Sie sind auf Seite 1von 186

1

Labor
From: http://www.lexoterica.wordpress.com

2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.2010.20
CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit
and are therefore entitled to CBA benefits as a matter of law and contract. Under the terms of
the CBA, 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. Most importantly,
the labor arbiters decision of January 17, 2002 affirmed all the way to the CA ruled
against the companys submission that they are independent contractors. Thus, as regular rankand-file employees, they fall within the CBA coverage. And, under the CBAs express terms,
they are entitled to its benefits.
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 the company. The tribunals
below uniformly answered this question in the affirmative. From this factual finding flows legal
effects touching on the terms and conditions of the petitioners regular employment. Farley

Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Employee benefits; permanent disability benefits. In accordance with the avowed policy of the
State to give maximum aid and full protection to labor, the Court applied the Labor Code
concept of permanent total disability to Filipino seafarers. The Court held that the notion of
disability is intimately related to the workers capacity to earn. What is compensated is not the
employees injury or illness but his inability to work resulting in the impairment of his earning
capacity; hence, disability should be understood less on its medical significance but more on the
loss of earning capacity.
In the present case, petitioner was able to secure a fit to work certification from a doctor only
after more than five months from the time he was medically repatriated due to a finding that
his disability is considered permanent and total. Significantly, petitioner remained unemployed
even after he filed on February 26, 2002 his complaint to recover permanent total disability
compensation and despite the August 31, 2005 Decision of the NLRC which was affirmed by the
Court of Appeals, ordering respondents to allow complainant to resume sea duty.
That petitioner was not likely to fully recover from his disability is mirrored by the Labor
Arbiters finding that his illness would possibly recur once he resumes his sea duties. This could
very well be the reason why petitioner was not re-deployed by respondents. Petitioners
disability being then permanent and total, he is entitled to 100% compensation, i.e.,
US$80,000 for officers, as stipulated in par. 20.1.7 of the parties CBA. Rizaldy M. Quitoriano

vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management A/S, G.R. No.
179868, January 21, 2010.
Labor Code; interpretation. Another basic principle is that expressed in Article 4 of the Labor
Code that all doubts in the interpretation and implementation of the Labor Code should be
interpreted in favor of the workingman. This principle has been extended by jurisprudence to
cover doubts in the evidence presented by the employer and the employee. The petitioner has,

2
at very least, shown serious doubts about the merits of the companys case, particularly in the
appreciation of the clinching evidence on which the NLRC and CA decisions were based. In
such contest of evidence, the Court applied Article 4 as basis to rule in favor of the
employee. In this case, the Court held that petitioner was constructively dismissed given the
hostile and discriminatory working environment he found himself in, particularly evidenced by
the escalating acts of unfairness against him that culminated in the appointment of another
HRD manager without any prior notice to him. Where no less than the companys chief
corporate officer was against him, petitioner had no alternative but to resign from his
employment.
The Court also gave significance to the fact that petitioner sought almost immediate official
recourse to contest his separation from service through a complaint for illegal dismissal, and
held that this is not the act of one who voluntarily resigned; his immediate filing of a complaint
characterizes him as one who deeply felt that he had been wronged. Manolo A. Peaflor vs.

Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.
Appeal; illegal dismissal. In the present case, the company terminated the services of four

drivers who were declared by the labor arbiter to be regular employees of the company in an
initial complaint filed by said drivers for regularization. Pending the companys appeal of the
labor arbiters decision, the company terminated the employment of said drivers on the ground
of redundancy, which action, the Court viewed as an implied admission of the regular
employment status of the drivers. The Court held that by implementing the dismissal action at
the time the labor arbiters ruling was under review, the company unilaterally negated the
effects of the labor arbiters ruling while at the same time appealing the same ruling to the
NLRC. This unilateral move is a direct affront to the NLRCs authority and an abuse of the
appeal process. All these go to show that company acted with patent bad faith. Farley Fulache,

et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Appeal; questions of fact. The rule that a Rule 45 petition deals only with legal issues is not an
absolute rule; it admits of exceptions. In the labor law setting, the Court may look into factual
issues when there is a conflict in the factual findings of the labor arbiter, the NLRC, and the
CA as in the present case where the labor arbiter found facts supporting the conclusion that
there had been constructive dismissal, while the NLRCs and the CAs factual findings
contradicted the labor arbiters findings. The conflicting factual findings are not binding on the
Court. The Court held that it retains the authority to pass upon the evidence presented and
draw conclusions therefrom. Manolo A. Peaflor vs. Outdoor Clothing Manufacturing

Corporation, et al., G.R. No. 177114, January 21, 2010.

Appeal under Rule 45; questions of law vs. questions of fact. Petitioners in the present case do
not question the findings of facts in the assailed decisions. They question the misapplication of
the law and jurisprudence on the facts recognized by the decisions. For example, they question
as contrary to law their exclusion from the CBA after they were recognized as regular rank-andfile employees of the company. They also question the basis in law for the dismissal of four
drivers and the legal propriety of the redundancy action taken against them.
The Court reiterated the established distinctions between questions of law and questions of
fact by quoting its rulings in New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and
Rafael Susan[G.R. No. 161818, August 20, 2008, 562 SCRA 503]: A question of law exists
when the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call for an examination of the probative value of
the evidence presented, the truth or falsehood of the facts being admitted. A question of fact
exists when a doubt or difference arises as to the truth or falsehood of facts or when the query

3
invites calibration of the whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as their relation to each
other and to the whole, and the probability of the situation. Farley Fulache, et al. vs. ABS-CBN

Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Dismissal; burden of proof. It is a settled rule that in employee termination disputes, the
employer bears the burden of proving that the employees dismissal was for just and valid
cause. That petitioner did indeed file a letter of resignation does not help the companys case
as, other than the fact of resignation, the company must still prove that the employee
voluntarily resigned. There can be no valid resignation where the act was made under
compulsion or under circumstances approximating compulsion, such as when an employees act
of handing in his resignation was a reaction to circumstances leaving him no alternative but to
resign. In this case, the Court held that petitioner had been constructively dismissed as his
resignation was a response to the unacceptable appointment of another person to a position he
still occupied. In sum, the evidence does not support the existence of voluntariness
in petitioners resignation. Manolo A. Peaflor vs. Outdoor Clothing Manufacturing Corporation,

et al., G.R. No. 177114, January 21, 2010.

Agency; principle of apparent authority. There is ample evidence that the hospital held out to
the patient that the doctor was its agent. The two factors that determined apparent authority in
this case were: first, the hospitals implied manifestation to the patient which led the latter to
conclude that the doctor was the hospitals agent; and second, the patients reliance upon the
conduct of the hospital and the doctor, consistent with ordinary care and prudence.
It is of record that the hospital required a consent for hospital care to be signed preparatory
to the surgery of the patient. The form reads: Permission is hereby given to the medical,

nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic
procedures and to administer such medications and treatments as may be deemed necessary or
advisable by the physicians of this hospital for and during the confinement of xxx.
By such statement, the hospital virtually reinforced the public impression that the doctor was a
physician of its hospital, rather than one independently practicing in it; that the medications and
treatments he prescribed were necessary and desirable; and that the hospital staff was
prepared to carry them out. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad

(substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya,
Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan
Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R.
No. 127590, February 2, 2010.
Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable

illness under the applicable standard contract for Filipino seafarers that binds the seafarer and
the vessels foreign owner, it was an error for the CA to treat such illness as work-related
and, therefore, compensable. The standard contract precisely did not consider gallstone as
compensable illness because the parties agreed, presumably based on medical science, that
such affliction is not caused by working on board ocean-going vessels.
Nor is there any evidence to prove that the nature of the seafarers work on board a ship
aggravated his illness. No one knows if he had gallstone at the time he boarded the vessel. By
the nature of this illness, it is highly probable that he already had it when he boarded his
assigned ship although it went undiagnosed because he had yet to experience its
symptoms. Bandila Shipping, Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100, February 22,

2010.

4
Compensable illness; work related. Melanoma is not listed as an occupational disease under
Annex A of the Rules on Employees Compensation. Hence, respondent has the burden of
proving, by substantial evidence, the causal relationship between her illness and her working
conditions. Substantial evidence means such relevant evidence as a reasonable mind might
accept to support a conclusion.
The Court in this case agreed with the petitioner and the ECC that respondent was not able to
positively prove that her ailment was caused by her employment and that the risk of contracting
the disease was increased by her working conditions. While the law requires only a reasonable
work-connection and not a direct causal relation, respondent still failed to show that her illness
was really brought about by the wound she sustained during the supervised gardening activity
in school. The CA accepted the allegation that the mole appeared right on the spot where
respondent sustained the injury without any further proof that the mole appeared because of
the injury. The CA further ruled that the risk of acquiring the said ailment increased by the
nature of [respondents] work in going to school and in returning to her residence during school
days x x x. However, the CA failed to consider that in a tropical country like the Philippines,
exposure to sunlight is common. Unlike farmers, fishermen or lifeguards, it was not shown that
respondent had chronic long-term exposure to the sun considered necessary for the
development of melanoma. Thus, the Court did not find the risk of contracting the disease to
have been heightened by respondents exposure to sunlight in going to work and returning to
her residence. Government Service Insurance System vs. Rosalinda A. Bernadas, G.R. No.

164731, February 11, 2010

Dismissal; due process. The essence of due process is the opportunity to be heard; it is the
denial of this opportunity that constitutes violation of due process of law. The employee was
given the opportunity to be heard when a proper notice of investigation was sent to him,
although the notice did not reach him for reasons outside the employers control. The employee
was not also totally unheard on the matter as he was able to explain his side through the two
(2) explanation letters he submitted. These letters are clear indications that he intimately knew
of the matter for which he was being investigated. If he was denied due process at all, the
denial was with respect to the charges of extortion, tardiness and absenteeism, which are
grounds invoked separately from loss of trust and confidence. These grounds were not serious
considerations in the dismissal that followed, and therefore, were not considered by the Court
as material to the present case. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861,

February 2, 2010.

Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving
the lawful cause sustaining the dismissal of the employee. The employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause. The employees
behavior constituted just cause. However, the company cannot deny that it failed to observe
due process. The law requires that the employer must furnish the worker sought to be
dismissed with two written notices before termination of employment can be legally effected:
(1) notice which apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (2) the subsequent notice which informs the employee of the
employers decision to dismiss him. Violation of the employees right to statutory due process,
even if the dismissal was for a just cause, warrants the payment of indemnity in the form of
nominal damages. This indemnity is not intended to penalize the employer but to vindicate or
recognize the employees right to statutory due process, which was violated by the employer in
the present case. Hilton Heavy Equipment Corporation and Peter Lim vs. Ananias Dy, G.R. No.

164860, February 2, 2010.

5
Dismissal; due process. Failure to observe due process in the termination of employment for a
just cause does not invalidate the dismissal but makes the company liable for non-compliance
with the procedural requirements of due process. The violation of the employees right to
statutory due process warrants the payment of nominal damages, the amount of which is
addressed to the sound discretion of the court, taking into account the relevant
circumstances. In the instant case, considering that the company already suffered financially
because of poor sales performance under the employees watch, it is proper to reduce the
amount of nominal damages awarded to petitioner to Thirty Thousand Pesos (P30,000.00). The
amount of nominal damages awarded is not intended to enrich the employee, but to deter
employers from future violations of the statutory due process rights of employees. Rolando P.

Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No. 179702, February 16,
2010
Dismissal; due process. In the dismissal of employees, it has been consistently held that the
twin requirements of notice and hearing are essential elements of due process. The employer
must furnish the worker with two written notices before termination of employment can be
legally effected: (1) a notice apprising the employee of the particular acts or omissions for
which his dismissal is sought, and (2) a subsequent notice informing the employee of the
employers decision to dismiss him. With regard to the requirement of a hearing, the essence of
due process lies simply in an opportunity to be heard, and not that an actual hearing should
always and indispensably be held.
Likewise, there is no requirement that the notices of dismissal themselves be couched in the
form and language of judicial or quasi-judicial decisions. What is required is for the employer to
conduct a formal investigation process, with notices duly served on the employees informing
them of the fact of investigation, and subsequently, if warranted, a separate notice of dismissal.
Through the formal investigatory process, the employee must be accorded the right to present
his or her side, which must be considered and weighed by the employer. The employee must
be sufficiently apprised of the nature of the charge, so as to be able to intelligently defend
himself or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor Relations

Commission, et al., G.R. No. 182299, February 22, 2010.

Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an
employer may terminate an employment due to gross and habitual neglect by the employee of
his duties. To sustain a termination of employment based on this provision of law, the
negligence must not only be gross but also habitual.
In the present case, the employer asserts that the employees failed to regularly undertake a
monthly physical inventory of the outlets merchandise. The Court was not persuaded as it
found that inventory preparation and reporting did not fall on the employees shoulders since
they were to assist the [stock] clerk only. Kulas Ideas & Creations, et al. vs. Juliet Alcoseba, et

al., G.R. No. 180123, February 18, 2010.

Dismissal; loss of trust and confidence. In Fungo v. Lourdes School of Mandaluyong, we


restated the guidelines for the application of loss of trust and confidence as a just cause for
dismissal of an employee from the service, thus: a) loss of confidence should not be simulated;
b) it should not be used as 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. In the
present case, the employee, who was a warehouseman, held a position of trust and confidence
and was given access to and authority over company property with clear tasks and guidelines
laid down very early in his employment. Like any business entity, the company has every right

6
to protect itself from actual threats to the viability of its operations. The employee, caught redhanded in a scheme to spirit off unpaid company sacks, not only violated his fiduciary duty as
custodian of company property resulting in the companys loss of trust and confidence in him;
he had also become a threat to the viability of company operations. To rule that he should be
reinstated would be oppressive to the company. The law, in protecting the rights of the
employee, authorizes neither the oppression nor the self-destruction of the employer. Bibiana

Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010.

Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the
concurrence of the following: (1) loss of confidence should not be simulated; (2) it should not
be used as a subterfuge for causes which are improper, illegal, or unjustified; (3) it may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary; (4) it must be
genuine, not a mere afterthought to justify an earlier action taken in bad faith; and (5) the
employee involved holds a position of trust and confidence. Loss of confidence, as a just cause
for termination of employment, is premised on the fact that the employee concerned holds a
position of responsibility, trust and confidence. He must be invested with confidence on delicate
matters, such as the custody, handling, care, and protection of the employers property and/or
funds. In order to constitute a just cause for dismissal, the act complained of must be workrelated such as would show the employee concerned to be unfit to continue working for the
employer.
The subject employee in this case is a managerial employee holding a highly sensitive position.
Being the Head of the Marketing Group of the company, he was in charge, among others,
of the over-all production and sales performance of the company. Thus, as aptly pointed out by
the CA, his performance was practically the lifeblood of the corporation, because its earnings
depended on the sales of the marketing group, which he used to head. The position held by the
employee required the highest degree of trust and confidence of his employer in the formers
exercise of managerial discretion insofar as the conduct of the latters business was
concerned. The employees inability to perform the functions of his office to the satisfaction of
his employer and the formers poor judgment as marketing head caused the company huge
financial losses. If these were not timely addressed and corrected, the company could have
collapsed, to the detriment of its policy holders, stockholders, employees, and the public in
general. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No.

179702,February 16, 2010

Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of
concealment and dishonesty marred the purchase of paper materials for the Womens Journals
special project, with the employee playing the principal and most active role. There is no
question that the employee failed to make a reasonable canvass of the prices of the paper
materials required by a companys special project, resulting in substantial losses to the
company. That a rush job was involved, is no excuse as canvassing could be done even in a
days time as shown by the audit departments canvass. That the employee was responsible for
concealment and omissions also appears clear to us; he failed, under dubious circumstances, to
seasonably disclose to his employer material information with financial impact on the purchase
transaction.
Thus, the Court cannot but conclude that substantial evidence exists justifying the employees
dismissal for a just cause loss of trust and confidence. For loss of trust and confidence to be
a ground for dismissal, the law requires only that there be at least some basis to justify the
dismissal. The fact that the employee had been with the company for 25 years cannot change
the conclusion that he had become a liability to the company whose interests he miserably

7
failed to protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No.

187120, February 16, 2010.

Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an
employee are two-fold, consisting of substantive and procedural aspects. Not only must the
dismissal be for a just or authorized cause; the basic requirements of procedural due process
notice and hearing must likewise be observed before an employee may be dismissed. The
burden of proof rests on the employer to show that the employees dismissal has met these due
process requirements. The case of the employer must stand or fall on its own merits and not on
the weakness of the employees defense. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No.

157861, February 2, 2010.

Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee
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. In addition to full backwages, the Court has also repeatedly ruled that in cases
where reinstatement is no longer feasible due to strained relations, then separation pay may be
awarded instead of reinstatement. In Mt. Carmel College v. Resuena, the Court reiterated that
the separation pay, as an alternative to reinstatement, should be equivalent to one (1) month
salary for every year of service. Sargasso Construction and Development Corporation vs.

National Labor Relations Commission (4th Division) and Gorgonio Mongcal,G.R. No. 164118,
February 9, 2010.

Dismissal; serious misconduct. Misconduct has been defined as improper or wrong conduct. It
is the transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error of judgment. The
misconduct to be serious must be of such grave and aggravated character and not merely trivial
and unimportant. Such misconduct, however serious, must nevertheless be in connection with
the employees work to constitute just cause for his separation.
In the present case, the Court found substantial evidence to prove that a serious misconduct
has been committed to justify termination from employment. The Certified Public Accountant
and Corporate Finance Manager of the company submitted a report dated February 19, 2000
stating that in spite of managements memorandum, the keys to the office and filing cabinets
were not surrendered. It was likewise stated in the report that petitioner Wilfredo Baron pulled
out some records without allowing a representative from the internal audit team to inspect
them. He noticed Wilfredo Baron deleting some files from the computer, which could no longer
be retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner)
carrying some documents, including a Daily Collection Report. When asked to present the
documents for inspection, Junatas refused and tore the document.
In addition, the audit team discovered that MSI incurred an inventory shortage of One Million
Thirty Thousand Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It
found that Wilfredo Baron, the operations manager, in conspiracy with the other petitioners,
orchestrated massive irregularities and grand scale fraud, which could no longer be documented
because of theft of company documents and deletion of computer files. Unmistakably, the
unauthorized taking of company documents and files, failure to pay unremitted collections,
failure to surrender keys to the filing cabinets despite earlier instructions, concealment of
shortages, and failure to record inventory transactions pursuant to a fraudulent scheme are acts
of grave misconduct, which are sufficient causes for dismissal from employment. Wilfredo M.

8
Baron, et al. vs. National Labor Relations Commission, et al., G.R. No. 182299,February 22,
2010.

Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy
must be proved by clear, direct and convincing evidence. In Fernandez v. National Labor
Relations Commission,The Court expounded on the degree of evidence required to establish the
existence of a conspiracy in this wise: While it is true that in conspiracy, direct proof is not
essential, it must however, be shown that it exists as clearly as the commission of the offense
itself. There must at least be adequate proof that the malefactors had come to an agreement
concerning the commission of a felony and decided to commit it. x x x For conspiracy to exist,
it is essential that there must be conscious design to commit an offense. Conspiracy is not the
product of negligence but of intentionality on the part of the cohorts.
Verily, there was a dearth of evidence directly linking the employee to the commission of the
crime of theft, as his mere act of loading the dump truck with aggregates did not show that he
knew of the other persons plan to deliver the load to a place other than the companys
construction site. The only conclusion, therefore, is that the company had illegally dismissed
the employee in the present case. Sargasso Construction and Development Corporation vs.

National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118,
February 9, 2010.

Employee; recovery of personal contributions. May a government employee, dismissed from the
service for cause, be allowed to recover the personal contributions he paid to the Government
Service Insurance System (GSIS)? The answer is yes.
Section 11(d) of Commonwealth Act No. 186, as amended, provides: Upon dismissal for cause
or on voluntary separation, he shall be entitled only to his own premiums and voluntary
deposits, if any, plus interest of three per centum per annum, compounded monthly. This
provision continues to govern cases of employees dismissed for cause and their claims for the
return of their personal contributions.
Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be
liberally construed in favor of the government employees. The money, subject of the
employees request, consists of personal contributions made by him, premiums paid in
anticipation of benefits expected upon retirement. The occurrence of a contingency, i.e., his
dismissal from the service prior to reaching retirement age, should not deprive him of the
money that belongs to him from the outset. To allow forfeiture of these personal contributions
in favor of the GSIS would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo,

Branch Clerk of Court, Regional Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167,
February 9, 2010.
Employee expenses; in-service training. 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 security guard would pay or incur in order to secure or renew his license. In-service
training being a requirement for the renewal of a security guards license, expenses incurred
therefore are claimed to be for the security guards personal account. However, the 1994
Revised Rules and Regulations Implementing the Private Security Agency Law (Republic Act No.
5487) provides that it shall be the primary responsibility of the operators of private security
agency and company security forces to maintain and upgrade the standards of efficiency,
discipline, performance and competence of their personnel. It further provides that [T]o
maintain and/or upgrade the standard of efficiency, discipline and competence of security
guards and detectives, company security force and private security agencies upon prior

9
authority shall conduct-in-service training The cost of training shall be pro-rated among the
participating agencies/private companies.
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 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 provision of law. While 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, if
there is no centralization, there can be no pro-rating, and therefore, the company that has its
own security forces must 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. Prior to the signing of the CBA, it was the
company providing for the in-service training of the guards. Thus, implicit from the companys
actuations was its acknowledgment of its legally mandated responsibility to shoulder the
expenses for in-service training. PNCC Skyway Traffic Management and Security Division

Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC
Skyway Corporation), G.R. No. 171231, February 17, 2010

Employer-employee relationship; control test. This Court still employs the control test to
determine the existence of an employer-employee relationship between hospital and doctor.
In Calamba Medical Center, Inc. v. National Labor Relations Commission, et al., the Court held
that: Under the control test, an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by which the
physician is to accomplish his task. x x x That petitioner exercised control over respondents
gains light from the undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, the doctors work is monitored through the hospitals
nursing supervisors, charge nurses and orderlies. Without the approval or consent of the
hospital or its medical director, no operations can be undertaken in those areas. For the control
test to apply, it is not essential for the employer to actually supervise the performance by the
employee of his duties, it being enough that it has the right to wield the power. Professional

Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino
Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and
Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and
Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.
Management prerogatives; contract of perpetual employment. The Court cannot countenance
the employees claim that a contract of perpetual employment was ever constituted. While the
Constitution recognizes the primacy of labor, it also recognizes the critical role of private
enterprise in nation-building and the prerogatives of management. A contract of perpetual
employment deprives management of its prerogative to decide whom to hire, fire and promote,
and renders inutile the basic precepts of labor relations. While management may validly waive it
prerogatives, such waiver should not be contrary to law, public order, public policy, morals or
good customs. An absolute and unqualified employment for life in the mold of petitioners
concept of perpetual employment is contrary to public policy and good customs, as it unjustly
forbids the employer from terminating the services of an employee despite the existence of a
just or valid cause. It likewise compels the employer to retain an employee despite the
attainment of the statutory retirement age, even if the employee has became a non-performing

10
asset or, worse, a liability to the employer. Ronilo Sorreda vs. Cambridge Electronics

Corporation, G.R. No. 172927, February 11, 2010.

Suspension; leave without prior authority. 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 Court, in the present case, saw nothing in the language of the union
leave provision that removes from the company the right to prescribe reasonable rules and
regulations to govern the manner of availing of union leaves, particularly the prerogative to
require its prior approval. In fact, prior notice is expressly required under the CBA so that the
company can appropriately respond to the request for leave. In this sense, the rule requiring
prior approval only made express what is implied from the terms of the CBA.
Despite managements disapproval of his requested leave, the employee still went on leave, in
open disregard of his superiors orders. This rendered the employee open to the charge of
insubordination, separately from his absence without official leave. Malayan Employees

Association-FFW and Rodolfo Mangalino vs. Malayan Insurance Company, Inc., G.R. No.
181357, February 2, 2010.
Quitclaim; elements. It is true that the law looks with disfavor on quitclaims and releases by
employees who have been inveigled or pressured into signing them by unscrupulous employers
seeking to evade their legal responsibilities and frustrate just claims of employees. In certain
cases, however, the Court has given effect to quitclaims executed by employees if the employer
is able to prove the following requisites, to wit: (1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to
law, public order, public policy, morals or good customs, or prejudicial to a third person with a
right recognized by law. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina

Ativo, et al., G.R. No. 188002, February 1, 2010.

Quitclaim; validity. In the case at bar, both the Labor Arbiter and the NLRC ruled that the
employees executed their quitclaims without any coercion from the company following their
voluntary resignation from the company. The contents of the quitclaim documents are simple,
clear and unequivocal. The records of the case are bereft of any substantial evidence to show
that the employees did not know that they were relinquishing their right short of what they had
expected to receive and contrary to what they have so declared. Put differently, at the time
they were signing their quitclaims, respondents honestly believed that the amounts received by
them were fair and reasonable settlements of the amounts, which they would have received had
they refused to voluntarily resign from the said company. Goodrich Manufacturing Corporation &

Mr. Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.

Vacation leave; scheduling. Although the preferred vacation leave schedule of employees should
be given priority, they cannot demand, as a matter of right, for their request to be automatically
granted by the company. If the employees were given the exclusive right to schedule their
vacation leave then said right should have been incorporated in the CBA. In the absence of such
right and in view of the mandatory provision in the CBA giving the company the right to
schedule the vacation leave of its employees, the CBA prevails.
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. It is a mere concession or act
of grace of the employer and not a matter of right on the part of the employee. It is, therefore,

11
well within the power and authority of an employer to impose certain conditions, as it deems fit,
on the grant of vacation leaves, such as having the option to schedule the same. PNCC Skyway

Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by


its President, Rene Soriano vs. PNCC Skyway Corporation),G.R. No. 171231, February 17, 2010
Labor Procedure
Appeal; question of fact. While as a rule, a petition for review on certiorari shall raise only
questions of law, we deem it appropriate to examine the facts in this review, given the
conflicting factual findings between the Labor Arbiter, on the one hand and, the NLRC and the
CA, on the other. The Labor Arbiter sustained Riveras dismissal with the finding that he
committed acts of dishonesty or fraud against his employer. The NLRC and the CA held that no
substantial evidence existed to support Riveras dismissal. Philippine Journalist, Inc. vs. Leozar

Dela Cruz y Balobal, G.R. No. 187120, February 16, 2010.

Execution of judgments; separation pay/backwages; computation. In concrete terms, the


question is whether a re-computation in the course of execution, of the labor arbiters original
computation of the awards made pegged as of the time the decision was rendered and
confirmed with modification by a final CA decision, is legally proper.
The Court held that under the terms of the decision under execution, no essential change is
made by a re-computation as this step is a necessary consequence that flows from the nature of
the illegality of dismissal declared in that decision. A re-computation (or an original
computation, if no previous computation has been made) is a part of the law specifically,
Article 279 of the Labor Code and the established jurisprudence on this provision that is read
into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until
full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the
consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal ruling
stands; only the computation of the monetary consequences of this dismissal is affected and
this is not a violation of the principle of immutability of final judgments. Session Delights Ice

Cream and Fast Foods vs. The Hon. Court of Appeals (Sixth Division), Hon. National Labor
Relations Commission (Second Division) and Adonis Armenio M. Flora, G.R. No. 172149,
February 8, 2010.

Jurisdiction; absence of employer-employee relationship. Jurisdiction over the subject matter of


a complaint is determined by the allegations of the complaint. In Pioneer Concrete Philippines,
Inc. v. Todaro, the Court reiterated that where no employer-employee relationship exists
between the parties, and the Labor Code or any labor statute or collective bargaining
agreement is not needed to resolve any issue raised by them, it is the Regional Trial Court
which has jurisdiction. Thus it has been consistently held that the determination of the existence
of a contract as well as the payment of damages is inherently civil in nature. A labor arbiter may
only take cognizance of a case and award damages where the claim for such damages arises
out of an employer-employee relationship.
In the present case, the employee, from the period May 8, 1999 to October 8, 1999, was clearly
a project employee of the company. There is, therefore, an employer-employee relationship.
Consequently, questions or disputes arising out of this relationship fell under the jurisdiction of
the labor arbiter. However, based on petitioners allegations in his position paper, his cause of
action was based on an alleged second contract of employment separate and distinct from his
project employment contract. While there existed an employer-employee relationship between
the parties while the project contract of employment existed, the present dispute is neither
rooted in the aforestated contract nor is it one inherently linked to it. Petitioner insists on a right

12
to be employed again in respondent company and seeks a determination of the existence of a
new and separate contract that established that right. As such, his case is within the
jurisdiction, not of the labor arbiter, but of the regular courts. The NLRC and the CA were
therefore correct in ruling that the labor arbiter erroneously took cognizance of the case. Ronilo

Sorreda vs. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010.

Jurisdiction; void judgment. The company admits that it failed to appeal the January 29, 2003
Order within the period prescribed by law. It likewise admits that the case was already in the
execution process when it resorted to a belated appeal to the DOLE Secretary. The company
sought to excuse itself from the effects of the finality of the Order by arguing that it was
allegedly issued without jurisdiction. As such, it may be assailed at any time.
While it is true that orders issued without jurisdiction are considered null and void and, as a
general rule, may be assailed at any time, the fact of the matter is that, in this case, it was well
within the jurisdiction of Director Manalo to issue the Order. Under Article 128(b) of the Labor
Code, as amended by Republic Act (RA) No. 7730, the DOLE Secretary and her representatives,
the regional directors, have jurisdiction over labor standards violations based on findings made
in the course of inspection of an employers premises. The said jurisdiction is not affected by
the amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations
found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the
visitorial and enforcement powers of the DOLE Secretary, are concerned. The last sentence of
Article 128(b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE
Secretary and her representatives, but such exception is neither an issue nor applicable
here. Tiger Construction and Development Corporation vs. Reynaldo, et al., G.R. No.

164141, February 26, 2010.

Labor Appeal; cash bond. Article 223 of the Labor Code provides that an appeal by the
employer to the NLRC from a judgment of a labor arbiter which involves a monetary award may
be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the NLRC, in an amount equivalent to the monetary award in the
judgment appealed from. Cash, means a sum of money; cash bail (the sense in which the
term cash bond is used) is a sum of money posted by a criminal defendant to ensure his
presence in court, used in place of a surety bond and real estate.
To comply with the appeal bond requirement, the company deposited the amount
of P71,909.77 with the United Coconut Planters Bank and surrendered to the NLRC the
passbook covering the deposit, along with a Deed of Assignment it executed assigning the
proceeds of the deposit in favor of the employee and authorizing the NLRC to release the same
in the event that the Labor Arbiters Decision becomes final and executory. Such Deed of
Assignment, as well as the passbook, is neither a cash bond nor a surety bond. The companys
appeal to the NLRC was thus not duly perfected, thereby rendering the Labor Arbiters Decision
final and executory. Mindanao Times Corporation vs. Mitchel R. Confesor, G.R. No. 183417,

February 5, 2010.

Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory
minimum 20% membership of rank-and-file employees in the employees union. 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. Accordingly, the retraction of six union members who later severed
and withdrew their union membership cannot cause the cancellation of the unions registration.

13
Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the
application for union registration or even way back to the organizational meeting. Before their
withdrawal, the six employees in question were bona fide union members. They never disputed
affixing their signatures beside their handwritten names during the organizational meetings.
While they alleged that they did not know what they were signing, their affidavits of retraction
were not re-affirmed during the hearings of the instant case rendering them of little, if any,
evidentiary value. In any case, even with the withdrawal of six union members, the union would
still be compliant with the mandatory membership requirement under Art. 234(c) since the
remaining 24 union members constitute more than the 20% membership requirement of 22
employees. Eagle Ridge Gold & Country Club vs. Court of Appeals, et al., G.R. No. 178989,

March 18, 2010.

Cessation of operations; financial assistance. Based on Article 283, in case of cessation of


operations, the employer is only required to pay his employees a separation pay of one month
pay or at least one-half month pay for every year of service, whichever is higher. That is all that
the law requires.
In the case at bar, petitioner paid respondents the following: (a) separation pay computed at
150% of their gross monthly pay per year of service; and (b) cash equivalent of earned and
accrued vacation and sick leaves. Clearly, petitioner had gone over and above the requirements
of the law. Despite this, however, the Labor Arbiter ordered petitioner to pay respondents an
additional amount, equivalent to one months salary, as a form of financial assistance.
The award of financial assistance is bereft of legal basis and serves to penalize petitioner who
had complied with the requirements of the law. The Court also point out that petitioner may, as
it has done, grant on a voluntary and ex gratia basis, any amount more than what is required
by the law, but to insist that more financial assistance be given is certainly something that the
Court cannot countenance. Moreover, any award of additional financial assistance to
respondents would put them at an advantage and in a better position than the rest of their coemployees who similarly lost their employment because of petitioners decision to cease its
operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No.

165951, March 30, 2010.

Cost of living allowance. COLA is not in the nature of an allowance intended to reimburse
expenses incurred by officials and employees of the government in the performance of their
official functions. It is not payment in consideration of the fulfillment of official duty. As
defined, cost of living refers to the level of prices relating to a range of everyday items or the
cost of purchasing those goods and services which are included in an accepted standard level of
consumption. Based on this premise, COLA is a benefit intended to cover increases in the cost
of living. Thus, it is and should be integrated into the standardized salary rates.
In the present case, the Court is not persuaded that the continued grant of COLA to the
uniformed personnel to the exclusion of other national government officials run afoul the equal
protection clause of the Constitution. The fundamental right of equal protection of the laws is
not absolute, but is subject to reasonable classification. If the groupings are characterized by
substantial distinctions that make real differences, one class may be treated and regulated
differently from another. The classification must also be germane to the purpose of the law and
must apply to all those belonging to the same class.
The Court found valid reasons to treat the uniformed personnel differently from other national
government officials. Being in charge of the actual defense of the State and the maintenance of
internal peace and order, they are expected to be stationed virtually anywhere in the country.
They are likely to be assigned to a variety of low, moderate, and high-cost areas. Since their

14
basic pay does not vary based on location, the continued grant of COLA is intended to help
them offset the effects of living in higher cost areas. Victoria C. Gutierrez, et al. vs. Department

of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission on Audit, et


al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et al./Kapisanan ng
mga Manggagawa sa Bureau of Agricultural Statistic (KMB), et al. vs. Department of Budget and
Management, et al./National Housing Authority vs. Epifanio P. Recana, et al./ Insurance
Commission Officers and Employees, et al. vs. Department of Budget and Management, et
al./Fiber Industry Development Authority Employees Association (FIDAEA),et al. vs. Department
of Budget and Management, et al./Bureau of Animal Industry Employees Association (BAIEA), et
al. vs. Department of Budget and Management, et al./Re: Request of Sandiganbayan for
authority to use their savings to pay their Cola Differential from July 1, 1989 to March 16,
1999, G.R. No. 153266/G.R. No. 159007/G.R. No. 159029/G.R. No. 170084/G.R. No.
172713/G.R. No. 173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-4-02-SB. March 18,
2010.
Compensable illness. Jurisprudence provides that to establish compensability of a nonoccupational disease, reasonable proof of work-connection and not direct causal relation is
required. Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings.
In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and
permanent disability benefits in favor of Villamater, as it was sufficiently shown that his having
contracted colon cancer was, at the very least, aggravated by his working conditions, taking into
consideration his dietary provisions on board, his age, and his job as Chief Engineer, who was
primarily in charge of the technical and mechanical operations of the vessels to ensure voyage
safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et

al., G.R. No. 179169, March 3, 2010.

Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the
2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and
(2) the work-related injury or illness must have existed during the term of the seafarers
employment contract. In other words, to be entitled to compensation and benefits under this
provision, it is not sufficient to establish that the seafarers illness or injury has rendered him
permanently or partially disabled; it must also be shown that there is a causal connection
between the seafarers illness or injury and the work for which he had been contracted.
The 2000 POEA-SEC defines work-related injury as injury(ies) resulting in disability or death
arising out of and in the course of employment and work-related illness as any sickness
resulting to disability or death as a result of an occupational disease listed under Section 32-A of
this contract with the conditions set therein satisfied.
Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the companydesignated physician who is entrusted with the task of assessing the seamans disability.
While it is true that medical reports issued by the company-designated physicians do not bind
the courts, the Courts examination of Dr. Ong-Salvadors Initial Medical Report have led it to
agree with her findings. Dr. Ong-Salvador was able to sufficiently explain her basis in
concluding that the respondents illness was not work-related: she found the respondent not to
have been exposed to any carcinogenic fumes, or to any viral infection in his workplace. Her
findings were arrived at after the respondent was made to undergo a physical, neurological and
laboratory examination, taking into consideration his past medical history, family history, and
social history. In addition, the respondent was evaluated by a specialist, a surgeon and an

15
oncologist. The series of tests and evaluations show that Dr. Ong-Salvadors findings were not
arrived at arbitrarily; neither were they biased in the companys favor.
The respondent, on the other hand, did not adduce proof to show a reasonable connection
between his work as an assistant housekeeping manager and his lymphoma. There was no
showing how the demands and nature of his job vis--vis the ships working conditions
increased the risk of contracting lymphoma. The non-work relatedness of the respondents
illness is reinforced by the fact that under the Implementing Rules and Regulations of the Labor
Code (ECC Rules), lymphoma is considered occupational only when contracted by operating
room personnel due to exposure to anesthetics. The records do not show that the respondents
work as an assistant housekeeping manager exposed him to anesthetics.
Accordingly, the Court held that the respondent is not entitled to total and permanent disability
benefits on account of his failure to refute the company-designated physicians findings that: (1)
his illness was not work-related; and (2) he was fit to resume sea duties. Magsaysay Maritime

Corporation and/or Cruise Ships Catering Services International N.V. vs. National Labor
Relations Commissions, et al., G.R. No. 186180, March 22, 2010.
Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving
that its conduct and action or the transfer of an employee are for valid and legitimate grounds
such as genuine business necessity. Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer to
overcome this burden of proof taints the employees transfer as a constructive dismissal.
In the present case, the employer failed to discharge this burden. The combination of harsh
actions taken by the bank rendered the employment condition of the employee hostile and
unbearable for the following reasons: First, there is no showing of any urgency or genuine
business necessity to transfer the employee to the Makati Head Office. The banks stated reason
that the employee had to undergo branch head training because of his gross inefficiency was
not supported by any proof that the employee had a record of gross inefficiency. Second, the
employees transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and
oppressive, since the respondent and his family are residents of Dumaguete City. Third, the
employer failed to present any valid reason why it had to require the employee to go to the
Makati Head Office to undergo branch head training when it could have just easily required the
latter to undertake the same training in the VISMIN area. Finally, there was nothing in the
order of transfer indicating the position which the employee would occupy after his training;
thus, the employee was effectively placed in a floating status. The banks contention that the
employee was assigned to a sensitive position in the DUHO Task Force is suspect when
considered with the fact that he was made to undergo branch head training which is totally
different from a position that entails reconciling book entries of all branches of the former.
Reconciling book entries is essentially an accounting task.
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. Based on the
factual considerations in the present case, the Court held that the hostile and unreasonable
working conditions of the bank justified the finding of the NLRC and the CA that the employee
was constructively dismissed. Philippine Veterans Bank vs. National Labor Relations

Commission, et al., G.R. No. 188882, March 30, 2010.

Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three working days from arrival for diagnosis and
treatment. Applying Section 20(B), paragraph (3) of the 2000 Amended Standard Terms and

16
Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels,
petitioner is required to undergo post-employment medical examination by a companydesignated physician within three working days from arrival, except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period
would suffice. In Maunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554
SCRA 446, 459] this Court explicitly declared that it is mandatory for a claimant to be examined
by a company-designated physician within three days from his repatriation. The unexplained
omission of this requirement will bar the filing of a claim for disability benefits. Alex C.

Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C. Maquilan, and/or MMS Co. Ltd., G.R.
No. 184722, March 15, 2010.
Dismissal; damages. Moral and exemplary damages are recoverable where the dismissal of an
employee was attended by bad faith or fraud or constituted an act oppressive to labor or was
done in a manner contrary to morals, good customs or public policy. With regard to the
employees of Promm-Gem, there being no evidence of bad faith, fraud or any oppressive act on
the part of the latter, the Court found no support for the award of damages.
As for P&G, the records show that it dismissed its employees through SAPS in a manner
oppressive to labor. The sudden and peremptory barring of the employees from work, and from
admission to the work place, after just a one-day verbal notice, and for no valid cause, bellows
oppression and utter disregard of the right to due process of the concerned petitioners. Hence,
an award of moral damages is called for. Joeb Aliviado, et al. vs. Procter & Gamble Philippines,

Inc., et al., G.R. No. 160506, March 9, 2010.


Dismissal; fraud and serious misconduct. In this case, the Court found that Pastoril was as

actively involved as Escoto and Omela in the sale of the Toyota Town Ace that resulted in a loss
to the company. All three participated in making the company believe that Aquino bought the
Toyota Town Ace for P190,000.00 when in fact, Aquino paid P200,000.00 for the vehicle. Thus,
Pastoril acted in concert with Escoto and Omela in the transaction that defrauded their employer
in the amount of P10,000.00. Pastoril prepared and issued the deed of sale indicating that the
vehicle was sold for P190,000.00, although she knew that the buyer was being charged
P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price
difference and tried to silence Rodriguez (who got wind of the anomaly) by giving him
P1,000.00 and passing the P10,000.00 price difference off as the approved discount Aquino
asked for. The Court held that there was a conspiracy between and among the three
employees, where every participant had made significant contributory acts. White Diamond

Trading Corporation and/or Jerry Uy vs. National Labor Relations Commission, et al., G.R. No.
186019. March 29, 2010.
Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for
termination of employment, is premised on the fact that the employee concerned holds a
position of responsibility or of trust and confidence. As such, he must be invested with
confidence on delicate matters, such as custody, handling or care and protection of the property
and assets of the employer. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and must show that the employee is unfit to continue to
work for the employer. In the instant case, the petitioners-employees of Promm-Gem have not
been shown to be occupying positions of responsibility or of trust and confidence. Neither is
there any evidence to show that they are unfit to continue to work as merchandisers for
Promm-Gem. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No.

160506, March 9, 2010.

17
Dismissal; just cause; misconduct. Misconduct has been defined as improper or wrong conduct;
the transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, unlawful in character implying wrongful intent and not mere error of judgment. The
misconduct to be serious must be of such grave and aggravated character and not merely trivial
and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b)
must relate to the performance of the employees duties; and (c) must show that the employee
has become unfit to continue working for the employer. In other words, in order to constitute
serious misconduct which will warrant the dismissal of an employee under paragraph (a) of
Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or
conduct must have been performed with wrongful intent. In the instant case, petitionersemployees of Promm-Gem may have committed an error of judgment in claiming to be
employees of P&G, but it cannot be said that they were motivated by any wrongful intent in
doing so. As such, the Court found them guilty of simple misconduct only, for assailing the
integrity of Promm-Gem as a legitimate and independent promotion firm. A misconduct which
is not serious or grave, as that existing in the instant case, cannot be a valid basis for dismissing
an employee. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No.

160506, March 9, 2010.

Dismissal; just cause; union security clause. In terminating the employment of an employee by
enforcing the union security clause, the employer is required 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.
It is the third requisite that appears to be lacking in this case. It is apparent from the identical
termination letters that GMC terminated Casio, et al., by relying upon the resolutions of the
union, which made no mention at all of the evidence supporting the decision of the union to
expel Casio, et al. from the union. GMC never alleged nor attempted to prove that the company
actually looked into the evidence of the union for expelling Casio, et al. and made a
determination on the sufficiency thereof. Without such a determination, GMC cannot claim that
it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a
determination of the sufficiency of evidence supporting the decision of the union constitutes
non-observance by GMC of procedural due process in the dismissal of employees. General

Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10,
2010.
Dismissal pursuant to union security clause; separate notice and haring required. GMC illegally
dismissed Casio, et al. because not only did GMC fail to make a determination of the sufficiency
of evidence to support the unions decision to expel Casio, et al., it also failed to accord the
expelled union members procedural due process, i.e., notice and hearing, prior to the
termination of their employment.
GMC, by its own admission, did not conduct a separate and independent investigation to
determine the sufficiency of the evidence supporting the unions expulsion of Casio, et al. It
simply acceded to the unions demand. Consequently, GMC cannot insist that it has no liability
for the payment of backwages and damages to Casio, et al., and that the liability for such
payment should fall only upon the union officers and board members who expelled Casio, et al.
GMC completely missed the point that the expulsion of Casio, et al. by the union and the
termination of employment of the same employees by GMC, although related, are two separate

18
and distinct acts. Despite a closed shop provision in the CBA, law and jurisprudence impose
upon GMC the obligation to accord Casio, et al. substantive and procedural due process before
complying with the unions demand to dismiss the expelled union members from service. The
failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et
al. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552,

March 10, 2010.

Employee benefit; bonus. By definition, a bonus is a gratuity or act of liberality of the giver. It
is something given in addition to what is ordinarily received by or strictly due the recipient. A
bonus is granted and paid to an employee for his industry and loyalty which contributed to the
success of the employers business and made possible the realization of profits. A bonus is also
granted by an enlightened employer to spur the employee to greater efforts for the success of
the business and realization of bigger profits.
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be
enforceable, it must have been promised by the employer and expressly agreed upon by the
parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature
of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas
bonus due to respondent Association has become more than just an act of generosity on the
part of the petitioner but a contractual obligation it has undertaken.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the
CBA. The rule is settled that any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of
non-diminution of benefits is founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full protection. Hence, absent any
proof that the employers consent was vitiated by fraud, mistake or duress, it is presumed that
it entered into the CBA voluntarily and had full knowledge of the contents thereof and was
aware of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics

Employees Association, G.R. No. 180866, March 2, 2010.

Employee; monetary award. The law and the rules are consistent in stating that the
employment permit must be acquired prior to employment. The Labor Code states: Any alien
seeking admission to the Philippines for employment purposes and any domestic or foreign
employer who desires to engage an alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor. Section 4, Rule XIV, Book 1 of the
Implementing Rules and Regulations provides: No alien seeking employment, whether as a
resident or non-resident, may enter the Philippines without first securing an employment permit
from the Ministry. If an alien enters the country under a non-working visa and wishes to be
employed thereafter, he may only be allowed to be employed upon presentation of a duly
approved employment permit.
Galera worked in the Philippines without a proper work permit but now wants to claim
employees benefits under Philippine labor laws. She cannot come to this Court with unclean
hands. To grant Galeras prayer is to sanction the violation of the Philippine labor laws requiring
aliens to secure work permits before their employment. WPP Marketing Communications, Inc.

et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing Communications, Inc. et
al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.

Employee vs. corporate officer. Corporate officers are given such character either by the
Corporation Code or by the corporations by-laws. Under Section 25 of the Corporation Code,
the corporate officers are the president, secretary, treasurer and such other officers as may be
provided in the by-laws. Other officers are sometimes created by the charter or by-laws of a

19
corporation, or the board of directors may be empowered under the by-laws of a corporation to
create additional offices as may be necessary.
An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate
officer (Vice-President with the operational title of Managing Director of Mindshare) during a
special meeting of WPPs Board of Directors is an appointment to a non-existent corporate
office. WPPs by-laws provided for only one Vice-President. At the time of Galeras appointment
on 31 December 1999, WPP already had one Vice-President in the person of Webster. Galera
cannot be said to be a director of WPP also because all five directorship positions provided in
the by-laws are already occupied. Finally, WPP cannot rely on its Amended By-Laws to support
its argument that Galera is a corporate officer. The Amended By-Laws provided for more than
one Vice-President and for two additional directors. Even though WPPs stockholders voted for
the amendment on 31 May 2000, the SEC approved the amendments only on 16 February
2001. Galera was dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang
did not present any evidence that Galeras dismissal took effect with the action of WPPs Board
of Directors.
Additionally, the following provisions in her employment contract are convincing indicators that
Galera was an employee and not a corporate officer: (1) it mandates where and how often she
is to perform her work; (2) the wages she receives are completely controlled by WPP; (3) she is
subject to the regular disciplinary procedures of WPP; (4) section 14 thereof clearly states that
she is a permanent employee not a Vice-President or a member of the Board of Directors; (5)
the intellectual property rights created or discovered by petitioner during her employment shall
automatically belong to private respondent WPP [Under the Intellectual Property Code, this
condition prevails if the creator of the work subject to the laws of patent or copyright is an
employee of the one entitled to the patent or copyright]; and (6) the disciplinary procedure
states that her right of redress is through Mindshares Chief Executive Officer for the AsiaPacific. This last circumstance implies that she was not even under the disciplinary control of
WPPs Board of Directors, and therefore, she could not have been a WPP corporate officer as
only the WPP Board of Directors could appoint and terminate its own corporate officer. WPP

Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs. WPP
Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.
Illegal dismissal. Under Republic Act No. 6715, employees who are illegally dismissed are
entitled to full backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time their actual compensation was withheld from them up to
the time of their actual reinstatement but if reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal termination up to the finality of the decision.
The employees in this case are entitled to backwages and separation pay, considering that
reinstatement is no longer possible because the positions they previously occupied are no longer
existing. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No.

149552, March 10, 2010.

Illegal dismissal. WPPs dismissal of Galera lacked both substantive and procedural due
process. Apart from Steedmans letter dated 15 December 2000 to Galera, WPP failed to prove
any just or authorized cause for Galeras dismissal. The law also requires that the employer
must furnish the worker sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs
the employee of the employers decision to dismiss him. Failure to comply with these
requirements taints the dismissal with illegality. WPPs acts clearly show that Galeras dismissal

20
did not comply with the two-notice rule. WPP Marketing Communications, Inc. et al. vs. Jocelyn

M. Galera/Jocelyn M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No.
169207/G.R. No. 169239, March 25, 2010.

Illegal dismissal; abandonment. Petitioner was, for five times, notified in writing by respondent
to resume teaching for the second semester of school year 2003-2004 following the service of
her suspension during the first semester. She was advised that a teaching load had already
been prepared for her. Respondent never replied to those notices. Petitioners justification for
her failure to respond to the notices was that her acceptance of the offer could be construed as
a waiver of her claims. The Court held that petitioners justification is not a valid excuse.
Petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her
desire to return to her job and negated any intention to sever the employer-employee
relationship. Petitioner forgets that her complaint for illegal dismissal which she filed on June
5, 2003 sprang, not from her dismissal on December 6, 2003 due to abandonment, but from
her suspension during the first semester of school year 2003-2004. While the filing of a
complaint with a prayer for reinstatement negates an intention to sever the employer-employee
relationship, the same contemplates an action taken subsequent to dismissal and not after an
employee, by all indications, abandoned her job. Evangeline C. Cobarrubias vs. Saint Louis

University, Inc., G.R. No. 176717, March 17, 2010.

Illegal dismissal; monetary awards. Clearly, the law intends the award of backwages and
similar benefits to accumulate past the date of the Labor Arbiters decision until the dismissed
employee is actually reinstated. But if, as in this case, reinstatement is no longer possible, this
Court has consistently ruled that backwages shall be computed from the time of illegal dismissal
until the date the decision becomes final.
Separation pay, on the other hand, is equivalent to one month pay for every year of service, a
fraction of six months to be considered as one whole year. Here that would begin from January
31, 1994 when petitioner Belen began his service. Technically the computation of his
separation pay would end on the day he was dismissed on August 20, 1999 when he
supposedly ceased to render service and his wages ended. But, since Belen was entitled to
collect backwages until the judgment for illegal dismissal in his favor became final, here on
September 22, 2008, the computation of his separation pay should also end on that date.
Further, since the monetary awards remained unpaid even after it became final on September
22, 2008 because of issues raised respecting the correct computation of such awards, it is but
fair that respondent Javellana be required to pay 12% interest per annum on those awards from
September 22, 2008 until they are paid. The 12% interest is proper because the Court treats
monetary claims in labor cases the equivalent of a forbearance of credit. It matters not that the
amounts of the claims were still in question on September 22, 2008. What is decisive is that
the order to pay the monetary awards had long become final. Daniel P. Javellana, Jr. vs. Albino

Belen/Albino Belen Vs. Daniel P. Javellana, Jr. and Javellana Farms, Inc., G.R. No. 181913/G.R.
No. 182158, March 5, 2010.
Labor only contracting. Indeed, it is management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature. However, in order for such
outsourcing to be valid, it must be made to an independent contractor because the current
labor rules expressly prohibit labor-only contracting. There is labor-only contracting when the
contractor or sub-contractor 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

21
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.
In the instant case, the financial statements of Promm-Gem show 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. It also has long term assets worth P432,895.28 and current assets of P719,042.32.
Promm-Gem has also proven that it maintained its own warehouse and office space with a floor
area of 870 square meters. It also had under its name three registered vehicles, which were
used for its promotional/merchandising business. Promm-Gem also has other clients aside from
P&G. Under the circumstances, we find that Promm-Gem has substantial investment, which
relates to the work to be performed. Under these circumstances, Promm-Gem cannot be
considered a labor-only contractor.
On the other hand, the Articles of Incorporation of SAPS show that it has a paid-in capital of
only P31,250.00. There is no other evidence to prove how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other
assets.
SAPS lack of substantial capital is highlighted by the records which show that its payroll for its
merchandisers alone for one month would already total P44,561.00. It had 6-month contracts
with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own
capital and investment. Its capital is not even sufficient for one months payroll. SAPS failed to
show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate
revenues to sustain its operations independently. Substantial capital refers to capitalization
used in the performance or completion of the job, work or service contracted out. In the
present case, SAPS has failed to show substantial capital.
Furthermore, the employees in this case performed merchandising and promotion of the
products of P&G, which are activities that the Court has considered directly related to the
manufacturing business of P&G. Considering that SAPS has no substantial capital or investment
and the workers it recruited are performing activities which are directly related to the principal
business of P&G, we find that SAPS is engaged in labor-only contracting. Joeb Aliviado, et al.

vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010.

Project employee. The test for distinguishing a project employee from a regular employee is
whether or not he has been assigned to carry out a specific project or undertaking, with the
duration and scope of his engagement specified at the time his service is contracted. Here, it is
not disputed that petitioner company contracted respondent Trinidads service by specific
projects with the duration of his work clearly set out in his employment contracts. He remained
a project employee regardless of the number of years and the various projects he worked for
the company.
Generally, length of service provides a fair yardstick for determining when an employee initially
hired on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization. But this standard will not be fair, if applied to the construction industry, simply
because construction firms cannot guarantee work and funding for its payrolls beyond the life of
each project. And getting projects is not a matter of course. Construction companies have no
control over the decisions and resources of project proponents or owners. There is no
construction company that does not wish it has such control but the reality, understood by
construction workers, is that work depended on decisions and developments over which
construction companies have no say.

22
In this case, respondent Trinidads series of employments with petitioner company were coterminous with its projects. When its Boni Serrano-Katipunan Interchange Project was finished
in December 2004, Trinidads employment ended with it. He was not dismissed. His
employment contract simply ended with the project for which he had signed up. His
employment history belies the claim that he continuously worked for the company. Intervals or
gaps separated one contract from another. William Construction Corp. and/or Teresita Uy and

William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010.

Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries


and wages he received during the pendency of his appeal, notwithstanding the reversal by the
NLRC of the LAs order of reinstatement. The pertinent law on the matter is not concerned with
the wisdom or propriety of the LAs order of reinstatement, for if it was, then it should have
provided that the pendency of an appeal should stay its execution. After all, a decision cannot
be deemed irrefragable unless it attains finality. College of the Immaculate Concepcion vs.

National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No. 167563, March
22, 2010.

Representation and Transportation Allowance; entitlement. Statutory law, as implemented by


administrative issuances and interpreted in decisions, has consistently treated RATA as distinct
from salary. Unlike salary, which is paid for services rendered, RATA belongs to a basket of
allowances to defray expenses deemed unavoidable in the discharge of office. Hence, RATA is
paid only to certain officials who, by the nature of their offices, incur representation and
transportation expenses.
At any rate, the denial of RATA must be grounded on relevant and specific provision of law. By
insisting that, as requisite for her receipt of RATA, respondent must discharge her office as
Bacnotans treasurer while on reassignment at the La Union treasurers office, the DBM
effectively punishes respondent for acceding to her reassignment. Surely, the law could not
have intended to place local government officials like respondent in the difficult position of
having to choose between disobeying a reassignment order or keeping an allowance.

Department of Budget and Management (DBM) vs. Olivia D. Leones, G.R. No. 169726, March
18, 2010.

Separation pay; termination for cause. Separation pay is only warranted when the cause for
termination is not attributable to the employees fault, such as those provided in Articles 283
and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no
longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious
misconduct.
Jurisprudence has classified theft of company property as a serious misconduct and denied the
award of separation pay to the erring employee. In this case, the Court saw no reason why this
same rule should not be similarly applied in the case of Capor. She attempted to steal the
property of her long-time employer. For committing such misconduct, she is definitely not
entitled to an award of separation pay.
Capors argument that despite the finding of theft, she should still be granted separation pay in
light of her long years of service with the Company did not persuade the Court. Indeed, length
of service and a previously clean employment record cannot simply erase the gravity of the
betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that
can simply be stacked against the employer. After all, an employer-employee relationship is
symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer
had treated his employee well, has accorded him fairness and adequate compensation as
determined by law, it is only fair to expect a long-time employee to return such fairness with at

23
least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is
more insulting and odious for a fair employer. While we sympathize with Capors plight, being
of retirement age and having served petitioners for 39 years, we cannot award any financial
assistance in her favor because it is not only against the law but also a retrogressive public
policy. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa (NLM)

Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.

Termination of employment; conviction in criminal case. Conviction in a criminal case is not


necessary to find just cause for termination of employment. Criminal cases require proof
beyond reasonable doubt while labor disputes require only substantial evidence, which means
such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion.
The evidence in this case was reviewed by the appellate court and two labor tribunals endowed
with expertise on the matter the Labor Arbiter and the NLRC. They all found substantial
evidence to conclude that Capor had been validly dismissed for dishonesty or serious
misconduct. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa

(NLM) Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.

Labor Procedure
Court; findings of fact (labor). A petition for review on certiorari under Rule 45 of the Rules of
Court should include only questions of law questions of fact are not reviewable. A question
of law exists when the doubt centers on what the law is on a certain set of facts, while a
question of fact exists when the doubt centers on the truth or falsity of the alleged facts. There
is a question of law if the issue raised is capable of being resolved without need of reviewing
the probative value of the evidence. Once the issue invites a review of the evidence, the
question is one of fact.
Whether YEU committed fraud and misrepresentation in failing to remove Pinedas signature
from the list of employees who supported YEUs application for registration and whether YEU
conducted an election of its officers are questions of fact. They are not reviewable.
Factual findings of the Court of Appeals are binding on the Court. Absent grave abuse of
discretion, the Court will not disturb the Court of Appeals factual findings. In Encarnacion v.
Court of Appeals (G.R. No. 101292, 8 June 1993), the Court held that, unless there is a clearly
grave or whimsical abuse on its part, findings of fact of the appellate court will not be
disturbed. The Supreme Court will only exercise its power of review in known exceptions such
as gross misappreciation of evidence or a total void of evidence. YTPI failed to show that the
Court of Appeals gravely abused its discretion. Yokohama Tire Philippines, Inc. vs. Yokohama

Employees Union, G.R. No. 163532, March 12, 2010.

Court; questions of fact (labor). The petition essentially raises questions of fact. While as a
rule, factual findings of the CA are binding on the Court, the Court exercised its discretionary
review authority to review the facts of this case in view of the conflict in the findings of facts of
the labor arbiter, on the one hand, and the NLRC and the CA, on the other. White Diamond

Trading Corporation and/or Jerry Uy vs. National LaborRelations Commission, et al., G.R. No.
186019. March 29, 2010.
Indispensable party. Rule 3, Section 7 of the Rules of Court defines indispensable parties as
those who are parties in interest without whom there can be no final determination of an
action. They are those parties who possess such an interest in the controversy that a final
decree would necessarily affect their rights, so that the courts cannot proceed without their
presence. A party is indispensable if his interest in the subject matter of the suit and in the
relief sought is inextricably intertwined with the other parties interest.

24
Unquestionably, Villamaters widow stands as an indispensable party to this complaint for
payment of permanent and total disability benefits, reimbursement of medical and
hospitalization expenses, moral and exemplary damages, and attorneys fees. Leonis Navigation

Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169,
March 3, 2010.

Jurisdiction; estoppel. Petitioner is already estopped from belatedly raising the issue of lack of
jurisdiction since it has actively participated in the proceedings before the LA and NLRC. We
have consistently held that while jurisdiction may be assailed at any stage, a partys active
participation in the proceedings before a court without jurisdiction will estop such party from
assailing such lack of it. It is an undesirable practice of a party participating in the proceedings
and submitting his case for decision and then accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction, when adverse. Philippine Veterans Bank vs. National Labor

Relations Commission, et al., G.R. No. 188882, March 30, 2010.

Jurisdiction; labor arbiter. 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.
With regard to the question of jurisdiction over the subject matter, Article 217(c) of the Labor
Code requires labor arbiters to refer cases involving the implementation of CBAs to the
grievance machinery provided therein and to voluntary arbitration. Moreover, Article 260 of the
Labor Code clarifies that such disputes must be referred first to the grievance machinery and, if
unresolved within seven days, they shall automatically be referred to voluntary arbitration.
Under this provision, 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. Miguela

Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or Victoria Reyes, G.R. No.
174420, March 22, 2010.
Jurisdiction; labor case. Article 217 of the Labor Code provides that the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide cases involving termination disputes.
The NLRC shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
Galera being an employee, the Labor Arbiter and the NLRC have jurisdiction over the present
case. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs.

WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25,
2010.
Jurisdiction; NLRC. The Labor Arbiter and the NLRC do not have jurisdiction over LRTA.
Petitioners themselves admitted in their complaint that LRTA is a government agency organized
and existing pursuant to an original charter (Executive Order No. 603), and that they are
employees of METRO.
Light Rail Transit Authority v. Venus, Jr. (G.R. Nos. 163782 & 163881, March 24, 2006), which
has a similar factual backdrop, holds that LRTA, being a government-owned or controlled
corporation created by an original charter, is beyond the reach of the Department of Labor and
Employment which has jurisdiction over workers in the private sector, Employees of petitioner
METRO cannot be considered as employees of petitioner LRTA. The employees hired by METRO
are covered by the Labor Code and are under the jurisdiction of the Department of Labor and
Employment, whereas the employees of petitioner LRTA, a government-owned and controlled

25
corporation with original charter, are covered by civil service rules. Herein private respondent
workers cannot have the best of two worlds, e.g., be considered government employees of
petitioner LRTA, yet allowed to strike as private employees under our labor laws.
In fine, the Labor Arbiters decision against LRTA was rendered without jurisdiction, hence, it is
void. Thus, it was improper for the appellate court to order the remand of the case to the NLRC,
and for it (NLRC) to give due course to LRTAs appeal. Emmanuel S. Hugo, et al. vs. Light Rail

Transit Authority, G.R. No. 181866, March 18, 2010.

NLRC; final decision. Petitioners received the June 15, 2004 resolution of the NLRC, denying
their motion for reconsideration, on June 16, 2004. They filed their petition for certiorari before
the CA on August 9, 2004, or 54 calendar days from the date of notice of the June 15, 2004
resolution. By reason of the finality of the June 15, 2004 NLRC resolution, the Labor Arbiter
issued on July 29, 2004 a Writ of Execution. Petitioners never moved for a reconsideration of
this Order regarding the voluntariness of their payment to Sonia, as well as the dismissal with
prejudice and the concomitant termination of the case.
However, petitioners argued that the finality of the case did not render the petition for certiorari
before the CA moot and academic. On this point, we agree with petitioners.
In the landmark case of St. Martin Funeral Home v. NLRC (G.R. No. 130866, September 16,
1998), we ruled that judicial review of decisions of the NLRC is sought via a petition for
certiorari under Rule 65 of the Rules of Court, and the petition should be filed before the CA,
following the strict observance of the hierarchy of courts. Under Rule 65, Section 4, petitioners
are allowed sixty (60) days from notice of the assailed order or resolution within which to file
the petition.
Simply put, the execution of the final and executory decision or resolution of the NLRC shall
proceed despite the pendency of a petition for certiorari, unless it is restrained by the proper
court. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et

al., G.R. No. 179169, March 3, 2010.

POEA; factual findings. As a general rule, factual findings of administrative and quasi-judicial
agencies specializing in their respective fields, especially when affirmed by the CA, must be
accorded high respect, if not finality. However, we are not bound to adhere to the general rule
if we find that the factual findings do not conform to the evidence on record or are not
supported by substantial evidence, as in the instant case.
The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete
evidence submitted by petitioner. We note that respondent did not deny the due execution of
the withdrawal form as well as the genuineness of his signature and thumb mark affixed
therein. On the contrary, he admitted signing the same. When he voluntarily signed the
document, respondent is bound by the terms stipulated therein. LNS International Manpower

Services vs. Armando Padua, Jr., G.R. No. 179792, March 5, 2010.

Dismissal; backwages. Article 279 of the Labor Code provides that 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.
Thus, a number of cases holds that an illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. The two reliefs 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

26
entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss
of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to the payment
of backwages.
Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu
of reinstatement is in order. Petitioners prayer for the award of backwages is meritorious, it,
and the award of separation pay not being mutually exclusive. Ferdinand
A. Pangilinan vs. Wellmade Manufacturing Corporation, G.R. No. 187005, April 7, 2010.
Dismissal; backwages. Reprimand
being
the
appropriate
imposable
penalty
for
respondents actuations from the very beginning, the Court finds that respondent was unfairly
denied from reporting for work and earning his keep, thus, entitling him to the payment
of backwages.
The Court is not unmindful of our previous pronouncements in similar cases involving
suspension or dismissal from service, wherein the penalty imposed was reduced, but the award
of backwages was denied.
Given the circumstances of the case, however, where the proper penalty should only be a
reprimand, the Court finds the aforementioned cases to be inapplicable herein. On this note, the
Court deems it proper to distinguish between the penalties of dismissal or suspension and
reprimand and their respective effects on the grant or award of backwages. When an employee
is dismissed or suspended it is but logical that since he is barred from reporting to work the
same negates his right to be paid backwages. He has no opportunity to work during the period
he was dismissed or suspended and, therefore, he has no salary to expect. However, the same
does not hold true for an employee who is reprimanded. A reprimand usually carries a warning
that a repetition of the same or similar act will be dealt with more severely. Under normal
circumstances, an employee who is reprimanded is never prevented from reporting to work. He
continues to work despite the warning. Thus, in the case at bar, since respondents penalty
should only be a reprimand, the Court deems it proper and equitable to affirm the Court of
Appeals (CAs) award of backwages.
In two instances, the Court granted the award of backwages during the period the employees
were prevented from reporting to work despite concluding that the employee concerned
violated reasonable office rules and regulations and imposing the penalty of reprimand.
In Jacinto v. Court of Appeals [G.R. No. 124540, November 14, 1997, 281 SCRA 657], the Court
awarded petitioner Jacinto backwages after finding that she was only culpable of violating
reasonable office rules and regulations for not having asked permission from school authorities
to leave the school premises and seek medical attention and for not filing an application for sick
leave for approval by the school authorities.
Also, in Bangalisan v. Court of Appeals [G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after
affirming the findings that one of the petitioners, Rodolfo Mariano, is only liable for his violation
of reasonable office rules and regulations for attending the wake and internment of his
grandmother without the benefit of an approved leave of absence and the imposition of the
penalty of reprimand, the Court still granted him backwages.
Consistent with the Courts rulings in Bangalisan and Jacinto, the grant of backwages to
respondent is but proper. It is to be stressed that when imposing penalties, it must not only be

27
made within the parameters of the law, but it should also satisfy the basic tenets of equity,
justice, and fairplay. National Power Corporation vs. Alan Olandesca, G.R. No. 171434, April

23, 2010.

Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza [G.R. No.
141141, June 25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or
defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle;
lack of fairness and straightforwardness; disposition to defraud, deceive or betray.
It is not disputed that respondent took several materials and supplies from petitioners
warehouse without the approved WRS. However, this should not be construed as dishonesty on
the part of respondent that would warrant his dismissal from the service for the following
reasons: First, the withdrawals of the supplies were duly recorded in the
security guards logbook. If respondent intended to defraud petitioner, he could have easily
taken items from the warehouse without having them recorded as he was then the Supervising
Property Officer who had free access to the supplies. Second, right after withdrawing the items,
respondent replaced them on his own initiative, without anyone instructing him to do so. This
act negates his intent to defraud petitioner. Third, there is no clear showing that respondent
misappropriated or converted the items for his own personal use or benefit. Fourth, the Graft
Investigation Officer of the Office of the Ombudsman, in its Resolution dated February 5, 1999,
in OMB-1-98-2011, dismissed a complaint for qualified theft filed by Teodulo V. Largo, Section
Chief, Power Generation Group of petitioner against respondent as there was no competent and
sufficient evidence on record to show that there was intent to gain on the part of the
respondent, considering that the materials and supplies taken by him were used in fencing the
watershed and reservation area of petitioner company. Likewise, there was no basis to charge
him for malversation of public property as there was no misappropriation of the supplies for his
personal use and that the same were for general purpose and not for any specific use.
Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not
exonerated from liability. It was an established company procedure that before materials can
be taken out from the warehouse, the issuance of a WRS is an indispensable requirement. In
fact, there was even a warning posted at the door of the property office that states:
BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLINA NG WALANG APRUBADONG WRS.
Being the Supervising Property Officer, respondent knows fully well that taking items from the
warehouse without the required WRS is against the company rules and regulations. It is the
paramount duty of respondent to protect the properties in the warehouse and to ensure that
none shall be taken away without proper documentation.
The Machiavellian principle that the end justifies the means has no place in government
service, which thrives on the rule of law, consistency and stability. Respondent, by taking the
said properties without the approved WRS, violated reasonable office rules and regulations as
provided in Section 52 (C), (3), Rule IV of Civil Service Commission Memorandum Circular No.
19, series of 1999 (Uniform Rules on Administrative Cases in the Civil Service). Since this is
respondents first offense in his more than 16 years of service, the appropriate penalty to be
imposed against him is reprimand. National Power Corporation vs. Alan Olandesca, G.R. No.

171434, April 23, 2010.

Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of
trust and confidence, two requisites must concur: (1) the employee concerned must be holding
a position of trust and confidence and (2) there must be an act that would justify the loss of
trust and confidence.

28
In the present case, respondent failed to justify its loss of trust and confidence
on Consolacion even as it imputed to him, via Notice of Formal Investigation of April 14, 2003,
non-compliance with (a) established non-written procedures and standards; (b) established
written procedures and standards, and (c) verbal orders and/or instructions. These alleged acts
of non-compliance are too general and can encompass just about any malfeasance. Nowhere in
the Notice was there a detailed narration of the facts and circumstances that would serve as
bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and
orders were. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.
Dismissal; management prerogative. Respondents right of management prerogative was
exercised in good faith. Respondent presented evidence of the low volume of sales and orders
for the production of industrial paper in 1999, which inevitably resulted to the companys
decision to streamline its operations. This fact was corroborated by respondents VP-Tissue
Manufacturing Director and was not disputed by petitioner. Exercising its management
prerogative and sound business judgment, respondent decided to cut down on operational costs
by shutting down one of its paper mill. As held in International Harvester Macleod, Inc. v.
Intermediate Appellate Court [233 Phil. 655,655-666 (1987)] the determination of the need to
phase out a particular department and consequent reduction of personnel and reorganization as
a labor and cost saving device is a recognized management prerogative which the courts will
not generally interfere with.
In this case, shutting down Paper Mill No. 4 was undoubtedly a business judgment arrived at in
the face of the low demand for the production of industrial paper at the time. Despite an
apparent reason to implement a retrenchment program as a cost-cutting measure, respondent,
did not dismiss the workers affected by the closure of Paper Mill No. 4 outright but gave them
an option to be transferred to posts of equal rank and pay. Retrenchment was given only as an
option in case the affected employee did not want to be transferred. The Court viewed this as
an indication of good faith on respondents part since it exhausted other possible measures
before retrenchment. Besides, the employers prerogative to bring down labor costs by
retrenchment must be exercised essentially as a measure of last resort, after less drastic means
have been tried and found wanting. Giving the workers an option to be transferred without any
diminution in rank and pay belie petitioners allegation that the streamlining scheme was
implemented as a ploy to ease out employees. Apparently, respondent implemented its
streamlining or reorganization plan in good faith, not in an arbitrary manner and without
violating the tenurial rights of its employees. Dannie M. Pantoja vs. SCA Hygiene Products

Corporation, G.R. No. 163554, April 23, 2010.

Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling
that Talam was validly dismissed on the ground of retrenchment. The Supreme Court came to
this conclusion based on the following considerations:
First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose
of getting rid of employees. The decision was upon the recommendation of the companys
external auditor. Second, the cost-cutting measure recommended involved reduction of TSFIs
payroll expense account which, as the auditor found, makes up 41% of the companys total
operating expenses. Third, Talam was dismissed due to a cause authorized by law
retrenchment to prevent losses. At the time of Talams dismissal, TSFIs financial condition, as
found by the external auditor, showed that it was not just expecting losses, it already suffered a
net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period
ending December 31, 2002. Fourth, TSFI resorted to other measures to abate its losses. It
claimed that during the crises period, it used as an office a small-room (a mere cubicle) with

29
only a two-person support staff in the persons of Grapilon and Hermle; it reduced the salaries of
its employees by as much as 30%. This submission by the company is substantiated by the
schedule of Operating Expenses for the year ended December 31, 2002 and September 30,
2002. A quick glance at the schedule readily shows a reduction of TSFIs operating expenses
across the board. The schedule indicates a substantial decrease in operating expenses, from
P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of December 2002. Francis

Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No.
175040, April 6, 2010.

Dismissal; serious misconduct. The findings of the CA and National Labor Relations Commission
(NLRC) establish the following: (1) Agads request for withdrawal of the 190 cylinders of LPG as
stated in a Memorandum dated 12 February 1992 cannot be given credence since the
Memorandum pertains to the replacement of the scrap materials due to Boy Bato consisting of
3,000 kilograms of black iron plates and not to the subject LPG cylinders; (2) Agad did not
observe Caltexs rules and regulations when he transferred the said cylinders to Millanes
compound without the RMRD form as required under Caltexs Field Accounting Manual;
(3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third
parties in violation of company rules; (4) Agad failed to submit the periodic inventory report of
the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of the sale
of the LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had
monetary value which Agad cannot appropriate for himself without Caltexs consent.
Considering these findings, it is clear that Agad committed a serious infraction amounting to
theft of company property. This act is akin to serious misconduct or willful disobedience by the
employee of the lawful orders of his employer in connection with his work, a just cause for
termination of employment recognized under Article 282(a) of the Labor Code.
Misconduct has been defined as a transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. To be serious, the misconduct must be of such grave and aggravated
character. Caltex (Philippines), Inc., et. al. vs. Hermie G. Abad, et. al., G.R. No. 163554, April

23, 2010.

Due Process; termination. The records belie Amulars claim of denial of procedural due process.
He chose not to present his side at the administrative hearing. In fact, he avoided the
investigation into the charges against him by filing his illegal dismissal complaint ahead of the
scheduled investigation. These facts show that the employee was given the opportunity to be
heard and he cannot now come to the Court protesting that he was denied this opportunity. To
belabor a point the Court has repeatedly made in employee dismissal cases, the essence of due
process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes
violation of due process of law. Technol Eight Philippines Corporation vs. National Labor

Relations Commission, et al., G.R. No. 187605. April 13, 2010.


Employer employee relationship. The elements to determine the existence of an employment

relationship are: (1) 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. In
filing a complaint for illegal dismissal, it is incumbent upon Abueva to prove the relationship by
substantial evidence.
In this regard, Abueva claims that he has worked with respondent hacienda for more than a
year already and that he was allowed to stay inside the hacienda. As such, he is a regular
employee entitled to monetary claims. However, petitioners have not presented competent
proof that respondents engaged the services of Abueva; that respondents paid his wages or

30
that respondents could dictate what his conduct should be while at work. In other
words, Abuevas allegations did not establish that his relationship with respondents had the
attributes of an employer-employee relationship based on the four-fold test. Abueva was not
able to discharge the burden of proving the existence of an employer-employee relationship.
Moreover, Abueva was not able to refute respondents assertion that he hires other men to
perform weeding job in the hacienda and that he is not exclusively working for
respondents. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19,

2010.

Illegal dismissal. Contrary to the CAs perception, the Court finds a work-connection
in Amulars and Ducays assault on Mendoza. As the CA itself noted, the underlying reason
why Amular and Ducay confronted Mendoza was to question him about his report to De Leon
Technols PCD assistant supervisor regarding the duos questionable work behavior. The
motivation behind the confrontation was rooted on workplace dynamics as
Mendoza, Amular and Ducay interacted with one another in the performance of their duties.
Under these circumstances, Amular undoubtedly committed misconduct or exhibited improper
behavior that constituted a valid cause for his dismissal under the law and jurisprudential
standards. The circumstances of his misdeed rendered him unfit to continue working
for Technol.
Thus, Amular was not illegally dismissed; he was dismissed for
cause. Technol Eight
Philippines
Corporation
vs.
National
Labor
Relations

Commission, et al., G.R. No. 187605. April 13, 2010.


Illegal Dismissal. 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 of application of the said standards. 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.
AMACC, by its submissions, admits that it did not renew the petitioners contracts because they
failed to pass the Performance Appraisal System for Teachers (PAST) and other requirements
for regularization that the school implements to maintain its high academic standards. The
evidence is unclear on the exact terms of the standards, although the school also admits that
these
were
standards
under
the
Guidelines
on
the
Implementation
of AMACC Faculty Plantilla put in place at the start of school year 2000-2001.
While the Court can grant that the standards were duly communicated to the petitioners and
could be applied beginning the 1st trimester of the school year 2000-2001, glaring and very
basic gaps in the 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. Without these pieces of evidence (effectively, the finding of just cause for the
non-renewal of the petitioners contracts), the Court has nothing to consider and pass upon as
valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the
termination of employment of employees on probationary status) lacks the supporting finding of
just cause that the law requires and, hence, is illegal. Yolanda M. Mercado, et al.

vs. Ama Computer College, Paraaque City, G.R. No. 183572, April 13, 2010.

Illegal dismissal. The Court is not unmindful of the rule in labor cases that the employer has the
burden of proving that the termination was for a valid or authorized cause; however, it is
likewise incumbent upon the employees that they should first establish by competent evidence
the fact of their dismissal from employment. The one who alleges a fact has the burden of

31
proving it and the proof should be clear, positive and convincing. In this case, aside from mere
allegations, no evidence was proffered by the petitioners that they were dismissed from
employment. The records are bereft of any indication that petitioners were prevented from
returning to work or otherwise deprived of any work assignment by respondents.
In Abad v. Roselle Cinema [G.R. No. 141371, March 24, 2006, 485 SCRA 262, 272], the Court
ruled that the substantial evidence proffered by the employer that it had not terminated the
employee should not be ignored on the pretext that the employee would not have filed the
complaint for illegal dismissal if he had not really been dismissed. The Court held that
such non sequitur reasoning cannot take the place of the evidence of both the employer and
the employee. Romeo Basay, et al. vs. Hacienda Consolation, et al.,G.R. No. 175532, April 19,

2010.

Illegal Dismissal. The Court views with approval the observation of the CA and the NLRC that
the employer cannot justify the defense of abandonment as it failed to prove that indeed the
employee had abandoned her work. It did not even bother to send a letter to her last known
address requiring her to report for work and explain her alleged continued absences.
The ratiocination of the NLRC on this score merits the Courts imprimatur, viz: The law clearly
spells out the manner by which an unjustified refusal to return to work by an employee may be
established. Thus, respondent should have given complainant a notice with warning concerning
her alleged absences (Section 2, Rule XIV, Book V, Implementing Rules and Regulations of the
Labor Code). The notice requirement actually consists of two parts to be separately served on
the employee to wit: (1) notice to apprise the employee of his absences with a warning
concerning a possible severance of employment in the event of an unjustified excuse therefor,
and (2) subsequent notice of the decision to dismiss in the event of an employees refusal to
pay heed to such warning. Only after complying with those requirements can it be reasonably
concluded that the employee actually abandoned his job. In the present case, more than two
(2) months had already lapsed since the employee allegedly started to absent herself when she
instituted her action for illegal dismissal. During the said period of time, no action was taken by
the company regarding the employees alleged absences, something which is quite peculiar had
her employment not been severed at all. Accordingly, the Court found no merit in the
companys defense of abandonment in view of an utter lack of evidence to support the same.
Hence, the employees charge of illegal dismissal stands uncontroverted. Diversified Security,

Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010.

Preventive Suspension; Process. What the Rules require is that the employer act on the
suspended workers status of employment within the 30-day period by concluding the
investigation either by absolving him of the charges, or meting the corresponding penalty if
liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any
corresponding action on the part of the employer, the employer must reinstate the employee or
extend the period of suspension, provided the employees wages and benefits are paid in the
interim.
In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did
by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was
not violated even if the termination notice was received only on June 4, 2002, absent any
showing that the delayed service of the notice on Taroy was attributable to Genesis
Transport. Genesis
Transport
Service,
Inc. et al.

vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5,
2010.

32
Reinstatement. Given the period that has lapsed and the inevitable change of circumstances
that must have taken place in the interim in the academic world and at AMACC, which changes
inevitably affect current school operations, the Court holds that in lieu of reinstatement the
petitioners should be paid separation pay computed on a trimestral basis from the time of
separation from service up to the end of the complete trimester preceding the finality of this
Decision. The separation pay shall be in addition to the other awards, properly recomputed, that
the
LA
originally
decreed. Yolanda
M.
Mercado, et al.
vs. Ama Computer

College, Paraaque City, G.R. No. 183572, April 13, 2010.


Release, Waiver and Quitclaim. Talam was not an unlettered employee; he was an information

technology consultant and must have been fully aware of the consequences of what he was
entering into. The quitclaim was a voluntary act as there is no showing that he was coerced into
executing the instrument; he received a valuable consideration for his less than two years of
service with the company. Thus, from all indications, the release and quitclaim was a valid and
binding undertaking that should have been recognized by the labor authorities and the CA.
While the law frowns upon releases and quitclaims executed by employees who are inveigled or
pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities, a legitimate waiver representing a voluntary settlement of a laborers claims
should be respected by the courts as the law between the parties. In the Courts
view, Talams release and quitclaim fall into the category of legitimate waivers as defined by the
Court.
With Talams voluntary execution of the release and quitclaim, the Court found the filing of the
illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to
afford Talam procedural due process. The release and quitclaim, in the Courts mind, erased
whatever infirmities there might have been in the notice of termination as Talam had already
voluntarily accepted his dismissal through the release and quitclaim. As such, the written notice
became academic; the notice, after all, is merely a protective measure put in place by law and
serves no useful purpose after protection has been assured. The Court thus finds no basis for
the conclusion that TSFI violated procedural due process and should pay nominal
damages. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu
City, et al., G.R. No. 175040, April 6, 2010.
Resignation of Employee. While the letter states that Peaflors resignation was irrevocable, it
does not necessarily signify that it was also voluntarily executed. Precisely because of the
attendant hostile and discriminatory working environment, Peaflor decided to permanently
sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive
dismissal that jurisprudence defines, among others, as involuntarily resignation due to the
harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear
discrimination, insensibility, or disdain by an employer exists and has become unbearable to the
employee. The gauge for constructive dismissal is whether a reasonable person in the
employees position would feel compelled to give up his employment under the prevailing
circumstances. With the appointment of Buenaobra to the position he then still
occupied, Peaflor felt that he was being eased out and this perception made him decide to
leave the company.
The fact of filing a resignation letter alone does not shift the burden of proving that the
employees dismissal was for a just and valid cause from the employer to the employee.
In Mora v. Avesco [G.R. No. 177414, November 14, 2008, 571 SCRA 226], the Court ruled that
should the employer interpose the defense of resignation, it is still incumbent upon the

33
employer to prove that the employee voluntarily resigned. Manolo A. Peaflor vs. Outdoor

Clothing Manufacturing Corp., et al., G.R. No. 177114, April 13, 2010.

Labor Procedure
Certiorari; questions of law. TSFI asks the Court to dismiss the present petition on the ground
that it is procedurally defective as, allegedly, it raises only questions of fact, in contravention of
the requirement under Rule 45 of the Rules of Court that an appeal by certiorari shall raise only
questions of law. While the petition indeed poses factual issues i.e., whether the company
was suffering from substantial losses to justify a retrenchment measure, whether it observed
fair and reasonable standards in implementing a retrenchment, and whether Talam deserved to
be retrenched the Court deems it proper to examine the facts itself in view of the conflicting
factual findings among the Labor Arbiter, the NLRC and the CA.Francis Ray Talam vs. National
Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.
Finding of facts. Findings of facts of quasi-judicial bodies like the NLRC, and affirmed by the CA
in due course, are conclusive on the Supreme Court, which is not a trier of facts.
Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect, but finality when affirmed by the CA. Such findings deserve full respect and,
without justifiable reason, ought not to be altered, modified or reversed. Diversified Security,

Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010
Res Judicata. On the issue of refund of underpayment, petitioners aver that cases of similar

import involving also the respondent union have been decided with finality in their favor by
the NLRC, viz: UMMGT v. Genesis Transport Service, Inc. (NLRC RAB III Case No. 04-518-03)
and Reyes v. Genesis Transport Service, Inc. (NLRC CA No. 04862-04); and Santos v. Genesis
Transport Service, Inc. (NLRC CA No. 041869-04). Petitioners thus pray that the Court accord
respect to the rulings of the NLRC in the above-cited cases and apply the principle of res
judicata vis--vis the present case. The Supreme Court held, however that, absent proof that
the NLRC cases cited by petitioners have attained finality, the Court may not consider them to
constitute res judicata on petitioners claim for refund of the underpayment due. Genesis

Transport
Service,
Inc. et al.
vs. Unyon ng Malayang Manggagawa ng Genesis
(UMMGT), et al., G.R. No. 182114, April 5, 2010

Illegal dismissal; backwages. The basis for the payment of backwages is different from that for
the award of separation pay. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and the employer. Backwages
represent compensation that should have been earned but were not collected because of the
unjust dismissal. The basis for computing backwages is usually the length of the employees
service while that for separation pay is the actual period when the employee was unlawfully
prevented from working.
As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines
[G.R. No. 178524, January 30, 2009] instructs that the award of separation pay is inconsistent
with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as
held in a catena of cases, an employee who is dismissed without just cause and without due
process is entitled to backwages and reinstatement or payment of separation pay in lieu
thereof. Thus, an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. Golden Ace Builders

and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

34
Illegal dismissal; doctrine of strained relations. Under the doctrine of strained relations, the
payment of separation pay is considered an acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it
releases the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust.
Strained relations must be demonstrated as a fact, however, to be adequately supported by
evidence substantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy.
In the present case, the Labor Arbiter found that actual animosity existed between petitioner
Azul and respondent as a result of the filing of the illegal dismissal case. Such finding,
especially when affirmed by the appellate court as in the case at bar, is binding upon the Court,
consistent with the prevailing rules that the Court will not try facts anew and that findings of
facts of quasi-judicial bodies are accorded great respect, even finality. Golden Ace Builders

and Arnold U. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

Illegal dismissal; separation pay. 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 normal consequences of
respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of
actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment of 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. Golden

Ace Builders and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

Labor procedure
Judgment; final and executory. The Labor Arbiters decision has long become final and
executory and it can no longer be reversed or modified. Nothing is more settled in law than
when a final judgment becomes executory, it thereby becomes immutable and unalterable. The
judgment may no longer be modified in any respect, even if the modification is meant to correct
what is perceived to be an erroneous conclusion of law or fact, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the
land. The only recognized exception are the correction of clerical errors or the making of socalled nunc pro tunc entries which cause no injury to any party, and, of course, where the
judgment is void.
Once a judgment becomes final and executory, the prevailing party should not be denied the
fruits of his victory by some subterfuge devised by the losing party. Final and executory
judgments can neither be amended nor altered except for correction of clerical errors, even if
the purpose is to correct erroneous conclusions of fact or of law. Trial and execution
proceedings constitute one whole action or suit such that a case in which execution has been
issued is regarded as still pending so that all proceedings in the execution are proceedings in
the suit.
It is no longer legally feasible to modify the final ruling in this case through the expediency of a
petition questioning the order of execution. Judgments of courts should attain finality at some

35
point lest there be no end in litigation. The final judgment in this case may no longer be
reviewed, or in any way modified directly or indirectly, by a higher court, not even by the
Supreme Court. The reason for this is that, litigation must end and terminate sometime and
somewhere, and it is essential to an effective and efficient administration of justice that, once a
judgment has become final, the winning party be not deprived of the fruits of the verdict.
Courts must guard against any scheme calculated to bring about that result and must frown
upon any attempt to prolong controversies. Marmosy Trading, Inc. and Victor Morales vs. Court

of Appeals, et al., G.R. No. 170515, May 6, 2010.

Acceptance of Benefits, render moot claim under other policies. As in the case of Capili v.
National Labor Relations Commission [273 SCRA 576], a claim for benefit under the companys
retirement plan becomes moot when the employee accepts retirement benefits on the basis of
Article 287 of the Labor Code. By Yusons acceptance of her retirement benefits through a
compromise agreement entered into with her employer, she is deemed to have opted to retire
under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No.

170369, June 16, 2010.

Approval for companys early retirement program; management prerogative. Approval of


applications for the early retirement program (ERP) is within the employers management
prerogatives. The exercise of management prerogative is valid as long as it is not done in a
malicious, harsh, oppressive, vindictive, or wanton manner. In the present case, the Court sees
no bad faith on the part of the employer. The 21 August 2001 memorandum clearly states that
petitioner, on its discretion, was offering ERP to its employees. The memorandum also states
that the reason for the ERP was to prevent further losses. Petitioner did not abuse its discretion
when it excluded respondent in the ERP because the latter is already about to retire. To allow
respondent to avail of the ERP would have been contrary to the purpose of the program. Korean

Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.
Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is

defined as a quitting because continued employment is rendered impossible, unreasonable or


unlikely, or when there is a demotion in rank or a diminution of pay. It exists when an act of
clear discrimination, insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued employment.
Here, there was no diminution of petitioners salary and other benefits. There was no evidence
that she was harassed or discriminated upon, or that respondents made it difficult for her to
continue with her other duties. Absent any evidence of bad faith, it is within the exercise of
respondents management prerogative to transfer some of petitioners duties, if, in their
judgment, this would be more beneficial to the corporation. Estrella Velasco vs. Transit

Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.
Constructive dismissal; off-detailing; resignation; notice requirement. The company evidently

placed petitioner on floating status after being relieved of her position. But, as the Court has
repeatedly ruled, such act of off-detailing does not amount to a dismissal so long as the
floating status does not continue beyond a reasonable time. In this case, the employees
floating status ran up to more than six months as of August 16, 2002. For this reason, the
company may be considered to have constructively dismissed the employee from work as of
that date. Hence, petitioners purported resignation on October 15, 2002 could not have been
legally possible.
The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002,
asking her to explain her failure to report for work and informing her that the company would

36
treat such failure as lack of interest in her continued employment. But these notices cannot
possibly take the place of the notices required by law as they came more than six months after
the company placed her on floating status, at which time, the employee is already deemed to
have been constructively dismissed her from work. Elsa S. Mali-on v. Equitable General Services

Inc., G.R. No. 185269, June 29, 2010.


Death benefits; entitlement. In order to avail of death benefits, the death of the employee

should occur during the term of the employment contract. For emphasis, we reiterate that the
death of a seaman during the term of employment contract makes the employer liable to his
heirs for death benefits, but if the seaman dies after his contract of employment has expired,
his beneficiaries are not entitled to the death benefits. Southeastern Shipping, Southeastern
Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
Death benefits; post-medical examination; inadvertence of employer. In the cases of
Philippines., Inc. v. Joaquin [437 SCRA 608] and Rivera v. Wallem Maritime Services, Inc .[474
SCRA 714], the Supreme Court stressed the importance of a post-employment medical
examination or its equivalent for the award of death benefits to seafarers and/or their
representatives in compliance with POEA Memorandum Circular No. 055-96 and Department
Order No. 33, Series of 1996, which provide that the seafarer must report to his employer for a
post-employment medical examination within three working days from the date of arrival,
otherwise, benefits under the POEA standard employment contract would be nullified.
However, in the present case, the absence of a post-employment medical examination cannot
be used to defeat respondents claim since the failure to subject the seafarer to this
requirement was not due to the seafarers fault but to the inadvertence or deliberate refusal of
petitioners. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112,

June 29, 2010.

Dismissal; breach of trust; lack of loss not a defense. The acts of the employee revealed a mind
that was willing to disregard bank rules and regulations when other branch officers concurred.
Her defense that the bank suffered no loss is of no moment. The focal point is that she
betrayed the trust of the bank. Hence, the bank rightfully terminated the services of the
employee for willful breach of the trust that it reposed in her. Luzviminda A. Ang vs. Philippine
National Bank, G.R. No. 178762, June 16, 2010.
Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer
to show that the dismissal of the employee is for just cause and failure to do so would mean
that the dismissal is not justified. This is in consonance with the guarantee of security of tenure
in the Constitution, and elaborated in the Labor Code. A dismissed employee is not required to
prove his innocence to the charges leveled against him by his employer. The determination of
the existence and sufficiency of a just cause must be exercised with fairness and in good faith
and after observing due process. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann
Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; exercised with compassion and understanding; doubts resolved in favor of employee.
While an employer has its own interest to protect, and pursuant thereto, it may terminate a
managerial employee for a just cause, such prerogative to dismiss or lay off an employee must
be exercised without abuse of discretion. Its implementation should be tempered with
compassion and understanding. The employer should bear in mind that, in the exercise of the
said prerogative, what is at stake is not only the employees position, but his very livelihood, his
very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter. The employer must affirmatively show rationally adequate evidence that the dismissal

37
was for justifiable cause. Thus, when the breach of trust or loss of confidence alleged is not
borne by clearly established facts, as in this case, such dismissal on the cited grounds cannot be
allowed. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn
Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; gross neglect of duty; duty to family is no defense. Dr. Estampas defense is not
acceptable. A persons duty to his family is not incompatible with his job-related commitment to
come to the rescue of victims of disasters. Disasters do not strike every day. Besides, knowing
that his job as senior medical health officer entailed the commitment to make a measure of
personal sacrifice, he had the choice to resign from it when he realized that he did not have the
will and the heart to respond. Dr. Edilberto Estampa, Jr. vs. Government of Davao, G.R. No.

190681, June 21, 2010.

Dismissal; loss of confidence not entitled to separation pay. It is significant to stress that for
there to be a valid dismissal based on loss of trust and confidence, the breach of trust must be
willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable
excuse. The basic premise for dismissal on the ground of loss of confidence is that the
employee concerned holds a position of trust and confidence. It is the breach of this trust that
results in the employers loss of confidence in the employee.
In the case of Aromin v. NLRC [553 SCRA 273], the assistant vice-president of BPI was validly
dismissed for loss of trust and confidence. The Court disallowed the payment of separation pay
on the ground that he was found guilty of willful betrayal of trust, a serious offense akin to
dishonesty. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor
Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801. June 18,
2010.
Dismissal; loss of trust and confidence; managerial employees. Loss of trust and confidence, as
a just cause for termination of employment, is premised on the fact that an employee
concerned holds a position where greater trust is placed by management and from whom
greater fidelity to duty is correspondingly expected. This includes managerial personnel
entrusted with confidence on delicate matters, such as the custody, handling, or care and
protection of the employers property. The betrayal of this trust is the essence of the offense for
which an employee is penalized.
It must be noted, however, that in a plethora of cases, the Supreme Court has distinguished the
treatment of managerial employees from that of rank-and-file personnel, insofar as the
application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to
rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires
proof of involvement in the alleged events in question, and that mere uncorroborated assertions
and accusations by the employer will not be sufficient. But as regards a managerial employee,
the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, it being sufficient that there is some basis for such
loss of confidence, such as when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded of his
position. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn
Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; mere negligence or carelessness not sufficient ground for loss of confidence.
Respondents negligence or carelessness in her duties, however, are not justifiable grounds for
petitioners loss of trust and confidence in her, especially in the absence of any malicious intent

38
or fraud on respondents part. Loss of trust and confidence stems from a breach of trust
founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not
commit any act which was dishonest or deceitful. She did not use her authority as the Finance
and Administration Manager to misappropriate company property nor did she abuse the trust
reposed in her by petitioners with respect to her responsibility to implement company rules. The
most that can be attributed to respondent is that she was remiss in the performance of her
duties. This, though, does not constitute dishonest or deceitful conduct which would justify the
conclusion of loss of trust and confidence. Lima Land, Inc., Leandro Javier, Sylvia Duque and
Premy Ann Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal for just cause, separation pay allowed in exceptional cases. While as a general rule,
an employee who has been dismissed for any of the just causes enumerated under Article 282
of the Labor Code is not entitled to separation pay, the Court has allowed in numerous cases
the grant of separation pay or some other financial assistance to an employee dismissed for just
causes on the basis of equity.
In the leading case of Philippine Long Distance Telephone Co. v. NLRC [164 SCRA 671] the
Court stated that 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. In granting separation pay to respondent, the NLRC
and Court of Appeals both adhered to this jurisprudential precept and cleared respondent of bad
faith. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor Relations
Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801, June 18, 2010.
Employee benefit; total disability construed. It has been held that disability is intimately related
to ones earning capacity. It should be understood less on its medical significance but more on
the loss of earning capacity. Total disability does not mean absolute helplessness. In disability
compensation, it is not the injury, which is compensated, but rather the incapacity to work
resulting in the impairment of ones earning capacity. Thus, permanent disability is the inability
of a worker to perform his job for more than 120 days, regardless of whether or not he loses
the use of any part of his body. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R.

No. 186289, June 29, 2010.

Employer-Employee Relationship; agents of insurance companies; exception to the Insular case;


Our ruling in the first Insular case [Insular Insurance v. NLRC, 179 SCRA 459] case did not
foreclose the possibility of an insurance agent becoming an employee of an insurance company;
if evidence exists showing that the company promulgated rules or regulations that effectively
controlled or restricted an insurance agents choice of methods or the methods themselves in
selling insurance, an employer-employee relationship would be present. The existence of an
employer-employee relationship is thus determined on a case-to-case basis depending on the
evidence on record. Gregorio V. Tongko v. The Manufacturers Life Insurance Co. (Phils) and

Renato A. Vergel De Dios, G.R. No. 167622, June 29, 2010.


Nature of employer; privatization; entitlement to benefits. Although the transformation of the

PNB from a government-owned corporation to a private one did not result in a break in its life
as juridical person, the same idea of continuity cannot be said of its employees. Section 27 of
Presidential Proclamation 50 provided for the automatic termination of employer-employee
relationship upon privatization of a government-owned and controlled corporation. Further,
such privatization cannot deprive the government employees involved of their accrued benefits
or compensation.
As for possible benefits accruing after privatization, the same should be deemed governed by
the Labor Code since the PNB that rehired the employee has become a private corporation.

39
Under the Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Section 7, the
employees separation from work for a just cause does not entitle her to termination
pay. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Nature of employer; privatization no defense; continuity of offense. The offense for which
petitioner was removed took place when the government still owned PNB and she was then a
government employee. But while PNB began as a government corporation, it did not mean that
its corporate being ceased and was subsequently reestablished when it was privatized. It
remained the same corporate entity before, during, and after the change over with no break in
its life as a corporation. Consequently, the offenses that were committed against the bank
before its privatization continued to be offenses against the bank after the
privatization. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Prescription of labor claims; overseas contract workers. The employment of seafarers, including
claims for death benefits, is governed by the contracts they sign every time they are hired or
rehired; and as long as the stipulations therein are not contrary to law, morals, public order or
public policy, they have the force of law between the parties.
In Cadalin v. POEAs Administrator [238 SCRA 721, 764] we held that Article 291 of the Labor
Code covers all money claims from employer-employee relationship. It is not limited to money
claims recoverable under the Labor Code, but applies also to claims of overseas contract
workers.
Article 291 of the Labor Code is the law governing prescription of money claims of seafarers, a
class of overseas contract workers. This law prevails over Section 28 of the Standard
Employment Contract for Seafarers, which provides for claims to be brought only within one
year from the date of the seafarers return to the point of hire. Thus, for the guidance of all,
Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the
prescriptive period for the filing of money claims by seafarers, is hereby declared null and void.
The applicable provision is Article 291 of the Labor Code, it being more favorable to the
seafarers and more in accord with the States declared policy to afford full protection to labor,
which provides for a three-year prescriptive period. Southeastern Shipping, Southeastern
Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
Quitclaims; general rule; requirements for validity; instances when it was annulled. As a rule,
quitclaims, waivers, or releases are looked upon with disfavor and are largely ineffective to bar
claims for the measure of a workers legal rights. To be valid, a Deed of Release, Waiver and/or
Quitclaim must meet the following requirements: (1) that there was no fraud or deceit on the
part of any of the parties; (2) that the consideration for the quitclaim is credible and
reasonable; and (3) that the contract is not contrary to law, public order, public policy, morals
or good customs, or prejudicial to a third person with a right recognized by law.
Courts have stepped in to annul questionable transactions, especially where there is clear proof
that a waiver, for instance, was obtained from an unsuspecting or a gullible person; or where
the agreement or settlement was unconscionable on its face. A quitclaim is ineffective in barring
recovery of the full measure of a workers rights, and the acceptance of benefits therefrom does
not amount to estoppel. Moreover, a quitclaim in which the consideration is scandalously low
and inequitable cannot be an obstacle to the pursuit of a workers legitimate claim. Interorient

Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.

Retirement benefits; does not include allowances. Executive Order No. 756 temporary measure;
statutory construction. Section 6 of Executive Order No. 756 (E.O. 756), which provides for
the computation of retirement proceeds including allowances, does not provide for a permanent
retirement plan, as against the prohibition of Section 28, Subsection (b) of Commonwealth Act

40
No. 186 (C.A. 186), as amended. The E.O. 756 should be read adjunct to its mandate of
reorganizing the Philippine International Trading Corporation. The increased benefit under E.O.
756 was clearly meant as an incentive for employees who retire, resign or are separated from
service during or as a consequence of the reorganization. As a temporary measure, it cannot
be interpreted as an exception to the general prohibition against separate or supplementary
insurance and/or retirement or pension plans under C.A. 186, as amended.
In reconciling E.O. 756 with C.A.186, as amended, uppermost in the mind of the Court is the
fact that the best method of interpretation is that which makes laws consistent with other laws
which are to be harmonized rather than having one considered repealed in favor of the
other. Philippine International Trading Corporation vs. Commission on Audit, G.R. No. 183517,
June 22, 2010.
Resignation; burden of proof. The rule in termination cases is that the employer bears the
burden of proving that he dismissed his employee for a just cause. And, when the employer
claims that the employee resigned from work, the burden is on the employer to prove that he
did so willingly. Whether that is the case would largely depend on the circumstances
surrounding such alleged resignation. Those circumstances must be consistent with the
employees intent to give up work. Elsa S. Mali-on v. Equitable General Services Inc., G.R. No.

185269, June 29, 2010.

Solidary liability of employers; proof of bad faith. Based on MAM Realty Development
Corporation v. NLRC[244 SCRA 797], for corporate officers to be held solidarily liable in labor
disputes there must be evidence of bad faith or malice. Querubin L. Alba and Rizalinda D. De
Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.
Labor Procedure
Judgment; amendment of final order; solidary liability. The Labor Arbiter cannot modify a final
and executory judgment, even if the modification is meant to correct erroneous conclusions of
fact and law, whether it be made by the court that rendered it or by the highest court in the
land. The only recognized exceptions are the corrections of clerical errors or the making of socalled nunc pro tunc entries which cause no prejudice to any party and in cases where the
judgment is void. Said exceptions do not apply in the present case. Querubin L. Alba and
Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.
Judgment; law of the case; definition and application. Law of the case has been defined as
the opinion delivered on a former appealit is a term applied to an established rule that when
an appellate court passes on a question and remands the case to the lower court for further
proceedings, the question there settled becomes the law of the case upon subsequent appeal.
OSCIs application of the law of the case principle to the instant case, as regards the remand of
the case to the Labor Arbiter for clarificatory hearings, is misplaced. The only matter settled in
the July 30, 1999 NLRC Decision, which can be regarded as law of the case, was the undisputed
fact that Bastol was suffering from a heart ailment. As it is, the issue on the degree of disability
of Bastols heart ailment and his entitlement to disability indemnity, as viewed by the NLRC
through said decision, has yet to be resolved. For this reason, the NLRC remanded the case to
Labor Arbiter Mayor, Jr. for conduct of further appropriate proceedings and to terminate the
same with dispatch. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289,

June 29, 2010.

Judgment; res judicata; nature and applicability. The nature of res judicata, as now embodied
in Sec. 47, Rule 39 of the Rules of Court, has two concepts, which are (i) bar by former
judgment and (ii) conclusiveness of judgment. These concepts of the doctrine of res
judicata are applicable to second actions involving substantially the same parties, the same

41
subject matter, and cause or causes of action. In the instant case, there is no second action to
speak of. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29,

2010.

Procedure; certificate of non-forum shopping; pro-forma complaints. For the expeditious and
inexpensive filing of complaints by employees, the Regional Arbitration Branch (RAB) of the
NLRC provides pro-forma complaint forms. This is to facilitate the exercise and protection of
employees rights by the convenient assertion of their claims against employers untrammeled by
procedural rules and complexities. To comply with the certification against forum shopping
requirement, a simple question embodied in the Complaint form answerable by yes or no
suffices. Employee-complainants are not even required to have a counsel before they can file
their complaint. An officer of the RAB, duly authorized to administer oaths, is readily available
to facilitate the execution of the required subscription or jurat of the complaint. Oriental Ship

Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Procedure; conduct of hearings; discretionary; exemptions. Although, the NLRC, while having
appellate jurisdiction over decisions and resolutions of the Labor Arbiter, may not dictate to the
latter how to conduct the labor case before it. Sec. 9 of Rule V of the then prevailing NLRC
Rules of Procedure, issued on December 10, 1999, provided for the nature of proceedings
before the Labor Arbiter as non-litigious in nature. Hence, the Labor Arbiter is given full
discretion to determine, motu proprio, on whether to conduct hearings or not.
Consequently, a hearing cannot be demanded by either party as a matter of right. The parties
are required to file their corresponding position papers and all the documentary evidence and
affidavits to prove their cause of action and defenses. The rationale behind this is to avoid
delay and curtail the pernicious practice of withholding of evidence.
The Court, however, has recognized specific instances of the impracticality for the Labor Arbiter
to follow the position paper method of disposing cases; thus, formal or clarificatory hearings
must be had in cases of termination of employment: such as, (i) when claims are not properly
ventilated for lack of proper determination whether complainant employee was a rank-and-file
or a managerial employee, (ii) that the Labor Arbiter cannot rely solely on the parties bare
allegations when the affidavits submitted presented conflicting factual issues, and (iii)
considering the dearth of evidence presented by complainants the Labor Arbiter should have set
the case for hearing. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289,

June 29, 2010.

Procedure; verification by counsel sufficient. The counsels verification in a Position Paper


substantially complies with the rule on verification. The second paragraph of Sec. 4, Rule 7 of
the Rules of Court provides: A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his personal knowledge or
based on authentic records. On the other hand, the actual verification of counsel states:
That I am the counsel of record for the complainant in the above-entitled case; that I caused
the preparation of the foregoing Position Paper; that I have read and understood the contents
thereof; and that I confirm that all the allegations therein contained are true and correct based
on recorded evidence. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No.
186289, June 29, 2010.
Procedure; late filing of position paper, and filing of prohibited pleading. The relaxation of rules
of technical procedure in the hearing of labor disputes shall not be applicable in case counsel
fails to file a position paper before the Labor Arbiter not just once but twice. His situation was
compounded when he filed a motion to recall order of dismissal, a prohibited pleading, albeit

42
gratuitously glossed over by the Labor Arbiter, which treated it as an appeal; and when he
belatedly paid the appeal fee.
Moreover, not having learned his lesson, petitioners counsel filed a motion for reconsideration
of the NLRC dismissal of his appeal, which is also prohibited, instead of interposing an appeal
before the Court of Appeals. Said motion for reconsideration not having tolled the running of the
reglementary period for the filing of a petition for certiorari under Rule 65, petitioners petition
before the appellate court was filed out of time three months late. Luis M. Rivera vs. ParentsTeachers Community Association and Easter Yase, G.R. No. 181532, June 29, 2010.
Procedure; late submission of documentary evidence allowed. The nature of the proceedings
before the Labor Arbiter is not only non-litigious and summary, but the Labor Arbiter is also
given great leeway to resolve the case; thus, he may avail himself of all reasonable means to
ascertain the facts of the controversy. The belated submission of additional documentary
evidence by respondent after the case was already submitted for decision did not make the
proceedings before the Labor Arbiter improper. The basic reason is that technical rules of
procedure are not binding in labor cases. Oriental Ship Management Co., Inc. vs. Romy B.

Bastol, G.R. No. 186289, June 29, 2010.

Procedure; quantum of evidence on appeal; substantial evidence. In administrative


proceedings, the quantum of proof required is substantial evidence, which is more than a mere
scintilla of evidence, but such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion. The Court of Appeals may review the factual findings
of the NLRC and reverse its ruling if it finds that the decision of the NLRC lacks substantial
basis. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No.
171327, June 18, 2010.
Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is
totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the
same is accompanied by a prayer for reinstatement. In the present case, however, petitioner
filed his complaint more than one year after his alleged termination from employment.
Moreover, petitioner did not ask for reinstatement in the complaint form, which he personally
filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position
Paper that was later prepared by his counsel. This is an indication that petitioner never had the
intention or desire to return to his job. Elpidio Calipay vs. National Labor Relations Commission,

et al., G.R. No. 166411, August 3, 2010.

Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by
substantial evidence that the dismissal is for just cause. If the employer fails to discharge the
burden of proof, the dismissal is deemed illegal. In the present case, BCPI failed to discharge its
burden when it failed to present any evidence of the alleged fistfight, aside from a single
statement, which was refuted by statements made by other witnesses and was found to be
incredible by both the Labor Arbiter and the NLRC. Alex Gurango vs. Best Chemicals and Plastic,

Inc., et al., G.R. No. 174593, August 25, 2010.

Dismissal; burden of proof. The law mandates that the burden of proving the validity of the
termination of employment rests with the employer. Failure to discharge this evidentiary burden
would necessarily mean that the dismissal was not justified and, therefore, illegal.
Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal
justification for dismissing employees. In case of doubt, such cases should be resolved in favor
of labor, pursuant to the social justice policy of labor laws and the Constitution. Century

Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630,
August 8, 2010.

43
Dismissal; due process. In termination proceedings of employees, procedural due process
consists of the twin requirements of notice and hearing. The employer must furnish the
employee with two written notices before the termination of employment can be effected: (1)
the first apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the second informs the employee of the employers decision to dismiss him.
The requirement of a hearing is complied with as long as there was an opportunity to be heard,
and not necessarily that an actual hearing was conducted. Pharmacia and Upjohn, Inc., et al.

vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.

Dismissal; due process. The Labor Code recognizes the right to due process of all workers,
without distinction as to the cause of their termination, even if the cause was their supposed
involvement in strike-related violence. In the present case, PHIMCO sent a letter to the affected
union members/officers, directing them to explain within 24 hours why they should not be
dismissed for the illegal acts they committed during the strike; three days later, the union
members/officers were informed of their dismissal from employment. We do not find this
company procedure to be sufficient compliance with due process. It does not appear from the
evidence that the union officers were specifically informed of the charges against them. Also,
the short interval of time between the first and second notice shows that a mere token
recognition of the due process requirements was made, indicating the companys intent to
dismiss the union members involved, without any meaningful resort to the guarantees accorded
them by law. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et

al., G.R. No. 170830, August 11, 2010.

Dismissal; employees past infractions. A previous offense may be used as valid justification for
dismissal from work only if the past infractions are related to the subsequent offense upon
which the basis of termination is decreed. The respondents previous incidents of tardiness in
reporting for work were entirely separate and distinct from his latest alleged infraction of
forgery. Hence, the same could no longer be utilized as an added justification for his dismissal.
Besides, respondent had already been sanctioned for his prior infractions. To consider these
offenses as justification for his dismissal would be penalizing respondent twice for the same
offense. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R.

No. 171630, August 8, 2010.

Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainants
allegations are more credible and that she was dismissed from her employment because the
Feng Shui master found that complainants Chinese Zodiac Sign was a mismatch to that of
respondents. This is not a just and valid cause for an employees dismissal.
In contrast, respondents pleadings and evidence suffer from several inconsistencies and the
affidavits presented by respondents only pertain to petty matters that are not sufficient to
support respondents alleged loss of trust and confidence. To be a valid cause for termination of
employment, the act or acts constituting breach of trust must have been done intentionally,
knowingly, and purposely; and they must be founded on clearly established facts. Wensha Spa

Center, inc. and/or Xu Zhi Jie ,vs. Loreta T. Yung,G.R. No. 185122, August 16, 2010.

Dismissal; gross negligence and loss of confidence. Gross negligence connotes want of care in
the performance of ones duties. Petitioners failure on 3 separate occasions to require clients
to sign the requisite documents constituted gross negligence. Furthermore, it has been held that
if the employees are cashiers, managers, supervisors, salesmen or other personnel occupying
positions of responsibility, the employers loss of trust and confidence in said employees may
justify the termination of their employment. As the Banks Personal Banking Manager,
petitioners failure to comply with basic banking policies and procedures were inimical to the

44
interests of the bank, making his dismissal based on loss of confidence justified. Jesus E.

Dycoco, Jr.vs. Equitable PCI Bank (now Banco de Oro), Rene Bunaventura and Siles
Samalea, G.R. No. 188271, August 16, 2010.

Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in
terminating the services of employees who perform functions which by their nature require the
employers full trust and confidence and the mere existence of basis for believing that the
employee has breached the trust of the employer is sufficient. However, this does not mean
that the said basis may be arbitrary and unfounded. Loss of trust and confidence, to be a valid
cause for dismissal, must be based on a willful breach of trust and founded on clearly
established facts. The basis for the dismissal must be clearly and convincingly established. It
must rest on substantial grounds and not on the employers arbitrariness, whim, caprice or
suspicion; otherwise, the employee would eternally remain at the mercy of the
employer.Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R.

Ramil, G.R. No. 171630, August 8, 2010.

Dismissal; probationary employment. Though the acts charged against de Castro took place
when he was still under probationary employment, the records show that de Castro was
dismissed on the ninth month of his employment with LBNI. By then, he was already a regular
employee by operation of law. As a regular employee, de Castro was entitled to security of
tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages,
and damages Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo Quigue, G.R.
No. 165153. August 25, 2010.
Dismissal; project employees; damages. Prior or advance notice of termination is not part of
procedural due process if the termination of a project employee is brought about by the
completion of the contract or phase thereof. 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. Therefore, failing to give project employees advance
notice of their termination is not a violation of procedural due process and cannot be the basis
for the payment of nominal damages. D.M. Consunji, Inc. vs. Antonio Gobres, et al., G.R. No.

169170, August 8, 2010.

Dismissal; separation pay and backwages. The awards of separation pay and backwages are not
mutually exclusive and both may be given to the respondent. The normal consequences of a
finding that an employee has been illegally dismissed are, firstly, that the employee becomes
entitled to reinstatement to his former position without loss of seniority rights and, secondly, the
payment of backwages corresponding to the period from his illegal dismissal up to actual
reinstatement. These are two separate and distinct remedies granted to the employee and the
inappropriateness or non-availability of one does not carry with it the inappropriateness or nonavailability of the other. Under the doctrine of strained relations, the payment of separation pay
has been considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. The grant of separation pay is a proper substitute only for
reinstatement; it cannot be an adequate substitute for both reinstatement and
backwages. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R.

Ramil, G.R. No. 171630, August 8, 2010.

Dismissal; serious misconduct. Misconduct is defined as the transgression of some established


and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. For serious misconduct to justify dismissal
under the law, (a) it must be serious, (b) must relate to the performance of the employees

45
duties; and (c) must show that the employee has become unfit to continue working for the
employer.
It is noteworthy that prior to this incident, there had been several cases of theft and vandalism
involving both respondent companys property and personal belongings of other employees. In
order to address this issue of losses, respondent company issued two memoranda implementing
an intensive inspection procedure and reminding all employees that those who will be caught
stealing and performing acts of vandalism will be dealt with in accordance with the companys
Code of Conduct. Despite these reminders, complainant took the packing tape and was caught
during the routine inspection. All these circumstances point to the conclusion that it was not just
an error of judgment, but a deliberate act of theft of company property. Nagkakaisang Lakas ng

Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines


Corporation, G.R. No. 171115, August 9, 2010.

Dismissal; union security. 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
employee based on the union security provision of the CBA.
The petitioner failed to satisfy the third requirement since nothing in the records would show
that respondents failed to maintain their membership in good standing in the union.
Significantly, petitioners act of dismissing respondents stemmed from the latters act of signing
an authorization letter to file a petition for certification election as they signed it outside the
freedom period. The mere signing of an authorization letter before the freedom period is not
sufficient ground to terminate the employment of respondents inasmuch as the petition itself
was actually filed during the freedom period. The court emphasizes anew that the employer is
bound to exercise caution in terminating the services of his employees especially so when it is
made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Picop

Resources Incorporated (PRI) vs. Anacleto L. Taeca, et al., G.R. No. 160828, August 9, 2010.

Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by
authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic
is an accredited drug testing center nor did it deny the complainants allegation that S.M. Lazo
Clinic was not accredited. Also, only a screening test was conducted to determine if the
complainant was guilty of using illegal drugs.Sulpicio Lines did not confirm the positive result of
the screening test with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines failed
to indubitably prove that Nacague was guilty of using illegal drugs and failed to clearly show
that it had a valid and legal cause for terminating Nacagues employment. When the alleged
valid cause for the termination of employment is not clearly proven, as in this case, the law
considers the matter a case of illegal dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc., G.R. No.

172589, August 8, 2010.

Dismissal; validity. The company did not adduce any evidence to prove that Siazars dismissal
had been for a just or authorized cause, as in fact it had been its consistent stand that it did not
terminate him and that he quit on his own. But given the findings of the Court that the company
had indeed dismissed Siazar and that such dismissal has remained unexplained, there can be no
other conclusion but that the dismissal was illegal. Agricultural and Industrial Supplies

Corporation, et al. vs. Jueber P. Siazar, et al., G.R. No. 177970, August 25, 2010.

Due process; decision rendered without due process. The violation of a partys right to due
process raises a serious jurisdictional issue that cannot be glossed over or disregarded at will.

46
Where the denial of the fundamental right to due process is apparent, a decision rendered in
disregard of that right is void for lack of jurisdiction. This rule is equally true in quasi-judicial
and administrative proceedings, for the constitutional guarantee that no man shall be deprived
of life, liberty, or property without due process is unqualified by the type of proceedings
(whether judicial or administrative) where he stands to lose the same. Winston F. Garcia vs.

Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No.
174137, August 10, 2010.

Employee; evaluation and promotion. The fact that employees were re-classified from Job
Grade Level 1 to Job Grade Level 2 as a result of a job evaluation program does not
automatically entail a promotion or grant them an increase in salary. Of primordial consideration
is not the nomenclature or title given to the employee, but the nature of his functions. What
transpired in this case was only a promotion in nomenclature. The employees continued to
occupy the same positions they were occupying prior to the job evaluation. Moreover, their job
titles remained the same and they were not given additional duties and responsibilities. SCA

Hygiene Products Corporation Employees Association-FFW vs. SCA Hygiene Products


Corporation, G.R. No. 182877, August 9, 2010.

Employee; security of tenure. A workers security of tenure is guaranteed by the Constitution


and the Labor Code. Under the security of tenure guarantee, a worker can only be terminated
from his employment for cause and after due process. For a valid termination by the employer:
(1) the dismissal must be for a valid cause as provided in Article 282, or for any of the
authorized causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be
afforded an opportunity to be heard and to defend himself. A just and valid cause for an
employees dismissal must be supported by substantial evidence, and before the employee can
be dismissed, he must be given proper notice of such cause/s and an adequate opportunity to
be heard. In the process, the employer bears the burden of proving that the dismissal of an
employee was for a valid cause. Its failure to discharge this burden renders the dismissal
unjustified and, therefore, illegal. Wensha Spa Center, Inc. and/or Xu Zhi Jie vs. Loreta T.

Yung,G.R. No. 185122, August 16, 2010.

Employee benefit; time of death. The death should be deemed compensable under the ECC
since Henry was on his way back to Manila in order to be on time and be ready for work the
next day when his accidental death occurred. He should already be deemed en route to the
performance of his duty at the time of the accident. It should be noted that Henrys superior
allowed him to travel to La Union to visit his ailing mother on the condition that that he return
the next day. Under these facts, Henry was in the course of complying with his superiors order
when he met his fatal accident. To be sure, he was not in an actual firefighting or accident
situation when he died, but returning to work as instructed by his superior is no less equivalent
to compensable performance of duty under Section 1, Rule III of the ECC Rules. Government

Service Insurance System vs. Felicitas Zarate, as substituted by her heirs, namely Melanie
Zarate, et al.,G.R. No. 170847, August 3, 2010.
Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order which
would generally authorize the suspension of judicial proceedings could not have affected the
Courts action on the present case due to the petitioners failure to raise the pendency of the
rehabilitation proceedings in its memorandum to the Court. At any rate, a stay order simply
suspends all actions for claims against a corporation undergoing rehabilitation; it does not work
to oust a court of its jurisdiction over a case properly filed before it. Thus, the Courts ruling on
the principal issue of the case stands. Nevertheless, with LBNIs manifestation that it is still
undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the

47
termination of the rehabilitation proceedings. Carlos De Castro vs. Liberty Broadcasting
Network, Inc. and Edgardo Quigue, G.R. No. 165153. August 25, 2010.
Job contracting. In permissible job contracting, the principal agrees to put out or farm out with
a contractor or subcontractor the performance or completion of a specific job, work or service
within a definite or predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal. The test is whether
the independent contractor has contracted to do the work according to his own methods and
without being subject to the principals control except only as to the results, he has substantial
capital, and he has assured the contractual employees entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization, security of tenure,
and social and welfare benefits. Spic n Span Services Corp. vs. Gloria Paje, et al., G.R. No.
174084, August 25, 2010.
Management prerogative; transfer of employees. Jurisprudence recognizes the exercise of
management prerogative to transfer or assign employees from one office or area of operation
to another, provided there is no demotion in rank or diminution of salary, benefits, and other
privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a
form of punishment or demotion without sufficient cause. To determine the validity of the
transfer of employees, the employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Should the employer fail to overcome
this burden of proof, the employees transfer shall be tantamount to constructive
dismissal. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724,

August 23, 2010.

Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger
is but a legal fiction intended as a tool to adjudicate rights and obligations between and among
the merged corporations and the persons that deal with them. Although in a merger it is as if
there is no change in the personality of the employer, there is in reality a change in the
situation of the employee. Once an FEBTC employee is absorbed, there are presumably changes
in his condition of employment even if his previous tenure and salary rate is recognized by BPI.
It is reasonable to assume that BPI would have different rules and regulations and company
practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new.
Not the least of these changes is the fact that prior to the merger FEBTC employees were
employees of an unorganized establishment and after the merger they became employees of a
unionized company that had an existing CBA with the certified union. Thus, although in a sense
BPI is continuing FEBTCs employment of these absorbed employees, BPIs employment of
these absorbed employees will not be under exactly the same terms and conditions as stated in
the latters employment contracts with FEBTC. Bank of the Philippine Islands vs. BPI Employees

Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.

Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained


relations, the payment of separation pay has been considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On the one hand, such
payment liberates the employee from what could be a highly oppressive work environment. On
the other, the payment releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust.Wensha Spa Center, Inc. and/or Xu

Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.

Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus
conductor was paid on commission basis, he falls within the coverage of R.A. 7641 and its

48
implementing rules. Thus, his retirement pay should include the cash equivalent of 5-days SIL
and 1/12 of 13th month pay. The NLRCs reliance on the case of R & E Transport, Inc. as a
basis for ruling that bus conductors are not covered by the law on SIL and 13th month pay is
erroneous since that involved a taxi driver who was paid according to the boundary system.
There is a difference between drivers paid under the boundary system and conductors who
are paid on commission basis. In practice, taxi drivers do not receive fixed wages and retain
only those sums in excess of the boundary or fee they pay to the owners or operators of the
vehicles. Conductors, on the other hand, are paid a certain percentage of the bus earnings for
the day. Rodolfo J. Serrano vs. Severino Santos Transit and/or Severino Santos, G.R. No.

187698, August 9, 2010.

Separation pay. In those instances where an employee has been validly dismissed for causes
other than serious misconduct or those reflecting on his moral character, separation pay may
still be granted after giving considerable weight to his long years of employment. In this case,
equity considerations dictate that respondents tenure be computed from 1978, the year when
respondent started working for Upjohn, and not only from 1996, when the merger of Pharmacia
and Upjohn took place. Pharmacia and Upjohn, Inc., et al. vs. Ricardo p. Albayda, Jr., G.R. No.

172724, August 23, 2010.

Strike; validity of strike. Despite the validity of the purpose of a strike and the unions
compliance with the procedural requirements, a strike may still be held illegal where the means
employed are illegal. While the strike had not been marred by actual violence and patent
intimidation, the picketing that respondent PILA officers and members undertook as part of their
strike activities effectively blocked the free ingress to and egress from PHIMCOs premises, thus
preventing non-striking employees and company vehicles from entering the PHIMCO compound.
In this manner, the picketers violated Article 264(e) of the Labor Code and tainted the strike
with illegality. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et

al., G.R. No. 170830, August 11, 2010.

Union; eligibility of confidential employees to join. Confidential employees are defined as those
who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and
effectuate 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. In the present
case, there is no showing that the secretaries/clerks and checkers assisted or acted in a
confidential capacity to managerial employees and obtained confidential information relating to
labor relations policies. And even assuming that they had exposure to internal business
operations of the company, as respondent claims, this is not per se ground for their exclusion in
the bargaining unit of the rank-and-file employees. Tunay na Pagkakaisa ng Manggagawa sa

Asia Brewery vs. Asia Brewery, Inc., G.R. No. 162025, August 3, 2010.

Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the Labor
Code, make a distinction between participating workers and union officers. The services of an
ordinary striking worker cannot be terminated for mere participation in an illegal strike; proof
must be adduced showing that he or she committed illegal acts during the strike. The services
of a participating union officer, on the other hand, may be terminated, not only when he
actually commits an illegal act during a strike, but also if he knowingly participates in an illegal
strike. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No.

170830, August 11, 2010.

49
Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop
Clause in their CBA with management are subject to its terms. However, under law and
jurisprudence, the following kinds of employees are exempted from its coverage, namely, (1)
employees who at the time the union shop agreement takes effect are bona fide members of a
religious organization which prohibits its members from joining labor unions on religious
grounds; (2) employees already in the service and already members of a union other than the
majority at the time the union shop agreement took effect; (3) confidential employees who are
excluded from the rank and file bargaining unit; and (4) employees excluded from the union
shop by express terms of the agreement. In the absence of any of these recognized exceptions,
there is no basis to conclude that the terms and conditions of employment under a valid CBA in
force in the surviving corporation should not be made to apply to the absorbed employees. Bank

of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank, G.R. No. 164301, August 10, 2010.

Labor Procedure
CSC; rules for dismissal. The filing of formal charges against the respondents without complying
with the mandated preliminary investigation or at least giving the respondents the opportunity
to comment violated the latters right to due process. These rules on due process apply even in
cases where the complainant is the disciplining officer himself, as in this case. The fact that the
charges against the respondents are serious or that the evidence of their guilt is strong cannot
compensate for the procedural shortcut undertaken by petitioner. Winston F. Garcia vs. Mario I.

Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137,
August 10, 2010.

Labor case; due process; reevaluation. A reevaluation is a process by which a person or office
(in this case the DOLE secretary) revisits its own initial pronouncement and makes another
assessment of its findings. In simple terms, to reevaluate is to take another look at a previous
matter in issue. From a procedural standpoint, a reevaluation is a continuation of the original
case and not a new proceeding. The evidence, financial reports and other documents submitted
by the parties in the course of the original proceeding are to be visited and reviewed again. A

reevaluation does not necessitate the introduction of new materials for review nor does it
require a full hearing for new arguments. Hence, failure to order the presentation of new
evidence in the reevaluation of an Order is not a violation of due process. NASECO Guards
Association PEMA vs. National Service Corporation, G.R. No. 165442, August 25, 2010.

Labor case; non-lawyer as representative. The respondents in this case were represented by a
non-lawyer who never showed any proof of his authority to represent the respondents.
Petitioner argued that the respondents representative had no personality to appear before the
Labor Arbiter or the NLRC, and his representation for the respondents should produce no legal
effect. The Court affirmed the ruling of the CA that the cited technical infirmity cannot defeat
the respondents preferred right to security of tenure, without prejudice to whatever action may
be taken against the representative, if he had indeed been engaged in the unauthorized
practice of law. Spic n Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25,
2010.
NLRC; factual findings. Findings of fact of the NLRC, affirming those of the LA, are entitled to
great weight and will not be disturbed if they are supported by substantial evidence. The CA
had overstepped its legal mandate by reversing the findings of fact of the LA and the NLRC as it
appears that both decisions were based on substantial evidence. There is no proof of
arbitrariness or abuse of discretion in the process by which each body arrived at its own
conclusions. Thus, the CA should have deferred to such specialized agencies that are considered

50
experts in matters within their jurisdictions. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P.

Albayda, Jr., G.R. No. 172724, August 23, 2010.

NLRC; review of decisions. The power of the Court of Appeals to review NLRC decisions via Rule
65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral
Home v. National Labor Relations Commission. This Court held that the proper vehicle for such
review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this
action should be filed in the Court of Appeals in strict observance of the doctrine of the
hierarchy of courts. Moreover, it is already settled that under Sec. 9 of B.P. 129, as amended,
the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions
for Certiorari is specifically given the power to pass upon the evidence, if and when necessary,
to resolve factual issues. Picop Resources Incorporated (PRI) vs. Anacleto L. Taeca, et al., G.R.

No. 160828, August 9, 2010.

Pleading verification. The lack of a verification in a pleading is only a formal defect, not a
jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring a
verification is simply to ensure that the allegations in the pleading are done in good faith, are
true and correct, and are not mere speculations. As previously explained in Torres v. Specialized
Packaging Development Corporation, where only two of the 25 real parties-in-interest signed
the verification, the verification by the two could be sufficient assurance that the allegations in
the petition were made in good faith, are true and correct, and are not speculative. Spic n Span
Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.
Procedural rules; strict application. Procedural rules setting the period for perfecting an appeal
or filing a petition for review are generally inviolable. It is doctrinally entrenched that an appeal
is not a constitutional right, but a mere statutory privilege. Hence, parties who seek to avail
themselves of such privilege must comply with the statutes or rules allowing it. Furthermore,
the perfection of an appeal in the manner and within the period permitted by law is not only
mandatory, but also jurisdictional. Failure to perfect the appeal renders the judgment of the
court final and executory. Just as a losing party has the privilege to file an appeal within the
prescribed period, so does the winner also have the correlative right to enjoy the finality of the
decision. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411,

August 3, 2010.

Real party in interest; dismissed employee. It is clear that the petitioners failed to include the
name of the dismissed employee in the caption and body of its petition for certiorari and,
instead, only indicated the name of the labor union as the party acting on behalf of such
dismissed employee. Hence, the Court of Appeals rightly dismissed the petition for not having
been filed by an indispensable party in interest. (The Court still proceeded to discuss the
substantive issues and merits of the case despite affirming the dismissal of the case based on
procedural grounds.) Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and
Helen Valenzuela vs. Keihin Philippines Corporation, G.R. No. 171115, August 9, 2010.
Rule 45; review of factual findings. As a general rule, only questions of law may be raised in
petitions for certiorari under Rule 45 of the Rules of Court. However, there are recognized
exceptions to the rule. Among the exceptions are when the findings of fact are conflicting and
when the findings are conclusions without citation of specific evidence on which they are based.
In the present case, the findings of fact of the Court of Appeals conflict with the findings of fact
of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals that Gurango
engaged in a fistfight is a conclusion without citation of specific evidence on which it is
based. Alex Gurango vs. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25,

2010.

51
Compensable illness. The CBA provision states: If a seafarer/officer, due to no fault of his own,
suffers permanent disability as a result of an accident while serving on board or while traveling
to or from the vessel on Companys business or due to marine peril, and as a result, his ability
to work is permanently reduced, totally or partially, the Company shall pay him a disability
compensation. Accident has been defined as: A fortuitous circumstance, event, or happening,
an event happening without any human agency, or if happening wholly or partly through human
agency, an event which under the circumstances is unusual and unexpected by the person to
whom it happens. The Court holds that the snap on the back of respondent was not an
accident, but an injury sustained by respondent from carrying the heavy basketful of fire
hydrant caps. The injury cannot be said to be the result of an accident or fortuitous event. It
resulted from the performance of a duty. Although the disability of respondent was not caused
by an accident, his disability is still compensable under the CBA provision: A seafarer/officer
who is disabled as a result of any injury, and who is assessed as less than 50% permanently
disabled, but permanently unfit for further service at sea in any capacity, shall also be entitled
to a 100% compensation. NFD International Manning Agents, Inc./Barber Ship Management

Ltd. vs. Esmeraldo C. Illescas, G.R. No. 183054, September 29, 2010.

Dismissal; due process. SPO2 Roaquin is entitled to reinstatement since he was dismissed from
the service without administrative due process. No one ever filed an administrative action
against him in connection with the crime of which he was charged in court. At any rate,
assuming that someone filed an administrative charge against Roaquin, still the law required the
PNP to give him notice of such charge and the right to answer the same. The PNP gave him no
chance to show why he should not be discharged nor does the record show that the PNP
investigated him or conducted a summary proceeding to determine his liability in connection
with the murder of which he was charged in court. While the PNP may have validly suspended
Roaquin from the service pending the adjudication of the criminal case against him, he is
entitled, after his acquittal, to reinstatement and payment of the salaries, allowances, and other
benefits withheld from him by reason of his discharge from the service. P/Chief Superintendent

Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. 159588, September 15,
2010.
Dismissal; misconduct. Misconduct is a transgression of some established and definite rule of
action, more particularly, unlawful behavior or gross negligence by a public officer. As
differentiated from simple misconduct, in grave misconduct the elements of corruption, clear
intent to violate the law or flagrant disregard of established rule, must be manifest. As Acting
Branch Cashier, petitioner was charged with responsibility of handling the banks daily
transactions which could run into large amounts. There is a tremendous difference between the
degree of responsibility, care, and trustworthiness expected of an ordinary employee in the
bureaucracy and that required of bank managers and other officials directly handling large sums
of money and properties. The evidence clearly shows that Echano took light of such
responsibility and his misconduct and dishonesty paved the way for the commission of fraud
against, and consequent damage to, the City Government of Manila. There is no doubt, based
on the evidence that Echano was guilty of grave misconduct. Salvador O. Echano, Jr. vs. Liberty

Toledo, G.R. No. 173930,September 15, 2010.


Dismissal; strike. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal
that is unjustly done, that is, the employer dismisses the employee without observing due
process, either substantive or procedural. Substantive due process requires the attendance of
any of the just or authorized causes for terminating an employee as provided under Articles

52
278, 283 or 284 of the Labor Code; while procedural due process demands compliance with the
twin-notice requirement. In contrast, on the consequences of an illegal strike, Article 264(a)
distinguishes between a union officer and a union member participating in an illegal strike. A
union officer who knowingly participates in an illegal strike is deemed to have lost his
employment status, but a union member who is merely instigated or induced to participate in
the illegal strike is more benignly treated. The petitioners were terminated for joining a strike
that was later declared to be illegal. The NLRC ordered their reinstatement or, in lieu of
reinstatement, the payment of their separation pay, because they were mere rank-and-file
workers whom the Unions officers had misled into joining the illegal strike. They were not
unjustly dismissed from work. Danilo Escario, et al vs. National Labor Relations

Commission, G.R. No. 160302, September 27, 2010.

Employee money claim; prescription. The Labor Code provides that money claims arising from
employer-employee relations shall be filed within 3 years from the time the cause of action
accrues; otherwise they shall be barred. In this case, it is undisputed that the complainant was
dismissed on January 1, 2000, and this was the time when the cause of action had accrued.
Since the present action was only filed on March 29, 2004, or exactly 4 years and 3 months
after his dismissal, the Labor Arbiter was correct in ruling that the action had already
prescribed. The fact that the complainant repeatedly followed up on his money claim with PLDT
during the years of 2001-2003 does not serve to toll the prescriptive period as provided under
Art. 1155 of the Civil Code since the complainant never made any written extrajudicial demand
for his claim nor did PLDT make any written acknowledgment of its obligation. Philippine Long

Distance Telephone Company (PLDT) vs. Roberto R. Pingol, G.R. No. 182622, September 8,
2010.
Employee money claim; prescription. In the case of Southeastern Shipping vs. Navarra Jr., the
Court held that Section 28 of the Standard Employment Contract for Seafarers, insofar as it
limits the prescriptive period within which the seafarers may file their money claims, is hereby
declared null and void. The applicable provision is Article 291 of the Labor Code, it being more
favorable to the seafarers and more in accord with the States declared policy to afford full
protection to labor. Therefore, the prescriptive period in the present case is three years from
the time the cause of action accrues and not the one-year period prescribed in the Standard
Employment Contract for Seafarers. Medline Management, Inc. and Grecomar Shipping Agency

vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.

Illegal dismissal. Petitioners are liable for constructive dismissal for placing respondents on shifts
of a few days per month and in eventually denying them workplace access, rendering
respondents employment impossible, unreasonable or unlikely, leaving them no choice but to
quit. The petitioners rested their case on the defense of respondents abandonment of work. For
this cause to prosper, petitioners should have proved (1) that the failure to report for work was
without justifiable reason, and (2) respondents intention to sever the employer-employee
relationship as shown by some overt acts. However, petitioners failed to rebut the respondents
claim that they were denied entry to their work area and the respondents act of filing a case for
illegal dismissal belies the intention to abandon work. Pasig Cylinder Manufacturing Corp.

vs. Danilo Rollo, et al., G.R. No. 173631, September 8, 2010.

Lay off. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation
to the laid-off employees. Article 283 of the Labor Code applies to MMC. Said provision is
emphatic that an employee, who was dismissed due to cessation of business operation, is
entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. It is jurisprudential that separation pay

53
should also be paid to employees even if the closure or cessation of operations is not due to
losses. The Court is not impressed with the claim that actual severe financial losses exempt
MMC from paying separation benefits to complainants. In the first place, MMC did not appeal
the decision of the Court of Appeals which affirmed the NLRCs award of separation pay. In the
second place, the non-issuance of a permit forced MMC to permanently cease its business
operations. 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. Manila

Mining Corp. Employees Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23,
September 29, 2010.
Non-diminution of benefits. Apex Mining Company, Inc. v. NLRC is instructive: The prohibition
against elimination or diminution of benefits set out in Article 100 of the Labor Code is
specifically concerned with benefits already enjoyed at the time of the promulgation of the
Labor Code. Article 100 does not purport to apply to situations arising after the promulgation
date of the Labor Code. Even assuming arguendo that Article 100 applies to the case at bar,
the same does not prohibit a union from offering and agreeing to reduce wages and benefits of
the employees. In Rivera v. Espiritu, this Court ruled that the right to free collective bargaining
includes the right to suspend it. Insular Hotel Employees Union-NFL vs. Waterfront Insular Hotel

Davao, G.R. No. 174040-41, September 22, 2010.

Reinstatement; entitlement to backwages. As a general rule, backwages are granted to


indemnify a dismissed employee for his loss of earnings during the whole period that he is out
of his job. Considering that an illegally dismissed employee is not deemed to have left his
employment, he is entitled to all the rights and privileges that accrue to him from the
employment. That backwages are not granted to employees participating in an illegal strike
accords with the reality that they do not render work for the employer during the period of the
illegal strike. Under the principle of a fair days wage for a fair days labor, the petitioners were
not entitled to the wages during the period of the strike (even if the strike might be legal),
because they performed no work during the strike. Thus, the Court deleted the award of
backwages and held that the striking workers were entitled only to reinstatement in Philippine
Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees
Union. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302,

September 27, 2010.

Reinstatement; separation pay. 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. To safeguard the spirit of social
justice that the Court has advocated in favor of the working man, 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. 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

54
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. Under the circumstances, the grant of separation pay in lieu of
reinstatement of the petitioners was proper. Danilo Escario, et al vs. National Labor Relations

Commission, G.R. No. 160302, September 27, 2010.

Retrenchment; notice requirement. Although there was authorized cause to dismiss respondent
from the service, we find that petitioner did not comply with the 30-day notice requirement.
Petitioner maintains that it substantially complied with the requirement of the law in that it
submitted two notices or reports with the DOLE. However, petitioner admitted that the reports
were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second
notice, before the intended date of respondents dismissal. The purpose of the one month prior
notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of
termination. Non-compliance with this rule violates the employees right to statutory due
process. Consequently, we affirm the NLRCs award of indemnity to respondent for want of
sufficient due notice.Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No.

165923, September 29, 2010.

Retrenchment; validity. As an authorized cause for separation from service under Article 283 of
the Labor Code, retrenchment is a valid exercise of management prerogative subject to the
strict requirements set by jurisprudence: (1) The retrenchment is reasonably necessary and
likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) The employer served written notice both to
the employees and to the DOLE at least one month prior to the intended date of retrenchment;
(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; (4) The employer
exercises its prerogative to retrench employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees right to security of tenure; and (5) 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. Petitioner implemented its retrenchment
program in good faith because it undertook several measures in cutting down its costs:
withdrawing privileges of its executives and expatriates; limiting the grant of additional
monetary benefits to managerial employees and cutting down expenses; selling of company
vehicles; and infusing fresh capital into the company. Petitioner was able to prove that it
incurred substantial business losses, it offered to pay respondent his separation pay, the
retrenchment scheme was arrived at in good faith, and lastly, the criteria or standard used in
selecting the employees to be retrenched was work efficiency which passed the test of fairness
and reasonableness. Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No.

165923, September 29, 2010.

Security of tenure. DECS Memorandum No. 10 provides that all incumbent teachers have until
September 19, 2000 to pass the Licensure Examination for Teachers (LET), otherwise they
cannot continue teaching in public or private schools unless they obtain a temporary permit to
teach as para-teachers. The complainants in this case were dismissed from the school on March
31, 2000 after they failed to pass the LET. The Supreme Court held that their dismissal was
illegal and premature. The law has provided a specific timeframe within which the teachers
could comply with the requirement of passing the LET hence, the school cannot deny them this

55
privilege, which the law has accorded to them, without violating their right to security of
tenure. St. Marys Academy of Dipolog City vs. Teresita Palacio, et al., G.R. No. 164913,

September 8, 2010.

Separation pay. While it is true that generally the grant of separation pay is not available to
employees who are validly dismissed, there are certain circumstances that warrant the grant of
some relief in favor of the terminated Union members based on equity. Bitter labor disputes,
especially
strikes,
always
generate
abhorrence
that
result
in
unpleasant
consequences. Considering this, the striking employees breach of restrictions imposed on their
concerted actions cannot be regarded as so inherently wicked that the employer can totally
disregard their long years of service prior to such breach. The records fail to disclose any past
infractions committed by the dismissed Union members. Taking these circumstances in
consideration, the Court regards the award of financial assistance to these Union members in
the form of one-half month salary for every year of service to the company up to the date of
their termination as equitable and reasonable. C. Alcantara & Sons, Inc. vs. Court of Appeals /

Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc.,
et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara &
Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Strike; termination of participants in illegal strike. Since the Unions strike has been declared
illegal, the Union officers can be terminated from employment for their actions. This includes
the shop stewards who cannot be shielded from the coverage of Article 264 of the Labor Code
since the Union appointed them as such and placed them in positions of leadership and power
over the men in their work units. As regards the rank and file Union members, Article 264
provides that termination from employment is not warranted by the mere fact that a union
member has taken part in an illegal strike. It must be shown that such union member, clearly
identified, performed an illegal act or acts during the strike. The striking Union members
allegedly committed the following prohibited acts: a. They threatened, coerced, and intimidated
non-striking employees, officers, suppliers and customers; b. They obstructed the free ingress
to and egress from the company premises; and c. They resisted and defied the implementation
of the writ of preliminary injunction issued against the strikers. The mere fact that the criminal
complaints against them were subsequently dismissed does not extinguish their liability under
the Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and
photos presented to establish their identity and guilt during the hearing of the petition to
declare the strike illegal. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang

Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc.,
et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Strike; validity. 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 their respective right to strike and lockout, which are otherwise available to
them under the law, in favor of voluntary arbitration. C. Alcantara & Sons, Inc. vs. Court of

Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara &


Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C.

56
Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September
29, 2010.
Unfair labor practice. 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. Article 252 of
the Labor Code defines the phrase duty to bargain collectively. 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. It cannot be said that MMC deliberately avoided the negotiation. It merely sought a
suspension and even expressed its willingness to negotiate once the mining operations resume.
There was valid reliance on the suspension of mining operations for the suspension of the CBA
negotiation. The Union failed to prove bad faith. Manila Mining Corp. Employees Association, et

al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, September 29, 2010.

LABOR PROCEDURE
Appeal; questions of fact. An issue of fact exists when what is in question is the truth or falsity
of the alleged facts, whereas an issue of law exists when what is in question is what the law is
on a certain state of facts. The test, therefore, for determining whether an issue is one of law
or of fact, is whether the CA could adjudicate it without reviewing or evaluating the evidence, in
which case, it is an issue of law; otherwise, it is an issue of fact. Here the CA needed only to
review the records to determine what law should be applied. Such question does not call for an
examination of the probative value of the evidence of the parties. Since petitioners appeal
involves only questions of law, they erred in taking recourse to the CA by Notice of
Appeal. P/Chief Superintendent Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L.

Roaquin, G.R. No. 159588, September 15, 2010.

Appeal; timeliness. Under the Rules of Procedure of the NLRC, service of notices and resolutions
by registered mail is completed upon receipt by the addressee or his agent. In this case, the
receipt of the Labor Arbiters decision by the security guard manning the compound where
several businesses operated, including that of the petitioner, does not constitute receipt by the
agent of the addressee. It is clear that the security guard was not employed by the petitioners.
For remedial law purposes, the guards receipt of any processes intended for the petitioners was
receipt by a stranger, without legal significance to the petitioners. Hence, the 10-day period for
filing the appeal should be counted from the day after notice was forwarded to the petitioners
office. Pasig Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. 173631, September
8, 2010.
Certiorari; NLRC. The power of the CA to review a decision of the NLRC in a petition
for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the
correctness of the NLRCs evaluation of the evidence. However, under certain circumstances,
the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to
determine whether these findings are supported by the evidence presented and the conclusions
derived therefrom are accurately ascertained. It is within the jurisdiction of the CA to review the
findings of the NLRC. Consequently, the CA cannot be faulted in re-evaluating the NLRCs
findings as it can affirm, modify or reverse the same if the evidence so warrants. Shimizu

Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.
Certiorari; regional director and BLR director. Relief in a special civil action for certiorari is
available only when the following essential requisites concur: (a) the petition must be directed
against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (b) the
tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave

57
abuse of discretion amounting to lack or excess of jurisdiction; and (c) there is no appeal, nor
any plain, speedy and adequate remedy in the ordinary course of law. There is no concurrence
of these requisites in C.A.-G.R. SP No. 69889. Firstly, the petition for the plebiscite to amend
PALEAs Constitution and By-Laws was merely incidental to the conduct of the general election
pursuant to the final and executory decision of the BLR. As such, the recourse open to PALEA
was not to file the petition for certiorari to assail such denial, but to first await the final election
results. Secondly, the Regional Director and the BLR Director were not exercising judicial or
quasi-judicial functions in issuing the order and the letter. Instead, they were performing the
purely ministerial act of enforcing the final and executory BLR resolution directing the conduct
of the general election. Philippine Airlines Employees Association (PALEA) vs. Hon. Hans Leo J.

Cacdac, G.R. No. 155097, September 27, 2010.

Failure to comply with condition precedent. The records show that the respondents failed to
comply with a condition precedent when they did not first bring their claim before the Grievance
Machinery as required under the employment contract. Despite this, the CA did not err in
dismissing the petitioners motion to dismiss because Section 4, Rule III of the NLRC Rules of
Procedure is clear that a motion to dismiss on the ground of failure to comply with a condition
precedent is a prohibited pleading. Medline Management, Inc. and Grecomar Shipping Agency

vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.

Labor arbiter; jurisdiction. As heirs of the deceased seaman, the respondents can file a case
before the Labor Arbiter for payment of death benefits as provided under Section 28 of the
POEA Standard Employment Contract. It is clearly provided therein that the NLRC shall have
original and exclusive jurisdiction over any and all disputes or controversies arising out of or by
virtue of the seamans contract.Medline Management, Inc. and Grecomar Shipping Agency vs.

Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.

Mediation. Procedurally, the first step to submit a case for mediation is to file a notice of
preventive mediation with the NCMB. It is only after this step that a submission agreement may
be entered into by the parties. Section 3, Rule IV of the NCMB Manual of Procedure provides
who may file a notice of preventive mediationonly a certified or duly recognized bargaining
agent. Cullo admitted that the case was filed not by the Union but by individual members
thereof. Clearly, the NCMB had no jurisdiction to entertain the notice filed before it. Insular

Hotel Employees Union-NFL vs. Waterfront Insular Hotel Davao, G.R. No. 174040-41,
September 22, 2010.

NLRC; acquisition of jurisdiction. The NLRC acquires jurisdiction over parties in cases before it
either by summons served on them or by their voluntary appearance before its Labor Arbiter.
The Return of Service of Summons indicated that 74 out of the 81 impleaded Union members
were served with summons. But they refused either to accept the summons or to acknowledge
receipt of the same. Such refusal cannot frustrate the NLRCs acquisition of jurisdiction over
them. Besides, the affected Union members voluntarily entered their appearance in the case
when they sought affirmative relief in the course of the proceedings like an award of damages
in their favor. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa

Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang
Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al.,G.R. No.
155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his
right foot is an injury which he suffered during the course of his employment. This is in
consonance with the Standard Terms and Conditions Governing the Employment of Filipino

58
Seafarers On Board Ocean-Going Vessels of the Department of Labor and Employment.
Applying the said provisions of this standard contract, respondent is entitled to receive sickness
wages covering the maximum period of 120 days. Moreover, petitioners violated the contract
when it failed to provide continuous treatment for respondent in accordance with the
recommendation of their company physician. Because of this failure, respondent was forced to
seek immediate medical attention at his own expense. Thus, he is also entitled to
reimbursement of his medical expenses. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R.

No. 161934, October 6, 2010

Compensable illness. For an injury or illness to be duly compensated under the terms of the
Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC),
there must be a showing that the injury or illness and the ensuing disability occurred during the
effectivity of the employment contract. Moreover, all of these conditions must be satisfied 1.)
The seafarers work must involve the risks described in the POEA-SEC; 2.) The disease was
contracted as a result of the seafarers exposure to the described risks; 3.) The disease was
contracted within a period of exposure and under such other factors necessary to contract it;
and 4.) There was no notorious negligence on the part of the seafarer. Specifically, with
respect to mental diseases, the POEA-SEC requires that it must be due to traumatic injury to the
head which did not occur in this case. In fact, respondent claimed that he became depressed
due to the frequent verbal abuse he received from his German superiors. However, he failed to
show concrete proof that, if indeed he was subjected to abuse, it directly resulted in his
depression. Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A.

Nazam, G.R. No. 190804. October 11, 2010.

Constructive dismissal; transfer. It is management prerogative to transfer or assign employees


from one office or area of operation to another. However, the employer must show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee, or that it does not
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden, the employees transfer shall be tantamount to
constructive dismissal. In the instant case, Del Villars demotion is readily apparent in his new
designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control
Manager from being Transportation Services Manager. The two posts are not of the same
weight in terms of duties and responsibilities. Moreover, while Del Villars transfer did not result
in the reduction of his salary, there was a diminution in his benefits because as a mere Staff
Assistant, he could no longer enjoy the use of a company car, gasoline allowance, and annual
foreign travel, which he previously enjoyed as Transportation Services Manager. Thus, Del Villar
was clearly constructively dismissed. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del

Villar, G.R. No. 163091, October 6, 2010.

Dismissal; closure of business. Petitioner terminated the employment of respondents on the


ground of closure or cessation of operation of the establishment which is an authorized cause
for termination under Article 283 of the Labor Code. While it is true that a change of ownership
in a business concern is not proscribed by law, the sale or disposition must be motivated by
good faith as a condition for exemption from liability. In the instant case, however, there was,
in fact, no change of ownership. Petitioner did not present any documentary evidence to
support its claim that it sold the same to ALPS Transportation. On the contrary, it continuously
operates under the same name, franchises and routes and under the same circumstances as
before the alleged sale. Thus, no actual sale transpired and, as such, there is no closure or
cessation of business that can serve as an authorized cause for the dismissal of

59
respondents.Peafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo

S. Catimbang, G.R. No. 178397, October 20, 2010.

Dismissal; constructive dismissal. 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 his employment. It also exists where
there is cessation of work because continued employment is rendered impossible, unreasonable
or unlikely, such as when an offer involves a demotion in rank and a diminution in pay. In the
present case, what made it impossible, unreasonable or unlikely for respondent to continue
working for SHS was the unlawful withholding of his salary. He then lost no time in submitting
his resignation letter and eventually filing a complaint for illegal dismissal just a few days after
his salary was withheld. These circumstances are inconsistent with voluntary resignation and
bolster the finding of constructive dismissal. SHS Perforated Materials, Inc., et al. vs. Manuel F.

Diaz, G.R. No. 185814, October 13, 2010.

Dismissal; corporate officer. It is not the nature of the services performed, but on the manner of
creation of the office that distinguishes corporate officers who may be ousted from office at will
and ordinary corporate employees who may only be terminated for just cause. Under Section
25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in order to
be considered as a corporate office. Thus, the creation of an office pursuant to a By-Law
provision giving a president the power to create an office does not qualify as a By-Law position.
In the present case, the position of Vice President for Finance and Administration which
respondent held was merely created by Matlings President pursuant to the companys By-Laws.
It is not a corporate office or By-Law position, and therefore, respondent was not a corporate
officer who could be ousted from office at will. Matling Industrial and Commercial Corp., et al.

vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.

Dismissal; gross and habitual neglect. Under Article 282 (b) of the Labor Code, an employer
may terminate an employee for gross and habitual neglect of duties. Gross negligence
connotes want of care in the performance of ones duties. Habitual neglect implies repeated
failure to perform ones duties for a period of time, depending upon the circumstances. A single
or isolated act of negligence does not constitute a just cause for the dismissal of the employee.
Assuming arguendo that respondent was negligent, although the Court found otherwise, the
lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be
categorized as habitual and, hence, not a just cause for his dismissal. St. Lukes Medical Center,

Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Dismissal; loss of confidence. Loss of confidence as a just cause for termination of employment
is premised on the fact that the employee concerned holds a position of trust and confidence.
This situation holds where a person is entrusted with confidence on delicate matters, such as
the custody, handling, or care and protection of the employers property. However, in order to
constitute a just cause for dismissal, the act complained of must be work-related such as
would show the employee concerned to be unfit to continue working for the employer. In the
instant case, the Resolution of the PAL Board of Directors, underscored respondents acts of
mismanagement and gross incompetence which resulted in huge financial losses for petitioner.
As a general rule, employers are allowed wider latitude of discretion in terminating the
employment of managerial personnel or those who, while not of similar rank, perform functions
which by their nature require the employers full trust and confidence. This must be
distinguished from the case of ordinary rank and file employees, whose termination on the basis
of these same grounds requires a higher proof of involvement in the events in

60
question. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M.

Quijano, G.R. No. 123294, October 20, 2010

Dismissal; probationary employee. Although respondent was a probationary employee, he is


nonetheless entitled to security of tenure. Section 3 (2) Article 13 of the Constitution
guarantees that right. In using the expression all workers, the Constitution puts no distinction
between a probationary and a permanent or regular employee. This means that probationary
employees cannot be dismissed except for cause or for failure to qualify as regular employees
(i.e., to meet the performance standards set by the company to be eligible for regular
employment). SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814,

October 13, 2010.

Dismissal; requirement. In dismissing an employee, the employer must furnish him with two
written notices: the first notice apprises the employee of the particular acts or omissions for
which his dismissal is sought, and the second is a subsequent notice, which informs the
employee of the employers decision to dismiss him. An administrative hearing must likewise be
held in order to give the employee a further opportunity to be heard. Petitioner hospital failed to
comply with the rule on twin notice and hearing as it merely required respondent to give his
written explanation and, thereafter, ordered his dismissal. St. Lukes Medical Center, Inc. and

Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Dismissal; serious misconduct. Serious misconduct as a valid cause for the dismissal of an
employee is defined simply as improper or wrongful conduct. It is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error of judgment. To be serious, the misconduct
must be of such grave and aggravated character and not merely trivial or unimportant.
Moreover, it must be related to the performance of the employees duties such as would show
him to be unfit to continue working for the employer. On the other hand, moral turpitude has
been defined as everything which is done contrary to justice, modesty, or good morals; an act
of baseness, vileness or depravity in the private and social duties which a man owes his
fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals. In
the case at bar, the transgressions imputed to private respondent have never been firmly
established as deliberate and willful acts. At the very most, they can only be characterized as
unintentional, albeit major, lapses in professional judgment. Philippine Airlines, Inc. vs. National

Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.

Employer-employee relationship. That complainants were employees of SIP is clear from the
fact that SIP paid their salary. When complainants charged SIP of underpayment, SIP even
interposed the defense of free board and lodging given to complainants. Furthermore, the IDs
issued to complainants bear the signature of Alejandro C. Pablo, proprietor of SIP. Likewise, the
memoranda issued to complainants regarding their absences without leave were signed by
Pablo. All these clearly show that SIP is the employer of complainants. Although GMPC engaged
the services of SIP to operate a canteen, SIP and its proprietors could not be considered as
labor-only contractors or mere agents of GMPC because they exercised the essential elements
of an employment relationship with the complainants such as hiring, payment of wages and the
power of control. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et

al., G.R. No. 192473, October 11, 2010.

Employer-employee relationship; test. The elements to determine the existence of


employment relationship are: (a) the selection and engagement of the employee; (b)
payment of wages; (c) the power of dismissal; and (d) the employers power to control
employees conduct. The most important of these elements is the employers control of

an
the
the
the

61
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. It should be remembered that the control test merely calls for
the existence of the right to control, and not necessarily the exercise thereof. Based on this
four-fold test, Manila Water emerges as the employer of respondent collectors. Respondent bill
collectors were individually hired by the contractor, but were under the direct control and
supervision of Manila Water. This control is manifested in the fact that respondent bill collectors
reported daily to the branch offices of Manila Water to remit their collections with the specified
monthly targets and comply with the collection reporting procedures prescribed by the latter.
Accordingly, respondent bill collectors are employees of petitioner Manila Water. Manila Water

Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.

Evidentiary doubts construed in favor of labor. Although it cannot be determined with certainty
whether respondent worked for the entire period from November 16 to November 30, 2005, the
consistent rule is that if doubt exists between the evidence presented by the employer and that
by the employee, the scales of justice must be tilted in favor of the latter in line with the policy
mandated by Articles 2 and 3 of the Labor Code to afford protection to labor and construe
doubts in favor of labor. In view of petitioners failure to satisfy their burden of proof,
respondent is presumed to have worked during the period in question and is, accordingly,
entitled to his salary. Therefore, the withholding of respondents salary by petitioners is contrary
to Article 116 of the Labor Code and, thus, unlawful. SHS Perforated Materials, Inc., et al. vs.

Manuel F. Diaz, G.R. No. 185814, October 13, 2010.

Illegal dismissal; full backwages and reinstatement. Under Republic Act No. 6715, employees
who are illegally dismissed are entitled to full backwages, inclusive of allowances and other
benefits or their monetary equivalent, computed from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. If reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the
finality of the decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No.

163091, October 6, 2010.

Illegal dismissal; moral and exemplary damages. Award of moral and exemplary damages for an
illegally dismissed employee is proper where the employee had been harassed and arbitrarily
terminated by the employer. Moral damages may be awarded to compensate one for injuries
such as mental anguish, besmirched reputation, wounded feelings, and social humiliation
occasioned by the employers unreasonable dismissal of the employee. The award of such
damages is based not on the Labor Code but on the Civil Code. These damages, however, are
not intended to enrich the illegally dismissed employee. Thus, the Court found it proper to
reduce the award of moral damages from P500,000 to P100,000.00 and exemplary damages
from P500,000 to P50,000.00. The reduced amounts are deemed sufficient to assuage the
sufferings experienced by Del Villar and to set an example for the public good. Coca Cola

Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Illegal dismissal; reinstatement and full backwages. Probationary employees who are unjustly
dismissed during the probationary period are entitled to reinstatement and payment of full
backwages and other benefits and privileges from the time they were dismissed up to their
actual reinstatement. Respondent is, thus, entitled to reinstatement without loss of seniority
rights and other privileges as well as to full backwages, inclusive of allowances and other
benefits or their monetary equivalent computed from the time his compensation was withheld
up to the time of actual reinstatement. SHS Perforated Materials, Inc., et al. vs. Manuel F.

Diaz, G.R. No. 185814, October 13, 2010.

62
Illegal dismissal; reinstatement and payment of backwages. Petitioners lack of just cause and
non-compliance with the procedural requisites in terminating respondents employment renders
them guilty of illegal dismissal. Consequently, under Article 279 of the Labor Code, as
amended, respondent is entitled to reinstatement to his former position without loss of seniority
rights and payment of backwages inclusive of allowances and other benefits, or their monetary
equivalent computed from the time the compensation was not paid up to the time of actual
reinstatement. St. Lukes Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No.

152166, October 20, 2010.

Illegal dismissal; separation pay in lieu of reinstatement. If reinstatement proves impracticable,


and hardly in the best interest of the parties, perhaps due to the lapse of time since the
employees dismissal, or if the employee decides not to be reinstated, respondent should be
awarded separation pay in lieu of reinstatement. In the present case, since reinstatement is no
longer feasible due to the long passage of time, petitioners are required to pay respondent his
separation pay equivalent to one (1) months pay for every year of service. Petitioners are thus
ordered to pay respondent his backwages and separation pay. The awards of separation pay
and backwages are not mutually exclusive and both may be given to respondent. St. Lukes

Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.

Job contracting; conditions. Job contracting is permissible only if the following conditions are
met: 1) the contractor carries on an independent business and undertakes the contract work on
his own 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 the work except as to the results thereof; and 2) the contractor has substantial
capital or investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of the business. Substantial capital or
investment refers to capital stocks and subscribed capitalization in the case of corporations,
tools, equipment, implements, machineries, and work premises, actually and directly used by
the contractor or subcontractor in the performance or completion of the job, work, or service
contracted out. The right to control refers to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in reaching that end. Manila Water

Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.

Jurisdiction; dismissal. Pursuant to Article 217 (a) 2 of the Labor Code, as amended, the illegal
dismissal of an officer or other employee of a private employer is properly cognizable by the
labor arbiter. However, where the complaint for illegal dismissal concerns a corporate officer,
the controversy is considered an intra-corporate dispute and falls under the jurisdiction of the
Securities and Exchange Commission (SEC). This jurisdiction of the SEC, however, was
transferred to the RTC, pursuant to RA No. 8799 which became effective on August 8, 2000.
Considering that the respondents complaint for illegal dismissal was commenced on August 10,
2000, the appropriate jurisdiction lie with the RTC should it turn out that the respondent was a
corporate, not a regular, officer of Matling. Matling Industrial and Commercial Corp., et al. vs.

Ricardo R. Coros, G.R. No. 157802, October 13, 2010.

Jurisdiction; labor dispute vs. intra-corporate dispute. Given Locsins status as a corporate
officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the
termination of his relationship with Nissan. In a number of cases it has been held that a
corporate officers dismissal is always a corporate act, or an intra-corporate controversy so that
the RTC should exercise jurisdiction. Locsin was undeniably Chairman and President, and was
elected to these positions by the Nissan board pursuant to its By-laws. As such, he was a

63
corporate officer, not an employee. Even as Executive Vice-President/Treasurer, Locsin already
acted as a corporate officer because the position of Executive Vice-President/Treasurer is
provided for in Nissans By-Laws. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis

Banson, G.R. No. 185567, October 20, 2010.

Labor-only contracting; elements. The Labor Code expressly prohibits labor-only contracting
which 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. Using the
above criteria, it is clear that FCCSI is a labor-only contractor while the principal Manila Water is
the real employer. FCCSI does not have substantial capital or investment to qualify as an
independent contractor as shown by the fact that although it has an authorized capital stock of
P400,000.00, only P100,000.00 of which is actually paid-up. Also, it was Manila Water that
provided the equipment and service vehicles needed in the performance of the contracted
service. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4,

2010.

Loss of confidence; distinction between managerial personnel and rank and employees . As a
general rule, employers are allowed wider latitude of discretion in terminating the employment
of managerial personnel or those who, while not of similar rank, perform functions which by
their nature require the employers full trust and confidence. This must be distinguished from
the case of ordinary rank and file employees, whose termination on the basis of these same
grounds requires a higher proof of involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice. Leandro M. Alcantara vs. The

Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.

Motion to dismiss; appeal. Petitioner Locsins submission that the NCLPI improperly elevated the
Labor Arbiters denial of the Motion to Dismiss to the CA is correct. A denial of a motion to
dismiss is an interlocutory order and hence, cannot be appealed until a final judgment on the
merits of the case is rendered. As a general rule, an aggrieved partys proper recourse to the
denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss
such as lack of jurisdiction in the present case before the labor arbiter, and actively participate
in the proceedings. Thereafter, the labor arbiters decision can be appealed to the NLRC, not to
the CA. This NLRC rule is similar to the general rule observed in civil procedure. Under the
Rules of Court, the only other recourse of the aggrieved party is to file an appropriate special
civil action under Rule 65 but only when there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law. In the labor law setting, a plain, speedy and adequate
remedy in the form of the corrective power of the NLRC is still open to the aggrieved party
when a labor arbiter denies a motion to dismiss. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc.

and Luis Banson,G.R. No. 185567, October 20, 2010.

Petition; failure to attach documents. Failure to attach all pleadings and documents, by itself, is
not a sufficient ground to dismiss a petition. The courts may liberally construe procedural rules
in order to meet and advance the cause of substantial justice. Procedural lapses will be
overlooked when they do not involve public policy, when they arose from an honest mistake or
unforeseen accident, and when they have not prejudiced the adverse party or deprived the
court of its authority. These conditions are present in the instant case. Furthermore, after

64
petitioners receipt of the Court of Appeals Resolution dismissing his petition for failure to attach
documents, he filed a Motion for Reconsideration along with the documents deemed by the
Court of Appeals as lacking in his original petition. Such subsequent submission should be
deemed substantial compliance as supported by jurisprudence. In these cases, the reasons
behind the failure of the petitioners to comply with the required attachments were no longer
scrutinized. Clearly, the Court of Appeals erred in dismissing petitioners special civil action for
certiorari despite subsequent substantial compliance with the rules on procedure. Leandro M.

Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20,
2010.
Private recruitment agencies; solidary liability. Republic Act No. 8042 provides for the joint and
solidary liability of private recruitment agencies with their foreign principals in any and all
money claims against them. Such provision is automatically incorporated by law in the contract
for overseas employment and is a condition precedent for its approval. This is to afford the
OFWs immediate and sufficient payment of what is due them. Moreover, such obligation is not
coterminous with the agreement between the local agent and its foreign principal so that if
either or both of the parties decide to end the agreement, the responsibilities of such parties
towards the contracted employees under the agreement do not at all end, but the same extends
up to and until the expiration of the employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement. Thus, to allow petitioners to simply
invoke the immunity from suit of its foreign principal or to wait for the judicial determination of
the foreign principals liability before petitioner can be held liable renders the law on joint and
solidary liability inutile.ATCI Overseas Corporation, et al. vs. Ma. Josefa Echin, G.R. No. 178551.

October 11, 2010

Redundancy. Redundancy is one of the authorized causes for the dismissal of an employee
under Article 283 of the Labor Code. Redundancy, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of the enterprise. Such
superfluity may be due to overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise. The determination of redundancy is an exercise of business judgment of the
employer the soundness of which 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. Thus, a company must not merely declare that it has become
overmanned, it must also produce adequate proof of such redundancy. Coca-Cola failed to
overcome this burden in the instant case. Instead, it offered proof of Del Villars poor
performance which is irrelevant in relation to the issue on redundancy. Coca Cola Bottlers

Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.

Reinstatement; doctrine of strained relations. Under the doctrine of strained relations, the
payment of separation pay is considered an acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. Payment liberates the employee from what could
be a highly oppressive work environment, and at the same time releases the employer from the
obligation of keeping in its employ a worker it no longer trusts. In the instant case,
respondents reinstatement is no longer feasible as antagonism has caused a severe strain in his
working relationship with petitioners. Therefore, a more equitable disposition would be an
award of separation pay equivalent to at least one month pay, in addition to his full backwages,
allowances and other benefits. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No.

185814, October 13, 2010.

65
Release and quitclaim; validity. Quitclaims executed by the employees are commonly frowned
upon as contrary to public policy. Thus, for quitclaims to be valid the following requisites must
be complied with: (a) that there was no fraud or deceit on the part of any of the parties; (b)
that the consideration of the quitclaim is credible and reasonable; and (c) that the contract is
not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third
person with a right recognized by law. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No.

161934, October 6, 2010

Retirement; compulsory. Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the
age for compulsory retirement at 65 years, while the minimum age for optional retirement is set
at 60 years. An employer is, however, free to impose a retirement age earlier than the
foregoing mandates provided that the prerogative is exercised pursuant to a mutually instituted
early retirement plan. In the present case, not even an iota of voluntary acquiescence to
UNIPROMs early retirement age option is attributable to petitioner. UNIPROMs Employees
Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on them. Petitioner
was forced to participate in the plan, and the only way she could have rejected the same was to
resign or lose her job. Such passive acquiescence on the part of employees cannot equate to
voluntary acceptance which must be explicit, voluntary, free, and uncompelled. Having
terminated petitioner merely on the basis of a provision in the retirement plan which was not
freely assented to by her, UNIPROM is guilty of illegal dismissal. Lourdes A. Cercado vs.

Uniprom, Inc., G.R. No. 188154. October 13, 2010.

Rule on appeal from denial of motion to dismiss; exception. As a general rule, a Labor Arbiters
denial of the Motion to Dismiss on the ground of lack of jurisdiction is appealable to the NLRC
and not to the CA by way of Rule 65. However, we take exception to this general rule in the
present case because a strict implementation of these rules would cause substantial injustice to
NCLPI. After all, the parties have sufficiently ventilated their positions on the disputed
employer-employee relationship and have, in fact, submitted the matter for the CAs
consideration. Moreover, the CA correctly ruled that Locsin was a corporate officer, not an
employee and therefore jurisdiction lies with the RTC and not the Labor Arbiter. Arsenio Z.

Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.

Seaman as a contractual employee; disability claims. A seaman is a contractual and not a


regular employee. Thus, in claims of seamen for compensation and disability benefits, the Court
cannot just disregard the provisions of the POEA Standard Employment Contract (POEA SEC).
In order to claim disability benefits under the POEA SEC, it is the company-designated
physician who must proclaim that the seaman suffered a permanent disability, due to either
injury or illness, during the term of the latters employment. In this case, the findings of
respondents designated physician that petitioner has been suffering from brief psychotic
disorder and that it is not work-related must be respected. While it is true that labor contracts
are impressed with public interest and the provisions of the POEA SEC must be construed
logically and liberally in favor of Filipino seamen in the pursuit of their employment on board
ocean-going vessels, the rule is that justice is, in every case, only for the deserving; it is to be
dispensed with in the light of established facts, the applicable law, and existing
jurisprudence. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline

SDN BHD, G.R. No. 187032, October 18, 2010

Separation pay; equity. In exceptional cases, this Court has granted separation pay to a legally
dismissed employee as an act of social justice or based on equity. In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the
moral character of the employee or would involve moral turpitude. There should be no question

66
that where it comes to such valid but not iniquitous causes as failure to comply with work
standards, the grant of separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the company. Philippine

Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294,
October 20, 2010.

Termination; loss of confidence. Loss of confidence as a just cause for termination of


employment applies when the employee concerned holds a position of trust and confidence.
However, in order to constitute a just cause for dismissal, the act complained of must be workrelated such as would show the employee concerned to be unfit to continue working for the
employer. Petitioner, who, as Branch Manager of the respondent bank undoubtedly held a
position of trust and confidence, admitted that he personally processed the two Certificates of
Time Deposit (CTDs) at issue, despite his knowledge that they were unfunded. By doing so, he
exposed his employer to great risk. Moreover, by issuing those CTDs, he was in effect certifying
the existence of time deposits in his branch that were actually fictitious. Thus, it can be said
that his obvious laxity or negligence in the issuance of the said CTDs was even tainted with
dishonesty. Respondent bank was thus justified in terminating petitioners employment on the
ground of loss of trust and confidence. Leandro M. Alcantara vs. The Philippine Commercial and

International Bank,G.R. No. 151349, October 20, 2010.

Termination; procedural due process. Notice and hearing constitute the essential elements of
due process in the dismissal of employees. The employer must furnish the employee with two
written notices before termination of employment can be legally effected. With regard to the
requirement of a hearing, the essence of due process lies simply in an opportunity to be heard;
an actual trial-type hearing is not indispensable. In this case, respondent acted in accordance
with procedural due process when it gave petitioner considerable leeway with regard to the
submission of his written explanation by allowing multiple extensions of time to submit the
same and by furnishing him the documents used in respondents investigation. Even assuming
that petitioner was not fully heard during the employers investigation, it was his fault because
of his misguided insistence on having a trial-type hearing. Leandro M. Alcantara vs. The

Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.

Termination; solidary liability of corporate directors and officers. Corporate directors and officers
are only solidarily liable with the corporation for termination of employment of corporate
employees if such is effected with malice or in bad faith. Bad faith does not connote bad
judgment or negligence; it imports dishonest purpose or some moral obliquity and conscious
doing of wrong; it means breach of known duty through some motive or interest or ill will; it
partakes of the nature of fraud. To sustain such a finding, there should be evidence on record
that an officer or director acted maliciously or in bad faith in terminating the employee. In the
instant case, petitioners withheld respondents salary in the sincere belief that respondent did
not work for the period in question. Thus, although they unlawfully withheld respondents
salary, it cannot be concluded that such was made in bad faith. Accordingly, corporate officers,
Hartmannshenn and Schumacher, cannot be held personally liable for the corporate obligations
of SHS. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13,

2010.

Wages; deduction by employer. The free board and lodging SIP furnished the employees cannot
operate as a set-off for the underpayment of their wages. It was held in Mabeza v. National
Labor Relations Commission that the employer cannot simply deduct from the employees
wages the value of the board and lodging without satisfying the following requirements: (1)
proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in

67
writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable
value of the facilities charged. It is clear from the records that SIP failed to comply with these
requirements. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et

al., G.R. No. 192473, October 11, 2010.

Wages, withholding. Management prerogative does not include the right to temporarily withhold
wages without the consent of the employee. Such an interpretation would be contrary to Article
116 of the Labor Code, which provides that it shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages of a worker or induce him to give up any
part of his wages by force, stealth, intimidation, threat or by any other means without the
workers consent. Withholding of wages is allowed only in the form of wage deductions under
the circumstances provided in Article 113 of the Labor Code such as: (a) In cases where the
worker is insured with his consent by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the insurance; (b) For union dues, in
cases where the right of the worker or his union to check-off has been recognized by the
employer or authorized in writing by the individual worker concerned; and (c) In cases where
the employer is authorized by law or regulations issued by the Secretary of Labor. In the
present case, the withholding of complainants wages does not fall under the exceptions
provided in Article 113 and is thus unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F.

Diaz, G.R. No. 185814, October 13, 2010.

Work-related illness; substantial evidence. Working conditions cannot be accepted to have


caused or at least increased the risk of contracting the disease in this case, brief psychotic
disorder- in the absence of substantial evidence. The evidence must be real and substantial, and
not merely apparent. In sum, petitioner failed to establish by substantial evidence that his brief
psychotic disorder was caused by the nature of his work as oiler of the company-owned vessel.
In fact, he failed to elaborate on the nature of his job as oiler of respondent company. The
Court, therefore, has difficulty in finding any link between his position as oiler and his illness.
Petitioner points out that his brief psychotic disorder which was caused by a family problem is
work-related simply because had it been a land-based employment, petitioner would have easily
gone home and attended to the needs of his family. This is not the work-related instance
contemplated by the provisions of the employment contract in order to be entitled to the
benefits. Otherwise, every seaman would automatically be entitled to compensation because the
nature of his work is not land-based. Edgardo M. Panganiban vs. Tara Trading Ship

Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010.

Writ of habeas data; labor disputes. Respondent questions her transfer and, through the
extraordinary remedy of habeas data, seeks the disclosure of the reasons behind it. However,
since her real objective is to be spared from complying with MERALCOs Memorandum directing
her reassignment, respondent should instead lodge her complaint with the NLRC and the Labor
Arbiters which have jurisdiction over such concerns. The writ of habeas data is a remedy
available only to a person whose right to privacy in life, liberty or security is violated or
threatened by an unlawful act or omission of a public official or employee or of a private
individual or entity engaged in the gathering, collecting or storing of data or information
regarding the person, family, home and correspondence of the aggrieved party. Petitioners
refusal to disclose the contents of reports which form the basis of respondents transfer does
not amount to a violation of her right to privacy. Manila Electric Company, Alexander S. Deyto
and Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. 184769, October 5, 2010.

68
Appeal; determination of date of filing. Under Section 3, Rule 13 of the Rules of Court, where
the filing of pleadings, appearances, motions, notices, orders, judgments, and all other papers
with the court/tribunal is made by registered mail, the date of mailing, as shown by the post
office stamp on the envelope or the registry receipt, shall be considered as the date of filing.
Thus, the date of filing is determinable from two sources: from the post office stamp on the
envelope or from the registry receipt, either of which may suffice to prove the timeliness of the
filing of the pleadings. If the date stamped on one is earlier than the other, the former may be
accepted as the date of filing. In this case, to prove that it mailed the notice of appeal and
appeal memorandum on October 27, 1997, instead of October 28, 1997, as shown by the
stamped date on the envelope, petitioner presented Registry Receipt No. 34581 bearing the
earlier date.Government Service Insurance System vs. National Labor Relations Commission

(NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.

Appeal; filed out of time; exceptional cases. An appeal must be perfected within the statutory or
reglementary period. This is not only mandatory, but also jurisdictional. Failure to perfect the
appeal on time renders the assailed decision final and executory and deprives the appellate
court or body of the legal authority to alter the final judgment, much less entertain the appeal.
However, in exceptional cases, a belated appeal may be given due course if greater injustice will
be visited upon the party should the appeal be denied. This is to serve the greater principles of
substantial justice and equity. Technical rules are not binding in labor cases and are not to be
applied strictly if the result would be detrimental to the working man. In the instant case, even
if the appeal was filed one day late, the same should have been entertained by the NLRC.
Government Service Insurance System vs. National Labor Relations Commission (NLRC),

Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.

Compensable illness; work-relatedness. Granting arguendo that petitioners illness was not preexisting, he still had to show that his illness not only occurred during the term of his contract
but also that it resulted from a work-related injury or illness, or at the very least aggravated by
the conditions of the work for which he was contracted for. Petitioner failed to discharge this
burden, however. That the exact and definite cause of petitioners illness is unknown cannot be
used to justify grant of disability benefits, absent proof that there is any reasonable connection
between work actually performed by petitioner and his illness. Jerry M. Francisco, vs. Bahia

Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No.
190545, November 22, 2010.
Dismissal; illegal strike; distinction between union officers and mere members. The liabilities of
individuals who participate in an illegal strike must be determined under Article 264 (a) of the
Labor Code which makes a distinction between union officers and mere members. The law
grants the employer the option of declaring a union officer who knowingly participated in an
illegal strike as having lost his employment. However, a worker merely participating in an illegal
strike may not be terminated from employment if he does not commit illegal acts during a
strike. Hence, with respect to respondents who are union officers, their termination by
petitioners is valid. Being fully aware that the proceedings before the Secretary of Labor were
still pending as in fact they filed a motion for reconsideration, they cannot invoke good faith as
a defense. For the rest of the individual respondents who are union members, they cannot be
terminated for mere participation in the illegal strike. Solid Bank Corp. Ernesto U. Gamier, et al.

and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et
al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Dismissal; misconduct; substantial evidence. The general rule is that where the findings of the
administrative body are amply supported by substantial evidence, such findings are accorded

69
not only respect but also finality, and are binding on the Court. The standard of substantial
evidence is satisfied when there is reasonable ground to believe that a person is responsible for
the misconduct complained of, even if such evidence might not be overwhelming or even
preponderant. In the present case, the testimonies of the witnesses, the statements during the
preliminary investigation, and the findings of the PNP Crime Lab on its examination of the
signatures, amounted to substantial evidence that adequately supported the conclusion that
petitioner Nacu was guilty of the acts complained of. Nacu was rightfully found guilty of grave
misconduct, dishonesty, and conduct prejudicial to the best interest of the service, and
penalized with dismissal. Irene K. Nacu, Substituted By Benjamin M. Nacu, Ervin K. Nacu, and

Nejie N. De Sagun vs. Civil Service Commission and Philippine Economic Zone Authority, G.R.
No. 187752, November 23, 2010.
Employer-employee relationship. Generally, in a business establishment, IDs are issued to
identify the holder as a bona fide employee of the issuing entity. While petitioner Teng alleged
that it was the maestros who hired the respondent workers, it was his company that issued to
the respondent workers IDs bearing their names as employees and Tengs signature as the
employer. 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. More importantly, the element
of control which we have ruled in a number of cases to be a strong indicator of the existence
of an employer-employee relationship 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. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.
Forum shopping; elements. By forum shopping, a party initiates two or more actions in separate
tribunals, grounded on the same cause, hoping that one or the other tribunal would favorably
dispose of the matter. The elements of forum shopping are: (1) identity of parties, or at least
such parties as would represent the same interest in both actions; (2) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (3) identity of the two
preceding particulars such that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action under consideration. In the
instant case, petitioner CABEU-NFL merely raised the fact of the pendency of two cases without
demonstrating any similarity in the causes of action between the said cases and the present
case. In the absence of such evidence to show that the issues involved in these cases are the
same, the Court cannot give credence to petitioners claim of forum shopping. Central Azucarera

De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central
Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605,
November 17, 2010.

Illegal strike. Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken
despite the issuance by the Secretary of Labor of an assumption order and/or certification is
illegal. So is a declaration of a strike during the pendency of cases involving the same grounds
for the strike. In the present case, 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. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid

Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No.
159461, November 15, 2010.
Illegal strike; proof of illegal acts. To justify termination of a union member who participated in
an illegal strike, there must be proof that he or she committed illegal acts during a strike.

70
Substantial evidence available under the attendant circumstances, which may justify the
imposition of the penalty of dismissal, may suffice. Petitioners have not adduced evidence on
such illegal acts committed by each of the individual respondents who are union members. The
dismissal of 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. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank

Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461,
November 15, 2010.
Illegal dismissal; backwages. The award of backwages is a legal consequence of a finding of
illegal dismissal. However, assuming that respondent-union members have indeed reported
back to work at the end of the concerted mass actions but were soon terminated by petitioners
who found their explanation unsatisfactory, they are not entitled to backwages in view of the
illegality of the said strike. Under the circumstances, respondents reinstatement without
backwages suffices for the appropriate relief. Solid Bank Corp. Ernesto U. Gamier, et al. and

Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R.
No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal dismissal; lack of substantive due process. The dismissal of an employee, which the
employer must validate, has a two-fold requirement: one is substantive, the other is
procedural. Not only must the dismissal be for a just or an authorized cause, as provided by
law; the rudimentary requirements of due process the opportunity to be heard and to defend
oneself must be observed as well. The employer has the burden of proving that the dismissal
was for a just cause; failure to show this, as in the present case, would necessarily mean that
the dismissal was unjustified and, therefore, illegal. The respondent workers allegation that
Teng summarily dismissed them on suspicion that they were not reporting to him the correct
volume of the fish caught in each fishing voyage was never denied by Teng. Unsubstantiated
suspicion is not a just cause to terminate ones employment under Article 282 of the Labor
Code. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. 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. Solid Bank
Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its

Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15,
2010.
Illness; when deemed pre-existing and not compensable. Petitioners illness already existed
when he commenced his fourth contract of employment with respondents, hence, not
compensable. Given that the employment of a seafarer is governed by the contract he signs
every time he is rehired and his employment is terminated when his contract expires,
petitioners illness during his previous contract with respondents is deemed pre-existing during
his subsequent contract. That petitioner was subsequently rehired by respondents despite
knowledge of his seizure attacks does not make the latter a guarantor of his health. Jerry M.
Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise
Lines, Ltd., G.R. No. 190545, November 22, 2010.
Indirect employer; solidary liability. The fact that there is no actual and direct employeremployee relationship between petitioner and respondents does not absolve the former from
liability for the latters monetary claims. When petitioner contracted DNL Securitys services,
petitioner became an indirect employer of respondent security guards, pursuant to Article 107 of

71
the Labor Code. Thus, after the contractor DNL Security failed to pay respondents the correct
wages and other monetary benefits, petitioner, as principal, became jointly and severally liable,
as provided in Articles 106 and 109 of the Labor Code. It should be understood, though, that
the solidary liability of petitioner does not preclude the application of Article 1217 of the Civil
Code on the right of reimbursement from its co-debtor. Government Service Insurance System

vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al.,G.R. No. 180045,
November 17, 2010.
Indirect employer; solidary liability; coverage. Petitioners liability as indirect employer covers
the payment of respondents salary differential and 13th month pay during the time they
worked for petitioner. Petitioners liability, however, cannot extend to the payment of separation
pay. An order to pay separation pay is invested with a punitive character, such that an indirect
employer should not be made liable without a finding that it had conspired in the illegal
dismissal of the employees. Government Service Insurance System vs. National Labor Relations

Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.

Inefficiency of employee; condonation by employer. While it is acknowledged that petitioner


Gregorios service record shows that his performance as a security guard was below par,
respondent Gulf Pacific never issued any memo citing him for the alleged repeated errors,
inefficiency, and poor performance while on duty, and instead continued to assign him to
various posts. This amounts to condonation by Gulf Pacific of whatever infractions Gregorio
may have committed. Even assuming the reasons for relieving Gregorio of his position were
true, it was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws. B ebina

G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and
Angel Quizon, G.R. No. 182086, November 24, 2010.

Jurisdiction; Secretary of Labor. It is well-settled that the Secretary of Labor, in the exercise of
his power to assume jurisdiction over a labor dispute 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. In the instant case, the fact that the award was higher than that which was
purportedly agreed upon in the MOA between management and the labor union is of no
moment because the Secretary, in resolving the CBA deadlock, is not limited to considering the
MOA as basis in computing the wage increases. He could, as he did, consider the financial
documents submitted by respondent as well as the parties bargaining history and respondents
financial outlook and improvements as stated in its website. Cirtek Employees Labor Union-

Federation of Free Workers vs. Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.

Jurisdiction; divestment. It bears noting that 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. Thus, neither should the provisions of the MOA restrict the Secretarys leeway in
deciding the matters before him. Cirtek Employees Labor Union-Federation of Free Workers vs.

Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.

Labor-only contracting. Section 5 of the DO No. 18-02, which implements Article 106 of the
Labor Code, provides that, 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 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 over the performance of the
work of the contractual employee. In the present case, Teng admitted that he solely provided

72
the capital and equipment, while the maestros supplied the workers. Also, the power of control
over the respondent workers was lodged not with the maestros but with Teng. Moreover, they
performed tasks that were necessary and desirable in Tengs fishing business. Taken together,
these incidents confirm the existence of a labor-only contracting which is prohibited in our
jurisdiction. Accordingly, a finding that the maestros are labor-only contractors is equivalent to a
finding that an employer-employee relationship exists between Teng and the respondent
workers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010
Mootness; amicable settlement as final satisfaction of judgment award. The conditional
settlement of the judgment award insofar as it operates as a final satisfaction thereof renders
the case moot and academic. In the case at bar, the settlement grants the petitioner the luxury
of having other remedies available to it such as its petition for certiorari pending before the
appellate court, and an eventual appeal to the Court. On the other hand, respondent employee
could no longer pursue other claims, including interests that may accrue during the pendency of
the case. The Labor Arbiter and the appellate court may not thus be faulted for interpreting
petitioners conditional settlement to be tantamount to an amicable settlement of the case
resulting in the mootness of the petition for certiorari. Career Philippines Ship Management,

Inc., vs. Geronimo Madjus, G.R. No. 186158, November 22, 2010.

Motion for reconsideration. As amended, Article 263 is now Article 262-A in which the word
unappealable from Article 263 has been deleted. Thus, although Art. 262-A makes the
voluntary arbitration award final and executory after ten calendar days from receipt of the copy
of the award or decision by the parties, the decision may still be reconsidered by the Voluntary
Arbitrator on the basis of a motion for reconsideration duly filed during that period. The
absence of a categorical language in Article 262-A does not preclude the filing of a motion for
reconsideration of the VAs decision within the 10-day period. Therefore, petitioners allegation
that the VAs decision had become final and executory by the time the respondent workers filed
an appeal with the CA fails. It is consequently ruled that the respondent workers seasonably
filed a motion for reconsideration of the VAs judgment, and the VA erred in denying the
motion. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.
Off-detail or Floating status. Temporary off-detail or floating status is the period of time
when security guards are in between assignments or when they are made to wait after being
relieved from a previous post. It takes place when the security agencys clients decide not to
renew their contracts with the agency. It also happens in instances where contracts for security
services stipulate that the client may request the agency for the replacement of the guards
assigned to it, such that the replaced security guard may be placed on temporary off-detail if
there are no available posts under the agencys existing contracts. It does not constitute a
dismissal, as the assignments primarily depend on the contracts entered into by the security
agencies with third parties, so long as such status does not continue beyond a reasonable time
period. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security
Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.
Off-detail or Floating status; when deemed constructive dismissal. When a floating status lasts
for more than six (6) months, the employee may be considered to have been constructively
dismissed. In the present case, of the three instances when petitioner Gregorio was temporarily
off-detailed, the last two already ripened into constructive dismissal. Although it could have
been difficult for respondent Gulf Pacific to post Gregorio given his age and his service record,
still the agency should not have allowed him to wait indefinitely for an assignment if its clients
were in truth less likely to accept him. If, indeed, Gregorio was undesirable as an employee,
Gulf Pacific could have dismissed him for cause. The unreasonable length of time that Gregorio

73
was not posted inevitably resulted in his being constructively dismissed from employment .

Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc.,
and Angel Quizon, G.R. No. 182086, November 24, 2010.
Parol evidence; application in labor cases. The appellate courts brushing aside of the
Paliwanag and the minutes of the meeting because they were not verified and notarized, thus
violating, so the appellate court reasoned, the rules on parol evidence, does not lie. Like any
other rule on evidence, parol evidence should not be strictly applied in labor cases. Cirtek

Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc., G.R. No.
190515, November 15, 2010.
Petition; service on counsel. Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of
Court, clearly provides that in a petition filed originally in the CA, the petitioner is required to
serve a copy of the petition on the adverse party before its filing. If the adverse party appears
by counsel, service shall be made on such counsel pursuant to Section 2, Rule 13. Thus, in the
instant case, petitioner CABEU-NFLs insistence that service of the copy of the CA petition should
have been made to it, rather than to its counsel, is unavailing. Central Azucarera De Bais

Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De
Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November
17, 2010.
Reinstatement; when not granted. Petitioner Gregorios position paper did not pray for
reinstatement, but only sought payment of money claims. Likewise, the strained relations
between the parties make reinstatement impracticable. What is more, even during the time of
the LAs decision, reinstatement was no longer legally feasible since Gregorio was past the age
qualification for a security guard license. Section 5[33] of R.A. 5487, enumerating the
qualifications for a security guard, provides that the person should not be less than 21 nor over
50 years of age. And as previously mentioned, as early as June 13, 2002, Gregorio was no
longer in possession of a valid license. Thus, separation pay should be paid in lieu of
reinstatement. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific

Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.

Retirement laws; liberal construction. Retirement laws are liberally construed in favor of the
retiree because their objective is to provide for the retirees sustenance and, hopefully, even
comfort, when he no longer has the capability to earn a livelihood. The liberal approach aims to
achieve the humanitarian purposes of the law in order that efficiency, security, and well-being
of government employees may be enhanced. Indeed, retirement laws are administered in favor
of the persons intended to be benefited, and all doubts are resolved in their favor. In this case,
as adverted to above, respondent was able to establish that he has a clear legal right to the
reinstatement of his retirement benefits. Government Service Insurance System vs. Fernando P.

De Leon, G.R. No. 186560, November 17, 2010.

Retirement benefit; entitlement. Respondents disqualification from receiving retirement benefits


under R.A. No. 910 does not mean that he is disqualified from receiving any retirement benefit
under any other existing retirement law. Prior to R.A. No. 8291, retiring government employees
who were not entitled to the benefits under R.A. No. 910 had the option to retire under either of
two laws: Commonwealth Act No. 186, as amended, or P.D. No. 1146. In his Comment,
respondent implicitly indicated his preference to retire under P.D. No. 1146, since this law
provides for higher benefits. Because respondent had complied with the requirements under the
said law at the time of his retirement, a fact which GSIS does not dispute, he is entitled to
receive the benefits provided under the same law. Government Service Insurance System vs.

Fernando P. De Leon, G.R. No. 186560, November 17, 2010.

74
Strike; definition. Article 212 of the Labor Code, as amended, defines strike as 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 and 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 or not
the disputants stand in the proximate relation of employers and employees. The term strike
shall also include slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage
plant equipment and facilities and similar activities. In the instant case, about 712 employees
absented themselves from work in a concerted fashion for three continuous days. Considering
that these mass actions stemmed from a bargaining deadlock and an order of assumption of
jurisdiction had already been issued by the Secretary of Labor to avert an impending strike, all
the elements of strike are evident in the Union-instigated mass actions. Solid Bank Corp.

Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed
Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.

Unfair labor practice. For a charge of unfair labor practice to prosper, it must be shown that
respondent CABs suspension of negotiation with CABEU-NFL and its act of concluding a CBA
with CABELA, another union in the bargaining unit, were motivated by ill will, bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or
public policy However, the facts show that CAB believed that CABEU-NFL was no longer the
representative of the workers. It just wanted to foster industrial peace by bowing to the wishes
of the overwhelming majority of its rank and file workers and by negotiating and concluding in
good faith a CBA with CABELA. Such actions of CAB are nowhere tantamount to anti-unionism,
the evil sought to be punished in cases of unfair labor practices. Central Azucarera De Bais

Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De
Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November
17, 2010.
Unfair labor practice; burden of proof. Basic is the principle that good faith is presumed and he
who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of
CAB, CABEU-NFL has the burden to present substantial evidence to prove the allegation of
unfair labor practice. Apparently, CABEU-NFL refers only to the execution of the supposed CBA
between CAB and CABELA and the request to suspend the negotiations, to conclude that bad
faith attended CABs actions. The Court is of the view that CABEU-NFL, in simply relying on the
said circumstances, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith. Central Azucarera De Bais Employees Union-NFL, represented by its

President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President,
Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.
Dismissal; due process; trial-type hearing is not essential. The essence of due process is an
opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain
ones side. Records show that Aboc was duly notified through a letter asking him to explain why
his services should not be terminated. In fact, he replied to the same by submitting a written
explanation. He was likewise duly afforded ample opportunity to defend himself during a
conference conducted. Abocs contention that the conference he attended cannot substitute the
hearing mandated by the Labor Code is bereft of merit. A formal trial-type hearing is not at all
times and in all instances essential to due process. It is enough that the parties are given a fair
and reasonable opportunity to explain their respective sides of the controversy and to present
supporting evidence on which a fair decision can be based. Antonio A. Aboc vs. Metropolitan

75
Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc,G.R.
Nos. 170542-43 and G.R. No. 176460, December 13, 2010.

Dismissal; due process; trial-type hearing is not essential. In dismissal cases, the essence of due
process is a fair and reasonable opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain ones side. A formal or trial type hearing is not at all
times and in all instances essential. Neither is it necessary that the witnesses be crossexamined. In the instant case, there was a proceeding where the respondent was apprised of
the charges against him as well as of his rights. Thereafter, he was notified of the formal
charges against him and was required to explain in writing why he should not be dismissed for
serious misconduct. A formal hearing was conducted and subsequently, respondent received a
Notice of Termination informing him that after a careful evaluation, he was found liable as
charged and dismissed from the service due to gross misconduct. Clearly, respondent was
afforded ample opportunity to air his side and defend himself. Hence, there was due
process. Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No.

189366, December 8, 2010.

Dismissal; due process. Respondent harps on the fact that his dismissal was preconceived
because there was already a decision to terminate him even before he was given the show
cause memorandum. Contrary to respondents allegations, he was given more than enough
opportunity to defend himself. The audit committees conclusion to dismiss respondent from
the service was merely recommendatory. It was not conclusive upon the petitioner company.
This is precisely the reason why the petitioner still conducted further investigations. To
reiterate, respondent was properly informed of the charges and had every opportunity to rebut
the accusations and present his version. Respondent was not denied due process of law for he
was adequately heard as the very essence of due process is the opportunity to be
heard.Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos.

163293 & 163297, December 8, 2010.

Dismissal; loss of confidence; guidelines for application. The Court has set the guidelines for the
application of the doctrine of loss of confidence as follows: (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. In the case at bar, no mention was made regarding petitioners alleged loss of trust
and confidence in respondent. Neither was there any explanation nor discussion of the alleged
sensitive and delicate position of respondent requiring the utmost trust of petitioner. Because
of its subjective nature, the Court has been very scrutinizing in cases of dismissal based on loss
of trust and confidence. Thus, when the breach of trust or loss of confidence is not clearly
established by facts, as in the instant case, such dismissal on the ground of loss and confidence
cannot be countenanced. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No.

149433, December 15, 2010.

Dismissal; serious misconduct; wrongful intent required. For misconduct or improper behavior to
be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of the
employees duties; and (c) must show that the employee has become unfit to continue working
for the employer. In the present case, the alleged infractions of respondent could hardly be
considered serious misconduct. In order to constitute serious misconduct which will warrant the
dismissal of an employee, it is not sufficient that the act or conduct complained of has violated
some established rules or policies. It is equally important and required that the act or conduct

76
must have been done with wrongful intent. Such is, however, lacking in the instant case. The

Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.

Dismissal; substantial evidence. The quantum of proof required in determining the legality of an
employees dismissal is only substantial evidence. In a similar case, the Court held that the
standard of substantial evidence is met where the employer, as in this case, has reasonable
ground to believe that the employee is responsible for the misconduct and his participation in
such misconduct makes him unworthy of the trust and confidence demanded by his position. In
the present case, petitioner has sufficiently established that respondent solicited, collected and
received the P1,500.00 down payment illegally from the spouses Mueda. Taken together, the
petitioner has discharged its burden of establishing the serious misconduct committed by
respondent. Such misconduct makes him unworthy of the trust and confidence demanded by
his position. Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No.

189366, December 8, 2010.

Dismissal; substantial evidence. The burden of proof rests on the employer to show that the
dismissal was for a just cause or authorized cause. Dismissal due to serious misconduct and loss
of trust and confidence must be supported by substantial evidence which is that amount of
relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even
if other minds, equally reasonable, might conceivably opine otherwise. In the present case,
evidence clearly shows that the acts of Aboc in helping organize the credit unions and in the
operations thereof constituted serious misconduct or breach of trust and confidence. His
participation in the credit unions is highly irregular and clearly in conflict with Metrobanks
business. Aboc claimed that he was only an unwilling participant doing a ministerial job. The
investigation, however, showed otherwise. Antonio A. Aboc vs. Metropolitan Bank And Trust

Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43
and G.R. No. 176460, December 13, 2010.
Dismissal; two-notice rule. The requirements of procedural due process were complied with
when petitioner sent a memo to respondent informing him of the specific charges and giving
him opportunity to air his side. Subsequently, in a letter, respondent was informed that on the
basis of the results of the investigation conducted, his written explanation, the written
explanation of other employees as well as the audit report, the management has decided to
terminate him. The two-notice requirement, which includes a written notice of the cause of
dismissal to afford the employee ample opportunity to be heard and defend himself, and written
notice of the decision to terminate him which states the reasons therefor, was thus complied
with. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos.

163293 & 163297, December 8, 2010.

Dismissal; willful disobedience. To justify willful disobedience or insubordination as a valid


ground for termination, the employees assailed conduct must have been willful or characterized
by a wrongful or perverse attitude and 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 the case at bar, while petitioners manual of procedures does not absolutely
prohibit the negotiation or acceptance of second-endorsed checks for deposits, it expressly
disallows the acceptance of checks endorsed by corporations, societies, firms, etc. and checks
with unusual endorsements. As shown by the records, this explicit policy was transgressed by
respondent intentionally and willfully. Respondent was instructed by management to stop the
transgression but he did not stop. Respondent admittedly disobeyed not only his superiors
directives but also simple bank rules. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs.

Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

77
Dismissal; willful breach of trust. Willful breach of trust requires that the loss of confidence must
not be simulated; it should not be used as a subterfuge for causes which are illegal, improper or
unjustified; it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; it must be genuine, not a mere afterthought to justify earlier action taken in bad faith;
and, the employee involved holds a position of trust and confidence. Respondent, as bank
manager, has the duty to ensure that bank rules are strictly complied with to serve the best
interest of the bank as he holds a position of trust and confidence. Any negligence in the
exercise of his responsibilities can be sufficient ground for loss of trust and confidence. As held
in one case, the mere existence of a basis for believing that a managerial employee has
breached the trust of his employer would suffice for his dismissal. Proof beyond reasonable
doubt is not required. In the case at bar, respondents wanton violation of bank policies equates
to abuse of authority and, therefore, abuse of the trust reposed in him. Such is enough for his
dismissal from service. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A.

Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.

Illegal dismissal; reinstatement and backwages. 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. Respondent is entitled to such
award. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December

15, 2010.

Job contracting; conditions. Permissible job contracting or subcontracting refers to an


arrangement whereby a principal agrees to farm out to the contractor the performance of a
specific work, or service within a predetermined period, regardless of whether such work, or
service is to be performed within or outside the premises of the principal. Thus, the following
conditions must 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 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 assures the contractual employees entitlement to all labor and occupational safety
and health standards, free exercise of the right to self-organization, security of tenure, and
social welfare benefits. In the case at bar, BMSI is engaged in labor-only contracting for LSC.
First, petitioners worked at LSCs premises, and nowhere else. There was no evidence that BMSI
exercised control over them. Second, there is no proof that BMSI had substantial capital. The
equipment used by BMSI was merely rented from LSC. Third, petitioners performed activities
which were directly related to the main business of LSC. Lastly, BMSI had no other client except
for LSC. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo,

Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping
Corporation, G.R. No. 186091, December 15, 2010.
Jurisdiction of Supreme Court; errors of fact; exceptions. The Court has stressed that its
jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is limited to
reviewing only errors of law, not of fact, unless the findings of fact complained of are devoid of
support by the evidence on record, or the assailed judgment is based on the misapprehension
of facts. In previous rulings, the Court has declared that when there is enough basis on which a
proper evaluation of the merits can be made, it may dispense with the time-consuming
procedure in order to prevent further delays in the disposition of the case. However, in the case

78
at bar, based on the nature of the two remaining issues which involve factual issues, and given
the inadequacy of the records, pleadings, and other evidence available before the Court to
properly resolve those questions, it is constrained to refrain from passing upon them. South

Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto.
Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc,
Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
Jopson, G.R. No. 173326, December 15, 2010.
Labor-only contracting and job contracting; how determined. The character of a business, that
is, whether as labor-only contractor or as job contractor, should be determined in terms of the
criteria set by statute. In one case the Court has explained that despite the fact that the service
contracts contain stipulations which are earmarks of independent contractorship, they do not
make it legally so. The language of a contract is neither determinative nor conclusive of the
relationship between the parties. The parties cannot dictate, by a declaration in a contract, the
character of a business. Thus, in distinguishing between the prohibited labor-only contracting
and permissible job contracting, the totality of the facts and the surrounding circumstances of
the case are to be considered. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin

Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao,
vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Labor-only contracting; elements. Labor-only contracting, a prohibited act, is an arrangement


where the contractor or subcontractor merely recruits, supplies, or places workers to perform a
job, work, or service for a principal. In labor-only contracting, the following elements are
present: (a) the contractor or subcontractor does not have substantial capital or investment to
actually perform the job, work, or service under its own account and responsibility; and (b) the
employees recruited, supplied, or placed by such contractor or subcontractor perform activities
which are directly related to the main business of the principal. Emmanuel Babas, Danilo T.

Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr.,
Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation,G.R. No. 186091,
December 15, 2010.
Labor-only contracting; workers are regular employees of principal. Indubitably, BMSI can only
be classified as a labor-only contractor. Consequently, the workers that BMSI supplied to its
principal LSC became regular employees of the latter. Having gained regular status, petitioners
were entitled to security of tenure and could only be dismissed for just or authorized causes and
after they had been accorded due process. The termination of LSCs Agreement with BMSI
cannot be considered a just or an authorized cause for petitioners dismissal. Emmanuel Babas,

Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano,
Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
186091, December 15, 2010.
Payroll reinstatement; effect of reversal on appeal. Since Metrobank chose payroll reinstatement
for Aboc, he then became a reinstated regular employee. This means that he was restored to
his previous position as a regular employee without loss of seniority rights and other privileges
appurtenant thereto. His payroll reinstatement put him on equal footing with the other regular
employees insofar as entitlement to the benefits given under the Collective Bargaining
Agreement is concerned. The fact that the decision of the LA was reversed on appeal has no
controlling significance. The rule is that even if the order of reinstatement of the LA is reversed
on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until final reversal by the higher court. Antonio

79
A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust Company
vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010.

Petition for certiorari; period for filing; retroactive application of amendments. By virtue of the
latest amendment of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by
Circular No. 56-2000, the 60-day period to file a petition for certiorari should be reckoned from
the date of receipt of the notice of the denial of the motion for reconsideration or new trial, if
one was filed. Being a curative statute, Circular No. 56-2000 has been applied by Court
retroactively in a number of cases. Given the above, respondent had a fresh 60-day period
from the date she received a copy of the NLRC Resolution denying her motion for
reconsideration within which to file the petition for certiorari. Thus, the Court ruled that
respondent seasonably filed the petition within the reglementary period provided. The Coca-

Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.

Registration as independent contractor; effect of. The CA erred in considering BMSIs Certificate
of Registration as sufficient proof that it is an independent contractor. In the case of San
Miguel Corporation v. Vicente B. Semillano, et. al., the Court has held that a Certificate of
Registration issued by the Department of Labor and Employment is not conclusive evidence of
such status. The fact of registration simply prevents the legal presumption of being a mere
labor-only contractor from arising. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr.,

Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto
Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Reinstatement; immediately executory pending appeal. Under Article 223 of the Labor Code, the
decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall be immediately executory pending appeal. 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. In the case at bench, it cannot be denied that Metrobank opted to reinstate
Aboc in its payroll. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan

Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460,
December 13, 2010.
Separation pay as a measure of social justice; when awarded. In several instances the Court
has awarded separation pay as a measure of social justice. However, the matter has been
clarified in PLDT Co. v. NLRC where the Court categorically declared that separation pay shall be
allowed as a measure of social justice only in those instances where the employee is validly
dismissed for cause other than serious misconduct. In another case, the Court ruled that in
addition to serious misconduct, separation pay should not be conceded to an employee who
was dismissed based on willful disobedience. In the case at bar, it was established that the
infractions committed by the respondent constituted serious misconduct or willful disobedience
resulting to loss of trust and confidence. Clearly therefore, even based on equity and social
justice, respondent does not deserve the award of separation pay. Equitable PCI Bank (Now

Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8,
2010.
Termination; grounds. Under the requirement of substantial due process, the grounds for
termination of employment must be based on just or authorized causes. Article 282 of the
Labor Code enumerates the just causes for the termination of employment, thus: (a) Serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work; (b) Gross and habitual neglect by the employee of

80
his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative; (d) Commission of a crime or offense by the
employee against the person of his employer or any immediate member of his family or his duly
authorized representative; and (e) Other causes analogous to the foregoing. The Coca-Cola

Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.

Verification and certification; effect of failure to sign. A petition satisfies the formal requirements
only with regard to those who signed the petition, but not the co-petitioners who did not sign
nor authorize the other petitioners to sign it on their behalf. In the case at bar, only seven (7)
of the nine petitioners signed the verification and certification against forum shopping. Thus, the
other petitioners who did not sign cannot be recognized as petitioners and have no legal
standing before the Court. The petition should be dismissed outright with respect to such nonconforming petitioners. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier,

Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs.
Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Verification and certification; substantial compliance rule. The requirement of the certification
of non-forum shopping is rooted in the principle that a party-litigant shall not be allowed to
pursue simultaneous remedies in different fora. However, the Court has relaxed the rule under
justifiable circumstances, considering that, although it is obligatory, it is not jurisdictional. Not
being jurisdictional, it can be relaxed under the rule of substantial compliance. In the case at
bar, the Court holds that there has been substantial compliance on the petitioners part in
consonance with our ruling in one case that the President of a petitioner-corporation is in a
position to verify the truthfulness and correctness of the allegations in the petition. Petitioner
Benzonan clearly satisfies the aforementioned jurisprudential requirement because he is the
President of petitioner-corporation. Moreover, he is also named as co-respondent of petitionercorporation in the labor case which is the subject matter of the special civil action. South

Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto.
Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc,
Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
Jopson, G.R. No. 173326, December 15, 2010.

Verification and certification; who can sign for the company without need of board resolution. In
previous cases, the Court has held that the following can sign the verification and certification
against forum shopping without need of a board resolution: (1) the Chairperson of the Board of
Directors, (2) the President of a corporation, (3) the General Manager or Acting General
Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the
above cases do not provide a complete listing of authorized signatories, the determination of
the sufficiency of the authority was done on a case to case basis. In the foregoing cases the
authority of said corporate representatives to sign the verification or certificate is justified in
their being in a position to verify the truthfulness and correctness of the allegations in the
petition. However, the better procedure is still to append a board resolution to the complaint or
petition to obviate questions regarding the authority of the signatory of the verification and
certification.South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon.

Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde,
Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And
Edgar Jopson, G.R. No. 173326, December 15, 2010.

81
2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.2011.
Apprenticeship agreement; validity. The apprenticeship agreements did not indicate the trade or
occupation in which the apprentice would be trained; neither was the apprenticeship program
approved by the Technical Education and Skills Development Authority (TESDA). These were
defective as they were executed in violation of the law and the rules. Moreover, with the
expiration of the first agreement and the retention of the employees, the employer, to all
intents and purposes, recognized the completion of their training and their acquisition of a
regular employee status. To foist upon them the second apprenticeship agreement for a second
skill which was not even mentioned in the agreement itself, is a violation of the Labor Codes
implementing rules and is an act manifestly unfair to the employees. Atlanta Industries, Inc.

and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.

Complaint; reinstatement. Petitioners question the order to reinstate respondents to their


former positions, considering that the issue of reinstatement was never brought up before the
Court of Appeals and respondents never questioned the award of separation pay to them.
Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief
sought, but may add a general prayer for such further or other reliefs as may be deemed just
and equitable. Under this rule, a court can grant the relief warranted by the allegation and the
evidence even if it is not specifically sought by the injured party; the inclusion of a general
prayer may justify the grant of a remedy different from or in addition to the specific remedy
sought, if the facts alleged in the complaint and the evidence introduced so warrant. The prayer
in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief
not otherwise specifically prayed for. Therefore, the court may grant relief warranted by the
allegations and the proof even if no such relief is prayed for. In the instant case, aside from
their specific prayer for reinstatement, respondents, in their separate complaints, prayed for
such reliefs which are deemed just and equitable.Prince Transport, Inc. and Mr. Renato Claros

vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.

Collection of accrued wages; two-fold test. After the Labor Arbiters decision is reversed by a
higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown
that the delay in enforcing the reinstatement pending appeal was without fault on the part of
the employer. The two-fold test in determining whether an employee is barred from recovering
his accrued wages requires that (1) there must be actual delay or that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not
be due to the employers unjustified act or omission. If the delay is due to the employers
unjustified refusal, the employer may still be required to pay the salaries notwithstanding the
reversal of the Labor Arbiters Decision. Social Security System vs. Efren Capada, et al., G.R. No.

168501, January 31, 2011.

Disciplinary measures; management prerogative. The policy of suspending drivers pending


payment of arrears in their boundary obligations is reasonable. It is acknowledged that an
employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline on his employees and to impose
penalties, including dismissal, if warranted, upon erring employees. This is a management
prerogative. Indeed, the manner in which management conducts its own affairs to achieve its
purpose is within the managements discretion. The only limitation on the exercise of
management prerogative is that the policies, rules, and regulations on work-related activities of
the employees must always be fair and reasonable, and the corresponding penalties, when

82
prescribed, commensurate to the offense involved and to the degree of the infraction. Primo E.

Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.

Dismissal; constructive dismissal. Respondent was suspended for one year after being charged
with and found liable for AWOL. After serving her suspension, respondent was allowed to return
to work. Respondent cannot be considered to have been constructively dismissed by the
petitioner during her period of suspension. 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, there was no cessation of employment relations
between the parties. It is unrefuted that respondent promptly resumed teaching at the
university right after the expiration of the suspension period. In other words, respondent never
quit. Hence, she cannot claim to have been left with no choice but to quit, a crucial element in a
finding of constructive dismissal. The University of the Immaculate Conception, et al. vs. NLRC,

et al., G.R. No. 181146, January 26, 2011.

Dismissal; due process. Respondent employee reported to the petitioner employer the loss of
cash which she placed inside the company locker. Immediately, petitioner ordered that she be
strip-searched by the company guards. However, the search on her and her personal belongings
yielded nothing. The petitioner also reported the matter to the police and requested the
Prosecutors Office for an inquest. Respondent was constrained to spend two weeks in jail for
failure to immediately post bail. The Court ruled that petitioners failed to accord respondent
substantive and procedural due process. Article 277(b) of the Labor Code mandates that subject
to the constitutional right of workers to security of tenure and their right to be protected against
dismissal, except for just and authorized cause and without prejudice to the requirement of
notice under Article 283 of the same Code, 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. The
due process requirements under the Labor Code are mandatory and may not be supplanted by
police investigation or court proceedings. The criminal aspect of the case is considered
independent of the administrative aspect. Thus, employers should not rely solely on the findings
of the Prosecutors Office. They are mandated to conduct their own separate investigation, and
to accord the employee every opportunity to defend himself. Robinsons Galleria/Robinsons

Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19,
2011.
Dismissal; neglect of duty. Neglect of duty, to be a ground for dismissal, must be both gross
and habitual. Gross negligence connotes want of care in the performance of ones duties.
Habitual neglect implies repeated failure to perform ones duties for a period of time, depending
upon the circumstances. A single or isolated act of negligence does not constitute a just cause
for the dismissal of the employee. Hospital Management Services Medical Center Manila vs.

Hospital Management Services, Inc. Medical Center Manila Employees Association-AFW., G.R.
No. 176287, January 31, 2011.

Dismissal; negligence in patient management. Negligence is defined as the failure to exercise


the standard of care that a reasonably prudent person would have exercised in a similar
situation. The Court emphasizes that the nature of the business of a hospital requires a higher
degree of caution and exacting standard of diligence in patient management and health care as

83
what is involved are lives of patients who seek urgent medical assistance. An act or omission
that falls short of the required degree of care and diligence amounts to serious misconduct
which constitutes a sufficient ground for dismissal. Hospital Management Services Medical

Center Manila vs. Hospital Management Services, Inc. Medical Center Manila Employees
Association-AFW., G.R. No. 176287, January 31, 2011.

Employee benefits; compensable illness. The degree of proof required under P.D. 626 is merely
substantial evidence, which means such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion. Accordingly, the claimant must show, at least by
substantial evidence that the development of the disease was brought about largely by the
conditions present in the nature of the job. What the law requires is a reasonable work
connection, not a direct causal relation. Alexander B. Gatus vs. Social Security System, G.R. No.

174725, January 26, 2011.

Employer-employee relationship; jeepney driver. It is already settled that the relationship


between jeepneyowners/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. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.
Employer-employee relationship; primary element. 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.
Petitioner asserts that his employer Manulifes control over him was demonstrated (1) when it
set the objectives and sales targets regarding production, recruitment and training programs;
and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of
Conduct to govern his activities. However, the court ruled that all these appear to speak of
control by the insurance company over its agents. 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. They are, however,
controls aimed only at specific results in undertaking an insurance agency, and are, in fact,
parameters set by law in defining an insurance agency and the attendant duties and
responsibilities an insurance agent must observe and undertake. 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. 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. Petitioner is an insurance agent not an employee. Gregorio V. Tongko vs.

The Manufacturers Life Insurance Co. (Phils.), Inc. and Renato A. Vergel de Dios, G.R. No.
167622, January 25, 2011.
Employer-employee relationship; probationary employment. 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 engagement. Thus, the services of an employee
who has been engaged on probationary basis may be terminated for any of the following: (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. Robinsons

84
Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No.
177937, January 19, 2011.

Employer-employee relationship; regular employment. The respondent employees were already


rendering service to the company when they were made to undergo apprenticeship. The
respondent were regular employees because they occupied positions such as machine operator,
scaleman and extruder operator tasks that are usually necessary and desirable in petitioner
employers usual business or trade as manufacturer of plastic building materials. These tasks
and their nature characterized the respondents 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. Atlanta

Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January
26, 2011.

Illegal dismissal; strained relations. Article 279 of the Labor Code provides that an employee
who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges, to full backwages, inclusive of allowances, and to other benefits or
their monetary equivalent computed from the time his compensation was withheld from him up
to the time of his actual reinstatement. However, due to the strained relations of the parties,
the payment of separation pay has been considered an acceptable alternative to reinstatement,
when the latter option is no longer desirable or viable. On the one hand, such payment
liberates the employee from what could be a highly oppressive work environment. On the
other, the payment releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust. Thus, as 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. Robinsons Galleria/Robinsons

Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19,
2011.
Illegal recruitment; elements. Recruitment and placement refers to the act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit
or not. When a person or entity, in any manner, offers or promises for a fee employment to two
or more persons, that person or entity shall be deemed engaged in recruitment and placement.
Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by
non-licensees or non-holders of authority are deemed illegal and punishable by law. And when
the illegal recruitment is committed against three or more persons, individually or as a group,
then it is deemed committed in large scale and carries with it stiffer penalties as the same is
deemed a form of economic sabotage. But to prove illegal recruitment, it must be shown that
the accused, without being duly authorized by law, gave complainants the distinct impression
that he had the power or ability to send them abroad for work, such that the latter were
convinced to part with their money in order to be employed. It is important that there must at
least be a promise or offer of an employment from the person posing as a recruiter, whether
locally or abroad. People of the Philippines vs. Teresita Tessie Laogo, G.R. No. 176264,

January 10, 2011.

Illegal dismissal; execution of waiver and quitclaim. An employees execution of a final


settlement and receipt of amounts agreed upon does not foreclose his right to pursue a claim
for illegal dismissal. Thus, an employee illegally retrenched is entitled to reinstatement without
loss of seniority rights and privileges, as well as to payment of full backwages from the time of

85
her separation until actual reinstatement, less the amount which he/she received as
retrenchment pay. Bernadeth Londonio and Joan Corcoro vs. Bio Research, Inc. and Wilson Y.

Ang, G.R. No. 191459, January 17, 2011.

Jurisdiction; labor arbiter. Petitioner was removed from his position as a manager through a
Board Resolution. Petitioner filed a complaint for illegal dismissal before the labor arbiter.
Respondents claimed that petitioner is both a stockholder and a corporate officer of respondent
corporation, hence, his action against respondents is an intra-corporate controversy over which
the Labor Arbiter has no jurisdiction. The Court ruled that this is not an intra-corporate
controversy but a labor case cognizable by the labor arbiter. To determine whether a case
involves an intra-corporate controversy that is to be heard and decided by the branches of the
RTC specifically designated by the Court to try and decide such cases, two tests must be
applied: (a) the status or relationship test, and (2) the nature of the controversy test. The first
test requires that the controversy arise out of intra-corporate or partnership relations among the
stockholders, members or associates of the corporation, partnership or association, between
any or all of them and the corporation, partnership or association of which they are
stockholders, members or associates; between such corporation, partnership, or association and
the public or between such corporation, partnership, or association and the State insofar as it
concerns its franchise, license or permit to operate. The second test requires that the dispute
among the parties be intrinsically connected with the regulation of the corporation. The Court
in this case held that petitioner is not a corporate officer because he was not validly appointed
by the Board, thus, failing the relationship test, and that this is a case of employment
termination which is a labor controversy and not an intra-corporate dispute, thus failing the
nature of the controversy test. Renato Real vs. Sangu Philippines, Inc. et al., G.R. No. 168757.

January 19, 2011.

Jurisdiction; labor dispute. Article 217 of the Labor Code states that unfair labor practices and
termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an
exception, under Article 262 the Voluntary Arbitrator, upon agreement of the parties, shall also
hear and decide all other labor disputes including unfair labor practices and bargaining
deadlocks. For the exception to apply, there must be agreement between the parties clearly
conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a
collective bargaining agreement. However, in the absence of a collective bargaining agreement,
it is enough that there is evidence on record showing the parties have agreed to resort to
voluntary arbitration. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R.

No. 181146, January 26, 2011.

NLRC; factual findings. Factual findings of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are generally accorded not only respect but even
finality by the courts when supported by substantial evidence, i.e., the amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. But these
findings are not infallible. When there is a showing that they were arrived at arbitrarily or in
disregard of the evidence on record, they may be examined by the courts. The CA can grant
the petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a
factual finding not supported by substantial evidence. Thus, it is within the jurisdiction of the CA
to review the findings of the NLRC. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado

Garcia, et al., G.R. No. 167291, January 12, 2011.

Petition; certificate of non-forum shopping. While the general rule is that the certificate of nonforum shopping must be signed by all the plaintiffs in a case and the signature of only one of
them is insufficient, the Court has stressed that the rules on forum shopping, which were

86
designed to promote and facilitate the orderly administration of justice, should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate
objective. Strict compliance with the provision regarding the certificate of non-forum shopping
underscores its mandatory nature in that the certification cannot be altogether dispensed with
or its requirements completely disregarded. It does not, however, prohibit substantial
compliance therewith under justifiable circumstances, considering especially that although it is
obligatory, it is not jurisdictional. In a number of cases, the Court has consistently held that
when all the petitioners share a common interest and invoke a common cause of action or
defense, the signature of only one of them in the certification against forum shopping
substantially complies with the rules. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado

Garcia, et al., G.R. No. 167291, January 12, 2011.

Petition; failure to attach documents. The respondent workers sought that the petition be
dismissed outright for the petitioners failure to attach to the petition a copy of the Production
and Work Schedule and a copy of the compromise agreement allegedly entered into material
portions of the record that should accompany and support the petition, pursuant to Section 4,
Rule 45 of the Rules of Court. InMariners Polytechnic Colleges Foundation, Inc. v. Arturo J.
Garchitorena the Court held that the phrase of the pleadings and other material portions of the
record xxx as would support the allegation of the petition clearly contemplates the exercise of
discretion on the part of the petitioner in the selection of documents that are deemed to be
relevant to the petition. The crucial issue to consider then is whether or not the documents
accompanying the petition sufficiently supported the allegations therein. The failure to attach
copy of the subject documents is not fatal as the challenged CA decision clearly summarized the
labor tribunals rulings. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et

al., G.R. No. 187320, January 26, 2011.

Petition; verification. The verification requirement is deemed substantially complied with when
some of the parties who undoubtedly have sufficient knowledge and belief to swear to the truth
of the allegations in the petition had signed the same. Such verification is deemed a sufficient
assurance that the matters alleged in the petition have been made in good faith or are true and
correct, and not merely speculative. In any case, the settled rule is that a pleading which is
required by the Rules of Court to be verified, may be given due course even without a
verification if the circumstances warrant the suspension of the rules in the interest of justice.
Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does
not of itself justify a court in refusing to allow and act on a case. Hence, the failure of some of
the respondents to sign the verification attached to their Memorandum of Appeal filed with the
NLRC is not fatal to their cause of action. Prince Transport, Inc. and Mr. Renato Claros vs.

Diosdado Garcia, et al.,G.R. No. 167291, January 12, 2011.

Regional director; review of decision. Petitioner appealed an adverse decision to the BLR. BLR
Director inhibited himself from the case because he had been a former counsel of respondent.
In view of the inhibition, DOLE Secretary took cognizance of the appeal. Jurisdiction to review
the decision of the Regional Director lies with the BLR. Once jurisdiction is acquired by the
court, it remains with it until the full termination of the case. Thus, jurisdiction remained with
the BLR despite the BLR Directors inhibition. When the DOLE Secretary resolved the appeal,
she merely stepped into the shoes of the BLR Director and performed a function that the latter
could not himself perform. She did so pursuant to her power of supervision and control over the
BLR. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National

Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila
Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.

87
Union registration; cancellation. The amendment introduced by RA 9481 sought to strengthen
the workers right to self-organization and enhance the Philippines compliance with its
international obligations as embodied in the International Labour Organization (ILO) Convention
No. 87, pertaining to the non-dissolution of workers organizations by administrative authority.
ILO Convention No. 87 provides that workers and employers organizations shall not be liable
to be dissolved or suspended by administrative authority. The ILO has expressed the opinion
that the cancellation of union registration by the registrar of labor unions, which in our case is
the BLR, is tantamount to dissolution of the organization by administrative authority when such
measure would give rise to the loss of legal personality of the union or loss of advantages
necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has
allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the right
to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a
union, and cancellation of registration for that matter, involve serious consequences for
occupational representation. It has, therefore, deemed it preferable if such actions were to be
taken only as a last resort and after exhausting other possibilities with less serious effects on
the organization. It is undisputed that appellee failed to submit its annual financial reports and
list of individual members in accordance with Article 239 of the Labor Code. However, the
existence of this ground should not necessarily lead to the cancellation of union registration. At
any rate, the Court in this case took note of the fact that on 19 May 2000, appellee had
submitted its financial statement for the years 1996-1999. With this submission, appellee has
substantially complied with its duty to submit its financial report for the said period. The

Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of
Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors
Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.

Wages; payment pending reinstatement. Employees are entitled to their accrued salaries during
the period between the Labor Arbiters order of reinstatement pending appeal and the
resolution of the National Labor Relations Commission (NLRC) overturning that of the Labor
Arbiter. Otherwise stated, even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, the employer is still obliged to reinstate and pay the wages of the employee during the
period of appeal until reversal by a higher court or tribunal. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period. Social Security System vs.

Efren Capada, et al., G.R. No. 168501, January 31, 2011.

Certiorari; effect of receipt of award. The prevailing partys receipt of the full amount of the
judgment award pursuant to a writ of execution issued by the labor arbiter does not close or
terminate the case if such receipt is qualified as without prejudice to the outcome of the petition
for certiorari pending with the Court of Appeals. Timoteo H. Sarona vs. National Labor Relations

Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.

Constructive dismissal; change in position. Constructive dismissal exists where there is cessation
of work because continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank or a diminution in pay and other benefits. Aptly called a
dismissal in disguise of an act amounting to dismissal but made to appear as if it were
not,constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment.In cases of a transfer of
an employee, the rule is settled that the employer is charged with the burden of proving that its

88
conduct and action are for valid and legitimate grounds such as genuine business necessity and
that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the
employer cannot overcome this burden of proof, the employees transfer shall be tantamount to
unlawful constructive dismissal. Jonathan V. Morales vs. Harbour Centre Port Terminal,

Inc., G.R. No. 174208, January 25, 2011.

Contract; novation. Novation is the extinguishment of an obligation by the substitution or


change of the obligation by a subsequent one which extinguishes or modifies the first, either by
changing the object or principal conditions, or, by substituting another in place of the debtor, or
by subrogating a third person in the rights of the creditor. In order for novation to take place,
the concurrence of the following requisites is indispensable: (1) There must be a previous valid
obligation; (2) There must be an agreement of the parties concerned to a new contract; (3)
There must be the extinguishment of the old contract; and (4) There must be the validity of the
new contract. The parties impliedly extinguished the first contract by agreeing to enter into the
second contract. The records also reveal that the 2nd contract extinguished the first contract by
changing its object or principal. These contracts were for overseas employment aboard different
vessels. The first contract was for employment aboard the MV Stolt Aspiration while the
second contract involved working in another vessel, the MV Stolt Pride. Petitioners and
Madequillo, Jr. accepted the terms and conditions of the second contract. Undoubtedly, he was
still employed under the first contract when he negotiated with petitioners on the second
contract. Since Madequillo was still employed under the first contract when he negotiated with
petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen

Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.

Employee; money claims. On the issue of how the seafarer will be compensated by reason of
the unreasonable non-deployment, the Supreme Court decreed the application of Section 10 of
Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a
contract involving Filipino workers for overseas deployment. The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive
jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages. x x x (Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the
second phrase of the provision. Applying the rules on actual damages, Article 2199 of the New
Civil Code provides that one is entitled to an adequate compensation only for such pecuniary
loss suffered by him as he has duly proved. Stolt-Nielsen Transportation Group, Inc., et al. vs.

Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.

Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary


measure resorted to by the employer pending investigation of an alleged malfeasance or
misfeasance committed by an employee. The employer temporarily bars the employee from
working if his continued employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers. On the other hand, the penalty of suspension refers to the
disciplinary action imposed on the employee after an official investigation or administrative
hearing is conducted. The employer exercises its right to discipline erring employees pursuant to
company rules and regulations. In the present case, Henry Delada filed a grievance against
Manila Pavilion Hotel (MPH). Failing to reach a settlement, Delada lodged a Complaint before
the National Conciliation and Mediation Board, which was eventually referred to a panel of

89
voluntary arbitrators (PVA). Meanwhile, citing security and safety reasons, MPH placed Delada
on a 30-day preventive suspension and proceeded with the administrative case against him.
MPH eventually found Delada liable for insubordination and willful disobedience of the transfer
order and imposed upon him a penalty of 90-day suspension. The PVA ruled that there was no
legal and factual basis to support MPHs imposition of preventive suspension on Delada, and
that the penalty of 90-day suspension imposed by MPH against Delada went beyond the 30-day
period of preventive suspension prescribed by the Implementing Rules of the Labor Code. PVA
also ruled that MPH lost its authority to continue with the administrative proceedings for
insubordination and willful disobedience of the transfer order and to impose the penalty of 90day suspension on Delada. According to the panel, it acquired exclusive jurisdiction over the
issue when the parties submitted the aforementioned issues before it. The Supreme Court held
that MPH did not lose its authority to discipline, and that MPH had the authority to continue with
the administrative proceedings for insubordination and willful disobedience against Delada and
to impose on him the penalty of suspension. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R.

No. 189947, January 25, 2011.

Employee; release and quitclaim. While the law looks with disfavor upon releases and quitclaims
by employees who are inveigled or pressured into signing them by unscrupulous employers
seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary
settlement of a laborers claims should be respected by the courts as the law between the
parties. Considering the petitioners claim of fraud and bad faith against Philcomsat to be
unsubstantiated, the Supreme Court found the quitclaim in dispute to be a legitimate waiver.
The Court of Appeals and the National Labor Relations Commission were unanimous in holding
that the petitioner voluntarily executed the subject quitclaim. The Supreme Court is not a trier
of facts, and this doctrine applies with greater force in labor cases. Factual questions are for the
labor tribunals to resolve and whether the petitioner voluntarily executed the subject quitclaim
is a question of fact. In this case, the factual issues have already been determined by the
National Labor Relations Commission and its findings were affirmed by the Court of Appeals.
Judicial review by the Supreme Court does not extend to a reevaluation of the sufficiency of the
evidence upon which the proper labor tribunal has based its determination. Hypte R. Aujero vs.

Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.

Employee benefit; holiday pay, service incentive leave pay and proportionate 13th month
pay. Under the Labor Code, the employee is entitled to his regular rate on holidays even if he
does not work. Likewise, express provision of the law entitles him to service incentive leave
benefit if he has rendered service for more than a year already. Furthermore, under
Presidential Decree No. 851, the employee should be paid his 13th month pay. The employer
has the burden of proving that it has paid these benefits to its employees. AbdulJuahid R.

Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes,G.R. No. 173648,
January 16, 2011.

Employee benefit; overtime pay. In the absence of any concrete proof that additional service
beyond the normal working hours and days had been rendered, overtime pay cannot be
granted. Handwritten itemized computations are self-serving, unreliable and unsubstantiated
evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and
unauthenticated as they are, there is no way of verifying the truth of the handwritten entries
stated therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene

Amby Reyes, G.R. No. 173648, January 16, 2011.

Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National
Labor Relations Commission, G.R. No. 159887, April 12, 2006, which stated that: Thus, the

90
Court has applied the Labor Code concept of permanent total disability to the case of seafarers.
In Philippine Transmarine Carriers v. NLRC, G.R. No. 123891, February 28, 2001, seaman
Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy and
was declared as unfit to work by the company-accredited physician. The Court affirmed the
award of disability benefits to the seaman, citing ECC v. Sanico, G.R. No. 134028, December 17,
1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA, G.R. No. 116015, July 31,
1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that disability should not be
understood more on its medical significance but on the loss of earning capacity. Permanent total
disability means disablement of an employee to earn wages in the same kind of work, or work
of similar nature that [he] was trained for or accustomed to perform, or any kind of work which
a person of [his] mentality and attainment could do. It does not mean absolute helplessness. It
likewise citedBejerano to reiterate that in a disability compensation, it is not the injury which is
compensated, but rather it is the incapacity to work resulting in the impairment of ones earning
capacity. The Court also cited the more recent case of Crystal Shipping, Inc. v. Natividad, G.R.
No. 154798, October 20, 2005, applying the same principles, and GSIS v. Cadiz, G.R. No.
145093, July 8, 2003, and Ijares v. CA, G.R. No. 105854, August 26, 1999, which declared that
permanent disability is the inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body. Magsaysay Maritime

Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.

Employee dismissal; due process. Notice and hearing constitute the essential elements of due
process in the dismissal of employees. The employer must furnish the employee with two
written notices before termination of employment can be legally effected. The first apprises the
employee of the particular acts or omissions for which dismissal is sought. The second informs
the employee of the employers decision to dismiss him. With regard to the requirement of a
hearing, the essence of due process lies simply in an opportunity to be heard, and not that an
actual hearing should always and indispensably be held. These requirements were satisfied in
this case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of
the particular acts being imputed against him, as well as the applicable law and the company
rules considered to have been violated. On November 17, 2003, Meralco conducted a hearing
on the charges against the petitioner where he was accorded the right to air his side and
present his defenses on the charges against him. Significantly, a high-ranking officer of the
supervisory union of Meralco assisted him during the said investigation. His sworn statement
that forms part of the case records even listed the matters that were raised during the
investigation. Finally, Meralco served a notice of dismissal dated February 4, 2004 upon Yabut.
Such notice notified the latter of the companys decision to dismiss him from employment on
the grounds clearly discussed therein.Norman Yabut vs. Manila Electric Company and Manuel M.

Lopez, G.R. No. 190436, January 16, 2011.

Employee dismissal; due process. Even if there is a just or valid cause for terminating an
employee, it is necessary to comply with the requirements of due process prior to the
termination. Lolita S. Concepcion vs. Minex Import Corporation/Minerama Corporation, et

al., G.R. No. 153569, January 24, 2011.

Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as
the want of care in the performance of ones duties and habitual neglect has been defined as
repeated failure to perform ones duties for a period of time, depending upon the
circumstances. These are not overly technical terms, which, in the first place, are expressly
sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by employer.
An employer may terminate an employment for any of the following causes: [xxx](b) Gross and

91
habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from
service due to habitual tardiness and absenteeism, and for having continued disregarding
attendance policies despite his undertaking to report on time. His weekly time record for the
first quarter of the year 2000 revealed that he came late 19 times out of the 47 times he
reported for work. He also incurred 19 absences out of the 66 working days during the quarter.
His absences without prior notice and approval from March 11-16, 2000 were considered to be
the most serious infraction of all because of its adverse effect on business operations. The
Supreme Court held that even in the absence of a written company rule defining gross and
habitual neglect of duties, Bitaras omissions qualify as such warranting his dismissal from the
service. Mansion Printing Center and Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120,

January 25, 2011.

Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires
the existence of a just and valid cause. Article 282 of the Labor Code enumerates
the just causes for termination by the employer: (a) serious misconduct or willful disobedience
by the employee of the lawful orders of his employer or the latters representative in connection
with the employees work; (b) gross and habitual neglect by the employee of his duties; ( c)
fraud or willful breach by the employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
It is unfair to require an employer to first be morally certain of the guilt of the employee by
awaiting a conviction before terminating him when there is already sufficient showing of the
wrongdoing. Requiring that certainty may prove too late for the employer, whose loss may
potentially be beyond repair. In the present case, no less than the DOJ Secretary found
probable cause for qualified theft against Concepcion. That finding was enough to justify her
termination for loss of confidence. Lolita S. Concepcion vs. Minex Import Corporation/Minerama

Corporation, et al., G.R. No. 153569, January 24, 2011.

Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid
ground for dismissal, it 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. In addition, loss of trust and confidence must rest on substantial grounds and
not on the employers arbitrariness, whims, caprices or suspicion.Manila Electric Company

(Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.

Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an
employment because of an employees serious misconduct, a cause that was present in this
case in view of the petitioners violation of his employers code of conduct. Misconduct is defined
as the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. For serious misconduct to justify dismissal, the following requisites must be present:
(a) it must be serious; (b) it must relate to the performance of the employees duties; and (c) it
must show that the employee has become unfit to continue working for the employer.
Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is
willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means.
The act clearly relates to the petitioners performance of his duties given his position as branch
field representative who is equipped with knowledge on meter operations, and who has the
duty to test electric meters and handle customers violations of contract. Instead of protecting

92
the companys interest, the petitioner himself used his knowledge to illegally obtain electric
power from Meralco. His involvement in this incident deems him no longer fit to continue
performing his functions for respondent-company. Norman Yabut vs. Manila Electric Company

and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.

Employer-employee relationship; commencement. The POEA Standard Employment Contract


provides that employment shall commence upon the actual departure of the seafarer from the
airport or seaport in the port of hire. Distinction must be made between the perfection of the
employment contract and the commencement of the employer-employee relationship. The
perfection of the contract, which in this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the object and the cause, as well as the
rest of the terms and conditions therein. The commencement of the employer-employee
relationship would have taken place had petitioner been actually deployed from the point of
hire. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498,

January 18, 2011.

Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has
already become final and executory as to Canoy since he did not appeal from it. Canoy cannot
now simply incorporate in his affidavit a verification of the contents and allegations of the
petition as he is not one of the petitioners therein. AbdulJuahid R. Pigcaulan vs. Security and

Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be

stated as follows: (1) The judgment or decree of a court of competent jurisdiction on the merits
concludes the parties and their privies to the litigation and constitutes a bar to a new action or
suit involving the same cause of action either before the same or any other tribunal; and (2)
Any right, fact, or matter in issue directly adjudicated or necessarily involved in the
determination of an action before a competent court in which a judgment or decree is rendered
on the merits is conclusively settled by the judgment therein and cannot again be litigated
between the parties and their privies whether the claim or demand, purpose, or subject matter
of the two suits is the same or not. These two main rules mark the distinction between the
principles governing the two typical cases in which a judgment may operate as evidence. In
speaking of these cases, the first general rule, and which corresponds to paragraph (b) of
Section 47 of Rule 39 of the Rules of Court is referred to as bar by former judgment while the
second general rule, which is embodied in paragraph (c) of the same section, is known as
conclusiveness of judgment. The present labor case is closely related to the civil case that
was decided with finality. The acts and omissions alleged by the Bank in the civil case as basis
of its counterclaim against Mauricio are the very same acts and omissions which were used as
grounds to terminate his employment. Considering that it has already been conclusively
determined with finality in the civil case that the questioned acts of Mauricio were well within
his discretion as branch manager and approving officer of the Bank, and the same were
sanctioned by the Head Office, the Supreme Court found that the Court of Appeals did not err in
holding that there was no valid or just cause for the Bank to terminate Mauricios
employment. Prudential Bank (now Bank of the Philippine Islands) vs. Antonio S.A. Mauricio,

substituted by his legal heirs Maria Fe, Voltaire, Antonio, Jr., Antonio, Earl John, and Francisco
Roberto all surnamed Mauricio, G.R. No. 183350, January 18, 2011.
Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator
Magsalin, G.R. No. 90426, December 15, 1989, the Supreme Court ruled that the voluntary
arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to
determine the scope of his own authority subject only, in a proper case, to the certiorari

93
jurisdiction of this Court. It was also held in that case that the failure of the parties to
specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction
over the related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20,
2003, the Supreme Court recognized that voluntary arbitrators are generally expected to decide
only those questions expressly delineated by the submission agreement; that, nevertheless,
they can assume that they have the necessary power to make a final settlement on the related
issues, since arbitration is the final resort for the adjudication of disputes. Thus, the Supreme
Court ruled that even if the specific issue brought before the arbitrators merely mentioned the
question of whether an employee was discharged for just cause, they could reasonably
assume that their powers extended beyond the determination thereof to include the power to
reinstate the employee or to grant back wages. In the same vein, if the specific issue brought
before the arbitrators referred to the date of regularization of the employee, law and
jurisprudence gave them enough leeway as well as adequate prerogative to determine the
entitlement of the employees to higher benefits in accordance with the finding of regularization.
Indeed, to require the parties to file another action for payment of those benefits would
certainly undermine labor proceedings and contravene the constitutional mandate providing full
protection to labor and speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R.

No. 189947, January 25, 2011.

Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed
with in absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the
strict implementation of the rules and considered them inviolable when it is shown that the
patent lack of merit of the appeals render liberal interpretation pointless and naught. The
contrary obtains in this case as Philcomsats case is not entirely unmeritorious. Specifically,
Philcomsat alleged that the petitioners execution of the subject quitclaim was voluntary despite
his claim that he did not do so. Philcomsat likewise argued that the petitioners educational
attainment and the position he occupied in Philcomsats hierarchy militate against his claim that
he was pressured or coerced into signing the quitclaim. The emerging trend in our
jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just
determination of his cause free from the constraints of technicalities. Far from having gravely
abused its discretion, the NLRC correctly prioritized substantial justice over the rigid and
stringent application of procedural rules. In the present case, the Supreme Court held that the
CA was correct in not finding grave abuse of discretion in the NLRCs decision to give due
course to Philcomsats appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine

Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.

Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment


of personnel is permissible even without the employees prior consent, it cannot be done when
the transfer is a preliminary step toward his removal, or a scheme to lure him away from his
permanent position, or when it is designed to indirectly terminate his service, or force his
resignation. Such a transfer would in effect circumvent the provision which safeguards the
tenure of office of those who are in the Civil Service. Significantly, Section 6, Rule III of CSC
Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when
an employee quits his work because of the agency heads unreasonable, humiliating, or
demeaning actuations which render continued work impossible. Hence, the employee is deemed
to have been illegally dismissed. This may occur although there is no diminution or reduction of
salary of the employee. It may be a transfer from one position of dignity to a more servile or
menial job.Republic of the Phil., represented by the Civil Service Commission vs. Minerva M.P.

Pacheco, G.R. No. 178021, January 31, 2011.

94
Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement
is no longer feasible, backwages shall be computed from the time of illegal dismissal up to the
finality of the decision should separation pay not be paid in the meantime. It is the employees
actual receipt of the full amount of his separation pay that will effectively terminate the
employment of an illegally dismissed employee. Otherwise, the employer-employee relationship
subsists and the illegally dismissed employee is entitled to backwages, taking into account the
increases and other benefits, including the 13th month pay, that were received by his coemployees who are not dismissed. It is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other
benefits and bonuses and general increases, to which he would have been normally entitled had
he not been dismissed and had not stopped working. Timoteo H. Sarona vs. National Labor

Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.

Reorganization; management prerogative. Admittedly, 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. By
management prerogative is meant the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods, processes
to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and
discipline, and dismissal and recall of workers. Although jurisprudence recognizes said
management prerogative, it has been ruled that the exercise thereof, while ordinarily not
interfered with, is not absolute and is subject to limitations imposed by law, collective
bargaining agreement, and general principles of fair play and justice. Thus, an employer may
transfer or assign employees from one office or area of operation to another, provided there is
no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. Indeed, having the right should not be confused with the
manner in which that right is exercised. Jonathan V. Morales was hired by Harbour Centre Port
Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly salary
ofP18,000.00. Regularized on November 17, 2000, Morales was promoted to Division Manager
of the Accounting Department, for which he was compensated a monthly salary of P33,700.00,
plus allowances starting July 1, 2002. Subsequent to HCPTIs transfer to its new offices at Vitas,
Tondo, Manila on January 2, 2003, Morales received an inter-office memorandum dated March
27, 2003, reassigning him to Operations Cost Accounting, tasked with the duty of monitoring
and evaluating all consumables requests, gears and equipment related to the corporations
operations and of interacting with its sub-contractor, Bulk Fleet Marine Corporation. The
memorandum was issued by HCPTIs new Administration Manager, duly noted by its new Vice
President for Administration and Finance, and approved by its President and Chief Executive
Officer. Morales protested that his reassignment was a clear demotion since the position to
which he was transferred was not even included in HCPTIs plantilla. In response to Morales
grievance that he had been effectively placed on floating status, an inter-office memorandum
was issued on April 4, 2003 to the effect that transfer of employees is a management
prerogative and that HCPTI had the right and responsibility to find the perfect balance
between the skills and abilities of employees to the needs of the business. However, the
Supreme Court found that HCPTI did not even bother to show that it had implemented a
corporate reorganization and/or approved a new plantilla of positions which included the one to
which Morales was being transferred. Thus, the Court reinstated the NLRCs July 29, 2005
Decision which found Morales reassignment to be a clear demotion despite lack of showing of

95
diminution of salaries and benefits. Jonathan V. Morales vs. Harbour Centre Port Terminal,

Inc., G.R. No. 174208, January 25, 2011.

Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a
petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise
questions of law. Moreover, if factual findings of the National Labor Relations Commission and
the Labor Arbiter have been affirmed by the Court of Appeals, the Supreme Court accords them
the respect and finality they deserve. It is well-settled and oft-repeated that findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only respect, but finality
when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to
deviate from what are clearly procedural guidelines and disturb and strike down the findings of
the Court of Appeals and those of the labor tribunals if there is a showing that they are
unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed,
that the impugned decision of the Court of Appeals is consistent with the findings of the labor
tribunals does not per se conclusively demonstrate the correctness thereof. By way of exception
to the general rule, the Supreme Court will scrutinize the facts if only to rectify the prejudice
and injustice resulting from an incorrect assessment of the evidence presented. Timoteo H.

Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No.
185280, January 18, 2011.
Abandonment; elements. Respondents filed an illegal dismissal case against the petitionercorporation. For its defense, petitioner-corporation alleged that the respondents abandoned
their work and were not dismissed, and that it sent letters advising respondents to report for
work, but they refused. The Court held that for abandonment to exist, it is essential (a) that the
employee must have failed to report for work or must have been absent without valid or
justifiable reason; and (b) that there must have been a clear intention to sever the employeremployee relationship manifested by some overt acts. The employer has the burden of proof to
show the employees 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. Based on the evidence presented, the
reason why respondents failed to report for work was because petitioner-corporation barred
them from entering its construction sites. 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. The
intent to discontinue the employment must be shown by clear proof that it was deliberate and
unjustified. Petitioner-corporation failed to show overt acts committed by respondents from
which it may be deduced that they had no more intention to work. Respondents filing of the
case for illegal dismissal barely four (4) days from their alleged abandonment is totally
inconsistent with the known concept of what constitutes abandonment. E.G. & I. Construction

Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.

Certification election; petition for cancellation of union registration. Respondent union filed a
petition for certification election. Petitioner moved to dismiss the petition for certification
election alleging the pendency of a petition for cancellation of the unions registration. The
DOLE Secretary ruled in favor of the legitimacy of the respondent as a labor organization and
ordered the immediate conduct of a certification election. Pending appeal in the Court of
Appeals, the petition for cancellation was granted and became final and executory. Petitioner
argued that the cancellation of the unions certificate of registration should retroact to the time
of its issuance. Thus, it claimed that the unions petition for certification election and its demand

96
to enter into collective bargaining agreement with the petitioner should be dismissed due to
respondents lack of legal personality. The Court ruled that the pendency of a petition for
cancellation of union registration does not preclude collective bargaining, and that an order to
hold a certification election is proper despite the pendency of the petition for cancellation of the
unions registration because at the time the respondent union filed its petition, it still had the
legal personality to perform such act absent an order cancelling its registration. Legend

International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, February
23, 2011.

Certiorari under Rule 65; review of facts by the Court of Appeals. While it is true that factual
findings made by quasi-judicial and administrative tribunals, if supported by substantial
evidence, are accorded great respect and even finality by the courts, this general rule admits of
exceptions. When there is a showing that a palpable and demonstrable mistake that needs
rectification has been committed or when the factual findings were arrived at arbitrarily or in
disregard of the evidence on record, these findings may be examined by the courts. In the
present case, the Court of Appeals found itself unable to completely sustain the findings of the
NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of
grave abuse of discretion. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et

al.G.R. No. 165381, February 9, 2011.

Construction Industry; project employees. Petitioner is a duly licensed labor contractor engaged
in painting houses and buildings. Respondents, former painters of the petitioner, filed an illegal
dismissal case against petitioner. Petitioner alleged that the respondents abandoned their job
and were not dismissed by the petitioner. The Labor Arbiter ruled that there was neither illegal
dismissal nor abandonment of job and that the respondents should be reinstated but without
any backwages. On appeal, petitioner alleged that the reinstatement of respondents to their
former positions, which were no longer existing, is impossible, highly unfair and unjust. It
further alleged that the project they were working on at the time of their alleged dismissal was
already completed. Having completed their tasks, their positions automatically ceased to exist.
Thus, there were no more positions where they can be reinstated as painters. The Court ruled
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. Respondents
belonged to the second type and are classified as regular employees of petitioner. 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 given to respondents which clearly spelled out the duration of their employment and
the specific work to be performed and there is no proof that they were made aware of these
terms and conditions of their employment at the time of hiring. Thus, it is now too late for
petitioner to claim that respondents are project employees whose employment is coterminous
with each project or phase of the project to which they are assigned. Nonetheless, assuming
that respondents were initially hired as project employees, a project employee 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 indispensable to the usual business or
trade of the employer. In this case, the evidence on record shows that respondents were
employed and assigned continuously to the various projects of petitioners. As painters, they

97
performed activities which were necessary and desirable in the usual business of petitioner,
which was 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.Exodus International Construction Corporation, et al. v. Guillermo

Biscocho, et al., G.R. No. 166109, February 23, 2011.

Constructive Dismissal; security guards. Respondent was hired by petitioner, a security agency,
as a security guard. He was assigned at the Philippine Heart Center until his relief on January
30, 2006. Respondent was not given any assignment thereafter. Thus, on August 2, 2006, he
filed a complaint for constructive dismissal and nonpayment of 13th month pay, with prayer for
damages against petitioner. To refute the claim, petitioner alleged that respondent was not
constructively or illegally dismissed, but had voluntarily resigned. The Court held that
respondent was constructively dismissed. In cases involving security guards, a relief and
transfer order in itself does not sever employment relationship between a security guard and his
agency. An employee has the right to security of tenure, but this does not give him a vested
right to his position as would deprive the company of its prerogative to change his assignment
or transfer him where his service, as security guard, will be most beneficial to the client.
Temporary off-detail or the period of time security guards are made to wait until they are
transferred or assigned to a new post or client does not constitute constructive dismissal, so
long as such status does not continue beyond six months. The onus of proving that there is no
post available to which the security guard can be assigned rests on the employer. In the instant
case, the failure of petitioner to give respondent a work assignment beyond the reasonable sixmonth period makes it liable for constructive dismissal. Nationwide Security and Allied Services,

Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.

Constructive dismissal; defense of abandonment. Respondent filed an illegal dismissal case


against the petitioner. Petitioner alleged that respondent abandoned his job and was not
dismissed. The Court held that respondent was illegally dismissed. The jurisprudential rule on
abandonment is constant. It is a matter of intention and cannot lightly be presumed from
certain equivocal acts. To constitute abandonment, two elements must concur: (1) the failure
to report for work or absence without valid or justifiable reason; and (2) a clear intent,
manifested through overt acts, to sever the employer-employee relationship. In this case,
petitioner failed to establish clear evidence of respondents intention to abandon his
employment. Except for petitioners bare assertion that respondent did not report to the office
for reassignment, no proof was offered to prove that respondent intended to sever the
employer-employee relationship. Besides, the fact that respondent filed the instant complaint
negates any intention on his part to forsake his work. It is a settled doctrine that the filing of a
complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee
who takes steps to protest his dismissal cannot by logic be said to have abandoned his
work. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614,

February 23, 2011.

Constructive dismissal; defense of resignation. Respondent, a security guard, filed an illegal


dismissal case against the petitioner. To refute the claim, petitioner alleged that respondent was
not constructively or illegally dismissed, but had voluntarily resigned. Petitioner alleged that
respondents resignation is evident from his withdrawal of his cash and firearm bonds.
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office. The intent to relinquish must concur with the overt act of

98
relinquishment. Thus, the acts of the employee before and after the alleged resignation must be
considered in determining whether, he or she, in fact, intended to sever his or her employment.
Should the employer interpose the defense of resignation, it is incumbent upon the employer to
prove that the employee voluntarily resigned. On this point, the Court held that petitioner failed
to discharge its burden. Moreover, the filing of a complaint belies petitioners claim that
respondent voluntarily resigned.Nationwide Security and Allied Services, Inc. v. Ronald P.

Valderama, G.R. No. 186614, February 23, 2011.

Execution of Judgment; properties covered. Premier Allied and Contracting Services, Inc.
(PACSI) and its President, the petitioner, were held liable to pay the respondents separation pay
and attorneys fees. To execute this judgment, the NLRC sheriff issued a Notice of Sale of a
property with a TCT in the name of the petitioner and his wife. The Court ruled that the Notice
of Sale is null and void. The power of the NLRC, or the courts, to execute its judgment extends
only to properties unquestionably belonging to the judgment debtor alone. A sheriff, therefore,
has no authority to attach the property of any person except that of the judgment debtor.
Likewise, there is no showing that the sheriff ever tried to execute on the properties of the
corporation. The TCT of the property bears out that, indeed, it belongs to petitioner and his
wife. Thus, even if we consider petitioner as an agent of the corporation and, therefore, not a
stranger to the case such that the provision on third-party claims will not apply to him, the
property was registered not only in the name of petitioner but also of his wife. She stands to
lose the property subject of execution without ever being a party to the case. This will be
tantamount to deprivation of property without due process. Paquito V. Ando v. Andresito Y.

Campo, et al., G.R. No. 184007, February 16, 2011.

Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against petitioner.
Petitioner alleged that the respondents abandoned their work and were never dismissed by the
petitioner. NLRC ruled that the respondents were not illegally dismissed since they failed to
present a written notice of termination. This was however reversed by the Court of Appeals.
The Court held that a written notice of dismissal is not a pre-requisite for a finding of illegal
dismissal. Petitioner failed to prove that respondents were dismissed for a just or authorized
cause. In an illegal dismissal case, the onus probandi rests on the employer to prove that the
dismissal of an employee is for a valid cause. E.G. & I. Construction Corporation and Edsel

Galeos v. Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.

Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against the
petitioners. Petitioners, in their defense, alleged that the respondents abandoned their work and
were not dismissed by the petitioners. Although In cases of illegal dismissal, the employer bears
the burden of proof to prove that the termination was for a valid or authorized cause, the
employee must first establish by substantial evidence the fact that he was dismissed. If there is
no dismissal, then there can be no question as to the legality or illegality thereof. In the present
case, the Court held that there was no evidence that respondents were dismissed or that they
were 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. Absent
any showing of an overt or positive act proving that petitioners had dismissed respondents, the
latters claim of illegal dismissal cannot be sustained. Exodus International Construction

Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.

Illegal dismissal; final and executory judgment. Respondent employee filed an illegal dismissal
case against the petitioner-company and Tom Madula, its operations manager. The case was
dismissed by the labor arbiter and the dismissal was affirmed by NLRC. On August 29, 2002, the

99
Court of Appeals reversed and set aside the NLRC decision and resolution. The CA ordered the
petitioner company to pay respondent separation pay, moral and exemplary damages, and
attorneys fees. The decision became final and executory on February 27, 2004, and
consequently a writ of execution was issued. Petitioner-company filed a Motion to Quash Writ of
Execution. The Labor Arbiter granted the Motion and exonerated the petitioner company from
paying backwages and held that it was petitioner Madula who should be liable to pay
backwages. Respondent then filed before the CA a Very Urgent Motion for Clarification of
Judgment. On December 10, 2004, CA granted the Motion and held that petitioner-company is
solely liable for the judgment award. As a general rule, final and executory judgments are
immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors;
(b) nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments. The
underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and
thus make orderly the discharge of judicial business, and (2) to put judicial controversies to an
end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to drag on
indefinitely and the rights and obligations of every litigant must not hang in suspense for an
indefinite period of time. What the CA rendered on December 10, 2004 was a nunc pro
tunc order clarifying the decretal portion of its August 29, 2002 Decision. The object of a
judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and
determination of new rights, but is one placing in proper form on the record, the judgment that
had been previously rendered, to make it speak the truth, so as to make it show what the
judicial action really was. It is not to correct judicial errors, such as to render a judgment anew
in place of the one it rendered, nor to supply nonaction by the court, however erroneous the
judgment may have been. Filipinas Palmoil Processing, Inc. and Dennis T. Villareal v. Joel P.

Dejapa, represented by his Attorney-in-Fact Myrna Manzano, G.R. No. 167332, February 7,
2011.
Illegal dismissal; liability of corporate officers. Petitioner filed a complaint against respondent
company and its officers for illegal dismissal, unfair labor practice, and money claims. Petitioner
alleged that the officers should be held personally liable for the acts of company which were
tainted with bad faith and arbitrariness. As a general rule, a corporate officer cannot be held
liable for acts done in his official capacity because a corporation, by legal fiction, has a
personality separate and distinct from its officers, stockholders, and members. To pierce this
fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or
an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal
dismissal cases, corporate officers may be held solidarily liable with the corporation if the
termination was done with malice or bad faith. Moral damages are awarded only where the
dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy. Exemplary damages may
avail if the dismissal was effected in a wanton, oppressive or malevolent manner. In the present
case, the Court held that petitioner failed to prove that his dismissal was orchestrated by the
individual respondents and their acts were attended with bad faith or were done
oppressively. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al.G.R. No.

165381, February 9, 2011.

Illegal dismissal; redundancy. Respondent-company, due to business troubles and losses,


implemented a Right-Sizing Program which entailed a company-wide reorganization involving
the transfer, merger, absorption or abolition of certain departments of the company. As a result,
respondent-company terminated the services of petitioner on account of redundancy. Petitioner
filed a complaint against respondent-company and its officers for illegal dismissal, unfair labor

100
practice, and money claims. The Court ruled that petitioner was validly dismissed. There is
redundancy when the service capability of the workforce is greater than what is reasonably
required to meet the demands of the business enterprise. A position becomes redundant when
it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in
volume of business, or dropping a particular product line or service activity previously
manufactured or undertaken by the enterprise. The Court has been consistent in holding that
the determination of whether or not an employees services are still needed or sustainable
properly belongs to the employer. Provided there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this
exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and
the NLRC. However, an employer cannot simply declare that it has become overmanned and
dismiss its employees without producing adequate proof to sustain its claim of redundancy.
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, such as but not limited to: preferred status, efficiency,
and seniority. The Court also held that the following evidence may be proffered to substantiate
redundancy: adoption of a new staffing pattern, feasibility studies/ proposal on the viability of
the newly created positions, job description and the approval by the management of the
restructuring.Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No.

165381, February 9, 2011.

Labor Union; collateral attack on legal personality. . Petitioner moved to dismiss the petition for
certification election filed by respondent union by questioning the validity of the respondents
union registration. The Court held that legitimacy of the legal personality of respondent cannot
be collaterally attacked in a petition for certification election proceeding but only through a
separate action instituted particularly for the purpose of assailing it. 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 certificate of registration is
issued to a union, its legal personality cannot be subject to a collateral attack. It may be
questioned only in an independent petition for cancellation in accordance with Section 5 of Rule
V, Book V of the Implementing Rules. Legend International Resorts Limited v. Kilusang

Manggagawa ng Legenda, G.R. No. 169754 , February 23, 2011.

Money claims; burden of proof. Respondents alleged that petitioner-corporation failed to pay
them their full compensation. The Labor Arbiter granted their monetary claims but the NLRC
reversed the award considering that the petitioner-corporation submitted copies of payrolls,
which it annexed to its memorandum on appeal, showing full payment. The general rule is that
the burden rests on the employer to prove payment, rather than on the employee to prove nonpayment. The reason for the rule is that the pertinent personnel files, payrolls, records,
remittances, and other similar documents which will show that overtime, differentials, service
incentive leave, and other claims of the worker have been paid are not in the possession of
the worker but in the custody and absolute control of the employer. In this case, the submission
by petitioner-corporation of the time records and payrolls only when the case was on appeal
before the NLRC is contrary to the elementary precepts of justice and fair play. Respondents
were not given the opportunity to check the authenticity and correctness of the evidence
submitted on appeal. Thus, the Supreme Court held that the monetary claims of respondents
should be granted. It is a time-honored principle that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter. It is the rule in controversies between a laborer and his master that doubts reasonably

101
arising from the evidence, or in the interpretation of agreements and writing, should be
resolved in the formers favor. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P.

Sato, et al., G.R. No. 182070 ,February 16, 2011.

National Labor Relations Commission; jurisdiction. Respondents filed an illegal dismissal case
against Premier Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner.
PACSI and the petitioner were held liable to pay the respondents separation pay and attorneys
fees. To execute this judgment, NLRC sheriff issued a Notice of Sale of a property with TCT in
the name of the petitioner and his wife. Petitioner filed an action for prohibition and damages
with prayer for the issuance of a temporary restraining order (TRO) before the Regional Trial
Court (RTC). The Court ruled that the RTC lacks jurisdiction to resolve the matter. The Court
has long recognized that regular courts have no jurisdiction to hear and decide questions which
arise from and are incidental to the enforcement of decisions, orders, or awards rendered in
labor cases by appropriate officers and tribunals of the Department of Labor and Employment.
To hold otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly
administration of justice. The NLRC Manual on the Execution of Judgment deals specifically with
third-party claims in cases brought before that body. It defines a third-party claim as one where
a person, not a party to the case, asserts title to or right to the possession of the property
levied upon. It also sets out the procedure for the filing of a third-party claim, to wit: such
person shall make an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title and shall file the same with the sheriff and copies thereof served
upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party. In the
present case, there is no doubt that petitioners complaint is a third-party claim within the
cognizance of the NLRC. Petitioner may indeed be considered a third party in relation to the
property subject of the execution since there is no question that the property belongs to
petitioner and his wife, and not to the corporation. It can be said that the property belongs to
the conjugal partnership, and not to petitioner alone. At the very least, the Court can consider
petitioners wife to be a third party within the contemplation of the law. Paquito V. Ando v.

Andresito Y. Campo, et al., G.R. No. 184007, February 16, 2011.

Placement Fee; proof of excessive collection. Petitioner filed a complaint against respondent for
collection of excess placement fee defined in Article 34(a) of the Labor Code. Petitioner
presented as her evidence a promissory note reflecting excessive fees and testified as to the
deductions made by her foreign employer. On the other hand, respondent presented an
acknowledgment receipt reflecting collection of an amount authorized by POEA. The Court held
that the pieces of evidence presented by petitioner are not substantial enough to show that the
respondent collected from her more than the allowable placement fee. In proceedings before
administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact
is substantial evidence, or that level of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. The Court gave more credence to respondents evidence
consisting of the acknowledgment receipt showing the amount paid by petitioner and received
by respondent. A receipt is a written and signed acknowledgment that money or goods have
been delivered. Although a receipt is not conclusive evidence, an exhaustive review of the
records of the case fails to disclose any other evidence sufficient and strong enough to overturn
the acknowledgment embodied in respondents receipt as to the amount it actually received
from petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the
contents of the receipt issued by respondent. The subject receipt remains as the primary or best
evidence. The promissory note presented by petitioner cannot be considered as adequate
evidence to show the excessive placement fee. It must be emphasized that a promissory note is

102
a solemn acknowledgment of a debt and a formal commitment to repay it on the date and
under the conditions agreed upon by the borrower and the lender. A person who signs such an
instrument is bound to honor it as a legitimate obligation duly assumed by him through the
signature he affixes thereto as a token of his good faith. The fact that respondent is not a
lending company does not preclude it from extending a loan to petitioner for her personal use.
As for the deductions purportedly made by petitioners foreign employer, the Court noted that
there is no single piece of document or receipt showing that deductions have in fact been made,
or is there any proof that these deductions from the salary formed part of the subject
placement fee. To be sure, mere general allegations of payment of excessive placement fees
cannot be given merit as the charge of illegal exaction is considered a grave offense which
could cause the suspension or cancellation of the agencys license. They should be proven and
substantiated by clear, credible, and competent evidence. Avelina F. Sagun v. Sunace

International Management Services, Inc., G.R. No. 179242, February 23, 2011.

Procedural due process; notice requirements. Petitioner was dismissed by respondent-company


due to redundancy. However, it failed to provide the Department of Labor and Employment with
a written notice regarding petitioners termination. The notice of termination was also not
properly served on the petitioner. Further, a reading of the notice shows that respondentcompany failed to properly inform the petitioner of the grounds for his termination. There are
two aspects which characterize the concept of due process under the Labor Code: one is
substantive whether the termination of employment was based on the provision of the Labor
Code or in accordance with the prevailing jurisprudence; the other is procedural the manner
in which the dismissal was effected. There is a psychological effect or a stigma in immediately
finding ones self laid off from work. This is why our labor laws have provided for procedural
due process. While employers have the right to terminate employees it can no longer sustain,
our laws also recognize the employees right to be properly informed of the impending
termination of his employment. Though the failure of respondent-company to comply with the
notice requirements under the Labor Code did not affect the validity of the dismissal, petitioner
is however entitled to nominal damages in addition to his separation pay. Nelson A. Culili v.

Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.

Quitclaims; validity. Respondents were terminated from employment due to retrenchment


implemented by petitioner. Upon their dismissal, the respondents signed individual Release
Waiver and Quitclaim. The Court ruled that a waiver or quitclaim is a valid and binding
agreement between the parties, provided that it constitutes a credible and reasonable
settlement, and that the one accomplishing it has done so voluntarily and with a full
understanding of its import. In this case, the respondents were sufficiently apprised of their
rights under the waivers and quitclaims that they signed. Each document contained the
signatures of the union president and its counsel, which proved that respondents were duly
assisted when they signed the waivers and quitclaims. Hence, the Court upheld the validity of
the waivers and quitclaims signed by the respondents in this case. Plastimer Industrial

Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.

Retrenchment; notice requirements. Petitioner issued a Memorandum informing all its


employees of the decision of the companys Board of Directors to downsize and reorganize its
business operations due to the change of its corporate structure. Petitioner served the individual
notice of termination on its employees on May 14, 2004 or 30 days before the effective date of
their termination on 13 June 2004, while it submitted the notice of termination to the
Department of Labor and Employment only on 26 May 2004, short of the one-month prior
notice requirement under Article 283 of the Labor Code. The Court held that petitioners failure

103
to comply with the one-month notice to the DOLE is only a procedural infirmity and does not
render the retrenchment illegal. When the dismissal is for a just cause, the absence of proper
notice will not nullify the dismissal or render it illegal or ineffectual. Instead, the employer
should indemnify the employee for violation of his statutory rights. Plastimer Industrial

Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.

Retrenchment; notice requirements. In 2004, the petitioner had to retrench and consequently
terminate the employment of the respondents. Respondents questioned the validity of the
retrenchment, and alleged that though petitioners financial statements in 2001 and 2002
reflected losses, it declared net income in 2003. The Court ruled that the fact that there was a
net income in 2003 does mean that there was no valid reason for the retrenchment. Records
showed that the net income of P6,185,707.05 in 2003 was not enough to allow petitioners to
recover the loss of P52,904,297.88 which it suffered in 2002. Article 283 of the Labor Code
recognizes retrenchment to prevent losses as a right of the management to meet clear and
continuing economic threats or during periods of economic recession to prevent losses. There is
no need for the employer to wait for substantial losses to materialize before exercising ultimate
and drastic option to prevent such losses. Plastimer Industrial Corporation and Teo Kee Bin v.

Natalia C. Gopo, et al.,G.R. No. 183390, February 16, 2011.

Unfair Labor Practice; right to self-organize. Respondent-company implemented a companywide reorganization which resulted in the abolition of petitioners position. Petitioner alleged that
he was illegally dismissed and that respondent-company is guilty of unfair labor practice
because his functions were outsourced to labor-only contractors. The Supreme Court held
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. Thus,
an employer may be held liable for unfair labor practice only if it can be shown that his acts
interfere with his employees right to self-organization. Since there is no showing that the
respondent companys implementation of the Right-Sizing Program was motivated by ill will, bad
faith or malice, or that it was aimed at interfering with its employees right to self-organization,
there is no unfair labor practice to speak of in this case. Nelson A. Culili v. Eastern

Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.

Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of


alleged habitual absenteeism and abandonment of work. Jurisprudence provides for two
essential requirements for abandonment of work to exist: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) clear intention to sever the employeremployee relationship manifested by some overt acts should both concur. Further, the
employees deliberate and unjustified refusal to resume his employment without any intention of
returning should be established and proven by the employer. The Court held that petitioners
failed to prove that it was respondent employee who voluntarily refused to report back for work
by his defiance and refusal to accept the memoranda and the notices of absences sent to him.
Petitioners failed to present evidence that they sent these notices to respondent employees
last known address for the purpose of warning him that his continued failure to report would be
construed as abandonment of work. Moreover, the fact that respondent employee never
prayed for reinstatement and has sought employment in another company which is a competitor
of petitioners cannot be construed as his overt acts of abandoning employment. Neither can
the delay of four months be taken as an indication that the respondent employees filing of a
complaint for illegal dismissal is a mere afterthought. Records show that respondent employee
attempted to get his separation pay and alleged commissions from the company, but it was only

104
after his requests went unheeded that he resorted to judicial recourse.Harpoon Marine Services,

Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.

Corporate officer; solidary liability. Respondent employee filed an illegal dismissal case against
the Petitioner Corporation and its President. Though the Court found that Respondent was
illegally dismissed, it held that the President of the Petitioner Corporation should not be held
solidarily liable with Petitioner Corporation. Obligations incurred by corporate officers, acting as
such corporate agents, are not theirs but the direct accountabilities of the corporation they
represent. Thus, they should not be generally held jointly and solidarily liable with the
corporation. The general rule is grounded on the theory that a corporation has a legal
personality separate and distinct from the persons comprising it. As exceptions to the general
rule, solidary liability may be imposed: (1) When directors and trustees or, in appropriate cases,
the officers of a corporation (a) vote for or assent to [patently] unlawful acts of the
corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs; (c)
are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members,
and other persons; (2) When the director or officer has consented to the issuance of watered
stock or who, having knowledge thereof, did not forthwith file with the corporate secretary his
written objection thereto; (3) When a director, trustee or officer has contractually agreed or
stipulated to hold himself personally and solidarily liable with the corporation; (4) When a
director, trustee or officer is made, by specific provision of law, personally liable for his
corporate action. To warrant the piercing of the veil of corporate fiction, the officers bad faith
or wrongdoing must be established clearly and convincingly as bad faith is never
presumed. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March

2, 2011.

Labor organization; collateral attack on legal personality. Respondent company questioned the
legal personality of the petitioner union in a certification election proceeding. The Court ruled
that the legal personality of the petitioner union cannot be collaterally attacked by respondent
company. Except when it is requested to bargain collectively, an employer is a mere bystander
to any petition for certification election; such proceeding is non-adversarial and merely
investigative, considering that its purpose is to determine if the employees would like to be
represented by a union and to select the organization that will represent them 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 the
allegation that some employees participating in a petition for certification election are actually
managerial employees will give an employer legal personality to block the certification election.
The employers only right in the proceeding is to be notified or informed thereof. Samahang

Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and
Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President v. Charter Chemical and
Coating Corporation, G.R. No. 169717, March 16, 2011.
Labor organization; membership of supervisory employees. Petitioner union filed a Petition for
Certification Election among the regular rank-and-file employees of the respondent company.
Respondent contends that petitioner union is not a legitimate labor organization because its
composition is a mixture of supervisory and rank-and-file employees. The Court ruled that the
inclusion of the supervisory employees in petitioner union does not divest it of its status as a
legitimate labor organization. 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

105
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. Samahang

Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and
Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President v. Charter Chemical and
Coating Corporation, G.R. No. 169717, March 16, 2011.

Labor organization; registration. Petitioner union filed a Petition for Certification Election among
the regular rank-and-file employees of the respondent company. Respondent company filed an
Answer with Motion to Dismiss on the ground that petitioner union is not a legitimate labor
organization because of its failure to comply with the documentary requirements set by law, i.e.
non-verification of the charter certificate. The Court ruled that it was not necessary for the
charter certificate to be certified and attested by the local/chapter officers. Considering that the
charter certificate is prepared and issued by the national union and not the local/chapter, it
does not make sense to have the local/chapters officers certify or attest to a document which
they did not prepare. In accordance with this ruling, petitioner unions charter certificate need
not be executed under oath. Consequently, it validly acquired the status of a legitimate labor
organization upon submission of (1) its charter certificate, (2) the names of its officers, their
addresses, and its principal office, and (3) its constitution and by-laws the last two
requirements having been executed under oath by the proper union officials. Samahang

Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and
Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President v. Charter Chemical and
Coating Corporation, G.R. No. 169717, March 16, 2011.

Reinstatement; accrued backwages. The Labor Arbiter and the NLRC held that petitioner
employer illegally dismissed the respondent employee. On appeal, the Court of Appeals reversed
the decision and ruled that the dismissal was valid. However, the Court of Appeals ordered
petitioner employer to pay respondent employee her salary from the date of the Labor Arbiters
decision ordering her reinstatement until the Court of Appeals rendered its decision declaring
the dismissal valid. Petitioner employer questioned the order and refused to pay. The Court held
that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court. On the other hand, if the employee has
been reinstated during the appeal period and such reinstatement order is reversed with finality,
the employee is not required to reimburse whatever salary he received, more so, if he actually
rendered services during the period. The payment of such wages cannot be deemed as unjust
enrichment on respondents part. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No.

177467, March 9, 2011.

Reinstatement; immediately executory order. The Labor Arbiter held that petitioner employer
illegally dismissed the respondent employee. Pending its appeal, petitioner employer failed to
immediately admit respondent employee back to work despite of an order of reinstatement. The
Court held that that the provision of Article 223 is clear that an award by the Labor Arbiter for
reinstatement shall be immediately executory even pending appeal and the posting of a bond by
the employer shall not stay the execution for reinstatement. The legislative intent is to make an
award of reinstatement immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray the executory nature of a reinstatement order or
award. In the case at bar, petitioner employer did not immediately admit respondent employee
back to work which, according to the law, should have been done as soon as an order or award

106
of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of
execution. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011.
Reinstatement; terms and conditions. Due to the order of reinstatement issued by the Labor
Arbiter, petitioner employer sent a letter to the respondent employee to report back to work
and assigned her to a new location. The Court held that such is not a bona fide reinstatement.
Under Article 223 of the Labor Code, an employee entitled to reinstatement 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. It is established
in jurisprudence that reinstatement means restoration to a state or condition from which one
had been removed or separated. The person reinstated assumes the position he had occupied
prior to his dismissal. Reinstatement presupposes that the previous position from which one
had been removed still exists, or that there is an unfilled position which is substantially
equivalent or of similar nature as the one previously occupied by the employee. Applying the
foregoing principle, it cannot be said that petitioner employer has a clear intent to reinstate
respondent employee to her former position under the same terms and conditions nor to a
substantially equivalent position. To begin with, the return-to-work order petitioner sent to
respondent employee is silent with regard to the position it wanted the respondent employee to
assume. Moreover, a transfer of work assignment without any justification therefor, even if
respondent employee would be presumably doing the same job with the same pay, cannot be
deemed as faithful compliance with the reinstatement order. Pfizer, Inc., et al. v. Geraldine

Velasco,G.R. No. 177467, March 9, 2011.

Termination by employer; willful disobedience. Petitioner employer ordered the respondent


employee to prepare checks for payment of petitioners obligations. Respondent did not
immediately comply with the instruction since petitioner employer has no sufficient funds to
cover the checks. Petitioner employer dismissed respondent employee for willful disobedience.
The Court held that respondent employee was illegally dismissed. The offense of willful
disobedience requires the concurrence of two (2) requisites: (1) the employees 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. Though there is nothing
unlawful in the directive of petitioner employer to prepare checks in payment of petitioners
obligations, respondent employees initial reluctance to prepare the checks, although seemingly
disrespectful and defiant, was for honest and well intentioned reasons. Protecting the petitioner
employer from liability under the Bouncing Checks Law was foremost in her mind. It was not
wrongful or willful. Neither can it be considered an obstinate defiance of company authority.
The Court takes into consideration that respondent employee, despite her initial reluctance,
eventually did prepare the checks on the same day she was tasked to do it. Lores Realty

Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No. 171189, March 9, 2011.

Wages; facilities and supplements. Respondent employees alleged underpayment of their


wages. Petitioner employer claimed that the cost of food and lodging provided by petitioner to
the respondent employees should be included in the computation of the wages received by
respondents. The Court makes a distinction between facilities and supplements.
Supplements constitute extra remuneration or special privileges or benefits given to or received
by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand,
are items of expense necessary for the laborers and his familys existence and subsistence so
that by express provision of law, they form part of the wage and when furnished by the
employer are deductible therefrom, since if they are not so furnished, the laborer would spend

107
and pay for them just the same. In short, the benefit or privilege given to the employee which
constitutes an extra remuneration above and over his basic or ordinary earning or wage is
supplement; and when said benefit or privilege is part of the laborers basic wages, it is a
facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or
sick leave) given, but in the purpose for which it is given. In the case at bench, the items
provided were given freely by petitioner employer for the purpose of maintaining the efficiency
and health of its workers while they were working at their respective projects. Thus, the Court is
of the view that the food and lodging, or the electricity and water allegedly consumed by
respondents in this case were not facilities but supplements which should not be included in the
computation of wages received by respondent employees. SLL International Cables Specialist

and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.

Wages; proof of payment. In an illegal dismissal case against the petitioner employer,
respondent employees alleged that they were underpaid. In their defense, petitioner employer
alleged that respondent employees actually received wages higher than the prescribed
minimum. The Court held that as a general rule, a party who alleged payment of wages as a
defense has the burden of proving it. Specifically with respect to labor cases, the burden of
proving payment of monetary claims rests on the employer, the rationale being that the
pertinent personnel files, payrolls, records, remittances and other similar documents which
will show that overtime, differentials, service incentive leave and other claims of workers have
been paid are not in the possession of the worker but in the custody and absolute control of
the employer. In this case, petitioner employer, aside from bare allegations that respondent
employees received wages higher than the prescribed minimum, failed to present any evidence,
such as payroll or payslips, to support their defense of payment. Thus, petitioner employer
utterly failed to discharge theonus probandi. SLL International Cables Specialist and Sonny L.

Lagon v. NLRC, Roldan Lopez, et al.,G.R. No. 172161, March 2, 2011.

Wages; value of facilities. Petitioner employer alleged that the cost of facilities must be included
in the computation of wages paid. The Court held that before the value of facilities can be
deducted from the employees wages, the following requisites must all be attendant: first, proof
must be shown that such facilities are customarily furnished by the trade; second, the provision
of deductible facilities must be voluntarily accepted in writing by the employee; and finally,
facilities must be charged at reasonable value. Mere availment is not sufficient to allow
deductions from employees wages. These requirements, however, have not been met in this
case. Petitioner employer failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employees salaries. It also failed to provide
proof of the employees written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether respondent employees actually enjoyed
said facilities. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et

al., G.R. No. 172161, March 2, 2011.

Dismissal; breach of trust and confidence. Petitioner was employed as Assistant Vice-President
of the Jewelry Department in respondent bank. His employment was terminated on the ground
of willful breach of trust and confidence. Jurisprudence provides for two requisites for dismissal
on the ground of loss of trust and confidence; (1) the employee concerned must be holding a
position of trust and confidence, and (2) there must be an act that would justify the loss of trust
and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based
on a willful breach of trust and founded on clearly established facts. The basis for the dismissal
must be clearly and convincingly established but proof beyond reasonable doubt is not

108
necessary. Furthermore, the burden of establishing facts as bases for an employers loss of
confidence is on the employer. The court held that the termination of petitioner was without
just cause and therefore illegal. Although the first requisite was present, the respondent failed
to satisfy the second requisite. Respondent bank was not able to show any concrete proof that
petitioner had participated in the approval of the questioned accounts. The invocation by
respondent of the loss of trust and confidence as ground for petitioners termination has
therefore no basis at all. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No.

169564. April 6, 2011.

Breach of Trust and Confidence; duties of employee. Petitioner was employed as Assistant VicePresident in respondent bank. His employment was terminated on the ground of willful breach
of trust and confidence for endorsing VISA card applicants who later turned out to be impostors
resulting in financial losses to respondent bank. The court held that petitioner was illegally
dismissed. As provided in Article 282 of the Labor Code, an employer may terminate an
employees employment for fraud or willful breach of trust reposed in him. However, in order to
constitute a just cause for dismissal, the act complained of must be work-related such as would
show the employee concerned to be unfit to continue working for the employer. The act of
betrayal of trust, if any, must have been committed by the employee in connection with the
performance of his function or position. The court found that the element of work-connection
was not present in this case since petitioner was assigned under the Jewelry department, and
therefore had nothing to do with the approval of VISA Cards, which was under a different
department altogether. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No.

169564. April 6, 2011.


Certiorari under Rule 45; questions of law and exceptions. The Labor Arbiter and the NLRC

found that respondent employer neglected to pay petitioners sickness allowance. However, on
appeal, the Court of Appeals reversed such findings and held that petitioner already received his
sickness allowance from respondent. Petitioner questioned the ruling of the Court of Appeals by
filing a petition for review on certiorari under Rule 45. The Supreme Court held that, as a rule,
only questions of law, not questions of fact, may be raised in a petition for review
on certiorari under Rule 45. However, this principle is subject to recognized exceptions. In the
labor law setting, the Court will delve into factual issues when conflict of factual findings exists
among the labor arbiter, the NLRC, and the Court of Appeals. Considering that in the present
case there were differing factual findings on the part of the Court of Appeals, on one hand, and
the Labor Arbiter and the NLRC, on the other, the Supreme Court found it necessary to make an
independent evaluation of the evidence on record. Wilfredo Y. Antiquina v. Magsaysay Maritime

Corporation and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011.

Rules of Procedure; liberal construction in favor of working class. Petitioner claimed disability
benefits under a Collective Bargaining Agreement that the respondent employer entered into
with a foreign union. The Court of Appeals refused to admit the evidence of petitioner showing
his membership in the union on the ground that it was submitted only with the Motion for
Reconsideration. The Supreme Court, in agreeing to examine the evidence belatedly submitted
by petitioner, pointed out that technical rules of procedure shall be liberally construed in favor
of the working class in accordance with the demands of substantial justice. Rules of procedure
and evidence should not be applied in a very rigid and technical sense in labor cases in order
that technicalities would not stand in the way of equitably and completely resolving the rights
and obligations of the parties. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or

Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011.

109
Disability Benefits; entitlement and burden of proof. Petitioner suffered a fractured arm while
working on respondents vessel. He filed a complaint for permanent disability benefits, among
others. Petitioner claims that he is entitled to the higher amount of disability benefits under the
Collective Bargaining Agreement which respondent entered into with a union of which petitioner
was a member. The Court of Appeals denied the petitioners claim. The Supreme Court, in
upholding the Court of Appeals, held that the burden of proof rests upon the party who asserts
the affirmative of an issue. And in labor cases, the quantum of proof necessary is substantial
evidence, or such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. Petitioner had the duty to prove by substantial evidence his
own positive assertions. He did not discharge this burden of proof when he submitted
photocopied portions of a different CBA with a different union. Wilfredo Y. Antiquina v.

Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011.

Public office; casual employees. Respondent was a casual teller who was dismissed from service
by petitioner without being formally charged. On appeal, the Civil Service Commission (CSC)
upheld the dismissal and reasoned that respondent was a casual employee, and therefore her
services may be terminated at any time, without need of a just cause. Upon review, both the
Court of Appeals and the Supreme Court found that respondent was illegally terminated. The
Supreme Court recognized its pronouncement in a recent case that Even a casual or temporary
employee enjoys security of tenure and cannot be dismissed except for cause enumerated in
Sec. 22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent laws.
However, the Court also went on to state that, despite this new ruling on casual employees, it is
not the intention of the Court to make the status of a casual employee at par with that of a
regular employee, who enjoys permanence of employment. The rule is still that casual
employment will cease automatically at the end of the period unless renewed. Casual employees
may also be terminated anytime though subject to certain conditions or qualifications with
reference to the CSC Form No. 001. Thus, they may be laid-off anytime before the expiration of
the employment period provided any of the following occurs: (1) when their services are no
longer needed; (2) funds are no longer available; (3) the project has already been
completed/finished; or (4) their performance are below par.Philippine Charity Sweepstakes

Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid,G.R. No. 191940. April
12, 2011.
Public office; security of tenure. Respondent was a casual teller who, having been found guilty
of Discourtesy in the Course of Official Duties and of Grave Misconduct, was dismissed from
service by petitioner. On appeal, the Civil Service Commission (CSC) ruled that despite lapses in
procedural due process committed by petitioner employer, the dismissal was proper since
respondent belonged to the category of a casual employee which does not enjoy security of
tenure. Hence, she may be separated from service at any time, there being no need to show
cause. The Court of Appeals disagreed and declared the dismissal illegal. The Supreme Court
affirmed the findings of the Court of Appeals. In doing so, the Court relied on Section 3(2),
Article XIII of the Constitution which guarantees the rights of all workers to security of tenure.
The Court also recognized its pronouncement in a recent case that Even a casual or temporary
employee enjoys security of tenure and cannot be dismissed except for cause enumerated in
Sec. 22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent
laws. Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie

Jean C. Lapid, G.R. No. 191940. April 12, 2011.

Dismissal; due process. Respondent was dismissed from her post as casual teller. When
respondent appealed her dismissal to the Civil Service Commission (CSC), the latter found that

110
respondent was never formally charged for the administrative offenses for which she was
dismissed. However, despite finding that procedural due process was not complied with, the
CSC nevertheless upheld the dismissal on the ground that being a casual employee, respondent
enjoyed no security of tenure and can be dismissed anytime. The Court found that respondent
was illegally terminated and ordered her reinstatement. Casual employees are entitled to due
process especially if they are to be removed for more serious causes or for causes other than
the reasons mentioned in CSC Form No. 001. This is pursuant to Section 2, Article IX(B) of the
Constitution. Furthermore, Section 46 of the Civil Service Law provides that no officer or

employee in the Civil Service shall be suspended or dismissed except for cause as provided by
law after due process. The reason for this is that their termination from the service could carry
a penalty affecting their rights and future employment in the government. Philippine Charity
Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No.
191940. April 12, 2011.
Section 10, Republic Act No. 8042; unconstitutional. Petitioner Yap was employed as an
electrician for respondents vessel under a 12-month contract. He was found to be illegally
terminated with nine months remaining on his contract term. The Court of Appeals (CA)
awarded petitioner salaries for three months as provided under Section 10 of Republic Act No.
8042. On certiorari, the Supreme Court reversed the CA and declared that petitioner was
entitled to his salaries for the full unexpired portion of his contract. The Court has previously
declared in Serrano v. Gallant Maritime Services, Inc. (2009) that the clause or for three
months for every year of the unexpired term, whichever is less provided in the 5th paragraph
of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas
Filipino Workers (OFWs) to equal protection of the laws. The subject clause contains a suspect
classification in that, in the computation of the monetary benefits of fixed-term employees who
are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired
portion of one year or more in their contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause singles out one classification of OFWs
and burdens it with a peculiar disadvantage. Moreover, the subject clause does not state or
imply any definitive governmental purpose; hence, the same violates not just petitioners right
to equal protection, but also his right to substantive due process under Section 1, Article III of
the Constitution. Claudio S. Yap vs. Thenamaris Ships Management and Intermare Maritime

Agencies, Inc., G.R. No. 179532, May 30, 2011

Doctrine of Operative Fact; applied as a matter of equity and fair play. Petitioner Yap was
employed on respondents vessel under a 12-month contract. Upon finding that he was illegally
terminated, the Court of Appeals (CA) awarded petitioner salaries for three months as provided
under Section 10 of Republic Act No. 8042 (RA 8042). While the case was pending in the
Supreme Court, Section 10 of RA 8042 was declared unconstitutional. In deciding to award
petitioner his salaries for the entire unexpired portion of his contract, the Supreme Court
rejected the application of the operative fact doctrine. As an exception to the general rule, the
doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a
statute prior to a determination of unconstitutionality is an operative fact and may have
consequences which cannot always be ignored. The doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on those who have relied on the invalid law.
This case should not be included in the aforementioned exception. After all, it was not the fault
of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To
rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a

111
wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs
security of tenure which an employment contract embodies and actually profit from such
violation based on an unconstitutional provision of law. Claudio S. Yap vs. Thenamaris Ships

Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011.

Migrant workers; computation of salary award. Petitioner Yap was employed as an electrician
for respondents vessel under a 12-month contract. He was found to be illegally terminated with
nine months remaining on his contract term, and was declared to be entitled to his salaries for
the balance of his contract. Respondents claim that the tanker allowance should be excluded
from the definition of the term salary. The Supreme Court, after examining the relevant
clauses of the contract, rejected respondents claim. The word salaries in Section 10 (5) does
not include overtime and leave pay. For seafarers, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses. A close perusal of the contract
reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather
encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. If
respondents intended it differently, the contract per se should have indicated that said
allowance does not form part of the basic salary or, simply, the contract should have separated
it from the basic salary clause. Claudio S. Yap vs. Thenamaris Ships Management and

Intermare Maritime Agencies, Inc. G.R. No. 179532, May 30, 2011.

Termination for Just Cause; separation pay by way of financial assistance. Petitioner Juliet
Apacible was employed as Assistant Area Sales Manager for respondents Cebu operations. She
was informed that she would be transferred to the Pasig office on account of the ongoing
reorganization. Petitioners repeated refusal to comply with the transfer order was treated by
respondent as insubordination and grounds for her dismissal. The Labor Arbiter, the NLRC and
the Court of Appeals all found that petitioner was justly dismissed from employment. The NLRC
awarded separation pay as financial assistance, however, noting that petitioners obstinacy was
upon the advice of her counsel and, therefore, there was a modicum of good faith on her part.
On appeal, the Court of Appeals (CA) deleted the award of separation pay. The Supreme Court
upheld the CA and declared that the award of financial assistance shall not be given to validly
terminated employees, whose offenses are iniquitous or reflective of some depravity in their
moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the
grant of financial assistance is misplaced compassion. In this case, petitioners adamant refusal
to transfer, coupled with her failure to heed the order for her to return the company vehicle
assigned to her and, more importantly, allowing her counsel to write letters couched in harsh
language to her superiors unquestionably show that she was guilty of insubordination, hence,
not entitled to the award of separation pay. Juliet G. Apacible vs.Multimed Industries, et

al., G.R. No. 178903, May 30, 2011.

Appeal; posting of Appeal Bond; Governments exemption from the same. Respondents are
supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned
by petitioner Banahaw Broadcasting Corporation (BBC). Respondents filed a complaint for illegal
dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining Agreement
(CBA) benefits against petitioner. The Labor Arbiter rendered a decision ordering petitioner BBC
to pay the money claims. On appeal to the NLRC, petitioner BBC averred that since it is wholly
owned by the Republic of the Philippines, it need not post an appeal bond. The NLRC dismissed
the appeal of BBC for non-perfection. The Court of Appeals affirmed the NLRC. The Supreme
Court, in sustaining the CA, held that as a general rule, the government and all the attached
agencies with no legal personality distinct from the former are exempt from posting appeal

112
bonds. The rationale is to protect the presumptive judgment creditor against the insolvency of
the presumptive judgment debtor. When the State litigates, it is not required to put up an
appeal bond because it is presumed to be always solvent. This exemption, however, does not,
as a general rule, apply to government-owned and controlled corporations (GOCCs) for the
reason that the latter has a personality distinct from its shareholders. In this case, BBC, though
owned by the government, is a corporation with a personality distinct from the Republic or any
of its agencies or instrumentalities, and therefore do not partake in the latters exemption from
the posting of appeal bonds. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et

al, G.R. No. 171673, May 30, 2011.

Appeal; posting of appeal bond within the 10-day period is mandatory and jurisdictional.
Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of
unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter
rendered a decision in favor of respondents and ordered petitioner BBC to pay the money
claims. Petitioner appealed to the NLRC, and without posting the appeal bond, filed a Motion for
the Re-computation of the Monetary Award in order that the appeal bond may be reduced. The
NLRC denied the motion and dismissed the appeal of BBC for non-perfection. The Court of
Appeals and the Supreme Court both sustained the dismissal by the NLRC. The Motion for the
Re-computation of the Monetary Award filed by BBC was tantamount to a motion for extension
to perfect the appeal, which is prohibited by the rules. The payment of the appeal bond within
the period provided by law is an indispensable and jurisdictional requisite and not a mere
technicality of law or procedure. Hence, the failure on the part of BBC to perfect the appeal had
the effect of rendering the judgment final and executory. Banahaw Broadcasting Corporation vs.

Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.

Voluntary Resignation; financial assistance may be awarded on equity considerations. Petitioner


filed a complaint for illegal dismissal against respondent. Finding instead that petitioner had
voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered
the latter to pay P18,000.00 by way of financial assistance. On appeal, the NLRC found
petitioner to be illegally dismissed. The Court of Appeals reaffirmed the findings of the LA but
deleted the award of financial assistance, ruling that the same may not be awarded in cases of
voluntary resignation. The Supreme Court, in upholding the award of financial assistance, stated
that while the rule is that financial assistance is allowed only in instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral
character, there are instances when financial assistance may be allowed as a measure of social
justice and as an equitable concession. In this case, petitioner, who has served respondent for
more than eight years without committing any infraction, may be granted such financial
assistance on equity considerations. Rodolfo Luna vs. Allado Construction Company, Inc. and/or

Ramon Allado, G.R. No. 175251, May 30, 2011.

National Labor Relations Commission; authority to review is limited to issues specifically brought
before it on appeal. Petitioner filed a complaint for illegal dismissal against respondent. Finding
that petitioner had voluntarily resigned, the Labor Arbiter dismissed the complaint against
respondent, but ordered the latter to pay P18,000.00 by way of financial assistance.
Respondents interposed an appeal with the National Labor Relations Commission (NLRC), purely
for the purpose of questioning the validity of the grant of financial assistance made by the Labor
Arbiter. Instead, the NLRC ruled that petitioner was illegally dismissed and was entitled to
separation pay. The Court of Appeals (CA) held that it was grave abuse of discretion for the
NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the
propriety of the award of financial assistance. The Supreme Court sustained the view of the CA,

113
reasoning that Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC
expressly provides that, on appeal, the NLRC shall limit itself only to the specific issues that
were elevated for review. In the case at bar, the NLRC evidently went against its own rules of
procedure when it passed upon the issue of illegal dismissal although this question was not
raised by respondents in their appeal. Rodolfo Luna vs. Allado Construction Company, Inc.

and/or Ramon Allado, G.R. No. 175251, May 30, 2011.

Appeal; decision of DOLE Secretary. For petitioners refusal to comply with his deployment
assignment, respondent manning agency filed a complaint against him for breach of contract
before the Philippine Overseas Employment Administration (POEA). The POEA penalized
petitioner with one year suspension from overseas deployment. The suspension was reduced to
six months by the Secretary of Labor. Petitioner appealed the latters decision with the Office of
the President (OP). The Supreme Court ruled that petitioners appeal was erroneous. The proper
remedy to question the decisions or orders of the Secretary of Labor is via Petition for Certiorari
under Rule 65. Appeals to the OP in labor cases have been eliminated, except those involving
national interest over which the President may assume jurisdiction. The present case does not
affect national interest. Hence, petitioners appeal to the OP did not toll the running of the
period and the assailed decision of the Secretary of Labor is deemed to have attained
finality. Miguel Dela Pena Barairo vs. Office of the President and MST Marine Services (Phils.)

Inc., G.R. No. 189314. June 15, 2011.

Appeal from decisions of labor arbiter; bond requirement for perfection of appeal may be
relaxed in meritorious cases. The posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the labor arbiter. However,
under Section 6, Rule VI of the NLRCs Revised Rules of Procedure, the bond may be reduced
albeit only (1) on meritorious grounds and (2) upon posting of a partial bond in a reasonable
amount in relation to the monetary award. For this purpose, the NLRC is not precluded from
conducting a preliminary determination of the employers financial capability to post the
required bond, without necessarily passing upon the merits. In the present case, the NLRC
gravely abused its discretion in denying petitioners motion to reduce bond peremptorily without
considering the evidence presented by petitioner showing that it was under a state of
receivership. Such circumstance constitutes meritorious grounds to reduce the bond. Moreover,
the petitioner exhibited its good faith by posting a partial cash bond during the reglementary
period. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No. 170416, June 22, 2011
Certiorari; substantial compliance. The three material dates which should be stated in the
petition forcertiorari under Rule 65 are the dates when the notice of judgment was received,
when a motion for reconsideration was filed and when the notice of the denial of the motion for
reconsideration was received. These dates should be reflected in the petition to enable the
reviewing court to determine if the petition was filed on time. In the present case, the petition
filed with the Court of Appeals failed to state when petitioner received the assailed NLRC
Decision and when he filed his partial motion for reconsideration. However, this omission is not
at all fatal because these material dates are reflected in petitioners Partial Motion for
Reconsideration attached to the petition. The failure to state these two dates in the petition
may be excused if the same are evident from the records of the case. The Court further stated
that the more important material date which must be duly alleged in the petition is the date of
receipt of the resolution of denial of the motion for reconsideration. Since petitioner has duly
complied with this rule, there was substantial compliance with the requisite formalities. William

114
Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27,
2011

Collective bargaining agreement; duty of parties to maintain status quo pending renegotiation.
Article 253 of the Labor Code 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. The law does not provide for any exception nor qualification on which economic
provisions of the existing agreement are to retain its force and effect. Likewise, the law does
not distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the
one in the present case. Hence, considering that no new CBA had been, in the meantime,
agreed upon by respondent GMC and the Union, the provisions of the imposed CBA continues to
have full force and effect until a new CBA is entered into by the parties. General Milling

Corporation-Independent Labor Union [GMC-ILU] vs. General Milling Corporation/General Milling


Corporation vs.General Milling Corporation-Independent Labor Union [GMC-ILU], et al., G.R.
Nos. 183122/183889, June 15, 2011.
Damages; fraud or bad faith for the award of moral damages. Moral and exemplary damages
are recoverable where the dismissal of an employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or were done in a manner contrary to morals, good
customs or public policy. In the present case, P&G dismissed its employees in a manner
oppressive to labor. The sudden and peremptory barring of petitioners from work, and from
admission to the work place, after just a one-day verbal notice, and for no valid cause,
constitutes oppression and utter disregard of the right to due process of the concerned
petitioners. Hence, the Supreme Court held that an award of moral damages is called for under
the circumstances. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No.

160506, June 6, 2011.

Dismissal; constructive dismissal. Petitioner was employed as an instructor of Data Center


College located in Ilocos Norte. When the college proposed to transfer him to Abra, he filed a
complaint alleging constructive dismissal since his re-assignment will entail an indirect reduction
of his salary or diminution of pay considering that no additional allowance will be given to cover
for board and lodging expenses. He claims that such additional allowance was given in the past
and therefore cannot be discontinued and withdrawn without violating the prohibition against
non-diminution of benefits. The Supreme Court affirmed the findings of the lower bodies and
declared that petitioners re-assignment did not amount to constructive dismissal. Constructive
dismissal is quitting because continued employment is rendered impossible, unreasonable or
unlikely, or because of a demotion in rank or a diminution of pay. It exists when there is a clear
act of discrimination, insensibility or disdain by an employer which becomes unbearable for the
employee to continue his employment. In the present case, the colleges right to transfer
petitioner is based on contractual stipulation, particularly the condition laid down in petitioners
employment contract that respondents have the prerogative to assign petitioner in any of its
branches or tie-up schools as the necessity demands. In any event, it is management
prerogative for employers to transfer employees on just and valid grounds such as genuine
business necessity. Since respondents have shown that it was experiencing some financial
constraints at the time, the re-assignment was not tainted with bad faith. Furthermore,
petitioner failed to present evidence that respondents committed to provide the additional
allowance or that they were consistently granting such benefit as to have ripened into a practice
which cannot be peremptorily withdrawn. Hence, there is no violation of the rule against

115
diminution of pay. William Endeliseo Barroga vs. Data Center College of the Philippines, et

al., G.R. No. 174158. June 27, 2011.

Dismissal; elements for loss of trust or confidence. Petitioners were employees of Promm-Gem,
a legitimate independent contractor, and were hired to work as merchandisers for respondent
P&G. When petitioners filed a claim against P&G for regularization and other benefits, it likewise
attacked Promm-Gem as being merely a labor-only contractor. The latter treated such move as
an act of disloyalty against Promm-Gem and petitioners were dismissed on the ground of grave
misconduct and breach of trust. The Supreme Court declared such termination illegal for being
without valid cause. Loss of trust and confidence, as a cause for termination of employment, is
premised on the fact that the employee concerned holds a position of responsibility or of trust
and confidence. As such, he must be invested with confidence on delicate matters, such as
custody, handling or care and protection of the property and assets of the employer. Moreover,
in order to constitute a just cause for dismissal, the act complained of must be work-related and
must show that the employee is unfit to continue to work for the employer. In the instant case,
the petitioners have not been shown to be occupying positions of responsibility or of trust and
confidence. Neither is there any evidence to show that they are unfit to continue to work as
merchandisers for Promm-Gem. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et

al., G.R. No. 160506, June 6, 2011.

Dismissal; elements for serious misconduct. Petitioners were employees of Promm-Gem, a


legitimate independent contractor. After several years of working as merchandisers for
respondent P&G, petitioners filed a claim against P&G for regularization and other benefits, and
asserted incidentally that Promm-Gem was merely a labor-only contractor. The latter treated
such move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the
ground of grave misconduct and breach of trust. The Supreme Court declared such termination
illegal for lack of a valid clause. To be a just cause for dismissal, such misconduct (a) must be
serious; (b) must relate to the performance of the employees duties; and (c) must show that
the employee has become unfit to continue working for the employer. In other words, in order
to constitute serious misconduct under Article 282 (a) of the Labor Code, it is not sufficient that
the act or conduct complained of has violated some established rules or policies. It is equally
important and required that the act or conduct must have been performed with wrongful intent.
In the instant case, petitioners may have committed an error of judgment in claiming to be
employees of P&G, but it cannot be said that they were motivated by any wrongful intent in
doing so. As such, the court found them guilty of simple misconduct only which does not
warrant a dismissal. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No.

160506, June 6, 2011.

Dismissal; financial assistance based on equity . The award of separation pay is authorized
under Article 283 and 284 of the Labor Code, and under Section 4 (b), Rule I, Book VI of the
Implementing Rules and Regulations where there is illegal dismissal and reinstatement is no
longer feasible. By way of exception, the courts have allowed grants of separation pay to stand
as a measure of social justice where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. However, there is no provision in
the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule
is that an employee who voluntarily resigns from employment is not entitled to separation pay,
except when it is stipulated in the employment contract or collective bargaining agreement
(CBA), or it is sanctioned by established employer practice or policy. In the present case, neither
the abovementioned provisions of the Labor Code nor the exceptions apply because petitioner
was not dismissed from his employment nor is there any evidence to show that payment of

116
separation pay is stipulated in his employment contract or sanctioned by established practice or
policy of his employer. Nevertheless, the Court noted that petitioner never had any derogatory
record during his long years of service with respondent and that his employment was severed
not by reason of any infraction on his part but because of his failing physical condition. Hence,
as a measure of social and compassionate justice and as an equitable concession, the Court
granted separation pay to petitioner by way of financial assistance.Romeo Villaruel vs. Yeo Han

Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1,
2011.
Dismissal; separation pay due to disease. Petitioner was employed as a machine operator until
he stopped working when he suffered from an illness. After his recovery, petitioner was directed
to report for work but he refused. Instead, he filed a case with the NLRC demanding his
separation pay. The NLRC awarded him separation benefits under Article 284 of the Labor
Code. However, the Court of Appeals (CA) deleted such award. On appeal, the Supreme Court
stated that Article 284 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. This is precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code, directs that an employer shall not terminate the services of the
employee unless there is a certification by a competent public health authority that the disease
is of such nature or at such a stage that it cannot be cured within a period of six (6) months
even with proper medical treatment. In the present case, petitioner was not terminated from his
employment and, instead, is deemed to have resigned therefrom, and therefore he is not
entitled to separation pay under Article 284 of the Labor Code. Romeo Villaruel vs. Yeo Han

Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1,
2011.
DOLE assumption of jurisdiction; effects. A strike conducted after the Secretary of Labor has
assumed jurisdiction over a labor dispute is illegal and any union officer who knowingly
participates in the strike may be declared as having lost his employment. The present case
involved 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. The Supreme Court upheld
the finding that the union officers committed illegal acts that warranted their dismissal from
work when they refused to work or abandoned their work to join union assemblies after the
Labor Secretary assumed jurisdiction over the labor dispute. Yolito Fadriquelan, et al. vs.

Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa


Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011.
Independent job contracting; required substantial capital. Petitioners assert that they are
employees of P&G and that Promm-Gem and SAPS are merely labor-only contractors providing
manpower services to P&G. 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. In the instant case, the Supreme Court found that Promm-Gem has substantial
investment which relates to the work to be performed. The financial statementsshow that it has
authorized capital stock of P1 million and a substantial amount of paid-in capital and other
assets to support its operations. Under the circumstances, Promm-Gem cannot be considered a

117
labor-only contractor; it is in fact a legitimate independent contractor. On the other hand, the
financial records of SAPS show that it has a paid-in capital of only P31,250.00. There is no
other evidence presented to show how much its working capital and assets are. Furthermore,
there is no showing of substantial investment in tools, equipment or other assets. 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, SAPS is considered to be
engaged in labor-only contracting. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc.,

et al., G.R. No. 160506, June 6, 2011.

Labor law; labor-only contracting v. independent job contracting. The law allows contracting
arrangements for the performance of specific jobs, works or services, regardless of whether
such activity is peripheral or core in nature. However, in order for such outsourcing to be valid,
it must be made to an independent contractor because the current labor rules expressly prohibit
labor-only contracting. There is labor-only contracting when the contractor or sub-contractor
merely recruits, supplies or places workers to perform a job, work or service for a
principaland 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 of control on the performance of the work of the
contractual employee. Where labor-only contracting exists, the law establishes an employeremployee relationship between the employer and the employees of the labor-only contractor.
The statute establishes this relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. 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. In the present case,
petitioners, who were recruited by Promm-Gem and SAPS to work as merchandisers of
respondent P&G, filed a complaint against the latter for regularization, service incentive leave
pay and other benefits on the ground that they were employees of P&G. With respect to the
contractor Promm-Gem, it was found to be a legitimate independent job contractor; hence,
there was no employer-employee relationship between its workers and P&G. On the other hand,
SAPS was found to be engaged in labor-only contracting. Consequently, the petitioners who
have been recruited and supplied by SAPSare considered to be the employees of P&G. Joeb M.

Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.

Labor strikes; liability of union officers and participating workers. A distinction exists 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.
Moreover, the participating union officers have to be properly identified. In the present case,
with respect to those union officers whose identity and participation in the strike having been
properly established, the termination was legal. Yolito Fadriquelan, et al. vs. Monterey Foods

Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW,


et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011.
Secretary of Labor; power to give arbitral awards. The Secretary of Labor is empowered to give
arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes under
Art. 263 (g) of the Labor Code. In the present case, the Supreme Court upheld the authority of
the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon

118
in the Memorandum of Agreement (MOA) between the parties. The Court further stated that
while an arbitral award cannot per se be categorized as an agreement voluntarily entered into
by the parties because it requires the interference and imposing power of the State thru the
Secretary of Labor when he assumes jurisdiction, the award can be considered as 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 between the
parties. Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics,
Inc., G.R. No. 190515. June 6, 2011.
Termination of employment; resignation v. dismissal. Petitioner claims he was dismissed on the
ground of illness and was therefore entitled to separation benefits under Article 284 of the
Labor Code. The Supreme Court (SC) disagreed and instead found that petitioner was the one
who initiated the severance of his employment relations on the ground that his health was
failing. In fact, he rejected respondents offer for him to return to work. The SC declared that
this is tantamount to resignation. Resignation is defined as the voluntary act of an employee
who finds himself in a situation where he believes that personal reasons cannot be sacrificed in
favor of the exigency of the service and he has no other choice but to disassociate himself from
his employment. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style

Yuhans Enterprises, G.R. No. 169191, June 1, 2011.

Unions; disaffiliation. A local union may disaffiliate at any time from its mother federation,
absent any showing that the same is prohibited under its constitution or rules. Such
disaffiliation, however, does not result in it losing its legal personality. 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. The mere act of 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. In the present case, whether the FFW
went against the will of its principal (the member-employees) by pursuing the case despite the
signing of the MOA, is not for the Court, nor for respondent employer to determine, but for the
Union and FFW to resolve on their own pursuant to their principal-agent relationship. Moreover,
the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in
an action at the instance of either or both the FFW and the union or a rival labor organization,
but not the employer as in this case. Cirtek Employees Labor Union-Federation of Free workers
vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011.
Labor relations; in pari delicto rule in illegal strikes or lockouts. When management and union
are in pari delicto, the contending parties must be brought back to their respective positions
before the controversy; that is, before the strike. In this case, managements fault arose 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. Indeed, the timing of the
drug test was suspicious. Moreover, management engaged in a runaway shop when it began
pulling out machines from the main building (AER building) to the compound (AER-PSC
premises) located on another street on the pretext that the main building was undergoing
renovation. On the other hand, like management, the union and the affected workers were also
at fault for resorting to a concerted work slowdown and walking out of their jobs in protest of
their illegal suspension. It was also wrong for them to have forced their way to the AER-PSC
premises to try to bring out the boring machines. Adding to the injury was the fact that the
picketing employees prevented the entry and exit of non-participating employees and possibly

119
AERs clients to the premises. Thus, the Supreme Court affirmed the ruling of the Court of
Appeals favoring the reinstatement of all the complaining employees, including those who
tested positive for illegal drugs, without backwages.Automotive Engine Rebuilders, Inc. et al. v.

Progresibong Unyon ng mga Manggagawa sa AER, et al./Progresibong Unyon ng mga


Manggagawa sa AER, et al. v. Automotive Engine Rebuilders, Inc., et al.,G.R. No. 160138/G.R.
No. 160192. July 13, 2011.
Employee dismissal; reorganization. Resignation is the voluntary act of an employee who is in a
situation where he believes that personal reasons cannot be sacrificed in favor of the exigency
of the service, and he has then no other choice but to disassociate himself from employment.
The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the
employee before and after the alleged resignation must be considered in determining whether
he, in fact, intended to terminate his employment. In this case, the element of voluntariness
was lacking. San Miguel Properties Philippines, Inc. (SMPI) claims that there was an existing
reorganization plan in 1998 and that it was implemented shortly after the effective date of
Gucabans resignation. While a reorganization of SMPIs corporate structure might have indeed
taken place, it happened more than a year after Gucabans separation from the company and
incidentally, after she filed the complaint. And although the company might have been suffering
from losses due to market decline as alleged, there was still no concrete plan for a corporate
reorganization at the time Gonzalez presented to Gucaban the seemingly last available
alternative options of voluntary resignation and termination by abolition of her office. In other
words, Gucabans separation from the company was the confluence of the fraudulent
representation to her that her office would be declared redundant, coupled with the subsequent
alienation which she suffered from the company by reason of her refusal to tender resignation.
The element of voluntariness in her resignation is, therefore, missing. San Miguel Properties

Philippines, Inc. vs. Gwendellyn Rose Gucaban, G.R. No. 153982. July 18, 2011.

Factual Findings of the CA and NLRC. The Supreme Court, as a rule, is bound by the factual
findings of the Court of Appeals, but has the discretion to reexamine the evidence in a case
when a basic conflict exists between the CAs findings of fact and those of the NLRC. In this
case, such a conflict existed and the SC had to determine whether Barit had been underpaid
and/or was not paid her wages during her employment in Saudi Arabia. The SC found that Barit
was fully paid her wages during her employment in Saudi Arabia. Nowhere in the records did it
appear that Barit complained about the alleged underpayment and non-payment of her wages
with the Philippine labor or consular representatives in Saudi Arabia, or even with the Saudi
authorities themselves. Neither was there any showing that she ever objected to or protested
her iniquitous work situation directly with the foreign principal, Hameed, if that had really been
the case, nor that Barit identified or spoke of any problem that could have prevented her from
seeking relief in Saudi Arabia. To make the agency liable for Barits alleged unpaid and
underpaid wages on the sole ground that it failed to submit copies of payslips and payrolls is
unfair, as the agency appeared to have taken all available means to secure the necessary
documents from Barits employer to dispute her claims. Jones International Manpower

Services, Inc., represented by its President, Edward G. Cue vs. Bella Agcaoili-Barit, G.R. No.
181919. July 20, 2011.
Compensable death. To be considered as a compensable death under the GSIS law, the injury
must be the result of an employment accident satisfying all of the following: 1) the employee
must have been injured at the place where his work requires him to be; 2) the employee must
have been performing his official functions; and 3) if the injury is sustained elsewhere, the
employee must have been executing an order for the employer. The requirement that the injury

120
must arise out of and in the course of employment proceeds from the limiting premise that the
injury must be the result of an accident. An accident excludes that which happens with intention
or design, with ones foresight or expectation or that which under the circumstances is expected
by the person to whom it happens. In this case, the Supreme Court found that the death of
Sgt. Angel did not result from an accident which is compensable under Presidential Decree No.
626. It was, on the contrary, occasioned by an intentional or designed act which removes the
resulting death from the coverage of the State Insurance Fund. The circumstances of Sgt.
Angels death his lifeless body was found hanging inside his cell with an electric cord tied
around his neck taken together with the unrebutted finding that there is no evidence of foul
play negate respondents claim of murder of her husband and of the compensability of such
death. Government Service Insurance System vs. Jum Angel, G.R. No. 166863. July 20, 2011.
Employee dismissal; evidence. Substantial evidence means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise. In this case, it was found that the agency
succeeded in showing by substantial evidence that its principal, Panstar, had a valid reason for
terminating Flores employment. Capt. B.H. Mun, decided to dismiss Flores (the ships Master)
not only for agitating the crew to rebel against the authorities of the vessel M/V Morning Charm,
but for several other infractions. As the records showed, and as Capt. B.H. Mun stressed in his
letter of November 17, 1997 to the agency management, Flores was also charged with
inefficiency or neglect of duty, insubordination, insolent and disrespectful behavior, and other
actuations which made him unfit for his position and rank. Abosta Shipmanagement Corporation

vs. National Labor Relations Commission (First Division) and Arnulfo R. Flores, G.R. No. 163252.
July 27, 2011.

Grounds for Dismissal. An employees propensity to commit repetitious infractions evinces


wrongful intent, making him undeserving of the compassion accorded by law to labor; thus,
dismissal of said employee would be justified. In this case, as petitioners employment record
showed, it was not the first time that he refused to collect fares from passengers. In fact, it
was already the third instance that he failed to collect fares from the riding public. His repeated
violation of the companys policies and rules showed his want of care for the employers policies.
And although petitioner already suffered the corresponding penalties for his past misconduct,
those infractions were still found to be relevant and may be considered in assessing his liability
for his present infraction. Jerry Mapili vs.. Philippine Rabbit Bus Lines, Inc., G.R. No. 172506.

July 27, 2011.

Labor relations; appropriate bargaining unit. An appropriate bargaining unit is 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. The test of grouping is community or
mutuality of interest. In this case, there should be only one bargaining unit for the employees
in the Cabuyao, San Fernando, and Otis plants of the Magnolia Poultry Products involved in
dressed chicken processing and Magnolia Poultry Farms 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. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors
and Exempt Union, G.R. No. 146206. August 1, 2011.

121
Labor organization; confidential employees. Confidential employees are defined as those who
(1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine,
and effectuate management policies in the field of labor relations. The two criteria are
cumulative, and both must be met if an employee is to be considered a confidential employee.
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 (as in this case) and the
whole gamut of employees who 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. In other words, 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, Inc.
vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011.
Labor organization; ineligibility to join. 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. 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 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, ones 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. San Miguel Foods, Inc. vs. San Miguel

Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011.

Certification election; role of employers. The general rule is that an employer has no standing
to question the process of certification election, since this is the sole concern of the workers.
Law and policy demand that employers take a strict, hands-off stance in certification elections.
The bargaining representative of employees should be chosen free from any extraneous
influence of management. The only exception is where the employer itself has to file the
petition pursuant to Article 258 of the Labor Code because of a request to bargain
collectively. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R.

No. 146206. August 1, 2011.

Appeal of the decision of the labor arbiter; posting of bond. The posting of a bond is
indispensable to the perfection of an appeal in cases involving monetary awards from the
Decision of the Labor Arbiter. However, the Supreme Court, considering the substantial merits
of the case, has on certain occasions relaxed this rule on, and excused the late posting of, the
appeal bond when there are strong and compelling reasons for the liberality. In this case, the
exception applies. The rule on the posting of an appeal bond cannot defeat the substantive
rights of respondents to be free from an unwarranted burden of answering for an illegal
dismissal for which they were never responsible since no employer-employee relationship
existed between the two. Marticio Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No.

196426. August 15, 2011.

122
Employer-employee relationship; four-fold test. Petitioners are not employees of respondents,
since their relationship failed to pass the four-fold test of employment: (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, which is the most important element. As found
by both the NLRC and the CA, respondents had no part in petitioners selection and
management; petitioners compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners; and petitioners performed their functions
as masiador and sentenciador free from the direction and control of respondents. Marticio

Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011.

Labor; illegal recruitment in large scale. To prove illegal recruitment, it must be shown that
appellant gave complainants the distinct impression that she had the power or ability to send
complainants abroad for work such that the latter were convinced to part with their money in
order to be employed. All eight private complainants in this case consistently declared that
Ochoa offered and promised them employment overseas. Moreover, Ochoa can also be
convicted for illegal recruitment based on Section 6 of Republic Act No. 8042, which clearly
provides that any person, whether or not a licensee or holder of authority may be held liable for
illegal recruitment for certain acts as enumerated in paragraphs (a) to (m). Among such acts is
the failure to reimburse expenses incurred by the worker in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually
take place without the workers fault. In this case, Ochoa received placement and medical fees
from private complainants and failed to reimburse the private complainants the amounts they
had paid when they were not able to leave for Taiwan and Saudi Arabia, through no fault of
their own. People of the Philippines vs.Rosario Rose Ochoa, G.R. No. 173792. August 31,

2011.

Illegal recruitment; admissibility of POEA certification. Section 36, Rule 130 of the Revised
Rules on Evidence, states that a witness can testify only to those facts which he knows of or
comes from his personal knowledge, that is, which are derived from his perception. This is
known as the hearsay rule. The law, however, provides for specific exceptions to the hearsay
rule, and one of the exceptions refers to entries in official records made in the performance of
duty by a public officer. Accordingly, in the case at bar, although Dir. Mateo was not presented
in court or did not testify during the trial to verify the said certification, such certification is
considered as prima facie evidence of the facts stated therein and is therefore presumed to be
truthful, because Ochoa did not present any plausible proof to rebut its truthfulness. People of

the Philippines vs. Rosario Rose Ochoa, G.R. No. 173792. August 31, 2011.

Illegal recruitment and estafa; may be charged separately. A person may be charged and
convicted separately of illegal recruitment under Republic Act No. 8042, in relation to the Labor
Code, and estafa under Article 315, paragraph 2(a) of the Revised Penal Code. The offense of
illegal recruitment is malum prohibitum, while estafa is malum in se. In this case, therefore,
Ochoa may also be charged and correspondingly held liable for estafa since all the elements for
the crime are present in Criminal Case Nos. 98-77301, 98-77302, and 98-77303. Ochoas deceit
was evident in her false representation to private complainants Gubat, Cesar, and Agustin that
she possessed the authority and capability to send said private complainants to Taiwan/Saudi
Arabia for employment as early as one to two weeks from completion of the requirements,
among which were the payment of placement fees and submission of a medical examination
report. People of the Philippines vs. Rosario Rose Ochoa, G.R. No. 173792. August 31, 2011.
Floating status; validity. The rule is settled 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

123
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 the sixmonth period and/or the actual dismissal of the employee is generally considered as
prematurely filed. In this case, the evidence adduced a quo clearly indicates that petitioners
were not in bad faith when they placed Leynes under floating status. Disgruntled by NHPIs
countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified
her intention to resign from her position on 12 February 2002. In view of the sensitive nature
of Leynes position and the critical stage of the Projects business development, NHPI was
constrained to hire Engr. Jose as Leynes replacement as a remedial measure. Nippon Housing

Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3, 2011.

Constructive dismissal; burden of proof. Constructive dismissal exists where there is cessation
of work because continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a diminution in pay. In constructive dismissal cases, the
employer is, concededly, charged with the burden of proving that its conduct and action or the
transfer of an employee are for valid and legitimate grounds such as genuine business
necessity. The Supreme Court found that in this case, respondents have more than amply
discharged this burden with proof of the circumstances surrounding Engr. Carlos employment
as Property Manager for the Project and the consequent unavailability of a similar position for
Leynes. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3,

2011.

Pleading; verification. Verification of a pleading is a formal, not jurisdictional, requirement


intended to secure the assurance that the matters alleged in a pleading are true and correct. It
is deemed substantially complied with when one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct. In this case, the
Supreme Court found that the petitions verification substantially complied with the
requirements of the rules. The SPA authorized Bello-Ona to represent Bello in the case from
which the present petition with the Supreme Court originated. As the daughter of Bello, BelloOna is deemed to have sufficient knowledge to swear to the truth of the allegations in the
petition, which are matters of record in the lower tribunals and the appellate court. Francis

Bello, represented herein by his daughter and attorney-in-fact, Geraldine Bello-Ona vs. Bonifacio
Security Services, Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011.

Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work
because continued employment has been rendered impossible, unreasonable, or unlikely, as
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. In this case,
other than his bare and self-serving allegations, Bello has not offered any evidence that he was
promoted in a span of four months since his employment as traffic marshal in July 2001 to a
detachment commander in November 2001. At most, the BSSI merely changed his assignment
or transferred him to the post where his service would be most beneficial to its clients. The
managements prerogative of transferring and reassigning employees from one area of
operation to another in order to meet the requirements of the business is generally not
constitutive of constructive dismissal. This was what exactly occurred in this case. Francis Bello,

represented herein by his daughter and attorney-in-fact, Geraldine Bello-Ona vs. Bonifacio
Security Services, Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011.
Procedural rules; failure to attach duplicate original or certified true copy of the assailed
decision. The refusal of the Court of Appeals to consider the petition was the absence of a

124
duplicate original or certified true copy of the assailed NLRC decision, in violation of Section 3,
Rule 46 of the Rules of Court (in relation to Section 1, Rule 65). The company, however,
corrected the procedural lapse by attaching a certified copy of the NLRC decision to its motion
for reconsideration. The Supreme Court found that the CA precipitately denied the petition
for certiorari based on an overly rigid application of the rules of procedure. In effect, it sacrificed
substance to form in a situation where the petitioners recourse was not patently frivolous or
meritless. Thus, the case was remanded to the NLRC for resolution of its appeal. Jobel

Enterprises and/or Mr. Benedict Lim vs. NLRC and Eric Martinez, Sr., G.R. No. 194031, August 8,
2011.
Appeal; decision or resolution of NLRC. As was enunciated in the case of St. Martin Funeral
Home v. NLRC, the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure,
which is filed before the CA, is the proper vehicle for judicial review of decisions of the NLRC.
The petition should be initially filed before the Court of Appeals in strict observance of the
doctrine on hierarchy of courts as the appropriate forum for the relief desired. Thus,
respondents recourse to the CA was the proper remedy to question the resolution of the
NLRC. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
Employer-employee relationship; four-fold test. To ascertain the existence of an employeremployee relationship jurisprudence 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 so-called control test.
Applying the aforementioned test, an employer-employee relationship was found to be absent in
the case at bar. Among other things, respondent was not required to report everyday during
regular office hours of petitioner. Respondents monthly retainer fees were paid to him either at
his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in
which respondent would accomplish any of the tasks in which his expertise as a liaison officer
was needed; respondent was left alone and given the freedom to accomplish the tasks using his
own means and method. Verily, the absence of the element of control on the part of the
petitioner engenders a conclusion that he is not an employee of the petitioner. Atok Big Wedge

Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.

Employment; regular employee. Article 280 of the Labor Code, in which the lower court used to
buttress its findings that respondent became a regular employee of the petitioner, is not
applicable in the case at bar. The Supreme Court has ruled that said provision is not the
yardstick for determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual employees,
for purposes of determining the right of an employee to certain benefits, to join or form a
union, or to security of tenure; it does not apply where the existence of an employment
relationship is in dispute. It is, therefore, erroneous on the part of the Court of Appeals to rely
on Article 280 in determining whether an employer-employee relationship exists between
respondent and the petitioner. Therefore, despite the fact that petitioner made use of the
services of respondent as a part-time consultant on retainer basis for eleven years, he still
cannot be considered as a regular employee of petitioner using only as basis Article 280 of the
Labor Code. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8,

2011.

Claim of disability benefits and sickness allowance; reporting requirements. Anent a seafarers
entitlement to compensation and benefits for injury and illness, Section 20-B (3) of 2000 POEASEC provides that in order for the seafarer to claim the said benefits, he must submit himself to
a post-employment medical examination by a company-designated physician within three

125
working days upon his return, except when he is physically incapacitated to do so, in which
case, a written notice to the agency within the same period is deemed as compliance. Failure of
the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of
the right to claim the above benefits. In this case, there was no dispute regarding the fact that
Esguerra had altogether failed to comply with the mandatory reporting requirement. Esguerra
also did not present any evidence to prove justification for his inability to submit himself to a
post-employment medical examination by a company-designated physician. Self-serving and
unsubstantiated declarations are insufficient to establish a case before quasi-judicial bodies
where the quantum of evidence required in establishing a fact is substantial evidence. Coastal

Safeway Marine Services vs. Esguerra, G.R. No. 185352, August 10, 2011.

Employee; probationary employee. Employment on probationary status of teaching personnel is


not only governed by the Labor Code but also by the Manual of Regulations for Private Schools.
Section 91 of the Manual of Regulations for Private Schools, states that: Every contract of
employment shall specify the designation, qualification, salary rate, the period and nature of
service and its date of effectivity, and such other terms and condition of employment as may be
consistent with laws and rules, regulations and standards of the school. Thus, it is important
that the contract of probationary employment specify the period or term of its effectivity. In
this case, therefore, the letters sent by petitioner College Dean Sr. Racadio, which were devoid
of specifics, cannot be considered as contracts. The closest they can resemble to are that of
informal correspondence among the said individuals. As such, petitioner school has the right
not to renew the contracts of the respondents, the old ones having expired at the end of their
terms. Assuming, arguendo, that the employment contracts between the petitioner school and
the respondent spouses were renewed, the SC found that there was a valid and just cause for
their dismissal since petitioners have repeatedly violated several departmental and instructional
policies, such as the late submission of final grades, failure to submit final test questions to the
Program Coordinator, the giving of tests in essay form instead of the multiple choice format as
mandated by the school and the high number of students with failing grades in the classes that
he handled. St. Paul College Quezon City, et al. vs. Remigio Michael A. Ancheta II and Cynthia

A. Ancheta, G.R. No. 169905. September 7, 2011.

Employee; existence of employer-employee relationship. To determine the existence of an


employer-employee relationship, case law has consistently applied the four-fold test.
Respondents argue that the element of control is lacking in this case, making petitioner-referee
an independent contractor and not an employee of respondents. The Supreme Court agreed as
it found that there was no control over the means and methods by which petitioner performs his
work as a referee officiating a PBA basketball game. The contractual stipulations in the retainer
contracts do not pertain to, much less dictate, how and when petitioner will blow the whistle
and make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to
maintain the integrity of the professional basketball league. Moreover, the following
circumstances indicate that petitioner is an independent contractor: (1) the referees are
required to report for work only when PBA games are scheduled, which is three times a week
spread over an average of only 105 playing days a year, and they officiate games at an average
of two hours per game; and (2) the only deductions from the fees received by the referees are
withholding taxes. There are no deductions for contributions to the Social Security System,
Philhealth or Pag-Ibig, which are the usual deductions from employees salaries. These
undisputed circumstances buttress the fact that petitioner is an independent contractor, and not

126
an employee of respondents. Jose Mel Bernante vs. Philippine Basketball Association, et

al., G.R. No. 192084. September 14, 2011.

Employee benefits; principle against diminution of benefits. The issue in this case was whether
or not the change in the scheme of distribution of the incremental proceeds from tuition fee
increase is a diminution of benefit. The Court held that it was not. Generally, employees have
a vested right over existing benefits voluntarily granted to them by their employer. The
principle against diminution of benefits, however, is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period of time which is
consistent and deliberate. In other words, the benefit must be characterized by regularity and
the voluntary and deliberate intent of the employer to grant the benefits over a significant
period of time. In the case at bench, contrary to UEEAs claim, the distribution of the 70%
incremental proceeds based on equal sharing scheme cannot be held to have ripened into a
company practice since the practice has not been for a long period of time. The same could not
also have ripened into a vested right because such grant was not a deliberate and voluntary act
on the part of the petitioner. The Supreme Court held that the grant by an employer of benefits
through an erroneous application of the law due to the absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally
discontinued. University of the East vs. University of the East Employees Association, G.R. No.

179593. September 14, 2011.

Employment benefits; entitlement to vacation and sick leave. BPI contends that at the time of
Uys dismissal, she was no longer functioning as a teller of the bank but as a low-counter staff
and as such, Uy is not anymore entitled to the tellers functional allowance pursuant to company
policy. BPI further argues that Uy is neither entitled to the monetary conversion of vacation and
sick leaves for failure to prove that she is entitled to these benefits at the time of her dismissal.
The Supreme Court ruled that Uy is entitled to the tellers functional allowance but not to
the monetary conversion of vacation and sick leaves. Uys function as a teller at the time of her
dismissal was factually established and was never impugned by the parties during the
proceedings held in the main case. Besides, BPI did not present any evidence to substantiate
its allegation that Uy was assigned as a low-counter staff at the time of her dismissal. It is a
hornbook rule that he who alleges must prove. As to the vacation and sick leave cash
conversion benefit, the Supreme Court held that entitlement to the same should be necessarily
proved since this privilege is not statutory or mandatory in character but only voluntarily
granted. As such, the existence of this benefit as well as the employees entitlement thereto
cannot be presumed but should be proved by the employee. In this case, however, the records
failed to prove that Uy was receiving this benefit at the time of her dismissal on December 14,
1995. BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the

Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735.
September 21, 2011.
Termination; constructive dismissal. The concept of constructive dismissal is inapplicable to
respondents in this case. 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. That the respondents were indeed not constructively dismissed was found by the Supreme
Court to be supported by substantial evidence. First,respondents Domingo and Remigio, even
while their petition for certiorari was pending before the CA, remained employed at UNILAB. In
those instances, there was actually no dismissal to speak of. Second,the respondents positions

127
were not abolished, unlike its provincial depots where the employees therein were considered
redundant employees. In this case, their accounting functions were merely consolidated under
the Finance Division of Unilab pursuant to its Shared Services Policy (SSP). Respondents, who
are accounting employees, cannot refuse their assignment to the Finance Division. The
Supreme Court noted that it cannot accept the proposition that when an employee opposes his
employers decision to transfer him to another work place, there being no bad faith or
underhanded motives on the part of either party, that the employees wishes should be made to
prevail. United Laboratories, Inc. vs. Jaime Domingo Substituted by his spouse Carmencita

Punzalan Domingo, et al., G.R. No. 186209, September 21, 2011.

Termination; loss of trust and confidence. Loss of confidence should ideally apply only to: (1)
cases involving employees occupying positions of trust and confidence, or (2) situations where
the employee is routinely charged with the care and custody of the employers money or
property. As branch manager of the bank, Lopez occupied a position of trust. His hold on his
position and his stay in the service depend on the employers trust and confidence in him and
on his managerial services. In this case, the Supreme Court found that Lopezs dismissal was
justified. He betrayed the trust and confidence of the employer-bank when he issued the
subject purchase orders without authority and despite the express directive of the bank to put
the clients application on hold. The bank had a genuine concern over the granted loan
applications as it found through its credit committee that Hertz was a credit risk. Whether the
credit committee was correct or not is immaterial as the banks direct order left Lopez without
any authority to clear the loan application on his own. Elmer Lopez vs. Keppel Bank Philippines,

Inc. et al., G.R. No. 176800. September 5, 2011.

Termination; loss of trust and confidence. Jumuad was found to have willfully breached her
duties as to be unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a
managerial employee; she executed management policies and had the power to discipline the
employees of KFC branches in her area. She recommended actions on employees to the head
office. According to the Supreme Court, based on established facts, the mere existence of the
grounds for the loss of trust and confidence justifies petitioners dismissal. In the present case,
the CERs reports of Hi-Flyer show that there were anomalies committed in the KFC branches
managed by Jumuad. On the principle of respondeat superior or command responsibility alone,
Jumuad may be held liable for negligence in the performance of her managerial duties. She may
not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement
in not performing her duty monitoring and supporting the day to day operations of the branches
and ensure that all the facilities and equipment at the restaurant were properly maintained and
serviced, could have prevented the whole debacle from occurring. Pamela Florentina P. Jumuad

vs. Hi-Flyer Food, Inc. and/or Jesus R. Montemayor, G.R. No. 187887. September 7, 2011.

Termination; illegal dismissal. In the case at bar, respondent security guards were relieved
from their posts because they filed with the Labor Arbiter a complaint against their employer for
money claims due to underpayment of wages. The Supreme Court found that this was not a
valid cause for dismissal. The Labor Code enumerates several just and authorized causes for a
valid termination of employment. An employee asserting his right and asking for minimum wage
is not among those causes. Alert Security and Investigation Agency, Inc., et al. vs. Saidali

Pasawilan, et al., G.R. No. 182397. September 14, 2011.

Termination; abandonment of work. Petitioners aver that respondents were merely transferred
to a new post wherein the wages are adjusted to the current minimum wage standards. They
maintain that the respondents voluntarily abandoned their jobs when they failed to report for
duty in the new location. Assuming that this contention was true, the Supreme Court held that

128
there was no abandonment of work. For there to be abandonment: first, there should be a
failure of the employee to report for work without a valid or justifiable reason, and second,
there should be a showing that the employee intended to sever the employer-employee
relationship. The fact that petitioners filed a complaint for illegal dismissal is indicative of their
intention to remain employed with private respondent. On the first element of failure to report
for work, in this case, there was no showing that respondents were notified of their new
assignments. Granting that the Duty Detail Orders were indeed issued, they served no
purpose unless the intended recipients of the orders are informed of such. Therefore, the Court
held that there was no abandonment of work in this case. Alert Security and Investigation

Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.

Termination; gross and habitual neglect. Neglect of duty, to be a ground for dismissal, must be
both gross and habitual. In this case, Respondents repeated failure to turn over his task of
preparing the payroll of the petitioners employees to someone capable of performing the vital
tasks which he could not effectively perform or undertake because of his heart ailment or
condition constitutes gross neglect. However, although the dismissal was legal, respondent was
still held to be entitled to a separation pay as a measure of compassionate justice, considering
his length of service and his poor physical condition which was one of the reasons he filed a
leave of absence. As a general rule, an employee who has been dismissed for any of the just
causes enumerated under Article 282 of the Labor Code is not entitled to separation pay. By
way of exception, however, the grant of separation pay or some other financial assistance may
be allowed to an employee dismissed for just causes on the basis of equity. Nissan Motors

Phils., Inc. vs. Victorino Angelo, G.R. No. 164181. September 14, 2011.

Termination; award of backwages. The base figure in computing the award of back wages to
an illegally dismissed employee is the employees basic salary plus regular allowances and
benefits received at the time of dismissal, unqualified by any wage and benefit increases
granted in the interim. The full backwages, as referred to in the body of the March 31, 2005
Supreme Court decision pertains to backwages as defined in Republic Act No. 6715. Under
said law, and as provided in jurisprudence, full backwages means backwages without any
deduction or qualification, including benefits or their monetary equivalent the employee is
enjoying at the time of his dismissal. Consequently, any benefit or allowance over and above
that allowed and provided by said law is deemed excluded under the said Supreme Court
Decision. BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of

the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735.
September 21, 2011.

Dismissal; constructive dismissal. For a transfer not to be considered a constructive dismissal,


the employer must be able to show that the transfer is for a valid reason, entails no diminution
in the terms and conditions of employment, and must not be unreasonably inconvenient or
prejudicial to the employee. If the employer fails to meet these standards, the employees
transfer shall amount, at the very least, to constructive dismissal. In this case, the Supreme
Court found that the real reason Menese was transferred from being the agencys payroll and
billing clerk of the PGH detachment to being a lady guard in the agencys main office, was
because of the request of Dapula, the new chief of the UP-PGH Security Division. The latters
request was based on the fact that she had committed the previous position of Menese to a
certain Amy Claro, a protge of Dapula. Thus, the Supreme Court found justification for
Meneses refusal to be transferred. Not only was the transfer arbitrary and done in bad faith, it
would also result in a demotion in rank and a diminution in pay: (1) she would hold the position

129
of lady guard and (2) she would be paid in accordance with the statutory minimum wage, or
from P11,720.00 to P7,500.00. Clearly, there was a demotion in rank and salary undertaken in
bad faith amounting to constructive dismissal. Emirate Security and Maintenance Systems, Inc.

and Roberto Yan vs. Glenda M. Menese, G.R. No. 182848. October 5, 2011.

Dismissal; illegal. Resignation is defined as 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. In this case,
the evidence on record suggested that petitioner did not resign; he was orally dismissed by Sy.
The crucial factor is the verbal order directly given by Sy, the company president, for petitioner
to immediately turn over his accountabilities. It is this lack of clear, valid and legal cause, not to
mention due process that made his dismissal illegal, warranting reinstatement and the award of
backwages. Moreover, the filing of a complaint for illegal dismissal just three weeks later is
difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily relinquish
his employment after being unceremoniously dismissed by no less than the company president,
he would not have sought redress from the NLRC and vigorously pursued this case against the
respondents. Jhorizaldy Uy vs. Centro Ceramica Corporation, et al., G.R. No. 174631. October

19, 2011.

Employee; death benefits. The death of a seaman during the term of employment makes the
employer liable to his heirs for death compensation benefits. This rule, however, is not
absolute. The employer may be exempt from liability if he can successfully prove that the
seamans death was caused by an injury directly attributable to his deliberate or willful act. The
Supreme Court agreed that Danilo died of Asphyxia by strangulation as proved by the NBI postmortem findings and certification issued by the medico-legal officer, Dr. Reyes. The photocopy
of the fax transmission of the purported English translation of Dr. Hameeds medical report to
prove that Danilo committed suicide should not be considered since the medical reports
genuineness and due execution were unverifiable: (1) the existence of the original medical
report, which was written in the arabic language, was not even attached to the records and has
not been proved; (2) the identity of the person who made the translation and whether the
translator has the recognized competence in both English and the language the medical report
was originally written were not established; (3) the alleged translated medical report was not
even signed by Dr. Hameed which creates doubt as to its authenticity. The unsigned translated
medical report is nothing but a self-serving document which ought to be treated as a mere
scrap of paper devoid of any evidentiary value even in administrative proceedings. Maritime

Factors Inc. vs. Bienvenido R. Hindang, G.R. No. 151993. October 19, 2011.

Employee benefits; entitlement to retirement benefits. A separation pay at the time of the
reorganization of the National Power Corporation and retirement benefits at the appropriate
future time are two separate and distinct entitlements. Stated otherwise, a retirement plan is a
different program from a separation package. In R.A. No. 1616, the retirees are entitled to
gratuity benefits to be paid by the last employer and refund of premiums to be paid by the
GSIS. On the other hand, retirement benefits under C.A. No. 186, as amended by R.A. No.
8291, are to be paid by the GSIS. In view of the fact that separation pay and retirement
benefits are different entitlements, as they have different legal bases, different sources of
funds, and different intents, the exclusiveness of benefits rule provided under R.A. No. 8291 is
not applicable. (Section 55 of R.A. No. 8291 states: Whenever other laws provide similar
benefits for the same contingencies covered by this Act, the member who qualifies to the
benefits shall have the option to choose which benefits will be paid to him.) Enrique U. Betoy

vs. The Board of Directors, National Power Corporation, G.R. Nos. 156556-57. October 4, 2011.

130
Employee; overtime pay. A claim for overtime pay will not be granted in the absence of any
factual and legal basis. In this respect, the records indicated that the labor arbiter granted
Meneses claim for holiday pay, rest day and premium pay on the basis of payrolls. There is no
such proof in support of Meneses claim for overtime pay other than her contention that she
worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was
working during the entire one hour meal break. The Supreme Court thus found the NLRCs
deletion of the overtime pay award in order. Emirate Security and Maintenance Systems, Inc.

and Roberto Yan vs. Glenda M. Menese, G.R. No. 182848. October 5, 2011.

Employee; permanent disability benefits. Permanent disability refers to the inability of a worker
to perform his job for more than 120 days, regardless of whether he loses the use of any part of
his body. What determines petitioners entitlement to permanent disability benefits is his
inability to work for more than 120 days. The certification by the company-designated
physician that petitioner is fit to work was issued after 199 days or more than 120 days from
the time he was medically repatriated to the Philippines. Petitioner herein was medically
repatriated to the Philippines on October 8, 2001. However, it was only on April 25, 2002 or
after a lapse of 199 days that Dr. Cruz issued a certification declaring him fit to work. Thus, the
Supreme Court found that petitioners disability is considered permanent and total because the
fit to work certification was issued by Dr. Cruz only on April 25, 2002, or more than 120 days
after he was medically repatriated on October 8, 2001. Furthermore, the company-designated
physicians certification that petitioner is fit to work does not make him ineligible for permanent
total disability benefits. It does not matter that the company-designated physician assessed
petitioner as fit to work. It is undisputed that from the time petitioner was repatriated on
October 8, 2001, he was unable to work for more than 120 days as he was only certified fit to
work on April 25, 2002. Consequently, petitioners disability is considered permanent and
total. Carmelito N. Valenzona vs. Fair Shipping Corporation, et al., G.R. No. 176884. October

19, 2011.

GSIS; retirement plan. Section 41(n) of Republic Act No. 8291 contemplates a situation wherein
GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance,
which calls for the termination of some of its employees, must design a plan to encourage,
induce, or motivate these employees, who are not yet qualified for either optional or compulsory
retirement under our laws, to instead voluntarily retire. Such is not the case with the GSIS
RFP. Its very objective, to motivate and reward employees for meritorious, faithful, and
satisfactory service, contradicts the nature of an early retirement incentive plan, or a financial
assistance plan, which involves a substantial amount that is given to motivate employees to
retire early. Instead, it falls exactly within the purpose of a retirement benefit, which is a form
of reward for an employees loyalty and lengthy service, in order to help him or her enjoy the
remaining years of his life. Without a doubt, the GSIS RFP is a supplementary retirement plan,
which is prohibited by the Teves Retirement Law. Government Service Insurance System
(GSIS), et al. vs. Commission on Audit, et al., G.R. No. 162372. October 19, 2011.
Strike; illegal strike. There is no question that the May 6, 2002 strike was illegal, first, because
when Kilusang Manggagawa 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

131
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. Magdala Multipurpose & Livelihood, et al.
vs. KMLMS, et al., G.R. No. 191138-39. October 19, 2011.
Union shop; new employees. May a corporation invoke its merger with another corporation as a
valid ground to exempt its absorbed employees from the coverage of a union shop clause
contained in its existing Collective Bargaining Agreement (CBA) with its own certified labor
union? The Supreme Court ruled in the negative. The former FEBTC employees retained the
regular status that they possessed while working for their former employer upon their
absorption by petitioner BPI. This fact would not remove them from the scope of the phrase
new employees as contemplated in the Union Shop Clause of the CBA. 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. The plain language of the CBA provision notwithstanding, the SC held that 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. What is
indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioners 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. Bank of the Philippine

Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No.
164301. October 19, 2011.

Procedural Law
NLRC; Certiorari. A writ of certiorari is a remedy to correct errors of jurisdiction, for which
reason it must clearly show that the public respondent has no jurisdiction to issue an order or to
render a decision. Rule 65 of the Rules of Court has instituted the petition for certiorari to
correct acts of any tribunal, board or officer exercising judicial or quasi-judicial functions with
grave abuse of discretion amounting to lack or excess of jurisdiction. This remedy serves as a
check on acts, either of excess or passivity, that constitute grave abuse of discretion of a judicial
or quasi-judicial function. In this case, the SC found that the CA proceeded to review the
records and to rule on issues that were no longer disputed during the appeal to the NLRC, such
as the existence of an employer-employee relationship. The pivotal issue before the NLRC was
whether petitioners telling respondent to take a rest, or to have a break, was already a positive
act of dismissing him. This issue was not discussed by the CA. The SC reviewed the NLRC
Resolution that reversed the LA Decision and found nothing in it that was whimsical,
unreasonable or patently violative of the law. It was the CA which erred in finding faults that
were inexistent in the NLRC Resolution. AGG Trucking and/or Alex Ang Gaeid vs. Melanio B.

Yuag, G.R. No. 195033. October 12, 2011.

NLRC; motion for reconsideration. On the issue of the propriety of entertaining the Petition for
Certiorari despite the prescribed Motion for Reconsideration with the NLRC, the SC found that
the CA committed error when it entertained the petition for certiorari and explained that when
respondent failed to file a Motion for Reconsideration of the NLRCs 30 November 2006
Resolution within the reglementary period, the Resolution attained finality and could no longer
be modified by the Court of Appeals. Untimeliness in filing motions or petitions is not a mere
technical or procedural defect, as leniency regarding this requirement will impinge on the right
of the winning litigant to peace of mind resulting from the laying to rest of the

132
controversy. AGG Trucking and/or Alex Ang Gaeid vs. Melanio B. Yuag, G.R. No. 195033.

October 12, 2011.

Award of attorneys fees; concepts. There are two commonly accepted concepts of attorneys
fees the ordinary and extraordinary. In its ordinary concept, an attorneys fee is the
reasonable compensation paid to a lawyer by his client for the legal services the former renders;
compensation is paid for the cost and/or results of legal services per agreement or as may be
assessed. In its extraordinary concept, attorneys fees are deemed indemnity for damages
ordered by the court to be paid by the losing party to the winning party. This is payable not to
the lawyer but to the client, unless the client and his lawyer have agreed that the award shall
accrue to the lawyer as additional or part of his compensation. Article 111 of the Labor Code,
as amended, contemplates the extraordinary concept of attorneys fees. Although an express
finding of facts and law is still necessary to prove the merit of the award, there need not be any
showing that the employer acted maliciously or in bad faith when it withheld the wages. Thus
the SC concluded that the CA erred in ruling that a finding of the employers malice or bad faith
in withholding wages must precede an award of attorneys fees under Article 111 of the Labor
Code. To reiterate, a plain showing that the lawful wages were not paid without justification is
sufficient. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and

Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.

Award of attorneys fees; Article 111. One of the issues of this case involved the effect of the
Memorandum of Agreement provision that attorneys fees shall be deducted from the
amelioration allowance (AA) and CBA receivables. In this regard, the CA held that the additional
grant of 10% attorneys fees by the NLRC violates Article 111 of the Labor Code, considering
that the MOA between the parties already ensured the payment of 10% attorneys fees
deductible from the AA and CBA receivables of the Unions members. In the present case, the
Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also gave up
the attorneys fees awarded to the Unions members in favor of their counsel. The award by the
NLRC cannot be taken to mean an additional grant of attorneys fees, in violation of the ten
percent (10%) limit under Article 111 of the Labor Code since it rests on an entirely different
legal obligation than the one contracted under the MOA. Simply stated, the attorneys fees
contracted under the MOA do not refer to the amount of attorneys fees awarded by the NLRC;
the MOA provision on attorneys fees does not have any bearing at all to the attorneys fees
awarded by the NLRC under Article 111 of the Labor Code. Based on these considerations, it is
clear that the CA erred in ruling that the LAs award of attorneys fees violated the maximum
limit of ten percent (10%) fixed by Article 111 of the Labor Code. Kaisahan at Kapatiran ng

mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo Borela, etc. vs. Manila
Water Company, Inc., G.R. No. 174179. November 16, 2011.

Disability benefits; compensable. In this case, respondent was diagnosed with Central Retinal
Vein Occlusion of his left eye. Central retinal vein occlusion causes painless vision loss which is
usually sudden, but it can also occur gradually over a period of days to weeks. This condition,
despite numerous medical procedures undertaken, eventually led to a total loss of sight of
respondents left eye. Loss of one bodily function falls within the definition of disability which is
essentially loss or impairment of a physical or mental function resulting from injury or
sickness. The disputable presumption that a particular injury or illness that results in disability,
or in some cases death, is work-related stands in the absence of contrary evidence. In the case
at bench, the said presumption was not overturned by the petitioners. Although, the employer
is not the insurer of the health of his employees, he takes them as he finds them and assumes

133
the risk of liability. Consequently, the Court concurred with the finding of the lower courts that
respondents disability is compensable. Fil-star Maritime Corporation, et al. vs. Hanziel O.

Resete,G.R. No. 192686. November 23, 2011.

Disability benefits; total disability. A total disability does not require that the employee be
completely disabled, or totally paralyzed. What is necessary is that the injury must be such that
the employee cannot pursue his or her usual work and earn from it. On the other hand, a total
disability is considered permanent if it lasts continuously for more than 120 days. What is
crucial is whether the employee who suffers from disability could still perform his work
notwithstanding the disability he incurred. Evidently, respondent was not able to return to his
job as a seafarer after his left eye was declared legally blind. Records showed that the
petitioners did not give him a new overseas assignment after his disability. This only proved
that his disability effectively barred his chances to be deployed abroad as an officer of an oceangoing vessel. Hence, the Supreme Court found it fitting that respondent be entitled to
permanent total disability benefits considering that he would not be able to resume his position
as a maritime officer, and the probability that he would be hired by other maritime employers
would be close to impossible. Fil-star Maritime Corporation, et al. vs. Hanziel O. Resete, G.R.

No. 192686. November 23, 2011.

Dismissal; gross and habitual neglect of duties. Gross negligence connotes want of care in the
performance of ones duties, while habitual neglect implies repeated failure to perform ones
duties for a period of time, depending on the circumstances. In the case at bench, Padao was
accused of having presented a fraudulently positive evaluation of the business, credit
standing/rating and financial capability of Reynaldo and Luzvilla Baluma and eleven other loan
applicants. Some businesses were eventually found not to exist at all, while in other
transactions, the financial status of the borrowers simply could not support the grant of loans in
the approved amounts. Moreover, Padao over-appraised the collateral of spouses Gardito and
Alma Ajero, and that of spouses Ihaba and Rolly Pango. Padaos repeated failure to discharge
his duties as a credit investigator of the bank amounted to gross and habitual neglect of duties
under Article 282 (b) of the Labor Code. He not only failed to perform what he was employed
to do, but also did so repetitively and habitually, causing millions of pesos in damage to PNB.
Thus, PNB acted within the bounds of the law by meting out the penalty of dismissal, which it
deemed appropriate given the circumstances. Philippine National Bank vs. Dan Padao, G.R.

Nos. 180849 and 187143. November 16, 2011.

Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule
regarding separation pay as a measure of social justice is that it shall be paid only in those
instances where the employee is validly dismissed for causes other than serious misconduct,
willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust,
commission of a crime against the employer or his family, or those reflecting on his moral
character. In this case, Padao was guilty of gross and habitual neglect of duties. Philippine

National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.

Employment of seafarers. The employment of seafarers, including claims for death benefits, is
governed by the contracts they sign every time they are hired or rehired; and as long as the
stipulations therein are not contrary to law, morals, public order or public policy, they have the
force of law between the parties. While the seafarer and his employer are governed by their
mutual agreement, the POEA rules and regulations require that the POEA Standard Employment
Contract (POEA-SEC) be integrated in every seafarers contract. In this case, considering that
petitioner executed an overseas employment contract with respondent company in November
1999, the 1996 POEA-SEC should govern. The 2000 POEA-SEC initially took effect on June 25,

134
2000. Thereafter, the Court issued the Temporary Restraining Order(TRO) which was later
lifted on June 5, 2002. Thus, petitioner cannot simply rely on the disputable presumption
provision mentioned in Section 20 (B)(4) of the 2000 POEA-SEC which states that: Those
illnesses not listed in Section 32 of this Contract are disputably presumed as work
related. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No. 185412.

November 16, 2011.

Employment of seafarers; disability compensation. Granting that the provisions of the 2000
POEA-SEC apply, the disputable presumption provision in Section 20 (B) does not allow
petitioner to just sit down and wait for respondent company to present evidence to overcome
the disputable presumption of work-relatedness of the illness. Contrary to his position, the
seafarer still has to substantiate his claim in order to be entitled to disability compensation. He
has to prove that the illness he suffered was work-related and that it must have existed during
the term of his employment contract. For disability to be compensable under Section 20 (B) of
the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related;
and (2) the work-related injury or illness must have existed during the term of the seafarers
employment contract. In other words, to be entitled to compensation and benefits under this
provision, it is not sufficient to establish that the seafarers illness or injury has rendered him
permanently or partially disabled; it must also be shown that there is a causal connection
between the seafarers illness or injury and the work for which he had been contracted.
Unfortunately for petitioner, he failed to prove that his varicose veins arose out of his
employment with respondent company. Gilbert Quizora vs. Denholm Crew Management

(Philippines), Inc., G.R. No. 185412. November 16, 2011.

Employees compensation; increased risk theory. For a sickness or resulting disability or death
to be compensable, the claimant must prove either (1) that the employees sickness was the
result of an occupational disease listed under Annex A of the Amended Rules on Employees
Compensation, or (2) that the risk of contracting the disease was increased by his working
conditions. Under the increased risk theory, there must be a reasonable proof that the
employees working condition increased his risk of contracting the disease, or that there is a
connection between his work and the cause of the disease. In this case, since Besitans
ailment, End Stage Renal Disease secondary to Chronic Glomerulonephritis is not among those
listed under Annex A, of the Amended Rules on Employees Compensation, he needs to show
by substantial evidence that his risk of contracting the disease was increased by his working
condition. Government Service Insurance System vs. Manuel P. Besitan, G.R. No. 178901.

November 23, 2011.

Employeess Compensation; proceedings; quantum of proof. Direct and clear evidence, is not
necessary to prove a compensable claim. Strict rules of evidence do not apply as PD No. 626
only requires substantial evidence. The SC found that Besitan has sufficiently proved that his
working condition increased his risk of contracting Glomerulonephritis, which according to GSIS
may be caused by bacterial, viral, and parasitic infection. When Besitan entered the
government service in 1976, he was given a clean bill of health. In 2005, he was diagnosed
with End Stage Renal Disease secondary to Chronic Glomerulonephritis. It would appear
therefore that the nature of his work could have increased his risk of contracting the disease.
His frequent travels to remote areas in the country could have exposed him to certain bacterial,
viral, and parasitic infection, which in turn could have caused his disease. Delaying his urination
during his long trips to the provinces could have also increased his risk of contracting the
disease. As a matter of fact, even the Bank Physician of Bangko Sentral ng Pilipinas, Dr.
Gregorio Suarez II, agreed that Besitans working condition could have contributed to the

135
weakening of his kidneys, which could have caused the disease. This Medical Certificate is
sufficient to prove that the working condition of Besitan increased his risk of contracting
Glomerulonephritis. In claims for compensation benefits, a doctors certification as to the
nature of a claimants disability deserves full credence because no medical practitioner would
issue certifications indiscriminately. Government Service Insurance System vs. Manuel P.

Besitan, G.R. No. 178901. November 23, 2011.

Illegal dismissal; employer-employee relationship. The elements to determine the existence of


an employment relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employees conduct. In this case, the documentary evidence presented by respondent to prove
that he was an employee of petitioner are as follows: (a) a document denominated as payroll
(dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed that
respondent received a monthly salary of P7,000.00 with the corresponding deductions due to
absences incurred by respondent; and (2) copies of petty cash vouchers, showing the amounts
he received and signed for in the payrolls. These documents showed that petitioner hired
respondent as an employee and he was paid monthly wages of P7,000.00. Additionally, as to
the existence of the power of control, it is not essential for the employer to actually supervise
the performance of duties of the employee. It is sufficient that the former has a right to wield
the power. In this case, petitioner even stated in his Position Paper that it was agreed that he
would help and teach respondent how to use the studio equipment. In such case, petitioner
certainly had the power to check on the progress and work of respondent. Cesar C. Lirio, doing
business under the name and style of Celkor Ad Sonimix vs. Wilmer D. Genovia, G.R. No.

169757. November 23, 2011.

Illegal recruitment; elements. The crime of illegal recruitment is committed when two elements
concur, namely: (1) the offender has no valid license or authority required by law to enable one
to lawfully engage in recruitment and placement of workers; and (2) he undertakes either any
activity within the meaning of recruitment and placement defined under Article 13 (b), or any
prohibited practices enumerated under Article 34 of the Labor Code. First, the petitioner was
found not to have been issued a license as proven by the certification from the DOLE-Dagupan
District Office stating that petitioner has not been issued any license by the POEA and neither is
it a holder of an authority to engage in recruitment and placement activities. Second, from the
testimonies of the private respondents, it is apparent that petitioner was able to convince the
private respondents to apply for work in Israel after parting with their money in exchange for
the services she would render. The said act of the petitioner, without a doubt, falls within the
meaning of recruitment and placement as defined in Article 13 (b) of the Labor Code. Finally,
the Supreme Court noted that in illegal recruitment cases, the failure to present receipts for
money that was paid in connection with the recruitment process will not affect the strength of
the evidence presented by the prosecution as long as the payment can be proved through clear
and convincing testimonies of credible witnesses. Delia D. Romero vs. People of the Philippines,

Romulo Padlan and Aruturo Siapno, G.R. No. 171644. November 23, 2011.

Probationary employment; security of tenure. It is settled that even if probationary employees


do not enjoy permanent status, they are accorded the constitutional protection of security of
tenure. This means they may only be terminated for a just cause or when they otherwise fail to
qualify as regular employees in accordance with reasonable standards made known to them by
the employer at the time of their engagement. In this case, the justification given by the
petitioners for Sys dismissal was her alleged failure to qualify by the companys standard.
Other than the general allegation that said standards were made known to her at the time of

136
her employment, however, no evidence, documentary or otherwise, was presented to
substantiate the same. Neither was there any performance evaluation presented to prove that
indeed hers was unsatisfactory. Hence, for failure of the petitioners to support their claim of
unsatisfactory performance by Sy, the SC held that Sys employment was unjustly terminated to
prevent her from acquiring a regular status in circumvention of the law on security of
tenure. Tamsons Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No.

192881. November 16, 2011.

Probationary employment; termination. Even on the assumption that Sy indeed failed to meet
the standards set by the petitioner-employer and made known to the former at the time of her
engagement, still, the termination was flawed for failure to give the required notice to Sy.
Section 2, Rule I, Book VI of the Implementing Rules provides that: If the termination is
brought about by the completion of a contract or phase thereof, or by failure of an employee to
meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee, within a reasonable time from the
effective date of termination. Tamsons Enterprises, Inc., et al. vs. Court of Appeals and

Rosemarie L. Sy, G.R. No. 192881. November 16, 2011.

Termination of employment; when company tolerated violation of company policy. The CA was
correct in stating that when the violation of company policy or breach of company rules and
regulations is tolerated by management, it cannot serve as a basis for termination. This
principle, however, only applies when the breach or violation is one which neither amounts to
nor involves fraud or illegal activities. In such a case, one cannot evade liability or culpability
based on obedience to the corporate chain of command. In this case, Padao, in affixing his
signature on the fraudulent reports, attested to the falsehoods contained therein. Moreover, by
doing so, he repeatedly failed to perform his duties as a credit investigator. Thus, the
termination of his employment is justified. Philippine National Bank vs. Dan Padao, G.R. Nos.

180849 and 187143. November 16, 2011.

2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2012.2.2012.2012.20
Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined to specific matters,
are generally accorded not only respect but finality when affirmed by the Court of Appeals.
Factual findings of quasi-judicial bodies like the NLRC, if supported by substantial evidence, are
accorded respect and even finality by the Supreme Court, more so when they coincide with
those of the Labor Arbiter. Such factual findings are given more weight when the same are
affirmed by the Court of Appeals. In the present case, the Supreme Court found no reason to
depart from these principles since the Labor Arbiter found that there was substantial evidence
to conclude that Oasay had breached the trust and confidence of Palacio Del Gobernador
Condominium Corporation, which finding the NLRC had likewise upheld. Sebastian F. Oasay, Jr.

vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306,
February 6, 2012.
Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its
existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to
be the implementing and operating arm of the Bases Conversion and Development Authority
tasked to manage the Clark Special Economic Zone. Expressly, CDC was formed in accordance
with Philippine corporation laws and existing rules and regulations promulgated by the
Securities and Exchange Commission pursuant to Section 16 of Republic Act 7227. CDC, a

137
government owned or controlled corporation without an original charter, was incorporated
under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the Constitution, the civil
service embraces only those government owned or controlled corporations with original charter.
As such, CDC and its employees are covered by the Labor Code and not by the Civil Service
Law. Antonio B. Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.
Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of
resignation. Article 285 of the Labor Code recognizes termination by the employee of the
employment contract by serving written notice on the employer at least one (1) month in
advance. Given that provision, the law contemplates the requirement of a written notice of
resignation. In the absence of a written resignation, it is safe to presume that the employer
terminated the seafarers. In this case, the Supreme Court found the dismissal of De Gracia, et
al. to be illegal since Cosmoship merely sent a telex to Skippers, the local manning agency,
claiming that De Gracia, et al. were repatriated because the latter voluntarily pre-terminated
their contracts. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd.

vs. Nathaniel Doza, et al.,G.R. No. 175558. February 8, 2012.

Dismissal; substantive and procedural due process. For a workers dismissal to be considered
valid, it must comply with both procedural and substantive due process. The legality of the
manner of dismissal constitutes procedural due process, while the legality of the act of dismissal
constitutes substantive due process. Procedural due process in dismissal cases consists of the
twin requirements of notice and hearing. The employer must furnish the employee with two
written notices before the termination of employment can be effected: (1) the first notice
apprises the employee of the particular acts or omissions for which his dismissal is sought; and
(2) the second notice informs the employee of the employers decision to dismiss him. Before
the issuance of the second notice, the requirement of a hearing must be complied with by
giving the worker an opportunity to be heard. It is not necessary that an actual hearing be
conducted. Substantive due process, on the other hand, requires that dismissal by the employer
be made based on a just or authorized cause under Articles 282 to 284 of the Labor Code. In
this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their
dismissal. Cosmoship furnished a telex to Skippers, the local manning agency, claiming that De
Gracia, et al. were repatriated because they voluntarily pre-terminated their contracts. This telex
was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pretermination of the employment contract akin to resignation and no illegal dismissal. However,
as correctly ruled by the CA, the telex message is a biased and self-serving document that
does not satisfy the requirement of substantial evidence. If, indeed, De Gracia, et al. voluntarily
pre-terminated their contracts, then De Gracia, et al. should have submitted their written
resignations. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel

Doza, et al., G.R. No. 175558. February 8, 2012.

Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity
or act of liberality of the giver which the recipient cannot demand as a matter of right. The
grant of a bonus is basically a management prerogative which cannot be forced upon the
employer who may not be obliged to assume the onerous burden of granting bonuses.
However, a bonus becomes a demandable or enforceable obligation if the additional
compensation is granted without any conditions imposed for its payment. In such case, the
bonus is treated as part of the wage, salary or compensation of the employee. Particularly
instructive is the ruling of the Court in Metro Transit Organization, Inc. v. National Labor
Relations Commission (G.R. No. 116008, July 11, 1995) where the Court said:

138
Whether or not a bonus forms part of wages depends upon the circumstances and conditions
for its payment. If it is additional compensation which the employer promised and agreed to
give without any conditions imposed for its payment, such as success of business or greater
production or output, then it is part of the wage. But if it is paid only if profits are realized or if a
certain level of productivity is achieved, it cannot be considered part of the wage. Where it is
not payable to all but only to some employees and only when their labor becomes more efficient
or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the
wage.
In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern
Telecoms Employees Union agreed on the inclusion of a provision for the grant of 14th,
15th and 16th month bonuses in the 1998-2001 CBA Side Agreement, as well as in their 20012004 CBA Side Agreement, which contained no qualification for its payment. There were no
conditions specified in the CBA Side Agreements for the grant of the bonus. There was nothing
in the relevant provisions of the CBA which made the grant of the bonus dependent on the
companys financial standing or contingent upon the realization of profits. There was also no
statement that if the company derives no profits, no bonus will be given to the employees. In
fine, the payment of these bonuses was not related to the profitability of business operations.
Consequently, the giving of the subject bonuses cannot be peremptorily withdrawn by Eastern
Telecommunications Phils., Inc. without violating Article 100 of the Labor Code, which prohibits
the unilateral elimination or diminution of benefits by the employer. The rule is settled that any
benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is
founded on the constitutional mandate to protect the rights of workers and to promote their
welfare and to afford labor full protection. Eastern Telecommunications Philippines, Inc. vs.

Eastern Telecoms Employees Union, G.R. No. 185665, February 8, 2012.

Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has
the burden of proving that the transfer of an employee is for just or valid ground, such as
genuine business necessity. The employer must demonstrate that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not
involve a demotion in rank or a diminution in salary and other benefits. If the employer fails to
overcome this burden of proof, the employees transfer is tantamount to unlawful constructive
dismissal. [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25,
2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or
valid ground. Petitioners bare assertions of imminent threat from the respondents are mere
accusations which are not substantiated by any proof. The Supreme Court agreed with the
Court of Appeals in ruling that the transfer of respondents amounted to a demotion. Julies

Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.

Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for
termination, Article 284 of the Labor Code provides that an employer may terminate the
services of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health, as well as to the
health of his co-employees. In order to validly terminate employment on this ground, Section 8,
Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that: (i) the
employee be suffering from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, and (ii) a certification by a
competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment. If the

139
disease or ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his normal health. In Triple
Eight Integrated Services, Inc. v. NLRC (G.R. No. 129584, December 3, 1998), the Court held
that the requirement for a medical certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employees illness and, thus, defeat the public policy on
the protection of labor.
In this case, Ynson should have reported back to work or attended the investigations conducted
by Wuerth Philippines, Inc. immediately upon being permitted to work by his doctors, knowing
that his position remained vacant for a considerable length of time. However, he did not even
show any sincere effort to return to work. Clearly, since there is no more hindrance for him to
return to work and attend the investigations set by Wuerth Philippines, Inc., Ynsons failure to
do so was without any valid or justifiable reason. His conduct shows his indifference and utter
disregard of his work and his employers interest, and displays his clear, deliberate, and gross
dereliction of duties. The power to dismiss an employee is a recognized prerogative inherent in
the employers right to freely manage and regulate his business. The law, in protecting the
rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The
workers right to security of tenure is not an absolute right, for the law provides that he may be
dismissed for cause. As a general rule, employers are allowed wide latitude of discretion in
terminating the employment of managerial personnel. The mere existence of a basis for
believing that such employee has breached the trust and confidence of his employer would
suffice for his dismissal. Needless to say, an irresponsible employee like Ynson does not deserve
a position in the workplace, and it is Wuerth Philippines, Inc.s management prerogative to
terminate his employment. To be sure, an employer cannot be compelled to continue with the
employment of workers when continued employment will prove inimical to the employers
interest. Wuerth Philippines, Inc. vs. Rodante Ynson, G.R. No. 175932, February 15, 2012.
Employee dismissal; due process. With respect to due process requirement, the employer is
bound to furnish the employee concerned with two (2) written notices before termination of
employment can be legally effected. One is the notice apprising the employee of the particular
acts or omissions for which his dismissal is sought and this may loosely be considered as the
proper charge. The other is the notice informing the employee of the managements decision to
sever his employment. This decision, however, must come only after the employee is given a
reasonable period from receipt of the first notice within which to answer the charge, thereby
giving him ample opportunity to be heard and defend himself with the assistance of his
representative should he so desire. The requirement of notice, it has been stressed, is not a
mere technicality but a requirement of due process to which every employee is entitled. Here,
Palacio Del Gobernador Condominium Corporation complied with the two-notice rule stated
above.Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar

T. Cruz, G.R. No. 194306, February 6, 2012.

Employee dismissal; due process. Cityland did not afford Galang the required notice before he
was dismissed. As the Court of Appeals noted, the investigation conference Tupas called to look
into the janitors complaints against Galang did not constitute the written notice required by law
as he had no clear idea what the charges against him were. Romeo A. Galang vs. Citiland Shaw

Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.

Employee dismissal; grounds. The validity of an employees dismissal from service hinges on the
satisfaction of the two substantive requirements for a lawful termination. These are, first,

140
whether the employee was accorded due process the basic components of which are the
opportunity to be heard and to defend himself. This is the procedural aspect. And second,
whether the dismissal is for any of the causes provided in the Labor Code of the Philippines.
This constitutes the substantive aspect. On the substantive aspect, the Supreme Court found
that Palacio Del Gobernador Condominium Corporations termination of the Oasays employment
was for a cause provided under the Labor Code. In terminating Oasays employment, Palacio
Del Gobernador Condominium Corporation invoked loss of trust and confidence. The first
requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be holding a position of trust and confidence. Here, it is indubitable that Oasay
holds a position of trust and confidence. The position of Building Administrator, being
managerial in nature, necessarily enjoys the trust and confidence of the employer. The second
requisite is that there must be an act that would justify the loss of trust and confidence. Loss of
trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of
trust and founded on clearly established facts. Palacio Del Gobernador Condominium
Corporation had established, by clear and convincing evidence, Oasays acts which justified its
loss of trust and confidence on the former. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador

Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.

Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to
continue his employment. The evidence supports the view that he continued to exhibit
undesirable traits as an employee and as a person, in relation to both his co-workers and his
superiors, particularly Tupas, her immediate supervisor. Quoting the Court of Appeals decision
with approval, the Supreme Court held: Without offering any possible ill motive that might
have impelled [the respondents] to summarily dismiss [Galang], who admitted having been
absorbed by the former as janitor upon the termination of his contract with his agency, this
Court is more inclined to give credence to the evidence pointing to the conclusion that
[Galangs] employment was actually severed for a just cause. Romeo A. Galang vs. Citiland

Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.

Employer; right to discipline employee. In Sagales v. Rustans Commercial Corporation (G.R.


No. 166554, November 27, 2008), the Supreme Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its
employees, this prerogative is subject to the regulation by the State in the exercise of its police
power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should
merit only the corresponding penalty demanded by the circumstance. The penalty
must be commensurate with the act, conduct or omission imputed to the employee
and must be imposed in connection with the disciplinary authority of the
employer. (Emphasis in the original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of
dismissal. There was no warning or admonition for respondents violation of team rules, only
outright termination of his services for an act which could have been punished appropriately
with a severe reprimand or suspension.Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente

Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to
establish or substantiate such claim by the requisite quantum of evidence. The issue of Javiers
alleged illegal dismissal is anchored on the existence of an employer-employee relationship
between him and Fly Ace. As the records bear out, the Labor Arbiter and the Court of Appeals
found Javiers claim of employment with Fly Ace as wanting and deficient. Although Section 10,

141
Rule VII of the New Rules of Procedure of the NLRC allows a relaxation of the rules of
procedure and evidence in labor cases, this rule of liberality does not mean a complete
dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the
facts speedily and objectively with little regard to technicalities or formalities but nowhere in the
rules are they provided a license to completely discount evidence, or the lack of it. The quantum
of proof required, however, must still be satisfied. Hence, when confronted with conflicting
versions on factual matters, it is for them in the exercise of discretion to determine which party
deserves credence on the basis of evidence received, subject only to the requirement that their
decision must be supported by substantial evidence. [ Salvador Lacorte v. Hon. Amado G.
Inciong, 248 Phil. 232 (1988)] Accordingly, Javier needs to show by substantial evidence that
he was indeed an employee of the company against which he claims illegal dismissal. Bitoy

Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo,G.R. No. 192558, February 15,
2012.
Employer-employee relationship; test. To determine the existence of an employer-employee
relationship, the following are considered: (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. Of these elements, the most important criterion is whether the employer
controls or has reserved the right to control the employee not only as to the result of the work
but also as to the means and methods by which the result is to be accomplished. In this case,
Javier was not able to persuade the Court that the above elements exist in his case. He could
not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly
Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be
while at work. In other words, Javiers allegations did not establish that his relationship with Fly
Ace had the attributes of an employer-employee relationship on the basis of the abovementioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an
agreement with a hauling company to undertake the delivery of its goods. It was also baffling
to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the company.
In short, all that Javier laid down were bare allegations without corroborative proof. Bitoy Javier

(Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15,
2012.
Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation;
perfection or birth; and consummation. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends at the moment of agreement
of the parties. Perfection or birth of the contract takes place when the parties agree upon the
essential elements of the contract. Consummation occurs when the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment thereof. Under Article
1315 of the Civil Code, a contract is perfected by mere consent and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in keeping with good faith, usage
and law. An employment contract, like any other contract, is perfected at the moment (1) the
parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a)
consent of the contracting parties, (b) object certain which is the subject matter of the contract
and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal,
International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a
3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is
the service to be rendered by Agustin and Minimo on board the vessel while the cause of the
contract is the monthly compensation they expect to receive. These terms were embodied in

142
the Contract of Employment which was executed by the parties. The agreement upon the terms
of the contract was manifested by the consent freely given by both parties through their
signatures in the contract. Neither parties disavow the consent they both voluntarily gave.
Thus, there is a perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha vs.

Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.

Employment relationship; commencement. The commencement of an employer-employee


relationship must be treated separately from the perfection of an employment
contract. Santiago v. CF Sharp Crew Management, Inc., (G.R. No. 162419, 10 July 2007) is an
instructive precedent on this point. In that case, the Supreme Court made a distinction
between the perfection of the employment contract and the commencement of the employeremployee relationship, thus:

The perfection of the contract, which in this case coincided with the date of execution thereof,
occurred when petitioner and respondent agreed on the object and the cause, as well as the
rest of the terms and conditions therein. The commencement of the employer-employee
relationship, as earlier discussed, would have taken place had petitioner been actually deployed
from the point of hire. Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth of certain rights
and obligations, the breach of which may give rise to a cause of action against the erring party.

Despite the fact that the employer-employee relationship has not commenced due to the failure
to deploy Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising from
the perfected Contract of Employment, such as the right to demand performance by C.F. Sharp
of its obligation under the contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer

Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.

Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a)
there be identity of parties or at least such parties that represent the same interests in both
actions; (b) there be identity of rights asserted and relief prayed for, the relief being founded on
the same facts; and (c) the identity of the two preceding particulars is such that any judgment
rendered in one action will, regardless of which party is successful, amount to res judicata in the
other action. Petitioners are correct as to the first two requisites of forum shopping. First, there
is identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is
identity of rights asserted i.e., the right of management to terminate employment and the right
of an employee against illegal termination. However, the third requisite of forum shopping is
missing in this case. Any judgment or ruling of the Office of the Commissioner of the
Metropolitan Basketball Association will not amount to res judicata. Res judicata is defined in
jurisprudence as to have four basic elements: (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. Here, although contractually authorized to settle disputes,
the Office of the Commissioner of the Metropolitan Basketball Association is not a court of
competent jurisdiction as contemplated by law with respect to the application of the doctrine
of res judicata. At best, the Office of the Commissioner of the Metropolitan Basketball
Association is a private mediator or go-between as agreed upon by team management and a
player in the Metropolitan Basketball Association Players Contract of Employment. Any
judgment that the Office of the Commissioner of the Metropolitan Basketball Association may
render will not result in a bar for seeking redress in other legal venues. Hence, respondents
action of filing the same complaint in the Regional Arbitration Branch of the NLRC does not

143
constitute forum shopping. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin

L. Teng, G.R. No. 187122, February 22, 2012.

Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified
and certified against forum-shopping by the parties-in-interest themselves. The purpose of
verification is to secure an assurance that the allegations in the pleading are true and correct
and have been filed in good faith. In the case at bar, the parties-in-interest are petitioner
Salenga, as the employee, and respondent Clark Development Corporation as the employer. A
corporation can only exercise its powers and transact its business through its board of directors
and through its officers and agents when authorized by a board resolution or its bylaws. The
power of a corporation to sue and be sued is exercised by the board of directors. The physical
acts of the corporation, like the signing of documents, can be performed only by natural
persons duly authorized for the purpose by corporate bylaws or by a specific act of the board.
Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the
Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent
corporation, may be considered as the appellant and employer referred to by the NLRC
Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B.

Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.

Labor; effect if procedural due process not followed but with a valid cause for termination. It is
required that the employer furnish the employee with two written notices: (1) a written notice
served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side; and (2) a written notice of
termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. The twin requirements
of notice and hearing constitute the elements of due process in cases of employees dismissal.
The requirement of notice is intended to inform the employee concerned of the employers
intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his employers charges
against him and accordingly, to defend himself therefrom before dismissal is effected.
Obviously, the second written notice, as indispensable as the first, is intended to ensure the
observance of due process. In this case, there was only one written notice which required
respondents to explain within five (5) days why they should not be dismissed from the service.
Alcovendas was the only one who signed the receipt of the notice. The others, as claimed by
Lynvil, refused to sign. The other employees argue that no notice was given to them. Despite
the inconsistencies, what is clear is that no final written notice or notices of termination were
sent to the employees. Due to the failure of Lynvil to follow the procedural requirement of twonotice rule, nominal damages in the amount of P50,000 were granted to Ariola, et al. despite
their dismissal for just cause. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R.

No. 181974, February 1, 2012.

Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate
directors and officers are solidarily liable with the corporation for the termination of employment
of employees done with malice or in bad faith. Indeed, moral damages are recoverable when
the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive
to labor, or is done in a manner contrary to good morals, good customs or public policy. The
term bad faith contemplates a state of mind affirmatively operating with furtive design or
with some motive of self-interest or will or for ulterior purpose. The Supreme Court agreed
with the ruling of both the NLRC and the Court of Appeals when they pronounced that there
was no evidence on record that indicates commission of bad faith on the part of De Borja, the

144
general manager of Lynvil, who was tasked with the supervision of the employees and the
operation of the business. There is no proof that he imposed on Ariola, et al. the por viaje
provision for purpose of effecting their summary dismissal. Lynvil Fishing Enterprises, Inc. vs.

Andres G. Ariola, et al.,G.R. No. 181974, February 1, 2012.

Labor; nature of employment; security of tenure. In the context of these facts (1) Ariola, et
al. were doing tasks necessary to Lynvils fishing business with positions ranging from captain of
the vessel tobodegero; (2) after the end of a trip, they will again be hired for another trip with
new contracts; and (3) this arrangement continued for more than ten years the Court believed
that Lynvil intended to go around the security of tenure of Ariola, et al. as regular employees.
The Court held that by the express provisions of the second paragraph of Article 280 which
cover casual employment, Ariola, et al. had become regular employees of Lynvil. Lynvil Fishing

Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.

Labor; procedural and substantive due process; grounds for valid termination; breach of
trust. Just cause is required for a valid dismissal. The Labor Code provides that an employer
may terminate an employment based on fraud or willful breach of the trust reposed on the
employee. Such breach is considered 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 also be based on substantial evidence and not on the
employers whims or caprices or suspicions otherwise, the employee would eternally remain at
the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by
the employer against a claim that the dismissal of an employee was arbitrary. And, in order to
constitute a just cause for dismissal, the act complained of must be work-related and shows
that the employee concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence in delicate matters, such as the handling or
care and protection of the property and assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is penalized. The Supreme Court found that
breach of trust is present in this case, when Ariola (the captain), Alcovendas (Chief Mate),
Calinao (Chief Engineer), Nubla (cook), Baez (oiler), and Sebullen ( bodegero) conspired with
one another and stole pampano and tangigue fish and delivered them to another vessel, to
the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No.

181974, February 1, 2012.

Labor; public prosecutors decision not binding on the labor tribunal. The Supreme Court has
held inNicolas v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a
criminal conviction is not necessary to find just cause for employment termination. Otherwise
stated, an employees acquittal in a criminal case, especially one that is grounded on the
existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty
of acts inimical to the employers interests. In the reverse, the finding of probable cause is not
followed by automatic adoption of such finding by the labor tribunals. In other words, whichever
way the public prosecutor disposes of a complaint, the finding does not bind the labor tribunal.
Lynvil contends that the filing of a criminal case before the Office of the Prosecutor is sufficient
basis for a valid termination of employment based on serious misconduct and/or loss of trust
and confidence. The Supreme Court held that Lynvil cannot argue that since the Office of the
Prosecutor found probable cause for theft, the Labor Arbiter must follow the finding as a valid
reason for the termination of respondents employment. The proof required for purposes that

145
differ from one and the other are likewise different. Lynvil Fishing Enterprises, Inc. vs. Andres

G. Ariola, et al., G.R. No. 181974, February 1, 2012.

Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court
decisions have laid two conditions for the validity of a fixed-contract agreement between the
employer and employee: First, the fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper pressure being brought to
bear upon the employee and absent any other circumstances vitiating his consent; or Second, it
satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter. Lynvil contends that
Ariola, et al. were employed under a fixed-term contract which expired at the end of the
voyage. Contrarily, Ariola, et al. contend that they became regular employees by reason of their
continuous hiring and performance of tasks necessary and desirable in the usual trade and
business of Lynvil. Textually, the provision in the contract between Lynvil and Ariola, et al.
that: NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa

patakarang por viaje na magmumula sa pagalis sa Navotas papunta sa pangisdaan at


pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of
employment. In the context, however, of the facts that: (1) Ariola, et al. were doing tasks
necessarily to Lynvils fishing business with positions ranging from captain of the vessel
to bodegero; (2) after the end of a trip, they will again be hired for another trip with new
contracts; and (3) this arrangement continued for more than ten years, the clear intention is to
go around the security of tenure of Ariola, et al. as regular employees. As such, the Supreme
Court found that Ariola, et al. are regular employees. Lynvil Fishing Enterprises, Inc. vs. Andres

G. Ariola, et al., G.R. No. 181974, February 1, 2012.

Labor Code; maximum award of attorneys fees in cases of recovery of wages. Article 111 of the
Labor Code provides for a maximum award of attorneys fees in cases of recovery of wages:
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys
fees equivalent to ten percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative
proceedings for the recovery of wages, attorneys fees which exceed ten percent of the amount
of wages recovered.
Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries
and protect their interest, attorneys fees in the amount of ten percent (10%) of the total claims
was imposed.Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd.

vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.

Labor contracting; elements. There is labor-only contracting where: (a) 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 (b) the workers recruited and
placed by such person are performing activities which are directly related to the principal
business of the employer. In the present case, the Supreme Court found that both the
capitalization requirement and the power of control on the part of Requio are wanting.
Generally, the presumption is that the contractor is a labor-only contractor unless such
contractor overcomes the burden of proving that it has the substantial capital, investment, tools
and the like. In the present case, though Garden of Memories is not the contractor, it has the
burden of proving that Requio has sufficient capital or investment since it is claiming the
supposed status of Requio as independent contractor. Garden of Memories, however, failed to
adduce evidence purporting to show that Requio had sufficient capitalization. Neither did it
show that she invested in the form of tools, equipment, machineries, work premises and other

146
materials which are necessary in the completion of the service contract. Garden of Memories

Park and Life Plan, Inc., et al. vs. NLRC, 2nd Div., et al., G.R. No. 160278, February 8, 2012.

Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of
Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust
termination of employment contracts:
In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, the workers shall be entitled to the full reimbursement of his
placement fee with interest of twelve percent (12%) per annum, plus his salaries for the
unexpired portion of his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.
The Migrant Workers Act provides that salaries for the unexpired portion of the employment
contract or three (3) months for every year of the unexpired term, whichever is less, shall be
awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March
2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc. (G.R. No. 167614),
the Court, in an En Banc Decision, declared unconstitutional the clause or for three months for
every year of the unexpired term, whichever is less and awarded the entire unexpired portion
of the employment contract to the overseas Filipino worker. On 8 March 2010, however, Section
7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and
once again reiterated the provision of awarding the unexpired portion of the employent contract
or three (3) months for every year of the unexpired term, whichever is less. Nevertheless, since
the termination occurred on January 1999 before the passage of the amendatory RA 10022, the
Supreme Court applied RA 8042, without touching on the constitutionality of Section 7 of RA
10022. The declaration in March 2009 of the unconstitutionality of the clause or for three
months for every year of the unexpired term, whichever is less in RA 8042 shall be given
retroactive effect to the termination that occurred in January 1999 because an unconstitutional
clause in the law confers no rights, imposes no duties and affords no protection. The
unconstitutional provision is inoperative, as if it was not passed into law at all. Skippers United

Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No.
175558. February 8, 2012.
NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters)
may hold any offending party in contempt, directly or indirectly, and impose appropriate
penalties in accordance with law. The penalty for direct contempt consists of either
imprisonment or fine, the degree or amount depends on whether the contempt is against the
Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the
Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules
of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate
indirect contempt proceedings before the trial court. This mode is to be observed only when
there is no law granting them contempt powers. As is clear under Article 218(d) of the Labor
Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the
offending party or parties in direct or indirect contempt. Robosa, et al., therefore, have not
improperly brought the indirect contempt charges against the respondents before the
NLRC. Federico S. Robosa, et al. vs. National Labor Relations Commission (First Division), et

al., G.R. No. 176085, February 8, 2012.

NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming
those of the Labor Arbiter, are accorded respect and due consideration when supported by
substantial evidence. The Supreme Court, however, found that the doctrine of great respect and
finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.s

147
complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent
rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent
resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were
constructively dismissed. But later on, it again reversed itself in its third and final resolution of
the case and ruled in favor of Julies bakeshop. Therefore, contrary to Reyess claim, the NLRC
did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals
is thus correct in reviewing the entire records of the case to determine which findings of the
NLRC is sound and in accordance with law. Besides, the Court of Appeals may still resolve
factual issues by express mandate of the law despite the respect given to administrative
findings of fact. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882,

February 15, 2012.

Probationary employee; valid cause for dismissal but without procedural due process; employee
entitled to nominal damages. Section 2, Rule I, Book VI of the Labor Codes Implementing Rules
and Regulations provides: If the termination is brought about by the completion of a contract

or phase thereof, or by failure of an employee to meet the standards of the employer in the
case of probationary employment, it shall be sufficient that a written notice is served the
employee within a reasonable time from the effective date of termination. Dalangin was hired
by Canadian Opportunities as Immigration and Legal Manager, subject to a probationary period
of six months. One month after hiring Dalangin, the company terminated his employment,
declaring him unfit and unqualified to continue as Immigration and Legal Manager, for
reasons which included obstinacy and utter disregard of company policies. Propensity to take
prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies
and objectives, lack of concern for the companys interest despite having just been employed in
the company (Declined to attend company sponsored activities, seminars intended to familiarize
company employees with Management objectives and enhancement of company interest and
objectives), lack of enthusiasm toward work, and lack of interest in fostering relationship with
his co-employees. The company contends that it complied with the rule on procedural due
process when it asked Dalangin, through a Memorandum, to explain why he could not attend
the seminar. When he failed to submit his explanation, the company served him a notice the
following day terminating his employment. According to the Supreme Court, the notice to
Dalangin was not served within a reasonable time from the effective date of his termination as
required by the rules since he was dismissed on the very day the notice was given to him.
However, because of the existence of a valid cause for termination, the Supreme Court did not
invalidate his dismissal but penalized the company for its non-compliance with the notice
requirement, and ordered the company to pay an indemnity, in the form of nominal damages
amounting to P10,000. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R.

No. 172223, February 6, 2012.

Probationary employee; valid dismissal even before 6 months. The essence of a probationary
period of employment fundamentally lies in the purpose or objective of both the employer and
the employee during the period. While the employer observes the fitness, propriety and
efficiency of a probationer to ascertain whether he is qualified for permanent employment, the
latter seeks to prove to the former that he has the qualifications to meet the reasonable
standards for permanent employment. The trial period or the length of time the probationary
employee remains on probation depends on the parties agreement, but it shall not exceed six
(6) months under Article 281 of the Labor Code. The Supreme Court found substantial evidence
indicating that the company was justified in terminating Dalangins probationary employment.
Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal was his

148
refusal to attend the companys Values Formation Seminar scheduled for October 27, 2001, a
Saturday. He refused to attend the seminar after he learned that it had no relation to his duties,
as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in
the province. When the Chief Operations Officer, insisted that he attend the seminar to
encourage his co-employees to attend, he stood pat on not attending, arguing that marked
differences exist between their positions and duties, and insinuating that he did not want to join
the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as
they were not supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00
p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would
be in violation of the law. This incident reveals Dalangins lack of interest in establishing a good
working relationship with his co-employees, especially the rank and file; he did not want to join
them because of his view that the seminar was not relevant to his position and duties. It also
betrays his arrogant and condescending attitude towards his co-employees, and a lack of
support for the company objective. Dalangin also exhibited negative working habits, particularly
with respect to the one hour lunch break policy of the company and the observance of the
companys working hours. Dalangin would take prolonged lunch breaks or would go out of the
office without leave of the company and call the personnel manager later only to say that he
would be unable to return to the office because of some personal matters he needs to attend
to. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr.,G.R. No. 172223, February

6, 2012.

Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts
in order to impart stability in the legal system. However, in not a few instances, the Supreme
Court has relaxed the rigid application of the rules of procedure to afford the parties the
opportunity to fully ventilate their cases on the merits. This is in line with the time honored
principle that cases should be decided only after giving all the parties the chance to argue their
causes and defenses. In that way, the ends of justice would be better served. For indeed, the
general objective of procedure is to facilitate the application of justice to the rival claims of
contending parties, bearing always in mind that procedure is not to hinder but to promote the
administration of justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No.
168115, June 8, 2007), the Supreme Court ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the
parties right to due process. In numerous cases, this Court has allowed liberal construction of
the rules when to do so would serve the demands of substantial justice and equity. x x x
Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper
and just determination of their causes, free from the constraints of needless technicalities. In
this case, besides the fact that a denial of the recourse to the Court of Appeals would serve
more to perpetuate an injustice and violation of Tengs rights under our labor laws, the
Supreme Court found that as correctly held by the Court of Appeals, no intent to delay the
administration of justice could be attributed to Teng. The Court of Appeals therefore did not
commit reversible error in excusing Tengs one-day delay in filing his motion for reconsideration
and in giving due course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez

and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.

Reinstatement; backwages. Employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed
from the time their actual compensation was withheld from them up to the time of their actual
reinstatement. But if reinstatement is no longer possible, the backwages shall be computed

149
from the time of their illegal termination up to the finality of the decision. Thus, when there is
an order of reinstatement, the computation of backwages shall be reckoned from the time of
illegal dismissal up to the time that the employee is actually reinstated to his former position.
Pursuant to the order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent
Manabat a letter requiring him to report back to work on May 4, 2007. Notwithstanding the said
letter, Manabat opted not to report for work. Thus, it is but fair that the backwages to be
awarded to Manabat should be computed from the time that he was illegally dismissed until the
time when he was required to report for work, i.e. from September 1, 2005 until May 4,
2007. Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.
Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing
jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right.
However, if reinstatement would only exacerbate the tension and strained relations between the
parties, or where the relationship between the employer and the employee has been unduly
strained by reason of their irreconcilable differences, particularly where the illegally dismissed
employee held a managerial or key position in the company, it would be more prudent to order
payment of separation pay instead of reinstatement. Under the doctrine of strained relations ,
the payment of separation pay is considered an acceptable alternative to reinstatement when
the latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it
releases the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust. In such cases, it should be proved that the employee concerned
occupies a position where he enjoys the trust and confidence of his employer; and that it is
likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of the employee concerned. In the present case,
the Supreme Court found that the relations between the parties had been already strained
thereby justifying the grant of separation pay in lieu of reinstatement in favor of Manabat.
Manabats reinstatement to his former position would only serve to intensify the atmosphere of
antipathy and antagonism between the parties. Undoubtedly, Bank of Lubaos filing of various
criminal complaints against Manabat for qualified theft and the subsequent filing by the latter of
the complaint for illegal dismissal against the former, taken together with the pendency of the
instant case for more than six years, had caused strained relations between the parties.
Considering that Manabats former position as bank encoder involves the handling of accounts
of the depositors of the Bank of Lubao, it would not be equitable on the part of the Bank of
Lubao to be ordered to maintain the former in its employ since it may only inspire vindictiveness
on the part of Manabat. Also, the refusal of Manabat to return to work is in itself an indication of
the existence of strained relations between him and the petitioner. Bank of Lubao, Inc.

vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.

Seafarers; employment contract; perfection stage vs. commencement stage. An employment


contract, like any other contract, is perfected at the moment (1) the parties come to agree upon
its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting
parties, (b) object certain which is the subject matter of the contract, and (c) cause of the
obligation. The object of the contract was the rendition of service by Fantonial on board the
vessel for which service he would be paid the salary agreed upon. In this case, the employment
contract was perfected on January 15, 2000 when it was signed by the parties who entered into
the contract in behalf of their principal. However, the employment relationship never
commenced since Fantonial was not allowed to leave on January 17, 2000 and go on board the
vessel M/V AUK in Germany on the ground that he was not yet declared fit to work on the day

150
of his scheduled departure. But, even if no employer-employee relationship commenced, there
was, contemporaneous with the perfection of the employment contract, the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the erring
party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs. Ricardo B. Fantonial, G.R. No.

165935, February 8, 2012.

Dismissal; constructive dismissal. Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay. Constructive dismissal is a dismissal in
disguise or an act amounting to dismissal but made to appear as if it were not. In constructive
dismissal cases, the employer is, concededly, charged with the burden of proving that its
conduct and action or the transfer of an employee are for valid and legitimate grounds such as
genuine business necessity. In the instant case, the overt act relied upon by petitioner is not
only a doubtful occurrence but is, if it did transpire, even consistent with the dismissal from
employment posited by the respondent. The factual appraisal of the Court of Appeals is correct.
Petitioner was displeased after incurring expenses for respondents medical check-up and, it is
credible that, thereafter, respondent was prevented entry into the work premises. This is
tantamount to constructive dismissal. The Supreme Court agreed with the Court of Appeals that
the incredibility of petitioners submission about abandonment of work renders credible the
position of respondent that she was prevented from entering the property. This was even
corroborated by the affidavits of Siarot and Mendoza which were made part of the records of
this case. Ma. Melissa A. Galang vs. Julia Malasuqui,G.R. No. 174173. March 7, 2012.
Dismissal; loss of trust and confidence. The rule is long and well settled that, in illegal dismissal
cases like the one at bench, the burden of proof is upon the employer to show that the
employees termination from service is for a just and valid cause. The employers case succeeds
or fails on the strength of its evidence and not on the weakness of that adduced by the
employee, in keeping with the principle that the scales of justice should be tilted in favor of the
latter in case of doubt in the evidence presented by them. Often described as more than a mere
scintilla, the quantum of proof is substantial evidence which is understood as such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even if other
equally reasonable minds might conceivably opine otherwise. Failure of the employer to
discharge the foregoing onus would mean that the dismissal is not justified and therefore illegal.
In the case at bar, the Supreme Court agreed with the petitioners that mere substantial
evidence and not proof beyond reasonable doubt is required to justify the dismissal from service
of an employee charged with theft of company property. However, the Court found no error in
the CAs findings that the petitioners had not adequately proven by substantial evidence that
Arlene and Joseph indeed participated or cooperated in the commission of theft relative to the
six missing intensifying screens so as to justify the latters termination from employment on the
ground of loss of trust and confidence. Blue Sky Trading Company, Inc. et al. vs. Arlene P. Blas

and Joseph D. Silvano, G.R. No. 190559. March 7, 2012.

Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of
company property on May 25, 2006. He maintains that he had no direct participation in the
incident and that he was not aware that an illegal activity was going on as he was at some
distance from the trucks when the alleged theft was being committed. He adds that he did not
call the attention of the foremen because he was a mere lineman and he was focused on what
he was doing at the time. He argues that in any event, his mere presence in the area was not
enough to make him a conspirator in the commission of the pilferage.

151
Gala misses the point. He forgets that as a probationary employee, his overall job performance
and his behavior were being monitored and measured in accordance with the standards
(i.e., the terms and conditions) laid down in his probationary employment agreement. Under
paragraph 8 of the agreement, he was subject to strict compliance with, and non-violation of
the Company Code on Employee Discipline, Safety Code, rules and regulations and existing
policies. Par. 10 required him to observe at all times the highest degree of transparency,
selflessness and integrity in the performance of his duties and responsibilities, free from any
form of conflict or contradicting with his own personal interest. Manila Electric Company vs. Jan

Carlo Gala, G.R. No. 191288. March 7, 2012.

Dismissal; relief of illegally dismissed employee. An illegally dismissed employee is entitled to


two reliefs: back wages 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 such is viable, or separation pay if reinstatement
is no longer viable, and to back wages. The normal consequences of respondents illegal
dismissal, then, are reinstatement without loss of seniority rights, and payment of back wages
computed from the time compensation was withheld from him up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent
to one month salary for every year of service should be awarded as an alternative. The payment
of separation pay is in addition to payment of back wages.
Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its
March 31, 2008 Decision which has already attained finality insofar as respondent is concerned.
Such contention is misplaced. The CA merely clarified the period of payment of back wages and
separation pay up to the finality of its decision (March 31, 2008) modifying the Labor Arbiters
decision. In view of the modification of monetary awards in the Labor Arbiters decision, the
time frame for the payment of back wages and separation pay is accordingly modified to the
finality of the CA decision. Norkis Distribution, Inc., et al. vs. Delfin S. Descallar, G.R. No.

185255. March 14, 2012

Employees; project vs. regular employees. The principal test for determining whether particular
employees are properly characterized as 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 a number of cases, the Court has held that the length of service or the re-hiring of
construction workers on a project-to-project basis does not confer upon them regular
employment status, since their re-hiring is only a natural consequence of the fact that
experienced construction workers are preferred. Employees who are hired for carrying out a
separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment
are properly treated as project employees and their services may be lawfully terminated upon
the completion of a project. Should the terms of their employment fail to comply with this
standard, they cannot be considered project employees.
Applying the above disquisition, the Court agreed with the findings of the CA that petitioners
were project employees. It is not disputed that petitioners were hired for the construction of
the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is
clear that petitioners employment was to carry out a specific project. Wilfredo Aro, Ronilo Tirol,

et al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. March 7, 2012.

152
Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship.
If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the
jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which
provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving
wages, rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an employeremployee relationship has been subjected to review by the Supreme Court, with the finding
being that there was no employer-employee relationship between petitioner and private
respondent, based on the evidence presented. The DOLE had no jurisdiction over the case, as
there was no employer-employee relationship present. Thus, the dismissal of the complaint
against petitioner is proper. Peoples Broadcasting Service (Bombo Rado Phils., Inc.) vs. The

Secretary of the Dept. of Labor & Employment, et al. G.R. No. 179652. March 6, 2012.

Management prerogative; resignation of employees running for public office. The Supreme
Court has consistently held that so long as a companys management prerogatives are exercised
in good faith for the advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements, the Court will uphold them. In the instant case, ABS-CBN validly justified the
implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its
objectivity and credibility and freeing itself from any appearance of impartiality so that the
confidence of the viewing and listening public in it will not be in any way eroded. Even as the
law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied. Ernesto Ymbong vs. ABS-CBN

Broadcasting Corporation, Veranda Sy & Dante Luzon, G.R. No. 184885. March 7, 2012.

Separation pay; payment to those who participated in illegal strikes. Separation pay may be
given as a form of financial assistance when a worker is dismissed in cases such as the
installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or
cessation of operation of the establishment, or in case the employee was found to have been
suffering from a disease such that his continued employment is prohibited by law. It is a
statutory right defined as the amount that an employee receives at the time of his severance
from the service and is designed to provide the employee with the wherewithal during the
period that he is looking for another employment. It is oriented towards the immediate future,
the transitional period the dismissed employee must undergo before locating a replacement job.
As a general rule, when just causes for terminating the services of an employee exist, the
employee is not entitled to separation pay because lawbreakers should not benefit from their
illegal acts. The rule, however, is subject to exceptions.
Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to
have knowingly participated in the illegal strike. Worse, the Union members committed
prohibited acts during the strike. Thus, as the Court has concluded in other cases it has
previously decided, such Union officers are not entitled to the award of separation pay in the
form of financial assistance. C. Alcantara & Sons, Inc. vs. Court of Appeals, et al./Nagkahiusang

Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al./Nagkahiusang Mamumuo
sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No. 155109/G.R. No.
155135/G.R. No. 179220. March 14, 2012.

153
Dismissal; due process. When the Labor Code speaks of procedural due process, the reference
is usually to the two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of
the Omnibus Rules Implementing the Labor Code. MGG Marine Services, Inc. v. NLRC tersely
described the mechanics of what may be considered a two-part due process requirement which
includes the two-notice rule, x x x one, of the intention to dismiss, indicating therein his acts or
omissions complained against, and two, notice of the decision to dismiss; and an opportunity to
answer and rebut the charges against him, in between such notices.
Here, the first and second notice requirements have not been properly observed. The adverted
memo would have had constituted the charge sheet, sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent to and received by
him. Neither was there compliance with the imperatives of a hearing or conference. Suffice it to
point out that the record is devoid of any showing of a hearing or conference having been
conducted. And the written notice of termination itself did not indicate all the circumstances
involving the charge to justify severance of employment. For violating petitioners right to due
process, the Supreme Court ordered the payment to petitioner of the amount of P30,000 as
nominal damages. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R.

No. 185829. April 25, 2012.

Dismissal; just cause. In fine, an employees failure to meet sales or work quotas falls under the
concept of gross inefficiency, which in turn is analogous to gross neglect of duty that is a just
cause for dismissal under Article 282 of the Code. However, in order for the quota imposed to
be considered a valid productivity standard and thereby validate a dismissal, managements
prerogative of fixing the quota must be exercised in good faith for the advancement of its
interest. The duty to prove good faith, however, rests with WWWEC as part of its burden to
show that the dismissal was for a just cause. WWWEC must show that such quota was imposed
in good faith. This WWWEC failed to do, perceptibly because it could not. The fact of the matter
is that the alleged imposition of the quota was a desperate attempt to lend a semblance of
validity to Alilings illegal dismissal. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo

III, et al., G.R. No. 185829. April 25, 2012.

Dismissal; retrenchment. Retrenchment is a valid exercise of management prerogative subject


to the strict requirements set by jurisprudence, to wit:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month
pay or at least month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, x x x efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to
retrench its employees in good faith and the considerable reduction of work allotments of
Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its
personnel. As for the notice requirement, however, contrary to petitioners contention, proper

154
notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and
must be complied with despite the fact that respondent is an overseas Filipino worker. In the
present case, although respondent was duly notified of his termination by Petrocon 30 days
before its effectivity, no allegation or proof was advanced by petitioner to establish that
Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus,
this requirement of the law was not complied with. Despite the fact that respondent was
employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to
the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all
Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine
labor and social legislations (citing Philippine National Bank v. Cabansag, G.R. No. 157010, June
21, 2005, 460 SCRA 514, 518 and Royal Crown Internationale v. NLRC, G.R. No. 78085, October
16, 1989, 178 SCRA 569.)International Management Services/Marilyn C. Pascual vs. Roel P.

Logarta, G.R. No. 163657, April 18, 2012.

Employee; probationary employee. The aforequoted Section 6 of the Implementing Rules of


Book VI, Rule VIII-A of the Code specifically requires the employer to inform the probationary
employee of such reasonable standards at the time of his engagement, not at any time later;
else, the latter shall be considered a regular employee. Thus, pursuant to the explicit provision
of Article 281 of the Labor Code, Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A
of the Labor Code and settled jurisprudence, petitioner Aliling is deemed a regular employee as
of June 11, 2004, the date of his employment contract.
The letter-offer to Aliling states that the regularization standards or the performance norms to
be used are still to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to
GX trucking sales, an activity entirely different to the Seafreight Sales for which he was
originally hired and trained for. In the present case, there was no proof that Aliling was
informed of the standards for his continued employment, such as the sales quota, at the time of
his engagement. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No.

185829. April 25, 2012.

Employee; separation package. Article 283 of the Labor Code provides only the required
minimum amount of separation pay, which employees dismissed for any of the authorized
causes are entitled to receive. Employers, therefore, have the right to create plans, providing for
separation pay in an amount over and above what is imposed by Article 283. There is nothing
therein that prohibits employers and employees from contracting on the terms of employment,
or from entering into agreements on employee benefits, so long as they do not violate the
Labor Code or any other law, and are not contrary to morals, good customs, public order, or
public policy.
Consequently, petitioners are not allowed to receive separation pay from both the Labor Code,
on the one hand, and the New Gratuity Plan and the SSP, on the other, they would receive
double compensation for the same cause (i.e., separation from the service due to
redundancy). Ma. Corina C. Jiao, et al. vs. Global Business Bank, Inc., et al., G.R. No. 182331,

April 18, 2012.

Employer-employee relationship. In determining the presence or absence of an employeremployee relationship, the Court has consistently looked for the following incidents, to wit: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employee on the means and methods by
which the work is accomplished. The last element, the so-called control test, is the most
important element.

155
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his
authority to deliver some 158 checks to SFC. Considering that petitioner contested respondents
challenge by pointing to the existing arrangements between BCC and SFC, it should be clear
that respondents did not exercise the power of control over petitioner, because he thereby
acted for the benefit and in the interest of SFC more than of BCC. Charlie Jao vs. BCC Products

Sales, Inc. and Terrance Ty, G.R. No. 163700, April 18, 2012.

Project employee; conversion into regular employee. In all the 38 projects where DMCI engaged
Jamins services, the tasks he performed as a carpenter were indisputably necessary and
desirable in DMCIs construction business. He might not have been a member of a work pool
since DMCI insisted that it does not maintain a work pool, but his continuous rehiring in 38
projects over a period of 31 years and the nature of his work unmistakably made him a regular
employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the Court held that 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 must be
deemed a regular employee.
Surely, length of time is not the controlling test for project employment but it is vital in
determining if the employee was hired for a specific undertaking or if it is tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the employer.
Here, [private] respondent had been a project employee several times over. The nature of his
employment ceased to be project-based when he was repeatedly re-hired due to the demands
of petitioners business. D.M. Consunji, Inc. and/or David M. Consunji vs. Estelito, G.R. No.

192514, April 18, 2012.

Dismissal; willful disobedience. For willful disobedience to be a valid cause for dismissal, these
two elements must concur: (1) the employees 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.
The petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work
constitutes willful disobedience. Because of his refusal to render overtime work, the company
failed to meet its printing deadlines, resulting in losses to the company. The Supreme Court
took into account the fact that petitioner was inclined to absent himself and to report late for
work despite being previously penalized, and affirmed the CAs ruling that the petitioner is
indeed utterly defiant of the lawful orders and the reasonable work standards prescribed by his
employer. The Court reiterated its previous rulings stating that an employer has the right to
require the performance of overtime service in any of the situations contemplated under Article
89 of the Labor Code and an employees non-compliance is willful disobedience. Realda v. New

Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.

Dismissal; inefficiency. The petitioners failure to observe Graphics, Inc.s work standards
constitutes inefficiency that is a valid cause for dismissal. Failure to observe prescribed
standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute
just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or
work quotas, either by failing to complete the same within the alloted reasonable period, or by
producing unsatisfactory results. As the operator of Graphics, Inc.s printer, he is mandated to
check whether the colors that would be printed are in accordance with the clients specifications
and for him to do so, he must consult the General Manager and the color guide used by
Graphics, Inc. before making a full run. The employee in this case failed to observe this simple

156
procedure and proceeded to print without making sure that the colors were at par with the
clients demands. This resulted to delays in the delivery of output, client dissatisfaction, and
additional costs to Graphics, Inc.. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190,

April 25, 2012.

Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the
manner by which the procedural due requirements of due process can be satisfied:
(1)
The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are given
the opportunity to submit their written explanation within a reasonable period. Reasonable
opportunity under the Omnibus Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately for their defense. This should
be construed as a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they will raise against the
complaint. Moreover, in order to enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employees. A general description of the charge
will not suffice. Lastly, the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being charged against the
employees.
(2)
After serving the first notice, the employers should schedule and conduct
a hearing orconference wherein the employees will be given the opportunity to: (a) explain
and clarify their defenses to the charge against them; (b) present evidence in support of their
defenses; and (c) rebut the evidence presented against them by the management. During the
hearing or conference, the employees are given the chance to defend themselves personally,
with the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.
Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and
defend itself. An administrative hearing set on the same day that the petitioner received the
memorandum and the 24-hour period given to him to submit a written explanation is far from
reasonable. Furthermore, there is no indication that Graphics, Inc. issued a second notice,
informing the petitioner of his dismissal. Graphics, Inc. admitted that it decided to terminate the
petitioners employment when he ceased to report for work after being served with the
memorandum requiring him to explain and subsequent to his failure to submit a written
explanation. However, there is nothing on record showing that Graphics, Inc. placed its decision
to dismiss in writing and that a copy thereof was sent to the petitioner. Notwithstanding the
existence of a just cause to terminate petitioners employment, respondent was ordered to pay
P30,000 as nominal damages for violation of the employees right to due process. Realda v.

New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.

Dismissal; willful disobedience. Willful disobedience requires the concurrence of two elements:
(1) the employees 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

157
known to the employee, and must pertain to the duties which he had been engaged to
discharge. Both elements are present in this case.
First, at no point did the dismissed employees deny Kingspoint Express claim that they refused
to comply with the directive for them to submit to a drug test or, at the very least, explain their
refusal. This gives rise to the impression that their non-compliance is deliberate. The utter lack
of reason or justification for their insubordination indicates that it was prompted by mere
obstinacy, hence, willful thereby justifying their dismissal. Second, that the companys order to
undergo a drug test is necessary and relevant in the performance of petitioners functions as
drivers of Kingspoint Express is obvious. As the NLRC correctly pointed out, drivers are
indispensable to Kingspoint Express primary business of rendering door-to-door delivery
services. It is common knowledge that the use of dangerous drugs has adverse effects on
driving abilities that may render employees incapable of performing their duties. Not only are
they acting against the interests of Kingspoint Express, they also pose a threat to the
public. Kakampi and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann

Co, G.R. No. 194813, April 25, 2012.

Dismissal; procedural due process requirements. While Kingspoint Express had reason to sever
petitioners employment, this Court finds its supposed observance of the requirements of
procedural due process pretentious. While Kingspoint Express required the dismissed employees
to explain their refusal to submit to a drug test, the two (2) days afforded to them to do so
cannot qualify as reasonable opportunity, which the Court construed in King of Kings
Transport, Inc. v. Mamac as a period of at least five (5) calendar days from receipt of the
notice.
Thus, even if a just cause exists for the dismissal of petitioners, Kingspoint Express is still liable
to indemnify the dismissed employees, with the exception of Panuelos, Dizon and Dimabayao,
who did not appeal the dismissal of their complaints, with nominal damages in the amount of
P30,000.00. Kakampi and its members, et al. v. Kingspoint Express and Logistic and/or Mary

Ann Co, G.R. No. 194813, April 25, 2012.

Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a
fundamental rule of procedure that higher courts are precluded from entertaining matters
neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the
first time only in a motion for reconsideration or on appeal. The alleged absence of employeremployee relationship cannot be raised for the first time on appeal. The resolution of this issue
requires the admission and calibration of evidence and the LA and the NLRC did not pass upon
it in their decisions. Petitioner is bound by its submissions that respondent is its employee and it
should not be permitted to change its theory. Such change of theory cannot be tolerated on
appeal, not on account of the strict application of procedural rules, but as a matter of
fairness. Duty Free Philippines Services, Inc. vs. Manolito Q. Tria. G.R. No. 174809. June 27,
2012.
Dismissal; abandonment. Abandonment cannot be inferred from the actuations of respondent.
When he discovered that his time card was off the rack, he immediately inquired from his
supervisor. He later sought the assistance of his counsel, who wrote a letter addressed to
Polyfoam requesting that he be re-admitted to work. When said request was not acted upon,
he filed the instant illegal dismissal case. These circumstances clearly negate the intention to
abandon his work. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs. Edgardo
Concepcion. G.R. No. 172349, June 13, 2012.

158
Dismissal; due process. To meet the requirements of due process in the dismissal of an
employee, an employer must furnish the worker with two written notices: (1) a written notice
specifying the grounds for termination and giving to said 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 employers decision to dismiss the
employee. The law does not require that an intention to terminate ones employment should be
included in the first notice. It is enough that employees are properly apprised of the charges
brought against them so they can properly prepare their defenses. It is only during the second
notice that the intention to terminate ones employment should be explicitly stated.
The guiding principles in connection with the hearing requirement in dismissal cases are the
following:
1. 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.
2. 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.
3. The ample opportunity to be heard standard in the Labor Code prevails over the
hearing or conference requirement in the implementing rules and regulations.
The existence of an actual, formal trial-type hearing, although preferred, is not absolutely
necessary to satisfy the employees right to be heard. Esguerra was able to present her
defenses; and only upon proper consideration of it did Valle Verde send the second
memorandum terminating her employment. Since Valle Verde complied with the two-notice
requirement, no procedural defect exists in Esguerras termination. Dolores T. Esguerra vs. Valle
Verde Country Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; loss of trust and confidence. 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. 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.
Loss of confidence as a just cause for termination of employment can be invoked when an
employee holds a position of responsibility, trust and confidence. In order to constitute a just
cause for dismissal, the act complained of must be related to the performance of the duties of
the dismissed employee and must show that he or she is unfit to continue working for the
employer for violation of the trust reposed in him or her. It was Esguerras responsibility to
account for the cash proceeds; in case of problems, she should have promptly reported it,
regardless of who was at fault. Instead, she settled the unaccounted amount only after the
accounting department informed her about the discrepancy, almost one month following the
incident. Esguerras failure to make the proper report reflects her irresponsibility in the custody
of cash for which she was accountable. Dolores T. Esguerra vs. Valle Verde Country Club, Inc.
and Ernesto Villaluna.G.R. No. 173012, June 13, 2012.

159
Dismissal; serious misconduct and loss of trust and confidence. Dejan is liable for violation of
Section 7, paragraphs 4 and 11 of the Company Code of Employee Discipline, constituting
serious misconduct, fraud and willful breach of trust of the employer, which are just causes for
termination of employment under the law. There is no dispute about the release of the meter
sockets. Also, the persons involved were clearly identified Dejan; Gozarin, a private electrician
who received the meter sockets; Reyes, the owner of the jeep where the meter sockets were
loaded by Gozarin; Duenas, a Meralco field representative; and Depante, another private
electrician who purportedly owned the meter sockets. The release by Dejan of the meter
sockets to Gozarin without the written authority or SPA from the customer or customers who
applied for electric connection (as a matter of company policy) served as a key element in
proving the private contracting activity for electric service connection being undertaken by
Dejan and Duenas.
Moreover, it was bad enough that Dejan failed to ask for a written authorization from the
customers for the release of the meter sockets as required by company policy, but the elaborate
scheme pursued by Dejan in concert with Duenas, were all undertaken to defraud Meralco.
Hence, Meralco had valid reasons for losing its trust and confidence in Dejan. He is no ordinary
employee. As branch representative, he was principally charged with the function and
responsibility to accept payment of fees required for the installation of electric service and
facilitate issuance of meter sockets. The duties of his position require him to always act with the
highest degree of honesty, integrity and sincerity, as the company puts it. In light of his
fraudulent act, Meralco, an enterprise imbued with public interest, cannot be compelled to
continue Dejans employment, as it would be inimical to its interest. Manila Electric Company
(Meralco) vs. Herminigildo H. Dejan. G.R. No. 194106, June 18, 2012.
Employee benefit; attorneys fees. Lazaro must establish a legal basis either by law, contract
or other sources of obligations to merit the receipt of the additional 10% attorneys fees
collected in the various foreclosure procedures he settled as the banks legal officer. Lazaro has
not produced any contract or provision of law that would warrant the payment of the additional
attorneys fees. He is only entitled to his salaries as the banks legal officer, because the
services he rendered in the foreclosure proceedings were part of his official tasks. Banco Filipino

Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino
Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012.

Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it
was under liquidation should not be credited in computing Lazaros retirement pay because,
during that period, the bank was considered closed. The Supreme Court held that banks under
liquidation retain their legal personality. In fact, even if they are prohibited from conducting
regular banking business, it is necessary that debts owed to them be collected. Lazaro
performed the duty of foreclosing debts in favor of Banco Filipino. It cannot rightfully disclaim
Lazaros work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the
absence of an applicable retirement agreement shall Article 287 of the Labor Code apply. There
is a provisohowever, that an employees retirement benefits under any agreement shall not be
less than those provided in the said article. The Rules of the Banco Filipino Retirement Fund do
not provide for benefits lower than those in the Labor Code. In fact, the bank offers a
retirement pay equivalent to one andone-half month salary for every year of service, a rate over
and above the one-half month salary threshold provided by the law. Although the Rules of the
Banco Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide
that prorated credit shall be given for incomplete years, regardless of the fraction of months in

160
the retirees length of service. Notwithstanding the lack of a rounding-up provision, still, the
higher retirement pay, together with the prorated crediting, cannot be deemed to be less
favorable than that provided for by the law. Ultimately, the more important threshold to be
considered in construing whether the retirement agreement provides less benefits, compared to
those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement
should at least amount to one-half of the employees monthly salary. Banco Filipino Savings and

Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012

Employee dismissal. When the floating status of employees lasts for more than six (6) months,
they may be considered to have been illegally dismissed from the service. Floating status
means an indefinite period of time when one does not receive any salary or financial benefit
provided by law. In this case, petitioners were actually reassigned to new posts, albeit in a
different location from where they resided. Thus, there can be no floating status or indefinite
period to speak of. Instead, petitioners were the ones who refused to report for work in their
new assignment.
In cases involving security guards, a relief and transfer order in itself does not sever the
employment relationship between the security guards and their agency. Employees have the
right to security of tenure, but this does not give them such a vested right to their positions as
would deprive the company of its prerogative to change their assignment or transfer them
where their services, as security guards, will be most beneficial to the client. An employer has
the right to transfer or assign its employees from one office or area of operation to another in
pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of
salary, benefits, and other privileges; and the transfer is not motivated by discrimination or bad
faith, or effected as a form of punishment or demotion without sufficient cause. While
petitioners may claim that their transfer to Manila will cause added expenses and
inconvenience, absent any showing of bad faith or ill motive on the part of the employer, the
transfer remains valid. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et
al. G.R. No. 187188, June 27, 2012.
Employee dismissal; burden of proof. Under the law, the burden of proving that the termination
of employment was for a valid or authorized cause rests on the employer. Failure to discharge
this burden would result in an unjust or illegal dismissal. The companys evidence on the
respondents alleged infractions do not substantially show that they violated company rules and
regulations to warrant their dismissal. It is obvious that the company overstepped the bounds of
its management prerogative in the dismissal of Mauricio and Camacho. It lost sight of the
principle that management prerogative must be exercised in good faith and with due regard to
the rights of the workers in the spirit of fairness and with justice in mind. Philbag Industrial

Manufacturing Corp. vs. Philbag Workers Union-Lakas at Gabay ng Manggagawang


Nagkakaisa. G.R. No. 182486, June 20, 2012.

Employee dismissal; due process. Retrenchment is subject to faithful compliance with the
substantive and procedural requirements laid down by law and jurisprudence. For a valid
retrenchment, the following elements must be present:
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;
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;

161
3. That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least month pay for every year of service, whichever is higher;
4. That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to
security of tenure; and
5. That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered by the
Club for the past two years had forced petitioner to close it down to avert further losses which
would eventually affect the operations of petitioner. Second, all 45 employees working in the
Club were served with notice of termination. The corresponding notice was likewise served to
the DOLE one month prior to retrenchment. Third, the employees were offered separation pay,
most of whom have accepted and opted not to join in this complaint. Fourth, the cessation of or
withdrawal from business operations was bona fide in character and not impelled by a motive to
defeat or circumvent the tenurial rights of employees. Waterfront Cebu City Hotel vs. Ma.
Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; due process. The following are the guiding principles in connection with the
hearing requirement in dismissal cases:
1. 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.
2. 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.
3. The ample opportunity to be heard standard in the Labor Code prevails over the
hearing or conference requirement in the implementing rules and regulations.
Given that the petitioners expressly 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. Prudential Guarantee and Assurance

Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance Inc.,
and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.

Employee dismissal; just cause. 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. Cosmos

Bottling Corp. vs. Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and Cecilia
Bautista. G.R. No. 193676 & G.R. No. 194303. June 20, 2012.

Employee dismissal; loss of trust and confidence. The Labor Code recognizes that an employer,
for just cause, may validly terminate the services of an employee for serious misconduct or

162
willful disobedience of the lawful orders of the employer or representative in connection with
the employees work. Fraud or willful breach by the employee of the trust reposed by the
employer in the former, or simply loss of confidence, also justifies an employees dismissal from
employment. Willful breach of trust or loss of confidence requires that the employee (1)
occupied a position of trust or (2) was routinely charged with the care of the employers
property. To warrant dismissal based on loss of confidence, there must be some basis for the
loss of trust or the employer must have reasonable grounds to believe that the employee is
responsible for the misconduct that renders the latter unworthy of the trust and confidence
demanded by his or her position. For more than a month, the petitioners did not even inform
PLDT of the whereabouts of the plant materials. Instead, he stocked these materials at his
residence even if they were needed in the daily operations of the company. In keeping with the
honesty and integrity demanded by his position, he should have turned over these materials to
the plants warehouse. Thus, PLDT reasonably suspected petitioner of stealing the companys
property. At that juncture, the employer may already dismiss the employee since it had
reasonable grounds to believe or to entertain the moral conviction that the latter was
responsible for the misconduct, and the nature of his participation therein rendered him
absolutely unworthy of the trust and confidence demanded by his position. Romeo E. Paulino
vs. NLRC, Philippine Long Distance Co., Inc.G.R. No. 176184, June 13, 2012.
Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for
dismissal was never intended to provide employers with a blank check for terminating their
employees. It should ideally apply only to cases involving employees occupying positions of
trust and confidence or to those situations where the employee is routinely charged with the
care and custody of the employers money or property. To the first class belong managerial
employees, i.e., those vested with the powers or prerogatives to lay down management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
effectively recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be one holding a position of trust and confidence. The second
requisite is that there must be an act that would justify the loss of trust and confidence.
Vallotas position as Junior Programmer is analogous to the second class of positions of trust
and confidence. Though he did not physically handle money or property, he became privy to
confidential data or information by the nature of his functions. At a time when the most
sensitive of information is found not printed on paper but stored on hard drives and servers, an
employee who handles or has access to data in electronic form naturally becomes the unwilling
recipient of confidential information. There was no other evidence presented to prove fraud in
the manner of securing or obtaining the files found in Vallotas computer. 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. Such act is not of the same class, degree or gravity as the acts that have been
held to be of such character. Prudential Guarantee and Assurance Employee Labor Union and

Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance Inc., and/or Jocelyn
Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; loss of trust and confidence. To validly dismiss an employee on the ground
of loss of trust and confidence under Article 282 (c) of the Labor Code of the Philippines, the
following guidelines must be observed: 1) loss of confidence should not be simulated; 2) it

163
should not be used as subterfuge for causes which are improper, illegal or unjustified; 3) it may
not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it must
be genuine, not a mere afterthought to justify earlier action taken in bad faith. More
importantly, it must be based on a willful breach of trust and founded on clearly established
facts. The testimony of Lobitaa constitutes substantial evidence to prove that respondent, as
the then Power Plant Manager, accepted commissions and/or kickbacks from suppliers, which
is a clear violation of Section 2.04 of petitioners Company Rules and Regulations. Jurisprudence
consistently holds that for managerial employees, the mere existence of a basis for believing
that such employee has breached the trust of his employer would suffice for his dismissal.
Respondents termination was for a just and valid cause. Apo Cement Corporation Vs. Zaldy E.
Baptisma. G.R. No. 176671. June 20, 2012.
Employee dismissal; order of reinstatement. Article 223 of the Labor Code provides that in case
there is an order of reinstatement, the employer must admit the dismissed employee under the
same terms and conditions, or merely reinstate the employee in the payroll. The order shall be
immediately executory. Thus, 3rd Alert cannot escape liability by simply invoking that Navia did
not report for work. The law states that the employer must still reinstate the employee in the
payroll. Where reinstatement is no longer viable as an option, separation pay equivalent to one
(1) month salary for every year of service could be awarded as an alternative. 3rd Alert Security
and Detective Services, Inc. vs. Romualdo Navia. G.R. No. 200653, June 13, 2012.
Employee dismissal; retrenchment. Retrenchment is the termination of employment initiated by
the employer through no fault of and without prejudice to the employees. It is resorted to
during periods of business recession, industrial depression, or seasonal fluctuations or during
lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new
production program or the introduction of new methods or more efficient machinery or of
automation. It is an act of the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction on the volume of his business.
In this case, the closure of a department or division of a company constitutes retrenchment by,
and not closure of, the company itself. Petitioner has not totally ceased its business operations.
It merely ceased operations of a department. Waterfront Cebu City Hotel vs. Ma. Melanie P.
Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; willful breach of trust. The loss of trust and confidence must be based on
willful breach of the trust reposed in the employee by his employer. Such 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. Moreover, it must be based
on substantial evidence and not on the employers whims or caprices or suspicions otherwise,
the employee would eternally remain at the mercy of the employer. The Supreme Court has
laid down the guidelines for the application of the loss of trust and confidence doctrine: (1) loss
of confidence should not be simulated; (2) it should not be used as a subterfuge for causes
which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought, to
justify an earlier action taken in bad faith. Villanueva worked for Meralco as a Branch
Representative whose tasks included the issuance of Contracts for Electric Service after receipt
of the amount due for service connection from customers. Obviously, he was entrusted not
only with the responsibility of handling company funds but also to cater to customers who
intended to avail of Meralcos services. This is nothing but an indication that trust and
confidence were reposed in him by the company, although his position was not strictly
managerial by nature. Meralcos loss of trust and confidence arising out of Villanuevas act of

164
misappropriation of company funds in the course of processing customer applications has been
proven by substantial evidence, thus, justified. Verily, the issuance of additional receipts for
excessive payments exacted from customers is a willful breach of the trust reposed in him by
the company. Vicente Villanueva, Jr. vs.. The National Labor Relations Commission, Third

Division, Manila Electric Company, Manuel Lopez, Chairman and CEO, and Francisco Collantes,
Manager. G.R. No. 176893, June 13, 2012.

Employee suit; damages. To obtain moral damages, the claimant must prove the existence of
bad faith by clear and convincing evidence, for the law always presumes good faith. It is not
even enough that one merely suffered sleepless nights, mental anguish and serious anxiety as
the result of the actuations of the other party. In this case, Lazaro did not state any moral
anguish that he suffered. Neither did he substantiate his imputations of malice to Banco Filipino.
He only made a sweeping declaration, without concrete proof, that the bank in refusing his
claim maliciously damaged his property rights and interest. Accordingly, neither moral damages
nor exemplary damage can be awarded to him.
With respect to attorneys fees, an award is proper only if that person was forced to litigate and
incur expenses to protect ones rights and interest by reason of an unjustified act or omission of
the party for whom it is sought. Banco Filipino had a prima facie legitimate defense that,
because it underwent liquidation proceedings, it cannot be compelled to credit that period in the
computation of the employees the retirement pay and profit shares. Considering that Banco
Filipinos refusal cannot be accurately characterized as unjustified, Lazaro cannot claim an
award of attorneys fees. Banco Filipino Savings and Mortgage Bank vs. Miguelito M.
Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No.
185346 & G.R. No. 185442. June 27, 2012.
Independent contractor; tests. Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out to 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. A person is considered engaged in
legitimate job contracting or subcontracting if the following conditions concur:
(a)
The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility according to its own manner and method, and free from the control and direction
of the principal in all matters connected with the performance of the work except as to the
results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and
(c)
The agreement between the principal and contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social welfare benefits.
In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a
principal. In labor-only contracting, the following elements are present:
(a) The contractor or subcontractor does not have substantial capital or investment to actually
perform the job, work or service under its own account and responsibility; and
(b) 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.

165
The test 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 subject to the
control of the employer, except only as to the results of the work.
Gramaje is not an independent job contractor, but a labor-only contractor. First, Gramaje has
no substantial capital or investment. The presumption is that a contractor is a labor-only
contractor unless he overcomes the burden of proving that it has substantial capital,
investment, tools, and the like. Neither Gramaje nor Polyfoam presented evidence showing
Gramajes ownership of the equipment and machineries used in the performance of the alleged
contracted job.
Second, Gramaje 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, Polyfoam, its apparent role having been merely to recruit persons to work for
Polyfoam. It is undisputed that respondent had performed his task of packing Polyfoams foam
products in Polyfoams premises. As to the recruitment of respondent, petitioners were able to
establish only that respondents application was referred to Gramaje, but that is all. Prior to his
termination, respondent had been performing the same job in Polyfoams business for almost
six (6) years. He was even furnished a copy of Polyfoams Mga Alituntunin at Karampatang
Parusa, which embodied Polyfoams rules on attendance, the manner of performing the
employees duties, ethical standards, cleanliness, health, safety, peace and order. These rules
carried with them the corresponding penalties in case of violation. While it is true that
petitioners submitted the Affidavit of Polyfoams supervisor, claiming that the latter did not
exercise supervision over respondent because the latter was not Polyfoams but Gramajes
employee, said Affidavit is insufficient to prove such claim. Petitioners should have presented
the person who they claim to have exercised supervision over respondent and their alleged
other employees assigned to Polyfoam. It was never established that Gramaje took entire
charge, control and supervision of the work and service agreed upon. Polyfoam-RGC
International, Corporation and Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No.
172349, June 13, 2012.
NLRC; jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a special law
governing overseas Filipino workers. However, there is no specific provision thereunder which
provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or
implementation of a CBA. Section 10 of R.A. 8042 simply speaks, in general, of claims arising
out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms
of damages. On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in
stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. In the present case, the basic issue raised
by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA
applies insofar as death benefits due to the heirs of Nelson are concerned. This issue clearly
involves the interpretation or implementation of the said CBA. Thus, the specific or special
provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and
between respondent GCI and AMOSUP provides that the Company and the Union agree that in
case of dispute or conflict in the interpretation or application of any of the provisions of this
Agreement, or enforcement of Company policies, the same shall be settled through negotiation,
conciliation or voluntary arbitration. The provisions of the CBA are in consonance with Rule VII,
Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and

166
Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that for
OFWs with collective bargaining agreements, the case shall be submitted for voluntary
arbitration in accordance with Articles 261 and 262 of the Labor Code. With respect to disputes
involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining
agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator
or panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties
may opt to submit the dispute to either the NLRC or to voluntary arbitration. Estate of Nelson R.

Dulay, represented by his wife Meddiry Jane P. Dulay vs. Aboitiz Jebsen Maritime, Inc. and
General Charterers, Inc. G.R. No. 172642, June 13, 2012.

Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA
Petition. However, the Supreme Court noted that in the CA Resolution, the appellate court
stated that their records revealed that Atty. Espinas, petitioners counsel of record at the time,
was duly served a copy of the following: CA Resolution granting respondents Motion for
Extension of Time to file the CA Petition; CA Resolution requiring petitioners to file their
Comment on the CA Petition; and CA Resolution, submitting the case for resolution, as no
comment was filed. Such service to Atty. Espinas was valid despite the fact he was already
deceased at the time. If a party to a case has appeared by counsel, service of pleadings and
judgments shall be made upon his counsel or one of them, unless service upon the party is
specifically ordered by the court. It is not the duty of the courts to inquire, during the progress
of a case, whether the law firm or partnership representing one of the litigants continues to
exist lawfully, whether the partners are still alive, or whether its associates are still connected
with the firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R.
No. 187188, June 27, 2012.
Dismissal; due process. Due process requirement is met when there is simply an opportunity to
be heard and to explain ones side even if no hearing is conducted. An employee may be
afforded ample opportunity to be heard by means of any method, verbal or written, whether in
a hearing, conference or some other fair, just and reasonable way. After receiving the first
notice apprising him of the charges against him, the employee may submit a written explanation
(which may be in the form of a letter, memorandum, affidavit or position paper) and offer
evidence in support thereof, like relevant company records and the sworn statements of his
witnesses. For this purpose, he may prepare his explanation personally or with the assistance of
a representative or counsel. He may also ask the employer to provide him copy of records
material to his defense. His written explanation may also include a request that a formal hearing
or conference be held. In such a case, the conduct of a formal hearing or conference becomes
mandatory, just as it is where there exist substantial evidentiary disputes or where company
rules or practice requires an actual hearing as part of employment pre-termination procedure.
Petitioners written response to the prerequisite notice provided her with an avenue to explain
and defend her side and thus served the purpose of due process. That there was no hearing,
investigation or right to appeal, which petitioner opined to be a violation of company policies, is
of no moment since the record is bereft of any showing that there is an existing company policy
that requires these procedures with respect to the termination of a CHR Director like petitioner
or that company practice calls for the same. There was also no request for a formal hearing on
the part of petitioner. As she was served with a notice apprising her of the charges against her
and also a subsequent notice informing her of the managements decision to terminate her
services after respondents found her written response to the first notice unsatisfactory,

167
petitioner was clearly afforded her right to due process. Flordeliza Maria Reyes-Rayel vs.
Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.
Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider
latitude of discretion in dismissing a managerial personnel who performs functions which by
their nature require the employers full trust and confidence.As distinguished from a rank and
file personnel, mere existence of a basis for believing that a managerial employee has breached
the trust of the employer justifies dismissal. Loss of confidence as a ground for dismissal does
not require proof beyond reasonable doubt as the law requires only that there be at least some
basis to justify it.
Petitioner was L&Ts CHR Director for Manufacturing, which is a managerial position saddled
with great responsibility. As such, she was directly responsible for managing her own
departmental staff. Because of this, petitioner must enjoy the full trust and confidence of her
superiors. However, petitioner delivered dismal performance and displayed poor work attitude,
which constitute sufficient reasons for an employer to terminate an employee on the ground of
loss of trust and confidence. First, records show that petitioner indeed unreasonably failed to
effectively communicate with her immediate superior. Second, the affidavits of petitioners coworkers revealed her negative attitude and unprofessional behavior towards them and the
company. Lastly, petitioner displayed inefficiency and ineptitude in her job as a CHR Director.
Taking all these circumstances collectively, the Court is convinced that respondents have
sufficient and valid reasons for terminating the services of petitioner as her continued
employment would be patently inimical to respondents interest. Flordeliza Maria Reyes-Rayel
vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.
Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for
the dismissal of employees recognized by the Labor Code. It is a management prerogative
resorted to by employers to avoid or to minimize business losses. The Court has laid down the
following standards that an employer should meet to justify retrenchment and to foil abuse,
namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence
In termination cases, the burden of proving that the dismissal was for a valid or authorized
cause rests upon the employer. The petitioner did not submit evidence of the losses to its
business operations and the economic havoc it would thereby imminently sustain. It only
claimed that respondents termination was due to its present business/financial condition. This
bare statement fell short of the norm to show a valid retrenchment. Indeed, not every loss
incurred or expected to be incurred by an employer can justify retrenchment. The employer
must prove, among others, that the losses are substantial and that the retrenchment is
reasonably necessary to avert such losses. Thus, by its failure to present sufficient and
convincing evidence to prove that retrenchment was necessary, respondents termination due to
retrenchment is not allowed. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs.
Hernani S. Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Employee training; reimbursement. The Supreme Court recognized the right of PAL to recoup
the costs of a pilots training in the form of service for a period of at least three (3) years. By
carrying over the same stipulation setting the age of fifty-seven (57) years as the reckoning

168
point when a pilot becomes disqualified to bid for a higher position in the present CBA, both PAL
and ALPAP recognized that the companys effort in sending pilots for training abroad is an
investment which necessarily expects a reasonable return in the form of service for a period of
at least three (3) years. This stipulation had been repeatedly adopted by the parties in the
succeeding renewals of their CBA, thus validating the impression that it is a reasonable and
acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently
disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot
to remain within PALs employ within a period of 3 years after he has been sent on training. The
supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly
covered the petitioners obligation to render service to PAL within 3 years to enable it to recoup
the costs of its investment. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July
16, 2012.
Employer-employee relationship; existence. The issue of whether or not an employer-employee
relationship existed is essentially a question of fact. The factors that determine the issue include
who has the power to select the employee, who pays the employees wages, who has the
power to dismiss the employee, and who exercises control of the methods and results by which
the work of the employee is accomplished. Although no particular form of evidence is required
to prove the existence of the relationship, and any competent and relevant evidence to prove
the relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioners employee. He
was undeniably employed as a pianist in petitioners Restaurant. First of all, petitioner actually
wielded the power of selection at the time it entered into the service contract with respondent.
The power of selection was firmly evidenced by, among others, the express written
recommendation by petitioners restaurant manager, for the increase of his remuneration.
Secondly, there is no denying that the remuneration denominated as talent fees was fixed on
the basis of his talent and skill and the quality of the music he played during the hours of
performance each night, taking into account the prevailing rate for similar talents in the
entertainment industry. Respondents remuneration, albeit denominated as talent fees, was still
considered as included in the term wagein the sense and context of the Labor Code, regardless
of how petitioner chose to designate the remuneration. Thirdly, the petitioner has the power to
dismiss respondent. The memorandum informing respondent of the discontinuance of his
service because of the present business or financial condition of petitioner showed that the
latter had the power to dismiss him from employment. Lastly, the power of the employer to
control the work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship. This is the so-called control test, and is
premised on whether the person for whom the services are performed reserves the right to
control both the end achieved and the manner and means used to achieve that end.
Respondent performed his work as a pianist under petitioners supervision and control.
Petitioners control of both the end achieved and the manner and means used to achieve that
end was demonstrated by the following, to wit: (1)He could not choose the time of his
performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week;
(2)He could not choose the place of his performance; (3) The restaurants manager required
him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to
conform to the Filipiniana motif; and (4)He was subjected to the rules on employees
representation check and chits, a privilege granted to other employees. Legend Hotel [Manila],

169
owned by Titatium Corporation, et al. vs. Hernani S. Realuyo, also known as Joey Roa. G.R. No.
153511, July 18, 2012.
Management prerogative; transfer of employees. An employers decision to transfer an
employee, if made in good faith, is a valid exercise of a management prerogative, although it
may result in personal inconvenience or hardship to the employee. Re-assignments made by
management pending investigation of irregularities allegedly committed by an employee fall
within the ambit of management prerogative. The purpose of reassignments is no different from
that of preventive suspension which management could validly impose as a disciplinary measure
for the protection of the companys property pending investigation of any alleged malfeasance
or misfeasance committed by the employee.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position
that required her employers utmost trust and confidence. Having lost his trust and confidence
in petitioner, respondent Delfin had the right to transfer her to ensure that she would no longer
have access to the companies confidential files. Although it is true that petitioner has yet to be
proven guilty, respondents had the authority to reassign her, pending investigation. When
petitioner was assigned to Cavite, there was an ongoing investigation of the charges filed
against her. It is undisputed that she refused to fill up, for no justifiable reasons, the
questionnaire distributed by her employer to determine who among those who had access to
the confidential files was responsible for their taking. Furthermore, a witness had executed an
Affidavit claiming that she found the missing files, and that her husband told her that it was
petitioner who handed those files to him. Lastly, the person who supposedly received these
documents from petitioner did not deny or rebuke the statements made by his wife. Josephine
Ruiz vs. Wendel Osaka Realty Corp., et al. G.R. No. 189082, July 11, 2012.
Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it
is applicable only to a situation where (1) there is no CBA or other applicable employment
contract providing for retirement benefits for an employee, or (2) there is a CBA or other
applicable employment contract providing for retirement benefits for an employee, but it is
below the requirement set by law. The rationale for the first situation is to prevent the absurd
situation where an employee, deserving to receive retirement benefits, is denied to them
through the nefarious scheme of employers to deprive employees of the benefits due them
under existing labor laws. On the other hand, the second situation aims to prevent private
contracts from derogating from the public law. The determining factor in choosing which
retirement scheme to apply is still superiorityin terms of benefits provided. Thus, even if there is
an existing CBA but the same does not provide for retirement benefits equal or superior to that
which is provided under Article 287 of the Labor Code, the latter will apply.
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and;
(2) the PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two
retirement schemes are alternative in nature such that the retired pilot can only be entitled to
that which provides for superior benefits. Comparing the benefits under the two (2) retirement
schemes, it can readily be perceived that the 22.5 days worth of salary for every year of service
provided under Article 287 of the Labor Code cannot match the 240% of salary or almost two
and a half worth of monthly salary per year of se