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LABOR LAW

REVIEW
Case Digests Atty. Marlon Manuel

Amsheryl

SAN BEDA COLLEGE OF LAW | 4B 2015-2016


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

PART I
RIGHT TO SELF-ORGANIZATION
Concept and Scope
Arts. 243, 246, 277 (c), 212 (e, f)
Omnibus Rules, Book V, Rule I-Rule II, as amended by D.O. 40, series of 2001
NUWHRAIN-MPHC v Secretary of Labor and Employment, July 31, 2009
Labor Organizations and Registration of Unions
Labor Code: Arts. 212 (g, h), 231, 234-242, 277 (a)
Omnibus Rules, Book V, Rule I, Sec. I (a, h-p, w, cc, ee, ff, jj, kk, zz, ccc), Rule III-V, XIV-XV, as amended by
D.O. 40-03, as further amended by D.O. 40-B.
R.A. No. 9481, Sec. 1-9
Department Order No. 40-F-03, series of 2008.
(Implementing Rules for R.A. 9481 amendments)
San Miguel Corporation Employees Union-Philippine Transport and General Workers Organization (SMCEUPTGWO) v. San Miguel Packaging Products Employees Union-Pambansang Diwa Ng Manggagawang Pilipino
(SMPPEU-PDMP), September 12, 2007
The Heritage Hotel Manila (Owned and Operated By Grand Plaza Hotel Corporation) v. Pinag-Isang Galing at Lakas
Ng Mga Manggagawa sa Heritage Manila (Piglas-Heritage), October 30, 2009
Eagle Ridge Golf and Country Club v. CA, March 18, 2010
Samahang Manggagawa sa Charter Chemical (SMCC-SUPER) v. Charter Chemical and Coating Corp, March 16,
2011
Yokohama Tire Phils. v. Yokohama Employees Union, March 10, 2010
Eligibility for Membership; Special Groups of Employees
Labor Code: Arts. 245, 212 (m)
R.A. No. 9481, Sec. 8-9
Department Order No. 40-F-03, series of 2008
Omnibus Rules, Book V, Rule I, Sec. I (hh), (nn), (xx), as amended by D.O. 40
Cathay Pacific Steel Corp. v. CA, August 2006
San Miguel Corp. Supervisors and Exempt Union v. Laguesma, August 15, 1997
Standard Chartered Bank Employees Union (SCBEU-NUBE) v. Standard Chartered Bank, April 22, 2008
Coastal Subic Bay Terminal v. DOLE, November 20, 2006
Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery v. Asia Brewery, August 3, 2010
San Miguel Foods v SMC supervisors and Exempt Union, August 1, 2011
Union Security Clause
BPI v BPI Employees Union, August 10, 2010 (Main Decision and Dissenting Opinion), October 19, 2011
General Milling Corp v Casio, March 10, 2010
PICOP Resources v Taneca, August 9, 2010
Victoriano v Elizalde Rope Workers Union, 59 SCRA 54
Kapatiran sa Meat and Canning Division v Ferrer-Calleja, 162 SCRA 367
Conditions of Membership and Rights of Members
Labor Code: Arts. 241, 274, 222 (b)
Omnibus Rules, Book V, Rule XI, XII, XIII, XVIII, XX, as amended by D.O. 40
NOTE: Compare the original provisions of the Labor Code with the amended provisions of R.A. No. 9481.

For reference:
Atlas Litographic Services v. Laguesma, 205 SCRA 12
De La Salle University Medical Center v. Laguesma, 294 SCRA 141
Tagaytay Highlands v. Tagaytay Highlands Employees Union- PTGWO, January 22, 2003
PART II
BARGAINING UNIT
Omnibus Rules, Book V, Rule I, Sec. 1 (d, t), as amended by D.O. 40-03
De La Salle v. De La Salle University Employees Association, 330 SCRA 363
San Miguel Foods v. San Miguel Corp. Supervisors and Exempt Union, August 1, 2011
Holy Child Catholic School v. HCCS-TELU-PIGLAS, July 23, 2013
BARGAINING AGENT, CERTIFICATION ELECTION PROCEEDINGS
Labor Code:
Arts. 255-259, 258-A (Note: Arts. 256 & 257 had been amended by R.A. 9481)
Omnibus Rules, Book V , Rule I, Sec. 1 (d, h, j, o, p, q, t, ll, ss, bbb),
Rules VI-X, as amended by D.O. 40, and further amended by D.O. 40-F-03, series of 2008
Republic of the Philippines, represented by DOLE, v. Kawashima Textile, July
23, 2008
St. James School of Quezon City v. Samahang Manggagawa sa St. James, November 23, 2005
DHL Phils. United Rank and File Association v. Buklod ng Manggagawa ng
DHL Phils., July 22, 2004
Sta. Lucia East Commercial Corporation v. Hon. Secretary Of Labor, August 14,
2009
Samahan Ng Mga Manggagawa Sa SammaLakas Sa Industriya Ng
Kapatirang Haligi Ng Alyansa (SammaLikha) v. Samma Corporation, March 13, 2009
Chris Garments Corporation v. Hon. Patricia A. Sto. Tomas and Chris Garments Workers UnionPTGWO, January 12, 2009
National Union Of Workers In Hotels, Restaurants And Allied Industries- Manila
Pavilion Hotel Chapter v. Secretary of Labor, July 31, 2009
Eagle Ridge Golf and Country Club v. CA, March 18, 2010
PICOP Resources, Inc. v. Taeca, August 9, 2010
Legend International Resorts v. Kilusang Manggagawa ng Legend, February 23, 2011
Samahang Manggagawa Sa Charter Chemical (SMCC-SUPER) v. Charter Chemical and Coating Corp., March 16,
2011
Voluntary Recognition
Sta. Lucia East Commercial Corporation v. Hon. Secretary Of Labor, August 14, 2009
For reference: Coastal Subic Bay Terminal v. DOLE, November 20, 2006
PART III
COLLECTIVE BARGAINING
Labor Code: Arts. 250-254, 247-249, 261
Omnibus Rules, Book V, Rule I, Sec. 1 (d, h, j, t, bbb), Rules XVI-XVII, as amended by D.O. 40-03
Art. 231, 212 (n), 260-262 (b), 277 (f,g,h)
Omnibus Rules, Book V, Rule XIX, XXI, as amended by D.O. 40-03
Union of Filipro Employees v. Nestle Phils., March 3, 2008
PAL v. PALEA, March 12, 2008
San Miguel Foods v. San Miguel Corporation Employees Union, October 5, 2007
Capitol Medical Center v. Trajano, June 30, 2005
Standard Chartered Bank Employees Union v. Confesor, June 16, 2004
General Milling Corporation v. CA, February 11, 2004

FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO) v. Sama-Samang
Nagkakaisang Manggagawa Sa FVC-Solidarity Of Independent And General Labor Organizations (SANAMA-FVCSIGLO), November 27, 2009
RFM Corporation v. KAMPI-NAFLU-KMU, February 4, 2009
Fulache v. ABS-CBN, GR No. 183810, January 21, 2010
Employees Union of Bayer v. Bayer Phils., December 6, 2010
General Milling Corp. Independent Labor Union v. General Milling, June 15, 2011
Malayan Employees Association v. Malayan Insurance Co., February 2, 2010
Santuyo v. Remerco Garments, March 22, 2010
Insular Hotel Employees Union v. Waterfront Insular Hotel, September 22, 2010
Cirtek Employees Labor Union v. Cirtek Electronics, November 15, 2010
Eastern Telecoms v. Eastern Telecoms Employees Union, February 8, 2012
PNCC Skyway Traffic Management & Security Division Workers Organization v. PNCC Skyway Corp., February
17, 2010
Supreme Steel v. Nagkakaisang Manggagawa sa Supreme, March 28, 2011
For reference:
Halaguea, et al., and other flight attendants of Philippine Airlines v Philippine
Airlines, October 2, 2009
PASSI v. Boclot, September 28, 2007
PART IV
UNFAIR LABOR PRACTICES
Labor Code:

Arts. 247-249, 261

Employees Union of Bayer Phils. v. Bayer Phils., December 6, 2010


Prince Transport v. Garcia, January 12, 2011
Manila Mining Employees Corp. v. Manila Mining, September 29, 2010
Central Azucarera de Bais Employees Union v. Central Azucarera de Bais, Nov. 17, 2010
BPI Employees Union-Davao v. BPI, July 24, 2013
Pepsi Cola Products v. Molon et al., February 18, 2013
Royal Plant Workers Union v. Coca Cola Bottlers, April 15, 2013
Goya v. Goya Employees Union, January 21, 2013
STRIKES, LOCKOUTS AND CONCERTED ACTIONS
Arts. 212 (o-s), 263-266, 254; Rules, Book V, Rule XXII, as amended by D.O. 40-03, and further amended by D.O. 40A and D.O. 40-G-03 (2010)
Bukluran ng Manggagawa sa Clothman Knitting v. CA, January 17, 2005
Steel Corporation v. SCP Employees Union, April 16, 2008
Biflex Phils. v. Filflex Industrial & Manufacturing Corp., Dec. 19, 2006
Bascon & Cole v. CA, February 5, 2004
Toyota Motor Phils. Corp. Workers Association v. Toyota Motor Phils, Oct. 19, 2007
NUWHRAIN Dusit Hotel Nikko Chapter v. CA, November 11, 2008
Capitol Medical Center v. NLRC, GR 147080, April 26, 2005
Trans-Asia Shipping Lines-Unlicensed Crews Employees Union v. CA, July 7, 2004
Manila Diamond Hotel Employees Union v. CA, Secretary, December 16, 2004
Philcom Employees Union v. Phil. Global Communications, July 17, 2006
Nissan Motors v. Secretary, June 21, 2006
FEU-NRMF v. FEU-NRMFEA-AFW, October 16, 2006
Pilipino Telephone Corporation v. PILTEA, June 22, 2007
Club Filipino v. Bautista, July 13, 2009
A. Soriano Aviation v. Employees Association of A. Soriano Aviation, August 14, 2009
Jackbilt Industries v. Jackbilt Employees Union, March 20, 2009
Alcantara & Sons v. CA, GR G.R. No. 155109, September 29, 2010
PHIMCO Industries, Inc. v. PILA, August 11, 2010
Solidbank Corporation v. Gamier, November 15, 2010

Escario v. NLRC, September 27, 2010


Bagong Pagkakaisa ng Manggagawa sa Triumph v. Secretary, July 5, 2010
Fadriquelan v. Monterey Foods, June 8, 2011
Magdala Multipurpose & Livelihood v. KMLMS, October 19, 2011
Automotive Engine Rebuilders v. Progresibong Unyon, July 13, 2011; January 16, 2013
Naranjo v. Biomedica Heath Care, September 19, 2012
VCMC v. Yballe, January 15, 2014
PART V
EMPLOYER-EMPLOYEE RELATIONSHIP
A. Elements of Relationship
Labor Code: Article 97 (a), (b), (c), (e); 167 (f), (g); 212 (e) & (f)
Cases:
Television and Production Exponents v. Servaa (GR 167648, January 28,2008)
ABS-CBN Broadcasting Corp. v. Nazareno (GR 164156, Sept. 26, 2006)
Fulache v. ABS-CBN (January 21, 2010)
(These three cases should be read in relation to Sonza v. ABS-CBN
Broadcasting Corporation [GR 138051, June 10, 2004])
Bernante v. PBA (September 14, 2011)
Abella v. PLDT (GR 159469, June 8, 2005)
Consulta v. CA (GR 145443, March 18, 2005)
Villamaria v. CA (GR 165881, April 19, 2006)
Republic of the Philippines v. ASIAPRO Cooperative (GR 172101, November
23, 2007)
Phil. Global Communications v. De Vera (GR 157214, June 7, 2005)
Coca Cola Bottlers v. Climaco (GR 146881, February 5, 2007)
Chavez v. NLRC (GR 146530, January 17, 2005)
Angelina Francisco v. NLRC (GR 170087, August 31, 2006)
Tongko v. Manufacturers Life Insurance (GR 167622, June 29, 2010 & January
25, 2011)
Intel Technology v. NLRC & Cabiles, February 5, 2014
Matling Industrial v. Coros (October 13, 2010)
Cosare v. Broadcom Asia, February 5, 2014
Atlanta Industries v. Sebolino (January 26, 2011)
Republic v. Asiapro Cooperative (November 23, 2007)
B. Independent Contractors and Labor-Only Contractors
Labor Code: Art. 106-109
Department Order No. 18-A, series of 2011 (which amended D.O. No. 18, s. 2002)
Cases:
Philippine Airlines v. Ligan (GR 146408, February 29, 2008)
San Miguel Corporation v. Aballa (GR 149011, June 28, 2005)
Meralco Industrial Engineering Services v. NLRC (GR 145402, March 14, 2008)
Manila Electric Company v. Benamira (GR 145271, July 14, 2005)
Dole Phils. v. Esteva (GR No. 161115, November 30, 2006)
Aliviado v. Procter and Gamble (GR 160506, March 9, 2010)
Temic Automotive v. Temic Automotive Phils. Employees Union (GR 186965,
December 23, 2009)
Smart Communications v. Astorga (GR 148132, January 28, 2008)
Coca-Cola Bottlers v. Agito (GR 179546, February 13, 2009)
Manila Water v. Dalumpines (GR 175501, October 4, 2010)
Babas v. Lorenzo Shipping (GR 186091, December 15, 2010)
Teng v. Pahagac (GR 169704, November 17, 2010)
PART VI
CLASSES OF EMPLOYEES

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


Magis Young Achievers Learning Center v. Manalo, February 13, 2009
Pier 8 Arrastre & Stevedoring Services v. Boclot, September 28, 2007
The Peninsula Manila v. Alipio, June 17, 2008
Rowell Industrial Corporation v. CA, March 7, 2007
ABS-CBN Broadcasting Corp. v. Nazareno, September 26, 2006
Kimberly Clark Phils. v. Secretary, November 23, 2007
Benares v. Pancho, April 29, 2005
Hacienda Bino/Hortencia Starke v. Cuenca, April 15, 2005
Gapayao v. Fulo, June 13, 2013
Universal Robina Sugar Milling Corp. v. Acibo, January 15, 2014
Filipinas Pre-fabricated Building Systems (FilSystems) v. Puente, March 18, 2005
St. Marys University v. CA, March 8, 2005
Poseidon Fishing v. NLRC, February 20, 2006
PLDT v. Arceo, May 5, 2006
Fulache v. ABS CBN, January 21, 2010
Leyte Geothermal Power Progressive Employees Union v. PNOC, March30, 2011
Asos v. PNCC, July 3, 2013
Malicdem v. Marulas Industrial Corp., February 26, 2014
Exodus International Construction v. Biscocho, February 23, 2011
DM Consunji v. Gobres, August 8, 2010
Mercado v. AMA Computer College, April 13, 2010
Colegio del Santisimo Rosario v. Rojo, September 4, 2013
University of the East v. Pepanio, January 23, 2013
Herrera-Manaois v. St. Scholasticas College, December 11, 2013
PART VII
SECURITY OF TENURE
Arts. 277 (b), 279, 282-287; Rules, Book VI, Secs. 2, 5, 6, Book V, Rule XXIII
Just Causes
Salas v. Aboitiz One, June 27, 2008
RB Michael Press v. Galit, February 13, 2008
San Miguel Corporation v. NLRC, April 16, 2008
LBC Express v. Mateo, June 9, 2009
Genuino v. NLRC, December 4, 2007
Bughaw v. Treasure Island, March 28, 2008
Moreno v. San Sebastian College, March 28, 2008
Janssen Pharmaceutica v. Silayro, February 26, 2008
Suico v. NLRC, January 30, 2007
Perez & Doria v. PT&T, April 7, 2009
Bacolod-Talisay Realty v. Dela Cruz, April 30, 2009
Prudential Guarantee & Assurance Labor Union v. NLRC, June 13, 2012
Cosmos Bottling Co. v. Fermin, June 20, 2012
Sampaguita Auto Transport v. NLRC & Sagad, January 30, 2013
Dongon v. Rapid Movers, Augsut 28, 2013
Alilem Credit Cooperative v. Bandiola, February 25, 2013
Cavite Apparel v. Marquez, February 6, 2013
Esguerra v. Valle Verde, June 13, 2012
Authorized Causes
Andrada v. NLRC, December 28, 2007
Manatad v. PT&T, March 7, 2008
Linton Commercial v. Hellera, October 10, 2007
AMA Computer College v. Garcia, April 14, 2008
GSWU-NAFLU-KMU v. NLRC, October 17, 2006
Dickinson Philippines v. NLRC, November 15, 2005

PT & T v. NLRC, April 15, 2005


Oriental Petroleum v. Fuentes, October 14, 2005
FASAP v. PAL, July 22, 2008 and October 2, 2009
General Milling Corp. v. Viajar, January 30, 2013
Constructive Dismissal/Preventive Suspension
Maricalum v. Decorion, April 12 2006
Uniwide Sales v. NLRC, February 29, 2008
Norkis Trading v. Genilo, February 11, 2008
Fungo v. Lourdes School, July 27, 2007
The University of the Immaculate Conception v. NLRC, January 26, 2011
Robinsons Galleria/Robinsons Supermarket Corp. v. Ranchez, January 19, 2011
Dreamland Hotel v. Johnson, March 12, 2014
Union Security Clause
Alabang Country Club v. NLRC, February 14, 2008
Inguillo v. First Philippine Scales, June 5, 2009
General Milling Corp. v. Casio, March 10, 2010
Disease
Crayons Processing v. Pula, July 30, 2007
Villaruel v. Yeo Han Guan, June 1, 2011
Padillo v. Rural bank of Nabunturan, January 21, 2013
Temporary Suspension of Operations/Floating Status
Manila Mining Corp. Employees Association v. Manila Mining Corp., September 29, 2010
Nippon Housing v. Leynes, August 3, 2011
SKM Art Corp. v. Bauca, November 27, 2013
Illegal Strike
Jackbilt Industries v. Jackbilt Employees Union, March 20, 2009
Escario v. NLRC, September 27, 2010
Abaria v. NLRC, December 7, 2011 (relate to Bascon v. CA, February 5, 2004)
PHIMCO Industries v. PHIMCO Industries Labor Association, August 11, 2010
Suspension
Caong v. Regualos, January 26, 2011
Consequences of Dismissal
Composite Enterprises v. Caparoso, August 8, 2007
Sagum v. CA, May 26, 2005
Agabon v. NLRC, November 17, 2004
Jaka Food Processing v. Pacot, March 28, 2005
Industrial Timber v. Ababon, March 30, 2006
Sangwoo Phil. v. Sangwoo Phils. Employees Union, December 9, 2013
Equitable Banking v. Sadac, June 8, 2006
Carlos v. CA, August 28, 2007
Tomas Claudio Memorial College v. CA, February 16, 2004
Chronicle Securities v. NLRC, November 25, 2004
Intercontinental Broadcasting v. Benedicto, July 20, 2006
Velasco v. NLRC, June 26, 2006
PCIB v. Abad, February 28, 2005
Bago v. NLRC, April 4, 2007
Panuncillo v. CAP Phils., February 9, 2007

Garcia v. Philippine Airlines, January 20, 2009


Islriz v.Capada, January 31, 2011
Lansangan v. Amkor Technology Philippines, January 30, 2009
Palteng v. UCPB, February 27, 2009
Alcantara & Sons v. CA, September 29, 2010
Aboc v. Metrobank, December 13, 2010
Prince Transport v. Garcia, January 12, 2011
Robinsons Galleria/Robinsons Supermarket Corp. v. Ranchez, January 19, 2011
Pfizer v. Velasco, March 9, 2011
Luna v. Allado Construction, May 30, 2011
Villaruel v. Yeo Han Guan, June 1, 2011
Nacar V. Gallery Frames, August 13, 2013
Integrated Microelectronics V. Pionilla, August 28, 2013
United Tourist Promotion V. Kemplin, February 5, 2014
PART VIII
DISPUTE SETTLEMENT
Labor Code: Arts. 128-129, 213-226, 254, 260-262-B, 263 (g-i), 273-275, 277
(b), 290-292, note the amendments introduced by R.A. 9347
Executive Order No. 126 & 251
Peoples Broadcasting v. Secretary, May 8, 2009
Diokno v. Cacdac, July 4, 2007
Jaguar Security v. Sales, April 22, 2008
Pioneer Concrete Philippines v. Todaro, June 8, 2007
Tegimenta Chemical Phils. v. Buensalida, June 17, 2008
Metro Transit Organization v. PIGLAS NFWU-KMU, April 14, 2008
Hacienda Valentin-Balabag v. Secretary, February 11, 2008
Pentagon Steel Corp. v. CA, June 26, 2009
Masmud v. NLRC, February 13, 2009
Negros Metal Corp. v. Lamayo, August 25, 2010
Albert Teng Fish Trading v. Pahagac, November 17, 2010
Sarona v. NLRC, January 18, 2012.
McBurnie v. Ganzon, EGI-Managers, Inc., October 17, 2013
Prince Transport v. Garcia, January 12, 2011.
Manila Pavillion v. Delada, January 25, 2012
Unilever v. Rivera, June 3, 2013.
Phil. Carpet Manufacturing Corp. v. Tagyamon, December 11, 2013
Nacar v. Gallery Frames, August 13, 2013

1. YES. The inclusion of Gatbontons vote was


proper not because it was not questioned but
because probationary employees have the right
to vote in a certification election. The votes
of the five other probationary employees should
thus also have been counted. Rule II, Sec. 2 of
Department Order No. 4003, series of 2003,
which amended Rule XI of the Omnibus Rules
Implementing the Labor Code, provides:

RIGHT TO SELF ORGANIZATION


NATIONAL
UNION OF
WORKERS IN HOTELS,
RESTAURANTS AND ALLIED INDUSTRIES
MANILA
PAVILION HOTEL CHAPTER
vs.
SECRETARY OF LABOR AND EMPLOYMENT
G.R. No. 181531. July 31, 2009.
FACTS
In a certification election conducted among the rank
and file employees of respondent Holiday Inn Manila
Pavilion Hotel (the Hotel), the following results were
obtained:

For purposes of this section, any employee,


whether employed for a definite period or not, shall
beginning on the first day of his/her service, be
eligible for membership in any labor organization.
The period of reckoning in determining who shall
be included in the list of eligible voters is in cases
where a timely appeal has been filed from the
Order of the MedArbiter, the date when the
Order of the Secretary of Labor and
Employment, whether affirming or denying the
appeal, becomes final and executory. The
provision in the CBA disqualifying probationary
employees from voting cannot override the
Constitutionallyprotected right of workers to
selforganization, as well as the provisions of
the
Labor
Code
and
its
Implementing Rules on certification elections and j
urisprudence thereon.

EMPLOYEES IN VOTERS LIST = 353


TOTAL VOTES CAST = 346
NUWHRAINMPHC = 151
HIMPHLU = 169
NO UNION = 1
SPOILED = 3
SEGREGATED = 22
Among the segregated were five votes on the
on the ground
that
they
were
cast
by
probationary employees and, pursuant to the
existing Collective Bargaining Agreement (CBA),
such employees cannot vote. It bears noting early
on, however, that the vote of one Jose
Gatbonton
(Gatbonton), a
probationary employee, was counted.

2. NO. under the socalled double majority rule,


for there to be a valid certification election,
majority of the bargaining unit must have
voted AND the winning union must have
garnered majority of the valid votes cast.
Prescinding from the Courts ruling that all the
probationary
employees
votes
should be deemed valid votes while that of the
supervisory employees should be excluded, it
follows that the number of valid votes cast
would increase from 321 to 337. Under Art.
256 of the Labor Code, the union obtaining
the majority of the valid votes cast by the
eligible voters shall be certified as the sole
and exclusive bargaining agent of all the
workers in the appropriate bargaining unit. This
majority is 50% + 1. Hence, 50% of 337 is 168.5 +
1
or
at least 170.
HIMPHLU
obtained 169 while petitioner received 151 votes.
Clearly, HIMPHLU was not able to obtain a
majority vote.

MedArbiter Calabocal ruled for the opening of 17 out


of the 22 segregated votes, except the five votes of the
probationary employees. Petitioner, which garnered
151 votes,
appealed
to
the
Secretary
of Labor and Employment (SOLE), arguing that the
votes of the probationary employees should have been
opened considering that probationary employee
Gatbontons vote was tallied. And petitioner averred
that respondent HIMPHLU, which garnered 169
votes, should not be immediately certified as the
bargaining agent, as the opening of the 17
segregated ballots would push the number of valid
votes cast to 338 (151 + 169 + 1 + 17), hence, the 169
votes
which
HIMPHLU
garnered would be one vote shortof the majority which
would then become 69.
The Secretary of Labor and Employment (SOLE),
through then Acting Secretary Luzviminda Padilla,
affirmed the MedArbiters Order.

SAN
MIGUEL
CORPORATION
EMPLOYEES
UNIONPHILIPPINE TRANSPORT AND GENERAL
WORKERS ORGANIZATION (SMCEUPTGWO),
petitioner,
vs.
SAN
MIGUEL
PACKAGING
PRODUCTS EMPLOYEES UNIONPAMBANSANG
DIWA NG MANGGAGAWANG PILIPINO (SMPPEU
PDMP), respondent
G.R. No. 171153, September 12, 2007

ISSUES:
1. Whether or not the five votes of the probationary
employees should be opened.
2. Whether HIMPHLU should be certified as the
exclusive bargaining unit.
HELD:

(2) No. After an exhaustive study of the governing


labor law provisions, both statutory and
regulatory, the court finds no legal justification
to support the conclusion that a trade union
center is allowed to directly create a local or
chapter through chartering. Department Order
No. 9 mentions two labor organizations either
of which is allowed to directly create a local or
chapter through chartering a duly
registered federation or
a national union.
Department Order No. 9 defines a "chartered
local" as a labor organization in the private
sector operating at the enterprise level that
acquired legal personality through a charter
certificate,
issued
by
a
duly
registered federation or national union and
reported to the Regional Office in accordance
with Rule III, Section 2-E of these Rules.

FACTS:
San Miguel Corporation Employees Union-Philippine
Transport and General Workers Organization
(SMCEU-PTGWO) is the incumbent bargaining agent
for the bargaining unit comprised of the regular
monthly-paid rank and file employees of the three
divisions of San Miguel Corporation (SMC), namely,
the San Miguel Corporate Staff Unit (SMCSU), San
Miguel Brewing Philippines (SMBP), and the San
Miguel Packaging Products (SMPP), in all offices and
plants of SMC while San Miguel Packaging Products
Employees
UnionPambansang
Diwa
ng
Manggagawang
Pilipino
(SMPPEUPDMP)
is
registered as a chapter of Pambansang Diwa ng
Manggagawang Pilipino (PDMP). SMCEU-PTGWO
filed a petition for the cancellation of SMPPEUs
registration and its dropping from the rolls of legitimate
labor organizations alleging that SMPPEU committed
fraud and falsification in obtaining its certificate of
registration and that PDMP does not have the power to
create a local or a chapter since it is a trade union
center. It was also found by the regional director that
SMPPEU failed to comply with the 20% %
membership requirement under the Labor Code.

Article 234 now includes the term trade union


center, but interestingly, the provision
indicating the procedure for chartering or
creating a local or chapter, namely Article 234A, still makes no mention of a "trade union
center. Also worth emphasizing is that even in
the most recent amendment of the
implementing rules,there was no mention of a
trade union center as being among the labor
organizations allowed to charter.

ISSUES:
(1) Is SMPPEU, a chapter, required to comply
with the 20% membership requirement under
the Labor Code?
(2) May PDMP, a trade union center, validly
create local and chapters?

The Court deems it proper to apply the Latin


maxim expressio unius est exclusio alterius.
Under this maxim of statutory interpretation,
the expression of one thing is the exclusion of
another. When certain persons or things are
specified in a law, contract, or will, an intention
to exclude all others from its operation may be
inferred. If a statute specifies one exception to
a general rule or assumes to specify the
effects of a certain provision, other exceptions
or effects are excluded.

HELD:
(1) No. The creation of a branch, local or chapter
is treated differently. The Court, in the
landmark case of Progressive Development
Corporation v. Secretary, Department of Labor
and Employment, declared that when an
unregistered union becomes a branch, local or
chapter, some of the aforementioned
requirements for registration are no longer
necessary or compulsory. Whereas an
applicant for registration of an independent
union is mandated to submit, among other
things, the number of employees and names
of all its members comprising at least 20% of
the employees in the bargaining unit where it
seeks to operate, as provided under Article
234 of the Labor Code and Section 2 of Rule
III, Book V of the Implementing Rules, the
same is no longer required of a branch, local
or chapter. The intent of the law in imposing
less requirements in the case of a branch or
local of a registered federation or national
union is to encourage the affiliation of a local
union with a federation or national union in
order to increase the local union's bargaining
powers respecting terms and conditions of
labor.

*A trade union center is any group of registered


national unions or federations organized for the mutual
aid and protection of its members; for assisting such
members in collective bargaining; or for participating in
the formulation of social and employment policies,
standards, and programs, and is duly registered with
the DOLE in accordance with Rule III, Section 2 of the
Implementing Rules.
THE HERITAGE HOTEL MANILA (OWNED AND
OPERATED
BY
GRAND
PLAZA
HOTEL
CORPORATION) V. PINAG-ISANG GALING AT
LAKAS
NG MGA MANGGAGAWA SA HERITAGE MANILA
(PIGLAS-HERITAGE),
G.R. No. 177024, Oct. 30, 2009
FACTS

Sometime in 2000, certain rank and file employees of


petitioner Heritage Hotel Manila formed the Heritage
Hotel Employees Union (the HHE union). DOLE-NCR
issued a certificate of registration to this union. the
HHE union filed a petition for certification
election. petitioner company opposed, alleging that the
HHE union misrepresented itself to be an independent
union, when it was, in truth, a local chapter of
the NUWHRAIN. the company also filed a petition for
the cancellation of the HHE unions registration
certificate.

dual unionism and showed that the new union was


merely an alter ego of the old.
ISSUE:
Whether or not the respondent union committed
misrepresentation in its application for union
registration?
HELD:
No. The Labor Code and its implementing rules do not
require that the number of members appearing on the
documents in question should completely dovetail. For
as long as the documents and signatures are shown to
be genuine and regular and the constitution and bylaws democratically ratified, the union is deemed to
have complied with registration requirements.

the Med-Arbiter granted the HHE unions petition for


certification election. Petitioner appealed to the
Secretary of Labor but the latter denied the appeal and
the motion for reconsideration, prompting the company
to file a petition for certiorari with the Court of
Appeals. the CA issued a writ of injunction against the
holding of the HHE unions certification election,
effective until the petition for cancellation of that unions
registration shall have been resolved with finality. The
decision of the CA became final when the HHE union
withdrew the petition for review that it filed with this
Court.

Petitioner company claims that respondent PIGLAS


union was required to submit the names of all its
members comprising at least 20 percent of the
employees in the bargaining unit. Yet the list it
submitted named only 100 members notwithstanding
that the signature and attendance sheets reflected a
membership of 127 or 128 employees. This omission,
said
the
company,
amounted
to
material
misrepresentation that warranted the cancellation of
the unions registration.

On December 10, 2003 certain rank and file


employees of petitioner company formed another
union, the respondent Pinag-Isang Galing at Lakas ng
mga Manggagawa sa Heritage Manila (the PIGLAS
union). This union applied for registration with the
DOLE-NCR and got its registration certificate. later,
the members of the first union, the HHE union,
adopted a resolution for its dissolution. The HHE union
then filed a petition for cancellation of its union
registration.

But, as the labor authorities held, this discrepancy is


immaterial. A comparison of the documents shows
that, except for six members, the names found in the
subject list are also in the attendance and signature
sheets. Notably, the bargaining unit that respondent
PIGLAS union sought to represent consisted of 250
employees. Only 20 percent of this number or 50
employees were required to unionize. Here, the union
more than complied with such requirement.

On September 4, 2004 respondent PIGLAS union filed


a petition for certification election, that petitioner
company also opposed, alleging that the new unions
officers and members were also those who comprised
the old union. According to the company, the
employees involved formed the PIGLAS union to
circumvent the Court of Appeals injunction against the
holding of the certification election sought by the
former union. Despite the companys opposition,
however, the Med-Arbiter granted the petition for
certification election. petitioner company filed a petition
to cancel the union registration of respondent PIGLAS
union. The company claimed that the documents
submitted with the unions application for registration
bore false information.

Labor laws are liberally construed in favor of labor


especially if doing so would affirm its constitutionally
guaranteed right to self-organization. Here, the
PIGLAS unions supporting documents reveal the
unmistakable yearning of petitioner companys rank
and file employees to organize. This yearning should
not be frustrated by inconsequential technicalities.
EAGLE RIDGE GOLF AND COUNTRY CLUB VS.
COURT OF APPEALS
GR. No. 178989, March 18, 2010
Doctrine: Art. 234[c] requires the list of names of all
the union members of an INDEPENDENT UNION
comprising at least 20% of the bargaining unit. This
should not be equated with the list of workers who
participated in the organizational meetings (Art.234
[b]). Subsequent affidavits of retraction (withdrawal of
membership) will not retroact to the time of application
for registration or even way back to the organizational
meeting.

Petitioner company alleged that the misrepresentation


was evidenced by the discrepancy in the number of
union members appearing in the application and the
list as well as in the number of signatories to the
attendance and signature sheets. The company further
alleged that 33 members of respondent PIGLAS union
were members of the defunct HHE union. This,
according to the company, violated the policy against

FACTS

Eagle Ridge Employees Union (EREU or Union) filed a


petition for certification election in Eagle Ridge Golf &
Country
Club.
Eagle
Ridge
opposed
this
petition, followed by its filing of a petition for the
cancellation of certificate of registration claiming
misrepresentation, false statement, or fraud to EREU
in connection with the adoption of its constitution and
by-laws, the numerical composition of the Union, and
the election of its officers.

organization seeking to represent the bargaining unit


of rank-and-file employees does not divest it of its
status as a legitimate labor organization.
FACTS:
Samahang Manggagawa sa Charter Chemical
Solidarity of Unions in the Philippines for
Empowerment and Reforms (petitioner union) filed a
petition for certification election among the regular
rank-and-file employees of Charter Chemical and
Coating Corporation (respondent company) with the
Mediation Arbitration Unit of the DOLE, National
Capital
Region.

Eagle Ridge alleged that the EREU declared in its


application for registration having 30 members, when
the minutes of its December 6, 2005 organizational
meeting showed it only had 26 members. Also, Eagle
Ridge contended that five employees who attended
the organizational meeting had manifested the desire
to withdraw from the union. The five executed
individual affidavits or Sinumpaang Salaysay.

Med-Arbiters Ruling
Dismissed the petition for certification election. It held
that the list of membership of petitioner union
consisted of 12 batchman, mill operator and leadman
who performed supervisory functions. Under Article
245 of the Labor Code, said supervisory employees
are prohibited from joining petitioner union which
seeks to represent the rank-and-file employees of
respondent company. As a result, not being a
legitimate labor organization, petitioner union has no
right to file a petition for certification election for the
purpose of collective bargaining.

ISSUE
Whether or not the separation of members from the
Union can detrimentally affect the registration of the
Union.
HELD
No. The fact that six union members, indeed,
expressed the desire to withdraw their membership
through their affidavits of retraction will not cause the
cancellation of registration on the ground of violation of
Art. 234(c) of the Labor Code requiring the mandatory
minimum 20% membership of rank-and-file employees
in the employees' union.

Department of Labor and Employments Ruling


Allowed the certification election among the regular
rank-and-file employees. There was no independent
evidence
presented
to
establish
respondent
companys claim that some members of petitioner
union were holding supervisory position.

Twenty percent (20%) of 112 rank-and-file employees


in Eagle Ridge would require a union membership of at
least 22 employees (112 x 205 = 22.4). When the
EREU filed its application for registration on December
19, 2005, there were clearly 30 union members. Thus,
when the certificate of registration was granted, there
is no dispute that the Union complied with the
mandatory 20% membership requirement.

Court of Appeals Ruling


It upheld the Med-Arbiters finding that petitioner union
consisted of both rank-and-file and supervisory
employees.
ISSUE
WON the alleged mixture of rank-and-file and
supervisory
employees
of
petitioner
unions
membership is a ground for the cancellation of
petitioner unions legal personality.

Besides, it cannot be argued that the six affidavits


of retraction retroact to the time of the application
of registration or even way back to the
organizational meeting. Prior to their withdrawal, the
six employees in question were bona fide union
members.

RULING
No. The CA found that petitioner union has for its
membership both rank-and-file and supervisory
employees. However, petitioner union sought to
represent the bargaining unit consisting of rank-andfile employees. Under Article 245 of the Labor Code,
supervisory employees are not eligible for membership
in a labor organization of rank-and-file employees.
Thus, the appellate court ruled that petitioner union
cannot be considered a legitimate labor organization
pursuant to Toyota Motor Philippines v. Toyota Motor
Philippines Corporation Labor Union (hereinafter
Toyota).

With the withdrawal of six union members, there is still


compliance with the mandatory membership
requirement under Art. 234(c), for the remaining 24
union members constitute more than the 20%
membership requirement of 22 employees.
SAMAHANG MANGGAGAWA SA CHARTER
CHEMICAL v. CHARTER CHEMICAL and COATING
CORPORATION
G.R. No. 169717, March 16, 2011

Preliminarily, we note that petitioner union questions


the factual findings of the Med-Arbiter, as upheld by

The inclusion of supervisory employees in a labor

the appellate court, that 12 of its members, consisting


of batchman, mill operator and leadman, are
supervisory employees. However, petitioner union
failed to present any rebuttal evidence in the
proceedings below after respondent company
submitted in evidence the job descriptions of the
aforesaid employees. The job descriptions indicate
that
the
aforesaid
employees
exercise
recommendatory managerial actions which are not
merely routinary but require the use of independent
judgment, hence, falling within the definition of
supervisory employees under Article 212(m) of the
Labor Code. For this reason, we are constrained to
agree with the Med-Arbiter, as upheld by the appellate
court, that petitioner union consisted of both rank-andfile and supervisory employees.

Yokohama challenged 78 votes cast by dismissed


employees. On the other hand, the Union challenged
68 votes cast by newly regularized rank-and-file
employees and another five (5) votes by alleged
supervisor-trainees. Yokohama formalized its protest
and raised as an issue the eligibility to vote of the 78
dismissed employees,[5] while the Union submitted
only a handwritten manifestation during the election.
Petitioner argues that the Court of Appeals erred in
ruling that the votes of the dismissed employees
should be appreciated. Petitioner posits that
employees who have quit or have been dismissed for
just cause prior to the date of the certification election
are excluded from participating in the certification
election. Petitioner had questioned the eligibility to vote
of the 78 dismissed employees.

Nonetheless, the inclusion of the aforesaid supervisory


employees in petitioner union does not divest it of its
status as a legitimate labor organization. The Court
held that while there is a prohibition against the
mingling of supervisory and rank-and-file employees in
one labor organization, the Labor Code does not
provide for the effects thereof. Thus, the Court held
that after a labor organization has been registered, it
may exercise all the rights and privileges of a
legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its
membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration,
unless such mingling was brought about by
misrepresentation, false statement or fraud under
Article 239 of the Labor Code.
YOKOHAMA
TIRE
PHILIPPINES,
YOKOHAMA EMPLOYEES UNION
G.R. No. 159553, December 10, 2007

INC.

Respondent counters that Section 2, Rule XII[16] of


the rules implementing Book V of the Labor Code
allows a dismissed employee to vote in the certification
election if the case contesting the dismissal is still
pending.
Section 2, Rule XII, the rule in force during the
November 23, 2001 certification election clearly,
unequivocally and unambiguously allows dismissed
employees to vote during the certification election if the
case they filed contesting their dismissal is still
pending
at
the
time
of
the
election.
ISSUES
I.
WHETHER OR NOT THE COURT OF APPEALS
SERIOUSLY ERRED IN DISALLOWING THE
APPRECIATION OF THE VOTES OF SIXTY-EIGHT
REGULAR RANK-AND-FILE.

v.

FACTS
On October 7, 1999, respondent Yokohama
Employees Union (Union) filed a petition for
certification election among the rank-and-file
employees of Yokohama. Upon appeal from the MedArbiters order dismissing the petition, the Secretary of
the Department of Labor and Employment (DOLE)
ordered an election with (1) Yokohama Employees
Union and (2) No Union as choices.[3] The election
held on November 23, 2001 yielded the following
result:

II.
WHETHER OR NOT THE COURT OF APPEALS
SERIOUSLY
ERRED
IN
ALLOWING
THE
APPRECIATION OF VOTES OF ALL OF ITS
EMPLOYEES
WHO
WERE
PREVIOUSLY
DISMISSED FOR SERIOUS MISCONDUCT AND
ABANDONMENT OF WORK WHICH ARE CAUSES
UNRELATED TO THE CERTIFICATION ELECTION.
Was it proper to appreciate the votes of the dismissed
employees
The new rule has explicitly stated that without a final
judgment declaring the legality of dismissal, dismissed
employees are eligible or qualified voters. Thus,

YOKOHAMA EMPLOYEES UNION 131


NO UNION 117
SPOILED 2
----250

RULE IX CONDUCT OF CERTIFICATION ELECTION


Section 5. Qualification of voters; inclusion-exclusion. .
. . An employee who has been dismissed from work
but has contested the legality of the dismissal in a
forum of appropriate jurisdiction at the time of the
issuance of the order for the conduct of a certification
election shall be considered a qualified voter, unless

VOTES CHALLENGED BY [YOKOHAMA] 78


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

his/her dismissal was declared valid in a final judgment


at the time of the conduct of the certification election.
Case cited - Engineering Equipment, Inc. v. NLRC
(1984)
Among the characteristics of the managerial rank are:
(1) he is not subject to the rigid observance of regular
office hours;
(2) his work requires the consistent exercise of
discretion and judgment in its performance;
(3) the output produced or the result accomplished
cannot be standardized in relation to a given period of
time;
(4) he manages a customarily recognized department
or subdivision of the establishment, customarily and
regularly directing the work of other employees therein;
(5) he either has the authority to hire or discharge
other
employees
or
his
suggestions
and
recommendations as to hiring and discharging,
advancement and promotion or other change of status
of other employees are given particular weight; and
(6) as a rule, he is not paid hourly wages nor subjected
to maximum hours of work.

xxxx
Thus, we find no reversible error on the part of the
DOLE Acting Secretary and the Court of Appeals in
ordering the appreciation of the votes of the dismissed
employees.
Finally, we need not resolve the other issues for being
moot. The 68 votes of the newly regularized rank-andfile employees, even if counted in favor of No Union,
will not materially alter the result. There would still be
208 votes in favor of respondent and 189 votes in
favor
of
No
Union.
We also note that the certification election is already a
fait accompli, and clearly petitioners rank-and-file
employees had chosen respondent as their bargaining
representative.
CATHAY PACIFIC STEEL CORPORATION
COURT OF APPEALS
G.R. No. 18065116456, August 30, 2006
Chico-Nazario, J.

VS

SAN MIGUEL CORPORATION SUPERVISORS AND


EXEMPT UNION VS. HON. LAGUESMA
G.R. No. 110399. August 15, 1997.

FACTS:
Enrique
Tamandong
III
was
a
Personnel
Superintendent in Cathay Pacific. His position has
fixed daily working hours or 8am to 12nn an 1pm to
5pm. Among his functions was issuing memos on
company rules and regulations, imposing disciplinary
sanctions such as warnings (with irregular attendance
and unauthorized leave of absences) and
suspensions, and executing the same which was
noted by the company Vice President.

FACTS:
Petitioner Union filed before the DOLE a Petition for
District Certification or Certification Election among the
supervisors and exempt employees of the SMC
Magnolia Poultry Products Plants of Cabuyao, San
Fernando and Otis. The Med-Arbiter issued an Order
to conduct certification among the supervisors and
exempt employees of the SMC Magnolia Poultry
Plants of Cabuyao, San Fernando and Otis as one
bargaining unit.

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

Respondent SMC filed a Notice of Appeal with


Memorandum of Appeal, pointing out, among others,
the Med-Arbiters error in grouping together all three
(3) separate plants into one bargaining unit, and in
including supervisory levels 3 and above whose
positions are confidential in nature since they have
access to information which is regarded by the
employer to be confidential from the business
standpoint. Laguesma granted respondent companys
appeal and ordered the remand of the case to the
Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be
included in the appropriate bargaining unit.

HELD:
Yes.
Tamondong does not possess the power to hire,
transfer, terminate, or discipline erring employees of
the company. At the most, the record merely showed
that he informed and warned rank-and-file employees
with respect to their violations of Cathay Pacific's rules
and regulations. Also, the functions performed by
Tamandong such as issuance of warning to
employees with irregular attendance and unauthorized
leave of absences and requiring employees to explain
regarding charges of abandonment of work, are
normally performed by a mere supervisor, and not by a
manager.

Laguesma granted respondent companys appeal and


ordered the remand of the case to the Med-Arbiter of
origin for determination of the true classification of
each employees sought to be included in the
appropriate bargaining unit. Upon petitioners motion,
Laguesma granted the reconsideration and directed
the conduct of separate certification elections among
the supervisors ranked as supervisory levels 1 to 4
and the exempt employees in each of the three plants.

Likewise the imposition upon Tamandongs required


fixed daily working hours is very uncharacteristic of a
managerial employee. A managerial rank is that he is
not subjected to the rigid observance of regular office
hours or maximum hours of work.

ISSUE:
1. Are supervisory employees and exempt
employees of the company considered
confidential employees, hence ineligible to join
a union?
2. If they are not confidential employees, do the
employees of the three plants constitute an
appropriate bargaining unit?

in San Fernando, Pampanga is immaterial.


Geographical location can be completely
disregarded if the communal or mutual
interests of the employees are not sacrificed.
We rule that the distance among the three
plants is not productive of insurmountable
difficulties in the administration of union affairs.
Neither are there regional differences that are
likely to impede the operations of a single
bargaining representative.

HELD:
1. NO. It is the contention of SMC that
supervisory employees 3 and 4 and the
exempt employees come within the meaning
of the term confidential employees primarily
because they answered in the affirmative
when asked Do you handle confidential data
or documents? in Position Questionnaires
submitted by the Union. In the same
questionnaire, however, it was also stated that
the confidential information handled by
questioned employees relate to product
formulation, product standards and product
specification which by no means relate to labor
relations. Granting arguendo that an employee
has access to confidential labor relations
information but such is merely incidental to his
duties and knowledge thereof is not necessary
in the performance of such duties, said access
does not render the employee a confidential
employee. If access to confidential labor
relations information is to be a factor in the
determination of an employees confidential
status, such information must relate to the
employers labor relations policies.

COASTAL SUBIC BAY V. DOLE


November 20, 2006
FACTS
Private respondents Coastal Subic Bay Terminal, Inc.
Rank-and-File Union (CSBTI-RFU) and Coastal Subic
Bay Terminal, Inc. Supervisory Union (CSBTI-SU) filed
separate petitions for certification election before MedArbiter Eladio de Jesus of the Regional Office No. III.
The rank-and-file union insists that it is a legitimate
labor organization having been issued a charter
certificate by the Associated Labor Union (ALU), and
the supervisory union by the Associated Professional,
Supervisory, Office and Technical Employees Union
(APSOTEU). Private respondents also alleged that the
establishment in which they sought to operate was
unorganized.
The Med-Arbiter dismissed the petitions, holding that
the ALU and APSOTEU are one and the same
federation having a common set of officers. Thus, the
supervisory and the rank-and-file unions were in effect
affiliated with only one federation. Secretary of Labor
and Employment reversed it. CA affirmed the decision
of the Secretary.

2. YES. An appropriate bargaining unit may be


defined as a group of employees of a given
employer, comprised of all or less than all of
the entire body of employees, which the
collective interest of all the employees,
consistent with equity to the employer, indicate
to be best suited to serve the reciprocal rights
and duties of the parties under the collective
bargaining provisions of the law.

ISSUE
Are ALU, a rank-and-file union and APSOTEU, a
supervisory union one and the same because of the
commonalities between them? Are they commingled?
HELD
Yes. First, as earlier discoursed, once a labor union
attains the status of a legitimate labor organization, it
continues as such until its certificate of registration is
cancelled or revoked in an independent action for
cancellation.23 In addition, the legal personality of a
labor organization cannot be collaterally attacked.24
Thus, when the personality of the labor organization is
questioned in the same manner the veil of corporate
fiction is pierced, the action partakes the nature of a
collateral attack. Hence, in the absence of any
independent action for cancellation of registration
against either APSOTEU or ALU, and unless and until
their registrations are cancelled, each continues to
possess a separate legal personality. The CSBTI-RFU
and CSBTI-SU are therefore affiliated with distinct and
separate federations, despite the commonalities of
APSOTEU and ALU.

It is readily seen that the employees in the


instant case have community or mutuality of
interest, which is the standard in determining
the proper constituency of a collective
bargaining unit. It is undisputed that they all
belong to the Magnolia Poultry Division of San
Miguel Corporation. This means that, although
they belong to three different plants, they
perform work of the same nature, receive the
same wages and compensation, and most
importantly, share a common stake in
concerted activities.
The fact that the three plants are located in
three different places, namely, in Cabuyao,
Laguna, in Otis, Pandacan, Metro Manila, and

In the instant case, the national federations that exist


as separate entities to which the rank-and-file and
supervisory unions are separately affiliated with, do
have a common set of officers. In addition, APSOTEU,
the supervisory federation, actively participates in the
CSBTI-SU while ALU, the rank-and-file federation,
actively participates in the CSBTI-RFU, giving
occasion to possible conflicts of interest among the
common officers of the federation of rank-and-file and
the federation of supervisory unions. For as long as
they are affiliated with the APSOTEU and ALU, the
supervisory and rank-and-file unions both do not meet
the criteria to attain the status of legitimate labor
organizations, and thus could not separately petition
for certification elections.

reversed the VA, ruling that eighty one employees are


excluded from and not eligible for inclusion in the
bargaining unit as defined in section two, article one of
the cba; the eighty one employees cannot be validly
members of respondent and/or if already members,
that their membership is violative of the cba and that
they should disaffiliate from respondent; and petitioner
has not committed any act that restrained or tended to
restrain its employees in the exercise of their right to
self organization. A certification election was held on
August 10, 2002 wherein petitioner won. As the
incumbent bargaining representative of ABIs rank and
file employees claiming interest in the outcome of the
case, petitioner filed with the CA an omnibus motion
for reconsideration of the decision and intervention,
with attached petition signed by the union officers.
Both motions were denied by CA.

The purpose of affiliation of the local unions into a


common enterprise is to increase the collective
bargaining power in respect of the terms and
conditions of labor. When there is commingling of
officers of a rank-and-file union with a supervisory
union, the constitutional policy on labor is
circumvented. Labor organizations should ensure the
freedom of employees to organize themselves for the
purpose of leveling the bargaining process but also to
ensure the freedom of workingmen and to keep open
the corridor of opportunity to enable them to do it for
themselves.

ISSUE
Whether or not workers were confidential employees
RULING
No. Secretaries or clerks, numbering about forty, are
rank and file employees and confidential employees.
Although Article 245 of the Labor Code limits the
ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence
has extended this prohibition to confidential employees
or those who by reason of their positions or nature of
work are required to assist or act in a fiduciary manner
to managerial employees and hence, are likewise privy
to sensitive and highly confidential records.
Confidential employees are thus excluded from the
rank-and-file bargaining unit. The rationale for their
separate category and disqualification to join any labor
organization is similar to the inhibition for managerial
employees because if allowed to be affiliated with a
Union, the latter might not be assured of their loyalty in
view of evident conflict of interests and the Union can
also become company-denominated with the presence
of managerial employees in the Union membership.
Having access to confidential information, confidential
employees may also become the source of undue
advantage. Said employees may act as a spy or spies
of either party to a collective bargaining agreement. In
the present case, the CBA expressly excluded
Confidential and Executive Secretaries from the rankand-file bargaining unit, for which reason ABI seeks
their disaffiliation from petitioner. As can be gleaned
from the above listing, it is rather curious that there
would be several secretaries/clerks for just one (1)
department/division performing tasks which are mostly
routine and clerical. Respondent insisted they fall
under the Confidential and Executive Secretaries
expressly excluded by the CBA from the rank-and-file
bargaining unit. However, perusal of the job
descriptions of these secretaries/clerks reveals that
their assigned duties and responsibilities involve
routine activities of recording and monitoring, and
other paper works for their respective departments
while secretarial tasks such as receiving telephone

WHEREFORE, the petition is GRANTED.


TUNAY NA PAGKAKAISA NG MANGGAGAWA SA
ASIA BREWERY VS ASIA BREWERY
G.R. No. 162025, August 3, 2010
FACTS
Respondent Asia Brewery Inc (ABI) is engaged in the
manufacture, sale and distribution of beer, shandy,
bottled water and glass products, it entered into a cba,
effective for five years with Lakas ng mga
Manggagagawa sa Asia-Independent (BLMA), the
exclusive bargaining representative of the formers
rank and file employees. Under the cba, twelve jobs
were excluded from the bargaining agreement.
Subsequently, a dispute arose when ABIs
management stopped deducting union dues from
eighty one employees, believing that their membership
in BLMA violated the CBA. Respondent insisted that
they fall under the Confidential and Executive
Secrtaries expressly excluded by the CBA from the
rank and file bargaining unit. BLMA claimed that ABIs
actions restrained the employees rights to self
organization and brought the matter to the grievance
machinery. As the parties failed to settle the
controversy, BLMA lodged a complaint before the
NCMB. The parties eventually agreed to submit the
case for arbitration to resolve the issue with respect to
the right of self organization. VA ruled in favor of
BLMA. Accordingly, the subject employees were
declared eligible for inclusion within the bargaining unit
represented by BLMA. On appeal to the CA, it

calls and filing of office correspondence appear to


have been commonly imposed as additional duties.
Respondent failed to indicate who among these
numerous
secretaries/clerks
have
access
to
confidential data relating to management policies that
could give rise to potential conflict of interest with their
Union membership. Clearly, the rationale under our
previous rulings for the exclusion of executive
secretaries or division secretaries would have little or
no significance considering the lack of or very limited
access to confidential information of these
secretaries/clerks. It is not even farfetched that the job
category may exist only on paper since they are all
daily-paid workers. Quite understandably, petitioner
had earlier expressed the view that the positions were
just being reclassified as these employees actually
discharged routine functions.

management policies in the field of labor relations. The


two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee
- that is, the confidential relationship must exist
between the employee and his supervisor, and the
supervisor must handle the prescribed responsibilities
relating to labor relations. The exclusion from
bargaining units of employees who, in the normal
course of their duties, become aware of management
policies relating to labor relations is a principal
objective sought to be accomplished by the
"confidential employee rule."
A confidential employee is one entrusted with
confidence on delicate, or with the custody, handling or
care
and
protection
of
the
employers
property. Confidential employees, such as accounting
personnel, should be excluded from the bargaining
unit, as their access to confidential information may
become the source of undue advantage. However,
such fact does not apply to the position of Payroll
Master and the whole gamut of employees who, as
perceived by petitioner, has access to salary and
compensation data. The CA correctly held that the
position of Payroll Master does not involve dealing with
confidential labor relations information in the course of
the performance of his functions. Since the nature of
his work does not pertain to company rules and
regulations and confidential labor relations, it follows
that he cannot be excluded from the subject bargaining
unit.

SAN MIGUEL FOODS, INCORPORATED vs. SAN


MIGUEL CORPORATION SUPERVISORS and
EXEMPT UNION
G.R. No. 146206 August 1, 2011
Under: Eligibility for Membership Special Groups of
Employees
FACTS: On the date of an ordered certification
election, petitioner San Miguel Foods, Inc. filed an
objection thereto questioning the eligibility to vote by
some of its employees on the grounds that some
employees do not belong to the bargaining unit which
respondent seeks to represent. Specifically, it argued,
among others, that certain employees (Note: which
includes, among others, Payroll Master, Human
Resource Assistant, and Personnel Assistant) should
not be allowed to vote as they are confidential
employees. The then Acting DOLE Undersecretary, in
a resolution affirmed the order of the Med-Arbiter
stating that respondent is certified to be the exclusive
bargaining agent of the supervisors and exempt
employees of petitioner's Magnolia Poultry Products
Plants, with modification that some of the challenged
employees be excluded from the bargaining unit which
respondent seeks to represent. The Court of Appeals
(CA) affirmed with modification the Resolution of the
DOLE Undersecretary, stating that those holding the
positions of Human Resource Assistant and Personnel
Assistant are excluded from the bargaining unit.

2. Corollarily, although Article 245 of the Labor Code


limits the ineligibility to join, form and assist any labor
organization to managerial employees, jurisprudence
has extended this prohibition to confidential employees
or those who by reason of their positions or nature of
work are required to assist or act in a fiduciary manner
to managerial employees and, hence, are likewise
privy
to
sensitive
and
highly
confidential
records. Confidential employees are thus excluded
from the rank-and-file bargaining unit. The rationale for
their separate category and disqualification to join any
labor organization is similar to the inhibition for
managerial employees, because if allowed to be
affiliated with a union, the latter might not be assured
of their loyalty in view of evident conflict of interests
and the union can also become company-denominated
with the presence of managerial employees in the
union membership. Having access to confidential
information, confidential employees may also become
the source of undue advantage. Said employees may
act as a spy or spies of either party to a collective
bargaining agreement.

ISSUES:
1. Whether the CA erred in not excluding the position
of Payroll Master in the definition of a confidential
employee
2. Whether the CA erred in ruling that the positions of
Human Resource Assistant and Personnel Assistant
belong to the category of confidential employees

In this regard, the CA correctly ruled that the positions


of Human Resource Assistant and Personnel Assistant
belong to the category of confidential employees and,
hence, are excluded from the bargaining unit,
considering their respective positions and job
descriptions. As Human Resource Assistant, the scope

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

of ones work necessarily involves labor relations,


recruitment and selection of employees, access to
employees' personal files and compensation package,
and human resource management. As regards a
Personnel Assistant, one's work includes the recording
of minutes for management during collective
bargaining negotiations, assistance to management
during grievance meetings and administrative
investigations, and securing legal advice for labor
issues from the petitioners team of lawyers, and
implementation of company programs. Therefore, in
the discharge of their functions, both gain access to
vital labor relations information which outrightly
disqualifies them from union membership.

"absorbed" as regular employees from the beginning


of their employment. What is indubitable from the
Union Shop Clause is that upon the effectivity of the
CBA, petitioner's new regular employees (regardless
of the manner by which they became employees of
BPI) are required to join the Union as a condition of
their continued employment.

There are no substantial differences between a newly


hired non-regular employee who was regularized
weeks or months after his hiring and a new employee
who was absorbed from another bank as a regular
employee pursuant to a merger, for purposes of
applying the Union Shop Clause.

BANK OF THE PHILIPPINE ISLANDS vs. BPI


EMPLOYEES
UNION-DAVAO
CHAPTERFEDERATION OF UNIONS IN BPI UNIBANK

The effect or consequence of BPI's so-called


"absorption" of former FEBTC employees should be
limited to what they actually agreed to, i.e., recognition
of the FEBTC employees' years of service, salary rate
and other benefits with their previous employer. The
effect should not be stretched so far as to exempt
former FEBTC employees from the existing CBA
terms, company policies and rules which apply to
employees similarly situated. If the Union Shop Clause
is valid as to other new regular BPI employees, there
is no reason why the same clause would be a violation
of the "absorbed" employees' freedom of association.

FACTS: The Bangko Sentral ng Pilipinas and


Securities and Exchange Commission approved the
Articles of Merger executed by and between BPI,
herein petitioner, and FEBTC. Pursuant to the Article
and Plan of Merger, all the assets and liabilities of
FEBTC were transferred to and absorbed by BPI as
the surviving corporation. FEBTC employees, including
those in its different branches across the country, were
hired by petitioner as its own employees, with their
status and tenure recognized and salaries and benefits
maintained.

Carpio (Dissenting Opinion):


Respondent BPI Employees Union is the exclusive
bargaining agent of BPI's rank and file employees. The
former FEBTC rank-and-file employees did not belong
to any labor union at the time of the merger.
Respondent Union then sent notices to the former
FEBTC employees who refused to join the Union, as
well as those who retracted their membership, and
called them to a hearing regarding the matter. When
these former FEBTC employees refused to attend the
hearing, the president of the Union requested BPI to
implement the Union Shop Clause of the CBA and to
terminate their employment pursuant thereto.
Petitioner refused to do so.

The former FEBTC employees should not be


considered as "new employees" of BPI. The former
FEBTC employees were absorbed by BPI immediately
upon merger, leaving no gap in their employment. The
employees retained their previous employment status,
tenure, salary and benefits. This clearly indicates the
intention of BPI to assume and continue the employeremployee relations of FEBTC and its employees. The
FEBTC employees' employment remained continuous
and unchanged, except that their employer, FEBTC,
merged with BPI which, as the surviving entity,
continued the combined business of the two banks.
Thus, the former FEBTC employees are immediately
regularized and made permanent employees of BPI.
They are not subject to any probationary period as in
the case of "new employees" of BPI. The 30-day
period within which regularized "new employees" of
BPI must join the Union does not apply to former
FEBTC employees who are not probationary
employees but are immediately regularized as
permanent employees of BPI. In short, the former
FEBTC employees are immediately given the same
permanent status as old employees of BPI.

ISSUE: WON the employees absorbed by the BPI due


to the merger are considered as "New Employees",
thus covered by the Union Shop Clause in the CBA
RULING: Yes.
The Union Shop Clause in the CBA simply states that
"new employees" who during the effectivity of the CBA
"may be regularly employed" by the Bank must join the
union within thirty (30) days from their regularization.
There is nothing in the said clause that limits its
application to only new employees who possess
nonregular status, meaning probationary status, at the
start of their employment. Petitioner likewise failed to
point to any provision in the CBA expressly excluding
from the Union Shop Clause new employees who are

Brion (Dissenting Opinion):


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

10

regulars, which distinction cannot simply be


disregarded because it establishes how the absorbed
employees came to work for BPI. Those who are
immediately hired as regulars acquire their status
through the voluntary act of hiring done within the
effective term or period of the CBA. The absorbed
employees, on the other hand, merely continued the
employment they started with FEBTC; they came to be
BPI employees by reason of a corporate merger that
changed the personality of their employer but did not
at all give them any new employment. Thus, they are
neither "new" employees nor employees who became
regular only during the term of the CBA in the way that
newly regularized employees become so. They were
regular employees under their present employment
long before BPI succeeded to FEBTC's role as
employer.

from their work for the interest of industrial peace in


the plant

Ultimately, the absorbed employees are best


recognized for what they really are a sui generis
group of employees whose classification will not be
duplicated until BPI has another merger where it would
be the surviving corporation and no provision would be
made to define the situation of the employees of the
merged constituent corporation. Significantly, this
classification obviously, not within the contemplation
of the CBA parties when they executed their CBA is
not contrary to, nor governed by, any of the agreed
terms of the existing CBA on union security, and thus
occupies a gap that BPI, in the exercise of its
management prerogative, can fill.

It is State policy to promote unionism to enable


workers to negotiate with management on an even
playing field and with more persuasiveness than if they
were to individually and separately bargain with the
employer. For this reason, the law has allowed
stipulations for union shop and closed shop as means
of encouraging workers to join and support the union
of their choice in the protection of their rights and
interest
vis--vis
the
employer
In terminating the employment of an employee by
enforcing the union security clause, the employer
needs only to determine and prove that: (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. These requisites
constitute just cause for terminating an employee
based on the union security provision of the CBA.

ISSUE:

Is

the

dismissal

illegal?

HELD:
YES.
There is no question that in the present case, the CBA
between GMC and IBM-Local 31 included a
maintenance of membership and closed shop clause
as can be gleaned from Sections 3 and 6 of Article II.
IBM-Local 31, by written request, can ask GMC to
terminate the employment of the employee/worker who
failed to maintain its good standing as a union
member.
Union security clauses are recognized and explicitly
allowed under Article 248(e) of the Labor Code

GMC vs. Casio


Doctrine: Enforcement of CBA union security clause in
connection with the right to due process of the
employees.
(HINDI
PO
AKO
SURE.
)
The labor union Ilaw at Buklod ng Mangagawa (IBM)Local 31 Chapter (Local 31) was the sole and
exclusive bargaining agent of the rank and file
employees of GMC in Lapu-Lapu City.

There is no question that in the present case, the CBA


between GMC and IBM-Local 31 included a
maintenance of membership and closed shop clause
as can be gleaned from Sections 3 and 6 of Article II.
IBM-Local 31, by written request, can ask GMC to
terminate the employment of the employee/worker who
failed to maintain its good standing as a union
member.
It is similarly undisputed that IBM-Local 31, through
Gabiana, the IBM Regional Director for Visayas and
Mindanao, twice requested GMC, in the letters dated
March 10 and 19, 1992, to terminate the employment
of Casio, et al. as a necessary consequence of their
expulsion
from
the
union.
It is the third requisite that there is sufficient evidence
to support the decision of IBM-Local 31 to expel Casio,
et al. which appears to be lacking in this case.
Irrefragably, GMC cannot dispense with the
requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to
the closed shop provision in the CBA. The rights of an
employee to be informed of the charges against him
and to reasonable opportunity to present his side in a

Casio, et al. were regular employees of GMC with daily


earnings ranging from P173.75 to P201.50, and length
of service varying from eight to 25 years.[7] Casio was
elected IBM-Local 31 President for a three-year term in
June 1991, while his co-respondents were union shop
stewards.
Subsequently, on February 29, 1992, Pino, et al., as
officers and members of the IBM-Local 31, issued a
Resolution expelling Casio, et al. from the union.
Gabiana then wrote a letter dated March 10, 1992,
addressed to Eduardo Cabahug (Cabahug), GMC
Vice-President
for
Engineering
and
Plant
Administration, informing the company of the expulsion
of Casio, et al. from the union pursuant to the
Resolution dated February 29, 1992 of IBM-Local 31
officers and board members. Gabiana likewise
requested that Casio, et al. be immediately dismissed

11

employee based on the union security provision of


the CBA.

controversy with either the company or his own union


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

As to the first requisite, there is no question that the


CBA between PRI and respondents included a union
security clause, specifically, a maintenance of
membership as stipulated in Sections 6 of Article II,
Union Security and Check-Off. Following the same
provision, PRI, upon written request from the Union,
can indeed terminate the employment of the employee
who failed to maintain its good standing as a union
member. Secondly, it is likewise undisputed that
NAMAPRI-SPFL, in two (2) occasions demanded from
PRI to terminate the employment of respondents due
to their acts of disloyalty to the Union. However, as to
the third requisite, we find that there is no sufficient
evidence to support the decision of PRI to terminate
the employment of the respondents.

PICOP RESOURCES v. TANECA


August 9, 2010
FACTS:
Respondents filed a Complaint for unfair labor
practice, illegal dismissal and money claims against
petitioner PICOP Resources, Incorporated (PRI) and
its officers. They were regular rank-and-file employees
of PRI and bona fide members of Nagkahiusang
Mamumuo sa PRI Southern Philippines Federation of
Labor (NAMAPRI-SPFL), which is the collective
bargaining agent for the rank-and-file employees of
petitioner PRI. PRI has a collective bargaining
agreement (CBA) with NAMAPRI-SPFL. It contained a
union security clause, to wit: All employees within the
appropriate bargaining unit who are members of the
UNION at the time of the signing of this AGREEMENT
shall, as a condition of continued employment by the
COMPANY, maintain their membership in the UNION
in good standing

The mere signing of the authorization in support of the


Petition for Certification Election of FFW before the
"freedom period," is not sufficient ground to terminate
the employment of respondents. Nothing in the records
would show that respondents failed to maintain their
membership in good standing in the Union.
Respondents did not resign or withdraw their
membership from the Union to which they belong.
Respondents continued to pay their union dues and
never joined the FFW. Hence, the third requisite is
lacking.

PRI sent a letter to the management of PRI demanding


the termination of employees who allegedly
campaigned for, supported and signed the Petition for
Certification Election of the Federation of Free
Workers Union (FFW) during the effectivity of the CBA.
NAMAPRI-SPFL contended that it is an act of
disloyalty and a valid basis for termination for a cause
in accordance with its Constitution and By-Laws and
CBA
terms.
After
investigation,
they were
subsequently sent termination notices on the ground of
"acts of disloyalty". Respondents then accused PRI of
Unfair Labor Practice. They alleged that none of them
ever withdrew their membership from NAMAPRI-SPFL
or submitted to PRI any union dues and check-off
disauthorizations against NAMAPRI-SPFL. They
claimed that they continue to remain on record
as bona fide members of NAMAPRI-SPFL. They also
claimed that there was lack of procedural due
process. The Labor Arbiter declared the respondents
dismissal to be illegal.

VICTORIANO
UNION
59 SCRA 54

ELIZALDE

ROPE

WORKERS

Benjamin Victoriano is a member of the religious sect


known as the "Iglesia ni Cristo" and had been in the
employ of the Elizalde Rope Factory, Inc. He was also
a member of the EPWU (Elizalde Rope Workers
Union). The Company has a collective bargaining
agreement containing a closed shop provision.
Victoriano tendered his resignation from EPWU
claiming that as per RA 3350 he is an exemption to the
closed shop agreement by virtue of his being a
member of the INC because apparently in the INC,
one is forbidden from being a member of any labor
union. The company moved to terminate Victoriano
due to his non-membership from the EPWU. EPWU
and ERF reiterated that he is not exempt from the
close shop agreement because RA 3350, which
provides that closed shop agreements shall not cover
members of any religious sects which prohibit
affiliation of their members in any such labor
organization, is unconstitutional and that said law
violates the EPWUs and ERFs legal/contractual
rights. Appellant Union, furthermore, asserted that a
"closed shop provision" in a collective bargaining
agreement cannot be considered violative of religious
freedom.

ISSUE: Whether or not respondents are validly


terminated pursuant to union security clause provided
in the CBA
HELD: No.
In terminating the employment of an employee by
enforcing the union security clause, the employer
needs to determine and prove that: (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. These
requisites constitute just cause for terminating an

ISSUE: Whether or not RA 3350 is unconstitutional.

12

Members of the supervisory union might refuse to


carry out disciplinary measures against their comember rank-and-file employees.
In the area of bargaining, their interests cannot be
considered identical. The needs of one are different
from those of the other. Moreover, in the event of a
strike, the national federation might influence the
supervisors' union to conduct a sympathy strike on the
sole basis of affiliation.
(NOTE! THIS RULING IS NOW REPEALED.)

HELD: No
Republic Act No. 3350 is constitutional. The Act
classifies employees and workers, as to the effect and
coverage of union shop security agreements, into
those who by reason of their religious beliefs and
convictions cannot sign up with a labor union, and
those whose religion does not prohibit membership in
labor unions. The classification introduced by said Act
is also germane to its purpose. The purpose of the law
is precisely to avoid those who cannot, because of
their religious belief, join labor unions, from being
deprived of their right to work and from being
dismissed from their work because of union shop
security agreements. The act also applies equally to
all members of said religious sects; this is evident from
its provision. The fact that the law grants a privilege to
members of said religious sects cannot by itself render
the Act unconstitutional.

KAPATIRAN SA MEAT AT CANNING V. BLR


CALLEJA
FACTS: Petitioner was an exclusive bargaining
representative. Prior to its expiration as such, it staged
a strike to pressure the employer to extend its contract.
Now, within the freedom period, another union
belonging to the same unit filed for certification
election. The same was challenged by herein
petitioner on the ground that the union petitioning for
certification election is mostly composed of Iglesia ni
Cristo members who once refused to affiliate with it. It
then contends that, by virtue of their prior religious
objection, the said union(mostly composed of INC
members) are not eligible to file for certification
election.

The right to religion prevails over contractual or legal


rights. As such, an INC member may refuse to join a
labor union and despite the fact that there is a closed
shop agreement in the factory where he was
employed, his employment could not be validly
terminated for his non-membership in the majority
therein. Further, the right to join a union includes the
right not to join a union. The law is not unconstitutional.
It recognizes both the rights of unions and employers
to enforce terms of contracts and at the same time it
recognizes the workers right to join or not to join
union. RA 3550 recognizes as well the primacy of a
constitutional right over a contractual right.

ISSUE
Whether or not INC members, who deliberately and
previously refused to affiliate with a union, may
organize by themselves.

For Reference:

RULING
Yes! This Court's decision inVictoriano vs. Elizalde
Rope Workers' Union, 59 SCRA 54, upholding the
right of members of the IGLESIA NI KRISTO sect not
to join a labor union for being contrary to their religious
beliefs, does not bar the members of that sect from
forming their own union. The public respondent
correctly observed that the "recognition of the tenets of
the sect ... should not infringe on the basic right of selforganization granted by the constitution to workers,
regardless of religious affiliation."

ATLAS V. LAGUESMA
Doctrine: Union of supervisory employees cannot be
merged and represented with the union of the rank and
file employees even through a national federation.
FACTS
Respondent is a supervisory union of petitioner and an
affiliate of the national federation representing the rank
and file employees of the same petitioner. Said
national federation sough for certification election for
the supervisors unit. However, petitioner opposed the
certification election on the ground that conflict of
interest would arise since same federation would
represent two adverse and distinct units, that of the
rank and file and supersisors.

BARGAINING UNIT
DE LA SALLE UNIVERSITY MEDICAL CENTER
AND COLLEGE OF MEDICINE VS. LAGUESMA
G.R. No. 102084, August 12, 1998

ISSUE
whether or not the union of rank and file employees
and union of supervisory employees can be members
of the same federation.

FACTS:
Petitioner De La Salle University Medical Center and
College of Medicine (DLSUMCCM) is a hospital and
medical school at Dasmarias, Cavite. Private
respondent Federation of Free Workers-De La Salle
University Medical Center and College of Medicine
Supervisory Union Chapter (FFW-DLSUMCCMSUC),

RULING
NO. We agree with the petitioner's contention that a
conflict of interest may arise in the areas of discipline,
collective bargaining and strikes.

13

on the other hand, is a labor organization composed of


the supervisory employees of petitioner DLSUMCCM.
On April 17, 1991, the Federation of Free Workers
(FFW), a national federation of labor unions, issued a
certificate
to
private
respondent
FFWDLSUMCCMSUC recognizing it as a local chapter. On
the same day, it filed on behalf of private respondent
FFW-DLSUMCCMSUC a petition for certification
election among the supervisory employees of
petitioner DLSUMCCM. Its petition was opposed by
petitioner DLSUMCCM on the grounds that several
employees who signed the petition for certification
election were managerial employees and that the
FFW-DLSUMCCMSUC was composed of both
supervisory and rank-and-file employees in the
company. The respondent however denied the
petitioners allegations and contended that It is not true
that supervisory employees are joining the rank-andfile employees' union. While it is true that both regular
rank-and-file employees and supervisory employees of
herein respondent have affiliated with FFW, yet there
are two separate unions organized by FFW. The
supervisory employees have a separate charter
certificate issued by FFW.

employees of petitioner DLSUMCCM are indeed


affiliated with the same national federation, the FFW,
petitioner DLSUMCCM has not presented any
evidence showing that the rank-and-file employees
composing the other union are directly under the
authority of the supervisory employees.
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF
CLUB
INCORPORATED
vs.
TAGAYTAY
HIGHLANDS EMPLOYEES UNION-PGTWO
G.R. No. 142000, January 22, 2003
FACTS:
On October 16, 1997, the Tagaytay Highlands
Employees Union (THEU)Philippine Transport and
General Workers Organization (PTGWO), a legitimate
labor organization said to represent majority of the
rank-and-file employees of THIGCI, filed a petition for
certification election. THIGCI, in its Comment, opposed
THEUs petition for certification election on the ground
that the list of union members submitted by it was
defective and fatally flawed as it included the names
and signatures of supervisors, resigned, terminated
and absent without leave (AWOL) employees, as well
as employees of The Country Club, Inc., a corporation
distinct and separate from THIGCI; and that out of the
192 signatories to the petition, only 71 were actual
rank-and-file employees of THIGCI. THIGCI also
alleged that some of the signatures in the list of union
members were secured through fraudulent and
deceitful means, and submitted copies of the
handwritten denial and withdrawal of some of its
employees from participating in the petition. Replying
to THIGCIs Comment, THEU asserted that it had
complied with all the requirements for valid affiliation
and inclusion in the roster of legitimate labor
organizations pursuant to DOLE Department Order
No. 9, series of 1997, on account of which it was duly
granted a Certification of Affiliation by DOLE on
October 10, 1997; and that Section 5, Rule V of said
Department Order provides that the legitimacy of its
registration cannot be subject to collateral attack, and
for as long as there is no final order of cancellation, it
continues to enjoy the rights accorded to a legitimate
organization.

ISSUE:
Whether or not supervisory union and rank-and-file
union can affiliate in the same federation
RULING:
YES. Supervisory employees have the right to selforganization as do other classes of employees save
only managerial ones. Conformably with the
constitutional mandate, Art. 245 of the Labor Code
now provides for the right of supervisory employees to
self-organization, subject to the limitation that they
cannot join an organization of rank-and-file employees.
The reason for the segregation of supervisory and
rank-and-file employees of a company with respect to
the exercise of the right to self-organization is the
difference in their interests. Supervisory employees
are more closely identified with the employer than with
the rank-and-file employees. If supervisory and rankand-file employees in a company are allowed to form a
single union, the conflicting interests of these groups
impair their relationship and adversely affect discipline,
collective bargaining and strikes. 10 These
consequences can obtain not only in cases where
supervisory and rank-and-file employees in the same
company belong to a single union but also where
unions formed independently by supervisory and rankand-file employees of a company are allowed to
affiliate with the same national federation. As we
explained in the case of Atlas vs. Laguesma, however,
such a situation would obtain only where two
conditions concur: First, the rank-and-file employees
are directly under the authority of supervisory
employees and second, the national federation is
actively involved in union activities in the company.
Although private respondent FFW-DLSUMCCMSUC
and another union composed of rank-and-file

ISSUE:
Whether the certificate of registration of the union
should be cancelled
RULING:
After a certificate of registration is issued to a union,
the legal personality cannot be subject to collateral
attack. it may be questioned only in an independent
petition for cancellation. the inclusion in a union of
disqualified employees is not among the grounds for
cancellation unless such inclusion is due to
misrepresentation, false statement or fraud under the
circumstances mentioned in sections a and c Article
239 of the Labor Code. THEU, having been validly
issued a certificate of registration, should be

14

SAN MIGUEL FOODS V. SAN MIGUEL CORP.


SUPERVISORS AND EXEMPT UNION
August 1, 2011

considered to have already acquired juridical


personality which may not be assailed collaterally. As
for petitioners allegation that some of the signatures in
the petition for certification election were obtained
through fraud, false statement and misrepresentation,
the proper procedure is, as reflected above, for it to file
a petition for cancellation of the certificate of
registration, and not to intervene in a petition for
certification election.

FACTS:
Petitioner is questioning the eligibility to vote by some
of its employees on the ground that some employees
do not belong to the bargaining unit.
ISSUES:
1. Should there be a separate bargaining unit for those
engaged in dressed chicken processing, i.e.,
handling and packaging of chicken meat and those
engaged in live chicken operations, i.e., those who
breed chicks and grow chickens? NO.
2. Are payroll masters confidential employees and
must be excluded from the bargaining unit? NO.
3. Are those holding the positions of Human
Resource Assistant and Personnel Assistant
excluded from the bargaining unit? YES.

DE LA SALLE V. DE LA SALLE UNIVERSITY


EMPLOYEES ASSOCIATION
330 SCRA 363
FACTS:
DLSU and the UNION (composed of regular nonacademic R&F) entered into a CBA. 60 days before its
expiration, the union initiated negotiations which were
unsuccessful. The Union filed a Notice of Strike with
the NCMB. During conciliation, 5 out of 11 issues were
resolved by parties.

RULING:
1. There should be only one bargaining unit for the
employees involved in dressed chicken processing
and those engaged in live chicken operations. Certain
factors, such as specific line of work, working
conditions, location of work, mode of compensation,
and other relevant conditions do not affect or impede
their commonality of interest. Although they seem
separate and distinct from each other, the specific
tasks of each division are actually interrelated and
there exists mutuality of interests which warrants the
formation of a single bargaining unit.

ISSUE:
Are computer operators and discipline officers (which
were previously excluded) confidential employees?
NO.
RULING:
The express exclusion of the computer operators and
discipline officers from the bargaining unit of rank-andfile employees in the 1986 collective bargaining
agreement does not bar any re-negotiation for the
future inclusion of the said employees in the
bargaining unit. During the freedom period, the parties
may not only renew the existing collective bargaining
agreement but may also propose and discuss
modifications or amendments thereto.

2. The CA correctly held that the position of Payroll


Master does not involve dealing with confidential labor
relations information in the course of the performance
of his functions. Since the nature of his work does not
pertain to company rules and regulations and
confidential labor relations, it follows that he cannot be
excluded from the subject bargaining unit.

We rule that the said computer operators and


discipline officers are not confidential employees.
As carefully examined by the Solicitor General, the
service record of a computer operator reveals that his
duties are basically clerical and non-confidential in
nature. As to the discipline officers, we agree with the
voluntary arbitrator that based on the nature of their
duties, they are not confidential employees and should
therefore be included in the bargaining unit of rankand-file employees.

3. Human Resource Assistant and Personnel Assistant


belong to the category of confidential employees and,
hence, are excluded from the bargaining unit,
considering their respective positions and job
descriptions. As Human Resource Assistant, the scope
of ones work necessarily involves labor relations,
recruitment and selection of employees, access to
employees' personal files and compensation package,
and human resource management. As regards a
Personnel Assistant, one's work includes the recording
of minutes for management during collective
bargaining negotiations, assistance to management
during grievance meetings and administrative
investigations, and securing legal advice for labor
issues from the petitioners team of lawyers, and
implementation of company programs. Therefore, in
the discharge of their functions, both gain access to
vital labor relations information which outrightly
disqualifies them from union membership.

-----------------The Court also affirms the findings of the voluntary


arbitrator that the employees of the College of St.
Benilde should be excluded from the bargaining unit of
the rank-and-file employees of Dela Salle University,
because the two educational institutions have their
own separate juridical personality and no sufficient
evidence was shown to justify the piercing of the veil of
corporate fiction.

15

[petitioner]s teaching personnel to the exclusion of


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

HOLY CHILD CATHOLIC SCHOOL vs. HON.


PATRICIA STO. TOMAS, in her official capacity as
Secretary of the Department of Labor and
Employment, and PINAG-ISANG TINIG AT LAKAS
NG ANAKPAWIS HOLY CHILD CATHOLIC
SCHOOL TEACHERS AND EMPLOYEES LABOR
UNION (HCCS-TELU-PIGLAS), Respondents.
G.R. No. 179146, July 23, 2013

ISSUE:
WON the commingling of non-academic and academic
rank-and-file employees in one labor organization
affect the latter's legitimacy and its right to file a
petition for certification election.

SUMMARY: This case is a Petition for Review on


Certiorari under Rule 45 assailing the Decision of the
Court of Appeals affirming the Resolution of the
Secretary of the Department of Labor and Employment
(SOLE) allowing private respondents petition for
certification election. The Resolution of SOLE directed
the conduct of two separate certification elections for
the teaching and the non-teaching personnel.
Corollary, it ruled that [private respondent] can
continue to exist as a legitimate labor organization
with the combined teaching and non-teaching
personnel in its membership and representing
both classes of employees in separate bargaining
negotiations and agreements.

HELD:
[Petitioner] appears to have confused the concepts of
membership in a bargaining unit and membership in a
union. In emphasizing the phrase to the exclusion of
academic employees stated in U.P. v. Ferrer-Calleja,
[petitioner] believed that the petitioning union could not
admit academic employees of the university to its
membership. But such was not the intention of the
Supreme Court.
The Supreme Court ordered the non-academic rankand-file employees of U.P. to constitute a bargaining
unit to the exclusion of the academic employees of the
institution, but did not order them to organize a
separate labor organization.

The Supreme Court ruled that the CA did not act with
grave abuse of discretion. The ruling of SOLE is
AFFIRMED.

In the same manner, the teaching and non-teaching


personnel of [petitioner] school must form separate
bargaining units. Thus, the order for the conduct of two
separate certification elections, one involving teaching
personnel and the other involving non-teaching
personnel. It should be stressed that in the subject
petition, [private respondent] union sought the conduct
of a certification election among all the rank-and-file
personnel of [petitioner] school. Since the decision of
the Supreme Court in the U.P. case prohibits us from
commingling teaching and non-teaching personnel in
one bargaining unit, they have to be separated into two
separate bargaining units with two separate
certification elections to determine whether the
employees in the respective bargaining units desired
to be represented by [private respondent].

DOCTRINE:
1. The legal personality of the Union, cannot be
collaterally attacked in certification election
proceedings by petitioner school which, as
employer, is generally a by stander in the
proceedings.
2. The commingling of non-academic and
academic rank-and-file employees in one labor
organization does not affect the latter's
legitimacy and its right to file a petition for
certification election.
FACTS:
Petitioner (School) has 98 teaching personnel, 25 nonteaching academic employees and 33 non-teaching
and non-academic employees. These 156 employees
supported the petition for certification election filed by
Private Respondent (Union). The School assails the
legitimacy of the Union and its right to file a petition for
certificate election due to the commingling of academic
and non-academic rank-and-file employees.

REPUBLIC OF THE PHILIPPINES, represented by


Department
of
Labor
and
Employment
(DOLE), Petitioner,
vs. KAWASHIMA TEXTILE MFG., PHILIPPINES,
INC., Respondent.
G.R. No. 160352, July 23, 2008
FACTS:
KFWU filed with DOLE Regional Office No. IV, a
Petition for Certification Election to be conducted in the
bargaining unit composed of 145 rank-and-file
employees of respondent.

PETITIONERS ARGUMENT:
The SOLE erred in interpreting the decision of the
Supreme Court in U.P. v. Ferrer-Calleja1. According to
Petitioner, the Court (in U.P. v. Ferrer-Calleja) sought
the creation of separate bargaining units, namely: (1)

Respondent-company filed a Motion to Dismiss the


petition on the ground that KFWU did not acquire any
legal personality because its membership of mixed
rank-and-file and supervisory employees violated

The Supreme Court stated that the non-academic rank-and


file employees of the University of the Philippines shall
constitute a bargaining unit to the exclusion of the academic
employees of the institution.

16

Article 245 of the Labor Code, and its failure to submit


its books of account contravened the ruling of the
Court in Progressive Development Corporation v.
Secretary, Department of Labor and Employment.

Effective 1989, R.A. No. 6715 restored the prohibition


against the questioned mingling in one labor
organization, viz:
Sec. 18. Article 245 of the same Code, as amended, is
hereby further amended to read as follows

ISSUE:
(1) whether a mixed membership of rank-and-file and
supervisory employees in a union is a ground for the
dismissal of a petition for certification election in view
of the amendment brought about by D.O. 9, series of
1997, which deleted the phraseology in the old rule
that [t]he appropriate bargaining unit of the rank-andfile employee shall not include the supervisory
employees and/or security guards; and

Art. 245. Ineligibility of managerial employees to join


any labor organization; right of supervisory employees.
Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees
shall not be eligible for membership in a labor
organization of the rank-and-file employees but may
join, assist or form separate labor organizations of their
own. (Emphasis supplied)

(2) whether the legitimacy of a duly registered labor


organization can be collaterally attacked in a petition
for a certification election through a motion to dismiss
filed by an employer such as Kawashima Textile
Manufacturing Phils., Inc.

Unfortunately, just like R.A. No. 875, R.A. No. 6715


omitted specifying the exact effect any violation of the
prohibition would bring about on the legitimacy of a
labor organization.

HELD:

Thus, when the issue of the effect of mingling was


brought to the fore in Toyota, the Court, citing Article
245 of the Labor Code, as amended by R.A. No. 6715,
held:

The petition is imbued with merit.


The key to the closure that petitioner seeks could have
been Republic Act (R.A.) No. 9481 [AN ACT
STRENGTHENING
THE
WORKERS
CONSTITUTIONAL
RIGHT
TO
SELFORGANIZATION, AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF
THE PHILIPPINES] Sections 8 and 9.
However, R.A. No. 9481 took effect only on June 14,
2007; hence, it applies only to labor representation
cases filed on or after said date. As the petition for
certification election subject matter of the present
petition was filed by KFWU on January 24, 2000,28
R.A. No. 9481 cannot apply to it. There may have
been curative labor legislations that were given
retrospective effect, but not the aforecited provisions of
R.A. No. 9481, for otherwise, substantive rights and
interests already vested would be impaired in the
process.

Clearly, based on this provision, a labor organization


composed of both rank-and-file and supervisory
employees is no labor organization at all. It cannot, for
any guise or purpose, be a legitimate labor
organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a
legitimate labor organization, including the right to file
a petition for certification election for the purpose of
collective bargaining. It becomes necessary, therefore,
anterior to the granting of an order allowing a
certification election, to inquire into the composition of
any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245
of the Labor Code xxxx
In the case at bar, as respondent unions membership
list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions, the
union could not, prior to purging itself of its supervisory
employee members, attain the status of a legitimate
labor organization. Not being one, it cannot possess
the requisite personality to file a petition for certification
election.

Instead, the law and rules in force at the time of the


filing by KFWU of the petition for certification election
on January 24, 2000 are R.A. No. 6715, amending
Book V of Presidential Decree (P.D.) No. 442 (Labor
Code),as amended, and the Rules and Regulations
Implementing R.A. No. 6715,34 as amended by
Department Order No. 9, series of 1997.

But then, on June 21, 1997, the 1989 Amended


Omnibus Rules was further amended by Department
Order No. 9, series of 1997 (1997 Amended Omnibus
Rules). Specifically, the requirement under Sec. 2(c) of
the 1989 Amended Omnibus Rules that the petition
for certification election indicate that the bargaining
unit of rank-and-file employees has not been mingled
with supervisory employees was removed.

One area of contention has been the composition of


the membership of a labor organization, specifically
whether there is a mingling of supervisory and rankand-file employees and how such questioned mingling
affects its legitimacy.

17

Consequently, the Court reinstates that of the DOLE


granting the petition for certification election of KFWU.

Manggagawa seeks to represent is the non-academic


personnel or the rank and file employees from the
motor
pool,
construction
and
transportation
departments, and not all the rank and file employees of
St. James. A subsequent motion for reconsideration
was denied by the DOLE. The ruling of the DOLE was
sustained by the Court of Appeals.

II. Now to the second issue of whether an employer


like respondent may collaterally attack the
legitimacy of a labor organization by filing a
motion to dismiss the latters petition for
certification election.

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

Except when it is requested to bargain collectively, an


employer is a mere bystander to any petition for
certification election; such proceeding is nonadversarial and merely investigative, for the purpose
thereof is to determine which organization will
represent the employees in their collective bargaining
with the employer. The choice of their representative is
the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing
a motion to dismiss or an appeal from it; not even a
mere allegation that some employees participating in a
petition for certification election are actually managerial
employees will lend an employer legal personality to
block the certification election. The employers only
right in the proceeding is to be notified or informed
thereof.

Ruling:
The petition has no merit.
The Validity of the Formation of the Labor Union
The issue on the employer-employee relationship
between St. James and majority of the members of
Samahang Manggagawa has already been resolved in
a previous case.
Prior to the holding of the certification election, St.
James filed a petition for cancellation of Samahang
Manggagawas union registration for lack of employeremployee relationship between St. James and
Samahang Manggagawas members. This case
reached the Court of Appeals, which held that the
construction workers are actually St. James regular
employees in its motor pool, construction and
transportation departments, and eventually the
Supreme Court which, in a Resolution dated 10
October 2001, closed any issue on the validity of the
formation of the labor union.

The amendments to the Labor Code and its


implementing rules have buttressed that policy even
more.
Petition is GRANTED.
G.R. No. 151326; November 23, 2005
ST.
JAMES
SCHOOL
OF
QUEZON
CITY, Petitioner, vs. SAMAHANG MANGGAGAWA
SA
ST.
JAMES
SCHOOL
OF
QUEZON
CITY, Respondent.
CARPIO, J.

The Validity of the Certification Election


Petitioner alleges that it has 179 rank and file
employees in its Quezon City Campus, all of which
were never able to vote during the certification election
since they were on duty. Even if the 84 votes should
be counted, it does not fall within the majority of total
number of employees of the five St. James campuses
570.

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

The argument is untenable. According to the Court,


the members of Samahang Manggagawa are
employees in the Tandang Sora campus. Under its
constitution and by-laws, Samahang Manggagawa
seeks to represent the motor pool, construction and
transportation employees of the Tandang Sora
campus. Thus, the computation of the quorum should
be based on the rank and file motor pool, construction
and transportation employees of the Tandang Sora
campus and not on all the employees in St. James
five campuses.

In 6 January 2000, the Med-Arbiter, Tomas F.


Falconitin, using the list of rank and file employees
submitted by St. James, ruled that at the time of the
certification election, the 84 voters were no longer
working at St. James. This decision was reversed by
the DOLE which ruled that what Samahang

In determining whether there was a quorum, the


number to be used is 149. A quorum existed in the
certification election when the 84 votes were cast.
Petition denied.

18

nullification of the election proceedings, the election


officer should have deferred issuing the Certification of
the results thereof. Section 13 of the Implementing
Rules cannot strictly be applied to the present case.

G.R. No. 152094; July 22, 2004


DHL PHILIPPINES CORPORATION UNITED RANK
AND FILE ASSOCIATION-FEDERATION OF FREE
WORKERS
(DHL-URFA-FFW), petitioner, vs.
BUKLOD
NG
MANGGAGAWA
NG
DHL
PHILIPPINES CORPORATION, respondent.
PANGANIBAN, J.

Respondents voted in favor of the petitioner because it


was their desire to have an independent union.
However, this misrepresentation caused them to
disaffiliate and form a new union. Upon filing the
application but prior the issuance of a certificate of
registration, the respondent already filed its petition to
nullify the certification election. This was opposed by
petitioner on the ground that there was no certificate
issued to respondent yet. However, the court held that
because such certificate was issued in favor of the
latter [respondent] four days after the filing of the
Petition, on December 23, 1997, the misgivings of the
former were brushed aside by the med-arbiter. Indeed,
the fact that respondent was not yet a duly registered
labor organization when the Petition was filed is of no
moment, absent any fatal defect in its application for
registration.

Facts:
A certification election was conducted among the
regular rank and file employees in the main office and
the regional branches of DHL Philippines Corporation
on November 25, 1997. The contending choices were
petitioner and "no union."
However, on December 19, 1997, a petition for the
nullification for the certification election was filed by the
respondent Buklod ng Manggagawa ng DHL
Philippines Corporation (BUKLOD) with the Industrial
Relations Division of the Department of Labor and
Employment (DOLE) on the ground of fraud and
deceit, particularly by misrepresenting to the
employees that it was an independent union even if it
was an affiliate of the Federation of Free Workers
(FFW).

Moreover, the respondents did not sleep on their


rights. Hence, their failure to follow strictly the
procedural technicalities regarding the period for filing
their protest should not be taken against them. Mere
technicalities should not be allowed to prevail over the
welfare of the workers. What is essential is that they
be accorded an opportunity to determine freely and
intelligently which labor organization shall act on their
behalf. Having been denied this opportunity by the
betrayal committed by petitioners officers in the
present case, the employees were prevented from
making an intelligent and independent choice.

Those who found out withdrew their membership and


formed BUKLOD, whose Certificate of Registration
was issued by DOLE on December 23, 1997.
Come January 19, 1998, petitioner received 546 votes
and "no union" garnering 348 votes, and was certified
by the election officer as the sole and exclusive
bargaining agent of the rank and file employees of the
corporation.

Lastly, the Court held that a certification election may


be set aside for misstatements made during the
campaign, where 1) a material fact has been
misrepresented in the campaign; 2) an opportunity for
reply has been lacking; and 3) the misrepresentation
has had an impact on the free choice of the employees
participating in the election. The misrepresentation
was committed by the officers of the petitioner, and
petitioner cannot claim that there was sufficient time
between the said misrepresentation and election to
ascertain the truth of petitioners statements.

The Med-Arbiter Tomas F. Falconitin nullified the


November 25, 1997 certification election and ordered
the conduct of a new one with respondent as one of
the choices, alongside petitioner and no choice. This
decision was reversed by DOLE Undersecretary
Rosalinda Dimapilis-Baldoz.
Upon reaching the Court of Appeals, it held that the
withdrawal of 704 out of 894 members of the petitioner
union was a valid impetus to hold a new certification
election.

Petition denied.
Issue:
Is the certification election valid?

STA. LUCIA EAST COMMERCIAL CORPORATION


vs. HON. SECRETARY OF LABOR AND
EMPLOYMENT
and
STA.
LUCIA
EAST
COMMERCIAL
CORPORATION
WORKERS
ASSOCIATION (CLUP LOCAL CHAPTER),
G.R. No. 162355 August 14, 2009
CARPIO, J.:

Ruling:
The Petition lacks merit.
The petitioner hinges the validity of the decision of the
election officer on the fact that no protest for the
misrepresentation was filed during the election or
within 5 days from the close thereof. However, the
Court held that when the med-arbiter admitted and
gave due course to respondents Petition for

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

19

among the regular rank- and-file employees of Sta.


Lucia
East
Commercial
Corporation
(THE
CORPORATION) and its Affiliates. The affiliate
companies included in the petition were SLE
Commercial, SLE Department Store, SLE Cinema,
Robsan East Trading, Bowling Center, Planet Toys,
Home Gallery and Essentials.

Med-Arbiter Bactin dismissed THE UNIONs petition


for direct certification on the ground of contract bar
rule. The prior voluntary recognition of SMSLEC and
the CBA between THE CORPORATION and SMSLEC
bars the filing of THE UNIONs petition for direct
certification. THE UNION raised the matter to the
Secretary.

On August 2001, Med-Arbiter Bactin ordered the


dismissal of the petition due to inappropriateness of
the bargaining unit.

The Ruling of the Secretary of Labor and


Employment.
The Secretary held that the subsequent negotiations
and registration of a CBA executed by THE
CORPORATION with SMSLEC could not bar THE
UNIONs petition. THE UNION constituted a registered
labor
organization
at
the
time
of
THE
CORPORATIONs voluntary recognition of SMSLEC.
THE CORPORATION then filed a petition for certiorari
before the appellate court.

Later CLUP in its local chapter under THE


CORPORATION reorganized itself and re-registered
as CLUP-Sta. Lucia East Commercial Corporation
Workers Association (herein THE UNION), limiting its
membership to the rank-and-file employees of Sta.
Lucia East Commercial Corporation.

The Ruling of the Appellate Court


The appellate court affirmed the ruling of the Secretary

On the same date, THE UNION or THE UNION filed


the instant petition for certification election. It claimed
that no certification election has been held among
them within the last 12 months prior to the filing of the
petition, and while there is another union registered
covering the same employees, namely Samahang
Manggawa sa SLEC [SMSLEC], it has not been
recognized as the exclusive bargaining agent of [THE
CORPORATIONs] employees.

Issue:
Whether THE CORPORATIONs voluntary recognition
of SMSLEC was validly done while a legitimate labor
organization was in existence in the bargaining unit.
Held:
NO. The fundamental factors in determining the
appropriate collective bargaining unit are: (1) the will of
the employees (Globe Doctrine); (2) affinity and unity
of the employees interest, such as substantial
similarity of work and duties, or similarity of
compensation and working conditions (Substantial
Mutual Interests Rule); (3) prior collective bargaining
history; and (4) similarity of employment status.

On November 2001, THE CORPORATION or THE


CORPORATION filed a motion to dismiss the petition.
It averred that it has voluntarily recognized SMSLEC
as the exclusive bargaining agent of its regular rankand-file employees, and that collective bargaining
negotiations already commenced between them. THE
CORPORATION argued that the petition should be
dismissed for violating the one year and negotiation
bar rules under the Omnibus Rules Implementing the
Labor Code.

(eto yung important)


The UNIONS initial problem was that they constituted
a legitimate labor organization representing a nonappropriate bargaining unit. However, The union
subsequently re-registered as THE UNION, limiting its
members to the rank-and-file of THE CORPORATION.
THE CORPORATION cannot ignore the union was a
legitimate labor organization at the time of THE
CORPORATIONs voluntary recognition of SMSLEC.

The CBA between SMSLEC and the corporation was


ratified by its rank-and-file employees and registered
with DOLE.
In the meantime, on December 2001, the union filed its
Opposition to THE CORPORATIONS
Motion to Dismiss questioning the validity of the
voluntary recognition of [SMSLEC] by [THE
CORPORATION] and their consequent negotiations
and execution of a CBA. According to [THE UNION],
the voluntary recognition of [SMSLEC] by [THE
CORPORATION] violated the requirements for
voluntary recognition, i.e., non-existence of another
labor organization in the same bargaining unit. It
pointed out that the time of the voluntary recognition
on 20 July 2001, appellants registration which covers
the same group of employees covered by Samahang
Manggagawa sa Sta. Lucia East Commercial, was
existing and has neither been cancelled or abandoned.

THE CORPORATION and SMSLEC cannot, by


themselves,
decide
whether
CLUP-THE
CORPORATION and its Affiliates Workers Union
represented an appropriate bargaining unit. The
inclusion in the union of disqualified employees is not
among the grounds for cancellation of registration,
unless such inclusion is due to misrepresentation,
false statement or fraud under the circumstances.
The union having been validly issued a certificate of
registration, should be considered as having acquired
juridical personality which may not be attacked
collaterally. The proper procedure for THE
CORPORATION is to file a petition for cancellation of

The Med-Arbiters Ruling

20

certificate
of
registration
of
CLUP-THE
CORPORATION and its Affiliates Workers Union and
not to immediately commence voluntary recognition
proceedings with SMSLEC.

Federation on the ground of prohibited mixture of


supervisory and rank-and-file employees and noncompliance with the attestation clause under
paragraph 2 of Article 235 of the Labor Code.

SAMAHAN NG MGA MANGGAGAWA SA SAMMA


LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI
NG ALYANSA (SAMMALIKHA) V. SAMMA
CORPORATION
March 13, 2009

CAs Ruling
CA reversed SOLs decision. CA held that
Administrative Circular No. 04-94 which required the
filing of a certificate of non-forum shopping applied to
petitions for certification election. It also ruled that the
Secretary of Labor erred in granting the appeal despite
the lack of proof of service on respondent. Lastly, it
found that petitioner had no legal standing to file the
petition for certification election because its members
were a mixture of supervisory and rank-and-file
employees.

Samahan ng mga Manggagawa sa Samma Lakas sa


Industriya ng Kapatirang Haligi ng Alyansa (SAMMALIKHA) filed a petition for certification election on July
24, 2001. It claimed that: (1) it was a local chapter of
the LIKHA Federation, a legitimate labor organization
registered with the DOLE; (2) it sought to represent all
the rank-and-file employees of respondent Samma
Corporation; (3) there was no other legitimate labor
organization
representing
these
rank-and-file
employees; (4) respondent was not a party to any
collective bargaining agreement and (5) no certification
or consent election had been conducted within the
employer unit for the last 12 months prior to the filing
of the petition.

Issues:
1. Whether a certificate for non-forum shopping
is required in a petition for certification
election. NO
2. Whether SAMMA LIKHA had the legal
personality to file the petition for certification
election. NO.
1. REQUIREMENT OF CERTIFICATE OF NONFORUM SHOPPING IS NOT REQUIRED IN A
PETITION FOR CERTIFICATION ELECTION.

Samma Corp. moved for the dismissal of the petition


arguing that (1) LIKHA Federation failed to establish its
legal personality; (2) petitioner failed to prove its
existence as a local chapter; (3) it failed to attach the
certificate of non-forum shopping and (4) it had a
prohibited mixture of supervisory and rank-and-file
employees.

The requirement for a certificate of non-forum


shopping refers to complaints, counter-claims, crossclaims, petitions or applications where contending
parties litigate their respective positions regarding the
claim for relief of the complainant, claimant, petitioner
or applicant. A certification proceeding, even though
initiated by a petition, is not a litigation but an
investigation of a non-adversarial and fact-finding
character.

Med-Arbiters Ruling
Med-Arbiter dismissed the petition on the following
grounds: (1) lack of legal personality for failure to
attach the certificate of registration purporting to show
its legal personality; (2) prohibited mixture of rank-andfile and supervisory employees and (3) failure to
submit a certificate of non-forum shopping.

Such proceedings are not predicated upon an


allegation of misconduct requiring relief, but,
rather, are merely of an inquisitorial nature. The
Board's functions are not judicial in nature, but are
merely of an investigative character. The object of the
proceedings is not the decision of any alleged
commission of wrongs nor asserted deprivation of
rights but is merely the determination of proper
bargaining units and the ascertainment of the will and
choice of the employees in respect of the selection of a
bargaining representative.

Petitioner moved for MR. The Regional Director of


DOLE forwarded the case to the Secretary of Labor.
During pendency of the petition, Samma Corp. filed a
petition for cancellation of petitioners union registration
in the DOLE Regional Office IV.
Sec. of Labors Ruling
Reversed the order of the med-arbiter. SOL ruled that
the legal personality of a union cannot be
collaterally attacked but may only be questioned in
an independent petition for cancellation of
registration. Thus, he directed the holding of a
certification election among the rank-and-file
employees of respondent, subject to the usual preelection
conference
and
inclusion-exclusion
proceedings.

Under the omnibus rules implementing the Labor Code


as amended by D.O. No. 9, the PCE is supposed to be
filed in the Regional Office which has jurisdiction over
the principal office of the employer or where the
bargaining unit is principally situated. The rules further
provide that where two or more petitions involving the
same bargaining unit are filed in one Regional Office,
the same shall be automatically consolidated. Hence,
the filing of multiple suits and the possibility of
conflicting decisions will rarely happen in this

Meanwhile, Director of DOLE revoked the charter


certificate of SAMMA-LIKHA as local chapter of LIKHA

21

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

it could only be filed during the 60-day freedom period


of the current CBA. The Secretary of Labor and
Employment affirmed said decision, observing the
contract bar rule.
A second petition for certification election was filed.
The same was dismissed by the Med-Arbiter and the
Secretary of Labor based on the abovementioned
grounds. A third petition for certification election, now
within the freedom period, was filed. Med-Arbiter
dismissed for non-existence of employer-employee
relationship and res judicata having set in.

2. LEGAL PERSONALITY OF PETITIONER


The erroneous inclusion of one supervisory employee
in the union of rank-and-file employees was not a
ground to impugn its legitimacy as a legitimate labor
organization which had the right to file a petition for
certification election.
LIKHA was granted legal personality as a federation.
With certificates of registration issued in their favor,
they are clothed with legal personality as legitimate
labor organizations.

ISSUE: Is the case barred by res judicata or


conclusiveness of judgment?

Such legal personality cannot thereafter be subject to


collateral attack, but may be questioned only in an
independent petition for cancellation of certificate of
registration. Unless petitioners union registration is
cancelled in independent proceedings, it shall continue
to have all the rights of a legitimate labor organization,
including the right to petition for certification election.

HELD: NO.
The doctrine of res judicata provides that a final
judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the
parties or their privies in all later suits on points and
matters determined in the former suit. The elements
of res judicata are: (1) the judgment sought to bar the
new action must be final; (2) the decision must have
been rendered by a court having jurisdiction over the
subject matter and the parties; (3) the disposition of
the case must be a judgment on the merits; and (4)
there must be as between the first and second action,
identity of parties, subject matter, and causes of
action.

Samma Corp. filed a petition for cancellation of the


registration of petitioner on December 14, 2002. In a
resolution dated April 14, 2003, petitioners charter
certificate was revoked by the DOLE. But on May 6,
2003, petitioner moved for the reconsideration of this
resolution. Neither of the parties alleged that this
resolution revoking petitioners charter certificate had
attained finality. However, in this petition, petitioner
prayed that its charter certificate be reinstated in the
roster of active legitimate labor [organizations]. The
proceedings on a petition for cancellation of
registration are independent of those of a petition for
certification election. This case originated from the
latter. If it is shown that petitioners legal personality
had already been revoked or cancelled with finality in
accordance with the rules, then it is no longer a
legitimate labor organization with the right to petition
for a certification election.

Here, the first three requisites are present. However,


the fourth element is not. The third petition for
certification election was filed well within the 60-day
freedom period.
There is no identity of causes of action to speak of
since in the first petition, the union has no cause of
action while in the third, a cause of action already
exists for the union as they are now legally allowed to
challenge the status of SMCGC-SUPER as exclusive
bargaining representative.

A FINAL NOTE
Respondent, as employer, had been the one opposing
the holding of a certification election among its rankand-file employees. This should not be the case. We
have already declared that, in certification elections,
the employer is a bystander; it has no right or material
interest to assail the certification election.

NATIONAL UNION OF WORKERS IN HOTELS,


RESTAURANTS
AND
ALLIED
INDUSTRIESMANILA
PAVILION
HOTEL
CHAPTER, Petitioner, vs. SECRETARY OF LABOR
AND EMPLOYMENT, BUREAU OF LABOR
RELATIONS, HOLIDAY INN MANILA PAVILION
HOTEL LABOR UNION AND ACESITE PHILIPPINES
HOTEL CORPORATION, Respondents.
G.R. No. 181531
July 31, 2009
CARPIO MORALES, J.:

CHRIS GARMENTS CORPORATION, petitioner, vs.


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

FACTS: Certification election was conducted among


the rank-and-file employees of Respondent Holiday
Inn Manila Pavilion Hotel. Out of the 346 votes cast, 22
were segregated. Contending unions referred the case
to the Med-Arbiter to determine which among said
votes should be opened and tallied. 11 of said votes
were segregated since they were cast by dismissed
employees, whose dismissal was pending before the

22

CA. 6 votes were cast by employees already


occupying supervisory positions. The last 5 votes were
cast by probationary employees. Med-Arbiter ruled for
the opening of 17 votes, particularly, those cast by 11
dismissed employees and the 6 supposedly
supervisory employees.

numerical composition of the Union, and the election of


its officers.
Going into specifics, Eagle Ridge alleged that the
EREU declared in its application for registration having
30 members, when the minutes of its December 6,
2005 organizational meeting showed it only had 26
members. The misrepresentation was exacerbated by
the discrepancy between the certification issued by the
Union secretary and president that 25 members
actually ratified the constitution and by-laws on
December 6, 2005 and the fact that 26 members
affixed their signatures on the documents, making one
signature a forgery.

ISSUE: May employees on probationary status at


the time of the certification election be allowed to
vote, notwithstanding the pendency of an appeal
with the Secretary of Labor and Employment?
HELD: YES.
In light of the pertinent provisions of D.O. No. 40-03,
and the principle that all employees are, from the first
day of their employment, eligible for membership in a
labor organization, it is evident that the period of
reckoning in determining who shall be included in the
list of eligible voters is, in cases where a timely appeal
has been filed from the Order of the Med-Arbiter, the
date when the Order of the Secretary of Labor and
Employment, whether affirming or denying the appeal,
becomes final and executory.
The filing of an appeal to the SOLE from the MedArbiters Order stays its execution, in accordance with
Sec. 21, and rationally, the Med-Arbiter cannot direct
the employer to furnish him/her with the list of eligible
voters pending the resolution of the appeal.

Finally, Eagle Ridge contended that five employees


who attended the organizational meeting had
manifested the desire to withdraw from the union. The
five executed individual affidavits or Sinumpaang
Salaysay on February 15, 2006, attesting that they
arrived late at said meeting which they claimed to be
drinking spree; that they did not know that the
documents they signed on that occasion pertained to
the organization of a union; and that they now wanted
to be excluded from the Union. The withdrawal of the
five, Eagle Ridge maintained, effectively reduced the
union membership to 20 or 21, either of which is below
the
mandatory
minimum
20%
membership
requirement under Art. 234(c) of the Labor Code.
Reckoned from 112 rank-and-file employees of Eagle
Ridge, the required number would be 22 or 23
employees.

During the pendency of the appeal, the employer may


hire additional employees. To exclude the employees
hired after the issuance of the Med-Arbiters Order but
before the appeal has been resolved would violate the
guarantee that every employee has the right to be part
of a labor organization from the first day of their
service. Even if the Implementing Rules gives the
SOLE 20 days to decide the appeal from the Order of
the Med-Arbiter, experience shows that it sometimes
takes months to be resolved. To rule then that only
those employees hired as of the date of the issuance
of the Med-Arbiters Order are qualified to vote would
effectively disenfranchise employees hired during the
pendency of the appeal. More importantly, reckoning
the date of the issuance of the Med-Arbiters Order as
the cut-off date would render inutile the remedy of
appeal to the SOLE.

The Union presented the duly accomplished union


membership forms of four additional members. And to
rebut the allegations in the affidavits of retraction of the
five union members, it presented the Sama-Samang
Sinumpaang Salaysay of eight union members;
another Sama-Samang Sinumpaang Salaysay, of four
other union members; and the Sworn Statement of the
Unions legal counsel. These affidavits attested to the
orderly and proper proceedings of the organizational
meeting on December 6, 2005.
Issue:
Did EREU commit fraud, misrepresentation and false
statement when it filed for its registration and did it fail
to comply with the membership requirement for the
registration as a labor organization?

EAGLE RIDGE GOLF & COUNTRY CLUB V. CA, ET.


AL.
G.R. No. 178989, March 18, 2010

Ruling:
Facts:
The Eagle Ridge Employees Union (EREU) filed a
petition for certification election in Eagle Ridge Golf &
Country Club, docketed as Case No. RO400-0601-RU002. Eagle Ridge opposed this petition,11 followed by
its filing of a petition for the cancellation of EREU's
certificate of registration ascribing misrepresentation,
false statement, or fraud to EREU in connection with
the adoption of its constitution and by-laws, the

No. A scrutiny of the records fails to show any


misrepresentation, false statement, or fraud committed
by EREU to merit cancellation of its registration. The
Union submitted the required documents attesting to
the facts of the organizational meeting on December 6,
2005, the election of its officers, and the adoption of
the Unions constitution and by-laws. EREU complied
with the mandatory minimum 20% membership

23

condition of continued employment by the COMPANY,


maintain their membership in the UNION in good
standing during the effectivity of the agreement. On
May 16, 2000, (Atty. Fuentes) sent a letter to the
management of PRI demanding the termination of
employees who allegedly campaigned for, supported
and signed the Petition for Certification Election of the
Federation of Free Workers Union (FFW) during the
effectivity of the CBA. NAMAPRI-SPFL considered
said act of campaigning for and signing the petition for
certification election of FFW as an act of disloyalty and
a valid basis for termination for a cause in accordance
with its Constitution and By-Laws, and the terms and
conditions of the CBA, specifically Article II, Sections
6.1 and 6.2 on Union Security Clause. Eventually, the
respondents were terminated.

requirement under Art. 234(c) when it had 30


employees as member when it registered. Any
seeming infirmity in the application and admission of
union membership, most especially in cases of
independent labor unions, must be viewed in favor of
valid membership.
In the issue of the affidavits of retraction executed by
six union members, the probative value of these
affidavits cannot overcome those of the supporting
affidavits of 12 union members and their counsel as to
the proceedings and the conduct of the organizational
meeting on December 6, 2005. The DOLE Regional
Director and the BLR OIC Director obviously erred in
giving credence to the affidavits of retraction, but not
according the same treatment to the supporting
affidavits. It is settled that affidavits partake the nature
of hearsay evidence, since they are not generally
prepared by the affiant but by another who uses his
own language in writing the affiants statement, which
may thus be either omitted or misunderstood by the
one writing them. It is required for affiants to re-affirm
the contents of their affidavits during the hearing of the
instant case for them to be examined by the opposing
party, i.e., the Union. For their non-presentation, the
six affidavits of retraction are inadmissible as evidence
against the Union in the instant case. Twenty percent
(20%) of 112 rank-and-file employees in Eagle Ridge
would require a union membership of at least 22
employees. When the EREU filed its application for
registration on December 19, 2005, there were clearly
30 union members. Thus, when the certificate of
registration was granted, there is no dispute that the
Union complied with the mandatory 20% membership
requirement.
Prior to their withdrawal, the six
employees who retracted were bona fide union
members. With the withdrawal of six union members,
there is still compliance with the mandatory
membership requirement under Art. 234(c), for the
remaining 24 union members constitute more than the
20% membership requirement of 22 employees.

ISSUE: Whether or not an existing CBA can be given


its full force and effect in all its terms and conditions
including its union security clause, even beyond the 5year period when no new CBA has yet been entered
into?
HELD: PRI anchored their decision to terminate
respondents employment on Article 253 of the Labor
Code which states that "it shall be the duty of both
parties to keep the status quo and to continue in full
force and effect the terms and conditions of the
existing agreement during the 60-day period and/or
until a new agreement is reached by the parties." It
claimed that they are still bound by the Union Security
Clause of the CBA even after the expiration of the
CBA; hence, the need to terminate the employment of
respondents. Petitioner's reliance on Article 253 is
misplaced. At the expiration of the freedom period, the
employer shall continue to recognize the majority
status of the incumbent bargaining agent where no
petition for certification election is filed. Applying the
provision of Article 256 of the Labor Code, it can be
said that while it is incumbent for the employer to
continue to recognize the majority status of the
incumbent bargaining agent even after the expiration
of the freedom period, they could only do so when no
petition for certification election was filed. The reason
is, with a pending petition for certification, any such
agreement entered into by management with a labor
organization is fraught with the risk that such a labor
union may not be chosen thereafter as the collective
bargaining representative. The provision for status
quo is conditioned on the fact that no certification
election was filed during the freedom period. Any other
view would render nugatory the clear statutory policy
to favor certification election as the means of
ascertaining the true expression of the will of the
workers as to which labor organization would
represent them.

PICOP RESOURCES, INC. V. TAECA


August 9, 2010
FACTS: On February 13, 2001, respondents filed a
Complaint for unfair labor practice, illegal dismissal
and money claims against petitioner PICOP
Resources, Inc. Respondents were regular rank-andfile employees of PRI and bona fide members
of Nagkahiusang
Mamumuo
sa PRI
Southern
Philippines Federation of Labor (NAMAPRI-SPFL),
which is the collective bargaining agent for the rankand-file employees of petitioner PRI. PRI has a
collective bargaining agreement (CBA) with NAMAPRISPFL for a period of five (5) years from May 22, 1995
until May 22, 2000. The CBA contained union security
provisions on maintenance of membership which
provides that all employees within the appropriate
bargaining unit who are members of the UNION at the
time of the signing of this AGREEMENT shall, as a

LEGEND
INTERNATIONAL
RESORTS
KILUSANG MANGGAGAWA NG LEGEND
February 23, 2011

24

V.

FACTS: On June 6, 2001, KML filed with the Med-Arbitrater


a Petition for Certification Election. KML alleged that it is a
legitimate labor organization of the rank and file employees
of
Legend
International
Resorts
Limited
(LEGEND). LEGEND moved to dismiss the petition alleging
that KML is not a legitimate labor organization because its
membership is a mixture of rank and file and supervisory
employees in violation of Article 245 of the Labor
Code. LEGEND also claimed that KML committed acts of
fraud and misrepresentation when it made it appear that
certain employees attended its general membership
meeting on April 5, 2001 when in reality some of them were
either at work; have already resigned as of March 2001; or
were abroad. In its Comment, KML argued that even if 41 of
its members are indeed supervisory employees and
therefore excluded from its membership, the certification
election could still proceed because the required number of
the total rank and file employees necessary for certification
purposes is still sustained. KML also claimed that its
legitimacy as a labor union could not be collaterally attacked
in the certification election proceedings but only through a
separate and independent action for cancellation of union
registration. Finally, as to the alleged acts of
misrepresentation, KML asserted that LEGEND failed to
substantiate its claim.

certificate of registration is issued to a union, its legal


personality cannot be subject to a collateral attack. In
may be questioned only in an independent petition for
cancellation in accordance with Section 5 of Rule V,
Book V of the Implementing Rules.
SAMAHANG MANGGAGAWA SA CHARTER
CHEMICAL SOLIDARITY OF UNIONS IN THE
PHILIPPINES
FOR
EMPOWERMENT
AND
REFORMS (SMCC-SUPER), ZACARRIAS JERRY
VICTORIO-Union
President,
Petitioner,
vs.
CHARTER
CHEMICAL
and
COATING
CORPORATION, Respondent.
G.R. No. 169717, March 16, 2011
Facts: On February 19, 1999, petitioner SMCCSUPER filed a petition for certification election among
the regular rank-and-file employees of respondent
company. Respondent company filed an Answer with
Motion to Dismiss because of the inclusion of
supervisory employees within petitioner union.The
Med-Arbiter dismissed the petition for certification
election.On appeal, the Department of Labor and
Employment (DOLE) reversed the Med-Arbiters ruling.
The Court of Appeals (CA) nullified the CAs ruling.
Issue: Whether or not the alleged mixture of rank-andfile and supervisory employees of petitioner unions
membership is a ground for the cancellation of
petitioner unions legal personality and dismissal of the
petition for certification election?
Held: No. While there is a prohibition against the
mingling of supervisory and rank-and-file employees in
one labor organization, the Labor Code does not
provide for the effects thereof. Thus, the Court held
that after a labor organization has been registered, it
may exercise all the rights and privileges of a
legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its
membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration,
unless such mingling was brought about by
misrepresentation, false statement or fraud under
Article 239 of the Labor Code.

ISSUE: Whether or not the legitimacy of the legal


personality of KML may be collaterally attacked in a petition
for certification election?
HELD: No. the legitimacy of the legal personality of KML
cannot be collaterally attacked in a petition for certification
election proceeding. This is in consonance with our ruling
in Laguna Autoparts Manufacturing Corporation v. Office of
the Secretary, Department of Labor and Employment that
such legal personality may not be subject to a collateral
attack but only through a separate action instituted
particularly for the purpose of assailing it. The Court further
held therein that to raise the issue of the respondent unions
legal personality is not proper in this case. The
pronouncement of the Labor Relations Division Chief, that
the respondent union acquired a legal personality x x x
cannot be challenged in a petition for certification election.
The discussion of the Secretary of Labor and Employment
on this point is also enlightening. Section 5, Rule V of D.O. 9
is instructive on the matter. It provides that the legal
personality of a union cannot be the subject of collateral
attack in a petition for certification election, but may be
questioned only in an independent petition for cancellation
of union registration. This has been the rule since NUBE v.
Minister of Labor, 110 SCRA 274 (1981). What applies in
this case is the principle that once a union acquires a
legitimate status as a labor organization, it continues as
such until its certificate of registration is cancelled or revoked
in an independent action for cancellation. The legal
personality of a legitimate labor organization x x x
cannot be subject to a collateral attack. The law is very
clear on this matter. x x x The Implementing Rules
stipulate that a labor organization shall be deemed
registered and vested with legal personality on the
date of issuance of its certificate of registration. Once a

STA. LUCIA EAST COMMERCIAL CORPORATION


(SLECC), Petitioner,
vs.
HON. SECRETARY OF LABOR AND EMPLOYMENT
and
STA.
LUCIA
EAST
COMMERCIAL
CORPORATION WORKERS ASSOCIATION (CLUPSLECCWA), Respondents.
G.R. No. 162355 August 14, 2009
Facts: On 27 February 2001, Confederated Labor
Union of the Philippines (CLUP), in behalf of its
chartered local, instituted a petition for certification
election among the regular rank-and-file employees of
Sta. Lucia East Commercial Corporation and its
Affiliates. The Med-Arbiter ordered the dismissal of the
petition due to inappropriateness of the bargaining

25

unit. CLUP-SLECC and its Affiliates Workers Union


reorganized itself and re-registered as CLUP-Sta.
Lucia East Commercial Corporation Workers
Association
(CLUP-SLECCWA)
limiting
its
membership to the rank-and-file employees of Sta.
Lucia East Commercial Corporation. It was issued
Certificate of Creation of a Local Chapter. It thereafter
filed a petition for certification election. Petitioner
SLECC filed a motion to dismiss. It averred that it has
voluntarily recognized Samahang Manggagawa sa
Sta. Lucia East Commercial (SMSLEC) on 20 July
2001 as the exclusive bargaining agent of its regular
rank-and-file employees, and that collective bargaining
negotiations already commenced between them.
SLECC argued that the petition should be dismissed
for violating the one year and negotiation bar. The
Med-Arbiter ruled dismissed the petition for
certification election. The Secretary of Labor and
Employment, on appeal, reversed the decision of the
Med-Arbiter. The Court of Appeals (CA) affirmed the
ruling of the Secretary.
Issue: Whether or not SLECCs voluntary recognition of
SMSLEC was done while a legitimate labor
organization was in existence in the bargaining unit?
Held: Yes. Any applicant labor organization shall
acquire legal personality and shall be entitled to the
rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of
registration.CLUP-SLECC and its Affiliates Workers
Unions initial problem was that they constituted a
legitimate labor organization representing a nonappropriate bargaining unit. However, CLUP-SLECC
and its Affiliates Workers Union subsequently reregistered as CLUP-SLECCWA, limiting its members
to the rank-and-file of SLECC. SLECC cannot ignore
that CLUP-SLECC and its Affiliates Workers Union
was a legitimate labor organization at the time of
SLECCs voluntary recognition of SMSLEC. SLECC
and SMSLEC cannot, by themselves, decide whether
CLUP-SLECC and its Affiliates Workers Union
represented an appropriate bargaining unit.The
inclusion in the union of disqualified employees is not
among the grounds for cancellation of registration,
unless such inclusion is due to misrepresentation,
false statement or fraud under the circumstances
enumerated in Article 239 of the Labor Code.THUS,
CLUP-SLECC AND ITS AFFILIATES WORKERS
UNION, HAVING BEEN VALIDLY ISSUED A
CERTIFICATE OF REGISTRATION, SHOULD BE
CONSIDERED AS HAVING ACQUIRED JURIDICAL
PERSONALITY WHICH MAY NOT BE ATTACKED
COLLATERALLY. THE PROPER PROCEDURE FOR
SLECC
IS
TO
FILE
A
PETITION
FOR
CANCELLATION
OF
CERTIFICATE
OF
REGISTRATION2 OF CLUP-SLECC AND ITS
AFFILIATES WORKERS UNION AND NOT TO
IMMEDIATELY
COMMENCE
VOLUNTARY
RECOGNITION PROCEEDINGS WITH SMSLEC.The

employer may voluntarily recognize the representation


status
of
a
union
in
unorganized
establishments.SLECC
WAS
NOT
AN
UNORGANIZED
ESTABLISHMENT
WHEN
IT
VOLUNTARILY RECOGNIZED SMSLEC AS ITS
EXCLUSIVE BARGAINING REPRESENTATIVE ON
20 JULY 2001. CLUP-SLECC AND ITS AFFILIATES
WORKERS UNION FILED A PETITION FOR
CERTIFICATION ELECTION ON 27 FEBRUARY 2001
AND THIS PETITION REMAINED PENDING AS OF
20 JULY 2001. THUS, SLECCS VOLUNTARY
RECOGNITION OF SMSLEC ON 20 JULY 2001, THE
SUBSEQUENT NEGOTIATIONS AND RESULTING
REGISTRATION OF A CBA EXECUTED BY SLECC
AND SMSLEC ARE VOID AND CANNOT BAR CLUPSLECCWAS
PRESENT
PETITION
FOR
CERTIFICATION ELECTION.
COASTAL SUBIC BAY TERMINAL V. DOLE
November 20, 2006
FACTS: Coastal Bay Subic Terminal Inc. RANK-ANDFILE UNION (CSBTI-RFU) and Coastal Bay Subic
Terminal Inc. SUPERVISORY UNION (CSBTI-SU)
filed separate petitions for certification election. The
employer opposed, citing that both were not legitimate
labor organizations and that the proposed Bargaining
Units were not particularly described. The rank and file
union insists that it has been issued a chartered
certificate by ALU and the supervisory union, by the
APSOTEU. The petition was dismissed by the Med
Arbiter, holding that ALU and APSOTEU are one and
the same federation and that in effect, the supervisory
and RNF unions were in effect, affiliated with only one
federation.
ISSUE: 1. Whether or not the rank and file and
supervisory unions were legitimate in a sense that they
could file
petitions for certification election.
2. Can supervisory employees join Rank and File
unions?
RULING: 1. Yes. A local union does not owe its
existence to the federation with which it is affiliated. It
is a separate and distinct voluntary association owing
its creation to the will of its members. Mere affiliation
does not divest the local union of its own personality;
neither does it give the mother federation the license to
act independently of the local union. It only gives rise
to a contract of agency, where the former acts in
representation of the latter. Hence, local unions are
considered principals while the federation is deemed to
be merely their agent. As such principals, the unions
are entitled to exercise the rights and privileges of a
legitimate labor organization, including the right to
seek certification as the sole and exclusive bargaining
agent in the appropriate employer unit.
2. No. Under Article 245 of the Labor Code,
supervisory employees are not eligible for membership

26

in a labor union of rank-and-file employees. The


supervisory employees are allowed to form their own
union but they are not allowed to join the rank-and-file
union because of potential conflicts of interest. Further,
to avoid a situation where supervisors would merge
with the rank-and-file or where the supervisors labor
union would represent conflicting interests, a local
supervisors union should not be allowed to affiliate
with the national federation of unions of rank-and-file
employees where that federation actively participates
in the union activity within the company. Thus, the
limitation is not confined to a case of supervisors
wanting to join a rank-and-file union. The prohibition
extends to a supervisors local union applying for
membership in a national federation the members of
which include local unions of rank-and-file employees.

ISSUE: Whether or not the Secretary of DOLE can


take cognizance of matters beyond the subject of the
notice of strike in CBA negotiations?
RULING:
Yes. The Secretary of DOLE may. Based on the
Notices of Strike filed by UFE-DFA-KMU, the
Secretary of the DOLE rightly decided on matters of
substance. That the union later on changed its mind is
of no moment because to give premium to such would
make the legally mandated discretionary power of the
Dole Secretary subservient to the whims of the parties.
It was UFE-DFA-KMU which first alleged a bargaining
deadlock as the basis for the filing of its Notice of
Strike; and at the time of the filing of the first Notice of
Strike, several conciliation conferences had already
been undertaken where both parties had already
exchanged with each other their respective CBA
proposals. In fact, during the conciliation meetings
before the NCMB, but prior to the filing of the notices
of strike, the parties had already delved into matters
affecting the meat of the collective bargaining
agreement.

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


[note: Amendatory laws provide that supervisory
employees MAY join RNF unions however for
purposes of determination of Bargaining Unit
membership, supervisory employees shall simply be
deemed not included.]

STANDARD CHARTERED
UNION V. CONFESOR

COLLECTIVE BARGAINING

BANK

EMPLOYEES

FACTS:
Standard Chartered Bank (the Bank, for brevity) is a
foreign banking corporation doing business in the
Philippines. The exclusive bargaining agent of the rank
and file employees of the Bank is the Standard
Chartered Bank Employees Union (the Union, for
brevity).

UNION OF FILIPRO EMPLOYEES V. NESTLE


PHILS.
March 3, 2008
Union of Filipro Employees Drug Food and Allied
Industries Union Kilusang Mayo Uno was the sole
and exclusive bargaining agent of the rank-and-file
employees of Nestle belonging to Alabang and
Cabuyao plants. Prior the expiration of the CBA, they
signified their intent to renegotiate a new CBA. Nestle
informed them about its counter proposal and that it
implemented rules to govern the conduct of CBA
negotiations. Due to a failure to reach an agreement,
conciliation proceedings bargaining deadlock ensued.
A notice of strike was filed by the union prediated on
Nestles alleged ULP (bargaining in bad faith by
setting preconditions in the ground rules and/or
refusing to include the issue of the retirement plan in
the CBA negotiations. The Secretary assumed
jurisdiction over the subject labor dispute.

Before the commencement of the negotiation, the


Union, through Divinagracia, suggested to the Banks
Human Resource Manager and head of the
negotiating panel, Cielito Diokno, that the bank
lawyers should be excluded from the negotiating
team. The Bank acceded.[11] Meanwhile, Diokno
suggested to Divinagracia that Jose P. Umali, Jr., the
President of the National Union of Bank
Employees (NUBE), the federation to which the
Union was affiliated, be excluded from the Unions
negotiating panel.[12] However, Umali was retained
as a member thereof.
On March 12, 1993, the parties met and set the ground
rules for the negotiation. Diokno suggested that the
negotiation be kept a family affair. The proposed noneconomic provisions of the CBA were discussed
first.[13] Even during the final reading of the noneconomic provisions on May 4, 1993, there were still
provisions on which the Union and the Bank could not
agree. Temporarily, the notation DEFERRED was
placed therein. Towards the end of the meeting, the
Union manifested that the same should be changed to
DEADLOCKED to indicate that such items remained
unresolved. Both parties agreed to place the notation
DEFERRED/DEADLOCKED.

Nestl and UFE-DFA-KMU filed their respective


position papers. Nestl addressed several issues
concerning economic provisions of the CBA as well as
the non-inclusion of the issue of the Retirement Plan in
the collective bargaining negotiations. On the other
hand, UFE-DFA-KMU limited itself to the issue of
whether or not the retirement plan was a mandatory
subject in its CBA negotiation.

27

The Union alleges that the Bank violated its duty to


bargain; hence, committed ULP under Article 248(g)
when it engaged in surface bargaining. It alleged that
the Bank just went through the motions of bargaining
without any intent of reaching an agreement, as
evident in the Banks counter-proposals.

The petitioner asserts that the private respondent


committed ULP, i.e., interference in the selection of the
Unions negotiating panel, when Cielito Diokno, the
Banks Human Resource Manager, suggested to the
Unions President Eddie L. Divinagracia that Jose P.
Umali, Jr., President of the NUBE, be excluded from
the Unions negotiating panel. In support of its claim,
Divinagracia executed an affidavit, stating that prior to
the commencement of the negotiation, Diokno
approached him and suggested the exclusion of Umali
from the Unions negotiating panel, and that during the
first meeting, Diokno stated that the negotiation be
kept a family affair.

Surface bargaining is defined as going through the


motions of negotiating without any legal intent to reach
an agreement.[50] The resolution of surface bargaining
allegations never presents an easy issue. The
determination of whether a party has engaged in
unlawful surface bargaining is usually a difficult one
because it involves, at bottom, a question of the intent
of the party in question, and usually such intent can
only be inferred from the totality of the challenged
partys conduct both at and away from the bargaining
table. It involves the question of whether an employers
conduct demonstrates an unwillingness to bargain in
good faith or is merely hard bargaining.

ISSUE(1): Whether or not the Union was able to


substantiate its claim of unfair labor practice against
the Bank arising from the latters alleged interference
with its choice of negotiator; surface bargaining;
making bad faith non-economic proposals; and refusal
to furnish the Union with copies of the relevant data

The minutes of meetings from March 12, 1993 to June


15, 1993 do not show that the Bank had any intention
of violating its duty to bargain with the Union. Records
show that after the Union sent its proposal to the Bank
on February 17, 1993, the latter replied with a list of its
counter-proposals on February 24, 1993. Thereafter,
meetings were set for the settlement of their
differences. The minutes of the meetings show that
both the Bank and the Union exchanged economic and
non-economic proposals and counter-proposals.

RULING: NO
The circumstances that occurred during the
negotiation do not show that the suggestion made by
Diokno to Divinagracia is an anti-union conduct from
which it can be inferred that the Bank consciously
adopted such act to yield adverse effects on the free
exercise of the right to self-organization and collective
bargaining of the employees, especially considering
that such was undertaken previous to the
commencement of the negotiation and simultaneously
with Divinagracias suggestion that the bank lawyers be
excluded from its negotiating panel.

The Union has not been able to show that the Bank
had done acts, both at and away from the bargaining
table, which tend to show that it did not want to reach
an agreement with the Union or to settle the
differences between it and the Union. Admittedly, the
parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the
duty to bargain does not compel either party to
agree to a proposal or require the making of a
concession.[53] Hence, the parties failure to agree
did not amount to ULP under Article 248(g) for
violation of the duty to bargain.

The records show that after the initiation of the


collective bargaining process, with the inclusion of
Umali in the Unions negotiating panel, the negotiations
pushed through. The complaint was made only on
August 16, 1993 after a deadlock was declared by the
Union on June 15, 1993.
It is clear that such ULP charge was merely an
afterthought. The accusation occurred after the
arguments and differences over the economic
provisions became heated and the parties had become
frustrated. It happened after the parties started to
involve personalities. As the public respondent noted,
passions may rise, and as a result, suggestions given
under less adversarial situations may be colored with
unintended meanings. Such is what appears to have
happened in this case.

ISSUE(2): whether or not the petitioner is estopped


from filing the instant action.
RULING: NO
In the case, however, the approval of the CBA and the
release of signing bonus do not necessarily mean that
the Union waived its ULP claim against the Bank
during the past negotiations. After all, the conclusion of
the CBA was included in the order of the SOLE, while
the signing bonus was included in the CBA itself.
Moreover, the Union twice filed a motion for
reconsideration respecting its ULP charges against the
Bank before the SOLE.

The Duty to Bargain Collectively


If at all, the suggestion made by Diokno to
Divinagracia should be construed as part of the normal
relations and innocent communications, which are all
part of the friendly relations between the Union and
Bank.

The Union Did Not Engage


In Blue-Sky Bargaining

28

We, likewise, do not agree that the Union is guilty of


ULP for engaging in blue-sky bargaining or making
exaggerated or unreasonable proposals.[59] The Bank
failed to show that the economic demands made by
the Union were exaggerated or unreasonable. The
minutes of the meeting show that the Union based its
economic proposals on data of rank and file
employees and the prevailing economic benefits
received by bank employees from other foreign banks
doing business in the Philippines and other branches
of the Bank in the Asian region.

They extended the original five-year period of the CBA


by four (4) months.

GENERAL MILLING CORPORATION VS CA FEB 11,


2004

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

On January 21, 2003, nine (9) days before the January


30, 2003 expiration of the originally-agreed five-year
CBA term (and four months and nine days away from
the expiration of the amended CBA period), the
respondent (SANAMA-SIGLO) filed before the
Department of Labor and Employment (DOLE) a
petition for certification election for the same rank-andfile unit covered by the FVCLU-PTGWO CBA.

On April 28, 1989, GMC and the union concluded a


collective bargaining agreement (CBA) which included
the issue of representation effective for a term of three
years. The day before the expiration of the CBA, the
union sent GMC a proposed CBA, with a request that
a counter-proposal be submitted within ten (10) days.
However, GMC had received collective and individual
letters from workers who stated that they had
withdrawn from their union membership, on grounds of
religious affiliation and personal differences. Believing
that the union no longer had standing to negotiate a
CBA, GMC did not send any counter-proposal.

Ruling:
NO. By express provision of Article 253-A, the
exclusive bargaining status cannot go beyond 5 years
and the representation status is a legal matter not for
the parties to agree upon. Despite the agreement to
extend the life of the CBA beyond the 5-yr period, the
exclusive bargaining status is effective only for five
years and hence, it can be challenged within the 60day period prior to the expiration of the CBAs first five
years.
RFM CORPORATION V. KAMPI-NAFLU-KMU
G.R. No. 162324, February 4, 2009
Carpio-Morales, J.

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

DOCTRINE:
If the terms of a CBA are clear and have no doubt
upon the intention of the contracting parties, as in the
herein questioned provision, the literal meaning thereof
shall prevail.

Ruling:
YES. The law mandates that the representation
provision of a CBA should last for five years.The
relation between labor and management should be
undisturbed until the last 60 days of the fifth year. It is
indisputable that when the union requested for a
renegotiation of the economic terms of the CBA on
November 29, 1991, it was still the certified collective
bargaining agent of the workers. The withdrawal of
some union members from the union will not affect the
majority status of the union as the exclusive bargaining
agent. GMC should have responded and kept its duty
to bargain collectively.

FACTS:
Petitioner RFM Corporation (RFM) is a domestic
corporation engaged in flour-milling and animal feeds
manufacturing. Sometime in 2000, its Flour Division
and SFI Feeds Division entered into collective
bargaining agreements (CBAs) with their respective
labor unions, the Kasapian ng Manggagawang
Pinagkaisa-RFM (KAMPI-NAFLU-KMU) for the Flour
Division,
and
Sandigan
at
Ugnayan
ng
Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLUKMU) for the Feeds Division (respondents). The CBAs,
which contained similar provisions, were effective for
five years, from July 1, 2000 up to June 30, 2005. A
section of the CBAs provides that the company should
make payment if Black Saturday, November 1, and
December 31 were declared as special holidays by the
National Government.

FVC LABOR UNION PHIL. TRANSPORT AND


GENERAL
WORKERS
ASSOCIATION
VS.
SANAMA-FVC-SIGLO
Facts: On December 22, 1997, the petitioner FVCLUPTGWO the recognized bargaining agent of the
rank-and-file employees of the FVC Philippines,
signed a five-year collective bargaining agreement
(CBA) with the company. The five-year CBA period
was from February 1, 1998 to January 30, 2003. At the
end of the 3rd year of the five-year term and pursuant
to the CBA, FVCLU-PTGWO and the company
entered into the renegotiation of the CBA and
modified, among other provisions, the CBAs duration.

During the first year of the effectivity of the CBAs in


2000, December 31 which fell on a Sunday was
declared by the national government as a special
holiday. Respondents thus claimed payment of their
members salaries, invoking the above-stated CBA
provision. Petitioner refused the claims for payment,

29

averring that December 31, 2000 was not


compensable as it was a rest day. The controversy
resulted in a deadlock, drawing the parties to submit
the same for voluntary arbitration. The voluntary
arbitrator ruled in favor of the respondents and upon
appeal, the Court of Appeals affirmed the VAs
decision.

to the privileges and benefits enjoyed by regular


employees. ABS-CBN alleged that the petitioners
services were contracted on various dates by its Cebu
station as independent contractors/off camera talents,
and they were not entitled to regularization in these
capacities. Thus they are not entitled to the benefits
granted under their collective bargaining agreement.

ISSUE:
Whether or not the employees are entitled to the
questioned salary according to the provision of the
CBA.

On January 17, 2002, Labor Arbiter Rendoque


rendered his decision5 holding that the petitioners were
regular employees of ABS-CBN, not independent
contractors, and are entitled to the benefits and
privileges of regular employees. Upon appeal, the
NLRC affirmed the Labor Arbiters Decision.

HELD:
Yes. If the terms of a CBA are clear and have no doubt
upon the intention of the contracting parties, as in the
herein questioned provision, the literal meaning thereof
shall prevail. That is settled.5 As such, the daily-paid
employees must be paid their regular salaries on the
holidays which are so declared by the national
government, regardless of whether they fall on rest
days. The CBA is the law between the parties, hence,
they are obliged to comply with its provisions.7 Indeed,
if petitioner and respondents intended the provision in
question to cover payment only during holidays falling
on work or weekdays, it should have been so
incorporated therein.
Petitioner maintains, however, that the parties failed to
foresee a situation where the special holiday would fall
on a rest day. The Court is not persuaded. The Labor
Code specifically enjoins that in case of doubt in the
interpretation of any law or provision affecting labor, it
should be interpreted in favor of labor.

ISSUE:
Whether or not the petitioners are entitled to the
benefits under the CBA.
HELD:
Yes. Under the terms of the CBA, the petitioners are
members of the appropriate bargaining unit because
they are regular rank-and-file employees and do not
belong to any of the excluded categories. Specifically,
nothing in the records shows that they are supervisory
or confidential employees; neither are they casual nor
probationary employees.
The Supreme Court sees no merit in ABS-CBNs
arguments that the petitioners are not entitled to CBA
benefits because: (1) they did not claim these benefits
in their position paper; (2) the NLRC did not
categorically rule that the petitioners were members of
the bargaining unit; and (3) there was no evidence of
this membership. CBA coverage is not only a question
of fact, but of law and contract. The factual issue is
whether the petitioners are regular rank-and-file
employees of ABS-CBN. The tribunals below uniformly
answered this question in the affirmative.

FULACHE
V.
ABS-CBN
BROADCASTING
CORPORATION
G.R. No. 183810, January 21, 2010
Brion, J.
DOCTRINE:
CBA coverage is not only a question of fact, but of law
and contract.

EMPLOYEES UNION
PHILIPPINES
December 6, 2010

FACTS:

OF

BAYER

V.

BAYER

FACTS:
Employees Union of Bayer Philippines is the exclusive
bargaining agent of all rank-and-file employees of
Bayer Philippines (Bayer). In 1997, its president
Juanito S. Facundo, negotiated with Bayer for the
signing of a CBA. During the negotiations, EUBP
rejected Bayers wage-increase proposal resulting in a
bargaining deadlock.

Petitioners, who worked as drivers, cameramen, and


editors for respondent, filed several complaints against
the latter for unfair labor practice, regularization, and
money claims. The petitioners alleged that on
December 17, 1999, ABS-CBN and the ABS-CBN
Rank-and-File Employees Union (Union) executed a
collective bargaining agreement (CBA) effective
December 11, 1999 to December 10, 2002; they only
became aware of the CBA when they obtained copies
of the agreement; they learned that they had been
excluded from its coverage as ABS-CBN considered
them temporary and not regular employees, in
violation of the Labor Code. They claimed they had
already rendered more than a year of service in the
company and, therefore, should have been recognized
as regular employees entitled to security of tenure and

Pending the resolution of the dispute, respondents,


headed by Avelina Remigio without any authority from
their union leaders, accepted Bayers wage-increase
proposal. EUBPs grievance committee questioned
Remigios action and reprimanded Remigio and her
allies. Thereafter, the DOLE Secretary issued an

30

arbitral award ordering EUBP and Bayer to execute a


CBA.

Whether an imposed CBA has the same effect as that


of a CBA duly agreed upon by the parties.

Meanwhile, the rift between Facundos leadership and


Remigios group broadened. Six months after the CBA,
respondent sought to disaffiliate from the union. A tugof-war then ensued between the two rival groups, with
both seeking recognition from Bayer and demanding
remittance of the union dues collected from its rankand-file members. Bayer refused to accede to the
demands of the 2 group but subsequently turn over the
collected union dues to herein respondent. Hence,
petitioner filed this case.

HELD: YES
Considering that no new CBA had been, in the
meantime, agreed upon by GMC and the Union, we
find, pursuant to Article 253 of the Labor Code, the
provisions of the imposed CBA continues to have full
force and effect until a new CBA has been entered into
by the parties. Article 253 mandates the parties to
keep the status quo and to continue in full force
and effect the terms and conditions of the existing
agreement during the 60-day period prior to the
expiration of the old CBA and/or until a new
agreement is reached by the parties. In the same
manner that it does not provide for any exception
nor qualification on which economic provisions of
the existing agreement are to retain its force and
effect, the law does not distinguish between a CBA
duly agreed upon by the parties and an imposed
CBA like the one under consideration.

ISSUE: Whether the act of the management of Bayer


in dealing and negotiating with Remigios splinter group
despite its validly existing CBA with EUBP can be
considered unfair labor practice.
HELD: YES. Bayer committed ULP.
Indeed, in Silva v. National Labor Relations
Commission, we explained the correlations of Article
248 (1) and Article 261 of the Labor Code to mean that
for a ULP case to be cognizable by the Labor Arbiter,
and for the NLRC to exercise appellate jurisdiction
thereon, the allegations in the complaint must show
prima facie the concurrence of two things, namely: (1)
gross violation of the CBA; and (2) the violation
pertains to the economic provisions of the CBA.

While it is true that the provisions of the imposed CBA


extend beyond said remaining two-year duration of the
original CBA in view of the parties admitted failure to
conclude a new CBA, the corresponding computation
of the benefits accruing in favor of GMCs covered
employees after the term of the original CBA was
correctly excluded in the aforesaid 27 October 2005
order issued in RAB VII-06-0475-1992. Rather than
the abbreviated pre-execution proceedings before
Executive Labor Arbiter Violeta Ortiz-Bantug, the
computation of the same benefits beyond 30
November 1993 should, instead, be threshed out by
GMC and the Union in accordance with the Grievance
Procedure outlined as follows under Article XII of the
imposed CBA
As for the benefits after the expiration of the term of
the parties original CBA, we find that the extent thereof
as well as identity of the employees entitled thereto will
be better and more thoroughly threshed out by the
parties themselves in accordance with the grievance
procedure outlined in Article XII of the imposed CBA.

This pronouncement in Silva, however, should not be


construed to apply to violations of the CBA which
can be considered as gross violations per se, such
as utter disregard of the very existence of the CBA
itself, similar to what happened in this case. When
an employer proceeds to negotiate with a splinter
union despite the existence of its valid CBA with
the duly certified and exclusive bargaining agent,
the former indubitably abandons its recognition of
the latter and terminates the entire CBA.
GENERAL
MILLING
CORPORATION
INDEPENDENT LABOR UNION V. GENERAL
MILLING CORPORATION
June 15, 2011

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

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

V.

Facts:
Rodolfo Mangalino, who is a union member of
Malayan Employees Associations was suspended for
taking a union leave without the prior authority of his
department head and despite a previous disapproval
of the requested leave. A provision in the unions
collective bargaining agreement (CBA) with the
company allows union officials to avail of union leaves
with pay for a total of ninety-man days per year for the
purpose of attending grievance meetings, LaborManagement Committee meetings, annual National
Labor Management Conferences, labor education
programs and seminars, and other union activities.

ISSUE:

31

The company issued a rule in November 2002


requiring not only the prior notice that the CBA
expressly requires, but prior approval by the
department head before the union and its members
can avail of union leaves. The rule was placed into
effect in November 2002 without any objection from
the union until a union officer, Mangalino, filed union
leave applications in January and February, 2004. His
department head disapproved the applications
because the department was undermanned at that
time.

issue) in the NCMB. Moreover, alleged violations of


the CBA should be resolved according to the
grievance procedure laid out therein. Thus, the labor
arbiter had no jurisdiction over the complaint.
Issue:
Is the contention that the labor arbiter lacks jurisdiction
as the case involves interpretation of the provision of
CBA valid?
Held:
Yes. Petitioners clearly and consistently questioned
the legality of RGMIs adoption of the new salary
scheme (i.e., piece-rate basis), asserting that such
action, among others, violated the existing CBA.
Indeed, the controversy was not a simple case of
illegal dismissal but a labor dispute involving the
manner of ascertaining employees salaries, a matter
which was governed by the existing CBA.

Issue:
Whether or not the suspension is invalid and violated
the CBA?
Held:
No. While it is true that the union and its members
have been granted union leave privileges under the
CBA, the grant cannot be considered separately from
the other provisions of the CBA, particularly the
provision on management prerogatives where the CBA
reserved for the company the full and complete
authority in managing and running its business.
The prior approval policy fully supported the validity of
the suspensions the company imposed on Mangalino.
We point out additionally that as an employee,
Mangalino had the clear obligation to comply with the
management disapproval of his requested leave while
at the same time registering his objection to the
company regulation and action. That he still went on
leave, in open disregard of his superiors orders,
rendered Mangalino open to the charge of
insubordination, separately from his absence without
official leave.

Under Article 261, voluntary arbitrators have original


and exclusive jurisdiction over matters which have not
been resolved by the grievance machinery. Pursuant
to Articles 217 in relation to Articles 260 and 261 of the
Labor Code, the labor arbiter should have referred the
matter to the grievance machinery provided in the
CBA. Because the labor arbiter clearly did not have
jurisdiction over the subject matter, his decision was
void.
CIRTEK EMPLOYEES LABOR UNION FEDERATION
OF FREE WORKERS vs CIRTEK
Facts:
Amicable settlement of the CBA between petitioner
union and respondent company was deadlocked,
petitioner went on strike. Secretary of Labor assumed
jurisdiction over the controversy and issued a Return
to Work Order which was complied with. Before the
Secretary of Labor could rule on the controversy,
respondent created a Labor Management Council
(LMC) through which it concluded with the officers of
petitioner a Memorandum of Agreement (MOA)
providing for daily wage increases of P6.00 per day
effective January 1, 2004 and P9.00 per day effective
January 1, 2005. Petitioner submitted the MOA via
Motion and Manifestation to the Secretary of Labor,
alleging that the remaining officers signed the MOA
under respondents assurance that should the
Secretary order a higher award of wage increase,
respondent would comply.

SANTUYO VS. REMERCO GARMENTS


G.R. No. 174420, March 22, 2010
Facts:
Petitioners, who had been employed as sewers, were
among those recalled due to the strike that was
subsequently declared illegal. Those who were
recalled are allowed to resume work on the condition
that they would no longer be paid a daily rate but on a
piece-rate basis. Without allowing RGMI to normalize
its operations, the union filed a notice of strike in the
National Conciliation and Mediation Board (NCMB) on
August 8, 1995. According to the union, RGMI
conducted a time and motion study and changed the
salary scheme from a daily rate to piece-rate basis
without consulting it. RGMI therefore not only violated
the existing collective bargaining agreement (CBA) but
also diminished the salaries agreed upon. It therefore
committed an unfair labor practice. Later, petitioners
filed a complaint with the labor arbiter and amended
their complaint, stating that respondents suspended
them for questioning their decision to pay salaries on a
piece-rate basis. Respondents, on the other hand,
moved to dismiss the complaint in view of the pending
conciliation proceedings (which involved the same

Secretary of Labor resolved the CBA deadlock by


awarding a wage increase of from P6.00 to P10.00 per
day effective January 1, 2004 and from P9.00 to
P15.00 per day effective January 1, 2005, and
adopting all other benefits as embodied in the MOA.
Respondent moved for a reconsideration of the
Decision as petitioners vice-president submitted a
Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan

32

na may Petsang ika-4 ng Agosto 2005, stating that the


union members were waiving their rights and benefits
under the Secretarys Decision. Court ruled in favor of
respondent and accordingly set aside the Decision of
the Secretary of Labor. It held that the Secretary of
Labor gravely abused his discretion in not respecting
the MOA. Petitioners filed the present petition,
maintaining that the Secretary of Labors award is in
order, being in accord with the parties CBA history
respondent having already granted P15.00 per day for
2001, P10.00 per day for 2002, and P10.00 per day for
2003, and that the Secretary has the power to grant
awards higher than what are stated in the CBA.

consideration to the context in which it is negotiated


and purpose which it is intended to serve.
EASTERN TELECOMMUNICATIONS, PHIL., INC. V.
EASTERN TELECOMS UNION
G.R. No. 185665; February 8, 2012
FACTS: Eastern Telecommunications Phils., Inc.
(ETPI) is a corporation engaged in the business of
providing telecommunications facilities employing
approximately 400 employees. Eastern Telecoms
Employees Union (ETEU) is the certified exclusive
bargaining agent of the companys rank and file
employees with a strong following of 147 regular
members. It has an existing collecti[ve] bargaining
agreement with the company to expire in the year
2004 with a Side Agreement signed on September 3,
2001. The labor dispute was a spin-off of the
companys plan to defer payment of the 2003 14th, 15th
and 16th month bonuses sometime in April 2004. The
companys main ground in postponing the payment of
bonuses is due to allege continuing deterioration of
companys financial position which started in the year
2000. However, ETPI while postponing payment of
bonuses sometime in April 2004, such payment would
also be subject to availability of funds.

Issue:
Whether or not the MOA entered into by the petitioner
and the respondent constitutes CBA between them
and thus restricts the Secretarys leeway in deciding
matters before it
Held:
No. It is well-settled that the Secretary of Labor, in the
exercise of his power to assume jurisdiction under Art.
263 (g)[11] of the Labor Code, may resolve all issues
involved in the controversy including the award of
wage increases and benefits. While an arbitral award
cannot per se be categorized as an agreement
voluntarily entered into by the parties because it
requires the intervention and imposing power of the
State thru the Secretary of Labor when he assumes
jurisdiction, the arbitral award can be considered an
approximation
of
a
collective
bargaining
agreement which would otherwise have been entered
into by the parties, hence, it has the force and effect of
a valid contract obligation. Since the filing and
submission of the MOA did not have the effect of
divesting the Secretary of his jurisdiction, or of
automatically disposing the controversy, then neither
should the provisions of the MOA restrict the
Secretarys leeway in deciding the matters before him.

Invoking the Side Agreement of the existing Collective


Bargaining Agreement for the period 2001-2004
between ETPI and ETEU which stated as follows: 4.
Employment Related Bonuses. The Company confirms
that the 14th, 15th and 16th month bonuses (other than
13th month pay) are granted. The union strongly
opposed the deferment in payment of the bonuses by
filing a preventive mediation complaint with the NCMB.
The company declared that until the matter is resolved
in a compulsory arbitration, the company cannot and
will not pay any bonuses to any and all union
members. ETEU filed a Notice of Strike on the ground
of unfair labor practice for failure of ETPI to pay the
bonuses in gross violation of the economic provision of
the existing CBA. Secretary of Labor and Employment,
finding that the company is engaged in an industry
considered vital to the, certified the labor dispute for
compulsory arbitration.

While a contract constitutes the law between the


parties, this is so in the present case with respect to
the CBA, not to the MOA in which even the unions
signatories had expressed reservations thereto. But
even assuming arguendo that the MOA is treated as a
new CBA, since it is imbued with public interest, it
must be construed liberally and yield to the common
good. While the terms and conditions of a CBA
constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA,
as a labor contract within the contemplation of Article
1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is not
merely contractual in nature but impressed with public
interest, thus, it must yield to the common good. As
such, it must be construed liberally rather than
narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due

ETEU theorized that the grant of the subject bonuses


is not only a company practice but also a contractual
obligation of ETPI to the union members. ETEU
contended that the unjustified and malicious refusal of
the company to pay the subject bonuses was a clear
violation of the economic provision of the CBA and
constitutes unfair labor practice (ULP). On the other
hand, ETPI contends that NLRC had no jurisdiction
over the issue which merely involved the interpretation
of the economic provision of the 2001-2004 CBA Side
Agreement. It averred that the subject bonuses were
not part of the legally demandable wage and the grant
thereof to its employees was an act of pure gratuity
and generosity on its part, involving the exercise of
management prerogative and always dependent on

33

the financial performance and realization of profits.


ETPI emphasized that even if it had an unconditional
obligation to grant bonuses to its employees, the
drastic decline in its financial condition had already
legally released it therefrom pursuant to Article 1267 of
the Civil Code.

when the giving of such bonus has been the


companys long and regular practice. The giving of the
subject bonuses cannot be peremptorily withdrawn by
ETPI without violating Article 100 of the Labor Code.
PNCC SKYWAY TRAFFIC MANAGEMENT AND
SECURITY DIVISION WORKERS ORGANIZATION
(PSTMSDWO) V. PNCC SKYWAY CORPORATION
G.R. No. 171231; February 17, 2010

NLRC dismissed ETEUs complaint and held that ETPI


could not be forced to pay the union members the
bonuses as the payment of these additional benefits
was basically a management prerogative. ETEU
moved for reconsideration but the motion was denied.
ETEU filed a petition for certiorari. The CA declared
that the Side Agreements of the 1998 and 2001 CBA
created a contractual obligation. However, the CA
sustained the NLRC finding that the allegation of ULP
was devoid of merit. ETPI appealed via Rule 45 of the
Rules of Court.

FACTS: Petitioner PSTMSDWO is a duly registered


labor union. Respondent PNCC Skyway Corporation is
a corporation duly organized and operating under and
by virtue of the laws of the Philippines. On November
15, 2002, petitioner and respondent entered into a
Collective Bargaining Agreement (CBA) incorporating
the terms and conditions of their agreement which
included vacation leave and expenses for security
license provisions.

ISSUES: (1) Whether or not petitioner ETPI is liable to


pay 14th, 15th and 16th month bonuses for the year
2003 and 14th month bonus for the year 2004 to the
members of respondent union; and (2) Whether or not
the CA erred in not dismissing outright ETEUs petition
for certiorari.

The pertinent provisions of the CBA relative to


vacation leave and sick leave are as follows: [b] The
company shall schedule the vacation leave of
employees
during
the
year
taking
into
consideration the request of preference of the
employees. [c] Any unused vacation leave shall be
converted to cash and shall be paid to the
employees on the first week of December
each year.

RULING: The Court finds no merit in the petition. A


bonus, however, becomes a demandable or
enforceable obligation when it is made part of the
wage or salary or compensation of the employee. A
reading of the [CBA Side Agreements] reveals that the
same provides for the giving of 14th, 15th and 16th
month bonuses without qualification. The records are
also bereft of any showing that the ETPI made it clear
before or during the execution of the Side Agreements
that the bonuses shall be subject to any condition. In
the absence of any proof that ETPIs consent was
vitiated by fraud, mistake or duress, it is presumed that
it entered into the Side Agreements voluntarily, that it
had full knowledge of the contents thereof and that it
was aware of its commitment under the contract.
Notwithstanding such huge losses, ETPI entered into
the 2001-2004 CBA Side Agreement. The parties to
the contract must be presumed to have assumed the
risks of unfavorable developments. It is, therefore, only
in absolutely exceptional changes of circumstances
that equity demands assistance for the debtor. In the
case at bench, the Court determines that ETPIs
claimed depressed financial state will not release it
from the binding effect of the 2001-2004 CBA Side
Agreement. Considering that ETPI had been
continuously suffering huge losses from 2000 to 2002,
its business losses in the year 2003 were not exactly
unforeseen or unexpected.
Granting arguendo that the CBA Side
Agreement does not contractually bind petitioner ETPI
to give the subject bonuses, nevertheless, the Court
finds that its act of granting the same has become an
established company practice such that it has virtually
become part of the employees salary or wage. A
bonus may be granted on equitable consideration

The Head of the TMSD issued a Memorandum dated


January 9, 2004 to all TMSD personnel. In the said
memorandum, it was provided that:
SCHEDULED VACATION LEAVE WITH PAY.
The 17 days (15 days SVL
plus 2-day-off) scheduled vacation
leave (SVL) with pay for the year 2004
had been published for everyone to
take a vacation with pay which will be
our opportunity to enjoy quality time
with our families and perform our
other activities requiring our personal
attention and supervision. Swapping
of SVL schedule is allowed on a oneon-one basis by submitting a written
request at least 30 days before the
actual schedule of SVL duly signed by
the concerned parties. However, the
undersigned may consider the rescheduling of the SVL upon the
written request of concerned TMSD
personnel at least 30 days before the
scheduled SVL. Re-scheduling will be
evaluated taking into consideration
the TMSDs operational requirement.
Petitioner objected to the implementation of the said
memorandum. It insisted that the individual members
of the union have the right to schedule their vacation
leave. It opined that the unilateral scheduling of the

34

employees' vacation leave was done to avoid the


monetization of their vacation leave in December
2004. Petitioner also demanded that the expenses for
the required in-service training of its member security
guards, as a requirement for the renewal of their
license, be shouldered by the respondent.

CBA must be strictly adhered to and respected if its


ends have to be achieved, being the law between the
parties. In Faculty Association of Mapua Institute of
Technology (FAMIT) v. Court of Appeals, this Court
held that the CBA during its lifetime binds all the
parties. The provisions of the CBA must be respected
since its terms and conditions constitute the law
between the parties. The parties cannot be allowed to
change the terms they agreed upon on the ground that
the same are not favorable to them.

Due to the disagreement between the parties,


petitioner elevated the matter to the DOLE-NCMB for
preventive mediation. The voluntary arbitrator ruled
that the scheduling of all vacation leaves shall be
under the discretion of the union members, and the
management to convert them into cash all the leaves
which the management compelled them to use. It also
ruled that the in-service-training of the company
security guards, as a requirement for renewal of
licenses, shall not be their personal account but that of
the company. All other claims were dismissed for lack
of merit. Respondent filed a motion for reconsideration,
which the voluntary arbitrator denied. Respondent filed
a Petition for Certiorari with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction
with the CA, and the CA annulled and set aside the
decision and order of the voluntary arbitrator. The CA
ruled that since the provisions of the CBA were clear,
the voluntary arbitrator has no authority to interpret the
same beyond what was expressly written. Petitioner
filed a motion for reconsideration. Hence, the instant
petition.

In the grant of vacation leave privileges to an


employee, the employer is given the leeway to impose
conditions on the entitlement to and commutation of
the same, as the grant of vacation leave is not a
standard of law, but a prerogative of management.
Along that line, since the grant of vacation leave is a
prerogative of the employer, the latter can compel its
employees to exhaust all their vacation leave credits.
Of course, any vacation leave credits left unscheduled
by the employer, or any scheduled vacation leave that
was not enjoyed by the employee upon the employer's
directive, due to exigencies of the service, must be
converted to cash, as provided in the CBA. However, it
is incorrect to award payment of the cash equivalent of
vacation leaves that were already used and enjoyed by
the employee. Accordingly, the vacation leave privilege
was not intended to serve as additional salary, but as a
non-monetary benefit. To give the employees the
option not to consume it with the aim of converting it to
cash at the end of the year would defeat the very
purpose of vacation leave. Petitioner's contention that
labor contracts should be construed in favor of the
laborer is without basis and, therefore, inapplicable to
the present case. This rule of construction does not
benefit petitioners because, as stated, there is here no
room for interpretation. Since the CBA is clear and
unambiguous, its terms should be implemented as
they are written.

ISSUES: (1) Whether the management has the sole


discretion to schedule the vacation leave; (2) Whether
the management is not liable for the in-service-training
of the security guard.
RULING:
(1) As to the issue on vacation leaves, the
same has no merit.
The rule is that where the language of a contract is
plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids.
The intention of the parties must be gathered from that
language, and from that language alone. Stated
differently, where the language of a written contract is
clear and unambiguous, the contract must be taken to
mean that which, on its face, it purports to mean,
unless some good reason can be assigned to show
that the words used should be understood in a
different sense.

(2) This brings Us to the issue of who is


accountable for the in-service training of the security
guards. On this point, We find the petition meritorious.
Although it is a rule that a contract freely entered into
between the parties should be respected, since a
contract is the law between the parties, there are,
however, certain exceptions to the rule, specifically
Article 1306 of the Civil Code. Moreover, the relations
between capital and labor are not merely contractual.
They are so impressed with public interest that labor
contracts must yield to the common good. If the
provisions in the CBA run contrary to law, public
morals, or public policy, such provisions may very well
be voided.

In the case at bar, the contested provision of the CBA


is clear and unequivocal. Article VIII, Section 1 (b) of
the CBA categorically provides that the scheduling of
vacation leave shall be under the option of the
employer. The preference requested by the employees
is not controlling because respondent retains its power
and prerogative to consider or to ignore said request.

In the present case, Article XXI, Section 6 of the CBA


provides that All expenses of security guards in
securing /renewing their licenses shall be for their
personal account. A reading of the provision would
reveal that it encompasses all possible expenses a

Thus, if the terms of a CBA are clear and leave no


doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail. In fine, the

35

security guard would pay or incur in order to secure or


renew his license.

RULING
Yes. The subject of litigation is incapable of pecuniary
estimation, exclusively cognizable by the RTC,
pursuant to Section 19 (1) of BP 129, as amended.
Being an ordinary civil action, the same is beyond the
jurisdiction of labor tribunals. The said issue cannot be
resolved solely by applying the Labor Code. Rather, it
requires the application of the Constitution, labor
statutes, law on contracts and the Convention on the
Elimination of All Forms of Discrimination Against
Women, and the power to apply and interpret the
constitution and CEDAW is within the jurisdiction of
trial courts, a court of general jurisdiction. Here, the
employer-employee relationship between the parties is
merely incidental and the cause of action ultimately
arose from different sources of obligation, i.e., the
Constitution and CEDAW.

Since it is the primary responsibility of operators of


company security forces to maintain and upgrade the
standards of efficiency, discipline, performance and
competence of their personnel, it follows that the
expenses to be incurred therein shall be for the
personal account of the company. Further, the intent of
the law to impose upon the employer the obligation to
pay for the cost of its employees training is manifested
in the aforementioned laws provision that Where the
quality of training is better served by centralization, the
CFSD Directors may activate a training staff from local
talents to assist. The cost of training shall be pro-rated
among the participating agencies/private companies. It
can be gleaned from the said provision that cost of
training shall be pro-rated among participating
agencies and companies if the training is best served
by centralization. The law mandates pro-rating of
expenses because it would be impracticable and unfair
to impose the burden of expenses suffered by all
participants on only one participating agency or
company. Thus, it follows that if there is no
centralization, there can be no pro-rating, and the
company that has its own security forces shall
shoulder the entire cost for such training. If the intent
of the law were to impose upon individual employees
the cost of training, the provision on the pro-rating of
expenses would not have found print in the law.

Thus, where the principal relief sought is to be


resolved not by reference to the Labor Code or other
labor relations statute or a collective bargaining
agreement but by the general civil law, the jurisdiction
over the dispute belongs to the regular courts of justice
and not to the labor arbiter and the NLRC. In such
situations, resolution of the dispute requires expertise,
not in labor management relations nor in wage
structures and other terms and conditions of
employment, but rather in the application of the
general civil law. Clearly, such claims fall outside the
area of competence or expertise ordinarily ascribed to
labor arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these
agencies disappears.

HALAGUEA, et al v. PHILIPPINE AIRLINES


INCORPORATED
G.R. No. 172013, October 2, 2009, Peralta

If We divest the regular courts of jurisdiction over the


case, then which tribunal or forum shall determine the
constitutionality or legality of the assailed CBA
provision? This Court holds that the grievance
machinery and voluntary arbitrators do not have the
power to determine and settle the issues at hand. They
have no jurisdiction and competence to decide
constitutional issues relative to the questioned
compulsory retirement age. Their exercise of
jurisdiction is futile, as it is like vesting power to
someone who cannot wield it.

FACTS
Petitioners are members of the Flight Attendants and
Stewards Association of the Philippines (FASAP), a
labor organization certified as the sole and exclusive
bargaining representative of the flight attendants, flight
stewards and pursers of PAL. In 2011, PAL and
FASAP entered into a CBA, a provision of which
provides that compulsory retirement for cabin
attendants hired before November 1996 shall be 55
(years old) for females and 60 for males. Petitioners
manifested that the aforementioned CBA provision is
discriminatory, and demanded for an equal treatment
with their male counterparts. Petitioners filed a Special
Civil Action for Declaratory Relief with the Makati RTC
seeking to invalidate the said CBA provision. The RTC
upheld its jurisdiction over the case, reasoning that the
allegations do not make out a labor dispute arising
from employer-employee relationship nor does it
involve a claim against PAL.

The change in the terms and conditions of


employment, should Section 144 of the CBA be held
invalid, is but a necessary and unavoidable
consequence of the principal relief sought, i.e.,
nullification of the alleged discriminatory provision in
the CBA. Thus, it does not necessarily follow that a
resolution of controversy that would bring about a
change in the terms and conditions of employment is a
labor dispute, cognizable by labor tribunals. It is unfair
to preclude petitioners from invoking the trial court's
jurisdiction merely because it may eventually result
into a change of the terms and conditions of
employment. Along that line, the trial court is not asked
to set and fix the terms and conditions of employment,

ISSUE
Does the RTC have jurisdiction over the petitioners
action challenging the legality or constitutionality of the
provisions on the compulsory retirement age contained
in the CBA?

36

but is called upon to determine whether CBA is


consistent with the laws.

the regular worker.. Because a reliever is treated as if


mere project employee

Although the CBA provides for a procedure for the


adjustment of grievances, such referral to the
grievance machinery and thereafter to voluntary
arbitration would be inappropriate to the petitioners,
because the union and the management have
unanimously agreed to the terms of the CBA and their
interest is unified.

Issue:
1) WON respondent in this case is a casual employee
2) WON the nature of the work of a reliever in this case
is
covered
by
the
CBA
2.1) WON respondent became a regular employee
Ruling:
1) Yes, he is a casual employee but the basis of this is
not because of the 1st paragraph of article 280.. But
under the 2nd paragraph because he does not fall
under any kinds of employee in article 280, however,
to be a regular employee under the 2nd paragraph the
employee must have rendered at least 1 year of
service whether or not it is continous or broken, the
total work time of the respondent is only 228.5 days.
Therefore he is not a regular employee UNDER THE
LABOR CODE ALONE.

The he dispute in the case at bar is not between


FASAP and respondent PAL, who have both
previously agreed upon the provision on the
compulsory retirement of female flight attendants as
embodied in the CBA. The dispute is between
respondent PAL and several female flight attendants
who questioned the provision on compulsory
retirement of female flight attendants. Thus, applying
the principle in the aforementioned case cited, referral
to the grievance machinery and voluntary arbitration
would not serve the interest of the petitioners. #

(to justify as to why didn't the court consider the 36


months to be beyond 1 year despite the fact that the
law allows "broken"... Because when the law tilts the
scale to labor, it must not be so tilted as to cause
injustice to the employer.. Plus, it is a common
industrial practice in stevedoring to get relievers in
cases where the regular stevedores could not make it
to work so that the business could continue for 24
hours or to finish without any interruptions, and the fact
that there was no prohibition imposed to the
respondent that he can freely offer his service to other
persons)

PASSI (STEVEDORING AND ARASTRE COMPANY)


V. BACOLOT
Doctrine: when the scales are tilted towards labor it
must not be so tilted as to cause injustice to the
employer
If a reliever is allowed to work for at least 365
accumulated days.. He may become a regular
employee under article 280(2).
FACTS
Bacolot was hired by PASSI to work as a stevedore for
an accumulated 36 months (but only worked for 228.5
days - average is 1 week of work per month), the
nature of his work is that of a reliever, he will only work
if the regular steverdore is absent.

2) Because of the "union shop" clause under the


existing CBA, the respondent being seen by the law as
a "casual employee" is deemed to have been a
member of a union within a certain time as a
precondition to employment (to clarify, even non-union
members may be hired but subject to this condition),
became a regular employee by virtue of the provisions
of the CBA because 228.5 days is equivalent to 8
months of work which is beyond the agreed 6 months
under the CBA.

On the CBA:
1) there is a stipulation that casual/probationary
employees shall become regular employees after the
accumulation of 6 months of employment from their
hiring.;

UNFAIR LABOR PRACTICE

2) and the adoption of a "union shop" as a condition for


employment
- there must be a certain time upon which the
employee must become a member of a union upon his
hiring

EMPLOYEES UNION OF BAYER PHILS (EUBP) VS.


BAYER PHILIPPINES, INC.
G.R. No. 162943, December 6, 2010, Villarama
Petitioner EUBP is the exclusive bargaining agent of
respondent Bayer. The parties figured in a bargaining
deadlock in 1997 for failure to agree on Bayers offer of
9.9% wage increase. Pending the resolution of the
dispute, AvelinaRemigio (Remigio) and 27 other union
members accepted said offer without authority from
the
union
leaders.
EUBPs grievance committee questioned
Remigios action and reprimanded Remigio and

Contention of the respondent:


1) he worked for beyond 6 months, thus, following the
CBA he should already be a regular employee
Contention of the petitioner:
1) CBA will not apply to you, you are neither a regular,
casual nor a probationary employee.. You are just a
mere reliever whose work depends on the absence of

37

her allies. Later, the DOLE Secretary issued an arbitral


award
ordering
EUBP
and Bayer to execute a CBA retroactive
to January
1, 1997 and to be made effective until December 31,
2001.

if there is no legitimate reason for doing so and without


first following the proper procedure. If such behavior
would be tolerated, bargaining and negotiations
between the employer and the union will never be
truthful and meaningful, and no CBA forged after
arduous negotiations will ever be honored or be relied
upon. A CBA entered into by a legitimate labor
organization that has been duly certified as the
exclusive bargaining representative and the employer
becomes the law between them.

Meanwhile, the rift between the Facundos leadership


and Remegios group broadened. Six months after the
signing of the 1997-2001 CBA, the latter group formed
the Reformed Employees Union of Bayer Philippines
(REUBP). A tug-of-war then ensued between the two
rival groups, with both seeking recognition from Bayer
and demanding remittance of the union dues collected
from its rank-and files members. Bayer decided to put
the union dues in a trust account.

When an employer proceeds to negotiate with a


splinter union despite the existence of its valid CBA
with the duly certified and exclusive bargaining agent,
the former indubitably abandons its recognition of the
latter and terminates the entire CBA.

EUBP then filed a complaint for ULP against Bayer for


the non-remittance of dues. During its pendency,
Bayer turned over the collected union dues to
Anastacia Villareal, Treasurer of REUBP. Herein
complaint was, however, dismissed and no appeal was
taken.

Respondents cannot claim good faith to justify their


acts. They knew that Facundos group represented the
duly-elected officers of EUBP. Moreover, they were
cognizant of the fact that even the DOLE Secretary
himself had recognized the legitimacy of EUBPs
mandate by rendering an arbitral award ordering the
signing of the 1997-2001 CBA between Bayer and
EUBP. Respondents were likewise well-aware of the
pendency of the intra-union dispute case, yet they still
proceeded to turn over the collected union dues to
REUBP and to effusively deal with Remigio. The
totality of respondents conduct, therefore, reeks with
anti-EUBP animus.

Petitioners filed a second ULP complaint against


herein
respondents.
Three
days
later,
petitioners amended the complaint charging the
respondents with unfair labor practice
committed by organizing a company union, gross violat
ion of the CBA and violation of their duty to bargain.
On even date, REUBP and Bayer agreed to sign a
new CBA. Remegio immediately informed her allies of
the management decision. In response, petitioners
immediately filed an urgent motion for the issuance of
a restraining order/injunction. Said CBA was, however,
eventually signed and ratified despite the BLRs ruling
and order that the management of Bayer should
respect the authority of the duly-elected officers of
EUBP in the administration of the prevailing CBA.

PRINCE TRANSPORT, INC. and MR. RENATO


CLAROS vs. DIOSDADO GARCIA, et al
January 12, 2011, G.R. No. 167291, Peralta
Petitioner PTI is a company engaged in the business
of transporting passengers by land, on the other hand,
respondents were hired as drivers, conductors,
mechanics and inspectors. In addition to their regular
monthly
income,
respondents
also
received
commissions equivalent to 8 to 10% of their wages;
sometime in October 1997, the said commissions were
reduced to 7 to 9%; this led respondents and other
employees of PTI to hold a series of meetings to
discuss the protection of their interests as employees;
these meetings led petitioner Claros, president of PTI,
to suspect that respondents are about to form a union.
In December 1997, PTI employees requested for a
cash advance, but the same was denied by
management, which resulted in demoralization on the
employees' ranks; later, the foregoing circumstances
led respondents to form a union for their mutual aid
and protection. In order to block the continued
formation of the union, PTI caused the transfer of all
union members and sympathizers to one of its subcompanies, Lubas Transport (Lubas); despite such
transfer, the schedule of drivers and conductors, as
well as their company identification cards, were issued
by PTI; the daily time records, tickets and reports of
the respondents were also filed at the PTI office; and,
all claims for salaries were transacted at the same

The second ULP was dismissed by the Labor Arbiter


for lack for jurisdiction for the issue involves an intraunion dispute. The NLRC likewise dismissed the
motion for a restraining order and/or injunction stating
that the subject matter involved an intra-union dispute,
over which the Commission has no jurisdiction. On
appeal, the CA sustained the two rulings hence, this
petition.
ISSUE
Whether the act of the management of Bayer in
dealing and negotiating with Remigios splinter group
despite its validly existing CBA with EUBP can be
considered unfair labor practice.
HELD
YES. It must be remembered that a CBA is entered
into in order to foster stability and mutual cooperation
between labor and capital. An employer should not be
allowed to rescind unilaterally its CBA with the duly
certified bargaining agent it had previously contracted
with, and decide to bargain anew with a different group

38

office; later, the business of Lubas deteriorated


because of the refusal of PTI to maintain and repair
the units being used therein, which resulted in the
virtual stoppage of its operations and respondents'
loss of employment.

WON the suspension of CBA negotiations can be


considered as unfair labor practice.
RULING
No. Unfair labor practice cannot be imputed to MMC
since the call of MMC for a suspension of the CBA
negotiations cannot be equated to refusal to bargain.
For a charge of unfair labor practice to prosper, it must
be shown that the employer was motivated by ill-will,
bad faith or fraud, or was oppressive to labor. The
employer must have acted in a manner contrary to
morals, good customs, or public policy causing social
humiliation, wounded feelings or grave anxiety. While
the law makes it an obligation for the employer and the
employees to bargain collectively with each other,
such compulsion does not include the commitment to
precipitately accept or agree to the proposals of the
other. All it contemplates is that both parties should
approach the negotiation with an open mind and make
reasonable effort to reach a common ground of
agreement.

Petitioners, on the other hand, denied the material


allegations of the complaints contending that herein
respondents were no longer their employees, since
they all transferred to Lubas.
ISSUE
Whether or not petitioner is guilty of unfair labor
practice
HELD
Yes. The respondents transfer of work assignments to
Lubas was designed by petitioners as a subterfuge to
foil the formers right to organize themselves into a
union. Under Article 248 (a) and (e) of the Labor Code,
an employer is guilty of unfair labor practice if it
interferes with, restrains or coerces its employees in
the exercise of their right to self-organization or if it
discriminates in regard to wages, hours of work and
other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization.

CENTRAL AZUCARERA DE BAIS EMPLOYEES


UNION-NFL
(CABEU-NFL)
V.
CENTRAL
AZUCARERA DE BAIS, INC. (CAB)
G.R. No. 186605, November 17, 2010, Mendoza
As a result of a bargaining deadlock, the NCMB
commenced
conciliation/mediation
proceedings
involving CAB, employer, and CABEU-NFL, the
exclusive bargaining agent. In a letter-response to the
NCMB,
CAB
sought
suspension
of
the
conciliation/mediation proceedings on the following
grounds:
1) CABEU-NFL lost its majority status by reason
of the disauthorization and withdrawal of
support thereto by more than 90% of the rank
and file employees in the bargaining unit; and
2) the workers themselves, acting as principal,
after disauthorizing the previous agent
CABEU-NFL have organized themselves into
a new Union known as Central Azucarera de
Bais Employees Labor Association (CABELA)
and after obtaining their registration certificate
and making due representation that it is a duly
organized union representing almost all the
rank and file workers of CAB, had concluded a
new collective bargaining agreement with
CAB.

Indeed, evidence of petitioners' unfair labor practice is


shown by the established fact that, after respondents'
transfer to Lubas, petitioners left them high and dry
insofar as the operations of Lubas was concerned.
Petitioners withheld the necessary financial and
logistic support such as spare parts, and repair and
maintenance of the transferred buses until only two
units remained in running condition. This left
respondents virtually jobless.
MANILA MINING CORP. EMPLOYESS v. MANILA
MINING CORP.
G.R. Nos. 178222-23, September 20, 2010, Perez
Manila Mining Corp. (MMC), a corporation engaged in
large-scale mining, constructed several tailings dams
to treat and store its waste materials and one of these
tailings dams was operating under a permit issued by
DENR-EMB. Petitioner Union, submitted letters to
MMC relating its intention to bargain collectively and
likewise submitted its CBA proposal. However, upon
expiration of the tailings permit, DENR-EMB did not
issue a permanent permit due to the inability of MMC
to secure an Environmental Compliance Certificate.
Hence, it was compelled to temporarily shut down its
mining operations, resulting in the temporary lay-off of
more than 400 employees, including the complainants.
MMC called for the suspension of negotiations on the
CBA with the Union until resumption of mining
operations.

The NCMB did not act on the letter-request. Neither


did it conclude the conciliation/mediation proceedings
involving CABEU-NFL and CAB.
ISSUE
Is CAB guilty of acts constituting unfair labor practice
(ULP) by refusing to bargain collectively in good faith?
HELD
No. By imputing bad faith to the actuations of CAB,
CABEU-NFL has the burden of proof to present

ISSUE

39

substantial evidence to support the allegation of unfair


labor practice.The circumstances relied upon as proof
of CABs bad faith are merely those mentioned in the
letter-response, namely, the execution of the supposed
CBA between CAB and CABELA and the request to
suspend the negotiations. In simply relying on the said
letter-response, CABEU-NFL failed to substantiate its
claim of unfair labor practice to rebut the presumption
of good faith.

beyond the bargaining units coverage. In contracting


out FEBTC functions to BOMC, BPI effectively
deprived the union of the membership of employees
handling said functions as well as curtailed the right of
those employees to join the union.
Thereafter, the Union demanded that the matter be
submitted to the grievance machinery as the resort to
the LMC was unsuccessful. As BPI allegedly ignored
the demand, the Union filed a notice of strike before
the National Conciliation and Mediation Board (NCMB)
on the following grounds:
a) Contracting out services/functions performed by
union members that interfered with, restrained and/or
coerced the employees in the exercise of their right to
self-organization;
b) Violation of duty to bargain; and
c) Union busting

Moreover, the filing of the complaint for unfair labor


practice was premature inasmuch as the issue of
collective bargaining is still pending before the NCMB.
CAB cannot be faulted for the NCMBs inaction.
BPI EMPLOYEES UNION-DAVAO V. BPI
July 24, 2013, G.R. No. 174912, Mendoza
BOMC, which was created pursuant to Central Bank
Circular No. 1388, Series of 1993 (CBP Circular No.
1388, 1993), and primarily engaged in providing and/or
handling support services for banks and other financial
institutions, is a subsidiary of the Bank of Philippine
Islands (BPI) operating and functioning as an entirely
separate and distinct entity. A service agreement
between BPI and BOMC was initially implemented in
BPIs Metro Manila branches. In this agreement,
BOMC undertook to provide services such as check
clearing, delivery of bank statements, fund transfers,
card production, operations accounting and control,
and cash servicing Not a single BPI employee was
displaced and those performing the functions, which
were transferred to BOMC, were given other
assignments. On January 1, 1996, the service
agreement was likewise implemented in Davao City.
Later, a merger between BPI and Far East Bank and
Trust Company (FEBTC) took effect on April 10, 2000
with BPI as the surviving corporation. Thereafter, BPIs
cashiering function and FEBTCs cashiering,
distribution and bookkeeping functions were handled
by BOMC. Consequently, twelve (12) former FEBTC
employees were transferred to BOMC to complete the
latters service complement.

BPI then filed a petition for assumption of


jurisdiction/certification with the Secretary of the
Department of Labor and Employment (DOLE), who
subsequently issued an order certifying the labor
dispute to the NLRC for compulsory arbitration. The
DOLE Secretary directed the parties to cease and
desist from committing any act that might exacerbate
the situation. The NLRC came out with a resolution
upholding the validity of the service agreement
between BPI and BOMC and dismissing the charge of
ULP. It ruled that the engagement by BPI of BOMC to
undertake some of its activities was clearly a valid
exercise of its management prerogative.11 It further
stated that the spinning off by BPI to BOMC of certain
services and functions did not interfere with, restrain or
coerce employees in the exercise of their right to selforganization. The Union is of the position that the
outsourcing of jobs included in the existing bargaining
unit to BOMC is a breach of the union-shop agreement
in the CBA. In transferring the former employees of
FEBTC to BOMC instead of absorbing them in BPI as
the surviving corporation in the merger, the number of
positions covered by the bargaining unit was
decreased, resulting in the reduction of the Unions
membership.

BPI Employees Union-Davao City-FUBU (Union),


objected to the transfer of the functions and the twelve
(12) personnel to BOMC contending that the functions
rightfully belonged to the BPI employees and that the
Union was deprived of membership of former FEBTC
personnel who, by virtue of the merger, would have
formed part of the bargaining unit represented by the
Union pursuant to its union shop provision in the CBA.
BPI proposed a Labor Management Conference (LMC)
between the parties. During the LMC, BPI invoked
management prerogative stating that the creation of
the BOMC was to preserve more jobs and to designate
it as an agency to place employees where they were
most needed. On the other hand, the Union charged
that BOMC undermined the existence of the union
since it reduced or divided the bargaining unit. While
BOMC employees perform BPI functions, they were

ISSUE
Whether or not the act of BPI to outsource the
cashiering, distribution and bookkeeping functions to
BOMC is in conformity with the law and the existing
CBA
RULING
No. The rule now is covered by Article 261 of the
Labor Code, which took effect on November 1,
1974.25 Article 261 provides: Accordingly, violations
of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated
as unfair labor practice and shall be resolved as
grievances
under
the
Collective
Bargaining
Agreement. For purposes of this article, gross
violations of Collective Bargaining Agreement shall

40

mean flagrant and/or malicious refusal to comply with


the economic provisions of such agreement.

Whether Pepsi committed ULP in the form of union


busting

Clearly, only gross violations of the economic


provisions of the CBA are treated as ULP. Otherwise,
they are mere grievances.

HELD
NO. Under Article 276(c) of the Labor Code, there is
union busting when the existence of the union is
threatened by the employers act of dismissing the
formers officers who have been duly-elected in
accordance with its constitution and by-laws.

In the present case, the alleged violation of the union


shop agreement in the CBA, even assuming it was
malicious and flagrant, is not a violation of an
economic provision in the agreement. The provisions
relied upon by the Union were those articles referring
to the recognition of the union as the sole and
exclusive bargaining representative of all rank-and-file
employees, as well as the articles on union security,
specifically, the maintenance of membership in good
standing as a condition for continued employment and
the union shop clause. It failed to take into
consideration its recognition of the banks exclusive
rights and prerogatives, likewise provided in the CBA,
which included the hiring of employees, promotion,
transfers, and dismissals for just cause and the
maintenance of order, discipline and efficiency in its
operations. It is incomprehensible how the "reduction
of positions in the collective bargaining unit" interferes
with the employees right to self-organization because
the employees themselves were neither transferred
nor dismissed from the service. It is to be emphasized
that contracting out of services is not illegal per se. It is
an exercise of business judgment or management
prerogative. Absent proof that the management acted
in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an
employer.In this case, bad faith cannot be attributed to
BPI because its actions were authorized by CBP
Circular.

On the other hand, the term unfair labor practice refers


to that gamut of offenses defined in the Labor
Codewhich, at their core, violates the constitutional
right of workers and employees to selforganization, with the sole exception of Article 257(f)
(previously Article 248[f]).
Unfair labor practice refers to acts that violate the
workers' right to organize. The prohibited acts are
related to the workers' right to self-organization and to
the observance of a CBA. Without that element, the
acts, no matter how unfair, are not unfair labor
practices. The only exception is Article 257(f).
ROYAL PLANT WORKERS UNION V. COCA COLA
BOTTLERS
G.R. No. 198783, April 15, 2013
PETITIONER Royal Plant Workers Union is the union
of bottling operators employed with respondent CocaCola Bottlers Philippines, Inc.-Cebu Plant (CCBPI).
In 1974, the bottling operators were provided with
chairs upon their request. Sometime in September
2008, the chairs were removed pursuant to a national
directive of respondent. This directive is in line with the
I operate, I maintain, I clean program of petitioner for
bottling operators.

PEPSI-COLA PRODUCTS PHILIPPINES, INC. vs.


MOLON, et. al
G.R. No. 175002, February 18, 2013, Perlas-Bernabe

The CCBPI maintains that the removal of the subject


chairs is a valid exercise of management prerogative.
Is there merit to this contention?

In 1999, Pepsi adopted a company-wide retrenchment


program denominated as Corporate Rightsizing
Program. On July 13, 1999, Pepsi notified the DOLE
of the initial batch of forty-seven (47) workers to be
retrenched.Among these employees were six (6)
elected officers and twenty-nine (29) active members
of the LEPCEU-ALU, including herein respondents.

RULING
Yes. The Supreme Court has 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, layoff of workers, and discipline,
dismissal 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.

On July 19, 1999, LEPCEU-ALU filed a Notice of


Strike before the National Conciliation and Mediation
Board (NCMB) due to Pepsis alleged acts of union
busting/ULP. It claimed that Pepsis adoption of the
retrenchment program was designed solely to bust
their union so that come freedom period, Pepsis
company union, the Leyte Pepsi-Cola Employees
Union-Union de Obreros de Filipinas - would garner
the majority vote to retain its exclusive bargaining
status.

In the present controversy, it cannot be denied that


CCBPI removed the operators chairs pursuant to a
national directive and in line with its I Operate, I
Maintain, I Clean program, launched to enable the
union to perform their duties and responsibilities more

ISSUE

41

efficiently.
The
chairs
were
not
removed
indiscriminately. They were carefully studied with due
regard to the welfare of the members of the Union. The
removal of the chairs was compensated by a) a
reduction of the operating hours of the bottling
operators from 2.5-hour rotation period to a 1.5-hour
rotation period; and b) an increase of the break period
from 15 to 30 minutes between rotations.

CBA. The Company filed a petition for review in the


Court of Appeals.
ISSUE
Whether or not the Company is guilty of violating the
CBA in engaging the services of a third party service
provider.
HELD
A careful reading of the above-enumerated categories
of employees reveals that the PESO contractual
employees do not fall within the enumerated
categories of employees stated in the CBA of the
parties. Since the Company had admitted that it
engaged the services of PESO to perform temporary
or occasional services which is akin to those
performed by casual employees, the Company should
have tapped the services of casual employees instead
of engaging PESO.

Apparently, the decision to remove the chairs was


done with good intentions, as CCBPI wanted to avoid
instances of operators sleeping on the job while in the
performance of their duties and responsibilities and
because of the fact that the chairs were not necessary,
considering that the operators constantly move about
while working. In short, the removal of the chairs was
designed to increase work efficiency. Hence, CCBPIs
exercise of its management prerogative was made in
good faith without doing any harm to the workers
rights.

While contracting out services is a management


prerogative, however, is not without limitation. In
contracting out services, the management must be
motivated by good faith and the contracting out should
not be resorted to circumvent the law or must not have
been the result of malicious arbitrary actions. In the
case at bench, the CBA of the parties has already
provided for the categories of the employees in the
Companys establishment. As stated earlier, the work
to be performed by PESO was similar to that of the
casual employees. With the provision on casual
employees, the hiring of PESO contractual employees,
therefore, is not in keeping with the spirit and intent of
their CBA. It is familiar and fundamental doctrine in
labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions.
However, this cannot be considered unfair labor
practice, because it is not a gross violation of the CBA.

GOYA, INC. v. GOYA, INC. EMPLOYEES UNIONFFW


G.R. No. 170054, January 21, 2013
Petitioner Goya, Inc. (Company), a domestic
corporation engaged in the manufacture, importation,
and wholesale of top quality food products. It hired
contractual employees from PESO Resources
Development Corporation (PESO) to perform
temporary and occasional services in its factory in
Parang, Marikina City. This prompted respondent
Goya, Inc. Employees UnionFFW (Union) to request
for a grievance conference on the ground that the
contractual workers do not belong to the categories of
employees stipulated in the existing Collective
Bargaining Agreement (CBA). The matter was
unresolved and referred to National Conciliation and
Mediation Board (NCMB) for voluntary arbitration. The
Union asserted that the hiring of contractual
employees from PESO is not a management
prerogative and in gross violation of the CBA
tantamount to unfair labor practice (ULP). It noted that
the contractual workers engaged have been assigned
to work in positions previously handled by regular
workers and Union members in effect violating CBAs
provision on Categories of Employees which provide
only for Probationary, Regular, and Casual. With the
hiring of contractual employees, the Union contended
that it would no longer have probationary and casual
employees from which it could obtain additional Union
members. In countering the Unions allegations, the
Company argued that: (a) the law expressly allows
contracting and subcontracting arrangements and that
the CBA merely provides for the definition of the
categories of employees and does not put a limitation
on the Companys right to engage the services of job
contractors or its management prerogative to address
temporary/occasional needs in its operation. The
Voluntary Arbitrator ruled that the engagement of
PESO is not in keeping with the intent and spirit of the

*** Definition under CBA


Casual Employee One hired by the Company to
perform occasional or seasonal work directly
connected with the regular operations of the Company,
or one hired for specific projects of limited duration not
connected directly with the regular operations of the
Company.

STRIKES AND LOCKOUTS


BUKLURAN NG MGA MANGGAGAWA
CLOTHMAN KNITTING V. CA
G.R. No. 158158, January 17, 2005, Callejo

SA

Petitioner is a legitimate labor union of the private


respondent employer. It filed a petition for certification
election. It incidentally resulted to respondent
becoming sour with its relation to the employees,
prompting it to temporarily close a department in the
company. As a result, members and officers of

42

petitioner union stopped from working and staged a


picket outside the employers building. LA, NLRC and
CA said that there was strike despite the argument of
the petitioner that there could not have been a strike
considering that most of those who participated in the
picket belong to the temporarily closed department.

STEEL CORPORATION OF THE PHILIPPINES vs.


SCP EMPLOYEES UNION-NATIONAL FEDERATION
OF LABOR UNIONS
G.R. Nos. 169829-30, April 16, 2008
Petitioner Steel Corporation of the Philippines (SCP) is
engaged in manufacturing construction materials,
supplying approximately 50% of the domestic needs
for roofing materials. On August 17, 1998, SCPFederated Union of the Energy Leaders General and
Allied Services (FUEL-GAS) filed a petition for
Certification Election in its bid to represent the rankand-file employees of the petitioner. Respondent SCP
Employees Union (SCPEU) National Federation of
Labor Unions (NAFLU) intervened, seeking to
participate and be voted for in such elect but the same
was denied for having been filed out of time. On
October 16, 2000, the Undersecretary rendered a
Decision certifying respondent as the exclusive
bargaining agent of petitioner's employees. As a
consequence of its certification as the exclusive
bargaining agent, respondent sent to petitioner CBA
proposals. Petitioner, however, held in abeyance any
action on the proposals in view of its pending motion
for reconsideration. Finding no justification in
petitioner's refusal to bargain with it, respondent filed a
Notice of Strike with the National Conciliation and
Mediation Board (NCMB) on December 11, 2000. The
union raised the issue of unfair labor practice (ULP)
allegedly committed by petitioner for the latter's refusal
to bargain with it. Meanwhile, the NLRC issued a
Resolution dated April 17, 2002, declaring petitioner as
having no obligation to recognize respondent as the
certified bargaining agent; dismissing the charge of
unfair labor practice; declaring as illegal the strike held
by the union; and declaring the loss of employment of
the officers of the union.

ISSUE
Whether or not the so called picket of the petitioner
union constituted an illegal strike.
HELD
Yes. A strike is any temporary stoppage of work by the
concerted action of employees as a result of an
industrial or labor dispute. A labor dispute includes any
controversy or matter concerning terms or conditions
of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing or
arranging the terms and conditions of employment,
regardless of whether the disputants stand in the
proximate relation of employer and employee.
The allegation that there can be no work stoppage
because the operation in the Dyeing and Finishing
Division had been shutdown is of no consequence. It
bears stressing that the other divisions were fully
operational. There is nothing on record showing that
the union members and the supporters who formed a
picket line in front of the respondents compound were
assigned to the finishing department. As can be clearly
inferred from the spot reports, employees from the
knitting department also joined in picket. The blockade
of the delivery of trucks and the attendance of
employees from the other departments of the
respondent meant work stoppage. The placards that
the picketers caused to be displayed arose from
matters concerning terms or conditions of employment
as well as the association or representation of persons
in negotiating, fixing, maintaining, changing or
arranging the terms and conditions of employment.

ISSUE
Whether or not the strike held by the respondents is
illegal

Clearly, the petitioner union, its officers, members and


supporters staged a strike. In order for a strike to be
valid, the following requirements laid down in
paragraphs (c) and (f) of Article 263 of the Labor Code
must be complied with: (a) a notice of strike must be
filed; (b) a strike-vote must be taken; and (c) the
results of the strike-vote must be reported to the
DOLE.41 It bears stressing that these requirements are
mandatory, meaning, non-compliance therewith makes
the strike illegal. The evident intention of the law in
requiring the strike notice and strike-vote report is to
reasonably regulate the right to strike, which is
essential to the attainment of legitimate policy
objectives embodied in the law.

RULING
YES. The strike is a legitimate weapon in the human
struggle for a decent existence. It is considered as the
most effective weapon in protecting the rights of the
employees to improve the terms and conditions of their
employment. But to be valid, a strike must be pursued
within legal bounds. The right to strike as a means for
the attainment of social justice is never meant to
oppress or destroy the employer. The law provides
limits for its exercise. In the instant case, the strike
undertaken by the officers of respondent union is
patently illegal for the following reasons: (1) it is a
union-recognition-strike which is not sanctioned by
labor laws; (2) it was undertaken after the dispute had
been certified for compulsory arbitration; and (3) it was
in violation of the Secretary's return-to-work order.
Respondent's notices of strike were founded on
petitioner's continued refusal to bargain with it. It thus

Considering that the petitioner union failed to comply


with the aforesaid requirements, the strike staged on
June 11 to 18, 2001 is illegal. Consequently, the
officers of the union who participated therein are
deemed to have lost their employment status.

43

BASCON v. CA, METRO CEBU COMMUNITY


HOSPITAL, INC.
G.R. No. 144899. February 5, 2004, Quisumbing

staged the strike to compel petitioner to recognize it as


the collective bargaining agent, making it a unionrecognition-strike. As its legal designation implies, this
kind of strike is calculated to compel the employer to
recognize one's union and not other contending
groups, as the employees' bargaining representative to
work out a collective bargaining agreement despite the
striking union's doubtful majority status to merit
voluntary recognition and lack of formal certification as
the exclusive representative in the bargaining unit
BIFLEX PHILS. V. FILFLEX INDUSTRIAL
MANUFACTURING CORP.
G.R. NO. 155679, Dec. 19, 2006, Carpio Morales

The petitioners in the instant case were employees of


private respondent Metro Cebu Community Hospital,
Inc. (MCCH) and members of the Nagkahiusang
Mamumuosa Metro Cebu Community Hospital (NAMAMCCH), a labor union of MCCH employees. Believing
that their union was the certified collective bargaining
agent, the members and officers of NAMA-MCCH
staged a series of mass actions inside MCCHs
premises for alleged failure of MCCH to negotiate and
renew the CBA. They marched around the hospital
putting
up
streamers,
placards
and
posters.Subsequently, the Department of Labor and
Employment (DOLE) office in Region 7 issued two (2)
certifications stating that NAMA-MCCH was not a
registered labor organization.Meanwhile, the MCCH
management received reports that petitioners
participated in NAMA-MCCHs mass actions.
Consequently, notices were served on all union
members, petitioners included, asking them to explain
in writing why they were wearing red and black ribbons
and roaming around the hospital with placards. In their
collective response dated March 18, 1996, the union
members, including petitioners, explained that wearing
armbands and putting up placards was their answer to
MCCHs illegal refusal to negotiate with NAMA-MCCH.

&

The labor sector staged a welga ng bayan to protest


the accelerating prices of oil. Petitioner-unions, led by
their officers, herein petitioners,staged a work
stoppage which lasted for several days, prompting
respondents to file on October 31, 1990 a petition to
declare the work stoppage illegal for failure to comply
with procedural requirements.
ISSUES:
(1) Is welga ng bayan an illegal strike?
(2) Was there an illegal lockout?
(3) Are union officers liable for blocking the free
ingress to and egress of the company premises?
HELD:
(1) Yes. Stoppage of work due to welga ng bayan is in
the nature of a general strike, an extended sympathy
strike. It affects numerous employers including those
who do not have a dispute with their employees
regarding their terms and conditions of employment.

Petitioner Bascon, at the time of her termination from


employment, already held the position of Head Nurse.
The other petitioner, Cole, had been working as a
nursing aide with MCCH. Both petitioners were
dismissed by the respondent hospital for allegedly
participating in an illegal strike.Bascon and Cole filed a
complaint for illegal dismissal

Employees who have no labor dispute with their


employer but who, on a day they are scheduled to
work, refuse to work and instead join a welga ng bayan
commit an illegal work stoppage.

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

(2) No. If there was illegal lockout, why, indeed, did not
petitioners file a protest with the management or a
complaint therefor against respondents? As the Labor
Arbiter observed, [t]he inaction of [petitioners] betrays
the weakness of their contention for normally a lockedout union will immediately bring management before
the bar of justice.

HELD
(1) NO. In this case, it was found that petitioners actual
participation in the illegal strike was limited to wearing
armbands and putting up placards. There was no
finding that the armbands or the placards contained
offensive words or symbols. Thus, neither such
wearing of armbands nor said putting up of placards
can be construed as an illegal act. In fact, per se, they
are within the mantle of constitutional protection under
freedom of speech.

(3) Yes. They violated Article 264(e) of the Labor Code


which provides that [n]o person engaged in picketing
shall obstruct the free ingress to or egress from the
employers premises for lawful purposes, or obstruct
public thoroughfares.
Petitioners, being union officers, should thus bear the
consequences of their acts of knowingly participating
in an illegal strike, conformably with the third
paragraph of Article 264 (a) of the Labor Code

In Article 264 (a) of the Labor Code it could be gleaned


that while a union officer can be terminated for mere
participation in an illegal strike, an ordinary striking
employee, like petitioners herein, must have
participated in the commission of illegal acts during the
strike. There must be proof that they committed illegal

44

acts during the strike. Substantial evidence, which may


justify the imposition of the penalty of dismissal, may
suffice.

vehicle manufacturers in the country employing around


1,400 workers for its plants in Bicutan and Sta. Rosa,
Laguna.

Evidence on record shows that various illegal acts


were committed by unidentified union members in the
course of the protracted mass action. And we
commiserate with MCCH, patients, and third parties for
the damage they suffered. But we cannot hold
petitioners responsible for acts they did not commit.
The law, obviously solicitous of the welfare of the
common worker, requires, before termination may be
considered, that an ordinary union member must have
knowingly participated in the commission of illegal acts
during a strike.

On February 14, 1999, the Union filed a petition for


certification election among the Toyota rank and file
employees with the National Conciliation and
Mediation Board (NCMB), but this was denied by MedArbiter Ma. Zosima C. Lameyra denied the petition.
This order was reversed on appeal to the DOLE
Secretary.

(2) As regards the appellate courts finding that


petitioners were justly terminated for gross
insubordination or willful disobedience, Article 282 of
the Labor Code provides in part:

In the meantime, the Union submitted its Collective


Bargaining Agreement (CBA) proposals to Toyota, but
the latter refused to negotiate in view of its pending
appeal. Consequently, the Union filed a notice of strike
on January 16, 2001 with the NCMB based on
Toyotas refusal to bargain. On February 5, 2001, the
NCMB-NCR converted the notice of strike into a
preventive mediation case on the ground that the issue
of whether or not the Union is the exclusive bargaining
agent of all Toyota rank and file employees was still
unresolved by the DOLE Secretary.

On the other hand, Toyota filed for reconsideration but


it was denied. Toyota challenged said Order via an
appeal to the DOLE Secretary.

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.
However, willful disobedience of the employers lawful
orders, as a just cause for dismissal of an employee,
envisages the concurrence of at least two requisites:
(1) the employee's assailed conduct must have 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 connection with Toyotas appeal, Toyota and the


Union were required to attend a hearing on February
21, 2001 before the Bureau of Labor Relations (BLR).
The hearing was cancelled and reset to February 22,
2001. On February 21, 2001, 135 Union officers and
members failed to render the required overtime work,
and instead marched to and staged a picket in front of
the BLR office in Intramuros, Manila. Mass actions on
February 22 and 23, 2001 in front of the BLR and the
DOLE offices pushed through. Toyota experienced
acute lack of manpower in its manufacturing and
production lines, and was unable to meet its
production goals resulting in huge losses of PhP
53,849,991.

In this case, we find lacking the element of willfulness


characterized by a perverse mental attitude on the part
of petitioners in disobeying their employers order as to
warrant the ultimate penalty of dismissal. Wearing
armbands and putting up placards to express ones
views without violating the rights of third parties, are
legal per se and even constitutionally protected. Thus,
MCCH could have done well to respect petitioners
right to freedom of speech instead of threatening them
with disciplinary action and eventually terminating
them.

Soon thereafter, on February 27, 2001, Toyota sent


individual letters to some 360 employees requiring
them to explain within 24 hours why they should not be
dismissed for their obstinate defiance of the companys
directive to render overtime work on February 21,
2001, for their failure to report for work on February 22
and 23, 2001, and for their participation in the
concerted actions which severely disrupted and
paralyzed the plants operations.Meanwhile, a
February 27, 2001 Manifesto was circulated by the
Union which urged its members to participate in a
strike/picket and to abandon their posts.

TOYOTA MOTOR PHILS. CORP. WORKERS


ASSOCIATION (TMPCWA) v. NLRC
G.R. Nos. 158786 & 158789, October 19, 2007,
Velasco
The Union is a legitimate labor organization duly
registered with the Department of Labor and
Employment (DOLE) and is the sole and exclusive
bargaining agent of all Toyota rank and file
employees.Toyota, on the other hand, is a domestic
corporation engaged in the assembly and sale of
vehicles and parts, and one of the largest motor

On the next day, the Union filed with the NCMB


another notice of strike for union busting amounting to
unfair labor practice.

45

On March 1, 2001, the Union nonetheless submitted


an explanation in compliance with the February 27,
2001 notices sent by Toyota to the erring employees.
The Union members explained that their refusal to
work on their scheduled work time for two consecutive
days was simply an exercise of their constitutional right
to peaceably assemble and to petition the government
for redress of grievances. It further argued that the
demonstrations staged by the employees on February
22 and 23, 2001 could not be classified as an illegal
strike or picket, and that Toyota had already condoned
the alleged acts when it accepted back the subject
employees.

Meanwhile, on May 23, 2001, at around 12:00 nn.,


despite the issuance of the DOLE Secretarys
certification Order, several payroll-reinstated members
of the Union staged a protest rally in front of Toyotas
Bicutan Plant. Then, on May 28, 2001, around fortyfour (44) Union members staged another protest action
in front of the Bicutan Plant. At the same time, some
twenty-nine (29) payroll-reinstated employees picketed
in front of the Santa Rosa Plants main entrance, and
were later joined by other Union members.
On June 5, 2001, notwithstanding the certification
Order, the Union filed another notice of strike, which
was docketed as NCMB-NCR-NS-06-150-01.

On March 16, 2001, Toyota terminated the


employment of 227 employees for participation in
concerted actions in violation of its Code of Conduct
and for misconduct under Article 282 of the Labor
Code.

In the meantime, the NLRC ordered both parties to


submit their respective position papers on June 8,
2001. The union, however, requested for abeyance of
the proceedings pending the petition for certiorari with
the CA. On June 19, 2001, the NLRC issued an Order,
reiterating its previous order for both parties to submit
their respective position papers on or before June 2,
2001. On June 27, 2001, the Union filed a Motion for
Reconsideration of the NLRCs June 19, 2001 Order,
praying for the deferment of the submission of position
papers until its petition for certiorari is resolved by the
CA.

In reaction to the dismissal of its union members and


officers, the Union went on strike on March 17, 2001.
Subsequently, from March 28, 2001 to April 12, 2001,
the Union intensified its strike by barricading the gates
of Toyotas Bicutan and Sta. Rosa plants. The strikers
prevented workers who reported for work from entering
the plants.
On March 29, 2001, Toyota filed a petition for
injunction with a prayer for the issuance of a temporary
restraining order (TRO) with the NLRC to seek free
ingress to and egress from its Bicutan and Sta. Rosa
manufacturing plants, this was granted by the
NLRC.Meanwhile, Toyota filed a petition to declare the
strike illegal with the NLRC arbitration branch, which
was docketed as NLRC NCR (South) Case No. 30-0401775-01, and prayed that the erring Union officers,
directors, and members be dismissed.

On June 29, 2001, only Toyota submitted its position


paper. On July 11, 2001, the NLRC again ordered the
Union to submit its position paper by July 19, 2001,
with a warning that upon failure for it to do so, the case
shall be considered submitted for decision. Meanwhile,
on July 17, 2001, the CA dismissed the Unions
petition for certiorari.
During the August 3, 2001 hearing, the Union, despite
several accommodations, still failed to submit its
position paper. Later that day, the Union claimed it
filed its position paper by registered mail.

On April 10, 2001, the DOLE Secretary assumed


jurisdiction over the labor dispute and issued an
Ordercertifying the labor dispute to the NLRC. In said
Order, the DOLE Secretary directed all striking
workers to return to work at their regular shifts by April
16, 2001 and ordered Toyota to accept the returning
employees under the same terms and conditions
obtaining prior to the strike or at its option, put them
under payroll reinstatement. The Union ended the
strike on April 12, 2001. The union members and
officers tried to return to work on April 16, 2001 but
were told that Toyota opted for payroll-reinstatement
authorized by the Order of the DOLE Secretary.

Subsequently, the NLRC, in its August 9, 2001


Decision, declared the strikes staged by the Union on
February 21 to 23, 2001 and May 23 and 28, 2001 as
illegal. Accordingly, both Toyota and the Union filed
Motions for Reconsideration, which the NLRC denied
in its September 14, 2001 Resolution. The CA then
consolidated the petitions.
In justifying the recall of the severance compensation,
the CA considered the participation in illegal strikes as
serious misconduct. However, in its June 20, 2003
Resolution, the CA modified its February 27, 2003
Decision by reinstating severance compensation to the
dismissed employees based on social justice.

In the meantime, the Union filed a motion for


reconsideration of the DOLE Secretarys April 10, 2001
certification Order, which, however, was denied by the
DOLE Secretary in her May 25, 2001 Resolution.
Consequently, a petition for certiorari was filed before
the CA, which was docketed as CA-G.R. SP No.
64998.

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

46

RULING
The Union contends that the NLRC violated its right to
due process when it disregarded its position paper in
deciding Toyotas petition to declare the strike illegal. It
is entirely the Unions fault that its position paper was
not considered by the NLRC. Records readily reveal
that the NLRC was even too generous in affording due
process to the Union. It issued no less than three (3)
orders for the parties to submit its position papers,
which the Union ignored until the last minute. No
sufficient justification was offered why the Union
belatedly filed its position paper.

It is obvious that the February 21 to 23, 2001


concerted actions were undertaken without satisfying
the prerequisites for a valid strike under Art. 263 of the
Labor Code. These requirements are mandatory and
the failure of a union to comply with them renders the
strike illegal.
Moreover, the aforementioned February 2001 strikes
are in blatant violation of Sec. D, par. 6 of Toyotas
Code of Conduct which prohibits "inciting or
participating in riots, disorders, alleged strikes or
concerted actions detrimental to [Toyotas] interest."
The penalty for the offense is dismissal. The Union
and its members are bound by the company rules, and
the February 2001 mass actions and deliberate refusal
to render regular and overtime work on said days
violated these rules. In sum, the February 2001 strikes
and walk-outs were illegal as these were in violation of
specific requirements of the Labor Code and a
company rule against illegal strikes or concerted
actions.

Petitioner Union contends that the protests or rallies


conducted on February 21 and 23, 2001 are not within
the ambit of strikes as defined in the Labor Code,
since they were legitimate exercises of their right to
peaceably assemble and petition the government for
redress of grievances. The Unions position fails to
convince us.
While the facts in Philippine Blooming Mills Employees
Organization are similar in some respects to that of the
present case, the Union fails to realize one major
difference: there was no labor dispute in Philippine
Blooming Mills Employees Organization. In the present
case, there was an on-going labor dispute arising from
Toyotas refusal to recognize and negotiate with the
Union, which was the subject of the notice of strike
filed by the Union on January 16, 2001.

With respect to the strikes committed from March 17 to


April 12, 2001, those were initially legal as the legal
requirements were met. However, on March 28 to April
12, 2001, the Union barricaded the gates of the
Bicutan and Sta. Rosa plants and blocked the free
ingress to and egress from the company premises.
Toyota employees, customers, and other people
having business with the company were intimidated
and were refused entry to the plants. As earlier
explained, these strikes were illegal because unlawful
means were employed.

A strike means any temporary stoppage of work by the


concerted action of employees as a result of an
industrial or labor dispute. A labor dispute, in turn,
includes any controversy or matter concerning terms
or conditions of employment or the association or
representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and
conditions of employment, regardless of whether the
disputants stand in the proximate relation of the
employer and the employee.35

Petitioner Union also posits that strikes were not


committed on May 23 and 28, 2001. The Union asserts
that the rallies held on May 23 and 28, 2001 could not
be considered strikes, as the participants were the
dismissed employees who were on payroll
reinstatement. It concludes that there was no work
stoppage. This contention has no basis.

The protest actions undertaken by the Union officials


and members on February 21 to 23, 2001 are not valid
and proper exercises of their right to assemble and ask
government for redress of their complaints, but are
illegal strikes in breach of the Labor Code. The Unions
position is weakened by the lack of permit from the
City of Manila to hold "rallies." Shrouded as
demonstrations, they were in reality temporary
stoppages of work perpetrated through the concerted
action of the employees who deliberately failed to
report for work on the convenient excuse that they will
hold a rally at the BLR and DOLE offices in Intramuros,
Manila, on February 21 to 23, 2001. The purported
reason for these protest actions was to safeguard their
rights against any abuse which the med-arbiter may
commit against their cause. However, the Union failed
to advance convincing proof that the med-arbiter was
biased against them.

It is clear that once the DOLE Secretary assumes


jurisdiction over the labor dispute and certifies the case
for compulsory arbitration with the NLRC, the parties
have to revert to the status quo ante (the state of
things as it was before). As provided under Article
2634(g) of the Labor Code, all striking workers are
directed to return to work at their regular shifts by April
16, 2001; the Company is in turn directed to accept
them back to work under the same terms and
conditions obtaining prior to the work stoppage,
subject to the option of the company to merely
reinstate a worker or workers in the payroll in light of
the negative emotions that the strike has generated
and the need to prevent the further deterioration of the
relationship between the company and its workers.
While it may be conceded that there was no work
disruption in the two Toyota plants, the fact still

47

remains that the Union and its members picketed and


performed concerted actions in front of the Company
premises. This is a patent violation of the assumption
of jurisdiction and certification Order of the DOLE
Secretary, which ordered the parties "to cease and
desist from committing any act that might lead to the
worsening of an already deteriorated situation." While
there are no work stoppages, the pickets and
concerted actions outside the plants have a
demoralizing and even chilling effect on the workers
inside the plants and can be considered as veiled
threats of possible trouble to the workers when they go
out of the company premises after work and of
impending disruption of operations to company officials
and even to customers in the days to come.

(1) The rallies held at the DOLE and BLR


offices on February 21, 22, and 23, 2001;
(2) The strikes held on March 17 to April 12,
2001; and
(3) The rallies and picketing on May 23 and
28, 2001 in front of the Toyota Bicutan and
Sta. Rosa plants.
Did they commit illegal acts during the illegal strikes on
February 21 to 23, 2001, from March 17 to April 12,
2001, and on May 23 and 28, 2001? The answer is in
the affirmative. As we have ruled that the strikes by the
Union on the three different occasions were illegal, we
now proceed to determine the individual liabilities of
the affected union members for acts committed during
these forbidden concerted actions.

From the foregoing discussion, we rule that the


February 21 to 23, 2001 concerted actions, the March
17 to April 12, 2001 strikes, and the May 23 and 28,
2001 mass actions were illegal strikes.

After a scrutiny of the records, we find that the 227


employees indeed joined the February 21, 22, and 23,
2001 rallies and refused to render overtime work or
report for work. These rallies, as we earlier ruled, are
in reality illegal strikes, as the procedural requirements
for strikes under Art. 263 were not complied with.
Worse, said strikes were in violation of the company
rule prohibiting acts "in citing or participating in riots,
disorders, alleged strikes or concerted action
detrimental to Toyotas interest." Anent the March 28
to April 12, 2001 strikes, evidence is ample to show
commission of illegal acts like acts of coercion or
intimidation and obstructing free ingress to or egress
from the company premises. Mr. Eduardo Nicolas III,
Toyotas Security Chief, attested in his affidavit that the
strikers "badmouthed people coming in and shouted
invectives such as bakeru at Japanese officers of the
company." The strikers even pounded the vehicles of
Toyota officials. More importantly, they prevented the
ingress of Toyota employees, customers, suppliers,
and other persons who wanted to transact business
with the company. These were patent violations of Art.
264(e) of the Labor Code, and may even constitute
crimes under the Revised Penal Code such as threats
or coercion among others.

Union officers are liable for unlawful strikes or illegal


acts during a strike. It is clear that the responsibility of
union officials is greater than that of the members. The
Union officials were in clear breach of Art. 264(a) when
they knowingly participated in the illegal strikes held
from February 21 to 23, 2001, from March 17 to April
12, 2001, and on May 23 and 28, 2001.
Members liability depends on participation in illegal
acts. Art. 264(a) of the Labor Code provides that a
member is liable when he knowingly participates in an
illegal act "during a strike." While the provision is silent
on whether the strike is legal or illegal, we find that the
same is irrelevant. As long as the members commit
illegal acts, in a legal or illegal strike, then they can be
terminated. However, when union members merely
participate in an illegal strike without committing any
illegal act, are they liable? This was squarely
answered in Gold City Integrated Port Service, Inc. v.
NLRC, where it was held that an ordinary striking
worker cannot be terminated for mere participation in
an illegal strike. This was an affirmation of the rulings
in Bacus v. Ople and Progressive Workers Union v.
Aguas, where it was held that though the strike is
illegal, the ordinary member who merely participates in
the strike should not be meted loss of employment on
the considerations of compassion and good faith and
in view of the security of tenure provisions under the
Constitution.
In
Esso
Philippines,
Inc.
v.
MalayangManggagawasa Esso (MME), it was
explained that a member is not responsible for the
unions illegal strike even if he voted for the holding of
a strike which became illegal. Thus, the rule on
vicarious liability of a union member was abandoned
and it is only when a striking worker "knowingly
participates in the commission of illegal acts during a
strike" that he will be penalized with dismissal.

Lastly, the strikers, though on payroll reinstatement,


staged protest rallies on May 23, 2001 and May 28,
2001 in front of the Bicutan and Sta. Rosa plants.
These workers acts in joining and participating in the
May 23 and 28, 2001 rallies or pickets were patent
violations of the April 10, 2001 assumption of
jurisdiction/certification Order issued by the DOLE
Secretary, which proscribed the commission of acts
that might lead to the "worsening of an already
deteriorated situation." Art. 263(g) is clear that strikers
who violate the assumption/certification Order may
suffer dismissal from work. This was the situation in
the May 23 and 28, 2001 pickets and concerted
actions, with the following employees who committed
illegal acts:

In the cases at bench, the individual respondents


participated in several mass actions, viz:

Anent the grant of severance compensation to legally


dismissed union members, Toyota assails the turn-

48

around by the CA in granting separation pay in its June


20, 2003 Resolution after initially denying it in its
February 27, 2003 Decision. The general rule is that
when just causes for terminating the services of an
employee under Art. 282 of the Labor Code exist, the
employee is not entitled to separation pay. The
apparent reason behind the forfeiture of the right to
termination pay is that lawbreakers should not benefit
from their illegal acts. The dismissed employee,
however, is entitled to "whatever rights, benefits and
privileges [s/he] may have under the applicable
individual or collective bargaining agreement with the
employer or voluntary employer policy or practice"65 or
under the Labor Code and other existing laws. With
respect to benefits granted by the CBA provisions and
voluntary management policy or practice, the
entitlement of the dismissed employees to the benefits
depends on the stipulations of the CBA or the
company rules and policies.

reconsideration of its February 27, 2003 Decision, the


CA however performed a volte-face by reinstating the
award of separation pay. The CAs grant of separation
pay is an erroneous departure from our ruling in Phil.
Long Distance Telephone Co. v. NLRC that serious
misconduct forecloses the award of separation pay.
NUWHRAIN Dusit Hotel Nikko Chapter v. CA
G.R. No. 163942, November 11, 2008, Velasco
Quick Facts: This case is with regard to the shaving of
heads issue of Hotel Employees. Whether such act,
among others, under certain circumstances amount to
an illegal strike. The SC said, yes it is.
FACTS
The Union is the certified bargaining agent of the
regular rank-and-file employees of Dusit Hotel Nikko
(Hotel), a five star service establishment owned and
operated by Philippine Hoteliers, Inc. located in Makati
City.

As in any rule, there are exceptions. One exception


where separation pay is given even though an
employee is validly dismissed is when the court finds
justification in applying the principle of social justice
well entrenched in the 1987 Constitution.

On October 24, 2000, the Union submitted its CBA


negotiation proposals to the Hotel. As negotiations
ensued, the parties failed to arrive at mutually
acceptable terms and conditions. Due to the
bargaining deadlock, the Union, on December 20,
2001, filed a Notice of Strike on the ground of the
bargaining deadlock with the NCMB. Thereafter,
conciliation hearings were conducted which proved
unsuccessful.

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.

Consequently, a Strike Vote was conducted by the


Union on January 14, 2002 on which it was decided
that the Union would wage a strike.
Soon thereafter, in the afternoon of January 17, 2002,
the Union held a general assembly at its office located
in the Hotel's basement, where some members
sported closely cropped hair or cleanly shaven heads.
The next day, or on January 18, 2002, more male
Union members came to work sporting the same hair
style. The Hotel prevented these workers from entering
the premises claiming that they violated the Hotel's
Grooming Standards.

A recall of recent cases decided bearing on the issue


reveals that when the termination is legally justified on
any of the grounds under Art. 282, separation pay was
not allowed. In all of the foregoing situations, the Court
declined to grant termination pay because the causes
for dismissal recognized under Art. 282 of the Labor
Code were serious or grave in nature and attended by
willful or wrongful intent or they reflected adversely on
the moral character of the employees. We therefore
find that in addition to serious misconduct, in
dismissals based on other grounds under Art. 282 like
willful disobedience, gross and habitual neglect of
duty, fraud or willful breach of trust, and commission of
a crime against the employer or his family, separation
pay should not be conceded to the dismissed
employee.

In view of the Hotel's action, the Union staged a picket


outside the Hotel premises. Later, other workers were
also prevented from entering the Hotel causing them to
join the picket. For this reason the Hotel experienced a
severe lack of manpower which forced them to
temporarily cease operations in three restaurants.
Subsequently, on January 20, 2002, the Hotel issued
notices to Union members, preventively suspending
them and charging them with the following offenses:
(1) violation of the duty to bargain in good faith; (2)
illegal picket; (3) unfair labor practice; (4) violation of
the Hotel's Grooming Standards; (5) illegal strike; and
(6) commission of illegal acts during the illegal strike.

In the case at bench, are the 227 striking employees


entitled to separation pay?
In the instant case, the CA concluded that the illegal
strikes committed by the Union members constituted
serious misconduct.In disposing of the Unions plea for

49

The next day, the Union filed with the NCMB a second
Notice of Strike on the ground of unfair labor practice
and violation of Article 248(a) of the Labor Code on
illegal lockout, which was docketed as NCMB-NCRNS-01-019-02. In the meantime, the Union officers and
members submitted their explanations to the charges
alleged by the Hotel, while they continued to stage a
picket just inside the Hotel's compound.

with the CA.

On January 26, 2002, the Hotel terminated the


services of 29 Union officers and 61 members; and
suspended 136 employees from 5-30 days. On the
same day, the Union declared a strike. Starting that
day, the Union engaged in picketing the premises of
the Hotel. During the picket, the Union officials and
members unlawfully blocked the ingress and egress of
the Hotel premises.

ISSUES
1. May the Secretary order payroll reinstatement rather
than actual reinstatement? - YES
2. Did the union stage an illegal strike? YES
- May Hotel Nikko legally prevent employees from
reporting for work for alleged violation of the hotel's
grooming standards? YES
- Was there an illegal lock-out committed by Hotel
Nikko? - NO

CA upheld NLRCs Ruling. The CA ratiocinated that


the Union failed to demonstrate that the NLRC
committed grave abuse of discretion and capriciously
exercised its judgment or exercised its power in an
arbitrary and despotic manner. Unions MR was again
denied.

Consequently, on January 31, 2002, the Union filed its


third Notice of Strike with the NCMB which, this time
on the ground of unfair labor practice and unionbusting.

RULING:
1. YES. Article 263(g) of the Labor Code states that
all workers must immediately return to work and
all employers must readmit all of them under the
same terms and conditions prevailing before the
strike or lockout. The phrase "under the same
terms and conditions" makes it clear that the norm
is actual reinstatement. This is consistent with the
idea that any work stoppage or slowdown in that
particular industry can be detrimental to the
national interest.

On the same day, the Secretary, through her January


31, 2002 Order, assumed jurisdiction over the labor
dispute and certified the case to the NLRC for
compulsory arbitration. The Hotel was ordered either
to have actual or payroll reinstatement of dismissed
employees.
After due proceedings, the NLRC issued its October 9,
2002 Decision in which it ordered the Hotel and the
Union to execute a CBA within 30 days from the
receipt of the decision. The NLRC also held that the
January 18, 2002 concerted action was an illegal strike
in which illegal acts were committed by the Union; and
that the strike violated the "No Strike, No Lockout"
provision of the CBA, which thereby caused the
dismissal of 29 Union officers and 61 Union members.

Thus, it was settled that in assumption of


jurisdiction cases, the Secretary should impose
actual reinstatement in accordance with the intent
and spirit of Art. 263(g) of the Labor Code.
However, this one is subject to exceptions. In
Manila Diamond Hotel Employees' Union v. Court
of Appeals that payroll reinstatement is a
departure
from
the
rule,
and
special
circumstances which make actual reinstatement
impracticable must be shown. In one case, payroll
reinstatement was allowed where the employees
previously occupied confidential positions,
because their actual reinstatement, the Court
said, would be impracticable and would only serve
to exacerbate the situation.

The NLRC ordered the Hotel to grant the 61 dismissed


Union members financial assistance in the amount of
month's pay for every year of service or their
retirement benefits under their retirement plan
whichever was higher.
The NLRC explained that the strike which occurred on
January 18, 2002 was illegal because it failed to
comply with the mandatory 30-day cooling-off period
and the seven-day strike ban, as the strike occurred
only 29 days after the submission of the notice of strike
on December 20, 2001 and only four days after the
submission of the strike vote on January 14, 2002. The
NLRC also ruled that even if the Union had complied
with the temporal requirements mandated by law, the
strike would nonetheless be declared illegal because it
was attended by illegal acts committed by the Union
officers and members.

The peculiar circumstances in the present case


validate the Secretary's decision to order payroll
reinstatement instead of actual reinstatement. It is
obviously impracticable for the Hotel to actually
reinstate the employees who shaved their heads
or cropped their hair because this was exactly the
reason they were prevented from working in the
first place. Further, as with most labor disputes
which have resulted in strikes, there is mutual
antagonism, enmity, and animosity between the
union
and
the
management.
Payroll
reinstatement, most especially in this case, would
have been the only avenue where further
incidents and damages could be avoided. Public

The Union MR of the NLRC's Decision was denied.


The Union filed a Petition for Certiorari under Rule 65

50

officials entrusted with specific jurisdictions enjoy


great confidence from this Court. The Secretary
surely meant only to ensure industrial peace as
she assumed jurisdiction over the labor dispute. In
this case, we are not ready to substitute our own
findings in the absence of a clear showing of
grave abuse of discretion on her part.

coming to work on January 18, 2002, some Union


members even had their heads shaved or their
hair cropped at the Union office in the Hotel's
basement. Clearly, the decision to violate the
company rule on grooming was designed and
calculated to place the Hotel management on its
heels and to force it to agree to the Union's
proposals.

2. Art. 212(o) of the Labor Code defines a strike as


"any temporary stoppage of work by the
concerted action of employees as a result of an
industrial or labor dispute."

In view of the Union's collaborative effort to violate


the Hotel's Grooming Standards, it succeeded in
forcing the Hotel to choose between allowing its
inappropriately hair styled employees to continue
working, to the detriment of its reputation, or to
refuse them work, even if it had to cease
operations in affected departments or service
units, which in either way would disrupt the
operations of the Hotel. This Court is of the
opinion, therefore, that the act of the Union was
not merely an expression of their grievance or
displeasure but, indeed, a calibrated and
calculated act designed to inflict serious damage
to the Hotel's finances or its reputation. Thus, we
hold that the Union's concerted violation of the
Hotel's Grooming Standards which resulted in the
temporary cessation and disruption of the Hotel's
operations is an unprotected act and should be
considered as an illegal strike.
Second, the Union's concerted action which
disrupted the Hotel's operations clearly violated
the CBA's "No Strike, No Lockout" Clause.

Noted authority on labor law, Ludwig Teller, lists


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

The facts are clear that the strike arose out of a


bargaining deadlock in the CBA negotiations with
the Hotel. The concerted action is an economic
strike upon which the afore-quoted "no strike/work
stoppage and lockout" prohibition is squarely
applicable and legally binding.

The Union staged an illegal strike.


First, the Union's violation of the Hotel's Grooming
Standards was clearly a deliberate and concerted
action to undermine the authority of and to
embarrass the Hotel and was, therefore, not a
protected action. The appearances of the Hotel
employees directly reflect the character and wellbeing of the Hotel, being a five-star hotel that
provides service to top-notch clients. Being bald
or having cropped hair per se does not evoke
negative or unpleasant feelings. The reality that a
substantial number of employees assigned to the
food and beverage outlets of the Hotel with full
heads of hair suddenly decided to come to work
bald-headed or with cropped hair, however,
suggests that something is amiss and insinuates
a sense that something out of the ordinary is
afoot. Obviously, the Hotel does not need to
advertise its labor problems with its clients. It can
be gleaned from the records before us that the
Union officers and members deliberately and in
apparent concert shaved their heads or cropped
their hair. This was shown by the fact that after

Third, the Union officers and members' concerted


action to shave their heads and crop their hair not
only violated the Hotel's Grooming Standards but
also violated the Union's duty and responsibility to
bargain in good faith. By shaving their heads and
cropping their hair, the Union officers and
members violated then Section 6, Rule XIII of the
Implementing Rules of Book V of the Labor Code.
This rule prohibits the commission of any act
which will disrupt or impede the early settlement
of the labor disputes that are under conciliation.
Since the bargaining deadlock is being conciliated
by the NCMB, the Union's action to have their
officers and members' heads shaved was
manifestly calculated to antagonize and
embarrass the Hotel management and in doing so
effectively disrupted the operations of the Hotel
and violated their duty to bargain collectively in
good faith.
Fourth, the Union failed to observe the mandatory
30-day cooling-off period and the seven-day strike

51

ban before it conducted the strike on January 18,


2002. The NLRC correctly held that the Union
failed to observe the mandatory periods before
conducting or holding a strike. Records reveal that
the Union filed its Notice of Strike on the ground
of bargaining deadlock on December 20, 2001.
The 30-day cooling-off period should have been
until January 19, 2002. On top of that, the strike
vote was held on January 14, 2002 and was
submitted to the NCMB only on January 18, 2002;
therefore, the 7-day strike ban should have
prevented them from holding a strike until January
25, 2002. The concerted action committed by the
Union on January 18, 2002 which resulted in the
disruption of the Hotel's operations clearly
violated the above-stated mandatory periods.

and until the NCMB is notified at least 24 hours of the


unions decision to conduct a strike vote, and the date,
place, and time thereof, the NCMB cannot determine
for itself whether to supervise a strike vote meeting or
not and insure its peaceful and regular conduct. The
failure of a union to comply with the requirement of the
giving of notice to the NCMB at least 24 hours prior to
the holding of a strike vote meeting will render the
subsequent strike staged by the union illegal.

CAPITOL MEDICAL CENTER, INC., petitioner, vs.


NATIONAL LABOR RELATIONS COMMISSION, et
al.
G.R. No. 147080. April 26, 2005, Callejo

On July 6 and 7, 1999, the two unions filed separate


notices of strike with the NCMB-RB VII against the
respondent on the ground of ULP. Then Secretary of
Labor Bienvenido E. Laguesma intervened and issued
the Order dated July 20, 1999 certifying the labor
dispute to the NLRC for compulsory arbitration and
enjoining any strike or lock-out.

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

Respondent Capitol Medical Center Employees


Association-Alliance of Filipino Workers (Union)
demanded to be certified as the exclusive bargaining
agent
of
Petitioner
Companys
rank-and-file
employees. The Union had to contend with another
union the Capitol Medical Center Alliance of
Concerned Employees (CMC-ACE). Med-Arbiter
granted the petition, but the Secretary of DOLE
reversed the same. Because of the Unions questioned
majority status, Petitioner refused to negotiate a CBA.
This resulted in a union-led strike by the Union.

Despite the aforesaid order, the petitioners went on


strike on July 23, paralyzing the respondents
operations. The SOLE was thus constrained to issue
the Order dated July 23, 1999 directing all striking
workers to return to work within twelve (12) hours from
receipt of this Order and for the Company to accept
them back under the same terms and conditions
prevailing before the strike.

ISSUE
Is the strike illegal?

On even date, twenty-one (21) of the striking workers,


including the individual petitioners, were dismissed
from employment by the respondent for alleged
violation of the cease-and-desist directive contained in
the Order of July 20, 1999 by waging an illegal strike.

HELD
YES. Respondent Union failed to comply with the
mandatory twenty-four (24) hour notice to the NCMB
for the conduct of a strike vote.

The bone of contention between the parties hinged on


the proper interpretation of the phrase for the company
to accept them back under the same terms and
conditions prevailing before the strike. The terminated
workers asserted that said phrase must be construed
to mean that they be reinstated to their former
assignments. The respondent posited that it refers
only to their salary grades, rank and seniority, but
cannot encompass the usurpation of managements
prerogative to determine where its employees are to
be assigned nor to determine their job assignments.

Unless the NCMB is notified of the date, place and


time of the meeting of the union members for the
conduct of a strike vote, the NCMB would be unable to
supervise the holding of the same, if and when it
decides to exercise its power of supervision.
The requirement of giving notice of the conduct of a
strike vote to the NCMB at least 24 hours before the
meeting for the said purpose is designed to (a) inform
the NCMB of the intent of the union to conduct a strike
vote; (b) give the NCMB ample time to decide on
whether or not there is a need to supervise the
conduct of the strike vote to prevent any acts of
violence and/or irregularities attendant thereto; and (c)
should the NCMB decide on its own initiative or upon
the request of an interested party including the
employer, to supervise the strike vote, to give it ample
time to prepare for the deployment of the requisite
personnel, including peace officers if need be. Unless

ISSUE
Whether or not the striking employees may be
reinstated in their former assignments by virtue of the
phrase "for the company to accept them back under
the same terms and conditions prevailing before the
strike" in the Order issued by the SOLE?
HELD

52

Yes. The respondent cannot rightfully exercise its


managements prerogative to determine where its
employees are to be assigned or to determine their job
assignments in view of the explicit directive contained
in the Orders of the SOLE to accept the striking
workers back under the same terms and conditions
prevailing prior to the strike. The order simply means
that the employees should be returned to their ship
assignments as before they staged their strike. To
reiterate, Article 263 (g) of the Labor Code constitutes
an exception to the management prerogative of hiring,
firing, transfer, demotion and promotion of employees.
And to the extent that Article 263 (g) calls for the
admission of all workers under the same terms and
conditions prevailing before the strike, the respondent
is restricted from exercising its generally unbounded
right to transfer or reassign its employees. The
respondent is mandated, under the said order, to issue
embarkation orders to the employees to enable them
to report to their ship assignments in compliance with
the Order of the Secretary of Labor.

Yes. The Secretary properly took cognizance of the


issue on the legality of the strike. As the Court of
Appeals correctly pointed out, since the very reason of
the Secretarys assumption of jurisdiction was PEUs
declaration of the strike, any issue regarding the strike
is not merely incidental to, but is essentially involved
in, the labor dispute itself.The powers granted to the
Secretary under Article 263(g) of the Labor Code have
been characterized as an exercise of the police power
of the State, with the aim of promoting public
good.When the Secretary exercises these powers, he
is granted great breadth of discretion in order to find a
solution to a labor dispute. The most obvious of these
powers is the automatic enjoining of an impending
strike or lockout or its lifting if one has already taken
place.In this case, the Secretary assumed jurisdiction
over the dispute because it falls in an industry
indispensable to the national interest. It is of no
moment that PEU never acquiesced to the submission
for resolution of the issue on the legality of the strike.
PEU cannot prevent resolution of the legality of the
strike by merely refusing to submit the issue for
resolution. It is also immaterial that this issue, as PEU
asserts, was not properly submitted for resolution of
the Secretary. The authority of the Secretary to
assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends
to all questions and controversies arising from such
labor dispute. The power is plenary and discretionary
in nature to enable him to effectively and efficiently
dispose of the dispute.

PHILCOM EMPLOYEES UNION V. PHIL. GLOBAL


COMMUNICATIONS
G.R. No. 144315, July 17, 2006, Carpio
Upon the expiration of the Collective Bargaining
Agreement (CBA) between petitioner Philcom
Employees Union (PEU or union, for brevity) and
private respondent Philippine Global Communications,
Inc. (Philcom, Inc.), the parties started negotiations for
the renewal of their CBA. While negotiations were
ongoing, PEU filedwith the National Conciliation and
Mediation Board (NCMB) National Capital Region, a
Notice of Strikedue to perceived unfair labor practice
committed by the company, and another Notice of
Strikeon the ground of bargaining deadlock. While the
union and the company officers and representatives
were meeting, the remaining union officers and
members staged a strike at the company premises,
barricading the entrances and egresses thereof and
setting up a stationary picket at the main entrance of
the building.Then Acting Labor Secretary Cresenciano
B. Trajano issued an Order assuming jurisdiction over
the dispute, enjoining any strike or lockout, whether
threatened or actual, directing the parties to cease and
desist from committing any act that may exacerbate
the situation, directing the striking workers to return to
work within twenty-four (24) hours from receipt of the
Secretarys Order and for management to resume
normal operations, as well as accept the workers back
under the same terms and conditions prior to the
strike.The Secretary of Labor adjudicated, among
other things, that the strike was illegal.

NISSAN MOTORS VS. SECRETARY OF LABOR


G.R. Nos. 158190-91, June 21, 2006, Garcia
A bargaining deadlock prompted the filing of four
notices of strike by the labor union. The DOLE, upon
Nissan Motors petition, issued an order assuming
jurisdiction over the dispute. Consequently, the DOLE
Secretary issued an order expressly enjoining any
strike or lockout and directed the parties to cease and
desist from committing any act that may exacerbate
the situation. Several Union Officers were dismissed
due to the continued conduct of a slowdown union
members who participated in such were not.
Petitioners fault the NLRC for dismissing only the
union officers for violation of the return to work order.
ISSUE
Is liability for the violation of a RTWO solely a
responsibility of union officers?
RULING
Yes. The public respondent Secretary of Labor and
Employment - and necessarily the CA - acted within
the bounds of the law and certainly rendered a
judicious solution to the dispute when she spared the
striking workers or union members from the penalty of
dismissal. This disposition takes stock of the following
circumstances justifying a less drastic penalty for

ISSUE
WON the Secretary properly took cognizance of the
issue on the alleged illegal strike even though it was
not properly submitted to the Secretary for resolution?
HELD

53

ordinary striking workers: a) the employees who


engaged in slowdown actually reported for work and
continued to occupy their respective posts, or, in fine,
did not abandon their jobs; b) they were only following
orders of their leaders; and c) no evidence has been
presented to prove their participation in the
commission of illegal activities during the strike. Nissan
Motor appeared to have also exacerbated, as earlier
indicated, the emerging volatile atmosphere despite
the Secretarys order veritably enjoining the parties to
respect the status quo prevailing when she assumed
jurisdiction over the dispute. Foremost of these
exacerbating acts is the en masse termination of most
of the Union members, albeit it may be conceded that
the employer has the prerogative of imposing
disciplinary sanctions against assumption-orderdefying employees.

Revised Rules of Court. Under the NLRC Revised


Rules of Procedure, service of copies of orders should
be madeby the process server either personally or
through registered mail.
The presumption of receipt of the copies of the
Assumption of JurisdictionOrder AJO could not be
taken for granted considering the adverse effect in
case the parties failedto heed to the injunction directed
by such Order. Defiance of the assumption and returnto-workorders of the Secretary of Labor after he has
assumed jurisdiction is a valid ground for the loss
ofemployment status of any striking union officer or
member. Employment is a property right ofwhich one
cannot be deprived of without due process. Due
process here would demand that therespondent union
be properly notified of the Assumption of Jurisdiction
Order of the Secretaryof Labor enjoining the strike and
requiring its members to return to work. Thus, there
must be aclear and unmistakable proof that the
requirements prescribed by the Rules in the manner
ofeffecting personal or substituted service had been
faithfully complied with.

FEU-NRMF v. FEU-NRMFEA-AFW
G.R. No. 168362, October 16, 2006, Chico-Nazario
FEU-NRMF and respondent union (a legitimate labor
organization and is the duly recognized representative
of the rank and file employees of petitioner), entered
into a CBA that will expire on 30 April 1996. In view of
the forthcoming expiry, respondent union sent a letter
proposal to petitioner FEU-NRMF stating their
economic and non-economic proposals for the
negotiation of the new CBA. FEU-NRMF rejected
respondent unions demands. Respondent union then
filed a Notice of Strike before NCMB on the ground of
bargaining deadlock, then it staged a strike. FEUNRMF filed a Petition for the Assumption of
Jurisdiction (AJO) or for Certification of Labor Dispute
with the NLRC, underscoring the fact that it is a
medical institution engaged in the business of
providing health care for its patients. Secretary of
Labor granted the petition and an Order assuming
jurisdiction over the labor dispute was issued, thereby
prohibiting any strike. The copy of the AJO was not
served to the respondent because there no union
officer was around. Instead the copy was posted in
several conspicuous places within the premises of the
hospital. Striking employees continued to strike
claiming that they did not know about the AJO order.
FEU-NRMF filed a case before the NLRC, contending
that respondent union staged the strike in defiance of
the AJO, hence, it was illegal.

Merely posting copies of the AJO does not satisfy the


rigid requirement for properservice outlined by the
above stated rules. Needless to say, the manner of
service made by theprocess server was invalid and
irregular. Respondent union could not therefore be
adjudged tohave defied the said Order since it was not
properly
apprised
thereof.
Accordingly,
the
strikeconducted by the respondent union was valid
under the circumstances.
PILIPINO TELEPHONE CORPORATION v. PILIPINO
TELEPHONE EMPLOYEES ASSOCIATION (PILTEA)
G.R. No. 160058, June 22, 2007, Puno
On July 13, 1998, the Union filed a Notice of Strike
with the NCMB for unfair labor practice due to the
alleged acts of "restraint and coercion of union
members and interference with their right to selforganization" committed by the Company. The
Company filed a petition for Consolidated Assumption
of Jurisdiction with the Office of the Secretary of Labor.
On August 14, 1998, then Secretary Bienvenido E.
Laguesma issued an Order assuming jurisdiction over
the entire labor dispute at Pilipino Telephone
Corporation. On September 4, 1998, the Union filed a
second Notice of Strike with the NCMB on the grounds
of: a) Union busting, for the alleged refusal of the
Company to turn over union funds; and b) The mass
promotion of union members during the CBA
negotiation, allegedly aimed at excluding them from
the bargaining unit during the CBA negotiation. On the
same day, the Union went on strike. On December 7,
1998, the Company filed with the NLRC a petition to
declare the Union's September 4, 1998 (second strike)
strike illegal.

ISSUE
Whether the service of the AJO was validly effected by
the process server so as to bindthe respondent union
and hold them liable for the acts committed
subsequent to the issuance ofthe said Order.
RULING
The process server resorted to posting the Order when
personal service was renderedimpossible since the
striking employees were not present at the strike area.
This mode ofservice, however, is not sanctioned by
either the NLRC Revised Rules of Procedure or the

ISSUES:

54

1. Whether or not the mass promotion of union


members constituted union busting
2. Whether or not the dismissal of union officers as a
penalty for illegal strike is correct

settledifferences. Noncompliance will illegalize the


strike. However, the union should not be prejudiced
when there was no counter-proposal submitted by the
employer to begin with.

HELD:
(1) NO. There was no union busting which would
warrant the non-observance of the cooling-off period.
To constitute union busting under Article 263 of the
Labor Code, there must be: 1) a dismissal from
employment of union officers duly elected in
accordance with the union constitution and by-laws;
and 2) the existence of the union must be threatened
by such dismissal. In the case at bar, the second
notice of strike filed by the Union merely assailed the
"mass promotion" of its officers and members during
the CBA negotiations. Surely, promotion is different
from dismissal.

Petitioner and the union had a CBA which expired on


May 31, 2000. Within the freedomperiod, the union
made several demands for negotiation but the
company replied that it could notmuster a quorum,
thus no CBA negotiations could be held. In order to
compel the company to negotiate, union filed a request
for preventive mediation with NCMB but again failed.
On April 2001,a notice of strike was filed by the union
and thereafter, a strike was held.
ISSUE
Whether the strike staged by respondent is legal
RULING
YES. In cases of bargaining deadlocks, the notice
shall, as far as practicable, further state theunresolved
issues in the bargaining negotiations and be
accompanied by the written proposals of theunion, the
counter-proposals of the employer and the proof of a
request for conference to settledifferences. Any notice
which does not conformwith the requirements of this
shall be deemed as not having been filed andthe party
concerned shall be so informed by the regional branch
of the Board.

This is consistent with our ruling in Bulletin Publishing


Corporation v. Sanchez27 that a promotion which is
manifestly beneficial to an employee should not give
rise to a gratuitous speculation that it was made to
deprive the union of the membership of the benefited
employee.
(2) YES. It cannot be overemphasized that strike, as
the most preeminent economic weapon of the workers
to force management to agree to an equitable sharing
of the joint product of labor and capital, exert some
disquieting effects not only on the relationship between
labor and management, but also on the general peace
and progress of society and economic well-being of
the State. This weapon is so critical that the law
imposes the supreme penalty of dismissal on union
officers who irresponsibly participate in an illegal strike
and union members who commit unlawful acts during
a strike. The responsibility of the union officers, as
main players in an illegal strike, is greater than that of
the members as the union officers have the duty to
guide their members to respect the law. The policy of
the state is not to tolerate actions directed at the
destabilization of the social order, where the
relationship between labor and management has been
endangered by abuse of one party's bargaining
prerogative, to the extent of disregarding not only the
direct order of the government to maintain the status
quo, but the welfare of the entire workforce though
they may not be involved in the dispute. The grave
penalty of dismissal imposed on the guilty parties is a
natural consequence, considering the interest of public
welfare.

The union cannot be faulted for its omission. The union


could not have attached the counter-proposal of the
company in the notice of strike it submitted to the
NCMB as there was no such counter- proposal.
Nowhere in the ruling of the LA can we find any
discussion of how respondents, as unionofficers,
knowingly participated in the alleged illegal strike.
A.
SORIANO
AVIATION
v.
EMPLOYEES
ASSOCIATION OF A. SORIANO AVIATION
G.R. No. 166879, August 14, 2009, Carpio-Morales
Petitioner, which is engaged in providing transportation
of guests to and from Amanpulo and El Nido resorts in
Palawan, and respondent, which is the duly certified
bargaining agent of the rank and file employees of the
petitioner, entered into a CBA which included a No
Strike-No Lock-out Clause. On several dates,
which were legal holidays and peak season, some of
the members of the union refused to rendered
overtime work. Petitioner treated the refusal as
a concerted action which is a violation of the No-Strike,
No-Lock-out Clause. Thus, it meted the workers 30day suspension and filed an illegal strike against
them. The attempted settlement having been futile, the
union filed a Notice of Strike. Despite the conciliation
no amicable settlement of the dispute was arrived, the
union went on strike. The company filed a motion to reopen the case which was granted by LA. In
its decision, LA declared that the strike is illegal. On
appeal, the NLRC dismissed it in per curiam decision.

CLUB FILIPINO vs. BAUTISTA


G.R. No. 168406, January 14, 2015, Leonen
Doctrine: In cases of bargaining deadlocks, the notice
shall state theunresolved issues in the bargaining
negotiations and be accompanied by the written
proposals of theunion, the counter-proposals of the
employer and the proof of a request for conference to

55

In the interim, into the second strike, petitioner filed a


complaint before LA for illegal strike on the ground
of alleged force
and
violence. In
its decision, LA declared the second strike illegal. On
appeal, the NLRC affirmed in toto the LAs
decision. On appeal to CA, the CA reversed and
set aside
the NLRC ruling. Hence, the present position.

Whether or not the filing of a petition with the labor


arbiter to declare a strike illegal is a condition sine qua
non for the valid termination of employees who commit
an illegal act in the course of such strike.
HELD
No. Article 264(e) of the Labor Code prohibits any
person engaged in picketing from obstructing the free
ingress to and egress from the employers premises.
Since respondent was found in the July 17, 1998
decision of the NLRC to have prevented the free entry
into and exit of vehicles from petitioners compound,
respondents officers and employees clearly committed
illegal acts in the course of the March 9, 1998 strike.
The use of unlawful means in the course of a strike
renders such strike illegal. Therefore, pursuant to the
principle of conclusiveness of judgment, the March 9,
1998 strike was ipso facto illegal. The filing of a
petition to declare the strike illegal was thus
unnecessary.

ISSUE
Whether or not the strike staged by the respondent is
illegal.
HELD
YES. The Union members repeated name-calling,
harassment and threats of bodily harm directed
against company officers and non-striking employees
and, more significantly, the putting up of placards,
banners and streamers with vulgar statements
imputing criminal negligence to the company, which
put to doubt reliability of its operations, come within the
purview of illegal acts under Art. 264 and
jurisprudence.

C. ALCANTARA & SONS, INC VS. CA


G.R. 155109, September 29, 2010

Specifically with respect to the putting up of those


banners and placards, coupled with the name-calling
and harassment, the same indicates that it was
resorted to coerce the resolution of the dispute the
very evil which Art. 264 seeks to prevent. While the
strike is the most preeminent economic weapon of
workers to force management to agree to an equitable
sharing of the joint product of labor and capital, it
exerts some disquieting effects not only on the
relationship between labor and management, but also
on the general peace and progress of society and
economic well-being of the State. If such weapon has
to be used at all, it must be used sparingly and within
the bounds of law in the interest of industrial peace
and public welfare.

The Company and the Union entered into a Collective


Bargaining Agreement (CBA) that bound them to hold
no strike and no lockout in the course of its life. At
some point the parties began negotiating the economic
provisions of their CBA but this ended in a deadlock,
prompting the Union to file a notice of strike. After
efforts at conciliation by the Department of Labor and
Employment (DOLE) failed, the Union conducted a
strike vote that resulted in an overwhelming majority of
its members favoring it. The Union reported the strike
vote to the DOLE and, after the observance of the
mandatory cooling-off period, went on strike. During
the strike, the Company filed a petition for the issuance
of a writ of preliminary injunction with prayer for the
issuance of a temporary restraining order (TRO) Ex
Parte with the National Labor Relations Commission
(NLRC) to enjoin the strikers from intimidating,
threatening, molesting, and impeding by barricade the
entry of non-striking employees at the Companys
premises. On June 29, 1999 the Labor Arbiter
rendered a decision, declaring the Unions strike illegal
for violating the CBAs no strike, no lockout, provision.
As a consequence, the Labor Arbiter held that the
Union officers should be deemed to have forfeited their
employment with the Company and that they should
pay actual damages. With respect to the striking Union
members, finding no proof that they actually committed
illegal acts during the strike, the Labor Arbiter ordered
their reinstatement without backwages.

JACKBILT INDUSTRIES v. JACKBILT EMPLOYEES


WORKERS UNION-NAFLU-KMU
G.R. Nos. 171618-19, March 20, 2009, Corobna
Due to the adverse effects of the Asian economic crisis
on the construction industry beginning 1997, Jackbilt
Industries, Inc. decided to temporarily stop its
business. Jackbilt Employees Workers Union-NAFLUKMU immediately protested the temporary shutdown
and contented that petitioner halted production to
avoid its duty to bargain collectively. The shutdown
was allegedly motivated by anti-union sentiments.
Accordingly, on March 9, 1998, respondent went on
strike. Its officers and members picketed petitioners
main gates and deliberately prevented persons and
vehicles from going into and out of the compound. On
its July 17, 1998 decision, the NLRC found out that
respondent prevented the free entry into and exit of
vehicles from petitioners compound.

ISSUES
1. Whether or the strike conducted is illegal?
2. Whether or not the union members should
also be terminated?
HELD

ISSUE

56

1. Yes, a strike may be regarded as invalid


although the labor union has complied with the
strict requirements for staging one as provided
in Article 263 of the Labor Code when the
same is held contrary to an existing
agreement, such as a no strike clause or
conclusive arbitration clause. Here, the CBA
between the parties contained a no strike, no
lockout provision that 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.
No law or public policy prohibits the Union and
the Company from mutually waiving the strike
and lockout maces available to them to give
way to voluntary arbitration. The Court finds no
compelling reason to depart from the findings
of the Labor Arbiter, the NLRC, and the CA
regarding the illegality of the strike. Social
justice is not one-sided. It cannot be used as a
badge for not complying with a lawful
agreement.
2. Yes, given that their illegal acts of threatening,
coercing
and
intimidating
non-strikers,
obstructing the free ingress and egress from
the company premises and resisted and defied
the implementation of the writ of preliminary
injunction issued against the strikers, their
employment can no longer reinstated.
However, 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.

RULING
No. Although the strike was illegal, PHIMCO violated
the requirements of due process of the Labor Code
when it dismissed the respondents.
Under Article 277b of the Labor Code, the employer
must send the employee, who is about to be
terminated, a written notice stating the cause/s for
termination and must give the employee the
opportunity to be heard and to defend himself.
To meet the requirements of due process in the
dismissal of an employee, an employer must furnish
him or her with two (2) written notices: (1) a written
notice specifying the grounds for termination
and giving the employee a reasonable opportunity to
explain his side and (2) another written notice
indicating that, upon due consideration of all
circumstances, grounds have been established to
justify the employer's decision to dismiss the
employee.
In the present case, PHIMCO sent a letter, on June 23,
1995, to thirty-six (36) union members, generally
directing them to explain within twenty-four (24) hours
why they should not be dismissed for the illegal acts
they committed during the strike; three days later, or
on June 26, 1995, the thirty-six (36) union members
were informed of their dismissal from employment.
SOLIDBANK CORPORATION V. GAMIER
G.R. Nos. 159460 159461, November 15, 2010,
Villarama
Petitioner Solidbank and respondent Solidbank
Employees Union (Union) were set to renegotiate the
economic provisions of their 1997-2001 CBA to cover
the remaining two years thereof. Seeing that an
agreement was unlikely, the Union declared a
deadlock on and filed a Notice of Strike. In view of the
impending actual strike, then Secretary of Labor and
Employment BienvenidoE. Laguesma assumed
jurisdiction. The assumption order dated directed the
parties to cease and desist from committing any and
all acts that might exacerbate the situation. Secretary
Laguesma resolved all economic and non-economic
issues submitted by the parties. Dissatisfied with the
Secretarys ruling, the Union officers and members
decided to protest the same by holding a rally infront of
the Office of the Secretary of Labor and Employment
in Intramuros, Manila, simultaneous with the filing of
their motion for reconsideration.The union members
also picketed the banks Head Office in Binondo and
Paseo de Roxas. As a result of the employees
concerted actions, Solidbanks business operations
were paralyzed. The herein 129 individual respondents
were among the 199 employees who were terminated
for their participation in the three-day work boycott and
protest action.

PHIMCO INDUSTRIES VS. PILA


G.R. NO. 170830, August 11, 2010, Brion
PHIMCO is a corporation engaged in the production of
matches and respondent Phimco Industries Labor
Association (PILA) is the duly authorized bargaining
representative of PHIMCOs daily-paid workers.
Because of the deadlock on economic issues, mainly
due to disagreements on salary increases and
benefits, PILA staged a strike. PHIMCO filed with the
NLRC a petition for preliminary injunction and
temporary restraining order (TRO), to enjoin the
strikers from preventing through force, intimidation and
coercion the ingress and egress of non-striking
employees into and from the company premises.
Several PILA members and officers were dismissed.
ISSUE
Whether or not the members and officers of the
respondent were validly dismissed

ISSUES

57

(1) Whether the protest rally and concerted work


abandonment/boycott staged by the respondents
violated the Order of the Secretary of Labor; (2)
whether the respondents were validly terminated; and
(3) whether the respondents are entitled to separation
pay or financial assistance.

in violation of the Secretarys assumption order. The


dismissal of herein respondent-union members are
therefore unjustified in the absence of a clear showing
that they committed specific illegal acts during the
mass actions and concerted work boycott.
(3)
Under
the
circumstances,
respondents
reinstatement without backwages suffices for the
appropriate relief. But since reinstatement is no longer
possible, given the lapse of considerable time from the
occurrence of the strike, not to mention the fact that
Solidbank had long ceased its banking operations, the
award of separation pay of one (1) month salary for
each year of service, in lieu of reinstatement, is in
order. For the twenty-one (21) individual respondents
who executed quitclaims in favor of the petitioners,
whatever amount they have already received from the
employer shall be deducted from their respective
separation pay.

RULING
(1) The Court has consistently ruled that once the
Secretary of Labor assumes jurisdiction over a labor
dispute, such jurisdiction should not be interfered with
by the application of the coercive processes of a strike
or lockout. A strike that is undertaken despite the
issuance by the Secretary of Labor of an assumption
order and/or certification is a prohibited activity and
thus illegal.
Article 264 (a) of the Labor Code, as amended, also
considers it a prohibited activity to declare a strike
during the pendency of cases involving the same
grounds for the same strike.There is no dispute that
when respondents conducted their mass actions on
April 3 to 6, 2000, the proceedings before the
Secretary of Labor were still pending as both parties
filed motions for reconsideration of the March 24, 2000
Order. Clearly, respondents knowingly violated the
aforesaid provision by holding a strike in the guise of
mass demonstration simultaneous with concerted work
abandonment/boycott.

ESCARIO v. NLRC
G.R. No. 160302, September 27, 2010, Bersamin
Officers and members of Malayang Samahan ng mga
Manggagawasa Balanced Foods walked out of the
premises of Pinakamasarap Corporation (PINA) and
proceeded to the barangay office to show support for
an officer of the Union charged with oral defamation by
PINAs personnel manager. As a result of the walkout,
PINA preventively suspended all officers of the Union
and terminated the officers of the Union after a month.
The Union later conducted a strike but the same was
declared to be an illegal strike by the Labor Arbiter.
The NLRC sustained the finding of the illegality of the
strike, but ruled that the union members should not be
considered to have abandoned their employment on
the ground that mere participation of a union member
in an illegal strike does not mean loss of employment.

(2) However, a worker merely participating in an illegal


strike may not be terminated from employment. It is
only when he commits illegal acts during a strike that
he may be declared to have lost employment status.
We have held that the responsibility of union officers,
as main players in an illegal strike, is greater than that
of the members and, therefore, limiting the penalty of
dismissal only for the former for participation in an
illegal strike is in order. Hence, with respect to
respondents who are union officers, the validity of their
termination by petitioners cannot be questioned. Being
fully aware that the proceedings before the Secretary
of Labor were still pending as in fact they filed a motion
for reconsideration of the March 24, 2000 Order, they
cannot invoke good faith as a defense.

ISSUE
Are the union members entitled to full backwages due
to their not being found to have abandoned their jobs?
RULING
No. Conformably with the long honored principle
of a fair days wage for a fair days labor, employees
dismissed for joining an illegal strike are not entitled to
backwages for the period of the strike even if they are
reinstated by virtue of their being merely members of
the striking union who did not commit any illegal act
during the strike.

For the rest of the individual respondents who are


union members, the rule is that an ordinary striking
worker cannot be terminated for mere participation in
an illegal strike. There must be proof that he or she
committed illegal acts during a strike. In all cases, the
striker must be identified. But proof beyond reasonable
doubt is not required. Substantial evidence available
under the attendant circumstances, which may justify
the imposition of the penalty of dismissal, may suffice.
Liability for prohibited acts is to be determined on an
individual basis.Petitioners have not adduced evidence
on such illegal acts committed by each of the individual
respondents who are union members. Instead,
petitioners simply point to their admitted participation in
the mass actions which they knew to be illegal, being

Article 264(a) authorizes the award of full backwages


only when the termination of employment is a
consequence of an unlawful lockout. Also, that
backwages are not granted to employees participating
in an illegal strike simply accords with the reality that
they do not render work for the employer during the
period of the illegal strike. 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

58

work but was illegally locked out, suspended or


dismissed or otherwise illegally prevented from
working.For this exception to apply, it is required that
the strike be legal.

On June 23, 2003, the DOLE Secretary included the


unions second notice of strike but, on the same day,
the union filed a third notice of strike based on
allegations that the company had engaged in union
busting and illegal dismissal of union officers. On July
7, 2003, the company filed a petition for certififcation of
their labor dispute to the NLRC for compulsory
arbitration but the DOLE Secretary denied the motion
and subsumed the third notice of strike.

BAGONG PAGKAKAISA NG MANGGAGAWA NG


TRIUMP VS SECRETARY OF LABOR
G.R. No. 167401
A bargaining deadlock arise between the parties, thus
a notice of strike was filed by petitioner, a notice of
lock-out was then filed by the respondent due to a
work-slowdown. But the secretary of labor assumed
jurisdiction and issued a RTW Order, but those who
want to return to work was prevented by the other
striking members.

The DOLE upheld the termination of 17 union officers


but the CA only upheld the validity of termination of 10
union officers and declared illegal that of the other 7,
hence, this petition.
ISSUES
1. Did slowdowns actually transpire at the companys
farms?
2. Did the union officers commit illegal acts that
warranted their dismissal from work?

Due to the intervention of the Sec. of Labor, it was


agreed that all would return to work except the officers
and the shop steward pending their investigation, they
were reinstated only in the payroll.
The Secretary of Labor refused to rule on the validity
of the dismissal of the Union Officers and the shop
stewardess because it believed that it is under the
jurisdiction of the Labor Artbiter

HELD
(1) Yes. No strike shall be declared after the Secretary
of Labor has assumed jurisdiction over a labor dispute.
A strike conducted after such assumption is illegal and
any union officer who knowingly participates in the
same may be declared as having lost his employment.
Here, what is involved is a slowdown strike. Unlike
other forms of strike, the employees involved in a
slowdown do not walk out of their jobs to hurt the
company. They need only to stop work or reduce the
rate of their work while generally remaining in their
assigned post.

ISSUE
WON the Sec of Labor has jurisdiction to hear and
decide cases of illegal dismissal arising out from a
strike/lock-out
RULING
Yes. First: Jurisdiction of Secretary of Labor - As the
term assume jurisdiction connotes, the intent of the law
is to give the Labor Secretary full authority to resolve
all matters within the dispute that gave rise to or which
arose out of the strike or lockout; it includes and
extends to all questions and controversies arising from
or related to the dispute, including cases over which
the labor arbiter has exclusive jurisdiction.
FADRIQUELAN
V.
MONTEREY
CORPORATION
G.R. No. 178409, June 8, 2011, Abad

The union officers and members in this case held a


slowdown strike at the companys farms despite the
fact that the DOLE Secretary had on May 12, 2003
already assumed jurisdiction over their labor dispute.
The evidence sufficiently shows that union officers and
members simultaneously stopped work at the
companys Batangas and Cavite farms at 7:00 a.m. on
May 26, 2003.

FOODS

(2) Qualified yes. A distinction exists, however,


between the ordinary workers liability for illegal strike
and that of the union officers who participated in it. The
ordinary worker cannot be terminated for merely
participating in the strike. There must be proof that he
committed illegal acts during its conduct. On the other
hand, a union officer can be terminated upon mere
proof that he knowingly participated in the illegal strike.
The participating union officers have to be properly
identified.

When the 3-year CBA between the union Bukluran ng


Manggagawasa
Monterey-Ilaw
at
Buklod
ng
Manggagawa and the company Monterey Foods
Corporation expired, and after reaching a deadlock in
the negotiation for a new CBA, the union filed a notice
of strike with the NCMB to which the DOLE Secretary
assumed jurisdiction on May 12, 2003.
On May 21, 2003, the union filed a second notice of
strike on the alleged ground that the company
committed ULPs. The company then sent notices to
the union officers, charging them with intentional acts
of slowdown, and 6 days later, the company sent
notices of termination from work for defying the the
assumption order.

Those who cannot be connected to the slowdowns


were illegally dismissed. IN this case, only the identity
and participations of Arturo Eguna, Armando Malaluan,
Danilo Alonso, Romulo Dimaano, RoelMayuga,
Wilfredo Rizaldo, Romeo Suico, Domingo Escamillas,
and Domingo Bautro in the slowdowns were properly

59

established. These officers simply refused to work or


they abandoned their work to join union assemblies.

union of the rank and file employees of AER which


was formed in the year 1998. AER accused the Unyon
of illegal concerted activities (illegal strike, illegal
walkout, illegal stoppage, and unfair labor practice)
while Unyon accused AER of unfair r On December
22, 1998, Unyon filed a petition for certification election
before the Department of Labor and Employment
(DOLE) after organizing their employees union within
AER. Resenting what they did, AER forced all of its
employees to submit their urine samples for drug
testing. Those who refused were threatened with
dismissal. On January 12, 1999, AER issued a
memorandum suspending seven employees from work
for violation of Article D, Item 2 of the Employees
handbook which reads as follows: Coming to work
under the influence of intoxicating liquor or any drug or
drinking any alcoholic beverages on the premises on
company time While they were in the process of
securing their respective medical certificates, however,
they were shocked to receive a letter from AER
charging them with insubordination and absence
without leave and directing them to explain their acts in
writing. Despite their written explanation, AER refused
to reinstate them. Meanwhile, Unyon found out that
AER was moving out machines from the main building
to the AER-PSC compound located on another street.
Sensing that management was going to engage in a
runaway shop, Unyon tried to prevent the transfer of
the machines which prompted AER to issue a
memorandum accusing those involved of gross
insubordination, work stoppage and other offenses. On
February 2, 1999, the affected workers were denied
entry into the AER premises by order of management.
Because of this, the affected workers staged a picket
in front of company premises hoping that management
would accept them back to work. When their picket
proved futile, they filed a complaint for unfair labor
practice, illegal suspension and illegal dismissal.

MAGDALA MULTIPURPOSE & LIVELIHOOD V.


KMLMS
G.R. Nos. 191138-39, October 19, 2011, Velasco
KMLMS held a strike-vote one day before its
registration was granted. It later staged a strike where
several illegal acts were committed. The company
argued that the strike was illegal, and all participating
union members should be declared to have forfeited
their employment. SC ruled in favor of the company.
The mandatory notice of strike and the conduct of the
strike-vote report were ineffective for having been filed
and conducted before KMLMS acquired legal
personality as an LLO.
ISSUE
Whether or not the strike was illegal.
RULING
Yes. A strike conducted by a union which acquired its
legal personality AFTER the filing of its Notice of Strike
and the conduct of the Strike Vote is ILLEGAL.
There is no question that the May 6, 2002 strike was
illegal, first, because when KilusangManggagawa ng
LGS,
Magdala
Multipurpose
and
Livelihood
Cooperative (KMLMS) filed the notice of strike on
March 5 or 14, 2002, it had not yet acquired legal
personality and, thus, could not legally represent the
eventual union and its members. And second,
similarly, when KMLMS conducted the strike-vote on
April 8, 2002, there was still no union to speak of,
since KMLMS only acquired legal personality as an
independent legitimate labor organization only on April
9, 2002 or the day after it conducted the strike-vote.
Consequently, the mandatory notice of strike and the
conduct of the strike-vote report were ineffective for
having been filed and conducted before KMLMS
acquired legal personality as a legitimate labor
organization, violating Art. 263(c), (d) and (f) of the
Labor Code and Rule XXII, Book V of the Omnibus
Rules Implementing the Labor Code. It is, thus, clear
that KMLMS did not comply with the mandatory
requirement of law and implementing rules on
possession of a legal personality as a legitimate labor
organization.

ISSUE
Whether or not the drug testing was valid
RULING
AERs fault is obvious from the fact that a day after the
union filed a petition for certification election before the
DOLE, it hit back by requiring all its employees to
undergo a compulsory drug test. Although AER argues
that the drug test was applied to all its employees, it
was silent as to whether the drug test was a regular
company policy and practice in their 35 years in the
automotive engine repair and rebuilding business. As
the Court sees it, it was AERs first ever drug test of its
employees immediately implemented after the workers
manifested their desire to organize themselves into a
union. Indeed, the timing of the drug test was
suspicious. Moreover, AER failed to show proof that
the drug test conducted on its employees was
performed by an authorized drug testing center. It did
not mention how the tests were conducted and
whether the proper procedure was employed.

AUTOMOTIVE ENGINE REBUILDERS, INC. (AER) v.


PROGRESIBONG
UNYON
NG
MGA
MANGGAGAWA SA AER
G.R. No. 16013, July 13, 2011, Mendoza
Records show that AER is a company engaged in the
automotive engine repair and rebuilding business and
other precision and engineering works for more than
35
years.
Progresibong
Unyon
Ng
Mga
Manggagawasa AER (Unyon) is the legitimate labor

60

Section 36 of R.A. No. 9165 provides that drug tests


shall be performed only by authorized drug testing
centers. Moreover, Section 36 also prescribes that
drug testing shall consist of both the screening test
and the confirmatory test. Department Order No. 53-03
further provides: Drug testing shall conform with the
procedures as prescribed by the Department of Health
(DOH). Only drug testing centers accredited by the
DOH shall be utilized. A list of accredited centers may
be accessed through the OSHC. Drug testing shall
consist of both the screening test and the confirmatory
test; the latter to be carried out should the screening
test turn positive. The employee concerned must be
informed of the test results whether positive or
negative. Furthermore, AER engaged in a runaway
shop when it began pulling out machines from the
main AER building to the AER-PSC compound located
on another street on the pretext that the main building
was undergoing renovation. Certainly, the striking
workers would have no reason to run and enter the
AER-PSC premises and to cause the return of the
machines to the AER building if they were not alarmed
that AER was engaging in a runaway shop.

dispute. Concerted is defined as mutually


contrived or planned or performed in unison.
In this case, the petitioners were absent for
various personal reasons. Petitioners were in
different places on said date and attended to
their personal needs or affairs. They did not go
to the company premises to petition Biomedica
for their grievance. This shows that there was
NO INTENT to go on strike.
2. YES. Petitioners were not afforded procedural
due process. The period of 24 hours given to
petitioners to answer the notice was severely
insufficient. The law provides that an
employee should be given reasonable
opportunity to file a response. The SC in King
of Kings Transport vs. Mamac construed this
to be a period of at least five (5) calendar days
from receipt of notice to give the employees an
opportunity to study the accusation against
them, consult a union officer or lawyer, gather
evidence, and decide on the defense they will
raise against the complaint.

NARANJO v. BIOMEDICA HEALTH CARE, INC.


G.R. No. 193789, September 19, 2012, Velasco

Petitioners were also not afforded substantive


due process. To justify the dismissal of an
employee on the ground of serious
misconduct, the employer must first establish
the existence of a valid company rule or
regulation. In this case, Biomedica failed to
establish that petitioners violated company
rules since they did not present a copy of the
rules and they failed to prove that petitioners
were made aware of such regulations.

Petitioners Naranjo et al are all employees of


Biomedica. Carina Motol is the President of said
company. On November 7, 2006, during Motols
birthday, petitioners were all absent for various
personal reasons. The next day, petitioners came in
for work but were not allowed to enter the premises.
Motol, through foul language, told them to find
employment elsewhere.

VISAYAS COMMUNITY MEDICAL CENTER (VCMC)


v. YBALLE
G.R. No. 196156, January 15, 2014

Subsequently, Biomedica issued notices to petitioners


accusing them of having conducted an illegal strike
and were asked to explain within 24 hours why they
should not be held guilty of and dismissed for violation
of company policy against illegal strikes. Biomedica,
however, did not furnish them with a copy of the said
company policy.

Respondents were hired as staff nurses (Ong and


Angel) and midwives (Yballe and Cortez) by petitioner
Visayas Community Medical Center (VCMC), formerly
the Metro Cebu Community Hospital, Inc. (MCCHI).
The four workers were among the 100 rank-and-file
employees whose services were terminated by the
VCMC for participating in the strike and picket in April
1996.

Petitioners failed to submit a written explanation, thus,


Biomedica served Notices of Termination to them. It
stated that petitioners engaged in an illegal strike.
Petitioners then filed a complaint for illegal dismissal.
The Labor Arbiter dismissed the complaint. The NLRC
reversed the LA. On appeal, the CA reinstated the
decision of the LA.

The dismissed workers had demanded for the hospital


management to resume bargaining. These workers
were part of a series of mass actions spearheaded by
Nava where they wore black and red armbands and
marched around the hospital premises, then put up
placards and streamers in the vicinity. Consequently,
VCMC sent termination letters to union leaders and
other members who participated in the strike and
picket. In the Decision dated December 7, 2011, SC
ruled that the mass termination of complainants was
illegal, notwithstanding the illegality of the strike in
which they participated.

ISSUES
1. Did the petitioners engage in an illegal strike?
2. Were the petitioners illegal dismissed?
HELD
1. NO. Petitioners did not go on strike. The Labor
Code defines a strike as any temporary
stoppage of work by the concerted action of
employees as a result of any industrial or labor

61

ISSUE
W/N union members who were illegally dismissed for
mere participation in an illegal strike are entitled to
separation pay?

March 1987 until he was terminated on 3 March 2000.


Respondent filed a complaint for illegal dismissal and
nonpayment of benefits against TAPE. TAPE
countered that the labor arbiter had no jurisdiction over
the case in the absence of an employer-employee
relationship between the parties. TAPE averred that
respondent was an independent contractor falling
under the talent group category and was working
under a special arrangement which is recognized in
the industry. Respondent for his part insisted that he
was a regular employee having been engaged to
perform an activity that is necessary and desirable to
TAPEs business for thirteen (13) years.

HELD
YES, they are entitled to separation pay but not
backwages.
With respect to backwages, the principle of a "fair
days wage for a fair days labor" remains as the basic
factor in determining the award thereof. 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,
suspended or dismissed or otherwise illegally
prevented from working.

ISSUE
Whether Respondent Roberto C. Servaa was a
regular employee

The alternative relief for union members who were


dismissed for having participated in an illegal strike is
the payment of separation pay in lieu of reinstatement
under the following circumstances: (a) 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; (b) reinstatement is inimical to
the employers interest; (c) reinstatement is no longer
feasible; (d) reinstatement does not serve the best
interests of the parties involved; (e) the employer is
prejudiced by the workers continued employment; (f)
facts that make execution unjust or inequitable have
supervened; or (g) strained relations between the
employer and employee.

RULING
Yes.
[Selection] Respondent was first connected with AgroCommercial Security Agency, which assigned him to
assist TAPE in its live productions. When the security
agencys contract with RPN-9 expired in 1995,
respondent was absorbed by TAPE or, in the latters
language, "retained as talent." Clearly, respondent was
hired by TAPE. Respondent presented his
identification card to prove that he is indeed an
employee of TAPE. It has been in held that in a
business establishment, an identification card is
usually provided not just as a security measure but to
mainly identify the holder thereof as a bona
fide employee of the firm who issues it.

In the Decision dated December 7, 2011, we held that


the grant of separation pay to complainants is the
appropriate relief under the circumstances, thus:

[Wages] Respondent claims to have been


receiving P5,444.44 as his monthly salary while TAPE
prefers to designate such amount as talent fees.
Wages, as defined in the Labor Code, are
remuneration or earnings, however designated,
capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the
same, which is payable by an employer to an
employee under a written or unwritten contract of
employment for work done or to be done, or for service
rendered or to be rendered. It is beyond dispute that
respondent received a fixed amount as monthly
compensation for the services he rendered to TAPE.

Considering that 15 years had lapsed from the onset of


this labor dispute, and in view of strained relations that
ensued, in addition to the reality of replacements
already hired by the hospital which had apparently
recovered from its huge losses, and with many of the
petitioners either employed elsewhere, already old and
sickly, or otherwise incapacitated, separation pay
without back wages is the appropriate relief.

EMPLOYER-EMPLOYEE
RELATIONSHIP

[Dismissal] The Memorandum informing respondent of


the discontinuance of his service proves that TAPE
had the power to dismiss respondent.

TELEVISION AND PRODUCTION EXPONENTS,


INC. and/or ANTONIO P. TUVIERA vs. ROBERTO C.
SERVAA
G.R. No. 167648, January 28, 2008

[Control] Control is manifested in the bundy cards


submitted by respondent in evidence. He was required
to report daily and observe definite work hours.

TAPE is a domestic corporation engaged in the


production of television programs, such as the longrunning variety program, "Eat Bulaga!". Its president is
Antonio P. Tuviera (Tuviera). Respondent Roberto C.
Servaa had served as a security guard for TAPE from

ABS-CBN BROADCASTING CORP. V. NAZARENO


G.R. 164156, Sept. 26, 2006

62

Petitioner ABS-CBN Broadcasting Corporation (ABSCBN) is engaged in the broadcasting business.


Petitioner employed respondents Nazareno, Gerzon,
Deiparine, and Lerasan as production assistants (PAs)
on different dates. They were assigned at the news
and public affairs, for various radio programs in the
Cebu Broadcasting Station, with a monthly
compensation of P4,000. They were issued ABS-CBN
employees identification cards and were required to
work for a minimum of eight hours a day, including
Sundays and holidays.

different duties under the control and direction of ABSCBN executives and supervisors.
In this case, it is undisputed that respondents had
continuously performed the same activities for an
average of five years. Their assigned tasks are
necessary or desirable in the usual business or trade
of the petitioner. The persisting need for their services
is sufficient evidence of the necessity and
indispensability of such services to petitioners
business or trade.40 While length of time may not be a
sole controlling test for project employment, it can be a
strong factor to determine whether the employee was
hired for a specific undertaking or in fact tasked to
perform functions which are vital, necessary and
indispensable to the usual trade or business of the
employer

The PAs were under the control and supervision of


Assistant Station Manager Dante J. Luzon, and News
Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN
Rank-and-File Employees executed a Collective
Bargaining Agreement (CBA) to be effective during the
period from December 11, 1996 to December 11,
1999. However, since petitioner refused to recognize
PAs as part of the bargaining unit, respondents were
not included to the CBA.

FARLEY FULACHE V. ABS-CBN BROADCASTING


CORPORATION
G.R. No. 183810, January 21, 2010, Brion
Petitioners Farley Fulache, Manolo Jabonero, David
Castillo, Jeffrey Lagunzad, Magdalena Malig-on Bigno,
Francisco Cabas, Jr., Harvey Ponce and Alan C.
Almendras (petitioners) and Cresente Atinen (Atinen)
filed two separate complaints for regularization, unfair
labor
practice
and
several
money
claims
(regularization case) against ABS-CBN Broadcasting
Corporation-Cebu (ABS-CBN).

On October 12, 2000, respondents filed a Complaint


for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay,
Premium Pay, Service Incentive Pay, Sick Leave Pay,
and 13th Month Pay with Damages against the
petitioner before the NLRC.
Respondents insisted that they belonged to a "work
pool" from which petitioner chose persons to be given
specific assignments at its discretion, and were thus
under its direct supervision and control regardless of
nomenclature.

The petitioners alleged that on December 17, 1999,


ABS-CBN
and
the
ABS-CBN
Rank-and-File
Employees Union (Union) executed a collective
bargaining agreement (CBA) effective December 11,
1999 to December 10, 2002; they only became aware
of the CBA when they obtained copies of the
agreement; they learned that they had been excluded
from its coverage as ABS-CBN considered them
temporary and not regular employees, in violation of
the Labor Code. They claimed they had already
rendered more than a year of service in the company
and, therefore, should have been recognized as
regular employees entitled to security of tenure and to
the privileges and benefits enjoyed by regular
employees. They asked that they be paid overtime,
night shift differential, holiday, rest day and service
incentive leave pay. They also prayed for an award of
moral damages and attorneys fees.

ISSUE
Are Nazareno et. al employees of ABS-CBN?
HELD
We agree with respondents contention that where a
person has rendered at least one year of service,
regardless of the nature of the activity performed, or
where the work is continuous or intermittent, the
employment is considered regular as long as the
activity exists, the reason being that a customary
appointment is not indispensable before one may be
formally declared as having attained regular status.
It is of no moment that petitioner hired respondents as
"talents." The fact that respondents received preagreed "talent fees" instead of salaries, that they did
not observe the required office hours, and that they
were permitted to join other productions during their
free time are not conclusive of the nature of their
employment. Respondents cannot be considered
"talents" because they are not actors or actresses or
radio specialists or mere clerks or utility employees.
They are regular employees who perform several

ABS-CBN claimed that to cope with fluctuating


business conditions, it contracts on a case-to-case
basis the services of persons who possess the
necessary talent, skills, training, expertise or
qualifications to meet the requirements of its programs
and productions. These contracted persons are called
talents and are considered independent contractors
who offer their services to broadcasting companies.
Instead of salaries, ABS-CBN pointed out that talents
are paid a pre-arranged consideration called talent fee

63

taken from the budget of a particular program and


subject to a ten percent (10%) withholding tax. Talents
do not undergo probation. Their services are engaged
for a specific program or production, or a segment
thereof. Their contracts are terminated once the
program, production or segment is completed.

ABS-CBN moved for the reconsideration of the


decision, reiterating that Fulache, Jabonero, Castillo
and Lagunzad were independent contractors, whose
services had been terminated due to redundancy;
thus, no backwages should have been awarded. On
the regularization issue, the NLRC stood by the ruling
that the petitioners were regular employees entitled to
the benefits and privileges of regular employees. On
the illegal dismissal case, the petitioners, while
recognized as regular employees, were declared
dismissed due to redundancy.

Labor Arbiter Rendoque rendered his decision holding


that the petitioners were regular employees of ABSCBN, not independent contractors, and are entitled to
the benefits and privileges of regular employees. ABSCBN appealed the ruling to the National Labor
Relations Commission (NLRC) mainly contending that
the petitioners were independent contractors, not
regular employees.

ISSUE
Whether or not the petitioners are covered by the CBA
and therefore entitled to its benefits.

While the appeal of the regularization case was


pending, ABS-CBN dismissed Fulache, Jabonero,
Castillo, Lagunzad and Atinen (all drivers) for their
refusal to sign up contracts of employment with service
contractor Able Services. The four drivers and Atinen
responded by filing a complaint for illegal dismissal
(illegal dismissal case). In defense, ABS-CBN alleged
that it decided to course through legitimate service
contractors all driving, messengerial, janitorial, utility,
make-up, wardrobe and security services for both the
Metro Manila and provincial stations, to improve its
operations and to make them more economically
viable. Fulache, Jabonero, Castillo, Lagunzad and
Atinen were not singled out for dismissal; as drivers,
they were dismissed because they belonged to a job
category that had already been contracted out.

HELD
YES. They are ABS-CBNs regular employees entitled
to the benefits and privileges of regular employees.
These benefits and privileges arise from entitlements
under the law (specifically, the Labor Code and its
related laws), and from their employment contract as
regular ABS-CBN employees, part of which is the CBA
if they fall within the coverage of this agreement. Thus,
what only needs to be resolved as an issue for
purposes of implementation of the decision is whether
the petitioners fall within CBA coverage.
The petitioners are members of the appropriate
bargaining unit because they are regular rank-and-file
employees and do not belong to any of the excluded
categories. Specifically, nothing in the records shows
that they are supervisory or confidential employees;
neither are they casual nor probationary employees.
Most importantly, the labor arbiters decision of January
17, 2002 affirmed all the way up to the CA level ruled
against ABS-CBNs submission that they are
independent contractors. Thus, as regular rank-and-file
employees, they fall within CBA coverage under the
CBAs express terms and are entitled to its benefits.

Labor Arbiter Rendoque upheld the validity of ABSCBN's contracting out of certain work or services in its
operations.He awarded them separation pay of one (1)
months salary for every year of service.Again, ABSCBN appealed to the NLRC which rendered on
December 15, 2004 a joint decision on the
regularization and illegal dismissal cases. The NLRC
ruled that there was an employer-employee
relationship between the petitioners and ABS-CBN as
the company exercised control over the petitioners in
the performance of their work; the petitioners were
regular employees because they were engaged to
perform activities usually necessary or desirable in
ABS-CBN's trade or business; they cannot be
considered contractual employees since they were not
paid for the result of their work, but on a monthly basis
and were required to do their work in accordance with
the companys schedule.The NLRC reversed the labor
arbiters ruling in the illegal dismissal case; it found that
petitioners Fulache, Jabonero, Castillo, Lagunzad and
Atinen had been illegally dismissed and awarded
thembackwages and separation pay in lieu of
reinstatement. Under both cases, the petitioners were
awarded CBA benefits and privileges from the time
they became regular employees up to the time of their
dismissal.

ABS-CBN forgot that by claiming redundancy as


authorized cause for dismissal, it impliedly admitted
that the petitioners were regular employees whose
services, by law, can only be terminated for the just
and authorized causes defined under the Labor Code.
JOSE Y. SONZA v. ABS-CBN BROADCASTING
CORPORATION
G.R. No. 138051, June 10, 2004, Carpio
In May 1994, respondent ABS-CBN Broadcasting
Corporation (ABS-CBN) signed an Agreement
(Agreement) with the Mel and Jay Management and
Development Corporation (MJMDC). Referred to in the
Agreement as AGENT, MJMDC agreed to provide
SONZAs services exclusively to ABS-CBN as talent for
radio and television. The Agreement listed the services
SONZA would render to ABS-CBN, as Co-host for Mel
& Jay radio and TV program, ABS-CBN agreed to pay
for SONZAs services a monthly talent fee of P310,000

64

for the first year and P317,000 for the second and third
year of the Agreement.

BERNARTE v. PBA
G.R. Nos. 192084, September 14, 2011, Carpio

In 1996, SONZA wrote a letter to ABS-CBNs President


stating his resignation, notice of rescission of the
Agreement, and waiver of recovery of the remaining
amount stipulated in paragraph 7 of the Agreement but
reserves the right to seek recovery of the other
benefits under said Agreement.Later on, SONZA filed
a complaint against ABS-CBN before the DOLE.
SONZA complained that ABS-CBN did not pay his
salaries, separation pay, service incentive leave pay,
13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan
(ESOP).ABS-CBN filed a Motion to Dismiss on the
ground that no employer-employee relationship existed
between the parties.

Bernarte and Guevarra aver that they were invited to


join the PBA as referees and they were made to sign
contracts on a year-to-year basis. However, changes
were made on the terms of their employment. Bernarte
received a letter advising him that his contract would
not be renewed citing his unsatisfactory performance
on and off the court. Guevarra alleged that beginning
February 2004, he was no longer made to sign a
contract. Respondents averred that complainants
entered into two contracts of retainer with the PBA in
the year 2003 and after December 2003, PBA decided
not to renew their contracts.
ISSUE
WON petitioner is an employee of the PBA, thus
illegally dismissed.

ISSUE
Whether or not there is an employer-employee
relationship between the respondent and petitioner

RULING
No. To determine the existence of an employeremployee relationship, case law has consistently
applied the four-fold test, to wit: (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 employee on the
means and methods by which the work is
accomplished. The so-called "control test" is the most
important indicator of the presence or absence of an
employer-employee relationship. In this case, PBA
admits repeatedly engaging petitioner's services, as
shown in the retainer contracts. PBA pays petitioner a
retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate
the retainer contract for petitioner's violation of its
terms and conditions.

HELD
There is no employer-employee relationship. Applying
the four-fold test, petitioner Sonza was considered by
the Court as an independent contractor.
Selection and engagement of employee: The specific
selection and hiring of SONZA, because of his unique
skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but
not conclusive, of an independent contractual
relationship.
Payment of wages: The power to bargain talent fees
way above the salary scales of ordinary employees is
a circumstance indicative, but not conclusive, of an
independent contractual relationship.

We agree with respondents that once in the playing


court, the referees exercise their own independent
judgment, based on the rules of the game, as to when
and how a call or decision is to be made. The referees
decide whether an infraction was committed, and the
PBA cannot overrule them once the decision is made
on the playing court. The referees are the only,
absolute, and nal authority on the playing court.
Respondents or any of the PBA ocers cannot and do
not determine which calls to make or not to make and
cannot control the referee when he blows the whistle
because such authority exclusively belongs to the
referees. The very nature of petitioner's job of
ociating a professional basketball game undoubtedly
calls for freedom of control by respondents.

Power of dismissal: For violation of any provision of


the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN
could terminate his services on grounds other than
breach of contract.
Power of control: 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 less
control the hirer exercises; the more likely the worker
is considered an independent contractor.

The fact that PBA repeatedly hired petitioner does not


by itself prove that petitioner is an employee of the
former. For a hired party to be considered an
employee, the hiring party must have control over the
means and methods by which the hired party is to
perform his work, which is absent in this case.

ABS-CBN did not exercise control over the means and


methods of performance of SONZAs work. Hence,
Sonza is not an employee but an independent
contractor.

65

ABELLA V. PLDT
G.R. No. 159469, June 8, 2005, Chico-Nazario

may be required of your position in accordance with


pertinent Company policies and guidelines. In pursuit
of this objective, you are hereby tasked with the
responsibilities of recruiting, training and directing your
Supervising Associates (SAs) and the Health
Consultants under their respective agencies, for the
purpose of promoting our corporate Love Mission. The
authority as MA likewise vests upon you command
responsibility for the actions of your SAs and
HealthCons; the Company therefore reserves the right
to debit your account for any accountabilities/financial
obligations arising therefrom.

PSI, a legitimate job contractor, entered into an


agreement with the PLDT to provide the latter with
such number of qualified uniformed and properly
armed security guards. PSI determined and paid the
compensation of the security guards. Upon
deployment, PLDT conducted interviews and
evaluation to ensure that the standards it set are met
by the security guards. PLDT rarely failed to accept
security guards referred to by PSI but on account of
height deficiency. PLDT likewise conducted seminars
for the security guards in its premises.

By your acceptance of this appointment, it is


understood that you must represent the Company on
an exclusive basis, and must not engage directly or
indirectly in activities, nor become affiliated in official or
unofficial capacity with companies or organizations
which compete or have the same business as
Pamana. It is further understood that his [sic] selfinhibition shall be effective for a period of one year
from date of official termination with the Company
arising from any cause whatsoever.

Later, several security guards deployed in PLDT


sought regularization of employment with PLDT,
claiming that PLDT employed them through the years
commencing from 1982 and that all of them served
PLDT directly for more than 1 year.
ISSUE
Are the security guards employees of PLDT?
HELD
No. Based on the following circumstances, PLDT is not
the employer of the security guards
a) The screening of security guards does not
amount to hiring but merely a referral by PSI
intended for possible assignment in a
designated client. Thus employer-employee
relationship is deemed perfected even before
the posting of the security guards with the
PLDT, as assignment only comes after
employment.
b) PSI had control over the determination and
payment of the security guards compensation.
c) PSI is a legitimate job contractor, hence, the
employer of the security guards.

In consideration of your undertaking the assignment


and the accompanying duties and responsibilities, you
shall be entitled to compensation computed as follows:
On Initial Membership Fee Entrance Fee 5%; Medical
Fee 6%; On Subsequent Membership Fee 6%
You are likewise entitled to participate in sales
contests and such other incentives that may be
implemented by the Company. This appointment is on
a non-employer-employee relationship basis, and shall
be in accordance with the Company Guidelines on
Appointment, Reclassification and Transfer of Sales
Associates.
On 4 March 1988, Pamana and the U.S. Naval Supply
Depot signed the FFCEA account. Consulta, claiming
that Pamana did not pay her commission for the
FFCEA account, filed a complaint for unpaid wages or
commission against Pamana, its President Razul Z.
Requesto ("Requesto"), and its Executive VicePresident Aleta Tolentino ("Tolentino").

As regards the holding of seminars for security guards,


it is not uncommon, especially for big aggressive
corporations like PLDT, to align or integrate their
corporate visions and policies externally or with that of
other entities they deal with such as their suppliers,
consultants, or contractors.

ISSUE
Whether Consulta was an employee of Pamana
RULING
Yes.Applying the four-fold test :(1) the power to hire;
(2) the payment of wages; (3) the power to dismiss;
and (4) the power to control. The power to control is
the most important of the four elements. The power to
control is explained as: x xx It should, however, be
obvious that not every form of control that the hiring
party reserves to himself over the conduct of the party
hired in relation to the services rendered may be
accorded the effect of establishing an employeremployee relationship between them in the legal or
technical sense of the term. A line must be drawn
somewhere, if the recognized distinction between an
employee and an individual contractor is not to vanish
altogether. Realistically, it would be a rare contract of

CONSULTA V. CA
GR 145443, March 18, 2005, Carpio
Pamana Philippines, Inc. ("Pamana") is engaged in
health care business. Raquel P. Consulta ("Consulta")
was a Managing Associate of Pamana. Consultas
appointment dated 1 December 1987 states: We are
pleased to formally confirm your appointment and
confer upon you the authority as MANAGING
ASSOCIATE (MA) effective on December 1, 1987 up
to January 2, 1988. In this capacity, your principal
responsibility is to organize, develop, manage, and
maintain a sales division and a full complement of
agencies and Health Consultants and to submit such
number of enrollments and revenue attainments as

66

VILLAMARIA vs. COURT OF APPEALS


BUSTAMANTE
GR No. 165881, April 19, 2006, Callejo, Sr.

service that gives untrammelled freedom to the party


hired and eschews any intervention whatsoever in his
performance of the engagement. 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.

AND

Oscar Villamaria, Jr. was the owner of Villamaria


Motors, a sole proprietorship engaged in assembling
passenger jeepneys with a public utility franchise to
operate along the Baclaran-Sucat route. By 1995,
Villamaria stopped assembling jeepneys and retained
only nine, four of which operated by employing drivers
on a boundary basis. One of those drivers was
respondent Bustamante.Bustamante remitted 450 a
day to Villamaria as boundary and kept the residue of
his daily earnings as compensation for driving the
vehicle. In August 1997, Villamaria verbally agreed to
sell the jeepney to Bustamante under a boundaryhulog scheme, where Bustamante would remit to
Villamaria P550 a day for a period of 4 years;
Bustamane would then become the owner of the
vehicle and continue to drive the same under
Villamarias franchise, but with Php 10,000
downpayment. On August 7, 1997, Villamaria
executed a contract entitled Kasunduan ng Bilihan ng
SasakyansaPamamagitan ng Boundary Hulog. The
parties agreed that if Bustamante failed to pay the
boundary- hulog for 3 days, Villamaria Motors would
hold on to the vehicle until Bustamante paid his
arrears, including a penalty of 50 a day; in case
Bustamante failed to remit the daily boundary-hulog for
a period of one week, the Kasunduan would cease to
have the legal effect and Bustamante would have to
return the vehicle to Villamaria motors.In 1999,
Bustamante and other drivers who also had the same
arrangement failed to pay their respective boundaryhulog. This prompted Villamaria to serve a Paalala.
On July 24, 2000.Villamaria took back the jeepney
driven by Bustamante and barred the latter from
driving the vehicle.Bustamante filed a complaint for
Illegal Dismissal.

In the present case, the power to control is missing.


Pamana tasked Consulta to organize, develop,
manage, and maintain a sales division, submit a
number of enrollments and revenue attainments in
accordance with company policies and guidelines, and
to recruit, train and direct her Supervising Associates
and Health Consultants. However, the manner in
which Consulta was to pursue these activities was not
subject to the control of Pamana. Consulta failed to
show that she had to report for work at definite hours.
The amount of time she devoted to soliciting clients
was left entirely to her discretion. The means and
methods of recruiting and training her sales
associates, as well as the development, management
and maintenance of her sales division, were left to her
sound judgment. Managing Associates only received
suggestions from Pamana on how to go about their
recruitment and sales activities. They could adopt the
suggestions but the suggestions were not binding on
them. They could adopt other methods that they
deemed more effective. Further, the Managing
Associates had to ask the Management of Pamana to
shoulder half of the advertisement cost for their
recruitment campaign. They shelled out their own
resources to bolster their recruitment. They shared in
the payment of the salaries of their secretaries. They
gave cash incentives to their sales associates from
their own pocket. These circumstances show that the
Managing Associates were independent contractors,
not employees, of Pamana.

ISSUES
WON the existence of a boundary-hulog agreement
negates the employer-employee relationship between
the vendor and vendee

The appointment provided that Consulta must


represent Pamana on an exclusive basis. She must
not engage directly or indirectly in activities of other
companies that compete with the business of Pamana.
However, the fact that the appointment required
Consulta to solicit business exclusively for Pamana did
not mean that Pamana exercised control over the
means and methods of Consultas work as the term
control is understood in labor jurisprudence. Neither
did it make Consulta an employee of Pamana.
Pamana did not prohibit Consulta from engaging in
any other business, or from being connected with any
other company, for as long as the business or
company did not compete with Pamanas business.

HELD
NO. Under the boundary-hulog scheme, a dual
juridical relationship is created; that of employeremployee and vendor-vendee. The Kasanduan did not
extinguish the employer employee relationship of the
parties existing before the execution of said deed.
a. Under this system the owner/operator exercises
control and supervision over the driver. It is unlike in
lease of chattels where the lessor loses complete
control over the chattel leased but the lessee is still
ultimately responsible for the consequences of its use.
The management of the business is still in the hands
of the owner/operator, who, being the holder of the
certificate of public convenience, must see to it that the
driver follows the route prescribed by the franchising

67

and regulatory authority, and the rules promulgated


with regard to the business operations.

cooperative alleges that its owners-members own the


cooperative, thus, no employer-employee relationship
can arise between them.

b. The driver performs activities which are usually


necessary or desirable in the usual business or trade
of the owner/operator. Under the Kasunduan,
respondent was required to remit Php 550 daily to
petitioner, an amount which represented the boundary
of petitioner as well as respondents partial payment
(hulog) of the purchase price of the jeepney. Thus, the
daily remittances also had a dual purpose: that of
petitioners boundary and respondents partial payment
(hulog) for the vehicle.

ISSUE
WON an employer-employee relationship
between Stanfilco and its owner-members

exists

HELD
YES. An owner-member of a cooperative can be an
employee of the latter and an employer-employee
relationship can exist between them. a cooperative
acquires juridical personality upon its registration with
the Cooperative Development Authority. It has its
Board of Directors, which directs and supervises its
business; meaning, its Board of Directors is the one in
charge in the conduct and management of its affairs.
With that, a cooperative can be likened to a
corporation with a personality separate and distinct
from its owners-members. It is true that the Service
Contracts executed between the respondent
cooperative and Stanfilco expressly provide that there
shall be no employer-employee relationship between
the respondent cooperative and its owners-members.
However, the existence of an employer-employee
relationship cannot be negated by expressly
repudiating it in a contract, when the terms and
surrounding circumstances show otherwise. The
employment status of a person is defined and
prescribed by law and not by what the parties say it
should be. It is settled that the contracting parties may
establish such stipulations, clauses, terms and
conditions as they want, and their agreement would
have the force of law between them. However, the
agreed terms and conditions must not be contrary to
law, morals, customs, public policy or public order. The
Service Contract provision in question must be struck
down for being contrary to law and public policy since
it is apparently being used by the respondent
cooperative merely to circumvent the compulsory
coverage of its employees, who are also its ownersmembers, by the Social Security Law. The four
elements in determining the existence of an employeremployee relationship are all present in this case.
First. It is expressly provided in the Service Contracts
that it is the respondent cooperative which has the
exclusive discretion in the selection and engagement
of the owners-members as well as its team leaders
who will be assigned at Stanfilco. Second. the weekly
stipends or the so-called shares in the service surplus
given by the respondent cooperative to its ownersmembers were in reality wages, as the same were
equivalent to an amount not lower than that prescribed
by existing labor laws, rules and regulations, including
the wage order applicable to the area and industry,
they are also given to the owners-members as
compensation in rendering services to respondent
cooperatives client, Stanfilco. Third .it is the
respondent cooperative which has the power to
investigate, discipline and remove the ownersmembers and its team leaders who were rendering

c. The obligation is not novated by an instrument that


expressly recognizes the old one,
changes only the terms of payment and adds other
obligations not incompatible with the old provisions or
where the contract merely supplements the previous
one.
d. The existence of an employment relation is not
dependent on how the worker is paid but on the
presence or absence of control over the means and
method of the work. The amount earned in excess of
the boundary hulog is equivalent to wages and the
fact that the power of dismissal was not mentioned in
the Kasunduan did not mean that private respondent
never exercised such power, or could not exercise
such power.
REPUBLIC v. ASIAPRO COOPERATIVE
G.R. No. 172101, November 23, 2007, Chico Nazario
Asiapro, as a cooperative, is composed of ownersmembers. Its primary objectives are to provide savings
and credit facilities and to develop other livelihood
services for its owners-members. In the discharge of
the aforesaid primary objectives, respondent
cooperative entered into several Service Contracts
with Stanfilco. The owners-members do not receive
compensation or wages from the respondent
cooperative. Instead, they receive a share in the
service surplus which Asiapro earns from different
areas of trade it engages in, such as the income
derived from the said Service Contracts with Stanfilco.
In order to enjoy the benefits under the Social Security
Law of 1997, the owners-members of Asiapro in
Stanfilco requested the services of the latter to register
them with SSS as self-employed and to remit their
contributions as such. Petitioner SSS sent a letter to
respondent cooperative informing the latter that based
on the Service Contracts it executed with Stanfilco,
Asiapro is actually a manpower contractor supplying
employees to Stanfilco and so, it is an employer of its
owners-members working with Stanfilco. Thus, Asiapro
should register itself with petitioner SSS as an
employer and make the corresponding report and
remittance of premium contributions. Despite letters
received, respondent cooperative continuously ignored
the demand of petitioner SSS. Respondent

68

services at Stanfilco. Fourth and most importantly, it is


the respondent cooperative which has the sole control
over the manner and means of performing the services
under the Service Contracts with Stanfilco as well as
the means and methods of work. All these clearly
prove that, indeed, there is an employer-employee
relationship between the respondent cooperative and
its owners-members.

In a long line of decisions, the Court, in determining


the existence of an employer-employee relationship,
has invariably adhered to the four-fold test, to wit: [1]
the selection and engagement of the employee; [2] the
payment of wages; [3] the power of dismissal; and [4]
the power to control the employees conduct, or the socalled "control test", considered to be the most
important element.

PHILIPPINE GLOBAL COMMUNICATIONS, INC. v.


RICARDO DE VERA
G.R. No. 157214, June 7, 2005

Applying the four-fold test to this case, we initially find


that it was respondent himself who sets the
parameters of what his duties would be in offering his
services to petitioner. Evidence also shows that
respondent PHILCOM did not have control over the
schedule of the complainant as it [is] the complainant
who is proposing his own schedule and asking to be
paid for the same. This is proof that the complainant
understood that his relationship with the respondent
PHILCOM was a retained physician and not as an
employee. If he were an employee he could not
negotiate as to his hours of work.

Petitioner Philippine Global Communications, Inc.


(PhilCom), is a corporation engaged in the business of
communication services and allied activities, while
respondent Ricardo De Vera is a physician by
profession whom petitioner enlisted to attend to the
medical needs of its employees.
On May 15, 1981, De Vera offered his services to the
petitioner, therein proposing his plan of works required
of a practitioner in industrial medicine including checkup and treatment of employees, pre-employment
physical and mental check-ups and holding clinic
hours for consultation of employees. For this purpose
they entered into a Retainership Agreement which will
be for a period of one year subject to renewal. The
retainership arrangement went on from 1981 to 1994
with changes in the retainers fee. However, for the
years 1995 and 1996, renewal of the contract was only
made verbally.

The complainant also admitted that his service for the


respondent was covered by a retainership contract
[which] was renewed every year from 1982 to
1994. The labor arbiter added the indicia, not disputed
by respondent, that from the time he started to work
with petitioner, he never was included in its payroll;
was never deducted any contribution for remittance to
the Social Security System (SSS); and was in fact
subjected by petitioner to the ten (10%) percent
withholding tax for his professional fee, in accordance
with the National Internal Revenue Code, matters
which are simply inconsistent with an employeremployee relationship.

In December 1996 when Philcom, thru a letterinformed


De Vera of its decision to discontinue the latters
"retainers contract with the Company because
management has decided that it would be more
practical to provide medical services to its employees
through accredited hospitals near the company
premises. De Vera filed a complaint for illegal
dismissal before the National Labor Relations
Commission (NLRC), alleging that that he had been
actually employed by Philcom as its company
physician since 1981 and was dismissed without due
process. He averred that he was designated as a
"company physician on retainer basis" for reasons
allegedly known only to Philcom.

We note, too, that the power to terminate the parties


relationship was mutually vested on both. Either may
terminate the arrangement at will, with or without
cause. Clearly, the elements of an employer-employee
relationship are wanting in this case. We may add that
the records are replete with evidence showing that
respondent had to bill petitioner for his monthly
professional fees. It simply runs against the grain of
common experience to imagine that an ordinary
employee has yet to bill his employer to receive his
salary.

The Labor Arbiter dismissed the complaint for lack of


merit and held that De Vera was an independent
contractor and that he was not dismissed instead his
contract ended when it was not renewed. NLRC
reversed and found De Vera to be a regular employee
of the company and ordered him to be reinstated.

Finally, remarkably absent from the parties


arrangement is the element of control, whereby the
employer has reserved the right to control the
employee not only as to the result of the work done but
also as to the means and methods by which the same
is to be accomplished. Petitioner had no control over
the means and methods by which respondent went
about performing his work at the company premises
not to mention the fact that respondents work hours
and the additional compensation were negotiated upon
by the parties.In fine, the parties themselves practically
agreed on every terms and conditions of respondents

ISSUE
Whether an employer-employee relationship exists
between petitioner and respondent
HELD

69

engagement, which thereby negates the element of


control in their relationship.

as truck driver on October 25, 1984. As such, the


petitioner was tasked to deliver the respondent
companys products from its factory in Mariveles,
Bataan, to its various customers, mostly in Metro
Manila. The respondent company furnished the
petitioner with a truck. Most of the petitioners delivery
trips were made at nighttime, commencing at 6:00 p.m.
from Mariveles, and returning thereto in the afternoon
two or three days after. The deliveries were made in
accordance with the routing slips issued by respondent
company indicating the order, time and urgency of
delivery. Initially, the petitioner was paid the sum of
P350.00 per trip. This was later adjusted to P480.00
per trip and, at the time of his alleged dismissal, the
petitioner was receiving P900.00 per trip.

COCA COLA BOTTLERS V. CLIMACO


G.R. No. 146881, February 5, 2007, Azcuna
Respondent was hired by petitioner as a company
doctor; a retainership agreement renewable annually
was signed pursuant thereto. For 3 consecutive years,
the retainer agreement was signed annually. On the 4th
year, the contract of respondent was not renewed yet
the latter remained working for the petitioner. On later
date, petitioner expressly told respondent that the
former will no longer renew the retainership.
ISSUE
Whether or not respondent is an employee of
petitioner.

ISSUE
Whether or not there existed an employer-employee
relationship between the respondent company and the
petitioner

RULING
No. The Court, in determining the existence of an
employer-employee relationship, has invariably
adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to
control the employees conduct, or the so-called
"control test," considered to be the most important
element.

RULING
YES. The elements to determine the existence of an
employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the
employers power to control the employees conduct.
The most important element is the employers control
of the employees conduct, not only as to the result of
the work to be done, but also as to the means and
methods to accomplish it.All the four elements are
present in this case. As earlier opined, of the four
elements of the employer-employee relationship, the
control test is the most important. Although the
respondents denied that they exercised control over
the manner and methods by which the petitioner
accomplished his work, a careful review of the records
shows that the latter performed his work as truck driver
under the respondents supervision and control. Their
right of control was manifested by the following
attendant circumstances:
1. The truck driven by the petitioner belonged to
respondent company;
2. There was an express instruction from the
respondents that the truck shall be used exclusively to
deliver respondent companys goods;
3. Respondents directed the petitioner, after
completion of each delivery, to park the truck in either
of two specific places only, to wit: at its office in Metro
Manila at 2320 Osmea Street, Makati City or at BEPZ,
Mariveles, Bataan; and
4. Respondents determined how, where and when the
petitioner would perform his task by issuing to him gate
passes and routing slips.

The Court agrees with the finding of the Labor Arbiter


and the NLRC that the circumstances of this case
show that no employer-employee relationship exists
between the parties. The Labor Arbiter and the NLRC
correctly found that petitioner company lacked the
power of control over the performance by respondent
of his duties. The Labor Arbiter reasoned that the
Comprehensive Medical Plan, which contains the
respondents objectives, duties and obligations, does
not tell respondent "how to conduct his physical
examination, how to immunize, or how to diagnose
and treat his patients, employees of [petitioner]
company, in each case."
Considering that there is no employer-employee
relationship between the parties, the termination of the
Retainership Agreement, which is in accordance with
the provisions of the Agreement, does not constitute
illegal dismissal of respondent. Consequently, there is
no basis for the moral and exemplary damages
granted by the Court of Appeals to respondent due to
his alleged illegal dismissal.
PEDRO
CHAVEZ
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION,
SUPREME
PACKAGING, INC. and ALVIN LEE
G.R. No. 146530. January 17, 2005

ANGELINA FRANCISCO v. NLRC


G.R. 170087, August 31, 2006, Ynares-Santiago

The respondent company, Supreme Packaging, Inc., is


in the business of manufacturing cartons and other
packaging materials for export and distribution. It
engaged the services of the petitioner, Pedro Chavez,

Petitioner was hired by Kasei Corporation during its


incorporation stage.She reported for work regularly
and served in various capacities as Accountant,

70

vouchers indicating her salaries/wages, benefits, 13th


month pay, bonuses and allowances, as well as
deductions and Social Security contributions from
August 1, 1999 to December 18, 2000.

Liaison Officer, Technical Consultant, Acting Manager


and Corporate Secretary, with substantially the same
job functions, that is, rendering accounting and tax
services to the company and performing functions
necessary and desirable for the proper operation of the
corporation such as securing business permits and
other licenses over an indefinite period of engagement.
XXX On October 15, 2001, petitioner asked for her
salary from Acedo and the rest of the officers but she
was informed that she is no longer connected with the
company.

It is therefore apparent that petitioner is economically


dependent on respondent corporation for her
continued employment in the latters line of business.
GREGORIO
V.
TONGKO
vs.
THE
MANUFACTURERS LIFE INSURANCE CO. (PHILS.),
INC. and RENATO A. VERGEL DE DIOS
G.R. No. 167622, January 25, 2011, Brion

ISSUE
Was there an employer-employee relationship
between petitioner and private respondent Kasei
Corporation?

TOPIC: Agency; Insurance Companies; Employeremployee relationships

HELD
Yes. In certain cases the control test is not sufficient to
give a complete picture of the relationship between the
parties, owing to the complexity of such a relationship
where several positions have been held by the worker.

DOCTRINE: Control over the performance of the task


of one providing service both with respect to the
means and manner, and the results of the service is
the primary element in determining whether an
employment relationship exists.In the Supreme Courts
June 29, 2010 Resolution of this case, they noted that
there are built-in elements of control specific to an
insurance agency, which do not amount to the
elements of control that characterize an employment
relationship governed by the Labor Code.The
Insurance Code provides definite parameters in the
way an agent negotiates for the sale of the companys
insurance products, his collection activities and his
delivery of the insurance contract or policy. They do
not reach the level of control into the means and
manner of doing an assigned task that invariably
characterizes an employment relationship as defined
by labor law.

The better approach would therefore be to adopt a


two-tiered test involving: (1) the putative employers
power to control the employee with respect to the
means and methods by which the work is to be
accomplished; and (2) the underlying economic
realities of the activity or relationship.
Thus, the determination of the relationship between
employer and employee depends upon the
circumstances of the whole economic activity,such as:
(1) the extent to which the services performed are an
integral part of the employers business; (2) the extent
of the workers investment in equipment and facilities;
(3) the nature and degree of control exercised by the
employer; (4) the workers opportunity for profit and
loss; (5) the amount of initiative, skill, judgment or
foresight required for the success of the claimed
independent enterprise; (6) the permanency and
duration of the relationship between the worker and
the employer; and (7) the degree of dependency of the
worker upon the employer for his continued
employment in that line of business.

FACTS
Taking from the November 2008 decision, the facts are
as follows:
Manufacturers Life Insurance, Co. is a domestic
corporation engaged in life insurance business. De
Dios was its President and Chief Executive Officer.
Petitioner Tongko started his relationship with Manulife
in 1977 by virtue of a Career Agent's Agreement.
Pertinent provisions of the agreement state that: (this
part is essential to determine relationship between Pet.
and Res.)
It is understood and agreed that the Agent is an
independent contractor and nothing contained herein
shall be construed or interpreted as creating an
employer-employee relationship between the
Company
and
the
Agent.
a) The Agent shall canvass for applications for Life
Insurance, Annuities, Group policies and other
products offered by the Company, and collect, in
exchange for provisional receipts issued by the
Agent, money due or to become due to the
Company in respect of applications or policies
obtained by or through the Agent or from
policyholders allotted by the Company to the Agent
for servicing, subject to subsequent confirmation of

The proper standard of economic dependence is


whether the worker is dependent on the alleged
employer for his continued employment in that line of
business.
By applying the control test, there is no doubt that
petitioner is an employee of Kasei Corporation
because she was under the direct control and
supervision of Seiji Kamura, the corporations Technical
Consultant.
Under the broader economic reality test, the petitioner
can likewise be said to be an employee of respondent
corporation because she had served the company for
six years before her dismissal, receiving check

71

receipt of payment by the Company as evidenced by


an Official Receipt issued by the Company directly to
the policyholder.
b) The Company may terminate this
Agreement for any breach or violation of any
of the provisions hereof by the Agent by giving
written notice to the Agent within fifteen (15)
days from the time of the discovery of the
breach.
No
waiver,
extinguishment,
abandonment, withdrawal or cancellation of
the right to terminate this Agreement by the
Company shall be construed for any previous
failure to exercise its right under any provision
of this Agreement.
c) Either of the parties hereto may likewise
terminate his Agreement at any time without
cause, by giving to the other party fifteen (15)
days notice in writing.

standards of behavior rather than employer directives


into how specific tasks are to be done.
In sum, the Supreme Court found absolutely no
evidence of labor law control.
INTEL TECHNOLOGY PHILIPPINES, INC. v.
NATIONAL LABOR RELATIONS COMMISSION AND
JEREMIAS CABILES
G.R. No. 200575, February 5, 2014, Mendoza
Cabiles was initially hired by Intel Phil. on April 16,
1997 as an Inventory Analyst. He was subsequently
promoted several times over the years and was also
assigned at Intel Arizona and Intel Chengdu. He later
applied for a position at Intel Semiconductor Limited
Hong Kong (Intel HK).
In a letter dated December 12, 2006, Cabiles was
offered the position of Finance Manager by Intel HK.
Before accepting the offer, he inquired from Intel Phil.,
through an email, the consequences of accepting the
newly presented opportunity in Hong Kong, particularly
his retirement benefits. He will celebrate his 10th year
of service with Intel on April 16, 2007. However, he will
be moving to Hong Kong as a local hire starting
February 1. On January 23, 2007, Intel Phil., through
Penny Gabronino (Gabronino), stated that he is not
entitled to receive his entitlement benefit.

De Dios sent Tongko a letter of termination(for inability


to push for company development and growth) in
accordance with Tongko's Agents Contract. Tongko
filed a complaint with the NLRC against Manulife for
illegal dismissal, alleging that he had an employeremployee relationship with De Dios instead of a
revocable agency by pointing out that the latter
exercised control over him through directives regarding
how to manage his area of responsibility and setting
objectives for him relating to the business. Tongko also
claimed that his dismissal was without basis and he
was not afforded due process.

On January 31, 2007, Cabiles signed the job


offer.8OCabiles executed a Release, Waiver and
Quitclaim (Waiver) in favor of Intel Phil. acknowledging
receipt of P165,857.62 as full and complete settlement
of all benefits due him by reason of his separation from
Intel Phil. On September 8, 2007, after seven (7)
months of employment, Cabiles resigned from Intel
HK.

ISSUE
Whether there is an employer-employee relationship
HELD
No Employer-Employee Relationship.The Supreme
Court ruled petitioners Motion against his favor since
he failed to show that the control Manulife exercised
over him was the control required to exist in an
employer-employee relationship; Manulifes control fell
short of this norm and carried only the characteristic of
the relationship between an insurance company and
its agents, as defined by the Insurance Code and by
the law of agency under the Civil Code.

On August 18, 2009, Cabiles filed a complaint for nonpayment of retirement benefits and for moral and
exemplary damages with the NLRC Regional
Arbitration Branch-IV. He insisted that he was
employed by Intel for 10 years and 5 months from April
1997 to September 2007 a period which included his
seven (7) month stint with Intel HK. Thus, he believed
he was qualified to avail of the benefits under the
companys retirement policy allowing an employee
who served for 10 years or more to receive retirement
benefits.

To reiterate, guidelines indicative of labor law "control"


do not merely relate to the mutually desirable result
intended by the contractual relationship; they must
have the nature of dictating the means and methods to
be employed in attaining the result. Tested by this
norm, Manulifes instructions regarding the objectives
and sales targets, in connection with the training and
engagement of other agents, are among the directives
that the principal may impose on the agent to achieve
the assigned tasks.They are targeted results that
Manulife wishes to attain through its agents. Manulifes
codes of conduct, likewise, do not necessarily intrude
into the insurance agents means and manner of
conducting their sales. Codes of conduct are norms or

On March 18, 2010, the LA ordered Intel Phil. together


with Grace Ong, Nida delos Santos, Gabronino, and
Pia Viloria, to pay Cabiles the amount of HKD
419,868.77 or its peso equivalent as retirement pay
with legal interest and attorneys fees. The LA held that
Cabiles did not sever his employment with Intel Phil.
when he moved to Intel HK, similar to the instances
when he was assigned at Intel Arizona and Intel
Chengdu.

72

Aggrieved, Intel Phil. elevated the case to the CA via a


petition for certiorari with application for a Temporary
Restraining Order (TRO) on April 5, 2011. The
application for TRO was denied. Earlier, on September
19, 2011, pending disposition of the petition before the
CA, the NLRC issued a writ of execution14 against Intel
Phil. As ordered by the NLRC, Intel Phil. satisfied the
judgment on December 13, 2011 by paying the
amount ofP3,201,398.60 which included the applicable
withholding taxes due and paid to the Bureau of
Internal Revenue. Cabiles received a net amount
of P2,485,337.35, covered by the Bank of the
Philippine
Islands
Managers
Check
No.
0000000806.16 By reason thereof, Intel Phil. filed on
December 21, 2011 a Supplement to the Petition for
Certiorari17 praying, in addition to the reliefs sought in
the main, that the CA order the restitution of all the
amounts paid by them pursuant to the NLRCs writ of
execution, dated September 19, 2011.

The Court, however, is again not convinced. The


continuity, existence or termination of an employeremployee relationship in a typical secondment contract
or any employment contract for that matter is
measured by the following yardsticks:1. the selection
and engagement of the employee;2. the payment of
wages;3. the power of dismissal; and4. the employers
power to control the employees conduct.28
As applied, all of the above benchmarks ceased upon
Cabiles assumption of duties with Intel HK on
February 1, 2007. Intel HK became the new employer.
It provided Cabiles his compensation. Cabiles then
became subject to Hong Kong labor laws, and
necessarily, the rights appurtenant thereto, including
the right of Intel HK to fire him on available grounds.
Lastly, Intel HK had control and supervision over him
as its new Finance Manager. Evidently, Intel Phil. no
longer had any control over him. Hence, Cabiles
theory of secondment must fail.

ISSUE
WON Cabiles had completed the required 10 year
continuous service21 with Intel Phil., thus, qualifying
him for retirement benefits.

What distinguishes Intel Chengdu and Intel Arizona


from Intel HK is the lack of intervention of Intel Phil. on
the matter. In the two previous transfers, Intel Phil.
remained as the principal employer while Cabiles was
on a temporary assignment. By virtue of which, it still
assumed responsibility for the payment of
compensation and benefits due him. The assignment
to Intel HK, on the other hand, was a permanent
transfer and Intel Phil. never participated in any way in
the process of his employment there. It was Cabiles
himself who took the opportunity and the risk. If it were
indeed similar to Intel Arizona and Intel Chengdu
assignments, Intel Philippines would have had a say in
it. Petition granted.

RULING
Resignation is the formal relinquishment of an
office,24 the overt act of which is coupled with an intent
to renounce. This intent could be inferred from the acts
of the employee before and after the alleged
resignation.25 In this case, Cabiles, while still on a
temporary assignment in Intel Chengdu, was offered
by Intel HK the job of a Finance Manager. In
contemplating whether to accept the offer, Cabiles
wrote Intel Phil. providing details and asked about the
retirement benefits. Despite a non-favorable reply as to
his retirement concerns, Cabiles still accepted the offer
of Intel HK.

MATLING
INDUSTRIAL
&
COMMERCIAL
CORPORATION V. RICARDO COROS
G.R. No. 157802, October 1, 2010

His acceptance of the offer meant letting go of the


retirement benefits he now claims as he was informed
through email correspondence that his 9.5 years of
service with Intel Phil. would not be rounded off in his
favor. He, thus, placed himself in this position, as he
chose to be employed in a company that would pay
him more than what he could earn in Chengdu or in
the Philippines. The choice of staying with Intel Phil.
vis--vis a very attractive opportunity with Intel HK put
him in a dilemma.

Doctrine: For a position to be considered as a


corporate office, or, for that matter, for one to be
considered as a corporate officer, the position must, if
not listed in the by-laws, have been created by the
corporation's board of directors, and the occupant
thereof appointed or elected by the same board of
directors or stockholders.
- The criteria for distinguishing between corporate
officers who may be ousted from office at will, on one
hand, and ordinary corporate employees who may only
be terminated for just cause, on the other hand, do not
depend on the nature of the services performed, but
on the manner of creation of the office.

Cabiles views his employment in Hong Kong as an


assignment or an extension of his employment with
Intel Phil. He cited as evidence the offer made to him
as well as the letter, dated January 8, 2007,27 both of
which used the word "assignment" in reference to his
engagement in Hong Kong as a clear indication of the
alleged continuation of his ties with Intel Phil. The
foregoing arguments of Cabiles, in essence, speak of
the "theory of secondment."

- The determination of whether the dismissed officer


was a regular employee or corporate officer unravels
the conundrum of whether a complaint for illegal
dismissal is cognizable by the Labor Arbiter or by the
RTC. In case of the regular employee, the LA has

73

jurisdiction; otherwise, the RTC exercises the legal


authority to adjudicate.

that matter, for one to be considered as a corporate


officer, the position must, if not listed in the by-laws,
have been created by the corporation's board of
directors, and the occupant thereof appointed or
elected by the same board of directors or stockholders.
This is the implication of the ruling in Tabang v.
National Labor Relations Commission, which reads:

FACTS
After respondent Ricardo Coros dismissal by Matling
as its Vice President for Finance and Administration,
he filed on August 10, 2000 a complaint for illegal
suspension and illegal dismissal against Matling and
some of its corporate officers in the NLRC, SubRegional Arbitration Branch XII, Iligan City.

The president, vice president, secretary and treasurer


are commonly regarded as the principal or executive
officers of a corporation, and modern corporation
statutes usually designate them as the officers of the
corporation. However, other offices are sometimes
created by the charter or by-laws of a corporation, or
the board of directors may be empowered under the
by-laws of a corporation to create additional offices as
may be necessary.

The petitioners moved to dismiss the complaint, raising


the ground, among others, that the complaint pertained
to the jurisdiction of the Securities and Exchange
Commission due to the controversy being intracorporate inasmuch as the respondent was a member
of Matlings Board of Directors aside from being its
Vice-President for Finance and Administration prior to
his termination.

It has been held that an 'office' is created by the


charter of the corporation and the officer is elected by
the directors or stockholders. On the other hand, an
'employee' usually occupies no office and generally is
employed not by action of the directors or stockholders
but by the managing officer of the corporation who also
determines the compensation to be paid to such
employee.

The respondent opposed the petitioners motion to


dismiss, insisting that his status as a member of
Matlings Board of Directors was doubtful, considering
that he had not been formally elected as such; that he
did not own a single share of stock in Matling,
considering that he had been made to sign in blank an
undated endorsement of the certificate of stock he had
been given in 1992; that Matling had taken back and
retained the certificate of stock in its custody; and that
even assuming that he had been a Director of Matling,
he had been removed as the Vice President for
Finance and Administration, not as a Director, a fact
that the notice of his termination dated April 10, 2000
showed.

This ruling was reiterated in the subsequent cases of


Ongkingco v. National Labor Relations Commission
and De Rossi v. National Labor Relations Commission.
The position of vice-president for administration and
finance, which Coros used to hold in the corporation,
was not created by the corporations Board of
Directors but only by its president or executive vicepresident pursuant to the by-laws of the corporation.
Moreover, Coros appointment to said position was not
made through any act of the board of directors or
stockholders of the corporation. Consequently, the
position to which Coros was appointed and later on
removed from, is not a corporate office despite its
nomenclature, but an ordinary office in the corporation.
Coros alleged illegal dismissal therefrom is, therefore,
within the jurisdiction of the labor arbiter.

On October 16, 2000, the Labor Arbiter granted the


petitioners motion to dismiss, ruling that the
respondent was a corporate officer.
On March 13, 2001, the NLRC set aside the dismissal,
concluding that the respondents complaint for illegal
dismissal was properly cognizable by the Labor Arbiter
not by the SEC, because he was not a corporate
officer by virtue of his position in Matling, albeit high
ranking and managerial, not being among the positions
listed in Matlings Constitution and by-laws.

MR was likewise denied.Hence this petition for review


on certiorari.

On motion for reconsideration, petitioners submitted a


certified machine copies of Matlings Amended Articles
of Incorporation and By-laws to prove that the
President of Matling was thereby granted full power to
create new offices and appoint the officers
thereto and the minutes of special meeting held on
June 7, 1999 by Matlings Board of Directors to prove
that the respondent was, indeed, a Member of the
Board of Directors. Nonetheless, the NLRC denied the
petitioners motion for Reconsideration. The petitioners
elevated the issue to the CA by petition for Certiorari.

ISSUE
Whether or not respondent was a corporate officer of
Matling Industrial and Commercial Corporation. - NO
RULING
Conformably with Section 25 of the Corporation Code,
a position must be expressly mentioned inthe by-laws
in order to be considered as a corporate office.
Thus, the creation of anoffice pursuant to or under a
by-law enabling provision is not enough to make
aposition a corporate office. Guerrea vs Lezama, the
first ruling on the matter, heldthat the only officers of a

The CA dismissed the petition for certiorari. For a


position to be considered as a corporate office, or, for

74

corporation were those given that character either by


the Corporation Code or by the by-laws; the rest of the
corporate officers could beconsidered only as
employees or subordinate officials.

stockholder had any relation at all to his appointment


and subsequent dismissal as Vice President for
Finance and Administration.
Even though he might have become a stockholder of
Matling in 1992, his promotion to the position of Vice
President for Finance and Administration in 1987 was
by virtue of the length of quality service he had
rendered as an employee of Matling. His subsequent
acquisition of the status of Director/stockholder had no
relation to his promotion. Besides, his status of
Director/stockholder was unaffected by his dismissal
from employment as Vice President for Finance and
Administration.

It is relevant to state in this connection that the SEC,


the primary agencyadministering the Corporation
Code, adopted a similar interpretation of Section 25of
the Corporation Code in its Opinion dated November
25, 1993, to wit:
Thus, pursuant to Section 25 of the Corporation Code,
whoever are the corporateofficers enumerated in the
By-laws are the exclusive officers of the corporation
andthe Board has no power to create other offices
without amending first the corporateBy-laws. However,
the Board may create appointive positions other than
thepositions of corporate officers, but the persons
occupying such positions are notconsidered as
corporate officers within the meaning of Section 25 of
the CorporationCodeand are not empowered to
exercise the functions of the corporate officers, except
those functions lawfully delegated to them. Their
functions and duties are tobe determined by the Board
of Directors/Trustees.

CAs decision is affirmed. Coros was an employee,


Labor Arbiter has jurisdiction on the illegal dismissal
case.
RAUL C. COSARE v. BROADCOM ASIA, INC. and
DANTE AREVALO
G.R. No. 201298, February 5, 2014, Reyes
Petitioner Cosare claims that he was the Assistant
Vice President for Sales (AVP for Sales) and Head of
the
Technical
Coordination
for
Respondent
Corporation. Sometime in 2003, one Alex Abiog was
appointed as Vice President for Sales, becoming his
immediate superior. Petitioner informed Arevalo, being
President, of certain anomalies Abiog was involved.
Petitioner was then furnished a memo, whereby he
was given forty-eight (48) hours from date to present
his explanation on the charges of irregularities.
Petitioner was totally barred from entering company
premises and to wait outside for further instructions,
but no instructions were given until 8PM. Petitioner
now files with LA complaint for constructive dismissal.

Moreover, the Board of Directors of Matling could not


validly delegate the power tocreate a corporate office
to the President, in light of Section 25 of the
CorporationCode requiring the Board of Directors itself
to elect the corporate officers. Verily,the power to elect
the corporate officers was a discretionary power that
the law exclusively vested in the Board of Directors,
and could not be delegated tosubordinate officers or
agents. The office of Vice President for Finance
andAdministration created by Matlings President
pursuant to By-law No. V was anordinary, not a
corporate, office.

ISSUE
Was Petitioner constructively dismissed?

To emphasize, the power to create new offices and the


power to appoint the officersto occupy them vested by
By-law No. V merely allowed Matlings President
tocreate non-corporate offices to be occupied by
ordinary employees of Matling. Suchpowers were
incidental to the Presidents duties as the executive
head of Matling toassist him in the daily operations of
the business.

HELD
YES.
The test of constructive dismissal is whether a
reasonable person in the employees position would
have felt compelled to give up his position under the
circumstances. It is an act amounting to dismissal but
is made to appear as if it were not. Constructive
dismissal is therefore a dismissal in disguise. The law
recognizes and resolves this situation in favor of
employees in order to protect their rights and interests
from the coercive acts of the employer.
It is clear from the cited circumstances that the
respondents already rejected Cosares continued
involvement with the company. Even their refusal to
accept the explanation which Cosare tried to tender on
April 2, 2009 further evidenced the resolve to deny
Cosare of the opportunity to be heard prior to any
decision on the termination of his employment. The
respondents allegedly refused acceptance of the
explanation as it was filed beyond the mere 48-hour

The criteria for distinguishing between corporate


officers who may be ousted from office at will, on one
hand, and ordinary corporate employees who may only
be terminated for just cause, on the other hand, do not
depend on the nature of the services performed, but
on the manner of creation of the office. In the
respondents case, he was supposedly at once an
employee, a stockholder, and a Director of Matling.
The circumstances surrounding his appointment to
office must be fully considered to determine whether
the
dismissal
constituted
an
intra-corporate
controversy or a labor termination dispute. We must
also consider whether his status as Director and

75

period which they granted to Cosare under the memo


dated March 30, 2009. However, even this limitation
was a flaw in the memo or notice to explain which only
further signified the respondents discrimination,
disdain and insensibility towards Cosare, apparently
resorted to by the respondents in order to deny their
employee of the opportunity to fully explain his
defenses and ultimately, retain his employment.

The CA correctly recognized the authenticity of the


operational documents, for the failure of Atlanta to
raise a challenge against these documents before the
labor arbiter, the NLRC and the CA itself. The
appellate court, thus, found the said documents
sufficient to establish the employment of the
respondents before their engagement as apprentices.

In sum, the respondents were already resolute on a


severance of their working relationship with Cosare,
notwithstanding the facts which could have been
established by his explanations and the respondents
full investigation on the matter. In addition to this, the
fact that no further investigation and final disposition
appeared to have been made by the respondents on
Cosares case only negated the claim that they
actually intended to first look into the matter before
making a final determination as to the guilt or
innocence of their employee. This also manifested
from the fact that even before Cosare was required to
present his side on the charges of serious misconduct
and willful breach of trust, he was summoned to
Arevalos office and was asked to tender his
immediate resignation in exchange for financial
assistance.

The fact that Sebolino and the three others were


already rendering service to the company when they
were made to undergo apprenticeship (as established
by the evidence) renders the apprenticeship
agreements irrelevant as far as the four are
concerned. This reality is highlighted by the CA finding
that the respondents occupied positions such as
machine operator, scaleman and extruder operator tasks that are usually necessary and desirable in
Atlanta's usual business or trade as manufacturer of
plastic building materials. These tasks and their nature
characterized the four as regular employees under
Article 280 of the Labor Code.Thus, when they were
dismissed without just or authorized cause, without
notice, and without the opportunity to be heard, their
dismissal was illegal under the law.
REPUBLIC V. ASIAPRO COOPERATIVE
G.R. No. 172101, November 23, 2007

ATLANTA INDUSTRIES, INC. and/or ROBERT


CHAN v. APRILITO R. SEBOLINO, KHIM V.
COSTALES, ALVIN V. ALMONTE, and JOSEPH H.
SAGUN
G.R. No. 187320, January 26, 2011, Brion

Under the respondents by-laws, owners-members are


of two categories, to wit: (1) regular member, who is
entitled to all the rights and privileges of membership;
and (2) associate member, who has no right to vote
and be voted upon and shall be entitled only to such
rights and privileges provided in its by-laws. In the
discharge of the aforesaid primary objectives,
respondent cooperative entered into several Service
Contracts. The owners-members do not receive
compensation or wages from the respondent
cooperative but instead they receive a share in the
service surplus which the respondent cooperative
earns from different areas of trade it engages in, such
as the income derived from the said Service Contracts
with Stanfilco. The owners-members get their income
from the service surplus generated by the quality and
amount of services they rendered. In order to enjoy the
benefits under the Social Security Law of 1997, the
owners-members of the respondent cooperative, who
were assigned to Stanfilco requested the services of
the latter to register them with petitioner SSS as selfemployed and to remit their contributions as such.
Petitioner SSS said that based on the Service
Contracts it executed with Stanfilco, respondent
cooperative is actually a manpower contractor
supplying employees to Stanfilco and for that reason, it
is an employer of its owners-members working with
Stanfilco. Thus, respondent cooperative should
register itself with petitioner SSS as an employer and
make the corresponding report and remittance of
premium contributions in accordance with the Social
Security Law of 1997. On 9 October 2002, respondent

Sebolino et al. filed several complaints for illegal


dismissal, regularization, underpayment, nonpayment
of wages and other money claims as well as damages.
They alleged that they had attained regular status as
they were allowed to work with Atlanta for more than
six (6) months from the start of a purported
apprenticeship agreement between them and the
company. They claimed that they were illegally
dismissed when the apprenticeship agreement
expired.
In defense, Atlanta and Chan argued that the workers
were not entitled to regularization and to their money
claims because they were engaged as apprentices
under
a
government-approved
apprenticeship
program. The company offered to hire them as regular
employees in the event vacancies for regular positions
occur in the section of the plant where they had
trained. They also claimed that their names did not
appear in the list of employees (Master List) prior to
their
engagement
as
apprentices.
ISSUE
Whether or not Sebolinoet. al. attained status of
regular employees and were illegally dismissed
HELD
YES. The petition is unmeritorious.

76

cooperative, through its counsel, sent a reply to


petitioner SSSs letter asserting that it is not an
employer because its owners-members are the
cooperative itself; hence, it cannot be its own
employer.

control test is the most important. In the case at bar, it


is the respondent cooperative which has the sole
control over the manner and means of performing the
services under the Service Contracts with Stanfilco as
well as the means and methods of work. Also, the
respondent cooperative is solely and entirely
responsible for its owners-members, team leaders and
other representatives at Stanfilco. All these clearly
prove that, indeed, there is an employer-employee
relationship between the respondent cooperative and
its owners-members.

ISSUE
Whether or not there is an employer-employee
relationship between [respondent cooperative] and its
[owners-members].
HELD
Yes. In determining the existence of an employeremployee relationship, the following elements are
considered: (1) the selection and engagement of the
workers; (2) the payment of wages by whatever
means; (3) the power of dismissal; and (4) the power
to control the workers conduct, with the latter
assuming primacy in the overall consideration.The
most important element is the employers control of the
employees conduct, not only as to the result of the
work to be done, but also as to the means and
methods to accomplish. The power of control refers to
the existence of the power and not necessarily to the
actual exercise thereof. It is not essential for the
employer to actually supervise the performance of
duties of the employee; it is enough that the employer
has the right to wield that power. All the aforesaid
elements are present in this case. First. It is expressly
provided in the Service Contracts that it is the
respondent cooperative which has the exclusive
discretion in the selection and engagement of the
owners-members as well as its team leaders who will
be assigned at Stanfilco. Second. Wages are defined
as remuneration or earnings, however designated,
capable of being expressed in terms of money,
whether fixed or ascertained, on a time, task, piece or
commission basis, or other method of calculating the
same, which is payable by an employer to an
employee under a written or unwritten contract of
employment for work done or to be done, or for service
rendered or to be rendered. In this case,
the weekly stipends or the so-called shares in the
service surplus given by the respondent cooperative to
its owners-members were in reality wages, as the
same were equivalent to an amount not lower than that
prescribed by existing labor laws, rules and
regulations, including the wage order applicable to the
area and industry; or the same shall not be lower than
the prevailing rates of wages. It cannot be doubted
then that those stipends or shares in the service
surplus are indeed wages, because these are given to
the owners-members as compensation in rendering
services
to
respondent
cooperatives
client,
Stanfilco. Third. It is also stated in the abovementioned Service Contracts that it is the respondent
cooperative which has the power to investigate,
discipline and remove the owners-members and its
team leaders who were rendering services at
Stanfilco.Fourth. As earlier opined, of the four
elements of the employer-employee relationship, the

PHILIPPINE AIRLINES V. LIGAN


GR 146408, February 29, 2008, Carpio Morales
Petitioner Philippine Airlines as Owner, and Synergy
Services Corporation (Synergy) as Contractor, entered
into an Agreementwhereby Synergy undertook to
provide loading, unloading, delivery of baggage and
cargo and other related services to and from
[petitioner]'s aircraft at the MactanStation.The
Agreement specified the CONTRACTOR shall furnish
all the necessary capital, workers, loading, unloading
and delivery materials, facilities, supplies, equipment
and tools. And it expressly provided that Synergy was
"an independent contractor and . . . that there would
be no employer-employee relationship between
CONTRACTOR and/or its employees on the one hand,
and OWNER, on the other." Respondents, who appear
to have been assigned by Synergy to petitioner
filedcomplaints before the NLRC Regional Office VII at
Cebu City against petitioner, Synergy and their
respective officials for underpayment, non-payment of
premium pay for holidays, premium pay for rest days,
serviceincentive leave pay, 13th month pay and
allowances, and for regularization of employment
status with petitioner, they claiming to be "performing
duties for the benefit of petitioner since their job is
directly connected with its business. Labor Arbiter
Dominador Almirante found Synergy an independent
contractor and dismissed respondents' complaint for
regularization against petitioner, but granted their
money claims.
ISSUE
Whether Synergy is a mere job-only contractor or a
legitimate contractor?
RULING
Synergy is a mere job-only contractor.
Section 5.Prohibition against labor-only contracting.
Labor-only contracting is hereby declared prohibited.
For this purpose, labor-only contracting shall refer to
an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform
a job, work or service for a principal, and any of the
following elements are [sic] present:
(i) The contractor or subcontractor does not have
substantial capital or investment which relates to the
job, work or service to be performed and the
employees recruited, supplied or placed by such

77

contractor or subcontractor are performing activities


which are directly related to the main business of the
principal; OR
(ii) The contractor does not exercise the right to control
over the performance of the work of the contractual
employee. (Emphasis, underscoring and capitalization
supplied)
Even if only one of the two elements is present then,
there is labor-only contracting.
The control test element under the immediately-quoted
paragraph echoes the prevailing jurisprudential trend
elevating such element as a primary determinant of
employer-employee relationship in job contracting
agreements.

subject to the control of the employer, except only as


to the results of the work. In legitimate labor
contracting, the law creates an employer-employee
relationship for a limited purpose, i.e., to ensure that
the employees are paid their wages. The principal
employer becomes jointly and severally liable with the
job contractor, only for the payment of the employees
wages whenever the contractor fails to pay the same.
Other than that, the principal employer is not
responsible for any claim made by the employees.
The Contract of Services between SMC and Sunflower
shows that the parties clearly disavowed the existence
of an employer-employee relationship between SMC
and private respondents. The language of a contract is
not, however, determinative of the parties relationship;
rather it is the totality of the facts and surrounding
circumstances of the case.A party cannot dictate, by
the mere expedient of a unilateral declaration in a
contract, the character of its business, i.e., whether as
labor-only contractor or job contractor, it being crucial
that its character be measured in terms of and
determined by the criteria set by statute.

Petitioner in fact admitted that it fixes the work


schedule of respondents as their work was dependent
on the frequency of plane arrivals. And as the NLRC
found, petitioner's managers and supervisors
approved respondents' weekly work assignments and
respondents and other regular PAL employees were
all referred to as "station attendants" of the cargo
operation and airfreight services of petitioner.
Respondents having performed tasks which are
usually necessary and desirable in the air
transportation business of petitioner, they should be
deemed its regular employees and Synergy as a laboronly contractor.

Furthermore, what appears is that Sunflower does not


have substantial capitalization or investment in the
form of tools, equipment, machineries, work premises
and other materials to qualify it as an independent
contractor. On the other hand, it is gathered that the
lot, building, machineries and all other working tools
utilized by private respondents in carrying out their
tasks were owned and provided by SMC. from the job
description provided by SMC itself, the work assigned
to private respondents was directlyrelated to the
aquaculture operations of SMC. Undoubtedly, the
nature of the work performed by private respondents in
shrimp harvesting, receiving and packing formed an
integral part of the shrimp processing operations of
SMC. As for janitorial and messengerial services, that
they are considered directly related to the principal
business of the employerhas been jurisprudentially
recognized.

SAN MIGUEL CORPORATION V. ABALLA


G.R. No. 149011, June 28, 2005, Carpio Morales
San Miguel Corporation entered into a contract of
services with Sunflower Cooperative for the rendition
of Messengerial, Janitorial, Shrimp Harvesting,
Sanitation, Washing, Cold Storage activities. Pertinent
provisions of the contract involve: 1. The cooperative
employs the necessary personnel and provides
adequate equipment, materials, tools and apparatus;
2. The cooperative has the entire charge, control and
supervision of the work and services; 3. No
employment relationship exists between the SMC and
the cooperative; 4. The cooperative undertakes to pay
the salary of the member-workers; 5. Unless sooner
terminated, the contract will be deemed renewed on a
month-to-month basis until terminated. Several
employees were engaged by sunflower cooperative.
Soon, such employees demanded recognition as
regular employees of SMC, alleging that they are
under the direct control and supervision of SMC
supervisors.

Furthermore, Sunflower did not carry on an


independent business or undertake the performance of
its service contract according to its own manner and
method, free from the control and supervision of its
principal, SMC, its apparent role having been merely to
recruit persons to work for SMC.
MERALCO INDUSTRIAL ENGINEERING SERVICES
V. NLRC
G.R. 145402, March 14, 2008, Chico-Nazario

ISSUE
Does direct control and supervision of the Principal
Contractee convert Job Contractng into LO
contracting?

Meralco and the private respondent executed a


contractwhere the latter would supply the petitioner
janitorial services,which include labor, materials, tools
and equipment, as well assupervision of its assigned
employees, at Meralcos RockwellThermal Plant in
Makati City.The 49 employees lodged a Complaint for
illegaldeduction, underpayment, non-payment of

RULING: Yes. The test to determine the existence of


independent contractorship is whether one claiming to
be an independent contractor has contracted to do the
work according to his own methods and without being

78

overtime pay, legalholiday pay, premium pay for


holiday and rest day and nightdifferentials against the
private respondent before the LA. By virtue of RA
6727, the contract between Meralco andthe private
respondent
was amended to increase the
minimumdaily wage per employee. 2 months after the
amendment of thecontract, Meralco sent a letter to
private respondent informingthem that at the end of
business hours of Jan. 31, 1990, it wouldbe
terminating
contract
entered
into
with
the
privaterespondents. On the said date, the
complainants were pulled outfrom their work. The
complainants amended their complaint toinclude the
charge of illegal dismissal and to implead Meralco asa
party respondent.The LA dismissed the complaint. On
appeal, the NLRCaffirmed the decision of the LA with
the modification that Meralcowas solidarily liable with
the private respondents. The CA on theother hand,
modified the Decision of the NLRC and held Meralcoto
be solidarily liable with the private respondent for
thesatisfaction of the laborers separation pay.

(AFSISI) and MERALCO took effect, terminating the


previous security service agreement with ASDAI.
Except as to the number of security guards, the
amount to be paid the agency, and the effectivity of the
agreement, the terms and conditions were
substantially identical with the security service
agreement with ASDAI. The individual respondents
amended their complaint to implead AFSISI as party
respondent and to allege that AFSISI terminated their
services on August 6, 1992 without notice and just
cause and therefore guilty of illegal dismissal. For the
first time in appeal before the Court of Appeals, the
individual respondents alleged that MERALCO is their
employer

ISSUE
Whether Meralco should be liable for the payment of
the dismissed laborers separation pay

HELD
(1) NO. The individual respondents cannot be
considered as regular employees of the MERALCO
for, although security services are necessary and
desirable to the business of MERALCO, it is not
directly related to its principal business and may even
be considered unnecessary in the conduct of
MERALCOs principal business, which is the
distribution of electricity.

ISSUES
1. Whether or not the individual respondents are
regular employees of MERALCO
2. Whether or not MERALCO is their employer
3. Whether or not MERALCO can be held solidarily
liable with AFSISI

RULING
The CA used Art. 109 of the Labor Code to
holdMeralcosolidarily liable with the private respondent
as regard tothe payment of separation pay. However,
the SC ruled that Art.109 should be read in relation to
Art. 106 and 107 of the LC.Thus, an indirect employer
can only be held liable with theindependent contractor
or subcontractor in the event that thelatter fails to pay
the wages of its employees. While it is true thatthe
petitioner was the indirect employer of the
complainants, itcannot be held liable in the same way
as the employer in everyrespect. Meralco may be
considered an indirect employer onlyfor purposes of
unpaid wages.

(2) NO. As to the provision in the agreement that


MERALCO reserved the right to seek replacement of
any guard whose behavior, conduct or appearance is
not satisfactory, such merely confirms that the power
to discipline lies with the agency. It is a standard
stipulation in security service agreements that the
client may request the replacement of the guards to it.
Service-oriented enterprises, such as the business of
providing security services, generally adhere to the
business adage that "the customer or client is always
right" and, thus, must satisfy the interests, conform to
the needs, and cater to the reasonable impositions of
its clients.
Neither is the stipulation that the agency cannot pull
out any security guard from MERALCO without its
consent an indication of control. It is simply a security
clause designed to prevent the agency from
unilaterally removing its security guards from their
assigned posts at MERALCOs premises to the latters
detriment.

MANILA ELECTRIC COMPANY v. ROGELIO


BENAMIRA
G.R. No. 145271, July 14, 2005, Austria-Martinez
The individual respondents are licensed security
guards formerly employed by Peoples Security, Inc.
(PSI) and deployed as such at MERALCOs head
office. On November 30, 1990, the security service
agreement between PSI and MERALCO was
terminated. Thereafter, fifty-six of PSIs security
guards, including herein eight individual respondents,
filed a complaint for unpaid monetary benefits against
PSI and MERALCO. Meanwhile, the security service
agreement between respondent Armed Security &
Detective Agency, Inc., (ASDAI) and MERALCO took
effect on December 1, 1990. Subsequently, the
individual respondents were absorbed by ASDAI and
retained at MERALCOs head office. On July 25, 1992,
the security service agreement between respondent
Advance Forces Security & Investigation Services, Inc.

The clause that MERALCO has the right at all times to


inspect the guards of the agency detailed in its
premises is likewise not indicative of control as it is not
a unilateral right. The agreement provides that the
agency is principally mandated to conduct inspections,
without prejudice to MERALCOs right to conduct its
own inspections.

79

(3) YES. The fact that there is no actual and direct


employer-employee relationship between MERALCO
and the individual respondents does not exonerate
MERALCO from liability as to the monetary claims of
the individual respondents. When MERALCO
contracted for security services with ASDAI as the
security agency that hired individual respondents to
work as guards for it, MERALCO became an indirect
employer of individual respondents pursuant to Article
107 of the Labor Code. When ASDAI as contractor
failed to pay the individual respondents, MERALCO as
principal becomes jointly and severally liable for the
individual respondents wages, under Articles 106 and
109 of the Labor Code

employer of the respondents, with CAMPCO acting


only as the agent or intermediary of petitioner. In 1993,
when CAMPCO wasestablished and the Service
Contract between petitioner and CAMPCO was
entered into, CAMPCO onlyhad P6,600.00 paid-up
capital, which could hardly be considered substantial.
(Refer to the Doctrine mentioned above, which is a
stronger indication about the labor-only contracting)
ALVIADO v. PROCTER & GAMBLE PHILS., INC.
G.R. No. 160506, March 9, 2010, Del Castillo
Petitioners worked as merchandisers of P&G. They all
individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five
months at a time.They were assigned at different
outlets, supermarkets and stores where they handled
all the products of P&G. They received their wages
from Promm-Gem or SAPS. Subsequently, petitioners
filed a complaint against P&G for regularization,
service incentive leave pay and other benefits with
damages. The complaint was later amendedto include
the matter of their subsequent dismissal. The Labor
Arbiter dismissed the complaint for lack of merit and
ruled that there was no employer-employee
relationship between petitioners and P&G. He found
that the selection and engagement of the petitioners,
the payment of their wages, the power of dismissal
and control with respect to the means and methods by
which their work was accomplished, were all done and
exercised by Promm-Gem/SAPS. He further found that
Promm-Gem and SAPS were legitimate independent
job contractors. On appeal to the NLRC, it affirmed the
decision of the LA.

ASDAI is held liable by virtue of its status as direct


employer, while MERALCO is deemed the indirect
employer of the individual respondents for the purpose
of paying their wages in the event of failure of ASDAI
to pay them. This statutory scheme gives the workers
the ample protection consonant with labor and social
justice provisions of the 1987 Constitution. However,
this is without prejudice to the right of reimbursement.
DOLE PHILIPPINES vs. ESTEVA
G.R. No. 161115, November 30, 2006
Doctrine: CAMPCO, the alleged contractor, did not
carry out an independent business from petitioner. It
was precisely established to render services to
petitioner to augment its workforce during peak
seasons. Petitionerwas its only client. Even as
CAMPCO had its own office and office equipment,
these were mainly usedfor administrative purposes;
the tools, machineries, and equipment actually used by
CAMPCOmembers when rendering services to the
petitioner belonged to the latter. This is indicative of a
labor-only contracting.

ISSUE
Whether or not the respondent is the employer of the
petitioner.

Dole Philippines and CAMPCO entered into a Service


Agreement. Respondents argued that they should be
considered regular employees of petitioner given that:
1.they were performing jobs that were usually
necessary and desirable in the usual business
of petitioner; 2. petitioner exercised control over
respondents, not only as to the results, but also as
tothe manner by which they performed their assigned
tasks; and 3. CAMPCO, a labor-only contractor,was
merely a conduit of petitioner. As regular employees of
petitioner, respondents asserted that theywere entitled
to security of tenure and those placed on stay home
status for more than six monthshad been
constructively and illegally dismissed.

HELD
In order to determine whether P&G is the employer of
petitioners, it is necessary to first determine whether
Promm-Gem and SAPS are labor-only contractors or
legitimate job contractors. There is "labor-only"
contracting where the person supplying workers to an
employer does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others, and the
workers recruited and placed by such person are
performing activities which are directly related to the
principal business of such employer. The Court held
that Promm-Gem cannot be regarded as labor-only
contractor but a legitimate independent contractor
because the financial statement of Promm-Gem shows
that it has authorized capital stock of P1 million and a
paid-in capital, or capital available for operations, of
P500,000.00 as of 1990.

ISSUE
Whether or not CAMPCO is a legitimate contractor and
if no, whether or not DOLE is liable as direct employer
RULING
NO. CAMPCO was a labor-only contractor and, thus,
petitioner is the real

On the other hand, the Articles of Incorporation of


SAPS shows that it has a paid-in capital of only P31,

80

250.00. There is no other evidence presented to show


how much its working capital and assets are.
Considering that SAPS has no substantial capital or
investment and the workers it recruited are performing
activities which are directly related to the principal
business of P&G, the court held that SAPS is engaged
in "labor-only contracting". The contractor is
considered merely an agent of the principal employer
and the latter is responsible to the employees of the
labor-only contractor as if such employees had been
directly employed by the principal employer.

its implementing rules. To reiterate, no evidence or


argument questions the companys basic objective of
achieving greater economy and efficiency of
operations. This, to our mind, goes a long way to
negate the presence of bad faith. No evidence likewise
stands before us showing that the outsourcing has
resulted in a reduction of work hours or the splitting of
the bargaining unit effects that under the implementing
rules of Article 106 of the Labor Code can make a
contracting arrangement illegal.
NO. It is in the appreciation of these forwarder services
as one whole package of inter-related services that we
discern a basic misunderstanding that results in the
error of equating the functions of the forwarders
employees with those of regular rank-and-file
employees of the company. A clerical job, for example,
may similarly involve typing and paper pushing
activities and may be done on the same company
products that the forwarders employees and company
employees may work on, but these similarities do not
necessarily mean that all these employees work for the
company. The regular company employees, to be
sure, work for the company under its supervision and
control, but forwarder employees work for the
forwarder in the forwarders own operation that is itself
a contracted work from the company. The company
controls its employees in the means, method and
results of their work, in the same manner that the
forwarder controls its own employees in the means,
manner and results of their work. Complications and
confusion result because the company at the same
time controls the forwarder in the results of the latters
work, without controlling however the means and
manner of the forwarder employees work.

TEMIC AUTOMOTIVE PHILIPPINES, INC. v. TEMIC


AUTOMOTIVE PHILIPPINES, INC. EMPLOYEES
UNION-FFW
G.R. No. 186965, December 23, 2009, Brion
Since 1998, the petitioner contracts out some of the
work in the warehouse department, specifically those
in the receiving and finished goods sections, to three
independent service providers or forwarders. These
forwarders also have their own employees who hold
the positions of clerk, material handler, system
encoder and general clerk.
This outsourcing arrangement gave rise to a union
grievance on the issue of the scope and coverage of
the collective bargaining unit, specifically to the
question of whether or not the functions of the
forwarders employees are functions being performed
by the regular rank-and-file employees covered by the
bargaining unit. The union thus demanded that the
forwarders' employees be absorbed into the
petitioner's regular employee force and be given
positions within the bargaining unit. The petitioner, on
the other hand, on the premise that the contracting
arrangement with the forwarders is a valid exercise of
its management prerogative

COCA-COLA BOTTLERS PHILS., INC. vs. ALAN M.


AGITO, et al
GR No. 179546, February 13, 2009

ISSUE
1. Whether or not the company validly contracted
out or outsourced the services involving
forwarding, packing, loading and clerical
activities related thereto.
2. Whether or not the functions of the forwarders
employees are functions being performed by
regular rank-and-file employees covered by
the bargaining unit

Petitioner (Coke) is a domestic corporation engaged in


manufacturing, bottling and distributing soft drink
beverages and other allied products. Respondents
were salesmen assigned at Coke Lagro Sales Office
for years but were not regularized. Coke averred that
respondents were employees of Interserve who were
tasked to perform contracted services in accordance
with the provisions of the Contract of Services
executed between Coke and Interserve on 23 March
2002. Said Contract constituted legitimate job
contracting, given that the latter was a bona fide
independent contractor with substantial capital or
investment in the form of tools, equipment, and
machinery necessary in the conduct of its business.

HELD
YES. In Meralco v. Quisumbing, we joined this
universal recognition of outsourcing as a legitimate
activity when we held that a company can determine in
its best judgment whether it should contract out a part
of its work for as long as the employer is motivated by
good faith; the contracting is not for purposes of
circumventing the law; and does not involve or be the
result of malicious or arbitrary action. Our own
examination of the agreement shows that the
forwarding
arrangement
complies
with
the
requirements of Article 106[26] of the Labor Code and

To prove the status of Interserve as an independent


contractor, petitioner presented the following pieces of
evidence: (1) the Articles of Incorporation of Interserve;
(2) the Certificate of Registration of Interserve with the
Bureau of Internal Revenue; (3) the Income Tax
Return, with Audited Financial Statements, of

81

Interserve for 2001; and (4) the Certificate of


Registration of Interserve as an independent job
contractor, issued by the Department of Labor and
Employment (DOLE).

(SNMI). Since SNMI was formed to do the sales and


marketing work, SMART abolished the CSMG/FSD,
Astorgas division. Despite the abolition of the
CSMG/FSD, Astorga continued reporting for work.
SMART issued a memorandum advising Astorga of
the termination of her employment on ground of
redundancy. Astorga states that the justification
advanced by SMART is not true because there was no
compelling economic reason for redundancy.

As a result, petitioner asserted that respondents were


employees of Interserve, since it was the latter which
hired them, paid their wages, and supervised their
work, as proven by: (1) respondents Personal Data
Files in the records of Interserve; (2) respondents
Contract of Temporary Employment with Interserve;
and (3) the payroll records of Interserve.

ISSUE
Whether or not the cause for Astorgas dismissal is
valid

ISSUES
1. Whether or not Inteserve is a labor-only contractor;
2. Whether or not an employer-employee relationship
exists between petitioner Coca-Cola Bottlers Phils. Inc.
and respondents.

RULING
Yes. Contrary to her claim, an employer is not
precluded from adopting a new policy conducive to a
more economical and effective management even if it
is not experiencing economic reverses. Neither does
the law require that the employer should suffer
financial losses before he can terminate the services of
the employee on the ground of redundancy.

HELD
1. Yes. In sum, Interserve did not have
substantial capital or investment in the form of
tools, equipment, machineries, and work
premises; and respondents, its supposed
employees, performed work which was directly
related to the principal business of petitioner. It
is, thus, evident that Interserve falls under the
definition of a labor-only contractor, under
Article 106 of the Labor Code; as well as
Section 5(i) of the Rules Implementing Articles
106-109 of the Labor Code, as amended. It is
also apparent that Interserve is a labor-only
contractor under Section 5(ii) of the Rules
Implementing Articles 106-109 of the Labor
Code, as amended, since it did not exercise
the right to control the performance of the work
of respondents.
2. Yes. With the finding that Interserve was
engaged in prohibited labor-only contracting,
petitioner shall be deemed the true employer
of respondents. As regular employees of
petitioner, respondents cannot be dismissed
except for just or authorized causes, none of
which were alleged or proven to exist in this
case, the only defense of petitioner against the
charge of illegal dismissal being that
respondents were not its employees.

Supreme Court agreed with the CA that the


organizational realignment introduced by SMART,
which culminated in the abolition of CSMG/FSD and
termination of Astorgas employment was an honest
effort to make SMARTs sales and marketing
departments more efficient and competitive. As the CA
had taken pains to elucidate:
x x x a careful and assiduous review of the records will
yield no other conclusion than that the reorganization
undertaken by SMART is for no purpose other than its
declared objective as a labor and cost savings
device. Indeed, this Court finds no fault in SMARTs
decision to outsource the corporate sales market to
SNMI in order to attain greater productivity. [Astorga]
belonged to the Sales Marketing Group under the
Fixed Services Division (CSMG/FSD), a distinct sales
force of SMART in charge of selling SMARTs
telecommunications services to the corporate
market. SMART, to ensure it can respond quickly,
efficiently and flexibly to its customers requirement,
abolished CSMG/FSD and shortly thereafter assigned
its functions to newly-created SNMI Multimedia
Incorporated, a joint venture company of SMART and
NTT of Japan, for the reason that CSMG/FSD does
not have the necessary technical expertise required for
the value added services. By transferring the duties of
CSMG/FSD to SNMI, SMART has created a more
competent and specialized organization to perform the
work required for corporate accounts. It is also relieved
SMART of all administrative costs management, time
and
money-needed
in
maintaining
the
CSMG/FSD. The determination to outsource the duties
of the CSMG/FSD to SNMI was, to Our mind, a sound
business judgment based on relevant criteria and is
therefore a legitimate exercise of management
prerogative.

SMART COMMUNICATIONS vs. ASTORGA


G.R. No. 148132, January 28, 2008, Nachura
Regina M. Astorga (Astorga) was employed by
respondent Smart Communications, Incorporated
(SMART) as District Sales Manager of the Corporate
Sales Marketing Group/ Fixed Services Division
(CSMG/FSD). SMART launched an organizational
realignment to achieve more efficient operations. Part
of the reorganization was the outsourcing of the
marketing and sales force. Thus, SMART entered into
a joint venture agreement with NTT of Japan, and
formed
SMART-NTT
Multimedia,
Incorporated

82

Indeed, out of our concern for those lesser


circumstanced in life, this Court has inclined towards
the worker and upheld his cause in most of his
conflicts with his employer.This favored treatment is
consonant with the social justice policy of the
Constitution. But while tilting the scales of justice in
favor of workers, the fundamental law also guarantees
the right of the employer to reasonable returns for his
investment. In this light, we must acknowledge the
prerogative of the employer to adopt such measures
as will promote greater efficiency, reduce overhead
costs and enhance prospects of economic gains, albeit
always
within
the
framework
of
existing
laws. Accordingly, we sustain the reorganization and
redundancy program undertaken by SMART.

distinct legal personality from Manila Water, and it was


duly registered as an independent contractor before
the DOLE.
ISSUE
Whether FCCSI was a labor-only contractor and that
respondent bill collectors are employees of petitioner
Manila Water.
RULING
Yes. FCCSI was a labor-only contractor and that
respondent bill collectors are employees of petitioner
Manila Water.
"Contracting" or "subcontracting" refers to an
arrangement whereby a principal agrees to put out or
farm out with a contractor or subcontractor the
performance or completion of a specific job, work, or
service within a definite or predetermined period,
regardless of whether such job, work, or service is to
be performed or completed within or outside the
premises of the principal.

MANILA WATER V. DALUMPINES


G.R. No. 175501, October 4, 2010, Nachura
By virtue of Republic Act No. 8041, otherwise known
as the "National Water Crisis Act of 1995," the
Metropolitan Waterworks and Sewerage System
(MWSS) was given the authority to enter into
concession agreements allowing the private sector in
its operations. Petitioner Manila Water Company, Inc.
(Manila Water) was one of two private concessionaires
contracted by the MWSS to manage the water
distribution system in the east zone of Metro Manila.
Before the expiration of the contract of services, the
121 bill collectors formed a corporation duly registered
with the Securities and Exchange Commission (SEC)
as the "Association Collectors Group, Inc." (ACGI).
ACGI was one of the entities engaged by Manila Water
for its courier service. However, Manila Water
contracted ACGI for collection services only in its
Balara Branch. Manila Water entered into a service
agreement with respondent First Classic Courier
Services, Inc. (FCCSI) also for its courier needs.
Earlier, in a memorandum, FCCSI gave a deadline for
the bill collectors who were members of ACGI to
submit applications and letters of intent to transfer to
FCCSI. On various dates, individual respondents were
terminated from employment. Manila Water no longer
renewed its contract with FCCSI because it decided to
implement a "collectorless" scheme whereby Manila
Water customers would instead remit payments
through "Bayad Centers."

Department Order No. 18-02, Series of 2002,


enunciates that labor-only contracting refers to an
arrangement where the contractor or subcontractor
merely recruits, supplies, or places workers to perform
a job, work, or service for a principal, and any of the
following elements are present: (i) the contractor or
subcontractor does not have substantial capital or
investment which relates to the job, work, or service to
be performed and the employees recruited, supplied,
or placed by such contractor or subcontractor are
performing activities which are directly related to the
main business of the principal; or (ii) the contractor
does not exercise the right to control the performance
of the work of the contractual employee.
FCCSI has no sufficient investment in the form of
tools, equipment and machinery to undertake contract
services for Manila Water involving a fleet of around
100 collectors assigned to several branches and
covering the service area of Manila Water customers
spread out in several cities/towns of the East Zone.
The only rational conclusion is that it is Manila Water
that provides most if not all the logistics and equipment
including service vehicles in the performance of the
contracted service, notwithstanding that the contract
between FCCSI and Manila Water states that it is the
Contractor which shall furnish at its own expense all
materials, tools and equipment needed to perform the
tasks of collectors.

The aggrieved bill collectors individually filed


complaints for illegal dismissal, unfair labor practice,
damages, and attorneys fees, with prayer for
reinstatement and backwages against petitioner
Manila Water and respondent FCCSI. The complaints
were consolidated and jointly heard. Petitioner Manila
Water, for its part, denied that there was an employeremployee relationship between its company and
respondent bill collectors. Based on the agreement
between FCCSI and Manila Water, respondent bill
collectors are the employees of the former, as it is the
former that has the right to select/hire, discipline,
supervise, and control. FCCSI has a separate and

BABAS v. LORENZO SHIPPING CORPORATION


G.R. No. 186091, December 15, 2010, Nachura
Lorenzo Shipping Corporation (LSC), a shipping
company, entered into an agreement with Best
Manpower Services, Inc. (BMSI) wherein BMSI
undertook to provide maintenance and repair services
to LSCs container vans, heavy equipment, trailer

83

chassis, and generator and to provide checkers to


inspect all containers received for loading to and/or
unloading from its vessels. Simultaneous with the
execution of the Agreement, LSC leased its
equipment, tools, and tractors to BMSI. BMSI then
hired petitioners on various dates to work at LSC as
checkers, welders, utility men, clerks, forklift operators,
motor pool and machine shop workers, technicians,
trailer drivers, and mechanics. Six years later, LSC
entered into another contract with BMSI, this time, a
service contract. Petitioners filed with the Labor a
complaint for regularization against LSC and BMSI.
Later, LSC terminated their Agreement which led to
petitioners losing employment.

business. Logically, when petitioners were assigned by


BMSI to LSC, BMSI acted merely as a labor-only
contractor.Lastly, as found by the NLRC, BMSI had no
other client except for LSC, and neither BMSI nor LSC
refuted this finding, thereby bolstering the NLRC
finding that BMSI is a labor-only contractor.
Consequently, the workers that BMSI supplied to LSC
became regular employees of the latter.
TENG V. PAHAGAC
G.R. No. 169704
Respondent was hired for the purpose of measuring
the volume of fishes caught by the petitioner company,
the counting/measuring was done using the tools and
equipment of petitioner and even through his express
direction. However, after sometime Teng terminated
the services of Pahagac and on several occasions
even doubted the measurements given by the
respondent which resulted to his termination of his
services.

ISSUE
Is BMSI engaged in labor-only contracting, entitling
petitioners to be considered as employees of LSC?
RULING
Yes. A person is considered engaged in legitimate job
contracting or subcontracting if the following conditions
concur:(a) The contractor carries on a distinct and
independent business and undertakes the contract
work on his account under his own responsibility
according to his own manner and method, free from
the control and direction of his employer or principal in
all matters connected with the performance of his work
except as to the results thereof;(b) The contractor has
substantial capital or investment; and(c) The
agreement between the principal and the contractor or
subcontractor assures the contractual employees'
entitlement to all labor and occupational safety and
health standards, free exercise of the right to selforganization, security of tenure, and social welfare
benefits.

ISSUE
WON there is an EE-ER relationship
RULING
Yes, The element of control is present in this case.
Teng not only owned the tools and equipment, he
directed how the respondent workers were to perform
their job as checkers; they, in fact, acted as Teng's
eyes and ears in every fishing expedition. furthermore
it was his company that issued to the respondent
workers identification cards (IDs) bearing their names
as employees and Teng's signature as the employer.
Generally, in a business establishment, IDs are issued
to identify the holder as a bonafide employee of the
issuing entity. For the 13 years that the respondent
workers worked for Teng, they received wages on a
regular basis, in addition to their shares in the fish
caught.

Given the above standards, we sustain the petitioners


contention that BMSI is engaged in labor-only
contracting. First, petitioners worked at LSCs
premises, and nowhere else. Other than the provisions
of the Agreement, there was no showing that it was
BMSI which established petitioners working procedure
and methods, which supervised petitioners in their
work, or which evaluated the same. There was
absolute lack of evidence that BMSI exercised control
over them or their work, except for the fact that
petitioners were hired by BMSI.Second, LSC was
unable to present proof that BMSI had substantial
capital. The record before us is bereft of any proof
pertaining to the contractors capitalization, nor to its
investment in tools, equipment, or implements actually
used in the performance or completion of the job,
work, or service that it was contracted to render. What
is clear was that the equipment used by BMSI were
owned by, and merely rented from, LSC.Third,
petitioners performed activities which were directly
related to the main business of LSC. The work of
petitioners as checkers, welders, utility men, drivers,
and mechanics could only be characterized as part of,
or at least clearly related to, and in the pursuit of, LSCs

CLASSES OF EMPLOYEE
MAGIS YOUNG ACHIEVERS LEARNING CENTER
AND MRS. VIOLETA T. CARIO V. ADELAIDA P.
MANALO
G.R No. 178835, February 13, 2009, Nachura
On April 18, 2002, Adelaida Manalo was hired as a
teacher and acting princiapl of Magis Young Achievers
Learning Center. It appears that, on March 29, 2003,
Manalo wrote a letter of resignation to Magis
directress Violeta Cario but, on March 31, 2003,
Manalo received a letter of termination from Magis so
Manalo filed a comlaint for illegal dismissal and nonpayment of 13th month pay with prayer for
reinstatement. Magis, among others, claimed that
Manalo was legally terminated becayse the 1-year
probationary periof had already lapsed and she failed

84

to meet the criteria set by the school pursuant to the


Manual of Regulation for Private Schools.The LA
dismissed the complaint. NLRC reversed the decision.
MR was denied. CA affirmed. MR was denied. Hence,
this petition.

However, since Magis failed to show by competent


evidence that Manalo did not meet the standards set
by the school, it can be concluded that her termination
before the end of her probationary period.
PIER 8 ARRASTRE & STEVEDORING SERVICES V.
BOCLOT
G .R . No . 1 73 8 49 , September 28, 2007, ChicoNazario

ISSUE
Is Adelaida Manalo a permanent employee?
HELD
No. The 6-month limit on the term of probationary
employment does not apply to all classes of
occupations. For academic personnel in private
schools, colleges, and universities, probationary
employment is governed by Sec. 92 of the 1992
Manual of Regulations for Private Schools,
supplemented by DOLE-DECS-CHED-TESDA Order
No. 1 dated February 7, 1996 and Sec. 4.m(4)[c] of the
Manual. For academic personnel in private elementary
and secondary schools, it is only after one has
satisfactorily completed the probationary period of
three (3) school years and is rehired that he acquires
full tenure as a regular or permanent employee.

Boclot was hired by PASSI to perform the functions of


a stevedore. Later on, Boclot filed Complaint with the
Labor Arbiter claiming regularization; payment of
service incentive leave and 13th month pays; moral,
exemplary and actual damages; and attorneys fees.
He alleged that he was hired by PASSI in October
1999 and was issued company ID No. 304, a PPA
Pass and SSS documents. In fact, respondent
contended that he became a regular employee by April
2000, since it was his sixth continuous month in
service in PASSIs regular course of business. He
argued on the basis of Articles 280 and 281 of the
Labor Code. He maintains that under paragraph 2 of
Article 280, he should be deemed a regular employee
having rendered at least one year of service with the
company.

Pursuant to Section 93 of the Manual, 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. Of course, the 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.

ISSUE
Whether or not he has attained regular status .
RULING
Yes. Though usual and necessary, his employment is
dependent on availability of work SC took judicial
notice that it is an industry practice in port services to
hire reliever stevedores in order to ensure smoothflowing 24-hour stevedoring and arrastre operations in
the port area. No doubt, serving as a stevedore,
respondent performs tasks necessary or desirable to
the usual business of petitioners. However, it should
be deemed part of the nature of his work that he can
only work as a stevedore in the absence of the
employee regularly employed for the very same
function.

All this does not mean that academic personnel cannot


acquire permanent employment status earlier than
after the lapse of three years. The period of probation
may be reduced if the employer, convinced of the
fitness and efficiency of a probationary employee,
voluntarily extends a permanent appointment even
before the three-year period ends.
Nonetheless, teachers on probationary employment
enjoy security of tenure. probationary employees enjoy
security of tenure during the term of their probationary
employment. As such, they cannot be removed except
for cause as provided by law, or if at the end of every
yearly contract during the three-year period, the
employee does not meet the reasonable standards set
by the employer at the time of engagement. But this
guarantee of security of tenure applies only during the
period of probation. Once that period expires, the
constitutional protection can no longer be invoked.

Moreover, respondent does not contest that he was


well aware that he would only be given work when
there are absent or unavailable employees.
Respondent also does not allege, nor is there any
showing, that he was disallowed or prevented from
offering his services to other cargo handlers in the
other piers at the North Harbor other than petitioners.
As aforestated, the situation of respondent is akin to
that of a seasonal or project or term employee, albeit
on a daily basis.

In this case, Manalo rendered service only from April


18, 2002, until March 31, 2003. She has not completed
the requisite three-year period of probationary
employment She cannot, by right, claim permanent
status. Manalos appointment as acting principal is
merely temporary, or one that is good until another
appointment is made to take its place.

Under the CBA, he qualifies as a regular employee


The Supreme Court still finds respondent to be a
regular employee on the basis of pertinent provisions
under the CBA between PASSI and its Workers union,
wherein it was stated that it agrees to convert to

85

regular status all incumbent probationary or casual


employees and workers in the Company who have
served the Company for an accumulated service term
of employment of not less than six (6) months from his
original date of hiring. Respondent assents that he is
not a member of the union, as he was not recognized
by PASSI as its regular employee, but this Court notes
that PASSI adopts a union-shop agreement, culling
from Article II of its CBA. Under a union-shop
agreement, although nonmembers may be hired, an
employee is required to become a union member after
a certain period, in order to retain employment. This
requirement applies to present and future employees.
The same article of the CBA stipulates that
employment in PASSI cannot be obtained without prior
membership in the union. Hence, applying the
foregoing provisions of the CBA, respondent should be
considered a regular employee after six months of
accumulated service. Having rendered 228.5 days, or
eight months of service to petitioners since 1999, then
respondent is entitled to regularization by virtue of the
said CBA provisions.

petitioner Elaine M. Alipio as regular staff nurse


without loss of seniority rights.
ISSUE
Whether or not Alipio is a regular employee
RULING
Under Article 280 of the Labor Code, an employment
is deemed regular when the activities performed by the
employee are usually necessary or desirable in the
usual business of the employer. However, any
employee who has rendered at least one year of
service, even though intermittent, is deemed regular
with respect to the activity performed and while such
activity actually exists.
In this case, records show that Alipio's services were
engaged by the hotel intermittently from 1993 up to
1998. Her services as a reliever nurse were
undoubtedly necessary and desirable in the hotel's
business of providing comfortable accommodation to
its guests. In any case, since she had rendered more
than one year of intermittent service as a reliever
nurse at the hotel, she had become a regular
employee as early as December 12, 1994. Lastly, per
the hotel's own Certification dated April 22, 1997, she
was already a "regular staff nurse" until her dismissal.

THE PENINSULA MANILA, ROLF PFISTERER AND


BENILDA QUEVEDO-SANTOS, vs. ELAINE M.
ALIPIO
G.R. No. 167310, June 17, 2008, Quisumbing

Being a regular employee, Alipio enjoys security of


tenure. Her services may be terminated only upon
compliance with the substantive and procedural
requisites for a valid dismissal: (1) the dismissal must
be for any of the causes provided in Article 28212 of
the Labor Code; and (2) the employee must be given
an opportunity to be heard and to defend himself.13

Petitioner is a corporation engaged in the hotel


business.
Co-petitioners
Rolf
Pfisterer
and
BenildaQuevedo-Santos were the general manager
and human resources manager, respectively, of the
hotel at the time of the controversy.
Respondent Elaine M. Alipio was hired merely as a
reliever nurse in the company's 24-hour clinic.
However, she had been performing the usual tasks
and functions of a regular nurse since the start of her
employment on December 11, 1993. Hence, after
about four years of employment in the hotel, she
inquired why she was not receiving her 13th month
pay. Alipio was paid P8,000 as her 13th month pay for
1997. Alipio likewise requested for the payment of her
13th month pay for 1993 to 1996, but her request was
denied.

ROWELL INDUSTRIAL CORPORATION vs. HON.


COURT OF APPEALS and JOEL TARIPE
G.R. No. 167714, March 7, 2007, Chico-Nazario
Petitioner
Rowell
Industrial
is
engaged
in
manufacturing tin cans for packaging consumer
products. Respondent Joel Taripe was employed by
petitioner as a rectangular power press machine
operator. Taripe alleged that upon employment, he
was made to sign a document, which was not fully
explained to him but was a condition for him to be
hired and for which he was not given a copy.

Alipio was informed by a fellow nurse that she can only


report for work after meeting up with petitioner Santos.
When Alipio met with Santos, Alipio was asked
regarding her payslip vouchers. She told Santos that
she made copies of her payslip vouchers because
Peninsula does not give her copies of the same.
Santos was peeved with Alipio's response because the
latter was allegedly not entitled to get copies of her
payslip vouchers. Santos likewise directed Alipio not to
report for work anymore.
Aggrieved, Alipio filed a complaint for illegal dismissal
against the petitioners.
Private respondents The Peninsula Manila and
BenildaQuevedo-Santos are ordered to reinstate

Apparently, the contract of employment was only good


for a period of five (5) months unless it is renewed by
mutual consent. Along with other contractual
employees, he was hired only to meet the increase in
demand for packaging materials for the Christmas
season and to build up stock levels for the early part of
the year. Taripe filed a complaint for regularization and
holiday pay.
The LA dismissed his complaint. The NLRC reversed
the LA. The CA affirmed the resolution of the NLRC.
ISSUE

86

Is Taripe a Regular Employee?

a "work pool" from which petitioner chose persons to


be given specific assignments at its discretion, and
were thus under its direct supervision and control
regardless of nomenclature.

HELD
YES. There are two kinds of regular employees: (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. Taripe
belonged to the first category.

For its part, petitioner alleged in its position paper that


the respondents were PAs who basically assist in the
conduct of a particular program ran by an anchor or
talent. Among their duties include monitoring and
receiving incoming calls from listeners and field
reporters and calls of news sources; generally, they
perform leg work for the anchors during a program or a
particular production. They are considered in the
industry as "program employees" in that, as
distinguished from regular or station employees, they
are basically engaged by the station for a particular or
specific program broadcasted by the radio station.
Petitioner asserted that as PAs, the complainants were
issued talent information sheets which are updated
from time to time, and are thus made the basis to
determine the programs to which they shall later be
called on to assist.

The purported contract of employment providing that


Taripewas hired as contractual employee for five (5)
months only, cannot prevail over the undisputed fact
that he was hired to perform the function of power
press operator, a function necessary or desirable in
petitioners business of manufacturing tin cans.
Petitioners contention that the four (4) months length
of service of Taripe did not grant him a regular status
is inconsequential, considering that length of service
assumes importance only when the activity in which
the employee has been engaged to perform is not
necessary or desirable to the usual business or trade
of the employer.

ISSUE
W/N the respondents can be considered as regular
employees

Also, it cannot be denied that the employment contract


signed by respondent Taripe did not mention that he
was hired only for a specific undertaking, the
completion of which had been determined at the time
of his engagement. The said employment contract
neither mentioned that respondent Taripe's services
were seasonal in nature and that his employment was
only for the duration of the Christmas season as
purposely claimed by petitioner. What was stipulated in
the said contract was that respondent Taripe's
employment was contractual for the period of five
months. As a rank-and-file employee, Taripe can
hardly be on equal terms with petitioner as almost
always, employees agree to any terms of employment
just to get employed.

HELD
YES. They are regular employees. Where a person
has rendered at least one year of service, regardless
of the nature of the activity performed, or where the
work is continuous or intermittent, the employment is
considered regular as long as the activity exists, the
reason being that a customary appointment is not
indispensable before one may be formally declared as
having attained regular status. Article 280 of the Labor
Code provides:
The primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in
relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or
desirable in the usual business or trade of the
employer.

ABS-CBN BROADCASTING CORPORATION v.


MARLYN
NAZARENO,
MERLOU
GERZON,
JENNIFER DEIPARINE, and JOSEPHINE LERASAN.
G.R. No. 164156, September 26, 2006

Not considered regular employees are project


employees, the completion or termination of which is
more or less determinable at the time of employment,
such as those employed in connection with a particular
construction project, and seasonal employees whose
employment by its nature is only desirable for a limited
period of time. Even then, any employee who has
rendered at least one year of service, whether
continuous or intermittent, is deemed regular with
respect to the activity performed and while such
activity actually exists.

Petitioner employed respondents Nazareno, Gerzon,


Deiparine, and Lerasan as production assistants (PAs)
on different dates. On October 12, 2000, respondents
filed a Complaint for Recognition of Regular
Employment Status, Underpayment of Overtime Pay,
Holiday Pay, Premium Pay, Service Incentive Pay, Sick
Leave Pay, and 13th Month Pay with Damages against
the petitioner before the NLRC. Respondents alleged
that they were engaged by respondent ABS-CBN as
regular and full-time employees for a continuous
period of more than five (5) years with a monthly salary
rate of Four Thousand (P4,000.00) pesos beginning
1995 up until the filing of this complaint on November
20, 2000. Respondents insisted that they belonged to

Respondents cannot be considered talents because


they are not actors or actresses or radio specialists or
mere clerks or utility employees. They are regular

87

employees who perform several different duties under


the control and direction of ABS-CBN executives and
supervisors.

Kimberly filed a motion for reconsideration of the


DOLE Order arguing in the main that the decision only
pertained to casuals who had rendered one year of
service as of April 21, 1986, the filing date of
KILUSAN-OLALIAs petition for certification election.

Thus, there are two kinds of regular employees under


the law: (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.

ISSUES
Whether the reckoning point in determining who
among Kimberlys casual employees are entitled to
regularization should be April 21, 1986, the date
KILUSAN-OLALIA filed a petition for certification
election to challenge the incumbency of UKCEOPTGWO
Whether the employees who are not parties in the
cases between the parties should not be included in
the implementation orders of DOLE

Under existing jurisprudence, project (for project


employees) could refer to two distinguishable types of
activities. First, a project may refer to a particular job or
undertaking that is within the regular or usual business
of the employer, but which is distinct and separate, and
identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at
determined or determinable times. Second, the term
project may also refer to a particular job or undertaking
that is not within the regular business of the employer.
Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular
business operations of the employer. The job or
undertaking also begins and ends at determined or
determinable times.

RULING
No. The law [thus] provides for two kinds of regular
employees, namely: (1) those who are engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer; and (2) those who have rendered at least
one year of service, whether continuous or broken,
with respect to the activity in which they are employed.
The individual petitioners herein who have been
adjudged to be regular employees fall under the
second category. These are the mechanics,
electricians, machinists, machine shop helpers,
warehouse helpers, painters, carpenters, pipefitters
and masons. It is not disputed that these workers have
been in the employ of KIMBERLY for more than one
year at the time of the filing of the petition for
certification election by KILUSAN-OLALIA.

The principal test is whether or not the project


employees were assigned to carry out a specific
project or undertaking, the duration and scope of which
were specified at the time the employees were
engaged for that project.
KIMBERLY-CLARK, INC. vs. SECRETARY
LABOR
G.R. No. 156668, November 23, 2007

OF
Considering that an employee becomes regular with
respect to the activity in which he is employed one
year after he is employed, the reckoning date for
determining his regularization is his hiring date.
Therefore, it is error for petitioner Kimberly to claim
that it is from April 21, 1986 that the one-year period
should be counted. While it is a fact that the issue of
regularization came about only when KILUSANOLALIA filed a petition for certification election, the
concerned employees attained regular status by
operation of law.

When the Collective Bargaining Agreement executed


by and between Kimberly-Clark, Inc., Kimberly and
UKCEO-PTGWO
expired,
KILUSAN-OLALIA
challenged the incumbency of UKCEO-PTGWO. A
certification election was subsequently conducted with
UKCEO-PTGWO winning by a margin of 20 votes over
KILUSAN-OLALIA. Remaining as uncounted were 64
challenged ballots cast by 64 casual workers whose
regularization was in question. KILUSAN-OLALIA filed
a protest.

No. The grant of the benefit of regularization should


not be limited to the employees who questioned their
status before the labor tribunal/court and asserted their
rights; it should also extend to those similarly situated.
There is, thus, no merit in petitioner's contention that
only those who presented their circumstances of
employment to the courts are entitled to regularization.

During the pendency of a case filed by KILUSANOLALIA against the Ministry of Labor and
Employment, Kimberly dismissed from service several
employees among which are the casual employees
whose regularization are in question. After a series of
cases between the parties which reached the Supreme
Court, DOLE eventually ordered Kimberly to pay the
workers who have been regularized their differential
pay with respect to minimum wage, cost of living
allowance, 13th month pay, and benefits provided for
under the applicable collective bargaining agreement
from the time they became regular employees.

BENARES V. PANCHO
G.R. NO. 151827, April 29, 2005
Respondent Had. Maasin II is a sugar cane plantation
located in Murcia, Negros Occidental with an area of

88

12-24 has. planted, owned and managed by Josefina


Benares, individual co-respondent.

Respondents alleged to have started working as sugar


farm workers on various dates in Hda. Maasin II which
is a sugar cane plantation located in Murcia, Negros
Occidental planted, owned and managed by Josefina
Benares, individual co-respondent. They alleged to
have been terminated without being paid termination
benefits by respondent in retaliation to what they have
done in reporting to the Department of Labor and
Employment their working conditions and their wages
and other mandatory benefits. Later on, in compliance
with an issued directive, a formal complaint was filed
for illegal dismissal with money claims. But the Labor
Arbiter dismissed the complaint for lack of merit.

On July 24, 1991, complainants thru counsel wrote the


Regional Director of the Department of Labor and
Employment, Bacolod City for intercession particularly
in the matter of wages and other benefits mandated by
law.
On October 15, 1991, complainants alleged to have
been terminated without being paid termination
benefits by respondent in retaliation to what they have
done in reporting to the Department of Labor and
Employment their working conditions viz-a-viz (sic)
wages and other mandatory benefits.

On appeal, the NLRC held that respondents attained


the status of regular seasonal workers of Hda. Maasin
II having worked therein from 1964-1985. It found that
petitioner failed to discharge the burden of proving that
the termination of respondents was for a just or
authorized cause. Hence, respondents were illegally
dismissed and should be awarded their money claims.
Said ruling was affirmed by the CA hence, this petition.

The NLRC held that respondents attained the status of


regular seasonal workers of Hda. Maasin II having
worked therein from 1964-1985. It found that petitioner
failed to discharge the burden of proving that the
termination of respondents was for a just or authorized
cause. Hence, respondents were illegally dismissed
and should be awarded their money claims.

ISSUE
Whether respondents are regular employees of
Hacienda Maasin and thus entitled to their monetary
claims; whether respondents were illegally dismissed.

ISSUE
Whether respondents are regular employees of
Hacienda Maasin and thus entitled to their monetary
claims.

HELD:
YES. The law provides for three kinds of employees:
(1) regular employees or those who have been
engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer; (2) project employees or those 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 service to be
performed is seasonal in nature and the employment is
for the duration of the season; and (3) casual
employees or those who are neither regular nor project
employees.

HELD
In this case, petitioner argues that respondents were
not her regular employees as they were merely
"pakiao" workers who did not work continuously in the
sugar plantation. They performed such tasks as
weeding, cutting and loading canes, planting cane
points, fertilizing, cleaning the drainage, etc. These
functions allegedly do not require respondents daily
presence in the sugarcane field as it is not everyday
that one weeds, cuts canes or applies fertilizer. In
support of her allegations, petitioner submitted "cultivo"
and milling payrolls.
The probative value of petitioners evidence, however,
has been passed upon by the labor arbiter, the NLRC
and the Court of Appeals. Although the labor arbiter
dismissed respondents complaint because their
"position paper is completely devoid of any discussion
about their alleged dismissal, much less of the
probative facts thereof,"20 the ground for the dismissal
of the complaint implies a finding that respondents are
regular employees.

The Court, in Hacienda Fatima, condensed the rule


that the primary standard for determining regular
employment is the reasonable connection between the
particular activity performed by the employee vis--vis
the usual trade or business of the employer. This
connection can be determined by considering the
nature of the work performed and its relation to the
scheme of the particular business or trade in its
entirety. If the employee has been performing the job
for at least a year, even if the performance is not
continuous and merely intermittent, the law deems
repeated and continuing need for its performance as
sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence,
the employment is considered regular, but only with
respect to such activity and while such activity exists.

The NLRC was more unequivocal when it pronounced


that respondents have acquired the status of regular
seasonal employees having worked for more than one
year, whether continuous or broken in petitioners
hacienda.
JOSEFINA BENARES V. JAIME PANCHO
G.R. No. 151827, April 29, 2005, Tinga

89

In this case, petitioner argues that respondents were


not her regular employees as they were merely pakiao
workers who did not work continuously in the sugar
plantation. They performed such tasks as weeding,
cutting and loading canes, planting cane points,
fertilizing, cleaning the drainage, etc.

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,[30] 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 employees
dismissal.

The probative value of petitioners evidence, however,


has been passed upon by the labor arbiter, the NLRC
and the Court of Appeals. Although the labor arbiter
dismissed respondents complaint because their
position paper is completely devoid of any discussion
about their alleged dismissal, much less of the
probative facts thereof, the ground for the dismissal of
the complaint implies a finding that respondents are
regular employees.
HACIENDA
BINO/HORTENCIA
STARKE,
INC./HORTENCIA L. STARKE, , vs. CANDIDO
CUENCA, et al.
G.R. No. 150478, April 15, 2005, Callejo

GAPAYAO V. FULO
G.R. No. 193493, June 13, 2013, Sereno

Hacienda Bino is a sugar plantation located in Negros


Occidental and represented in this case by Hortencia
L. Starke, owner and operator of the said
hacienda.The 76 individual respondents were part of
the workforce of Hacienda Bino consisting of 220
workers, performing various works.On July 18, 1996,
during the off-milling season, petitioner Starke issued
an Order or Notice, which stated, that all those who
signed in favor of CARP are expressing their desire to
get out of employment on their own volition andonly
those who did not sign for CARP will be given
employment by Hda. Bino.

Jaime Fulo (deceased), a laborer in the agricultural


landholdings, a harvester in the abaca plantation, and
a repairman/utility worker in several business
establishments owned by petitioner, died of "acute
renal failure secondary to 1st degree burn 70%
secondary electrocution" while doing repairs at the
residence and business establishment of petitioner.
Private respondent led a claim for social security
benets with the SSS, However, upon verication and
evaluation, it was discovered that the deceased was
not a registered member of the SSS. The latter
demanded that petitioner remit the social security
contributions of the deceased, but petitioner denied
that the deceased was his employee.

The respondents regarded such notice as a


termination of their employment. As a consequence,
they filed a complaint for illegal dismissal, wage
differentials, 13th month pay, holiday pay and premium
pay for holiday, service incentive leave pay, and moral
and exemplary damages with the NLRC Bacolod City,
on September 17, 1996.

ISSUE
Whether or not there exists between the deceased
Jaime Fulo and petitioner an employer-employee
relationship that would merit an award of benefits in
favor of private respondent under social security laws

On October 6, 1997, the Labor Arbiter rendered a


Decision, finding that petitioner Starkes notice was
tantamount to a termination of the respondents
services, and holding that the petitioner company was
guilty of illegal dismissal. On appeal, the NLRC
affirmed with modification the decision of the Labor
Arbiter.

RULING
Yes. Farm workers generally fall under the denition of
seasonal employees. We have consistently held that
seasonal employees may be considered as regular
employees. 56 Regular seasonal employees are those
called to work from time to time. The nature of their
relationship with the employer is such that during the
o season, they are temporarily laid o; but
reemployed during the summer season or when their
services may be needed. 57 They are in regular
employment because of the nature of their job, and not
because of the length of time they have worked.

ISSUE
Whether or not the respondents are regular or
seasonal employees of Hacienda Bino?
RULING
Regular employees. 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

For regular employees to be considered as such, the


primary standard used is the reasonable connection

90

between the particular activity they perform and the


usual trade or business of the employer.

work was not dependent on the completion or


termination of any project; that since his work was not
dependent on any project, his employment with the
[petitioner-]company was continuous and without
interruption for the past ten (10) years;that on October
1, 1999, he was dismissed from his employment
allegedly because he was a project employee. He filed
a pro forma complaint for illegal dismissal.

Pakyaw workers are considered employees for as long


as their employers exercise control over them. It
should be remembered that the control test merely
calls for the existence of the right to control, and not
necessarily the exercise thereof. 69 It is not essential
that the employer actually supervises the performance
of duties by the employee. It is enough that the former
has a right to wield the power.

"The [petitioner-]company however claims that


complainant was hired as a project employee in the
companys various projects; that his employment
contracts showed that he was a project worker with
specific project assignments; that after completion of
each project assignment, his employment was likewise
terminated and the same was correspondingly
reported to the DOLE.Labor Arbiter dismissed the
complaint for lack of merit. The CA concluded that
respondent was a regular employee of petitioners.

UNIVERSAL ROBINA SUGAR MILLING CORP.


(URSUMCO ) V. ACIBO
G.R. No. 186439, January 15, 2014, Brion
URSUMCO
hired
employees
on
different
capacities,i.e., drivers, crane operators, bucket
hookers, welders, mechanics, laboratory attendants
and aides, steel workers, laborers, carpenters and
masons, among others. At the start of their respective
engagements, the employees signed contracts of
employment for a period of one (1) month or for a
given season. URSUMCO repeatedly hired them to
perform the same duties and, for every engagement,
required the latter to sign new employment contracts
for the same duration of one month or a given season.

ISSUE
Whether Roger Puente is a project employee.
RULING
In general, the factual findings of the Court of Appeals
are binding on the Supreme Court. One exception to
this rule, however, is when the factual findings of the
former are contrary to those of the trial court (or the
lower administrative body, as the case may be). The
question of whether respondent is a regular or a
project employee is essentially factual in nature;
nonetheless, the Court is constrained to resolve it due
to the incongruent findings of the NLRC and the
CA.The Labor Code defines regular, project and
casual employees as follows: ART. 280. Regular and
Casual Employment. - The provision of written
agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the
employee has been engaged to perform activities
which are usually necessary or desirable in the usual
business or trade of the employer, except where the
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. With particular
reference to the construction industry, to which
Petitioner Filsystems belongs, Department (of Labor
and Employment) Order No. 19,11 Series of 1993,
which make it clear that 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." In D.M.
Consunji, Inc. v. NLRC, this Court has ruled that "the
length of service of a project employee is not the
controlling test of employment tenure but whether or

ISSUE
Are the employees considered regular employees?
HELD
Yes. However, the designation must be qualified. They
are
regular
seasonal
employees.
To exclude the asserted seasonal employee from
those classified as regular employees, the employer
must show that: (1) the employee must be performing
work or services that are seasonal in nature; and (2)
he had been employed for the duration of the season.
Hence, when the seasonal workers are continuously
and repeatedly hired to perform the same tasks or
activities for several seasons or even after the
cessation of the season, this length of time may
likewise serve as badge of regular employment. Even
though denominated as seasonal workers, if these
workers are called to work from time to time and are
only temporarily laid off during the off-season, the law
does not consider them separated from the service
during the off-season period. The law simply considers
these seasonal workers on leave until re-employed.
FILIPINAS PRE-FABRICATED BUILDING SYSTEMS
(FILSYSTEMS) V. PUENTE
March 18, 2005, Panganiban
"[Respondent] avers that he started working with
[Petitioner] Filsystems, Inc., a corporation engaged in
construction business, on June 12, 1989; that he was
initially hired by [petitioner] company as an installer;
that he was later promoted to mobile crane operator
and was stationed at the company premises; that his

91

not the 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."

G.R. NO. 157788, March 08, 2005, Quisumbing


Respondent Marcelo Donelo started teaching on a
contractual basis at St. Mary's University in 1992. In
1995, he was issued an appointment as an Assistant
Professor I. He was promoted to Assistant Professor
III. He taught until the first semester of school year
1999-2000 when the school discontinued giving him
teaching assignments. Respondent filed a complaint
for illegal dismissal against the university. Petitioner St.
Mary's University showed that respondent was merely
a part-time instructor and, except for three semesters,
carried a load of less than eighteen units. Petitioner
argued that respondent never attained permanent or
regular status for he was not a full-time teacher.
Further, petitioner showed that respondent was under
investigation by the university for giving grades to
students who did not attend classes. The Labor
Arbiter ruled that respondent was lawfully dismissed
because he had not attained permanent or regular
status pursuant to the Manual of Regulations for
Private Schools. The Labor Arbiter held that only fulltime teachers with regular loads of at least 18 units,
who have satisfactorily completed three consecutive
years of service qualify as permanent or regular
employees.On appeal by respondent, the National
Labor Relations Commission (NLRC) reversed the
Decision of the Labor Arbiter and ordered the
reinstatement of respondent without loss of seniority
rights and privileges with full backwages from the time
his salaries were withheld until actual reinstatement.4 It
held that respondent was a full-time teacher as he did
not appear to have other regular remunerative
employment and was paid on a regular monthly basis
regardless of the number of teaching hours. As a fulltime teacher and having taught for more than 3 years,
respondent qualified as a permanent or regular
employee of the university. Petitioner sought for
reconsideration and pointed out that respondent was
also working for the Provincial Government of Nueva
Vizcaya from 1993 to 1996. Nevertheless, the NLRC
denied petitioner's Motion for Reconsideration.
Aggrieved, petitioner elevated the matter to the Court
of Appeals, which affirmed the Decision of the NLRC.

In the present case, the contracts of employment of


Puente attest to the fact that he was hired for specific
projects. His employment was coterminous with the
completion of the projects for which he had been hired.
Those contracts expressly provided that his tenure of
employment depended on the duration of any phase of
the project or on the completion of the construction
projects. Furthermore, petitioners regularly submitted
to the labor department reports of the termination of
services of project workers. Such compliance with the
reportorial requirement confirms that respondent was a
project employee.Respondents Complaint specified
the address of Filsystems, as "69 INDUSTRIA ROAD,
B.BAYAN Q.C.," but specified his place of work as
"PROJECT TO PROJECT." These statements,
coupled with the other pieces of evidence presented
by petitioners, convinces the Court that -- contrary to
the subsequent claims of respondent -- he performed
his work at the project site, not at the companys
premises. Respondents employment contract provides
as follows: "x xx employment, under this contract is
good only for the duration of the project unless
employees services is terminated due to completion of
the phase of work/section of the project or piece of
work to which employee is assigned:
"We agree clearly that employment is on a Project to
Project Basis and that upon termination of services
there is no separation pay: POSITION : Mobil Crane
Operator; PROJECT NAME : World Finance Plaza;
LOCATION : Meralco Ave., Ortigas Center, Pasig City;
ASSIGNMENT : Lifting & Hauling of Materials
Evidently, although the employment contract did not
state a particular date, it did specify that the
termination of the parties employment relationship
was to be on a "day certain" -- the day when the phase
of work termed "Lifting & Hauling of Materials" for the
"World Finance Plaza" project would be completed.
Thus, respondent cannot be considered to have been
a regular employee. He was a project employee.

ISSUE
Whether or not private respondent is a permanent
regular employee, full time, and was illegally
dismissed.

That he was employed with Petitioner Filsystems for


ten years in various projects did not ipso facto make
him a regular employee, considering that the definition
of regular employment in Article 280 of the Labor Code
makes a specific exception with respect to project
employment. The mere rehiring of respondent on a
project-to-project basis did not confer upon him regular
employment status. "The practice was dictated by the
practical consideration that experienced construction
workers are more preferred." It did not change his
status as a project employee.
SAINT MARY'S
APPEALS

UNIVERSITY

V.

COURT

RULING
No. Section 93 of the 1992 Manual of Regulations for
Private Schools, provides that full-time teachers who
have satisfactorily completed their probationary period
shall be considered regular or permanent.6
Furthermore, the probationary period shall not be more
than six consecutive regular semesters of satisfactory
service for those in the tertiary level. Thus, the
following requisites must concur before a private
school teacher acquires permanent status: (1) the
teacher is a full-time teacher; (2) the teacher must

OF

92

stating that he was being employed only on a por


viaje basis and that his employment would be
terminated at the end of the trip for which he was being
hired.

have rendered three consecutive years of service; and


(3) such service must have been satisfactory.
Section 45 of the 1992 Manual of Regulations for
Private Schools provides that full-time academic
personnel are those meeting all the following
requirements:
a. Who possess at least the minimum academic
qualifications prescribed by the Department under this
Manual for all academic personnel;
b. Who are paid monthly or hourly, based on the
regular teaching loads as provided for in the policies,
rules and standards of the Department and the school;
c. Whose total working day of not more than eight
hours a day is devoted to the school;
d. Who have no other remunerative occupation
elsewhere requiring regular hours of work that will
conflict with the working hours in the school;
andcralawlibrary
e. Who are not teaching full-time in any other
educational institution.

He was promoted to Boat Captain but was later


demoted to Radio Operator. As a Radio Operator, he
monitored the daily activities in their office and
recorded in the duty logbook the names of the callers
and time of their calls.
On 3 July 2000, Estoquia failed to record a 7:25 a.m.
call in one of the logbooks. When he reviewed the two
logbooks, he noticed that he was not able to record the
said call in one of the logbooks so he immediately
recorded the 7:25 a.m. call after the 7:30 a.m. entry.
In the morning of 4 July 2000, petitioner detected the
error in the entry in the logbook. Estoquia was asked
to prepare an incident report to explain the reason for
the said oversight. On the same day, Poseidons
secretary summoned Estoquia to get his separation
pay.

All teaching personnel who do not meet the foregoing


qualifications are considered part-time.

Estoquia filed a complaint for illegal dismissal with the


Labor Arbiter.

With respondents teaching load of twelve units or less,


he could not claim he worked for the number of hours
daily as prescribed by Section 45 of the Manual.
Furthermore, the records also indubitably show he was
employed elsewhere from 1993 to 1996. Since there is
no showing that respondent worked on a full-time
basis for at least three years, he could not have
acquired a permanent status.11 A part-time employee
does not attain permanent status no matter how long
he has served the school.12 And as a part-timer, his
services could be terminated by the school without
being held liable for illegal dismissal.
Yet, this is not to say that part-time teachers may not
have security of tenure. The school could not lawfully
terminate a part-timer before the end of the agreed
period without just cause. But once the period,
semester, or term ends, there is no obligation on the
part of the school to renew the contract of employment
for the next period, semester, or term.

Poseidon and Terry de Jesus asserted that Estoquia


was a contractual or a casual employee employed only
on a"por viaje" or per trip basis and that his
employment would be terminated at the end of the trip
for which he was being hired.
ISSUE
WON Eustoqia was a regular employee
WON deep -sea fishing is a seasonal industry
WON Eustoqia was illegally dismissed
RULING
Yes, Eustoquia was a regular employee.
Article 280 draws a line between regular and casual
employment. The provision enumerates two (2) kinds
of employees, the regular employees and the casual
employees. The regular employees consist of the
following:
1) those 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 such service is continuous or broken.

That petitioner did not give any teaching assignment to


the respondent during a given term or semester, even
if factually true, did not amount to an actionable
violation of respondent's rights. It did not amount to
illegal dismissal of the part-time teacher.
POSEIDON FISHING/TERRY DE JESUS V. NLRC
G.R. No. 168052, February 20. 2006, Chico Nazario

In a span of 12 years, Eustoquia worked for petitioner


first as a Chief Mate, then Boat Captain, and later as
Radio Operator. His job was directly related to the
deep-sea fishing business of petitioner Poseidon. His
work was, therefore, necessary and important to the
business of his employer. Such being the scenario
involved, Eustoquia is considered a regular employee.

Petitioner Poseidon Fishing is a fishing company


engaged in the deep-sea fishing industry with Terry de
Jesus as the manager.
Jimmy S. Estoquia was employed as Chief Mate in
January 1988 and after five years. The contract with
Eustoqia per the "Kasunduan", there was a provision

93

There is nothing in the contract that says complainant


is a casual, seasonal or a project worker. The date
July 1 to 31, 1998 under the heading "Pagdating" had
been placed there merely to indicate the possible date
of arrival of the vessel and is not an indication of the
status of employment of the crew of the vessel.

Yes, Eustoqia was illegally dismissed.


There is no sufficient evidence on record to prove
Eustoqias negligence, gross or simple, in the
performance of his duties to warrant a reduction of six
months salary and be summarily dismissed. At best,
the simple negligence is punishable only with
admonition or suspension for a day or two.

The test to determine whether employment is regular


or not is the reasonable connection between the
particular activity performed by the employee in
relation to the usual business or trade of the employer.
And, 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.

His dismissal was without valid cause and where


illegal dismissal is proven, the worker is entitled to
back wages and other similar benefits without
deductions or conditions.
PLDT v. ROSALINA ARCEO
G.R. No. 149985, May 5, 2006
In May 1990, respondent Rosalina Arceo (Arceo)
applied for the position of telephone operator with
petitioner PLDT Tarlac Exchange. She, however, failed
the pre-employment qualifying examination. Having
failed the test, Arceo requested PLDT to allow her to
work at the latters office even without pay. PLDT
agreed and assigned her to its commercial section
where she was made to perform various tasks like
photocopying documents, sorting out telephone bills
and notices of disconnection, and other minor
assignments and activities. After two weeks, PLDT
decided to pay her the minimum wage.

In the case at bar, the act of hiring and re-hiring in


various capacities is a mere gambit employed by
petitioner to thwart the tenurial protection of private
respondent. Such pattern of re-hiring and the recurring
need for his services are testament to the necessity
and indispensability of such services to petitioners
business or trade.
No, the activity of catching fish is a continuous process
and could hardly be considered as seasonal in nature.
Project employees is defined as those workers hired:
(1) for a specific project or undertaking, and
(2) the completion or termination of such project has
been determined at the time of the engagement of the
employee.

On February 15, 1991, PLDT saw no further need


for Arceos services and decided to fire her but, through
the intervention of one employee, she was
recommended for an on-the-job training on minor
traffic work. When she failed to assimilate traffic
procedures, the company transferred her to auxiliary
services, a minor facility. Subsequently, Arceo took the
pre-qualifying exams for the position of telephone
operator two more times but again failed in both
attempts. Finally, on October 13, 1991, PLDT
discharged Arceo from employment. She then filed a
case for illegal dismissal before the labor arbiter. The
latter ruled in her favor. Arceo was reinstated as
casual employee with a minimum wage of P106 per
day. On September 3, 1996 or more than three years
after her reinstatement, Arceo filed a complaint for
unfair labor practice, underpayment of salary,
underpayment of overtime pay, holiday pay, rest day
pay and other monetary claims. She alleged in her
complaint that, since her reinstatement, she had yet to
be regularized and had yet to receive the benefits due
to a regular employee. Labor arbiter ruled
that Arceo was already qualified to become a regular
employee. NLRC affirmed. PLDT went to the CA via a
petition for certiorari. CA also affirmed and declared
that,

The principal test for determining whether particular


employees are "project employees" as distinguished
from "regular employees," is whether or not the
"project employees" were assigned to carry out a
"specific project or undertaking," the duration and
scope of which were specified at the time the
employees were engaged for that project.
In this case, Eustoquia was never informed that he will
be assigned to a "specific project or undertaking at
the time of their engagement.
Once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, re-hired by
the same employer for the same tasks or nature of
tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the
employer, then the employee must be deemed a
regular employee.
Eustoquias functions were usually necessary or
desirable in the usual business or trade of petitioner
fishing company and he was hired continuously for 12
years for the same nature of tasks. Hence, he was of
regular employee.

It is doctrinaire that in determining what


constitutes regular employment, what is
considered [as] the reasonable connection
between the particular activity performed by

94

the employee in relation to the usual business


or trade of the employer, i.e. if the work is
usually necessary or desirable in the usual
business or trade of the employer. xxx
And even granting the argument of petitioner
that the nature of Arceos work is casual or
temporary, still she had been converted into a
regular employee by virtue of the proviso in
the second paragraph of Article 280 for having
worked with PLDT for more than one (1) year.

we are constrained to confirm her regularization in that


position.
FULACHE V. ABS-CBN
G.R. No. 183810, January 21, 2010, Brion
Petitioners are employees performing manual works
for respondent. They were dismissed without just
cause; as a consequence thereof, they filed for illegal
dismissal and invoked their rights under the CBA. As a
defense, respondent contended that petitioners were
not its employees, but talents. Thus, they cannot be
entitled to the benefits stipulated in the CBA for rank
and file employees.

PLDT argues that while Article 280 of the Labor Code


regularizes a casual employee who has rendered at
least one year of service (whether continuous or
broken) the proviso is subject to the condition that the
employment subsists or the position still exists. Even
if Arceo had rendered more than one year of service
as a casual employee, PLDT insisted that this fact
alone would not automatically make her a regular
employee since her position had long been abolished.
PLDT also argues that it would be an even greater
error if Arceo were to be regularized as a telephone
operator since she repeatedly failed the qualifying
exams for that position.

ISSUE
Whether or not petitioners are regular employees.
RULING
Yes. they are ABS-CBNs regular employees entitled to
the benefits and privileges of regular employees.
These benefits and privileges arise from entitlements
under the law (specifically, the Labor Code and its
related laws), and from their employment contract as
regular ABS-CBN employees, part of which is the CBA
if they fall within the coverage of this agreement.

ISSUE
Is Arceo eligible to become a regular employee of
PLDT?

Petitioners are members of the appropriate bargaining


unit because they are regular rank-and-file employees
and do not belong to any of the excluded categories.
Specifically, nothing in the records shows that they are
supervisory or confidential employees; neither are they
casual nor probationary employees. Most importantly,
the
labor
arbiters
decision
of January
17,
2002 affirmed all the way up to the CA level ruled
against ABS-CBNs submission that they are
independent contractors. Thus, as regular rank-and-file
employees, they fall within CBA coverage under the
CBAs express terms and are entitled to its benefits.

HELD
Yes. Under Art 280 of the LC, a regular employee is
(1) one who is either engaged to perform activities that
are necessary or desirable in the usual trade or
business of the employer or (2) a casual employee
who has rendered at least one year of service, whether
continuous or broken, with respect to the activity in
which he is employed.
Under the first criterion, respondent is qualified to be a
regular employee. Her work, consisting mainly of
photocopying documents, sorting out telephone bills
and disconnection notices, was certainly necessary or
desirable to the business of PLDT. But even if the
contrary were true, the uncontested fact is that she
rendered service for more than one year as a casual
employee. Hence, under the second criterion, she is
still eligible to become a regular employee.

LEYTE GEOTHERMAL POWER PROGRESSIVE


EMPLOYEES UNION ALU TUCP vs. PHILIPPINE
NATIONAL
OIL
COMPANY

ENERGY
DEVELOPMENT CORPORATION
G.R. No. 170351, March 30, 2011
Respondent is a GOCC while petitioner is a legitimate
labor organization. Among [respondents] geothermal
projects is the Leyte Geothermal Power Project
located at the Greater Tongonan Geothermal
Reservation in Leyte. Thus, the [respondent] hired and
employed hundreds of employees on a contractual
basis, whereby, their employment was only good up to
the completion or termination of the project and would
automatically expire upon the completion of such
project. Majority of the employees hired by
[respondent] in its Leyte Geothermal Power Projects
had become members of petitioner. In view of that
circumstance, the petitioner demands from the
[respondent] for recognition of it as the collective
bargaining agent of said employees and for a CBA

Petitioners argument that respondents position has


been abolished, if indeed true, does not
preclude Arceos becoming a regular employee. The
order to reinstate her also included the alternative to
reinstate her to a position equivalent thereto. Thus,
PLDT can still regularize her in an equivalent position.
Under Article 280, any employee who has rendered at
least one year of service shall be considered a regular
employee with respect to the activity in which he is
employed and his employment shall continue while
such activity exists. For PLDTs failure to show that the
activity undertaken by Arceo has been discontinued,

95

negotiation with it. However, the [respondent] did not


heed such demands of the petitioner. Sometime in
1998 when the project was about to be completed, the
[respondent] proceeded to serve Notices of
Termination of Employment upon the employees who
are members of the petitioner.

he was required to take a 60-day leave of absence


because of Kochs disease. He applied for sick leave
but he was told he was not entitled to sick leave
because he was not a regular employee.
ISSUE
Is petitioner a regular employee?

ISSUE
WON they are project employees

HELD
Yes.
-This Court is convinced however that although he
started as a project employee, he eventually became a
regular employee of PNCC. In the case at bar,
petitioner worked continuously for more than two years
after the supposed three-month duration of his project
employment for the NAIA II Project. While his
appointment for said project allowed such extension
since it specifically provided that in case his services
are still needed beyond the validity of [the] contract,
the Company shall extend [his] services.

HELD
YES. By entering into such a contract, an employee is
deemed to understand that his employment is
coterminous with the project. He may not expect to be
employed continuously beyond the completion of the
project. It is of judicial notice that project employees
engaged for manual services or those for special skills
like those of carpenters or masons, are, as a rule,
unschooled. However, this fact alone is not a valid
reason for bestowing special treatment on them or for
invalidating a contract of employment. Project
employment contracts are not lopsided agreements in
favor of only one party thereto. The employers interest
is equally important as that of the employee[s] for
theirs is the interest that propels economic activity.
While it may be true that it is the employer who drafts
project employment contracts with its business interest
as overriding consideration, such contracts do not, of
necessity, prejudice the employee. Neither is the
employee left helpless by a prejudicial employment
contract. After all, under the law, the interest of the
worker is paramount. Unions own admission, both
parties had executed the contracts freely and
voluntarily without force, duress or acts tending to
vitiate the worker[s] consent. Thus, we see no reason
not to honor and give effect to the terms and
conditions stipulated therein. The litmus test to
determine whether an individual is a project employee
lies in setting a fixed period of employment involving a
specific undertaking which completion or termination
has been determined at the time of the particular
employees engagement.

While for first three months, petitioner can be


considered a project employee of PNCC, his
employment thereafter, 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.
- Failure of an employer to file termination reports after
every project completion proves that an employee is
not a project employee.
PNCC did not report the termination of petitioners
supposed project employment for the NAIA II Project
to the DOLE. Department Order No. 19, or the
Guidelines Governing the Employment of Workers in
the Construction Industry, requires employers to
submit a report of an employees termination to the
nearest public employment office every time an
employees employment is terminated due to a
completion of a project.

PASOS V. PNCC
G.R. No. 192394, July 3, 2013, Villarama

MACARTHUR MALICDEM AND HERMENIGILDO


FLORES v.MARULAS INDUSTRIAL CORPORATION
AND MIKE MANCILLA
G.R. No. 204406, February 26, 2014, Mendoza

Petitioner started working for PNCC. Based on


PNCCs "Personnel Action Form Appointment for
Project Employment", he was designated as Clerk II
Accountingat NAIA II. It also stated Project
employment starting on April 26, 1996 to July 25,
1996. Petitioners employment, however, did not end
on July 25, 1996, but was extended. He was rehired
several times. Despite the termination of his
employment on October 19, 2000, petitioner claims
that his superior instructed him to report for work the
following day, intimating to him that he will again be
employed for the succeeding SM projects. For
purposes of reemployment, he then underwent a
medical examination which allegedly revealed that he
had pneumonitis. He took a 14-day sick leave. Then

TOPIC:Effect of continuous re-hiring of a project


employee for the same tasks that are vital, necessary
and indispensable to the usual trade or business of the
employer
DOCTRINE: Once a project or work pool employee
has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the
same tasks or nature of tasks; and (2) these tasks are
vital, necessary and indispensable to the usual
business or trade of the employer, then the employee

96

must be deemed a regular employee, pursuant to


Article 280 of the Labor Code and jurisprudence. To
rule otherwise would allow circumvention of labor laws
in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, hence
allowing the prevention of acquisition of tenurial
security by project or work pool employees who have
already gained the status of regular employees by the
employers conduct.

Even granting that petitioners were project employees,


they can still be considered as regular as they were
continuously hired by the same employer for the same
position as extruder operators. Being responsible for
the operation of machines that produced sacks, their
work was vital and indispensable the business of the
employer.
The respondents cannot use the alleged expiration of
the employment contracts of the petitioners as a shield
of their illegal acts. The project employment contracts
that the petitioners were made to sign every year since
the start of their employment were only a stratagem to
violate their security of tenure in the company.

FACTS:
Petitioners Malicdem and Flores were hired by
respondent corporation as extruder operators in 2006
They were responsible for the bagging of filament
yarn, the quality of pp yarn package and the
cleanliness of the work place area. Their employment
contracts were for a period of one (1) year. Every year
thereafter, they would sign a Resignation/Quitclaim in
favor of Marulas a day after their contracts ended, and
then sign another contract for one (1) year until such
time that they were told not to report to work anymore.
They were asked to sign a paper acknowledging the
completion of their contractual status. Claiming that
they were illegally dismissed, the corporation
countered that their contracts showed that they were
fixed term employees for a specific undertaking which
was to work on a particular order of a customer for a
specific period. Their severance from employment then
was due to the expiration of their contracts.

The respondents invocation of William Uy Construction


Corp. v. Trinidad is misplaced because it is applicable
only in cases involving the tenure of project employees
in the construction industry. It is widely known that in
the construction industry, a project employees work
depends on the availability of projects, necessarily the
duration of his employment. It is not permanent but
coterminous with the work to which he is assigned. It
would be extremely burdensome for the employer, who
depends on the availability of projects, to carry him as
a permanent employee and pay him wages even if
there are no projects for him to work on.The rationale
behind this is that once the project is completed it
would be unjust to require the employer to maintain
these employees in their payroll.

ISSUE
Whether or not petitioners were illegally dismissed

EXODUS
INTERNATIONAL
CONSTRUCTION
CORPORATION and ANTONIO P. JAVALERA v.
GUILLERMO BISCOCHO, FERNANDO PEREDA,
FERDINAND MARIANO, GREGORIO BELLITA and
MIGUEL BOBILLO
G.R. No. 166109, February 23, 2011, Del Castillo

HELD
Yes.
The test to determine whether employment is regular
or not is the reasonable connection between the
particular activity performed by the employee in
relation to 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.

Petitioner
Exodus
International
Construction
Corporation (Exodus) is a duly licensed labor
contractor for the painting of residential houses,
condominium units and commercial buildings.
Petitioner Antonio P. Javalera is the President and
General Manager of Exodus.
On February 1, 1999, Exodus obtained from Dutch
Boy Philippines, Inc. (Dutch Boy) a contractfor the
painting of the Imperial Sky Garden located at Ongpin
Street, Binondo, Manila. On July 28, 1999, Dutch Boy
awarded another contractto Exodus for the painting of
Pacific Plaza Towers in Fort Bonifacio, Taguig City. In
the furtherance of its business, Exodus hired
respondents as painters on different dates with the
corresponding wages.

It is clear then that there was deliberate intent on the


part of the employer to prevent the regularization of
petitioners. To begin with, there is no actual project.
The only stipulations in the contracts were the dates of
their effectivity, the duties and responsibilities of the
petitioners as extruder operators, the rights and
obligations of the parties, and the petitioners
compensation and allowances. As there was no
specific project or undertaking to speak of, the
respondents cannot invoke the exception in Article 280
of the Labor Code. This is a clear attempt to frustrate
the regularization of the petitioners and to circumvent
the law.

Guillermo Biscocho (Guillermo) was assigned at the


Imperial Sky Garden from February 8, 1999 to
February 8, 2000. Fernando Pereda (Fernando)
worked in the same project from February 8, 1999 to
June 17, 2000. Likewise, Ferdinand Mariano
(Ferdinand) worked there from April 12, 1999 to

97

February 17, 2000. All of them were then transferred to


Pacific Plaza Towers. Gregorio S. Bellita (Gregorio)
was assigned to work at the house of Mr. Teofilo Yap
in Ayala Alabang, Muntinlupa City from May 20, 1999
to December 4, 1999. Afterwards he was transferred to
Pacific Plaza Towers. Miguel B. Bobillo (Miguel) was
hired and assigned at Pacific Plaza Towers on March
10, 2000.

ISSUE
WON respondents were illegally dismissed.
RULING
There was no dismissal in this case, hence, there is no
question that can be entertained regarding its legality
or illegality. As found by the Labor Arbiter, there was
no evidence that respondents were dismissed nor
were they prevented from returning to their work. It
was only respondents unsubstantiated conclusion that
they were dismissed. As a matter of fact, respondents
could not name the particular person who effected
their
dismissal
and
under
what
particular
circumstances.

On November 27, 2000, Guillermo, Fernando,


Ferdinand, and Miguel filed a complaintfor illegal
dismissal and non-payment of holiday pay, service
incentive leave pay, 13th month pay and night-shift
differential pay. On December 1, 2000, Gregorio also
filed a complaint stating that he was dismissed from
the service on September 12, 2000 while Guillermo,
Fernando, Ferdinand, and Miguel were orally notified
of their dismissal from the service on November 25,
2000.

The Labor Arbiter is also correct in ruling that there


was no abandonment on the part of respondents that
would justify their dismissal from their employment.

Petitioners denied respondents allegations. As


regards Gregorio, petitioners averred that on
September 15, 2000, he absented himself from work
and applied as a painter with SAEI-EEI which is the
general building contractor of Pacific Plaza Towers.
Since then, he never reported back to work.

It is a settled rule that "[m]ere absence or failure to


report for work x xx is not enough to amount to
abandonment of work." "Abandonment is the
deliberate and unjustified refusal of an employee to
resume his employment."
Respondents must be reinstated and paid their holiday
pay, service incentive leave pay, and 13th month pay.

Guillermo absented himself from work without leave on


November 27, 2000. When he reported for work the
following day, he was reprimanded for being Absent
Without Official Leave (AWOL). Because of the
reprimand, he worked only half-day and thereafter was
unheard of until the filing of the instant complaint.
Fernando, Ferdinand, and Miguel were caught eating
during working hours on November 25, 2000 for which
they were reprimanded by their foreman. Since then
they no longer reported for work.

Clearly therefore, there was no dismissal, much less


illegal, and there was also no abandonment of job to
speak of. The Labor Arbiter is therefore correct in
ordering that respondents be reinstated but without
any backwages. However, petitioners are of the
position that the reinstatement of respondents to their
former positions, which were no longer existing, is
impossible, highly unfair and unjust. The project was
already completed by petitioners on September 28,
2001. Thus the completion of the project left them with
no more work to do. Having completed their tasks,
their positions automatically ceased to exist.
Consequently, there were no more positions where
they can be reinstated as painters.

On March 21, 2002, the Labor Arbiter rendered a


Decisionexonerating petitioners from the charge of
illegal dismissal as respondents chose not to report for
work. The Labor Arbiter ruled that respondents should
be reinstated but without any backwages. However,
she allowed the claims for holiday pay, service
incentive leave pay and 13th month pay.

Petitioners are misguided. They forgot that there are


two types of employees in the construction industry.
The first is referred to as project employees or those
employed in connection with a particular construction
project or phase thereof and such employment is
coterminous with each project or phase of the project
to which they are assigned. The second is known as
non-project employees or those employed without
reference to any particular construction project or
phase of a project.

Petitioners sought recourse to the NLRC limiting their


appeal to the award of service incentive leave pay,
13th month pay, holiday pay and 10% attorneys fees
in the sum of P70,183.23. On January 17, 2003, the
NLRC dismissed the appeal. Aggrieved, petitioners
filed with the CA a petition for certiorari. On August 10,
2004, the CA dismissed the petition and affirmed the
findings of the Labor Arbiter and the NLRC. However,
in addition to the reliefs awarded to respondents in the
March 21, 2002 Decision of the Labor Arbiter which
was affirmed by the NLRC in a Resolution dated
January 17, 2003, the petitioners were directed by the
CA to solidarily pay full backwages, inclusive of all
benefits the respondents should have received had
they not been dismissed.

The second category is where respondents are


classified. As such they are regular employees of
petitioners. It is clear from the records of the case that
when one project is completed, respondents were
automatically transferred to the next project awarded
to petitioners. There was no employment agreement

98

given to respondents which clearly spelled out the


duration of their employment, the specific work to be
performed and that such is made clear to them at the
time of hiring. It is now too late for petitioners to claim
that respondents are project employees whose
employment is coterminous with each project or phase
of the project to which they are assigned.

Labor Code. The only notice required is for the


employer to notify the DOLE of the employees
termination from the employment for each project.
FACTS:
Respondents Antonio Gobres, Magellan Dalisay,
GodofredoParagsa, Emilio Aleta and GenerosoMelo
worked as carpenters in the construction projects of
petitioner D.M. Consunji, Inc., a construction company,
on several occasions and/or at various times. Their
termination from employment for each project was
reported to the Department of Labor and Employment
(DOLE), in accordance with Policy Instruction No. 20,
which was later superseded by Department Order No.
19, series of 1993.

Nonetheless, assuming that respondents were initially


hired as project employees, petitioners must be
reminded of our ruling in Maraguinot, Jr. v. National
Labor Relations Commission that "[a] project
employee xxx may acquire the status of a regular
employee when the following [factors] concur:
1. There is a continuous rehiring of project
employees even after cessation of a project;
and
2. The tasks performed by the alleged "project
employee"
are
vital,
necessary
and
indespensable to the usual business or trade
of the employer."

Respondents last assignment was at Quad 4-Project


in Glorietta, Ayala, Makati, where they started working
on September 1, 1998. On October 14, 1998,
respondents saw their names included in the Notice of
Termination posted on the bulletin board at the project
premises. Respondents filed a Complaint with the
Arbitration Branch of the National Labor Relations
Commission (NLRC) against petitioner D.M. Consunji,
Inc. and David M. Consunji for illegal dismissal, and
non-payment of 13th month pay, five (5) days service
incentive leave pay, damages and attorneys fees.

In this case, the evidence on record shows that


respondents
were
employed
and
assigned
continuously to the various projects of petitioners. As
painters, they performed activities which were
necessary and desirable in the usual business of
petitioners, who are engaged in subcontracting jobs for
painting of residential units, condominium and
commercial buildings. As regular employees,
respondents are entitled to be reinstated without loss
of seniority rights.

The Labor Arbiter, the NLRC and the Court of Appeals


all found that respondents, as project employees, were
validly terminated due to the completion of the phases
of work for which their services were engaged.

Respondents are also entitled to their money claims


such as the payment of holiday pay, service incentive
leave pay, and 13th month pay. Petitioners as the
employer of respondents and having complete control
over the records of the company could have easily
rebutted the monetary claims against it. All that they
had to do was to present the vouchers or payrolls
showing payment of the same. However, they decided
not to provide the said documentary evidence. Our
conclusion therefore is that they never paid said
benefits and therefore they must be ordered to settle
their obligation with the respondents.

However, the Court of Appeals held that respondents


were entitled to nominal damages, because petitioner
failed to give them advance notice of their termination.
The appellate court cited the case of Agabon v. NLRC
as basis for the award of nominal damages.
ISSUE
Is prior notice of termination required to be sent to the
employee before an employer could terminate him
based on completion of the project for which he was
hired? -NO
RULING
Unlike in Agabon, respondents, in this case, were not
terminated for just cause under Article 282 of the
Labor Code. Dismissal based on just causes
contemplate acts or omissions attributable to the
employee. Instead, respondents were terminated due
to the completion of the phases of work for which their
services were engaged.

The CA erred when it ordered reinstatement of


respondents with payment of full backwages. In cases
where there is no evidence of dismissal, the remedy is
reinstatement but without backwages. In this case,
both the Labor Arbiter and the NLRC made a finding
that there was no dismissal much less an illegal one.
D.M. CONSUNJI, INC. V. ANTONIO GOBRES
G.R. No. 169170, August 8, 2010

As project employees, respondents termination is


governed by Section 1 (c) and Section 2 (III), Rule
XXIII (Termination of Employment), Book V of the
Omnibus Rules Implementing the Labor Code.In this
case, the Labor Arbiter, the NLRC and the Court of
Appeals all found that respondents were validly
terminated due to the completion of the phases of work

Doctrine: If the termination of project employees is


brought about by the completion of the contract or
phase thereof, no prior notice is required. An employer
need not comply with the twin-notice rule unless
termination is due to a Just or Legal Cause under the

99

offers, Article 281 should assume primacy and the


fixed-period character of the contract must give way.
This conclusion is immeasurably strengthened by the
petitioners and the AMACCs hardly concealed
expectation that the employment on probation could
lead to permanent status, and that the contracts are
renewable unless the petitioners fail to pass the
schools standards.

for which respondents services were engaged. The


above rule clearly states, If the termination is brought
about by the completion of the contract or phase
thereof, no prior notice is required.
Cioco, Jr. v. C.E. Construction Corporation explained
that this is because completion of the work or project
automatically terminates the employment, in which
case, the employer is, under the law, only obliged to
render a report to the DOLE on the termination of the
employment.

If the school were to apply the probationary standards


(as in fact it says it did in the present case), these
standards must not only be reasonable but must have
also been communicated to the teachers at the start of
the probationary period, or at the very least, at the start
of the period when they were to be applied. These
terms, in addition to those expressly provided by the
Labor Code, would serve as the just cause for the
termination of the probationary contract. As explained
above, the details of this finding of just cause must be
communicated to the affected teachers as a matter of
due process.

YOLANDA M. MERCADO v. AMA COMPUTER


COLLEGE-PARAAQUE CITY, INC.
G.R. No. 183572, April 13, 2010, Brion
The petitioners were faculty members who started
teaching at AMACC. AMACC implemented new faculty
screening guidelines, set forth in its Guidelines on the
Implementation of AMACC Faculty Plantilla. Pursuant
to said guidelines, entitlement to salary increase was
determined. The petitioners failed to obtain a passing
rating based on the performance standard, and hence,
were not entitled to said increase. This prompted them
to file with the NLRC complaint for underpayment of
wages, inter alia.
AMACC countered that Petitioners were under a
contracted term and under a non-tenured appointment
and were still within the three-year probationary period
for teachers. Their contracts were not renewed for the
following term because they failed to pass the
Performance Appraisal System for Teachers (PAST)
while others failed to comply with the other
requirements for regularization, promotion, or increase
in salary.

While we can grant that the standards were duly


communicated to the petitioners and could be applied
beginning the 1st trimester of the school year 20002001, glaring and very basic gaps in the schools
evidence still exist. The exact terms of the standards
were never introduced as evidence; neither does the
evidence show how these standards were applied to
the petitioners.[48] Without these pieces of evidence
(effectively, the finding of just cause for the nonrenewal of the petitioners contracts), we have nothing
to consider and pass upon as valid or invalid for each
of the petitioners. Inevitably, the non-renewal (or
effectively, the termination of employment of
employees on probationary status) lacks the
supporting finding of just cause that the law requires
and, hence, is illegal.

ISSUE
Should the teachers probationary status be
disregarded simply because the contracts were fixedterm?

COLEGIO DEL SANTISIMO ROSARIO AND SR.


ZENAIDA S. MOFADA, OP v. EMMANUEL ROJO
GR. No. 170388, September 04, 2013, Del Castillo

HELD
NO. To be sure, nothing is illegitimate in defining the
school-teacher relationship in this manner. The school,
however, cannot forget that its system of fixed-term
contract is a system that operates during the
probationary period and for this reason is subject to
the terms of Article 281 of the Labor Code. Unless this
reconciliation is made, the requirements of this Article
on probationary status would be fully negated as the
school may freely choose not to renew contracts
simply because their terms have expired.The
inevitable effect of course is to wreck the scheme that
the Constitution and the Labor Code established to
balance
relationships
between
labor
and
management.

Colegio del Santisimo Rosario (CSR) hired respondent


as a high school teacher on probationary basis for the
school years 1992-1993, 1993-19947 and 1994-1995.
On April 5, 1995, CSR, through Mofada, decided not to
renew
respondents
services.
Thus, on July 13, 1995, respondent filed a Complaint
for illegal dismissal. He alleged that since he had
served three consecutive school years which is the
maximum number of terms allowed for probationary
employment, he should be extended permanent
employment. Citing paragraph 75 of the 1970 Manual
of Regulations for Private Schools (1970 Manual),
respondent asserted that full- time teachers who have
rendered three (3) consecutive years of satisfactory
services shall be considered permanent.

Given the clear constitutional and statutory intents, we


cannot but conclude that in a situation where the
probationary status overlaps with a fixed-term
contract not specifically used for the fixed term it

On the other hand, petitioners argued that respondent

100

knew that his Teachers Contract for school year 19941995 with CSR would expire on March 31,
1995. Accordingly, respondent was not dismissed but
his probationary contract merely expired and was not
renewed. Petitioners also claimed that the three
years mentioned in paragraph 75 of the 1970 Manual
refer to 36 months, not three school years. And since
respondent served for only three school years of 10
months each or 30 months, then he had not yet served
the three years or 36 months mentioned in paragraph
75 of the 1970 Manual.

postgraduate degrees. The two enrolled in graduate


studies but failed to finish it. UE extended probationary
appointments to Bueno and Pepanio. The Dean of the
UE College of Arts and Sciences, sent notices to
probationary faculty members, reminding them of the
expiration of the probationary status of those lacking in
postgraduate qualification. Pepanio replied that she
was enrolled at the PUP while Bueno later wrote UE,
demanding that it consider her a regular employee
based on her six-and-a-half-year service. Pepanio
cited her 3.5 years service. Respondents filed cases of
illegal dismissal against the school before the LA.

ISSUE
Whether or not Rojo has acquired permanent status

ISSUE
Whether or not UE illegally dismissed Bueno and
Pepanio.

HELD
Yes. 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 teachers performance.

HELD
No. The policy requiring postgraduate degrees of
college teachers was provided in the Manual of
Regulations as early as 1992. The requirement of a
masteral degree for tertiary education teachers is not
unreasonable. The operation of educational institutions
involves public interest. The government has a right to
ensure that only qualified persons, in possession of
sufficient academic knowledge and teaching skills, are
allowed to teach in such institutions. Government
regulation in this field of human activity is desirable for
protecting, not only the students, but the public as well
from ill-prepared teachers, who are lacking in the
required scientific or technical knowledge. They may
be required to take an examination or to possess
postgraduate degrees as prerequisite to employment.
Respondents were each given only semester-tosemester appointments from the beginning of their
employment with UE precisely because they lacked
the required master's degree. It was only when UE and
the faculty union signed their 2001 CBA that the school
extended petitioners a conditional probationary status
subject to their obtaining a master's degree within their
probationary period. It is clear, therefore, that the
parties intended to subject respondents' permanent
status appointments to the standards set by the law
and the university.

If the contract is not renewed, the employment


relationship terminates. If the contract is renewed,
usually for another school year, the probationary
employment continues. Again, at the end of that
period, the parties may opt to renew or not to renew
the contract. If renewed, this second renewal of the
contract for another school year would then be the last
year since it would be the third school year of
probationary employment.
At the end of this third year, the employer may now
decide whether to extend a permanent appointment to
the employee, primarily on the basis of the employee
having met the reasonable standards of competence
and efficiency set by the employer. For the entire
duration of this three-year period, the teacher remains
under probation.
Upon the expiration of his contract of employment,
being simply on probation, he cannot automatically
claim security of tenure and compel the employer to
renew his employment contract. It is when the yearly
contract is renewed for the third time that Section 93 of
the manual becomes operative, and the teacher then
is entitled to regular or permanent employment status.

HERRERA-MANAOIS V. ST. SCHOLASTICAS


COLLEGE
G.R. No. 188914, December 11, 2013, Sereno

UNIVERSITY OF THE EAST V. PEPANIO


G.R. No. 193897, January 23, 2013

SSC, situated in the City of Manila, is a private


educational institution offering elementary, secondary,
and tertiary education. Manaoisapplied for a position
as fulltime instructor for school year 20002001. She
mentioned in her application letter that she had been
taking the course Master of Arts in English Studies,
Major in Creative Writing, at the University of the
Philippines, Diliman (UP); that she was completing her
masters thesis; and that her oral defense was
scheduled for June 2000.Her application was
approved and herprobationary employment continued
for a total of three consecutive years.Upon completion

DECS required college faculty members to have a


master's degree as a minimum educational
qualification for acquiring regular status. In 1994, UE
and its union executed a CBA with effect up to 1999
which provided that UE shall extend only semester-tosemester appointments to college faculty staffs who
did not possess the minimum qualifications. UE hired
the two respondents on a semester-to-semester basis
to teach in its college. They could not qualify for
probationary or regular status because they lacked

101

of her third year of probationary employment, she


received a letter from the Dean of College and
Chairperson of the Promotions and Permanency Board
officially informing her of the boards decision not to
renew her contract because of her failure to finish her
masters degree.

2003, Salas ran out of Quickboxes he failed to


promptly inform his immediate supervisor of the nondelivery of the requisitioned items thus hampering the
operations of Aboitiz. After due notices and an
administrative hearing conducted, he was dismissed
for neglect of duty and wilful breach of trust. Salas filed
a complaint for illegal dismissal.

ISSUE
Whether the completion of a masters degree is
required in order for a tertiary level educator to earn
the status of permanency in a private educational
institution?

ISSUE
Does the single act (omission) of an employee
constitute gross neglect so as to warrant the penalty of
dismissal?

HELD
Yes.Art. 281.of the Labor Code provides, Probationary
employment shall not exceed six (6) months from the
date the employee started working, unless it is covered
by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been
engaged on a probationary basis may be terminated
for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards
made known by the employer to the employee at the
time of his engagement. An employee who is allowed
to work after a probationary period shall be considered
a regular employee.

RULING
No. Gross negligence connotes 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. To warrant removal from service, the negligence
should not merely be gross, but also habitual.
Undoubtedly, it was Salas duty, as material controller,
to monitor and maintain the availability and supply of
Quickbox needed by Aboitiz in its day-to-day
operations, and on June 4, 2003, Aboitiz had run out of
Large Quickbox. However, records show that Salas
made a requisition for Quickbox as early as May 21,
2003; that he made several follow-ups with Eric
Saclamitao regarding the request; and that he even
talked to the supplier to facilitate the immediate
delivery of the Quickbox. It cannot be gainsaid that
Salas exerted efforts to avoid a stock out of Quickbox.
Accordingly, he cannot be held liable for gross
negligence.

At this juncture, we reiterate the rule that mere


completion of the threeyear probation, even with an
aboveaverage performance, does not guarantee that
the employee will automatically acquire a permanent
employment status. It is settled jurisprudence that the
probationer can only qualify upon fulfillment of the
reasonable standards set for permanent employment
as a member of the teaching personnel. In line with
academic freedom and constitutional autonomy, an
institution of higher learning has the discretion and
prerogative to impose standards on its teachers and
determine whether these have been met. Upon
conclusion of the probation period, the college or
university, being the employer, has the sole
prerogative to make a decision on whether or not to
rehire the probationer. The probationer cannot
automatically assert the acquisition of security of
tenure and force the employer to renew the
employment contract. In the case at bar, Manaois
failed to comply with the stated academic qualifications
(Holder of a masters degree, to teach largely in his
major field) required for the position of a permanent
fulltime faculty member.

His failure to notify his supervisor did not amount to


gross neglect of duty or to willful breach of trust, which
would justify his dismissal from service. Salas, as
material controller was tasked with monitoring and
maintaining the availability and supply of Quickbox.
There appears nothing to suggest that Salas position
was a highly or even primarily confidential position, so
that he can be removed for loss of trust and
confidence by the employer. No just cause exists to
warrant Salas dismissal. Consequently, he is entitled
to reinstatement to his former position without loss of
seniority rights, and to payment of backwages.
RB MICHAEL PRESS V. GALIT
G.R. No. 153510, February 13, 2008, Velasco
Respondent was employed by petitioner R.B. Michael
Press as an offset machine operator. During his
employment, Galit was tardy for a total of 190 times
and was absent without leave for a total of nine and a
half days. He was ordered to render overtime service
in order to comply with a job order deadline, but he
refused to do so. The following day respondent
reported for work but petitioner Escobia told him not to
work, and to return later in the afternoon for a hearing.
When he returned, a copy of an Office Memorandum
was served on him. Petitioners aver that Galit was

SECURITY OF TENURE
SALAS V. ABOITIZ ONE
G.R. No. 178236, June 27, 2008, Nachura
Salas was hired as an assistant utility man by Aboitiz
who eventually became material controller after a few
years. He was tasked with monitoring and maintaining
the availability and supply of Quickbox needed by
Aboitiz in its day-to-day operations. Some time in

102

dismissed due to the following offenses: (1) tardiness


constituting neglect of duty; (2) serious misconduct;
and (3) insubordination or willful disobedience.
Respondent subsequently filed a complaint for illegal
dismissal and money claims before the National Labor
Relations Commission (NLRC). The CA found that it
was not the tardiness and absences committed by
respondent, but his refusalto render overtime work
which caused the termination of his employment.
Itfurther ruled that the basis for computing his
backwages should be his daily salary at the time of his
dismissal which was PhP 230, and that his backwages
should be computed from the time of his dismissal up
to the finality of the CAs decision

What the lower tribunals perceived as laxity, we


consider as leniency. SMCs tendency to excuse
justified absences actually redounded to the benefit of
respondent since the imposition of the corresponding
penalty would have been deleterious to him. In a world
where no work-no pay is the rule of thumb, several
days of suspension would be difficult for an ordinary
working man like respondent. He should be thankful
that SMC did not exact from him almost 70 days
suspension before he was finally dismissed from work.
In any case, when SMC imposed the penalty of
dismissal for the 12th and 13th AWOPs, it was acting
well within its rights as an employer. An employer has
the prerogative to prescribe reasonable rules and
regulations necessary for the proper conduct of its
business, to provide certain disciplinary measures in
order to implement said rules and to assure that the
same would be complied with. An employer enjoys a
wide latitude of discretion in the promulgation of
policies, rules and regulations on work-related
activities of the employees.

ISSUES
Whether there was just cause to terminate the
employment of respondent
RULING
Respondent did not adduce any evidence to show
waiver or condonation on the part of petitioners. Thus
the finding of the CA that petitioners cannot use the
previous absences and tardiness because respondent
was not subjected to any penalty is bereft of legal
basis. The petitioners did not impose any punishment
for the numerous absences and tardiness of
respondent. Thus, said infractions can be used
collectively by petitioners as a ground for dismissal.

It is axiomatic that appropriate disciplinary sanction is


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

SAN MIGUEL CORPORATION V. NLRC


G.R. Nos. 146121-22, April 16, 2008, Tinga
It appears that per company records, respondent
(Ernesto M. Ibias) was AWOP( Absent without
permission) on the following dates in 1997: 2, 4 and 11
January; 26, 28 and 29 April; and 5, 7, 8, 13, 21, 22,
28 and 29 May. For his absences on 2, 4 and 11
January and 28 and 29 April, he was given a written
warning[7] dated 9 May 1997 that he had already
incurred five (5) AWOPs and that further absences
would be subject to disciplinary action. For his
absences on 28 and 29 April and 7 and 8 May,
respondent was alleged to have falsified his medical
consultation card by stating therein that he was
granted sick leave by the plant clinic on said dates
when in truth he was not. After the completion of the
investigation, SMC concluded that respondent
committed the offenses of excessive AWOPs and
falsification of company records or documents, and
accordingly dismissed him. The dismissal was
rendered without having the respondent previously
suspended for prior violations

Management also has its own rights, which, as such,


are entitled to respect and enforcement in the interest
of simple fair play. Out of its concern for those with
[fewer] privileges in life, the Supreme Court has
inclined more often than not toward the worker and
upheld his cause in his conflicts with the employer.
Such favoritism, however, has not blinded the Court to
rule that justice is in every case for the deserving, to
be dispensed in the light of the established facts and
applicable law and doctrine.
All told, we find that SMC acted well within its rights
when it dismissed respondent for his numerous
absences. Respondent was afforded due process and
was validly dismissed for cause.

ISSUE
Whether or not the dismissal was correct

LBC EXPRESS v. MATEO


G.R. No. 168215, June 9, 2009, Corona

HELD
YES, Respondents dismissal was well within the
purview of SMCs management prerogative.

Doctrine: To justify a dismissal, there must be gross


and habitual negiligence. However, the habituality may
be dispensed with if the negligence is so gross that
there was substiantial loss in the company. An
employer cannot legally be compelled to continue with

103

the employment of a person admittedly guilty of gross


negligence in the performance of his duties.

ISSUE
Whether or not Genuino is entitled to payment of such
salaries.

James Mateo, designated as a customer associate,


was a regular employee of LBC Express (LBC). His job
was to deliver and pick-up packages to and from LBC
and its customers. One day, Mateo arrived at LBCs
Escolta office, to drop off packages coming from
various LBC airposts. He parked his motorcycle
directly in front of the LBC office, switched off the
engine and took the key with him. He returned
promptly within three to five minutes but the
motorcycle was gone. After investigation, he received
a notice of termination from LBC. He was barred from
reporting for work.
ISSUE
Whether Mateo was grossly
performance of his duties

negligent

in

HELD
No, since the dismissal was valid. Citibank had valid
grounds to dismiss Genuino on ground of loss of
confidence.
The
NLRC's
order
for
payroll
reinstatement is set aside. The employee shall either
be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement
provided herein. If the decision of the labor arbiter is
later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has
the right to require the dismissed employee on payroll
reinstatement to refund the salaries s/he received
while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her
employer under existing laws, collective bargaining
agreement provisions, and company practices.
However, if the employee was reinstated to work
during the pendency of the appeal, then the employee
is entitled to the compensation received for actual
services rendered without need of refund. Considering
that Genuino was not reinstated to work or placed on
payroll reinstatement, and her dismissal is based on a
just cause, then she is not entitled to be paid the
salaries.

the

RULING
YES. Mateo was undisputedly negligent when he left
the motorcycle along
Escolta, Manila without locking it despite clear, specific
instructions to do so. It proved that he did not exercise
even the slightest degree of care during that very short
time. Mateo deliberately did not heed the employers
very important precautionary measure to ensure the
safety of company property.
Although Mateos
infraction was not habitual, we must take into account
the substantial amount lost. In this case, LBC lost a
motorcycle with a book value of P46,000 which by any
means could not be considered a trivial amount.

EDUARDO BUGHAW, JR. v. TREASURE ISLAND


INDUSTRIAL CORPORATION
G.R. No. 173151, March 28, 2008, Chico Nazario

MARILOU S. GENUINO v. NLRC


G.R. Nos. 142732-33, December 4, 2007, Velasco
Genuino was employed by Citibank as Treasury Sales
Division Head with the rank of Assistant VicePresident. Citibank sent Genuino a letter charging her
with "knowledge and/or involvement" in transactions
"which were irregular or even fraudulent and was
informed she was under preventive suspension. Later,
after investigation and administrative hearing,
Genuino's employment was terminated by Citibank on
grounds of (1) serious misconduct, (2) willful breach of
the trust reposed upon her by the bank, and (3)
commission of a crime against the bank. She filed
before the Labor Arbiter a Complaint for illegal
suspension and illegal dismissal with damages and
prayer for temporary restraining order and/or writ of
preliminary injunction. The LA found there was illegal
dismissal and ordered for Genuinos reinstatement.
The NLRC reversed the Labor Arbiter's decision with
the following modification: (1) DECLARING the
dismissal of the complainant valid but (2) ORDERING
the respondent bank to pay the salaries due to the
complainant from the date it reinstated complainant in
the payroll as found by the Labor Arbiter up to and until
the date of its (NLRC) decision. CA affirmed NLRC.

Petitioner was employed as production worker by


respondent. Respondent was receiving information
that many of its employees were using prohibited
drugs during working hours and within the company
premises. Petitioner was impleaded by one Loberanes
in the crime by claiming that part of the money used for
buying illegal drugs was given by him. A notice was
given by respondent company to petitioner to explain
why no disciplinary action be taken against him.
Notwithstanding such petitioner failed to appear before
the respondents legal counsel on the scheduled
hearing date and to explain his side on the matter.
Petitioner was then terminated without notice. Hence
he filed an illegal dismissal against his employer.
ISSUE
Whether petitioner was illegally dismissed
HELD
YES. Under the Labor Code, the requirements for the
lawful dismissal of an employee are two-fold, the
substantive and the procedural aspects. Not only must
the dismissal be for a just or authorized cause, the
rudimentary requirements of due process - notice and

104

hearing must, likewise, be observed before an


employee may be dismissed. Without the concurrence
of the two, the termination would, in the eyes of the
law, be illegal, for employment is a property right of
which one cannot be deprived of without due process.
While there is no dispute that respondent fully
complied with the first-notice requirement apprising
petitioner of the cause of his impending termination
and giving him the opportunity to explain his side, we
find that it failed to satisfy the need for a second notice
informing petitioner that he was being dismissed from
employment.

Morenos dismissal from employment in accordance


with the school manual, but Dean Espejo dissented
and called only for a suspension for one semester.
Moreno was terminated in her work. Moreno instituted
with the NLRC a complaint for illegal termination
against SSC-R.
ISSUE
Whether or not the dismissal of Moreno was proper
and legal?
HELD
No. The misconduct of Moreno falls below the required
level of gravity that would warrant dismissal as a
penalty. Under Art. 282(a) of the Labor Code, willful
disobedience of the employers lawful orders as a just
cause for termination of employment envisages the
concurrence of at least two requisites: (1) the
employees assailed conduct must have been willful or
intentional, the willfulness being 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 has been engaged to discharge. SSC-R
failed to adduce any concrete evidence to prove that
Moreno indeed harbored perverse or corrupt
motivations in violating the school policy. Even if
dismissal for cause is the prescribed penalty for the
misconduct committed, it is disproportionate to the
offense. The Court deems it appropriate to impose the
penalty of suspension of 1 year on Moreno.

Further, the Agabon doctrine enunciates the rule that if


the dismissal was for just cause but procedural due
process was not observed, the dismissal should be
upheld. Where the dismissal is for just cause, as in the
instant case, the lack of statutory due process should
not nullify the dismissal or render it illegal or
ineffectual. However, the employer should indemnify
the employee for the violation of his right to procedural
due process.
MORENO v. SAN SEBASTIAN
G.R. No. 175283, March 28, 2008, March 28, 2008
Jackqui R. Moren is an employee, a teaching fellow in
San Sebastian College (SSC-R). Moreno was first
appointed as a full-time college faculty member. Then,
Moreno became a member of the permanent college
faculty. The SSC-R HR conducted a formal
investigation regarding Morenos unauthorized external
teaching engagements and HR found out that Moreno
indeed had unauthorized teaching assignments at the
Centro Escolar University and at the College of the
Holy Spirit, Manila. Moreno received a MEMO from the
Dean of her college, requiring her to explain the
reports
regarding
her
unauthorized
teaching
engagements. The said activities allegedly violated
Section 2.2 of Article II of SSC-Rs Faculty Manual.
Moreno admitted her failure to secure any written
permission before she taught in other schools. Moreno
further stated that it was never her intention to
jeopardize her work in SSC-R and that she merely
wanted to improve her familys poor financial
conditions. A Special Grievance Committee was then
formed in order to investigate and make
recommendations regarding Morenos case. Moreno
admitted she did not formally disclose her teaching
loads at the College of the Holy Spirit and at the
Centro Escolar University; that the Dean of her college
was aware of her external teaching loads; that she
went beyond the maximum limit for an outside load;
that she did not deny teaching part-time in the
aforementioned schools; and that she did not wish to
resign because she felt she deserved a second
chance. The grievance committee issued its resolution
which unanimously found that she violated the
prohibition against a full-time faculty having an
unauthorized external teaching load. The majority of
the grievance committee members recommended

JANSENN PHARMACEUTICA v. SILAYRO


G.R. No. 172528, February 26, 2008, Chico Nazario
Petitioner is the division of Johnson & Johnson
Philippines Inc. engaged in the sale and manufacture
of pharmaceutical products. Petitioner employed
respondent as Territory/Medical Representative.
During his employment, respondent received from
petitioner several awards and citations. On the dark
side, however, respondent was also investigated for,
and in some cases found guilty of, several
administrative charges. Petitioner issued a Notice of
Disciplinary Action finding respondent guilty of the
following offenses (1) delayed submission of process
reports, for which he was subjected to a one-day
suspension without pay, effective 24 November
1998; and (2) cheating in his ROL test, for which he
was subjected again to a one-day suspension.
Petitioner then terminated the services of respondent.
Petitioner found respondent guilty of dishonesty in
accomplishing the report on the number of product
samples in his possession and failing to return the
company vehicle and his other accountabilities in
violation of Sections 9.2.9 and 9.2.4 of the Code of
Conduct. Petitioner also found respondent to be a
habitual offender whose previous offenses included:
(1) Granting unauthorized premium/free goods to
customer in 1994; (2) Unauthorized pull-out of stocks
from customer in 1994; (3) Delay in submission of

105

reports despite oral admonition and written reprimand


in 1998; and (4) Dishonesty in accomplishing other
accountable documents or instruments (in connection
with the ROL test) in 1998. Respondent filed a
Complaint against petitioner and its officers for illegal
dismissal.

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.

ISSUE
Whether or not sufficient grounds existed for the
dismissal of the respondent

From the aforecited provision, it is implicit that these


requirements afford the employee an opportunity to
explain his side, respond to the charge, present his or
her evidence and rebut the evidence presented
against him or her.

RULING
No. In termination cases, the burden of proof rests with
the employer to show that the dismissal is for just and
valid cause. Failure to do so would necessarily mean
that the dismissal was not justified and therefore was
illegal. Dishonesty is a serious charge, which the
employer must adequately prove, especially when it is
the basis for termination.
In this case, petitioner had not been able to identify an
act of dishonesty, misappropriation, or any illicit act,
which the respondent may have committed in
connection with the erroneously reported product
samples. While respondent was admittedly negligent in
filling out his August and September 1998 DCR, his
errors alone are insufficient evidence of a dishonest
purpose. Since fraud implies willfulness or wrongful
intent, the innocent non-disclosure of or inadvertent
errors in declaring facts by the employee to the
employer will not constitute a just cause for the
dismissal of the employee. In addition, the subsequent
acts of respondent belie a design to misappropriate
product samples. So as to escape any liability,
respondent could have easily just submitted for audit
only the number of product samples which he
reported. Instead, respondent brought all the product
samples in his custody during the audit and,
afterwards, honestly admitted to his negligence.
Negligence is defined as the failure to exercise the
standard of care that a reasonably prudent person
would have exercised in a similar situation. To this
Court, respondent did not commit any willful violation,
rather he merely failed to exercise the standard care
required of a territory representative to carefully count
the number of product samples delivered to him in
August and September 1998.
Moreover, petitioner failed to observe procedural due
process in connection with the aforementioned charge.
Section 2(d) of Rule 1 of The Implementing Rules of
Book VI states that:

The superficial compliance with two notices and a


hearing in this case cannot be considered valid where
these notices were issued and the hearing made
before an offense was even committed. The first
notice, issued on 24 November 1998, was premature
since respondent was obliged to return his
accountabilities only on 25 November 1998. As
respondents preventive suspension began on 25
November 1998, he was still performing his duties as
territory representative the day before, which required
the use of the company car and other company
equipment. During the administrative hearing on 3
December 1998, both parties clarified the confusion
caused by the petitioners premature notice and
agreed that respondent would surrender his
accountabilities as soon as the petitioner gave its
instructions. Since petitioners ostensible compliance
with the procedural requirements of notice and hearing
took place before an offense was even committed,
respondent was robbed of his rights to explain his side,
to present his evidence and rebut what was presented
against him, rights ensured by the proper observance
of procedural due process.
SUICO V. NLRC
G.R. No. 146762, January 30, 2007, Austria-Martinez
Suico, Ceniza, Dacut (complainants were regular
employees of Philippine Long Distance Telephone
Company (PLDT) Cebu Jones Exchange and
members of Manggagawa ng Komunikasyon ng
Pilipinas (MKP). MKP launched a strike against PLDT.
Complainants participated in the strike by picketing the
PLDT. PLDT sent 2 notices to Suico et.al, for the acts
of violation that happen during the strike. But the
complainant failed to provide the required written
explanation the acts charged to them. They replied
informing, that they opt to exercise their rights to due
process and request to furnish a copy of the formal
written complain, statement of witness/es and
preliminary investigations and/or report/s conducted on
the aforesaid incident, if any. PLDT findings based on
the available evidence found the complainants guilty
and were subsequently terminated.

For termination of employment based on just causes


as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying
the ground or grounds for 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

ISSUE:
Whether PLDT violated the requirements of due
process under the Labor Code when it dismissed said

106

employee ample opportunity to be heard and to defend


himself with the assistance of his representative if he
so desires. The omnibus rules implementing the Labor
Code, on the other hand, require a hearing and
conference during which the employee concerned is
given the opportunity to respond to the charge, present
his evidence or rebut the evidence presented against
him. We reaffirm the time-honored doctrine that, in
case of conflict, the law prevails over the
administrative regulations implementing it.

employees without heeding their request for the


conduct of a formal hearing as provided for under
PLDT Systems Practice No. 94-016 and prior to
submission of their respective answers to the charges
against them.
RULING
The procedure adopted by PLDT in dismissing Suico,
et al. fell short of the requirements of due process.
PLDT complied with the two-notice requirement of due
process. The first notices sent to Suico, et al. set out in
detail the nature and circumstances of the violations
imputed to them, required them to explain their side
and expressly warned them of the possibility of their
dismissal should their explanation be found wanting.
The last notices informed Suico, et al. of the decision
to terminate their employment and cited the evidence
upon which the decision was based. These two notices
would have sufficed had it not been for the existence
of Systems Practice No. 94-016. Under Systems
Practice No. 94-016, PLDT granted its employee the
alternative of either filing a written answer to the
charges or requesting for opportunity to be heard and
defend himself with the assistance of his counsel or
union representative, if he so desires.

The following are the guiding principles in connection


with the hearing requirement in dismissal cases:
(a) ample opportunity to be heard means any
meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and
submit evidence in support of his defense, whether
in a hearing, conference or some other fair, just and
reasonable way.
(b) a formal hearing or conference becomes
mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a
company rule or practice requires it, or when similar
circumstances justify it.
(c) the ample opportunity to be heard standard in the
Labor Code prevails over the hearing or conference
requirement in the implementing rules and
regulations.

Suico, et al. exercised their option under Systems


Practice No. 94-016 by requesting that a formal
hearing be conducted and that they be given copies of
sworn statements and other pertinent documents to
enable them to prepare for the hearing. This option is
part of their right to due process. PLDT is bound to
comply with the Systems Practice. Company policies
or practices are binding on the parties. Some can ripen
into an obligation on the part of the employer, such as
those which confer benefits on employees or regulate
the procedures and requirements for their termination

Note: Petitioners in this case, however, were found to


be illegally dismissed as there was no just cause for
the termination of their employment.
BACOLOD-TALISAY REALTY AND DEVELOPMENT
CORPORATION, et al. v. ROMEODELA CRUZ
G.R. No. 179563
Respondent as an employee of the petitioner made the
following: payroll paddling, selling canepoints without
the knowledge and consent of the petitioner and
misappropriating the said proceeds and also renting
out the tractor to be used on another farm. Due to this,
he was suspended for 30 days through a letter
informing him of such suspension and after 30 days he
received another letter informing him that he was
dismissed from work.

PEREZ v. PT&T
G.R. No. 152048, April 7, 2009, Corona
Petitioners Felix Perez and Amante Doria were
employed by respondent Philippine Telegraph and
Telephone Company. They later received a
memorandum dismissing them from the service for
having falsified company documents, prompting them
to file a complaint for illegal dismissal on the ground
that they were dismissed on the same date that they
received the said memorandum. Petitioners argue that
due process was not observed in the absence of a
hearing in which they could have explained their side.

ISSUE
WON petitioner observed due process in dismissing
respondent
RULING
No, petitioner did not comply due to the fact that in
validly dismissing and employee two notices are
mandatory 1) a first notice to apprise him of his fault,
and 2) a second notice to him that his employment is
being terminated.

ISSUE
Is a hearing (or conference) mandatory in cases
involving the dismissal of an employee?
RULING
No. We note a marked difference in the standards of
due process to be followed as prescribed in the Labor
Code and its implementing rules. The Labor Code, on
one hand, provides that an employer must provide the

In the present case the first letter only informed him of


the suspension and did not effectively apprise him of

107

his fault nor is given chance to present his side or be


heard.

To be a valid ground for dismissal, 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 employers arbitrariness, whims,
caprices or suspicion; otherwise, the employee would
remain eternally at the mercy of the employer. Further,
in order to constitute a just cause for dismissal, the act
complained of must be work-related and show that the
employee concerned is unfit to continue working for
the employer. Such ground for dismissal has never
been intended to afford an occasion for abuse
because of its subjective nature.

Although the petitioner did terminate him for a just


cause, but the procedure was not followed.
PRUDENTIAL GUARANTEE AND ASSURANCE
EMPLOYEE LABOR UNION AND SANDY T.
VALLOTA V. NATIONAL LABOR RELATIONS
COMMISSION, PRUDENTIAL GUARANTEE AND
ASSURANCE, INC., AND/OR JOCELYN RETIZOS
G.R. No. 185335, June 13, 2012, Mendoza
Vallota worked with PGAI on May 16, 1995 as a Junior
Programmer assigned to the EDP Department
reporting directly to his head Gerald Dy Victory, until
his replacement by Jocelyn Retizos sometime in 1997.
In Aug. 2005, Vallota was elected to the Board of
Directors of the union.

There was no other evidence presented to prove fraud


in the manner of securing or obtaining the files found in
Vallotas computer. In fact, aside from the presence of
these files in Vallotas hard drive, there was no other
evidence to prove any gross misconduct on his part.
There was no proof either that the presence of such
files was part of an attempt to defraud his employer or
to use the files for a purpose other than that for which
they were intended. If anything, the presence of the
files reveals some degree of carelessness or neglect in
his failure to delete them, but it is an extremely
farfetched conclusion bordering on paranoia to state
that it is part of a larger conspiracy involving corporate
espionage. If anything, the presence of the files would
merely merit the development of some suspicion on
the part of the employer, but should not amount to a
loss of trust and confidence such as to justify the
termination of his employment.

On Nov. 11, 2005, PGAIs HR Manager Atty. Rillo


invited union president Mike Apostol to his office to
inform him that an on-the-spot security check in the IT
Department will be conducted. PGAI network
administrator Angelo Gutierrez conducted an
inspection but did not find anything unusual with
Vallotas computed but Retizos insisted and took over
the inspection until she found a folder named MAA, a
copy of which was saved and later printed but no copy
was given to Vallota.
On Nov. 14, 2005, Vallota received a memorandum
directing him to explain within 72 hours why highly
confidential files were stored in his computer and
placed him under a 30-day preventive suspension
which was extended for another 30 days. The union
requested that a grievance committee be convened
and that the contents of the computers of other IT
personnel be similarly produced but this was ignored
and a notice of termination was given to Vallota on the
ground of loss of trust and confidence, prompting the
union and Vallota to file a complaint for illegal
dismissal. The LA, the NLRC, and the CA held that
there was illegal dismissal. Hence, this petition.

(2) The following are the guiding principles in


connection with the hearing requirement in dismissal
cases:
(a) ample opportunity to be heard means any
meaningful opportunity (verbal or written) given to
the employee to answer the charges against him
and submit evidence in support of his defense,
whether in a hearing, conference or some other
fair, just and reasonable way.
(b) a formal hearing or conference becomes
mandatory only when requested by the employee
in writing or substantial evidentiary disputes exist
or a company rule or practice requires it, or when
similar circumstances justify it.
(c) the ample opportunity to be heard standard in
the Labor Code prevails over the hearing or
conference requirement in the implementing rules
and regulations.

ISSUES
1. Was Vallota validly dismissed on the ground of
loss of trust and confidence?
2. Were the requirements of procedural due
process for termination observed?
HELD
(1) No. Vallotas position as Junior Programmer is
analogous to the second class of positions of trust and
confidence. The act alleged to have caused the loss of
trust and confidence of PGAI in Vallota was the
presence in his computers hard drive of a folder
named MAA allegedly containing files with information
on MAA Mutual Life Philippines, a domestic
corporation selling life insurance policies to the buying
public, and files relating to PGAIs internal affairs.

In this case, the two-notice requirement was complied


with. PGAI issued to Vallota a written Notice of
Charges & Preventive Suspension (Ref. No. AC-0502) dated November 14, 2005. After an exchange of

108

memoranda, PGAI then informed Vallota of his


dismissal in its decision dated December 21, 2005.

In a complaint dated August 10, 2007, respondent


Efren I. Sagad charged the petitioner Sampaguita Auto
Transport Corporation (company) with illegal dismissal
and damages plus attorney's fees.

However, the Union and Vallota requested a


conference or a convening of a grievance committee,
such formal hearing became mandatory. After PGAI
failed to affirmatively respond to such request, it
follows that the hearing requirement was not complied
with and, therefore, Vallota was denied his right to
procedural due process.

Sagad alleged that on May 14, 2006, the company


hired him as a regular bus driver, not as a probationary
employee as the company claimed. He disowned his
purported signature on the contract of probationary
Employment submitted in evidence by the company.
He maintained that his signature was forged. He
further alleged that on November 5, 2006, he was
dismissed by the company for allegedly conniving with
conductor Vitola in issuing tickets outside their
assigned route.

The petition was granted.


COSMOS BOTTLING CO. V. FERMIN
G.R. No. 194303, June 20, 2012, Sereno
Wilson B. Fermin (Fermin) was a forklift operator at
Cosmos Bottling Corporation (COSMOS), where he
started his employment on 27 August 1976 On 16
December 2002, he was accused of stealing the
cellphone of his fellow employee, Luis Braga (Braga).
Fermin was then given a Show Cause Memorandum,
requiring him to explain why the cellphone was found
inside his locker. In compliance therewith, he
submitted an affidavit the following day, explaining that
he only hid the phone as a practical joke and had
every intention of returning it to Braga.

The company countered that it employed Sagad as a


probationary bus driver (evidenced by a probationary
employment contract6) from May 14, 2006 to October
14, 2006; he was duly informed of his corresponding
duties and responsibilities. He was further informed
that during the probationary period, his attendance,
performance and work attitude shall be evaluated to
determine whether he would qualify for regular
employment. For this purpose and as a matter of
company policy, an evaluator was deployed on a
company bus (in the guise of a passenger) to observe
the drivers work performance and attitude.

After conducting an investigation, COSMOS found


Fermin guilty of stealing Bragas phone in violation of
company rules and regulations. Consequently, on 2
October 2003, the company terminated Fermin from
employment after 27 years of service.

Allegedly, on September 21, 2006, an evaluator


boarded Sagads bus. The evaluator described
Sagads manner of driving as "reckless driver,
nakikipaggitgitan, nakikipaghabulan, nagsasakay sa
gitna ng kalsada, sumusubsob ang pasahero. Sagad
disputed the evaluators observations. In an
explanation (rendered in Filipino), he claimed that he
could not have been driving as reported because his
wife (who was pregnant) and one of his children were
with him on the bus. He admitted though that at one
time, he chased an "Everlasting" bus to serve warning
on its driver not to block his bus when he was
overtaking. He also admitted that once in a while, he
sped up to make up for lost time in making trips.

ISSUE
Whether or not the termination is valid.
RULING
Yes. Article 282(e) of the Labor Code talks of other
analogous causes or those which are susceptible of
comparison to another in general or in specific detail
as a cause for termination of employment. A cause
analogous to serious misconduct is a voluntary and/or
willful act or omission attesting to an employees moral
depravity. Theft committed by an employee against a
person other than his employer, if proven by
substantial evidence, is a cause analogous to serious
misconduct. Previous infractions may be cited as
justification for dismissing an employee only if they are
related to the subsequent offense. However, it must be
noted that such a discussion was unnecessary since
the theft, taken in isolation from Fermins other
violations, was in itself a valid cause for the termination
of his employment.

On October 15, 2006, upon conclusion of the


evaluation, the company terminated Sagads
employment for his failure to qualify as a regular
employee.
ISSUE
Whether or not Sagad is a regular employee
RULING
Sagad was dismissed, not as a probationary
employee, but as one who had attained regular status.
The companys evidence on Sagads purported hiring
as a probationary employee is inconclusive. To start
with, Sagad denied that he entered into a probationary
employment contract with the company, arguing that
the signature on the supposed contract was not his.
He also denied receiving the alleged notice terminating

SAMPAGUITA AUTO TRANSPORT CORPORATION


v. NATIONAL LABOR RELATIONS COMMMISSION
and EFREN I. SAGAD
G.R. No. 197384, January 30, 2013, Brion

109

his probationary employment. The same thing is true


with his purported letter asking that he be given
another chance to work for the company. He asserts
that not only is the letter not in his handwriting, the
signature on the letter was also not his.
The records indicate that he was retained even beyond
the expiration of his supposed probationary
employment on October 14, 2006. As the NLRC noted,
Sagad claimed that he was dismissed by the company
on November 5, 2006, after he was accused of
conniving with conductor Vitola in issuing tickets
outside their assigned route.
The company never refuted this particular assertion of
Sagad and its silence can only mean that Sagad
remained in employment until November 4, 2006,
thereby attaining regular status as of that date. Under
the law, "an employee who is allowed to work after a
probationary period shall be considered a regular
employee.

intended to benefit Rapid Movers and Forwarders. The


SC also took into consideration the fact that Dongon
had served respondent for seven long unblemished
years, thus, arriving at a conclusion that his dismissal
was plainly unwarranted.
The SC reiterated that an employer is given wide
latitude of discretion in managing its own affairs. But
the exercise of management prerogative is not
limitless, but hemmed in by good faith and due
consideration of the rights of employees.
ALILEM
CREDIT
COOPERATIVE,
BANDIOLA, JR.
G.R. No. 173489, February 25, 2013

INC.

v.

Respondent was employed by petitioner as


bookkeeper. Petitioner's Board of Directors (the Board)
received a letter from a certain Napoleon Gao-ay
(Napoleon) reporting the alleged immoral coaduct and
unbecoming behavior of respondent by having an illicit
relationship with Napoleons sister, Thelma G. Palma
(Thelma). This prompted the Board to conduct a
preliminary investigation. In its Summary Investigation
Report, the Ad Hoc Committee concluded that
respondent was involved in an extra-marital affair with
Thelma. Respondent was informed of Board
Resolution embodying the Boards decision to
terminate his services as bookkeeper of petitioner,
effective July 31, 1997, without any compensation or
benefit except the unpaid balance of his regular salary
for services actually rendered. Aggrieved, respondent
filed a Complaint for Illegal Dismissal against petitioner
before the NLRC.

NATHANIEL N. DONGON v. RAPID MOVERS


AND FORWARDERS CO., INC., AND/OR
NICANOR E. JAO, JR.
G.R. No. 163431, August 28, 2013, Bersamin
Dongon is a truck helper leadman in Rapid Movers
and Forwarders. Dongons area of assignment is in
Tanduay Otis Warehouse where he and his driver
Villaruz tried to get the goods to be distributed to
clients. To get the clearance for the release of goods,
Dongon lent his ID card to Villaruz. But, the security
guard noticed the misrepresentation, accosted them,
and reported the matter to the management of
Tanduay. Dongon was dismissed from work due to
willful disobedience. He now claims that he was
illegally dismissed from work.

ISSUE
W/N respondent's dismissal from employment is valid

He argues that the dismissal as a penalty is too harsh


and disproportionate to his supposed violation. Said
violation was only his first infraction and was even
committed in good faith without malice. Rapid Movers
and Forwarders argues that they rightly exercised their
power to dismiss petitioner on the ground of violation
of the companys manual of discipline.

HELD
YES. To be sure, an employer is free to regulate all
aspects of employment. It may make reasonable rules
and regulations for the government of its employees
which become part of the contract of employment
provided they are made known to the employee. In the
event of a violation, an employee may be validly
terminated from employment on the ground that an
employer cannot rationally be expected to retain the
employment of a person whose lack of morals, respect
and loyalty to his employer, regard for his employers
rules and application of the dignity and responsibility,
has so plainly and completely been bared.

The LA dismissed the complaint. NLRC reversed the


LA. The CA affirmed the decision of the NLRC.
ISSUE
Was the dismissal of Dongon legal?
HELD
NO. Dongon was illegally dismissed. The SC held that
the disobedience attributed to Dongon could not be
justly characterized as willful within the contemplation
of the law. Wilfullness must be attended by a wrongful
and perverse mental attitude rendering the
eomployees
act
inconsistent
with
proper
subordination. Dongon did not benefit from it nor was
the business of respondent prejudiced. The Court
believed Dongons explanation that his deed had been

While respondents act of engaging in extra--marital


affairs may be considered personal to him and does
not directly affect the performance of his assigned task
as bookkeeper, aside from the fact that the act was
specifically provided for by petitioners Personnel
Policy as one of the grounds for termination of
employment, said act raised concerns to petitioner as
the Board received numerous complaints and petitions
from the cooperative members themselves asking for

110

the removal of respondent because of his immoral


conduct.
CAVITE
APPAREL,
INCORPORATED
ADRIANO TIMOTEO v. MICHELLE MARQUEZ
G.R. No. 172044, February 06, 2013

ones duties. Habitual neglect imparts repeated failure


to perform ones duties for a period of time, depending
on the circumstances. Under these standards and the
circumstances obtaining in the case, we agree with the
CA that Michelle is not guilty of gross and habitual
neglect of duties.

and

On August 22, 1994, Cavite Apparel hired Michelle as


a regular employee in its Finishing Department.
Michelle enjoyed, among other benefits, vacation and
sick leaves of seven (7) days each per annum. Prior to
her dismissal on June 8, 2000, Michelle committed the
following infractions (with their corresponding
penalties):
a.
First Offense: Absence without leave (AWOL)
on December 6, 1999 written warning
b.
Second Offense: AWOL on January 12, 2000
stern warning with three (3) days suspension
c.
Third Offense: AWOL on April 27, 2000
suspension for six (6) days.

Even assuming that she failed to present a medical


certificate for her sick leave on May 8, 2000, the
records are bereft of any indication that apart from the
four occasions when she did not report for work,
Michelle had been cited for any infraction since she
started her employment with the company in 1994.
Four absences in her six years of service, to our mind,
cannot be considered gross and habitual neglect of
duty, especially so since the absences were spread
out over a six-month period.
Michelles penalty of dismissal too harsh or not
proportionate to the infractions she committed
Michelle might have been guilty of violating company
rules on leaves of absence and employee discipline,
still we find the penalty of dismissal imposed on her
unjustified under the circumstances. As earlier
mentioned, Michelle had been in Cavite Apparels
employ for six years, with no derogatory record other
than the four absences without official leave in
question, not to mention that she had already been
penalized for the first three absences, the most serious
penalty being a six-day suspension for her third
absence on April 27, 2000.

On May 8, 2000, Michelle got sick and did not report


for work. When she returned, she submitted a medical
certificate. Cavite Apparel, however, denied receipt of
the certificate. Michelle did not report for work on May
15-27, 2000 due to illness. When she reported back to
work, she submitted the necessary medical
certificates. Nonetheless, Cavite Apparel suspended
Michelle for six (6) days (June 1-7, 2000). When
Michelle returned on June 8, 2000, Cavite Apparel
terminated her employment for habitual absenteeism.
Michelle filed a complaint for illegal dismissal with
prayer for reinstatement, backwages and attorneys
fees with the NLRC.

While previous infractions may be used to support an


employees dismissal from work in connection with a
subsequent similar offense, we cautioned employers in
an earlier case that although they enjoy a wide latitude
of discretion in the formulation of work-related policies,
rules and regulations, their directives and the
implementation of their policies must be fair and
reasonable; at the very least, penalties must be
commensurate to the offense involved and to the
degree of the infraction.

The NLRC noted that for Michelles first three


absences, she had already been penalized ranging
from a written warning to six days suspension. These,
the NLRC declared, should have precluded Cavite
Apparel from using Michelles past absences as bases
to impose on her the penalty of dismissal, considering
her six years of service with the company. It likewise
considered the penalty of dismissal too severe. The
NLRC thus concluded that Michelle had been illegally
dismissed and ordered her reinstatement with
backwages. The Court of Appeals affirmed the ruling
of the NLRC.

ESGUERRA v. VALLE VERDE


G.R. NO. 173012, June 13, 2012
On April 1, 1978, Valle Verde hired Esguerra as Head
Food Checker. In 1999, she was promoted to Cost
Control Supervisor. On January 15, 2000, the Couples
for Christ held a seminar at the country club. Esguerra
was tasked to oversee the seminar held in the two
function rooms the Ballroom and the Tanay Room.

ISSUE
Whether Michelle was illegally dismissed, specifically:
a)
Whether Michelles AWOLs were habitual
b)
Whether the dismissal imposed by Cavite
Apparel too harsh of a penalty

The Valle Verde Management found out the following


day that only the proceeds from the Tanay Room had
been remitted to the accounting department. There
were also unauthorized charges of food on the account
of Judge Rodolfo Bonifacio, one of the participants.

RULING
Yes.
Michelles four absences were not habitual; "totality of
infractions" doctrine not applicable. Neglect of duty, to
be a ground for dismissal under Article 282 of the
Labor Code, must be both gross and habitual. Gross
negligence implies want of care in the performance of

On March 6, 2000, Valle Verde sent a memorandum to


Esguerra
requiring her to show cause as to why no disciplinary a

111

ction should be taken against her for the nonremittance of the Ballrooms sales. Esguerra was
placed under preventive suspension with pay, pending
investigation. In her letter-response, Esguerra denied
having committed any misappropriation. Valle Verde
found Esguerras explanation unsatisfactory and,
on July 26, 2000, issued a second memorandum
terminating Esguerras employment.

matching are unsuccessful, permanent retrenchment


takes place and separation pay is released.
2. Permanent retrenchment and payment of
separation pay and other benefits after the thirty (30)
days notice has lapsed; or
3. Immediate retrenchment and payment of
separation pay, benefits and one months salary in
lieu of notice to allow you to look for other
employment opportunities.

ISSUE
Whether the dismissal is valid.

Legend gave said


until January 14,
option number 2
default choice in
preferences.

HELD
We now dwell on the substantive aspect of Esguerras
dismissal. We have held that there are two (2) classes
of positions of trust the first class consists of
managerial employees, or those vested with the power
to lay down management policies; and the second
class consists of cashiers, auditors, property
custodians or those who, in the normal and routine
exercise of their functions, regularly handle significant
amounts of money or property.

employees a period of one week or


1998 to choose their option, with
(permanent retrenchment) as the
case they failed to express their

Curiously, on the same day, the Labor and


Employment Center of the Subic Bay Metropolitan
Authority advertised that Legend International Resorts,
Inc. was in need of employees for positions similar to
those vacated by petitioners.
After informing the retrenched employees of their
retrenchment or option, Legend paid the retrenched
employees their salaries up to February 6, 1998,
separation pay, pro-rated 13th-month pay, ex-gratia,
meal allowance, unused vacation leave credits, and
tax refund. Petitioners, in turn, signed quitclaims but
reserved their right to sue Legend.

Esguerra held the position of Cost Control Supervisor


and had the duty to remit to the accounting department
the cash sales proceeds from every transaction she
was assigned to. This is not a routine task that a
regular employee may perform; it is related to the
handling of business expenditures or finances. For this
reason, Esguerra occupies a position of trust and
confidence a position enumerated in the second class
of positions of trust. Any breach of the trust imposed
upon her can be a valid cause for dismissal.

Subsequently, 14 of the 34 retrenched employees


filed a complaint for illegal dismissal and money claims
against Legend and its officials. Complainants alleged
that they were illegally dismissed because Legend,
after giving retrenchment as the reason for their
termination, created new positions similar to those they
had just vacated. Legend, on the other hand, invoked
management prerogative when it terminated the
retrenched employees; and said that complainants
voluntarily signed quitclaims so that they were already
barred from suing Legend.

RUBEN ANDRADA VS. NLRC


G.R. No. 173231, December 28, 2007, Velasco
Petitioners Ruben Andrada, Jovencio Poblete, Filamer
Alfonso, Harvey Cayetano, Vicente Mantala, Jr.,
Bernaldo delos Santos, and Joven Pabustan were
hired on various dates from 1995 up to 1997 and
worked as architects, draftsmen, operators, engineers,
and surveyors in the Subic Legend Resorts and
Casino, Inc. (Legend) Project Development Division on
various projects.

ISSUE
Whether petitioners were legally dismissed.
HELD
NO. A companys exercise of its management
prerogatives is not absolute. It cannot exercise its
prerogative in a cruel, repressive, or despotic manner.
The requirements for retrenchment are: (1) it is
undertaken to prevent losses, which are not merely de
minimis, but substantial, serious, actual, and real, or if
only expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) the
employer serves written notice both to the employees
and the DOLE at least one month prior to the intended
date of retrenchment; and (3) the employer pays the
retrenched employees separation pay equivalent to
one month pay or at least month pay for every year of
service, whichever is higher. The Court later added the
requirements that the employer must use fair and

Legend sent notice to the Department of Labor and


Employment of its intention to retrench and terminate
the employment of thirty-four (34) of its employees,
which include petitioners, in the Project Development
Division. Legend explained that it would be retrenching
its employees on a last-in-first-out basis. The following
day Legend sent the 34 employees their respective
notices of retrenchment, stating the same reasons for
their retrenchment. It also offered the employees the
following options, to wit:
1. Temporary retrenchment/lay-off for a period not
to exceed six months within which we shall explore
your possible reassignment to other departments or
affiliates, after six months and redeployment and/or

112

reasonable criteria in ascertaining who would be


dismissed and x x x retained among the employees
and that the retrenchment must be undertaken in good
faith. Except for the written notice to the affected
employees and the DOLE, non-compliance with any of
these requirements render[s] the retrenchment illegal.

implemented by respondent was invalid and


petitioners separation was illegal. NLRC affirmed the
decision of the Labor Arbiter. On appeal, the Court of
Appeals reversed the decision of the NLRC.
ISSUE
Whether or not the retrenchment
implemented by respondent was valid.

In the present case, Legend glaringly failed to show its


financial condition prior to and at the time it enforced
its retrenchment program. It failed to submit audited
financial statements regarding its alleged financial
losses. Though Legend complied with the notice
requirements and the payment of separation benefits
to the retrenched employees, its failure to establish the
basis for the retrenchment of its employees constrains
us to declare the retrenchment illegal.

program

HELD
Yes. The Court finds that respondent was fully justified
in implementing a retrenchment program.
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, 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 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. In the discharge of these
requirements, it is the employer who bears the onus,
being in the nature of affirmative defense.

Legend also failed to establish redundancy.


Retrenchment and redundancy are two different
concepts; they are not synonymous and therefore
should not be used interchangeably. It is however not
enough for a company to merely declare that positions
have become redundant. It must produce adequate
proof tantamount to substantial evidence of such
redundancy to justify the dismissal of the affected
employees.
JUVY M. MANATAD vs. PHILIPPINE TELEGRAPH
AND TELEPHONE CORPORATION
G.R. No. 172363, March 7, 2008, Chico Nazario

For a valid retrenchment, the following requisites must


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

In September 1988, petitioner was employed by


respondent Philippine Telegraph and Telephone
Corporation (PT&T) as junior clerk. She was later
promoted as Account Executive, the position she held
until she was temporarily laid off from employment on
1 September 1998. Petitioners temporary separation
from employment was pursuant to the Temporary Staff
Reduction Program adopted by respondent due to
serious business reverses. Petitioner received a letter
from respondent inviting her to avail herself of its Staff
Reduction Program Package until full payment of the
separation package. However, she did not opt to avail
herself of the said package. Later on, petitioner
received a Notice of Retrenchment from respondent
permanently dismissing her from employment.

Since respondent was undergoing business reverses,


not only for a single fiscal year, but for several years
prior to and even after the program, it was justified in
implementing a retrenchment program.
Where appropriate and where conditions are in accord
with law and jurisprudence, the Court has authorized
valid reductions in the work force to forestall business
losses, the hemorrhaging of capital, or even to
recognize an obvious reduction in the volume of
business which has rendered certain employees
redundant.

Consequently, petitioner filed a Complaint for illegal


dismissal against respondent before the Labor Arbiter.
She alleged that the retrenchment program adopted by
respondent was illegal for it was gaining profits for the
period of July 1997 to June 1998. On the other hand,
respondent asserted that petitioner was separated
from service pursuant to a valid retrenchment
implemented by the company, due to huge business
losses suffered by respondent, it was constrained to
arrest escalating operating costs by downsizing its
workforce.

LINTON COMMERCIAL CO., INC. v. HELLERA


G.R. No. 163147, October 10, 2007, Tinga
Linton is a domestic corporation engaged in the
business of importation, wholesale, retail and
fabrication of steel and its by-products. Linton issued a
memorandum 5 addressed to its employees informing
them of the company's decision to suspend its
operations from 18 December 1997 to 5 January 1998
due to the currency crisis that aected its business

The Labor Arbiter rendered a Decision in favor of


petitioner ruling that the retrenchment program

113

operations. Linton issued another memorandum 8


informing them that eective 12 January 1998, it would
implement a new compressed workweek of three (3)
days on a rotation basis. In other words, each worker
would be working on a rotation basis for three working
days only instead for six days a week. Aggrieved,
sixty-eight (68) workers (workers) led a Complaint for
illegal reduction of workdays.

distinction between redundancy and retrenchment, and


their requisites as valid grounds for dismissal.
FACTS
AMA dismissed several regular employees due to the
prevailing economic condition of our economy and
that their employment is no longer necessary for the
reason that function can be handled by the other
existing staff. AMA defends the legality of the
dismissal on the ground of redundancy and/or
retrenchment.

ISSUE
Whether or not there was an illegal reduction of work.

ISSUE
Is redundancy the same as retrenchment?

RULING
Yes. A close examination of petitioners' nancial
reports for 1997-1998 shows that, while the company
suered a loss of P3, 645,422.00 in 1997, it retained a
considerable amount of earnings 45 and operating
income. A year of nancial losses would not warrant
the immolation of the welfare of the employees, which
in this case was done through a reduced workweek
that resulted in an unsettling diminution of the periodic
pay for a protracted period. Permitting reduction of
work and pay at the slightest indication of losses would
be contrary to the State's policy to afford protection to
labor and provide full employment. Certainly,
management has the prerogative to come up with
measures to ensure protability or loss minimization.
However, such privilege is not absolute. Management
prerogative must be exercised in good faith and with
due regard to the rights of labor.

HELD
No. The existence of redundancy or retrenchment is a
question of fact. AMA failed to sufficiently prove either
of the two.
Redundancy exists when the service capability of the
workforce is in excess of what is reasonably needed to
meet the demands of the business enterprise. Among
the requisites of a valid redundancy program are: (1)
the good faith of the employer in abolishing the
redundant position; and (2) fair and reasonable criteria
in ascertaining what positions are to be declared
redundant and accordingly abolished.
The determination that the employee's services are no
longer necessary or sustainable for being redundant is
an exercise of business judgment of the employer. The
wisdom or soundness of this judgment is not subject to
discretionary review of the Labor Arbiter and the
NLRC, provided there is no violation of law and no
showing that it was prompted by an arbitrary or
malicious act. In other words, it is not enough for a
company to merely declare that it has become
overmanned. It must produce adequate proof of such
redundancy to justify the dismissal of the affected
employees.

To date, no denite guidelines have yet been set to


determine whether the alleged losses are sucient to
justify the reduction of work hours. If the standards set
in determining the justiability of nancial losses under
Article 283 (i.e., retrenchment) or Article 286 (i.e.,
suspension of work) of the Labor Code were to be
considered, petitioners would end up failing to meet
the standards. On the one hand, Article 286 applies
only when there is a bona de suspension of the
employer's operation of a business or undertaking for
a period not exceeding six (6) months. 49 Records
show that Linton continued its business operations
during the eectivity of the compressed workweek,
which spanned more than the maximum period. On the
other hand, for retrenchment to be justied, any claim
of actual or potential business losses must satisfy the
following standards: (1) the losses incurred are
substantial and not de minimis; (2) the losses are
actual or reasonably imminent; (3) the retrenchment is
reasonably necessary and is likely to be eective in
preventing the expected losses; and (4) the alleged
losses, if already incurred, or the expected imminent
losses sought to be forestalled, are proven by
sucient and convincing evidence. 50 Linton failed to
comply with these standards.

Retrenchment, on the other hand, is the termination of


employment effected by management during periods
of business recession, industrial depression, seasonal
fluctuations, lack of work or considerable reduction in
the volume of the employer's business. Resorted to by
an employer to avoid or minimize business losses, it is
a management prerogative consistently recognized by
the Court. The necessary conditions for the company
losses to justify retrenchment are as follows:
(1) the losses incurred are substantial and not de
minimis;
(2) the losses are actual or reasonably imminent;
(3) the retrenchment is reasonably necessary and
is likely to be effective in preventing the expected
losses; and
(4)
the alleged losses, if already incurred,
or the expected imminent losses sought to be
forestalled, are proven by sufficient and
convincing evidence.

AMA COMPUTER COLLEGE V. GARCIA


G.R. No. 166703, April 14, 2008, Chico-Nazario
NOTE: The doctrine in this case focuses only on the

114

necessary arrangements.17 In order to meet the


foregoing purpose, service of the written notice must
be made individually upon each and every employee
of the company. Nevertheless, the validity of
termination of services can exist independently of the
procedural infirmity in the dismissal.

GSWU-NAFLU-KMU v. NLRC
G.R. No. 165757, October 17, 2006, Carpio Morales
On September 8, 1999, petitioners Galaxie Steel
Workers Union and Galaxie employees filed a
complaint for illegal dismissal, unfair labor practice,
and money claims against Galaxie. The Labor Arbiter,
by Decision of October 30, 2000, declared valid
Galaxies closure of business but nevertheless ordered
it to pay petitioner-employees separation pay, pro-rata
13th month pay, and vacation and sick leave credits.

BECTON DICKINSON PHILS. INC. and WILFREDO


JOAQUIN
G.R. Nos. 159969 & 160116, November 15, 2005,
Garcia
In 1989, Becton, Phils. had two (2) main divisions,
namely: (a) the Medical Division; and (b) the
Diagnostics Division. Jesus Fargas headed the
Medical Division, while the position of head of the
Diagnostics Division was vacant. Also vacant was the
position of Country Manager of Becton, Phils. On
September 12, 1989, private respondent Reinerio Z.
Esmaquel started his stint with Becton, Phils. as
Director of Sales and Marketing of the Diagnostics
Division. He held this position until March 1998. As
Sales and Marketing Director of the companys
Diagnostics Division, respondent reported to Becton,
Asias Vice President of Diagnostics Sector. He was in
charge of the overall supervision of twenty-three (23)
employees working under the sales and marketing
organization. In March, 1998, Jesus Fargas was
promoted to the position of Country Manager for
Becton, Phils. Respondent, on the other hand, was
appointed Business Director thereof, reporting, this
time, to the Country Manager instead of the Vice
President of Diagnostics Sector of Becton, Asia.
Respondent was responsible for sales and marketing
of Infectious Disease Diagnostic, Immunocytometry
System, and Instrument Service for the Asia Pacific
Region. He held this position up to December, 1999.

On appeal, the NLRC upheld the Labor Arbiters


decision but it reversed too the award for separation
pay, the closure of Galaxies business being due to
serious business losses.
ISSUE
(1) Whether or not [Galaxie] is guilty of unfair labor
practice in closing its business operations shortly after
petitioner union filed for certification election.
(2) Whether or not the written notice posted by
[Galaxie] on the company bulletin board sufficiently
complies with the notice requirement under Article 283
of the Labor Code.
RULING
Galaxies documentary evidence shows that it had
been experiencing serious financial losses at the time
it closed business operations; supported by substantial
evidence consisting of the audited financial
statements showing that Galaxie continuously incurred
losses from 1997 up to mid-1999. True, the union was
seeking the holding of a certification election at the
time that Galaxie closed its business operation, but
that, without more, was not sufficient to attribute antiunionism against Galaxie. Petitioners failed to present
concrete evidence supporting their claim of unfair labor
practice. Unfair labor practice refers to acts that violate
the workers right to organize, and are defined in
Articles 248 and 261 of the Labor Code. The prohibited
acts relate to the workers right to self-organization and
to the observance of Collective Bargaining Agreement
without which relation the acts, no matter how unfair,
are not deemed unfair labor practices.

In January, 2000, Becton, Phils. reorganized under the


concept of Go To Market. For purposes of selling its
products, Becton, Phils. had organized two (2)
divisions, namely, the Sales Division and the
Marketing Division, and designated respondent as the
Director of Sales. As such, respondent was
responsible for the whole sales force for all products of
the company. Under the foregoing reorganization, the
Sales Division was responsible for in-market sales or
the sale of all the products of the company to the
distributors. The distributors who buy the products at
wholesale, in turn, are the ones selling the products to
the end users. The company is, however, generally
responsible for the sale promotions of the companys
products to the end users.

With regard to the notice requirement, the Labor


Arbiter found, and it was upheld by the NLRC and the
Court of Appeals, that the written notice of closure or
cessation of Galaxies business operations was posted
on the company bulletin board one month prior to its
effectivity. The mere posting on the company bulletin
board does not, however, meet the requirement under
Article 283 of "serving a written notice on the workers."
The purpose of the written notice is to inform the
employees of the specific date of termination or
closure of business operations, and must be served
upon them at least one month before the date of
effectivity to give them sufficient time to make the

Eventually, respondent was also appointed one of the


members of the Becton Dickinson (BD) Philippines
Leadership Team, a group within Becton, Phils., which
was responsible for the formulation of policies and
rules of the company.
In November, 2000, pursuant to its established policies

115

and guidelines for terminating employees, Becton,


Phils. retrenched nine (9) employees, giving them
separation benefits in accordance with such
guidelines. Its very own Country Manager, Jesus
Fargas, was among those whose services were
terminated. Accordingly, each of them received
separation benefits. In addition thereto, the nine (9)
terminated employees were also paid retirement
benefits.

of a particular product line or service activity previously


manufactured or undertaken by the enterprise.
Furthermore, 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.

On May 16, 2001, Becton, Asia announced the


appointment of petitioner Wilfredo Joaquin, a former
Filipino citizen who later acquired American
citizenship, as the new Country Manager of Becton,
Phils. Being a stranger to the companys operations, as
well as to the customers of Becton, Phils., Joaquin
sought respondents assistance to address serious
problems of the company, and to orient him in the
mechanics of the companys sales and marketing
efforts in the Philippines.

A lowly employee or a sales manager, as in the


present case, who is confronted with the same
dilemma of whether signing a release and quitclaim
and accept what the company offers them, or refusing
to sign and walk out without receiving anything, may
do succumb to the same pressure, being very well
aware that it is going to take quite a while before he
can recover whatever he is entitled to, because it is
only after a protracted legal battle starting from the
labor arbiter level, all the way to this Court, can he
receive anything at all. The Court understands that
such a risk of not receiving anything whatsoever,
coupled with the probability of not immediately getting
any gainful employment or means of livelihood in the
meantime, constitutes enough pressure upon anyone
who is asked to sign a release and quitclaim in
exchange of some amount of money which may be
way below what he may be entitled to based on
company practice and policy or by law.

Then, on that fateful day of July 10, 2001 or barely two


(2) months from Joaquins assumption of his position
as Country Manager, Becton, Phils. served upon
respondent a notice of terminationof employment
effective August 10, 2001, on the ground that his
position has been declared redundant.
Respondent was terminated and required to sign a
Release and Quitclaim,[14] otherwise, his separation
pay and retirement benefits will be withheld.
Respondent found no other alternative but to give in,
and reluctantly signed the document.

It may likewise be noted that what respondent received


when he signed the Release and Quitclaim was less
than half of what he is entitled to under the
circumstances, as correctly computed by the Labor
Arbiter in his March 26, 2002 decision. This is another
reason why the Court cannot rely upon such Release
and Quitclaim to validly bar respondent from thereafter
claiming additional benefits from petitioner Becton,
Phils..

ISSUE
Whether or not private respondent Esmaquel is
illegally dismissed.
RULING
Yes. Petitioners utterly failed to establish by
substantial evidence that indeed, respondents position
in the company became redundant due to concrete
and real factors recognized by law and relevant
jurisprudence. Redundancy is one of the authorized
causes of dismissal. Redundancy in an employers
personnel force necessarily or even ordinarily refers to
duplication of work. That no other person was holding
the same position that private respondent held prior to
the termination of his services, does not show that his
position had not become redundant. Indeed, in any
well organized business enterprise, it would be
surprising to find duplication of work and two (2) or
more people doing the work of one person. We believe
that redundancy, for purposes of the Labor Code,
exists where the services of an employee are in
excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a
position is redundant where it is superfluous, and
superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of
workers, decrease in volume of business, or dropping

ORIENTAL PETROLEUM v. FUENTES


GR. No. 151818, October 14, 2005
Petitioner
Oriental
Petroleum
and
Minerals
Corporation, through its Senior Vice President for
Operations and Administration, Apollo P. Madrid,
informed respondents of its retrenchment program as
a consequence of which respondents would be
terminated from employment. They were also advised
that they would receive greater separation benefits if
they qualify for retirement or resignation benefits under
the retirement plan. Petitioner and respondents could
not agree on the amounts. The latter then filed
separate complaints8 for illegal retrenchment with
prayer for the payment of backwages, actual damages,
moral and exemplary damages, and attorneys fees.
Labor Arbiter dismissed the complaint. NLRC held that
petitioners serious financial difficulties necessitated
the retrenchment of respondents.

116

ISSUE
Whether or not petitioner undertook a valid
retrenchment
as
it
was
already actually
sufferingserious financial losses

FASAP v. PAL
G.R. No. 178083, July 22, 2008, Ynares Santiago
Petitioner is the EBR of respondents flight attendants
and stewards. Due to its alleged financial loss,
respondent made a retrenchment scheme, thereby,
terminating many of the employees, including
members of petitioner union. As a consequence,
petitioner filed for illegal dismissal on the ground that
the retrenchment scheme of the respondent is illegal.

HELD
Retrenchment is one of the authorized causes
recognized by the Labor Code for the dismissal of
employees. It is a management prerogative resorted to
by employers to avoid or minimize business
losses. The Court has laid down the following
standards that a company must meet to justify
retrenchment and to foil abuse:
1.
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.
2.
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.
3.
thirdly, it
must
be
reasonably
necessary and likely to effectively prevent the
expected losses.
4.
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.

ISSUE
Whether or not the retrenchment scheme by PAL is
valid
RULING
No. while it is true that the exercise of this right is a
prerogative of management, there must be faithful
compliance
with
substantive
and
procedural
requirements of the law and jurisprudence, for
retrenchment strikes at the very heart of the workers
employment, the lifeblood upon which he and his
family owe their survival. Retrenchment is only a
measure of last resort, when other less drastic means
have been tried and found to be inadequate.
The burden clearly falls upon the employer to prove
economic or business losses with sufficient supporting
evidence. Its failure to prove these reverses or losses
necessarily means that the employees dismissal was
not justified. Any claim of actual or potential business
losses must satisfy certain established standards, all of
which must concur, before any reduction of personnel
becomes legal. These are:
(1) That 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 imminent as perceived
objectively and in good faith by the
employer;

Financial statements, in themselves, do not suffice to


meet the stringent requirement of the law that the
losses must be substantial, continuing and without any
immediate prospect of abating. Retrenchment being a
measure of last resort, petitioner should have been
able to demonstrate that it expected no abatement of
its losses in the coming years. Petitioner having failed
in this regard, we find that the Court of Appeals did not
err in dismissing as unimpressive and insufficient
petitioners audited financial statements.

(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 (1) month pay or at
least one-half () month pay for every
year of service, whichever is higher;
(4) That the employer exercises
prerogative to retrench employees
good faith for the advancement of
interest and not to defeat

117

its
in
its
or

circumvent the employees right to


security of tenure; and,

Viajar. On appeal, the NLRC affirmed LAs decision.


Viajar filed a petition before the Court of Appeals. The
CA granted the petition. Thus, GMC filed this instant
petition for review before the Supreme Court.

(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,
efficiency,
seniority,
physical fitness, age, and financial
hardship for certain workers.[45]

ISSUE
Whether or not Viajar was validly terminated from
GMC
HELD
The petition is denied. Art. 283 of the Labor Code
provides that redundancy is one of the authorized
causes for dismissal. It is imperative that the employer
must comply with the requirements for a valid
implementation of the companys redundancy program,
to wit: (a) the employer must serve a written notice to
the affected employees and the DOLE at least one (1)
month before the intended date of retrenchment; (b)
the employer must pay the employees a separation
pay equivalent to at least one month pay or at least
one month pay for every year of service, whichever is
higher; (c) the employer must abolish the redundant
positions in good faith; and (d) the employer must set
fair and reasonable criteria in ascertaining which
positions are redundant and may be abolished.

In the instant case, PAL failed to substantiate its claim


of actual and imminent substantial losses which would
justify the retrenchment of more than 1,400 of its cabin
crew personnel. Although the Philippine economy was
gravely affected by the Asian financial crisis, however,
it cannot be assumed that it has likewise brought PAL
to the brink of bankruptcy. Likewise, the fact that PAL
underwent
corporate
rehabilitation
does
not
automatically justify the retrenchment of its cabin crew
personnel.
Moreover, in assessing the overall performance of
each cabin crew personnel, PAL only considered the
year 1997. This makes the evaluation of each cabin
attendants efficiency rating capricious and prejudicial
to PAL employees covered by it. By discarding the
cabin crew personnels previous years of service and
taking into consideration only one years worth of job
performance for evaluation, PAL virtually did away with
the concept of seniority, loyalty and past efficiency,
and treated all cabin attendants as if they were on
equal footing, with no one more senior than the other.

MARICALUM MINING V. DECORION


G.R. No. 158637, April 12, 2006, Tinga
Decorion was a regular employee of Maricalum
Mining. Because of his alleged insubordination for
failure to attend a meeting, he was placed under
preventive suspension. He was also not allowed to
report for work the following day. [See Ruling for other
relevant facts and dates]

In sum, PALs retrenchment program is illegal because


it was based on wrongful premise (Plan 14, which in
reality turned out to be Plan 22, resulting in
retrenchment of more cabin attendants than was
necessary) and in a set of criteria or rating variables
that is unfair and unreasonable when implemented. It
failed to take into account each cabin attendants
respective service record, thereby disregarding
seniority and loyalty in the evaluation of overall
employee performance.

ISSUE
Was the suspension justified?
HELD
No.
Sections 8 and 9 of Rule XXIII, Book V of the
Implementing Rules provide as follows:
Section 8. 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.

GENERAL MILLING CORPORATION v. VIOLETA L.


VIAJAR
G.R. No. 181738, January 30, 2013
Violeta Viajar received a Letter-Memorandum from
General Milling Corporation (GMC) informing her that
her services are no longer needed because her
position as Purchasing Staff was deemed redundant.
When Viajar reported for work on October 31, 2003, a
month prior the effectivity from her severance from
GMC, the guard on duty prevented her from entering
the companys premises. She was also asked to sign
an Application for Retirement and Benefits. Viajar
refused to sign. Thus, she filed a complaint for illegal
dismissal. The Labor Arbiter ruled in favor of GMC and
held that the latter acted in good faith in terminating

Section 9. Period of Suspension --No preventive suspension shall last


longer than thirty (30) days. XXX

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

118

presence in the companys premises posed a serious


threat to his employer and co-workers. The preventive
suspension was clearly unjustified.

answer directly the allegations attributed to her; and


(3) Memorandum seeking from the private respondent
an explanation regarding the incidents reported by
Uniwide employees and security personnel for alleged
irregularities committed by the private respondent such
as allowing the entry of unauthorized persons inside a
restricted area during non-office hours, falsification of
or inducing another employee to falsify personnel or
company records, sleeping and allowing a nonemployee to sleep inside the private office,
unauthorized search and bringing out of company
records, purchase of damaged home furnishing items
without the approval from superior, taking advantage
of buying damaged items in large quantity, alteration of
approval slips for the purchase of damaged items and
abandonment of work.

What is more, Decorions suspension persisted


beyond the 30-day period allowed by the Implementing
Rules. XXX . The Court ruled that preventive
suspension which lasts beyond the maximum period
allowed by the Implementing Rules amounts to
constructive dismissal.
Similarly, from the time Decorion was placed under
preventive suspension on April 11, 1996 up to the time
a grievance meeting was conducted on June 5, 1996,
55 days had already passed. Another 48 days went by
before he filed a complaint for illegal dismissal on July
23, 1996. Thus, at the time Decorion filed a complaint
for illegal dismissal, he had already been suspended
for a total of 103 days.

In a letter, private respondent answered the allegations


made against her. On August 2, 1998, Apduhan issued
a Memorandum, advising Kawada of a hearing
scheduled on August 12, 1998 and warning her that
failure to appear shall constitute as waiver and the
case shall be submitted for decision based on
available papers and evidence. On August 3, 1998,
private respondent thinking that she was constructively
dismissed, filed a case for illegal dismissal before the
Labor Arbiter (LA). On August 8, 1998, Apduhan sent
a letter addressed to private respondent, which the
latter received on even date, advising private
respondent to report for work, as she had been absent
since August 1, 1998; and warning her that upon her
failure to do so, she shall be considered to have
abandoned her job.

Decorions preventive suspension had already ripened


into constructive dismissal at that time. While actual
dismissal and constructive dismissal do take place in
different fashion, the legal consequences they
generate are identical.
UNIWIDE SALES WAREHOUSE CLUB VS. NLRC
G.R. No. 154503, February 29, 2008
TOPIC: Constructive Dismissal; Abandonment
DOCTRINE: Case law defines constructive dismissal
as a cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution in pay or
both; or when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable to the
employee.

On September 1, 1998, Apduhan issued a


Memorandum stating that since private respondent
was unable to attend the scheduled August 12, 1998
hearing, the case was evaluated on the basis of the
evidence on record; and enumerating the pieces of
evidence of the irregularities and violations of company
rules committed by private respondent, the latter's
defenses and the corresponding findings by Uniwide.
Kawada was thereafter terminated from her
employment on the grounds of violations of Company
Rules, Abandonment of Work and loss of trust and
confidence.

The test of constructive dismissal is whether a


reasonable person in the employee's position would
have felt compelled to give up his position under the
circumstances. It is an act amounting to dismissal but
made to appear as if it were not. In fact, the employee
who is constructively dismissed may be allowed to
keep on coming to work. Constructive dismissal is
therefore a dismissal in disguise. The law recognizes
and resolves this situation in favor of employees in
order to protect their rights and interests from the
coercive acts of the employer.

ISSUE
Whether or
dismissed.

FACTS
Amalia Kawada, a Full Assistant Store Manager
received 3 Memorandums issued by the Store
Manager Apduhan: (1) summarizing the various
reported
incidents
signifying
unsatisfactory
performance on the latter's part which include the
commingling of good and damaged items, sale of a
voluminous quantity of damaged toys and ready-towear items at unreasonable prices, and failure to
submit inventory reports; (2) Memorandum satting that
the answers given were all hypothetical and did not

not

respondent

was

constructively

HELD
No. The Court finds that private respondent's
allegation of harassment is a specious statement
which contains nothing but empty imputation of a fact
that could hardly be given any evidentiary weight by
this Court. Private respondent's bare allegations of
constructive dismissal, when uncorroborated by the
evidence on record, cannot be given credence.

119

The right to impose disciplinary sanctions upon an


employee for just and valid cause, as well as the
authority to determine the existence of said cause in
accordance with the norms of due process, pertains in
the first place to the employer. Precisely, petitioners
gave private respondent successive memoranda so as
to give the latter an opportunity to controvert the
charges against her. Clearly, the memoranda are not
forms of harassment, but petitioners' compliance with
the requirements of due process.

NORKIS TRADING CO. INC. and/or MANUEL


GASPAR
E.
ALBOS,
JR.
v.
MELVIN GNILO
G.R. No. 159730, February 11, 2008, Austria-Martinez
Melvin R. Gnilo (respondent) was initially hired by
Norkis Trading Co., Inc. (petitioner Norkis) as Norkis
Installment Collector (NIC) in April 1988. Manuel
Gaspar E. Albos, Jr. (petitioner Albos) is the Senior
Vice-President of petitioner Norkis. Respondent held
various positions in the company until he was
appointed as Credit and Collection Manager of Magna
Financial Services Group, Inc.-Legaspi Branch,
petitioner Norkiss sister company, in charge of the
areas of Albay and Catanduanes with travel and
transportation allowances and a service car.

On petitioners' claim of abandonment by private


respondent, well-settled is the rule that to constitute
abandonment of work, two elements must concur: (1)
the employee must have failed to report for work or
must have been absent without valid or justifiable
reason, and (2) there must have been a clear intention
on the part of the employee to sever the employeremployee relationship manifested by some overt act.
The employer has the burden of proof to show the
employee's deliberate and unjustified refusal to
resume his employment without any intention of
returning. Mere absence is not sufficient. There must
be an unequivocal intent on the part of the employee
to discontinue his employment.

A special audit team was conducted in respondent's


office in Legaspi, Albay from March 13 to April 5, 2000
when it was found out that respondent forwarded the
monthly collection reports of the NICs under his
supervision without checking the veracity of the same.
It appeared that the monthly collection highlights for
the months of April to September 1999 submitted by
respondent to the top management were all overstated
particularly the account handled by NIC Dennis Cadag.
Respondent was then charged by petitioners' Inquiry
Assistance Panel (Panel) with negligence of basic
duties and responsibilities resulting in loss of trust and
confidence and laxity in directing and supervising his
own
subordinates.
During
the
investigation,
respondent admitted that he was negligent for failing to
regularly check the report of each NIC under his
supervision; that he only checked at random the NIC's
monthly collection highlight reports; and that as a
leader, he is responsible for the actions of his
subordinates. He however denied being lax in
supervising his subordinates, as he imposed discipline
on them if the need arose.

Private respondent's failure to report for work despite


the August 8, 1998 letter sent by Apduhan to private
respondent advising the latter to report for work is not
sufficient to constitute abandonment. It is a settled rule
that failure to report for work after a notice to return to
work has been served does not necessarily constitute
abandonment.
Private respondent mistakenly believed that the
successive memoranda sent to her from March 1998
to June 1998 constituted discrimination, insensibility or
disdain which was tantamount to constructive
dismissal. Thus, private respondent filed a case for
constructive dismissal against petitioners and
consequently stopped reporting for work.

On May 30, 2000, petitioner Norkis through its Human


Resource Manager issued a memorandum placing
respondent under 15 days suspension without pay,
travel and transportation allowance, effective upon
receipt thereof. Respondent filed a letter protesting his
suspension and seeking a review of the penalty
imposed.

The Court finds that petitioners were not able to


establish that private respondent deliberately refused
to continue her employment without justifiable reason.
To repeat, the Court will not make a drastic conclusion
that private respondent chose to abandon her work on
the basis of her mistaken belief that she had been
constructively dismissed by Uniwide.

Another memorandum4 dated June 30, 2000 was


issued to respondent requiring him to report on July 5,
2000 to the head office of petitioner Norkis in
Mandaluyong City for a re-training or a possible new
assignment without prejudice to his request for a
reconsideration or an appeal of his suspension. He
was then assigned to the Marketing Division directly
reporting to petitioner Albos.

Nonetheless, the Court agrees with the findings of the


LA that the termination of private respondent was
grounded on the existence of just cause under Article
282 (c) of the Labor Code or willful breach by the
employee of the trust reposed on him by his employer
or a duly authorized representative.
Private respondent occupies a managerial position. As
a managerial employee, mere existence of a basis for
believing that such employee has breached the trust of
his employer would suffice for his dismissal.

In a letter5 dated July 27, 2000, respondent requested


petitioner Albos that he be assigned as Sales Engineer
or to any position commensurate with his

120

qualifications. However, on July 28, 2000, respondent


was formally appointed as Marketing Assistant to
petitioner
Albos,
which
position
respondent
subsequently assumed. However, on October 4, 2000,
respondent filed with the Labor Arbiter (LA) a
complaint for illegal suspension, constructive
dismissal, non-payment of allowance, vacation/sick
leave, damages and attorney's fees against
petitioners.

to review the records and the arguments of the parties


to resolve the factual issues and render substantial
justice to the parties.
Well-settled is the rule that it is the prerogative of the
employer to transfer and reassign employees for valid
reasons and according to the requirement of its
business. An owner of a business enterprise is given
considerable leeway in managing his business. Our
law recognizes certain rights, collectively called
management prerogative as inherent in the
management of business enterprises. 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.

On March 30, 2001, the LA rendered his


decision6 dismissing the complaint for lack of merit.
The LA found that the position of Credit and Collection
Manager held by respondent involved a high degree of
responsibility requiring trust and confidence; that his
failure to observe the required procedure in the
preparation of reports, which resulted in the overstated
collection reports continuously for more than six
months, was sufficient to breach the trust and
confidence of petitioners and was a valid ground for
termination; that instead of terminating him, petitioners
merely imposed a 15-day suspension which was not
illegal; and that petitioners exercised their inherent
prerogative as an employer when they appointed
respondent as a Marketing Assistant.

The employer bears the burden of showing that the


transfer is not unreasonable, inconvenient or
prejudicial to the employee; and does not involve a
demotion in rank or a diminution of his salaries,
privileges and other benefits.18Should the employer fail
to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal.

Respondent appealed the LA decision to the National


Labor Relations Commission (NLRC), which reversed
the LAs decision. It held that the transfer of
respondent from the position of Credit and Collection
Manager to Marketing Assistant resulted in his
demotion in rank from Manager to a mere rank and file
employee, which was tantamount to constructive
dismissal and therefore illegal.

Constructive dismissal is defined as a quitting because


continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in
rank or a diminution of pay.20 Likewise, constructive
dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer becomes
unbearable to the employee, leaving him with no
option but to forego his continued employment.21

Petitioners filed a petition for certiorari with the CA.


Subsequently, they also filed a Motion for the Issuance
of a Temporary Restraining Order or a Writ of
Preliminary Injunction, as respondent had filed a
Motion for the Issuance of a Writ of Execution with the
NLRC. On August 25, 2003, the CA denied petitioners
Motion for Reconsideration.
Issue:
WON
private
dismissed.

respondent

was

A transfer is defined as a "movement from one position


to another which is of equivalent rank, level or salary,
without break in service."22 Promotion, on the other
hand, is the "advancement from one position to
another with an increase in duties and responsibilities
as authorized by law, and usually accompanied by an
increase in salary."23Conversely, 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.

constructively

Ruling:
Petitioners contend that factual findings of quasijudicial agencies, while generally accorded finality,
may be reviewed by this Court when the findings of the
NLRC and the LA are contradictory; that in the
exercise of its equity jurisdiction, this Court may look
into the records of the case to re-examine the
questioned findings.

In this case, while the transfer of respondent from


Credit and Collection Manager to Marketing Assistant
did not result in the reduction of his salary, there was a
reduction in his duties and responsibilities which
amounted to a demotion tantamount to a constructive
dismissal as correctly held by the NLRC and the CA.

The general rule is that the factual findings of the


NLRC, as affirmed by the CA, are accorded high
respect and finality unless the factual findings and
conclusions of the LA clash with those of the NLRC
and the CA, as it appears in this case. Thus we have

As Credit and Collection Manager, respondent was


clothed with all the duties and responsibilities of a
managerial employee. On the other hand, the work of

121

a Marketing Assistant is clerical in nature, which does


not involve the exercise of any discretion.

FACTS
Rodelia S. Fungo, petitioner, alleged in her petition
that she was employed as secretary of respondent Fr.
Servillano B. Bustamante, rector of Lourdes School of
Mandaluyong. Respondent Fr. Bustamante authorized
her to file and keep confidential documents in his
office. He entrusted to her the duplicate keys of the
filing cabinet and she was allowed to take any
document therefrom whenever she had to bring some
matters to his attention.

There is constructive dismissal 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.
Moreover, petitioners failed to refute respondents
claim that as Credit and Collection Manager, he was
provided with a service car which was no longer
available to him as Marketing Assistant; thus, such
was a reduction in his benefit.

In January 1996, petitioners husband, Nicolas Fungo,


an elementary school teacher in the same school, was
dismissed from the service because of his low
performance rating. According to petitioner, her
husbands services were terminated because of his
statement during a faculty meeting that the Mission
and Vision Statement of the school is not being
practiced. He was also one of those who signed a
letter asking the Provincial Minister of the Capuchins in
the Philippines to appoint Fr. Miguel Peralta either as
rector or vice rector of the school. Fr. Peralta is a close
rival of respondent Fr. Bustamante since their
seminary days.

Anent
petitioners'
claim
that
respondent
unconditionally accepted his formal appointment as
Marketing Assistant on August 3, 2000, we note that in
a letter dated July 27, 2000 addressed to petitioner
Albos when he learned that he would be assigned as a
Marketing Assistant, respondent had expressed
reservations on such assignment and asked that he
instead be assigned as Sales Engineer or to any
position
commensurate
to
his
qualifications.
Respondent could not be faulted for accepting the
position of a Marketing Assistant, since he did so and
stayed put in order to compare and evaluate his
position. However, he experienced not only a demotion
in his duties and responsibilities, an undignified
treatment by his immediate superior, which prompted
him to file this case.

Petitioner then wrote respondent Fr. Bustamante


questioning the performance rating given to her
husband. She attached to her letter documents
containing the summary of efficiency ratings of all the
teachers. She retrieved these documents from the
filing cabinet.

We note that the alleged overstated collection reports


of three NICs under respondent's supervision
submitted in 1997, were already mentioned in the IAP
report of the 1999 incident for which respondent was
meted the penalty of 15- day suspension without
salary, travel and transportation allowance; thus, the
same could no longer be used to justify his transfer.
Moreover, respondent's demotion, which was a
punitive action, was, in effect, a second penalty for the
same negligent act of respondent.

On March 8, 1996 petitioner received a letter from


respondent Fr. Bustamante requiring her to explain in
writing why she should not be dismissed from
employment for willful breach of trust reposed on her.
On March 11, 1996, petitioner filed her written
explanation.

Doctrine: Resignation is the voluntary act of


employees who are compelled by personal reasons to
disassociate themselves from their employment. It
must be done with the intention of relinquishing an
office, accompanied by the act of abandonment.
Resignation is inconsistent with the filing of the
complaint.

Petitioner further alleged in her petition that in the


morning of April 1, 1996, Fr. Manuel Remirez, the
school treasurer, summoned her to his office.
Thereupon, he compelled her to tender her resignation
within 30 minutes, otherwise, she will not receive her
separation pay. Petitioner pleaded for one day
deferment so she could consult her aunt, Milagros
Tadeo, former assistant principal on academics for the
elementary department of the same school. However,
Fr. Remirez denied her plea. Considering that her
husband was jobless and that her family was in
financial predicament, petitioner submitted her
resignation letter on the very same day. Subsequently,
she received her separation pay.

There is constructive dismissal if an act of clear


discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee
that it would foreclose any choice by him except to
forego her continued employment.

On January 28, 1997, petitioner filed with the Labor


Arbiter a complaint for illegal dismissal with prayer for
reinstatement and payment of backwages and other
benefits, as well as for an award of moral and
exemplary damages and attorneys fees. Petitioner

Petition denied
RODELIA FUNGO V. LOURDES SCHOOL OF
MANDALUYONG
G.R. No. 152531, July 27, 2007

122

alleged therein that she was forced to resign and to


accept her separation pay; and that Fr. Remirez took
advantage of her economic plight, compelling her to
submit her resignation letter within 30 minutes.

her resignation within 30 minutes. He threatened her


that if she would not resign, her separation pay would
be forfeited. These circumstances glaringly show that
respondents wanted to terminate her employment, but
they made it appear that she voluntarily resigned.

The LA found that petitioner was constructively


dismissed. This was reversed by the NRLC holding
that petitioner voluntarily resigned. When her motion
for reconsideration was denied, petitioner went to CA
which dismissed the petition. With her motion for
reconsideration being denied, petitioner elevated the
case to the SC.

Resignation is the voluntary act of employees who are


compelled by personal reasons to disassociate
themselves from their employment. It must be done
with the intention of relinquishing an office,
accompanied by the act of abandonment. It would
have been illogical therefore for the petitioner to resign
and then file a complaint for illegal dismissal.
Resignation is inconsistent with the filing of the
complaint.

ISSUE
WON the petitioner was constructively dismissed from
the service. - YES

There is constructive dismissal if an act of clear


discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee
that it would foreclose any choice by him except to
forego her continued employment.

RULING
Respondents argue that petitioners act of retrieving the
document from the files inside the rectors office was
improper and constituted a willful breach of the trust
reposed upon her by Fr. Bustamante. Such breach of
trust is a just cause for terminating her services.

An examination of the records of this case convinced


us that petitioner was indeed made to resign against
her will with threat that she will not be given her
separation pay should she fail to do so. Clearly, her
consent was vitiated. Indeed, it is very unlikely that
petitioner, who worked in the school for almost fifteen
(15) years, would simply resign voluntarily. Her receipt
of the benefits could be considered as an act of selfpreservation, taking into consideration the financial
predicament she and her family were then facing.
Thus, we rule that petitioner was constructively
dismissed from her employment.

To be a valid ground for dismissal, loss of trust and


confidence must be based on a willful breach of trust
and founded on clearly established facts. 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 Nokom v. National Labor Relations Commission, we
set the guidelines for the application of loss of
confidence as a just cause for dismissing an employee
from the service, thus:
a. loss of confidence should not be simulated;
b. it should not be used as a subterfuge for
causes which are improper, illegal or unjustified;
c. it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and
d. it must be genuine, not a mere afterthought to
justify earlier action taken in bad faith.

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 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. Considering, however, that the nature
of petitioners work requires constant interaction with
Fr. Bustamante, their working relationship has been
strained. Thus, the payment of separation pay and
other benefits in lieu of reinstatement is in order.

In the instant case, Fr. Bustamante entrusted to


petitioner various documents in his office. She could
take any document from the filing cabinet inside his
office. While she retrieved documents pertaining to the
efficiency ratings of all teachers in the school for the
year 1990-1991, such act did not constitute a breach
of trust and confidence since she did not show those
documents to any other person except to Fr.
Bustamante himself. Significantly, he did not dispute
the fact that petitioner had access to the records.

THE
UNIVERSITY
OF
THE IMMACULATE
CONCEPTION V. NLRC
G.R. No. 181146, January 26, 2011, Carpio
Private respondent Teodora C. Axalan is a regular
faculty member in the Petitioner Uiversity holding the
position of Associate Professor II. From 18 November
to 22 November 2002, Axalan attended a seminar in
Quezon City on website development. Axalan then
received a memorandum from Dean Maria Rosa
Celestial asking her to explain in writing why she
should not be dismissed for having been absent
without official leave. In her letter, Axalan claimed that

When petitioner asked Fr. Bustamante why her


husbands performance rating was low, Fr. Remirez
summoned her to his office and urged her to tender

123

ROBINSONS
GALLERIA/ROBINSONS
SUPERMARKET CORPORATION and/or JESS
MANUEL v. IRENE R. RANCHEZ
G.R. No. 177937, January 19, 2011

she held online classes while attending the seminar.


She explained that she was under the impression that
faculty members would not be marked absent even if
they were not physically present in the classroom as
long as they conducted online classes.

Respondent Ranchez was a probationary employee


for 5 months. She was hired as a cashier by
Robinsons sometime within that period. Two weeks
after she was hired, she reported the loss of cash
which she had placed in the company locker. She
offered to pay for the lost amount but the Operations
Manager of Robinsons had her strip-searched then
reported her to the police even though they found
nothing on her person. An information for Qualified
Theft was filed with the Quezon City Regional Trial
Court. She was detained for 2 weeks for failure to
immediately post bail. Weeks later, respondent
Ranchez filed a complaint for illegal dismissal and
damages. A year later, Robinsons sent to respondent
by mail a notice of termination and/or notice of
expiration of probationary employment.

ISSUE
Was Axalan constructively dismissed?
HELD
NO.
Constructive dismissal occurs when there is cessation
of work because continued employment is rendered
impossible, unreasonable, or unlikely as when there is
a demotion in rank or diminution in pay or when a clear
discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee leaving the latter
with no other option but to quit.
In this case however, there was no cessation of
employment relations between the parties. It
is unrefuted that Axalan promptly resumed teaching at
the university right after the expiration of the
suspension period. In other words, Axalan never quit.
Hence, Axalan cannot claim that she was left with no
choice but to quit, a crucial element in a finding of
constructive dismissal. Thus, Axalan cannot be
deemed to have been constructively dismissed.

The Labor Arbiter dismissed the complaint for illegal


dismissal, alleging that at the time of filing respondent
Ranchez had not yet been terminated. She was merely
investigated. However, the NLRC reversed this ruling,
stating that Ranchez was illegally dismissed and that
Robinson's should reinstate her. It held that Ranchez
was deprived of due process when she was stripsearched and sent to jail for two weeks because such
amounted to constructive dismissal, making it
impossible for the respondent to continue under the
employment. Even though she was merely a
probationary employee, the lapse of the probationary
contract did not amount to a valid dismissal because
there was already an unwarranted constructive
dismissal beforehand.

Note that on the first AWOL incident, the university


even offered to drop the AWOL charge
against Axalan if she would only write a letter of
contrition.
But Axalan adamantly
refused
knowing fully well that the administrative case would
take its course leading to possible sanctions. She
cannot now be heard that the imposition of the penalty
of six-month suspension without pay for each AWOL
charge is unreasonable. We are convinced
that Axalan was validly suspended for cause and in
accord with procedural due process.

ISSUE
Whether respondent was legally terminated from
employment
by
petitioners.

The Court recognizes the right of employers to


discipline its employees for serious violations of
company rules after affording the latter due process
and if the evidence warrants. The university, after
affording Axalan due process and finding her guilty of
incurring AWOL on two separate occasions, acted well
within the bounds of labor laws in imposing the penalty
of six-month suspension without pay for each
incidence of AWOL.

HELD
NO. The petition is unmeritorious.

As a learning institution, the university cannot be


expected to take lightly absences without official leave
among its employees, more so among its faculty
members even if they happen to be union officers. To
do so would send the wrong signal to
the studentry and the rest of its teaching staff that
irresponsibility is widely tolerated in the academe.

A probationary employee, like a regular employee,


enjoys security of tenure. However, in cases of
probationary employment, aside from just or
authorized causes of termination, an additional ground
is provided under Article 281 of the Labor Code,i.e.,
the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance
with reasonable standards made known by the
employer to the employee at the time of the

There is probationary employment when 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.

124

engagement.Thus, the services of an employee who


has been engaged on probationary basis may be
terminated for any of the following:

work. It was then that he found out to his dismay that


the resort was far from finished. However, he was
instructed to supervise construction and speak with
potential guests. He also undertook the overall
preparation of the guestrooms and staff for the
opening of the hotel, even performing menial tasks. As
Johnson remained unpaid since August 2007 and he
has loaned all his money to petitioners, he asked for
his salary after the resort was opened but the
petitioners refused. Johnson became very alarmed
with the situation. After another embarrassment was
handed out by petitioner Prentice in front of the staff,
which highlighted his lack of real authority in the hotel
and the disdain for him by petitioners, respondent
Johnson was forced to submit his resignation.

(1) a just or
(2) an authorized cause; and
(3) when he fails to qualify as a regular employee in
accordance with reasonable standards prescribed by
the employer.
Article 277(b) of the Labor Code mandates that the
employer shall furnish the worker, whose employment
is sought to be terminated, a written notice containing
a statement of the causes of termination, and shall
afford the latter ample opportunity to be heard and to
defend himself with the assistance of a representative
if he so desires, in accordance with company rules and
regulations pursuant to the guidelines set by the
Department of Labor and Employment.

ISSUE
Whether or not Johnson voluntarily resigned.
HELD
No. Although the resort did not open until
approximately
8th
October
2007,
Johnson's
employment began, as per Employment Agreement,
on 1st August 2007. During the interim period,
Johnson was frequently instructed by Prentice to
supervise the construction staff and speak with
potential future guests who visited the site out of
curiosity. The petitioners maintain that they have paid
the amount of P7,200.00 to Johnson for his three
weeks of service from October 8, 2007 until November
3, 2007, the date of Johnson's resignation, which
Johnson did not controvert. Even so, the amount the
petitioners paid to Johnson as his three-week salary is
significantly deficient as Johnson's monthly salary as
stipulated in their contract is P60,000.00. Thus, the
amount which Johnson should have been paid is
P45,000.00 and not P7,200.00. In light of this
deficiency, there is more reason to believe that the
petitioners withheld the salary of Johnson without a
valid reason. It only goes to show that while it was
Johnson who tendered his resignation, it was due to
the petitioners acts that he was constrained to resign.
The petitioners cannot expect Johnson to tolerate
working for them without any compensation. Since
Johnson was constructively dismissed, he was illegally
dismissed. Thus, an illegally dismissed employee is
entitled to two reliefs: backwages and reinstatement.
The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible
because of strained relations between the employee
and the employer, separation pay is granted. In effect,
an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages. The
accepted doctrine is that separation pay may avail in
lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties.
Separation pay in lieu of reinstatement may likewise
be awarded if the employee decides not to be
reinstated. Under the doctrine of strained relations, the
payment of separation pay is considered an

In the instant case, based on the facts on record,


petitioners failed to accord respondent substantive and
procedural due process.The haphazard manner in the
investigation of the missing cash, which was left to the
determination of the police authorities and the
Prosecutor's Office, left respondent with no choice but
to cry foul. Administrative investigation was not
conducted by petitioner Supermarket.On the same day
that the missing money was reported by respondent to
her immediate superior, the company already prejudged her guilt without proper investigation, and
instantly reported her to the police as the suspected
thief, which resulted in her languishing in jail for two
weeks.
The due process requirements under the Labor Code
are mandatory and may not be replaced with police
investigation or court proceedings. An illegally or
constructively dismissed employee, respondent is
entitled to: (1) either reinstatement, if viable, or
separation pay, if reinstatement is no longer viable;
and (2) backwages. These two reliefs are separate
and distinct from each other and are awarded
conjunctively.
In this case, since respondent was a probationary
employee at the time she was constructively dismissed
by petitioners, she is entitled to separation pay and
backwages. Reinstatement of respondent is no longer
viable considering the circumstances.
DREAMLAND HOTEL V. JOHNSON
G.R. No. 191455, March 12, 2014
Prentice and Johnson entered into an Employment
Agreement, which stipulates among others, that
Johnson shall serve as Operations Manager of
Dreamland from August 1, 2007 and shall serve as
such for a period of three (3) years. From the start of
August 2007, as stipulated in the Employment
Agreement, respondent Johnson already reported for

125

acceptable alternative to reinstatement when the latter


option is no longer desirable or viable.

CBA, the Union properly requested the Club to enforce


the Union security provision in their CBA and terminate
said respondents. Then, in compliance with the Unions
request, the Club reviewed the documents submitted
by the Union, requested said respondents to submit
written explanations, and thereafter afforded them
reasonable opportunity to present their side. After it
had determined that there was sufficient evidence that
said respondents malversed Union funds, the Club
dismissed them from their employment conformably
with Sec. 4(f) of the CBA.

ALABANG COUNTRY CLUB V. NLRC


G.R. No. 170287, February 14, 2008, Velasco
Petitioner Alabang Country Club, Inc. (Club) is a
domestic non-profit corporation with principal office at
Country Club Drive, Ayala Alabang, Muntinlupa City.
Respondents are Alabang Country Club Independent
Employees Union (Union),the exclusive bargaining
agent of the Clubs rank-and-file employees. The Club
and the Union entered into a Collective Bargaining
Agreement (CBA), which provided for a Union shop
and maintenance of membership shop.The Union
discovered some irregularly recorded entries,
unaccounted expenses and disbursements, and
uncollected loans from the Union funds by
respondents Pizarro, Braza, and Castueras.Despite
their explanations, respondents Pizarro, Braza, and
Castueras were expelled from the Union.the Union,
Invoking the Security Clause of the CBA, the Club
dismissed upon demand of the Union the respondents
Pizarro, Braza, and Castueras in view of their
expulsion from the Union.

Considering the foregoing circumstances, we are


constrained to rule that there is sufficient cause for the
three respondents termination from employment.
INGUILLO V. FIRST PHILIPPINE SCALES
G.R. No. 165407 June 5, 2009, Peralta
FPSI (Employer respondent corporation) and FPSI
Labor Union entered into a collective bargaining
agreement. It provided for a union security clause.
During the lifetime of the CBA Inguillo (petitioner) and
several other FPSI employees joined another union
(Nagkakaisang Lakas ng Manggagawa or NLM), NLM
filed a case for intra union dispute. The med arbiter
decided in favour of FPSILU and ordered the officers
and members of NLM to return the P90,000 union
dues erroneously collected from employees. FPSILU
sought the dismissal of petitioners on the grounds of
disloyalty and thus invoking the union security clause.
FPSI effected the dismissal. Petitioners assail the
legality of their dismissal based on the said Union
Security Clause.

ISSUE
Whether or not the respondents dismissal from the
Club was proper?
RULING
Yes. One cause for termination is dismissal from
employment due to the enforcement of the union
security clause in the CBA. Here, Art. II of the CBA on
Union security contains the provisions on the Union
shop and maintenance of membership shop. 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.

ISSUE
Is the dismissal valid?
RULING
Yes. In terminating the employment of an employee by
enforcing the Union Security Clause, the employer
needs only to determine and prove that: (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 union's decision to expel the
employee from the union or company.

In terminating the employment of an employee by


enforcing the union security clause, the employer
needs only to determine and prove that: (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 unions decision to expel the
employee from the union. These requisites constitute
just cause for terminating an employee based on the
CBAs union security provision.

In terminating the employment of an employee by


enforcing the Union Security Clause, the employer
needs only to determine and prove that: (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 union's decision to expel the
employee from the union or company.
GENERAL MILLING CORP. V. CASIO
G.R. No. 149552, March 10, 2010, Leonardo de
Castro

The three respondents were expelled from and by the


Union after due investigation for acts of dishonesty and
malversation of Union funds. In accordance with the

126

The labor union Ilaw at Buklod ng Mangagawa (IBM)


was the sole and exclusive bargaining agent of the
rank and file employees of GMC. The union entered
into a CBA with GMC. The effectivity of the said CBA
was retroactive to August 1, 1991. The CBA contained
a security provision. Gabiana, the IBM Regional
Director, furnished Casio, et al. with copies of the
Affidavits of 2 GMC employees, charging Casio, et al.
with "acts inimical to the interest of the union."
Gabiana then wrote a letter addressed to Eduardo
Cabahug (Cabahug), GMC Vice-President for
Engineering and Plant Administration, informing the
company of the expulsion of Casio, et al. from the
union pursuant to the Resolution. Gabiana likewise
requested that Casio, et al. "be immediately dismissed
from their work for the interest of industrial peace in
the plant pursuan to the security provision in the CBA.

It is similarly undisputed that IBM-Local 31, through


Gabiana, the IBM Regional Director for Visayas and
Mindanao, twice requested GMC, in the letters dated
March 10 and 19, 1992, to terminate the employment
of Casio, et al. as a necessary consequence of their
expulsion from the union. It is the third requisite that
there is sufficient evidence to support the decision of
IBM-Local 31 to expel Casio, et al. which appears to
be lacking in this case.
Irrefragably, GMC cannot dispense with the
requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to
the closed shop provision in the CBA. The rights of an
employee to be informed of the charges against him
and to reasonable opportunity to present his side in a
controversy with either the company or his own union
are not wiped away by a union security clause or a
union shop clause in a collective bargaining
agreement.

ISSUE
Whether the dismissal from employment due to the
enforcement of the union security clause in the CBA is
legal?

CRAYONS PROCESSING, INC V. FELIPE PULA

RULING
The dismissal is illegal. There is no question that in the
present case, the CBA between GMC and IBM-Local
31 included a maintenance of membership and closed
shop clause as can be gleaned from Sections 3 and 6
of Article II. IBM-Local 31, by written request, can ask
GMC to terminate the employment of the
employee/worker who failed to maintain its good
standing as a union member. Union security clauses
are recognized and explicitly allowed under Article
248(e) of the Labor Code It is State policy to promote
unionism to enable workers to negotiate with
management on an even playing field and with more
persuasiveness than if they were to individually and
separately bargain with the employer. For this reason,
the law has allowed stipulations for union shop and
closed shop as means of encouraging workers to join
and support the union of their choice in the protection
of their rights and interest vis--vis the employer In
terminating the employment of an employee by
enforcing the union security clause, the employer
needs only to determine and prove that: (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. These requisites
constitute just cause for terminating an employee
based on the union security provision of the CBA.[26]
There is no question that in the present case, the CBA
between GMC and IBM-Local 31 included a
maintenance of membership and closed shop clause
as can be gleaned from Sections 3 and 6 of Article II.
IBM-Local 31, by written request, can ask GMC to
terminate the employment of the employee/worker who
failed to maintain its good standing as a union
member.

G.R. No. 167727, July 30, 2007, Tinga


Petitioner Crayons Processing, Inc. (Crayons)
employed respondent Felipe Pula (Pula) as a
Preparation Machine Operator beginning June 1993.
On 27 November 1999, Pula, then aged 34, suffered a
heart attack and was rushed to the hospital, where he
was confined for around a week. Pulas wife duly
notified Crayons of her husbands medical condition.
Subsequently, on 25 February 2000, Pula underwent
an Angiogram Test at the Philippine Heart Center
under the supervision of a Dr. Recto, who advised him
to take a two-week leave from work. Following the
angiogram procedure, respondent was certified as fit
to work by Dr. Recto. On 11 April 2000, Pula returned
to work, but 13 days later, he was taken to the
company clinic after complaining of dizziness.
Diagnosed as having suffered a relapse, he was
advised by his physician to take a leave of absence
from work for one (1) month. Pula reported back for
work on 13 June 2000, armed with a certification from
his physician that he was fit to work. However, Pula
claimed that he was not given any post or assignment,
but instead, on 20 June 2000, he was asked to resign
with an offer from Crayons of P12, 000 as financial
assistance. Pula refused the offer and instead filed a
complaint for illegal dismissal.
ISSUE
Whether or not the dismissal without certification
issued by a competent public health authority was
proper
HELD
No. For a dismissal on the ground of disease to be
considered valid, two requisites must concur: (a) the
employee must be suffering from a disease which
cannot be cured within six months and his continued

127

employment is prohibited by law or prejudicial to his


health or to the health of his co-employees; and (b) a
certification to that effect must be issued by a
competent public health authority. The burden falls
upon the employer to establish these requisites, and in
the absence of such certification, the dismissal must
necessarily be declared illegal.

terminated the services of petitioner and that during


their mandatory conference, he even told the latter that
he could go back to work anytime but petitioner clearly
manifested that he was no longer interested in
returning to work and instead asked for separation
pay.
ISSUE
Whether or not petitioner is entitled to SepPay

As succinctly stressed in Tan v. NLRC, it is only where


there is a prior certification from a competent public
authority that the disease afflicting the employee
sought to be dismissed is of such nature or at such
stage that it cannot be cured within six (6) months
even with proper medical treatment that the latter
could be validly terminated from his job.

RULING
NO.
A plain reading of the provision clearly
presupposes that it is the employer who terminates the
services of the employee 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. It does not
contemplate a situation where it is the employee who
severs his or her employment ties.

Without the required certification, the characterization


or even diagnosis of the disease would primarily be
shaped according to the interests of the parties rather
than the studied analysis of the appropriate medical
professionals. The requirement of a medical certificate
under Article 284 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 in the protection of labor.

PADILLO v. RURAL BANK OF NABUNTURAN, INC.


G.R. No. 199338, January 21, 2013, Perlas-Bernabe
Petitioner, the late Eleazar Padillo (Padillo), was an
employee of respondent Rural Bank of Nabunturan,
Inc. (Bank) as its SA Bookkeeper. Due to liquidity
problems
in
2003,
the
Bank
took
out
retirement/insurance plans with Philippine American
Life and General Insurance Company (Philam Life) for
all its employees in anticipation of its possible closure
and the concomitant severance of its personnel.
Respondent Mark Oropeza is the president and major
stockholder of the bank. Padillo suffered a mild stroke
due to hypertension which consequently impaired his
ability to effectively pursue his work. He wrote a letter
addressed to Oropeza expressing his intention to avail
of an early retirement package. Despite several followups, his request remained unheeded. Not having
received his claimed retirement benefits, Padillo filed
with the NLRC a complaint for the recovery of unpaid
retirement benefits.

The NLRCs conclusion that no such certification was


required since Pula had effectively been absented due
to illness for more than six (6) months is unsupported
by jurisprudence and plainly contrary to the language
of the Implementing Rules. The indefensibility of such
conclusion is further heightened by the fact that Pula
was able to obtain two different medical certifications
attesting to his fitness to resume work.
Assuming that the burden did fall on Pula to establish
that he was fit to return to work, those two medical
certifications stand as incontestable in the absence of
contrary evidence of similar nature from Crayons.
Then again, the burden lies solely on Crayons to prove
that Pula was unfit to return to work.[32] Even absent
the certifications favorable to Pula, Crayons would still
be unable to justify his dismissal on the ground of ill
health or disease, without the necessary certificate
from a competent public health authority.

The Labor Arbiter dismissed Padillos complaint on the


ground that the latter did not qualify to receive any
benefits under Article 300 of the Labor Code as he
was only fifty-five (55) years old when he resigned,
while the law specifically provides for an optional
retirement age of sixty (60) and compulsory retirement
age of sixty-five (65). The NLRC reversed the Labor
Arbiters ruling. The CA reversed the NLRCs ruling but
with modification. It directed the respondents to pay
Padillo the amount of P50,000.00 as financial
assistance exclusive of the P100,000.00 Philam Life
Plan benefit.

VILLARUEL v. YEO HAN GUAN


G.R. No. 169191, June 1, 2011, Peralta
Doctrine: Since petitioner was not terminated from his
employment and, instead, is deemed to have resigned
therefrom, he is not entitled to separation pay under
the provisions of the Labor Code.
Respondent averred that petitioner was hired as
machine operator from March 1993 until he stopped
working sometime in February 1999 on the ground that
he was suffering from illness; after his recovery,
petitioner was directed to report for work, but he never
showed up. Respondent claimed that he never

ISSUE
Whether or not Padillo is entitled to claim for retirement
benefits
under
the
Labor
Code?
HELD
No. In the absence of any applicable agreement, an

128

employee must (1) retire when he is at least sixty (60)


years of age and (2) serve at least (5) years in the
company to entitle him/her to a retirement benefit of at
least one-half (1/2) month salary for every year of
service, with a fraction of at least six (6) months being
considered as one whole year. Notably, these age and
tenure requirements are cumulative and noncompliance with one negates the employees
entitlement to the retirement benefits under Article 300
of the Labor Code altogether.

if the suspension of operations lasts for more than 6


months. Thus is bred the issue regarding the
responsibility of MMC toward its employees.
Under Article 283, the employer can lawfully close
shop anytime as long as cessation of or withdrawal
from business operations is bona fide in character and
not impelled by a motive to defeat or circumvent the
tenurial rights of employees, and as long as he pays
his employees their termination pay in the amount
corresponding to their length of service. The cessation
of operations, in the case at bar is of such nature. It
was proven that MMC stopped its operations precisely
due to failure to secure permit to operate a tailings
pond. Separation pay must nonetheless be given to
the separated employees.

In this case, it is undisputed that there exists no


retirement plan, collective bargaining agreement or
any other equivalent contract between the parties
which set out the terms and condition for the
retirement of employees, with the sole exception of the
Philam Life Plan which premiums had already been
paid by the Bank.

NIPPON HOUSING PHILS. VS. LEYNES


G.R. No. 177816, August 3, 2011

Unfortunately, while Padillo was able to comply with


the five (5) year tenure requirement as he served for
twenty-nine (29) years he, however, fell short with
respect to the sixty (60) year age requirement given
that he was only fifty-five (55) years old when he
retired. Therefore, without prejudice to the proceeds
due under the Philam Life Plan, petitioners claim for
retirement benefits must be denied.

Nippon Housing is engaged in the business of


providing building maintenance From its original
ventured into building management and gained Bay
Gardens Condominium Project (the Project) of the Bay
Gardens Condominium Corporation (BGCC) as its first
and only building maintenance client. They hired
respondent Maiah Angela Leynes on 26 March 2001
for the position of Property Manager, with a salary of
P40,000.00 per month. Her responsibilities include
surveying the requirements of the government and the
client for said project, the formulation of house rules
and regulations, the preparation of the annual
operating and capital expenditure budget, hiring and
deployment of manpower, salary and position
determination as well as the assignment of the
schedules and responsibilities of employees. Leynes
had a misunderstanding with the building engineer of
the project (Cantuba) and barred the latters entry to
the site. The Engr. also accused the former of conceit,
pride and poor managerial skills. Takada, the NHPI's
Vice President issued a memorandum attributing the
incident to "simple personal differences" and directing
Leynes to allow Engr. Cantuba to report back for work.
Disappointed with this management decision, she
submitted a letter to NHPIs President (Ota) asking for
an emergency leave of absence for the supposed
purpose of coordinating with her lawyer regarding her
resignation letter. NHPI offered the Property Manager
position to Engr. Carlos Jose as a consequence
Leynes' signification of her intention to resign.
However, she sent another letter expressing her
intention to return to work and to call off her planned
resignation. However, she received a letter from the
management to report instead to the main office as
one in a floating status because someone already
occupies her post. Aggrieved, Leynes filed a complaint
against petitioner for illegal dismissal, unpaid salaries,
benefits, damages and attorney's fees. The Labor
arbiter found that the petitioners act of putting Leynes
on a floating status was equivalent to termination
without just cause. The NLRC ruled that NHPI's

MANILA
MINING
CORP.
EMPLOYEES
ASSOCIATION-FEDERATION OF FREE WORKERS
CHAPTER, SAMUEL G. ZUIGA v. MANILA MINING
CORP.
G.R. Nos. 178222-23, September 29, 2010, Perez
Respondent is a mining corporation. Due to its failure
to obtain the necessary permit with the DENR-EMBs
to operate the mining business, it temporary lay-off
private complainant for a period exceeding 6 months
resulting
in
their
constructive
dismissal.
The Union attributes bad faith on the part of MMC in
implementing the temporary lay-off, hence this case.
ISSUE
Whether or not the layoff is illegal
Whether or not the employees are entitled to a
separation pay
HELD
The lay-off is neither illegal nor can it be considered as
unfair labor practice. Even as we declare the validity
of the lay-off, we cannot say that MMC has no
obligation at all to the laid-off employees. The validity
of its act of suspending its operations does not excuse
it from paying separation pay. Article 286 of the Labor
Code allows the bona fide suspension of operations for
a period not exceeding six (6) months.During the
suspension,
an
employee
is
not
deemed
terminated. As a matter of fact, the employee is
entitled to be reinstated once the employer resumes
operations within the 6-month period. However, Article
286 is silent with respect to the rights of the employee

129

placement of Leynes on floating status was


necessitated by the client's contractually guaranteed
right to request for her relief. However, this was later
on reversed by the CA, hence, this present petition
before the SC.

RULING
Yes. Although petitioners suspension of operations is
valid because the fire caused substantial losses to
petitioner and damaged its factory, it failed to prove
that its suspension of operations is bona fide. The list
of materials burned was not the only evidence
submitted by petitioner. It was corroborated by pictures
and the fire investigation report, and they constitute
substantial evidence of petitioners losses.

ISSUE
Whether or not Leynes floating status is tantamount to
constructive dismissal.
RULING
No, the placement of Leynes on a floating status due
to redundancy is valid. The record, moreover, shows
that NHPI simply placed her on floating status "until
such time that another project could be secured" for
her. The rule is settled, however, that "off-detailing" is
not equivalent to dismissal, so long as such status
does not continue beyond a reasonable time and that it
is only when such a "floating status" lasts for more
than six months that the employee may be considered
to have been constructively dismissed. A complaint for
illegal dismissal filed prior to the lapse of said sixmonth and/or the actual dismissal of the employee is
generally considered as prematurely filed. Since the
petitioner has no other client for the building
management side of its business, it acted within its
prerogatives when it eventually terminated Leynes'
services on the ground of redundancy. One of the
recognized authorized causes for the termination of
employment, redundancy exists when the service
capability of the workforce is in excess of what is
reasonably needed to meet the demands of the
business enterprise.

Under Article 286 of the Labor Code, the bona fide


suspension of the operations of a business or
undertaking for a period not exceeding six months
shall not terminate employment. Article 286 provides:
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 fulfillment by the employee of a
military or civic duty shall not terminate employment.
In all such cases, the employer shall reinstate the
employee to his former position without loss of
seniority rights if he indicates his desire to resume his
work not later than one (1) month from the resumption
of operations of his employer or from his relief from the
military or civic duty.
Under Article 286 of the Labor Code, the bona fide
suspension of the operation of a business or
undertaking for a period not exceeding six months
shall not terminate employment. Consequently, when
the bona fide suspension of the operation of a
business or undertaking exceeds six months, then the
employment of the employee shall be deemed
terminated. By the same token and applying said rule
by analogy, if the employee was forced to remain
without work or assignment for a period exceeding six
months, then he is in effect constructively dismissed.
Indeed, petitioners manifestation dated October 2,
2001 that it is willing to admit respondents if they
return to work was belatedly made, almost one year
after petitioners suspension of operations expired in
November 2000. We find that petitioner no longer
recalled, nor wanted to recall, respondents after six
months.

SKM ARTCRAFT CORPORATION vs. BAUCA


G.R. No. 171282, November 27, 2013, Villarama

The 23 respondents were employed by petitioner SKM


Art Craft Corporation which is engaged in the
handicraft business. On April 18, 2000, around 1:12
a.m., a fire occurred at the inspection and
receiving/repair/packing area of petitioners premises
in Intramuros, Manila. The fire investigation report
stated that the structure and the beach rubber building
were totally damaged. Also burned were four container
vans and a trailer truck. The estimated damage
was P22 million. On May 8, 2000, petitioner informed
respondents that it will suspend its operations for six
months, effective May 9, 2000. On May 16, 2000, only
eight days after receiving notice of the suspension of
petitioners operations, the 23 respondents (and other
co-workers) filed a complaint for illegal dismissal. They
alleged that there was discrimination in choosing the
workers to be laid off and that petitioner had
discovered that most of them were members of a
newly-organized union.

JACKBILT INDUSTRIES V. JACKBILT EMPLOYEES


UNION
G.R. Nos. 171618-19, March 20, 2009, Corona
Due to the adverse effects of the Asian economic crisis
on the construction industry, petitioner decided to
temporarily stop its business of producing concrete
hollow blocks, compelling most of its employees to go
on leave for six months. Respondent union
immediately protested the temporary shutdown.
Because its collective bargaining agreement with
petitioner was expiring during the period of the
shutdown, respondent claimed that petitioner halted
production to avoid its duty to bargain collectively. The

ISSUE
Whether or not respondents were illegally dismissed

130

shutdown was allegedly motivated by anti-union


sentiments. Accordingly, respondent went on strike. Its
officers and members picketed petitioners main gates
and deliberately prevented persons and vehicles from
going into and out of the compound.

proceeded to the barangay office to show support for


an officer of the Union charged with oral defamation by
PINAs personnel manager. As a result of the walkout,
PINA preventively suspended all officers of the Union
and terminated the officers of the Union after a month.
The Union later conducted a strike but the same was
declared to be an illegal strike by the Labor Arbiter.
The NLRC sustained the finding of the illegality of the
strike, but ruled that the union members should not be
considered to have abandoned their employment on
the ground that mere participation of a union member
in an illegal strike does not mean loss of employment.
Petitioners were ordered reinstated.

Petitioner filed a petition for injunction with a prayer for


the issuance of a TRO in the NLRC. NLRC issued a
TRO directing the respondents to refrain from
preventing access to petitioners property. The union
violated such order. The union officers and members
were then required to explain but they refused to do
so. Thus, they were dismissed. Respondents then filed
a complaint before the LA. The labor arbiter dismissed
the complaints for illegal lockout and unfair labor
practice for lack of merit. However, because petitioner
did not file a petition to declare the strike illegal before
terminating respondents officers and employees, it
was found guilty of illegal dismissal. NLRC only
modified the monetary award. CA held that the
temporary shutdown was moved by anti-union
sentiments. Petitioner was therefore guilty of unfair
labor practice. Petitioner asserts that the filing of a
petition to declare the strike illegal was unnecessary
since the NLRC, in its July 17, 1998 decision, had
already found that respondent committed illegal acts in
the course of the strike.

ISSUE
Is payment of separation pay in lieu of reinstatement
allowed?
RULING
Yes. The absence from an order of reinstatement of an
alternative relief should the employer or a supervening
event not within the control of the employee prevent
reinstatement negates the very purpose of the order.
The judgment favorable to the employee is thereby
reduced to a mere paper victory, for it is all too easy
for the employer to simply refuse to have the employee
back. To safeguard the spirit of social justice that the
Court has advocated in favor of the working man,
therefore, the right to reinstatement is to be considered
renounced or waived only when the employee
unjustifiably or unreasonably refuses to return to work
upon being so ordered or after the employer has
offered to reinstate him.

ISSUE
Whether or not the filing of a petition with the labor
arbiter to declare a strike illegal is a condition sine qua
non for the valid termination of employees who commit
an illegal act in the course of such strike
RULING
Not a condition sine qua non. Article 264(e) of the
Labor Code prohibits any person engaged in picketing
from obstructing the free ingress to and egress from
the employers premises. Since respondent was found
by the NLRC to have prevented the free entry into and
exit of vehicles from petitioners compound,
respondents officers and employees clearly committed
illegal acts in the course of the strike. The use of
unlawful means in the course of a strike renders such
strike illegal. Therefore, pursuant to the principle of
conclusiveness of judgment, strike was ipso facto
illegal. The filing of a petition to declare the strike
illegal was thus unnecessary. Consequently, we
uphold the legality of the dismissal of respondents
officers and employees. Article 264 of the Labor Code
further provides that an employer may terminate
employees found to have committed illegal acts in the
course of a strike. Petitioner clearly had the legal right
to terminate respondents officers and employees.

However, separation pay is made an alternative relief


in lieu of reinstatement in certain circumstances, like:
(a) 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; (b)
reinstatement is inimical to the employers interest; (c)
reinstatement is no longer feasible; (d) reinstatement
does not serve the best interests of the parties
involved; (e) the employer is prejudiced by the workers
continued employment; (f) facts that make execution
unjust or inequitable have supervened; or (g) strained
relations between the employer and employee.
Here, PINA manifested that the reinstatement of the
petitioners would not be feasible because: (a) it would
inflict disruption and oppression upon the employer; (b)
petitioners [had] stayed away for more than 15 years;
(c) its machines had depreciated and had been
replaced with newer, better ones; and (d) it now sold
goods through independent distributors, thereby
abolishing the positions related to sales and
distribution.

ESCARIO v. NLRC
G.R. No. 160302, September 27, 2010, Bersamin

The appropriate amount for separation pay is one


month per year of service.

Officers and members of Malayang Samahan ng mga


Manggagawa sa Balanced Foods walked out of the
premises of Pinakamasarap Corporation (PINA) and

ABARIA VS. NLRC

131

G.R. No. 154113

PILA filed a complaint for ULP and illegal dismissal.


On July 7, 1995, Acting Labor Secretary Brillantes
assumed jurisdiction over the dispute and ordered all
striking employees (except those terminated) to return
to work within 24 hours. On the same day, PILA ended
its strike.

Due to a violation to the constitution and by-laws of the


Federation to which they belong to, the officers of the
said union are temporarily suspended from their office
and membership pending investigation.
The next day said union together with some of its
members launch a series of mass action through
"picketing" (wearing red and black armbands and
marching around the hospital with their placards,
posters and streamers), however for the span of 5
months prohibited acts were committed by the strikers
such as blocking the ingress and egress of the hospital
and violence substantiated with pictures.

On Aug. 28, 1995, PHIMCOM filed a petition to declare


the strike illegal claiming that the strikers prevented
ingress to and egress from the PHIMCO compound,
thereby paralyzing PHIMCOs operations. LA found the
strike illegal. NLRC reversed the decision. Meanwhile,
the LA declared the dismissal illegal. The NLRC
consolidated the two cases and ruled totally in the
unions favor. CA affirmed. MR was denied. Hence,
this petition.

Later it was found and proven that the said "union"


conducting the strike is not a legitimate labor
organization registered with DOLE.

ISSUE
1. Was the strike illegal?
2. Was there illegal dismissal?

Both the Union officers and union members were


terminated

HELD
(1) Yes. Despite the validity of the purpose of a strike
and compliance with the procedural requirements, a
strike may still be held illegal where the means
employed are illegal falling within the prohibitions
under Art. 264(e) of the Labor Code. While the picket
was moving, the movement was in circles, very close
to the gates, with the strikers in a hand-to-shoulder
formation without a break in their ranks, thus
preventing non-striking workers and vehicles from
coming in and getting out. Supported by actual
blocking benches and obstructions, what the union
demonstrated was a very persuasive and quietly
intimidating strategy whose chief aim was to paralyze
the operations of the company, not solely by the work
stoppage of the participating workers, but by excluding
the company officials and non-striking employees from
access to and exit from the company premises. No
doubt, the strike caused the company operations
considerable damage, as the NLRC itself recognized
when it ruled out the reinstatement of the dismissed
strikers.

ISSUE
WON the termination was valid
RULING
Only the termination of union officers were said to be
valid even though it was conducted by labor union not
registered with DOLE as the law provides that union
officers are held to be liable in cases of illegal strikes
and that the union members participating in a illegal
strike may only be terminated only if they committed
the said illegal and/or prohibited acts during the strike.
Although there was picture of violence and other
prohibited acts committed by the members, they were
not individually identified nor is their illegal/prohibited
acts identified.
PHIMCO
INDUSTRIES
INC.
V.
PHIMCO
INDUSTRIES LABOR ASSOCIATION (PILA), AND
ERLINDA VASQUEZ, ET AL.
G.R. No. 170830, August 11, 2010, Brion

The effects of illegal strikes, outlined in Article 264 of


the Labor Code, make a distinction between
participating workers and union officers. The services
of an ordinary striking worker cannot be terminated for
mere participation in an illegal strike; proof must be
adduced showing that he or she committed illegal acts
during the strike. The services of a participating union
officer, on the other hand, may be terminated, not only
when he actually commits an illegal act during a strike,
but also if he knowingly participates in an illegal strike.
Erlinda Vazquez, Ricardo Sacristan, Leonida Catalan,
Maximo Pedro, Nathaniela Dimaculangan, Rodolfo
Mojico, Romeo Caramanza, Reynaldo Ganitano,
Alberto Basconcillo, and Ramon Falcis stand to be
dismissed as participating union officers, pursuant to
Article 264(a), paragraph 3, of the Labor Code.

When the last CBA between PHIMCO and PILA was


about to expire, PHIMCO and PILA negotiated for its
renewal but this resulted in a deadlock on economic
issues, mainly due to disagreements on salary
increases and benefits. On April 21, 1995, PILA staged
a strike after complying with the requirements thereof.
On May 3, 1995, PHIMCO filed a petition for
preliminary injunction and TRO before the NLRC which
issued an ex-parte TRO effective for 20 days until
June 5, 1995.
On June 23, 1995, PHIMCO sent a letter to 36 union
members directing them to explain within 24-hours
why they should not be dismissed for the illegal acts
they committed during the strike. On June 26, 1995,
they were informed of their dismissal. On July 6, 1995,

132

(2) Yes. PHIMCO failed to observe procedural due


process since the employees were not given an ample
opportunity to be heard and to defend themselves. The
short interval of time between the first and second
notice speaks for itself.

relationship between him and petitioners. In fact, it was


made clear that petitioners could put an end to the
suspension if they only pay their recent arrears. As it
was, the suspension dragged on for years because of
petitioners stubborn refusal to pay. It would have been
different if petitioners complied with the condition and
respondent still refused to readmit them to work. Then
there would have been a clear act of dismissal. But
such was not the case. Instead of paying, petitioners
even filed a complaint for illegal dismissal against
respondent.

CAONG V. REGUALOS
G.R. No. 179428, January 26, 2011, Nachura
Petitioners Caong, Tresquio and Daluyon were
employed as jeepney drivers by Respondent Regualos
under a boundary agreement. They filed separate
complaints for illegal dismissal against Regualos who
barred them from driving the jeepneys due to
deficiencies in their boundary payments. However,
Regualos told them that they could resume their use of
the vehicles after they pay their arrears.

COMPOSITE ENTERPRISES, INC. v. EMILIO M.


CAPAROSO and JOEVE QUINDIPAN
G.R. No. 159919, August 8, 2007, Austria Martinez
Petitioner is engaged in the distribution and/or supply
of confectioneries to various retail establishments
within the Philippines. Emilio Caparoso and Joeve P.
Quindipan (respondents) were employed as its
deliverymen until they were terminated on October 8,
1999.

Regualos alleged that the petitioners were lessees of


his vehicles and not his employees. Thus, the Labor
Arbiter had no jurisdiction. The Labor Arbiter ruled that
there was an employer-employee relationship between
Regualos and the petitioners and that there was no
dismissal because they would be allowed to use the
vehicles once they pay their arrears. A reasonable
sanction was deemed to be an appropriate penalty.

Respondents filed a complaint for illegal dismissal


against petitioner with the National Labor Relations
Commission
(NLRC).
Petitioner
denied
that
respondents were illegally dismissed, alleging that they
were employed on a month-to-month basis and that
they were terminated as a result of the expiration of
their contracts of employment.

Petitioners appealed the decision to the NLRC, which


agreed with the Labor Arbiter. The CA also affirmed. It
ruled that the employer-employee relationship of the
parties was not severed but merely suspended
because Regualos refused to allow petitioners to drive
the jeepneys when they failed to pay their obligations.

The Labor Arbiter issued a Writ of Execution directing


the Sheriff to effect respondent's reinstatement.
Consistent with its stand that physical reinstatement
was no longer possible, petitioner reinstated
respondents into its payroll, conditioned on the NLRC's
ruling on its motion to be allowed to pay separation
pay in lieu of reinstatement.

ISSUE
Whether the petitioners were illegally dismissed
HELD
It is already settled that the relationship between
jeepney owners/operators and jeepney drivers under
the boundary system is that of employer-employee and
not of lessor-lessee. The fact that the drivers do not
receive fixed wages but only get the amount in excess
of the so-called "boundary" that they pay to the
owner/operator is not sufficient to negate the
relationship between them as employer and employee.

RULING
Article 223 (3rd paragraph) of the Labor Code, as
amended by Section 12 of Republic Act (R.A.) No.
6715,34 and Section 2 of the NLRC Interim Rules on
Appeals under R.A. No. 6715, Amending the Labor
Code, provide that an order of reinstatement by the
Labor Arbiter is immediately executory even pending
appeal.

The Labor Arbiter, the NLRC, and the CA uniformly


declared that petitioners were not dismissed from
employment but merely suspended pending payment
of their arrears. Findings of fact of the CA, particularly
where they are in absolute agreement with those of the
NLRC and the Labor Arbiter, are accorded not only
respect but even finality, and are deemed binding upon
this Court so long as they are supported by substantial
evidence.

In authorizing execution pending appeal of the


reinstatement aspect of a decision of the Labor Arbiter
reinstating a dismissed or separated employee, the
law itself has laid down a compassionate policy which,
once more, vivifies and enhances the provisions of the
1987 Constitution on labor and the working man.
Payment of separation pay as a substitute for
reinstatement is allowed only under exceptional
circumstances, viz: (1) when reasons exist which are
not attributable to the fault or are beyond the control of
the employer, such as when the employer -- who is in
severe financial strait, has suffered serious business

We have no reason to deviate from such findings.


Indeed, petitioners suspension cannot be categorized
as dismissal, considering that there was no intent on
the part of respondent to sever the employer-employee

133

losses, and has ceased operations -- implements


retrenchment, or abolishes the position due to the
installation of labor-saving devices; (2) when the
illegally dismissed employee has contracted a disease
and his reinstatement will endanger the safety of his
co-employees; or, (3) where a strained relationship
exists between the employer and the dismissed
employee.

The LA ruled that petitioner's dismissal was illegal.


Petitioner filed a Partial Appeal with the NLRC for
reinstatement and the payment of full backwages. She
argued that the decision of the Labor Arbiter did not
show a case of irretrievable estrangement between her
and private respondents as to preclude her
reinstatement. She also questioned the denial of her
claim for damages. Private respondents, on the other
hand, moved for a reversal of the decision and the
dismissal of the case.

In this case, petitioner sought to justify the payment of


separation pay instead of reinstatement on the basis of
its implementation of a retrenchment program for
"serious and persistent financial difficulties."However,
petitioner only submitted as evidence the notice of its
intention to implement a retrenchment program, which
it sent to the Department of Labor and Employment on
July 25, 2000. It did not submit its financial statements
duly audited by an independent external auditor. Its
failure to do so seriously casts doubt on its claim of
losses and insistence on the payment of separation
pay.

The NLRC reversed the decision of the Labor Arbiter.


The Court of Appeals found the decision of the Labor
Arbiter to be more conformable with the evidence and
the law and granted the petition and said: considering
that the dismissal was without basis, reinstatement
with payment of backwages is in order. However, due
to the strained relations which would not bring
harmony between the parties brought about by the
litigation and private respondents' consistent stand that
there was a just cause for petitioner Sagum's dismissal
for loss of trust and confidence and gross negligence,
we find that separation pay should be awarded as an
alternative to reinstatement.

SAGUM v. COURT OF APPEALS


G.R. No. 158759, May 26, 2005, Puno
Petitioner was hired as a Recording/Filing Clerk in
June 1980. By her efficiency, loyalty and dedication to
the service, she was promoted as Membership
Secretary in April 1981, Acting Executive Secretary in
February 1986, and Executive Secretary in September
1986. As Executive Secretary, she has served eleven
(11) National Presidents. After eight (8) years, or on
September 17, 1994, petitioner was appointed as
Office Manager in concurrent capacity as Executive
Secretary. On July 30, 1996, petitioner was
preventively suspended for thirty (30) days. She was
served two (2) written notices demanding her
explanation for the imputed offenses and indiscretions,
subjected to an administrative investigation, and
dismissed by private respondent institute on
September 1, 1996 for gross negligence and loss of
trust and confidence.

ISSUE
Is the petitioner entitled to reinstatement?
HELD
YES. We find for the petitioner on the issue of
reinstatement.
Article 279 of the Labor Code provides the law on
reinstatement, viz.:
Article 279. Security of Tenure. -- In cases of regular
employment, the employer shall not terminate the
services of an employee except for a just cause or
when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation
was withheld from him up to the time of his actual
reinstatement.

Petitioner states that she again earned the ire of


private respondents when she gave an unsolicited
advice to the members of the EXCOM during a
Committee Meeting. The EXCOM had allegedly
decided to demote Dela Torre, her immediate
subordinate, from her position as Administrative
Secretary to a Clerk. Petitioner commented that it
would be illegal to demote an employee.On August 31,
1996, after the expiration of her thirty-day suspension,
petitioner called up private respondent Mendoza to ask
when she could go back to work. The latter told her
that she could not report for work anymore and
advised her to wait for a call. On the same day, a
Memo was issued to petitioner dismissing her effective
September 1, 1996 on the ground of gross negligence
and loss of trust and confidence. Petitioner filed a case
for illegal dismissal.

The existence of strained relations is a factual finding


and should be initially raised, argued and proven
before the Labor Arbiter. Petitioner is correct that the
finding of strained relations does not have any basis
on the records. Indeed, nowhere was the issue raised
in private respondents' pleadings before the Labor
Arbiter and the NLRC. Sieving through the records,
private respondents first raised the issue in their
Comment to Petitioner's Motion for Partial
Reconsideration
before
the
Court
of
Appeals. In Globe-Mackay
Cable
and
Radio
Corporation v. NLRC, we emphasized that the
principle of strained relations cannot be applied
indiscriminately. Otherwise, an illegally dismissed
employee can never be reinstated because invariably,

134

some hostility is engendered between litigants. As a


rule, no strained relations should arise from a valid and
legal act of asserting one's right; otherwise, an
employee who asserts his right could be easily
separated from the service by merely paying his
separation pay on the pretext that his relationship with
his employer had already become strained.

They already were warned of termination if the same


act was repeated, still, they disregarded the warning.
ISSUE
Whether the Agabons were illegally dismissed
RULING
No, there was valid dismissal but there was violation of
statutory due process.

In the case at bar, there are no hard facts upon which


to base the application of the doctrine of strained
relationship. Petitioner is correct that mere persistency
in argument does not amount to proof,and to deny an
employee's right to be reinstated on the basis of the
mere consistency of the employer's stand that the
dismissal was for cause is to make a mockery of the
right of reinstatement under Article 279 of the Labor
Code.

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.

Be that as it may, we reject petitioner's claim for moral


and exemplary damages. The award of moral and
exemplary damages is proper when an illegally
dismissed employee had been harassed and arbitrarily
terminated by the employer, as when the latter
committed an anti-social and oppressive abuse of its
right to investigate and dismiss an employee. In the
case at bar, we are not convinced that private
respondents acted in a wanton or oppressive manner.
The measures undertaken were relevant to the
company-wide audit and investigation conducted
within the institute. The suspension of petitioner
without prior investigation is akin to preventive
suspension
which
was
necessary
pending
investigation of company records which she had
access to.

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.

JENNY M. AGABON and VIRGILIO C. AGABON v.


NATIONAL LABOR RELATIONS COMMISSION
(NLRC), RIVIERA HOME IMPROVEMENTS, INC. and
VICENTE ANGELES
G.R. No. 15869, November 17, 2004

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.

Petitioners were employed by Riviera Home as


gypsum board and cornice installers from January
1992 to February 23, 1999 when they were dismissed
for abandonment of work. Petitioners filed a complaint
for illegal dismissal and was decided in their favor by
the Labor Arbiter. Riviera appealed to the NLRC
contending just cause for the dismissal because of
petitioners abandonment of work. NLRC ruled there
was just cause and petitioners were not entitled to
backwages and separation pay. The CA in turn ruled
that the dismissal was not illegal because they have
abandoned their work but ordered the payment of
money claims.

he 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.

The Agabons claim, among others that Riviera violated


the requirements of notice and hearing when the latter
did not send written letters of termination to their
addresses. Riviera claims that the Agabons
abandoned their work. More than once, they
subcontracted installation works for other companies.

JAKA FOOD PROCESSING CORPORATION v.


DARWIN PACOT, ROBERT PAROHINOG, DAVID
BISNAR, MARLON DOMINGO, RHOEL LESCANO
and JONATHAN CAGABCAB
G.R. No. 151378, March 28, 2005

135

Respondents Darwin Pacot, Robert Parohinog, David


Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan
Cagabcab were earlier hired by petitioner JAKA Foods
Processing Corporation (JAKA, for short) until the
latter terminated their employment on August 29, 1997
because the corporation was "in dire financial straits".
It is not disputed, however, that the termination was
effected without JAKA complying with the requirement
under Article 283 of the Labor Code regarding the
service of a written notice upon the employees and the
Department of Labor and Employment at least one (1)
month before the intended date of termination.

For these reasons, there ought to be a difference in


treatment when the ground for dismissal is one of the
just causes under Article 282, and when based on one
of the authorized causes under Article 283.
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 employers exercise of his management
prerogative.

In time, respondents separately filed with the regional


Arbitration Branch of the National Labor Relations
Commission (NLRC) complaints for illegal dismissal,
underpayment of wages and nonpayment of service
incentive leave and 13th month pay against JAKA and
its HRD Manager, Rosana Castelo. After due
proceedings, the Labor Arbiter rendered a
decision declaring the termination illegal and ordering
JAKA and its HRD Manager to reinstate respondents
with full backwages, and separation pay if
reinstatement is not possible.

The records before us reveal that, indeed, JAKA was


suffering from serious business losses at the time it
terminated respondents employment. It is, therefore,
established that there was ground for respondents
dismissal, i.e., retrenchment, which is one of the
authorized causes enumerated under Article 283 of the
Labor Code. Likewise, it is established that JAKA
failed to comply with the notice requirement under the
same Article. Considering the factual circumstances in
the instant case and the above ratiocination, we,
therefore, deem it proper to fix the indemnity at
P50,000.00.

ISSUE
What are the legal implications of a situation where an
employee is dismissed for cause but such dismissal
was effected without the employers compliance with
the notice requirement under the Labor Code

NOTE: Not related to the topic concerned, but still is a


helpful piece of knowledge:
We likewise find the Court of Appeals to have been in
error when it ordered JAKA to pay respondents
separation pay equivalent to one (1) month salary for
every year of service. This is because in Reahs
Corporation vs. NLRC, we made the following
declaration:

RULING
We note that there are divergent implications of a
dismissal for just cause under Article 282, on one
hand, and a dismissal for authorized cause under
Article 283, on the other.
A dismissal for just cause under Article 282 implies
that the employee concerned has committed, or is
guilty of, some violation against the employer, i.e. the
employee has committed some serious misconduct, is
guilty of some fraud against the employer, or he has
neglected his duties. Thus, it can be said that the
employee himself initiated the dismissal process.

"The rule, therefore, is that in all cases of business


closure or cessation of operation or undertaking of the
employer, the affected employee is entitled to
separation pay. This is consistent with the state policy
of treating labor as a primary social economic force,
affording full protection to its rights as well as its
welfare. The exception is when the closure of business
or cessation of operations is due to serious business
losses or financial reverses; duly proved, in which
case, the right of affected employees to separation pay
is lost for obvious reasons. xxx".

On another breath, a dismissal 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
employers
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.

INDUSTRIAL TIMBER V. ABABON


G.R. No. 164518, January 25, 2006, Ynares Santiago

The clear-cut distinction between a dismissal for just


cause under Article 282 and a dismissal for authorized
cause under Article 283 is further reinforced by the fact
that in the first, payment of separation pay, as a rule, is
not required, while in the second, the law requires
payment of separation pay.

They insist that the holding in International Timber


Corporation
v.
National
Labor
Relations
Commission2 that the closure of ITCs Butuan Plant
was valid should not have been applied in the instant
cases which pertain to ITCs Stanply Plant. They
further claim that the findings by the Labor Arbiter that

136

there was a shortage of raw materials; that the wood


processing plaint permit has expired; that the lease
contract with IPGC was terminated; and that ITC and
IPGC were not business conduits, were all debunked
by the NLRC.

posted, in conspicuous places within the company


premises, notices of its permanent closure and
cessation of business operations, effective March 16,
2004, due to serious economic losses and financial
reverses. The DOLE was furnished a copy of said
notice together with a separate letter notifying it of the
companys permanent closure. SPEU was also
furnished with a copy of the notice of permanent
closure. Forthwith, SPI offered separation benefits of
one-half () month pay for every year of service to
each of its employees. 234 employees of SPI accepted
the offer, received the said sums and executed
quitclaims. Those who refused the offer, i.e., the
minority employees, were nevertheless given until
March 25, 2004 to accept their checks and
correspondingly, execute quitclaims. However, the
minority employees did not claim the said checks.

While we ruled in this case that the sanction should be


stiffer in a dismissal based on authorized cause where
the employer failed to comply with the notice
requirement than a dismissal based on just cause with
the same procedural infirmity, however, in instances
where the execution of a decision becomes
impossible, unjust, or too burdensome, modification of
the decision becomes necessary in order to harmonize
the disposition with the prevailing circumstances.
In the case at bar, there was valid authorized cause
considering the closure or cessation of ITCs business
which was done in good faith and due to
circumstances beyond ITCs control. Moreover, ITC
had ceased to generate any income since its closure
on August 17, 1990. Several months prior to the
closure, ITC experienced diminished income due to
high production costs, erratic supply of raw materials,
depressed prices, and poor market conditions for its
wood products. It appears that ITC had given its
employees all benefits in accord with the CBA upon
their termination.

The Labor Arbiter ruled in favor of SPI and the NLRC


sustained the ruling. But the NLRC opined that since
SPI already gave separation benefits to 234 of its
employees, the minority employees should not be
denied of the same. On appeal to the CA, SPI sent a
Formal Offer of Settlement to SPEU, offering the
amount of P15, 000.00 as financial assistance to each
of the minority employees. The CA held that the
minority employees were not entitled to separation pay
considering that the companys closure was due to
serious business losses but still ordered SPI to pay the
minority employees P15, 000.00 each.

SANGWOO PHILIPPINES, INC. AND/OR SANG IK


JANG, JISSO JANG, WISSO JANG AND
NORBERTO TADEO V. SANGWOO PHILIPPINES,
INC. EMPLOYEE UNION OLALIA
G.R. No. 173154, G.R. No. 173229, December 9,
2013, Perlas Bernabe

ISSUE
(a) Whether or not the minority employees are entitled
to separation pay; and (b) Whether or not SPI
complied with the notice requirement of Article 297
(formerly Article 283) of the Labor Code.

On July 25, 2003, during the collective bargaining


agreement (CBA) negotiations between Sangwoo
Philippines, Inc. Employees Union Olalia (SPEU)
and Sangwoo Philippines, Inc.(SPI), the latter filed with
the Department of Labor and Employment (DOLE) a
letter-notice of temporary suspension of operations for
one (1) month, beginning September 15, 2003, due to
lack of orders from its buyers. SPEU was furnished a
copy of the said letter. Negotiations on the CBA,
however, continued and on September 10, 2003, the
parties signed a handwritten Memorandum of
Agreement, which, among others, specified the
employees wages and benefits for the next two (2)
years, and that in the event of a temporary shutdown,
all machineries and raw materials would not be taken
out of the SPI premises.

HELD
(a) NO. Article [297] of the Labor Code does not
obligate an employer to pay separation benefits when
the closure is due to serious losses. To require an
employer to be generous when it is no longer in a
position to do so, in our view, would be unduly
oppressive, unjust, and unfair to the employer. Ours is
a system of laws, and the law in protecting the rights of
the working man, authorizes neither the oppression
nor the self-destruction of the employer.
(b) NO. Article 297 of the Labor Code provides that
before any employee is terminated due to closure of
business, it must give a one (1) month prior written
notice to the employee and to the DOLE. In this
relation, case law instructs that it is the personal right
of the employee to be personally informed of his
proposed dismissal as well as the reasons therefor;
and such requirement of notice is not a mere
technicality or formality which the employer may
dispense with. To this end, jurisprudence states that
an employers act of posting notices to this effect in
conspicuous areas in the workplace is not enough.
Verily, for something as significant as the involuntary

On September 15, 2003, SPI temporarily ceased


operations. Thereafter, it successively filed two (2)
letters with the DOLE, copy furnished SPEU, for the
extension of the temporary shutdown until March 15,
2004. Meanwhile, SPEU filed a complaint for unfair
labor practice, illegal closure, illegal dismissal,
damages and attorneys fees before the Regional
Arbitration Branch IV of the NLRC. Subsequently, SPI

137

loss of ones employment, nothing less than an


individually-addressed notice of dismissal supplied to
each worker is proper.

Bank be ordered forever released from liability under


said judgment.
ISSUE
How do you compute for the full backwages of an
illegally dismissed employee?

The Court finds that the LA, NLRC, and CA erred in


ruling that SPI complied with the notice requirement
when it merely posted various copies of its notice of
closure in conspicuous places within the business
premises. As earlier explained, SPI was required to
serve written notices of termination to its employees,
which it, however, failed to do.It is well to stress that
while SPI had a valid ground to terminate its
employees, i.e., closure of business, its failure to
comply
with
the
proper
procedure
for
terminationrenders itliable to pay the employee
nominal damages for such omission. Based on
existing jurisprudence, an employer which has a valid
cause for dismissing its employee but conducts the
dismissal with procedural infirmity is liable to pay the
employee nominal damages in the amount of
P30,000.00 if the ground for dismissal is a just cause,
or the amount of P50,000.00 if the ground for dismissal
is an authorized cause.35 However, case law exhorts
that in instances where the payment of such damages
becomes impossible, unjust, or too burdensome,
modification becomes necessary in order to harmonize
the disposition with the prevailing circumstances.
EQUITABLE
BANKING
CORPORATION
RICARDO SADAC
G.R. No. 164772, June 8, 2006, Chico Nazario

HELD
The Labor Code under Article 279 mandates that an
employees full backwages shall be inclusive of
allowances and other benefits or their monetary
equivalent.
For backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished
or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal.
Backwages in general are granted on grounds of
equity for earnings which a worker or employee has
lost due to his illegal dismissal. It is not private
compensation or damages but is awarded in
furtherance and effectuation of the public objective of
the Labor Code. Nor is it a redress of a private right
but rather in the nature of a command to the employer
to make public reparation for dismissing an employee
either due to the formers unlawful act or bad faith.

vs.

The applicable modern definition of full backwages is


now found in Millares v. National Labor Relations
Commission 305 SCRA 500 (1999), where although
the issue in Millares concerned separation pay
separation pay and backwages both have employees
wage rate at their foundation.

Respondent Sadac was appointed Vice President of


the Legal Department of petitioner Bank and
subsequently General Counsel thereof. A letter was
sent to the chairman of the board of directors of
petitioner company accusing respondent of abusive
conduct. On that basis, the bank instructed the delivery
of all materials under his custody. Sadac requested for
a hearing and investigation but the same remained
unheeded, prompting him to file a complaint for illegal
dismissal with damages against petitioner bank. Upon
learning of the filing of the complaint, the bank
terminated the services of Sadac. He was removed
form his office and was disentitled to any
compensation and other benefits.

The base figure to be used in the computation of


backwages is pegged at the wage rate at the time of
the employees dismissal, inclusive of regular
allowances that the employee had been receiving such
as the emergency living allowances and the 13th
month pay mandated under the law. Also, the
backwages actually refers to backwages without
qualifications and deductions.
CARLOS v. COURT OF APPEALS
G.R. No. 168096, August 28, 2007, Chico-Nazario, J:

The Labor Arbiter dismissed the complaint for lack of


merit. On appeal, the NLRC reversed the Labor Arbiter
and declared respondent Sadacs dismissal as illegal.
Petitioner Bank filed Special Civil Action for Certiorari
before the SC assailing the NLRC Resolution In the
SCs Decision9 of 13 June 1997, it held respondent
Sadacs dismissal illegal.

Petitioner ABC Security is a domestic corporation


engaged in the business of job contracting by
providing security services to its clientele. Petitioner
Honest Care Janitorial is a domestic corporation
likewise engaged in job contracting janitorial services.
Private respondents were employed by petitioner ABC
Security as security guards and were assigned to
Greenvalley Country Club at the time they were
allegedly separated from employment. petitioners
averred that private respondents were not dismissed
but voluntarily resigned from their respective
employments.

Pursuant thereto, respondent Sadac filed with the


Labor Arbiter a Motion for Execution thereof. Likewise,
petitioner Bank filed a Manifestation and Motion
praying that the award in favor of respondent Sadac be
computed and that after payment is made, petitioner

ISSUE

138

Whether or not private respondents were illegally


dismissed by petitioners.

Is Natividad entitled to payment of backwages during


the period of his detention?

RULING
Yes. Resignation is the voluntary act of employees
who are compelled by personal reasons to dissociate
themselves from their employment. It must be done
with the intention of relinquishing an office,
accompanied by the act of abandonment. 17 It is
illogical for private respondents to resign and then le
a complaint for illegal dismissal.

HELD
Yes. The payment of backwages is generally granted
on the ground of equity. It is a form of relief that
restores the income that was lost by reason of the
unlawful dismissal; the grant thereof is intended to
restore the earnings that would have accrued to the
dismissed employee during the period of dismissal
until it is determined that the termination of
employment is for a just cause. It is not private
compensation or damages but is awarded in
furtherance and effectuation of the public objective of
the Labor Code. Nor is it a redress of a private right
but rather in the nature of a command to the employer
to make public reparation for dismissing an employee
either due to the formers unlawful act or bad faith.

An employee who is unjustly dismissed from work shall


be entitled to reinstatement without loss of seniority
rights and other privileges and to full back wages,
inclusive of allowances, and to other benets or their
monetary equivalents computed from the time
compensation was withheld up to the time of actual
reinstatement.

The award of backwages is not conditioned on the


employees ability or inability to, in the interim, earn
any income. Although Natividad was charged for an
offense three times; the prosecutor found no probable
cause on the first two charges. He is not yet been
convicted by final judgment under the third charge,
thus, he is presumed innocent until his guilt is proved
beyond reasonable doubt.

Undoubtedly, private respondents are entitled to the


payment of full backwages, that is, without deducting
their earnings elsewhere during the periods of their
illegal dismissal. However, where, as in this case,
reinstatement is no longer feasible due to strained
relations between the parties, separation pay
equivalent to one month's salary for every year of
service shall be granted. the award for separation pay
equivalent to one-month pay for every year of service
shall be computed from the time the private
respondents were illegally separated from their
employment up to the nality of this Court's Decision in
the instant petition.

CHRONICLE SECURITIES V. NLRC


November 25, 2004, Ynares Santiago
Sometime in September 1993, petitioners hired private
respondent Neal H. Cruz, who was then the executive
editor of the Today newpaper, as the publicist and the
editor in chief of its national daily broadsheet, the
Manila Chronicle. As compensation for his services,
private respondent received a monthly compensation
of P60,000.00 plus a brand new car.

TOMAS CLAUDIO MEMORIAL COLLEGE (TCMC) V


COURT OF APPEALS (CA)
G.R. No. 152568, February 16, 2004, Callejo
Natividad, a regular employee of TCMC, was arrested
without warrant for an alleged violation of the
Dangerous
Drugs
Act.
Pending
preliminary
investigation, TCMC dismissed Natividad. The
prosecutor dismissed the complaint against Natividad
for lack of probable cause.

Thereafter, private respondent quit his job with Today


to assume the duties and responsibilities as the editor
in chief of the Manila Chronicle. Private respondent
went about the task of improving the over-all image of
the Manila Chronicle. However, due to private
respondent's role in the publication of a controversial
article that was carried by the newspaper sometime in
July 1994, petitioners terminated his services.
Consequently, private respondent filed a complaint for
illegal dismissal against herein petitioners. Labor
Arbiter Ariel C. Santos rendered a decision7 holding
that private respondent Neal Cruz was illegally
dismissed. Petitioners appealed the decision with the
National Labor Relations Commission (NLRC), which
affirmed the labor arbiter's decision. Petitioners
contend that contrary to established jurisprudence, the
Labor Arbiter's computation of the amount due to the
private respondent was principally based on the
mistaken premise that complainant was entitled to
backwages even beyond the closure and cessation of
petitioners' newspaper business on January 19, 1998.
Petitioners argue that this should not be the case

Natividad was again arrested for the second and third


time. The prosecutor dismissed the second complaint
for lack of probable cause, while the third complaint is
still undergoing preliminary investigation. Natividad
posted a bail bond for his release.
Subsequently, he challenged the legality of his
dismissal before the Labor Arbiter. The Labor Arbiter
dismissed the complaint. NLRC affirmed the decision
on appeal. However, upon appeal to the CA, the
dismissal was upheld but awarded backwages
because of TCMCs failure to observe the proper
procedure for dismissal.
ISSUE

139

because the amount of backwages should only be


computed from the date of illegal dismissal up to the
time when reinstatement was still possible.
Reinstatement could not have been possible beyond
the date of the closure of the Manila Chronicle on
January 19, 1998. Therefore, backwages should only
be computed from September 15, 1994, the effectivity
of private respondents termination by the petitioners
until the date when the Manila Chronicle ceased
publication. Petitioners further contend that they only
had one newspaper business and, with the closure of
the same, the reinstatement of private respondent
Neal Cruz to his former position as Editor-In-Chief
became a physical and legal impossibility. Private
respondent could not claim that he should have been
appointed to another position with the petitioners
because he was hired solely for his editorial skills.
There is simply no equivalent or substantially
equivalent position to which private respondent could
be assigned in petitioners' organization.

from the time of their illegal termination up to the


finality of the decision.
In the case at bar, the Manila Chronicle ceased
publication on January 19, 1998. The cessation of
publication was a permanent one and it was
precipitated by the paper's dire financial condition
which was aggravated by a crippling strike causing it to
finally shut down. Petitioners' closure of their
newspaper business was made on legal and valid
grounds. It was never resorted to as a means to
deprive the private respondent of the opportunity to be
reinstated to his former position. To allow the
computation of the backwages due the private
respondent to be based on a period beyond January
19, 1998 would be an injustice to the petitioners.
Our power to exact retribution from erring employers
for cases of illegal dismissal should not go beyond
what is recognized as just and fair under the
circumstances. While we are inclined more often than
not toward the worker and uphold his cause in his
conflicts with his employer, such favoritism has not
blinded us to the rule that justice is in every case for
the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine.

ISSUE
Whether or not the basis of computation of backwages
by the NLRC is correct.
RULING
There is no question that petitioners illegally dismissed
private respondent Neal Cruz. Even petitioners
themselves are no longer questioning the findings of
the Labor Arbiter and the NLRC on this aspect.
Petitioners main concern in this petition is the proper
computation of backwages to be awarded to the
private respondent who is rightfully entitled to the
payment of backwages, the only question that remains
is how much? Backwages, in general, are granted on
grounds