation pay to complainants is theappropriate relief under the circumstances, thus:

Considering that 15 years had lapsed from the onset ofthis labor dispute, and in view of strained relations thatensued, in addition to the reality of replacementsalready hired by the hospital which had apparentlyrecovered from its huge losses, and with many of thepetitioners either employed elsewhere, already old andsickly, or otherwise incapacitated, separation paywithout back wages is the appropriate relief.

EMPLOYER-EMPLOYEERELATIONSHIP

TELEVISION AND PRODUCTION EXPONENTS,INC. and/or ANTONIO P. TUVIERA vs. ROBERTO C.SERVAÑAG.R. No. 167648, January 28, 2008

TAPE is a domestic corporation engaged in theproduction of television programs, such as the long-running variety program, "Eat Bulaga!". Its president isAntonio P. Tuviera (Tuviera). Respondent Roberto C.Servaña had served as a security guard for TAPE from

March 1987 until he was terminated on 3 March 2000.Respondent filed a complaint for illegal dismissal andnonpayment of benefits against TAPE. TAPEcountered that the labor arbiter had no jurisdiction overthe case in the absence of an employer-employeerelationship between the parties. TAPE averred thatrespondent was an independent contractor fallingunder the talent group category and was workingunder a special arrangement which is recognized inthe industry. Respondent for his part insisted that hewas a regular employee having been engaged toperform an activity that is necessary and desirable toTAPE’s business for thirteen (13) years.

ISSUEWhether Respondent Roberto C. Servaña was aregular employee

RULINGYes.[Selection] Respondent was first connected with Agro-Commercial Security Agency, which assigned him toassist TAPE in its live productions. When the securityagency’s contract with RPN-9 expired in 1995,respondent was absorbed by TAPE or, in the latter’slanguage, "retained as talent." Clearly, respondent washired by TAPE. Respondent presented hisidentification card to prove that he is indeed anemployee of TAPE. It has been in held that in abusiness establishment, an identification card isusually provided not just as a security measure but tomainly identify the holder thereof as a bonafide employee of the firm who issues it.

[Wages] Respondent claims to have beenreceiving P5,444.44 as his monthly salary while TAPEprefers to designate such amount as talent fees.Wages, as defined in the Labor Code, areremuneration or earnings, however designated,capable of being expressed in terms of money,whether fixed or ascertained on a time, task, piece orcommission basis, or other method of calculating thesame, which is payable by an employer to anemployee under a written or unwritten contract ofemployment for work done or to be done, or for servicerendered or to be rendered. It is beyond dispute thatrespondent received a fixed amount as monthlycompensation for the services he rendered to TAPE.

[Dismissal] The Memorandum informing respondent ofthe discontinuance of his service proves that TAPEhad the power to dismiss respondent.

[Control] Control is manifested in the bundy cardssubmitted by respondent in evidence. He was requiredto report daily and observe definite work hours.

ABS-CBN BROADCASTING CORP. V. NAZARENOG.R. 164156, Sept. 26, 2006

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Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business.Petitioner employed respondents Nazareno, Gerzon,Deiparine, and Lerasan as production assistants (PAs)on different dates. They were assigned at the newsand public affairs, for various radio programs in theCebu Broadcasting Station, with a monthlycompensation of P4,000. They were issued ABS-CBNemployees’ identification cards and were required towork for a minimum of eight hours a day, includingSundays and holidays.

The PAs were under the control and supervision ofAssistant Station Manager Dante J. Luzon, and NewsManager Leo Lastimosa.

On December 19, 1996, petitioner and the ABS-CBNRank-and-File Employees executed a CollectiveBargaining Agreement (CBA) to be effective during theperiod from December 11, 1996 to December 11,1999. However, since petitioner refused to recognizePAs as part of the bargaining unit, respondents werenot included to the CBA.

On October 12, 2000, respondents filed a Complaintfor Recognition of Regular Employment Status,Underpayment of Overtime Pay, Holiday Pay,Premium Pay, Service Incentive Pay, Sick Leave Pay,and 13th Month Pay with Damages against thepetitioner before the NLRC.

Respondents insisted that they belonged to a "workpool" from which petitioner chose persons to be givenspecific assignments at its discretion, and were thusunder its direct supervision and control regardless ofnomenclature.

ISSUEAre Nazareno et. al employees of ABS-CBN?

HELDWe agree with respondents’ contention that where aperson has rendered at least one year of service,regardless of the nature of the activity performed, orwhere the work is continuous or intermittent, theemployment is considered regular as long as theactivity exists, the reason being that a customaryappointment is not indispensable before one may beformally declared as having attained regular status.

It is of no moment that petitioner hired respondents as"talents." The fact that respondents received pre-agreed "talent fees" instead of salaries, that they didnot observe the required office hours, and that theywere permitted to join other productions during theirfree time are not conclusive of the nature of theiremployment. Respondents cannot be considered"talents" because they are not actors or actresses orradio specialists or mere clerks or utility employees.They are regular employees who perform several

different duties under the control and direction of ABS-CBN executives and supervisors.

In this case, it is undisputed that respondents hadcontinuously performed the same activities for anaverage of five years. Their assigned tasks arenecessary or desirable in the usual business or tradeof the petitioner. The persisting need for their servicesis sufficient evidence of the necessity andindispensability of such services to petitioner’sbusiness or trade.40 While length of time may not be asole controlling test for project employment, it can be astrong factor to determine whether the employee washired for a specific undertaking or in fact tasked toperform functions which are vital, necessary andindispensable to the usual trade or business of theemployer

FARLEY FULACHE V. ABS-CBN BROADCASTINGCORPORATIONG.R. No. 183810, January 21, 2010, Brion

Petitioners Farley Fulache, Manolo Jabonero, DavidCastillo, Jeffrey Lagunzad, Magdalena Malig-on Bigno,Francisco Cabas, Jr., Harvey Ponce and Alan C.Almendras (petitioners) and Cresente Atinen (Atinen)filed two separate complaints for regularization, unfairlabor practice and several money claims(regularization case) against ABS-CBN BroadcastingCorporation-Cebu (ABS-CBN).

The petitioners alleged that on December 17, 1999,ABS-CBN and the ABS-CBN Rank-and-FileEmployees Union (Union) executed a collectivebargaining agreement (CBA) effective December 11,1999 to December 10, 2002; they only became awareof the CBA when they obtained copies of theagreement; they learned that they had been excludedfrom its coverage as ABS-CBN considered themtemporary and not regular employees, in violation ofthe Labor Code. They claimed they had alreadyrendered more than a year of service in the companyand, therefore, should have been recognized asregular employees entitled to security of tenure and tothe privileges and benefits enjoyed by regularemployees. They asked that they be paid overtime,night shift differential, holiday, rest day and serviceincentive leave pay. They also prayed for an award ofmoral damages and attorney’s fees.

ABS-CBN claimed that to cope with fluctuatingbusiness conditions, it contracts on a case-to-casebasis the services of persons who possess thenecessary talent, skills, training, expertise orqualifications to meet the requirements of its programsand productions. These contracted persons are calledtalents and are considered independent contractorswho offer their services to broadcasting companies.

Instead of salaries, ABS-CBN pointed out that talentsare paid a pre-arranged consideration called talent fee

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taken from the budget of a particular program andsubject to a ten percent (10%) withholding tax. Talentsdo not undergo probation. Their services are engagedfor a specific program or production, or a segmentthereof. Their contracts are terminated once theprogram, production or segment is completed.

Labor Arbiter Rendoque rendered his decision holdingthat the petitioners were regular employees of ABS-CBN, not independent contractors, and are entitled tothe benefits and privileges of regular employees. ABS-CBN appealed the ruling to the National LaborRelations Commission (NLRC) mainly contending thatthe petitioners were independent contractors, notregular employees.

While the appeal of the regularization case waspending, ABS-CBN dismissed Fulache, Jabonero,Castillo, Lagunzad and Atinen (all drivers) for theirrefusal to sign up contracts of employment with servicecontractor Able Services. The four drivers and Atinenresponded by filing a complaint for illegal dismissal(illegal dismissal case). In defense, ABS-CBN allegedthat it decided to course through legitimate servicecontractors all driving, messengerial, janitorial, utility,make-up, wardrobe and security services for both theMetro Manila and provincial stations, to improve itsoperations and to make them more economicallyviable. Fulache, Jabonero, Castillo, Lagunzad andAtinen were not singled out for dismissal; as drivers,they were dismissed because they belonged to a jobcategory that had already been contracted out.

Labor Arbiter Rendoque upheld the validity of ABS-CBN's contracting out of certain work or services in itsoperations.He awarded them separation pay of one (1)months salary for every year of service.Again, ABS-CBN appealed to the NLRC which rendered onDecember 15, 2004 a joint decision on theregularization and illegal dismissal cases. The NLRCruled that there was an employer-employeerelationship between the petitioners and ABS-CBN asthe company exercised control over the petitioners inthe performance of their work; the petitioners wereregular employees because they were engaged toperform activities usually necessary or desirable inABS-CBN's trade or business; they cannot beconsidered contractual employees since they were notpaid for the result of their work, but on a monthly basisand were required to do their work in accordance withthe company’s schedule.The NLRC reversed the laborarbiters ruling in the illegal dismissal case; it found thatpetitioners Fulache, Jabonero, Castillo, Lagunzad andAtinen had been illegally dismissed and awardedthembackwages and separation pay in lieu ofreinstatement. Under both cases, the petitioners wereawarded CBA benefits and privileges from the timethey became regular employees up to the time of theirdismissal.

ABS-CBN moved for the reconsideration of thedecision, reiterating that Fulache, Jabonero, Castilloand Lagunzad were independent contractors, whoseservices had been terminated due to redundancy;thus, no backwages should have been awarded. Onthe regularization issue, the NLRC stood by the rulingthat the petitioners were regular employees entitled tothe benefits and privileges of regular employees. Onthe illegal dismissal case, the petitioners, whilerecognized as regular employees, were declareddismissed due to redundancy.

ISSUEWhether or not the petitioners are covered by the CBAand therefore entitled to its benefits.

HELDYES. They are ABS-CBNs regular employees entitledto the benefits and privileges of regular employees.These benefits and privileges arise from entitlementsunder the law (specifically, the Labor Code and itsrelated laws), and from their employment contract asregular ABS-CBN employees, part of which is the CBAif they fall within the coverage of this agreement. Thus,what only needs to be resolved as an issue forpurposes of implementation of the decision is whetherthe petitioners fall within CBA coverage.

The petitioners are members of the appropriatebargaining unit because they are regular rank-and-fileemployees and do not belong to any of the excludedcategories. Specifically, nothing in the records showsthat they are supervisory or confidential employees;neither are they casual nor probationary employees.Most importantly, the labor arbiters decision of January17, 2002 affirmed all the way up to the CA level ruledagainst ABS-CBNs submission that they areindependent contractors. Thus, as regular rank-and-fileemployees, they fall within CBA coverage under theCBAs express terms and are entitled to its benefits.

ABS-CBN forgot that by claiming redundancy asauthorized cause for dismissal, it impliedly admittedthat the petitioners were regular employees whoseservices, by law, can only be terminated for the justand authorized causes defined under the Labor Code.

JOSE Y. SONZA v. ABS-CBN BROADCASTINGCORPORATIONG.R. No. 138051, June 10, 2004, Carpio

In May 1994, respondent ABS-CBN BroadcastingCorporation (ABS-CBN) signed an Agreement(Agreement) with the Mel and Jay Management andDevelopment Corporation (MJMDC). Referred to in theAgreement as AGENT, MJMDC agreed to provideSONZAs services exclusively to ABS-CBN as talent forradio and television. The Agreement listed the servicesSONZA would render to ABS-CBN, as Co-host for Mel& Jay radio and TV program, ABS-CBN agreed to payfor SONZAs services a monthly talent fee of P310,000

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for the first year and P317,000 for the second and thirdyear of the Agreement.

In 1996, SONZA wrote a letter to ABS-CBNs Presidentstating his resignation, notice of rescission of theAgreement, and waiver of recovery of the remainingamount stipulated in paragraph 7 of the Agreement butreserves the right to seek recovery of the otherbenefits under said Agreement.Later on, SONZA fileda complaint against ABS-CBN before the DOLE.SONZA complained that ABS-CBN did not pay hissalaries, separation pay, service incentive leave pay,13th month pay, signing bonus, travel allowance andamounts due under the Employees Stock Option Plan(ESOP).ABS-CBN filed a Motion to Dismiss on theground that no employer-employee relationship existedbetween the parties.

ISSUEWhether or not there is an employer-employeerelationship between the respondent and petitioner

HELDThere is no employer-employee relationship. Applyingthe four-fold test, petitioner Sonza was considered bythe Court as an independent contractor.

Selection and engagement of employee: The specificselection and hiring of SONZA, because of his uniqueskills, talent and celebrity status not possessed byordinary employees, is a circumstance indicative, butnot conclusive, of an independent contractualrelationship.

Payment of wages: The power to bargain talent feesway above the salary scales of ordinary employees isa circumstance indicative, but not conclusive, of anindependent contractual relationship.

Power of dismissal: For violation of any provision ofthe Agreement, either party may terminate theirrelationship. SONZA failed to show that ABS-CBNcould terminate his services on grounds other thanbreach of contract.

Power of control: The control test is the most importanttest our courts apply in distinguishing an employeefrom an independent contractor.This test is based onthe extent of control the hirer exercises over a worker.The greater the supervision and control the hirerexercises, the more likely the worker is deemed anemployee. The converse holds true as well the lesscontrol the hirer exercises; the more likely the workeris considered an independent contractor.

ABS-CBN did not exercise control over the means andmethods of performance of SONZAs work. Hence,Sonza is not an employee but an independentcontractor.

BERNARTE v. PBAG.R. Nos. 192084, September 14, 2011, Carpio

Bernarte and Guevarra aver that they were invited tojoin the PBA as referees and they were made to signcontracts on a year-to-year basis. However, changeswere made on the terms of their employment. Bernartereceived a letter advising him that his contract wouldnot be renewed citing his unsatisfactory performanceon and off the court. Guevarra alleged that beginningFebruary 2004, he was no longer made to sign acontract. Respondents averred that complainantsentered into two contracts of retainer with the PBA inthe year 2003 and after December 2003, PBA decidednot to renew their contracts.

ISSUEWON petitioner is an employee of the PBA, thusillegally dismissed.

RULINGNo. To determine the existence of an employer-employee relationship, case law has consistentlyapplied the four-fold test, to wit: (a) the selection andengagement of the employee; (b) the payment ofwages; (c) the power of dismissal; and (d) theemployer's power to control the employee on themeans and methods by which the work isaccomplished. The so-called "control test" is the mostimportant indicator of the presence or absence of anemployer-employee relationship. In this case, PBAadmits repeatedly engaging petitioner's services, asshown in the retainer contracts. PBA pays petitioner aretainer fee, exclusive of per diem or allowances, asstipulated in the retainer contract. PBA can terminatethe retainer contract for petitioner's violation of itsterms and conditions.

We agree with respondents that once in the playingcourt, the referees exercise their own independentjudgment, based on the rules of the game, as to whenand how a call or decision is to be made. The refereesdecide whether an infraction was committed, and thePBA cannot overrule them once the decision is madeon the playing court. The referees are the only,absolute, and final authority on the playing court.Respondents or any of the PBA officers cannot and donot determine which calls to make or not to make andcannot control the referee when he blows the whistlebecause such authority exclusively belongs to thereferees. The very nature of petitioner's job ofofficiating a professional basketball game undoubtedlycalls for freedom of control by respondents.

The fact that PBA repeatedly hired petitioner does notby itself prove that petitioner is an employee of theformer. For a hired party to be considered anemployee, the hiring party must have control over themeans and methods by which the hired party is toperform his work, which is absent in this case.

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ABELLA V. PLDTG.R. No. 159469, June 8, 2005, Chico-Nazario

PSI, a legitimate job contractor, entered into anagreement with the PLDT to provide the latter withsuch number of qualified uniformed and properlyarmed security guards. PSI determined and paid thecompensation of the security guards. Upondeployment, PLDT conducted interviews andevaluation to ensure that the standards it set are metby the security guards. PLDT rarely failed to acceptsecurity guards referred to by PSI but on account ofheight deficiency. PLDT likewise conducted seminarsfor the security guards in its premises.

Later, several security guards deployed in PLDTsought regularization of employment with PLDT,claiming that PLDT employed them through the yearscommencing from 1982 and that all of them servedPLDT directly for more than 1 year.

ISSUEAre the security guards employees of PLDT?HELDNo. Based on the following circumstances, PLDT is notthe employer of the security guards

a) The screening of security guards does notamount to hiring but merely a referral by PSIintended for possible assignment in adesignated client. Thus employer-employeerelationship is deemed perfected even beforethe posting of the security guards with thePLDT, as assignment only comes afteremployment.

b) PSI had control over the determination andpayment of the security guards’ compensation.

c) PSI is a legitimate job contractor, hence, theemployer of the security guards.

As regards the holding of seminars for security guards,it is not uncommon, especially for big aggressivecorporations like PLDT, to align or integrate theircorporate visions and policies externally or with that ofother entities they deal with such as their suppliers,consultants, or contractors.

CONSULTA V. CAGR 145443, March 18, 2005, Carpio

Pamana Philippines, Inc. ("Pamana") is engaged inhealth care business. Raquel P. Consulta ("Consulta")was a Managing Associate of Pamana. Consulta’sappointment dated 1 December 1987 states: “We arepleased to formally confirm your appointment andconfer upon you the authority as MANAGINGASSOCIATE (MA) effective on December 1, 1987 upto January 2, 1988. In this capacity, your principalresponsibility is to organize, develop, manage, andmaintain a sales division and a full complement ofagencies and Health Consultants and to submit suchnumber of enrollments and revenue attainments as

may be required of your position in accordance withpertinent Company policies and guidelines. In pursuitof this objective, you are hereby tasked with theresponsibilities of recruiting, training and directing yourSupervising Associates (SAs) and the HealthConsultants under their respective agencies, for thepurpose of promoting our corporate Love Mission. Theauthority as MA likewise vests upon you commandresponsibility for the actions of your SAs andHealthCons; the Company therefore reserves the rightto debit your account for any accountabilities/financialobligations arising therefrom.

By your acceptance of this appointment, it isunderstood that you must represent the Company onan exclusive basis, and must not engage directly orindirectly in activities, nor become affiliated in official orunofficial capacity with companies or organizationswhich compete or have the same business asPamana. It is further understood that his [sic] self-inhibition shall be effective for a period of one yearfrom date of official termination with the Companyarising from any cause whatsoever.

In consideration of your undertaking the assignmentand the accompanying duties and responsibilities, youshall be entitled to compensation computed as follows:On Initial Membership Fee Entrance Fee 5%; MedicalFee 6%; On Subsequent Membership Fee 6%You are likewise entitled to participate in salescontests and such other incentives that may beimplemented by the Company. This appointment is ona non-employer-employee relationship basis, and shallbe in accordance with the Company Guidelines onAppointment, Reclassification and Transfer of SalesAssociates.On 4 March 1988, Pamana and the U.S. Naval SupplyDepot signed the FFCEA account. Consulta, claimingthat Pamana did not pay her commission for theFFCEA account, filed a complaint for unpaid wages orcommission against Pamana, its President Razul Z.Requesto ("Requesto"), and its Executive Vice-President Aleta Tolentino ("Tolentino").

ISSUEWhether Consulta was an employee of PamanaRULINGYes.Applying the four-fold test :(1) the power to hire;(2) the payment of wages; (3) the power to dismiss;and (4) the power to control. The power to control isthe most important of the four elements. The power tocontrol is explained as: “x xx It should, however, beobvious that not every form of control that the hiringparty reserves to himself over the conduct of the partyhired in relation to the services rendered may beaccorded the effect of establishing an employer-employee relationship between them in the legal ortechnical sense of the term. A line must be drawnsomewhere, if the recognized distinction between anemployee and an individual contractor is not to vanishaltogether. Realistically, it would be a rare contract of

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service that gives untrammelled freedom to the partyhired and eschews any intervention whatsoever in hisperformance of the engagement. Logically, the lineshould be drawn between rules that merely serve asguidelines towards the achievement of the mutuallydesired result without dictating the means or methodsto be employed in attaining it, and those that control orfix the methodology and bind or restrict the party hiredto the use of such means. The first, which aim only topromote the result, create no employer-employeerelationship unlike the second, which address both theresult and the means used to achieve it.

In the present case, the power to control is missing.Pamana tasked Consulta to organize, develop,manage, and maintain a sales division, submit anumber of enrollments and revenue attainments inaccordance with company policies and guidelines, andto recruit, train and direct her Supervising Associatesand Health Consultants. However, the manner inwhich Consulta was to pursue these activities was notsubject to the control of Pamana. Consulta failed toshow that she had to report for work at definite hours.The amount of time she devoted to soliciting clientswas left entirely to her discretion. The means andmethods of recruiting and training her salesassociates, as well as the development, managementand maintenance of her sales division, were left to hersound judgment. Managing Associates only receivedsuggestions from Pamana on how to go about theirrecruitment and sales activities. They could adopt thesuggestions but the suggestions were not binding onthem. They could adopt other methods that theydeemed more effective. Further, the ManagingAssociates had to ask the Management of Pamana toshoulder half of the advertisement cost for theirrecruitment campaign. They shelled out their ownresources to bolster their recruitment. They shared inthe payment of the salaries of their secretaries. Theygave cash incentives to their sales associates fromtheir own pocket. These circumstances show that theManaging Associates were independent contractors,not employees, of Pamana.

The appointment provided that Consulta mustrepresent Pamana on an exclusive basis. She mustnot engage directly or indirectly in activities of othercompanies that compete with the business of Pamana.However, the fact that the appointment requiredConsulta to solicit business exclusively for Pamana didnot mean that Pamana exercised control over themeans and methods of Consulta’s work as the termcontrol is understood in labor jurisprudence. Neitherdid it make Consulta an employee of Pamana.Pamana did not prohibit Consulta from engaging inany other business, or from being connected with anyother company, for as long as the business orcompany did not compete with Pamana’s business.

VILLAMARIA vs. COURT OF APPEALS ANDBUSTAMANTEGR No. 165881, April 19, 2006, Callejo, Sr.

Oscar Villamaria, Jr. was the owner of VillamariaMotors, a sole proprietorship engaged in assemblingpassenger jeepneys with a public utility franchise tooperate along the Baclaran-Sucat route. By 1995,Villamaria stopped assembling jeepneys and retainedonly nine, four of which operated by employing driverson a “boundary basis.” One of those drivers wasrespondent Bustamante.Bustamante remitted 450 aday to Villamaria as boundary and kept the residue ofhis daily earnings as compensation for driving thevehicle. In August 1997, Villamaria verbally agreed tosell the jeepney to Bustamante under a “boundary-hulog scheme”, where Bustamante would remit toVillamaria P550 a day for a period of 4 years;Bustamane would then become the owner of thevehicle and continue to drive the same underVillamaria’s franchise, but with Php 10,000downpayment. On August 7, 1997, Villamariaexecuted a contract entitled “Kasunduan ng Bilihan ngSasakyansaPamamagitan ng Boundary Hulog”. Theparties agreed that if Bustamante failed to pay theboundary- hulog for 3 days, Villamaria Motors wouldhold on to the vehicle until Bustamante paid hisarrears, including a penalty of 50 a day; in caseBustamante failed to remit the daily boundary-hulog fora period of one week, the Kasunduan would cease tohave the legal effect and Bustamante would have toreturn the vehicle to Villamaria motors.In 1999,Bustamante and other drivers who also had the samearrangement failed to pay their respective boundary-hulog. This prompted Villamaria to serve a “Paalala”.On July 24, 2000.Villamaria took back the jeepneydriven by Bustamante and barred the latter fromdriving the vehicle.Bustamante filed a complaint forIllegal Dismissal.

ISSUESWON the existence of a boundary-hulog agreementnegates the employer-employee relationship betweenthe vendor and vendee

HELDNO. Under the boundary-hulog scheme, a dualjuridical relationship is created; that of employer-employee and vendor-vendee. The Kasanduan did notextinguish the employer employee relationship of theparties existing before the execution of said deed.

a. Under this system the owner/operator exercisescontrol and supervision over the driver. It is unlike inlease of chattels where the lessor loses completecontrol over the chattel leased but the lessee is stillultimately responsible for the consequences of its use.The management of the business is still in the handsof the owner/operator, who, being the holder of thecertificate of public convenience, must see to it that thedriver follows the route prescribed by the franchising

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and regulatory authority, and the rules promulgatedwith regard to the business operations.

b. The driver performs activities which are usuallynecessary or desirable in the usual business or tradeof the owner/operator. Under the Kasunduan,respondent was required to remit Php 550 daily topetitioner, an amount which represented the boundaryof petitioner as well as respondent’s partial payment(hulog) of the purchase price of the jeepney. Thus, thedaily remittances also had a dual purpose: that ofpetitioner’s boundary and respondent’s partial payment(hulog) for the vehicle.

c. The obligation is not novated by an instrument thatexpressly recognizes the old one,changes only the terms of payment and adds otherobligations not incompatible with the old provisions orwhere the contract merely supplements the previousone.

d. The existence of an employment relation is notdependent on how the worker is paid but on thepresence or absence of control over the means andmethod of the work. The amount earned in excess ofthe “boundary hulog” is equivalent to wages and thefact that the power of dismissal was not mentioned inthe Kasunduan did not mean that private respondentnever exercised such power, or could not exercisesuch power.

REPUBLIC v. ASIAPRO COOPERATIVEG.R. No. 172101, November 23, 2007, Chico Nazario

Asiapro, as a cooperative, is composed of owners-members. Its primary objectives are to provide savingsand credit facilities and to develop other livelihoodservices for its owners-members. In the discharge ofthe aforesaid primary objectives, respondentcooperative entered into several Service Contractswith Stanfilco. The owners-members do not receivecompensation or wages from the respondentcooperative. Instead, they receive a share in theservice surplus which Asiapro earns from differentareas of trade it engages in, such as the incomederived from the said Service Contracts with Stanfilco.In order to enjoy the benefits under the Social SecurityLaw of 1997, the owners-members of Asiapro inStanfilco requested the services of the latter to registerthem with SSS as self-employed and to remit theircontributions as such. Petitioner SSS sent a letter torespondent cooperative informing the latter that basedon the Service Contracts it executed with Stanfilco,Asiapro is actually a manpower contractor supplyingemployees to Stanfilco and so, it is an employer of itsowners-members working with Stanfilco. Thus, Asiaproshould register itself with petitioner SSS as anemployer and make the corresponding report andremittance of premium contributions. Despite lettersreceived, respondent cooperative continuously ignoredthe demand of petitioner SSS. Respondent

cooperative alleges that its owners-members own thecooperative, thus, no employer-employee relationshipcan arise between them.

ISSUEWON an employer-employee relationship existsbetween Stanfilco and its owner-members

HELDYES. An owner-member of a cooperative can be anemployee of the latter and an employer-employeerelationship can exist between them. a cooperativeacquires juridical personality upon its registration withthe Cooperative Development Authority. It has itsBoard of Directors, which directs and supervises itsbusiness; meaning, its Board of Directors is the one incharge in the conduct and management of its affairs.With that, a cooperative can be likened to acorporation with a personality separate and distinctfrom its owners-members. It is true that the ServiceContracts executed between the respondentcooperative and Stanfilco expressly provide that thereshall be no employer-employee relationship betweenthe respondent cooperative and its owners-members.However, the existence of an employer-employeerelationship cannot be negated by expresslyrepudiating it in a contract, when the terms andsurrounding circumstances show otherwise. Theemployment status of a person is defined andprescribed by law and not by what the parties say itshould be. It is settled that the contracting parties mayestablish such stipulations, clauses, terms andconditions as they want, and their agreement wouldhave the force of law between them. However, theagreed terms and conditions must not be contrary tolaw, morals, customs, public policy or public order. TheService Contract provision in question must be struckdown for being contrary to law and public policy sinceit is apparently being used by the respondentcooperative merely to circumvent the compulsorycoverage of its employees, who are also its owners-members, by the Social Security Law. The fourelements in determining the existence of an employer-employee relationship are all present in this case.First. It is expressly provided in the Service Contractsthat it is the respondent cooperative which has theexclusive discretion in the selection and engagementof the owners-members as well as its team leaderswho will be assigned at Stanfilco. Second. the weeklystipends or the so-called shares in the service surplusgiven by the respondent cooperative to its owners-members were in reality wages, as the same wereequivalent to an amount not lower than that prescribedby existing labor laws, rules and regulations, includingthe wage order applicable to the area and industry,they are also given to the owners-members ascompensation in rendering services to respondentcooperative’s client, Stanfilco. Third .it is therespondent cooperative which has the power toinvestigate, discipline and remove the owners-members and its team leaders who were rendering

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services at Stanfilco. Fourth and most importantly, it isthe respondent cooperative which has the sole controlover the manner and means of performing the servicesunder the Service Contracts with Stanfilco as well asthe means and methods of work. All these clearlyprove that, indeed, there is an employer-employeerelationship between the respondent cooperative andits owners-members.

PHILIPPINE GLOBAL COMMUNICATIONS, INC. v.RICARDO DE VERAG.R. No. 157214, June 7, 2005

Petitioner Philippine Global Communications, Inc.(PhilCom), is a corporation engaged in the business ofcommunication services and allied activities, whilerespondent Ricardo De Vera is a physician byprofession whom petitioner enlisted to attend to themedical needs of its employees.

On May 15, 1981, De Vera offered his services to thepetitioner, therein proposing his plan of works requiredof a practitioner in industrial medicine including check-up and treatment of employees, pre-employmentphysical and mental check-ups and holding clinichours for consultation of employees. For this purposethey entered into a Retainership Agreement which willbe for a period of one year subject to renewal. Theretainership arrangement went on from 1981 to 1994with changes in the retainer’s fee. However, for theyears 1995 and 1996, renewal of the contract was onlymade verbally.

In December 1996 when Philcom, thru a letterinformedDe Vera of its decision to discontinue the latter’s"retainer’s contract with the Company becausemanagement has decided that it would be morepractical to provide medical services to its employeesthrough accredited hospitals near the companypremises. De Vera filed a complaint for illegaldismissal before the National Labor RelationsCommission (NLRC), alleging that that he had beenactually employed by Philcom as its companyphysician since 1981 and was dismissed without dueprocess. He averred that he was designated as a"company physician on retainer basis" for reasonsallegedly known only to Philcom.

The Labor Arbiter dismissed the complaint for lack ofmerit and held that De Vera was an “independentcontractor” and that he was not dismissed instead hiscontract ended when it was not renewed. NLRCreversed and found De Vera to be a regular employeeof the company and ordered him to be reinstated.

ISSUEWhether an employer-employee relationship existsbetween petitioner and respondent

HELD

In a long line of decisions, the Court, in determiningthe existence of an employer-employee relationship,has invariably adhered to the four-fold test, to wit: [1]the selection and engagement of the employee; [2] thepayment 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 mostimportant element.

Applying the four-fold test to this case, we initially findthat it was respondent himself who sets theparameters of what his duties would be in offering hisservices to petitioner. Evidence also shows thatrespondent PHILCOM did not have control over theschedule of the complainant as it [is] the complainantwho is proposing his own schedule and asking to bepaid for the same. This is proof that the complainantunderstood that his relationship with the respondentPHILCOM was a retained physician and not as anemployee. If he were an employee he could notnegotiate as to his hours of work.

The complainant also admitted that his service for therespondent was covered by a retainership contract[which] was renewed every year from 1982 to1994. The labor arbiter added the indicia, not disputedby respondent, that from the time he started to workwith petitioner, he never was included in its payroll;was never deducted any contribution for remittance tothe Social Security System (SSS); and was in factsubjected by petitioner to the ten (10%) percentwithholding tax for his professional fee, in accordancewith the National Internal Revenue Code, matterswhich are simply inconsistent with an employer-employee relationship.

We note, too, that the power to terminate the parties’relationship was mutually vested on both. Either mayterminate the arrangement at will, with or withoutcause. Clearly, the elements of an employer-employeerelationship are wanting in this case. We may add thatthe records are replete with evidence showing thatrespondent had to bill petitioner for his monthlyprofessional fees. It simply runs against the grain ofcommon experience to imagine that an ordinaryemployee has yet to bill his employer to receive hissalary.

Finally, remarkably absent from the parties’arrangement is the element of control, whereby theemployer has reserved the right to control theemployee not only as to the result of the work done butalso as to the means and methods by which the sameis to be accomplished. Petitioner had no control overthe means and methods by which respondent wentabout performing his work at the company premisesnot to mention the fact that respondent’s work hoursand the additional compensation were negotiated uponby the parties.In fine, the parties themselves practicallyagreed on every terms and conditions of respondent’s

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engagement, which thereby negates the element ofcontrol in their relationship.

COCA COLA BOTTLERS V. CLIMACOG.R. No. 146881, February 5, 2007, Azcuna

Respondent was hired by petitioner as a companydoctor; a retainership agreement renewable annuallywas signed pursuant thereto. For 3 consecutive years,the retainer agreement was signed annually. On the 4th

year, the contract of respondent was not renewed yetthe latter remained working for the petitioner. On laterdate, petitioner expressly told respondent that theformer will no longer renew the retainership.

ISSUEWhether or not respondent is an employee ofpetitioner.

RULINGNo. The Court, in determining the existence of anemployer-employee relationship, has invariablyadhered to the four-fold test: (1) the selection andengagement of the employee; (2) the payment ofwages; (3) the power of dismissal; and (4) the power tocontrol the employee’s conduct, or the so-called"control test," considered to be the most importantelement.

The Court agrees with the finding of the Labor Arbiterand the NLRC that the circumstances of this caseshow that no employer-employee relationship existsbetween the parties. The Labor Arbiter and the NLRCcorrectly found that petitioner company lacked thepower of control over the performance by respondentof his duties. The Labor Arbiter reasoned that theComprehensive Medical Plan, which contains therespondent’s objectives, duties and obligations, doesnot tell respondent "how to conduct his physicalexamination, how to immunize, or how to diagnoseand treat his patients, employees of [petitioner]company, in each case."

Considering that there is no employer-employeerelationship between the parties, the termination of theRetainership Agreement, which is in accordance withthe provisions of the Agreement, does not constituteillegal dismissal of respondent. Consequently, there isno basis for the moral and exemplary damagesgranted by the Court of Appeals to respondent due tohis alleged illegal dismissal.

PEDRO CHAVEZ vs. NATIONAL LABORRELATIONS COMMISSION, SUPREMEPACKAGING, INC. and ALVIN LEEG.R. No. 146530. January 17, 2005

The respondent company, Supreme Packaging, Inc., isin the business of manufacturing cartons and otherpackaging materials for export and distribution. Itengaged the services of the petitioner, Pedro Chavez,

as truck driver on October 25, 1984. As such, thepetitioner was tasked to deliver the respondentcompanys products from its factory in Mariveles,Bataan, to its various customers, mostly in MetroManila. The respondent company furnished thepetitioner with a truck. Most of the petitioners deliverytrips were made at nighttime, commencing at 6:00 p.m.from Mariveles, and returning thereto in the afternoontwo or three days after. The deliveries were made inaccordance with the routing slips issued by respondentcompany indicating the order, time and urgency ofdelivery. Initially, the petitioner was paid the sum ofP350.00 per trip. This was later adjusted to P480.00per trip and, at the time of his alleged dismissal, thepetitioner was receiving P900.00 per trip.

ISSUEWhether or not there existed an employer-employeerelationship between the respondent company and thepetitioner

RULINGYES. The elements to determine the existence of anemployment relationship are: (1) the selection andengagement of the employee; (2) the payment ofwages; (3) the power of dismissal; and (4) theemployers power to control the employees conduct.The most important element is the employers controlof the employees conduct, not only as to the result ofthe work to be done, but also as to the means andmethods to accomplish it.All the four elements arepresent in this case. As earlier opined, of the fourelements of the employer-employee relationship, thecontrol test is the most important. Although therespondents denied that they exercised control overthe manner and methods by which the petitioneraccomplished his work, a careful review of the recordsshows that the latter performed his work as truck driverunder the respondents supervision and control. Theirright of control was manifested by the followingattendant circumstances:1. The truck driven by the petitioner belonged torespondent company;2. There was an express instruction from therespondents that the truck shall be used exclusively todeliver respondent companys goods;3. Respondents directed the petitioner, aftercompletion of each delivery, to park the truck in eitherof two specific places only, to wit: at its office in MetroManila at 2320 Osmea Street, Makati City or at BEPZ,Mariveles, Bataan; and4. Respondents determined how, where and when thepetitioner would perform his task by issuing to him gatepasses and routing slips.

ANGELINA FRANCISCO v. NLRCG.R. 170087, August 31, 2006, Ynares-Santiago

Petitioner was hired by Kasei Corporation during itsincorporation stage.She reported for work regularlyand served in various capacities as Accountant,

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Liaison Officer, Technical Consultant, Acting Managerand Corporate Secretary, with substantially the samejob functions, that is, rendering accounting and taxservices to the company and performing functionsnecessary and desirable for the proper operation of thecorporation such as securing business permits andother licenses over an indefinite period of engagement.XXX On October 15, 2001, petitioner asked for hersalary from Acedo and the rest of the officers but shewas informed that she is no longer connected with thecompany.

ISSUEWas there an employer-employee relationshipbetween petitioner and private respondent KaseiCorporation?

HELDYes. In certain cases the control test is not sufficient togive a complete picture of the relationship between theparties, owing to the complexity of such a relationshipwhere several positions have been held by the worker.

The better approach would therefore be to adopt atwo-tiered test involving: (1) the putative employerspower to control the employee with respect to themeans and methods by which the work is to beaccomplished; and (2) the underlying economicrealities of the activity or relationship.

Thus, the determination of the relationship betweenemployer and employee depends upon thecircumstances of the whole economic activity,such as:(1) the extent to which the services performed are anintegral part of the employers business; (2) the extentof the workers investment in equipment and facilities;(3) the nature and degree of control exercised by theemployer; (4) the workers opportunity for profit andloss; (5) the amount of initiative, skill, judgment orforesight required for the success of the claimedindependent enterprise; (6) the permanency andduration of the relationship between the worker andthe employer; and (7) the degree of dependency of theworker upon the employer for his continuedemployment in that line of business.

The proper standard of economic dependence iswhether the worker is dependent on the allegedemployer for his continued employment in that line ofbusiness.

By applying the control test, there is no doubt thatpetitioner is an employee of Kasei Corporationbecause she was under the direct control andsupervision of Seiji Kamura, the corporations TechnicalConsultant.

Under the broader economic reality test, the petitionercan likewise be said to be an employee of respondentcorporation because she had served the company forsix years before her dismissal, receiving check

vouchers indicating her salaries/wages, benefits, 13th

month pay, bonuses and allowances, as well asdeductions and Social Security contributions fromAugust 1, 1999 to December 18, 2000.

It is therefore apparent that petitioner is economicallydependent on respondent corporation for hercontinued employment in the latter’s line of business.

GREGORIO V. TONGKO vs. THEMANUFACTURERS LIFE INSURANCE CO. (PHILS.),INC. and RENATO A. VERGEL DE DIOSG.R. No. 167622, January 25, 2011, Brion

TOPIC: Agency; Insurance Companies; Employer-employee relationships

DOCTRINE: Control over the performance of the taskof one providing service both with respect to themeans and manner, and the results of the service isthe primary element in determining whether anemployment relationship exists.In the Supreme CourtsJune 29, 2010 Resolution of this case, they noted thatthere are built-in elements of control specific to aninsurance agency, which do not amount to theelements of control that characterize an employmentrelationship governed by the Labor Code.TheInsurance Code provides definite parameters in theway an agent negotiates for the sale of the companysinsurance products, his collection activities and hisdelivery of the insurance contract or policy. They donot reach the level of control into the means andmanner of doing an assigned task that invariablycharacterizes an employment relationship as definedby labor law.

FACTSTaking from the November 2008 decision, the facts areas follows:Manufacturers Life Insurance, Co. is a domesticcorporation engaged in life insurance business. DeDios was its President and Chief Executive Officer.Petitioner Tongko started his relationship with Manulifein 1977 by virtue of a Career Agent's Agreement.Pertinent provisions of the agreement state that: (thispart is essential to determine relationship between Pet.and Res.)

It is understood and agreed that the Agent is anindependent contractor and nothing contained hereinshall be construed or interpreted as creating anemployer-employee relationship between theCompany and the Agent.a) The Agent shall canvass for applications for LifeInsurance, Annuities, Group policies and otherproducts offered by the Company, and collect, inexchange for provisional receipts issued by theAgent, money due or to become due to theCompany in respect of applications or policiesobtained by or through the Agent or frompolicyholders allotted by the Company to the Agentfor servicing, subject to subsequent confirmation of

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receipt of payment by the Company as evidenced byan Official Receipt issued by the Company directly tothe policyholder.

b) The Company may terminate thisAgreement for any breach or violation of anyof the provisions hereof by the Agent by givingwritten notice to the Agent within fifteen (15)days from the time of the discovery of thebreach. No waiver, extinguishment,abandonment, withdrawal or cancellation ofthe right to terminate this Agreement by theCompany shall be construed for any previousfailure to exercise its right under any provisionof this Agreement.c) Either of the parties hereto may likewiseterminate his Agreement at any time withoutcause, by giving to the other party fifteen (15)days notice in writing.

De Dios sent Tongko a letter of termination(for inabilityto push for company development and growth) inaccordance with Tongko's Agents Contract. Tongkofiled a complaint with the NLRC against Manulife forillegal dismissal, alleging that he had an employer-employee relationship with De Dios instead of arevocable agency by pointing out that the latterexercised control over him through directives regardinghow to manage his area of responsibility and settingobjectives for him relating to the business. Tongko alsoclaimed that his dismissal was without basis and hewas not afforded due process.

ISSUEWhether there is an employer-employee relationship

HELDNo Employer-Employee Relationship.The SupremeCourt ruled petitioners Motion against his favor sincehe failed to show that the control Manulife exercisedover him was the control required to exist in anemployer-employee relationship; Manulifes control fellshort of this norm and carried only the characteristic ofthe relationship between an insurance company andits agents, as defined by the Insurance Code and bythe law of agency under the Civil Code.

To reiterate, guidelines indicative of labor law "control"do not merely relate to the mutually desirable resultintended by the contractual relationship; they musthave the nature of dictating the means and methods tobe employed in attaining the result. Tested by thisnorm, Manulifes instructions regarding the objectivesand sales targets, in connection with the training andengagement of other agents, are among the directivesthat the principal may impose on the agent to achievethe assigned tasks.They are targeted results thatManulife wishes to attain through its agents. Manulifescodes of conduct, likewise, do not necessarily intrudeinto the insurance agents means and manner ofconducting their sales. Codes of conduct are norms or

standards of behavior rather than employer directivesinto how specific tasks are to be done.

In sum, the Supreme Court found absolutely noevidence of labor law control.

INTEL TECHNOLOGY PHILIPPINES, INC. v.NATIONAL LABOR RELATIONS COMMISSION ANDJEREMIAS CABILESG.R. No. 200575, February 5, 2014, Mendoza

Cabiles was initially hired by Intel Phil. on April 16,1997 as an Inventory Analyst. He was subsequentlypromoted several times over the years and was alsoassigned at Intel Arizona and Intel Chengdu. He laterapplied for a position at Intel Semiconductor LimitedHong Kong (Intel HK).

In a letter dated December 12, 2006, Cabiles wasoffered the position of Finance Manager by Intel HK.Before accepting the offer, he inquired from Intel Phil.,through an email, the consequences of accepting thenewly presented opportunity in Hong Kong, particularlyhis retirement benefits. He will celebrate his 10th yearof service with Intel on April 16, 2007. However, he willbe moving to Hong Kong as a local hire startingFebruary 1. On January 23, 2007, Intel Phil., throughPenny Gabronino (Gabronino), stated that he is notentitled to receive his entitlement benefit.

On January 31, 2007, Cabiles signed the joboffer.8OCabiles executed a Release, Waiver andQuitclaim (Waiver) in favor of Intel Phil. acknowledgingreceipt of P165,857.62 as full and complete settlementof all benefits due him by reason of his separation fromIntel Phil. On September 8, 2007, after seven (7)months of employment, Cabiles resigned from IntelHK.

On August 18, 2009, Cabiles filed a complaint for non-payment of retirement benefits and for moral andexemplary damages with the NLRC RegionalArbitration Branch-IV. He insisted that he wasemployed by Intel for 10 years and 5 months from April1997 to September 2007 – a period which included hisseven (7) month stint with Intel HK. Thus, he believedhe was qualified to avail of the benefits under thecompany’s retirement policy allowing an employeewho served for 10 years or more to receive retirementbenefits.

On March 18, 2010, the LA ordered Intel Phil. togetherwith Grace Ong, Nida delos Santos, Gabronino, andPia Viloria, to pay Cabiles the amount of HKD419,868.77 or its peso equivalent as retirement paywith legal interest and attorney’s fees. The LA held thatCabiles did not sever his employment with Intel Phil.when he moved to Intel HK, similar to the instanceswhen he was assigned at Intel Arizona and IntelChengdu.

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Aggrieved, Intel Phil. elevated the case to the CA via apetition for certiorari with application for a TemporaryRestraining Order (TRO) on April 5, 2011. Theapplication for TRO was denied. Earlier, on September19, 2011, pending disposition of the petition before theCA, the NLRC issued a writ of execution14 against IntelPhil. As ordered by the NLRC, Intel Phil. satisfied thejudgment on December 13, 2011 by paying theamount ofP3,201,398.60 which included the applicablewithholding taxes due and paid to the Bureau ofInternal Revenue. Cabiles received a net amountof P2,485,337.35, covered by the Bank of thePhilippine Islands Manager’s Check No.0000000806.16 By reason thereof, Intel Phil. filed onDecember 21, 2011 a Supplement to the Petition forCertiorari17 praying, in addition to the reliefs sought inthe main, that the CA order the restitution of all theamounts paid by them pursuant to the NLRC’s writ ofexecution, dated September 19, 2011.

ISSUEWON Cabiles had completed the required 10 yearcontinuous service21 with Intel Phil., thus, qualifyinghim for retirement benefits.

RULINGResignation is the formal relinquishment of anoffice,24 the overt act of which is coupled with an intentto renounce. This intent could be inferred from the actsof the employee before and after the allegedresignation.25 In this case, Cabiles, while still on atemporary assignment in Intel Chengdu, was offeredby Intel HK the job of a Finance Manager. Incontemplating whether to accept the offer, Cabileswrote Intel Phil. providing details and asked about theretirement benefits. Despite a non-favorable reply as tohis retirement concerns, Cabiles still accepted the offerof Intel HK.

His acceptance of the offer meant letting go of theretirement benefits he now claims as he was informedthrough email correspondence that his 9.5 years ofservice with Intel Phil. would not be rounded off in hisfavor. He, thus, placed himself in this position, as hechose to be employed in a company that would payhim more than what he could earn in Chengdu or inthe Philippines. The choice of staying with Intel Phil.vis-à-vis a very attractive opportunity with Intel HK puthim in a dilemma.

Cabiles views his employment in Hong Kong as anassignment or an extension of his employment withIntel Phil. He cited as evidence the offer made to himas well as the letter, dated January 8, 2007,27 both ofwhich used the word "assignment" in reference to hisengagement in Hong Kong as a clear indication of thealleged continuation of his ties with Intel Phil. Theforegoing arguments of Cabiles, in essence, speak ofthe "theory of secondment."

The Court, however, is again not convinced. Thecontinuity, existence or termination of an employer-employee relationship in a typical secondment contractor any employment contract for that matter ismeasured by the following yardsticks:1. the selectionand engagement of the employee;2. the payment ofwages;3. the power of dismissal; and4. the employer’spower to control the employee’s conduct.28

As applied, all of the above benchmarks ceased uponCabiles’ assumption of duties with Intel HK onFebruary 1, 2007. Intel HK became the new employer.It provided Cabiles his compensation. Cabiles thenbecame subject to Hong Kong labor laws, andnecessarily, the rights appurtenant thereto, includingthe right of Intel HK to fire him on available grounds.Lastly, Intel HK had control and supervision over himas its new Finance Manager. Evidently, Intel Phil. nolonger had any control over him. Hence, Cabiles’theory of secondment must fail.

What distinguishes Intel Chengdu and Intel Arizonafrom Intel HK is the lack of intervention of Intel Phil. onthe matter. In the two previous transfers, Intel Phil.remained as the principal employer while Cabiles wason a temporary assignment. By virtue of which, it stillassumed responsibility for the payment ofcompensation and benefits due him. The assignmentto Intel HK, on the other hand, was a permanenttransfer and Intel Phil. never participated in any way inthe process of his employment there. It was Cabileshimself who took the opportunity and the risk. If it wereindeed similar to Intel Arizona and Intel Chengduassignments, Intel Philippines would have had a say init. Petition granted.

MATLING INDUSTRIAL & COMMERCIALCORPORATION V. RICARDO COROSG.R. No. 157802, October 1, 2010

Doctrine: For a position to be considered as acorporate office, or, for that matter, for one to beconsidered as a corporate officer, the position must, ifnot listed in the by-laws, have been created by thecorporation's board of directors, and the occupantthereof appointed or elected by the same board ofdirectors or stockholders.

- The criteria for distinguishing between corporateofficers who may be ousted from office at will, on onehand, and ordinary corporate employees who may onlybe terminated for just cause, on the other hand, do notdepend on the nature of the services performed, buton the manner of creation of the office.

- The determination of whether the dismissed officerwas a regular employee or corporate officer unravelsthe conundrum” of whether a complaint for illegaldismissal is cognizable by the Labor Arbiter or by theRTC. “In case of the regular employee, the LA has

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jurisdiction; otherwise, the RTC exercises the legalauthority to adjudicate.

FACTSAfter respondent Ricardo Coros’ dismissal by Matlingas its Vice President for Finance and Administration,he filed on August 10, 2000 a complaint for illegalsuspension and illegal dismissal against Matling andsome of its corporate officers in the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The petitioners moved to dismiss the complaint, raisingthe ground, among others, that the complaint pertainedto the jurisdiction of the Securities and ExchangeCommission due to the controversy being intra-corporate inasmuch as the respondent was a memberof Matling’s Board of Directors aside from being itsVice-President for Finance and Administration prior tohis termination.

The respondent opposed the petitioners’ motion todismiss, insisting that his status as a member ofMatling’s Board of Directors was doubtful, consideringthat he had not been formally elected as such; that hedid not own a single share of stock in Matling,considering that he had been made to sign in blank anundated endorsement of the certificate of stock he hadbeen given in 1992; that Matling had taken back andretained the certificate of stock in its custody; and thateven assuming that he had been a Director of Matling,he had been removed as the Vice President forFinance and Administration, not as a Director, a factthat the notice of his termination dated April 10, 2000showed.

On October 16, 2000, the Labor Arbiter granted thepetitioners’ motion to dismiss, ruling that therespondent was a corporate officer.

On March 13, 2001, the NLRC set aside the dismissal,concluding that the respondent’s complaint for illegaldismissal was properly cognizable by the Labor Arbiternot by the SEC, because he was not a corporateofficer by virtue of his position in Matling, albeit highranking and managerial, not being among the positionslisted in Matling’s Constitution and by-laws.

On motion for reconsideration, petitioners submitted acertified machine copies of Matling’s Amended Articlesof Incorporation and By-laws to prove that thePresident of Matling was thereby granted “full power tocreate new offices and appoint the officersthereto” and the minutes of special meeting held onJune 7, 1999 by Matling’s Board of Directors to provethat the respondent was, indeed, a Member of theBoard of Directors. Nonetheless, the NLRC denied thepetitioners’ motion for Reconsideration. The petitionerselevated the issue to the CA by petition for Certiorari.

The CA dismissed the petition for certiorari. For aposition to be considered as a corporate office, or, for

that matter, for one to be considered as a corporateofficer, the position must, if not listed in the by-laws,have been created by the corporation's board ofdirectors, and the occupant thereof appointed orelected by the same board of directors or stockholders.This is the implication of the ruling in Tabang v.National Labor Relations Commission, which reads:

The president, vice president, secretary and treasurerare commonly regarded as the principal or executiveofficers of a corporation, and modern corporationstatutes usually designate them as the officers of thecorporation. However, other offices are sometimescreated by the charter or by-laws of a corporation, orthe board of directors may be empowered under theby-laws of a corporation to create additional offices asmay be necessary.

It has been held that an 'office' is created by thecharter of the corporation and the officer is elected bythe directors or stockholders. On the other hand, an'employee' usually occupies no office and generally isemployed not by action of the directors or stockholdersbut by the managing officer of the corporation who alsodetermines the compensation to be paid to suchemployee.

This ruling was reiterated in the subsequent cases ofOngkingco v. National Labor Relations Commissionand De Rossi v. National Labor Relations Commission.

The position of vice-president for administration andfinance, which Coros used to hold in the corporation,was not created by the corporation’s Board ofDirectors but only by its president or executive vice-president pursuant to the by-laws of the corporation.Moreover, Coros’ appointment to said position was notmade through any act of the board of directors orstockholders of the corporation. Consequently, theposition to which Coros was appointed and later onremoved from, is not a corporate office despite itsnomenclature, but an ordinary office in the corporation.Coros alleged illegal dismissal therefrom is, therefore,within the jurisdiction of the labor arbiter.

MR was likewise denied.Hence this petition for reviewon certiorari.

ISSUEWhether or not respondent was a corporate officer ofMatling Industrial and Commercial Corporation. - NO

RULINGConformably with Section 25 of the Corporation Code,a position must be expressly mentioned inthe by-lawsin order to be considered as a corporate office.

Thus, the creation of anoffice pursuant to or under aby-law enabling provision is not enough to makeaposition a corporate office. Guerrea vs Lezama, thefirst ruling on the matter, heldthat the only officers of a

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corporation were those given that character either bythe Corporation Code or by the by-laws; the rest of thecorporate officers could beconsidered only asemployees or subordinate officials.

It is relevant to state in this connection that the SEC,the primary agencyadministering the CorporationCode, adopted a similar interpretation of Section 25ofthe Corporation Code in its Opinion dated November25, 1993, to wit:

Thus, pursuant to Section 25 of the Corporation Code,whoever are the corporateofficers enumerated in theBy-laws are the exclusive officers of the corporationandthe Board has no power to create other officeswithout amending first the corporateBy-laws. However,the Board may create appointive positions other thanthepositions of corporate officers, but the personsoccupying such positions are notconsidered ascorporate officers within the meaning of Section 25 ofthe CorporationCodeand are not empowered toexercise the functions of the corporate officers, exceptthose functions lawfully delegated to them. Theirfunctions and duties are tobe determined by the Boardof Directors/Trustees.

Moreover, the Board of Directors of Matling could notvalidly delegate the power tocreate a corporate officeto the President, in light of Section 25 of theCorporationCode requiring the Board of Directors itselfto elect the corporate officers. Verily,the power to electthe corporate officers was a discretionary power thatthe law exclusively vested in the Board of Directors,and could not be delegated tosubordinate officers oragents. The office of Vice President for FinanceandAdministration created by Matling’s Presidentpursuant to By-law No. V was anordinary, not acorporate, office.

To emphasize, the power to create new offices and thepower to appoint the officersto occupy them vested byBy-law No. V merely allowed Matling’s Presidenttocreate non-corporate offices to be occupied byordinary employees of Matling. Suchpowers wereincidental to the President’s duties as the executivehead of Matling toassist him in the daily operations ofthe business.

The criteria for distinguishing between corporateofficers who may be ousted from office at will, on onehand, and ordinary corporate employees who may onlybe terminated for just cause, on the other hand, do notdepend on the nature of the services performed, buton the manner of creation of the office. In therespondents case, he was supposedly at once anemployee, a stockholder, and a Director of Matling.The circumstances surrounding his appointment tooffice must be fully considered to determine whetherthe dismissal constituted an intra-corporatecontroversy or a labor termination dispute. We mustalso consider whether his status as Director and

stockholder had any relation at all to his appointmentand subsequent dismissal as Vice President forFinance and Administration.

Even though he might have become a stockholder ofMatling in 1992, his promotion to the position of VicePresident for Finance and Administration in 1987 wasby virtue of the length of quality service he hadrendered as an employee of Matling. His subsequentacquisition of the status of Director/stockholder had norelation to his promotion. Besides, his status ofDirector/stockholder was unaffected by his dismissalfrom employment as Vice President for Finance andAdministration.

CA’s decision is affirmed. Coros was an employee,Labor Arbiter has jurisdiction on the illegal dismissalcase.

RAUL C. COSARE v. BROADCOM ASIA, INC. andDANTE AREVALOG.R. No. 201298, February 5, 2014, Reyes

Petitioner Cosare claims that he was the AssistantVice President for Sales (AVP for Sales) and Head ofthe Technical Coordination for RespondentCorporation. Sometime in 2003, one Alex Abiog wasappointed as Vice President for Sales, becoming hisimmediate superior. Petitioner informed Arevalo, beingPresident, of certain anomalies Abiog was involved.Petitioner was then furnished a memo, whereby hewas given forty-eight (48) hours from date to presenthis explanation on the charges of irregularities.Petitioner was totally barred from entering companypremises and to wait outside for further instructions,but no instructions were given until 8PM. Petitionernow files with LA complaint for constructive dismissal.

ISSUEWas Petitioner constructively dismissed?

HELDYES.“The test of constructive dismissal is whether areasonable person in the employee’s position wouldhave felt compelled to give up his position under thecircumstances. It is an act amounting to dismissal butis made to appear as if it were not. Constructivedismissal is therefore a dismissal in disguise. The lawrecognizes and resolves this situation in favor ofemployees in order to protect their rights and interestsfrom the coercive acts of the employer.”“It is clear from the cited circumstances that therespondents already rejected Cosare’s continuedinvolvement with the company. Even their refusal toaccept the explanation which Cosare tried to tender onApril 2, 2009 further evidenced the resolve to denyCosare of the opportunity to be heard prior to anydecision on the termination of his employment. Therespondents allegedly refused acceptance of theexplanation as it was filed beyond the mere 48-hour

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period which they granted to Cosare under the memodated March 30, 2009. However, even this limitationwas a flaw in the memo or notice to explain which onlyfurther signified the respondents’ discrimination,disdain and insensibility towards Cosare, apparentlyresorted to by the respondents in order to deny theiremployee of the opportunity to fully explain hisdefenses and ultimately, retain his employment.”

“In sum, the respondents were already resolute on aseverance of their working relationship with Cosare,notwithstanding the facts which could have beenestablished by his explanations and the respondents’full investigation on the matter. In addition to this, thefact that no further investigation and final dispositionappeared to have been made by the respondents onCosare’s case only negated the claim that theyactually intended to first look into the matter beforemaking a final determination as to the guilt orinnocence of their employee. This also manifestedfrom the fact that even before Cosare was required topresent his side on the charges of serious misconductand willful breach of trust, he was summoned toArevalo’s office and was asked to tender hisimmediate resignation in exchange for financialassistance.”

ATLANTA INDUSTRIES, INC. and/or ROBERTCHAN v. APRILITO R. SEBOLINO, KHIM V.COSTALES, ALVIN V. ALMONTE, and JOSEPH H.SAGUNG.R. No. 187320, January 26, 2011, Brion

Sebolino et al. filed several complaints for illegaldismissal, regularization, underpayment, nonpaymentof wages and other money claims as well as damages.They alleged that they had attained regular status asthey were allowed to work with Atlanta for more thansix (6) months from the start of a purportedapprenticeship agreement between them and thecompany. They claimed that they were illegallydismissed when the apprenticeship agreementexpired.

In defense, Atlanta and Chan argued that the workerswere not entitled to regularization and to their moneyclaims because they were engaged as apprenticesunder a government-approved apprenticeshipprogram. The company offered to hire them as regularemployees in the event vacancies for regular positionsoccur in the section of the plant where they hadtrained. They also claimed that their names did notappear in the list of employees (Master List) prior totheir engagement as apprentices.

ISSUEWhether or not Sebolinoet. al. attained status ofregular employees and were illegally dismissed

HELDYES. The petition is unmeritorious.

The CA correctly recognized the authenticity of theoperational documents, for the failure of Atlanta toraise a challenge against these documents before thelabor arbiter, the NLRC and the CA itself. Theappellate court, thus, found the said documentssufficient to establish the employment of therespondents before their engagement as apprentices.

The fact that Sebolino and the three others werealready rendering service to the company when theywere made to undergo apprenticeship (as establishedby the evidence) renders the apprenticeshipagreements irrelevant as far as the four areconcerned. This reality is highlighted by the CA findingthat the respondents occupied positions such asmachine operator, scaleman and extruder operator -tasks that are usually necessary and desirable inAtlanta's usual business or trade as manufacturer ofplastic building materials. These tasks and their naturecharacterized the four as regular employees underArticle 280 of the Labor Code.Thus, when they weredismissed without just or authorized cause, withoutnotice, and without the opportunity to be heard, theirdismissal was illegal under the law.

REPUBLIC V. ASIAPRO COOPERATIVEG.R. No. 172101, November 23, 2007

Under the respondent’s by-laws, owners-members areof two categories, to wit: (1) regular member, who isentitled to all the rights and privileges of membership;and (2) associate member, who has no right to voteand be voted upon and shall be entitled only to suchrights and privileges provided in its by-laws. In thedischarge of the aforesaid primary objectives,respondent cooperative entered into several ServiceContracts. The owners-members do not receivecompensation or wages from the respondentcooperative but instead they receive a share in theservice surplus which the respondent cooperativeearns from different areas of trade it engages in, suchas the income derived from the said Service Contractswith Stanfilco. The owners-members get their incomefrom the service surplus generated by the quality andamount of services they rendered. In order to enjoy thebenefits under the Social Security Law of 1997, theowners-members of the respondent cooperative, whowere assigned to Stanfilco requested the services ofthe latter to register them with petitioner SSS as self-employed and to remit their contributions as such.Petitioner SSS said that based on the ServiceContracts it executed with Stanfilco, respondentcooperative is actually a manpower contractorsupplying employees to Stanfilco and for that reason, itis an employer of its owners-members working withStanfilco. Thus, respondent cooperative shouldregister itself with petitioner SSS as an employer andmake the corresponding report and remittance ofpremium contributions in accordance with the SocialSecurity Law of 1997. On 9 October 2002, respondent

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cooperative, through its counsel, sent a reply topetitioner SSSs letter asserting that it is not anemployer because its owners-members are thecooperative itself; hence, it cannot be its ownemployer.

ISSUEWhether or not there is an employer-employeerelationship between [respondent cooperative] and its[owners-members].

HELDYes. In determining the existence of an employer-employee relationship, the following elements areconsidered: (1) the selection and engagement of theworkers; (2) the payment of wages by whatevermeans; (3) the power of dismissal; and (4) the powerto control the workers conduct, with the latterassuming primacy in the overall consideration.Themost important element is the employer’s control of theemployee’s conduct, not only as to the result of thework to be done, but also as to the means andmethods to accomplish. The power of control refers tothe existence of the power and not necessarily to theactual exercise thereof. It is not essential for theemployer to actually supervise the performance ofduties of the employee; it is enough that the employerhas the right to wield that power. All the aforesaidelements are present in this case. First. It is expresslyprovided in the Service Contracts that it is therespondent cooperative which has the exclusivediscretion in the selection and engagement of theowners-members as well as its team leaders who willbe assigned at Stanfilco. Second. Wages are definedas remuneration or earnings, however designated,capable of being expressed in terms of money,whether fixed or ascertained, on a time, task, piece orcommission basis, or other method of calculating thesame, which is payable by an employer to anemployee under a written or unwritten contract ofemployment for work done or to be done, or for servicerendered or to be rendered. In this case,the weekly stipends or the so-called shares in theservice surplus given by the respondent cooperative toits owners-members were in reality wages, as thesame were equivalent to an amount not lower than thatprescribed by existing labor laws, rules andregulations, including the wage order applicable to thearea and industry; or the same shall not be lower thanthe prevailing rates of wages. It cannot be doubtedthen that those stipends or shares in the servicesurplus are indeed wages, because these are given tothe owners-members as compensation in renderingservices to respondent cooperatives client,Stanfilco. Third. It is also stated in the above-mentioned Service Contracts that it is the respondentcooperative which has the power to investigate,discipline and remove the owners-members and itsteam leaders who were rendering services atStanfilco.Fourth. As earlier opined, of the fourelements of the employer-employee relationship, the

control test is the most important. In the case at bar, itis the respondent cooperative which has the solecontrol over the manner and means of performing theservices under the Service Contracts with Stanfilco aswell as the means and methods of work. Also, therespondent cooperative is solely and entirelyresponsible for its owners-members, team leaders andother representatives at Stanfilco. All these clearlyprove that, indeed, there is an employer-employeerelationship between the respondent cooperative andits owners-members.

PHILIPPINE AIRLINES V. LIGANGR 146408, February 29, 2008, Carpio Morales

Petitioner Philippine Airlines as Owner, and SynergyServices Corporation (Synergy) as Contractor, enteredinto an Agreementwhereby Synergy undertook toprovide loading, unloading, delivery of baggage andcargo and other related services to and from[petitioner]'s aircraft at the MactanStation.TheAgreement specified the CONTRACTOR shall furnishall the necessary capital, workers, loading, unloadingand delivery materials, facilities, supplies, equipmentand tools. And it expressly provided that Synergy was"an independent contractor and . . . that there wouldbe no employer-employee relationship betweenCONTRACTOR and/or its employees on the one hand,and OWNER, on the other." Respondents, who appearto have been assigned by Synergy to petitionerfiledcomplaints before the NLRC Regional Office VII atCebu City against petitioner, Synergy and theirrespective officials for underpayment, non-payment ofpremium pay for holidays, premium pay for rest days,serviceincentive leave pay, 13th month pay andallowances, and for regularization of employmentstatus with petitioner, they claiming to be "performingduties for the benefit of petitioner since their job isdirectly connected with its business. Labor ArbiterDominador Almirante found Synergy an independentcontractor and dismissed respondents' complaint forregularization against petitioner, but granted theirmoney claims.

ISSUEWhether Synergy is a mere job-only contractor or alegitimate contractor?

RULINGSynergy is a mere job-only contractor.Section 5.Prohibition against labor-only contracting.Labor-only contracting is hereby declared prohibited.For this purpose, labor-only contracting shall refer toan arrangement where the contractor or subcontractormerely recruits, supplies or places workers to performa job, work or service for a principal, and any of thefollowing elements are [sic] present:(i) The contractor or subcontractor does not havesubstantial capital or investment which relates to thejob, work or service to be performed and theemployees recruited, supplied or placed by such

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contractor or subcontractor are performing activitieswhich are directly related to the main business of theprincipal; OR(ii) The contractor does not exercise the right to controlover the performance of the work of the contractualemployee. (Emphasis, underscoring and capitalizationsupplied)Even if only one of the two elements is present then,there is labor-only contracting.The control test element under the immediately-quotedparagraph echoes the prevailing jurisprudential trendelevating such element as a primary determinant ofemployer-employee relationship in job contractingagreements.

Petitioner in fact admitted that it fixes the workschedule of respondents as their work was dependenton the frequency of plane arrivals. And as the NLRCfound, petitioner's managers and supervisorsapproved respondents' weekly work assignments andrespondents and other regular PAL employees wereall referred to as "station attendants" of the cargooperation and airfreight services of petitioner.Respondents having performed tasks which areusually necessary and desirable in the airtransportation business of petitioner, they should bedeemed its regular employees and Synergy as a labor-only contractor.

SAN MIGUEL CORPORATION V. ABALLAG.R. No. 149011, June 28, 2005, Carpio Morales

San Miguel Corporation entered into a contract ofservices with Sunflower Cooperative for the renditionof Messengerial, Janitorial, Shrimp Harvesting,Sanitation, Washing, Cold Storage activities. Pertinentprovisions of the contract involve: 1. The cooperativeemploys the necessary personnel and providesadequate equipment, materials, tools and apparatus;2. The cooperative has the entire charge, control andsupervision of the work and services; 3. Noemployment relationship exists between the SMC andthe cooperative; 4. The cooperative undertakes to paythe salary of the member-workers; 5. Unless soonerterminated, the contract will be deemed renewed on amonth-to-month basis until terminated. Severalemployees were engaged by sunflower cooperative.Soon, such employees demanded recognition asregular employees of SMC, alleging that they areunder the direct control and supervision of SMCsupervisors.

ISSUEDoes direct control and supervision of the PrincipalContractee convert Job Contractng into LOcontracting?

RULING: Yes. The test to determine the existence ofindependent contractorship is whether one claiming tobe an independent contractor has contracted to do thework according to his own methods and without being

subject to the control of the employer, except only asto the results of the work. In legitimate laborcontracting, the law creates an employer-employeerelationship for a limited purpose, i.e., to ensure thatthe employees are paid their wages. The principalemployer becomes jointly and severally liable with thejob contractor, only for the payment of the employeeswages whenever the contractor fails to pay the same.Other than that, the principal employer is notresponsible for any claim made by the employees.

The Contract of Services between SMC and Sunflowershows that the parties clearly disavowed the existenceof an employer-employee relationship between SMCand private respondents. The language of a contract isnot, however, determinative of the parties relationship;rather it is the totality of the facts and surroundingcircumstances of the case.A party cannot dictate, bythe mere expedient of a unilateral declaration in acontract, the character of its business, i.e., whether aslabor-only contractor or job contractor, it being crucialthat its character be measured in terms of anddetermined by the criteria set by statute.

Furthermore, what appears is that Sunflower does nothave substantial capitalization or investment in theform of tools, equipment, machineries, work premisesand other materials to qualify it as an independentcontractor. On the other hand, it is gathered that thelot, building, machineries and all other working toolsutilized by private respondents in carrying out theirtasks were owned and provided by SMC. from the jobdescription provided by SMC itself, the work assignedto private respondents was directlyrelated to theaquaculture operations of SMC. Undoubtedly, thenature of the work performed by private respondents inshrimp harvesting, receiving and packing formed anintegral part of the shrimp processing operations ofSMC. As for janitorial and messengerial services, thatthey are considered directly related to the principalbusiness of the employerhas been jurisprudentiallyrecognized.

Furthermore, Sunflower did not carry on anindependent business or undertake the performance ofits service contract according to its own manner andmethod, free from the control and supervision of itsprincipal, SMC, its apparent role having been merely torecruit persons to work for SMC.

MERALCO INDUSTRIAL ENGINEERING SERVICESV. NLRCG.R. 145402, March 14, 2008, Chico-Nazario

Meralco and the private respondent executed acontractwhere the latter would supply the petitionerjanitorial services,which include labor, materials, toolsand equipment, as well assupervision of its assignedemployees, at Meralco’s RockwellThermal Plant inMakati City.The 49 employees lodged a Complaint forillegaldeduction, underpayment, non-payment of

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overtime pay, legalholiday pay, premium pay forholiday and rest day and nightdifferentials against theprivate respondent before the LA. By virtue of RA6727, the contract between Meralco andthe privaterespondent was amended to increase theminimumdaily wage per employee. 2 months after theamendment of thecontract, Meralco sent a letter toprivate respondent informingthem that at the end ofbusiness hours of Jan. 31, 1990, it wouldbeterminating contract entered into with theprivaterespondents. On the said date, thecomplainants were pulled outfrom their work. Thecomplainants amended their complaint toinclude thecharge of illegal dismissal and to implead Meralco asaparty respondent.The LA dismissed the complaint. Onappeal, the NLRCaffirmed the decision of the LA withthe modification that Meralcowas solidarily liable withthe private respondents. The CA on theother hand,modified the Decision of the NLRC and held Meralcotobe solidarily liable with the private respondent forthesatisfaction of the laborer’s separation pay.

ISSUEWhether Meralco should be liable for the payment ofthe dismissed laborer’s separation pay

RULINGThe CA used Art. 109 of the Labor Code toholdMeralcosolidarily liable with the private respondentas regard tothe payment of separation pay. However,the SC ruled that Art.109 should be read in relation toArt. 106 and 107 of the LC.Thus, an indirect employercan only be held liable with theindependent contractoror subcontractor in the event that thelatter fails to paythe wages of its employees. While it is true thatthepetitioner was the indirect employer of thecomplainants, itcannot be held liable in the same wayas the employer in everyrespect. Meralco may beconsidered an indirect employer onlyfor purposes ofunpaid wages.

MANILA ELECTRIC COMPANY v. ROGELIOBENAMIRAG.R. No. 145271, July 14, 2005, Austria-Martinez

The individual respondents are licensed securityguards formerly employed by People’s Security, Inc.(PSI) and deployed as such at MERALCO’s headoffice. On November 30, 1990, the security serviceagreement between PSI and MERALCO wasterminated. Thereafter, fifty-six of PSI’s securityguards, including herein eight individual respondents,filed a complaint for unpaid monetary benefits againstPSI and MERALCO. Meanwhile, the security serviceagreement between respondent Armed Security &Detective Agency, Inc., (ASDAI) and MERALCO tookeffect on December 1, 1990. Subsequently, theindividual respondents were absorbed by ASDAI andretained at MERALCO’s head office. On July 25, 1992,the security service agreement between respondentAdvance Forces Security & Investigation Services, Inc.

(AFSISI) and MERALCO took effect, terminating theprevious security service agreement with ASDAI.Except as to the number of security guards, theamount to be paid the agency, and the effectivity of theagreement, the terms and conditions weresubstantially identical with the security serviceagreement with ASDAI. The individual respondentsamended their complaint to implead AFSISI as partyrespondent and to allege that AFSISI terminated theirservices on August 6, 1992 without notice and justcause and therefore guilty of illegal dismissal. For thefirst time in appeal before the Court of Appeals, theindividual respondents alleged that MERALCO is theiremployer

ISSUES1. Whether or not the individual respondents areregular employees of MERALCO2. Whether or not MERALCO is their employer3. Whether or not MERALCO can be held solidarilyliable with AFSISI

HELD(1) NO. The individual respondents cannot beconsidered as regular employees of the MERALCOfor, although security services are necessary anddesirable to the business of MERALCO, it is notdirectly related to its principal business and may evenbe considered unnecessary in the conduct ofMERALCO’s principal business, which is thedistribution of electricity.

(2) NO. As to the provision in the agreement thatMERALCO reserved the right to seek replacement ofany guard whose behavior, conduct or appearance isnot satisfactory, such merely confirms that the powerto discipline lies with the agency. It is a standardstipulation in security service agreements that theclient may request the replacement of the guards to it.Service-oriented enterprises, such as the business ofproviding security services, generally adhere to thebusiness adage that "the customer or client is alwaysright" and, thus, must satisfy the interests, conform tothe needs, and cater to the reasonable impositions ofits clients.Neither is the stipulation that the agency cannot pullout any security guard from MERALCO without itsconsent an indication of control. It is simply a securityclause designed to prevent the agency fromunilaterally removing its security guards from theirassigned posts at MERALCO’s premises to the latter’sdetriment.

The clause that MERALCO has the right at all times toinspect the guards of the agency detailed in itspremises is likewise not indicative of control as it is nota unilateral right. The agreement provides that theagency is principally mandated to conduct inspections,without prejudice to MERALCO’s right to conduct itsown inspections.

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(3) YES. The fact that there is no actual and directemployer-employee relationship between MERALCOand the individual respondents does not exonerateMERALCO from liability as to the monetary claims ofthe individual respondents. When MERALCOcontracted for security services with ASDAI as thesecurity agency that hired individual respondents towork as guards for it, MERALCO became an indirectemployer of individual respondents pursuant to Article107 of the Labor Code. When ASDAI as contractorfailed to pay the individual respondents, MERALCO asprincipal becomes jointly and severally liable for theindividual respondents’ wages, under Articles 106 and109 of the Labor Code

ASDAI is held liable by virtue of its status as directemployer, while MERALCO is deemed the indirectemployer of the individual respondents for the purposeof paying their wages in the event of failure of ASDAIto pay them. This statutory scheme gives the workersthe ample protection consonant with labor and socialjustice provisions of the 1987 Constitution. However,this is without prejudice to the right of reimbursement.

DOLE PHILIPPINES vs. ESTEVAG.R. No. 161115, November 30, 2006

Doctrine: CAMPCO, the alleged contractor, did notcarry out an independent business from petitioner. Itwas precisely established to render services topetitioner to augment its workforce during peakseasons. Petitionerwas its only client. Even asCAMPCO had its own office and office equipment,these were mainly usedfor administrative purposes;the tools, machineries, and equipment actually used byCAMPCOmembers when rendering services to thepetitioner belonged to the latter. This is indicative of alabor-only contracting.

Dole Philippines and CAMPCO entered into a ServiceAgreement. Respondents argued that they should beconsidered regular employees of petitioner given that:1.they were performing jobs that were usuallynecessary and desirable in the usual businessof petitioner; 2. petitioner exercised control overrespondents, not only as to the results, but also astothe manner by which they performed their assignedtasks; and 3. CAMPCO, a labor-only contractor,wasmerely a conduit of petitioner. As regular employees ofpetitioner, respondents asserted that theywere entitledto security of tenure and those placed on “stay homestatus” for more than six monthshad beenconstructively and illegally dismissed.

ISSUEWhether or not CAMPCO is a legitimate contractor andif no, whether or not DOLE is liable as direct employer

RULINGNO. CAMPCO was a labor-only contractor and, thus,petitioner is the real

employer of the respondents, with CAMPCO actingonly as the agent or intermediary of petitioner. In 1993,when CAMPCO wasestablished and the ServiceContract between petitioner and CAMPCO wasentered into, CAMPCO onlyhad P6,600.00 paid-upcapital, which could hardly be considered substantial.

(Refer to the Doctrine mentioned above, which is astronger indication about the labor-only contracting)

ALVIADO v. PROCTER & GAMBLE PHILS., INC.G.R. No. 160506, March 9, 2010, Del Castillo

Petitioners worked as merchandisers of P&G. They allindividually signed employment contracts with eitherPromm-Gem or SAPS for periods of more or less fivemonths at a time.They were assigned at differentoutlets, supermarkets and stores where they handledall the products of P&G. They received their wagesfrom Promm-Gem or SAPS. Subsequently, petitionersfiled a complaint against P&G for regularization,service incentive leave pay and other benefits withdamages. The complaint was later amendedto includethe matter of their subsequent dismissal. The LaborArbiter dismissed the complaint for lack of merit andruled that there was no employer-employeerelationship between petitioners and P&G. He foundthat the selection and engagement of the petitioners,the payment of their wages, the power of dismissaland control with respect to the means and methods bywhich their work was accomplished, were all done andexercised by Promm-Gem/SAPS. He further found thatPromm-Gem and SAPS were legitimate independentjob contractors. On appeal to the NLRC, it affirmed thedecision of the LA.

ISSUEWhether or not the respondent is the employer of thepetitioner.

HELDIn order to determine whether P&G is the employer ofpetitioners, it is necessary to first determine whetherPromm-Gem and SAPS are labor-only contractors orlegitimate job contractors. There is "labor-only"contracting where the person supplying workers to anemployer does not have substantial capital orinvestment in the form of tools, equipment,machineries, work premises, among others, and theworkers recruited and placed by such person areperforming activities which are directly related to theprincipal business of such employer. The Court heldthat Promm-Gem cannot be regarded as labor-onlycontractor but a legitimate independent contractorbecause the financial statement of Promm-Gem showsthat it has authorized capital stock of P1 million and apaid-in capital, or capital available for operations, ofP500,000.00 as of 1990.

On the other hand, the Articles of Incorporation ofSAPS shows that it has a paid-in capital of only P31,

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250.00. There is no other evidence presented to showhow much its working capital and assets are.Considering that SAPS has no substantial capital orinvestment and the workers it recruited are performingactivities which are directly related to the principalbusiness of P&G, the court held that SAPS is engagedin "labor-only contracting". The contractor isconsidered merely an agent of the principal employerand the latter is responsible to the employees of thelabor-only contractor as if such employees had beendirectly employed by the principal employer.

TEMIC AUTOMOTIVE PHILIPPINES, INC. v. TEMICAUTOMOTIVE PHILIPPINES, INC. EMPLOYEESUNION-FFWG.R. No. 186965, December 23, 2009, Brion

Since 1998, the petitioner contracts out some of thework in the warehouse department, specifically thosein the receiving and finished goods sections, to threeindependent service providers or forwarders. Theseforwarders also have their own employees who holdthe positions of clerk, material handler, systemencoder and general clerk.

This outsourcing arrangement gave rise to a uniongrievance on the issue of the scope and coverage ofthe collective bargaining unit, specifically to thequestion of whether or not the functions of theforwarders employees are functions being performedby the regular rank-and-file employees covered by thebargaining unit. The union thus demanded that theforwarders' employees be absorbed into thepetitioner's regular employee force and be givenpositions within the bargaining unit. The petitioner, onthe other hand, on the premise that the contractingarrangement with the forwarders is a valid exercise ofits management prerogative

ISSUE1. Whether or not the company validly contracted

out or outsourced the services involvingforwarding, packing, loading and clericalactivities related thereto.

2. Whether or not the functions of the forwardersemployees are functions being performed byregular rank-and-file employees covered bythe bargaining unit

HELDYES. In Meralco v. Quisumbing, we joined thisuniversal recognition of outsourcing as a legitimateactivity when we held that a company can determine inits best judgment whether it should contract out a partof its work for as long as the employer is motivated bygood faith; the contracting is not for purposes ofcircumventing the law; and does not involve or be theresult of malicious or arbitrary action. Our ownexamination of the agreement shows that theforwarding arrangement complies with therequirements of Article 106[26] of the Labor Code and

its implementing rules. To reiterate, no evidence orargument questions the company’s basic objective ofachieving greater economy and efficiency ofoperations. This, to our mind, goes a long way tonegate the presence of bad faith. No evidence likewisestands before us showing that the outsourcing hasresulted in a reduction of work hours or the splitting ofthe bargaining unit effects that under the implementingrules of Article 106 of the Labor Code can make acontracting arrangement illegal.

NO. It is in the appreciation of these forwarder servicesas one whole package of inter-related services that wediscern a basic misunderstanding that results in theerror of equating the functions of the forwardersemployees with those of regular rank-and-fileemployees of the company. A clerical job, for example,may similarly involve typing and paper pushingactivities and may be done on the same companyproducts that the forwarders employees and companyemployees may work on, but these similarities do notnecessarily mean that all these employees work for thecompany. The regular company employees, to besure, work for the company under its supervision andcontrol, but forwarder employees work for theforwarder in the forwarders own operation that is itselfa contracted work from the company. The companycontrols its employees in the means, method andresults of their work, in the same manner that theforwarder controls its own employees in the means,manner and results of their work. Complications andconfusion result because the company at the sametime controls the forwarder in the results of the latter’swork, without controlling however the means andmanner of the forwarder employees work.

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

Petitioner (Coke) is a domestic corporation engaged inmanufacturing, bottling and distributing soft drinkbeverages and other allied products. Respondentswere salesmen assigned at Coke Lagro Sales Officefor years but were not regularized. Coke averred thatrespondents were employees of Interserve who weretasked to perform contracted services in accordancewith the provisions of the Contract of Servicesexecuted between Coke and Interserve on 23 March2002. Said Contract constituted legitimate jobcontracting, given that the latter was a bona fideindependent contractor with substantial capital orinvestment in the form of tools, equipment, andmachinery necessary in the conduct of its business.

To prove the status of Interserve as an independentcontractor, petitioner presented the following pieces ofevidence: (1) the Articles of Incorporation of Interserve;(2) the Certificate of Registration of Interserve with theBureau of Internal Revenue; (3) the Income TaxReturn, with Audited Financial Statements, of

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Interserve for 2001; and (4) the Certificate ofRegistration of Interserve as an independent jobcontractor, issued by the Department of Labor andEmployment (DOLE).

As a result, petitioner asserted that respondents wereemployees of Interserve, since it was the latter whichhired them, paid their wages, and supervised theirwork, as proven by: (1) respondents’ Personal DataFiles in the records of Interserve; (2) respondents’Contract of Temporary Employment with Interserve;and (3) the payroll records of Interserve.

ISSUES1. Whether or not Inteserve is a labor-only contractor;2. Whether or not an employer-employee relationshipexists between petitioner Coca-Cola Bottlers Phils. Inc.and respondents.

HELD1. Yes. In sum, Interserve did not have

substantial capital or investment in the form oftools, equipment, machineries, and workpremises; and respondents, its supposedemployees, performed work which was directlyrelated to the principal business of petitioner. Itis, thus, evident that Interserve falls under thedefinition of a “labor-only” contractor, underArticle 106 of the Labor Code; as well asSection 5(i) of the Rules Implementing Articles106-109 of the Labor Code, as amended. It isalso apparent that Interserve is a labor-onlycontractor under Section 5(ii) of the RulesImplementing Articles 106-109 of the LaborCode, as amended, since it did not exercisethe right to control the performance of the workof respondents.

2. Yes. With the finding that Interserve wasengaged in prohibited labor-only contracting,petitioner shall be deemed the true employerof respondents. As regular employees ofpetitioner, respondents cannot be dismissedexcept for just or authorized causes, none ofwhich were alleged or proven to exist in thiscase, the only defense of petitioner against thecharge of illegal dismissal being thatrespondents were not its employees.

SMART COMMUNICATIONS vs. ASTORGAG.R. No. 148132, January 28, 2008, Nachura

Regina M. Astorga (Astorga) was employed byrespondent Smart Communications, Incorporated(SMART) as District Sales Manager of the CorporateSales Marketing Group/ Fixed Services Division(CSMG/FSD). SMART launched an organizationalrealignment to achieve more efficient operations. Partof the reorganization was the outsourcing of themarketing and sales force. Thus, SMART entered intoa joint venture agreement with NTT of Japan, andformed SMART-NTT Multimedia, Incorporated

(SNMI). Since SNMI was formed to do the sales andmarketing work, SMART abolished the CSMG/FSD,Astorgas division. Despite the abolition of theCSMG/FSD, Astorga continued reporting for work.SMART issued a memorandum advising Astorga ofthe termination of her employment on ground ofredundancy. Astorga states that the justificationadvanced by SMART is not true because there was nocompelling economic reason for redundancy.

ISSUEWhether or not the cause for Astorga’s dismissal isvalid

RULINGYes. Contrary to her claim, an employer is notprecluded from adopting a new policy conducive to amore economical and effective management even if itis not experiencing economic reverses. Neither doesthe law require that the employer should sufferfinancial losses before he can terminate the services ofthe employee on the ground of redundancy.

Supreme Court agreed with the CA that theorganizational realignment introduced by SMART,which culminated in the abolition of CSMG/FSD andtermination of Astorgas employment was an honesteffort to make SMARTs sales and marketingdepartments more efficient and competitive. As the CAhad taken pains to elucidate:

x x x a careful and assiduous review of the records willyield no other conclusion than that the reorganizationundertaken by SMART is for no purpose other than itsdeclared objective as a labor and cost savingsdevice. Indeed, this Court finds no fault in SMARTsdecision to outsource the corporate sales market toSNMI in order to attain greater productivity. [Astorga]belonged to the Sales Marketing Group under theFixed Services Division (CSMG/FSD), a distinct salesforce of SMART in charge of selling SMARTstelecommunications services to the corporatemarket. SMART, to ensure it can respond quickly,efficiently and flexibly to its customers requirement,abolished CSMG/FSD and shortly thereafter assignedits functions to newly-created SNMI MultimediaIncorporated, a joint venture company of SMART andNTT of Japan, for the reason that CSMG/FSD doesnot have the necessary technical expertise required forthe value added services. By transferring the duties ofCSMG/FSD to SNMI, SMART has created a morecompetent and specialized organization to perform thework required for corporate accounts. It is also relievedSMART of all administrative costs management, timeand money-needed in maintaining theCSMG/FSD. The determination to outsource the dutiesof the CSMG/FSD to SNMI was, to Our mind, a soundbusiness judgment based on relevant criteria and istherefore a legitimate exercise of managementprerogative.

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Indeed, out of our concern for those lessercircumstanced in life, this Court has inclined towardsthe worker and upheld his cause in most of hisconflicts with his employer.This favored treatment isconsonant with the social justice policy of theConstitution. But while tilting the scales of justice infavor of workers, the fundamental law also guaranteesthe right of the employer to reasonable returns for hisinvestment. In this light, we must acknowledge theprerogative of the employer to adopt such measuresas will promote greater efficiency, reduce overheadcosts and enhance prospects of economic gains, albeitalways within the framework of existinglaws. Accordingly, we sustain the reorganization andredundancy program undertaken by SMART.

MANILA WATER V. DALUMPINESG.R. No. 175501, October 4, 2010, Nachura

By virtue of Republic Act No. 8041, otherwise knownas the "National Water Crisis Act of 1995," theMetropolitan Waterworks and Sewerage System(MWSS) was given the authority to enter intoconcession agreements allowing the private sector inits operations. Petitioner Manila Water Company, Inc.(Manila Water) was one of two private concessionairescontracted by the MWSS to manage the waterdistribution system in the east zone of Metro Manila.Before the expiration of the contract of services, the121 bill collectors formed a corporation duly registeredwith the Securities and Exchange Commission (SEC)as the "Association Collector’s Group, Inc." (ACGI).ACGI was one of the entities engaged by Manila Waterfor its courier service. However, Manila Watercontracted ACGI for collection services only in itsBalara Branch. Manila Water entered into a serviceagreement with respondent First Classic CourierServices, Inc. (FCCSI) also for its courier needs.Earlier, in a memorandum, FCCSI gave a deadline forthe bill collectors who were members of ACGI tosubmit applications and letters of intent to transfer toFCCSI. On various dates, individual respondents wereterminated from employment. Manila Water no longerrenewed its contract with FCCSI because it decided toimplement a "collectorless" scheme whereby ManilaWater customers would instead remit paymentsthrough "Bayad Centers."

The aggrieved bill collectors individually filedcomplaints for illegal dismissal, unfair labor practice,damages, and attorney’s fees, with prayer forreinstatement and backwages against petitionerManila Water and respondent FCCSI. The complaintswere consolidated and jointly heard. Petitioner ManilaWater, for its part, denied that there was an employer-employee relationship between its company andrespondent bill collectors. Based on the agreementbetween FCCSI and Manila Water, respondent billcollectors are the employees of the former, as it is theformer that has the right to select/hire, discipline,supervise, and control. FCCSI has a separate and

distinct legal personality from Manila Water, and it wasduly registered as an independent contractor beforethe DOLE.

ISSUEWhether FCCSI was a labor-only contractor and thatrespondent bill collectors are employees of petitionerManila Water.

RULINGYes. FCCSI was a labor-only contractor and thatrespondent bill collectors are employees of petitionerManila Water.

"Contracting" or "subcontracting" refers to anarrangement whereby a principal agrees to put out orfarm out with a contractor or subcontractor theperformance or completion of a specific job, work, orservice within a definite or predetermined period,regardless of whether such job, work, or service is tobe performed or completed within or outside thepremises of the principal.

Department Order No. 18-02, Series of 2002,enunciates that labor-only contracting refers to anarrangement where the contractor or subcontractormerely recruits, supplies, or places workers to performa job, work, or service for a principal, and any of thefollowing elements are present: (i) the contractor orsubcontractor does not have substantial capital orinvestment which relates to the job, work, or service tobe performed and the employees recruited, supplied,or placed by such contractor or subcontractor areperforming activities which are directly related to themain business of the principal; or (ii) the contractordoes not exercise the right to control the performanceof the work of the contractual employee.

FCCSI has no sufficient investment in the form oftools, equipment and machinery to undertake contractservices for Manila Water involving a fleet of around100 collectors assigned to several branches andcovering the service area of Manila Water customersspread out in several cities/towns of the East Zone.The only rational conclusion is that it is Manila Waterthat provides most if not all the logistics and equipmentincluding service vehicles in the performance of thecontracted service, notwithstanding that the contractbetween FCCSI and Manila Water states that it is theContractor which shall furnish at its own expense allmaterials, tools and equipment needed to perform thetasks of collectors.

BABAS v. LORENZO SHIPPING CORPORATIONG.R. No. 186091, December 15, 2010, Nachura

Lorenzo Shipping Corporation (LSC), a shippingcompany, entered into an agreement with BestManpower Services, Inc. (BMSI) wherein BMSIundertook to provide maintenance and repair servicesto LSCs container vans, heavy equipment, trailer

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chassis, and generator and to provide checkers toinspect all containers received for loading to and/orunloading from its vessels. Simultaneous with theexecution of the Agreement, LSC leased itsequipment, tools, and tractors to BMSI. BMSI thenhired petitioners on various dates to work at LSC ascheckers, welders, utility men, clerks, forklift operators,motor pool and machine shop workers, technicians,trailer drivers, and mechanics. Six years later, LSCentered into another contract with BMSI, this time, aservice contract. Petitioners filed with the Labor acomplaint for regularization against LSC and BMSI.Later, LSC terminated their Agreement which led topetitioners losing employment.

ISSUEIs BMSI engaged in labor-only contracting, entitlingpetitioners to be considered as employees of LSC?

RULINGYes. A person is considered engaged in legitimate jobcontracting or subcontracting if the following conditionsconcur:(a) The contractor carries on a distinct andindependent business and undertakes the contractwork on his account under his own responsibilityaccording to his own manner and method, free fromthe control and direction of his employer or principal inall matters connected with the performance of his workexcept as to the results thereof;(b) The contractor hassubstantial capital or investment; and(c) Theagreement between the principal and the contractor orsubcontractor assures the contractual employees'entitlement to all labor and occupational safety andhealth standards, free exercise of the right to self-organization, security of tenure, and social welfarebenefits.

Given the above standards, we sustain the petitionerscontention that BMSI is engaged in labor-onlycontracting. First, petitioners worked at LSCspremises, and nowhere else. Other than the provisionsof the Agreement, there was no showing that it wasBMSI which established petitioners working procedureand methods, which supervised petitioners in theirwork, or which evaluated the same. There wasabsolute lack of evidence that BMSI exercised controlover them or their work, except for the fact thatpetitioners were hired by BMSI.Second, LSC wasunable to present proof that BMSI had substantialcapital. The record before us is bereft of any proofpertaining to the contractors capitalization, nor to itsinvestment in tools, equipment, or implements actuallyused in the performance or completion of the job,work, or service that it was contracted to render. Whatis clear was that the equipment used by BMSI wereowned by, and merely rented from, LSC.Third,petitioners performed activities which were directlyrelated to the main business of LSC. The work ofpetitioners as checkers, welders, utility men, drivers,and mechanics could only be characterized as part of,or at least clearly related to, and in the pursuit of, LSCs

business. Logically, when petitioners were assigned byBMSI to LSC, BMSI acted merely as a labor-onlycontractor.Lastly, as found by the NLRC, BMSI had noother client except for LSC, and neither BMSI nor LSCrefuted this finding, thereby bolstering the NLRCfinding that BMSI is a labor-only contractor.

Consequently, the workers that BMSI supplied to LSCbecame regular employees of the latter.

TENG V. PAHAGACG.R. No. 169704

Respondent was hired for the purpose of measuringthe volume of fishes caught by the petitioner company,the counting/measuring was done using the tools andequipment of petitioner and even through his expressdirection. However, after sometime Teng terminatedthe services of Pahagac and on several occasionseven doubted the measurements given by therespondent which resulted to his termination of hisservices.

ISSUEWON there is an EE-ER relationship

RULINGYes, The element of control is present in this case.Teng not only owned the tools and equipment, hedirected how the respondent workers were to performtheir job as checkers; they, in fact, acted as Teng'seyes and ears in every fishing expedition. furthermoreit was his company that issued to the respondentworkers identification cards (IDs) bearing their namesas employees and Teng's signature as the employer.Generally, in a business establishment, IDs are issuedto identify the holder as a bonafide employee of theissuing entity. For the 13 years that the respondentworkers worked for Teng, they received wages on aregular basis, in addition to their shares in the fishcaught.

CLASSES OF EMPLOYEE

MAGIS YOUNG ACHIEVERS LEARNING CENTERAND MRS. VIOLETA T. CARIO V. ADELAIDA P.MANALOG.R No. 178835, February 13, 2009, Nachura

On April 18, 2002, Adelaida Manalo was hired as ateacher and acting princiapl of Magis Young AchieversLearning Center. It appears that, on March 29, 2003,Manalo wrote a letter of resignation to Magis’directress Violeta Cario but, on March 31, 2003,Manalo received a letter of termination from Magis soManalo filed a comlaint for illegal dismissal and non-payment of 13th month pay with prayer forreinstatement. Magis, among others, claimed thatManalo was legally terminated becayse the 1-yearprobationary periof had already lapsed and she failed

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to meet the criteria set by the school pursuant to theManual of Regulation for Private Schools.The LAdismissed the complaint. NLRC reversed the decision.MR was denied. CA affirmed. MR was denied. Hence,this petition.

ISSUEIs Adelaida Manalo a permanent employee?

HELDNo. The 6-month limit on the term of probationaryemployment does not apply to all classes ofoccupations. For academic personnel in privateschools, colleges, and universities, probationaryemployment is governed by Sec. 92 of the 1992Manual of Regulations for Private Schools,supplemented by DOLE-DECS-CHED-TESDA OrderNo. 1 dated February 7, 1996 and Sec. 4.m(4)[c] of theManual. For academic personnel in private elementaryand secondary schools, it is only after one hassatisfactorily completed the probationary period ofthree (3) school years and is rehired that he acquiresfull tenure as a regular or permanent employee.

Pursuant to Section 93 of the Manual, no vested rightto a permanent appointment shall accrue until theemployee has completed the prerequisite three-yearperiod necessary for the acquisition of a permanentstatus. Of course, the mere rendition of service forthree consecutive years does not automatically ripeninto a permanent appointment. It is also necessary thatthe employee be a full-time teacher, and that theservices he rendered are satisfactory.

All this does not mean that academic personnel cannotacquire permanent employment status earlier thanafter the lapse of three years. The period of probationmay be reduced if the employer, convinced of thefitness and efficiency of a probationary employee,voluntarily extends a permanent appointment evenbefore the three-year period ends.

Nonetheless, teachers on probationary employmentenjoy security of tenure. probationary employees enjoysecurity of tenure during the term of their probationaryemployment. As such, they cannot be removed exceptfor cause as provided by law, or if at the end of everyyearly contract during the three-year period, theemployee does not meet the reasonable standards setby the employer at the time of engagement. But thisguarantee of security of tenure applies only during theperiod of probation. Once that period expires, theconstitutional protection can no longer be invoked.

In this case, Manalo rendered service only from April18, 2002, until March 31, 2003. She has not completedthe requisite three-year period of probationaryemployment She cannot, by right, claim permanentstatus. Manalo’s appointment as acting principal ismerely temporary, or one that is good until anotherappointment is made to take its place.

However, since Magis failed to show by competentevidence that Manalo did not meet the standards setby the school, it can be concluded that her terminationbefore the end of her probationary period.

PIER 8 ARRASTRE & STEVEDORING SERVICES V.BOCLOTG.R. No. 173849, September 28, 2007, Chico-Nazario

Boclot was hired by PASSI to perform the functions ofa stevedore. Later on, Boclot filed Complaint with theLabor Arbiter claiming regularization; payment ofservice incentive leave and 13th month pays; moral,exemplary and actual damages; and attorney’s fees.He alleged that he was hired by PASSI in October1999 and was issued company ID No. 304, a PPAPass and SSS documents. In fact, respondentcontended that he became a regular employee by April2000, since it was his sixth continuous month inservice in PASSI’s regular course of business. Heargued on the basis of Articles 280 and 281 of theLabor Code. He maintains that under paragraph 2 ofArticle 280, he should be deemed a regular employeehaving rendered at least one year of service with thecompany.

ISSUEWhether or not he has attained regular status .

RULINGYes. Though usual and necessary, his employment isdependent on availability of work SC took judicialnotice that it is an industry practice in port services tohire “reliever” stevedores in order to ensure smooth-flowing 24-hour stevedoring and arrastre operations inthe port area. No doubt, serving as a stevedore,respondent performs tasks necessary or desirable tothe usual business of petitioners. However, it shouldbe deemed part of the nature of his work that he canonly work as a stevedore in the absence of theemployee regularly employed for the very samefunction.

Moreover, respondent does not contest that he waswell aware that he would only be given work whenthere are absent or unavailable employees.Respondent also does not allege, nor is there anyshowing, that he was disallowed or prevented fromoffering his services to other cargo handlers in theother piers at the North Harbor other than petitioners.As aforestated, the situation of respondent is akin tothat of a seasonal or project or term employee, albeiton a daily basis.

Under the CBA, he qualifies as a regular employeeThe Supreme Court still finds respondent to be aregular employee on the basis of pertinent provisionsunder the CBA between PASSI and its Workers’ union,wherein it was stated that it agrees to convert to

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regular status all incumbent probationary or casualemployees and workers in the Company who haveserved the Company for an accumulated service termof employment of not less than six (6) months from hisoriginal date of hiring. Respondent assents that he isnot a member of the union, as he was not recognizedby PASSI as its regular employee, but this Court notesthat PASSI adopts a union-shop agreement, cullingfrom Article II of its CBA. Under a union-shopagreement, although nonmembers may be hired, anemployee is required to become a union member aftera certain period, in order to retain employment. Thisrequirement applies to present and future employees.The same article of the CBA stipulates thatemployment in PASSI cannot be obtained without priormembership in the union. Hence, applying theforegoing provisions of the CBA, respondent should beconsidered a regular employee after six months ofaccumulated service. Having rendered 228.5 days, oreight months of service to petitioners since 1999, thenrespondent is entitled to regularization by virtue of thesaid CBA provisions.

THE PENINSULA MANILA, ROLF PFISTERER ANDBENILDA QUEVEDO-SANTOS, vs. ELAINE M.ALIPIOG.R. No. 167310, June 17, 2008, Quisumbing

Petitioner is a corporation engaged in the hotelbusiness. Co-petitioners Rolf Pfisterer andBenildaQuevedo-Santos were the general managerand human resources manager, respectively, of thehotel at the time of the controversy.

Respondent Elaine M. Alipio was hired merely as areliever nurse in the company's 24-hour clinic.However, she had been performing the usual tasksand functions of a regular nurse since the start of heremployment on December 11, 1993. Hence, afterabout four years of employment in the hotel, sheinquired why she was not receiving her 13th monthpay. Alipio was paid P8,000 as her 13th month pay for1997. Alipio likewise requested for the payment of her13th month pay for 1993 to 1996, but her request wasdenied.

Alipio was informed by a fellow nurse that she can onlyreport for work after meeting up with petitioner Santos.When Alipio met with Santos, Alipio was askedregarding her payslip vouchers. She told Santos thatshe made copies of her payslip vouchers becausePeninsula does not give her copies of the same.Santos was peeved with Alipio's response because thelatter was allegedly not entitled to get copies of herpayslip vouchers. Santos likewise directed Alipio not toreport for work anymore.Aggrieved, Alipio filed a complaint for illegal dismissalagainst the petitioners.Private respondents The Peninsula Manila andBenildaQuevedo-Santos are ordered to reinstate

petitioner Elaine M. Alipio as regular staff nursewithout loss of seniority rights.

ISSUEWhether or not Alipio is a regular employeeRULINGUnder Article 280 of the Labor Code, an employmentis deemed regular when the activities performed by theemployee are usually necessary or desirable in theusual business of the employer. However, anyemployee who has rendered at least one year ofservice, even though intermittent, is deemed regularwith respect to the activity performed and while suchactivity actually exists.

In this case, records show that Alipio's services wereengaged by the hotel intermittently from 1993 up to1998. Her services as a reliever nurse wereundoubtedly necessary and desirable in the hotel'sbusiness of providing comfortable accommodation toits guests. In any case, since she had rendered morethan one year of intermittent service as a relievernurse at the hotel, she had become a regularemployee as early as December 12, 1994. Lastly, perthe hotel's own Certification dated April 22, 1997, shewas already a "regular staff nurse" until her dismissal.

Being a regular employee, Alipio enjoys security oftenure. Her services may be terminated only uponcompliance with the substantive and proceduralrequisites for a valid dismissal: (1) the dismissal mustbe for any of the causes provided in Article 28212 ofthe Labor Code; and (2) the employee must be givenan opportunity to be heard and to defend himself.13

ROWELL INDUSTRIAL CORPORATION vs. HON.COURT OF APPEALS and JOEL TARIPEG.R. No. 167714, March 7, 2007, Chico-Nazario

Petitioner Rowell Industrial is engaged inmanufacturing tin cans for packaging consumerproducts. Respondent Joel Taripe was employed bypetitioner as a “rectangular power press machineoperator”. Taripe alleged that upon employment, hewas made to sign a document, which was not fullyexplained to him but was a condition for him to behired and for which he was not given a copy.

Apparently, the contract of employment was only goodfor a period of five (5) months unless it is renewed bymutual consent. Along with other contractualemployees, he was hired only to meet the increase indemand for packaging materials for the Christmasseason and to build up stock levels for the early part ofthe year. Taripe filed a complaint for regularization andholiday pay.

The LA dismissed his complaint. The NLRC reversedthe LA. The CA affirmed the resolution of the NLRC.

ISSUE

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Is Taripe a Regular Employee?

HELDYES. There are two kinds of regular employees: (1)those who are engaged to perform activities which areUSUALLY NECESSARY OR DESIRABLE in theUSUAL BUSINESS or TRADE of the employer; and(2) those who have rendered at least one year ofservice, whether continuous or broken, with respect tothe activity in which they are employed. Taripebelonged to the first category.

The purported contract of employment providing thatTaripewas hired as contractual employee for five (5)months only, cannot prevail over the undisputed factthat he was hired to perform the function of powerpress operator, a function necessary or desirable inpetitioner’s business of manufacturing tin cans.Petitioner’s contention that the four (4) months lengthof service of Taripe did not grant him a regular statusis inconsequential, considering that length of serviceassumes importance only when the activity in whichthe employee has been engaged to perform is notnecessary or desirable to the usual business or tradeof the employer.

Also, it cannot be denied that the employment contractsigned by respondent Taripe did not mention that hewas hired only for a specific undertaking, thecompletion of which had been determined at the timeof his engagement. The said employment contractneither mentioned that respondent Taripe's serviceswere seasonal in nature and that his employment wasonly for the duration of the Christmas season aspurposely claimed by petitioner. What was stipulated inthe said contract was that respondent Taripe'semployment was contractual for the period of fivemonths. As a rank-and-file employee, Taripe canhardly be on equal terms with petitioner as ‘almostalways, employees agree to any terms of employmentjust to get employed’.

ABS-CBN BROADCASTING CORPORATION v.MARLYN NAZARENO, MERLOU GERZON,JENNIFER DEIPARINE, and JOSEPHINE LERASAN.G.R. No. 164156, September 26, 2006

Petitioner employed respondents Nazareno, Gerzon,Deiparine, and Lerasan as production assistants (PAs)on different dates. On October 12, 2000, respondentsfiled a Complaint for Recognition of RegularEmployment Status, Underpayment of Overtime Pay,Holiday Pay, Premium Pay, Service Incentive Pay, SickLeave Pay, and 13th Month Pay with Damages againstthe petitioner before the NLRC. Respondents allegedthat they were engaged by respondent ABS-CBN asregular and full-time employees for a continuousperiod of more than five (5) years with a monthly salaryrate of Four Thousand (P4,000.00) pesos beginning1995 up until the filing of this complaint on November20, 2000. Respondents insisted that they belonged to

a "work pool" from which petitioner chose persons tobe given specific assignments at its discretion, andwere thus under its direct supervision and controlregardless of nomenclature.

For its part, petitioner alleged in its position paper thatthe respondents were PAs who basically assist in theconduct of a particular program ran by an anchor ortalent. Among their duties include monitoring andreceiving incoming calls from listeners and fieldreporters and calls of news sources; generally, theyperform leg work for the anchors during a program or aparticular production. They are considered in theindustry as "program employees" in that, asdistinguished from regular or station employees, theyare basically engaged by the station for a particular orspecific program broadcasted by the radio station.Petitioner asserted that as PAs, the complainants wereissued talent information sheets which are updatedfrom time to time, and are thus made the basis todetermine the programs to which they shall later becalled on to assist.

ISSUEW/N the respondents can be considered as regularemployees

HELDYES. They are regular employees. Where a personhas rendered at least one year of service, regardlessof the nature of the activity performed, or where thework is continuous or intermittent, the employment isconsidered regular as long as the activity exists, thereason being that a customary appointment is notindispensable before one may be formally declared ashaving attained regular status. Article 280 of the LaborCode provides:

The primary standard, therefore, of determining regularemployment is the reasonable connection between theparticular activity performed by the employee inrelation to the usual trade or business of the employer.The test is whether the former is usually necessary ordesirable in the usual business or trade of theemployer.

Not considered regular employees are “projectemployees,” the completion or termination of which ismore or less determinable at the time of employment,such as those employed in connection with a particularconstruction project, and “seasonal employees” whoseemployment by its nature is only desirable for a limitedperiod of time. Even then, any employee who hasrendered at least one year of service, whethercontinuous or intermittent, is deemed regular withrespect to the activity performed and while suchactivity actually exists.

Respondents cannot be considered “talents” becausethey are not actors or actresses or radio specialists ormere clerks or utility employees. They are regular

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employees who perform several different duties underthe control and direction of ABS-CBN executives andsupervisors.

Thus, there are two kinds of regular employees underthe law: (1) those engaged to perform activities whichare necessary or desirable in the usual business ortrade of the employer; and (2) those casual employeeswho have rendered at least one year of service,whether continuous or broken, with respect to theactivities in which they are employed.

Under existing jurisprudence, project (for projectemployees) could refer to two distinguishable types ofactivities. First, a project may refer to a particular job orundertaking that is within the regular or usual businessof the employer, but which is distinct and separate, andidentifiable as such, from the other undertakings of thecompany. Such job or undertaking begins and ends atdetermined or determinable times. Second, the termproject may also refer to a particular job or undertakingthat is not within the regular business of the employer.Such a job or undertaking must also be identifiablyseparate and distinct from the ordinary or regularbusiness operations of the employer. The job orundertaking also begins and ends at determined ordeterminable times.

The principal test is whether or not the projectemployees were assigned to carry out a specificproject or undertaking, the duration and scope of whichwere specified at the time the employees wereengaged for that project.

KIMBERLY-CLARK, INC. vs. SECRETARY OFLABORG.R. No. 156668, November 23, 2007

When the Collective Bargaining Agreement executedby and between Kimberly-Clark, Inc., Kimberly andUKCEO-PTGWO expired, KILUSAN-OLALIAchallenged the incumbency of UKCEO-PTGWO. Acertification election was subsequently conducted withUKCEO-PTGWO winning by a margin of 20 votes overKILUSAN-OLALIA. Remaining as uncounted were 64challenged ballots cast by 64 casual workers whoseregularization was in question. KILUSAN-OLALIA fileda protest.

During the pendency of a case filed by KILUSAN-OLALIA against the Ministry of Labor andEmployment, Kimberly dismissed from service severalemployees among which are the casual employeeswhose regularization are in question. After a series ofcases between the parties which reached the SupremeCourt, DOLE eventually ordered Kimberly to pay theworkers who have been regularized their differentialpay with respect to minimum wage, cost of livingallowance, 13th month pay, and benefits provided forunder the applicable collective bargaining agreementfrom the time they became regular employees.

Kimberly filed a motion for reconsideration of theDOLE Order arguing in the main that the decision onlypertained to casuals who had rendered one year ofservice as of April 21, 1986, the filing date ofKILUSAN-OLALIA’s petition for certification election.

ISSUESWhether the reckoning point in determining whoamong Kimberly’s casual employees are entitled toregularization should be April 21, 1986, the dateKILUSAN-OLALIA filed a petition for certificationelection to challenge the incumbency of UKCEO-PTGWOWhether the employees who are not parties in thecases between the parties should not be included inthe implementation orders of DOLE

RULINGNo. The law [thus] provides for two kinds of regularemployees, namely: (1) those who are engaged toperform activities which are usually necessary ordesirable in the usual business or trade of theemployer; and (2) those who have rendered at leastone year of service, whether continuous or broken,with respect to the activity in which they are employed.The individual petitioners herein who have beenadjudged to be regular employees fall under thesecond category. These are the mechanics,electricians, machinists, machine shop helpers,warehouse helpers, painters, carpenters, pipefittersand masons. It is not disputed that these workers havebeen in the employ of KIMBERLY for more than oneyear at the time of the filing of the petition forcertification election by KILUSAN-OLALIA.

Considering that an employee becomes regular withrespect to the activity in which he is employed oneyear after he is employed, the reckoning date fordetermining his regularization is his hiring date.Therefore, it is error for petitioner Kimberly to claimthat it is from April 21, 1986 that the one-year periodshould be counted. While it is a fact that the issue ofregularization came about only when KILUSAN-OLALIA filed a petition for certification election, theconcerned employees attained regular status byoperation of law.

No. The grant of the benefit of regularization shouldnot be limited to the employees who questioned theirstatus before the labor tribunal/court and asserted theirrights; it should also extend to those similarly situated.There is, thus, no merit in petitioner's contention thatonly those who presented their circumstances ofemployment to the courts are entitled to regularization.

BENARES V. PANCHOG.R. NO. 151827, April 29, 2005

Respondent Had. Maasin II is a sugar cane plantationlocated in Murcia, Negros Occidental with an area of

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12-24 has. planted, owned and managed by JosefinaBenares, individual co-respondent.

On July 24, 1991, complainants thru counsel wrote theRegional Director of the Department of Labor andEmployment, Bacolod City for intercession particularlyin the matter of wages and other benefits mandated bylaw.

On October 15, 1991, complainants alleged to havebeen terminated without being paid terminationbenefits by respondent in retaliation to what they havedone in reporting to the Department of Labor andEmployment their working conditions viz-a-viz (sic)wages and other mandatory benefits.

The NLRC held that respondents attained the status ofregular seasonal workers of Hda. Maasin II havingworked therein from 1964-1985. It found that petitionerfailed to discharge the burden of proving that thetermination of respondents was for a just or authorizedcause. Hence, respondents were illegally dismissedand should be awarded their money claims.

ISSUEWhether respondents are regular employees ofHacienda Maasin and thus entitled to their monetaryclaims.

HELDIn this case, petitioner argues that respondents werenot her regular employees as they were merely"pakiao" workers who did not work continuously in thesugar plantation. They performed such tasks asweeding, cutting and loading canes, planting canepoints, fertilizing, cleaning the drainage, etc. Thesefunctions allegedly do not require respondents’ dailypresence in the sugarcane field as it is not everydaythat one weeds, cuts canes or applies fertilizer. Insupport of her allegations, petitioner submitted "cultivo"and milling payrolls.

The probative value of petitioner’s evidence, however,has been passed upon by the labor arbiter, the NLRCand the Court of Appeals. Although the labor arbiterdismissed respondents’ complaint because their"position paper is completely devoid of any discussionabout their alleged dismissal, much less of theprobative facts thereof,"20 the ground for the dismissalof the complaint implies a finding that respondents areregular employees.

The NLRC was more unequivocal when it pronouncedthat respondents have acquired the status of regularseasonal employees having worked for more than oneyear, whether continuous or broken in petitioner’shacienda.

JOSEFINA BENARES V. JAIME PANCHOG.R. No. 151827, April 29, 2005, Tinga

Respondents alleged to have started working as sugarfarm workers on various dates in Hda. Maasin II whichis a sugar cane plantation located in Murcia, NegrosOccidental planted, owned and managed by JosefinaBenares, individual co-respondent. They alleged tohave been terminated without being paid terminationbenefits by respondent in retaliation to what they havedone in reporting to the Department of Labor andEmployment their working conditions and their wagesand other mandatory benefits. Later on, in compliancewith an issued directive, a formal complaint was filedfor illegal dismissal with money claims. But the LaborArbiter dismissed the complaint for lack of merit.

On appeal, the NLRC held that respondents attainedthe status of regular seasonal workers of Hda. MaasinII having worked therein from 1964-1985. It found thatpetitioner failed to discharge the burden of proving thatthe termination of respondents was for a just orauthorized cause. Hence, respondents were illegallydismissed and should be awarded their money claims.Said ruling was affirmed by the CA hence, this petition.

ISSUEWhether respondents are regular employees ofHacienda Maasin and thus entitled to their monetaryclaims; whether respondents were illegally dismissed.

HELD:YES. The law provides for three kinds of employees:(1) regular employees or those who have beenengaged to perform activities which are usuallynecessary or desirable in the usual business or tradeof the employer; (2) project employees or those whoseemployment has been fixed for a specific project orundertaking, the completion or termination of whichhas been determined at the time of the engagement ofthe employee or where the work or service to beperformed is seasonal in nature and the employment isfor the duration of the season; and (3) casualemployees or those who are neither regular nor projectemployees.

The Court, in Hacienda Fatima, condensed the rulethat the primary standard for determining regularemployment is the reasonable connection between theparticular activity performed by the employee vis--visthe usual trade or business of the employer. Thisconnection can be determined by considering thenature of the work performed and its relation to thescheme of the particular business or trade in itsentirety. If the employee has been performing the jobfor at least a year, even if the performance is notcontinuous and merely intermittent, the law deemsrepeated and continuing need for its performance assufficient evidence of the necessity if notindispensability of that activity to the business. Hence,the employment is considered regular, but only withrespect to such activity and while such activity exists.

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In this case, petitioner argues that respondents werenot her regular employees as they were merely pakiaoworkers who did not work continuously in the sugarplantation. They performed such tasks as weeding,cutting and loading canes, planting cane points,fertilizing, cleaning the drainage, etc.

The probative value of petitioners evidence, however,has been passed upon by the labor arbiter, the NLRCand the Court of Appeals. Although the labor arbiterdismissed respondents complaint because theirposition paper is completely devoid of any discussionabout their alleged dismissal, much less of theprobative facts thereof, the ground for the dismissal ofthe complaint implies a finding that respondents areregular employees.

HACIENDA BINO/HORTENCIA STARKE,INC./HORTENCIA L. STARKE, , vs. CANDIDOCUENCA, et al.G.R. No. 150478, April 15, 2005, Callejo

Hacienda Bino is a sugar plantation located in NegrosOccidental and represented in this case by HortenciaL. Starke, owner and operator of the saidhacienda.The 76 individual respondents were part ofthe workforce of Hacienda Bino consisting of 220workers, performing various works.On July 18, 1996,during the off-milling season, petitioner Starke issuedan Order or Notice, which stated, that all those whosigned in favor of CARP are expressing their desire toget out of employment on their own volition andonlythose who did not sign for CARP will be givenemployment by Hda. Bino.

The respondents regarded such notice as atermination of their employment. As a consequence,they filed a complaint for illegal dismissal, wagedifferentials, 13th month pay, holiday pay and premiumpay for holiday, service incentive leave pay, and moraland exemplary damages with the NLRC Bacolod City,on September 17, 1996.

On October 6, 1997, the Labor Arbiter rendered aDecision, finding that petitioner Starkes’ notice wastantamount to a termination of the respondents’services, and holding that the petitioner company wasguilty of illegal dismissal. On appeal, the NLRCaffirmed with modification the decision of the LaborArbiter.

ISSUEWhether or not the respondents are regular orseasonal employees of Hacienda Bino?

RULINGRegular employees. The primary standard fordetermining regular employment is the reasonableconnection between the particular activity performedby the employee in relation to the usual trade orbusiness of the employer. There is no doubt that the

respondents were performing work necessary anddesirable in the usual trade or business of anemployer. Hence, they can properly be classified asregular employees.

For respondents to be excluded from those classifiedas regular employees, it is not enough that theyperform work or services that are seasonal in nature.They must have been employed only for the durationof one season. While the records sufficiently show thatthe respondents work in the hacienda was seasonal innature, there was, however, no proof that they werehired for the duration of one season only. In fact, thepayrolls,[30] submitted in evidence by the petitioners,show that they availed the services of the respondentssince 1991. Absent any proof to the contrary, thegeneral rule of regular employment should, therefore,stand. It bears stressing that the employer has theburden of proving the lawfulness of his employeesdismissal.

GAPAYAO V. FULOG.R. No. 193493, June 13, 2013, Sereno

Jaime Fulo (deceased), a laborer in the agriculturallandholdings, a harvester in the abaca plantation, anda repairman/utility worker in several businessestablishments owned by petitioner, died of "acuterenal failure secondary to 1st degree burn 70%secondary electrocution" while doing repairs at theresidence and business establishment of petitioner.Private respondent filed a claim for social securitybenefits with the SSS, However, upon verification andevaluation, it was discovered that the deceased wasnot a registered member of the SSS. The latterdemanded that petitioner remit the social securitycontributions of the deceased, but petitioner deniedthat the deceased was his employee.

ISSUEWhether or not there exists between the deceasedJaime Fulo and petitioner an employer-employeerelationship that would merit an award of benefits infavor of private respondent under social security laws

RULINGYes. Farm workers generally fall under the definition ofseasonal employees. We have consistently held thatseasonal employees may be considered as regularemployees. 56 Regular seasonal employees are thosecalled to work from time to time. The nature of theirrelationship with the employer is such that during theoff season, they are temporarily laid off; butreemployed during the summer season or when theirservices may be needed. 57 They are in regularemployment because of the nature of their job, and notbecause of the length of time they have worked.

For regular employees to be considered as such, theprimary standard used is the reasonable connection

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between the particular activity they perform and theusual trade or business of the employer.

Pakyaw workers are considered employees for as longas their employers exercise control over them. Itshould be remembered that the control test merelycalls for the existence of the right to control, and notnecessarily the exercise thereof. 69 It is not essentialthat the employer actually supervises the performanceof duties by the employee. It is enough that the formerhas a right to wield the power.

UNIVERSAL ROBINA SUGAR MILLING CORP.(URSUMCO ) V. ACIBOG.R. No. 186439, January 15, 2014, Brion

URSUMCO hired employees on differentcapacities,i.e., drivers, crane operators, buckethookers, welders, mechanics, laboratory attendantsand aides, steel workers, laborers, carpenters andmasons, among others. At the start of their respectiveengagements, the employees signed contracts ofemployment for a period of one (1) month or for agiven season. URSUMCO repeatedly hired them toperform the same duties and, for every engagement,required the latter to sign new employment contractsfor the same duration of one month or a given season.

ISSUEAre the employees considered regular employees?

HELDYes. However, the designation must be qualified. Theyare regular seasonal employees.To exclude the asserted “seasonal” employee fromthose classified as regular employees, the employermust show that: (1) the employee must be performingwork or services that are seasonal in nature; and (2)he had been employed for the duration of the season.

Hence, when the “seasonal” workers are continuouslyand repeatedly hired to perform the same tasks oractivities for several seasons or even after thecessation of the season, this length of time maylikewise serve as badge of regular employment. Eventhough denominated as “seasonal workers”, if theseworkers are called to work from time to time and areonly temporarily laid off during the off-season, the lawdoes not consider them separated from the serviceduring the off-season period. The law simply considersthese seasonal workers on leave until re-employed.

FILIPINAS PRE-FABRICATED BUILDING SYSTEMS(FILSYSTEMS) V. PUENTEMarch 18, 2005, Panganiban"[Respondent] avers that he started working with[Petitioner] Filsystems, Inc., a corporation engaged inconstruction business, on June 12, 1989; that he wasinitially hired by [petitioner] company as an ‘installer’;that he was later promoted to mobile crane operatorand was stationed at the company premises; that his

work was not dependent on the completion ortermination of any project; that since his work was notdependent on any project, his employment with the[petitioner-]company was continuous and withoutinterruption for the past ten (10) years;that on October1, 1999, he was dismissed from his employmentallegedly because he was a project employee. He fileda pro forma complaint for illegal dismissal.

"The [petitioner-]company however claims thatcomplainant was hired as a project employee in thecompany’s various projects; that his employmentcontracts showed that he was a project worker withspecific project assignments; that after completion ofeach project assignment, his employment was likewiseterminated and the same was correspondinglyreported to the DOLE.Labor Arbiter dismissed thecomplaint for lack of merit. The CA concluded thatrespondent was a regular employee of petitioners.

ISSUEWhether Roger Puente is a project employee.

RULINGIn general, the factual findings of the Court of Appealsare binding on the Supreme Court. One exception tothis rule, however, is when the factual findings of theformer are contrary to those of the trial court (or thelower administrative body, as the case may be). Thequestion of whether respondent is a regular or aproject employee is essentially factual in nature;nonetheless, the Court is constrained to resolve it dueto the incongruent findings of the NLRC and theCA.The Labor Code defines regular, project andcasual employees as follows: “ART. 280. Regular andCasual Employment. - The provision of writtenagreement to the contrary notwithstanding andregardless of the oral agreement of the parties, anemployment shall be deemed to be regular where theemployee has been engaged to perform activitieswhich are usually necessary or desirable in the usualbusiness or trade of the employer, except where theemployment has been fixed for a specific project orundertaking the completion or termination of which hasbeen determined at the time of the engagement of theemployee or where the work or services to beperformed is seasonal in nature and the employment isfor the duration of the season.” With particularreference to the construction industry, to whichPetitioner Filsystems belongs, Department (of Laborand Employment) Order No. 19,11 Series of 1993,which make it clear that a project employee is onewhose "employment has been fixed for a specificproject or undertaking the completion or termination ofwhich has been determined at the time of theengagement of the employee or where the work orservices to be performed is seasonal in nature and theemployment is for the duration of the season." In D.M.Consunji, Inc. v. NLRC, this Court has ruled that "thelength of service of a project employee is not thecontrolling test of employment tenure but whether or

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not ‘the employment has been fixed for a specificproject or undertaking the completion or termination ofwhich has been determined at the time of theengagement of the employee.’"

In the present case, the contracts of employment ofPuente attest to the fact that he was hired for specificprojects. His employment was coterminous with thecompletion of the projects for which he had been hired.Those contracts expressly provided that his tenure ofemployment depended on the duration of any phase ofthe project or on the completion of the constructionprojects. Furthermore, petitioners regularly submittedto the labor department reports of the termination ofservices of project workers. Such compliance with thereportorial requirement confirms that respondent was aproject employee.Respondent’s Complaint specifiedthe address of Filsystems, as "69 INDUSTRIA ROAD,B.BAYAN Q.C.," but specified his place of work as"PROJECT TO PROJECT." These statements,coupled with the other pieces of evidence presentedby petitioners, convinces the Court that -- contrary tothe subsequent claims of respondent -- he performedhis work at the project site, not at the company’spremises. Respondent’s employment contract providesas follows: "x xx employment, under this contract isgood only for the duration of the project unlessemployee’s services is terminated due to completion ofthe phase of work/section of the project or piece ofwork to which employee is assigned:

"We agree clearly that employment is on a Project toProject Basis and that upon termination of servicesthere is no separation pay: POSITION : Mobil CraneOperator; PROJECT NAME : World Finance Plaza;LOCATION : Meralco Ave., Ortigas Center, Pasig City;ASSIGNMENT : Lifting & Hauling of Materials

Evidently, although the employment contract did notstate a particular date, it did specify that thetermination of the parties’ employment relationshipwas to be on a "day certain" -- the day when the phaseof work termed "Lifting & Hauling of Materials" for the"World Finance Plaza" project would be completed.Thus, respondent cannot be considered to have beena regular employee. He was a project employee.

That he was employed with Petitioner Filsystems forten years in various projects did not ipso facto makehim a regular employee, considering that the definitionof regular employment in Article 280 of the Labor Codemakes a specific exception with respect to projectemployment. The mere rehiring of respondent on aproject-to-project basis did not confer upon him regularemployment status. "The practice was dictated by thepractical consideration that experienced constructionworkers are more preferred." It did not change hisstatus as a project employee.

SAINT MARY'S UNIVERSITY V. COURT OFAPPEALS

G.R. NO. 157788, March 08, 2005, Quisumbing

Respondent Marcelo Donelo started teaching on acontractual basis at St. Mary's University in 1992. In1995, he was issued an appointment as an AssistantProfessor I. He was promoted to Assistant ProfessorIII. He taught until the first semester of school year1999-2000 when the school discontinued giving himteaching assignments. Respondent filed a complaintfor illegal dismissal against the university. Petitioner St.Mary's University showed that respondent was merelya part-time instructor and, except for three semesters,carried a load of less than eighteen units. Petitionerargued that respondent never attained permanent orregular status for he was not a full-time teacher.Further, petitioner showed that respondent was underinvestigation by the university for giving grades tostudents who did not attend classes. The LaborArbiter ruled that respondent was lawfully dismissedbecause he had not attained permanent or regularstatus pursuant to the Manual of Regulations forPrivate Schools. The Labor Arbiter held that only full-time teachers with regular loads of at least 18 units,who have satisfactorily completed three consecutiveyears of service qualify as permanent or regularemployees.On appeal by respondent, the NationalLabor Relations Commission (NLRC) reversed theDecision of the Labor Arbiter and ordered thereinstatement of respondent without loss of seniorityrights and privileges with full backwages from the timehis salaries were withheld until actual reinstatement.4 Itheld that respondent was a full-time teacher as he didnot appear to have other regular remunerativeemployment and was paid on a regular monthly basisregardless of the number of teaching hours. As a full-time teacher and having taught for more than 3 years,respondent qualified as a permanent or regularemployee of the university. Petitioner sought forreconsideration and pointed out that respondent wasalso working for the Provincial Government of NuevaVizcaya from 1993 to 1996. Nevertheless, the NLRCdenied petitioner's Motion for Reconsideration.Aggrieved, petitioner elevated the matter to the Courtof Appeals, which affirmed the Decision of the NLRC.

ISSUEWhether or not private respondent is a permanentregular employee, full time, and was illegallydismissed.

RULINGNo. Section 93 of the 1992 Manual of Regulations forPrivate Schools, provides that full-time teachers whohave satisfactorily completed their probationary periodshall be considered regular or permanent.6Furthermore, the probationary period shall not be morethan six consecutive regular semesters of satisfactoryservice for those in the tertiary level. Thus, thefollowing requisites must concur before a privateschool teacher acquires permanent status: (1) theteacher is a full-time teacher; (2) the teacher must

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have rendered three consecutive years of service; and(3) such service must have been satisfactory.

Section 45 of the 1992 Manual of Regulations forPrivate Schools provides that full-time academicpersonnel are those meeting all the followingrequirements:a. Who possess at least the minimum academicqualifications prescribed by the Department under thisManual for all academic personnel;b. Who are paid monthly or hourly, based on theregular teaching loads as provided for in the policies,rules and standards of the Department and the school;c. Whose total working day of not more than eighthours a day is devoted to the school;d. Who have no other remunerative occupationelsewhere requiring regular hours of work that willconflict with the working hours in the school;andcralawlibrarye. Who are not teaching full-time in any othereducational institution.

All teaching personnel who do not meet the foregoingqualifications are considered part-time.

With respondent’s teaching load of twelve units or less,he could not claim he worked for the number of hoursdaily as prescribed by Section 45 of the Manual.Furthermore, the records also indubitably show he wasemployed elsewhere from 1993 to 1996. Since there isno showing that respondent worked on a full-timebasis for at least three years, he could not haveacquired a permanent status.11 A part-time employeedoes not attain permanent status no matter how longhe has served the school.12 And as a part-timer, hisservices could be terminated by the school withoutbeing held liable for illegal dismissal.Yet, this is not to say that part-time teachers may nothave security of tenure. The school could not lawfullyterminate a part-timer before the end of the agreedperiod without just cause. But once the period,semester, or term ends, there is no obligation on thepart of the school to renew the contract of employmentfor the next period, semester, or term.

That petitioner did not give any teaching assignment tothe respondent during a given term or semester, evenif factually true, did not amount to an actionableviolation of respondent's rights. It did not amount toillegal dismissal of the part-time teacher.

POSEIDON FISHING/TERRY DE JESUS V. NLRCG.R. No. 168052, February 20. 2006, Chico Nazario

Petitioner Poseidon Fishing is a fishing companyengaged in the deep-sea fishing industry with Terry deJesus as the manager.

Jimmy S. Estoquia was employed as Chief Mate inJanuary 1988 and after five years. The contract withEustoqia per the "Kasunduan", there was a provision

stating that he was being employed only on a ‘’porviaje’’ basis and that his employment would beterminated at the end of the trip for which he was beinghired.

He was promoted to Boat Captain but was laterdemoted to Radio Operator. As a Radio Operator, hemonitored the daily activities in their office andrecorded in the duty logbook the names of the callersand time of their calls.

On 3 July 2000, Estoquia failed to record a 7:25 a.m.call in one of the logbooks. When he reviewed the twologbooks, he noticed that he was not able to record thesaid call in one of the logbooks so he immediatelyrecorded the 7:25 a.m. call after the 7:30 a.m. entry.

In the morning of 4 July 2000, petitioner detected theerror in the entry in the logbook. Estoquia was askedto prepare an incident report to explain the reason forthe said oversight. On the same day, Poseidon’ssecretary summoned Estoquia to get his separationpay.

Estoquia filed a complaint for illegal dismissal with theLabor Arbiter.

Poseidon and Terry de Jesus asserted that Estoquiawas a contractual or a casual employee employed onlyon a"por viaje" or per trip basis and that hisemployment would be terminated at the end of the tripfor which he was being hired.

ISSUEWON Eustoqia was a regular employeeWON deep -sea fishing is a seasonal industryWON Eustoqia was illegally dismissed

RULINGYes, Eustoquia was a regular employee.

Article 280 draws a line between regular and casualemployment. The provision enumerates two (2) kindsof employees, the regular employees and the casualemployees. The regular employees consist of thefollowing:1) those engaged to perform activities which areusually necessary or desirable in the usual business ortrade of the employer; and2) those who have rendered at least one year ofservice whether such service is continuous or broken.

In a span of 12 years, Eustoquia worked for petitionerfirst as a Chief Mate, then Boat Captain, and later asRadio Operator. His job was directly related to thedeep-sea fishing business of petitioner Poseidon. Hiswork was, therefore, necessary and important to thebusiness of his employer. Such being the scenarioinvolved, Eustoquia is considered a regular employee.

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There is nothing in the contract that says complainantis a casual, seasonal or a project worker. The dateJuly 1 to 31, 1998 under the heading "Pagdating" hadbeen placed there merely to indicate the possible dateof arrival of the vessel and is not an indication of thestatus of employment of the crew of the vessel.

The test to determine whether employment is regularor not is the reasonable connection between theparticular activity performed by the employee inrelation to the usual business or trade of the employer.And, if the employee has been performing the job forat least one year, even if the performance is notcontinuous or merely intermittent, the law deems therepeated and continuing need for its performance assufficient evidence of the necessity, if notindispensability of that activity to the business.

In the case at bar, the act of hiring and re-hiring invarious capacities is a mere gambit employed bypetitioner to thwart the tenurial protection of privaterespondent. Such pattern of re-hiring and the recurringneed for his services are testament to the necessityand indispensability of such services to petitioners’business or trade.

No, the activity of catching fish is a continuous processand could hardly be considered as seasonal in nature.

Project employees is defined as those workers hired:(1) for a specific project or undertaking, and(2) the completion or termination of such project hasbeen determined at the time of the engagement of theemployee.

The principal test for determining whether particularemployees are "project employees" as distinguishedfrom "regular employees," is whether or not the"project employees" were assigned to carry out a"specific project or undertaking," the duration andscope of which were specified at the time theemployees were engaged for that project.

In this case, Eustoquia was never informed that he willbe assigned to a "specific project or undertaking” atthe time of their engagement.

Once a project or work pool employee has been: (1)continuously, as opposed to intermittently, re-hired bythe same employer for the same tasks or nature oftasks; and (2) these tasks are vital, necessary andindispensable to the usual business or trade of theemployer, then the employee must be deemed aregular employee.

Eustoquia’s functions were usually necessary ordesirable in the usual business or trade of petitionerfishing company and he was hired continuously for 12years for the same nature of tasks. Hence, he was ofregular employee.

Yes, Eustoqia was illegally dismissed.

There is no sufficient evidence on record to proveEustoqia’s negligence, gross or simple, in theperformance of his duties to warrant a reduction of sixmonths salary and be summarily dismissed. At best,the simple negligence is punishable only withadmonition or suspension for a day or two.

His dismissal was without valid cause and whereillegal dismissal is proven, the worker is entitled toback wages and other similar benefits withoutdeductions or conditions.

PLDT v. ROSALINA ARCEOG.R. No. 149985, May 5, 2006

In May 1990, respondent Rosalina Arceo (Arceo)applied for the position of telephone operator withpetitioner PLDT Tarlac Exchange. She, however, failedthe pre-employment qualifying examination. Havingfailed the test, Arceo requested PLDT to allow her towork at the latters office even without pay. PLDTagreed and assigned her to its commercial sectionwhere she was made to perform various tasks likephotocopying documents, sorting out telephone billsand notices of disconnection, and other minorassignments and activities. After two weeks, PLDTdecided to pay her the minimum wage.

On February 15, 1991, PLDT saw no further needfor Arceos services and decided to fire her but, throughthe intervention of one employee, she wasrecommended for an on-the-job training on minortraffic work. When she failed to assimilate trafficprocedures, the company transferred her to auxiliaryservices, a minor facility. Subsequently, Arceo took thepre-qualifying exams for the position of telephoneoperator two more times but again failed in bothattempts. Finally, on October 13, 1991, PLDTdischarged Arceo from employment. She then filed acase for illegal dismissal before the labor arbiter. Thelatter ruled in her favor. Arceo was reinstated ascasual employee with a minimum wage of P106 perday. On September 3, 1996 or more than three yearsafter her reinstatement, Arceo filed a complaint forunfair labor practice, underpayment of salary,underpayment of overtime pay, holiday pay, rest daypay and other monetary claims. She alleged in hercomplaint that, since her reinstatement, she had yet tobe regularized and had yet to receive the benefits dueto a regular employee. Labor arbiter ruledthat Arceo was already qualified to become a regularemployee. NLRC affirmed. PLDT went to the CA via apetition for certiorari. CA also affirmed and declaredthat,

It is doctrinaire that in determining whatconstitutes regular employment, what isconsidered [as] the reasonable connectionbetween the particular activity performed by

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the employee in relation to the usual businessor trade of the employer, i.e. if the work isusually necessary or desirable in the usualbusiness or trade of the employer. xxxAnd even granting the argument of petitionerthat the nature of Arceos work is casual ortemporary, still she had been converted into aregular employee by virtue of the proviso inthe second paragraph of Article 280 for havingworked with PLDT for more than one (1) year.

PLDT argues that while Article 280 of the Labor Coderegularizes a casual employee who has rendered atleast one year of service (whether continuous orbroken) the proviso is subject to the condition that theemployment subsists or the position still exists. Evenif Arceo had rendered more than one year of serviceas a casual employee, PLDT insisted that this factalone would not automatically make her a regularemployee since her position had long been abolished.PLDT also argues that it would be an even greatererror if Arceo were to be regularized as a telephoneoperator since she repeatedly failed the qualifyingexams for that position.

ISSUEIs Arceo eligible to become a regular employee ofPLDT?

HELDYes. Under Art 280 of the LC, a regular employee is(1) one who is either engaged to perform activities thatare necessary or desirable in the usual trade orbusiness of the employer or (2) a casual employeewho has rendered at least one year of service, whethercontinuous or broken, with respect to the activity inwhich he is employed.

Under the first criterion, respondent is qualified to be aregular employee. Her work, consisting mainly ofphotocopying documents, sorting out telephone billsand disconnection notices, was certainly necessary ordesirable to the business of PLDT. But even if thecontrary were true, the uncontested fact is that sherendered service for more than one year as a casualemployee. Hence, under the second criterion, she isstill eligible to become a regular employee.

Petitioners argument that respondents position hasbeen abolished, if indeed true, does notpreclude Arceos becoming a regular employee. Theorder to reinstate her also included the alternative toreinstate her to a position equivalent thereto. Thus,PLDT can still regularize her in an equivalent position.

Under Article 280, any employee who has rendered atleast one year of service shall be considered a regularemployee with respect to the activity in which he isemployed and his employment shall continue whilesuch activity exists. For PLDTs failure to show that theactivity undertaken by Arceo has been discontinued,

we are constrained to confirm her regularization in thatposition.

FULACHE V. ABS-CBNG.R. No. 183810, January 21, 2010, Brion

Petitioners are employees performing manual worksfor respondent. They were dismissed without justcause; as a consequence thereof, they filed for illegaldismissal and invoked their rights under the CBA. As adefense, respondent contended that petitioners werenot its employees, but “talents.” Thus, they cannot beentitled to the benefits stipulated in the CBA for rankand file employees.

ISSUEWhether or not petitioners are regular employees.

RULINGYes. they are ABS-CBNs regular employees entitled tothe benefits and privileges of regular employees.These benefits and privileges arise from entitlementsunder the law (specifically, the Labor Code and itsrelated laws), and from their employment contract asregular ABS-CBN employees, part of which is the CBAif they fall within the coverage of this agreement.

Petitioners are members of the appropriate bargainingunit because they are regular rank-and-file employeesand do not belong to any of the excluded categories.Specifically, nothing in the records shows that they aresupervisory or confidential employees; neither are theycasual nor probationary employees. Most importantly,the labor arbiters decision of January 17,2002 affirmed all the way up to the CA level ruledagainst ABS-CBNs submission that they areindependent contractors. Thus, as regular rank-and-fileemployees, they fall within CBA coverage under theCBAs express terms and are entitled to its benefits.

LEYTE GEOTHERMAL POWER PROGRESSIVEEMPLOYEES UNION – ALU – TUCP vs. PHILIPPINENATIONAL OIL COMPANY – ENERGYDEVELOPMENT CORPORATIONG.R. No. 170351, March 30, 2011

Respondent is a GOCC while petitioner is a legitimatelabor organization. Among [respondent’s] geothermalprojects is the Leyte Geothermal Power Projectlocated at the Greater Tongonan GeothermalReservation in Leyte. Thus, the [respondent] hired andemployed hundreds of employees on a contractualbasis, whereby, their employment was only good up tothe completion or termination of the project and wouldautomatically expire upon the completion of suchproject. Majority of the employees hired by[respondent] in its Leyte Geothermal Power Projectshad become members of petitioner. In view of thatcircumstance, the petitioner demands from the[respondent] for recognition of it as the collectivebargaining agent of said employees and for a CBA

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negotiation with it. However, the [respondent] did notheed such demands of the petitioner. Sometime in1998 when the project was about to be completed, the[respondent] proceeded to serve Notices ofTermination of Employment upon the employees whoare members of the petitioner.

ISSUEWON they are project employees

HELDYES. By entering into such a contract, an employee isdeemed to understand that his employment iscoterminous with the project. He may not expect to beemployed continuously beyond the completion of theproject. It is of judicial notice that project employeesengaged for manual services or those for special skillslike those of carpenters or masons, are, as a rule,unschooled. However, this fact alone is not a validreason for bestowing special treatment on them or forinvalidating a contract of employment. Projectemployment contracts are not lopsided agreements infavor of only one party thereto. The employer’s interestis equally important as that of the employee[s’] fortheirs is the interest that propels economic activity.While it may be true that it is the employer who draftsproject employment contracts with its business interestas overriding consideration, such contracts do not, ofnecessity, prejudice the employee. Neither is theemployee left helpless by a prejudicial employmentcontract. After all, under the law, the interest of theworker is paramount. Union’s own admission, bothparties had executed the contracts freely andvoluntarily without force, duress or acts tending tovitiate the worker[s’] consent. Thus, we see no reasonnot to honor and give effect to the terms andconditions stipulated therein. The litmus test todetermine whether an individual is a project employeelies in setting a fixed period of employment involving aspecific undertaking which completion or terminationhas been determined at the time of the particularemployee’s engagement.

PASOS V. PNCCG.R. No. 192394, July 3, 2013, Villarama

Petitioner started working for PNCC. Based onPNCC’s "Personnel Action Form Appointment forProject Employment", he was designated as “Clerk IIAccounting”at NAIA II. It also stated “Projectemployment starting on April 26, 1996 to July 25,1996.” Petitioner’s employment, however, did not endon July 25, 1996, but was extended. He was rehiredseveral times. Despite the termination of hisemployment on October 19, 2000, petitioner claimsthat his superior instructed him to report for work thefollowing day, intimating to him that he will again beemployed for the succeeding SM projects. Forpurposes of reemployment, he then underwent amedical examination which allegedly revealed that hehad pneumonitis. He took a 14-day sick leave. Then

he was required to take a 60-day leave of absencebecause of Koch’s disease. He applied for sick leavebut he was told he was not entitled to sick leavebecause he was not a regular employee.

ISSUEIs petitioner a regular employee?

HELDYes.-This Court is convinced however that although hestarted as a project employee, he eventually became aregular employee of PNCC. In the case at bar,petitioner worked continuously for more than two yearsafter the supposed three-month duration of his projectemployment for the NAIA II Project. While hisappointment for said project allowed such extensionsince it specifically provided that in case his “servicesare still needed beyond the validity of [the] contract,the Company shall extend [his] services”.

While for first three months, petitioner can beconsidered a project employee of PNCC, hisemployment thereafter, when his services wereextended without any specification of as to theduration, made him a regular employee of PNCC. Andhis status as a regular employee was not affected bythe fact that he was assigned to several other projectsand there were intervals in between said projects sincehe enjoys security of tenure.

- Failure of an employer to file termination reports afterevery project completion proves that an employee isnot a project employee.

PNCC did not report the termination of petitioner’ssupposed project employment for the NAIA II Projectto the DOLE. Department Order No. 19, or the“Guidelines Governing the Employment of Workers inthe Construction Industry,” requires employers tosubmit a report of an employee’s termination to thenearest public employment office every time anemployee’s employment is terminated due to acompletion of a project.

MACARTHUR MALICDEM AND HERMENIGILDOFLORES v.MARULAS INDUSTRIAL CORPORATIONAND MIKE MANCILLAG.R. No. 204406, February 26, 2014, Mendoza

TOPIC:Effect of continuous re-hiring of a projectemployee for the same tasks that are vital, necessaryand indispensable to the usual trade or business of theemployer

DOCTRINE: Once a project or work pool employeehas been: (1) continuously, as opposed tointermittently, rehired by the same employer for thesame tasks or nature of tasks; and (2) these tasks arevital, necessary and indispensable to the usualbusiness or trade of the employer, then the employee

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must be deemed a regular employee, pursuant toArticle 280 of the Labor Code and jurisprudence. Torule otherwise would allow circumvention of labor lawsin industries not falling within the ambit of PolicyInstruction No. 20/Department Order No. 19, henceallowing the prevention of acquisition of tenurialsecurity by project or work pool employees who havealready gained the status of regular employees by theemployers conduct.

FACTS:Petitioners Malicdem and Flores were hired byrespondent corporation as extruder operators in 2006They were responsible for the bagging of filamentyarn, the quality of pp yarn package and thecleanliness of the work place area. Their employmentcontracts were for a period of one (1) year. Every yearthereafter, they would sign a Resignation/Quitclaim infavor of Marulas a day after their contracts ended, andthen sign another contract for one (1) year until suchtime that they were told not to report to work anymore.They were asked to sign a paper acknowledging thecompletion of their contractual status. Claiming thatthey were illegally dismissed, the corporationcountered that their contracts showed that they werefixed term employees for a specific undertaking whichwas to work on a particular order of a customer for aspecific period. Their severance from employment thenwas due to the expiration of their contracts.

ISSUEWhether or not petitioners were illegally dismissed

HELDYes.

The test to determine whether employment is regularor not is the reasonable connection between theparticular activity performed by the employee inrelation to the usual business or trade of the employer.If the employee has been performing the job for atleast one year, even if the performance is notcontinuous or merely intermittent, the law deems therepeated and continuing need for its performance assufficient evidence of the necessity, if notindispensability of that activity to the business.

It is clear then that there was deliberate intent on thepart of the employer to prevent the regularization ofpetitioners. To begin with, there is no actual project.The only stipulations in the contracts were the dates oftheir effectivity, the duties and responsibilities of thepetitioners as extruder operators, the rights andobligations of the parties, and the petitionerscompensation and allowances. As there was nospecific project or undertaking to speak of, therespondents cannot invoke the exception in Article 280of the Labor Code. This is a clear attempt to frustratethe regularization of the petitioners and to circumventthe law.

Even granting that petitioners were project employees,they can still be considered as regular as they werecontinuously hired by the same employer for the sameposition as extruder operators. Being responsible forthe operation of machines that produced sacks, theirwork was vital and indispensable the business of theemployer.

The respondents cannot use the alleged expiration ofthe employment contracts of the petitioners as a shieldof their illegal acts. The project employment contractsthat the petitioners were made to sign every year sincethe start of their employment were only a stratagem toviolate their security of tenure in the company.

The respondents invocation of William Uy ConstructionCorp. v. Trinidad is misplaced because it is applicableonly in cases involving the tenure of project employeesin the construction industry. It is widely known that inthe construction industry, a project employees workdepends on the availability of projects, necessarily theduration of his employment. It is not permanent butcoterminous with the work to which he is assigned. Itwould be extremely burdensome for the employer, whodepends on the availability of projects, to carry him asa permanent employee and pay him wages even ifthere are no projects for him to work on.The rationalebehind this is that once the project is completed itwould be unjust to require the employer to maintainthese employees in their payroll.

EXODUS INTERNATIONAL CONSTRUCTIONCORPORATION and ANTONIO P. JAVALERA v.GUILLERMO BISCOCHO, FERNANDO PEREDA,FERDINAND MARIANO, GREGORIO BELLITA andMIGUEL BOBILLOG.R. No. 166109, February 23, 2011, Del Castillo

Petitioner Exodus International ConstructionCorporation (Exodus) is a duly licensed laborcontractor for the painting of residential houses,condominium units and commercial buildings.Petitioner Antonio P. Javalera is the President andGeneral Manager of Exodus.

On February 1, 1999, Exodus obtained from DutchBoy Philippines, Inc. (Dutch Boy) a contractfor thepainting of the Imperial Sky Garden located at OngpinStreet, Binondo, Manila. On July 28, 1999, Dutch Boyawarded another contractto Exodus for the painting ofPacific Plaza Towers in Fort Bonifacio, Taguig City. Inthe furtherance of its business, Exodus hiredrespondents as painters on different dates with thecorresponding wages.

Guillermo Biscocho (Guillermo) was assigned at theImperial Sky Garden from February 8, 1999 toFebruary 8, 2000. Fernando Pereda (Fernando)worked in the same project from February 8, 1999 toJune 17, 2000. Likewise, Ferdinand Mariano(Ferdinand) worked there from April 12, 1999 to

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February 17, 2000. All of them were then transferred toPacific Plaza Towers. Gregorio S. Bellita (Gregorio)was assigned to work at the house of Mr. Teofilo Yapin Ayala Alabang, Muntinlupa City from May 20, 1999to December 4, 1999. Afterwards he was transferred toPacific Plaza Towers. Miguel B. Bobillo (Miguel) washired and assigned at Pacific Plaza Towers on March10, 2000.

On November 27, 2000, Guillermo, Fernando,Ferdinand, and Miguel filed a complaintfor illegaldismissal and non-payment of holiday pay, serviceincentive leave pay, 13th month pay and night-shiftdifferential pay. On December 1, 2000, Gregorio alsofiled a complaint stating that he was dismissed fromthe service on September 12, 2000 while Guillermo,Fernando, Ferdinand, and Miguel were orally notifiedof their dismissal from the service on November 25,2000.

Petitioners denied respondents’ allegations. Asregards Gregorio, petitioners averred that onSeptember 15, 2000, he absented himself from workand applied as a painter with SAEI-EEI which is thegeneral building contractor of Pacific Plaza Towers.Since then, he never reported back to work.

Guillermo absented himself from work without leave onNovember 27, 2000. When he reported for work thefollowing day, he was reprimanded for being AbsentWithout Official Leave (AWOL). Because of thereprimand, he worked only half-day and thereafter wasunheard of until the filing of the instant complaint.Fernando, Ferdinand, and Miguel were caught eatingduring working hours on November 25, 2000 for whichthey were reprimanded by their foreman. Since thenthey no longer reported for work.

On March 21, 2002, the Labor Arbiter rendered aDecisionexonerating petitioners from the charge ofillegal dismissal as respondents chose not to report forwork. The Labor Arbiter ruled that respondents shouldbe reinstated but without any backwages. However,she allowed the claims for holiday pay, serviceincentive leave pay and 13th month pay.

Petitioners sought recourse to the NLRC limiting theirappeal to the award of service incentive leave pay,13th month pay, holiday pay and 10% attorney’s feesin the sum of P70,183.23. On January 17, 2003, theNLRC dismissed the appeal. Aggrieved, petitionersfiled with the CA a petition for certiorari. On August 10,2004, the CA dismissed the petition and affirmed thefindings of the Labor Arbiter and the NLRC. However,in addition to the reliefs awarded to respondents in theMarch 21, 2002 Decision of the Labor Arbiter whichwas affirmed by the NLRC in a Resolution datedJanuary 17, 2003, the petitioners were directed by theCA to solidarily pay full backwages, inclusive of allbenefits the respondents should have received hadthey not been dismissed.

ISSUEWON respondents were illegally dismissed.

RULINGThere was no dismissal in this case, hence, there is noquestion that can be entertained regarding its legalityor illegality. As found by the Labor Arbiter, there wasno evidence that respondents were dismissed norwere they prevented from returning to their work. Itwas only respondents’ unsubstantiated conclusion thatthey were dismissed. As a matter of fact, respondentscould not name the particular person who effectedtheir dismissal and under what particularcircumstances.

The Labor Arbiter is also correct in ruling that therewas no abandonment on the part of respondents thatwould justify their dismissal from their employment.

It is a settled rule that "[m]ere absence or failure toreport for work x xx is not enough to amount toabandonment of work." "Abandonment is thedeliberate and unjustified refusal of an employee toresume his employment."

Respondents must be reinstated and paid their holidaypay, service incentive leave pay, and 13th month pay.

Clearly therefore, there was no dismissal, much lessillegal, and there was also no abandonment of job tospeak of. The Labor Arbiter is therefore correct inordering that respondents be reinstated but withoutany backwages. However, petitioners are of theposition that the reinstatement of respondents to theirformer positions, which were no longer existing, isimpossible, highly unfair and unjust. The project wasalready completed by petitioners on September 28,2001. Thus the completion of the project left them withno more work to do. Having completed their tasks,their positions automatically ceased to exist.Consequently, there were no more positions wherethey can be reinstated as painters.

Petitioners are misguided. They forgot that there aretwo types of employees in the construction industry.The first is referred to as project employees or thoseemployed in connection with a particular constructionproject or phase thereof and such employment iscoterminous with each project or phase of the projectto which they are assigned. The second is known asnon-project employees or those employed withoutreference to any particular construction project orphase of a project.

The second category is where respondents areclassified. As such they are regular employees ofpetitioners. It is clear from the records of the case thatwhen one project is completed, respondents wereautomatically transferred to the next project awardedto petitioners. There was no employment agreement

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given to respondents which clearly spelled out theduration of their employment, the specific work to beperformed and that such is made clear to them at thetime of hiring. It is now too late for petitioners to claimthat respondents are project employees whoseemployment is coterminous with each project or phaseof the project to which they are assigned.

Nonetheless, assuming that respondents were initiallyhired as project employees, petitioners must bereminded of our ruling in Maraguinot, Jr. v. NationalLabor Relations Commission that "[a] projectemployee xxx may acquire the status of a regularemployee when the following [factors] concur:

1. There is a continuous rehiring of projectemployees even after cessation of a project;and2. The tasks performed by the alleged "projectemployee" are vital, necessary andindespensable to the usual business or tradeof the employer."

In this case, the evidence on record shows thatrespondents were employed and assignedcontinuously to the various projects of petitioners. Aspainters, they performed activities which werenecessary and desirable in the usual business ofpetitioners, who are engaged in subcontracting jobs forpainting of residential units, condominium andcommercial buildings. As regular employees,respondents are entitled to be reinstated without lossof seniority rights.

Respondents are also entitled to their money claimssuch as the payment of holiday pay, service incentiveleave pay, and 13th month pay. Petitioners as theemployer of respondents and having complete controlover the records of the company could have easilyrebutted the monetary claims against it. All that theyhad to do was to present the vouchers or payrollsshowing payment of the same. However, they decidednot to provide the said documentary evidence. Ourconclusion therefore is that they never paid saidbenefits and therefore they must be ordered to settletheir obligation with the respondents.

The CA erred when it ordered reinstatement ofrespondents with payment of full backwages. In caseswhere there is no evidence of dismissal, the remedy isreinstatement but without backwages. In this case,both the Labor Arbiter and the NLRC made a findingthat there was no dismissal much less an illegal one.

D.M. CONSUNJI, INC. V. ANTONIO GOBRESG.R. No. 169170, August 8, 2010

Doctrine: If the termination of project employees isbrought about by the completion of the contract orphase thereof, no prior notice is required. An employerneed not comply with the twin-notice rule unlesstermination is due to a Just or Legal Cause under the

Labor Code. The only notice required is for theemployer to notify the DOLE of the employee’stermination from the employment for each project.

FACTS:Respondents Antonio Gobres, Magellan Dalisay,GodofredoParagsa, Emilio Aleta and GenerosoMeloworked as carpenters in the construction projects ofpetitioner D.M. Consunji, Inc., a construction company,on several occasions and/or at various times. Theirtermination from employment for each project wasreported to the Department of Labor and Employment(DOLE), in accordance with Policy Instruction No. 20,which was later superseded by Department Order No.19, series of 1993.

Respondents’ last assignment was at Quad 4-Projectin Glorietta, Ayala, Makati, where they started workingon September 1, 1998. On October 14, 1998,respondents saw their names included in the Notice ofTermination posted on the bulletin board at the projectpremises. Respondents filed a Complaint with theArbitration Branch of the National Labor RelationsCommission (NLRC) against petitioner D.M. Consunji,Inc. and David M. Consunji for illegal dismissal, andnon-payment of 13th month pay, five (5) days serviceincentive leave pay, damages and attorney’s fees.

The Labor Arbiter, the NLRC and the Court of Appealsall found that respondents, as project employees, werevalidly terminated due to the completion of the phasesof work for which their services were engaged.

However, the Court of Appeals held that respondentswere entitled to nominal damages, because petitionerfailed to give them advance notice of their termination.The appellate court cited the case of Agabon v. NLRCas basis for the award of nominal damages.

ISSUEIs prior notice of termination required to be sent to theemployee before an employer could terminate himbased on completion of the project for which he washired? -NO

RULINGUnlike in Agabon, respondents, in this case, were notterminated for just cause under Article 282 of theLabor Code. Dismissal based on just causescontemplate acts or omissions attributable to theemployee. Instead, respondents were terminated dueto the completion of the phases of work for which theirservices were engaged.

As project employees, respondents’ termination isgoverned by Section 1 (c) and Section 2 (III), RuleXXIII (Termination of Employment), Book V of theOmnibus Rules Implementing the Labor Code.In thiscase, the Labor Arbiter, the NLRC and the Court ofAppeals all found that respondents were validlyterminated due to the completion of the phases of work

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for which respondents’ services were engaged. Theabove rule clearly states, “If the termination is broughtabout by the completion of the contract or phasethereof, no prior notice is required.”

Cioco, Jr. v. C.E. Construction Corporation explainedthat this is because completion of the work or projectautomatically terminates the employment, in whichcase, the employer is, under the law, only obliged torender a report to the DOLE on the termination of theemployment.

YOLANDA M. MERCADO v. AMA COMPUTERCOLLEGE-PARAAQUE CITY, INC.G.R. No. 183572, April 13, 2010, Brion

The petitioners were faculty members who startedteaching at AMACC. AMACC implemented new facultyscreening guidelines, set forth in its Guidelines on theImplementation of AMACC Faculty Plantilla. Pursuantto said guidelines, entitlement to salary increase wasdetermined. The petitioners failed to obtain a passingrating based on the performance standard, and hence,were not entitled to said increase. This prompted themto file with the NLRC complaint for underpayment ofwages, inter alia.AMACC countered that Petitioners were under acontracted term and under a non-tenured appointmentand were still within the three-year probationary periodfor teachers. Their contracts were not renewed for thefollowing term because they failed to pass thePerformance Appraisal System for Teachers (PAST)while others failed to comply with the otherrequirements for regularization, promotion, or increasein salary.

ISSUEShould the teachers’ probationary status bedisregarded simply because the contracts were fixed-term?

HELDNO. “To be sure, nothing is illegitimate in defining theschool-teacher relationship in this manner. The school,however, cannot forget that its system of fixed-termcontract is a system that operates during theprobationary period and for this reason is subject tothe terms of Article 281 of the Labor Code. Unless thisreconciliation is made, the requirements of this Articleon probationary status would be fully negated as theschool may freely choose not to renew contractssimply because their terms have expired.Theinevitable effect of course is to wreck the scheme thatthe Constitution and the Labor Code established tobalance relationships between labor andmanagement.”

“Given the clear constitutional and statutory intents, wecannot but conclude that in a situation where theprobationary status overlaps with a fixed-termcontract not specifically used for the fixed term it

offers, Article 281 should assume primacy and thefixed-period character of the contract must give way.This conclusion is immeasurably strengthened by thepetitioners and the AMACCs hardly concealedexpectation that the employment on probation couldlead to permanent status, and that the contracts arerenewable unless the petitioners fail to pass theschools standards.”

“If the school were to apply the probationary standards(as in fact it says it did in the present case), thesestandards must not only be reasonable but must havealso been communicated to the teachers at the start ofthe probationary period, or at the very least, at the startof the period when they were to be applied. Theseterms, in addition to those expressly provided by theLabor Code, would serve as the just cause for thetermination of the probationary contract. As explainedabove, the details of this finding of just cause must becommunicated to the affected teachers as a matter ofdue process.”

“While we can grant that the standards were dulycommunicated to the petitioners and could be appliedbeginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the schoolsevidence still exist. The exact terms of the standardswere never introduced as evidence; neither does theevidence show how these standards were applied tothe petitioners.[48] Without these pieces of evidence(effectively, the finding of just cause for the non-renewal of the petitioners contracts), we have nothingto consider and pass upon as valid or invalid for eachof the petitioners. Inevitably, the non-renewal (oreffectively, the termination of employment ofemployees on probationary status) lacks thesupporting finding of just cause that the law requiresand, hence, is illegal.”

COLEGIO DEL SANTISIMO ROSARIO AND SR.ZENAIDA S. MOFADA, OP v. EMMANUEL ROJOGR. No. 170388, September 04, 2013, Del Castillo

Colegio del Santisimo Rosario (CSR) hired respondentas a high school teacher on probationary basis for theschool years 1992-1993, 1993-19947 and 1994-1995.On April 5, 1995, CSR, through Mofada, decided not torenew respondent’s services.

Thus, on July 13, 1995, respondent filed a Complaintfor illegal dismissal. He alleged that since he hadserved three consecutive school years which is themaximum number of terms allowed for probationaryemployment, he should be extended permanentemployment. Citing paragraph 75 of the 1970 Manualof Regulations for Private Schools (1970 Manual),respondent asserted that “full- time teachers who haverendered three (3) consecutive years of satisfactoryservices shall be considered permanent.”

On the other hand, petitioners argued that respondent

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knew that his Teacher’s Contract for school year 1994-1995 with CSR would expire on March 31,1995. Accordingly, respondent was not dismissed buthis probationary contract merely expired and was notrenewed. Petitioners also claimed that the “threeyears” mentioned in paragraph 75 of the 1970 Manualrefer to “36 months,” not three school years. And sincerespondent served for only three school years of 10months each or 30 months, then he had not yet servedthe “three years” or 36 months mentioned in paragraph75 of the 1970 Manual.

ISSUEWhether or not Rojo has acquired permanent status

HELDYes. The common practice is for the employer and theteacher to enter into a contract, effective for oneschool year. At the end of the school year, theemployer has the option not to renew the contract,particularly considering the teacher’s performance.

If the contract is not renewed, the employmentrelationship terminates. If the contract is renewed,usually for another school year, the probationaryemployment continues. Again, at the end of thatperiod, the parties may opt to renew or not to renewthe contract. If renewed, this second renewal of thecontract for another school year would then be the lastyear – since it would be the third school year – ofprobationary employment.

At the end of this third year, the employer may nowdecide whether to extend a permanent appointment tothe employee, primarily on the basis of the employeehaving met the reasonable standards of competenceand efficiency set by the employer. For the entireduration of this three-year period, the teacher remainsunder probation.

Upon the expiration of his contract of employment,being simply on probation, he cannot automaticallyclaim security of tenure and compel the employer torenew his employment contract. It is when the yearlycontract is renewed for the third time that Section 93 ofthe manual becomes operative, and the teacher thenis entitled to regular or permanent employment status.

UNIVERSITY OF THE EAST V. PEPANIOG.R. No. 193897, January 23, 2013

DECS required college faculty members to have amaster's degree as a minimum educationalqualification for acquiring regular status. In 1994, UEand its union executed a CBA with effect up to 1999which provided that UE shall extend only semester-to-semester appointments to college faculty staffs whodid not possess the minimum qualifications. UE hiredthe two respondents on a semester-to-semester basisto teach in its college. They could not qualify forprobationary or regular status because they lacked

postgraduate degrees. The two enrolled in graduatestudies but failed to finish it. UE extended probationaryappointments to Bueno and Pepanio. The Dean of theUE College of Arts and Sciences, sent notices toprobationary faculty members, reminding them of theexpiration of the probationary status of those lacking inpostgraduate qualification. Pepanio replied that shewas enrolled at the PUP while Bueno later wrote UE,demanding that it consider her a regular employeebased on her six-and-a-half-year service. Pepaniocited her 3.5 years service. Respondents filed cases ofillegal dismissal against the school before the LA.

ISSUEWhether or not UE illegally dismissed Bueno andPepanio.

HELDNo. The policy requiring postgraduate degrees ofcollege teachers was provided in the Manual ofRegulations as early as 1992. The requirement of amasteral degree for tertiary education teachers is notunreasonable. The operation of educational institutionsinvolves public interest. The government has a right toensure that only qualified persons, in possession ofsufficient academic knowledge and teaching skills, areallowed to teach in such institutions. Governmentregulation in this field of human activity is desirable forprotecting, not only the students, but the public as wellfrom ill-prepared teachers, who are lacking in therequired scientific or technical knowledge. They maybe required to take an examination or to possesspostgraduate degrees as prerequisite to employment.Respondents were each given only semester-to-semester appointments from the beginning of theiremployment with UE precisely because they lackedthe required master's degree. It was only when UE andthe faculty union signed their 2001 CBA that the schoolextended petitioners a conditional probationary statussubject to their obtaining a master's degree within theirprobationary period. It is clear, therefore, that theparties intended to subject respondents' permanentstatus appointments to the standards set by the lawand the university.

HERRERA-MANAOIS V. ST. SCHOLASTICA’SCOLLEGEG.R. No. 188914, December 11, 2013, Sereno

SSC, situated in the City of Manila, is a privateeducational institution offering elementary, secondary,and tertiary education. Manaoisapplied for a positionas full–time instructor for school year 2000–2001. Shementioned in her application letter that she had beentaking the course Master of Arts in English Studies,Major in Creative Writing, at the University of thePhilippines, Diliman (UP); that she was completing hermaster’s thesis; and that her oral defense wasscheduled for June 2000.Her application wasapproved and herprobationary employment continuedfor a total of three consecutive years.Upon completion

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of her third year of probationary employment, shereceived a letter from the Dean of College andChairperson of the Promotions and Permanency Boardofficially informing her of the board’s decision not torenew her contract because of her failure to finish hermaster’s degree.

ISSUEWhether the completion of a master’s degree isrequired in order for a tertiary level educator to earnthe status of permanency in a private educationalinstitution?

HELDYes.Art. 281.of the Labor Code provides, “Probationaryemployment shall not exceed six (6) months from thedate the employee started working, unless it is coveredby an apprenticeship agreement stipulating a longerperiod. The services of an employee who has beenengaged on a probationary basis may be terminatedfor a just cause or when he fails to qualify as a regularemployee in accordance with reasonable standardsmade known by the employer to the employee at thetime of his engagement. An employee who is allowedto work after a probationary period shall be considereda regular employee.”

At this juncture, we reiterate the rule that merecompletion of the three–year probation, even with anabove–average performance, does not guarantee thatthe employee will automatically acquire a permanentemployment status. It is settled jurisprudence that theprobationer can only qualify upon fulfillment of thereasonable standards set for permanent employmentas a member of the teaching personnel. In line withacademic freedom and constitutional autonomy, aninstitution of higher learning has the discretion andprerogative to impose standards on its teachers anddetermine whether these have been met. Uponconclusion of the probation period, the college oruniversity, being the employer, has the soleprerogative to make a decision on whether or not tore–hire the probationer. The probationer cannotautomatically assert the acquisition of security oftenure and force the employer to renew theemployment contract. In the case at bar, Manaoisfailed to comply with the stated academic qualifications(Holder of a master’s degree, to teach largely in hismajor field) required for the position of a permanentfull–time faculty member.

SECURITY OF TENURESALAS V. ABOITIZ ONEG.R. No. 178236, June 27, 2008, Nachura

Salas was hired as an assistant utility man by Aboitizwho eventually became material controller after a fewyears. He was tasked with monitoring and maintainingthe availability and supply of Quickbox needed byAboitiz in its day-to-day operations. Some time in

2003, Salas ran out of Quickboxes – he failed topromptly inform his immediate supervisor of the non-delivery of the requisitioned items thus hampering theoperations of Aboitiz. After due notices and anadministrative hearing conducted, he was dismissedfor neglect of duty and wilful breach of trust. Salas fileda complaint for illegal dismissal.

ISSUEDoes the single act (omission) of an employeeconstitute gross neglect so as to warrant the penalty ofdismissal?

RULINGNo. Gross negligence connotes want or absence of orfailure to exercise slight care or diligence, or the entireabsence of care. It evinces a thoughtless disregard ofconsequences without exerting any effort to avoidthem. To warrant removal from service, the negligenceshould not merely be gross, but also habitual.Undoubtedly, it was Salas duty, as material controller,to monitor and maintain the availability and supply ofQuickbox needed by Aboitiz in its day-to-dayoperations, and on June 4, 2003, Aboitiz had run out ofLarge Quickbox. However, records show that Salasmade a requisition for Quickbox as early as May 21,2003; that he made several follow-ups with EricSaclamitao regarding the request; and that he eventalked to the supplier to facilitate the immediatedelivery of the Quickbox. It cannot be gainsaid thatSalas exerted efforts to avoid a stock out of Quickbox.Accordingly, he cannot be held liable for grossnegligence.

His failure to notify his supervisor did not amount togross neglect of duty or to willful breach of trust, whichwould justify his dismissal from service. Salas, asmaterial controller was tasked with monitoring andmaintaining the availability and supply of Quickbox.There appears nothing to suggest that Salas positionwas a highly or even primarily confidential position, sothat he can be removed for loss of trust andconfidence by the employer. No just cause exists towarrant Salas dismissal. Consequently, he is entitledto reinstatement to his former position without loss ofseniority rights, and to payment of backwages.

RB MICHAEL PRESS V. GALITG.R. No. 153510, February 13, 2008, Velasco

Respondent was employed by petitioner R.B. MichaelPress as an offset machine operator. During hisemployment, Galit was tardy for a total of 190 timesand was absent without leave for a total of nine and ahalf days. He was ordered to render overtime servicein order to comply with a job order deadline, but herefused to do so. The following day respondentreported for work but petitioner Escobia told him not towork, and to return later in the afternoon for a hearing.When he returned, a copy of an Office Memorandumwas served on him. Petitioners aver that Galit was

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dismissed due to the following offenses: (1) tardinessconstituting neglect of duty; (2) serious misconduct;and (3) insubordination or willful disobedience.Respondent subsequently filed a complaint for illegaldismissal and money claims before the National LaborRelations Commission (NLRC). The CA found that itwas not the tardiness and absences committed byrespondent, but his refusalto render overtime workwhich caused the termination of his employment.Itfurther ruled that the basis for computing hisbackwages should be his daily salary at the time of hisdismissal which was PhP 230, and that his backwagesshould be computed from the time of his dismissal upto the finality of the CA’s decision

ISSUESWhether there was just cause to terminate theemployment of respondentRULINGRespondent did not adduce any evidence to showwaiver or condonation on the part of petitioners. Thusthe finding of the CA that petitioners cannot use theprevious absences and tardiness because respondentwas not subjected to any penalty is bereft of legalbasis. The petitioners did not impose any punishmentfor the numerous absences and tardiness ofrespondent. Thus, said infractions can be usedcollectively by petitioners as a ground for dismissal.

SAN MIGUEL CORPORATION V. NLRCG.R. Nos. 146121-22, April 16, 2008, Tinga

It appears that per company records, respondent(Ernesto M. Ibias) was AWOP( Absent withoutpermission) on the following dates in 1997: 2, 4 and 11January; 26, 28 and 29 April; and 5, 7, 8, 13, 21, 22,28 and 29 May. For his absences on 2, 4 and 11January and 28 and 29 April, he was given a writtenwarning[7] dated 9 May 1997 that he had alreadyincurred five (5) AWOPs and that further absenceswould be subject to disciplinary action. For hisabsences on 28 and 29 April and 7 and 8 May,respondent was alleged to have falsified his medicalconsultation card by stating therein that he wasgranted sick leave by the plant clinic on said dateswhen in truth he was not. After the completion of theinvestigation, SMC concluded that respondentcommitted the offenses of excessive AWOPs andfalsification of company records or documents, andaccordingly dismissed him. The dismissal wasrendered without having the respondent previouslysuspended for prior violations

ISSUEWhether or not the dismissal was correct

HELDYES, Respondents dismissal was well within thepurview of SMCs management prerogative.

What the lower tribunals perceived as laxity, weconsider as leniency. SMCs tendency to excusejustified absences actually redounded to the benefit ofrespondent since the imposition of the correspondingpenalty would have been deleterious to him. In a worldwhere no work-no pay is the rule of thumb, severaldays of suspension would be difficult for an ordinaryworking man like respondent. He should be thankfulthat SMC did not exact from him almost 70 dayssuspension before he was finally dismissed from work.

In any case, when SMC imposed the penalty ofdismissal for the 12th and 13th AWOPs, it was actingwell within its rights as an employer. An employer hasthe prerogative to prescribe reasonable rules andregulations necessary for the proper conduct of itsbusiness, to provide certain disciplinary measures inorder to implement said rules and to assure that thesame would be complied with. An employer enjoys awide latitude of discretion in the promulgation ofpolicies, rules and regulations on work-relatedactivities of the employees.

It is axiomatic that appropriate disciplinary sanction iswithin the purview of management imposition. Thus, inthe implementation of its rules and policies, theemployer has the choice to do so strictly or not, sincethis is inherent in its right to control and manage itsbusiness effectively. Consequently, management hasthe prerogative to impose sanctions lighter than thosespecifically prescribed by its rules, or to condonecompletely the violations of its erring employees. Ofcourse, this prerogative must be exercised free ofgrave abuse of discretion, bearing in mind therequirements of justice and fair play. Indeed, we havepreviously stated:

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

All told, we find that SMC acted well within its rightswhen it dismissed respondent for his numerousabsences. Respondent was afforded due process andwas validly dismissed for cause.

LBC EXPRESS v. MATEOG.R. No. 168215, June 9, 2009, Corona

Doctrine: To justify a dismissal, there must be grossand habitual negiligence. However, the habituality maybe dispensed with if the negligence is so gross thatthere was substiantial loss in the company. Anemployer cannot legally be compelled to continue with

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the employment of a person admittedly guilty of grossnegligence in the performance of his duties.

James Mateo, designated as a customer associate,was a regular employee of LBC Express (LBC). His jobwas to deliver and pick-up packages to and from LBCand its customers. One day, Mateo arrived at LBC’sEscolta office, to drop off packages coming fromvarious LBC airposts. He parked his motorcycledirectly in front of the LBC office, switched off theengine and took the key with him. He returnedpromptly within three to five minutes but themotorcycle was gone. After investigation, he receiveda notice of termination from LBC. He was barred fromreporting for work.

ISSUEWhether Mateo was grossly negligent in theperformance of his duties

RULINGYES. Mateo was undisputedly negligent when he leftthe motorcycle alongEscolta, Manila without locking it despite clear, specificinstructions to do so. It proved that he did not exerciseeven the slightest degree of care during that very shorttime. Mateo deliberately did not heed the employer’svery important precautionary measure to ensure thesafety of company property. Although Mateo’sinfraction was not habitual, we must take into accountthe substantial amount lost. In this case, LBC lost amotorcycle with a book value of P46,000 which by anymeans could not be considered a trivial amount.

MARILOU S. GENUINO v. NLRCG.R. Nos. 142732-33, December 4, 2007, Velasco

Genuino was employed by Citibank as Treasury SalesDivision Head with the rank of Assistant Vice-President. Citibank sent Genuino a letter charging herwith "knowledge and/or involvement" in transactions"which were irregular or even fraudulent” and wasinformed she was under preventive suspension. Later,after investigation and administrative hearing,Genuino's employment was terminated by Citibank ongrounds of (1) serious misconduct, (2) willful breach ofthe trust reposed upon her by the bank, and (3)commission of a crime against the bank. She filedbefore the Labor Arbiter a Complaint for illegalsuspension and illegal dismissal with damages andprayer for temporary restraining order and/or writ ofpreliminary injunction. The LA found there was illegaldismissal and ordered for Genuino’s reinstatement.The NLRC reversed the Labor Arbiter's decision withthe following modification: (1) DECLARING thedismissal of the complainant valid but (2) ORDERINGthe respondent bank to pay the salaries due to thecomplainant from the date it reinstated complainant inthe payroll as found by the Labor Arbiter up to and untilthe date of its (NLRC) decision. CA affirmed NLRC.

ISSUEWhether or not Genuino is entitled to payment of suchsalaries.

HELDNo, since the dismissal was valid. Citibank had validgrounds to dismiss Genuino on ground of loss ofconfidence. The NLRC's order for payrollreinstatement is set aside. The employee shall eitherbe admitted back to work under the same terms andconditions prevailing prior to his dismissal orseparation or, at the option of the employer, merelyreinstated in the payroll. The posting of a bond by theemployer shall not stay the execution for reinstatementprovided herein. If the decision of the labor arbiter islater reversed on appeal upon the finding that theground for dismissal is valid, then the employer hasthe right to require the dismissed employee on payrollreinstatement to refund the salaries s/he receivedwhile the case was pending appeal, or it can bededucted from the accrued benefits that the dismissedemployee was entitled to receive from his/heremployer under existing laws, collective bargainingagreement provisions, and company practices.However, if the employee was reinstated to workduring the pendency of the appeal, then the employeeis entitled to the compensation received for actualservices rendered without need of refund. Consideringthat Genuino was not reinstated to work or placed onpayroll reinstatement, and her dismissal is based on ajust cause, then she is not entitled to be paid thesalaries.

EDUARDO BUGHAW, JR. v. TREASURE ISLANDINDUSTRIAL CORPORATIONG.R. No. 173151, March 28, 2008, Chico Nazario

Petitioner was employed as production worker byrespondent. Respondent was receiving informationthat many of its employees were using prohibiteddrugs during working hours and within the companypremises. Petitioner was impleaded by one Loberanesin the crime by claiming that part of the money used forbuying illegal drugs was given by him. A notice wasgiven by respondent company to petitioner to explainwhy no disciplinary action be taken against him.Notwithstanding such petitioner failed to appear beforethe respondent’s legal counsel on the scheduledhearing date and to explain his side on the matter.Petitioner was then terminated without notice. Hencehe filed an illegal dismissal against his employer.

ISSUEWhether petitioner was illegally dismissed

HELDYES. Under the Labor Code, the requirements for thelawful dismissal of an employee are two-fold, thesubstantive and the procedural aspects. Not only mustthe dismissal be for a just or authorized cause, therudimentary requirements of due process - notice and

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hearing must, likewise, be observed before anemployee may be dismissed. Without the concurrenceof the two, the termination would, in the eyes of thelaw, be illegal, for employment is a property right ofwhich one cannot be deprived of without due process.While there is no dispute that respondent fullycomplied with the first-notice requirement apprisingpetitioner of the cause of his impending terminationand giving him the opportunity to explain his side, wefind that it failed to satisfy the need for a second noticeinforming petitioner that he was being dismissed fromemployment.

Further, the Agabon doctrine enunciates the rule that ifthe dismissal was for just cause but procedural dueprocess was not observed, the dismissal should beupheld. Where the dismissal is for just cause, as in theinstant case, the lack of statutory due process shouldnot nullify the dismissal or render it illegal orineffectual. However, the employer should indemnifythe employee for the violation of his right to proceduraldue process.

MORENO v. SAN SEBASTIANG.R. No. 175283, March 28, 2008, March 28, 2008

Jackqui R. Moren is an employee, a teaching fellow inSan Sebastian College (SSC-R). Moreno was firstappointed as a full-time college faculty member. Then,Moreno became a member of the permanent collegefaculty. The SSC-R HR conducted a formalinvestigation regarding Moreno’s unauthorized externalteaching engagements and HR found out that Morenoindeed had unauthorized teaching assignments at theCentro Escolar University and at the College of theHoly Spirit, Manila. Moreno received a MEMO from theDean of her college, requiring her to explain thereports regarding her unauthorized teachingengagements. The said activities allegedly violatedSection 2.2 of Article II of SSC-R’s Faculty Manual.Moreno admitted her failure to secure any writtenpermission before she taught in other schools. Morenofurther stated that it was never her intention tojeopardize her work in SSC-R and that she merelywanted to improve her family’s poor financialconditions. A Special Grievance Committee was thenformed in order to investigate and makerecommendations regarding Moreno’s case. Morenoadmitted she did not formally disclose her teachingloads at the College of the Holy Spirit and at theCentro Escolar University; that the Dean of her collegewas aware of her external teaching loads; that shewent beyond the maximum limit for an outside load;that she did not deny teaching part-time in theaforementioned schools; and that she did not wish toresign because she felt she deserved a secondchance. The grievance committee issued its resolutionwhich unanimously found that she violated theprohibition against a full-time faculty having anunauthorized external teaching load. The majority ofthe grievance committee members recommended

Moreno’s dismissal from employment in accordancewith the school manual, but Dean Espejo dissentedand called only for a suspension for one semester.Moreno was terminated in her work. Moreno institutedwith the NLRC a complaint for illegal terminationagainst SSC-R.

ISSUEWhether or not the dismissal of Moreno was properand legal?

HELDNo. The misconduct of Moreno falls below the requiredlevel of gravity that would warrant dismissal as apenalty. Under Art. 282(a) of the Labor Code, willfuldisobedience of the employer’s lawful orders as a justcause for termination of employment envisages theconcurrence of at least two requisites: (1) theemployee’s assailed conduct must have been willful orintentional, the willfulness being characterized by a"wrongful and perverse attitude"; and (2) the orderviolated must have been reasonable, lawful, madeknown to the employee and must pertain to the dutieswhich he has been engaged to discharge. SSC-Rfailed to adduce any concrete evidence to prove thatMoreno indeed harbored perverse or corruptmotivations in violating the school policy. Even ifdismissal for cause is the prescribed penalty for themisconduct committed, it is disproportionate to theoffense. The Court deems it appropriate to impose thepenalty of suspension of 1 year on Moreno.

JANSENN PHARMACEUTICA v. SILAYROG.R. No. 172528, February 26, 2008, Chico Nazario

Petitioner is the division of Johnson & JohnsonPhilippines Inc. engaged in the sale and manufactureof pharmaceutical products. Petitioner employedrespondent as Territory/Medical Representative.During his employment, respondent received frompetitioner several awards and citations. On the darkside, however, respondent was also investigated for,and in some cases found guilty of, severaladministrative charges. Petitioner issued a Notice ofDisciplinary Action finding respondent guilty of thefollowing offenses (1) delayed submission of processreports, for which he was subjected to a one-daysuspension without pay, effective 24 November1998; and (2) cheating in his ROL test, for which hewas subjected again to a one-day suspension.Petitioner then terminated the services of respondent.Petitioner found respondent guilty of dishonesty inaccomplishing the report on the number of productsamples in his possession and failing to return thecompany vehicle and his other accountabilities inviolation of Sections 9.2.9 and 9.2.4 of the Code ofConduct. Petitioner also found respondent to be ahabitual offender whose previous offenses included:(1) Granting unauthorized premium/free goods tocustomer in 1994; (2) Unauthorized pull-out of stocksfrom customer in 1994; (3) Delay in submission of

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reports despite oral admonition and written reprimandin 1998; and (4) Dishonesty in accomplishing otheraccountable documents or instruments (in connectionwith the ROL test) in 1998. Respondent filed aComplaint against petitioner and its officers for illegaldismissal.

ISSUEWhether or not sufficient grounds existed for thedismissal of the respondent

RULINGNo. In termination cases, the burden of proof rests withthe employer to show that the dismissal is for just andvalid cause. Failure to do so would necessarily meanthat the dismissal was not justified and therefore wasillegal. Dishonesty is a serious charge, which theemployer must adequately prove, especially when it isthe basis for termination.In this case, petitioner had not been able to identify anact of dishonesty, misappropriation, or any illicit act,which the respondent may have committed inconnection with the erroneously reported productsamples. While respondent was admittedly negligent infilling out his August and September 1998 DCR, hiserrors alone are insufficient evidence of a dishonestpurpose. Since fraud implies willfulness or wrongfulintent, the innocent non-disclosure of or inadvertenterrors in declaring facts by the employee to theemployer will not constitute a just cause for thedismissal of the employee. In addition, the subsequentacts of respondent belie a design to misappropriateproduct samples. So as to escape any liability,respondent could have easily just submitted for auditonly the number of product samples which hereported. Instead, respondent brought all the productsamples in his custody during the audit and,afterwards, honestly admitted to his negligence.Negligence is defined as the failure to exercise thestandard of care that a reasonably prudent personwould have exercised in a similar situation. To thisCourt, respondent did not commit any willful violation,rather he merely failed to exercise the standard carerequired of a territory representative to carefully countthe number of product samples delivered to him inAugust and September 1998.Moreover, petitioner failed to observe procedural dueprocess in connection with the aforementioned charge.Section 2(d) of Rule 1 of The Implementing Rules ofBook VI states that:

For termination of employment based on just causesas defined in Article 282 of the Labor Code:(i) A written notice served on the employee specifyingthe ground or grounds for termination, and giving saidemployee reasonable opportunity within which toexplain his side.(ii) A hearing or conference during which the employeeconcerned, with the assistance of counsel if he sodesires is given opportunity to respond to the

charge, present his evidence, or rebut theevidence presented against him.(iii) A written notice of termination served on theemployee, indicating that upon due consideration of allthe circumstances, grounds have been established tojustify his termination.

From the aforecited provision, it is implicit that theserequirements afford the employee an opportunity toexplain his side, respond to the charge, present his orher evidence and rebut the evidence presentedagainst him or her.

The superficial compliance with two notices and ahearing in this case cannot be considered valid wherethese notices were issued and the hearing madebefore an offense was even committed. The firstnotice, issued on 24 November 1998, was prematuresince respondent was obliged to return hisaccountabilities only on 25 November 1998. Asrespondent’s preventive suspension began on 25November 1998, he was still performing his duties asterritory representative the day before, which requiredthe use of the company car and other companyequipment. During the administrative hearing on 3December 1998, both parties clarified the confusioncaused by the petitioner’s premature notice andagreed that respondent would surrender hisaccountabilities as soon as the petitioner gave itsinstructions. Since petitioner’s ostensible compliancewith the procedural requirements of notice and hearingtook place before an offense was even committed,respondent was robbed of his rights to explain his side,to present his evidence and rebut what was presentedagainst him, rights ensured by the proper observanceof procedural due process.

SUICO V. NLRCG.R. No. 146762, January 30, 2007, Austria-Martinez

Suico, Ceniza, Dacut (complainants were regularemployees of Philippine Long Distance TelephoneCompany (PLDT) Cebu Jones Exchange andmembers of Manggagawa ng Komunikasyon ngPilipinas (MKP). MKP launched a strike against PLDT.Complainants participated in the strike by picketing thePLDT. PLDT sent 2 notices to Suico et.al, for the actsof violation that happen during the strike. But thecomplainant failed to provide the required writtenexplanation the acts charged to them. They repliedinforming, that they opt to exercise their rights to dueprocess and request to furnish a copy of the formalwritten complain, statement of witness/es andpreliminary investigations and/or report/s conducted onthe aforesaid incident, if any. PLDT findings based onthe available evidence found the complainants guiltyand were subsequently terminated.

ISSUE:Whether PLDT violated the requirements of dueprocess under the Labor Code when it dismissed said

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employees without heeding their request for theconduct of a formal hearing as provided for underPLDT Systems Practice No. 94-016 and prior tosubmission of their respective answers to the chargesagainst them.

RULINGThe procedure adopted by PLDT in dismissing Suico,et al. fell short of the requirements of due process.PLDT complied with the two-notice requirement of dueprocess. The first notices sent to Suico, et al. set out indetail the nature and circumstances of the violationsimputed to them, required them to explain their sideand expressly warned them of the possibility of theirdismissal should their explanation be found wanting.The last notices informed Suico, et al. of the decisionto terminate their employment and cited the evidenceupon which the decision was based. These two noticeswould have sufficed had it not been for the existenceof Systems Practice No. 94-016. Under SystemsPractice No. 94-016, PLDT granted its employee thealternative of either filing a written answer to thecharges or requesting for opportunity to be heard anddefend himself with the assistance of his counsel orunion representative, if he so desires.

Suico, et al. exercised their option under SystemsPractice No. 94-016 by requesting that a formalhearing be conducted and that they be given copies ofsworn statements and other pertinent documents toenable them to prepare for the hearing. This option ispart of their right to due process. PLDT is bound tocomply with the Systems Practice. Company policiesor practices are binding on the parties. Some can ripeninto an obligation on the part of the employer, such asthose which confer benefits on employees or regulatethe procedures and requirements for their termination

PEREZ v. PT&TG.R. No. 152048, April 7, 2009, Corona

Petitioners Felix Perez and Amante Doria wereemployed by respondent Philippine Telegraph andTelephone Company. They later received amemorandum dismissing them from the service forhaving falsified company documents, prompting themto file a complaint for illegal dismissal on the groundthat they were dismissed on the same date that theyreceived the said memorandum. Petitioners argue thatdue process was not observed in the absence of ahearing in which they could have explained their side.

ISSUEIs a hearing (or conference) mandatory in casesinvolving the dismissal of an employee?

RULINGNo. We note a marked difference in the standards ofdue process to be followed as prescribed in the LaborCode and its implementing rules. The Labor Code, onone hand, provides that an employer must provide the

employee ample opportunity to be heard and to defendhimself with the assistance of his representative if heso desires. The omnibus rules implementing the LaborCode, on the other hand, require a hearing andconference during which the employee concerned isgiven the opportunity to respond to the charge, presenthis evidence or rebut the evidence presented againsthim. We reaffirm the time-honored doctrine that, incase of conflict, the law prevails over theadministrative regulations implementing it.

The following are the guiding principles in connectionwith the hearing requirement in dismissal cases:

(a) ample opportunity to be heard means anymeaningful opportunity (verbal or written) given tothe employee to answer the charges against him andsubmit evidence in support of his defense, whetherin a hearing, conference or some other fair, just andreasonable way.(b) a formal hearing or conference becomesmandatory only when requested by the employee inwriting or substantial evidentiary disputes exist or acompany rule or practice requires it, or when similarcircumstances justify it.(c) the ample opportunity to be heard standard in theLabor Code prevails over the hearing or conferencerequirement in the implementing rules andregulations.

Note: Petitioners in this case, however, were found tobe illegally dismissed as there was no just cause forthe termination of their employment.

BACOLOD-TALISAY REALTY AND DEVELOPMENTCORPORATION, et al. v. ROMEODELA CRUZG.R. No. 179563

Respondent as an employee of the petitioner made thefollowing: payroll paddling, selling canepoints withoutthe knowledge and consent of the petitioner andmisappropriating the said proceeds and also rentingout the tractor to be used on another farm. Due to this,he was suspended for 30 days through a letterinforming him of such suspension and after 30 days hereceived another letter informing him that he wasdismissed from work.

ISSUEWON petitioner observed due process in dismissingrespondent

RULINGNo, petitioner did not comply due to the fact that invalidly dismissing and employee two notices aremandatory 1) a first notice to apprise him of his fault,and 2) a second notice to him that his employment isbeing terminated.

In the present case the first letter only informed him ofthe suspension and did not effectively apprise him of

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his fault nor is given chance to present his side or beheard.

Although the petitioner did terminate him for a justcause, but the procedure was not followed.

PRUDENTIAL GUARANTEE AND ASSURANCEEMPLOYEE LABOR UNION AND SANDY T.VALLOTA V. NATIONAL LABOR RELATIONSCOMMISSION, PRUDENTIAL GUARANTEE ANDASSURANCE, INC., AND/OR JOCELYN RETIZOSG.R. No. 185335, June 13, 2012, Mendoza

Vallota worked with PGAI on May 16, 1995 as a JuniorProgrammer assigned to the EDP Departmentreporting directly to his head Gerald Dy Victory, untilhis replacement by Jocelyn Retizos sometime in 1997.In Aug. 2005, Vallota was elected to the Board ofDirectors of the union.

On Nov. 11, 2005, PGAI’s HR Manager Atty. Rilloinvited union president Mike Apostol to his office toinform him that an on-the-spot security check in the ITDepartment will be conducted. PGAI networkadministrator Angelo Gutierrez conducted aninspection but did not find anything unusual withVallota’s computed but Retizos insisted and took overthe inspection until she found a folder named MAA, acopy of which was saved and later printed but no copywas given to Vallota.

On Nov. 14, 2005, Vallota received a memorandumdirecting him to explain within 72 hours why highlyconfidential files were stored in his computer andplaced him under a 30-day preventive suspensionwhich was extended for another 30 days. The unionrequested that a grievance committee be convenedand that the contents of the computers of other ITpersonnel be similarly produced but this was ignoredand a notice of termination was given to Vallota on theground of loss of trust and confidence, prompting theunion and Vallota to file a complaint for illegaldismissal. The LA, the NLRC, and the CA held thatthere was illegal dismissal. Hence, this petition.

ISSUES1. Was Vallota validly dismissed on the ground ofloss of trust and confidence?2. Were the requirements of procedural dueprocess for termination observed?

HELD(1) No. Vallota’s position as Junior Programmer isanalogous to the second class of positions of trust andconfidence. The act alleged to have caused the loss oftrust and confidence of PGAI in Vallota was thepresence in his computers hard drive of a foldernamed MAA allegedly containing files with informationon MAA Mutual Life Philippines, a domesticcorporation selling life insurance policies to the buyingpublic, and files relating to PGAIs internal affairs.

To be a valid ground for dismissal, loss of trust andconfidence must be based on a willful breach of trustand founded on clearly established facts. A breach iswillful if it is done intentionally, knowingly andpurposely, without justifiable excuse, as distinguishedfrom an act done carelessly, thoughtlessly, heedlesslyor inadvertently. It must rest on substantial groundsand not on the employers arbitrariness, whims,caprices or suspicion; otherwise, the employee wouldremain eternally at the mercy of the employer. Further,in order to constitute a just cause for dismissal, the actcomplained of must be work-related and show that theemployee concerned is unfit to continue working forthe employer. Such ground for dismissal has neverbeen intended to afford an occasion for abusebecause of its subjective nature.

There was no other evidence presented to prove fraudin the manner of securing or obtaining the files found inVallota’s computer. In fact, aside from the presence ofthese files in Vallota’s hard drive, there was no otherevidence to prove any gross misconduct on his part.There was no proof either that the presence of suchfiles was part of an attempt to defraud his employer orto use the files for a purpose other than that for whichthey were intended. If anything, the presence of thefiles reveals some degree of carelessness or neglect inhis failure to delete them, but it is an extremelyfarfetched conclusion bordering on paranoia to statethat it is part of a larger conspiracy involving corporateespionage. If anything, the presence of the files wouldmerely merit the development of some suspicion onthe part of the employer, but should not amount to aloss of trust and confidence such as to justify thetermination of his employment.

(2) The following are the guiding principles inconnection with the hearing requirement in dismissalcases:

(a) ample opportunity to be heard means anymeaningful opportunity (verbal or written) given tothe employee to answer the charges against himand submit evidence in support of his defense,whether in a hearing, conference or some otherfair, just and reasonable way.(b) a formal hearing or conference becomesmandatory only when requested by the employeein writing or substantial evidentiary disputes existor a company rule or practice requires it, or whensimilar circumstances justify it.(c) the ample opportunity to be heard standard inthe Labor Code prevails over the hearing orconference requirement in the implementing rulesand regulations.

In this case, the two-notice requirement was compliedwith. PGAI issued to Vallota a written Notice ofCharges & Preventive Suspension (Ref. No. AC-05-02) dated November 14, 2005. After an exchange of

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memoranda, PGAI then informed Vallota of hisdismissal in its decision dated December 21, 2005.

However, the Union and Vallota requested aconference or a convening of a grievance committee,such formal hearing became mandatory. After PGAIfailed to affirmatively respond to such request, itfollows that the hearing requirement was not compliedwith and, therefore, Vallota was denied his right toprocedural due process.

The petition was granted.

COSMOS BOTTLING CO. V. FERMING.R. No. 194303, June 20, 2012, Sereno

Wilson B. Fermin (Fermin) was a forklift operator atCosmos Bottling Corporation (COSMOS), where hestarted his employment on 27 August 1976 On 16December 2002, he was accused of stealing thecellphone of his fellow employee, Luis Braga (Braga).Fermin was then given a Show Cause Memorandum,requiring him to explain why the cellphone was foundinside his locker. In compliance therewith, hesubmitted an affidavit the following day, explaining thathe only hid the phone as a practical joke and hadevery intention of returning it to Braga.

After conducting an investigation, COSMOS foundFermin guilty of stealing Bragas phone in violation ofcompany rules and regulations. Consequently, on 2October 2003, the company terminated Fermin fromemployment after 27 years of service.

ISSUEWhether or not the termination is valid.

RULINGYes. Article 282(e) of the Labor Code talks of otheranalogous causes or those which are susceptible ofcomparison to another in general or in specific detailas a cause for termination of employment. A causeanalogous to serious misconduct is a voluntary and/orwillful act or omission attesting to an employee’s moraldepravity. Theft committed by an employee against aperson other than his employer, if proven bysubstantial evidence, is a cause analogous to seriousmisconduct. Previous infractions may be cited asjustification for dismissing an employee only if they arerelated to the subsequent offense. However, it must benoted that such a discussion was unnecessary sincethe theft, taken in isolation from Fermin’s otherviolations, was in itself a valid cause for the terminationof his employment.

SAMPAGUITA AUTO TRANSPORT CORPORATIONv. NATIONAL LABOR RELATIONS COMMMISSIONand EFREN I. SAGADG.R. No. 197384, January 30, 2013, Brion

In a complaint dated August 10, 2007, respondentEfren I. Sagad charged the petitioner Sampaguita AutoTransport Corporation (company) with illegal dismissaland damages plus attorney's fees.

Sagad alleged that on May 14, 2006, the companyhired him as a regular bus driver, not as a probationaryemployee as the company claimed. He disowned hispurported signature on the contract of probationaryEmployment submitted in evidence by the company.He maintained that his signature was forged. Hefurther alleged that on November 5, 2006, he wasdismissed by the company for allegedly conniving withconductor Vitola in issuing tickets outside theirassigned route.

The company countered that it employed Sagad as aprobationary bus driver (evidenced by a probationaryemployment contract6) from May 14, 2006 to October14, 2006; he was duly informed of his correspondingduties and responsibilities. He was further informedthat during the probationary period, his attendance,performance and work attitude shall be evaluated todetermine whether he would qualify for regularemployment. For this purpose and as a matter ofcompany policy, an evaluator was deployed on acompany bus (in the guise of a passenger) to observethe driver’s work performance and attitude.

Allegedly, on September 21, 2006, an evaluatorboarded Sagad’s bus. The evaluator describedSagad’s manner of driving as "reckless driver,nakikipaggitgitan, nakikipaghabulan, nagsasakay sagitna ng kalsada, sumusubsob ang pasahero. Sagaddisputed the evaluator’s observations. In anexplanation (rendered in Filipino), he claimed that hecould not have been driving as reported because hiswife (who was pregnant) and one of his children werewith him on the bus. He admitted though that at onetime, he chased an "Everlasting" bus to serve warningon its driver not to block his bus when he wasovertaking. He also admitted that once in a while, hesped up to make up for lost time in making trips.

On October 15, 2006, upon conclusion of theevaluation, the company terminated Sagad’semployment for his failure to qualify as a regularemployee.

ISSUEWhether or not Sagad is a regular employee

RULINGSagad was dismissed, not as a probationaryemployee, but as one who had attained regular status.The company’s evidence on Sagad’s purported hiringas a probationary employee is inconclusive. To startwith, Sagad denied that he entered into a probationaryemployment contract with the company, arguing thatthe signature on the supposed contract was not his.He also denied receiving the alleged notice terminating

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his probationary employment. The same thing is truewith his purported letter asking that he be givenanother chance to work for the company. He assertsthat not only is the letter not in his handwriting, thesignature on the letter was also not his.The records indicate that he was retained even beyondthe expiration of his supposed probationaryemployment on October 14, 2006. As the NLRC noted,Sagad claimed that he was dismissed by the companyon November 5, 2006, after he was accused ofconniving with conductor Vitola in issuing ticketsoutside their assigned route.The company never refuted this particular assertion ofSagad and its silence can only mean that Sagadremained in employment until November 4, 2006,thereby attaining regular status as of that date. Underthe law, "an employee who is allowed to work after aprobationary period shall be considered a regularemployee.

NATHANIEL N. DONGON v. RAPID MOVERSAND FORWARDERS CO., INC., AND/ORNICANOR E. JAO, JR.G.R. No. 163431, August 28, 2013, Bersamin

Dongon is a truck helper leadman in Rapid Moversand Forwarders. Dongon’s area of assignment is inTanduay Otis Warehouse where he and his driverVillaruz tried to get the goods to be distributed toclients. To get the clearance for the release of goods,Dongon lent his ID card to Villaruz. But, the securityguard noticed the misrepresentation, accosted them,and reported the matter to the management ofTanduay. Dongon was dismissed from work due towillful disobedience. He now claims that he wasillegally dismissed from work.

He argues that the dismissal as a penalty is too harshand disproportionate to his supposed violation. Saidviolation was only his first infraction and was evencommitted in good faith without malice. Rapid Moversand Forwarders argues that they rightly exercised theirpower to dismiss petitioner on the ground of violationof the company’s manual of discipline.

The LA dismissed the complaint. NLRC reversed theLA. The CA affirmed the decision of the NLRC.

ISSUEWas the dismissal of Dongon legal?

HELDNO. Dongon was illegally dismissed. The SC held thatthe disobedience attributed to Dongon could not bejustly characterized as willful within the contemplationof the law. Wilfullness must be attended by a wrongfuland perverse mental attitude rendering theeomployee’s act inconsistent with propersubordination. Dongon did not benefit from it nor wasthe business of respondent prejudiced. The Courtbelieved Dongon’s explanation that his deed had been

intended to benefit Rapid Movers and Forwarders. TheSC also took into consideration the fact that Dongonhad served respondent for seven long unblemishedyears, thus, arriving at a conclusion that his dismissalwas plainly unwarranted.

The SC reiterated that an employer is given widelatitude of discretion in managing its own affairs. Butthe exercise of management prerogative is notlimitless, but hemmed in by good faith and dueconsideration of the rights of employees.

ALILEM CREDIT COOPERATIVE, INC. v.BANDIOLA, JR.G.R. No. 173489, February 25, 2013

Respondent was employed by petitioner asbookkeeper. Petitioner's Board of Directors (the Board)received a letter from a certain Napoleon Gao-ay(Napoleon) reporting the alleged immoral coaduct andunbecoming behavior of respondent by having an illicitrelationship with Napoleon’s sister, Thelma G. Palma(Thelma). This prompted the Board to conduct apreliminary investigation. In its Summary InvestigationReport, the Ad Hoc Committee concluded thatrespondent was involved in an extra-marital affair withThelma. Respondent was informed of BoardResolution embodying the Board’s decision toterminate his services as bookkeeper of petitioner,effective July 31, 1997, without any compensation orbenefit except the unpaid balance of his regular salaryfor services actually rendered. Aggrieved, respondentfiled a Complaint for Illegal Dismissal against petitionerbefore the NLRC.

ISSUEW/N respondent's dismissal from employment is valid

HELDYES. To be sure, an employer is free to regulate allaspects of employment. It may make reasonable rulesand regulations for the government of its employeeswhich become part of the contract of employmentprovided they are made known to the employee. In theevent of a violation, an employee may be validlyterminated from employment on the ground that anemployer cannot rationally be expected to retain theemployment of a person whose lack of morals, respectand loyalty to his employer, regard for his employer’srules and application of the dignity and responsibility,has so plainly and completely been bared.

While respondent’s act of engaging in extra--maritalaffairs may be considered personal to him and doesnot directly affect the performance of his assigned taskas bookkeeper, aside from the fact that the act wasspecifically provided for by petitioner’s PersonnelPolicy as one of the grounds for termination ofemployment, said act raised concerns to petitioner asthe Board received numerous complaints and petitionsfrom the cooperative members themselves asking for

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the removal of respondent because of his immoralconduct.

CAVITE APPAREL, INCORPORATED andADRIANO TIMOTEO v. MICHELLE MARQUEZG.R. No. 172044, February 06, 2013

On August 22, 1994, Cavite Apparel hired Michelle asa regular employee in its Finishing Department.Michelle enjoyed, among other benefits, vacation andsick leaves of seven (7) days each per annum. Prior toher dismissal on June 8, 2000, Michelle committed thefollowing infractions (with their correspondingpenalties):

a. First Offense: Absence without leave (AWOL)on December 6, 1999 – written warningb. Second Offense: AWOL on January 12, 2000– stern warning with three (3) days suspensionc. Third Offense: AWOL on April 27, 2000 –suspension for six (6) days.

On May 8, 2000, Michelle got sick and did not reportfor work. When she returned, she submitted a medicalcertificate. Cavite Apparel, however, denied receipt ofthe certificate. Michelle did not report for work on May15-27, 2000 due to illness. When she reported back towork, she submitted the necessary medicalcertificates. Nonetheless, Cavite Apparel suspendedMichelle for six (6) days (June 1-7, 2000). WhenMichelle returned on June 8, 2000, Cavite Apparelterminated her employment for habitual absenteeism.Michelle filed a complaint for illegal dismissal withprayer for reinstatement, backwages and attorney’sfees with the NLRC.

The NLRC noted that for Michelle’s first threeabsences, she had already been penalized rangingfrom a written warning to six days suspension. These,the NLRC declared, should have precluded CaviteApparel from using Michelle’s past absences as basesto impose on her the penalty of dismissal, consideringher six years of service with the company. It likewiseconsidered the penalty of dismissal too severe. TheNLRC thus concluded that Michelle had been illegallydismissed and ordered her reinstatement withbackwages. The Court of Appeals affirmed the rulingof the NLRC.

ISSUEWhether Michelle was illegally dismissed, specifically:

a) Whether Michelle’s AWOLs were habitualb) Whether the dismissal imposed by CaviteApparel too harsh of a penalty

RULINGYes.Michelle’s four absences were not habitual; "totality ofinfractions" doctrine not applicable. Neglect of duty, tobe a ground for dismissal under Article 282 of theLabor Code, must be both gross and habitual. Grossnegligence implies want of care in the performance of

one’s duties. Habitual neglect imparts repeated failureto perform one’s duties for a period of time, dependingon the circumstances. Under these standards and thecircumstances obtaining in the case, we agree with theCA that Michelle is not guilty of gross and habitualneglect of duties.

Even assuming that she failed to present a medicalcertificate for her sick leave on May 8, 2000, therecords are bereft of any indication that apart from thefour occasions when she did not report for work,Michelle had been cited for any infraction since shestarted her employment with the company in 1994.Four absences in her six years of service, to our mind,cannot be considered gross and habitual neglect ofduty, especially so since the absences were spreadout over a six-month period.Michelle’s penalty of dismissal too harsh or notproportionate to the infractions she committedMichelle might have been guilty of violating companyrules on leaves of absence and employee discipline,still we find the penalty of dismissal imposed on herunjustified under the circumstances. As earliermentioned, Michelle had been in Cavite Apparel’semploy for six years, with no derogatory record otherthan the four absences without official leave inquestion, not to mention that she had already beenpenalized for the first three absences, the most seriouspenalty being a six-day suspension for her thirdabsence on April 27, 2000.

While previous infractions may be used to support anemployee’s dismissal from work in connection with asubsequent similar offense, we cautioned employers inan earlier case that although they enjoy a wide latitudeof discretion in the formulation of work-related policies,rules and regulations, their directives and theimplementation of their policies must be fair andreasonable; at the very least, penalties must becommensurate to the offense involved and to thedegree of the infraction.

ESGUERRA v. VALLE VERDEG.R. NO. 173012, June 13, 2012

On April 1, 1978, Valle Verde hired Esguerra as HeadFood Checker. In 1999, she was promoted to CostControl Supervisor. On January 15, 2000, the Couplesfor Christ held a seminar at the country club. Esguerrawas tasked to oversee the seminar held in the twofunction rooms the Ballroom and the Tanay Room.

The Valle Verde Management found out the followingday that only the proceeds from the Tanay Room hadbeen remitted to the accounting department. Therewere also unauthorized charges of food on the accountof Judge Rodolfo Bonifacio, one of the participants.

On March 6, 2000, Valle Verde sent a memorandum toEsguerrarequiring her to show cause as to why no disciplinary a

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ction should be taken against her for the non-remittance of the Ballrooms sales. Esguerra wasplaced under preventive suspension with pay, pendinginvestigation. In her letter-response, Esguerra deniedhaving committed any misappropriation. Valle Verdefound Esguerras explanation unsatisfactory and,on July 26, 2000, issued a second memorandumterminating Esguerras employment.

ISSUEWhether the dismissal is valid.

HELDWe now dwell on the substantive aspect of Esguerrasdismissal. We have held that there are two (2) classesof positions of trust the first class consists ofmanagerial employees, or those vested with the powerto lay down management policies; and the secondclass consists of cashiers, auditors, propertycustodians or those who, in the normal and routineexercise of their functions, regularly handle significantamounts of money or property.

Esguerra held the position of Cost Control Supervisorand had the duty to remit to the accounting departmentthe cash sales proceeds from every transaction shewas assigned to. This is not a routine task that aregular employee may perform; it is related to thehandling of business expenditures or finances. For thisreason, Esguerra occupies a position of trust andconfidence a position enumerated in the second classof positions of trust. Any breach of the trust imposedupon her can be a valid cause for dismissal.

RUBEN ANDRADA VS. NLRCG.R. No. 173231, December 28, 2007, Velasco

Petitioners Ruben Andrada, Jovencio Poblete, FilamerAlfonso, Harvey Cayetano, Vicente Mantala, Jr.,Bernaldo delos Santos, and Joven Pabustan werehired on various dates from 1995 up to 1997 andworked as architects, draftsmen, operators, engineers,and surveyors in the Subic Legend Resorts andCasino, Inc. (Legend) Project Development Division onvarious projects.

Legend sent notice to the Department of Labor andEmployment of its intention to retrench and terminatethe employment of thirty-four (34) of its employees,which include petitioners, in the Project DevelopmentDivision. Legend explained that it would be retrenchingits employees on a last-in-first-out basis. The followingday Legend sent the 34 employees their respectivenotices of retrenchment, stating the same reasons fortheir retrenchment. It also offered the employees thefollowing options, to wit:

1. Temporary retrenchment/lay-off for a period notto exceed six months within which we shall exploreyour possible reassignment to other departments oraffiliates, after six months and redeployment and/or

matching are unsuccessful, permanent retrenchmenttakes place and separation pay is released.2. Permanent retrenchment and payment of

separation pay and other benefits after the thirty (30)days notice has lapsed; or3. Immediate retrenchment and payment ofseparation pay, benefits and one months salary inlieu of notice to allow you to look for otheremployment opportunities.

Legend gave said employees a period of one week oruntil January 14, 1998 to choose their option, withoption number 2 (permanent retrenchment) as thedefault choice in case they failed to express theirpreferences.

Curiously, on the same day, the Labor andEmployment Center of the Subic Bay MetropolitanAuthority advertised that Legend International Resorts,Inc. was in need of employees for positions similar tothose vacated by petitioners.

After informing the retrenched employees of theirretrenchment or option, Legend paid the retrenchedemployees their salaries up to February 6, 1998,separation pay, pro-rated 13th-month pay, ex-gratia,meal allowance, unused vacation leave credits, andtax refund. Petitioners, in turn, signed quitclaims butreserved their right to sue Legend.

Subsequently, 14 of the 34 retrenched employeesfiled a complaint for illegal dismissal and money claimsagainst Legend and its officials. Complainants allegedthat they were illegally dismissed because Legend,after giving retrenchment as the reason for theirtermination, created new positions similar to those theyhad just vacated. Legend, on the other hand, invokedmanagement prerogative when it terminated theretrenched employees; and said that complainantsvoluntarily signed quitclaims so that they were alreadybarred from suing Legend.

ISSUEWhether petitioners were legally dismissed.

HELDNO. A company’s exercise of its managementprerogatives is not absolute. It cannot exercise itsprerogative in a cruel, repressive, or despotic manner.The requirements for retrenchment are: (1) it isundertaken to prevent losses, which are not merely deminimis, but substantial, serious, actual, and real, or ifonly expected, are reasonably imminent as perceivedobjectively and in good faith by the employer; (2) theemployer serves written notice both to the employeesand the DOLE at least one month prior to the intendeddate of retrenchment; and (3) the employer pays theretrenched employees separation pay equivalent toone month pay or at least month pay for every year ofservice, whichever is higher. The Court later added therequirements that the employer must use fair and

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reasonable criteria in ascertaining who would bedismissed and x x x retained among the employeesand that the retrenchment must be undertaken in goodfaith. Except for the written notice to the affectedemployees and the DOLE, non-compliance with any ofthese requirements render[s] the retrenchment illegal.

In the present case, Legend glaringly failed to show itsfinancial condition prior to and at the time it enforcedits retrenchment program. It failed to submit auditedfinancial statements regarding its alleged financiallosses. Though Legend complied with the noticerequirements and the payment of separation benefitsto the retrenched employees, its failure to establish thebasis for the retrenchment of its employees constrainsus to declare the retrenchment illegal.

Legend also failed to establish redundancy.Retrenchment and redundancy are two differentconcepts; they are not synonymous and thereforeshould not be used interchangeably. It is however notenough for a company to merely declare that positionshave become redundant. It must produce adequateproof tantamount to substantial evidence of suchredundancy to justify the dismissal of the affectedemployees.

JUVY M. MANATAD vs. PHILIPPINE TELEGRAPHAND TELEPHONE CORPORATIONG.R. No. 172363, March 7, 2008, Chico Nazario

In September 1988, petitioner was employed byrespondent Philippine Telegraph and TelephoneCorporation (PT&T) as junior clerk. She was laterpromoted as Account Executive, the position she helduntil she was temporarily laid off from employment on1 September 1998. Petitioners temporary separationfrom employment was pursuant to the Temporary StaffReduction Program adopted by respondent due toserious business reverses. Petitioner received a letterfrom respondent inviting her to avail herself of its StaffReduction Program Package until full payment of theseparation package. However, she did not opt to availherself of the said package. Later on, petitionerreceived a Notice of Retrenchment from respondentpermanently dismissing her from employment.

Consequently, petitioner filed a Complaint for illegaldismissal against respondent before the Labor Arbiter.She alleged that the retrenchment program adopted byrespondent was illegal for it was gaining profits for theperiod of July 1997 to June 1998. On the other hand,respondent asserted that petitioner was separatedfrom service pursuant to a valid retrenchmentimplemented by the company, due to huge businesslosses suffered by respondent, it was constrained toarrest escalating operating costs by downsizing itsworkforce.

The Labor Arbiter rendered a Decision in favor ofpetitioner ruling that the retrenchment program

implemented by respondent was invalid andpetitioner’s separation was illegal. NLRC affirmed thedecision of the Labor Arbiter. On appeal, the Court ofAppeals reversed the decision of the NLRC.

ISSUEWhether or not the retrenchment programimplemented by respondent was valid.

HELDYes. The Court finds that respondent was fully justifiedin implementing a retrenchment program.

Retrenchment is the termination of employmentinitiated by the employer through no fault of theemployees and without prejudice to the latter, resortedto by management during periods of businessrecession; industrial depression; or seasonalfluctuations, during lulls occasioned by lack of orders,shortage of materials, conversion of the plant for a newproduction program, or the introduction of newmethods or more efficient machinery or automation.Retrenchment is a valid management prerogative. It is,however, subject to faithful compliance with thesubstantive and procedural requirements laid down bylaw and jurisprudence. In the discharge of theserequirements, it is the employer who bears the onus,being in the nature of affirmative defense.

For a valid retrenchment, the following requisites mustbe complied with: (a) the retrenchment is necessary toprevent losses and such losses are proven; (b) writtennotice to the employees and to the DOLE at least onemonth prior to the intended date of retrenchment; and(c) payment of separation pay equivalent to one-monthpay or at least one-half month pay for every year ofservice, whichever is higher.

Since respondent was undergoing business reverses,not only for a single fiscal year, but for several yearsprior to and even after the program, it was justified inimplementing a retrenchment program.

Where appropriate and where conditions are in accordwith law and jurisprudence, the Court has authorizedvalid reductions in the work force to forestall businesslosses, the hemorrhaging of capital, or even torecognize an obvious reduction in the volume ofbusiness which has rendered certain employeesredundant.

LINTON COMMERCIAL CO., INC. v. HELLERAG.R. No. 163147, October 10, 2007, Tinga

Linton is a domestic corporation engaged in thebusiness of importation, wholesale, retail andfabrication of steel and its by-products. Linton issued amemorandum 5 addressed to its employees informingthem of the company's decision to suspend itsoperations from 18 December 1997 to 5 January 1998due to the currency crisis that affected its business

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operations. Linton issued another memorandum 8informing them that effective 12 January 1998, it wouldimplement a new compressed workweek of three (3)days on a rotation basis. In other words, each workerwould be working on a rotation basis for three workingdays only instead for six days a week. Aggrieved,sixty-eight (68) workers (workers) filed a Complaint forillegal reduction of workdays.

ISSUEWhether or not there was an illegal reduction of work.

RULINGYes. A close examination of petitioners' financialreports for 1997-1998 shows that, while the companysuffered a loss of P3, 645,422.00 in 1997, it retained aconsiderable amount of earnings 45 and operatingincome. A year of financial losses would not warrantthe immolation of the welfare of the employees, whichin this case was done through a reduced workweekthat resulted in an unsettling diminution of the periodicpay for a protracted period. Permitting reduction ofwork and pay at the slightest indication of losses wouldbe contrary to the State's policy to afford protection tolabor and provide full employment. Certainly,management has the prerogative to come up withmeasures to ensure profitability or loss minimization.However, such privilege is not absolute. Managementprerogative must be exercised in good faith and withdue regard to the rights of labor.

To date, no definite guidelines have yet been set todetermine whether the alleged losses are sufficient tojustify the reduction of work hours. If the standards setin determining the justifiability of financial losses underArticle 283 (i.e., retrenchment) or Article 286 (i.e.,suspension of work) of the Labor Code were to beconsidered, petitioners would end up failing to meetthe standards. On the one hand, Article 286 appliesonly when there is a bona fide suspension of theemployer's operation of a business or undertaking fora period not exceeding six (6) months. 49 Recordsshow that Linton continued its business operationsduring the effectivity of the compressed workweek,which spanned more than the maximum period. On theother hand, for retrenchment to be justified, any claimof actual or potential business losses must satisfy thefollowing standards: (1) the losses incurred aresubstantial and not de minimis; (2) the losses areactual or reasonably imminent; (3) the retrenchment isreasonably necessary and is likely to be effective inpreventing the expected losses; and (4) the allegedlosses, if already incurred, or the expected imminentlosses sought to be forestalled, are proven bysufficient and convincing evidence. 50 Linton failed tocomply with these standards.

AMA COMPUTER COLLEGE V. GARCIAG.R. No. 166703, April 14, 2008, Chico-Nazario

NOTE: The doctrine in this case focuses only on the

distinction between redundancy and retrenchment, andtheir requisites as valid grounds for dismissal.

FACTSAMA dismissed several regular employees “due to theprevailing economic condition of our economy” andthat their employment is “no longer necessary for thereason that function can be handled by the otherexisting staff”. AMA defends the legality of thedismissal on the ground of redundancy and/orretrenchment.

ISSUEIs redundancy the same as retrenchment?

HELDNo. The existence of redundancy or retrenchment is aquestion of fact. AMA failed to sufficiently prove eitherof the two.

Redundancy exists when the service capability of theworkforce is in excess of what is reasonably needed tomeet the demands of the business enterprise. Amongthe requisites of a valid redundancy program are: (1)the good faith of the employer in abolishing theredundant position; and (2) fair and reasonable criteriain ascertaining what positions are to be declaredredundant and accordingly abolished.

The determination that the employee's services are nolonger necessary or sustainable for being redundant isan exercise of business judgment of the employer. Thewisdom or soundness of this judgment is not subject todiscretionary review of the Labor Arbiter and theNLRC, provided there is no violation of law and noshowing that it was prompted by an arbitrary ormalicious act. In other words, it is not enough for acompany to merely declare that it has become“overmanned”. It must produce adequate proof of suchredundancy to justify the dismissal of the affectedemployees.

Retrenchment, on the other hand, is the termination ofemployment effected by management during periodsof business recession, industrial depression, seasonalfluctuations, lack of work or considerable reduction inthe volume of the employer's business. Resorted to byan employer to avoid or minimize business losses, it isa management prerogative consistently recognized bythe Court. The necessary conditions for the companylosses to justify retrenchment are as follows:

(1) the losses incurred are substantial and not deminimis;(2) the losses are actual or reasonably imminent;(3) the retrenchment is reasonably necessary andis likely to be effective in preventing the expectedlosses; and

(4) the alleged losses, if already incurred,or the expected imminent losses sought to beforestalled, are proven by sufficient andconvincing evidence.

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GSWU-NAFLU-KMU v. NLRCG.R. No. 165757, October 17, 2006, Carpio Morales

On September 8, 1999, petitioners Galaxie SteelWorkers Union and Galaxie employees filed acomplaint for illegal dismissal, unfair labor practice,and money claims against Galaxie. The Labor Arbiter,by Decision of October 30, 2000, declared validGalaxie’s closure of business but nevertheless orderedit to pay petitioner-employees separation pay, pro-rata13th month pay, and vacation and sick leave credits.

On appeal, the NLRC upheld the Labor Arbiter’sdecision but it reversed too the award for separationpay, the closure of Galaxie’s business being due toserious business losses.

ISSUE(1) Whether or not [Galaxie] is guilty of unfair laborpractice in closing its business operations shortly afterpetitioner union filed for certification election.

(2) Whether or not the written notice posted by[Galaxie] on the company bulletin board sufficientlycomplies with the notice requirement under Article 283of the Labor Code.

RULINGGalaxie’s documentary evidence shows that it hadbeen experiencing serious financial losses at the timeit closed business operations; supported by substantialevidence consisting of the audited financialstatements showing that Galaxie continuously incurredlosses from 1997 up to mid-1999. True, the union wasseeking the holding of a certification election at thetime that Galaxie closed its business operation, butthat, without more, was not sufficient to attribute anti-unionism against Galaxie. Petitioners failed to presentconcrete evidence supporting their claim of unfair laborpractice. Unfair labor practice refers to acts that violatethe workers’ right to organize, and are defined inArticles 248 and 261 of the Labor Code. The prohibitedacts relate to the workers’ right to self-organization andto the observance of Collective Bargaining Agreementwithout which relation the acts, no matter how unfair,are not deemed unfair labor practices.

With regard to the notice requirement, the LaborArbiter found, and it was upheld by the NLRC and theCourt of Appeals, that the written notice of closure orcessation of Galaxie’s business operations was postedon the company bulletin board one month prior to itseffectivity. The mere posting on the company bulletinboard does not, however, meet the requirement underArticle 283 of "serving a written notice on the workers."The purpose of the written notice is to inform theemployees of the specific date of termination orclosure of business operations, and must be servedupon them at least one month before the date ofeffectivity to give them sufficient time to make the

necessary arrangements.17 In order to meet theforegoing purpose, service of the written notice mustbe made individually upon each and every employeeof the company. Nevertheless, the validity oftermination of services can exist independently of theprocedural infirmity in the dismissal.

BECTON DICKINSON PHILS. INC. and WILFREDOJOAQUING.R. Nos. 159969 & 160116, November 15, 2005,Garcia

In 1989, Becton, Phils. had two (2) main divisions,namely: (a) the Medical Division; and (b) theDiagnostics Division. Jesus Fargas headed theMedical Division, while the position of head of theDiagnostics Division was vacant. Also vacant was theposition of Country Manager of Becton, Phils. OnSeptember 12, 1989, private respondent Reinerio Z.Esmaquel started his stint with Becton, Phils. asDirector of Sales and Marketing of the DiagnosticsDivision. He held this position until March 1998. AsSales and Marketing Director of the company’sDiagnostics Division, respondent reported to Becton,Asia’s Vice President of Diagnostics Sector. He was incharge of the overall supervision of twenty-three (23)employees working under the sales and marketingorganization. In March, 1998, Jesus Fargas waspromoted to the position of Country Manager forBecton, Phils. Respondent, on the other hand, wasappointed Business Director thereof, reporting, thistime, to the Country Manager instead of the VicePresident of Diagnostics Sector of Becton, Asia.Respondent was responsible for sales and marketingof Infectious Disease Diagnostic, ImmunocytometrySystem, and Instrument Service for the Asia PacificRegion. He held this position up to December, 1999.

In January, 2000, Becton, Phils. reorganized under theconcept of Go To Market. For purposes of selling itsproducts, Becton, Phils. had organized two (2)divisions, namely, the Sales Division and theMarketing Division, and designated respondent as theDirector of Sales. As such, respondent wasresponsible for the whole sales force for all products ofthe company. Under the foregoing reorganization, theSales Division was responsible for in-market sales orthe sale of all the products of the company to thedistributors. The distributors who buy the products atwholesale, in turn, are the ones selling the products tothe end users. The company is, however, generallyresponsible for the sale promotions of the company’sproducts to the end users.

Eventually, respondent was also appointed one of themembers of the Becton Dickinson (BD) PhilippinesLeadership Team, a group within Becton, Phils., whichwas responsible for the formulation of policies andrules of the company.

In November, 2000, pursuant to its established policies

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and guidelines for terminating employees, Becton,Phils. retrenched nine (9) employees, giving themseparation benefits in accordance with suchguidelines. Its very own Country Manager, JesusFargas, was among those whose services wereterminated. Accordingly, each of them receivedseparation benefits. In addition thereto, the nine (9)terminated employees were also paid retirementbenefits.

On May 16, 2001, Becton, Asia announced theappointment of petitioner Wilfredo Joaquin, a formerFilipino citizen who later acquired Americancitizenship, as the new Country Manager of Becton,Phils. Being a stranger to the companys operations, aswell as to the customers of Becton, Phils., Joaquinsought respondents assistance to address seriousproblems of the company, and to orient him in themechanics of the companys sales and marketingefforts in the Philippines.

Then, on that fateful day of July 10, 2001 or barely two(2) months from Joaquins assumption of his positionas Country Manager, Becton, Phils. served uponrespondent a notice of terminationof employmenteffective August 10, 2001, on the ground that hisposition has been declared redundant.

Respondent was terminated and required to sign aRelease and Quitclaim,[14] otherwise, his separationpay and retirement benefits will be withheld.Respondent found no other alternative but to give in,and reluctantly signed the document.

ISSUEWhether or not private respondent Esmaquel isillegally dismissed.

RULINGYes. Petitioner’s utterly failed to establish bysubstantial evidence that indeed, respondents positionin the company became redundant due to concreteand real factors recognized by law and relevantjurisprudence. Redundancy is one of the authorizedcauses of dismissal. Redundancy in an employer’spersonnel force necessarily or even ordinarily refers toduplication of work. That no other person was holdingthe same position that private respondent held prior tothe termination of his services, does not show that hisposition had not become redundant. Indeed, in anywell organized business enterprise, it would besurprising to find duplication of work and two (2) ormore people doing the work of one person. We believethat redundancy, for purposes of the Labor Code,exists where the services of an employee are inexcess of what is reasonably demanded by the actualrequirements of the enterprise. Succinctly put, aposition is redundant where it is superfluous, andsuperfluity of a position or positions may be theoutcome of a number of factors, such as overhiring ofworkers, decrease in volume of business, or dropping

of a particular product line or service activity previouslymanufactured or undertaken by the enterprise.

Furthermore, the managerial prerogative to transferpersonnel must be exercised without grave abuse ofdiscretion, bearing in mind the basic elements ofjustice and fair play. Having the right should not beconfused with the manner in which that right isexercised. Thus, it cannot be used as a subterfuge bythe employer to rid himself of an undesirable worker.

A lowly employee or a sales manager, as in thepresent case, who is confronted with the samedilemma of whether signing a release and quitclaimand accept what the company offers them, or refusingto sign and walk out without receiving anything, maydo succumb to the same pressure, being very wellaware that it is going to take quite a while before hecan recover whatever he is entitled to, because it isonly after a protracted legal battle starting from thelabor arbiter level, all the way to this Court, can hereceive anything at all. The Court understands thatsuch a risk of not receiving anything whatsoever,coupled with the probability of not immediately gettingany gainful employment or means of livelihood in themeantime, constitutes enough pressure upon anyonewho is asked to sign a release and quitclaim inexchange of some amount of money which may beway below what he may be entitled to based oncompany practice and policy or by law.

It may likewise be noted that what respondent receivedwhen he signed the Release and Quitclaim was lessthan half of what he is entitled to under thecircumstances, as correctly computed by the LaborArbiter in his March 26, 2002 decision. This is anotherreason why the Court cannot rely upon such Releaseand Quitclaim to validly bar respondent from thereafterclaiming additional benefits from petitioner Becton,Phils..

ORIENTAL PETROLEUM v. FUENTESGR. No. 151818, October 14, 2005

Petitioner Oriental Petroleum and MineralsCorporation, through its Senior Vice President forOperations and Administration, Apollo P. Madrid,informed respondents of its retrenchment program asa consequence of which respondents would beterminated from employment. They were also advisedthat they would receive greater separation benefits ifthey qualify for retirement or resignation benefits underthe retirement plan. Petitioner and respondents couldnot agree on the amounts. The latter then filedseparate complaints8 for illegal retrenchment withprayer for the payment of backwages, actual damages,moral and exemplary damages, and attorney’s fees.Labor Arbiter dismissed the complaint. NLRC held thatpetitioner’s serious financial difficulties necessitatedthe retrenchment of respondents.

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ISSUEWhether or not petitioner undertook a validretrenchment as it was already actuallysufferingserious financial losses

HELDRetrenchment is one of the authorized causesrecognized by the Labor Code for the dismissal ofemployees. It is a management prerogative resorted toby employers to avoid or minimize businesslosses. The Court has laid down the followingstandards that a company must meet to justifyretrenchment and to foil abuse:

1. Firstly, the losses expected should besubstantial and not merely de minimis inextent. If the loss purportedly sought to beforestalled by retrenchment is clearly shown tobe insubstantial and inconsequential incharacter, the bonafide nature of theretrenchment would appear to be seriously inquestion.2. Secondly, the substantial lossapprehended must be reasonably imminent,as such imminence can be perceivedobjectively and in good faith by theemployer. There should, in other words, be acertain degree of urgency for theretrenchment, which is after all a drasticrecourse with serious consequences for thelivelihood of the employees retired orotherwise laid-off.3. thirdly, it must be reasonablynecessary and likely to effectively prevent theexpected losses.4. Lastly, but certainly not the leastimportant, alleged losses if already realized,and the expected imminent losses sought tobe forestalled, must be proved by sufficientand convincing evidence.

Financial statements, in themselves, do not suffice tomeet the stringent requirement of the law that thelosses must be substantial, continuing and without anyimmediate prospect of abating. Retrenchment being ameasure of last resort, petitioner should have beenable to demonstrate that it expected no abatement ofits losses in the coming years. Petitioner having failedin this regard, we find that the Court of Appeals did noterr in dismissing as unimpressive and insufficientpetitioner’s audited financial statements.

FASAP v. PALG.R. No. 178083, July 22, 2008, Ynares Santiago

Petitioner is the EBR of respondent’s flight attendantsand stewards. Due to its alleged financial loss,respondent made a retrenchment scheme, thereby,terminating many of the employees, includingmembers of petitioner union. As a consequence,petitioner filed for illegal dismissal on the ground thatthe retrenchment scheme of the respondent is illegal.

ISSUEWhether or not the retrenchment scheme by PAL isvalid

RULINGNo. while it is true that the exercise of this right is aprerogative of management, there must be faithfulcompliance with substantive and proceduralrequirements of the law and jurisprudence, forretrenchment strikes at the very heart of the workersemployment, the lifeblood upon which he and hisfamily owe their survival. Retrenchment is only ameasure of last resort, when other less drastic meanshave been tried and found to be inadequate.

The burden clearly falls upon the employer to proveeconomic or business losses with sufficient supportingevidence. Its failure to prove these reverses or lossesnecessarily means that the employees dismissal wasnot justified. Any claim of actual or potential businesslosses must satisfy certain established standards, all ofwhich must concur, before any reduction of personnelbecomes legal. These are:

(1) That retrenchment is reasonablynecessary and likely to preventbusiness losses which, if alreadyincurred, are not merely de minimis,but substantial, serious, actual andreal, or if only expected, arereasonably imminent as perceivedobjectively and in good faith by theemployer;

(2) That the employer served writtennotice both to the employees and tothe Department of Labor andEmployment at least one month priorto the intended date of retrenchment;

(3) That the employer pays theretrenched employees separation payequivalent to one (1) month pay or atleast one-half () month pay for everyyear of service, whichever is higher;

(4) That the employer exercises itsprerogative to retrench employees ingood faith for the advancement of itsinterest and not to defeat or

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circumvent the employees right tosecurity of tenure; and,

(5) That the employer used fair andreasonable criteria in ascertaining whowould be dismissed and who would beretained among the employees, suchas status, efficiency, seniority,physical fitness, age, and financialhardship for certain workers.[45]

In the instant case, PAL failed to substantiate its claimof actual and imminent substantial losses which wouldjustify the retrenchment of more than 1,400 of its cabincrew personnel. Although the Philippine economy wasgravely affected by the Asian financial crisis, however,it cannot be assumed that it has likewise brought PALto the brink of bankruptcy. Likewise, the fact that PALunderwent corporate rehabilitation does notautomatically justify the retrenchment of its cabin crewpersonnel.

Moreover, in assessing the overall performance ofeach cabin crew personnel, PAL only considered theyear 1997. This makes the evaluation of each cabinattendants efficiency rating capricious and prejudicialto PAL employees covered by it. By discarding thecabin crew personnels previous years of service andtaking into consideration only one years worth of jobperformance for evaluation, PAL virtually did away withthe concept of seniority, loyalty and past efficiency,and treated all cabin attendants as if they were onequal footing, with no one more senior than the other.

In sum, PALs retrenchment program is illegal becauseit was based on wrongful premise (Plan 14, which inreality turned out to be Plan 22, resulting inretrenchment of more cabin attendants than wasnecessary) and in a set of criteria or rating variablesthat is unfair and unreasonable when implemented. Itfailed to take into account each cabin attendantsrespective service record, thereby disregardingseniority and loyalty in the evaluation of overallemployee performance.

GENERAL MILLING CORPORATION v. VIOLETA L.VIAJARG.R. No. 181738, January 30, 2013

Violeta Viajar received a Letter-Memorandum fromGeneral Milling Corporation (GMC) informing her thather services are no longer needed because herposition as Purchasing Staff was deemed redundant.When Viajar reported for work on October 31, 2003, amonth prior the effectivity from her severance fromGMC, the guard on duty prevented her from enteringthe companys premises. She was also asked to signan Application for Retirement and Benefits. Viajarrefused to sign. Thus, she filed a complaint for illegaldismissal. The Labor Arbiter ruled in favor of GMC andheld that the latter acted in good faith in terminating

Viajar. On appeal, the NLRC affirmed LAs decision.Viajar filed a petition before the Court of Appeals. TheCA granted the petition. Thus, GMC filed this instantpetition for review before the Supreme Court.

ISSUEWhether or not Viajar was validly terminated fromGMC

HELDThe petition is denied. Art. 283 of the Labor Codeprovides that redundancy is one of the authorizedcauses for dismissal. It is imperative that the employermust comply with the requirements for a validimplementation of the companys redundancy program,to wit: (a) the employer must serve a written notice tothe affected employees and the DOLE at least one (1)month before the intended date of retrenchment; (b)the employer must pay the employees a separationpay equivalent to at least one month pay or at leastone month pay for every year of service, whichever ishigher; (c) the employer must abolish the redundantpositions in good faith; and (d) the employer must setfair and reasonable criteria in ascertaining whichpositions are redundant and may be abolished.

MARICALUM MINING V. DECORIONG.R. No. 158637, April 12, 2006, Tinga

Decorion was a regular employee of MaricalumMining. Because of his alleged insubordination forfailure to attend a meeting, he was placed underpreventive suspension. He was also not allowed toreport for work the following day. [See Ruling for otherrelevant facts and dates]

ISSUEWas the suspension justified?

HELDNo.

Sections 8 and 9 of Rule XXIII, Book V of theImplementing Rules provide as follows:

Section 8. Preventive suspension. ---The employer may place the workerconcerned under preventivesuspension if his continuedemployment poses a serious andimminent threat to the life or propertyof the employer or his co-workers.

Section 9. Period of Suspension ---No preventive suspension shall lastlonger than thirty (30) days. XXX

In this case, Decorion was suspended only becausehe failed to attend a meeting called by his supervisor.There is no evidence to indicate that his failure toattend the meeting prejudiced his employer or that his

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presence in the company’s premises posed a seriousthreat to his employer and co-workers. The preventivesuspension was clearly unjustified.

What is more, Decorion’s suspension persistedbeyond the 30-day period allowed by the ImplementingRules. XXX . The Court ruled that preventivesuspension which lasts beyond the maximum periodallowed by the Implementing Rules amounts toconstructive dismissal.

Similarly, from the time Decorion was placed underpreventive suspension on April 11, 1996 up to the timea grievance meeting was conducted on June 5, 1996,55 days had already passed. Another 48 days went bybefore he filed a complaint for illegal dismissal on July23, 1996. Thus, at the time Decorion filed a complaintfor illegal dismissal, he had already been suspendedfor a total of 103 days.

Decorions preventive suspension had already ripenedinto constructive dismissal at that time. While actualdismissal and constructive dismissal do take place indifferent fashion, the legal consequences theygenerate are identical.

UNIWIDE SALES WAREHOUSE CLUB VS. NLRCG.R. No. 154503, February 29, 2008

TOPIC: Constructive Dismissal; AbandonmentDOCTRINE: Case law defines constructive dismissalas a cessation of work because continued employmentis rendered impossible, unreasonable or unlikely; whenthere is a demotion in rank or diminution in pay orboth; or when a clear discrimination, insensibility, ordisdain by an employer becomes unbearable to theemployee.

The test of constructive dismissal is whether areasonable person in the employee's position wouldhave felt compelled to give up his position under thecircumstances. It is an act amounting to dismissal butmade to appear as if it were not. In fact, the employeewho is constructively dismissed may be allowed tokeep on coming to work. Constructive dismissal istherefore a dismissal in disguise. The law recognizesand resolves this situation in favor of employees inorder to protect their rights and interests from thecoercive acts of the employer.

FACTSAmalia Kawada, a Full Assistant Store Managerreceived 3 Memorandums issued by the StoreManager Apduhan: (1) summarizing the variousreported incidents signifying unsatisfactoryperformance on the latter's part which include thecommingling of good and damaged items, sale of avoluminous quantity of damaged toys and ready-to-wear items at unreasonable prices, and failure tosubmit inventory reports; (2) Memorandum satting thatthe answers given were all hypothetical and did not

answer directly the allegations attributed to her; and(3) Memorandum seeking from the private respondentan explanation regarding the incidents reported byUniwide employees and security personnel for allegedirregularities committed by the private respondent suchas allowing the entry of unauthorized persons inside arestricted area during non-office hours, falsification ofor inducing another employee to falsify personnel orcompany records, sleeping and allowing a non-employee to sleep inside the private office,unauthorized search and bringing out of companyrecords, purchase of damaged home furnishing itemswithout the approval from superior, taking advantageof buying damaged items in large quantity, alteration ofapproval slips for the purchase of damaged items andabandonment of work.

In a letter, private respondent answered the allegationsmade against her. On August 2, 1998, Apduhan issueda Memorandum, advising Kawada of a hearingscheduled on August 12, 1998 and warning her thatfailure to appear shall constitute as waiver and thecase shall be submitted for decision based onavailable papers and evidence. On August 3, 1998,private respondent thinking that she was constructivelydismissed, filed a case for illegal dismissal before theLabor Arbiter (LA). On August 8, 1998, Apduhan senta letter addressed to private respondent, which thelatter received on even date, advising privaterespondent to report for work, as she had been absentsince August 1, 1998; and warning her that upon herfailure to do so, she shall be considered to haveabandoned her job.

On September 1, 1998, Apduhan issued aMemorandum stating that since private respondentwas unable to attend the scheduled August 12, 1998hearing, the case was evaluated on the basis of theevidence on record; and enumerating the pieces ofevidence of the irregularities and violations of companyrules committed by private respondent, the latter'sdefenses and the corresponding findings by Uniwide.Kawada was thereafter terminated from heremployment on the grounds of violations of CompanyRules, Abandonment of Work and loss of trust andconfidence.

ISSUEWhether or not respondent was constructivelydismissed.

HELDNo. The Court finds that private respondent'sallegation of harassment is a specious statementwhich contains nothing but empty imputation of a factthat could hardly be given any evidentiary weight bythis Court. Private respondent's bare allegations ofconstructive dismissal, when uncorroborated by theevidence on record, cannot be given credence.

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The right to impose disciplinary sanctions upon anemployee for just and valid cause, as well as theauthority to determine the existence of said cause inaccordance with the norms of due process, pertains inthe first place to the employer. Precisely, petitionersgave private respondent successive memoranda so asto give the latter an opportunity to controvert thecharges against her. Clearly, the memoranda are notforms of harassment, but petitioners' compliance withthe requirements of due process.

On petitioners' claim of abandonment by privaterespondent, well-settled is the rule that to constituteabandonment of work, two elements must concur: (1)the employee must have failed to report for work ormust have been absent without valid or justifiablereason, and (2) there must have been a clear intentionon the part of the employee to sever the employer-employee relationship manifested by some overt act.The employer has the burden of proof to show theemployee's deliberate and unjustified refusal toresume his employment without any intention ofreturning. Mere absence is not sufficient. There mustbe an unequivocal intent on the part of the employeeto discontinue his employment.

Private respondent's failure to report for work despitethe August 8, 1998 letter sent by Apduhan to privaterespondent advising the latter to report for work is notsufficient to constitute abandonment. It is a settled rulethat failure to report for work after a notice to return towork has been served does not necessarily constituteabandonment.

Private respondent mistakenly believed that thesuccessive memoranda sent to her from March 1998to June 1998 constituted discrimination, insensibility ordisdain which was tantamount to constructivedismissal. Thus, private respondent filed a case forconstructive dismissal against petitioners andconsequently stopped reporting for work.

The Court finds that petitioners were not able toestablish that private respondent deliberately refusedto continue her employment without justifiable reason.To repeat, the Court will not make a drastic conclusionthat private respondent chose to abandon her work onthe basis of her mistaken belief that she had beenconstructively dismissed by Uniwide.

Nonetheless, the Court agrees with the findings of theLA that the termination of private respondent wasgrounded on the existence of just cause under Article282 (c) of the Labor Code or willful breach by theemployee of the trust reposed on him by his employeror a duly authorized representative.

Private respondent occupies a managerial position. Asa managerial employee, mere existence of a basis forbelieving that such employee has breached the trust ofhis employer would suffice for his dismissal.

NORKIS TRADING CO. INC. and/or MANUELGASPAR E. ALBOS, JR. v.MELVIN GNILOG.R. No. 159730, February 11, 2008, Austria-Martinez

Melvin R. Gnilo (respondent) was initially hired byNorkis Trading Co., Inc. (petitioner Norkis) as NorkisInstallment Collector (NIC) in April 1988. ManuelGaspar E. Albos, Jr. (petitioner Albos) is the SeniorVice-President of petitioner Norkis. Respondent heldvarious positions in the company until he wasappointed as Credit and Collection Manager of MagnaFinancial Services Group, Inc.-Legaspi Branch,petitioner Norkis’s sister company, in charge of theareas of Albay and Catanduanes with travel andtransportation allowances and a service car.

A special audit team was conducted in respondent'soffice in Legaspi, Albay from March 13 to April 5, 2000when it was found out that respondent forwarded themonthly collection reports of the NICs under hissupervision without checking the veracity of the same.It appeared that the monthly collection highlights forthe months of April to September 1999 submitted byrespondent to the top management were all overstatedparticularly the account handled by NIC Dennis Cadag.Respondent was then charged by petitioners' InquiryAssistance Panel (Panel) with negligence of basicduties and responsibilities resulting in loss of trust andconfidence and laxity in directing and supervising hisown subordinates. During the investigation,respondent admitted that he was negligent for failing toregularly check the report of each NIC under hissupervision; that he only checked at random the NIC'smonthly collection highlight reports; and that as aleader, he is responsible for the actions of hissubordinates. He however denied being lax insupervising his subordinates, as he imposed disciplineon them if the need arose.

On May 30, 2000, petitioner Norkis through its HumanResource Manager issued a memorandum placingrespondent under 15 days suspension without pay,travel and transportation allowance, effective uponreceipt thereof. Respondent filed a letter protesting hissuspension and seeking a review of the penaltyimposed.

Another memorandum4 dated June 30, 2000 wasissued to respondent requiring him to report on July 5,2000 to the head office of petitioner Norkis inMandaluyong City for a re-training or a possible newassignment without prejudice to his request for areconsideration or an appeal of his suspension. Hewas then assigned to the Marketing Division directlyreporting to petitioner Albos.

In a letter5 dated July 27, 2000, respondent requestedpetitioner Albos that he be assigned as Sales Engineeror to any position commensurate with his

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qualifications. However, on July 28, 2000, respondentwas formally appointed as Marketing Assistant topetitioner Albos, which position respondentsubsequently assumed. However, on October 4, 2000,respondent filed with the Labor Arbiter (LA) acomplaint for illegal suspension, constructivedismissal, non-payment of allowance, vacation/sickleave, damages and attorney's fees againstpetitioners.

On March 30, 2001, the LA rendered hisdecision6 dismissing the complaint for lack of merit.The LA found that the position of Credit and CollectionManager held by respondent involved a high degree ofresponsibility requiring trust and confidence; that hisfailure to observe the required procedure in thepreparation of reports, which resulted in the overstatedcollection reports continuously for more than sixmonths, was sufficient to breach the trust andconfidence of petitioners and was a valid ground fortermination; that instead of terminating him, petitionersmerely imposed a 15-day suspension which was notillegal; and that petitioners exercised their inherentprerogative as an employer when they appointedrespondent as a Marketing Assistant.

Respondent appealed the LA decision to the NationalLabor Relations Commission (NLRC), which reversedthe LA’s decision. It held that the transfer ofrespondent from the position of Credit and CollectionManager to Marketing Assistant resulted in hisdemotion in rank from Manager to a mere rank and fileemployee, which was tantamount to constructivedismissal and therefore illegal.

Petitioners filed a petition for certiorari with the CA.Subsequently, they also filed a Motion for the Issuanceof a Temporary Restraining Order or a Writ ofPreliminary Injunction, as respondent had filed aMotion for the Issuance of a Writ of Execution with theNLRC. On August 25, 2003, the CA denied petitioners’Motion for Reconsideration.

Issue:WON private respondent was constructivelydismissed.

Ruling:Petitioners contend that factual findings of quasi-judicial agencies, while generally accorded finality,may be reviewed by this Court when the findings of theNLRC and the LA are contradictory; that in theexercise of its equity jurisdiction, this Court may lookinto the records of the case to re-examine thequestioned findings.

The general rule is that the factual findings of theNLRC, as affirmed by the CA, are accorded highrespect and finality unless the factual findings andconclusions of the LA clash with those of the NLRCand the CA, as it appears in this case. Thus we have

to review the records and the arguments of the partiesto resolve the factual issues and render substantialjustice to the parties.

Well-settled is the rule that it is the prerogative of theemployer to transfer and reassign employees for validreasons and according to the requirement of itsbusiness. An owner of a business enterprise is givenconsiderable leeway in managing his business. Ourlaw recognizes certain rights, collectively calledmanagement prerogative as inherent in themanagement of business enterprises. The right ofemployees to security of tenure does not give themvested rights to their positions to the extent ofdepriving management of its prerogative to changetheir assignments or to transfer them. Managerialprerogatives, however, are subject to limitationsprovided by law, collective bargaining agreements, andgeneral principles of fair play and justice.

The employer bears the burden of showing that thetransfer is not unreasonable, inconvenient orprejudicial to the employee; and does not involve ademotion in rank or a diminution of his salaries,privileges and other benefits.18Should the employer failto overcome this burden of proof, the employee’stransfer shall be tantamount to constructive dismissal.

Constructive dismissal is defined as a quitting becausecontinued employment is rendered impossible,unreasonable or unlikely; when there is a demotion inrank or a diminution of pay.20 Likewise, constructivedismissal exists when an act of clear discrimination,insensibility or disdain by an employer becomesunbearable to the employee, leaving him with nooption but to forego his continued employment.21

A transfer is defined as a "movement from one positionto another which is of equivalent rank, level or salary,without break in service."22 Promotion, on the otherhand, is the "advancement from one position toanother with an increase in duties and responsibilitiesas authorized by law, and usually accompanied by anincrease in salary."23Conversely, demotion involves asituation in which an employee is relegated to asubordinate or less important position constituting areduction to a lower grade or rank, with acorresponding decrease in duties and responsibilities,and usually accompanied by a decrease in salary.

In this case, while the transfer of respondent fromCredit and Collection Manager to Marketing Assistantdid not result in the reduction of his salary, there was areduction in his duties and responsibilities whichamounted to a demotion tantamount to a constructivedismissal as correctly held by the NLRC and the CA.

As Credit and Collection Manager, respondent wasclothed with all the duties and responsibilities of amanagerial employee. On the other hand, the work of

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a Marketing Assistant is clerical in nature, which doesnot involve the exercise of any discretion.

There is constructive dismissal when an employee'sfunctions, which were originally supervisory in nature,were reduced; and such reduction is not grounded onvalid grounds such as genuine business necessity.Moreover, petitioners failed to refute respondent’sclaim that as Credit and Collection Manager, he wasprovided with a service car which was no longeravailable to him as Marketing Assistant; thus, suchwas a reduction in his benefit.

Anent petitioners' claim that respondentunconditionally accepted his formal appointment asMarketing Assistant on August 3, 2000, we note that ina letter dated July 27, 2000 addressed to petitionerAlbos when he learned that he would be assigned as aMarketing Assistant, respondent had expressedreservations on such assignment and asked that heinstead be assigned as Sales Engineer or to anyposition commensurate to his qualifications.Respondent could not be faulted for accepting theposition of a Marketing Assistant, since he did so andstayed put in order to compare and evaluate hisposition. However, he experienced not only a demotionin his duties and responsibilities, an undignifiedtreatment by his immediate superior, which promptedhim to file this case.

We note that the alleged overstated collection reportsof three NICs under respondent's supervisionsubmitted in 1997, were already mentioned in the IAPreport of the 1999 incident for which respondent wasmeted the penalty of 15- day suspension withoutsalary, travel and transportation allowance; thus, thesame could no longer be used to justify his transfer.Moreover, respondent's demotion, which was apunitive action, was, in effect, a second penalty for thesame negligent act of respondent.

Petition denied

RODELIA FUNGO V. LOURDES SCHOOL OFMANDALUYONGG.R. No. 152531, July 27, 2007

Doctrine: Resignation is the voluntary act ofemployees who are compelled by personal reasons todisassociate themselves from their employment. Itmust be done with the intention of relinquishing anoffice, accompanied by the act of abandonment.Resignation is inconsistent with the filing of thecomplaint.

There is constructive dismissal if an act of cleardiscrimination, insensibility, or disdain by an employerbecomes so unbearable on the part of the employeethat it would foreclose any choice by him except toforego her continued employment.

FACTSRodelia S. Fungo, petitioner, alleged in her petitionthat she was employed as secretary of respondent Fr.Servillano B. Bustamante, rector of Lourdes School ofMandaluyong. Respondent Fr. Bustamante authorizedher to file and keep confidential documents in hisoffice. He entrusted to her the duplicate keys of thefiling cabinet and she was allowed to take anydocument therefrom whenever she had to bring somematters to his attention.

In January 1996, petitioners husband, Nicolas Fungo,an elementary school teacher in the same school, wasdismissed from the service because of his lowperformance rating. According to petitioner, herhusband’s services were terminated because of hisstatement during a faculty meeting that the Missionand Vision Statement of the school is not beingpracticed. He was also one of those who signed aletter asking the Provincial Minister of the Capuchins inthe Philippines to appoint Fr. Miguel Peralta either asrector or vice rector of the school. Fr. Peralta is a closerival of respondent Fr. Bustamante since theirseminary days.

Petitioner then wrote respondent Fr. Bustamantequestioning the performance rating given to herhusband. She attached to her letter documentscontaining the summary of efficiency ratings of all theteachers. She retrieved these documents from thefiling cabinet.

On March 8, 1996 petitioner received a letter fromrespondent Fr. Bustamante requiring her to explain inwriting why she should not be dismissed fromemployment for willful breach of trust reposed on her.

On March 11, 1996, petitioner filed her writtenexplanation.

Petitioner further alleged in her petition that in themorning of April 1, 1996, Fr. Manuel Remirez, theschool treasurer, summoned her to his office.Thereupon, he compelled her to tender her resignationwithin 30 minutes, otherwise, she will not receive herseparation pay. Petitioner pleaded for one daydeferment so she could consult her aunt, MilagrosTadeo, former assistant principal on academics for theelementary department of the same school. However,Fr. Remirez denied her plea. Considering that herhusband was jobless and that her family was infinancial predicament, petitioner submitted herresignation letter on the very same day. Subsequently,she received her separation pay.

On January 28, 1997, petitioner filed with the LaborArbiter a complaint for illegal dismissal with prayer forreinstatement and payment of backwages and otherbenefits, as well as for an award of moral andexemplary damages and attorneys fees. Petitioner

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alleged therein that she was forced to resign and toaccept her separation pay; and that Fr. Remirez tookadvantage of her economic plight, compelling her tosubmit her resignation letter within 30 minutes.

The LA found that petitioner was constructivelydismissed. This was reversed by the NRLC holdingthat petitioner voluntarily resigned. When her motionfor reconsideration was denied, petitioner went to CAwhich dismissed the petition. With her motion forreconsideration being denied, petitioner elevated thecase to the SC.

ISSUEWON the petitioner was constructively dismissed fromthe service. - YES

RULINGRespondents argue that petitioners act of retrieving thedocument from the files inside the rector’s office wasimproper and constituted a willful breach of the trustreposed upon her by Fr. Bustamante. Such breach oftrust is a just cause for terminating her services.

To be a valid ground for dismissal, loss of trust andconfidence must be based on a willful breach of trustand founded on clearly established facts. Loss ofconfidence must not be indiscriminately used as ashield by the employer against a claim that thedismissal of an employee was arbitrary. And, in orderto constitute a just cause for dismissal, the actcomplained of must be work-related and shows thatthe employee concerned is unfit to continue workingfor the employer

In Nokom v. National Labor Relations Commission, weset the guidelines for the application of loss ofconfidence as a just cause for dismissing an employeefrom the service, thus:

a. loss of confidence should not be simulated;b. it should not be used as a subterfuge forcauses which are improper, illegal or unjustified;c. it may not be arbitrarily asserted in the face ofoverwhelming evidence to the contrary; andd. it must be genuine, not a mere afterthought tojustify earlier action taken in bad faith.

In the instant case, Fr. Bustamante entrusted topetitioner various documents in his office. She couldtake any document from the filing cabinet inside hisoffice. While she retrieved documents pertaining to theefficiency ratings of all teachers in the school for theyear 1990-1991, such act did not constitute a breachof trust and confidence since she did not show thosedocuments to any other person except to Fr.Bustamante himself. Significantly, he did not disputethe fact that petitioner had access to the records.

When petitioner asked Fr. Bustamante why herhusbands performance rating was low, Fr. Remirezsummoned her to his office and urged her to tender

her resignation within 30 minutes. He threatened herthat if she would not resign, her separation pay wouldbe forfeited. These circumstances glaringly show thatrespondents wanted to terminate her employment, butthey made it appear that she voluntarily resigned.

Resignation is the voluntary act of employees who arecompelled by personal reasons to disassociatethemselves from their employment. It must be donewith the intention of relinquishing an office,accompanied by the act of abandonment. It wouldhave been illogical therefore for the petitioner to resignand then file a complaint for illegal dismissal.Resignation is inconsistent with the filing of thecomplaint.

There is constructive dismissal if an act of cleardiscrimination, insensibility, or disdain by an employerbecomes so unbearable on the part of the employeethat it would foreclose any choice by him except toforego her continued employment.

An examination of the records of this case convincedus that petitioner was indeed made to resign againsther will with threat that she will not be given herseparation pay should she fail to do so. Clearly, herconsent was vitiated. Indeed, it is very unlikely thatpetitioner, who worked in the school for almost fifteen(15) years, would simply resign voluntarily. Her receiptof the benefits could be considered as an act of self-preservation, taking into consideration the financialpredicament she and her family were then facing.Thus, we rule that petitioner was constructivelydismissed from her employment.

Under Article 279 of the Labor Code, an employeewho is unjustly dismissed from work shall be entitled toreinstatement without loss of seniority rights and otherprivileges and to his full backwages, inclusive ofallowances, and to his other benefits or their monetaryequivalent computed from the time his compensationwas withheld from him up to the time of his actualreinstatement. Considering, however, that the natureof petitioners work requires constant interaction withFr. Bustamante, their working relationship has beenstrained. Thus, the payment of separation pay andother benefits in lieu of reinstatement is in order.

THE UNIVERSITY OF THE IMMACULATECONCEPTION V. NLRCG.R. No. 181146, January 26, 2011, Carpio

Private respondent Teodora C. Axalan is a regularfaculty member in the Petitioner Uiversity holding theposition of Associate Professor II. From 18 Novemberto 22 November 2002, Axalan attended a seminar inQuezon City on website development. Axalan thenreceived a memorandum from Dean Maria RosaCelestial asking her to explain in writing why sheshould not be dismissed for having been absentwithout official leave. In her letter, Axalan claimed that

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she held online classes while attending the seminar.She explained that she was under the impression thatfaculty members would not be marked absent even ifthey were not physically present in the classroom aslong as they conducted online classes.

ISSUEWas Axalan constructively dismissed?

HELDNO.

“Constructive dismissal occurs when there is cessationof work because continued employment is renderedimpossible, unreasonable, or unlikely as when there isa demotion in rank or diminution in pay or when a cleardiscrimination, insensibility, or disdain by an employerbecomes unbearable to the employee leaving the latterwith no other option but to quit.”

“In this case however, there was no cessation ofemployment relations between the parties. Itis unrefuted that Axalan promptly resumed teaching atthe university right after the expiration of thesuspension period. In other words, Axalan never quit.Hence, Axalan cannot claim that she was left with nochoice but to quit, a crucial element in a finding ofconstructive dismissal. Thus, Axalan cannot bedeemed to have been constructively dismissed.”

“Note that on the first AWOL incident, the universityeven offered to drop the AWOL chargeagainst Axalan if she would only write a letter ofcontrition. But Axalan adamantly refusedknowing fully well that the administrative case wouldtake its course leading to possible sanctions. Shecannot now be heard that the imposition of the penaltyof six-month suspension without pay for each AWOLcharge is unreasonable. We are convincedthat Axalan was validly suspended for cause and inaccord with procedural due process.”

“The Court recognizes the right of employers todiscipline its employees for serious violations ofcompany rules after affording the latter due processand if the evidence warrants. The university, afteraffording Axalan due process and finding her guilty ofincurring AWOL on two separate occasions, acted wellwithin the bounds of labor laws in imposing the penaltyof six-month suspension without pay for eachincidence of AWOL.”

“As a learning institution, the university cannot beexpected to take lightly absences without official leaveamong its employees, more so among its facultymembers even if they happen to be union officers. Todo so would send the wrong signal tothe studentry and the rest of its teaching staff thatirresponsibility is widely tolerated in the academe.”

ROBINSONS GALLERIA/ROBINSONSSUPERMARKET CORPORATION and/or JESSMANUEL v. IRENE R. RANCHEZG.R. No. 177937, January 19, 2011

Respondent Ranchez was a probationary employeefor 5 months. She was hired as a cashier byRobinsons sometime within that period. Two weeksafter she was hired, she reported the loss of cashwhich she had placed in the company locker. Sheoffered to pay for the lost amount but the OperationsManager of Robinsons had her strip-searched thenreported her to the police even though they foundnothing on her person. An information for QualifiedTheft was filed with the Quezon City Regional TrialCourt. She was detained for 2 weeks for failure toimmediately post bail. Weeks later, respondentRanchez filed a complaint for illegal dismissal anddamages. A year later, Robinsons sent to respondentby mail a notice of termination and/or notice ofexpiration of probationary employment.

The Labor Arbiter dismissed the complaint for illegaldismissal, alleging that at the time of filing respondentRanchez had not yet been terminated. She was merelyinvestigated. However, the NLRC reversed this ruling,stating that Ranchez was illegally dismissed and thatRobinson's should reinstate her. It held that Ranchezwas deprived of due process when she was strip-searched and sent to jail for two weeks because suchamounted to constructive dismissal, making itimpossible for the respondent to continue under theemployment. Even though she was merely aprobationary employee, the lapse of the probationarycontract did not amount to a valid dismissal becausethere was already an unwarranted constructivedismissal beforehand.

ISSUEWhether respondent was legally terminated fromemployment by petitioners.

HELDNO. The petition is unmeritorious.

There is probationary employment when the employeeupon his engagement is made to undergo a trial periodduring which the employer determines his fitness toqualify for regular employment based on reasonablestandards made known to him at the time ofengagement.

A probationary employee, like a regular employee,enjoys security of tenure. However, in cases ofprobationary employment, aside from just orauthorized causes of termination, an additional groundis provided under Article 281 of the Labor Code,i.e.,the probationary employee may also be terminated forfailure to qualify as a regular employee in accordancewith reasonable standards made known by theemployer to the employee at the time of the

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engagement.Thus, the services of an employee whohas been engaged on probationary basis may beterminated for any of the following:

(1) a just or(2) an authorized cause; and(3) when he fails to qualify as a regular employee inaccordance with reasonable standards prescribed bythe employer.

Article 277(b) of the Labor Code mandates that theemployer shall furnish the worker, whose employmentis sought to be terminated, a written notice containinga statement of the causes of termination, and shallafford the latter ample opportunity to be heard and todefend himself with the assistance of a representativeif he so desires, in accordance with company rules andregulations pursuant to the guidelines set by theDepartment of Labor and Employment.

In the instant case, based on the facts on record,petitioners failed to accord respondent substantive andprocedural due process.The haphazard manner in theinvestigation of the missing cash, which was left to thedetermination of the police authorities and theProsecutor's Office, left respondent with no choice butto cry foul. Administrative investigation was notconducted by petitioner Supermarket.On the same daythat the missing money was reported by respondent toher immediate superior, the company already pre-judged her guilt without proper investigation, andinstantly reported her to the police as the suspectedthief, which resulted in her languishing in jail for twoweeks.

The due process requirements under the Labor Codeare mandatory and may not be replaced with policeinvestigation or court proceedings. An illegally orconstructively dismissed employee, respondent isentitled to: (1) either reinstatement, if viable, orseparation pay, if reinstatement is no longer viable;and (2) backwages. These two reliefs are separateand distinct from each other and are awardedconjunctively.

In this case, since respondent was a probationaryemployee at the time she was constructively dismissedby petitioners, she is entitled to separation pay andbackwages. Reinstatement of respondent is no longerviable considering the circumstances.

DREAMLAND HOTEL V. JOHNSONG.R. No. 191455, March 12, 2014

Prentice and Johnson entered into an EmploymentAgreement, which stipulates among others, thatJohnson shall serve as Operations Manager ofDreamland from August 1, 2007 and shall serve assuch for a period of three (3) years. From the start ofAugust 2007, as stipulated in the EmploymentAgreement, respondent Johnson already reported for

work. It was then that he found out to his dismay thatthe resort was far from finished. However, he wasinstructed to supervise construction and speak withpotential guests. He also undertook the overallpreparation of the guestrooms and staff for theopening of the hotel, even performing menial tasks. AsJohnson remained unpaid since August 2007 and hehas loaned all his money to petitioners, he asked forhis salary after the resort was opened but thepetitioners refused. Johnson became very alarmedwith the situation. After another embarrassment washanded out by petitioner Prentice in front of the staff,which highlighted his lack of real authority in the hoteland the disdain for him by petitioners, respondentJohnson was forced to submit his resignation.

ISSUEWhether or not Johnson voluntarily resigned.

HELDNo. Although the resort did not open untilapproximately 8th October 2007, Johnson'semployment began, as per Employment Agreement,on 1st August 2007. During the interim period,Johnson was frequently instructed by Prentice tosupervise the construction staff and speak withpotential future guests who visited the site out ofcuriosity. The petitioners maintain that they have paidthe amount of P7,200.00 to Johnson for his threeweeks of service from October 8, 2007 until November3, 2007, the date of Johnson's resignation, whichJohnson did not controvert. Even so, the amount thepetitioners paid to Johnson as his three-week salary issignificantly deficient as Johnson's monthly salary asstipulated in their contract is P60,000.00. Thus, theamount which Johnson should have been paid isP45,000.00 and not P7,200.00. In light of thisdeficiency, there is more reason to believe that thepetitioners withheld the salary of Johnson without avalid reason. It only goes to show that while it wasJohnson who tendered his resignation, it was due tothe petitioners acts that he was constrained to resign.The petitioners cannot expect Johnson to tolerateworking for them without any compensation. SinceJohnson was constructively dismissed, he was illegallydismissed. Thus, an illegally dismissed employee isentitled to two reliefs: backwages and reinstatement.The two reliefs provided are separate and distinct. Ininstances where reinstatement is no longer feasiblebecause of strained relations between the employeeand the employer, separation pay is granted. In effect,an illegally dismissed employee is entitled to eitherreinstatement, if viable, or separation pay ifreinstatement is no longer viable, and backwages. Theaccepted doctrine is that separation pay may avail inlieu of reinstatement if reinstatement is no longerpractical or in the best interest of the parties.Separation pay in lieu of reinstatement may likewisebe awarded if the employee decides not to bereinstated. Under the doctrine of strained relations, thepayment of separation pay is considered an

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acceptable alternative to reinstatement when the latteroption is no longer desirable or viable.

ALABANG COUNTRY CLUB V. NLRCG.R. No. 170287, February 14, 2008, Velasco

Petitioner Alabang Country Club, Inc. (Club) is adomestic non-profit corporation with principal office atCountry Club Drive, Ayala Alabang, Muntinlupa City.Respondents are Alabang Country Club IndependentEmployees Union (Union),the exclusive bargainingagent of the Clubs rank-and-file employees. The Cluband the Union entered into a Collective BargainingAgreement (CBA), which provided for a Union shopand maintenance of membership shop.The Uniondiscovered some irregularly recorded entries,unaccounted expenses and disbursements, anduncollected loans from the Union funds byrespondents Pizarro, Braza, and Castueras.Despitetheir explanations, respondents Pizarro, Braza, andCastueras were expelled from the Union.the Union,Invoking the Security Clause of the CBA, the Clubdismissed upon demand of the Union the respondentsPizarro, Braza, and Castueras in view of theirexpulsion from the Union.

ISSUEWhether or not the respondents’ dismissal from theClub was proper?

RULINGYes. One cause for termination is dismissal fromemployment due to the enforcement of the unionsecurity clause in the CBA. Here, Art. II of the CBA onUnion security contains the provisions on the Unionshop and maintenance of membership shop. There isunion shop when all new regular employees arerequired to join the union within a certain period as acondition for their continued employment. There ismaintenance of membership shop when employeeswho are union members as of the effective date of theagreement, or who thereafter become members, mustmaintain union membership as a condition forcontinued employment until they are promoted ortransferred out of the bargaining unit or the agreementis terminated.

In terminating the employment of an employee byenforcing the union security clause, the employerneeds only to determine and prove that: (1) the unionsecurity clause is applicable; (2) the union isrequesting for the enforcement of the union securityprovision in the CBA; and (3) there is sufficientevidence to support the unions decision to expel theemployee from the union. These requisites constitutejust cause for terminating an employee based on theCBAs union security provision.

The three respondents were expelled from and by theUnion after due investigation for acts of dishonesty andmalversation of Union funds. In accordance with the

CBA, the Union properly requested the Club to enforcethe Union security provision in their CBA and terminatesaid respondents. Then, in compliance with the Unionsrequest, the Club reviewed the documents submittedby the Union, requested said respondents to submitwritten explanations, and thereafter afforded themreasonable opportunity to present their side. After ithad determined that there was sufficient evidence thatsaid respondents malversed Union funds, the Clubdismissed them from their employment conformablywith Sec. 4(f) of the CBA.

Considering the foregoing circumstances, we areconstrained to rule that there is sufficient cause for thethree respondents termination from employment.

INGUILLO V. FIRST PHILIPPINE SCALESG.R. No. 165407 June 5, 2009, Peralta

FPSI (Employer – respondent corporation) and FPSILabor Union entered into a collective bargainingagreement. It provided for a union security clause.During the lifetime of the CBA Inguillo (petitioner) andseveral other FPSI employees joined another union(Nagkakaisang Lakas ng Manggagawa or NLM), NLMfiled a case for intra union dispute. The med arbiterdecided in favour of FPSILU and ordered the officersand members of NLM to return the P90,000 uniondues erroneously collected from employees. FPSILUsought the dismissal of petitioners on the grounds ofdisloyalty and thus invoking the union security clause.FPSI effected the dismissal. Petitioners assail thelegality of their dismissal based on the said UnionSecurity Clause.

ISSUEIs the dismissal valid?

RULINGYes. In terminating the employment of an employee byenforcing the Union Security Clause, the employerneeds only to determine and prove that: (1) the unionsecurity clause is applicable; (2) the union isrequesting for the enforcement of the union securityprovision in the CBA; and (3) there is sufficientevidence to support the union's decision to expel theemployee from the union or company.

In terminating the employment of an employee byenforcing the Union Security Clause, the employerneeds only to determine and prove that: (1) the unionsecurity clause is applicable; (2) the union isrequesting for the enforcement of the union securityprovision in the CBA; and (3) there is sufficientevidence to support the union's decision to expel theemployee from the union or company.

GENERAL MILLING CORP. V. CASIOG.R. No. 149552, March 10, 2010, Leonardo deCastro

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The labor union Ilaw at Buklod ng Mangagawa (IBM)was the sole and exclusive bargaining agent of therank and file employees of GMC. The union enteredinto a CBA with GMC. The effectivity of the said CBAwas retroactive to August 1, 1991. The CBA containeda security provision. Gabiana, the IBM RegionalDirector, furnished Casio, et al. with copies of theAffidavits of 2 GMC employees, charging Casio, et al.with "acts inimical to the interest of the union."Gabiana then wrote a letter addressed to EduardoCabahug (Cabahug), GMC Vice-President forEngineering and Plant Administration, informing thecompany of the expulsion of Casio, et al. from theunion pursuant to the Resolution. Gabiana likewiserequested that Casio, et al. "be immediately dismissedfrom their work for the interest of industrial peace inthe plant” pursuan to the security provision in the CBA.

ISSUEWhether the dismissal from employment due to theenforcement of the union security clause in the CBA islegal?

RULINGThe dismissal is illegal. There is no question that in thepresent case, the CBA between GMC and IBM-Local31 included a maintenance of membership and closedshop clause as can be gleaned from Sections 3 and 6of Article II. IBM-Local 31, by written request, can askGMC to terminate the employment of theemployee/worker who failed to maintain its goodstanding as a union member. Union security clausesare recognized and explicitly allowed under Article248(e) of the Labor Code It is State policy to promoteunionism to enable workers to negotiate withmanagement on an even playing field and with morepersuasiveness than if they were to individually andseparately bargain with the employer. For this reason,the law has allowed stipulations for union shop andclosed shop as means of encouraging workers to joinand support the union of their choice in the protectionof their rights and interest vis--vis the employer Interminating the employment of an employee byenforcing the union security clause, the employerneeds only to determine and prove that: (1) the unionsecurity clause is applicable; (2) the union isrequesting for the enforcement of the union securityprovision in the CBA; and (3) there is sufficientevidence to support the decision of the union to expelthe employee from the union. These requisitesconstitute just cause for terminating an employeebased on the union security provision of the CBA.[26]There is no question that in the present case, the CBAbetween GMC and IBM-Local 31 included amaintenance of membership and closed shop clauseas can be gleaned from Sections 3 and 6 of Article II.IBM-Local 31, by written request, can ask GMC toterminate the employment of the employee/worker whofailed to maintain its good standing as a unionmember.

It is similarly undisputed that IBM-Local 31, throughGabiana, the IBM Regional Director for Visayas andMindanao, twice requested GMC, in the letters datedMarch 10 and 19, 1992, to terminate the employmentof Casio, et al. as a necessary consequence of theirexpulsion from the union. It is the third requisite thatthere is sufficient evidence to support the decision ofIBM-Local 31 to expel Casio, et al. which appears tobe lacking in this case.

Irrefragably, GMC cannot dispense with therequirements of notice and hearing before dismissingCasio, et al. even when said dismissal is pursuant tothe closed shop provision in the CBA. The rights of anemployee to be informed of the charges against himand to reasonable opportunity to present his side in acontroversy with either the company or his own unionare not wiped away by a union security clause or aunion shop clause in a collective bargainingagreement.

CRAYONS PROCESSING, INC V. FELIPE PULA

G.R. No. 167727, July 30, 2007, Tinga

Petitioner Crayons Processing, Inc. (Crayons)employed respondent Felipe Pula (Pula) as aPreparation Machine Operator beginning June 1993.On 27 November 1999, Pula, then aged 34, suffered aheart attack and was rushed to the hospital, where hewas confined for around a week. Pulas wife dulynotified Crayons of her husbands medical condition.Subsequently, on 25 February 2000, Pula underwentan Angiogram Test at the Philippine Heart Centerunder the supervision of a Dr. Recto, who advised himto take a two-week leave from work. Following theangiogram procedure, respondent was certified as fitto work by Dr. Recto. On 11 April 2000, Pula returnedto work, but 13 days later, he was taken to thecompany clinic after complaining of dizziness.Diagnosed as having suffered a relapse, he wasadvised by his physician to take a leave of absencefrom work for one (1) month. Pula reported back forwork on 13 June 2000, armed with a certification fromhis physician that he was fit to work. However, Pulaclaimed that he was not given any post or assignment,but instead, on 20 June 2000, he was asked to resignwith an offer from Crayons of P12, 000 as financialassistance. Pula refused the offer and instead filed acomplaint for illegal dismissal.

ISSUEWhether or not the dismissal without certificationissued by a competent public health authority wasproper

HELDNo. For a dismissal on the ground of disease to beconsidered valid, two requisites must concur: (a) theemployee must be suffering from a disease whichcannot be cured within six months and his continued

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employment is prohibited by law or prejudicial to hishealth or to the health of his co-employees; and (b) acertification to that effect must be issued by acompetent public health authority. The burden fallsupon the employer to establish these requisites, and inthe absence of such certification, the dismissal mustnecessarily be declared illegal.

As succinctly stressed in Tan v. NLRC, it is only wherethere is a prior certification from a competent publicauthority that the disease afflicting the employeesought to be dismissed is of such nature or at suchstage that it cannot be cured within six (6) monthseven with proper medical treatment that the lattercould be validly terminated from his job.

Without the required certification, the characterizationor even diagnosis of the disease would primarily beshaped according to the interests of the parties ratherthan the studied analysis of the appropriate medicalprofessionals. The requirement of a medical certificateunder Article 284 cannot be dispensed with; otherwise,it would sanction the unilateral and arbitrarydetermination by the employer of the gravity or extentof the employee's illness and thus defeat the publicpolicy in the protection of labor.

The NLRCs conclusion that no such certification wasrequired since Pula had effectively been absented dueto illness for more than six (6) months is unsupportedby jurisprudence and plainly contrary to the languageof the Implementing Rules. The indefensibility of suchconclusion is further heightened by the fact that Pulawas able to obtain two different medical certificationsattesting to his fitness to resume work.

Assuming that the burden did fall on Pula to establishthat he was fit to return to work, those two medicalcertifications stand as incontestable in the absence ofcontrary evidence of similar nature from Crayons.Then again, the burden lies solely on Crayons to provethat Pula was unfit to return to work.[32] Even absentthe certifications favorable to Pula, Crayons would stillbe unable to justify his dismissal on the ground of illhealth or disease, without the necessary certificatefrom a competent public health authority.

VILLARUEL v. YEO HAN GUANG.R. No. 169191, June 1, 2011, Peralta

Doctrine: Since petitioner was not terminated from hisemployment and, instead, is deemed to have resignedtherefrom, he is not entitled to separation pay underthe provisions of the Labor Code.

Respondent averred that petitioner was hired asmachine operator from March 1993 until he stoppedworking sometime in February 1999 on the ground thathe was suffering from illness; after his recovery,petitioner was directed to report for work, but he nevershowed up. Respondent claimed that he never

terminated the services of petitioner and that duringtheir mandatory conference, he even told the latter thathe could go back to work anytime but petitioner clearlymanifested that he was no longer interested inreturning to work and instead asked for separationpay.

ISSUEWhether or not petitioner is entitled to SepPay

RULINGNO. A plain reading of the provision clearlypresupposes that it is the employer who terminates theservices of the employee found to be suffering fromany disease and whose continued employment isprohibited by law or is prejudicial to his health as wellas to the health of his co-employees. It does notcontemplate a situation where it is the employee whosevers his or her employment ties.

PADILLO v. RURAL BANK OF NABUNTURAN, INC.G.R. No. 199338, January 21, 2013, Perlas-Bernabe

Petitioner, the late Eleazar Padillo (Padillo), was anemployee of respondent Rural Bank of Nabunturan,Inc. (Bank) as its SA Bookkeeper. Due to liquidityproblems in 2003, the Bank took outretirement/insurance plans with Philippine AmericanLife and General Insurance Company (Philam Life) forall its employees in anticipation of its possible closureand the concomitant severance of its personnel.Respondent Mark Oropeza is the president and majorstockholder of the bank. Padillo suffered a mild strokedue to hypertension which consequently impaired hisability to effectively pursue his work. He wrote a letteraddressed to Oropeza expressing his intention to availof an early retirement package. Despite several follow-ups, his request remained unheeded. Not havingreceived his claimed retirement benefits, Padillo filedwith the NLRC a complaint for the recovery of unpaidretirement benefits.

The Labor Arbiter dismissed Padillo’s complaint on theground that the latter did not qualify to receive anybenefits under Article 300 of the Labor Code as hewas only fifty-five (55) years old when he resigned,while the law specifically provides for an optionalretirement age of sixty (60) and compulsory retirementage of sixty-five (65). The NLRC reversed the LaborArbiter’s ruling. The CA reversed the NLRC’s ruling butwith modification. It directed the respondents to payPadillo the amount of P50,000.00 as financialassistance exclusive of the P100,000.00 Philam LifePlan benefit.

ISSUEWhether or not Padillo is entitled to claim for retirementbenefits under the Labor Code?

HELDNo. In the absence of any applicable agreement, an

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employee must (1) retire when he is at least sixty (60)years of age and (2) serve at least (5) years in thecompany to entitle him/her to a retirement benefit of atleast one-half (1/2) month salary for every year ofservice, with a fraction of at least six (6) months beingconsidered as one whole year. Notably, these age andtenure requirements are cumulative and non-compliance with one negates the employee’sentitlement to the retirement benefits under Article 300of the Labor Code altogether.

In this case, it is undisputed that there exists noretirement plan, collective bargaining agreement orany other equivalent contract between the partieswhich set out the terms and condition for theretirement of employees, with the sole exception of thePhilam Life Plan which premiums had already beenpaid by the Bank.

Unfortunately, while Padillo was able to comply withthe five (5) year tenure requirement – as he served fortwenty-nine (29) years – he, however, fell short withrespect to the sixty (60) year age requirement giventhat he was only fifty-five (55) years old when heretired. Therefore, without prejudice to the proceedsdue under the Philam Life Plan, petitioners’ claim forretirement benefits must be denied.

MANILA MINING CORP. EMPLOYEESASSOCIATION-FEDERATION OF FREE WORKERSCHAPTER, SAMUEL G. ZUIGA v. MANILA MININGCORP.G.R. Nos. 178222-23, September 29, 2010, Perez

Respondent is a mining corporation. Due to its failureto obtain the necessary permit with the DENR-EMB’sto operate the mining business, it temporary lay-offprivate complainant for a period exceeding 6 monthsresulting in their constructive dismissal.The Union attributes bad faith on the part of MMC inimplementing the temporary lay-off, hence this case.

ISSUEWhether or not the layoff is illegalWhether or not the employees are entitled to aseparation pay

HELDThe lay-off is neither illegal nor can it be considered asunfair labor practice. Even as we declare the validityof the lay-off, we cannot say that MMC has noobligation at all to the laid-off employees. The validityof its act of suspending its operations does not excuseit from paying separation pay. Article 286 of the LaborCode allows the bona fide suspension of operations fora period not exceeding six (6) months.During thesuspension, an employee is not deemedterminated. As a matter of fact, the employee isentitled to be reinstated once the employer resumesoperations within the 6-month period. However, Article286 is silent with respect to the rights of the employee

if the suspension of operations lasts for more than 6months. Thus is bred the issue regarding theresponsibility of MMC toward its employees.

Under Article 283, the employer can lawfully closeshop anytime as long as cessation of or withdrawalfrom business operations is bona fide in character andnot impelled by a motive to defeat or circumvent thetenurial rights of employees, and as long as he payshis employees their termination pay in the amountcorresponding to their length of service. The cessationof operations, in the case at bar is of such nature. Itwas proven that MMC stopped its operations preciselydue to failure to secure permit to operate a tailingspond. Separation pay must nonetheless be given tothe separated employees.

NIPPON HOUSING PHILS. VS. LEYNESG.R. No. 177816, August 3, 2011

Nippon Housing is engaged in the business ofproviding building maintenance From its originalventured into building management and gained BayGardens Condominium Project (the Project) of the BayGardens Condominium Corporation (BGCC) as its firstand only building maintenance client. They hiredrespondent Maiah Angela Leynes on 26 March 2001for the position of Property Manager, with a salary ofP40,000.00 per month. Her responsibilities includesurveying the requirements of the government and theclient for said project, the formulation of house rulesand regulations, the preparation of the annualoperating and capital expenditure budget, hiring anddeployment of manpower, salary and positiondetermination as well as the assignment of theschedules and responsibilities of employees. Leyneshad a misunderstanding with the building engineer ofthe project (Cantuba) and barred the latter’s entry tothe site. The Engr. also accused the former of conceit,pride and poor managerial skills. Takada, the NHPI'sVice President issued a memorandum attributing theincident to "simple personal differences" and directingLeynes to allow Engr. Cantuba to report back for work.Disappointed with this management decision, shesubmitted a letter to NHPI’s President (Ota) asking foran emergency leave of absence for the supposedpurpose of coordinating with her lawyer regarding herresignation letter. NHPI offered the Property Managerposition to Engr. Carlos Jose as a consequenceLeynes' signification of her intention to resign.However, she sent another letter expressing herintention to return to work and to call off her plannedresignation. However, she received a letter from themanagement to report instead to the main office asone in a “floating status” because someone alreadyoccupies her post. Aggrieved, Leynes filed a complaintagainst petitioner for illegal dismissal, unpaid salaries,benefits, damages and attorney's fees. The Laborarbiter found that the petitioner’s act of putting Leyneson a floating status was equivalent to terminationwithout just cause. The NLRC ruled that NHPI's

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placement of Leynes on floating status wasnecessitated by the client's contractually guaranteedright to request for her relief. However, this was lateron reversed by the CA, hence, this present petitionbefore the SC.

ISSUEWhether or not Leynes’ floating status is tantamount toconstructive dismissal.

RULINGNo, the placement of Leynes on a floating status dueto redundancy is valid. The record, moreover, showsthat NHPI simply placed her on floating status "untilsuch time that another project could be secured" forher. The rule is settled, however, that "off-detailing" isnot equivalent to dismissal, so long as such statusdoes not continue beyond a reasonable time and that itis only when such a "floating status" lasts for morethan six months that the employee may be consideredto have been constructively dismissed. A complaint forillegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee isgenerally considered as prematurely filed. Since thepetitioner has no other client for the buildingmanagement side of its business, it acted within itsprerogatives when it eventually terminated Leynes'services on the ground of redundancy. One of therecognized authorized causes for the termination ofemployment, redundancy exists when the servicecapability of the workforce is in excess of what isreasonably needed to meet the demands of thebusiness enterprise.

SKM ARTCRAFT CORPORATION vs. BAUCAG.R. No. 171282, November 27, 2013, Villarama

The 23 respondents were employed by petitioner SKMArt Craft Corporation which is engaged in thehandicraft business. On April 18, 2000, around 1:12a.m., a fire occurred at the inspection andreceiving/repair/packing area of petitioner’s premisesin Intramuros, Manila. The fire investigation reportstated that the structure and the beach rubber buildingwere totally damaged. Also burned were four containervans and a trailer truck. The estimated damagewas P22 million. On May 8, 2000, petitioner informedrespondents that it will suspend its operations for sixmonths, effective May 9, 2000. On May 16, 2000, onlyeight days after receiving notice of the suspension ofpetitioner’s operations, the 23 respondents (and otherco-workers) filed a complaint for illegal dismissal. Theyalleged that there was discrimination in choosing theworkers to be laid off and that petitioner haddiscovered that most of them were members of anewly-organized union.

ISSUEWhether or not respondents were illegally dismissed

RULINGYes. Although petitioner’s suspension of operations isvalid because the fire caused substantial losses topetitioner and damaged its factory, it failed to provethat its suspension of operations is bona fide. The listof materials burned was not the only evidencesubmitted by petitioner. It was corroborated by picturesand the fire investigation report, and they constitutesubstantial evidence of petitioner’s losses.

Under Article 286 of the Labor Code, the bona fidesuspension of the operations of a business orundertaking for a period not exceeding six monthsshall not terminate employment. Article 286 provides:

ART. 286. When employment not deemed terminated.– The bona fide suspension of the operations of abusiness or undertaking for a period not exceeding six(6) months, or the fulfillment by the employee of amilitary or civic duty shall not terminate employment.

In all such cases, the employer shall reinstate theemployee to his former position without loss ofseniority rights if he indicates his desire to resume hiswork not later than one (1) month from the resumptionof operations of his employer or from his relief from themilitary or civic duty.

Under Article 286 of the Labor Code, the bona fidesuspension of the operation of a business orundertaking for a period not exceeding six monthsshall not terminate employment. Consequently, whenthe bona fide suspension of the operation of abusiness or undertaking exceeds six months, then theemployment of the employee shall be deemedterminated. By the same token and applying said ruleby analogy, if the employee was forced to remainwithout work or assignment for a period exceeding sixmonths, then he is in effect constructively dismissed.Indeed, petitioner’s manifestation dated October 2,2001 that it is willing to admit respondents if theyreturn to work was belatedly made, almost one yearafter petitioner’s suspension of operations expired inNovember 2000. We find that petitioner no longerrecalled, nor wanted to recall, respondents after sixmonths.

JACKBILT INDUSTRIES V. JACKBILT EMPLOYEESUNIONG.R. Nos. 171618-19, March 20, 2009, Corona

Due to the adverse effects of the Asian economic crisison the construction industry, petitioner decided totemporarily stop its business of producing concretehollow blocks, compelling most of its employees to goon leave for six months. Respondent unionimmediately protested the temporary shutdown.Because its collective bargaining agreement withpetitioner was expiring during the period of theshutdown, respondent claimed that petitioner haltedproduction to avoid its duty to bargain collectively. The

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shutdown was allegedly motivated by anti-unionsentiments. Accordingly, respondent went on strike. Itsofficers and members picketed petitioner’s main gatesand deliberately prevented persons and vehicles fromgoing into and out of the compound.

Petitioner filed a petition for injunction with a prayer forthe issuance of a TRO in the NLRC. NLRC issued aTRO directing the respondents to refrain frompreventing access to petitioner’s property. The unionviolated such order. The union officers and memberswere then required to explain but they refused to doso. Thus, they were dismissed. Respondents then fileda complaint before the LA. The labor arbiter dismissedthe complaints for illegal lockout and unfair laborpractice for lack of merit. However, because petitionerdid not file a petition to declare the strike illegal beforeterminating respondent’s officers and employees, itwas found guilty of illegal dismissal. NLRC onlymodified the monetary award. CA held that thetemporary shutdown was moved by anti-unionsentiments. Petitioner was therefore guilty of unfairlabor practice. Petitioner asserts that the filing of apetition to declare the strike illegal was unnecessarysince the NLRC, in its July 17, 1998 decision, hadalready found that respondent committed illegal acts inthe course of the strike.

ISSUEWhether or not the filing of a petition with the laborarbiter to declare a strike illegal is a condition sine quanon for the valid termination of employees who commitan illegal act in the course of such strike

RULINGNot a condition sine qua non. Article 264(e) of theLabor Code prohibits any person engaged in picketingfrom obstructing the free ingress to and egress fromthe employer’s premises. Since respondent was foundby the NLRC to have prevented the free entry into andexit of vehicles from petitioner’s compound,respondent’s officers and employees clearly committedillegal acts in the course of the strike. The use ofunlawful means in the course of a strike renders suchstrike illegal. Therefore, pursuant to the principle ofconclusiveness of judgment, strike was ipso factoillegal. The filing of a petition to declare the strikeillegal was thus unnecessary. Consequently, weuphold the legality of the dismissal of respondent’sofficers and employees. Article 264 of the Labor Codefurther provides that an employer may terminateemployees found to have committed illegal acts in thecourse of a strike. Petitioner clearly had the legal rightto terminate respondent’s officers and employees.

ESCARIO v. NLRCG.R. No. 160302, September 27, 2010, Bersamin

Officers and members of Malayang Samahan ng mgaManggagawa sa Balanced Foods walked out of thepremises of Pinakamasarap Corporation (PINA) and

proceeded to the barangay office to show support foran officer of the Union charged with oral defamation byPINA’s personnel manager. As a result of the walkout,PINA preventively suspended all officers of the Unionand terminated the officers of the Union after a month.The Union later conducted a strike but the same wasdeclared to be an illegal strike by the Labor Arbiter.The NLRC sustained the finding of the illegality of thestrike, but ruled that the union members should not beconsidered to have abandoned their employment onthe ground that mere participation of a union memberin an illegal strike does not mean loss of employment.Petitioners were ordered reinstated.

ISSUEIs payment of separation pay in lieu of reinstatementallowed?

RULINGYes. The absence from an order of reinstatement of analternative relief should the employer or a superveningevent not within the control of the employee preventreinstatement negates the very purpose of the order.The judgment favorable to the employee is therebyreduced to a mere paper victory, for it is all too easyfor the employer to simply refuse to have the employeeback. To safeguard the spirit of social justice that theCourt has advocated in favor of the working man,therefore, the right to reinstatement is to be consideredrenounced or waived only when the employeeunjustifiably or unreasonably refuses to return to workupon being so ordered or after the employer hasoffered to reinstate him.

However, separation pay is made an alternative reliefin lieu of reinstatement in certain circumstances, like:(a) when reinstatement can no longer be effected inview of the passage of a long period of time orbecause of the realities of the situation; (b)reinstatement is inimical to the employers interest; (c)reinstatement is no longer feasible; (d) reinstatementdoes not serve the best interests of the partiesinvolved; (e) the employer is prejudiced by the workerscontinued employment; (f) facts that make executionunjust or inequitable have supervened; or (g) strainedrelations between the employer and employee.

Here, PINA manifested that the reinstatement of thepetitioners would not be feasible because: (a) it wouldinflict disruption and oppression upon the employer; (b)petitioners [had] stayed away for more than 15 years;(c) its machines had depreciated and had beenreplaced with newer, better ones; and (d) it now soldgoods through independent distributors, therebyabolishing the positions related to sales anddistribution.

The appropriate amount for separation pay is onemonth per year of service.

ABARIA VS. NLRC

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G.R. No. 154113

Due to a violation to the constitution and by-laws of theFederation to which they belong to, the officers of thesaid union are temporarily suspended from their officeand membership pending investigation.

The next day said union together with some of itsmembers launch a series of mass action through"picketing" (wearing red and black armbands andmarching around the hospital with their placards,posters and streamers), however for the span of 5months prohibited acts were committed by the strikerssuch as blocking the ingress and egress of the hospitaland violence substantiated with pictures.

Later it was found and proven that the said "union"conducting the strike is not a legitimate labororganization registered with DOLE.

Both the Union officers and union members wereterminated

ISSUEWON the termination was valid

RULINGOnly the termination of union officers were said to bevalid even though it was conducted by labor union notregistered with DOLE as the law provides that unionofficers are held to be liable in cases of illegal strikesand that the union members participating in a illegalstrike may only be terminated only if they committedthe said illegal and/or prohibited acts during the strike.

Although there was picture of violence and otherprohibited acts committed by the members, they werenot individually identified nor is their illegal/prohibitedacts identified.

PHIMCO INDUSTRIES INC. V. PHIMCOINDUSTRIES LABOR ASSOCIATION (PILA), ANDERLINDA VASQUEZ, ET AL.G.R. No. 170830, August 11, 2010, Brion

When the last CBA between PHIMCO and PILA wasabout to expire, PHIMCO and PILA negotiated for itsrenewal but this resulted in a deadlock on economicissues, mainly due to disagreements on salaryincreases and benefits. On April 21, 1995, PILA stageda strike after complying with the requirements thereof.On May 3, 1995, PHIMCO filed a petition forpreliminary injunction and TRO before the NLRC whichissued an ex-parte TRO effective for 20 days untilJune 5, 1995.

On June 23, 1995, PHIMCO sent a letter to 36 unionmembers directing them to explain within 24-hourswhy they should not be dismissed for the illegal actsthey committed during the strike. On June 26, 1995,they were informed of their dismissal. On July 6, 1995,

PILA filed a complaint for ULP and illegal dismissal.On July 7, 1995, Acting Labor Secretary Brillantesassumed jurisdiction over the dispute and ordered allstriking employees (except those terminated) to returnto work within 24 hours. On the same day, PILA endedits strike.

On Aug. 28, 1995, PHIMCOM filed a petition to declarethe strike illegal claiming that the strikers preventedingress to and egress from the PHIMCO compound,thereby paralyzing PHIMCO’s operations. LA found thestrike illegal. NLRC reversed the decision. Meanwhile,the LA declared the dismissal illegal. The NLRCconsolidated the two cases and ruled totally in theunion’s favor. CA affirmed. MR was denied. Hence,this petition.

ISSUE1. Was the strike illegal?2. Was there illegal dismissal?

HELD(1) Yes. Despite the validity of the purpose of a strikeand compliance with the procedural requirements, astrike may still be held illegal where the meansemployed are illegal falling within the prohibitionsunder Art. 264(e) of the Labor Code. While the picketwas moving, the movement was in circles, very closeto the gates, with the strikers in a hand-to-shoulderformation without a break in their ranks, thuspreventing non-striking workers and vehicles fromcoming in and getting out. Supported by actualblocking benches and obstructions, what the uniondemonstrated was a very persuasive and quietlyintimidating strategy whose chief aim was to paralyzethe operations of the company, not solely by the workstoppage of the participating workers, but by excludingthe company officials and non-striking employees fromaccess to and exit from the company premises. Nodoubt, the strike caused the company operationsconsiderable damage, as the NLRC itself recognizedwhen it ruled out the reinstatement of the dismissedstrikers.

The effects of illegal strikes, outlined in Article 264 ofthe Labor Code, make a distinction betweenparticipating workers and union officers. The servicesof an ordinary striking worker cannot be terminated formere participation in an illegal strike; proof must beadduced showing that he or she committed illegal actsduring the strike. The services of a participating unionofficer, on the other hand, may be terminated, not onlywhen he actually commits an illegal act during a strike,but also if he knowingly participates in an illegal strike.Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan,Maximo Pedro, Nathaniela Dimaculangan, RodolfoMojico, Romeo Caramanza, Reynaldo Ganitano,Alberto Basconcillo, and Ramon Falcis stand to bedismissed as participating union officers, pursuant toArticle 264(a), paragraph 3, of the Labor Code.

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(2) Yes. PHIMCO failed to observe procedural dueprocess since the employees were not given an ampleopportunity to be heard and to defend themselves. Theshort interval of time between the first and secondnotice speaks for itself.

CAONG V. REGUALOSG.R. No. 179428, January 26, 2011, Nachura

Petitioners Caong, Tresquio and Daluyon wereemployed as jeepney drivers by Respondent Regualosunder a boundary agreement. They filed separatecomplaints for illegal dismissal against Regualos whobarred them from driving the jeepneys due todeficiencies in their boundary payments. However,Regualos told them that they could resume their use ofthe vehicles after they pay their arrears.

Regualos alleged that the petitioners were lessees ofhis vehicles and not his employees. Thus, the LaborArbiter had no jurisdiction. The Labor Arbiter ruled thatthere was an employer-employee relationship betweenRegualos and the petitioners and that there was nodismissal because they would be allowed to use thevehicles once they pay their arrears. A reasonablesanction was deemed to be an appropriate penalty.

Petitioners appealed the decision to the NLRC, whichagreed with the Labor Arbiter. The CA also affirmed. Itruled that the employer-employee relationship of theparties was not severed but merely suspendedbecause Regualos refused to allow petitioners to drivethe jeepneys when they failed to pay their obligations.

ISSUEWhether the petitioners were illegally dismissed

HELDIt is already settled that the relationship betweenjeepney owners/operators and jeepney drivers underthe boundary system is that of employer-employee andnot of lessor-lessee. The fact that the drivers do notreceive fixed wages but only get the amount in excessof the so-called "boundary" that they pay to theowner/operator is not sufficient to negate therelationship between them as employer and employee.

The Labor Arbiter, the NLRC, and the CA uniformlydeclared that petitioners were not dismissed fromemployment but merely suspended pending paymentof their arrears. Findings of fact of the CA, particularlywhere they are in absolute agreement with those of theNLRC and the Labor Arbiter, are accorded not onlyrespect but even finality, and are deemed binding uponthis Court so long as they are supported by substantialevidence.

We have no reason to deviate from such findings.Indeed, petitioners suspension cannot be categorizedas dismissal, considering that there was no intent onthe part of respondent to sever the employer-employee

relationship between him and petitioners. In fact, it wasmade clear that petitioners could put an end to thesuspension if they only pay their recent arrears. As itwas, the suspension dragged on for years because ofpetitioners stubborn refusal to pay. It would have beendifferent if petitioners complied with the condition andrespondent still refused to readmit them to work. Thenthere would have been a clear act of dismissal. Butsuch was not the case. Instead of paying, petitionerseven filed a complaint for illegal dismissal againstrespondent.

COMPOSITE ENTERPRISES, INC. v. EMILIO M.CAPAROSO and JOEVE QUINDIPANG.R. No. 159919, August 8, 2007, Austria Martinez

Petitioner is engaged in the distribution and/or supplyof confectioneries to various retail establishmentswithin the Philippines. Emilio Caparoso and Joeve P.Quindipan (respondents) were employed as itsdeliverymen until they were terminated on October 8,1999.

Respondents filed a complaint for illegal dismissalagainst petitioner with the National Labor RelationsCommission (NLRC). Petitioner denied thatrespondents were illegally dismissed, alleging that theywere employed on a month-to-month basis and thatthey were terminated as a result of the expiration oftheir contracts of employment.

The Labor Arbiter issued a Writ of Execution directingthe Sheriff to effect respondent's reinstatement.Consistent with its stand that physical reinstatementwas no longer possible, petitioner reinstatedrespondents into its payroll, conditioned on the NLRC'sruling on its motion to be allowed to pay separationpay in lieu of reinstatement.

RULINGArticle 223 (3rd paragraph) of the Labor Code, asamended by Section 12 of Republic Act (R.A.) No.6715,34 and Section 2 of the NLRC Interim Rules onAppeals under R.A. No. 6715, Amending the LaborCode, provide that an order of reinstatement by theLabor Arbiter is immediately executory even pendingappeal.

In authorizing execution pending appeal of thereinstatement aspect of a decision of the Labor Arbiterreinstating a dismissed or separated employee, thelaw itself has laid down a compassionate policy which,once more, vivifies and enhances the provisions of the1987 Constitution on labor and the working man.

Payment of separation pay as a substitute forreinstatement is allowed only under exceptionalcircumstances, viz: (1) when reasons exist which arenot attributable to the fault or are beyond the control ofthe employer, such as when the employer -- who is insevere financial strait, has suffered serious business

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losses, and has ceased operations -- implementsretrenchment, or abolishes the position due to theinstallation of labor-saving devices; (2) when theillegally dismissed employee has contracted a diseaseand his reinstatement will endanger the safety of hisco-employees; or, (3) where a strained relationshipexists between the employer and the dismissedemployee.

In this case, petitioner sought to justify the payment ofseparation pay instead of reinstatement on the basis ofits implementation of a retrenchment program for"serious and persistent financial difficulties."However,petitioner only submitted as evidence the notice of itsintention to implement a retrenchment program, whichit sent to the Department of Labor and Employment onJuly 25, 2000. It did not submit its financial statementsduly audited by an independent external auditor. Itsfailure to do so seriously casts doubt on its claim oflosses and insistence on the payment of separationpay.

SAGUM v. COURT OF APPEALSG.R. No. 158759, May 26, 2005, Puno

Petitioner was hired as a Recording/Filing Clerk inJune 1980. By her efficiency, loyalty and dedication tothe service, she was promoted as MembershipSecretary in April 1981, Acting Executive Secretary inFebruary 1986, and Executive Secretary in September1986. As Executive Secretary, she has served eleven(11) National Presidents. After eight (8) years, or onSeptember 17, 1994, petitioner was appointed asOffice Manager in concurrent capacity as ExecutiveSecretary. On July 30, 1996, petitioner waspreventively suspended for thirty (30) days. She wasserved two (2) written notices demanding herexplanation for the imputed offenses and indiscretions,subjected to an administrative investigation, anddismissed by private respondent institute onSeptember 1, 1996 for gross negligence and loss oftrust and confidence.

Petitioner states that she again earned the ire ofprivate respondents when she gave an unsolicitedadvice to the members of the EXCOM during aCommittee Meeting. The EXCOM had allegedlydecided to demote Dela Torre, her immediatesubordinate, from her position as AdministrativeSecretary to a Clerk. Petitioner commented that itwould be illegal to demote an employee.On August 31,1996, after the expiration of her thirty-day suspension,petitioner called up private respondent Mendoza to askwhen she could go back to work. The latter told herthat she could not report for work anymore andadvised her to wait for a call. On the same day, aMemo was issued to petitioner dismissing her effectiveSeptember 1, 1996 on the ground of gross negligenceand loss of trust and confidence. Petitioner filed a casefor illegal dismissal.

The LA ruled that petitioner's dismissal was illegal.Petitioner filed a Partial Appeal with the NLRC forreinstatement and the payment of full backwages. Sheargued that the decision of the Labor Arbiter did notshow a case of irretrievable estrangement between herand private respondents as to preclude herreinstatement. She also questioned the denial of herclaim for damages. Private respondents, on the otherhand, moved for a reversal of the decision and thedismissal of the case.

The NLRC reversed the decision of the Labor Arbiter.The Court of Appeals found the decision of the LaborArbiter to be more conformable with the evidence andthe law and granted the petition and said: consideringthat the dismissal was without basis, reinstatementwith payment of backwages is in order. However, dueto the strained relations which would not bringharmony between the parties brought about by thelitigation and private respondents' consistent stand thatthere was a just cause for petitioner Sagum's dismissalfor loss of trust and confidence and gross negligence,we find that separation pay should be awarded as analternative to reinstatement.

ISSUEIs the petitioner entitled to reinstatement?

HELDYES. We find for the petitioner on the issue ofreinstatement.

Article 279 of the Labor Code provides the law onreinstatement, viz.:Article 279. Security of Tenure. -- In cases of regularemployment, the employer shall not terminate theservices of an employee except for a just cause orwhen authorized by this Title. An employee who isunjustly dismissed from work shall be entitled toreinstatement without loss of seniority rights and otherprivileges and to his full backwages, inclusive ofallowances, and to his other benefits or their monetaryequivalent computed from the time his compensationwas withheld from him up to the time of his actualreinstatement.

The existence of strained relations is a factual findingand should be initially raised, argued and provenbefore the Labor Arbiter. Petitioner is correct that thefinding of strained relations does not have any basison the records. Indeed, nowhere was the issue raisedin private respondents' pleadings before the LaborArbiter and the NLRC. Sieving through the records,private respondents first raised the issue in theirComment to Petitioner's Motion for PartialReconsideration before the Court ofAppeals. In Globe-Mackay Cable and RadioCorporation v. NLRC, we emphasized that theprinciple of strained relations cannot be appliedindiscriminately. Otherwise, an illegally dismissedemployee can never be reinstated because invariably,

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some hostility is engendered between litigants. As arule, no strained relations should arise from a valid andlegal act of asserting one's right; otherwise, anemployee who asserts his right could be easilyseparated from the service by merely paying hisseparation pay on the pretext that his relationship withhis employer had already become strained.

In the case at bar, there are no hard facts upon whichto base the application of the doctrine of strainedrelationship. Petitioner is correct that mere persistencyin argument does not amount to proof,and to deny anemployee's right to be reinstated on the basis of themere consistency of the employer's stand that thedismissal was for cause is to make a mockery of theright of reinstatement under Article 279 of the LaborCode.

Be that as it may, we reject petitioner's claim for moraland exemplary damages. The award of moral andexemplary damages is proper when an illegallydismissed employee had been harassed and arbitrarilyterminated by the employer, as when the lattercommitted an anti-social and oppressive abuse of itsright to investigate and dismiss an employee. In thecase at bar, we are not convinced that privaterespondents acted in a wanton or oppressive manner.The measures undertaken were relevant to thecompany-wide audit and investigation conductedwithin the institute. The suspension of petitionerwithout prior investigation is akin to preventivesuspension which was necessary pendinginvestigation of company records which she hadaccess to.

JENNY M. AGABON and VIRGILIO C. AGABON v.NATIONAL LABOR RELATIONS COMMISSION(NLRC), RIVIERA HOME IMPROVEMENTS, INC. andVICENTE ANGELESG.R. No. 15869, November 17, 2004

Petitioners were employed by Riviera Home asgypsum board and cornice installers from January1992 to February 23, 1999 when they were dismissedfor abandonment of work. Petitioners filed a complaintfor illegal dismissal and was decided in their favor bythe Labor Arbiter. Riviera appealed to the NLRCcontending just cause for the dismissal because ofpetitioner’s abandonment of work. NLRC ruled therewas just cause and petitioners were not entitled tobackwages and separation pay. The CA in turn ruledthat the dismissal was not illegal because they haveabandoned their work but ordered the payment ofmoney claims.

The Agabons claim, among others that Riviera violatedthe requirements of notice and hearing when the latterdid not send written letters of termination to theiraddresses. Riviera claims that the Agabonsabandoned their work. More than once, theysubcontracted installation works for other companies.

They already were warned of termination if the sameact was repeated, still, they disregarded the warning.

ISSUEWhether the Agabons were illegally dismissed

RULINGNo, there was valid dismissal but there was violation ofstatutory due process.

Procedurally, (1) if the dismissal is based on a justcause under Article 282, the employer must give theemployee two written notices and a hearing oropportunity to be heard if requested by the employeebefore terminating the employment: a notice specifyingthe grounds for which dismissal is sought a hearing oran opportunity to be heard and after hearing oropportunity to be heard, a notice of the decision todismiss; and (2) if the dismissal is based on authorizedcauses under Articles 283 and 284, the employer mustgive the employee and the Department of Labor andEmployment written notices 30 days prior to theeffectivity of his separation.

From the foregoing rules four possible situations maybe derived: (1) the dismissal is for a just cause underArticle 282 of the Labor Code, for an authorized causeunder Article 283, or for health reasons under Article284, and due process was observed; (2) the dismissalis without just or authorized cause but due processwas observed; (3) the dismissal is without just orauthorized cause and there was no due process; and(4) the dismissal is for just or authorized cause but dueprocess was not observed.

In the fourth situation, the dismissal should be upheld.While the procedural infirmity cannot be cured, itshould not invalidate the dismissal. However, theemployer should be held liable for non-compliance withthe procedural requirements of due process.

he present case squarely falls under the fourthsituation. The dismissal should be upheld because itwas established that the petitioners abandoned theirjobs to work for another company. Private respondent,however, did not follow the notice requirements andinstead argued that sending notices to the last knownaddresses would have been useless because they didnot reside there anymore. Unfortunately for the privaterespondent, this is not a valid excuse because the lawmandates the twin notice requirements to theemployee's last known address. Thus, it should beheld liable for non-compliance with the proceduralrequirements of due process.

JAKA FOOD PROCESSING CORPORATION v.DARWIN PACOT, ROBERT PAROHINOG, DAVIDBISNAR, MARLON DOMINGO, RHOEL LESCANOand JONATHAN CAGABCABG.R. No. 151378, March 28, 2005

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Respondents Darwin Pacot, Robert Parohinog, DavidBisnar, Marlon Domingo, Rhoel Lescano and JonathanCagabcab were earlier hired by petitioner JAKA FoodsProcessing Corporation (JAKA, for short) until thelatter terminated their employment on August 29, 1997because the corporation was "in dire financial straits".It is not disputed, however, that the termination waseffected without JAKA complying with the requirementunder Article 283 of the Labor Code regarding theservice of a written notice upon the employees and theDepartment of Labor and Employment at least one (1)month before the intended date of termination.

In time, respondents separately filed with the regionalArbitration Branch of the National Labor RelationsCommission (NLRC) complaints for illegal dismissal,underpayment of wages and nonpayment of serviceincentive leave and 13th month pay against JAKA andits HRD Manager, Rosana Castelo. After dueproceedings, the Labor Arbiter rendered adecision declaring the termination illegal and orderingJAKA and its HRD Manager to reinstate respondentswith full backwages, and separation pay ifreinstatement is not possible.

ISSUEWhat are the legal implications of a situation where anemployee is dismissed for cause but such dismissalwas effected without the employer’s compliance withthe notice requirement under the Labor Code

RULINGWe note that there are divergent implications of adismissal for just cause under Article 282, on onehand, and a dismissal for authorized cause underArticle 283, on the other.A dismissal for just cause under Article 282 impliesthat the employee concerned has committed, or isguilty of, some violation against the employer, i.e. theemployee has committed some serious misconduct, isguilty of some fraud against the employer, or he hasneglected his duties. Thus, it can be said that theemployee himself initiated the dismissal process.

On another breath, a dismissal for an authorizedcause under Article 283 does not necessarily implydelinquency or culpability on the part of the employee.Instead, the dismissal process is initiated by theemployer’s exercise of his managementprerogative, i.e. when the employer opts to install laborsaving devices, when he decides to cease businessoperations or when, as in this case, he undertakes toimplement a retrenchment program.

The clear-cut distinction between a dismissal for justcause under Article 282 and a dismissal for authorizedcause under Article 283 is further reinforced by the factthat in the first, payment of separation pay, as a rule, isnot required, while in the second, the law requirespayment of separation pay.

For these reasons, there ought to be a difference intreatment when the ground for dismissal is one of thejust causes under Article 282, and when based on oneof the authorized causes under Article 283.

Accordingly, it is wise to hold that: (1) if the dismissal isbased on a just cause under Article 282 but theemployer failed to comply with the notice requirement,the sanction to be imposed upon him shouldbe tempered because the dismissal process was, ineffect, initiated by an act imputable to the employee;and (2) if the dismissal is based on an authorizedcause under Article 283 but the employer failed tocomply with the notice requirement, the sanctionshould be stiffer because the dismissal process wasinitiated by the employer’s exercise of his managementprerogative.

The records before us reveal that, indeed, JAKA wassuffering from serious business losses at the time itterminated respondents’ employment. It is, therefore,established that there was ground for respondents’dismissal, i.e., retrenchment, which is one of theauthorized causes enumerated under Article 283 of theLabor Code. Likewise, it is established that JAKAfailed to comply with the notice requirement under thesame Article. Considering the factual circumstances inthe instant case and the above ratiocination, we,therefore, deem it proper to fix the indemnity atP50,000.00.

NOTE: Not related to the topic concerned, but still is ahelpful piece of knowledge:We likewise find the Court of Appeals to have been inerror when it ordered JAKA to pay respondentsseparation pay equivalent to one (1) month salary forevery year of service. This is because in ReahsCorporation vs. NLRC, we made the followingdeclaration:

"The rule, therefore, is that in all cases of businessclosure or cessation of operation or undertaking of theemployer, the affected employee is entitled toseparation pay. This is consistent with the state policyof treating labor as a primary social economic force,affording full protection to its rights as well as itswelfare. The exception is when the closure of businessor cessation of operations is due to serious businesslosses or financial reverses; duly proved, in whichcase, the right of affected employees to separation payis lost for obvious reasons. xxx".

INDUSTRIAL TIMBER V. ABABONG.R. No. 164518, January 25, 2006, Ynares Santiago

They insist that the holding in International TimberCorporation v. National Labor RelationsCommission2 that the closure of ITC’s Butuan Plantwas valid should not have been applied in the instantcases which pertain to ITC’s Stanply Plant. Theyfurther claim that the findings by the Labor Arbiter that

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there was a shortage of raw materials; that the woodprocessing plaint permit has expired; that the leasecontract with IPGC was terminated; and that ITC andIPGC were not business conduits, were all debunkedby the NLRC.

While we ruled in this case that the sanction should bestiffer in a dismissal based on authorized cause wherethe employer failed to comply with the noticerequirement than a dismissal based on just cause withthe same procedural infirmity, however, in instanceswhere the execution of a decision becomesimpossible, unjust, or too burdensome, modification ofthe decision becomes necessary in order to harmonizethe disposition with the prevailing circumstances.

In the case at bar, there was valid authorized causeconsidering the closure or cessation of ITC’s businesswhich was done in good faith and due tocircumstances beyond ITC’s control. Moreover, ITChad ceased to generate any income since its closureon August 17, 1990. Several months prior to theclosure, ITC experienced diminished income due tohigh production costs, erratic supply of raw materials,depressed prices, and poor market conditions for itswood products. It appears that ITC had given itsemployees all benefits in accord with the CBA upontheir termination.

SANGWOO PHILIPPINES, INC. AND/OR SANG IKJANG, JISSO JANG, WISSO JANG ANDNORBERTO TADEO V. SANGWOO PHILIPPINES,INC. EMPLOYEE UNION – OLALIAG.R. No. 173154, G.R. No. 173229, December 9,2013, Perlas Bernabe

On July 25, 2003, during the collective bargainingagreement (CBA) negotiations between SangwooPhilippines, Inc. Employees Union – Olalia (SPEU)and Sangwoo Philippines, Inc.(SPI), the latter filed withthe Department of Labor and Employment (DOLE) aletter-notice of temporary suspension of operations forone (1) month, beginning September 15, 2003, due tolack of orders from its buyers. SPEU was furnished acopy of the said letter. Negotiations on the CBA,however, continued and on September 10, 2003, theparties signed a handwritten Memorandum ofAgreement, which, among others, specified theemployees’ wages and benefits for the next two (2)years, and that in the event of a temporary shutdown,all machineries and raw materials would not be takenout of the SPI premises.

On September 15, 2003, SPI temporarily ceasedoperations. Thereafter, it successively filed two (2)letters with the DOLE, copy furnished SPEU, for theextension of the temporary shutdown until March 15,2004. Meanwhile, SPEU filed a complaint for unfairlabor practice, illegal closure, illegal dismissal,damages and attorney’s fees before the RegionalArbitration Branch IV of the NLRC. Subsequently, SPI

posted, in conspicuous places within the companypremises, notices of its permanent closure andcessation of business operations, effective March 16,2004, due to serious economic losses and financialreverses. The DOLE was furnished a copy of saidnotice together with a separate letter notifying it of thecompany’s permanent closure. SPEU was alsofurnished with a copy of the notice of permanentclosure. Forthwith, SPI offered separation benefits ofone-half (½) month pay for every year of service toeach of its employees. 234 employees of SPI acceptedthe offer, received the said sums and executedquitclaims. Those who refused the offer, i.e., theminority employees, were nevertheless given untilMarch 25, 2004 to accept their checks andcorrespondingly, execute quitclaims. However, theminority employees did not claim the said checks.

The Labor Arbiter ruled in favor of SPI and the NLRCsustained the ruling. But the NLRC opined that sinceSPI already gave separation benefits to 234 of itsemployees, the minority employees should not bedenied of the same. On appeal to the CA, SPI sent aFormal Offer of Settlement to SPEU, offering theamount of P15, 000.00 as financial assistance to eachof the minority employees. The CA held that theminority employees were not entitled to separation payconsidering that the company’s closure was due toserious business losses but still ordered SPI to pay theminority employees P15, 000.00 each.

ISSUE(a) Whether or not the minority employees are entitledto separation pay; and (b) Whether or not SPIcomplied with the notice requirement of Article 297(formerly Article 283) of the Labor Code.

HELD(a) NO. Article [297] of the Labor Code does notobligate an employer to pay separation benefits whenthe closure is due to serious losses. To require anemployer to be generous when it is no longer in aposition to do so, in our view, would be undulyoppressive, unjust, and unfair to the employer. Ours isa system of laws, and the law in protecting the rights ofthe working man, authorizes neither the oppressionnor the self-destruction of the employer.

(b) NO. Article 297 of the Labor Code provides thatbefore any employee is terminated due to closure ofbusiness, it must give a one (1) month prior writtennotice to the employee and to the DOLE. In thisrelation, case law instructs that it is the personal rightof the employee to be personally informed of hisproposed dismissal as well as the reasons therefor;and such requirement of notice is not a meretechnicality or formality which the employer maydispense with. To this end, jurisprudence states thatan employer’s act of posting notices to this effect inconspicuous areas in the workplace is not enough.Verily, for something as significant as the involuntary

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loss of one’s employment, nothing less than anindividually-addressed notice of dismissal supplied toeach worker is proper.

The Court finds that the LA, NLRC, and CA erred inruling that SPI complied with the notice requirementwhen it merely posted various copies of its notice ofclosure in conspicuous places within the businesspremises. As earlier explained, SPI was required toserve written notices of termination to its employees,which it, however, failed to do.It is well to stress thatwhile SPI had a valid ground to terminate itsemployees, i.e., closure of business, its failure tocomply with the proper procedure forterminationrenders itliable to pay the employeenominal damages for such omission. Based onexisting jurisprudence, an employer which has a validcause for dismissing its employee but conducts thedismissal with procedural infirmity is liable to pay theemployee nominal damages in the amount ofP30,000.00 if the ground for dismissal is a just cause,or the amount of P50,000.00 if the ground for dismissalis an authorized cause.35 However, case law exhortsthat in instances where the payment of such damagesbecomes impossible, unjust, or too burdensome,modification becomes necessary in order to harmonizethe disposition with the prevailing circumstances.

EQUITABLE BANKING CORPORATION vs.RICARDO SADACG.R. No. 164772, June 8, 2006, Chico Nazario

Respondent Sadac was appointed Vice President ofthe Legal Department of petitioner Bank andsubsequently General Counsel thereof. A letter wassent to the chairman of the board of directors ofpetitioner company accusing respondent of abusiveconduct. On that basis, the bank instructed the deliveryof all materials under his custody. Sadac requested fora hearing and investigation but the same remainedunheeded, prompting him to file a complaint for illegaldismissal with damages against petitioner bank. Uponlearning of the filing of the complaint, the bankterminated the services of Sadac. He was removedform his office and was disentitled to anycompensation and other benefits.

The Labor Arbiter dismissed the complaint for lack ofmerit. On appeal, the NLRC reversed the Labor Arbiterand declared respondent Sadac’s dismissal as illegal.Petitioner Bank filed Special Civil Action for Certioraribefore the SC assailing the NLRC Resolution In theSC’s Decision9 of 13 June 1997, it held respondentSadac’s dismissal illegal.

Pursuant thereto, respondent Sadac filed with theLabor Arbiter a Motion for Execution thereof. Likewise,petitioner Bank filed a Manifestation and Motionpraying that the award in favor of respondent Sadac becomputed and that after payment is made, petitioner

Bank be ordered forever released from liability undersaid judgment.

ISSUEHow do you compute for the full backwages of anillegally dismissed employee?

HELDThe Labor Code under Article 279 mandates that anemployee’s full backwages shall be inclusive ofallowances and other benefits or their monetaryequivalent.

For backwages to be awarded to an illegally dismissedemployee, should not, as a general rule, be diminishedor reduced by the earnings derived by him elsewhereduring the period of his illegal dismissal.

Backwages in general are granted on grounds ofequity for earnings which a worker or employee haslost due to his illegal dismissal. It is not privatecompensation or damages but is awarded infurtherance and effectuation of the public objective ofthe Labor Code. Nor is it a redress of a private rightbut rather in the nature of a command to the employerto make public reparation for dismissing an employeeeither due to the former’s unlawful act or bad faith.

The applicable modern definition of full backwages isnow found in Millares v. National Labor RelationsCommission 305 SCRA 500 (1999), where althoughthe issue in Millares concerned separation pay –separation pay and backwages both have employee’swage rate at their foundation.

The base figure to be used in the computation ofbackwages is pegged at the wage rate at the time ofthe employee’s dismissal, inclusive of regularallowances that the employee had been receiving suchas the emergency living allowances and the 13thmonth pay mandated under the law. Also, the“backwages” actually refers to backwages withoutqualifications and deductions.

CARLOS v. COURT OF APPEALSG.R. No. 168096, August 28, 2007, Chico-Nazario, J:

Petitioner ABC Security is a domestic corporationengaged in the business of job contracting byproviding security services to its clientele. PetitionerHonest Care Janitorial is a domestic corporationlikewise engaged in job contracting janitorial services.Private respondents were employed by petitioner ABCSecurity as security guards and were assigned toGreenvalley Country Club at the time they wereallegedly separated from employment. petitionersaverred that private respondents were not dismissedbut voluntarily resigned from their respectiveemployments.

ISSUE

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Whether or not private respondents were illegallydismissed by petitioners.

RULINGYes. Resignation is the voluntary act of employeeswho are compelled by personal reasons to dissociatethemselves from their employment. It must be donewith the intention of relinquishing an office,accompanied by the act of abandonment. 17 It isillogical for private respondents to resign and then filea complaint for illegal dismissal.

An employee who is unjustly dismissed from work shallbe entitled to reinstatement without loss of seniorityrights and other privileges and to full back wages,inclusive of allowances, and to other benefits or theirmonetary equivalents computed from the timecompensation was withheld up to the time of actualreinstatement.

Undoubtedly, private respondents are entitled to thepayment of full backwages, that is, without deductingtheir earnings elsewhere during the periods of theirillegal dismissal. However, where, as in this case,reinstatement is no longer feasible due to strainedrelations between the parties, separation payequivalent to one month's salary for every year ofservice shall be granted. the award for separation payequivalent to one-month pay for every year of serviceshall be computed from the time the privaterespondents were illegally separated from theiremployment up to the finality of this Court's Decision inthe instant petition.

TOMAS CLAUDIO MEMORIAL COLLEGE (TCMC) VCOURT OF APPEALS (CA)G.R. No. 152568, February 16, 2004, Callejo

Natividad, a regular employee of TCMC, was arrestedwithout warrant for an alleged violation of theDangerous Drugs Act. Pending preliminaryinvestigation, TCMC dismissed Natividad. Theprosecutor dismissed the complaint against Natividadfor lack of probable cause.

Natividad was again arrested for the second and thirdtime. The prosecutor dismissed the second complaintfor lack of probable cause, while the third complaint isstill undergoing preliminary investigation. Natividadposted a bail bond for his release.

Subsequently, he challenged the legality of hisdismissal before the Labor Arbiter. The Labor Arbiterdismissed the complaint. NLRC affirmed the decisionon appeal. However, upon appeal to the CA, thedismissal was upheld but awarded backwagesbecause of TCMC’s failure to observe the properprocedure for dismissal.

ISSUE

Is Natividad entitled to payment of backwages duringthe period of his detention?

HELDYes. The payment of backwages is generally grantedon the ground of equity. It is a form of relief thatrestores the income that was lost by reason of theunlawful dismissal; the grant thereof is intended torestore the earnings that would have accrued to thedismissed employee during the period of dismissaluntil it is determined that the termination ofemployment is for a just cause. It is not privatecompensation or damages but is awarded infurtherance and effectuation of the public objective ofthe Labor Code. Nor is it a redress of a private rightbut rather in the nature of a command to the employerto make public reparation for dismissing an employeeeither due to the formers unlawful act or bad faith.

The award of backwages is not conditioned on theemployee’s ability or inability to, in the interim, earnany income. Although Natividad was charged for anoffense three times; the prosecutor found no probablecause on the first two charges. He is not yet beenconvicted by final judgment under the third charge,thus, he is presumed innocent until his guilt is provedbeyond reasonable doubt.

CHRONICLE SECURITIES V. NLRCNovember 25, 2004, Ynares Santiago

Sometime in September 1993, petitioners hired privaterespondent Neal H. Cruz, who was then the executiveeditor of the Today newpaper, as the publicist and theeditor in chief of its national daily broadsheet, theManila Chronicle. As compensation for his services,private respondent received a monthly compensationof P60,000.00 plus a brand new car.

Thereafter, private respondent quit his job with Todayto assume the duties and responsibilities as the editorin chief of the Manila Chronicle. Private respondentwent about the task of improving the over-all image ofthe Manila Chronicle. However, due to privaterespondent's role in the publication of a controversialarticle that was carried by the newspaper sometime inJuly 1994, petitioners terminated his services.Consequently, private respondent filed a complaint forillegal dismissal against herein petitioners. LaborArbiter Ariel C. Santos rendered a decision7 holdingthat private respondent Neal Cruz was illegallydismissed. Petitioners appealed the decision with theNational Labor Relations Commission (NLRC), whichaffirmed the labor arbiter's decision. Petitionerscontend that contrary to established jurisprudence, theLabor Arbiter's computation of the amount due to theprivate respondent was principally based on themistaken premise that complainant was entitled tobackwages even beyond the closure and cessation ofpetitioners' newspaper business on January 19, 1998.Petitioners argue that this should not be the case

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because the amount of backwages should only becomputed from the date of illegal dismissal up to thetime when reinstatement was still possible.Reinstatement could not have been possible beyondthe date of the closure of the Manila Chronicle onJanuary 19, 1998. Therefore, backwages should onlybe computed from September 15, 1994, the effectivityof private respondents termination by the petitionersuntil the date when the Manila Chronicle ceasedpublication. Petitioners further contend that they onlyhad one newspaper business and, with the closure ofthe same, the reinstatement of private respondentNeal Cruz to his former position as Editor-In-Chiefbecame a physical and legal impossibility. Privaterespondent could not claim that he should have beenappointed to another position with the petitionersbecause he was hired solely for his editorial skills.There is simply no equivalent or substantiallyequivalent position to which private respondent couldbe assigned in petitioners' organization.

ISSUEWhether or not the basis of computation of backwagesby the NLRC is correct.

RULINGThere is no question that petitioners illegally dismissedprivate respondent Neal Cruz. Even petitionersthemselves are no longer questioning the findings ofthe Labor Arbiter and the NLRC on this aspect.Petitioners main concern in this petition is the propercomputation of backwages to be awarded to theprivate respondent who is rightfully entitled to thepayment of backwages, the only question that remainsis how much? Backwages, in general, are granted ongrounds of equity for earnings which a worker oremployee has lost due to his illegal dismissal. Itrepresents compensation that should be earned butwas not collected because an employer has unjustlydismissed an employee.33 Thus, the payment ofbackwages is a form of relief that restores the incomethat was lost by reason of unlawful dismissal.

Article 279 of the Labor Code of the Philippines, asamended, provides that:

An employee who is unjustly dismissed from workshall be entitled to reinstatement without loss ofseniority rights and other privileges and to his fullbackwages, inclusive of allowances, and to hisother benefits or their monetary equivalentcomputed from the time his compensation waswithheld from him up to the time of his actualreinstatement. (Underscoring supplied)

Under Republic Act No. 6715, employees who areillegally dismissed are entitled to full backwages,among others, computed from the time their actualcompensation was withheld from them up to the timeof their actual reinstatement. If reinstatement is nolonger possible, the backwages shall be computed

from the time of their illegal termination up to thefinality of the decision.

In the case at bar, the Manila Chronicle ceasedpublication on January 19, 1998. The cessation ofpublication was a permanent one and it wasprecipitated by the paper's dire financial conditionwhich was aggravated by a crippling strike causing it tofinally shut down. Petitioners' closure of theirnewspaper business was made on legal and validgrounds. It was never resorted to as a means todeprive the private respondent of the opportunity to bereinstated to his former position. To allow thecomputation of the backwages due the privaterespondent to be based on a period beyond January19, 1998 would be an injustice to the petitioners.

Our power to exact retribution from erring employersfor cases of illegal dismissal should not go beyondwhat is recognized as just and fair under thecircumstances. While we are inclined more often thannot toward the worker and uphold his cause in hisconflicts with his employer, such favoritism has notblinded us to the rule that justice is in every case forthe deserving, to be dispensed in the light of theestablished facts and the applicable law and doctrine.

INTERCONTINENTAL BROADCASTINGCORPORATION v. REYNALDO BENEDICTOG.R. NO. 152843, July 20, 2006, Corona

Intercontinental Broadcasting Corporation is agovernment-owned and controlled corporation. It isengaged in the business of mass mediacommunications. Reynaldo Benedicto was appointedby Ceferino Basilio, the general manager then ofpetitioner, as marketing manager. In a letter datedOctober 11, 1994 signed by Tomas Gomez III, at thattime the president of petitioner, Benedicto wasterminated from his position. Benedicto filed acomplaint with the NLRC for illegal dismissal anddamages. He alleged that after his appointment, hewas able to increase the televiewing, listening andaudience ratings of petitioner which resulted in itsimproved competitive financial strength.11 He claimedthat he successfully initiated, pursued andconsummated an advertising contract with VTVCorporation for a period of five years involving theamount of P600 million.12 However, on October 11,1994, he was terminated from his position without justor authorized cause. The Labor Arbiter ruled in favor ofBenedicto finding that he was indeed illegallydismissed. Finding the award excessive, petitioner, onOctober 15, 1998, filed with the NLRC itsmemorandum on appeal with motion to re-compute theaward on which the appeal bond was to be based. TheNLRC dismissed the appeal and ruled that petitionerfailed to perfect its appeal since it did not file theappeal bond within the reglementary period. The CAaffirmed the NLRC's decision.

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ISSUEWhether or not Benedicto was illegally dismissed.

RULINGYes. The labor arbiter found that Benedicto was anemployee (the marketing manager) of petitioner. Healso determined that there was no just or authorizedcause for Benedicto's termination. Neither didpetitioner comply with the two-notice requirement forvalid termination under the law. He thereforeconcluded that Benedicto was illegally dismissed.

These factual findings of the NLRC, confirmed by theCA, are binding on us since they are supported bysubstantial evidence. Petitioner, aside from merelystating that Benedicto's appointment wasunauthorized, did not extensively deal with the issue ofwhether Benedicto was in fact its employee. Besides, itis estopped from denying such fact considering itsadmission that its former President, Tomas Gomez III,wrote him a letter of termination on October 11,1994.37 Petitioner, furthermore, never contested thefinding of illegal dismissal. Accordingly, there are nostrong reasons for us to again delve into the facts.

PCIB vs. ABADG.R. No. 158045, February 28, 2005

Anastacio D. Abad was the senior Assistant Manager(Sales Head) of [petitioner Philippine CommercialInternational Bank (PCI Bank now Equitable PCIBank)], Tacloban City Branch when he was dismissedfrom his work. Before he was terminated, he receiveda Memorandum concerning the irregular clearing ofPNB-Naval Check of Sixtu Chu, the Bank’s valuedclient. He denied the allegations. During the actualinvestigation conducted by [petitioner] Bank, severaltransactions violative of the Bank’s Policies and Rulesand Regulations were [uncovered] by the Fact-FindingCommittee. Said transactions placed the Bank at riskin the amount of P23,044,527.88 and wereconsummated in the span of only one (1) month. Hewas asked to explain the irregularities. Subsequently,he was terminated. Abad instituted a Complaint forIllegal Dismissal. Labor Arbiter ruled in favor of thebank. NLRC and CA affirmed and held that thedismissal of Abad was valid. However, the CAawarded separation pay equivalent to one half (1/2)month pay for every year of service, in accordancewith the social justice policy in favor of the workingclass.

ISSUEWON the Court of Appeals grossly erred in awardingseparation pay equivalent to one-half (1/2) month’spay for every year of service to respondent, the samebeing contrary to law and jurisprudence. (The Court istasked to determine the propriety of awardingseparation pay to an employee despite the finding oflawful dismissal.)

HELDAn employee dismissed for any of the just causesenumerated under Article 282 of the Labor Code isnot, as a rule, entitled to separation pay. As anexception, allowing the grant of separation pay orsome other financial assistance to an employeedismissed for just causes is based on equity. TheCourt has granted separation pay as a measure ofsocial justice even when an employee has been validlydismissed, as long as the dismissal was not due toserious misconduct or reflective of personal integrity ormorality.

We hold that henceforth separation pay shall beallowed as a measure of social justice only in thoseinstances where the employee is validly dismissed forcauses other than serious misconduct or thosereflecting on his moral character. Where the reason forthe valid dismissal is, for example, habitual intoxicationor an offense involving moral turpitude, like theft orillicit sexual relations with a fellow worker, theemployer may not be required to give the dismissedemployee separation pay, or financial assistance, orwhatever other name it is called, on the ground ofsocial justice.

Under the San Miguel test, separation pay may beawarded, provided that the dismissal does not fallunder either of two circumstances: (1) there wasserious misconduct, or (2) the dismissal reflected onthe employee’s moral character. The dismissal in thepresent case was due to loss of trust and confidence,not serious misconduct.

While he violated the bank’s policy, rules andregulations, there was no indication that his actionswere perpetrated for his self-interest or for an unlawfulpurpose. On the contrary, and as the facts indicate,hisactions were motivated by a desire to accommodate avalued client of the bank.

The policy of social justice is not intended tocountenance wrongdoing simply because it iscommitted by the underprivileged. At best it maymitigate the penalty but it certainly will not condone theoffense.

BAGO V. NLRCG.R. No. 170001, April 4, 2007, Carpio Morales

Petitioner is an employee of the private respondents.The branch manager of the latter dismissed thepetitioner on account of her act of falsely accusing herof having an affair with the asst. branch manager.Petitioner wrote a sorry letter, admitting her faults andasking for reconsideration but to no avail. She thenfiled a case for illegal dismissal. She contends, interalia, that she is a rank and file employee who cannotsimply be dismissed without just or authorized cause.

ISSUE

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Whether or not the dismissal is valid.

RULINGYes. Arlyn’s claim that she is an ordinary rank-and-fileemployee, hence, she cannot be dismissed for loss oftrust and confidence does not lie. The observation ofthe Court of Appeals that "[h]er work is of such natureas to require a substantial amount of trust andconfidence on the part of x x x her employer" is well-taken in light of her following functions, as enumeratedby the NLRC:

1. Batches, collates and encode[s] policies,endorsements and official receipts;2. Generates printed production, collection, statisticaland receivable reports for submission to the HeadOffice;3. Reconciles and finalizes production and collectionreports;4. Maintains the computer hardware and software;and5. Performs other related functions as may beassigned to her by her superior from time to timewhich functions "required the use of judgment anddiscretion."

Arlyn of course incorrectly assumes that mere rank-and-file employees cannot be dismissed on the groundof loss of confidence. Jurisprudence holds otherwisealbeit it requires "a higher proof of involvement" in thequestioned acts.

But even assuming further that Arlyn may not bedismissed for loss of confidence, she can, on theground of fraud or betrayal of trust, following Article282 of the Labor Code which provides that:An employer may terminate an employee for any of thefollowing causes:x x x x(c) Fraud or willful breach by the employee of the trustreposed in him by his employer or duly authorizedrepresentative;x x x x(e) Other causes analogous to the foregoing.39

As for the propriety of dismissal as a penalty in light ofArlyn’s eight years of service during which, so sheclaims, she committed no infraction, the doctrinesestablished in Salvador v. Philippine Mining ServiceCorp.,45 to wit:To be sure, length of service is taken intoconsideration in imposing the penalty to be meted anerring employee. However, the case at barinvolves dishonesty and pilferage by petitioner whichresulted in respondent’s loss of confidence in him.Unlike other just causes for dismissal, trust in anemployee, once lost is difficult, if not impossible, toregain.

MILAGROS PANUNCILLO v. CAP PHILIPPINES,INC.515 SCRA 323 (2007)

Milagros Panuncillo was hired as Office Senior Clerkby CAP Philippines Inc. In order to secure theeducation of her son, Panuncillo procured aneducational plan which she had fully paid but whichshe later sold to Josefina Pernes for P37,000. Beforethe actual transfer of the plan could be effected,however, Panuncillo pledged it for P50,000 to JohnChua who, however, sold it to Benito Bonghanoy.Bonghanoy in turn sold the plan to Gaudioso R. Uy forP60,000. Having gotten wind of the transactionssubsequent to her purchase of the plan, Josefinainformed CAP Philippines Inc. that Panuncillo had"swindled" her but that she was willing to settle thecase amicably as long as Panuncillo will pay theamount involved and the interest. CAP Philippines Inc.terminated the services of Panuncillo. Panuncillosought reconsideration of her dismissal. Acting onPanuncillo’s motion for reconsideration, CAPPhilippines Inc. denied the same. Panuncillo thus fileda complaint for illegal dismissal, 13th month pay,service incentive leave pay, damages and attorney’sfees against CAP Philippines Inc.

ISSUEWhether or not Milagros has been illegally dismissed

HELDPanuncillo’s repeated violation of Section 8.4 of CAPPhilippines Inc’s Code of Discipline, she violated thetrust and confidence of CAP Philippines Inc. and itscustomers. To allow her to continue with heremployment puts CAP Philippines Inc. under the riskof being embroiled in unnecessary lawsuits fromcustomers similarly situated as Josefina, et al. Clearly,CAP Philippines Inc. exercised its managementprerogative when it dismissed Panuncillo. Under theLabor Code, the employer may terminate anemployment on the ground of serious misconduct orwillful disobedience by the employee of the lawfulorders of his employer or representative in connectionwith his work. Infractions of company rules andregulations have been declared to belong to thiscategory and thus are valid causes for termination ofemployment by the employer. The employer cannot becompelled to continue the employment of a personwho was found guilty of maliciously committing actswhich are detrimental to his interests. It will be highlyprejudicial to the interests of the employer to imposeon him the charges that warranted his dismissal fromemployment. Indeed, it will demoralize the rank and fileif the undeserving, if not undesirable, remain in theservice. It may encourage him to do even worse andwill render a mockery of the rules of discipline thatemployees are required to observe. This Court wasmore emphatic in holding that in protecting the rights ofthe laborer, it cannot authorize the oppression or self-destruction of the employer.

GARCIA V. PHILIPPINE AIRLINESG.R. No. 164856, January 20, 2009, Carpio Morales

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Employees-herein petitioners were allegedly caught inthe act of sniffing shabu. After due notice, PALdismissed petitioners. The Labor Arbiter ruled in favorof employees. NLRC reversed the said LA’s decision.

Prior to the promulgation of the Labor Arbitersdecision, the Securities and Exchange Commission(SEC) placed PAL, which was suffering from severefinancial losses, under an Interim RehabilitationReceiver, who was subsequently replaced by aPermanent Rehabilitation Receiver.

ISSUES(1) Can petitioners collect their wages during theperiod between the LA’s order of reinstatementpending appeal and the NLRC decision overturningthat of the LA?(2) Is the impossibility to comply with the reinstatementorder due to corporate rehabilitation provides areasonable justification for the failure to exercise theoptions under Article 223 of the Labor Code?

HELD(1) Yes. The Court reaffirms the prevailing principlethat even if the order of reinstatement of the LaborArbiter is reversed on appeal, it is obligatory on thepart of the employer to reinstate and pay the wages ofthe dismissed employee during the period of appealuntil reversal by the higher court. It settles the viewthat the Labor Arbiter's order of reinstatement isimmediately executory and the employer has to eitherre-admit them to work under the same terms andconditions prevailing prior to their dismissal, or toreinstate them in the payroll, and that failing toexercise the options in the alternative, employer mustpay the employees salaries.

(2) Yes. After the labor arbiters decision is reversed bya higher tribunal, the employee may be barred fromcollecting the accrued wages xxx The test is two-fold:(1) there must be actual delay or the fact that the orderof reinstatement pending appeal was not executedprior to its reversal; and (2) the delay must not be dueto the employers unjustified act or omission.

It is settled that upon appointment by the SEC of arehabilitation receiver, all actions for claims before anycourt, tribunal or board against the corporation shallipso jure be suspended. XXX Respondent was, duringthe period material to the case, effectively deprived ofthe alternative choices under Article 223 of the LaborCode, not only by virtue of the statutory injunction butalso in view of the interim relinquishment ofmanagement control to give way to the full exercise ofthe powers of the rehabilitation receiver. Had therebeen no need to rehabilitate, respondent may haveopted for actual physical reinstatement pending appealto optimize the utilization of resources. Then again,though the management may think this wise, therehabilitation receiver may decide otherwise, not tomention the subsistence of the injunction on claims.

ISLRIZ TRADING/VICTOR HUGO LU vs. CAPADAG.R. No. 168501, January 31, 2011

Four of the respondents were drivers while the other 5are helpers of Islriz Trading, a gravel and sandbusiness owned and operated by petitioner VictorHugo Lu. Claiming that they were illegally dismissed,respondents filed a Complaint for illegal dismissal andnon-payment of overtime pay, holiday pay, rest daypay, allowances and separation pay against petitioner.On his part, petitioner imputed abandonment of workagainst respondents. LA ruled that Petitioner is guiltyof illegal dismissal.

On appeal the NLRC reversed the decision of the LA.Undeterred, petitioner brought the matter to the CAthrough Petition for Certiorari the CA quoted the Orderof Labor Arbiter Castillon and agreed with herratiocination. Hence this Petition.

ISSUEWhether or not the respondents may collect theirwages during the period between the LA’s order ofreinstatement pending appeal and the NLRCResolution overturning that of the LA.

HELDEmployees are entitled to their accrued salaries duringthe period between the Labor Arbiter’s order ofreinstatement pending appeal and the resolution of theNational Labor Relations Commission (NLRC)overturning that of the Labor Arbiter. Otherwise stated,even if the order of reinstatement of the Labor Arbiteris reversed on appeal, the employer is still obliged toreinstate and pay the wages of the employee duringthe period of appeal until reversal by a higher court ortribunal. In this case, respondents are entitled to theiraccrued salaries from the time petitioner received acopy of the Decision of the Labor Arbiter declaringrespondents’ termination illegal and ordering theirreinstatement up to the date of the NLRC resolutionoverturning that of the Labor Arbiter.

LANSANGAN v. AMKOR TECHNOLOGYPHILIPPINES, INC.G.R. No. 177026, January 30, 2009, Carpio Morales

An anonymous e-mail was sent to the GeneralManager of Amkor Technology Philippines(respondent) detailing allegations of malfeasance onthe part of its supervisory employees LunesaLansangan and Rosita Cendaña (petitioners) for"stealing company time." Respondent thusinvestigated the matter, requiring petitioners to submittheir written explanation. In handwritten letters,petitioners admitted their wrongdoing. Respondentthereupon terminated petitioners for "extremely seriousoffenses" as defined in its Code of Discipline,prompting petitioners to file a complaint for illegaldismissal against it.

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Labor Arbiter Arthur L. Amansec, by Decision ofOctober 20, 2004,5 dismissed petitioners’ complaint,he having found them guilty of dishonesty punishableas a serious form of misconduct and fraud or breach oftrust under Article 282 of the Labor Code.

The Arbiter, however, ordered the reinstatement ofpetitioners to their former positions without backwages"as a measure of equitable and compassionate relief"owing mainly to petitioners’ prior unblemishedemployment records, show of remorse, harshness ofthe penalty and defective attendance monitoringsystem of respondent.

Respondent assailed the reinstatement aspect of theArbiter’s order before the National Labor RelationsCommission (NLRC). In the meantime,petitioners, without appealing the Arbiter’s finding themguilty of "dishonesty as a form of serious misconductand fraud or breach of trust," moved for the issuanceof a "writ of reinstatement."

After a series of oppositions, motions and orders, theArbiter issued an alias writ of execution following whichrespondent’s bank account at Equitable-PCI Bank wasgarnished. Respondent thereupon moved for thequashal of the alias writ of execution and lifting of thenotice of garnishment, which the Arbiter denied byOrder of January 26, 2005, drawing respondent toappeal to the NLRC.

After consolidating respondent’s appeal from the LaborArbiter’s order of reinstatement and subsequentappeal/order denying the quashal of the alias writ ofexecution and lifting of the notice of garnishment, theNLRC, by Resolution of June 30, 2005, grantedrespondent’s appeals by deleting the reinstatementaspect of the Arbiter’s decision and setting aside theArbiter’s Alias Writ of Execution and Notice ofGarnishment.

Petitioners’ motion for reconsideration of the NLRCResolution having been denied, they filed a petition forcertiorari before the Court of Appeals which, byDecision10 of September 19, 2006, while affirming thefinding that petitioners were guilty of misconduct andthe like, ordered respondent to "pay petitioners theircorresponding backwages.

ISSUEWON petitioners committed serious misconduct, fraud,dishonest and breach of trust

RULINGThe decision of the Arbiter finding that petitionerscommitted "dishonesty as a form of seriousmisconduct and fraud, or breach of trust" had becomefinal, petitioners not having appealed the same beforethe NLRC as in fact they even moved for the executionof the reinstatement aspect of the decision. It bears

recalling that it was only respondent which assailed theArbiter’s decision to the NLRC – to solely question thepropriety of the order for reinstatement, and itsucceeded.

The Arbiter found petitioners’ dismissal to be valid.Such finding had, as stated earlier, become final,petitioners not having appealed it.WHEREFORE, the petition is DENIED.

ELIZABETH D. PALTENG V. UNITED COCONUTPLANTERS BANKG.R. No. 172199, February 27, 2009

DOCTRINE: Reinstatement and payment ofbackwages are distinct and separate reliefs. Theaward of one does not bar the other. Backwages maybe awarded without reinstatement, and reinstatementmay be ordered without awarding backwages.

The Court, despite ordering reinstatement or paymentof separation pay in lieu of reinstatement, has notawarded backwages as penalty for the misconduct orinfraction committed by the employee.

FACTSPetitioner Elizabeth D. Palteng was the SeniorAssistant Manager/Branch Operations Officer ofrespondent United Coconut Planters Bank in itsBanaue Branch in Quezon City.

On April 15, 1996, Area Head and Vice-PresidentEulallo S. Rodriguez reported to the bank’s InternalAudit and Credit Review Division that bank clientClariza L. Mercado -The Red Shop has incurred PastDue Domestic Bills Purchased (BP) of P34,260,000.After conducting a diligence audit, the division reportedto the Audit and Examination Committee that Paltengcommitted several offenses under the EmployeeDiscipline Code in connection with Mercado’s PastDue Domestic BP. It also recommended that thematter be referred to the Committee on EmployeeDiscipline for proper disposition.

On August 14, 1996, Palteng was required to explainwhy no disciplinary action should be taken against her.In response, Palteng explained that while she admittedcommitting a major offense that may cause herdismissal, she claimed that it was an honest mistake.

After hearing and investigation, the committeerecommended Palteng’s dismissal. On October 25,1996, Palteng was dismissed with forfeiture of allbenefits.

Palteng filed a complaint for illegal dismissal seekingreinstatement to her former position without loss ofseniority rights with full backwages, or in thealternative, payment of separation pay with fullbackwages, and recovery of her monetary claims withdamages.

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LA found her dismissal as illegal and ordered paymentof separation pay in lieu or reinstatement with paymentof full backwages from dismissal to finality of judgmentand damages.

NLRC affirmed with the order that damages bedeleted.

CA affirmed decision and modified payment ofbackwages from the date of dismissal to promulgationof Labor Arbiter’s decision only.

ISSUEWhether the award of backwages, if any, should becounted from the time petitioner was illegallydismissed until the promulgation of the Labor Arbiter’sDecision on December 6, 1999, or until the finality ofthe decision. - NONE AT ALL.

HELDSettled is the rule that an employee who is illegallydismissed from work is entitled to reinstatementwithout loss of seniority rights, and other privileges aswell as to full backwages, inclusive of allowances, andto other benefits or their monetary equivalentcomputed from the time his compensation waswithheld from him up to the time of his actualreinstatement. However, in the event thatreinstatement is no longer possible, the employee maybe given separation pay instead.

Notably, reinstatement and payment of backwages aredistinct and separate reliefs. The award of one doesnot bar the other. Backwages may be awarded withoutreinstatement, and reinstatement may be orderedwithout awarding backwages.

In a number of cases, the Court, despite orderingreinstatement or payment of separation pay in lieu ofreinstatement, has not awarded backwages as penaltyfor the misconduct or infraction committed by theemployee.

In the case at bar, petitioner admitted that she grantedthe BP accommodation against Mercado’s personalchecks beyond and outside her authority. The LaborArbiter, the NLRC and the Court of Appeals all foundher to have committed an “error of judgment,” “honestmistake,” “honest mistake” vis-à-vis a “major offense.”

Since petitioner was not faultless in regard to theoffenses imputed against her, we hold that the awardof separation pay only, without backwages, is proper.

C. ALCANTARA & SONS, INC V. CA ET AL.G.R. No. 155109. September 29, 2010, Abad

C. Alcantara & Sons, Inc., (the Company) is adomestic corporation engaged in the manufacture andprocessing of plywood. Nagkahiusang Mamumuo sa

Alsons-SPFL (the Union) is the exclusive bargainingagent of the Companys rank and file employees. TheCompany and the Union entered into a CollectiveBargaining Agreement (CBA) that bound them to holdno strike and no lockout in the course of its life. Atsome point the parties began negotiating the economicprovisions of their CBA but this ended in a deadlock,prompting the Union to file a notice of strike. Afterefforts at conciliation by the Department of Labor andEmployment (DOLE) failed, the Union conducted astrike vote that resulted in an overwhelming majority ofits members favoring it. The Union reported the strikevote to the DOLE and, after the observance of themandatory cooling-off period, went on strike.

ISSUEIs the strike invalid notwithstanding compliance withprocedural requirements under the Labor Code?

HELDYES.

“A strike may be regarded as invalid although the laborunion has complied with the strict requirements forstaging one as provided in Article 263 of the LaborCode when the same is held contrary to an existingagreement, such as a no strike clause or conclusivearbitration clause.[19] Here, the CBA between theparties contained a no strike, no lockout provision thatenjoined both the Union and the Company fromresorting to the use of economic weapons available tothem under the law and to instead take recourse tovoluntary arbitration in settling their disputes.”

“No law or public policy prohibits the Union and theCompany from mutually waiving the strike and lockoutmaces available to them to give way to voluntaryarbitration.Indeed, no less than the 1987 Constitutionrecognizes in Section 3, Article XIII, preferential use ofvoluntary means to settle disputes.” Thus:

The State shall promote the principleof shared responsibility betweenworkers and employers and thepreferential use of voluntary modes insettling disputes, includingconciliation, and shall enforce theirmutual compliance therewith to fosterindustrial peace.

“Since the Union’s strike has been declared illegal, theUnion officers can, in accordance with law beterminated from employment for their actions. Thisincludes the shop stewards. They cannot be shieldedfrom the coverage of Article 264 of the Labor Codesince the Union appointed them as such and placedthem in positions of leadership and power over themen in their respective work units. As regards the rankand file Union members, Article 264 of the Labor Codeprovides that termination from employment is notwarranted by the mere fact that a union member hastaken part in an illegal strike. It must be shown that

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such a union member, clearly identified, performed anillegal act or acts during the strike.”

ABOC v. METROPOLITAN BANK AND TRUSTCOMPANYG.R. Nos. 170542-43 and G.R. No. 176460, December13, 2010

Aboc, the Regional Operations Coordinator ofMetrobank in Cebu City, for nine years, maintained anunblemished employment record until he received aninter-office letter on January 29, 1998, requiring him toexplain in writing the charges that he had activelyparticipated in the lending activities of his immediatesupervisor, Wynster Y. Chua (Chua), the BranchManager of Metrobank where he was assigned.

Aboc wrote a letter to Metrobank explaining that hehad no interest whatsoever in the lending business ofChua because it was solely owned by the latter. Headmitted, however, that he did some acts for Chua inconnection with his lending activity. He did so becausehe could not say no to Chua because of the lattersinfluence and ascendancy over him.

Metrobank, on the other hand, replied that Aboc andother employees organized two unregistered creditunions known as Cebu North Road Investment (CNRI)and the First Fund Access (FFA), which openedaccounts with Metrobank under fictitious names andused Metrobanks premises, equipment and facilities intheir lending business.

During the investigation conducted by Metrobankon January 15, 1998, it was discovered that Abocsolicited investors including its clients for said creditunion. He also induced bank clients to withdraw theiraccounts and invest them in CNRI.

Metrobank required Aboc to submit a writtenexplanation why he should not be dismissed for causeand attend a conference in which he was allowed tobring a counsel of his own choice. He submitted hiswritten explanation and he attended the conference.

Thereafter, Metrobank found that Aboc's actionsconstituted serious misconduct and a breach of trustand confidence. On February 12, 1998, Metrobankterminated his services.

ISSUEWhether or not Aboc was legally dismissed.

HELDYes. Article 282 states:

"ART. 282. TERMINATION BYEMPLOYER. - An employer mayterminate an employment for any ofthe following causes

(a) Serious misconduct or willfuldisobedience by the employee of thelawful orders of his employer orrepresentative in connection with hiswork;

xxx(c) Fraud or willful breach by theemployee of the trust reposed in himby his employer or duly authorizedrepresentative;

xxx"

In termination cases, the burden of proof rests on theemployer to show that the dismissal was for a justcause or authorized cause. An employee's dismissaldue to serious misconduct and loss of trust andconfidence must be supported by substantial evidence.Substantial evidence is that amount of relevantevidence as a reasonable mind might accept asadequate to support a conclusion, even if other minds,equally reasonable, might conceivably opineotherwise.

In the case at bench, Metrobank's evidence clearlyshows that the acts of Aboc in helping Chua organizethe CNRI and FFA credit unions and in the operationsthereof constituted serious misconduct or breach oftrust and confidence.

Abocs highly irregular participation in the lendingbusiness of CNRI and FFA jeopardized the business ofMetrobank. CNRI and FFA were practically competingwith the business of Metrobank by soliciting investorsincluding clients of the bank for their creditunions. Aboc admitted that he was able to induceNerinilda, the widow of a former branch accountant ofMetrobank, to withdraw her UNISA account withMetrobank and invest it with their credit union.

PRINCE TRANSPORT V. GARCIAG.R. No. 167291, January 12, 2011

Prince Transport, Inc. (PTI), is a company engaged inthe business of transporting passengers by land;respondents were hired either as drivers, conductors,mechanics or inspectors, except for respondentDiosdado Garcia (Garcia), who was assigned asOperations Manager. Sometime in October 2007 thecommissions received by the respondents werereduced to 7 to 9% from 8 to 10%. This ledrespondents and other employees of PTI to hold aseries of meetings to discuss the protection of theirinterests as employees. Ranato Claros, president ofPTI, made known to Garcia his objections to theformation of a union and in order to block thecontinued formation of the union, PTI caused thetransfer of all union members and sympathizers to oneof its sub-companies, Lubas Transport (Lubas). The

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business of Lubas deteriorated because of the refusalof PTI to maintain and repair the units being usedtherein, which resulted in the virtual stoppage of itsoperations and respondents' loss of employment.Hence, the respondent-employees filed complaintsagainst PTI for illegal dismissal and unfair laborpractice. PTI contended that it has nothing to do withthe management and operations of Lubas as well asthe control and supervision of the latter's employees.

ISSUEWhether or not the order to reinstate respondents wasvalid considering that the issue of reinstatement wasnever brought up before the CA and respondentsnever questioned the award of separation pay.

HELDYES. It is clear from the complaints filed byrespondents that they are seeking reinstatement.Section 2 (c), Rule 7 of the Rules of Court providesthat a pleading shall specify the relief sought, but mayadd a general prayer for such further or other reliefs asmay be deemed just and equitable. Under this rule, acourt can grant the relief warranted by the allegationand the proof even if it is not specifically sought by theinjured party; the inclusion of a general prayer mayjustify the grant of a remedy different from or togetherwith the specific remedy sought, if the facts alleged inthe complaint and the evidence introduced so warrant.The general prayer is broad enough “to justifyextension of a remedy different from or together withthe specific remedy sought.” Even without the prayerfor a specific remedy, proper relief may be granted bythe court if the facts alleged in the complaint and theevidence introduced so warrant. The court shall grantrelief warranted by the allegations and the proof even ifno such relief is prayed for. The prayer in thecomplaint for other reliefs equitable and just in thepremises justifies the grant of a relief not otherwisespecifically prayed for. In the instant case, aside fromtheir specific prayer for reinstatement, respondents, intheir separate complaints, prayed for such reliefswhich are deemed just and equitable.

ROBINSONS GALLERIA/ROBINSONSSUPERMARKET CORP. V. RANCHEZG.R. No. 177937, January 19, 2011, Nachura

Respondent was a probationary employee of petitionerRobinsons Galleria/Robinsons SupermarketCorporation (petitioner Supermarket) for a period offive (5) months. Two weeks after she was hired,respondent reported to her supervisor the loss of cashamounting to Twenty Thousand Two Hundred Ninety-Nine Pesos (P20,299.00) which she had placed insidethe company locker.An information for Qualified Theftwas filed against her.Respondent filed a complaint forillegal dismissal and damages, and was put in prisonfor 2 weeks. On March 12, 1998, petitioners sent torespondent by mail a notice of termination and/ornotice of expiration of probationary employment dated

March 9, 1998.In dismissing the complaint for illegaldismissal, the Labor Arbiter ratiocinated that at thetime respondent filed the complaint for illegaldismissal, she was not yet dismissed by petitioners.

ISSUEWhether respondent was constructively and illegallydismissed by petitioner?

RULINGYes. There is probationary employment when theemployee upon his engagement is made to undergo atrial period during which the employer determines hisfitness to qualify for regular employment based onreasonable standards made known to him at the timeof engagement. A probationary employee, like aregular employee, enjoys security of tenure. However,in cases of probationary employment, aside from justor authorized causes of termination, an additionalground is provided under Article 281 of the LaborCode, i.e., the probationary employee may also beterminated for failure to qualify as a regular employeein accordance with reasonable standards made knownby the employer to the employee at the time of theengagement. In the instant case, based on the facts onrecord, petitioners failed to accord respondentsubstantive and procedural due process. Thehaphazard manner in the investigation of the missingcash, which was left to the determination of the policeauthorities and the Prosecutors Office, left respondentwith no choice but to cry foul. Administrativeinvestigation was not conducted by petitionerSupermarket. On the same day that the missingmoney was reported by respondent to her immediatesuperior, the company already pre-judged her guiltwithout proper investigation, and instantly reported herto the police as the suspected thief, which resulted inher languishing in jail for two weeks.

As correctly pointed out by the NLRC, the due processrequirements under the Labor Code are mandatoryand may not be supplanted by police investigation orcourt proceedings. The criminal aspect of the case isconsidered independent of the administrative aspect.Thus, employers should not rely solely on the findingsof the Prosecutors Office. They are mandated toconduct their own separate investigation, and toaccord the employee every opportunity to defendhimself. Furthermore, respondent was not representedby counsel when she was strip-searched inside thecompany premises or during the police investigation,and in the preliminary investigation before theProsecutors Office.

Respondent was constructively dismissed by petitionerSupermarket effective October 30, 1997. It wasunreasonable for petitioners to charge her withabandonment for not reporting for work upon herrelease in jail. It would be the height of callousness toexpect her to return to work after suffering in jail fortwo weeks. Work had been rendered unreasonable,

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unlikely, and definitely impossible, considering thetreatment that was accorded respondent bypetitioners.

PFIZER V. VELASCOG.R. No. March 9, 2011, Leonardo-De Castro

Geraldine L. Velasco, an employee of PFIZER, INC.,having a high risk pregnancy, was advised to undergobed rest, resulting to an extended leave of absence.She was served two show cause noticed for violationof company rules and was effectively placed underpreventive suspension. Velasco filed a complaint forillegal suspension with money claims. She thenreceived a "Third Show-cause Notice”. PFIZERinformed Velasco of its "Management Decision"terminating her employment. On 5 December 2003,the Labor Arbiter rendered its decision declaring thedismissal of Velasco illegal, ordering her reinstatementwith backwages and further awarding moral andexemplary damages with attorney’s fees. Pfizer arguesthe validity of respondent’s dismissal from employmenthaving found that it was in accordance with the twonotice rule pursuant to the due process requirementand with just cause.

Respondent Velasco filed a Motion forReconsideration wherein the Court of Appeals affirmedthe validity of respondent’s dismissal from employmentbut modified its earlier ruling by directing PFIZER topay respondent her wages from the date of the LaborArbiter’s Decision dated December 5, 2003 up to theCourt of Appeals Decision dated November 23, 2005.

On the other hand, PFIZER filed the instant petitionassailing the aforementioned Court of AppealsResolutions. PFIZER further assert that Velascoshould reimburse the wages received while the casewas pending on appeal.ISSUEWhether or not the Court of Appeals committed aserious but reversible error when it ordered Pfizer topay Velasco wages from the date of the Labor Arbiter’sdecision ordering her reinstatement until November 23,2005, when the Court of Appeals rendered its decisiondeclaring Velasco’s dismissal valid.

RULINGNo. The petition is without merit.The provision of Article 223 is clear that an award [bythe Labor Arbiter] for reinstatement shall beimmediately executory even pending appeal and theposting of a bond by the employer shall not stay theexecution for reinstatement. In the case at bar,PFIZER did not immediately admit respondent back towork which, according to the law, should have beendone as soon as an order or award of reinstatement ishanded down by the Labor Arbiter without need for theissuance of a writ of execution.

PFIZER makes much of respondent’s non-compliancewith its return- to-work directive by downplaying thereasons forwarded by respondent as less thansufficient to justify her purported refusal to bereinstated. In PFIZER’s view, the return-to-work orderit sent to respondent was adequate to satisfy thejurisprudential requisites concerning the reinstatementof an illegally dismissed employee.

To reiterate, under Article 223 of the Labor Code, anemployee entitled to reinstatement "shall either beadmitted back to work under the same terms andconditions prevailing prior to his dismissal orseparation or, at the option of the employer, merelyreinstated in the payroll." It is established injurisprudence that reinstatement means restoration toa state or condition from which one had been removedor separated. To begin with, the return-to-work orderPFIZER sent respondent is silent with regard to theposition or the exact nature of employment that itwanted respondent to take up as of July 1, 2005. Evenif we assume that the job awaiting respondent in thenew location is of the same designation and paycategory as what she had before, it is plain from thetext of PFIZER’s June 27, 2005 letter that suchreinstatement was not "under the same terms andconditions" as her previous employment, consideringthat PFIZER ordered respondent to report to its mainoffice in Makati City while knowing fully well thatrespondent’s previous job had her stationed in BaguioCity (respondent’s place of residence) and it was stillnecessary for respondent to be briefed regarding herwork assignments and responsibilities, including herrelocation benefits.

The Court is cognizant of the prerogative ofmanagement to transfer an employee from one officeto another within the business establishment, providedthat there is no demotion in rank or diminution of hissalary, benefits and other privileges and the action isnot motivated by discrimination, made in bad faith, oreffected as a form of punishment or demotion withoutsufficient cause. The June 27, 2005 return-to-workdirective implying that respondent was being relocatedto PFIZER’s Makati main office would necessarilycause hardship to respondent, a married woman with afamily to support residing in Baguio City.

PFIZER further implores the Court to annul the awardof backwages and separation pay as well as to requirerespondent to refund the amount that she was able tocollect by way of garnishment from PFIZER as heraccrued salaries since it was proven on appeal that thedismissal was valid.

The Court reaffirms the prevailing principle that even ifthe order of reinstatement of the Labor Arbiter isreversed on appeal, it is obligatory on the part of theemployer to reinstate and pay the wages of thedismissed employee during the period of appeal untilreversal by the higher court.

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LUNA V. ALLADO CONSTRUCTIONG.R. No. 175251, May 30, 2011, Leonardo de Castro

Petitioner alleges that he was given a travel orderdated to proceed to respondents main office in DavaoCity for reassignment. Upon arrival at the office, hewas asked to sign several sets of "Contract of ProjectEmployment". He refused. Thus, he was not given areassignment or any other work. These incidentsprompted him to file the complaint.

Respondents, on the other hand, alleged thatpetitioner applied for a leave of absence which wasgranted. Upon expiration of his leave, he was advisedto report to the company’s project in SaranganiProvince. However, he refused and claimed insteadthat he had been dismissed illegally.

Finding that petitioner is deemed resigned, the LaborArbiter (LA) dismissed petitioners complaint for illegaldismissal, but ordered respondent to pay the formerthe amount ofP18,000.00 by way of financialassistance.

Respondents appealed with the National LaborRelations Commission (NLRC) which reversed thedecision of the LA, declared respondents guilty ofillegal dismissal, and ordered them to pay petitionerone-month salary for every year of service asseparation pay. Respondents moved forreconsideration but their motion was denied.

Respondents elevated their cause to the CAviaapetition forcertiorariunder Rule 65. The CA grantedrespondents petition forcertiorariand deleted the awardof financial assistance. Further, the CA held that it wasgrave abuse of discretion for the NLRC to rule on theissue of illegal dismissal when such issue was notraised on appeal.

ISSUESWhether the NLRC could still review issues notbrought during the appeal.

RULINGThe 2002 Rules of Procedure of the NLRC, which wasin effect at the time respondents appealed the LaborArbiters decision, provided that the NLRC shall limititself only to the specific issues that were elevated forreview. Here, the NLRC passed upon the issue ofillegal dismissal although this was not brought up inthe appeal. Therefore, by considering the argumentsand issues in the reply/opposition to appeal whichwere not properly raised by timely appeal norcomprehended within the scope of the issue raised inpetitioners appeal, public respondent committed graveabuse of discretion amounting to excess of jurisdiction.

ROMEO VILLARUEL v. YEO HAN GUANG.R. No. 169191, June 1, 2011, Peralta

Petitioner alleged that in June 1963, he was employedas a machine operator by Ribonette ManufacturingCompany owned and managed by herein respondentYeo Han Guan. Petitioner further alleged that onOctober 5, 1998, he got sick and was confined in ahospital; on December 12, 1998, he reported for workbut was no longer permitted to go back because of hisillness; he asked that respondent allow him to continueworking but be assigned a lighter kind of work but hisrequest was denied; instead, he was offered a sum ofP15,000.00 as his separation pay; however, the saidamount corresponds only to the period between 1993and 1999; petitioner prayed that he be grantedseparation pay computed from his first day ofemployment in June 1963, but respondent refused.Aside from separation pay, petitioner prayed for thepayment of service incentive leave for three years aswell as attorney's fees.

ISSUEWhether or not petitioner was entitled to separationpay

HELDNO. The Court agrees with the CA in its observation ofthe following circumstances as proof that respondentdid not terminate petitioner's employment: first, theonly cause of action in petitioner's original complaint isthat he was offered a very low separation pay; second,there was no allegation of illegal dismissal, both inpetitioner's original and amended complaints andposition paper; and, third, there was no prayer forreinstatement.

In consonance with the above findings, the Court findsthat petitioner was the one who initiated the severanceof his employment relations with respondent. It isevident from the various pleadings filed by petitionerthat he never intended to return to his employmentwith respondent on the ground that his health is failing.Indeed, petitioner did not ask for reinstatement. In fact,he rejected respondent's offer for him to return to work.This is tantamount to resignation.

Resignation is defined as the voluntary act of anemployee who finds himself in a situation where hebelieves that personal reasons cannot be sacrificed infavor of the exigency of the service and he has noother choice but to disassociate himself from hisemployment.

It may not be amiss to point out at this juncture thataside from Article 284 of the Labor Code, the award ofseparation pay is also authorized in the situations dealtwith in Article 283[16] of the same Code and underSection 4 (b), Rule I, Book VI of the ImplementingRules and Regulations of the said Code[17] wherethere is illegal dismissal and reinstatement is no longerfeasible. By way of exception, this Court has allowedgrants of separation pay to stand as a measure of

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social justice where the employee is validly dismissedfor causes other than serious misconduct or thosereflecting on his moral character.[18] However, there isno provision in the Labor Code which grantsseparation pay to voluntarily resigning employees. Infact, the rule is that an employee who voluntarilyresigns from employment is not entitled to separationpay, except when it is stipulated in the employmentcontract or CBA, or it is sanctioned by establishedemployer practice or policy. In the present case,neither the abovementioned provisions of the LaborCode and its implementing rules and regulations northe exceptions apply because petitioner was notdismissed from his employment and there is noevidence to show that payment of separation pay isstipulated in his employment contract or sanctioned byestablished practice or policy of herein respondent, hisemployer.

Since petitioner was not terminated from hisemployment and, instead, is deemed to have resignedtherefrom, he is not entitled to separation pay underthe provisions of the Labor Code.

The foregoing notwithstanding, this Court, in a numberof cases, has granted financial assistance to separatedemployees as a measure of social and compassionatejustice and as an equitable concession.

NACAR VS. GALLERY FRAMESG.R. No. 189871, August 13, 2013, Peralta

Doctrine: On illegal dismissal cases, backwages will becomputed from the date of illegal dismissal until thedate of the decision of the Labor Arbiter. But if theemployer appeals, then the end date shall be extendeduntil the day when the appellate court’s decision shallbecome final. Hence, as a consequence, the liability ofthe employer, if he loses on appeal, will increase.

Nacar filed a labor case against Gallery Framesalleging he was dismissed without cause on January24, 1997. On October 15, 1998, the Labor Arbiter (LA)found Gallery Frames guilty of illegal dismissal hencethe Arbiter awarded Nacar damages consisting ofbackwages and separation pay.

Gallery Frames appealed all the way to the SupremeCourt (SC). The Supreme Court affirmed the decisionof the Labor Arbiter and the decision became final onMay 27, 2002.

After the finality of the SC decision, Nacar filed amotion before the LA for recomputation as he allegedthat his backwages should be computed from the timeof his illegal dismissal (January 24, 1997) until thefinality of the SC decision (May 27, 2002) with interest.The LA denied the motion as he ruled that thereckoning point of the computation should only be fromthe time Nacar was illegally dismissed (January 24,1997) until the decision of the LA (October 15, 1998).

ISSUEWhether or not the LA is correct

RULINGNO. Refer to the doctrine. This is just but a risk that theemployer cannot avoid when it continued to seekrecourses against the Labor Arbiter’s decision. This isalso in accordance with Article 279 of the Labor Code.

INTEGRATED MICROELECTRONICS, INC. v.PIONILLAG.R. No. 200222, August 28, 2013, Perlas-Bernabe

Petitioner IMI employed respondent Adonis Pionilla asone of its production worker. Pionilla was later ondismissed for violating company rules and regulationswhich prohibits lending one's ID since the same isconsidered a breach of its security rules. It wasreported that Pionilla was seen escorting a lady toboard the company shuttle bus at a terminal, and thatthe lady was wearing a company ID – which serves asa free pass for shuttle bus passengers – even if shewas just a job applicant at IMI. Pionilla admitted that helent his ID to the lady who turned out to be his relative.It was also admitted by Pionilla that at the time of theincident, he had two Ids in his name as he lost hisoriginal ID but was able to secure a temporary ID lateron. As Pionilla and his relative were about to board theshuttle bus, they were both holding separate Ids, bothin his name. The day after the incident, Pionillareceived a notice requiring him to explain the incidentand a committee was subsequently formed toinvestigate the matter. Subsequently IMI found Pionillaguilty and was dismissed from service.

ISSUEWhether or not Pionilla was illegally dismissed andhence entitled to reinstatement and full back wages

HELDAn illegally dismissed employee is entitled to eitherreinstatement, if viable or separation pay ifreinstatement is no longer viable and backwages. Incertain cases, however, the Court has orderedreinstatement of the employee without backwagesconsidering the fact that (1) the dismissal of theemployee would be too harsh a penalty and, (2) theemployer was in good faith in terminating theemployee.

The Court observed that: (a) the penalty of dismissalwas too harsh of a penalty to be imposed againstPionilla for his infractions; and (b) IMI was in good faithwhen it dismissed Pionilla as his dereliction of its policyon ID usage was honestly perceived to be a threat tothe company's security. In this respect, since thesecircumstances trigger the application of the exceptionto the rule on backwages, the Court finds it proper toaccord the same disposition and consequently directs

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the deletion of the award of back wages in favor ofPionilla, notwithstanding the illegality of the dismissal.

UNITED TOURIST PROMOTIONS v. HARLAND B.KEMPLIN (Security of Tenure)G.R. No. 205453, February 05, 2014, Reyes

United Tourist Promotions employed Kemplin to be itsPresident for a period of five years, to commence onMarch 1, 2002 and to end on March 1, 2007,“renewable for the same period, subject to new termsand conditions”. Kemplin continued to render hisservices to UTP even after his fixed term contract ofemployment expired. Records show that on May 12,2009, Kemplin, signing as President of UTP, enteredinto advertisement agreements with Pizza Hut and M.Lhuillier. Kemplin then filed for illegal dismissal againstpetitioner

ISSUEWhether or not Kemplin is a regular employeeWhether or not Kemplin was illegally dismissed

HELDYES. Considering that he continued working asPresident for UTP for about one (1) year and five (5)months and since [his] employment is not covered byanother fixed term employment contract, [Kemplin’s]employment after the expiration of his fixed termemployment is already regular. Therefore, he isguaranteed security of tenure and can only beremoved from service for cause and after compliancewith due process. This is notwithstanding [UTP andJersey’s] insistence that they merely tolerated[Kemplin’s] "consultancy" for humanitarian reasons.

In this case, [UTP and Jersey] failed to prove theexistence of just cause for his termination. Thependency of a criminal suit against an employee, doesnot, by itself, sufficiently establish a ground for anemployer to terminate the former. It also bearsstressing that the letter failed to categorically indicatewhich of the policies of UTP did Kemplin violate towarrant his dismissal from service. Further, Kemplinwas never given the chance to refute the chargesagainst him as no hearing and investigation wereconducted. Corollarily, in the absence of a hearing andinvestigation, the existence of just cause to terminateKemplin could not have been sufficiently established.

The Court is well aware that reinstatement is the ruleand, for the exception of "strained relations" to apply, itshould be proved that it is likely that, if reinstated, anatmosphere of antipathy and antagonism would begenerated as to adversely affect the efficiency andproductivity of the employee concerned. Under thedoctrine of strained relations, the payment ofseparation pay is considered an acceptable alternativeto reinstatement when the latter option is no longerdesirable or viable.

DISPUTE SETTLEMENT

PEOPLE’S BROADCASTING V. SECRETARY OFLABORG.R. No. 179652, May 8, 2009

Jandeleon Juezan filed a complaint before the DOLEagainst Bombo Radyo Phils for illegal deduction, non-payment of service incentive leave, 13th month pay,premium pay for holiday and rest day and illegaldiminution of benefits, delayed payment of wages andnon-coverage of SSS, PAG-IBIG and Philhealth. Onthe basis of the complaint, the DOLE conducted aplant level inspection. After the conduct of summaryinvestigations, the DOLE Regional Director held thatJuezan was an employee of Bombo Radyo, andtherefore entitled to money claims. Bombo Radyoappealed the decision, but DOLE dismissed the same.CA affirmed such dismissal.

ISSUEWhether or not the Secretary of Labor has the powerto determine the existence of an employer-employeerelationship and settled the dispute.

RULINGNO. Art. 128 (b) of the Labor Code, as amended byR.A. 7730. The provision is explicit that the visitorialand enforcement power of the DOLE comes into playonly “in cases when the relationship of employer-employee still exists.” This clause signifies that theemployer-employee relationship must have existedeven before the emergence of the controversy.Necessarily, the DOLE’s power does not apply in twoinstances, namely: (i) where the employer-employeerelationship has ceased; and (ii) where no suchrelationship has ever existed. The existence of anemployer-employee relationship is a statutoryprerequisite to and a limitation on the power of theSecretary of Labor, one which the legislative branch isentitled to impose. The rationale underlying thislimitation is to eliminate the prospect of competingconclusions of the Secretary of Labor and the NLRC. Ifthe Secretary of Labor proceeds to exercise hisvisitorial and enforcement powers absent the firstrequisite, his office confers jurisdiction on itself which itcannot otherwise acquire. Nevertheless, a mereassertion of absence of employer-employeerelationship does not deprive the DOLE of jurisdictionover the claim. At least a prima facie showing of suchabsence of relationship, as in this case, is needed topreclude the DOLE from the exercise of its power.

UPDATE: The case is heard again by the court. Fromthe 2008 decision, PAO filed a Motion for Clarificationof Decision (with Leave of Court). The PAO sought toclarify as to the visitorial and enforcement power ofDOLE can be considered as co-extensive with thepower to determine the existence of an Er-Eerelationship. In March 6, 2012, the Court resolved the

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second motion for reconsideration overturning the firstdecision.

Revised Ruling:

No limitation in the law was placed upon the power ofthe DOLE to determine the existence of an employer-employee relationship. No procedure was laid downwhere the DOLE would only make a preliminaryfinding, that the power was primarily held by theNLRC. The law did not say that the DOLE would firstseek the NLRCs determination of the existence of anemployer-employee relationship, or that should theexistence of the employer-employee relationship bedisputed, the DOLE would refer the matter to theNLRC. The DOLE must have the power to determinewhether or not an employer-employee relationshipexists, and from there to decide whether or not to issuecompliance orders in accordance with Art. 128(b) ofthe Labor Code, as amended by RA 7730.

The determination of the existence of an employer-employee relationship by the DOLE must berespected. The expanded visitorial and enforcementpower of the DOLE granted by RA 7730 would berendered nugatory if the alleged employer could, bythe simple expedient of disputing the employer-employee relationship, force the referral of the matterto the NLRC. The Court issued the declaration that atleast a prima facie showing of the absence of anemployer-employee relationship be made to oust theDOLE of jurisdiction. But it is precisely the DOLE thatwill be faced with that evidence, and it is the DOLEthat will weigh it, to see if the same does successfullyrefute the existence of an employer-employeerelationship.

If the DOLE makes a finding that there is an existingemployer-employee relationship, it takes cognizance ofthe matter, to the exclusion of the NLRC. The DOLEwould have no jurisdiction only if the employer-employee relationship has already been terminated, orit appears, upon review, that no employer-employeerelationship existed in the first place.

DIOKNO vs. CACDACG.R. No. 168475, July 4, 2007, Chico Nazario

The First Line Association of Meralco SupervisoryEmployees (FLAMES) is a legitimate labororganization which is the supervisory union ofMeralco. Petitioners and private respondents aremembers of FLAMES. FLAMES Executive Boardcreated the Committee on Election (COMELEC) for theconduct of its union elections. Subsequently, privaterespondents filed their respective certificates ofcandidacy.

Petitioners filed a Petition with the COMELEC seekingthe disqualification of private respondents. Petitionersalleged that private respondents allowed themselves to

be assisted by non-union members, and committedacts of disloyalty which are inimical to the interest ofFLAMES. In their campaign, they allegedly colludedwith the officers of the Meralco Savings and LoanAssociation (MESALA) and the Meralco Mutual Aidand Benefits Association (MEMABA) and exertedundue influence on the members of FLAMES.COMELEC issued a Decision, declaring privaterespondents officially disqualified to run and/or toparticipate in the FLAMES elections. The COMELECalso resolved to exclude their names from the list ofcandidates in the polls or precincts, and furtherdeclared that any vote cast in their favor shall not becounted. According to the COMELEC, privaterespondents violated Article IV, Section 4(a)(6) of theFLAMES Constitution and By-Laws (CBL) by allowingnon-members to aid them in their campaign. Their actsof solicitation for support from non-union memberswere deemed inimical to the interest of FLAMES.

The provision relied upon by the COMELEC indisqualifying private respondents applies to a caseof expulsion of members from the union. In full, ArticleIV, Section 4 (a) (6) of the FLAMES CBL, provides, towit:

Section 4(a). Any member may be DISMISSED and/orEXPELLED from the UNION, after due process andinvestigation, by a two-thirds (2/3) vote of theExecutive Board, for any of the following causes:

(6) Acting in a manner harmful to the interest andwelfare of the UNION and/or its MEMBERS.

Issue:Whether or not private respondents were validlydisqualified

Held:No. First, Article IV, Section 4(a)(6) of the FLAMESCBL, embraces exclusively the case of dismissaland/or expulsion of members from the union. Even acursory reading of the provision does not tell us thatthe same is to be automatically or directly applied inthe disqualification of a candidate from union elections,which is the matter at bar. It cannot be denied that theCOMELEC erroneously relied on Article IV, Section4(a)(6) because the same does not contemplate thesituation of private respondents Daya, et al. The latterare not sought to be expelled or dismissed by theExecutive Board. They were brought before theCOMELEC to be disqualified as candidates in the 7May 2003 elections.

Second, the aforecited provision evidently enunciateswith clarity the procedural course that should be takento dismiss and expel a member from FLAMES. TheCBL is succinct in stating that the dismissal andexpulsion of a member from the union should be afterdue process and investigation, the same to beexercised by two-thirds (2/3) vote of the Executive

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Board for any of the cause mentioned therein. Theunmistakable directive is that in cases of expulsion anddismissal, due process must be observed as laid downin the CBL.

Third, nevertheless, even if we maintain a lenientstance and consider the applicability of Article IV,Section 4(a)(6) in the disqualification of privaterespondents Daya, et al., from the elections of 7 May2003, still, the disqualification made by the COMELECpursuant to the subject provision was a rank disregardof the clear due process requirement embodiedtherein. Nowhere do we find that private respondentsDaya, et al. were investigated by the ExecutiveBoard. Neither do we see the observance of the votingrequirement as regards private respondents Daya, etal. In all respects, they were denied due process.

Fourth, the Court of Appeals, the BLR Director, andthe Med-Arbiter uniformly found that due process waswanting in the disqualification order of theCOMELEC. We are in accord with their conclusion. If,indeed, there was a violation by private respondentsDaya, et al., of the FLAMES CBL that could be aground for their expulsion and/or dismissal from theunion, which in turn could possibly be made a groundfor their disqualification from the elections, theprocedural requirements for their expulsion shouldhave been observed. In any event, therefore, whetherthe case involves dismissal and/or expulsion from theunion or disqualification from the elections, the properprocedure must be observed. The disqualification ruledby the COMELEC against private respondentsDaya, et al., must not be allowed to abridge a clearprocedural policy established in the FLAMES CBL. Ifwe uphold the COMELEC, we are countenancing aclear case of denial of due process which is anathemato the Constitution of the Philippines which safeguardsthe right to due process.

Fifth, from another angle, the erroneousdisqualification of private respondents Daya, et al.,constituted a case of disenfranchisement on the part ofthe member-voters of FLAMES. By wrongfullyexcluding them from the 7 May 2003 elections, theoptions afforded to the union members wereclipped. Hence, the mandate of the union cannot besaid to have been rightfully determined. The factualirregularities in the FLAMES elections clearly provideproper bases for the annulment of the union electionsof 7 May 2003.

JAGUAR SECURITY V. SALESG.R. No. 162420, April 22, 2008, Austria Martinez

Petitioner Jaguar Security and Investigation Agency(Jaguar) is a private corporation engaged in thebusiness of providing security services to its clients,one of whom is Delta Milling Industries, Inc. (Delta).Private respondents Sales, Tamayo, Caranyagan,Silva, Jr., Moron and Fetalvero were hired as security

guards by Jaguar. They were assigned at the premisesof Delta in Libis, Quezon City. Caranyagan andTamayo were terminated by Jaguar. Allegedly theirdismissals were arbitrary and illegal. Sales, Moron,Fetalvero and Silva remained with Jaguar. All theguard-employees, claim for monetary benefits. Inaddition to these money claims, Caranyagan andTamayo argue that they were entitled to separationpay and back wages, for the time they were illegallydismissed until finality of the decision. Furthermore, allrespondents claim for moral and exemplary damages.Respondent security guards instituted the instant laborcase before the labor arbiter. The LA dismissed thecharges of illegal dismissal on the part of thecomplainants Tamayo and Caranyagan for lack ofmerit but ordering respondents., to jointly and severallypay all the six complainants money claims for theirservices. Petitioner Jaguar filed a partial appealquestioning the failure of public respondent NLRC toresolve its cross-claim against Delta as the partyultimately liable for payment of the monetary award tothe security guards. The NLRC dismissed the appeal,holding that it was not the proper forum to raise theissue. Petitioner filed a petition for certiorari with theCA. CA dismissed the petition for lack of merit.

Petitioner insists that its cross-claim should have beenruled upon in the labor case as the filing of a cross-claim is allowed under Section 3 of the NLRC Rules ofProcedure which provides for the suppletoryapplication of the Rules of Court. Petitioner argues thatthe claim arose out of the transaction or occurrencethat is the subject matter of the original action.Petitioner further argues that as principal, Delta MillingIndustries, Inc. (Delta Milling) is liable for the awardedwage increases, pursuant to Wage Order Nos. NCR-04, NCR-05 and NCR-06; and in line with the ruling inEagle Security Agency, Inc. v. National LaborRelations Commission, petitioner should bereimbursed of any payments to be made.

ISSUEWhether petitioner may claim reimbursement fromDelta Milling through a cross-claim filed with the laborcourt.

RULINGIn the present case, there exists no employer-employee relationship between petitioner and DeltaMilling. In its cross-claim, petitioner is not seeking anyrelief under the Labor Code but merely reimbursementof the monetary benefits claims awarded and to bepaid to the guard employees. There is no labor disputeinvolved in the cross-claim against Delta Milling.Rather, the cross-claim involves a civil disputebetween petitioner and Delta Milling. Petitioner's cross-claim is within the realm of civil law, and jurisdictionover it belongs to the regular courts. Moreover, theliability of Delta Milling to reimburse petitioner will onlyarise if and when petitioner actually pays itsemployees the adjudged liabilities. Payment, which

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means not only the delivery of money but also theperformance, in any other manner, of the obligation, isthe operative fact which will entitle either of thesolidary debtors to seek reimbursement for the sharewhich corresponds to each of the debtors. In this case,it appears that petitioner has yet to pay the guardemployees.

PIONEER CONCRETE PHILIPPINES, INC. v.TODAROG.R. No. 154830, June 8, 2007Austria-Martinez

Antonio Todaro filed with the Makati RTC a complaintfor Sum of Money and Damages against PioneerInternational Limited (PIL), an Australian corporation,Pioneer Concrete Philippines, Inc. (PCPI), and PioneerPhilippines Holdings, Inc. (PPHI). Todaro has justresigned from another company when PIL contactedTodaro and asked him if he was available to join themin connection with their intention to establish a ready-mix concrete plant and other related operations in thePhilippines. Subsequently, PIL and Todaro came to anagreement wherein the former consented to engagethe services of the latter as a consultant for two tothree months, after which, he would be employed asthe manager of PIL's ready-mix concrete operationsshould the company decide to invest in the Philippines.Subsequently, PIL started its operations in thePhilippines. However, it refused to comply with itsundertaking to employ Todaro on a permanent basis.Petitioners moved to dismiss the complaint on theground that RTC has no jurisdiction over the subjectmatter as the same is within the jurisdiction of theNLRC.

ISSUEWhich court has jurisdiction over the dispute?

RULINGThe RTC has jurisdiction. Where no employer-employee relationship exists between the parties andno issue is involved which may be resolved byreference to the Labor Code, other labor statutes orany collective bargaining agreement, it is the RegionalTrial Court that has jurisdiction. In the present case, noemployer-employee relationship exists betweenpetitioners and respondent. In fact, in his complaint,private respondent is not seeking any relief under theLabor Code, but seeks payment of damages onaccount of petitioners' alleged breach of theirobligation under their agreement to employ him. It issettled that an action for breach ofcontractual obligation is intrinsically a civil dispute. Inthe alternative, respondent seeks redress on the basisof the provisions of Articles 19 and 21 of the CivilCode. Hence, it is clear that the present action is withinthe realm of civil law, and jurisdiction over it belongs tothe regular courts.

TEGIMENTA CHEMICAL V. BUENSALIDA

G.R. No. 176466

Respondent was an employee of the petitioner, duringhis work he received and injury on his finger, whichcaused him to be hospitalized, their principal firstshouldered the expenses then it was charged onpetitioner which later on charged to respondent.

Respondent filed with the petitioner his application toobtain the benefits in his SSS and PhilHealth, but thepetitioner allegedly failed to file such and respondentsclaim for reimbursement of his hospital expenses wasalso denied by the petitioner since it was filed out oftime with SSS. Thus, he filed in Davao a case forillegal deduction.

Petitioner then pending resolution of the first case re-assigned respondent to Manila in a night-shift which isalleged to be a schedule whose income is unstableand is irregular contrary to which being granted to himin his current work with the petitioner. Thus, he filed inManila a case for illegal dismissal.

Petitioner now sought to dismiss the complaint as healleged that respondent is guilty of forum-shopping

ISSUEWON respondent is guilty of forum-shopping

RULINGNo, the law upon which petitioner stand states "a partyhaving more than one cause of action against theother party arising out of the same relationship shallinclude all of them in one complaint or petition."(Section 1 (b), Rule 3 of the NLRC Rules ofProcedure).

In the present case this is not applicable because ofthe fact that at the time when the first complaint wasfiled, the second complaint cannot be currently filedbecause it has not yet happened yet, therefore it wouldhave been impossible for the respondent to file a caseof illegal dismissal prior the re-assignment made bythe petitioner.

There is no violation of forum-shopping because thetwo action is based on a different set of facts anddifferent causes of action the first is grounded upon theillegal collection made by the petitioner againstrespondent and the second is based on the re-assignment which is being alleged to be a constructivedismissal and as a means of harassment, ruling oneither case would not affect the resolution nor conflictwith the other.

METRO TRANSIT ORGANIZATION, INC. AND JOSEL. CORTEZ, JR. V. PIGLAS NFWU-KMU ANDSAMMY MALUNES, ET AL.G.R. No. 175460, April 14, 2008, Chico-Nazario

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For purposes of CBA, MTO’s rank and file employeesformed the Pinag-isnag Lakas ng Manggagawa saMetro, Inc. – National Federation of Labor (PIGLAS).Meanwhile, its managerial and supervisory employeescreated their own union, Supervisory EmployeesAssociation of Metro (SEAM).

MTO and PIGLAS entered into a CBA. SEAM similarlynegotiated with MTO under a separate CBA.Disgruntled with PIGLAS, some rank-and-fileemployees formed another union with the umbrella ofthe Philippine Transport Group Workers Organization– Trade Union Congress of the PH (PTGWO-TUCP),which negotiated with management for certification asthe new bargaining agent. The intra-union dispute wassettled through a certification election where PIGLASwon. PIGLAS then renegotiated the CBA demandinghigher benefits.

On July 25, 2000, due to a bargaining deadlock,PIGLAS filed a notice of strike then staged a strike.Sec. of DOLE then issued an order or assumption ofjurisdiction/return to work but the striking employeesrefused to receive a copy of the order, hence, theywere posted in the stations and terminals of the LRTbut the striking PIGLAS members still refused toaccede to the order. Thus, the LRTA formally informedMTO that it issued a board resolution which allowedLRTA’s MOA to expire, directed the LRTA to take overthe operations and maintenance of the LRT Line soMTO sent termination notices to its employees.

PIGLAS members thereafter filed a complaint againstMTO and the LRTA for illegal dismissal, ULP for unionbusting, damages, and attorney’s fees. The LAdeclared the dismissal illegal. NLRC denied the appealfor non-perfection since MTO failed to post therequired bond. MR was denied. CA affirmed. Hence,this petition.

ISSUEWas the availment for the extraordinary remedy ofcertiorari proper?

HELDNo. The rule is, for the writ to issue, it must be shownthat there is no appeal, nor any plain, speedy andadequate remedy in the ordinary course of law. Amotion for reconsideration is a condition sine qua nonfor the filing of a petition for certiorari. Its purpose is togrant an opportunity for the court to correct any actualor perceived error attributed to it by the re-examinationof the legal and factual circumstances of the case. Therationale of the rule rests upon the presumption thatthe court or administrative body which issued theassailed order or resolution may amend the same, ifgiven the chance to correct its mistake or error.

In the case at bar, MTO directly went to the Court ofAppeals on certiorari without filing a motion forreconsideration with the NLRC. The motion for

reconsideration would have aptly furnished a plain,speedy, and adequate remedy. As a rule, the CA, inthe exercise of its original jurisdiction, will not takecognizance of a petition for certiorari under Rule 65,unless the lower court has been given the opportunityto correct the error imputed to it. MTO’s failure to file amotion for reconsideration against the assailedResolution of the NLRC rendered its petition forcertiorari before the appellate court as fatally defective.

This case does not fall under any of the recognizedexceptions to the filing of a motion for reconsideration,to wit: (1) when the issue raised is purely of law; (2)when public interest is involved; (3) in case of urgency;or when the questions raised are the same as thosethat have already been squarely argued andexhaustively passed upon by the lower court.

HACIENDA VALENTIN-BALABAG V. SECRETARYOF LABORG.R. No. 159026, February 11, 2008, Austria Martinez

Mardy Cabigo and 40 other workers (privaterespondents) filed with the Department of Labor andEmployment-Bacolod District Office (DOLE Bacolod) arequest for payroll inspection of Hacienda ValentinBalabag owned by Alberta Yanson (petitioner). DOLEBacolod conducted an inspection of petitioner'sestablishment and issued a Notice of InspectionReport, finding petitioner liable for the followingviolations of labor standard laws and directing her tocorrect the same.

In a Compliance Order dated August 12, 1998, DOLEBacolod directed petitioner to pay, within five (5)days,P9,084.00 to each of the 41 respondents or atotal of P372,444.00, and to submit proof of paymentthereof. It also required petitioner to correct existingviolations of occupational safety and health standards.

Petitioner filed with DOLE Bacolod a Double VerifiedSpecial Appearance to Oppose "Writ of Execution" ForBeing a Blatant and Dangerous Violation of DueProcess, claiming that she did not receive any form ofcommunication, or participate in any proceedingrelative to the subject matter of the writ of execution.

Petitioner filed with public respondent a VerifiedAppeal and Supplement to the Verified Appeal, postingtherewith an appeal bond of P1,000.00 in money orderand attaching thereto a Motion to be Allowed to PostMinimal Bond with Motion for Reduction ofBond. Public respondent dismissed her appeal.

ISSUEWhether or not CA was correct in holding that publicrespondent did not commit grave abuse of discretion inrejecting the appeal of petitioner due to theinsufficiency of her appeal bond.

RULING

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Yes. As held in Allied Investigation Bureau, Inc. v.Secretary of Labor and Employment, the CA held thatpublic respondent did not commit grave abuse ofdiscretion in holding that petitioner failed to perfect herappeal due to the insufficiency of her bond.

Under Department Order No. 18-02 (ImplementingRules), Series of 2002, amending Department OrderNo. 7-A, Series of 1995, implementing Article 128(b),thus:

Section 9. Cash or surety bond; when required. - Incase the order involves a monetary award, an appealby the employer may be perfected only upon theposting of a cash or surety bond issued by a dulyaccredited bonding company. The bond should be inthe amount equivalent to the monetary awardindicated in the order.

Under the foregoing Implementing Rules, it is plain thatpublic respondent has no authority to accept an appealunder a reduced bond.

PENTAGON STEEL CORP. V. CAG.R. No. 174141, June 26, 2009, Brion

The petitioner, a corporation engaged in themanufacture of G.I. wire and nails, employedrespondent Perfecto Balogo (the respondent) sinceSeptember 1, 1979 in its wire drawing department. Thepetitioner alleged that the respondent absented himselffrom work on August 7, 2002 without giving prior noticeof his absence. As a result, the petitioner sent him aletter by registered mail dated August 12, 2002, writtenin Filipino, requiring an explanation for his absence.The petitioner sent another letter to the respondent onAugust 21, 2002, also by registered mail, informinghim that he had been absent without official leave(AWOL) from August 7, 2002 to August 21, 2002.

The respondent alleged that on August 6, 2002, hecontracted flu associated with diarrhea and sufferedloose bowel movement due to the infection. Therespondent maintained that his illness had preventedhim from reporting for work for ten (10) days. When therespondent finally reported for work on August 17,2002, the petitioner refused to take him back despitethe medical certificate he submitted. On August 19,2002, the respondent again reported for work,exhibiting a note from his doctor indicating that he wasfit to work. The petitioner, however, did not allow himto resume work on the same date. Issue: whether ornot respondent abandoned his job. Respondent did notabandon his job First, the respondent had a validreason for absenting himself from work. Therespondent presented a medical certificate from hisdoctor attesting to the fact that he was sick with fluassociated with diarrhea or loose bowel movementwhich prevented him from reporting for work for 10days. The petitioner never effectively refuted therespondents reason for his absence. Second, there

was no clear intention on the respondents part to severthe employer-employee relationship. Considering thatintention is a mental state, the petitioner must showthat the respondents overt acts point unerringly to hisintent not to work anymore. That abandonment isnegated finds support in a long line of cases where theimmediate filing of a complaint for illegal dismissal wascoupled with a prayer for reinstatement; the filing of thecomplaint for illegal dismissal is proof enough of thedesire to return to work.The prayer for reinstatement,as in this case, speaks against any intent to sever theemployer-employee relationship. We additionally takenote of the undisputed fact that the respondent hadbeen in the petitioners employ for 23 years. Prior to hisdismissal, the respondents service record wasunblemished having had no record of infraction ofcompany rules. abandonment after the respondentslong years of service and the consequent surrender ofbenefits earned from years of hard work are highlyunlikely. Under the given facts, no basis in reasonexists for the petitioners theory that the respondentabandoned his job.

MASMUD v. NLRCG.R. No. 183385, February 13, 2009, Nachura

The late Alexander J. Masmud (Alexander), thehusband of Evangelina Masmud (Evangelina) filed acomplaint against First Victory Shipping Services andAngelakos (Hellas) S.A. on July 9, 2003 for non-payment of permanent disability benefits, medicalexpenses, sickness allowance, moral and exemplarydamages, and attorney's fees. Alexander engaged theservices of Atty. Rolando B. Go, Jr. (Atty. Go) as hiscounsel. In consideration of Atty. Go's legal services,Alexander agreed to pay attorney's fees on acontingent basis, as follows: twenty percent (20%) oftotal monetary claims as settled or paid and anadditional ten percent (10%) in case of appeal.

On November 21, 2003, LA rendered a Decisiongranting the monetary claims ofAlexander. Alexander's employer filed an appealbefore the NLRC. During the pendency of theproceedings before the NLRC, Alexander died. Afterexplaining the terms of the lawyer's fees toEvangelina, Atty. Go caused her substitution ascomplainant. On April 30, 2004, the NLRC rendered aDecision dismissing the appeal of Alexander'semployer. On appeal before the CA, the decision ofthe LA was affirmed with modification. Thereafter,Alexander‘s employer appealed to the Supreme Court.

On February 6, 2006, the Court issued a Resolutiondismissing the case for lack of merit.On January 10,2005, the LA directed the NLRC Cashier to release theamount of P3,454,079.20 to Evangelina. Out of thesaid amount, Evangelina paid Atty. Go the sum ofP680,000.00. Dissatisfied, Atty. Go filed a motionto record and enforce the attorney's lien alleging thatEvangelina reneged on their contingent fee

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agreement. Evangelina paid only the amount ofP680,000.00, equivalent to 20% of the award asattorney's fees, thus, leaving a balance of 10%, plusthe award pertaining to the counsel as attorney's fees.

ISSUEShould the legal compensation of a lawyer in a laborproceeding be based on Article 111 of the Labor Code

HELDNO. Contrary to Evangelina’s proposition, Article 111 of the LaborCode deals with the extraordinary concept ofattorney’s fees. Itregulates the amount recoverable as attorney's fees inthe nature of damages sustained by and awarded tothe prevailing party. It may not be used as thestandard in fixing the amount payable to the lawyer byhis client for the legal services he rendered. In thisregard, Section 24, Rule 138 of the Rules of Courtshould be observed in determining Atty. Go’scompensation. Considering that Atty. Go successfullyrepresented his client, it is only proper that he shouldreceive adequate compensation for his efforts. Evenas we agree with the reduction of the award ofattorney's fees by the CA, the fact that a lawyer playsa vital role in the administration of justice emphasizesthe need to secure to him his honorarium lawfullyearned as a means to preserve the decorum andrespectability of the legal profession. A lawyer is asmuch entitled to judicial protection against injustice orimposition of fraud on the part of his client as the client isagainst abuse on the part of his counsel. The duty of the court is notalone to ensure that a lawyer acts in a proper and lawfulmanner, but also to see that a lawyer is paid his justfees. With his capital consisting of his brains and withhis skill acquired at tremendous cost not only in moneybut in expenditure of time and energy, he is entitled tothe protection of any judicial tribunal against anyattempt on the part of his client to escape payment ofhis just compensation. It would be ironic if after puttingforth the best in him to secure justice for his client; hehimself would not get his due.

NEGROS METAL CORPORATION VS. ARMELIOLAMAYOG.R. No. 186557, August 25, 2010

Armelo J. Lamayo (respondent) began working forNegros Metal Corporation (petitioner or the company)in September 1999 as a machinist.

Sometime in May 2002, company manager, called hisattention why he was using the grinder there to whichhe replied that since the machine there was bigger, hewould finish his work faster.

Respondents explanation was found unsatisfactoryhence, he was, via memorandum, charged of loiteringand warned. He was at first suspended but informedby Uy that his services had been terminated and thathe should draft his resignation letter, drawingrespondent to file a complaint for illegal dismissal.

In lieu of a position paper, petitioner submitted aManifestation contending that the complaint should bedismissed because the Labor Arbiter had nojurisdiction over it since, under their CollectiveBargaining Agreement (CBA), such matters must firstbe brought before the company's grievancemachinery.

ISSUEW/N grievance machinery procedure should havebeen followed first before respondents complaint forillegal dismissal could be given due course

RULINGNO. Under Art. 217, it is clear that a labor arbiter hasoriginal and exclusive jurisdiction over terminationdisputes. On the other hand, under Article 261, avoluntary arbitrator has original and exclusivejurisdiction over grievances arising from theinterpretation or enforcement of company policies.

As a general rule then, termination disputes should bebrought before a labor arbiter, except when the parties,under Art. 262, unmistakably express that they agreeto submit the same to voluntary arbitration.

In the present case, the CBA provision on grievancemachinery being invoked by petitioner does notexpressly state that termination disputes are includedin the ambit of what may be brought before thecompany's grievance machinery.

TIMOTEO H. SARONA vs. NATIONAL LABORRELATIONS COMMISSION, ROYALE SECURITYAGENCY (FORMERLY SCEPTRE SECURITYAGENCY) and CESAR S. TANG.R. No. 185280, January 18, 2012

Petitioner was hired in 1976 by Sceptre as a securityguard. In 2003, he was asked to resign as arequirement for his application for a position at Royale.Shortly thereafter, however, he was dismissed.Petitioner filed a complaint for illegal dismissal, inwhich he prayed for piercing the corporate veil ofSceptre and Royale in connection with computing forhis separation pay. The Labor Arbiter ruled inpetitioner’s favor but refused to pierce the corporateveil. Petitioner filed a reply to the respondents’Memorandum of Appeal. As the filing of an appeal isthe prescribed remedy, the NLRC dismissed thepetitioner’s efforts to reverse the Labor Arbiter’sdecision, essentially saying that petitioner has alreadywaived his right to question the latter’s decision. Onthe other hand, respondent argues that the petitioner isbarred from questioning the manner by which hisbackwages and separation pay were computed as hehad, earlier, moved for the execution of the NLRC’sNovember 30, 2005 Decision and the respondentspaid him the full amount of the monetary award

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thereunder shortly after the writ of execution wasissued.

ISSUESWhether the full satisfaction of the award under theNLRC’s November 30, 2005 Decision bars thepetitioner from questioning the validity thereofWhether the petitioner’s backwages should be limitedto his salary for three (3) months

RULINGBecause his receipt of the proceeds of the awardunder the NLRC’s November 30, 2005 Decision isqualified and without prejudice to the CA’sresolution of his petition for certiorari, thepetitioner is not barred from exercising his right toelevate the decision of the CA to this Court.

The petitioner’s receipt of the monetary awardadjudicated by the NLRC is not absolute, unconditionaland unqualified. The petitioner’s May 3, 2007 Motionfor Release contains a reservation, stating in hisprayer that: "it is respectfully prayed that therespondents and/or Great Domestic Insurance Co. beordered to RELEASE/GIVE the amount of P23,521.67in favor of the complainant TIMOTEO H. SARONAwithout prejudice to the outcome of the petition withthe CA."

The prevailing party’s receipt of the full amount of thejudgment award pursuant to a writ of execution issuedby the labor arbiter does not close or terminate thecase if such receipt is qualified as without prejudice tothe outcome of the petition for certiorari pending withthe CA. Simply put, the execution of the final andexecutory decision or resolution of the NLRC shallproceed despite the pendency of a petitionfor certiorari, unless it is restrained by the proper court.

It is well-settled, even axiomatic, that ifreinstatement is not possible, the period coveredin the computation of backwages is from the timethe employee was unlawfully terminated until thefinality of the decision finding illegal dismissal.

With respect to the petitioner’s backwages, this Courtcannot subscribe to the view that it should be limited toan amount equivalent to three (3) months of his salary.Backwages is a remedy affording the employee a wayto recover what he has lost by reason of the unlawfuldismissal. In awarding backwages, the primordialconsideration is the income that should have accruedto the employee from the time that he was dismissedup to his reinstatement and the length of service priorto his dismissal is definitely inconsequential.

If reinstatement is no longer possible, backwagesshould be computed from the time the employee wasterminated until the finality of the decision, finding thedismissal unlawful.

In case separation pay is awarded and reinstatementis no longer feasible, backwages shall be computedfrom the time of illegal dismissal up to the finality of thedecision should separation pay not be paid in themeantime. It is the employee’s actual receipt of the fullamount of his separation pay that will effectivelyterminate the employment of an illegally dismissedemployee. Otherwise, the employer-employeerelationship subsists and the illegally dismissedemployee is entitled to backwages, taking into accountthe increases and other benefits, including the 13thmonth pay, that were received by his co-employeeswho are not dismissed. It is the obligation of theemployer to pay an illegally dismissed employee orworker the whole amount of the salaries or wages,plus all other benefits and bonuses and generalincreases, to which he would have been normallyentitled had he not been dismissed and had notstopped working.

In fine, this Court holds Royale liable to pay thepetitioner backwages to be computed from hisdismissal on October 1, 2003 until the finality of thisdecision. Nonetheless, the amount received by thepetitioner from the respondents in satisfaction of theNovember 30, 2005 Decision shall be deductedaccordingly.

NOTE: I did not include issue on piercing the corporateveil as I am not sure if it is important to the subject ofdispute settlement

McBurnie v. Ganzon, EGI-Managers, Inc.G.R. Nos. 178034 & 178117, G R. Nos. 186984-85,October 17, 2013, Reyes

On October 4, 2002, McBurnie, an Australian national,instituted a complaint for illegal dismissal and othermonetary claims against the respondents. McBurnieclaimed that on May 11, 1999, he signed a five-yearemployment agreement with the company EGI as anExecutive Vice-President who shall oversee themanagement of the company’s hotels and resortswithin the Philippines. He performed work for thecompany until sometime in November 1999, when hefigured in an accident that compelled him to go back toAustralia while recuperating from his injuries. While inAustralia, he was informed by respondent Ganzon thathis services were no longer needed because theirintended project would no longer push through.

The respondents opposed the complaint, contendingthat their agreement with McBurnie was to jointlyinvest in and establish a company for the managementof hotels. They did not intend to create an employer-employee relationship, and the execution of theemployment contract that was being invoked byMcBurnie was solely for the purpose of allowingMcBurnie to obtain an alien work permit in thePhilippines. At the time McBurnie left for Australia for

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his medical treatment, he had not yet obtained a workpermit.

In a Decision dated September 30, 2004, the LAdeclared McBurnie as having been illegally dismissedfrom employment, and thus entitled to receive from therespondents the following amounts: (a)US$985,162.00 as salary and benefits for theunexpired term of their employment contract,(b) P2,000,000.00 as moral and exemplary damages,and (c) attorney’s fees equivalent to 10% of the totalmonetary award.

Feeling aggrieved, the respondents appealed the LA’sDecision to the NLRC. On November 5, 2004, theyfiled their Memorandum of Appeal and Motion toReduce Bond, and posted an appeal bond in theamount of P100,000.00.

On March 31, 2005, the NLRC denied the motion toreduce bond, explaining that "in cases involvingmonetary award, an employer seeking to appeal the[LA’s] decision to the Commission is unconditionallyrequired by Art. 223, Labor Code to post bond in theamount equivalent to the monetary award x x x." Thus,the NLRC required from the respondents the posting ofan additional bond in the amount of P54,083,910.00.

ISSUEThis case concerns the sufficiency of the appeal bondthat was posted by the respondents.

HELDThe present rule on the matter is Section 6, Rule VI ofthe 2011 NLRC Rules of Procedure, which wassubstantially the same provision in effect at the time ofthe respondents’ appeal to the NLRC.

The posting of a bond is indispensable to theperfection of an appeal in cases involving monetaryawards from the decision of the Labor Arbiter. Thelawmakers clearly intended to make the bond amandatory requisite for the perfection of an appeal bythe employer as inferred from the provision that anappeal by the employer may be perfected "only uponthe posting of a cash or surety bond." The word "only"makes it clear that the posting of a cash or surety bondby the employer is the essential and exclusive meansby which an employer’s appeal may be perfected. x xx.

Moreover, the filing of the bond is not only mandatorybut a jurisdictional requirement as well, that must becomplied with in order to confer jurisdiction upon theNLRC. Non-compliance therewith renders the decisionof the Labor Arbiter final and executory. Thisrequirement is intended to assure the workers that ifthey prevail in the case, they will receive the moneyjudgment in their favor upon the dismissal of theemployer’s appeal. It is intended to discourageemployers from using an appeal to delay or evade

their obligation to satisfy their employees’ just andlawful claims.

To begin with, the Court rectifies its priorpronouncement – the unqualified statement that evenan appellant who seeks a reduction of an appeal bondbefore the NLRC is expected to post a cash or suretybond securing the full amount of the judgment awardwithin the 10-day reglementary period to perfect theappeal.

MANILA PAVILION HOTEL VS. DELADAG.R. No. 189947, January 25, 2012, Sereno

Delada was the Union President of the Manila PavilionSupervisors Association at MPH. He was originallyassigned as Head Waiter of Rotisserie, a fine-diningrestaurant operated by petitioner. Pursuant to asupervisory personnel reorganization program, MPHreassigned him as Head Waiter of Seasons CoffeeShop, another restaurant operated by petitioner at thesame hotel. Respondent declined the inter-outlettransfer and instead asked for a grievance meeting onthe matter, pursuant to their Collective BargainingAgreement (CBA). He also requested his retention asHead Waiter of Rotisserie while the grievanceprocedure was ongoing.

MPH replied and told respondent to report to his newassignment for the time being, without prejudice to theresolution of the grievance involving the transfer. Headamantly refused to assume his new post at theSeasons Coffee Shop and instead continued to reportto his previous assignment at Rotisserie. Thus, MPHsent him several memoranda on various dates,requiring him to explain in writing why he should not bepenalized for the following offenses: seriousmisconduct; willful disobedience of the lawful orders ofthe employer; gross insubordination; gross andhabitual neglect of duties; and willful breach of trust.Despite the notices from MPH, Delada persistentlyrebuffed orders for him to report to his newassignment. According to him, since the grievancemachinery under their CBA had already been initiated,his transfer must be held in abeyance. Thus, on 9 May2007, MPH initiated administrative proceedingsagainst him.

ISSUEWhether MPH retained the authority to continue withthe administrative case against Delada forinsubordination and willful disobedience of the transferorder

RULINGAccordingly, we rule in this case that MPH did not loseits authority to discipline respondent for his continuedrefusal to report to his new assignment. In relation tothis point, we recall our Decision in Allied BankingCorporation v. Court of Appeals.

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In Allied Banking Corporation, employer Allied Bankreassigned respondent Galanida from its Cebu Citybranch to its Bacolod and Tagbilaran branches. Herefused to follow the transfer order and instead filed aComplaint before the Labor Arbiter for constructivedismissal. While the case was pending, Allied Bankinsisted that he report to his new assignment. When hecontinued to refuse, it directed him to explain in writingwhy no disciplinary action should be meted out to him.Due to his continued refusal to report to his newassignment, Allied Bank eventually terminated hisservices. When the issue of whether he could validlyrefuse to obey the transfer orders was brought beforethis Court, we ruled thus:

The refusal to obey a valid transfer order constituteswillful disobedience of a lawful order of an employer.Employees may object to, negotiate and seek redressagainst employers for rules or orders that they regardas unjust or illegal. However, until and unless theserules or orders are declared illegal or improper bycompetent authority, the employees ignore or disobeythem at their peril. For Galanida’s continued refusal toobey Allied Bank's transfer orders, we hold that thebank dismissed Galanida for just cause in accordancewith Article 282(a) of the Labor Code. Galanida is thusnot entitled to reinstatement or to separation pay.(Emphasis supplied, citations omitted).

It is important to note what the PVA said on Delada’sdefiance of the transfer order:

In fact, Delada cannot hide under the legal cloak of thegrievance machinery of the CBA or the voluntaryarbitration proceedings to disobey a valid order oftransfer from the management of the hotel. While it istrue that Delada’s transfer to Seasons is the subject ofthe grievance machinery in accordance with theprovisions of their CBA, Delada is expected to complyfirst with the said lawful directive while awaiting theresults of the decision in the grievance proceedings.This issue falls squarely in the case of Allied BankingCorporation vs. Court of Appeals x x x.

Pursuant to Allied Banking, unless the order of MPH isrendered invalid, there is a presumption of the validityof that order. Since the PVA eventually ruled that thetransfer order was a valid exercise of managementprerogative, we hereby reverse the Decision and theResolution of the CA affirming the Decision of the PVAin this respect. MPH had the authority to continue withthe administrative proceedings for insubordination andwillful disobedience against Delada and to impose onhim the penalty of suspension. As a consequence,petitioner is not liable to pay back wages and otherbenefits for the period corresponding to the penalty of90-day suspension.

UNILEVER PHILIPPINES, INC. v. MARIA RUBY M.RIVERAG.R. No. 201701, June 3, 2013

Rivera was employed as Unilever's Area ActivationExecutive for Area 9 South in the cities of Cotabatoand Davao.

Sometime in 2007, Unilever’s internal auditorconducted a random audit and found out that therewere fictitious billings and fabricated receiptssupposedly from Ventureslink amounting toP11,200,000.00. It was also discovered that somefunds were diverted from the original intended projects.Upon further verification, It was found that the funddeviations were upon the instruction of Rivera.

On July 16, 2007, Unilever issued a show-cause noticeto Rivera asking her to explain the following charges,to wit: a) Conversion and Misappropriation ofResources; b) Breach of Fiduciary Trust; c) PolicyBreaches; and d) Integrity Issues.

Rivera admitted the fund diversions, but explained thatsuch actions were mere resourceful utilization ofbudget because of the difficulty of procuring funds fromthe head office. She insisted that the diverted fundswere all utilized in the company’s promotional venturesin her area of coverage.

Unilever found Rivera guilty of serious breach of thecompany’s Code of Business Principles compelling itto sever their professional relations.

ISSUEWhether or not a validly dismissed employee, likeRivera, is entitled to an award of separation pay

RULINGAs a general rule, an employee who has beendismissed for any of the just causes enumerated underArticle 282 of the Labor Code is not entitled to aseparation pay.

In this case, Rivera was dismissed from work becauseshe intentionally circumvented a strict company policy,manipulated another entity to carry out her instructionswithout the company’s knowledge and approval, anddirected the diversion of funds, which she evenadmitted doing under the guise of shortening thelaborious process of securing funds for promotionalactivities from the head office. These transgressionswere serious offenses that warranted her dismissalfrom employment and proved that her termination fromwork was for a just cause. Hence, she is not entitled toa separation pay.

More importantly, Rivera did not appeal the March 31,2009 ruling of the NLRC disallowing the award ofseparation pay to her. It was Unilever who elevated thecase to the CA. It is axiomatic that a party who doesnot appeal, or file a petition for certiorari, is not entitledto any affirmative relief. Due process prevents thegrant of additional awards to parties who did not

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appeal. An appellee who is not an appellant mayassign errors in his brief where his purpose is tomaintain the judgment, but he cannot seekmodification or reversal of the judgment or claimaffirmative relief unless he has also appealed. It was,therefore, erroneous for the CA to grant an affirmativerelief to Rivera who did not ask for it.

PHILIPPINE CARPET MANUFACTURINGCORPORATION v. TAGYAMONG.R. No. 191475, December 11, 2013

Petitioner Philippine Carpet Manufacturing Corporation(PCMC) is a corporation registered in the Philippinesengaged in the business of manufacturing wool andyarn carpets and rugs. Respondents were its regularand permanent employees, but were affected bypetitioner’s retrenchment and voluntary retirementprograms.

Thru a memorandum of dismissal, they were informedthat in view of a slump in the market demand forproducts due to the un-competitiveness of thecompany's price, the company is constrained toreduce the number of its workforce. Claiming that theywere aggrieved by PCMC’s decision to terminate theiremployment, respondents filed separate complaints forillegal dismissal against PCMC. Respondents primarilyrelied on the Supreme Court’s decision in PhilippineCarpet Employees Association (PHILCEA) v. Hon. Sto.Tomas (Philcea case), as to the validity of thecompany’s retrenchment program. They furtherexplained that PCMC did not, in fact, suffer lossesshown by its acts prior to and subsequent to theirtermination. They also insisted that their acceptance ofseparation pay and signing of quitclaim is not a bar tothe pursuit of illegal dismissal case.

ISSUEW/N the respondents' acceptance of separation payand signing of quitclaim is a bar to the pursuit of illegaldismissal case

HELDNO. "As a rule, deeds of release and quitclaim cannotbar employees from demanding benefits to which theyare legally entitled or from contesting the legality oftheir dismissal. The acceptance of those benefitswould not amount to estoppel." To excuserespondents from complying with the terms of theirwaivers, they must locate their case within any of threenarrow grounds: (1) the employer used fraud or deceitin obtaining the waivers; (2) the consideration theemployer paid is incredible and unreasonable; or (3)the terms of the waiver are contrary to law, publicorder, public policy, morals, or good customs orprejudicial to a third person with a right recognized bylaw. The instant case falls under the first situation.

As the ground for termination of employment wasillegal, the quitclaims are deemed illegal as the

employees’ consent had been vitiated by mistake orfraud. The law looks with disfavor upon quitclaims andreleases by employees pressured into signing byunscrupulous employers minded to evade legalresponsibilities. The circumstances show thatpetitioner’s misrepresentation led its employees,specifically respondents herein, to believe that thecompany was suffering losses which necessitated theimplementation of the voluntary retirement andretrenchment programs, and eventually the executionof the deeds of release, waiver and quitclaim.

PRINCE TRANSPORT, Inc. and Mr. RENATOCLAROS v. DIOSDADO GARCIA et al.G.R. No. 167291, January 12, 2011

Respondents, former employees of Prince Transporttransferred to a sub-company Lubas Transport, filedvarious complaints charging petitioners with illegaldismissal, unfair labor practice and illegal deductionsand praying for the award of premium pay for holidayand rest day, holiday pay, service leave pay, 13thmonth pay, moral and exemplary damages andattorney's fees.The Labor Arbiter ruled that petitioners are not guilty ofunfair labor practice in the absence of evidence toshow that they violated respondents’ right to self-organization. The Labor Arbiter also held that Lubas isthe respondents’ employer and that it (Lubas) is anentity which is separate, distinct and independent fromPTI. Nonetheless, the Labor Arbiter found that Lubasis guilty of illegally dismissing respondents from theiremployment.

Respondents filed a Partial Appeal with the NLRCpraying, among others, that PTI should also be heldequally liable as Lubas. The NLRC modified theDecision of the Labor Arbiter. Respondents filed aMotion for Reconsideration, but the NLRC denied it.Respondents then filed a special civil action forcertiorari with the CA assailing the Decision andResolution of the NLRC. The CA rendered the hereinassailed Decision which granted respondents' petition.The CA ruled that petitioners are guilty of unfair laborpractice; that Lubas is a mere instrumentality, agentconduit or adjunct of PTI; and that petitioners’ act oftransferring respondents’ employment to Lubas isindicative of their intent to frustrate the efforts ofrespondents to organize themselves into a union.Petitioners filed a Motion for Reconsideration, but theCA denied it.

ISSUESa. Whether the Court of Appeals should haverespected the findings of the Labor Arbiter, which wasaffirmed by the NLRCb. Whether the petition filed with the CA is fatallydefective, because the attached verification andcertificate against forum shopping was signed only byrespondent Garcia

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c. Whether the CA should not have given due courseto the petition filed before it with respect to some of therespondents, considering that these respondents didnot sign the verification attached to the Memorandumof Partial Appeal earlier filed with the NLRCd. Whether the CA erred and committed grave abuseof discretion when it ordered petitioners to reinstaterespondents to their former positions, considering thatthe issue of reinstatement was never brought upbefore it and respondents never questioned the awardof separation pay to them

RULINGa. No. The power of the CA to review NLRC decisionsvia a petition for certiorari under Rule 65 of the Rulesof Court has been settled as early as this Court’sdecision in St. Martin Funeral Homes v. NLRC. In saidcase, the Court held that the proper vehicle for suchreview is a special civil action for certiorari under Rule65 of the said Rules, and that the case should be filedwith the CA in strict observance of the doctrine ofhierarchy of courts. Moreover, it is already settled thatunder Section 9 of Batas Pambansa Blg. 129, asamended by Republic Act No. 7902, the CA —pursuant to the exercise of its original jurisdiction overpetitions for certiorari — is specifically given the powerto pass upon the evidence, if and when necessary, toresolve factual issues.Firstly, petitioners posit that the petition filed with theCA is fatally defective, because the attachedverification and certificate against forum shopping wassigned only by respondent Garcia.b. No. While the general rule is that the certificate ofnon-forum shopping must be signed by all the plaintiffsin a case and the signature of only one of them isinsufficient, the Court has stressed that the rules onforum shopping, which were designed to promote andfacilitate the orderly administration of justice, shouldnot be interpreted with such absolute literalness as tosubvert its own ultimate and legitimate objective. Strictcompliance with the provision regarding the certificateof non-forum shopping underscores its mandatorynature in that the certification cannot be altogetherdispensed with or its requirements completelydisregarded. It does not, however, prohibit substantialcompliance therewith under justifiable circumstances,considering especially that although it is obligatory, it isnot jurisdictional.

In a number of cases, the Court has consistently heldthat when all the petitioners share a common interestand invoke a common cause of action or defense, thesignature of only one of them in the certificationagainst forum shopping substantially complies with therules. In the present case, there is no question thatrespondents share a common interest and invoke acommon cause of action. Hence, the signature ofrespondent Garcia is a sufficient compliance with therule governing certificates of non-forum shopping. Inthe first place, some of the respondents actuallyexecuted a Special Power of Attorney authorizing

Garcia as their attorney-in-fact in filing a petition forcertiorari with the CA.

c. No. With respect to the absence of some of theworkers’ signatures in the verification, the verificationrequirement is deemed substantially complied withwhen some of the parties who undoubtedly havesufficient knowledge and belief to swear to the truth ofthe allegations in the petition had signed the same.Such verification is deemed a sufficient assurance thatthe matters alleged in the petition have been made ingood faith or are true and correct, and not merelyspeculative. Moreover, respondents' Partial Appealshows that the appeal stipulated as complainants-appellants "Rizal Beato, et al.", meaning that therewere more than one appellant who were all workers ofpetitioners.

In any case, the settled rule is that a pleading which isrequired by the Rules of Court to be verified, may begiven due course even without a verification if thecircumstances warrant the suspension of the rules inthe interest of justice. Indeed, the absence of averification is not jurisdictional, but only a formaldefect, which does not of itself justify a court inrefusing to allow and act on a case. Hence, the failureof some of the respondents to sign the verificationattached to their Memorandum of Appeal filed with theNLRC is not fatal to their cause of action.

d. No. It is clear from the complaints filed byrespondents that they are seeking reinstatement.

In any case, Section 2 (c), Rule 7 of the Rules of Courtprovides that a pleading shall specify the relief sought,but may add a general prayer for such further or otherreliefs as may be deemed just and equitable. Underthis rule, a court can grant the relief warranted by theallegation and the proof even if it is not specificallysought by the injured party; the inclusion of a generalprayer may justify the grant of a remedy different fromor together with the specific remedy sought, if the factsalleged in the complaint and the evidence introducedso warrant.

Moreover, in BPI Family Bank v. Buenaventura, thisCourt ruled that the general prayer is broad enough "tojustify extension of a remedy different from or togetherwith the specific remedy sought." Even without theprayer for a specific remedy, proper relief may begranted by the court if the facts alleged in thecomplaint and the evidence introduced so warrant. Thecourt shall grant relief warranted by the allegations andthe proof even if no such relief is prayed for. Theprayer in the complaint for other reliefs equitable andjust in the premises justifies the grant of a relief nototherwise specifically prayed for. In the instant case,aside from their specific prayer for reinstatement,respondents, in their separate complaints, prayed forsuch reliefs which are deemed just and equitable.

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NOTE: I did not include issues on piercing thecorporate veil and unfair labor practice as I am notsure whether they’re important to the subject of disputesettlement