SURVEY OF JURISPRUDENCE ON TERMINATION DISPUTES AND … of Jurisprudence o… · · 2015-04-20SURVEY OF JURISPRUDENCE ON TERMINATION DISPUTES AND SECURITY OF TENURE ... J. Peralta

SURVEY OF JURISPRUDENCE ON TERMINATION DISPUTES AND SECURITY OF TENURE

CASE TITLE

PRINCIPLE

DOCTRINE (SC)

PROCESS CYCLE TIME

TREND OF DECISION

2013

GAN vs. GALDERMA PHILS., INC. G.R. No. 177167 17 January 2013 J. Peralta

Test of Constructive Dismissal; Definition of Resignation

To begin with, constructive dismissal is defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution of pay and other benefits. It exists if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment. There is involuntary resignation due to the harsh, hostile, and unfavourable conditions set by the employer. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his employment/position under the circumstances. On the other hand, resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or her employment. Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear, positive, and convincing evidence that his resignation was not voluntary but was actually a case of constructive dismissal; that it is a

25 July 2002 – filed complaint for illegal constructive dismissal LA – 21 April 2003 NLRC – CA – 21 March 2007

LA – dismissed complaint NLRC – affirmed LA CA – affirmed NLRC decision SC – affirmed CA

Survey of Jurisprudence on Termination and Security of Tenure Page 2

product of coercion or intimidation. He has to prove his allegations with particularity. Gan could not have been coerced. Coercion exists when there is a reasonable or well-grounded fear of an imminent evil upon a person or his property or upon the person or property of his spouse, descendants or ascendants.

PHILIPPINE PLAZA HOLINGS, INC. vs. EPISCOPE G.R. No. 192826 27 February 2013 J. Bersamin

Loss of trust and confidence as a ground for termination

Classes of Positions of trust

Quantum of proof required in case of

Among the just causes for termination is the employer’s loss of trust and confidence in its employee. Article 296 (c) [formerly Article 282 (c)] of the Labor Code provides that an employer may terminate the services of an employee for fraud or wilful breach of the trust reposed in him. But in order for the said cause to be properly invoked, certain requirements must be complied with namely, (1) the employee concerned must be holding a position of trust and confidence and (2) there must be an act that would justify the loss of trust and confidence. It is noteworthy to mention that there are two classes positions of trust: on the one hand, there are managerial employees whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and to other officers or members of the managerial staff; on the other hand, there are fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or thos who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely charged with the care and custody of the employer’s money or property, and are thus classified as occupying positions of trust and confidence. Primarily, it is apt to point out that proof beyond reasonable doubt is not required in dismissing an employee on the ground of loss of trust and confidence; it is sufficient that there lies some basis to believe that the employee concerned is responsible for the misconduct and that the nature of the employee’s participation

LA – 20 October 2005 NLRC – 30 May 2007; 14 November 2007 (MR) CA – 26 March 2010; 05 July 2010 (MR)

LA – dismissed complaint for illegal dismissal

NLRC – affirmed LA decision; denied MR of PPHI CA – reversed NLRC decision SC – reversed the conclusions and findings of CA


dismissal due to loss of trust and confidence

therein rendered him absolutely unworthy of trust and confidence demanded by his position.

LEOPARD SECURITY & INVESTIGATION AGENCY vs. QUITOY G.R. No. 186344 10 February 2013 J. Perez

Temporary “off-detail” or “floating status”

Award of Separation Pay ; Doctrine of Strained Relations

Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has repeatedly recognized that security guards may be temporarily sidelined by their security agency as their assignments primarily depend on the contracts entered into by the latter with third parties. Temporary "off-detail" or "floating status" is the period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. It takes place when, as here, the security agency’s clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. For as long as such temporary inactivity does not continue for a period exceeding six months, it has been ruled that placing an employee on temporary "off-detail" or "floating status" is not equivalent to dismissal.

Having correctly ruled out illegal dismissal of respondents, the CA reversibly erred, however, when it sustained the NLRC’s award of separation pay on the ground that the parties’ relationship had already been strained. For one, liability for the payment of separation pay is a legal consequence of illegal dismissal where reinstatement is no longer viable or feasible. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to the twin reliefs of full backwages and reinstatement without loss of seniority rights. Aside from the instances provided under Articles 283 and 284 of the Labor Code, separation pay is, however, granted when reinstatement is no longer feasible because of strained relations between the employer and the employee. In cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when

03 May 2005 – filed complaint for illegal dismissal LA – 06 April 2006 NLRC – 20 March 2007 CA – 26 September 2008

LA – illegal dismissal; awarded separation pay in lieu of reinstatement; proportionate 13

th

month pay and service incentive leave pay

NLRC – modified LA decision and ruled there was no illegal dismissal but sustained the awards given by LA CA –affirmed NLRC decision including the awards SC - modified the decision of CA and directed the reinstatement of respondents in lieu of the award of separation pay and to deduct the sum of P1,025.00 from the SILP individually awarded in favor of


the latter recourse is no longer practical or in the best interest of the parties.

As a relief granted in lieu of reinstatement, however, it consequently goes without saying that an award of separation pay is inconsistent with a finding that there was no illegal dismissal. Standing alone, the doctrine of strained relations will not justify an award of separation pay, a relief granted in instances where the common denominator is the fact that the employee was dismissed by the employer. Even in cases of illegal dismissal, the doctrine of strained relations is not applied indiscriminately as to bar reinstatement, especially when the employee has not indicated an aversion to returning to work or does not occupy a position of trust and confidence in or has no say in the operation of the employer’s business. Although litigation may also engender a certain degree of hostility, it has likewise been ruled that the understandable strain in the parties’ relations would not necessarily rule out reinstatement which would, otherwise, become the rule rather than the exception in illegal dismissal cases.

respondents. The rest is AFFIRMED.

BAÑARES vs. TAWTRASCO G.R. No. 197353 11 April 2013 J. Velasco, Jr.

Reinstatement

Reinstatement, as a labor law concept, means the admission of an employee back to work prevailing prior to his dismissal; restoration to a state or position from which one had been removed or separated, which presupposes that there shall be no demotion in rank and/or diminution of salary, benefits and other privileges; if the position previously occupied no longer exists, the restoration shall be to a substantially equivalent position in terms of salary, benefits and other privileges. Management’s prerogative to transfer an employee from one office or station to another within the business establishment, however, generally remains unaffected by a reinstatement order, as long as there is no resulting demotion or diminution of salary and other benefits

07 March 2006 – filed complaint for illegal dismissal LA – 22 August 2006 (no appeal was filed; LA decision became final and executor) 27 April 2007 – filed with LA complaint for non-payment of wages and withholding of privileges with Manifestation with

LA – illegal dismissal; ordered petitioner’s immediate reinstatement without loss of seniority rights and benefits and awarded full backwages.

NLRC –denied appeal (assailing the 14 April 2008 LA


Abandonment

Doctrine of Strained Relations; Award of Separation Pay

and/or the action is not motivated by consideration less than fair or effected as a punishment or to get back at the reinstated employee.

For abandonment to exist, it is essential (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. These concurring elements of abandonment are not present in the instant case.

Reinstatement is no longer viable where, among other things, the relations between the employer and employee have been so severely strained, that it is not in the best interest of the parties, nor is it advisable or practical to order reinstatement. Under the doctrine of strained relations, payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. Indeed, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, such as: (1) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (2) reinstatement is inimical to the employer’s interest; (3) reinstatement is no longer feasible; (4) reinstatement does not serve the best interests of the parties involved; (5) the employer is prejudiced by the workers’ continued employment; (6) facts that make execution unjust or inequitable have supervened; or (7) strained relations between the employer and the employee.

application for the issuance of Writ of Execution (of the 22 August 2006 LA decision) LA - 14 April 2008; LA issued the Writ of Execution NLRC – 7 July 2009 CA –14 October 2010

decision) CA – set aside NLRC decision and ruled that petitioner was fully reinstated

SC – set aside CA decision; NLRC July 7, 2009 Decision and November 18, 2009 Resolution as well as the April 14, 2008 Order of the Labor Arbiter are hereby REINSTATED with MODIFICATION in that the Tabaco Women’s Transport Service Cooperative Is ORDERED to pay petitioner Alexander B. Bañares the following:

(1) Backwages and other emoluments due to petitioner from March 31, 2007 when petitioner did not report for work until finality of this Decision with interest thereon at


12% per annum from finality of this Decision until paid;

(2) Separation pay equivalent to one (1) month salary for every year of service reckoned from the time he started his employment with TAWTRASCO until the finality of this Decision; and

(3) 10% attorney's fees computed from the total monetary benefits.

The case is REMANDED to the RAB V of the NLRC in Legaspi City for the computation, as expeditiously as possible, of the monetary awards

UNIVAC DEVELOPMENT INC., vs. SORIANO G.R. No. 182072 19 June 2013 J. Peralta

Right to security of tenure of probationary employee

It is undisputed that respondent was hired as a probationary employee.1âwphi1 As such, he did not enjoy a permanent status. Nevertheless, he is accorded the constitutional protection of security of tenure which means that he can only be dismissed from employment for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known to him by the employer at the time of his

LA – 29 July 2005 NLRC – 28 April 2006; 31 July 2006 (MR) CA – 24 October 2007; 14 march 2008 (MR)


NLRC – affirmed LA decision in its entirety


Requirements for dismissal of probationary employee based on failure to meet probationary standards

engagement It is primordial that at the start of the probationary period, the standards for regularization be made known to the probationary employee. x x x Equally important is the requirement that in order to invoke "failure to meet the probationary standards" as a justification for dismissal, the employer must show how these standards have been applied to the subject employee. x x x Indeed, the power of the employer to terminate a probationary employee is subject to three limitations, namely: (1) it must be exercised in accordance with the specific requirements of the contract; (2) the dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to circumvent the contract or the law; and (3) there must be no unlawful discrimination in the dismissal.

32 In this case, not only did

petitioner fail to show that respondent was apprised of the standards for regularization but it was likewise not shown how these standards had been applied in his case. Pursuant to well-settled doctrine, petitioner’s failure to specify the reasonable standards by which respondent’s alleged poor performance was evaluated as well as to prove that such standards were made known to him at the start of his employment, makes respondent a regular employee. In other words, because of this omission on the part of petitioner, respondent is deemed to have been hired from day one as a regular employee.

CA – nullified and set aside NLRC decision; found the respondent illegally dismissed SC – affirmed CA decision with Modification, petitioner is ordered to pay respondent: (1) backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the date of his dismissal up to the finality of this decision; (2) separation pay in lieu of reinstatement equivalent to at least one month pay, or one month pay for every year of service, whichever is higher (with a fraction of at least six months being considered as one whole year), computed from the

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time of his employment or engagement up to the finality of the decision; (3) attorney's fees equivalent to 10% of the monetary awards; and (4) interest at 6% per annum from date of termination until full payment

PASOS vs. PHILIPPINE NATIONAL CONSTRUCTION CORPORATION G.R. No. 192394 03 July 2013 J. Villarama, Jr.

Project employee and Regular Employee

In the instant case, the appointments issued to petitioner indicated that he was hired for specific projects. This Court is convinced however that although he started as a project employee, he eventually became a regular employee of PNCC.

Under Article 280 of the Labor Code, as amended, a project employee is one whose "employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season." Thus, the principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project.

33

x x x

While for first three months, petitioner can be considered a project employee of PNCC, his employment thereafter,

18 February 2003 – filed complaint for illegal dismissal LA – 28 March 2006 NLRC - 31 October 2008 CA – 26 March 2010; 26 May 2010 (MR)

LA – illegal dismissal; ruled that petitioner attained regular employment; awarded full backwages and separation pay in lieu of reinstatement

NLRC – reversed LA; dismissed the complaint CA – dismissed petition for lack of merit SC - reinstated LA decision with modifications:

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when his services were extended without any specification of as to the duration, made him a regular employee of PNCC. And his status as a regular employee was not affected by the fact that he was assigned to several other projects and there were intervals in between said projects since he enjoys security of tenure.

1) respondent PNCC is DIRECTED to pay petitioner Roy D. Pasos full back wages from the time of his illegal dismissal on October 19, 2000 up to the finality of this Decision, with interest at 6% per annum, and 12% legal interest thereafter until fully paid; 2) respondent PNCC is ORDERED to reinstate petitioner Pasos to his former position or to a substantially equivalent one, without loss of seniority rights and other benefits attendant to the position; and

3) respondent PNCC is DIRECTED to pay petitioner Pasos


attorney's fees equivalent to 10% of his total monetary award.

DONGON vs. RAPID MOVERS AND FORWARDERS CO., INC. G.R. No. 163431 28 August 2013 J. Bersamin

Willful disobedience as ground for dismissal

Management prerogative; right to discipline employees

Willful disobedience to the lawful orders of an employer is one of the valid grounds to terminate an employee under Article 296 (formerly Article 282) of the Labor Code. For willful disobedience to be a ground, it is required that: (a) the conduct of the employee must be willful or intentional; and (b) the order the employee violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties that he had been engaged to discharge. Willfulness must be attended by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination. In any case, the conduct of the employee that is a valid ground for dismissal under the Labor Code constitutes harmful behavior against the business interest or person of his employer. It is implied that in every act of willful disobedience, the erring employee obtains undue advantage detrimental to the business interest of the employer.

It is true that an employer is given a wide latitude of discretion in managing its own affairs. The broad discretion includes the implementation of company rules and regulations and the imposition of disciplinary measures on its employees. But the exercise of a management prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker. In this light, the management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor.

To us, dismissal should only be a last resort, a penalty to be meted only after all the relevant circumstances have

01 June 2001 – filed a complaint for illegal dismissal LA - 10 September 2001 NLRC – 17 June 2002 CA – 24 October 2003


NLRC – reversed LA decision; awarded backwages and separation pay CA – reinstated LA decision SC – reversed and set aside CA decision; reinstated NLRC decision;


been appreciated and evaluated with the goal of ensuring that the ground for dismissal was not only serious but true. The cause of termination, to be lawful, must be a serious and grave malfeasance to justify the deprivation of a means of livelihood. This requirement is in keeping with the spirit of our Constitution and laws to lean over backwards in favor of the working class, and with the mandate that every doubt must be resolved in their favor.

Although we recognize the inherent right of the employer to discipline its employees, we should still ensure that the employer exercises the prerogative to discipline humanely and considerately, and that the sanction imposed is commensurate to the offense involved and to the degree of the infraction. The discipline exacted by the employer should further consider the employee’s length of service and the number of infractions during his employment. x x x

COLEGIO DEL SANTISIMO ROSARIO vs. MOFADA G.R. No. 170388 04 September 2013 J. Del Castillo

Probationary employment of Teachers In Mercado v. AMA Computer College-Parañaque City, Inc., we had occasion to rule that cases dealing with employment on probationary status of teaching personnel are not governed solely by the Labor Code as the law is supplemented, with respect to the period of probation, by special rules found in the Manual of Regulations for Private Schools (the Manual).With regard to the probationary period, Section 92 of the 1992 Manualprovides:

Section 92. Probationary Period. – Subject in all instances to compliance with the Department and school requirements, the probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular

13 July 1995 – filed a complaint for illegal dismissal LA - 07 October 2002 NLRC – 31 July 2003 CA – 31 August 2005; 10 November 2005 (MR)

LA – ruled respondent was illegally dismissed; petitioner ordered to pay severance compensation, 13

th

month pay, moral and exemplary damages and 10% attorney’s fees

NLRC – affirmed with modification LA decision; ordered reinstatement of


semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis. (Emphasis supplied)

In this case, petitioners’ teachers who were on probationary employment were made to enter into a contract effective for one school year. Thereafter, it may be renewed for another school year, and the probationary employment continues. At the end of the second fixed period of probationary employment, the contract may again be renewed for the last time. Such employment for fixed terms during the teachers’ probationary period is an accepted practice in the teaching profession. In Magis Young Achievers’ Learning Center v. Manalo, we noted that:

The common practice is for the employer and the teacher to enter into a contract, effective for one school year. At the end of the school year, the employer has the option not to renew the contract, particularly considering the teacher’s performance. If the contract is not renewed, the employment relationship terminates. If the contract is renewed, usually for another school year, the probationary employment continues. Again, at the end of that period, the parties may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for another school year would then be the last year – since it would be the third school year – of probationary employment. At the end of this third year, the employer may now decide whether to extend a permanent appointment to the employee,

respondent to his former position without loss of seniority rights and full backwages CA – affirmed NLRC decision SC –affirmed the CA decision


primarily on the basis of the employee having met the reasonable standards of competence and efficiency set by the employer. For the entire duration of this three-year period, the teacher remains under probation. Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew his employment contract. It is when the yearly contract is renewed for the third time that Section 93 of the Manual becomes operative, and the teacher then is entitled to regular or permanent employment status. (Emphases supplied)

x x x That teachers on probationary employment also enjoy the protection afforded by Article 281 of the Labor Code is supported by Section 93 of the 1992 Manual which provides:

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made regular or permanent. Full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. (Emphasis supplied)

The above provision clearly provides that full-time teachers become regular or permanent employees once they have satisfactorily completed the probationary period of three school years.

37 The use of the term

satisfactorily necessarily connotes the requirement for schools to set reasonable standards to be followed by teachers on probationary employment. For how else can one determine if probationary teachers have satisfactorily completed the probationary period if

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standards therefor are not provided? As such, "no vested right to a permanent appointment shall accrue until the employee has completed the prerequisite three-year period necessary for the acquisition of a permanent status. [However, it must be emphasized that] mere rendition of service for three consecutive years does not automatically ripen into a permanent appointment. It is also necessary that the employee be a full-time teacher, and that the services he rendered are satisfactory." x x x x x xthis Court has definitively pronounced that "in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 should assume primacy and the fixed-period character of the contract must give way. An example given of a fixed-term contract specifically used for the fixed term it offers is a replacement teacher or a reliever contracted for a period of one year to temporarily take the place of a permanent teacher who is on leave. The expiration of the reliever’s fixed-term contract does not have probationary status implications as he or she was never employed on probationary basis. This is because his or her employment is for a specific purpose with particular focus on the term. There exists an intent to end his or her employment with the school upon expiration of this term. However, for teachers on probationary employment, in which case a fixed term contract is not specifically used for the fixed term it offers, it is incumbent upon the school to have not only set reasonable standards to be followed by said teachers in determining qualification for regular employment, the same must have also been


communicated to the teachers at the start of the probationary period, or at the very least, at the start of the period when they were to be applied. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the probationary contract. The specific details of this finding of just cause must be communicated to the affected teachers as a matter of due process. Corollarily, should the teachers not have been apprised of such reasonable standards at the time specified above, they shall be deemed regular employees. x x x As a matter of due process, teachers on probationary employment, just like all probationary employees, have the right to know whether they have met the standards against which their performance was evaluated. Should they fail, they also have the right to know the reasons therefor.

SME BANK INC. vs. DE GUZMAN G.R. No. 184517 17 October 2014 C.J. Sereno

Validity of Resignation and Retirement

x x x While resignation letters containing words of gratitude may indicate that the employees were not coerced into resignation, this fact alone is not conclusive proof that they intelligently, freely and voluntarily resigned. To rule that resignation letters couched in terms of gratitude are, by themselves, conclusive proof that the employees intended to relinquish their posts would open the floodgates to possible abuse. In order to withstand the test of validity, resignations must be made voluntarily and with the intention of relinquishing the office, coupled with an act of relinquishment.41 Therefore, in order to determine whether the employees truly intended to resign from their respective posts, we cannot merely rely

LA – 27 October 2004 NLRC – 08 May 2006 CA – 13 march 2008

LA – respondents were illegally dismissed as it appeared that they had involuntarily executed their resignation letters.

NLRC – affirmed LA decision with modification; respondents were

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Closure of Business as an authorized cause to dismiss employee

on the tenor of the resignation letters, but must take into consideration the totality of circumstances in each particular case. x x x Retirement, like resignation, should be an act completely voluntary on the part of the employee. If the intent to retire is not clearly established or if the retirement is involuntary, it is to be treated as a discharge. x x x In San Miguel Corporation v. NLRC, we have explained that involuntary retirement is tantamount to dismissal, as employees can only choose the means and methods of terminating their employment, but are powerless as to the status of their employment and have no choice but to leave the company. This rule squarely applies to Eufemia’s case. Indeed, she could only choose between resignation and retirement, but was made to understand that she had no choice but to leave SME Bank. Thus, we conclude that, similar to her other co-employees, she was illegally dismissed from employment. x x x

The law permits an employer to dismiss its employees in the event of closure of the business establishment. However, the employer is required to serve written notices on the worker and the Department of Labor at least one month before the intended date of closure. Moreover, the dismissed employees are entitled to separation pay, except if the closure was due to serious business losses or financial reverses. However, to be exempt from making such payment, the employer must justify the closure by presenting convincing evidence that

awarded backwages, separation pay and moral and exemplary damages CA - affirmed NLRC decision SC – respondents were indeed illegally dismissed;


it actually suffered serious financial reverses.

In this case, the records do not support the contention of SME Bank that it intended to close the business establishment. x x x

Even assuming that the parties intended to close the bank, the records do not show that the employees and the Department of Labor were given written notices at least one month before the dismissal took place. Moreover, aside from their bare assertions, the parties failed to substantiate their claim that SME Bank was suffering from serious financial reverses.

x x x

There are two types of corporate acquisitions: asset sales and stock sales. In asset sales, the corporate entity sells all or substantially all of its assets to another entity. In stock sales, the individual or corporate shareholders sell a controlling block of stockto new or existing shareholders.

In asset sales, the rule is that the seller in good faith is authorized to dismiss the affected employees, but is liable for the payment of separation pay under the law. The buyer in good faith, on the other hand, is not obliged to absorb the employees affected by the sale, nor is it liable for the payment of their claims. The most that it may do, for reasons of public policy and social justice, is to give preference to the qualified separated personnel of the selling firm.

In contrast with asset sales, in which the assets of the selling corporation are transferred to another entity, the transaction in stock sales takes place at the shareholder


Right to Security of tenure

level. Because the corporation possesses a personality separate and distinct from that of its shareholders, a shift in the composition of its shareholders will not affect its existence and continuity. Thus, notwithstanding the stock sale, the corporation continues to be the employer of its people and continues to be liable for the payment of their just claims. Furthermore, the corporation or its new majority share holders are not entitled to lawfully dismiss corporate employees absent a just or authorized cause.

x x x

The right to security of tenure guarantees the right of employees to continue in their employment absent a just or authorized cause for termination. This guarantee proscribes a situation in which the corporation procures the severance of the employment of its employees – who patently still desire to work for the corporation – only because new majority stockholders and a new management have come into the picture. This situation is a clear circumvention of the employees’ constitutionally guaranteed right to security of tenure, an act that cannot be countenanced by this Court.

It is thus erroneous on the part of the corporation to consider the employees as terminated from their employment when the sole reason for so doing is a change of management by reason of the stock sale. The conformity of the employees to the corporation’s act of considering them as terminated and their subsequent acceptance of separation pay does not remove the taint of illegal dismissal. Acceptance of separation pay does not bar the employees from subsequently contesting the legality of their dismissal, nor does it estop them from challenging the legality of their separation from the service.


We therefore see it fit to expressly reverse our ruling in Manlimos insofar as it upheld that, in a stock sale, the buyer in good faith has no obligation to retain the employees of the selling corporation; and that the dismissal of the affected employees is lawful, even absent a just or authorized cause.

2012

MANSION PRINTING CENTER vs. BITARA, JR. G.R. No. 168120 25 January 2012 J. Perez

Gross negligence

On this score, Valiao v. Court of Appeals is instructive:

xxx It bears stressing that petitioner’s absences and tardiness were not isolated incidents but manifested a pattern of habituality. xxx The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by him should not be taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate and independent of each other. x x x In Valiao, we defined gross negligence as “want of care in the performance of one’s duties” and habitual neglect as “repeated failure to perform one’s duties for a period of time, depending upon the circumstances.”51 These are not overly technical terms, which, in the first place, are expressly sanctioned by the Labor Code of the Philippines, to wit:

ART. 282. Termination by employer. - An employer may terminate an employment for any of the following causes:

27 April 2000 – filed a complaint for illegal dismissal LA – 21 December 2000 NLRC - CA – 18 March 2004; 10 May 2005 (MR)

LA – dismissed complaint for lack of merit NLRC – 29 June 2001 – affirmed LA decision in toto CA – reversed NLRC and LA

SC -


Procedural due process

(a) xxx (b) Gross and habitual neglect by the employee of his duties; xxx

Clearly, even in the absence of a written company rule defining gross and habitual neglect of duties, respondent’s omissions qualify as such warranting his dismissal from the service. x x x Procedural due process entails compliance with the two-notice rule in dismissing an employee, to wit: (1) the employer must inform the employee of the specific acts or omissions for which his dismissal is sought; and (2) after the employee has been given the opportunity to be heard, the employer must inform him of the decision to terminate his employment.

x x x In Bughaw v. Treasure Island Industrial Corporation, this Court, in verifying the veracity of the allegation that respondent refused to receive the Notice of Termination, essentially looked for the following: (1) affidavit of service stating the reason for failure to serve the notice upon the recipient; and (2) a notation to that effect, which shall be written on the notice itself. Thus:

xxx Bare and vague allegations as to the manner of service and the circumstances surrounding the same would not suffice. A mere copy of the notice of termination allegedly sent by respondent to petitioner, without proof of receipt, or in the very least, actual service


thereof upon petitioner, does not constitute substantial evidence. It was unilaterally prepared by the petitioner and, thus, evidently self-serving and insufficient to convince even an unreasonable mind.

YABUT vs. MANILA ELECTRIC COMPANY G.R. No. 190436 16 January 2012 J. Reyes

Termination of employment due to Serious Misconduct

To reiterate, Article 282 (a) provides that an employer may terminate an employment because of an employee's serious misconduct, a cause that was present in this case in view of the petitioner's violation of his employer's code of conduct. Misconduct is defined as the “transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that the employee has become unfit to continue working for the employer.

In reviewing the CA’s Decision, we again consider the petitioner's duties and powers as a Meralco employee. And we conclude that he committed a serious misconduct. Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioner's performance of his duties given his position as branch field representative who is equipped with knowledge on meter operations, and who has the duty to test electric meters and handle customers' violations of contract. Instead of protecting the company’s interest, the petitioner himself used his knowledge to illegally obtain electric power from Meralco. His involvement in this incident deems him no longer fit to continue performing his functions for respondent-company.

LA – 28 December 2004 NLRC – 31 March 2006; 28 August 2006 (MR) CA – 10 August 2009; 26 November 2009 (MR)

LA – petitioner was illegally dismissed from service

NLRC – denied petition for lack of merit; denied MR CA – reversed NLRC; petitioner’s dismissal from service is lawful; right to due process was not violated SC – dismissal of petitioner was based on just causes under Art. 282 of the Labor Code


Termination also justified based on loss of trust and confidence

x x x The dismissal is also justified as the act imputed upon the petitioner qualifies as “fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative” under Article 282 (c) of the Labor Code. While the petitioner contests this ground by denying that his position is one of trust and confidence, it is undisputed that at the time of his dismissal, he was holding a supervisory position after he rose from the ranks since commencement of his employment with Meralco. As a supervisor with duty and power that included testing of service meters and investigation of violations of contract of customers, his position can be treated as one of trust and confidence, requiring a high degree of honesty as compared with ordinary rank-and-file employees. This Court declared in The Coca-Cola Export Corporation v. Gacayan:

Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer's property. But, in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer. (citations omitted)


WUERTH PHILIPPINES, INC. vs. YNSON G.R. No. 175392 15 February 2012 J. Peralta

Disease as a ground for dismissal from service

With regard to disease as a ground for termination, Article 284 of the Labor Code provides that an employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health, as well as to the health of his co-employees. In order to validly terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that:

Section 8. Disease as a ground for dismissal. — Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health.

In Triple Eight Integrated Services, Inc. v. NLRC, the Court held that the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and, thus, defeat the public policy on the protection of labor. In the

05 September 2003 - for illegal dismissal and non-payment of allowances, with claim for moral and exemplary damages and attorney’s fees LA – 15 July 2004 NLRC – 29 July 2005; 24 November 2005 (MR) CA – 13 July 2006; 6 December 2006 (MR)

LA - illegal dismissal; ordered respondent’s reinstatement to his former position without loss of seniority rights and privileges; in case of appeal, ordered to reinstate complainant in the payroll; ordered petitioner to pay respondent full backwages, medical benefits, 13

th month pay

for year 2003, Moral and Exemplary Damages, and 10% of the total award as attorney’s fees NLRC – affirmed with modification LA decision; reduced the award for moral and exemplary damages,


Management prerogative to dismiss an employee

present case, there was no showing that prior to terminating respondent's employment, petitioner secured the required certification from a competent public health authority that the disease he suffered was of such nature or at such a stage that it cannot be cured within six months despite proper medical treatment, pursuant to Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code. x x x Despite the completion of his treatment, respondent failed to attend the investigations set on July 25, 2003 and August 18, 2003. Thus, his unexplained absence in the proceedings should be construed as waiver of his right to be present therein in order to adduce evidence that would have justified his continued absence from work. x x x Clearly, since there is no more hindrance for him to return to work and attend the investigations set by petitioner, respondent's failure to do so was without any valid or justifiable reason. Respondent's conduct shows his indifference and utter disregard of his work and his employer's interest, and displays his clear, deliberate, and gross dereliction of duties. x x x It bears stressing that respondent was not an ordinary rank-and-file employee. With the nature of his position, he was reposed with managerial duties to oversee petitioner's business in his assigned area. As a managerial employee, respondent was tasked to perform important and crucial functions and, thus, bound by more exacting work ethic. He should have realized that such sensitive

including the attorney’s fees as the same was based on total awards - On MR, NLRC

further reduced it award for moral and exemplary damages

CA – partly considered the petition meritorious; petitioner had the right to terminate respondent; deleted the awards for backwages and moral and exemplary damages; but awarded P1,225,000.00 (representing his salary from February 2003 to August 29, 2003), medical expenses of P94,100.00, temperate


AWARD - a. The award of salary of respondent Rodante Ynson from February 2003 to August 29, 2003, amounting to P1,225,000.00, is deleted; however, he is entitled to the payment of his salary, chargeable against his accrued sick leave benefits and other similar leave benefits, if any, from January 24to June 4, 2003, as may be provided by existing company policy of petitioner Wuerth Philippines, Inc.; b. The award of temperate damages, in the amount of P100,000.00, is reduced to P50,000.00; c. While the award of 13

th month

pay, in the amount of P175,000.00 is deleted; however, respondent may still be entitled to the 13

th month pay, either full or

pro-rated amount, in consonance with existing company policy of petitioner; and d. The award of medical expenses amounting to P94,100.00 and attorney's fees of 10% of the total monetary award are deleted.

position required the full trust and confidence of his employer in every exercise of managerial discretion insofar as the conduct of the latter's business is concerned. The power to dismiss an employee is a recognized prerogative inherent in the employer's right to freely manage and regulate his business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The worker's right to security of tenure is not an absolute right, for the law provides that he may be dismissed for cause.As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal. Needless to say, an irresponsible employee like respondent does not deserve a place in the workplace, and it is petitioner's management prerogative to terminate his employment. To be sure, an employer cannot be compelled to continue with the employment of workers when continued employment will prove inimical to the employer's interest. To condone such conduct will certainly erode the discipline that an employer should uniformly apply so that it can expect compliance with the same rules and regulations by its other employees. Otherwise, the rules necessary and proper for the operation of its business would be gradually rendered ineffectual, ignored, and eventually become meaningless. As applied to the present case, it would be the height of unfairness and injustice if the employer would be left hanging in the dark as to when respondent could report to work or be available for the scheduled hearings, which becomes detrimental to the orderly daily operations of petitioner's business.

damages of P100,000.00, 13

th

month pay of P175,000.00, and attorney’s fees of 10% of the total monetary award SC – modified the decision of CA; REMANDED the case to the NLRC Fifth Division, Cagayan de Oro City for proper computation of awards which respondent may be entitled to.


JULIE’S BAKESHOP vs. ARNAIZ, et.al. G.R. No. 173882 15 February 2012 J. Del Castillo

Transfer/reassignment which constitutes constructive dismissal

Demotion as constructive dismissal

We have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor. In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity. The employer must demonstrate that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. “If the employer fails to overcome this burden of proof, the employee’s transfer is tantamount to unlawful constructive dismissal. x x x Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. X x x What appears to this Court is that respondents’ transfer was an act of retaliation on the part of petitioners due to the former’s filing of complaints against them, and thus, was clearly made in bad faith. In fact, petitioner Reyes even admitted that he caused the reassignments due to the pending complaints filed against him. Demotion involves a situation in which an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary. When there is a demotion in rank and/or a diminution in pay; when a clear discrimination, insensibility or disdain by an employer

LA – 25 August 2000 NLRC – 18 December 2003; 19 April 2004 (MR) CA – 23 September 2005

LA – dismissed the complaint NLRC –overruled LA decision and REMANDED the case for further proceedings in its 17 January 2002 decision; In its 23 September 2003 Resolution, NLRC vacated its previous decision and ruled that respondents were illegally dismissed; ordered respondents’ reinstatement, payment of backwages, salary differentials, premium pay, 13

th

month pay, service incentive leave pay, and COLA

- On 18 December 2003, upon MR filed by petitioner, NLRC ruled that respondents were not illegally dismissed


becomes unbearable to the employee; or when continued employment is rendered impossible, unreasonable or unlikely, the transfer of an employee may constitute constructive dismissal. We agree with the CA in ruling that the transfer of respondents amounted to a demotion. Although there was no diminution in pay, there was undoubtedly a demotion in titular rank. One cannot deny the disparity between the duties and functions of a chief baker to that of a utility/security personnel tasked to clean and manage the orderliness of the outside premises of the bakeshop. Respondents were even prohibited from entering the bakeshop. The change in the nature of their work undeniably resulted to a demeaning and humiliating work condition.

- On 19 April 2004, denied respondents’ MR

CA – reversed and set aside NLRC resolutions dated 18 December 2003 and 19 April 2004; remanded the case to the LA for computation of backwages andother monetary awards.

SC - affirmed CA decision

C. ALCANTARA & SONS, INC. vs. COURT OF APPEALS G.R. No. 155109 14 March 2012 J. Peralta (Motion for Resonsideration of 29 September 2010 Decision)

Termination of employment of Union officers/members due to participation in or commission of illegal acts during strike

Payment of separation pay

The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the Union, participated in by the Union officers and members, is illegal being in violation of the no strike-no lockout provision of the CBA which enjoined both the Union and the company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling their disputes.[22] We, therefore, find no reason to depart from such conclusion.

Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and members participating in illegal strikes and/or committing illegal acts, to wit:

ART. 264. PROHIBITED ACTIVITIES (a) x x x

LA – 29 June 1999 NLRC – 08 November 1999 CA - 24 February 2005 SC – 29 September 2010 (Decision)

LA – declared strike illegal ; Union officers deemed forfeited their employment; union members were ordered reinstated with backwages; denied Union’s counterclaim

NLRC – affirmed LA decision insofar as declaring the strike illegal, termination of Union officers


Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any Union officer who knowingly participates in an illegal strike and any worker or Union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike.

Thus, the above-quoted provision sanctions the dismissal of a Union officer who knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful strike.[23] In this case, the Union officers were in clear breach of the above provision of law when they knowingly participated in the illegal strike.

As to the Union members, the same provision of law provides that a member is liable when he knowingly participates in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that CASI presented substantial evidence to show that the striking Union members committed the following prohibited acts:

a. They threatened, coerced, and

intimidated non-striking employees, officers, suppliers and customers;

b. They obstructed the free ingress to and egress from the company premises; and

c. They resisted and defied the

and directing them to pay damages; but modified it and ruled that identified union members should likewise be terminated from service for commission of illegal and prohibited acts CA –dismissed petition and ruled that resinstatement of union members pending appeal had no basis SC – reversed and set aside CA decision and reinstated NLRC decision dated 08 November 1999; On MR, reconsidered its previous decision only insofar as the award of separation pay;


implementation of the writ of preliminary injunction issued against the strikers.

The commission of the above prohibited acts by the striking Union members warrants their dismissal from employment. X x x Finally, as regards the separation pay as a form of financial assistance awarded by the Court, we find it necessary to reconsider the same and delete the award pursuant to prevailing jurisprudence. Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the employee was found to have been suffering from a disease such that his continued employment is prohibited by law. It is a statutory right defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. It is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job. As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from their illegal acts. The rule, however, is subject to exceptions. The Court, in Philippine Long Distance Telephone Co. v. NLRC,laid down the guidelines when separation pay in the form of financial assistance may be allowed, to wit:

We hold that henceforth separation pay shall


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

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed x x x.

x x x

However, in a number of cases cited in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, we refrained from awarding separation pay or financial assistance to Union officers and members who were separated from service due to their participation in or commission of illegal acts during the strike.In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA), the strike was found to be illegal because of procedural infirmities and for defiance of the Secretary of Labor’s assumption order. Hence, we upheld the Union officers’ dismissal without granting financial assistance. In Sukhotai Cuisine and Restaurant v. Court of Appeals, and Manila Diamond Hotel and Resort, Inc. (Manila


Diamond Hotel) v. Manila Diamond Hotel Employees Union, the Union officers and members who participated in and committed illegal acts during the illegal strike were deemed to have lost their employment status and were not awarded financial assistance. In Telefunken Semiconductors Employees Union v. Court of Appeals, the Court held that the strikers’ open and willful defiance of the assumption order of the Secretary of Labor constitute serious misconduct and reflective of their moral character, hence, granting of financial assistance to them cannot be justified. In Chua v. National Labor Relations Commission,[57]we disallowed the award of financial assistance to the dismissed employees for their participation in the unlawful and violent strike which resulted in multiple deaths and extensive property damage because it constitutes serious misconduct on their part. Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as we concluded in Toyota, Telefunken, Chua and the other cases cited above, we delete the award of separation pay as a form of financial assistance.

BILLY REALDA vs. NEW AGE GRAPHICS, INC. AND JULIAN I. MIRASOL, JR. G.R. NO. 192190 25 April 2012 J. Reyes

Security of Tenure, not an absolute right

Security of tenure is indeed constitutionally guaranteed. However, this should not be indiscriminately invoked to deprive an employer of its management prerogatives and right to shield itself from incompetence, inefficiency and disobedience displayed by its employees. The procedure laid down by Graphics, Inc. which the petitioner was bound to observe does not appear to be unreasonable or unnecessarily difficult. On the contrary, it is necessary

SC – affirmed CA decision


Totality of Infraction considered in imposing penalty

and relevant to the achievement of Graphics, Inc.’s objectives. The petitioner’s non-compliance is therefore hard to comprehend. x x x While a penalty in the form of suspension had already been imposed on the petitioner for his habitual tardiness and repeated absenteeism, the principle of “totality of infractions” sanctions the act of Graphics, Inc. of considering such previous infractions in decreeing dismissal as the proper penalty for his tardiness and unauthorized absences incurred afterwards, in addition to his refusal to render overtime work and conform to the prescribed work standards. In Merin v. National Labor Relations Commission, this Court expounded on the principle of totality of infractions as follows:

The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that petitioner was penalized for his previous infractions, this does not and should not mean that his employment record would be wiped clean of his infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee's past misconduct and present behavior must be taken together in determining the proper imposable penalty[.] Despite the sanctions imposed upon


petitioner, he continued to commit misconduct and exhibit undesirable behavior on board. Indeed, the employer cannot be compelled to retain a misbehaving employee, or one who is guilty of acts inimical to its interests. (Citations omitted)

This Court cannot condone the petitioner’s attempt to belittle his habitual tardiness and absenteeism as these are manifestation of lack of initiative, diligence and discipline that are adverse to Graphics, Inc.’s interest. In Challenge Socks Corporation v. Court of Appeals, this Court said that it reflects an indifferent attitude to and lack of motivation in work. It is inimical to the general productivity and business of the employer. This is especially true when it occurred frequently and repeatedly within an extensive period of time and despite several warnings.

INTERNATIONAL MANAGEMENT SERVICES vs. LOGARTA G.R. No. 163657 18 April 2012 J. Peralta

Requisites of Retrenchment as a valid excuse of management prerogative

Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages. It is one of economic grounds to dismiss employees and is resorted by an employer primariy to avoid or minimize business losses X x x Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence, to wit:

(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably

LA - NLRC – 29 October 1999 CA – 08 January 2004; 12 May 2004 (MR)

LA – ordered petitioner to pay respondent his wages for the unexpired portion of his contract of employment; all other claims were dismissed NLRC – affirmed LA decision but reduced the award CA – dismissed the petition and affirmed NLRC


imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain worker

Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth requirements were complied with by respondent’s employer. However, the second and third requisites were absent when Petrocon terminated the services of respondent

decision SC –denied petition; affirmed with modification the CA decision; petitioner was ordered to pay the respondent one month salary as separation pay and Php50,000.00 as nomnal damages

MORALES vs. METROBANK G.R. No. 182475 21 November 2012

Redundancy; Requisites for its valid implementation

One of the authorized causes for the dismissal of an employee,redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business

20 February 2004 – filed a complaint for illegal dismissal

LA – declared petitoner’s dismissal illegal; ordered his


J. Perez enterprise.A position is redundant when it is superfluous, and superfluity of a position or positions could be the result of a number of factors, such as the overhiring of workers, a decrease in the volume of business or the dropping of a particular line or service previously manufactured or undertaken by the enterprise.Time and again, it has been ruled that an employer has no legal obligation to keep more employees than are necessary for the operation of its business.For the implementation of a redundancy program to be valid, however, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.

X x x

In implementing a redundancy program, it has been ruled that the employer is required to adopt a fair and reasonable criteria, taking into consideration such factors as (a) preferred status; (b) efficiency; and (c) seniority,among others.

LA – 11 November 2005 NLRC – 20 July 2006 CA – 20 September 2007

reinstatement, backwages assessed at P390,005.00 at the time of the rendition of the decision, 13th month pay in the sum of P32,500.50, quarterly bonus in the sum of P130,002.00 and CBA signing bonus in the sum of P120,000.00. On the ground that Morales’ dismissal from service was tainted with bad faith and malice, the Labor Arbiter likewise held Metrobank liable to pay said employee P100,000.00 in moral damages, P100,000.00 in exemplary damages and attorney’s fees at 10% of the total award computed at P87,250.65. From the grand total of P959,757.15 in monetary awards, the Labor Arbiter decreed the deduction of the


sum of P158,496.95 which Morales had acknowledged to have received by way of separation benefits. NLRC – reversed and set aside LA decision CA – dismissed the petition and upheld validity of petitioner’s termination from service SC – denied petition for lack of merit

2011

2010

C. ALCANTARA & SONS, INC. vs. COURT OF APPEALS G.R. No. 155109 14 March 2012 J. Peralta

Termination of employment of union officers and/or members due to commission of prohibited or illegal acts during strike

Since the Union’s strike has been declared illegal, the Union officers can, in accordance with law be terminated from employment for their actions. This includes the shop stewards. They cannot be shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such and placed them in positions of leadership and power over the men in their respective work units. As regards the rank and file Union members, Article 264 of the Labor Code provides that termination from employment is not warranted by the mere fact that a union member has taken part in an illegal strike. It must be shown that such a union member, clearly identified,

LA – 29 June 1999 NLRC – 08 November 1999 CA - 24 February 2005

LA – declared strike illegal ; Union officers deemed forfeited their employment; union members were ordered reinstated with backwages; denied Union’s counterclaim

NLRC – affirmed LA


Reinstatement pending appeal

performed an illegal act or acts during the strike. x x x The mere fact that the criminal complaints against the terminated Union members were subsequently dismissed for one reason or another does not extinguish their liability under the Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and photos presented to establish their identity and guilt during the hearing of the petition to declare the strike illegal. The technical grounds that the Union interposed for denying admission of the photos are also not binding on the NLRC x x x The CA denied reinstatement for the reason that the reinstatement pending appeal provided under Article 223 of the Labor Code contemplated illegal dismissal or termination cases and not cases under Article 264. But this perceived distinction does not find support in the provisions of the Labor Code. The grounds for termination under Article 264 are based on prohibited acts that employees could commit during a strike. On the other hand, the grounds for termination under Articles 282 to 284 are based on the employee’s conduct in connection with his assigned work. Still, Article 217, which defines the powers of Labor Arbiters, vests in the latter jurisdiction over all termination cases, whatever be the grounds given for the termination of employment. Consequently, Article 223, which provides that the decision of the Labor Arbiter reinstating a dismissed employee shall immediately be executory pending appeal, cannot but apply to all terminations irrespective of the grounds on which they are based.

decision insofar as declaring the strike illegal, termination of Union officers and directing them to pay damages; but modified it and ruled that identified union members should likewise be terminated from service for commission of illegal and prohibited acts CA – dismissed petition and ruled that resinstatement of union members pending appeal had no basis


Payment of Separation Pay for validly dismissed employees

x x x While it is true that generally the grant of separation pay is not available to employees who are validly dismissed, there are, in furtherance of the law’s policy of compassionate justice, certain circumstances that warrant the grant of some relief in favor of the terminated Union members based on equity. Bitter labor disputes, especially strikes, always generate a throng of odium and abhorrence that sometimes result in unpleasant, although unwanted, consequences.[25] Considering this, the striking employees’ breach of certain restrictions imposed on their concerted actions at their employer’s doorsteps cannot be regarded as so inherently wicked that the employer can totally disregard their long years of service prior to such breach. The records also fail to disclose any past infractions committed by the dismissed Union members. Taking these circumstances in consideration, the Court regards the award of financial assistance to these Union members in the form of one-half month salary for every year of service to the company up to the date of their termination as equitable and reasonable.

PICOP RESOURCES, INCORPORATED (PRI) vs. RICARDO DEQUILLA, et.al. G.R. No. 172666 07 December 2011 J. Mendoza

Termination of employment due to violation of Union Security Clause

There is no question that in the CBA entered into by the parties, there is a union security clause. The clause imposes upon the workers the obligation to join and maintain membership in the company’s recognized union as a condition for employment.

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition


affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.

x x x It is basic in labor jurisprudence that the burden of proof rests upon management to show that the dismissal of its worker was based on a just cause. When an employer exercises its power to terminate an employee by enforcing the union security clause, it needs to determine and prove the following: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. x x x Considering the peculiar circumstances, the Court is of the view that the acts of private respondents are not


Award

enough proof of a violation of the Union Security Clause which would warrant their dismissal. PICOP failed to show in detail how private respondents campaigned and supported FFW. Their mere act of signing an authorization for a petition for certification election before the freedom period does not necessarily demonstrate union disloyalty. It is far from being within the definition of “acts of disloyalty” as PICOP would want the Court to believe. The act of “signing an authorization for a petition for certification election” is not disloyalty to the union per se considering that the petition for certification election itself was filed during the freedom period which started on March 22, 2000. Moreover, as correctly ruled by the CA, the records are bereft of proof of any contemporaneous acts of resignation or withdrawal of union membership or non-payment of union dues x x x Considering that private respondents were illegally dismissed, basic law provides that they shall be entitled to the benefit of full backwages and reinstatement unless the latter is no longer viable, in which case, a grant of separation pay shall be awarded equivalent to one month salary for every year of service. Private respondents are also entitled to an award of attorney’s fees equivalent to 10% of the total monetary award as they were compelled to litigate in order to seek redress for their illegal dismissal.

2009

LA ROSA vs AMBASSADOR HOTEL G.R. 177059

Constructive dismissal

Case law holds that constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination,

17 April 2002 – Filing of complaint LA 30 Sept 2003

LA – illegal dismissal, separation pay at ½ month pay for


13 March 2009 J. Carpio-Morales

Abandonment

insensibility, or disdain by an employer becomes unbearable to the employee. Respondent’s sudden, arbitrary and unfounded adoption of the two-day work scheme which greatly reduced petitioners’ salaries renders it liable for constructive dismissal. Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. And the burden of proof to show that there was unjustified refusal to go back to work rests on the employer.

x x x Abandonment is a matter of intention and cannot lightly be inferred or legally presumed from certain equivocal acts. For abandonment to exist, two requisites must concur: first, the employee must have failed to report for work or must have been absent without valid or justifiable reason; and second, there must have been a clear intention on the part of the employee to sever the employer-employee relationship as manifested by some overt acts. The second element is the more determinative factor. Abandonment as a just ground for dismissal thus requires clear, willful, deliberate, and unjustified refusal of the employee to resume employment. Mere absence or failure to report for work, even after notice to return, is not tantamount to abandonment. (Emphasis and underscoring supplied)

NLRC – 08 September 2005 CA – 12 December 2006 SC- 13 March 2009

every year of service with full backwages and 10% Atty.’s fees. NLRC – affirmed LA decision with modification CA – reversed NLRC and ruled that there was no constructive dismissal SC – reinstated LA’s decision

MENDROS vs. MITSUBISHI PHIL. G.R. 169780 16 February 2009 J. Velasco, Jr.

Requisites of valid Retrenchment The right of management to retrench or to lay-off workers to meet clear and continuing economic threats or during periods of economic recession to prevent losses is recognized by Article 283 of the Labor Code, as amended

x x x Decisional law teaches that the requirements for a valid retrenchment are: (1) that the retrenchment is reasonably

September 2009 – filing of complaint (for illegal temporary lay-off/retrenchment) LA - 27 February 2001 NLRC – 23 September 2002; 30 January 2004

LA – dismissed complaint NLRC – reversed LA ; denied MR CA – reversed and set aside NLRC decision; reinstated


necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) that the employer serves written notice both to the employees concerned and the DOLE at least a month before the intended date of retrenchment; (3) that the employer pays the retrenched employee separation pay in an amount prescribed by the Code; (4) that the employer exercises its prerogative to retrench in good faith; and (5) that it uses fair and reasonable criteria in ascertaining who would be retrenched or retained.

(MR) CA – 18 November 2004

LA decision SC – affirmed CA decision

MOTOROLA PHILS vs. AMBROCIO G.R. 173279 30 March 2009 J. Carpio-Morales

Entitlement to separation pay in case of termination due to redundancy

Technicality aside, on the merits, respondents have no cause of action as against petitioners with respect to their claim for additional retirement benefits. Article 283 of the Labor Code, as amended, provides:

ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in

LA-16 December 2002 NLRC – 13 December 2004 CA – 01 March 2006; 27 June 2006 SC –30 March 2009

LA – granted retirement pay NLRC – did not grant retirement pay as the respondents were actually dismissed due to redundancy CA – dismissed the petition on technicalities (non submission of certificate of non-forum shopping and no apparent authorization) 27 June 2006 decision reinstated the petition


Distinction between Separation pay and Retirement pay

cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year." (Emphasis supplied)

Separation pay has been defined as the amount that an employee receives at the time of his severance and is designed to provide the employee with the wherewithal during the period he is looking for another employment, and is recoverable only in the instances enumerated under Articles 283 and 284 of the Labor Code, as amended, or in illegal dismissal cases when reinstatement is no longer possible.

Retirement pay, on the other hand, presupposes that the employee entitled to it has reached the compulsory retirement age or has rendered the required number of years as provided for in the collective bargaining agreement (CBA), the employment contract or company policy, or in the absence thereof, in Republic Act No. 7641 or the Retirement Law.

2008

PRICE vs. INNODATA PHILS., INC. G.R. No. 178505 30 September 2008 J. Chico-Nazario

Kinds of Employees – Regular or Fixed-term - petitioners being regular employees of Innodata Phils, are entitled to Security of Tenure

The applicable test to determine whether an employment should be considered regular or non-regular is the reasonable connection between the activity performed by the employee in relation to the usual business of the trade of the employer. However, it is also true that while certain forms of employment require the performance of usual or desirable functions and exceed 1 year, these do not necessarily result in regular employment.

Under the Civil Code, fixed-term contracts are not

Date of Filing: 22 May 2000 Date of Decision – Labor Arbiter: 17 October 2000 Date of Decision – NLRC: 14 December 2001

Labor Arbiter rendered declaring complainants’ dismissal illegal and ordering respondent INNODATA PHILS. INC./INNODAT


Burden of proof in Illegal Dismissal cases

Awards - separation pay, in lieu of reinstatement, equivalent to one month pay for every year of service, to be computed from the commencement of their employment up to the date respondent Innodata Philippines,

limited as they are under the present Labor Code to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination.

While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the exemption rather than the general rule. In Brent (181 SCRA 714 [1990]), the Court identified circumstances wherein a fixed-term is an essential and natural appurtenance:

o Overseas employment contracts o Appointments to positions of dean, assistant

dean, college secretary, principal and other administrative offices in educational institutions

o Certain company officials providing that these officials may lose hteir jobs as president, executive vice-president or vice president etc. because the stockholders or board of directors for one reason or another did not re-elect them.

The Court reiterates the rule that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has the burden of proof. An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges, with full backwages computed to the time of dismissal up to the time of actual reinstatement. Considering that Innodata has ceased its operations in June 2002 due to business losses, the proper award is separation pay equivalent to 1 month per year of service, to be computed from the commencement of their employment up to the closure of Innodata.

Date of Decision – CA: 25 September 2006 Date of Decision – SC: 30 September 2008

A CORPORATION to reinstate them to their former or equivalent position without loss of seniority rights and benefits.

NLRC: reversed the Labor Arbiter’s Decision dated 17 October 2000, and absolved INNODATA of the charge of illegal dismissal. The NLRC found that petitioners were not regular employees, but were fixed-term employees as stipulated in their respective contracts of employment.

Court of Appeals promulgated its Decision sustaining the


Inc./Innodata Corporation ceased operations; Full backwages, computed from the time petitioners’ compensation was withheld from them up to the time respondent Innodata Philippines, Inc./Innodata Corporation ceased operations; 10% of the total monetary award as attorney’s fees. Costs against respondent Innodata Philippines, Inc./Innodata Corporation.

ruling of the NLRC that petitioners were not illegally dismissed.

SC reversed CA decision and uphold the decision of the Labor Arbiter

ASTORGA V. SMART COMMUNICATIONS G.R. No. 148132 28 January 2008 J. Nachura

Illegal Dismissal and return of vehicle issued as part of employment package

SMART’s demand for payment of the market value of the car or, in the alternative, the surrender of the car, is not a labor, but a civil, dispute. It involves the relationship of debtor and creditor rather than employee-employer relations. As such, the dispute falls within the jurisdiction of the regular courts. Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor Relations Commission The characterization of an employee’s services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not shown. However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior

Date of Filing Date of Decision – Labor Arbiter: 20 August 1998 Date of Decision – NLRC: 27 September 1999 Date of Decision – CA: 11 June 2001 Date of Decision – SC: 28 January 2008

Labor Arbiter

declared Astorga’s dismissal from employment illegal.

NLRC sustained Astorga’s dismissal reversing the Labor Arbiter

CA affirmed NLRC decision

SC affirmed CA decision with modification to the awards


Awards - SMART is ordered to pay Astorga P50,000.00 as indemnity for its non-compliance with procedural due process; separation pay equivalent to one (1) month pay, and her salary from February 15, 1998 until the effective date of her termination on April 3, 1998; The award of backwages is DELETED for lack of basis.

to termination. The record is clear that Astorga received the notice of termination only on March 16, 1998[39] or less than a month prior to its effectivity on April 3, 1998. Likewise, the Department of Labor and Employment was notified of the redundancy program only on March 6, 1998. Be that as it may, this procedural infirmity would not render the termination of Astorga’s employment illegal. The validity of termination can exist independently of the procedural infirmity of the dismissal. However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART for non-compliance with the one-month mandatory notice requirement, in light of our ruling in Jaka Food Processing Corporation v. Pacot

YRASEGUI V. PHILIPPINE AIRLINES, INC. G.R. No. 168081 17 October 2008 J. RT Reyes

Illegal Dismissal – Obesity as a Ground for Dismissal under analogous causes

The standards violated in this case were not mere “orders” of the employer; they were the “prescribed weights” that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an employee’s position. In

Date of Filing: Date of Decision – Labor Arbiter Valentin C. Reyes: 18 November 1998

Labor Arbiter ruled that petitioner was illegally dismissed

NLRC affirmed


Awards - petitioner was granted separation pay equivalent to ½ month’s pay per year of service. It should include regular allowances which he might have been receiving

this sense, the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal. The failure to meet the employer’s qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) – the “other causes analogous to the foregoing”.

Date of Decision – NLRC : 23 January 2000 Date of Decision – CA: 31 August 2004 Date of Decision – SC: 17 October 2008

decision of Labor Arbiter

CA reversed decision of NLRC

SC affirmed decision of CA with modification regarding entitlement to separation pay

MERIN V. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 171790 17 October 2008 J. Tinga

Principle of Totality of Infractions

Illegal Dismissal - Employer has the right to dismiss an employee as a measure of self-protection

The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that petitioner was penalized for his previous infractions, this does not and should not mean that his employment record would be wiped clean of his infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee’s past misconduct and present behavior must be taken together in determining the proper imposable penalty. Despite the sanctions imposed upon by the petitioner, he continued to commit misconduct and exhibit

Date of Filing: Date of Decision – Labor Arbiter Antonio A. Cea: 28 August 2003 Date of Decision – NLRC: 29 December 2004 Date of Decision – CA: 30 November 2005 Date of Decision – SC: 17 October 2008

Labor Arbiter ruled that repatriation is illegal

NLRC reversed Labor Arbiter’s decision


SC affirmed CA decision with modification on the payment of nominal damages


Award - Great Southern Maritime Services Corporation is ordered to pay petitioner the amount of Thirty Thousand Pesos (P30,000.00) as nominal damages for non-compliance with statutory due process.

undesirable behavior on-board. Indeed, the employer cannot be compelled to retain a misbehaving employee or one who is guilty of acts inimical to his interests. It has a right to dismiss such an employee if only as a measure of self-protection.

WOODRIDGE SCHOOL V. PE BENITO G.R. No. 160240 29 October 2008 J. Nachura

Kinds of Employee - Enjoyment of security of tenure by probationary employees

Awards - both petitioners

Probationary employees enjoy security of tenure in a sense that during their probationary employment, they cannot be dismissed except for cause or when he fails to qualify as a regular employee. However, upon expiration of their contract of employment, probationary employees cannot claim security of tenure and compel their employers to renew their employment contracts. In fact, the services of an employee hired on probationary basis may be terminated when he fails to comply as a regular employee in accordance with reasonable standards made known by the employer to the employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probation period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, the law does not preclude the employer from terminating the probationary employment on justifiable ground.

Date of Filing: 28 February 2001 Date of Decision – Labor Arbiter Vicente R. Layawen: 29 November 2001 Date of Decision – NLRC: 28 June 2002 Date of Decision – CA: 30 June 2003 Date of Decision – SC: 29 October 2008

Labor Arbiter ruled that the termination of the respondents’ probationary employment was justified because of their failure to submit vital teaching documents

NLRC affirmed Labor Arbiter’s decision

CA reversed NLRC decision

SC affirmed CA decision


[respondents herein] are entitled to the award of moral and exemplary damages

SAGALES V. RUSTAN’S COMMERCIAL CORP G.R. No. 166554 27 November 2008 J. Reyes

Kinds of employee – Managerial Employee; trust and confidence rule

Illegal Dismissal - petitioner deserves compassion more than condemnation

The nature of the job of an employee becomes relevant in termination of employment by the employer because the rules on termination of managerial and supervisory employees are different from those in the rank-and-file. Managerial employees are tasked to perform key and sensitive functions, and thus are bound by more exacting work ethics. As a consequence, managerial employees are covered by the trust and confidence rule. The same holds true for supervisory employees occupying positions of responsibility.

Security of tenure is a paramount right of every employee as is held by the Constitution. The reason for this is that labor is deemed to be “property” within the meaning of constitutional guarantees. Indeed, as it is the policy of the State to guarantee the right of every worker to security of tenure as an act of social justice, such right should not be denied on mere speculation of any similar or unclear nebulous basis. Indeed the right of every person to security of tenure is all the more secured by the Labor Code by providing that the employer shall not terminate the services of an employee except for a just cause or when authorized by law. Otherwise, an employee who is illegally dismissed shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

The quantum of proof required for the application of the loss of trust and confidence rule is not proof

Date of Filing Date of Decision – Labor Arbiter: 24 July 2002 Date of Decision – NLRC: 10 April 2003 Date of Decision – CA: 12 July 2004 Date of Decision – SC: 27 November 2008

Labor Arbiter ruled that the petition for illegal dismissal is dismissed for lack of merit

NLRC reversed the decision of the Labor Arbiter

CA reversed the decision of NLRC

SC reversed the decision of CA


Awards - petitioner is granted separation pay and backwages in lieu of reinstatement

beyond reasonable doubt. It is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer. We do not condone dishonesty. After all, honesty is the best policy. However, punishment should be commensurate with the offense committed. The supreme penalty of dismissal is the death penalty to a working man. Thus, care should be exercised by employers in imposing dismissal to erring employees. The penalty of dismissal should be availed of as a last resort.

AKLAN ET AL V. SAN MIGUEL CORP. G.R. No. 168537 11 December 2008 J. Reyes

Labor-Only Contracting distinguished from permissible job contracting

A finding that a contractor is a “labor-only” contractor, as opposed to permissible job contracting, is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the “labor-only” contractor is considered as a mere agent of the principal, the real employer.

In its ruling, the NLRC considered the following elements to determine the existence of an employer-employee relationship: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the

Date of Filing: 17 September 2001 Date of Decision – Labor Arbiter Veneranda C. Guerrero: Date of Decision – NLRC: 19 December 2003 Date of Decision – CA:

Labor Arbiter ruled that respondent (BMA) is liable for illegal dismissal and ordered the reinstatement of the petitioners

NLRC reversed the decision of


Illegal Dismissal -Just and Authorized Causes Petitioners alleged that they were illegally dismissed after filing a complaint for underpayment of wages and non-payment of benefits before the DOLE; they were terminated after staging a peaceful picket to protest the non-payment of their claims.

power to control the worker’s conduct. All four elements were found by the NLRC to be vested in BMA.

The employer-employee relationship between BMA and petitioners is not tarnished by the absence of registration with DOLE as an independent job contractor on the part of BMA. The absence of registration only gives rise to the presumption that the contractor is engaged in labor-only contracting, a presumption that respondent BMA ably refuted. Thus, We find no grave abuse of discretion in the CA observation that respondent BMA is the true employer of petitioners who should be held directly liable for their claims. Likewise, no grave abuse of discretion can be ascribed to the CA when it ruled that illegal dismissal was absent.

Unless there is a showing that the employee signed involuntarily or under duress, quitclaims and releases are upheld by this Court as the law between the parties

As correctly observed by the NLRC, the language employed by the above quitclaims and releases indicates in no uncertain terms that petitioners voluntarily and freely acknowledged receipt of full satisfaction of all claims against respondents. Thus, the quitclaims effectively barred petitioners from questioning their dismissal.

15 April 2005 Date of Decision – SC: 11 December 2008

Labor Arbiter


SC affirmed CA decision

2007

VICTORY LINER vs. RACE G.R. No. 164820 28 March 2007 J.Chico-Nazario

EE/ER Relationship

Causes of termination – Abandonment

Procedural compliance with the Twin Notice Rule

Reinstatement

There are four elements in determining EE/ER relationship; the Control Test is the most crucial and determinative indicator of the presence or absence of EE/ER relationship; respondent is entitled to backwages computed from the time his compensation was withheld from him until his actual reinstatement, without loss of seniority rights

LA decided the case 2001; SC 2007

NLRC reversed LA; CA affirmed

NLRC; SC affirmed CA


CAÑEDA vs PAL G.R. No. 152232 26 February 2007 J. Corona

EE/ER

Loss of trust and confidence

Misappropriation of company funds

It is immaterial that a person holding a position of trust and confidence did not misappropriate company funds. It is enough that such employee incurred shortage in the fund entrusted to him

LA-April 14, 1998; CA – Feb 26, 2007

LA- illegal dismissaal NLRC– reversed Ca – reinstate LA SC- dismissal is legal.

CENTRAL PANGASINAN ELECTRIC CORP vs NLRC G.R. 163561 24 July 2007 J. Quisumbing

ER-EE

Just cause- violation of company’s code of conduct

Gross misconduct and acts of dishonesty

Violations of company rule, and certain acts tantamount to serious misconduct

LA – 14 Jan 2000- Sc – 24 July 2007

LA-dismissed SC -affirmed

THELMA DUMPIT-MURILLO vs. COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND EDWARD TAN G.R. No. 164652 08 June 2007 J. Quisumbing

Talent contracts

Existence of ER-EE relationship

x x x The Court of Appeals committed reversible error when it held that petitioner was a fixed-term employee. Petitioner was a regular employee under contemplation of law. The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular employment status. x x x In Manila Water Company, Inc. v. Pena, we said that the elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee, (b) the payment of wages, (c) the power of dismissal, and (d) the employer’s power to control. The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. x x x Concerning regular employment, the law provides for two

20 December 1999 – Filed complaint LA – 29 March 2000 NLRC 30 August 2000 CA – 30 January 2004

LA – dismissed complaint NLRC – reversed LA; held that an employer-employee relationship existed between petitioner and ABC; that the subject talent contract was void; that the petitioner was a regular employee illegally dismissed; and that she was entitled to reinstatement and backwages or separation pay, aside from 13

th month pay

and service incentive leave pay, moral and exemplary damages and attorney’s fees.


Regular employment

Fixed-term employment

Security of tenure

kinds of employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed.In other words, regular status arises from either the nature of work of the employee or the duration of his employment. x x x The contention of the appellate court that the contract was characterized by a valid fixed-period employment is untenable. For such contract to be valid, it should be shown that the fixed period was knowingly and voluntarily agreed upon by the parties. There should have been no force, duress or improper pressure brought to bear upon the employee; neither should there be any other circumstance that vitiates the employee’s consent.. It should satisfactorily appear that the employer and the employee dealt with each other on more or less equal terms with no moral dominance being exercised by the employer over the employee. Moreover, fixed-term employment will not be considered valid where, from the circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee. x x x

While this Court has recognized the validity of fixed-term employment contracts in a number of cases, it has consistently emphasized that when the circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck down for being contrary to law, morals, good customs, public order or public policy. As a regular employee, petitioner isentitled to security of

CA - reversed the NLRC; ruled that petitioner is a fixed-term EE SC - reversed and set aside CA; affirmed NLRC decision; ruled petitioner as regular employee


tenure and can be dismissed only for just cause and after due compliance with procedural due process. Since private respondents did not observe due process in constructively dismissing the petitioner, we hold that there was an illegal dismissal.

2006

RENATO S. GATBONTON vs. NATIONAL LABOR RELATIONS COMMISSION, MAPUA INSTITUTE OF TECHNOLOGY and JOSE CALDERON G.R. NO. 146779 23 January 2006 J. Austria-Martinez

Illegal suspension

Claim for damages

Preventive suspension is a disciplinary measure for the protection of the company’s property pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. However, when it is determined that there is no sufficient basis to justify an employee’s preventive suspension, the latter is entitled to the payment of salaries during the time of preventive suspension. While petitioner’s preventive suspension may have been unjustified, this does not automatically mean that he is entitled to moral or other damages. x xx The records of this case are bereft of any evidence showing that respondent MIT acted in bad faith or in a wanton or fraudulent manner in preventively suspending petitioner, thus, the Labor Arbiter was correct in not awarding any damages in favor of petitioner.

1999-Complaint for illegal suspension 18 June 1999 – LA 30 September 1999 – NLRC 13 December 1999 – NLRC (MR) 10 November 2000 – CA 16 January 2001 – CA (MR) 23 January 2006 - SC

LA declared suspension illegal

& directed respondent MIT

to pay backwages but dismissed

claim for damages

NLRC granted respondent MIT appeal and set

aside LA decision; denied

petitioner’s MR

CA affirmed NLRC decision; denied petitioner’s MR

SC reinstated LA’s

decision


INDUSTRIAL TIMBER CORPORATION, ET AL. VS. VIRGILIO ABABON, ET AL.

G.R. No. 164518 25 January 2006 J. Ynares-Santiago

Dismissal due to authorized cause – closure or cessation of business

Non-compliance with the notice requirement

The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code. x xx A partial or total closure or cessation of operations of establishment or undertaking may either be due to serious business losses or financial reverses or otherwise. Under the first kind, the employer must sufficiently and convincingly prove its allegation of substantial losses, while under the second kind, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of service.

While an employer is under no obligation to conduct hearings before effecting termination of employment due to authorized cause, however, the law requires that it must notify the DOLE and its employees at least one month before the intended date of closure.

x xx Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal process was initiated by the employer’s exercise of his management prerogative, as opposed to a dismissal based on a just cause under Article 282 with the same procedural infirmity where the sanction to be imposed upon the employer should be tempered as the dismissal process

1990 -filed complaint for illegal dismissal, unfair labor practice and damages 20 January 1992 - LA 20 May 1993 – NLRC 21 October 2002 – CA 25 January 2006 - SC

LA upheld the validity of the closure; ordered petitioner to pay separation pay of ½ month for every year of service

NLRC set aside LA decision of the Labor Arbiter; ordered reinstatement of EEs to former positions, and the payment of full back wages, damages and attorney’s fees CA affirmed the 20 May 1993 NLRC decision SC – affirmed the LA decision with modification; petitioner was ordered to pay separation pay equivalent to one month pay or to at least one-half month pay for every year of service, whichever is higher, and

http://sc.judiciary.gov.ph/jurisprudence/2006/jan2006/164518.htm

http://sc.judiciary.gov.ph/jurisprudence/2006/jan2006/164518.htm


was, in effect, initiated by an act imputable to the employee. In light of the factual circumstances of the cases at bar, we deem it wise and reasonable to award P50,000.00 to each employee as nominal damages.

P50,000.00 as nominal damages to each employee.

PREMIER DEVELOPMENT BANKvs.ELSIE ESCUDERO MANTAL G.R. No. 167716 23 March 2006 J. Ynares-Santiago

Illegal dismissal

Just cause for termination; gross negligence; misconduct; loss of trust and confidence

Gross negligence means an absence of that diligence that a reasonably prudent man would use in his own affairs. To constitute a just cause for termination of employment, the neglect of duties must not only be gross by habitual as well. The single or isolated act of negligence does not constitute just cause for the dismissal of the employee. x xx

Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. Fraud and willful neglect of duties imply bad faith of the employee in failing to perform his job to the detriment of the employer and the latter’s business. x xx

2000-2001 filing of complaint for illegal suspension, dismissal, unpaid salary and 13

th month

pay, moral and exemplary damages 04 September 2002 - LA rendered decision

LA – there is illegal suspension and illegal dismissal; ordered respondent’s reinstatement to her former position, with full backwages, half month salary and half month 13

th

month pay, and attorney’s fees.

http://sc.judiciary.gov.ph/jurisprudence/2006/mar2006/G.R.%20No.%20167716.htm



Award in case of unjust dismissal

On the other hand, misconduct is improper or wrongful conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. Under Article 282 of the Labor Code, the misconduct, to be a just cause for termination, must be of such grave and aggravated character, not merely of a trivial or unimportant nature. For serious misconduct to warrant the dismissal of an employee, it (1) must be serious; (2) must relate to the performance of the employee’s duty; and (3) must show that the employee has become unfit to continue working for the employer. x xx An employer may terminate an employee for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. However, the right of an employer to terminate an employee based on loss of confidence must not be exercised arbitrarily and without just cause. To be a valid reason for dismissal, loss of confidence must be genuine. Uncorroborated assertions and accusations by the employer will not suffice, otherwise it will jeopardize the constitutional guarantee of security of tenure of the employee. x xx Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, inclusive of allowances, and other benefits or their monetary equivalent from the time the compensation was withheld up to the time of actual reinstatement. In addition, recovery of attorney’s fees is reasonable under the circumstances. It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights

NLRC reversed LA CA – reinstated LA decision SC – affirmed CA; ordering the reinstatement of respondent to her former position, with full backwages, inclusive of allowances and to the other benefits or their monetary equivalent from the time her compensation was withheld up to her actual reinstatement, plus attorney’s fees


and interest, he is entitled to an award of attorney’s fees

BIG AA MANUFACTURER VS. EUTIQUIO ANTONIO ET. AL. G.R. No. 160854 March 3, 2006 J. Quisumbing

Kinds of EEs

Illegal dismissal

We are constrained to agree with the unanimous ruling of the Court of Appeals, NLRC and Labor Arbiter that respondents are petitioner’sregular employees. Respondents were employed for more than one year and their work as carpenters was necessary or desirable in petitioner’s usual trade or business of manufacturing office furniture. Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer (Magsalin v. National Organization of Working Men, G.R. No. 148492, 9 May 2003, 403 SCRA 199, 204). True, certain forms of employment require the performance of usual or desirable functions and exceed one year but do not necessarily result to regular employment under Article 280 of the Labor Code (Millares v. National Labor Relations Commission, G.R. No. 110524, 29 July 2002, 434 Phil. 524, 538). Some specific exceptions include project or seasonal employment. Yet, in this case, respondents cannot be considered project employees. Petitioner had neither shown that respondents were hired for a specific project the duration of which was determined at the time of their hiring nor identified the specific project or phase thereof for which respondents were hired. The consistent rule is that the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause, failing in which would make the termination illegal, as in this case (Hantex Trading Co., Inc. v. Court of Appeals, G.R. No. 148241, 27 September 2002,

13 January 2000 – filed illegal lay-off and illegal deductions 1 June2000 - LA rendered decision 11 April 2003 - CA

3 March 2006 – SC decision

LA - rendered a decision ordering Big-Aa Manufacturers II, et. al. to pay respondents its separation pay, and backwages. The LA further held that respondents were constructively dismissed when the Implementing Guidelines changed their status from regular employees to project employees. NLRC - modified LA decision It ordered petitioner to reinstate respondents to their former positions or to pay them separation pay in case reinstatement was no longer feasible, with full backwages in either case.NLRC ruled that respondents were regular


Abandonment

Award in case of unjust dismissal

438 Phil. 737, 747). For accusing respondents of abandonment, petitioner must present evidence (1) not only of respondents’ failure to report for work or absence without valid reason, but (2) also of respondents’ clear intention to sever employer-employee relations as manifested by some overt acts. The second element is the more determinative factor. Here, petitioner’s argument in support of its abandonment charge was that respondents may have resented its issuance of the Implementing Guidelines. This, in our view, fails to establish respondents’ intention to abandon their jobs. On the contrary, by filing the complaint for illegal dismissal within two days of their dismissal on January 11, 2000 and by seeking reinstatement in their position paper, respondents manifested their intention against severing their employment relationship with petitioner and abandoning their jobs. It is settled that an employee who forthwith protests his layoff cannot be said to have abandoned his work (Stamford Marketing Corp. v. Julian, G.R. No. 145496, 24 February 2004, 423 SCRA 633, 649). Finally, Article 279 of the Labor Code, provides that a regular employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. If reinstatement is no longer feasible, separation pay equivalent to one month salary for every year of service should be awarded as an alternative.

employees not independent contractors. It further held that petitioner failed to justify its reason for terminating respondents and its failure to comply with the due process requirements. CA– affirmed NLRC decision SC – denied Petition. NLRC is ordered to recomputed the respondents backwages and separation pay, as aforementioned, and execute the payments to respondents.


DOMINADOR S. PEREZ AND CELINE CAMPOS VS. THE MEDICAL CITY GENERALHOSPITAL ET. AL. G.R. No. 150198 March 6, 2006 J. Azcuna

Dismissal; Power of dismissal

Reinstatement

The power to dismiss an employee is a recognized prerogative that is inherent in the employer’s right to freely manage and regulate his business. An employer cannot be expected to retain an employee whose lack of morals, respect and loyalty to his employer or regard for his employer’s rules and appreciation of the dignity and responsibility of his office has so plainly and completely been bared. An employer may not be compelled to continue to employ a person whose continuance in service will patently be inimical to his interest. The dismissal of an employee, in a way, is a measure of self-protection. Nevertheless, whatever acknowledged right the employer has to discipline his employee; it is still subject to reasonable regulation by the State in the exercise of its police power (Philippine-Singapore Transport Services, Inc. v. NLRC, G.R. No. 95449, August 18, 1997, 277 SCRA 506).Thus, it is within the power of this Court not only to scrutinize the basis for dismissal but also to determine if the penalty is commensurate to the offense, notwithstanding the company rules. The reinstatement of petitioners is in line with the social justice mandate of the Constitution. Nevertheless, the Court does not countenance the wrongful act of pilferage but simply maintains that the extreme penalty of dismissal is not justified and a lesser penalty would suffice. Under the facts of this case, suspension would be adequate. Without making any doctrinal pronouncement on the length of the suspension in cases similar to this, the Court holds that considering petitioners’ non-employment since January 2000, they may be deemed to have already served their period of suspension. Consequently, the Labor Arbiter’s order of reinstatement is upheld, with the deletion of the award of backwages, so as not to put a premium on acts of dishonesty.

19January 2000 filed a complaint for illegal dismissal

29 August 2000– LA rendered decision 7 August 2001 – CA decision

6 March 2006 – SC decision

LA –found respondents guilty of illegal dismissal and ordered the reinstatement of petitioners with backwages and without loss of seniority rights. NLRC - reversed LA decision and the complaint was dismissed. CA – affirmed the NLRC decision. SC- Petition is PARTIALLY GRANTED and the assailed Decision dated August 7, 2001 rendered by the CA is SET ASIDE. Petitioners Perez and Campos are ordered reinstated without backwages but without loss of seniority.



MERCURY DRUG CORPORATION VS. ZENAIDA G. SERRANO G.R. No. 160509 March 10, 2006 J. Carpio

Dismissal; loss of trust and confidence;

Dishonesty

Two Notice Rule

Loss of trust and confidence is premised on the fact that the employee holds a position whose functions may only be performed by someone who has the confidence of management. Such employee has a greater duty to management than ordinary workers. The betrayal of this trust is the essence of the offense which is a ground for the employee’s termination (See Caingat v. National Labor Relations Commission, G.R. No. 154308, 10 March 2005, 453 SCRA 142). Serrano’s act of pocketing the payment and handing it to the cashier only after the customer returned to the branch gave Mercury reasonable ground to believe, if not entertain the moral conviction, that Serrano is guilty of dishonesty. This made her unworthy of the trust and confidence reposed on her by Mercury. Further, the evidence for the qualified theft charge, establishing probable cause after the preliminary investigation, constitutes just cause for Serrano’s termination based on loss of trust and confidence. While the trial court eventually dismissed the theft case against Serrano for the prosecution’s failure to prove her guilt beyond reasonable doubt, the evidence against Serrano substantially proved her culpability warranting her dismissal from employment. Serrano’s act of dishonesty did not require criminal conviction. That Serrano eventually remitted the payment to the cashier did not obliterate or mitigate her wrongdoing. In dismissing an employee, the employer must serve the employee two notices: (1) the first to inform the employee of the particular acts or omissions for which the employer seeks his dismissal, and (2) the second to inform the employee of his employer’s decision to terminate him. The first notice must state that the employer seeks dismissal for the act or omission charged against the employee, otherwise, the notice does not comply with the rules.

25 March 1992 Filed for illegal dismissal, unfair labor practice and non-payment of benefits.

31 August 1998 LA rendered decision 31January 2003 – CA decision 10 March 2006 – SC decision

LA –Mercury Drug Corporation, guilty of illegally dismissing Serrano, without lawful cause and due process and thus ordered to reinstate her to her previous position without loss of seniority rights and other privileges with payment of full backwages. The charge of unfair labor practice was dismissed for lack of merit NLRC- reversed LA decision and dismissed the complaint. CA – reversed NLRC decision and upheld the findings of the LA. SC –PARTLY GRANTS the petition. The Court SETS ASIDE the 31 January 2003 Decision and the 21 October 2003 Resolution of the


In Maquiling v. Philippine Tuberculosis Society, Inc.(G.R. No. 143384, 4 February 2005, 450 SCRA 465), the Court held that the first notice must inform outright the employee that an investigation will be conducted on the charges specified in such notice which, if proven, will result in the employee’s dismissal. In Agabon v. NLRC, the Court held that if the dismissal was for cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual. However, Mercury’s violation of Serrano’s right to statutory due process warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the Court, taking into account the relevant circumstances. Accordingly, the Court deems the amount of P30,000 sufficient as nominal damages, pursuant to prevailing jurisprudence.

Court of Appeals in CA-G.R. SP No. 59152. The Court upholds respondent Zenaida G. Serrano’s dismissal from employment by petitioner Mercury Drug Corporation on the ground of loss of trust and confidence. However, the Court ORDERS petitioner Mercury Drug Corporation to pay respondent Zenaida G. Serrano the amount of P30,000 as nominal damages for failure to comply fully with the notice requirement as part of due process.

RONALDO B. CASIMIRO et. al. vs STERN REAL ESTATE

Causes of Termination Article 283 of the Labor Code of the Philippines authorizes retrenchment as one of the valid causes to dismiss

Filed a complaint for illegaldismissal before

LA - ruled in favor of the retrenched


INC.REMBRANDT HOTEL and/or GRACE KRISTIN MEEHAN (General Manager), and ERIC SINGSON (Owner) G.R. No. 162233 March 10, 2006 J. Callejo, Sr.

(Authorized cause)

Retrenchment

Quitclaim

employees as a measure to avoid or minimize business losses. Retrenchment is the “termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation.” Simply put, it is a reduction in manpower, a measure utilized by an employer to minimize losses incurred in the operation of its business. It is a management prerogative consistently recognized and affirmed by this Court. The Court also finds that the quitclaims executed by the individual petitioners in this case are valid and binding. Indeed, quitclaims executed by employees are commonly frowned upon as being contrary to public policy, and where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or where the terms of settlement are unconscionable on their faces, the law will step in to annul the questionable transactions. (Mindoro Lumber and Hardware v. Bacay, G.R. No. 158753, June 8, 2005, 459 SCRA 714, 722, citing Bogo-Medellin Sugarcane Planters Association, Inc. v. NLRC, 296 SCRA 108 (1998). However, when such quitclaim was made voluntarily and there is no evidence that the employer was guilty of fraud or intimidation in obtaining such waiver, as in this case, the validity of the quitclaim must be upheld.

the NLRC. 6 March 2000 – LA decision 15 January 2001 - NLRC decision 31 July 2003 – CA decision 10 March 2006 SC decision

employees.

NLRC – reversed LA decision and dismissed the complaint for lack of merit. CA –affirmed NLRC decision SC – affirmed CA decision

AGRIPINO V. MOLINA VS PACIFIC PLANS, INC. G.R. No. 165476 March 10, 2006

Just cause for termination – Dismissal; Serious misconduct

Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action; a forbidden act, a dereliction of duty, unlawful in character and implies wrongful intent and not mere error of judgment. The misconduct to be serious

2001filed a complaint for illegaldismissal and illegal suspension with claim for monetary benefits.

LA-dismissed the complaint and the counterclaims for lack of merit. There was a lawful


J. Callejo, Sr.

Loss of trust and confidence

Employees occupying a position of trust and confidence owe a higher duty than those performing low-level tasks. A slight assistance to a direct competitor could constitute a breach of the employee’s duty of loyalty.

must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however, serious, must nevertheless, be in connection with the employee’s work to constitute just cause for his separation(Samson v. National Labor Relations Commission, 386 Phil. 669, 682 (2000). The loss of trust and confidence, in turn, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently(Diamond Motors Corporation v. Court of Appeals, supra note 65, at 50-51). As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. (Gonzales v. National Labor Relations Commission, G.R. No. 131653, March 26, 2001, 355 SCRA 195, 208).The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal (Asia Pacific Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, 791). Loyalty of an employee to his employer consists of certain very basic and common sense obligations. An employee must not, while employed, act contrary to the employer’s interest (Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285, 770 A.2d 1158 (2001). The scope of the duty of loyalty that an employee owes to his employer may vary with the nature of their relationship. Employees occupying a position of trust and confidence owe a higher duty than those performing low-level tasks. Assisting an employee’s competitor can even constitute a breach of the employee’s duty of loyalty. An employee’s self-dealing may breach that duty (Platinum Management, Inc. v. Dahms, 285 N.J. Super 276, 666 A.2d 1028 (1995).

18 November 2002 –LA decision 19 November 2003 NLRC affirmed LA decision

13 August 2004 – CA decision 10 March 2006 SC decision

dismissal.

NLRC – reversed LA decision and ordered for immediate reinstatement without demotionin rank and salary; and payment of backwages. CA – reversed NLRC decision and reinstates the decision of the LA. SC - The August 13, 2004 Decision and September 27, 2004 Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The decision and resolution of the NLRC are reinstated.


However, when competition is indirect or minimal, the employer may be required to show that the employee received substantial assistance from the competitor. If an employee usurped a corporate opportunity or secretly profited from a competitive activity, the employer may receive the value of the lost opportunity or the secret profit.

EDNA ABAD ET AL VS.ROSELLE CINEMA, ET AL. G.R. No. 141371 March 24, 2006 J. Austria-Martinez

Just cause for termination – Dismissal; Abandonment;

Voluntarily terminated from their work

Abandonment, involves termination of an employee by the employer (People’s Security, Inc. v. National Labor Relations Commission, G.R. No. 96451, September 8, 1993, 226 SCRA 146, 154). The truth of the matter is that before respondent could dismiss petitioners on ground of abandonment, petitioners filed with the LA their complaint for illegal dismissal. In the present case, it must be stressed that there is no evidence showing that respondents were actually dismissed by petitioners, let alone, on ground of abandonment. Neither is there a showing that petitioners formally resigned from work. What is actually involved herein is the informal voluntary termination of employment by the petitioners’ employees. Given that petitioners were not illegally dismissed, but voluntarily terminated their work, therefore, they are not entitled to an award of separation pay and backwages(Sentinel Security Agency, Inc. v. National Labor Relations Commission, 356 Phil. 434, 447 (1998). Also, petitioners Escanillas and Martinez are not entitled to any salary from January 16-31, 1997 since they have already left respondents’ employ by then. With regard to petitioner Abad, the Court sustains the NLRC’s award of her salary for said period in the amount of P1,710.19, as it was shown that she resigned only on January 31, 1997.

Filed complaints for illegal dismissal, underpayment, non-payment of overtime pay, premium for holiday, premium pay for rest day, holiday pay, service incentive leave, night shift differentials, separation pay, damages, and attorney’s fees. 17 April 1998 – LA decision 24 December 1998 - NLRC decision 30 September 1999 – CA decision 24 March 2006 – SC decision

LA–ruled that petitioners’ were not illegally dismissed. LA denied their money claims.

NLRC – reversed LA decision CA – reversed NLRC decision and reinstated LA decision. SC – petition is PARTIALLY GRANTED. The Court of Appeals Decision dated September 30, 1999 is AFFIRMED insofar only as it reinstated the Labor Arbiter’s finding that there was no illegal dismissal. However, the NLRC’s Decision dated December


24, 1998 granting monetary awards to petitioners Edna Abad, Joseph Martinez, and EliseoEscanillas, Jr., is AFFIRMED but MODIFIED.

MARICALUM MINING CORPORATION VSANTONIO DECORION G.R. No. 158637 April 12, 2006 J. Tinga

Preventive suspension The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or his co-workers. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker. In this case, Decorion was suspended only because he failed to attend a meeting called by his supervisor. There is no evidence to indicate that his failure to attend the meeting prejudiced his employer or that his presence in the company’s premises posed a serious threat to his employer and co-workers. The preventive suspension was clearly unjustified (Rural Bank of Baao, Inc. v. NLRC, G.R. No. 90527, March 23, 1992, 207 SCRA 444).Decorion’s suspension persisted beyond the 30-day period allowed by the Implementing Rules.

23 July 1996 filed complaints for illegal dismissal and paymentfor moral and exemplary damages and atty.’s fees. 26 November 1998 - LA decision 12 April 2006 SC decision

LA-finding Decorion’s dismissal illegal and ordering his reinstatement with payment of backwages and attorney’s fees.

NLRC – reversedLA decision and dismissed the complaint. CA – reinstated LA decision. SC – affirmed CA decision

STAR PAPER CORPORATION ET. AL. VS RONALDO D. SIMBOL ET. AL.

Dismissal due to violation of company policy “marriage with co-worker ;Occupational qualification

These courts also find the no-spouse employment policy invalid for failure of the employer to present any evidence of business necessity other than the general perception

Filed constructive dismissal against the employer.

LA-dismissed the complaint for lack of merit.


G.R. No. 164774 April 12, 2006 J. Puno

requirements that spouses in the same workplace might adversely affect the business. They hold that the absence of such a bona fide occupational qualification invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office. Thus, they rule that unless the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an employer may not discriminate against an employee based on the identity of the employee’s spouse. This is known as the bona fide occupational qualification exception. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice. To justify a bona fide occupational qualification, the employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how this detriment will happen in the case of WilfredaComia, then a Production Helper in the Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven

31 May 2002 – LA decision.

11 January 2002 - NLRC decision 3 August 2004 – CA decision 12 April 2006 - SC decision

NLRC – affirmed LA decision CA – reversing NLRC’s decision SC – Affirmed CA decision.


presumption of a perceived danger at the expense of an employee’s right to security of tenure.

TOWER INDUSTRIAL SALES AND JOHN KENNETH OCAMPOVS COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION (NLRC, THIRD DIVISION) AND RUFOPAMALO, JR. G.R. No. 165727 April 19, 2006 J. Chico-Nazario

Illegal dismissal It is well-encrypted in our jurisprudence that the employer has the burden of proving that the dismissal is for just cause, and failure to do so would necessarily mean that the dismissal was unjustified and, therefore, illegal. It is the employer who must prove its validity, and not the employee who must prove its invalidity. To allow an employer to dismiss an employee based on mere allegations and generalities would place the employee in a dangerous situation. He would be at the mercy of his employer and the right to security of tenure, which this Court is bound to protect, would be unduly emasculated (Sanyo Travel Corporation v. National Labor Relations Commission, 345 Phil. 346, 357 (1997).

12 February 2002, private respondent filed a Complaint with the Labor Arbiter for unfair labor practice and claimed overtime pay, premium for holiday pay and service incentive leave pay. 18 April 2002, he filed an Amended Complaint for Illegal Dismissal on 9 March 2002 and claimed for overtime pay, premium for holiday pay and separation pay. In his position paper, he prayed for 13th month pay, service incentive leave pay, overtime pay and legal holiday pay in addition to the charge of illegal dismissal. 29 November 2002 –LA decision 28 November2003 - NLRC decision 19April 2006 SC decision

LA – rendered a decision that Pamalowas validly dismissed.

NLRC - reversed the Decision of the Labor Arbiter. Respondent Tower Industries Sales is ordered to reinstate the complainant and to pay him full backwages computed from his date of dismissal on March 14, 2002 up to his reinstatement. CA – affirmed NLRC’s decision. SC – affirmedCA decision.

BERNABE FALCO, et al. vs. MERCURY FREIGHT INT'L INC., et al.

Just cause for termination – Serious misconduct; willful disobedience by the employee of the lawful orders of his employer

In Philippine Airlines, Inc. v. National Labor Relations Commission (4

th Division), we ruled that pilferage by an

employee is a serious offense and a valid ground for dismissal.

1999 filed a complaint for illegal suspension/ dismissal,

LA – valid dismissal; ordered respondent company to pay


G.R. No. 153824 9 August 2006 J. Sandoval-Gutierrez

x x x

In Manila Trading & Supply Co. v. Zulueta, we ruled that an employer cannot legally be compelled to continue with the employment of a person who is guilty of misfeasance or malfeasance towards his employer and whose continuance in employment is patently inimical to the latter’s interests. For the law, in protecting the rights of labor, authorizes neither the oppression nor the self-destruction of the employer.

underpayment and nonpayment of wages and 13

th

month pay

20 February 2000-LA

NLRC affirmed LA decision

25 March 2002 – CA affirmed NLRC decision

petitioners’ unpaid salaries

NLRC – affirmed LA decision CA – affirmed NLRC

SC – affirmed CA decision in toto

SALVADOR BUNAGAN vs. SENTINELWATCHMAN& PROTECTIVE AGENCY, INC. G.R. No. 144376 September 13, 2006 J. Puno

Appeal from the Decision of the Labor Arbiter

Reinstatement

Under the law, an appeal from the decision of the Labor Arbiter is perfected upon filing of a memorandum of appeal and payment of the appeal fee within ten (10) calendar days from receipt of the questioned decision, award or order of the Labor Arbiter. In case of a judgment involving a monetary award, the appellant is also required to post a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from.The Rules of Procedure of the NLRC prohibits the filing of a motion for extension of time to perfect the appeal, and the filing of a notice of appeal without the memorandum of appeal will not stall the running of the period to appeal.

Under the law, an illegally dismissed employee is entitled to reinstatement and backwages, and if reinstatement is no longer possible, he may be given separation pay in lieu of reinstatement.

LA decided the case October 1995; NLRC February 1996; NLRC decided MR July 1996; CA (undated); SC September 2006

NLRC reversed LA; CA set aside and annulled NLRC; SC reversed CA

ASIAN INTERNATIONAL MANPOWER SERVICES, INC. (AIMS) vs. COURT OF APPEALS and ANICETA LACERNA

Causes for termination In termination cases involving Filipino workers recruited for overseas employment, the burden of proving just or authorized cause for termination rests with the foreign based employer/principal and the local based entity which recruited the

LA decided the case June 2001; NLRC June 2002; CA May 2005; SC October 2006

NLRC affirmed LA; CA reversed NLRC; SC affirmed CA


G.R. No. 169652 October 9, 2006 J. YNARES-SANTIAGO

worker both being solidarily liable for liabilities arising from the illegal dismissal of the worker.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less.

PEÑARANDA vs. BAGANGA PLYWOOD CORP. G.R. 159577 03 May 2006 CJ. Panganiban

Managerial Employees

Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of the employees, including entitlement to overtime pay and premium pay for working on rest days. Under this provision, managerial employees are “those whose primary duty consists of the management ofthe establishment in which they are employed or of a department or subdivision.” The Implementing Rules of the Labor Code state that the managerial employees are those who meet the following conditions: “(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; (2) They customarily and regularly direct the work of two or more employees therein; (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.” The Court disagrees with the NLRC’s finding that petitioner

Date of Filing: May 2001 Date of Decision – Labor Arbiter: Date of Decision – NLRC: 08 May 2002 Date of Decision – CA: 04 July 2003 Date of Decision – SC: 03 May 2006

Labor Arbiter ruled there was no illegal dismissal; petitioner entitled to overtime pay, premium pay for working on rest days and attorney’s fees.

NLRC reversed the Labor Arbiter’s decision awarding overtime pay and premium pay, petitioner not entitled thereto being a managerial employee.


Managerial staff – Petitioner was found not a managerial employee but a member of the managerial staff

was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled ot the provisions of law on labor standards. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: “(1) The primary duty consists of the performance of work directly related to management policies of the employer; (2) Customarily and regularly exercise discretion and independenet judgment; (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.”

CA affirmed the Decision of the NLRC.

SC affirmed the CA Decision.

EASTERN TELECOMMUNICATIONS PHILS. INC vs DIAMSE G.R. 169299 16 June 2006 J. Ynares-Santiago

Illegal Dismissal – burden of proof.

Loss of trust and confidence – as a valid ground for dismissal must be based on wilful breach and founded on clearly established facts; employer has burden of proof.

Time honored is the rule that in dismissal cases, the burden of proof is on the employer to show that the employee was dismissed for a valid and just cause. However, to be a valid ground for dismissal, the loss of trust and confidence must be based on a wilful breach and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust and confidence must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion, otherwise, the employee would eternally remain

Date of Filing: Date of Decision – Labor Arbiter: 30 August 2002 Date of Decision – NLRC: 24 July 2003 Date of Decision – CA: 31 May 2005 10 August 2005 (MR) Date of Decision – SC: 16 June 2006

Labor Arbiter found ETPI liable for illegal dismissal.

NLRC reversed the Decision of the Labor Arbiter.

CA reversed the Decision of the NLRC.

SC affirmed the Decision of the


Mere delay in liquidation of cash advance – cannot sustain a finding of loss of trust and confidence.

Violation of right to security of tenure – presume employee misappropriated funds without established proof.

Illegal Dismissal – reinstatement; strained relations rule.

at the mercy of the employer. The employer, thus, carries the burden of clearly and convincingly establishing the facts upon which loss of confidence in the employee may be made to rest. The mere delay in the liquidation of the cash advance cannot sustain a finding of loss of trust and confidence. ETPI merely suspected, without supporting proof, that Diamse misappropriated the funds. This certainly does not meet the requirement that loss of trust and confidence must be based on a willful breach and founded on clearly established facts. By itself, the delay in the liquidation of the cash advance does not clearly and convincingly establish that it was sought “intentionally, knowingly and purposely, without justifiable excuse” in order to provide a reasonable basis with which to conclude that the balance of the cash advance was misappropriated. Undoubtedly, it cannot be presumed that Diamse misappropriated the funds because to do so would do violence to her right to security of tenure and the well-settled rule that the burden of proof is on the employer to establish the ground for dismissal. Suspicion has never been a valid ground for dismissal and the employee’s fate cannot, in justice, be hinged upon conjectures and surmises. An employee who is illegally dismissed is entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time the employee’s compensation was withheld up to the time of the employee’s actual reinstatement. However, the filing of this labor case and the attendant litigation has caused strained relations between Diamse and ETPI. The latter should, thus, not be compelled to reinstate Diamse who is tasked to handle delicate matters concerning the property and money of

CA with modification that the case be remanded to the LA for the computation of backwages, inclusive of allowances and other benefits or their monetary equivalent; and separation pay in lieu of reinstatement.


ETPI. Besides, Diamse has impliedly agreed to the payment of separation pay in lieu of reinstatement when she did not take issue with the ruling of the Court of Appeals that this case has caused strained relations between the parties. In fact, she moved for the execution of the Decision of the Court of Appeals dated May 31, 2005.

PETROLEUM SHIPPING LIMITED vs NATIONAL LABOR RELATIONS COMMISSION G.R. 148130 16 June 2006 J. Carpio

Employer-employee relationship - Seafarers are contractual employees; employment of seafarers are for a fixed period only

The Court squarely passed upon the issue in Millares v. NLRC where one of the issues raised was whether seafarers are regular or contractual employees whose employment are terminated everytime their contracts of employment expire. The Court explained: “[I]t is clear that seafarers are considered contractual employees. They can not be considered as regular employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. We need not depart from the rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers.” “In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard Employment Contract governing the employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. And in no case should the contract


Cannot be considered as a regular employee notwithstanding work performed is necessary and desirable.

PD 851 (13th

Month Pay Law) does not apply to seafarers.

of seamen be longer than 12 months. It reads: Section C. Duration of Contract The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew Contract. Any extension of the Contract period shall be subject to the mutual consent of the parties. Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only. Constrained by the nature of their employment which is quite peculiar and unique initself, it is for the mutual interest of both the seafarer and the employer why the employment status must be contractual only or for a certain period of time. Seafarers spend most of their time at sea and understandably, they can not stay for a long and an indefinite period of time at sea. Limited access to shore society during the employment will have an adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during the COE is a reality that necessitates the limitation of its period”. The Court reiterated the Millares ruling in Gu-Miro v. Adorable where it held that a radio officer on board a vessel cannot be considered as a regular employee notwithstanding that the work he performs is necessary and desirable in the business of the company. PD 851 does not apply to seafarers. The WHEREAS clauses of PD 851 provides: WHEREAS, it is necessary to further protect the level of real wages from ravages of world-wide inflation; WHEREAS, there has been no increase in the legal minimum wage rates since 1970; WHEREAS, the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New


Contract of Enlistment must provide for 13

th Month Pay;

Separation Pay

Year. PD 851 contemplates the situation of land-based workers, and not of seafarers who generally earn more than domestic land-based workers. Tanchico’s employment is governed by his Contract of Enlistment (“Contract”). The Contract has been approved by the POEA in accordance with Title I, Book One of the Labor Code and the POEA Rules Governing Employment. The coverage of the Contract includes Compensation, Overtime, Sundays and Holidays, Vacations, Living Allowance, Sickness, Injury and Death, Transportation and Travel Expense, Subsistence and Living Quarters. It does not provide for the payment of 13

th month pay. The Contract of Employment, which is the

standard employment contract of the POEA, likewise does not provide for the payment of 13

th month pay.

In Coyoca v. NLRC which involves a claim for separation pay, this Court held: “Furthermore, petitioner’s contract did not provide for separation benefits. In this connection, it is important to note that neither does POEA standard employment contract for Filipino seamen provide for such benefits. As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing Overseas Employment and the said Rules do not provide for separation or termination pay. x x x” Hence, in the absence of any provision in his Contract governing the payment of 13

th month pay, Tanchico is not

entitled to the benefit.

PHILIPPINE DIAMOND HOTEL AND RESORT, INC. vs MANILA DIAMOND HOTEL EMPLOYEES UNION

Dismissal of union officers for staging and participating in illegal strike.

As the appellate court correctly held, the union officers should be dismissed for staging and participating in the illegal strike, following paragraph 3, Article 264(a) of the Labor Code which provides that “. . .[a]ny union officer who knowingly participates in an illegal


G.R. 158075 30 June 2006 J. Carpio Morales

Ordinary striking worker cannot be dismissed for mere participation in an illegal strike.

Award of backwages – in cases of ULP strikes, rests on court’s discretion and only in exceptional cases.

“No backwages rule”; Exceptions

strike and any worker or union officer who knowingly participates in the commission of illegal acts during strike may be declared to have lost his employment status . . .” An ordinary striking worker cannot, thus be dismissed for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike, unlike a union officer who may be dismissed by mere knowingly participating in an illegal strike and/or committing an illegal act during a strike. Thus, J.P. Heilbronn Co. v. National Labor Union, instructs: When in case of strikes, and according to the C[ourt of] I[ndustrial] R[elations] even if the strike is legal, strikers may not collect their wages during the days they did not go to work, for the same reasons if not more, laborers who voluntarily absent themselves from work to attend the hearing of a case in which they seek to prove and establish their demands against the company, the legality and propriety of which demands is not yet known, should lose their pay during the period of such absence from work. The age-old rule governing the relation between labor and capital or management and employee is that of a “fair day’s wage for a fair day’s labor.” If there is no work performed by the employee there can be no wage or pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer’s time. (Emphasis and underscoring supplied) Jurisprudential law, however, recognizes several exceptions to the “no backwages rule,” to wit: when the employees were illegally locked to thus compel them to stage a strike; when the employer is guilty of the grossest form of ULP; when the employer committed discrimination in the rehiring of strikers refusing to readmit those against whom


there were pending criminal cases while admitting nonstrikers who were also criminally charged in court; or when the workers who staged a voluntary ULP strike offered to return to work unconditionally but the employer refused to reinstate them

GENUINO ICE COMPANY, INC vs MAGPANTAY G.R. 147790 27 June 2006 J. Austria-Martinez

Termination of employment by employer – Art. 282 Just Causes; Burden of proof rests on the employer.

Neglect of duty as ground for dismissal.

Willful disobedience or

Under Article 282 of the Labor Code, as amended, an employer may terminate an employment for any of the following causes: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and, (e) other causes analogous to the foregoing. The employer has the burden of proving that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. On the other hand, fraud and willful neglect of duties imply bad faith on the part of the employee in failing to perform his job to the detriment of the employer and the latter’s business. Thus, the single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Willful disobedience, or insubordination as otherwise branded in this case, as a just cause for dismissal of an employee, necessitates the concurrence of at least two requisites: (1) the employee's assailed conduct must have

Date of Filing: 18 November 1996 Date of Decision – Labor Arbiter: 14 August 1998 Date of Decision – NLRC: 30 June 1999 31 August 1999 (MR) Date of Decision – CA: 03 August 2000 16 March 2001 (MR) Date of Decision – SC: 27 June 2006

Labor Arbiter found there is valid cause to dismiss complainant.

NLRC affirmed the Decision of LA.

CA reversed the Decision of the NLRC and found there is illegal dismissal; ordered to pay separation pay and full backwages; remanded to LA for computation.

SC reversed the CA Decision and reinstated the NLRC Decision.


insubordination as just cause for dismissal

Management Prerogative.

Transfer of employee.

Termination; Twin Notice

been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. In Coca-Cola Bottlers, Phils. Inc v. Kapisanan ng Malayang Manngagawa sa Coca-Cola-FFW, it was held that an employer enjoys a wide latitude of discretion in the promulgation of policies, rules and regulations on work-related activities of the employees so long as they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements. Company policies and regulations are generally valid and binding on the parties and must be complied with until finally revised or amended, unilaterally or preferably through negotiation, by competent authority. For misconduct or improper behavior to be a just cause for dismissal, the same must be related to the performance of the employee’s duties and must show that he has become unfit to continue working for the employer. The rule is that the transfer of an employee ordinarily lies within the ambit of the employer’s prerogatives. The employer exercises the prerogative to transfer an employee for valid reasons and according to the requirement of its business, provided the transfer does not result in demotion in rank or diminution of the employee’s salary, benefits and other privileges. Section 2 (d), Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code provides for the standards of due process, which shall be substantially observed, to wit: For termination of employment based on just causes as defined in Article 282 of the Labor Code:


Rule; Due Process

(i) A written notice served on the employee specifying the ground or grounds of termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (iii) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. Simply stated, the employer must furnish the employee a written notice containing a statement of the cause for termination and to afford said employee ample opportunity to be heard and defend himself with the assistance of his representative, if he so desires, and the employee must be notified in writing of the decision dismissing him, stating clearly the reasons therefor.

DR. DANILO T. TING and MRS. ELENA TING, doing business under the name and style of GST FISHING ENTERPRISES vs. HON. COURT OF APPEALS and PILARDO ISMAEL G.R. No. 146174 12 July 2006 CHICO-NAZARIO, J.

Termination

Due process

Termination must comply foremost with the substantive aspect prescribed by the law. Article 279

[ of the Labor

Code makes it clear that, in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by law. We have said that, in an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee is for a valid cause. The cardinal rule is that an employee sought to be dismissed must be served two written notices before termination of his employment. The first notice is to apprise the employee of the particular acts or omissions

15 February 1999 - Executive Labor Arbiter

20 May 1999 - National Labor Relations Commission (NLRC)

31 August 1999 NLRC denied MR

5 June 2000 - Court of Appeals

17 November 2000 - Court of Appeals Resolution denying

LA declared dismissal illegal &

directed respondent to pay

separation and backwages, as well as unpaid

wages and commissions

NLRC declared

that dismissal was for just cause

http://sc.judiciary.gov.ph/jurisprudence/2006/july2006/G.R.%20No.%20146174.htm#_ftn42


by reason of which his dismissal has been decided upon; and the second notice is to inform the employee of the employer’s decision to dismiss him. We do not think that management prerogative can ever be used as a cloak to render nugatory the constitutional mandate of security of tenure. Management prerogative cannot be so exercised with arbitrariness and in defiance of the due process of the law.

MR

12 July 2006 - SC hence no basis for

separation pay and/or

backwages, but only to an

indemnity for violating due

process of law

The CA found that private

respondent’s dismissal was

without observance of due

process of law, denied

petitioner’s MR

SC affirmed CA’s decision

FELIX M. CRUZ, JR., vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION AND CITYTRUST BANKING CORPORATION G.R. NO. 148544 12July 2006 J. AUSTRIA-MARTINEZ

Dismissal

Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidenceor that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is

27 January 1998 – NLRC , denied MR

27 April 2001– CA, denied MR

12 July 2006 - SC

LA ordered reinstatement to former position without loss of seniority rights with full backwages. NLRC set aside LA decision and went on dismissing the case for lack of merit CA sustained the


Due process

penalized. It is well settled that the basic requirement of notice and hearing in termination cases is for the employer to inform the employee of the specific charges against him and to hear his side and defenses. This does not, however, mean a full adversarial proceeding. As to the requirement of notice, the Labor Code provides that before an employee can be validly dismissed, the employer is required to furnish the employee with two (2) written notices: (a) a written notice containing a statement of the cause for termination to afford the employee ample opportunity to be heard and defend himself with the assistance of his representative, if he so desires; and, (b) if the employer decides to terminate the services of the employee, the employer must notify him in writing of the decision to dismiss him, stating clearly

the reasons therefor.

NLRC and held that the act constituted a willful breach of his employer’s trust and confidence which justifies his termination from employment; that petitioner’s dismissal from employment was the result of a thorough investigation and hearing where he was given the opportunity to explain his side. SC dismissed petition for lack of merit.

SKIPPERS UNITED PACIFIC, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, GERVACIO ROSAROSO, and COURT OF APPEALS, G.R. NO. 148893 12July 2006 J. AUSTRIA-MARTINEZ

Illegal Dismissal The rule in labor cases is that the employer has the burden of proving that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal.

[17] The two-fold

requirements for a valid dismissal are as follows: (1) dismissal must be for a cause provided for in the Labor Code, which is substantive; and (2) the observance of notice and hearing prior to the employee’s dismissal, which is procedural.

18 August 1997 - Complaint for illegal dismissal and monetary claims

11 August 1998 – LA

26 February 1999 – NLRC, denied MR

7 May 2001 - CA, denied MR

LA found that respondent was illegally dismissed NLRC affirmed the LA’s Decision CA dismissed the petition and affirmed in toto the NLRC Decision SC affirmed CA

L.C. ORDOÑEZ CONSTRUCTION, A.C. ORDOÑEZ CONSTRUCTION,

Illegal dismissal The respondents’ immediate filing of a complaint for illegal dismissal unambiguously shows that respondents had no

5 February 1993 - Complaint for illegal

LA ruled that petitioners were



L.C. ORDOÑEZ GRAVEL and SAND and TRUCKING, and/or LAMBERTO ORDOÑEZ vs. IMELDA NICDAO, RODRIGO SICAT and ROMEO BAUTISTA G.R. No. 149669 27 July 2006 J. AUSTRIA-MARTINEZ

intention whatsoever to abandon their employment. Human experience tells us that no employee in his right mind would go through the trouble of filing a case unless the employer had indeed terminated the

services of the employee. The Court reiterated the long-

standing rule that the filing of the complaint for illegal dismissal negates the allegation of abandonment.

dismissal

21 June1994 – LA

15 June1995 – NLRC, denied MR

13 March 2001 –CA, denied MR

27 July 2006 – SC

illegally dismissed NLRC reversed and set aside the LA’s decision CA reinstated LA decision with modification SC affirmed CA decision with modification

GSP MANUFACTURING CORPORATION and CHARO APACIBLE vs. PAULINA CABANBAN G.R. No. 150454 July 14, 2006 CORONA, J.

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

16 June 1992 - Ccomplaint illegal dismissal

7 May 1993 – LA decision

10 August 1995 - NLRC

LA found respondents guilty of illegal dismissal NLRC issued a resolution affirming in toto the decision of the LA CA affirmed LA Decision SC affirmed CA

MARIO SUAN, ET AL. vs.COURT OF APPEALS, PASCUAL LINER, INC., MANUEL PASCUAL, JR., RODOLFO PASCUAL, ROLANDO PASCUAL, ERLINDA SORIANO, and MELY BAUTISTA G.R. No. 150819 July 27, 2006 TINGA, J.

Illegal Dismissal And if they were dismissed for a just cause such as

abandonment of work, there should be a definitive ruling

that the procedural safeguards have been complied

with. Specifically, there should be a showing that

petitioners were furnished the required two (2) written

notices at their last known addresses, which could have

apprised them of the particular acts or omissions for which

their dismissal is sought and informed them of PASVIL’s

8 March 1999 – Complaint for illegal dismissal

24 October 2000 – NLRC denied MR

27 july 2006 - SC

LA and NLRC ruled that there was no illegal dismissal SC REMANDED to the CA for further proceedings


decision to dismiss them. This requirement is not a mere

formality that may be dispensed with at will. Its disregard is

a matter of serious concern since it constitutes a safeguard

of the highest order in response to man’s innate sense of

justice.

On the other hand, if their termination was for an

authorized cause such as the cessation of PASVIL’s

operations, as the NLRC has also seemingly held, the

burden of proving that such cessation is bona fide falls upon

PASVIL. In addition, the requirements that it (a) serve a

written notice on the workers and on the Department of

Labor and Employment at least one (1) month before the

effective date of the closure, and (b) pay its dismissed

employees separation pay equivalent to one (1) month pay

or at least one-half (1/2) month pay for every year of

service, whichever is higher, with a fraction of at least six (6)

months to be considered one (1) whole year, should also be

shown to have been complied with.

INTERCONTINENTAL BROADCASTING CORPORATION vs. REYNALDO BENEDICTO, deceased, substituted by his surviving spouse LOURDES V. BENEDICTO, and children, namely: REYNALDO V. BENEDICTO, SHIRLEY V. BENEDICTO-TAN, EDGAR V. BENEDICTO and LILIBETH V. BENEDICTO-DE LA

Illegal Dismissal These factual findings of the NLRC, confirmed by the CA, are binding on us since they are supported by substantial evidence. Petitioner, aside from merely stating that Benedicto’s appointment was unauthorized,

[36] did not

extensively deal with the issue of whether Benedicto was in fact its employee. Besides, it is estopped from denying such fact considering its admission that its former President, Tomas Gomez III, wrote him a letter of termination on October 11, 1994. Petitioner, furthermore, never contested the finding of illegal dismissal. Accordingly, there are no

3 December 1996 - Compliant for illegal dismissal and damages

17 August 1998 – LA Decision

5 March 1999 – NLRC decision

20 Juky 2006 - SC

LA found that there was indeed illegally dismissal NLRC dismissed the appeal CA affirmed the NLRC’s decision.



VICTORIA G.R. No. 152843 July 20, 2006 CORONA, J.

strong reasons for us to again delve into the facts. SC reversed and remanded to the LA for re-computation of backwages and commissions

C.F. SHARP & CO., INC., vs. RENATO ZIALCITA G.R. No. 157619 July 17, 2006 QUISUMBING, J.

Illegal Dismissal As Assistant Crewing Manager, the respondent occupied a

position of responsibility, imbued with trust and

confidence. To be a valid ground for dismissal, however,

loss of trust and confidence must be based on a willful

breach of trust and founded on clearly established facts. A

breach is willful if it is done intentionally, knowingly and

purposely, without justifiable excuse, as distinguished from

an act done carelessly, thoughtlessly, heedlessly or

inadvertently. It must rest on substantial grounds and not

on the employer’s arbitrariness, whims, caprices or

suspicion. Further, the act complained of must be work-

related and shows that the employee concerned is unfit to

continue working for the employer. It must be premised on

the fact that the employee concerned is invested with

delicate matters, such as the handling or care and

protection of the property and assets of the employer.

It bears stressing that in termination cases, the employer

bears the onus of proving that the dismissal was for just

cause. Indeed, a condemnation of dishonesty and disloyalty

cannot arise from suspicions spawned by speculative

inferences. Because of its subjective nature, this Court has

been strictly scrutinizing the allegations and the evidence in

cases of dismissal based on loss of trust and confidence

because they can easily be concocted by an abusive

employer. Thus, when the breach of trust or loss of

confidence alleged is not borne by clearly established facts,

February 22, 1996 – LA decision

October 30, 1996 –NLRC decision to remand

September 29, 2000 - NLRC reversed the LA’s decision

LA ordered for reinstatement NLRC vacated the decision to be remand to LA LA dismissed for lack of merit NLRC reversed the LA’s decision CA affirmed the NLRC SC affirmed


as in this case, such dismissal on the cited grounds cannot

be allowed. The fact that respondent is a managerial

employee does not by itself exclude him from the

protection of the constitutional guarantee of security of

tenure.

2005

PNOC-EDC, ET.AL. vs. ABELLA G.R. No. 153904 17 January 2005 J. Chico-Nazario

Reinstatement

Waiver/Compromise Agreement

Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position more or less of a similar nature as that previously occupied by the employee.

An employee who is separated from his employment on a false or nonexistent cause is entitled to be reinstated to his former position because the separation is illegal. If the position is no longer available for any other valid and justifiable reason, however, the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. The law itself can not exact compliance with what is impossible. Ad imposible tenetur. The employer’s reedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights.

The waiver, executed by the private respondent and the petitioner company in which mutual concessions were given and mutual benefits were derived, was approved and considered by the NLRC in dismissing the appeal of the petitioners. Conformably, the Compromise Agreement approved by the proper authority became the decision in the instant case.

If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned or conveniently forgotten, simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law

PNOC-EDC, ET.AL. vs. ABELLA G.R. No. 153904 17 January 2005 J. Chico-Nazario

Reinstatement

Waiver/Compromise Agreement



will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.

Management has wide latitude to regulate, according to his own discretion and judgment, all aspects of employment, to the requirements of its business. The scope and limits of the exercise of management prerogative, however, should attain a state of equilibrium when pitted against the constitutional right of labor to security of tenure.

Of relevant significance in the case at bar is the right of the employer to transfer employees in their work station. We have previously held that it is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications, aptitudes and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit for the company. This right flows from ownership and from the established rule that labor (laws) do not authorize the substitution of judgment of the employer in the conduct of his business, unless it is shown to be contrary to law, morals, or public policy.

The rationale behind this rule is that an employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful.

The Philippine Constitution, while inexorably committed towards the protection of the working class from exploitation and unfair treatment, nevertheless



mandates the policy of social justice so as to strike a balance between an avowed predilection for labor, on the one hand, and the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg, on the other. Indeed, we should not be unmindful of the legal norm that justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence.

JAKA FOOD PROCESSING CORPORATION vs. DARWIN PACOT, et. al. G.R. No. 151378 28 March 2005 J. Garcia

Dismissal due to authorized cause – Retrenchment

Non-compliance with procedural requirements in case of termination of EEs due to authorized causes

Adismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.

LA NLRC – 30 August 1999; 28 January 2000 (on MR) CA-16 November 2000

LA- declared termination illegal and ordered reinstatement with full backwages and separation pay if reinstatement is not possible

NLRC – affirmed in toto the LA (30 August 1999); on MR, modified its earlier decision, reversing and setting aside the awards of backwages, service incentive leave pay. Respondents entitled to a separation pay equivalent to one month plus P2,000.00 as indemnification for its failure to observe due process in


effecting the retrenchment. CA – reversed the NLRC 28 January 2000 decision; ordered petitioner to pay respondents equivalent to one (1) month salary, the proportionate 13

th month pay

and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the finality of Decision SC – fixed the amount of indemnity to P50,000.00

ME-SHURN CORP. AND SAMMY CHOU vs. ME-SHURN WORKERS UNION-FSM AND ROSALINA CRUZ G.R. No. 156292 11 January 2005 J. Panganiban

Business Closure constituting Unfair Labor Practice.

To justify the closure of a business and the termination of the services of the concerned employees, the law requires the employer to prove that it suffered substantial actual losses. The cessation of a company’s operation shortly after the organization of a labor union, as well as the resumption of business barely a month after, gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. These acts constitute


Notice to DOLE of business closure is mandatory; Security of Tenure

unfair labor practices.

Concededly, the determination to cease operations is a management prerogative that the State does not usually interfere in. Indeed, no business can be required to continue operating at a loss, simply to maintain the workers in employment. That would be a taking of property without due process of law. But where it is manifest that the closure is motivated not by a desire to avoid further losses, but to discourage the workers from organizing themselves into a union for more effective negotiations with management, the State is bound to intervene.

Notice to the DOLE is mandatory to enable the proper authorities to ascertain whether the closure and/or dismissals were being done in good faith and not just a pretext for evading compliance with the employer’s just obligations to the affected employees. This requirement is intended to protect the workers’ right to security of tenure. The absence of such requirement taints the dismissal.

F.F. MARINE CORPORATION and/or MR. ERIC A. CRUZ vs. 2

ND

DIV, NLRC and RICARDO M. MAGNO G.R. No. 152039 8 April 2005 J. Tinga

Retrenchment

Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Retrenchment is a valid management prerogative. It is, however, subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence.

There are three (3) basic requisites for a valid retrenchment to exist, to wit: (a) the retrenchment is

Filed complaint for illegal dismissal, moral & exemplary damages – 12 January 1999 LA - 06 August 199 NLRC – 11 October 2000 CA – 31 January 2002

LA – upheld the retrenchment program

NLRC – reversed CA – affirmed NLRC SC - affirmed CA


necessary to prevent losses and such losses are proven; (b) written notice to the employees and to the DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.

Jurisprudential standards to justify retrenchment have been reiterated by this Court in a long line of cases to forestall management abuse of this prerogative, viz:

. . . . Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bonafide nature of the retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called “golden parachutes”, can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy


of providing “full protection” to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means—e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.—have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. (emphasis supplied)

Retrenchment is one of the economic grounds to dismiss employees. It is resorted to by an employer primarily to avoid or minimize business losses. The law recognizes this under Article 283 of the Labor Code. However, the employer bears the burden to prove his allegation of economic or business reverses. The employer’s failure to prove it necessarily means that the employee’s dismissal was not justified. Considering that the ground for retrenchment availed of by petitioners was not sufficiently and convincingly established, the retrenchment is hereby declared illegal and of no effect. The quitclaims executed by retrenched employees in favor of petitioners were therefore not voluntarily entered into by them. Their consent was similarly vitiated by mistake or fraud.


Validity of Quitclaims executed by retrenched Ees

Award in case EE declared illegally dismissed

xxx

As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. The amounts already received by the retrenched employees as consideration for signing the quitclaims should, however, be deducted from their respective monetary awards. Sad to say, among the retrenched employees, only Magno filed an action for illegal dismissal. It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. In the event, however, that reinstatement is no longer feasible, or if the employee decides not to be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages. As to the amount of separation pay, this Court has ruled that separation pay may be computed at one (1) month pay, or one (1/2) month pay for every year of service, whichever is higher. It is noteworthy that the separation pay being awarded in the instant case is due to illegal dismissal; hence, it is different from the amount of separation pay provided for in Article 283 in case of retrenchment to prevent losses or in case of closure or cessation of the employer’s business, in either of which the separation pay is equivalent to at least one (1) month or one-half (1/2) month pay for every year of service,


whichever is higher.

ABERDEEN COURT, INC. and RICHARD NG vs. MATEO C. AGUSTING, JR. G.R. No. 149371 13 April 2005 J. Azcuna

Probationary employment

It can be gleaned from Article 281 of the Labor Code that there are two grounds to legally terminate a probationary employee. It may be done either: a) for a just cause or b) when employee fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the start of the employment.

XXxx

In Servidad v. NLRC et al.,[15]

where effectively the probationary period was for one year, the Court stated:

If the nature of the job did actually necessitate at least one year for the employee to acquire the requisite training and experience, still, the same could not be a valid probationary employment as it falls short of the requirement of Article 281 of the Labor Code. It was not brought to light that the petitioner was duly informed at the start of his employment, of the reasonable standards under which he could qualify as a regular employee. The rudiments of due process demand that an employee should be apprised beforehand of the conditions of his employment and the basis for his advancement.

Similarly, in Secon Philippines Ltd. v. NLRC,[16]

the dismissal of the employee was declared illegal by the Court because the employer did not prove that the employee was properly apprised of the standards of the job at the time of his engagement and, naturally, the employer could not show that the employee failed to meet such standards.

LA – undated decision NLRC - 29 February 2000 CA -

LA – EE illegally dismissed

NLRC – reversed LA CA – reinstated LA decision SC – modified CA decision; respondent was dismissed for a just cause but petitioner was ordered to pay nominal damages in the amount of P30,000.00

http://sc.judiciary.gov.ph/jurisprudence/1999/mar99/128682.htm

http://sc.judiciary.gov.ph/jurisprudence/2005/apr2005/149371.htm#_ftn15

http://sc.judiciary.gov.ph/jurisprudence/1999/dec99/97399.htm

http://sc.judiciary.gov.ph/jurisprudence/2005/apr2005/149371.htm#_ftn16


The Implementing Rules of the Labor Code in Book VI, Rule I, Section 6, also provides:

Probationary employment. -- There is

probationary employment where the employee, upon his engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment, based on reasonable standards made known to him at the time of engagement.

Probationary employment shall be governed by the following rules:

. . . (c) The services of an employee who has

been engaged on probationary basis may be terminated only for a just cause, when he fails to qualify as a regular employee in accordance with the reasonable standards prescribed by the employer.

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee.

The above rule, however, should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, in regard to which there is no need to spell out a policy or standard to be met. Nevertheless, it appears that petitioners violated due process in the dismissal of respondent, by not affording him the required notice. As this Court held in Agabon, et al. v. NLRC, et al., an employer who dismisses an

http://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/158693.htm

http://sc.judiciary.gov.ph/jurisprudence/2004/nov2004/158693.htm


Non-Compliance with procedural requirement in termination of EE for just cause

employee for just cause but does so without notice, is liable for nominal damages in the amount of P30,000.

HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE vs. CANDIDO CUENCA, et.al. G.R. No. 150478 15 April 2005 J. Callejo, Sr.

Regular EE vs. Seasonal EE The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season. While the records sufficiently show that the respondents’ work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls, submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employee’s dismissal.

LA – 06 October 1997 NLRC – 24 July 1998 CA – 31 July 2001; 24 September 2001 (MR)

LA – illegal dismissal

NLRC – LA decision was affirmed with modification ; ordered payment of holiday pay CA – deleted award for payment of holiday pay and premium pay on holiday SC - affirmed CA

ANVIL ENSEMBLES GARMENT vs. CA G.R. No. 155037 29 April 2005 J. Callejo, Sr.

Negligence as a ground for termination of employment

Thus, under the Labor Code, to be a valid ground for dismissal, the negligence must be gross and habitual. Gross negligence has been defined as the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of the person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Put differently, gross negligence is characterized by want of even slight

Filed complaint for illegal dismissal – 03 September 1998 LA – 31 July 1998 NLRC – 23 November 1999

LA – EE was illegally dismissed

NLRC – affirmed in toto LA CA - dismissed the petition and


Right to security of tenure of probationary employee

Award – LA granted full backwages and attorney’s fees

care, acting or omitting to act in a situation where there is a duty to act, not inadvertently, but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected. In this case, contrary to its claim, the petitioner utterly failed to show that the respondent committed gross negligence as to warrant his dismissal. While the respondent is only a probationary employee and does not enjoy permanent status, nonetheless, he is entitled to constitutional protection of security of tenure. His employment may only be terminated for a valid and just cause or if he fails to qualify as a regular employee in accordance with the reasonable standards made known to him by the employer at the time of engagement and after due process. Since neither circumstance attended the petitioner’s termination of the respondent’s employment, the appellate court correctly affirmed the decision of the NLRC finding the petitioner guilty of illegal dismissal.

CA - 18 January 2002

affirmed NLRC SC – affirmed CA decision in toto

CAPITOL MEDICAL CENTER, INC., ET.AL. vs. MERIS G.R. No. 155098 16 September 2005 J. Carpio-Morales

Closure of establishments.

Management Prerogatives.

The right to close an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose of circumventing the provisions on termination of employment embodied in the Labor Code.

Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. This mass of privileges comprises the so-called management prerogatives. Although they may be broad and unlimited in scope, the State has the right to determine whether an employer’s privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of Labor.

Case filed in 1992 LA decided the case in 1998 SC in 2005. Total – 13 years.

NLRC affirmed LA; CA reversed NLRC; SC affirmed CA.


Closure of Establishments.

Reinstatements.

Award of Damages.

It would indeed be stretching the intent and spirit of the law if a court were to unjustly interfere in management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss. As long as the company’s exercise of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld.

The right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character.

Reinstatement is not feasible in case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists.

The award of damages cannot be sustained solely on the premise that the employer fired his employee without just cause or due process – additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, such as:

1. That the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and

2. That social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom.

2004

TEXON MANUFACTURING, ET Prescriptive Period: Illegal One’s employment or profession is a ‘property right’ and LA decided the case NLRC affirmed LA;


AL. vs. GRACE MILLENA, ET AL. G.R. No. 141380 14 April 2004 J. Sandoval-Gutierrez

dismissal with money claims the wrongful interference therewith is an actionable wrong. The right is considered to be property within the protection of the constitutional guarantee of due process of law. Clearly then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an action predicated ‘upon an injury to the rights of the plaintiff,’ as contemplated under Article 1146 of the New Civil Code, which must be brought within 4 years.

1996; NLRC 1997; CA 1999; SC 2004

CA affirmed NLRC; SC affirmed CA

PHILIPS SEMICONDUCTORS (PHILS.), INC. vs. ELOISA FADRIQUELA G.R. No. 141717 14 April 2004 J. Callejo, Sr.

Kinds of EEs: Regular and Contractual Employee

Security of Tenure

Power to Dismiss, Management Prerogative

Procedural Due Process: Notice and Hearing

Reinstatement

The two kinds of regular employees under the law are (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed. The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. The law does not provide the qualification that the employee must first be issued a regular appointment or must be declared as such before he can acquire a regular employee status; In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was assigned to wirebuilding at the transistor division. There is no dispute that the work of the respondent was necessary or desirable in the business or trade of the petitioner. She remained under the employ of the petitioner without any

LA decided the case 1997; NLRC 1998; CA 1999; SC 2004


http://sc.judiciary.gov.ph/jurisprudence/2004/apr2004/141380.htm



interruption since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28) days. The original contract of employment had been extended or renewed for four times, to the same position, with the same chores. Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her services to the petitioner’s business. By operation of law, then, the respondent had attained the regular status of her employment with the petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code; The respondent’s re-employment under contracts ranging from two to three months over a period of one year and twenty-eight days, with an express statement that she may be reassigned at the discretion of the petitioner and that her employment may be terminated at any time upon notice, was but a catch-all excuse to prevent her regularization. Such statement is contrary to the letter and spirit of Articles 279 and 280 of the Labor Code Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of employment. The guarantee is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood and those of his dependents. When a person loses his job, his dependents suffer as well. The worker should therefor be protected and insulated against any arbitrary deprivation of his job.

The power to dismiss is a formal prerogative of the employer. However, this is not without limitations. The employer is bound to exercise caution in terminating the services of his employees. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should


respect and protect the rights of their employees which include the right to labor. To rule that the mere dialogue between private respondent and petitioner sufficiently complied with the demands of due process is to disregard the strict mandate of the law. A conference is not a substitute for the actual observance of notice and hearing. The failure of private respondent to give petitioner the benefit of a hearing before she was dismissed constitutes an infringement on her constitutional right to due process of law and not to be denied the equal protection of the laws. The right of a person to his labor is deemed to be his property within the meaning of the constitutional guarantee. This is his means of livelihood. He cannot be deprived of his labor or work without due process of law; respondent is entitled to reinstatement and payment of full backwages.

EMCO PLYWOOD CORPORATION, ET AL. vs. PERFERIO ABELGAS, ET AL. G.R. No. 148532 14 April 2004 J. Panganiban

Causes of Termination- Retrenchment

Separation Pay

Retrenchment is one of the authorized causes for the dismissal of employees. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse:

Firstly, the losses expected should be substantial and not merely de minimis in extent. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called ‘golden parachutes,’ can scarcely claim to be retrenching in good faith to avoid losses. To

LA decided the case 1996; NLRC 1997; CA 2001; SC 2004




impart operational meaning to the constitutional policy of providing ‘full protection’ to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means – e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. – have been tried and found wanting. “Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.

Not every loss incurred or expected to be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary to avert such losses.” The employer bears the burden of proving the existence or the imminence of substantial losses with clear and satisfactory evidence that there are legitimate business reasons justifying a retrenchment. Should the employer fail to do so, the dismissal shall be deemed unjustified.

For a valid termination due to retrenchment, the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the Department of Labor and Employment at least one (1) month before the actual date of the retrenchment. The purpose of this requirement is to give employees some time to prepare for the eventual loss of their jobs, as well as to give DOLE theopportunity to ascertain the verity of the alleged cause of termination.

PHILIPPINE JOURNALISTS, INC., petitioner, vs.

Illegal dismissal and payment of backwages

Under Art. 279 of the Labor Code, an employee who is unjustly dismissed is entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of his full backwages, inclusive of allowances, and other

LA - 10 June 1993 NLRC- 20 March 1996

LA-held that respondent and the other five employees were


MICHAEL MOSQUEDA, respondent.

G.R. No. 141430 07 May 2004 J. SANDOVAL-GUTIERREZ

benefits or their monetary equivalent, computed from the time his compensation was withheld from him (which, as a rule, is from the time of his illegal dismissal) up to the time of his actual reinstatement.

Similarly, under R.A. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.

This Court does not see any reason to depart from the foregoing rule in the case of herein respondent who, as held by three (3) independent bodies, was illegally dismissed, and thus, rightfully entitled to an award of full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from March 10, 1992, the date of his illegal dismissal (and not from March 11, 1992 as erroneously held by the Court of Appeals) up to the time of his actual reinstatement.

CA-23 August 1999 SC – 07 May 2004

illegally dismissed from employment and ordering petitioner (1) to reinstate them to their former positions and (2) to pay their backwages and moral and exemplary damages and attorney’s fees equivalent to 10% of the monetary awards.

NLRC- rendered a Decision dated affirming the Arbiter’s Decision with modification in the sense that the award of backwages, damages and attorney’s fees was deleted. CA- Court of Appeals granted the petition and reinstated the Arbiter’s award of backwages. SC- AFFIRMED with MODIFICATION in


the sense that respondent is awarded his full backwages, other privileges and benefits, or their monetary equivalent corresponding to the period of his dismissal from March 10, 1992 up to his actual reinstatement

R TRANSPORT CORPORATION, Petitioner,

vs.

ROGELIO EJANDRA, Respondent.

G.R. NO. 148508 : May 20, 2004 J. CORONA

ER-EE

Just cause

Abandonment

Procedural Due Process

Petitioner is barred to negate the existence of an employer-employee relationship. In its petition filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. Petitioner maintained that private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner impliedly admitted that it was in fact the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-employee relationship. Petitioner’s claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor Code clearly provides that an employee’s wages can be in the form of commissions.

To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the

LA- 23February1997 NLRC-30 May 1997 CA-22December 2000 SC-20 May 2004

LA- found the dismissal of Rogelio Ejandra to be without just cause and, therefore, illegal and ORDERING R-Transport to REINSTATE him to his former position without loss of seniority and other benefits and to pay him backwages from the time of his dismissal until actual reinstatement. NLRC rendered a decision affirming the decision of the Labor Arbiter.


employer-employee relationship. Of the two, the second element is the more determinative factor and should be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.

In addition to the fact that petitioner had no valid cause to terminate private respondent from work, it violated the latter’s right to procedural due process by not giving him the required notice and hearing. Section 2, Rule XXIII, Book V of Department Order No. 9 provides for the procedure for dismissal for just or authorized cause.

CA denied the petition for lack of merit and affirmed LA and NLRC. SC denied the petition for lack of merit and affirmed LA, NLRC and CA.

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID, President, respondents.

G.R. No. 159890 May 28, 2004

J. YNARES-SANTIAGO

ER-EE

Kinds of Employees – Regular or Casual for purposes of determining their rights to certain benefits, such as to join or form a union, or to security of tenure.

Payment by commission/s.

Well-entrenched is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the Labor Arbiter and the National Labor Relations Commission shall be accorded not only respect but even finality when supported by substantial evidence. The decisive factor in such finality is the presence of substantial evidence to support said finding, otherwise, such factual findings cannot be accorded finality by this Court.

12 Considering the conflicting

findings of fact by the Labor Arbiter and the NLRC as well as the Court of Appeals, there is a need to reexamine the records to determine with certainty which of the propositions espoused by the contending parties is

LA- 29 November 2001 NLRC- 05 April 2002 CA- 07 March 2003 SC- 28 May 2004

LA rendered declaring respondents to pay jointly and severally complainant his awarded separation pay, back wages (partial) unpaid commissions, refund of deductions, damages and attorney’s fees. NLRC reversed the


supported by substantial evidence.

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the most important.

13 The so-called "control test" is

commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services areperformed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.

In Encyclopedia Britannica (Philippines), Inc. v. NLRC, it was ruled that there could be no employer-employee relationship where the element of control is absent. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, no relationship of employer-employee exists.

Article 280 is not a crucial factor in determining the existence of an employment relationship. It merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining their rights to certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute.

There is no categorical pronouncement that the payment of compensation on commission basis is conclusive proof of

decision of the Labor Arbiter and dismissed the instant case for lack of cause of action. CA denied the petition. SC affirmed the CA decision denying petitioner’s appeal.


the existence of an employer-employee relationship. After all, commission, as a form of remuneration, may be availed of by both an employee or a non-employee.

SAN JUAN DE DIOS EDUCATIONAL FOUNDATION EMPLOYEES UNION-ALLIANCE OF FILIPINO WORKERS; MA. CONSUELO MAQUILING, LEONARDO MARTINEZ, ANDRES AYALA, VIRGINIA ARLANTE, ROGELIO BELMONTE, MA. ELENA GARCIA and RODOLFO CALUCIN, JR., petitioners, vs. SAN JUAN DE DIOS EDUCATIONAL FOUNDATION, INC. (HOSPITAL) and NATIONAL LABOR RELATIONS COMMISSION, respondents.

G.R. No. 143341 May 28, 2004 J . CALLEJO, SR.

Illegal dismissal

Despite the receipt of an order from then SOLE to return to their respective jobs, the Union officers and members refused to do so and defied the same. Consequently, then, the strike staged by the Union is a prohibited activity under Article 264 of the Labor Code. Hence, the dismissal of its officers is in order.

43 The respondent Foundation was, thus,

justified in terminating the employment of the petitioner Union’s officers.

The records of this case do not show any hint that Calucin’s [Jr.’s] dismissal is due to his trade union activities. On the other hand, per findings of the public respondent, the Foundation was able to support with documents how Calucin [Jr.] declared himself irrelevant in the Foundation through his tardiness and shallow excuses such as fetching the water, cooking breakfast, seeing to it that his kids took breakfast before going to school, preparing packed lunch for himself and even the diversions from the usual route of jeepneys that he rode in on these days that he was absent are all lame excuses that amount to lack of interest in his work. His lackluster work attitude reached his highest point when he filed for a leave of absence of three months to join his brother’s business venture. Furthermore, it is not true that his attendance improved in 1993 because the records show that in 1993, his tardiness worsened to the point that his repeated tardiness went beyond the maximum contemplated in the Foundation’s Code of Discipline.

For the foregoing reasons, Calucin, Jr.’s dismissal is valid.

NLRC-09 February 1999 CA-25 November1999 SC-28 May 2004

NLRC dismissed the claim of unfair labor practice arising from the illegal dismissal of Rogelio Calucin, Jr. It ruled that Calucin, Jr.’s dismissal was based on his continued tardiness for the year 1992 to 1993, which affected his efficiency as reflected by his performance rating and, therefore, sanctioned by Article 282(b) of the Labor Code.

As regards the Foundation’s refusal to pay the money claims of the twenty-seven employees, the NLRC ruled that the same was sanctioned by law, considering that the aforesaid employees refused


to return to work even after the SOLE already issued a RTWO effective August 31, 1994. CA partially granted the petition in the sense that the complaint for the payment of the money claims of the 27 employees are granted and private respondent is hereby ordered to pay the money claims of the twenty-seven (27) employees while the rest of the assailed decision is affirmed in all other respects. SC denied the petition and affirmed the CA decision.

FERNANDO GOvs. COURT OF APPEALS and MOLDEX PRODUCTS, INC.,

G.R. No. 158922 May 28, 2004 J. Ynares-Santiago


Constructive dismissal exists where there is a cessation of work because continued employment is rendered impossible, unreasonable or unlikely. It is present when an employee's functions, which were originally supervisory in nature, were reduced, and such reduction is not grounded on valid grounds such as genuine business necessity.

It should be remembered that the petitioner has submitted

NLRC-30April 2001 and 31 May 2002 CA-30 June 2003 SC- 28 May 2004

NLRC found the dismissal of the complainant to be illegal ordered respondent to pay complainant his backwages and his separation pay and 10% of the total


a letter of resignation. It is thus incumbent upon him to substantiate his claim that his resignation was not voluntary but in truth was actually a constructive dismissal.

The failure of the petitioner to fully substantiate his claim that the respondent stripped him of his duties and functions is fatal to his present petition. Except for the sworn statements previously discussed, which we have found to be lacking in probative value, petitioner did not present any other proof of the alleged stripping of his functions by the respondent. Petitioner's bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.

The totality of the evidence indubitably shows that petitioner resigned from employment without any coercion or compulsion from respondent. His resignation was voluntary. As such, he shall only be entitled to his 13th month pay and leave pay benefits. These, however, have already been paid to him by respondent.

award as attorney’s fees.

NLRC modified its decision in a later resolution which deleted the award of attorney's fees for lack of factual basis but affirmed the rest of the Labor Arbiter's award.

CA set aside and annulled the twin resolutions of the NLRC.

SC denied the petition and affirmed the CA decision.


RADIN C. ALCIRA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MIDDLEBY PHILIPPINES CORPORATION/FRANK THOMAS, XAVIER G. PEÑA and TRIFONA F. MAMARADLO, respondents G.R. No. 149859 09June 2004 J. CORONA

Illegal Dismissal

Probationary Employees

It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of tenure. This means they may only be terminated for just cause or when they otherwise fail to qualify as regular employees in accordance with reasonable standards made known to them by the employer at the time of their engagement.

In Manlimos, et. al. vs. National Labor Relations Commission, this constitutional protection ends on the expiration of the probationary period. On that date, the parties are free to either renew or terminate their contract of employment. Manlimos concluded that "(t)his development has rendered moot the question of whether there was a just cause for the dismissal of the petitioners xxx." In the case at bar, respondent Middleby exercised its option not to renew the contract when it informed petitioner on the last day of his probationary employment that it did not intend to grant him a regular status.

Although we can regard petitioner’s severance from work as dismissal, the same cannot be deemed illegal. As found by the labor arbiter, the NLRC and the Court of Appeals, petitioner (1) incurred ten absences (2) was tardy several times (3) failed to wear the proper uniform many times and (4) showed inferior supervisory skills. Petitioner failed to satisfactorily refute these substantiated allegations. Taking all this in its entirety, respondent Middleby was clearly justified to end its employment relationship with petitioner.

LA- 19 May 1998 NLRC- 23 March 1999 CA- 22June2001 SC- 09 June 2004

LA dismissed the

complaint on the

ground that: (1) respondents were able to prove that petitioner was apprised of the standards for becoming a regular employee; (2) respondent Mamaradlo’s affidavit showed that petitioner "did not perform well in his assigned work and his attitude was below par compared to the company’s standard required of him" and (3) petitioner’s dismissal on November 20, 1996 was before his "regularization," considering that, counting from May 20, 1996, the six-month probationary period ended on November 20, 1996..

NLRC affirmed LA.


CA affirmed NLRC.

SC denied the petition and affirmed CA.

JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent.

GR No. 138051 10 June 2004

J. CARPIO

ER-EE

INDEPENDENT CONTRACTOR

SECURITY OF TENURE

The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial evidence. Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. A party cannot prove the absence of substantial evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible.

Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well – the

LA-8 July 1997 NLRC-24February 1998 CA- 26 March 1999 SC-10 June 2004

LA dismissed the complaint for lack of jurisdiction.

NLRC affirmed the LA decision.

CA dismissed the petition for certiorari and affirmed NLRC.

SC affirmed CA.


less control the hirer exercises, the more likely the worker is considered an independent contractor.

ABS-CBN was not involved in the actual performance that produced the finished product of SONZA’s work.

33 ABS-

CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming."

34 ABS-CBN’s sole concern was the quality

of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZA’s work.

Not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an employer-employee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it.

The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee relationship under labor laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that every person who renders


services to another for a fee is an employee - to give meaning to the security of tenure clause - will lead to absurd results.

Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. This Court will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as employees. If radio and television program hosts can render their services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press.

CHARLES JOSEPH U. RAMOS, petitioner, vs. HONORABLE COURT OF APPEALS and UNION BANK OF THE PHILIPPINES, respondents.

G.R. No. 145405 29 June 2004 J. CORONA

Just Cause of Termination-Loss of Trust and Confidence

The Supreme Court, on several occasions, upheld the dismissal of bank employees for loss of trust and confidence and gross neglect of responsibilities. In view of the nature of its business, banks have every reason to demand that the conduct of their employees holding sensitive positions be fully deserving of their trust. If bank employees will be allowed to do their work without the exercise of due diligence, no bank will survive.

To validly dismiss an employee on the ground of loss of trust and confidence, the following guidelines must

*Nothing is mentioned about the dates of promulgation of the decisions of the LA, NLRC and CA. SC- 29 June 2004

LA ruled that petitioner was illegally dismissed.

NLRC reversed the findings of the LA and dismissed the complaint for lack of merit.

CA upheld the NLRC.

SC dismissed the


be followed:

1. the loss of confidence must not be simulated;

2. it should not be used as a subterfuge for causes which are illegal, improper or unjustified;

3. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary;

4. it must be genuine, not a mere afterthought, to justify earlier action taken in bad faith; and

5. the employee involved holds a position of trust and confidence.

In the case at bar, petitioner held a position of trust and confidence as the regular branch cashier and acting branch manager of respondent’s J.P. Rizal branch. Petitioner was utterly negligent in performing his duties as acting branch manager. The scam perpetrated by Paras could have been easily detected had petitioner conscientiously done his job in carefully overseeing the branch’s operations. Respondent bank therefore had reason to lose its trust and confidence and to impose the penalty of dismissal on him.

petition and upheld the CA.

MITSUBISHI MOTORS PHILIPPINES CORPORATION, petitioner,

Illegal Dismissal

Just/Authorized Causes

Reinstatement/backwages

An employee cannot be dismissed except for just or authorized cause as found in the Labor Code and after due process.

33 The following grounds would justify the dismissal

VA-03November1997 CA-13September2000

Voluntary Arbitrator (VA) rendered a decision


vs. CHRYSLER PHILIPPINES LABOR UNION and NELSON PARAS, respondents.

GR No. 148738 29 June 2004 J. CALLEJO SR.

of an employee: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of the employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or of any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing.

It is a settled doctrine that the employer has the burden of proving the lawfulness of his employee’s dismissal. The validity of the charge must be clearly established in a manner consistent with dueprocess. Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. Gross negligence has been defined to be the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Considering that respondent Paras was not dismissed for a just or authorized cause, his dismissal from employment was illegal. Furthermore, the petitioner’s failure to inform him of any charges against him deprived him of due process. Clearly, the termination of his employment based on his alleged unsatisfactory performance rating was effected merely to cover up and "deodorize" the illegality of his dismissal.

SC-29June2004

finding the dismissal of Paras valid for his failure to pass the probationary standards of MMPC.

CA reversed the ruling of the Voluntary Arbitrator holding the dismissal of Paras illegal and ordered the latter’s reinstatement and payment of backwages.

SC affirmed the CA decision with modifications. The petitioner was ordered to pay respondent Paras separation pay equivalent to one (1) month, or to at least one-half (1/2) month pay for every year of service, whichever is higher, a fraction of at least six (6) months to be considered as one


The normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the payment of backwages computed from the time the employee’s compensation was withheld from him. Since respondent Paras’ dismissal from employment is illegal, he is entitled tore instatement and to be paid backwages from the time of his dismissal up to the time of his actual reinstatement.

Business reverses or losses are recognized by law as an authorized cause for termination of employment. Still, it is an essential requirement that alleged losses in business operations must be proven convincingly. Otherwise, such ground for termination would be susceptible to abuse by scheming employers, who might be merely feigning business losses or reverses in their business ventures to ease out employees. Retrenchment is an authorized cause for termination of employment which the law accords an employer who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some employees. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing.

The unfavorable financial conditions of the petitioner may not justify reinstatement. However, it is not a sufficient ground to deny backwages to respondent Paras who was illegally dismissed. Considering that notices of retrenchment were mailed on February 25, 1998 and made effective one month therefrom, respondent Paras should be paid full backwages from the date of his illegal dismissal up to March 25, 1998. Pursuant to Article 283 of the Labor Code, he should be paid separation pay equivalent to one (1) month salary, or to at least one-half month pay for every year of service, whichever is higher, a fraction of at least six months to be considered as one (1) year.

year; and to pay full backwages, computed from the time of his dismissal up to March 25, 1998. That portion of the decision of the Court of Appeals directing the reinstatement of the Paras was deleted.


R.P. DINGLASAN CONSTRUCTION, INC., petitioner, vs. MARIANO ATIENZA and SANTIAGO ASI, respondents.

GR No. 156104 29 June 2004 J. PUNO

Illegal Dismissal

Abandonment of Work Constructive Dismissal

In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee is for a valid cause.

11 In the case at bar, petitioner failed to

discharge its burden. It failed to establish that private respondents deliberately and unjustifiably refused to resume their employment without any intention of returning to work.

To constitute abandonment of work, two (2) requisites must concur: first, the employee must have failed to report for work or must have been absent without justifiable reason; and second, there must have been a clear intention on the part of the employee to sever the employer-employee relationship as manifested by overt acts. Abandonment as a just ground for dismissal requires deliberate, unjustified refusal of the employee to resume his employment. Mere absence or failure to report for work, after notice to return, is not enough to amount to abandonment.

Constructive dismissal is defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the offer of employment involves a demotion in rank and diminution of pay. In the case at bar, petitioner committed constructive dismissal when it offered to reassign private respondents to another company but with no guaranteed working hours and payment of only the minimum wage. The terms of the redeployment thus became unacceptable for private respondents and foreclosed any choice but to reject petitioner’s offer, involving as it does a demotion in status and diminution in pay. Thereafter, for six (6) months, private respondents were in a floating status. Interestingly, it was only after private respondents filed a complaint with the DOLE that petitioner backtracked in its position and

LA-03September 1998 NLRC – Nothing is mentioned regarding the date of promulgation. CA-17J anuary2001 and 30 October 2002 SC-29 January 2004

LA found that private respondents were illegally dismissed from service and ordering their reinstatement.

NLRC affirmed LA.

CA affirmed LA and NLRC.

SC affirmed CA


offered to reinstate private respondents to their former job in Shell Corporation with no diminution in salary. Eventually, however, petitioner unilaterally withdrew its offer of reinstatement, refused to meet with the private respondents and instead decided to dismiss them from service.

Electruck Asia Inc., vs. Meris, et. al. G.R. No. 147031 27 July 2004 J. Carpio Morales

illegal dismissal-onus probandi

compliance with the twin notice rule

In illegal dismissal cases, the onus probandi lies on the employer As for petitioner’s contention that the Serranoruling is not applicable, the same is well-taken but not for the reason it proffered. The Serrano doctrine which dispenses with the twin requirement of notice and hearing does not apply because, as already discussed, petitioner had not proved that the termination of respondents was for a just or authorized cause. Reinstatement is no longer feasible, due to company’s insolvency. In lieu thereof, payment to respondents of separation pay equivalent to one (1) month pay for every year of service is in order.

LA-27 September 1996 NLRC-28 May 1997 CA-31 July 2000 SC-27 July 2004

LA-termination valid NLRC-upheld LA CA-reversed NLRC SC-affirmed CA

PENTAGON INTERNATIONAL SHIPPING INC., VS. WILLIAM B. ADELANTAR G. R. No. 157373 27 July 2004 J. Ynares-Santiago

illegal dismissal with money claim

Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard Employment Contract governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. In no case should the contract of seamen be longer than 12 months. A seafarer, is not a regular employee as defined in Article 280 of the Labor Code. Hence, he is not entitled to full backwages and separation pay in lieu of reinstatement as provided in Article 279 of the Labor Code. As we held in

LA-1999 NLRC CA-26 September 2002 SC-27 July 2004

LA-held that dismissal was illegal NLRC-affirmed LA CA-modified amount awarded by LA and NLRC SC-reversed CA;


Millares, Adelantar is a contractual employee whose rights and obligations are governed primarily by Rules and Regulations of the POEA and, more importantly, by R.A. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995.

petitioner ordered to pay unexpired portion of contract plus 10% of the award as attorney’s fees

RENE P. VALIAO vs. CA G. R. NO. 146621 30 July 2004 J. Quisumbing

illegal dismissal

preventive suspension

causes of termination- serious misconduct and gross habitual neglect of duties, including habitual tardiness and absenteeism

For an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process.

Serious misconduct and habitual neglect of duties are among the just causes for terminating an employee under the Labor Code of the Philippines. Gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances.

Petitioner’s repeated acts of absences without leave and his frequent tardiness reflect his indifferent attitude to and lack of motivation in his work. More importantly, his repeated and habitual infractions, committed despite several warnings, constitute gross misconduct unexpected from an employee of petitioner’s stature.

Labor Arbiter found that petitioner is entitled to salary differentials for the period of his preventive suspension, as there is no sufficient basis shown to justify his preventive suspension. During the pendency of the investigation, the employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to life or property of the employer or of his co-workers. But in this case, there is no indication that petitioner posed a serious threat to the life and property of the employer or his co-employees. Neither was it shown that he was in such a position to unduly influence the outcome of the investigation. Hence, his

LA-11 December 1998 NLRC-07 July 1999 CA-22 August 2000 SC-30 July 2004

LA-dismissal valid but preventive suspension without basis; award of attorney’s fees NLRC-affirmed LA CA-affirmed NLRC SC-affirmed CA but with modification, deleted award of attorney’s fees


preventive suspension could not be justified, and the payment of his salary differentials is in order.

Award of attorney’s fees cannot be sustained, in view of our findings that petitioner was validly dismissed from employment.

GABUAY vs. OVERSEA PAPER SUPPLY G.R. No. 148837 13 August 2004 j. Callejo, Sr.

Abandonment

Illegal dismissal

Separation pay

Financial assistance

The factors considered for finding a valid abandonment are present in the case at bar: the petitioners’ failure to report for work or absence was without valid or justifiable cause, and their refusal to report for work notwithstanding their receipt of letters requiring them to return to work, show their clear intention to sever the employer-employee relationship Separation pay is defined as the amount that an employee receives at the time of his severance and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. Under the Labor Code, the award of separation pay is sanctioned when termination was due to an authorized cause, i.e., (a) installation of labor saving device, redundancy, retrenchment to prevent losses, closure or cessation of business operations not due to serious business losses or financial reverses; and, (b) disease prejudicial to the health of the employee and his fellow employees. Separation pay is, likewise, awarded in lieu of reinstatement if it can be shown that the reinstatement of the employee is no longer feasible, as when the relationship between employer and employee has become strained. In some cases, it is awarded as a measure of social justice.

In the present case, the petitioners were not dismissed, either legally or illegally; the petitioners abandoned their jobs. They failed to return to work despite the respondents’ directive requiring them to do so. There is,

LA- 18 November 1999 SC- 13 August 2004

LA – No illegal dismissal; Complainants abandoned their jobs. Case dismissed. NLRC – awarded financial assistance; CA- deleted award of financial assistance; SC – reinstated LA’s decision


thus, no room for the award of financial assistance in the form of separation pay. To sustain the claim for separation pay under the circumstances herein established would be to reward the petitioners for abandoning their work

PINERO vs. NLRC G.R. 149610 20 August 2004 J. Ynares-SAntiago

Illegal strike

Illegal dismissal

Requisites for a valid strike are as follows: (a) a notice of strike filed with the DOLE thirty days before the intended date thereof or fifteen days in case of unfair labor practice; (b) strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; (c) notice given to the DOLE of the results of the voting at least seven days before the intended strike. These requirements are mandatory and failure of a union to comply therewith renders the strike illegal. The strike was therefore correctly declared illegal, for non-compliance with the procedural requirements of Article 263 of the Labor Code, and Piñero properly dismissed from service. Pursuant to Article 264 of the Labor Code, any union officer who knowingly participates in an illegal strikeand any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. An employee who is dismissed for cause is generally not entitled to any financial assistance. Equity considerations, however, provide an exception. Equity has been defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law. Under the circumstances, social and compassionate justice dictate that petitioner Piñero be awarded financial assistance equivalent to one-

LA – 28 October 1994 – illegal strike, valid dismissal SC 20 August 2004

LA – illegal strike, valid dismissal SC – LA affirmed, awarded financial assistance to Pinero on compassionate justice


half (1/2) month’s pay for every year of servicecomputed from his date of employment up to October 28, 1994 when he was declared to have lost his employment status. Indeed, equities of this case should be accorded due weight because labor law determinations are not only secundum rationem but also secundum caritatem.

CHIANG KAI SHEK COLLEGE vs. CA G.R. 152988 24 August 2004 CJ. Davide, Jr.

Illegal dismissal


Separation pay

Retirement pay

Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such service must have been satisfactory. The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due notice and hearing. Case law defines constructive dismissal as a cessation from work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. Complainant was unceremoniously and constructively dismissed by the petitioners without just cause and without observing the twin requirements of due process, i.e., due notice and hearing, in violation of the tenets of equity and fair play. Complainant is therefore entitled to reinstatement and back wages.

LA - 18 October 1995 SC - 24 August 2008

LA – dismissed complaint SC – LA decision reversed. Complainant was constructively dismissed; entitled to reinstatement and back wages.

LITTON MILLS, INC. vs .SALES G.R. No. 151400 1 September 2004 J. CALLEJO, SR.

Illegal dismissal- the employer is burdened to prove theft as just cause for termination of employee.

In illegal dismissal cases, the employer is burdened to prove just cause for terminating the employment of its employee with clear and convincing evidence. The case of the employer must stand or fall on its own merits and not on the weakness of the employee’s defense. The alleged

Date of Decision: LA -16 February 2000 CA-28 September 2001 SC -1 September 2004

LA- dismissed the complaint for illegal dismissal NLRC- affirmed


Cause of termination- just cause

Awards- ordering the reinstatement of the respondent and remanding the case to the Labor Arbiter for the computation of the monetary awards

weakness of the defense of the employee cannot operate to relieve nor discharge the employer of its burden in termination cases. This principle is designed to give flesh and blood to the guaranty of security of tenure granted by the Constitution to employees under the Labor Code.

CA- Reversed LA and NLRC SC- Affirmed CA decision

CIOCO, JR. vs. C. E. CONSTRUCTION CORP. G. R. No. 156748 08 September 2004 J. PUNO

Termination of employment of Project employees.

Workers employed with the company for several years on various project did not automatically make them regular employees.

Cause of termination- completion of the project.

Substantive and Procedural requirements of due process with respect to the termination of Project employees.

The fact that the WORKERS have been employed with the COMPANY for several years on various projects, the longest being nine (9) years, did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code, makes specific exception with respect to project employment. The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred. It did not change their status as project employees.

The labor arbiter categorically found that the appropriate notices to the WORKERS and the corresponding reports were submitted by the COMPANY to the DOLE

Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides that no prior notice of termination is required if the termination is brought about by completion of the contract or phase thereof for which the worker has been engaged. This is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE

Date of Decision:

LA- April 17, 2000 NLRC- 26 October 2001

CA- 28 August 2002 SC-08 September 2004

LA- rendered decision dismissing the complaint for illegal dismissal. NLRC- affirmed LA decision. CA- reversed LA and NLRC decision. Their dismissal as project employees declared as illegal. SC- reversed CA decision. The termination of employment of project employees is declared valid and legal.


on the termination of the employment.

COCA-COLA BOTTLERS PHILIPPINES, INC vs. VITAL G.R. No. 154384 September 13, 2004 J. SANDOVAL-GUTIERREZ

Illegal dismissal- the dismissal of respondent from the service on the ground of wilful disobedience or violation of company rules and regulations is not justified

Cause of termination- just cause

Awards- separation pay plus full back wages, and other privileges and benefits, or their monetary equivalent, during the period of his dismissal up to his supposed actual reinstatement.

There is no showing that respondent’s acts were inimical to petitioner’s interest. Petitioner has not also shown that previously, respondent violated any of its rules or regulations. Certainly, respondent’s acts may be considered as isolated incidents not amounting to a willful disobedience or violation of petitioner company’s rules and regulations.

Respondent who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights, full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

However, the circumstances obtaining in this case do not warrant the reinstatement of respondent. Antagonism caused a severe strain in the relationship between him and petitioner company. A more equitable disposition would be an award of separation pay equivalent to at least one month pay, or one month pay for every year of service, whichever is higher, (with a fraction of at least six (6) months being considered as one (1) whole year), in addition to his full backwages, allowances and other benefits.

Date of Decision: LA - 7 August 1998 NLRC - 17 March 1999 CA- 30 April 2002 SC- 13 September 2004

LA- dismissed the complaint for illegal dismissal and damages NLRC- reversed LA decision CA- Affirmed NLRC Decision

SC- AFFIRMED CA

with MODIFICATION that in lieu of reinstatement, respondent is awarded separation pay plus full back wages, and other privileges and benefits, or their monetary equivalent, during the period of his dismissal up to his supposed actual reinstatement.

DUNCAN ASSOCIATION OF Valid Management Policy- Glaxo has a right to guard its trade secrets, manufacturing Date of Decision: NCMB- rendered


DETAILMAN-PTGWO and TECSON vs. GLAXO WELLCOME PHILIPPINES, INC. G.R. No. 162994 September 17, 2004 J. TINGA

Pharmaceutical Company prohibiting its employees from marrying employees of any competitor company.


formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the company’s seminar on new products which were directly competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in

Grievance Machinery- no settlement NCMB- for voluntary Arbitration CA- 19 May 2003 SC- 17 September 2004

its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.

CA-Affirmed NCMB decision as valid exercise of management prerogative SC- Affirmed CA


pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. None of these conditions are present in the instant case. In this case, petitioner’s transfer to another place of assignment was merely in keeping with the policy of the company in avoidance of conflict of interest, and thus valid.

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission, which involved a complaint filed by a medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment when he refused to accept his reassignment to a new area, the Court upheld the right of the drug company to transfer or reassign its employee in accordance with its operational demands and requirements. The ruling of the Court therein, quoted hereunder, also finds application in the instant case: By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should anticipate reassignment according to the demands of their business. It would be a poor drug corporation which cannot even assign its representatives or detail men to new markets calling for opening or expansion or to areas where the need for pushing its products is great. More so if such reassignments are part of the employment contract.

PLDT COMPANY VS. TOLENTINO G.R. No. 143171 21 September 2004 J. CORONA

Termination of Managerial employee- security of tenure

Cause of termination- Loss of trust and confidence.

Doctrine of strained relationship shall be strictly applied so as not to deprive an illegally dismissed

PLDT’s basis for respondent’s dismissal was not enough to defeat respondent’s security of tenure.

Loss of trust and confidence justifies dismissal of managerial employee on the reason that when an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence; she gives up some of the rigid guaranties available to ordinary workers. Infractions which if committed by others would be

Date of Decision: LA-30 April 1997 SC- 21 September 2004

LA- illegal dismissal orders reinstatement w/ full backwages and other benefits and damages NLRC- reversed L.A decision


employee of his right to reinstatement.

Awards- Reinstatement with full backwages and attorney’s fees.

overlooked or condoned or penalties mitigated may be visited with more severe disciplinary action. A company’s resort to acts of self-defense would be more easily justified.

However, the right of the management to dismiss must be balanced against the managerial employee’s right to security of tenure which is not one of the guaranties he gives up. This Court has consistently ruled that managerial employees enjoy security of tenure and, although the standards for their dismissal are less stringent, the loss of trust and confidence must be substantial and founded on clearly established facts sufficient to warrant the managerial employee’s separation from the company. Substantial evidence is of critical importance and the burden rests on the employer to prove it.

The petitioner’s dismissal was not founded on clearly established facts sufficient to warrant separation from employment. While dishonesty of an employee is not to be condoned, neither should a condemnation on that ground be tolerated based on suspicion spawned by speculative inferences.

The alleged strained relationship of the employee and management cannot be applied in this case to defeat reinstatement. To protect labor’s security of tenure, we emphasize that the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every labor dispute almost always results in "strained relations" and the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.

CA- reinstated LA decision SC- Affirmed CA

BRISTOL MYERS SQUIBB, Procedural compliance with the An employer cannot be compelled to continue with the Date of Decision: NCMB- rendered


(PHILS.), INC. vs. VILORIA G.R. No. 148156 27 September 2004 J. CALLEJO, SR.

twin notice rule

Termination of Managerial Employee.

Cause of termination- violation of the company’s code of ethics- valid dismissal

employment of workers guilty of acts of misfeasance or malfeasance, and whose continuance in the service of the employer is clearly inimical to the former’s interest. The law, in protecting the rights of workers, authorizes neither oppression nor self-destruction of the employer (Bondoc vs. NLRC, 276 SCRA 288).

There is no denying that complainant Rogelio T. Viloria was a regular employee of the respondent Bristol Myers Squibb having been employed by the latter from 26 November 1984 until 24 December 1997 with the latest position of Territory Manager. As such regular employee, he is entitled to security of tenure and cannot be terminated from the service except for a just cause or for an authorized cause and after observance of procedural due process (Art. 279 in relation to Art. 277 (b) of the Labor Code, as amended).

The law is clear that before termination of employment can be legally effected the employer must serve two (2) written notices. The first notice informs the employee of the particular act/s or omission/s for which his dismissal is being sought and giving him an opportunity to present his defense, and the second notice informs the employee of the employer’s decision to terminate/or retain him in service. On the basis of the documentary evidence submitted, it has been established that respondent has substantially complied with the twin requirements of procedural due process. As a matter of fact, the company’s decision to terminate complainant’s employment was arrived at only after receipt of complainant’s explanation.

Grievance Machinery- no settlement NCMB- for voluntary Arbitration CA- 19 May 2003 SC- 17 September 2004

its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.

CA-Affirmed NCMB decision as valid exercise of management prerogative SC- Affirmed CA

GUSTILO vs. WYETH Cause of termination- habitual "It is the employer's prerogative to prescribe reasonable Date of Decision: LA- rendered


PHILIPPINES, INC. G.R. No. 149629 04 October 2004 J. SANDOVAL-GUTIERREZ

offender whose numerous contraventions of company rules constitute serious misconduct w/c warrants dismissal.

G.R: Employee dismissed for cause not entitled to separation pay

Exception: separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character

rules and regulations necessary or proper for the conduct of its business or concern, to provide certain disciplinary measures to implement said rules and to assure that the same be complied with. At the same time, it is one of the fundamental duties of the employee to yield obedience to all reasonable rules, orders, and instructions of the employer, and willful or intentional disobedience thereof, as a general rule, justifies rescission of the contract of service and the preemptory dismissal of the employee."

Records show the various violations of respondent company’s rules and regulations committed by petitioner. His dismissal from the service is, therefore, in order. Indeed, in Piedad vs. Lanao del Norte Electric Cooperative, Inc., we ruled that a series of irregularities when put together may constitute serious misconduct, which under Article 282 of the Labor Code, as amended, is a just cause for dismissal.

The rule embodied in the Omnibus Rules Implementing the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay.

7 However, in PLDT

vs. NLRC and Abucay, we held:

"x x x henceforth, separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, x x x an offense involving moral turpitude x x x, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice."

LA- 05 March 1998 NLRC-13 August 1999 CA- 24 January 2001 SC- 04 October 2004

decision for illegal dismissal w/ payment of backwages, separation pay damages and atty’s fees. NLRC- affirmed LA decision w/ modification of reinstatement or in lieu of reinstatement, payment of separation pay. CA- reversed LA and NLRC decision w/ separation pay. SC- affirmed CA decision but w/o separation pay.


In granting separation pay of legally dismissed employee, may invoke social justice only if their hands are clean and their motives blameless x x x." Here, petitioner failed to measure up to such requirement.

NATIONAL FEDERATION OF LABOR (NFL) vs. CA G.R. No. 149464 19 October 2004 J. CALLEJO, SR.

Cause of termination- Just cause, retrenchment

Payment of separation pay

Validity of quitclaims

Payment of wages in checks- valid

Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business insolvency should be paid separation pay equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year.

ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to at least his one (1) month pay or to at least (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months

Date of Decision: LA-24 November 1998 NLRC-19 May 1999 CA- 07 May 2001 SC- 19 October 2004

LA- dismiss the complaint for illegal dismissal NLRC- Affirmed LA decision CA- Affirmed NLRC decision SC- Affirmed CA Decision


shall be considered one (1) whole year.

Patently, in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay of employees shall be equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher.

22 In no case will an employee get less

than one-month separation pay if the separation from the service is due to the above stated causes, provided that he has already served for at least six months. Thus, if an employee had been in the service for at least six months, he is entitled to a full month’s pay as his termination pay if his separation from the job is due to any of the causes enumerated above. However, if he has to his credit ten years of service, he is entitled to five months pay, this being higher than one-month pay. Stated differently, the computation of termination pay should be based on either one-month or one-half month pay, whichever will yield to the employees’ higher separation pay, taking into consideration his length of service.

23

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not be disowned simply because of a change of mind. It is only where there is a clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.

We do not agree with the claim of the petitioners that the




payment of separation pay and other benefits in check is in violation of Article 102 of the Labor Code, which provides:

Art. 102. - Forms of Payment. – No employers shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such payment is customary on the date of effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor or a stipulation in a collective bargaining agreement.

CHINA BANKING CORP. vs. BORROMEO G.R. No. 156515 19 October 2004 J. CALLEJO, SR.

Termination of Managerial employee.

Cause of termination-Resignation

Due process- conduct of investigation no longer necessary when there is already an admission.

Labor Arbiter, are not bound by the technical niceties of the law and procedure and the rules obtaining in courts of law

It is well recognized that company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by competent authority. Moreover, management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. With more reason should these truisms apply to the respondent, who, by reason of his position, was required to act judiciously and to exercise his authority in harmony with company policies.

Contrary to his protestations, the respondent was given the opportunity to be heard and considering his admissions, it became unnecessary to hold any formal investigation. More particularly, it became unnecessary for the petitioner Bank to conduct an investigation on whether the respondent had committed an "infraction of Bank procedures in handling any Bank transaction or work assignment which results in a

Date of Decision: LA- 16 February 1999 NLRC-20 October 1999 CA- 19 July , 2002 SC-19 October 2004

LA- denied the complaint for payment of separation pay, mid-year bonus, profit share and damages against the petitioner Bank.

NLRC- affirmed LA decision CA- reversed LA and NLRC decision because of violation of Due Process, and remanding the case to the LA for further hearings.


loss or probable loss" because the respondent already admitted the same. All that was needed was to inform him of the findings of the management and this was done by way of the Memorandumdated May 23, 1997 addressed to the respondent. His claim of denial of due process must perforce fail.

Contrary to the respondent’s contention that the petitioner Bank could not properly impose the accessory penalty of restitution on him without imposing the principal penalty of "Written Reprimand/Suspension," the latter’s Code of Ethics expressly sanctions the imposition of restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in view of his voluntary separation from the petitioner Bank, the imposition of the penalty of reprimand or suspension would be futile. The petitioner Bank was left with no other recourse but to impose the ancillary penalty of restitution. It was certainly within the petitioner Bank’s prerogative to impose on the respondent what it considered the appropriate penalty under the circumstances pursuant to its company rules and regulations.

It bears stressing that the respondent was not just a rank and file employee. At the time of his resignation, he was the Assistant Vice- President, Branch Banking Group for the Mindanao area of the petitioner Bank. His position carried authority for the exercise of independent judgment and discretion, characteristic of sensitive posts in corporate hierarchy. As such, he was, as earlier intimated, required to act judiciously and to exercise his authority in harmony with company policies.

On the other hand, the petitioner Bank’s business is essentially imbued with public interest and owes great fidelity to the public it deals with. It is expected to exercise the highest degree of diligence in the selection and

SC-reversed and set aside CA Order and reinstated NLRC decision.


supervision of their employees. As a corollary, and like all other business enterprises, its prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected. The law, in protecting the rights of labor, authorized neither oppression nor self-destruction of an employer company which itself is possessed of rights that must be entitled to recognition and respect.

PHIL. AMERICAN LIFE AND GENERAL INSURANCE CO. vs. GRAMAJE G.R. 156963 11 November 2004 J. Chico-Nazario

Management Prerogative in relation to the employee’s right to security of tenure

Valid transfer in relation to the excise of management prerogative

Discrimination

We have held that the right and privilege of the employer to exercise the so-called management prerogative is recognized, and the courts will not interfere with it. This privilege is inherent in the right of employers to control and manage their enterprise effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice.

In the pursuit of its legitimate business interests, management has the prerogative to transfer or assign employees from one office or area of operation to another – provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.

The unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248(e) of the Labor Code. It is the failure to treat all persons equally when no reasonable distinction can be found

Date of Decision- L.A.- 01 June 2000 N.L.R.C. – 27 November 2000 C.A. – 18 October 2002 MR- 20 January 2003 (denied) SC- 11 November 2004

L.A-complainant not illegally dismissed

N.L.R.C- affirmed the decision of L.A. C.A. – reversed the decision of NLRC; payment of separation pay in lieu of reinstatement, full backwages inclusive of allowances and other benefits or monetary benefits; case was remanded to L.A. for the determination of monetary liabilities of private respondents; Payment of exemplary and


Test of valid transfer


between those favored and those not favoured.

In the case of Blue Dairy Corporation v. NLRC, we explained the test for determining the validity of the transfer of employees, as follows:

But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee's transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay.

Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment. The circumstances which prevailed in the working environment of the respondent clearly demonstrate this

It is no less than the Constitution which guarantees

moral damages due to the findings of constructive dismissal. SC- Affirmed CA’s decision; dismissed the petition


Security of tenure-act of social justice

Abandonment

protection to the workers' security of tenure as a policy of the State. This guarantee is an act of social justice.

for abandonment to exist, it is essential (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts

AGABON VS. NLRC G.R. 158693 17 November 2004 J. Ynares-Santiago

Valid dismissal (procedural due process)

Just causes

To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.

Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter's representative in connection with the employee's work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of abandonment, these two factors

L.A. – 28 December 1999

N.L.R.C.-

C.A.- 23 January 2003

SC – 17 November 2004

L.A – illegal dismissal; payment of backwages; payment of separation pay in lieu of reinstatement; payment of holiday pay and service incentive pay as well as premium pay for holiday and rest days; NLRC – reversed the decision of LA; petitioners abandoned their work, therefore not entitled to separation pay and backwages; denial of other monetary claims for lack of evidence


Abandonment

Procedure for terminating employee

should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. – In all cases of termination of employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable

C.A.- no illegal dismissal rather the petitioners abandoned their employment; the decision of NLRC was reversed only insofar as the dismissal of money claims. SC- Affirmed with Modification; private respondent was ordered to pay nominal damages for non compliance with statutory due process


Dismissal based on just causes

opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employee's last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer


must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.

In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have


been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee's last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process.

Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10.

27 Breaches of these due process requirements

violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing.

UNION MOTOR CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION G.R. 159738 09 December 2004 J. Callejo, Sr.

Dismissal

Dismissal is the ultimate penalty that can be meted to an employee. Thus, it must be based on just cause and must be supported by clear and convincing evidence. To effect a valid dismissal, the law requires not only that there be just and valid cause for termination; it, likewise, enjoins the employer to afford the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code enumerates the just causes for the termination of

Date of Filing: (NLRC) 18 May 1999 -for illegal dismissal Date of Decision: LA- 19 October 2000 NLRC- 29 November 2001

LA- failure to report to work for ten (10) days without approved leave of absence was equivalent to gross neglect of duty NLRC- decision of

http://www.lawphil.net/judjuris/juri2004/nov2004/gr_158693_2004.html#fnt27


Negligence as a ground for dismissal

employment by the employer:

ART. 282. TERMINATION BY EMPLOYER

An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties.

To warrant removal from service, the negligence should not merely be gross but also habitual. Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. The petitioner has not sufficiently shown that the respondent had wilfully disobeyed the company rules and regulation. The petitioner also failed to prove that the respondent abandoned his job. The bare fact that the respondent incurred excusable and unavoidable absences does not amount to an abandonment of his employment.

CA-10 April 2003

LA was set aside and reversed; reinstatement; payment of full backwages CA: Affirmed SC: Affirmed

URBANES, JR. Vs. CA G.R. 138379 25 November 2004 J. Austria-Martinez

Right to transfer /reassign employees

As a general rule, the right to transfer or reassign employees is recognized as an employer's right and the prerogative of management. As the exigency of the business may require, an employer, in the exercise of his prerogative may transfer an employee, provided that said transfer does not result in a demotion in rank or diminution in salary, benefits and other privileges of the employee; or is not unreasonable, inconvenient or prejudicial to the latter; or is not used as a subterfuge by the employer to rid himself of an undesirable

Date of Filing: (NLRC) 28 March 1995 Date of Decision: LA- 31 October 1995 NLRC- 28 January 1998 CA- 11 February 1999

LA-payment of separation pay; refund of bond plus 10 % attorney’s fees NLRC- Affirmed CA- Affirmed


worker. The management prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. There must be no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee. It is clear that while petitioner has the prerogative to transfer its guards pursuant to business exigencies, he has the burden, however, to show that the exercise of such prerogative was not done with grave abuse of discretion or contrary to justice and fair play.

-22 April 1999 (MR) SC- 25 November 2004

SC- Affirmed with modification; reinstatement and payment of backwages; remanded to NLRC for computation of backwages

NASIPIT LUMBER COMPANY and PILIPPINE WALLBOARD CORPORATION vs. NOWM G.R. No. 146225 25 November 2004 J. Callejo, Sr.

Suspension of operation not exceeding six (6) months

We agree with the contention of the petitioners that under Article 286 of the Labor Code, an employer may bona fide suspend the operation of its business for a period of not exceeding six (6) months. In such a case, there is no termination of the employment of the employees, but only a temporary displacement. When the suspension of the business operations exceeds six (6) months, then the employment of the employees would be deemed terminated. On the other hand, if the operation of the business is resumed within six (6) months from the bona fide suspension thereof, it shall be the duty of the employer to reinstate his employees to their former positions without loss of seniority rights, if the latter would indicate their desire to resume work within one (1) month from such resumption of operations, conformably to Article 286 of the Labor Code which reads:

Art. 286. When employment not deemed terminated - The bona fide suspension of the operations of a business or undertaking for a period not exceeding six (6) months, or the fulfilment by the employee of a military service or

Date of Filing: Sub-Regional Arbitration branch of NLRC: 18 November 1996 Date of Decision – Labor Arbiter: 7 July 1997 Date of Decision – NLRC: 31 March 1998 Date of Decision – CA: 16 August 2000 Resolution on MR: 28 November 2000 Date of Decision – SC: 25 November 2004

Labor Arbiter : Dismissed NLRC: set aside LA’s decision; awarded separation pay CA: Affirmed with modification; payment of separation pay equivalent to one-half (½) month pay for every year of service MR: denied SC: Affirmed with modification


Closure as a management prerogative

civic duty shall not terminate employment.

In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

Closure or suspension of operations for economic reasons is, therefore, recognized as a valid exercise of management prerogative. The determination to cease or suspend operations is a prerogative of management, which the State does not usually interfere with as no business or undertaking is required to continue operating at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a taking of property without due process of law.

However, the burden of proving, with sufficient and convincing evidence, that such closure or suspension is bona fide falls upon the employer.

FELIX vs. NLRC G.R. No. 148256 17 November 2004 J. Carpio Morales

Absence of proof of loss of confidence- dismissal cannot be sustained

Unlike in other cases where the complainant has the burden of proof to discharge its allegations, the burden of establishing facts as bases for an employer's loss of confidence in an employee — facts which reasonably generate belief by the employer that the employee was connected with some misconduct and the nature of his participation therein is such as to render him unworthy of trust and confidence demanded of his position — is on the employer. Should the employer fail in discharging this onus, the dismissal of the employee cannot be sustained. This is consonant with the constitutional guarantee of security of tenure, as implemented in what is now Sec. 279

Date of Filing: 10 October 1994 (illegal dismissal) Date of Decision: LA:16 October 1996 NLRC: 20 March 1998 (MR) 07 May 1998 CA: 21 May 2001 (MR): 07 August 2002

Labor Arbiter: Dismissed

NLRC: Affirmed (MR) Denied

CA: Affirmed

SC: Granted; decision of CA was set aside; the petitioner was declared


Hearing in case of denial

Loss of confidence

of the Labor Code, as amended.

It is settled that where the employee denies the charges against him, a hearing is necessary to thresh out any doubt. The failure of the company to give petitioner, who denied the charges against him, the benefit of a hearing and an investigation before his termination constitutes an infringement of his constitutional right to due process.

It bears emphasis that the matter of determining whether the cause for dismissing an employee is justified on the ground of loss of confidence cannot be left entirely to the employer. Impartial tribunals do not rely only on the statement made by the employer that there is "loss of confidence" unless duly proved or sufficiently substantiated.

While Article 282 of the Labor Code provides that an employer may terminate an employee based on fraud or willful breach of the trust reposed in him by his employer or duly authorized representative, loss of trust and confidence as a just cause for dismissal was never intended to provide employers with a carte blanche for terminating employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given imprimatur by this Court, could readily reduce to barren the constitutional guarantee of security of tenure.

SC:17 November 2004

illegally dismissed; payment of full backwages and separation pay.

Documents

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