[G.R. No. 212054. March 11, 2015.

]
ST. LUKE'S MEDICAL CENTER, INC vs. MARIA THERESA V. SANCHEZ
Facts:
Sanchez is a Staff Nurse at St. Luke's Medical Center, Inc. (SLMC). Records reveal that
at the end of her shift on May 29, 2011, Sanchez passed through the SLMC Centralization
Entrance/Exit where she was subjected to the standard inspection procedure by the security
personnel. The Security Guard on-duty, noticed a pouch in her bag and asked her to open the
same. The said pouch contained assortment of medical stocks which were subsequently
confiscated. Sanchez was brought to the SLMC In-House Security Department (IHSD) where
she complied with the directive to write an Incident Report and also submitted an undated
handwritten letter of apology.
An initial investigation was also conducted by the SLMC Division of Nursing which
thereafter served Sanchez a notice to explain. Consequently, Sanchez was placed under
preventive suspension effective June 3, 2011 until the conclusion of the investigation by SLMC's
Employee and Labor Relations Department (ELRD) which, thereafter, required her to explain
why she should not be terminated from service for acts of dishonesty due to her possession of the
questioned items in violation of Section 1, Rule I of the SLMC Code of Discipline. In response,
she submitted a letter, which merely reiterated her claims in her previous letter. She likewise
requested for a case conference, which SLMC granted. After hearing her side, SLMC, on July 4,
2011, informed Sanchez of its decision to terminate her employment effective closing hours of
July 6, 2011. This prompted her to file a complaint for illegal dismissal before the NLRC.
In her position paper, Sanchez maintained her innocence, claiming that she had no
intention of bringing outside the SLMC's premises the questioned items since she merely
inadvertently left the pouch containing them in her bag as she got caught up in work that day.
She further asserted that she could not be found guilty of pilferage since the questioned items
found in her possession were neither SLMC's nor its employees' property. She also stressed the
fact that SLMC did not file any criminal charges against her. Anent her supposed admission in
her handwritten letter, she claimed that she was unassisted by counsel when she executed the
same and, thus, was inadmissible for being unconstitutional.
For its part, SLMC contended that Sanchez was validly dismissed for just cause as she
had committed theft in violation of Section 1, Rule I of the SLMC Code of Discipline, which
punishes acts of dishonesty, i.e., robbery, theft, pilferage, and misappropriation of funds, with
termination from service.
The Labor Arbiter (LA) ruled that Sanchez was validly dismissed for intentionally taking
the property of SLMC's clients for her own personal benefit, which constitutes an act of
dishonesty as provided under SLMC's Code of Discipline. The NLRC reversed and set aside the

LA ruling, and held that Sanchez was illegally dismissed. CA upheld the NLRC, ruling that the
latter did not gravely abuse its discretion in finding that Sanchez was illegally dismissed.

Issue:
Whether or not respondent Sanchez was illegally dismissed by SLMC.

Held:
Article 296 (formerly Article 282) of the Labor Code provides that an employer may
terminate an employment for any of the following causes: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or his representative in
connection with his work; xxx
Note that for an employee to be validly dismissed on this ground, the employer's orders,
regulations, or instructions must be: (1) reasonable and lawful, (2) sufficiently known to the
employee, and (3) in connection with the duties which the employee has been engaged to
discharge.
The Court finds that Sanchez was validly dismissed by SLMC for her willful disregard
and disobedience of Section 1, Rule I of the SLMC Code of Discipline, which reasonably
punishes acts of dishonesty, i.e., "theft, pilferage of hospital or co-employee property, . . . or its
attempt in any form or manner from the hospital, co-employees, doctors, visitors, [and]
customers (external and internal)" with termination from employment. Such act is obviously
connected with Sanchez's work, who, as a staff nurse, is tasked with the proper stewardship of
medical supplies. Significantly, records show that Sanchez made a categorical admission in her
handwritten letter i.e., "[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng
gamit" that despite her knowledge of its express prohibition under the SLMC Code of
Discipline, she still knowingly brought out the subject medical items with her. It is apt to clarify
that SLMC cannot be faulted in construing the taking of the questioned items as an act of
dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner) considering that
the intent to gain may be reasonably presumed from the furtive taking of useful property
appertaining to another.
Note that Section 1, Rule 1 of the SLMC Code of Discipline is further supplemented by
the company policy requiring the turn-over of excess medical supplies/items for proper
handling and providing a restriction on taking and bringing such items out of the SLMC
premises without the proper authorization or "pass" from the official concerned, which Sanchez
was equally aware thereof. As it is clear that the company policies subject of this case are
reasonable and lawful, sufficiently known to the employee, and evidently connected with the
latter's work, the Court concludes that SLMC dismissed Sanchez for a just cause.

Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage.
While damage aggravates the charge, its absence does not mitigate nor negate the employee's
liability. Neither is SLMC's non-filing of the appropriate criminal charges relevant to this
analysis. An employee's guilt or innocence in a criminal case is not determinative of the
existence of a just or authorized cause for his or her dismissal. It is well-settled that conviction
in a criminal case is not necessary to find just cause for termination of employment, as in this
case. Criminal and labor cases involving an employee arising from the same infraction are
separate and distinct proceedings which should not arrest any judgment from one to the other.

[G.R. No. 171282. November 27, 2013.]

SKM ART CRAFT CORPORATION vs. BAUCA

Facts:
The 23 respondents here were employed by petitioner SKM Art Craft Corporation which
is engaged in the handicraft business. On April 18, 2000, around 1:12 a.m., a fire occurred at the
inspection and receiving/repair/packing area of petitioner's premises in Intramuros, Manila. The
fire investigation report 4 stated that the structure and the beach rubber building were totally
damaged. Also burned were four container vans and a trailer truck. The estimated damage was
P22 million.
On May 8, 2000, petitioner informed respondents that it will suspend its operations for
six months, effective May 9, 2000. On May 16, 2000, only eight days after receiving notice of
the suspension of petitioner's operations, the 23 respondents (and other co-workers) filed a
complaint for illegal dismissal in NLRC. They alleged that there was discrimination in choosing
the workers to be laid off and that petitioner had discovered that most of them were members of
a newly-organized union.
Petitioner denied the claim of illegal dismissal and said that Article 286 of the Labor
Code allows the bona fide suspension of a business or undertaking for a period not exceeding six
months. Petitioner claimed that the fire cost it millions in losses and that it is impossible to
resume its normal operations for a significant period of time. 8
The Labor Arbiter ruled that respondents were illegally dismissed and ordered petitioner
to reinstate them and pay them back wages. The National Labor Relations Commission set aside
the Labor Arbiter's Decision and ruled that there was no illegal dismissal. The CA set aside the
NLRC Decision and Resolution and reinstated the Labor Arbiter's Decision.
Issue:
Whether or not the respondents were illegally dismissed.
Held:
Article 286 of the Labor Code provides that the bona fide suspension of the operations
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the
employer shall reinstate the employee to his former position without loss of seniority rights if he
indicates his desire to resume his work not later than one (1) month from the resumption of
operations of his employer or from his relief from the military or civic duty.
The NLRC correctly noted that the complaint for illegal dismissal filed by respondents
was premature since it was filed only eight days after petitioner announced that it will suspend its
operations for six months. In Nippon Housing Phil., Inc. v. Leynes, we said that a complaint for

illegal dismissal filed prior to the lapse of said six months is generally considered as prematurely
filed.
In this case, however, we agree with the Labor Arbiter and the CA that respondents were
already considered illegally dismissed since petitioner failed to recall them after six months,
when its bona fide suspension of operations lapsed. We stress that under Article 286 of the Labor
Code, the employment will not be deemed terminated if the bona fide suspension of operations
does not exceed six months. But if the suspension of operations exceeds six months, the
employment will be considered terminated.
Petitioner claims now that despite its liberality and gesture of goodwill, none of the
respondents reported for work, and that aside from respondents' self-serving claims made in the
form of manifestations filed before the Labor Arbiter, nothing on record will show that
respondents actually presented themselves to petitioner for reinstatement.
We seriously doubt petitioner's liberality or goodwill. In its manifestation, petitioner even
opposed the motion filed by respondents for execution of the reinstatement aspect of the Labor
Arbiter's Decision. And when the Labor Arbiter granted the motion for execution of the
reinstatement aspect of her decision, petitioner filed a manifestation and motion to quash the writ
of execution. In this motion to quash, petitioner claimed that none of the respondents indicated
their desire to return to work either through the office of the Labor Arbiter or through their
counsel, by filing the appropriate notice or manifestation. Notably, petitioner wanted the Labor
Arbiter to believe that no manifestation was filed by respondents. But now, petitioner admits that
manifestations were in fact filed by respondents before the Labor Arbiter. Petitioner's lack of
candor to the Labor Arbiter is unfair. Petitioner's declaration that it is willing to reinstate
respondents also lacks credence because it was in fact opposing such reinstatement.
Now, petitioner and almost all of the respondents have agreed to settle this case.
In sum, while we agree with the CA in setting aside the NLRC Decision and Resolution and in
reinstating the Labor Arbiter's Decision, the CA and Labor Arbiter's Decisions will now be
subject to the settlement agreements entered into by petitioner and almost all of the respondents.

[G.R. No. 190053. March 24, 2014.]

NAVOTAS SHIPYARD CORPORATION and JESUS VILLAFLOR vs. INNOCENCIO
MONTALLANA

Facts:
The Respondents filed a complaint for illegal (constructive) dismissal, with money
claims, against the petitioners, Navotas Shipyard Corporation (company) and its
President/General Manager, Jesus Villaflor. The respondents alleged that on October 20, 2003,
the company's employees (about 100) were called to a meeting where Villaflor told them:
"Magsasara na ako ng negosyo, babayaran ko na lang kayo ng separation pay dahil wala na
akong pangsweldo sa inyo. Marami akong mga utang sa krudo, yelo, at iba pa." Since then, they
were not allowed to report for work but Villaflor's promise to give them separation pay never
materialized despite their persistent demands and follow-ups.
The petitioners, on the other hand, claimed that due to the "seasonal lack of fish caught
and uncollected receivables, the company suffered financial reverses. It was thus constrained to
temporarily cease operations. They projected that the company could resume operations before
the end of six months or on April 22, 2004. It reported the temporary shutdown to the
Department of Labor and Employment, National Capital Region (DOLE-NCR) and filed an
Establishment Termination Report.
The Labor Arbiter dismissed the complaint for lack of merit, but awarded the respondents
13th month pay and service incentive leave pay for the year 2003. LA ruled that the respondents
could not have been illegally dismissed. The NLRC dismissed the appeal for lack of merit and
affirmed the LA.
The CA found merit in the respondents' submission that the company's shutdown was not
temporary, but permanent. While it acknowledged that initially, the shutdown was only
temporary, it "has ripened into a closure or cessation of operations" after it exceeded the six
months allowable period under Article 286 of the Labor Code. It thus became a dismissal, it
pointed out that, by operation of law, when the petitioners failed to reinstate the respondents after
the lapse of six months. It noted that "during the proceedings [before] the LA covering a period
in excess of six months, there is no showing on record that notices to return to work were given
to the petitioners or that operations have resumed." The CA declared that the NLRC committed
grave abuse of discretion in upholding LAs ruling that no illegal dismissal took place as the LA
disregarded the obtaining facts and the applicable provisions of law. It set aside the challenged
NLRC decision and granted the respondents' claims for service incentive leave pay, 13th month
pay, separation pay and backwages.
The petitioners now seek relief from this Court through the present Rule 45 appeal on the
ground that the CA committed a reversible error of law when it awarded separation pay and
backwages notwithstanding the closure of the company's business operations. They argue
that under the circumstances, the respondents are not entitled to backwages, pursuant to Article

283 of the Labor Code. They maintain that although they "suffered business losses that led to the
disposition of their fishing vessels in order to pay their debts, diesel, salaries and others, they
gave the separation pays of their employees."

Issues:
1

Whether Article 283 of the Labor Code on retrenchment or Article 286 of the Labor
Code on temporary shutdown is applicable in this case.

Whether or not the respondents were illegally dismissed and entitled CA award.

Held:
1.
According to the CA, the "petitioners anchor their arguments mainly on Article 283 of
the Labor Code, stating that private respondents resorted to retrenchment and permanent closure
of business, while private respondents maintain that what is applicable is Article 286 . . . as the
closure of business was merely temporary."
The petitioners undertook a temporary shutdown. In fact, the company notified the DOLE
of the shutdown and filed an Establishment Termination Report containing the names of the
affected employees. The petitioners expected the company to recover before the end of the sixmonth shutdown period, but unfortunately, no recovery took place. Thus, the shutdown became
permanent. According to the petitioners, they gave the company's employees their separation
pay.
We disagree with the company's position that it resorted to a retrenchment under Article
283 of the Labor Code; it was a temporary shutdown under Article 286 where the employees are
considered on floating status or whose employment is temporarily suspended. Citing Sebuguero
v. National Labor Relations Commission, the CA was correct when it said that "[t]here is no
specific provision of law which treats of a temporary retrencShment or lay-off." 21
2.
Under the circumstances, we cannot say that the company's employees were illegally
dismissed; rather, they lost their employment because the company ceased operations after
failing to recover from their financial reverses. The CA itself recognized what happened to the
company when it observed: "The temporary shutdown has ripened into a closure or cessation of
operations. In this situation[,] private respondents are definitely entitled to the corresponding
benefits of separation." 22 Even the respondents had an inkling of the company's fate when they
claimed before the LA that on October 20, 2003, they were called, together with all the other
employees of the company, by Villaflor; the latter allegedly told them that he would be closing
the company, but would give them their separation pay. He also disclosed to them the reason

he could no longer pay their salaries due to the company's unsettled financial obligations on fuel
and ice and other indebtedness.
The respondents' verbal account of what happened during the meeting, particularly the
company's imminent closure, to our mind, confirmed the company's dire situation. The
temporary shutdown, it appears, was a last ditch effort on the part of Villaflor to make the
company's operations viable but, as it turned out, the effort proved futile. The shutdown became
permanent as the CA itself acknowledged. The CA misappreciated the facts when it opined that
the respondents were illegally dismissed because they were not reinstated by the petitioners after
the lapse of the company's temporary shutdown. It lost sight of the fact that the company did not
resume operations anymore, a situation the CA itself recognized. The respondents, therefore, had
no more jobs to go back to; hence, their non-reinstatement.
In these lights, the CA was not only incorrect from the point of law; it likewise
disregarded, or at the very least, grossly misappreciated the evidence on record that the
petitioner was in distress and had temporarily suspended its operations, and duly reflected
these circumstances to the DOLE. From this perspective, there was no grave abuse of discretion
to justify the CA's reversal of the NLRC's findings and conclusions.
Since there was no illegal dismissal, the respondents are not entitled to backwages. The
evidence on hand substantially shows that the company closed down due to serious business
reverses, an authorized cause for termination of employment. Failure to notify the respondents in
writing of the closure of the company will not invalidate the termination of their employment,
but the company has to pay them nominal damages for the violation of their right to procedural
due process. Considering that the company's closure was due to serious financial reverses,
it is not legally bound to give the separated employees separation pay.

[G.R. No. 204761. April 2, 2014.]

EMERITUS SECURITY AND MAINTENANCE SYSTEMS, INC. vs. JANRIE C. DAILIG
Facts:
In August 2000, petitioner hired respondent as one of its security guards. During his
employment, respondent was assigned to petitioner's various clients. On 10 December 2005,
respondent was relieved from his post.
On 14 July 2006, respondent filed a complaint for illegal dismissal, underpayment of
salaries and non-payment of full backwages before the NLRC. Respondent claimed that on
various dates in December 2005 and from January to May 2006, he went to petitioner's office to
follow-up his next assignment. After more than six months since his last assignment, still
respondent was not given a new assignment. Respondent argued that if an employee is on
floating status for more than six months, such employee is deemed illegally dismissed.
Petitioner denied dismissing respondent. Petitioner admitted that it relieved respondent
from his last assignment on 10 December 2005; however, petitioner required respondent to
report to the head office within 48 hours from receipt of the order of relief. Respondent allegedly
failed to comply. Petitioner further alleged that it had informed respondent that he had been
absent without official leave for the month of January 2006, and that his failure to report within
72 hours from receipt of the notice would mean that he was no longer interested to continue his
employment. Petitioner also claimed that there was no showing that respondent was prevented
from returning to his work and that it had consistently manifested its willingness to reinstate him
to his former position. In addition, the fact that there was no termination letter sent to respondent
purportedly proved that respondent was not dismissed.
The Labor Arbiter ruled that complainant was illegally dismissed. Petitioner appealed before the
NLRC, which dismissed the appeal for lack of merit. The Court of Appeals affirmed the finding
of the Labor Arbiter and the NLRC that respondent was illegally dismissed by petitioner.
However, the Court of Appeals set aside the Labor Arbiter and the NLRC's reinstatement order.
Instead, the Court of Appeals ordered the payment of separation pay, invoking the doctrine of
strained relations between the parties.

Issues:
1
2

Whether respondent Daileg was illegally dismissed.

If he was, whether respondent is entitled to separation pay, instead of reinstatement.

Held:
1.
Petitioner admits relieving respondent from his post as security guard on 10 December
2005. There is also no dispute that respondent remained on floating status at the time he filed his
complaint for illegal dismissal on 16 June 2006. In other words, respondent was on floating
status from 10 December 2005 to 16 June 2006 or more than six months. Petitioner's allegation
of sending respondent a notice sometime in January 2006, requiring him to report for work, is
unsubstantiated, and thus, self-serving. The Court agrees with the ruling of the Labor Arbiter,
NLRC and Court of Appeals that a floating status of a security guard, such as respondent, for
more than six months constitutes constructive dismissal.
2.
Reinstatement is the general rule, while the award of separation pay is the exception.
In this case, petitioner claims that it complied with the reinstatement order of the Labor
Arbiter. On 23 January 2008, petitioner sent respondent a notice informing him of the Labor
Arbiter's decision to reinstate him. Respondent admits receiving a reinstatement notice from
petitioner. Thereafter, respondent was assigned to one of petitioner's clients. However,
respondent points out that he was not reinstated by petitioner Emeritus Security and Maintenance
Systems, Inc. but was employed by another company, Emme Security and Maintenance Systems,
Inc. (Emme). Thus, according to respondent, he was not reinstated at all. Petitioner counters that
Emeritus and Emme are sister companies with the same Board of Directors and officers, arguing
that Emeritus and Emme are in effect one and the same corporation.
Considering petitioner's undisputed claim that Emeritus and Emme are one and the same,
there is no basis in respondent's allegation that he was not reinstated to his previous employment.
Besides, respondent assails the corporate personalities of Emeritus and Emme only in his
Comment filed before this Court. Further, respondent did not appeal the Labor Arbiter's
reinstatement order.
Contrary to the Court of Appeals' ruling, there is nothing in the records showing any
strained relations between the parties to warrant the award of separation pay. There is neither
allegation nor proof that such animosity existed between petitioner and respondent. In fact,
petitioner complied with the Labor Arbiter's reinstatement order. Thus, considering that (1)
petitioner reinstated respondent in compliance with the Labor Arbiter's decision, and (2) there is
no ground, particularly strained relations between the parties, to justify the grant of separation
pay, the Court of Appeals erred in ordering the payment thereof, in lieu of reinstatement.

[G.R. No. 207253. August 20, 2014.]

CRISPIN B. LOPEZ vs. IRVINE CONSTRUCTION CORP. and TOMAS SY SANTOS

Facts:
Respondent Irvine Construction Corp. (Irvine) is a construction which initially hired
petitioner Lopez as laborer in November 1994 and, thereafter, designated him as a guard at its
warehouse in the year 2000, with a working hours from 7 o'clock in the morning until 4 o'clock
in the afternoon. On December 18, 2005, Lopez was purportedly terminated from his
employment, whereupon he was told "Ikaw ay lay-off muna." Thus, on January 10, 2006, he
filed a complaint for illegal dismissal with prayer for the payment of separation benefits against
Irvine before the NLRC.
For its part, respondent Irvine denied Lopez's claims, alleging that he was employed only
as a laborer who, however, sometimes doubled as a guard. As laborer, Lopez's duty was to bring
construction materials from the suppliers' vehicles to the company warehouse when there is a
construction project in Cavite. As evidenced by an Establishment Termination Report dated
December 28, 2005 which Irvine previously submitted before the Department of Labor and
Employment (DOLE), Lopez was, however, temporarily laid-off on December 27, 2005 after the
Cavite project was finished. Eventually, Lopez was asked to return to work through a letter dated
June 5, 2006 (return to work order), allegedly sent to him within the six (6) month period under
Article 286 of the Labor Code which pertinently provides that "[t]he bona-fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months . . . shall not
terminate employment." As such, Irvine argued that Lopez's filing of the complaint for illegal
dismissal was premature.
The Labor Arbiter ruled that Lopez was illegally dismissed. NLRC uphold the LA's
ruling. The CA granted Irvine's certiorari petition in a Decision dated September 14, 2012,
thereby reversing the NLRC. It held that Lopez's complaint for illegal dismissal was prematurely
filed since there was no indicia that Lopez was actually prevented by Irvine from returning to
work or was deprived of any work assignments or duties. On the contrary, the CA found that
Lopez was asked to return to work within the six-month period under Article 286 of the Labor
Code. Accordingly, it concluded that Lopez was merely temporarily laid off, and, thus, he could
not have been dismissed.

Issue:
Whether or not petitioner Lopez was illegally dismissed.

Held:
Ruling on the propriety of Irvine's course of action in this case preliminarily calls for a
determination of Lopez's employment status that is, whether Lopez was a project or a regular
employee. The NLRC found that no substantial evidence had been presented by Irvine to show
that Lopez had been assigned to carry out a "specific project or undertaking," with its duration
and scope specified at the time of engagement. In view of the weight accorded by the courts to
factual findings of labor tribunals such as the NLRC, the Court, absent any cogent reason to hold
otherwise, concurs with its ruling that Lopez was not a project but a regular employee. This
conclusion is bolstered by the undisputed fact that Lopez had been employed by Irvine since
November 1994, or more than 10 years from the time he was laid off on December 27, 2005.
Article 280 of the Labor Code provides that any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular employee.
As a regular employee, Lopez is entitled to security of tenure, and, hence, dismissible only if a
just or authorized cause exists therefor. Among the authorized causes for termination under
Article 283 of the Labor Code is retrenchment, or what is sometimes referred to as a "lay-off":
In the case at bar, Irvine asserts that it only temporarily laid-off Lopez from work on
December 27, 2005 for the reason that its project in Cavite had already been finished. It is
readily apparent that the supposed lay-off of Lopez was hardly justified considering the absence
of any causal relation between the cessation of Irvine's project in Cavite with the suspension of
Lopez's work. To repeat, Lopez is a regular and not a project employee. Hence, the continuation
of his engagement with Irvine, either in Cavite, or possibly, in any of its business locations,
should not have been affected by the culmination of the Cavite project alone.
In light of the well-entrenched rule that the burden to prove the validity and legality of
the termination of employment falls on the employer, Irvine should have established the bona
fide suspension of its business operations or undertaking that would have resulted in the
temporary lay-off of its employees for a period not exceeding six (6) months in accordance with
Article 286 of the Labor Code. In this case, Irvine failed to prove compliance with the
parameters of Article 286 of the Labor Code. As the records would show, it merely completed
one of its numerous construction projects which does not, by and of itself, amount to a bona
fide suspension of business operations or undertaking. In invoking Article 286 of the Labor
Code, the paramount consideration should be the dire exigency of the business of the
employer that compels it to put some of its employees temporarily out of work. This means
that the employer should be able to prove that it is faced with a clear and compelling economic
reason which reasonably forces it to temporarily shut down its business operations or a particular
undertaking, incidentally resulting to the temporary lay-off of its employees. Due to the grim
economic consequences to the employee, case law states that the employer should also bear the
burden of proving that there are no posts available to which the employee temporarily out
of work can be assigned.

The same can be said of the employee in this case as no evidence was submitted by Irvine
to show any dire exigency which rendered it incapable of assigning Lopez to any of its projects.
Add to this the fact that Irvine did not proffer any sufficient justification for singling out Lopez
for lay-off among its other three hundred employees, thereby casting a cloud of doubt on Irvine's
good faith in pursuing this course of action. Verily, Irvine cannot conveniently suspend the work
of any of its employees in the guise of a temporary lay-off when it has not shown compliance
with the legal parameters under Article 286 of the Labor Code. With Irvine failing to prove such
compliance, the resulting legal conclusion is that Lopez had been constructively dismissed; and
since the same was effected without any valid cause and due process, the NLRC properly
affirmed the LA's ruling that Lopez's dismissal was illegal.

[G.R. No. 198538. September 29, 2014.]

EXOCET SECURITY AND ALLIED SERVICES CORPORATION and/or MA. TERESA
MARCELO vs. ARMANDO D. SERRANO

Facts:
Petitioner Exocet Security and Allied Services Corporation (Exocet) is engaged in the
provision of security personnel to its various clients or principals. Petitioner assigned respondent
Armando D. Serrano (Serrano) as "close-in" security personnel to its clients starting September
24, 1994. On August 15, 2006, Serrano was relieved by JG Summit from his duties. For more
than six months after he reported back to Exocet, Serrano was without any reassignment. On
March 15, 2007, Serrano filed a complaint for illegal dismissal against Exocet with the National
Labor Relations Commission. (NLRC).
For its defense, Exocet denied dismissing Serrano alleging that, after August 15, 2006,
Serrano no longer reported for duty assignment as VIP security for JG Summit, and that on
September 2006, he was demanding for VIP Security detail to another client. However, since, at
that time, Exocet did not have clients in need of VIP security assignment, Serrano was
temporarily assigned to general security service. 6 Exocet maintained that it was Serrano who
declined the assignment on the ground that he is not used to being a regular security guard.
Serrano, Exocet added, even refused to report for immediate duty, as he was not given a VIP
security assignment.
The Labor Arbiter found that Serrano, while not actually dismissed, was placed on a
floating status for more than six months and so, was deemed constructively dismissed. Not
satisfied with the award, Serrano appealed the Labor Arbiter's Decision to the NLRC. The NLRC
ruled that Serrano was not constructively dismissed, as his termination was due to his own fault,
stubborn refusal, and deliberate failure to accept a re-assignment. The appellate court rendered a
Decision in Serrano's favor and ordering Exocet to pay Serrano separation pay and backwages.

Issue:
Whether or not respondent Serrano was constructively dismissed.
Held:
The crux of the controversy lies on the consequence of the lapse of the six-month period,
during which respondent Serrano was placed on a "floating status" and petitioner Exocet could
not assign him to a position he wants. While there is no specific provision in the Labor
Code which governs the "floating status" or temporary "off-detail" of security guards employed

by private security agencies, this situation was considered by this Court in several cases as a
form of temporary retrenchment or lay-off. Since it involves a circumstance that is generally
outside the control of the security agency or the employer, the Court has ruled that when a
security guard is placed on a "floating status," he or she does not receive any salary or
financial benefit provided by law.
It must be emphasized, however, that although placing a security guard on "floating
status" or a temporary "off-detail" is considered a temporary retrenchment measure, there is
similarly no provision in the Labor Code which treats of a temporary retrenchment or lay-off.
Neither is there any provision which provides for its requisites or its duration. Nevertheless,
since an employee cannot be laid-off indefinitely, the Court has applied Article 292 (previously
Article 286) of the Labor Code by analogy to set the specific period of temporary lay-off to a
maximum of six (6) months. This Court has held that the placement of the employee on a
floating status should not last for more than six months. After six months, the employee should
be recalled for work, or for a new assignment; otherwise, he is deemed terminated.
Under the Department Order No. 14, Series of 2001 (DO 14-01), the lack of service
assignment for a continuous period of six (6) months is an authorized cause for the termination
of the employee, who is then entitled to a separation pay equivalent to half month pay for every
year of service. To validly terminate a security guard for lack of service assignment for a
continuous period of six months under DO 14-01, the security agency must comply with the
provisions of Article 289 (previously Art. 283) of the Labor Code, which mandates that a written
notice should be served on the employee on temporary off-detail or floating status and to the
DOLE one (1) month before the intended date of termination.
In every case, the Court has declared that the burden of proving that there are no posts
available to which the security guard may be assigned rests on the employer.
In the controversy now before the Court, there is no question that the security guard,
Serrano, was placed on floating status after his relief from his post as a VIP security by his
security agency's client. Yet, there is no showing that his security agency, petitioner Exocet, acted
in bad faith when it placed Serrano on such floating status. What is more, the present case is not
a situation where Exocet did not recall Serrano to work within the six-month period as
required by law and jurisprudence. Exocet did, in fact, make an offer to Serrano to go back
to work. It is just that the assignment although it does not involve a demotion in rank or
diminution in salary, pay, benefits or privileges was not the security detail desired by Serrano.
Clearly, Serrano's lack of assignment for more than six months cannot be attributed to petitioner
Exocet.
The security guard's right to security of tenure does not give him a vested right to the
position as would deprive the company of its prerogative to change the assignment of, or transfer
the security guard to, a station where his services would be most beneficial to the client.
Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of
the six-month period of floating status as a case of constructive dismissal, without looking into

the peculiar circumstances that resulted in the security guard's failure to assume another post.
This is especially true in the present case where the security guard's own refusal to accept a nonVIP detail was the reason that he was not given an assignment within the six-month period. The
security agency, Exocet, should not then be held liable.
Indeed, Serrano was guilty of wilful disobedience to a lawful order of his employer in
connection with his work, which is a just cause for his termination under Art. 288 (previously
Art. 282) of the Labor Code. Nonetheless, Exocet did not take Serrano's wilful disobedience
against him. Hence, Exocet is considered to have waived its right to terminate Serrano on such
ground.
In this factual milieu, since respondent Serrano was not actually or constructively
dismissed from his employment by petitioner Exocet, it is best that petitioner Exocet direct him
to report for work, if any security assignment is still available to him. If respondent Serrano still
refuses to be assigned to any available guard position, he shall be deemed to have abandoned his
employment with petitioner.
If no security assignment is available for respondent, petitioner Exocet should comply
with the requirements of DO 14-01, in relation to Art. 289 of the Labor Code, and serve a written
notice on Serrano and the DOLE one (1) month before the intended date of termination, and pay
Serrano separation pay equivalent to half month pay for every year of his actual service.

[G.R. No. 202996. June 18, 2014.]

MARLO A. DEOFERIO vs. INTEL TECHNOLOGY PHILIPPINES, INC. and/or MIKE
WENTLING

Facts:
On February 1, 1996, respondent Intel Technology Philippines, Inc. (Intel) employed
Deoferio as a product quality and reliability engineer. In July 2001, Intel assigned him to the
United States as a validation engineer for an agreed period of two years. On January 27, 2002,
Deoferio was repatriated to the Philippines after being confined at Providence St. Vincent
Medical Center for major depression with psychosis. In the Philippines, he worked as a product
engineer.
Deoferio underwent a series of medical and psychiatric treatment at Intel's expense after
his confinement in the United States. After several consultations, Dr. Lee issued a psychiatric
report dated January 17, 2006 concluding and stating that Deoferio's psychotic symptoms are not
curable within a period of six months and "will negatively affect his work and social relation
with his co-worker[s]." Pursuant to these findings, Intel issued Deoferio a notice of termination
on March 10, 2006.
Deoferio responded to his termination of employment by filing a complaint for illegal
dismissal with prayer for money claims against respondents Intel and Mike
Wentling (respondents). He denied that he ever had mental illness and insisted that he
satisfactorily performed his duties as a product engineer. He argued that Intel violated his
statutory right to procedural due process when it summarily issued a notice of termination. He
further claimed that he was entitled to a salary differential equivalent to the pre-terminated
period of his assignment in the United States minus the base pay that he had already received.
Deoferio also prayed for backwages, separation pay, moral and exemplary damages, as well as
attorney's fees.
Respondents argued that Deoferio's dismissal was based on Dr. Lee's certification that:
(1) his schizophrenia was not curable within a period of six months even with proper medical
treatment; and (2) his continued employment would be prejudicial to his and to the other
employees' health. The respondents also insisted that Deoferio's presence at Intel's premises
would pose an actual harm to his co-employees as shown by his previous acts. The respondents
further asserted that the twin-notice requirement in dismissals does not apply to terminations
under Article 284 of the Labor Code. They emphasized that the Labor Code's implementing
rules (IRR) only requires a competent public health authority's certification to effectively
terminate the services of an employee.

The Labor Arbiter (LA) ruled that Deoferio had been validly dismissed. The LA gave
weight to Dr. Lee's certification that Deoferio had been suffering from schizophrenia and was not
fit for employment. The evidence on record shows that Deoferio's continued employment at Intel
would pose a threat to the health of his co-employees. The LA further held that the Labor
Code and its IRR do not require the employer to comply with the twin-notice requirement in
dismissals due to disease. The National Labor Relations Commission (NLRC) wholly affirmed
the LA's ruling. The CA affirmed the NLRC decision

Issues:
1

Whether petitioner Deoferio was suffering from schizophrenia and whether his
continued employment was prejudicial to his health, as well as to the health of his
co-employees;
Whether the twin-notice requirement in dismissals applies to terminations due to
disease; and As part of the second issue, the following issues are raised:
(a) Whether Deoferio is entitled to nominal damages for violation of his
right to statutory procedural due process; and
(b) Whether the respondents are solidarily liable to Deoferio for nominal
damages.

Whether Deoferio is entitled to salary differential, backwages, separation pay,

moral and exemplary damages, as well as attorney's fees.

Held:
1.
Intel had an authorized cause to dismiss Deoferio from employment.
The present case involves termination due to disease an authorized cause for dismissal
under Article 284 of the Labor Code. As substantive requirements, the Labor Code and
its IRR 33 require the presence of the following elements: (1) An employer n has been found to
be suffering from any disease. (2) His continued employment is prohibited by law or prejudicial
to his health, as well as to the health of his co-employees. (3) A competent public health
authority certifies that the disease is of such nature or at such a stage that it cannot be cured
within a period of six months even with proper medical treatment. The third
element substantiates the contention that the employee has indeed been suffering from a disease
that: (1) is prejudicial to his health as well as to the health of his co-employees; and (2) cannot be
cured within a period of six months even with proper medical treatment. Without the medical
certificate, there can be no authorized cause for the employee's dismissal. The absence of this
element thus renders the dismissal void and illegal.

Simply stated, this requirement is not merely a procedural requirement, but a substantive one.
In the current case, we agree with the CA that Dr. Lee's psychiatric report substantially
proves that Deoferio was suffering from schizophrenia, that his disease was not curable within a
period of six months even with proper medical treatment, and that his continued employment
would be prejudicial to his mental health. This conclusion is further substantiated by the unusual
and bizarre acts that Deoferio committed while at Intel's employ.
2.
The twin-notice requirement applies to terminations under Article 284 of the Labor Code.
The Labor Code and its IRR are silent on the procedural due process required in terminations
due to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of
the IRR expressly states that the employee should be afforded procedural due process in all cases
of dismissals.
(a) Intel's violation of Deoferio's right to statutory procedural due process warrants the
payment of indemnity in the form of nominal damages.
(b) Intel shall be solely liable to Deoferio for the satisfaction of nominal damages.
Wentling, as 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. There is also no ground for piercing the veil of corporate fiction
because Wentling acted in good faith and merely relied on Dr. Lee's psychiatric report in carrying
out the dismissal.
3.
Deoferio's claim for salary differential is already barred by prescription. Under Article
291 of the Labor Code, all money claims arising from employer-employee relations shall be filed
within three years from the time the cause of action accrued. In the current case, more than four
years have elapsed from the pre-termination of his assignment to the United States until the filing
of his complaint against the respondents. We thus see no point in further discussing this matter.
His claim for backwages, separation pay, moral and exemplary damages, as well as attorney's
fees must also necessarily fail as a consequence of our finding that his dismissal was for an
authorized cause and that the respondents acted in good faith when they terminated his services.

[G.R. No. 200575. February 5, 2014.]

INTEL TECHNOLOGY PHILIPPINES, INC. vs. NATIONAL LABOR RELATIONS
COMMISSION AND JEREMIAS CABILES

Facts:
Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He
was subsequently promoted several times over the years and was also assigned at Intel Arizona
and Intel Chengdu. He later applied for a position at Intel Semiconductor Limited Hong
Kong (Intel HK). In a letter, dated December 12, 2006, Cabiles was offered the position of
Finance Manager by Intel HK. Before accepting the offer, he inquired from Intel Phil., through
an email, the consequences of accepting the newly presented opportunity in Hong Kong. On
January 23, 2007, Intel Phil. Replied that Cabiles is not eligible to receive your retirement
benefit given that you have not reached 10 years of service at the time you moved to Hong
Kong, that it will not round up the years of service.
On January 31, 2007, Cabiles signed the job offer. On March 8, 2007, Intel Phil. issued
Cabiles his "Intel Final Pay Separation Voucher." On March 26, 2007, Cabiles executed a
Release, Waiver and Quitclaim (Waiver) in favor of Intel Phil. acknowledging receipt of the
amount in the said voucher as full and complete settlement of all benefits due him by reason of
his separation from Intel Phil. On September 8, 2007, after seven (7) months of employment,
Cabiles resigned from Intel HK. About two years thereafter, or on August 18, 2009, Cabiles filed
a complaint for non-payment of retirement benefits and for moral and exemplary damages with
the NLRC Regional Arbitration Branch-IV. He insisted that he was employed by Intel for 10
years and 5 months from April 1997 to September 2007 a period which included his seven (7)
month stint with Intel HK. Thus, he believed he was qualified to avail of the benefits under the
company's retirement policy allowing an employee who served for 10 years or more to receive
retirement benefits.
In a petition before the Court, Intel Phil. insists as serious error the CA's affirmation of
the NLRC decision holding it liable for the retirement benefits claimed by Cabiles. It contends
that he is disqualified to receive the benefits for his failure to complete the required minimum ten
(10) years of service as he resigned to assume new responsibilities with Intel HK effective
February 1, 2007. While Cabiles views his employment with Intel HK as a continuation of his
service with Intel Phil. alleging that it was but an assignment by his principal employer, similar

to his assignments to Intel Arizona and Intel Chengdu. Having rendered 9.5 years of service with
Intel Phil. and an additional seven months with Intel HK, he claims that he had completed the
required 10 year continuous service 21 with Intel Phil., thus, qualifying him for retirement
benefits.

Issues:
1
2
3

Whether or not private respondent Cabiles was entitled to retire under Intel
Philippines retirement plan.
Whether or not private respondents quitclaim is void.
Whether or not private respondent has the legal obligation to return all the
amounts paid by Intel pursuant to the writ of execution.

Held:
1.
Private respondent Cabiles was not entitled to retirement pay under Intel Philippines
retirement plan. Here, he resigned from Intel Philippines. Cabiles calls the attention of the Court
to the lack of evidence proving his resignation. He states that no severance of relationship was
made upon his transfer to Intel HK. The Court is not convinced. Resignation is the formal
relinquishment of an office, the overt act of which is coupled with an intent to renounce. This
intent could be inferred from the acts of the employee before and after the alleged resignation.
In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered
by Intel HK the job of a Finance Manager. In contemplating whether to accept the offer, Cabiles
wrote Intel Philippines, in which he manifested two of his main concerns: a) clearance
procedures; and b) the probability of getting his retirement pay despite the non-completion of the
required 10 years of employment service. Beyond these concerns, however, was his acceptance
of the fact that he would be ending his relationship with Intel Phil. as his employer. The words he
used local hire, close, clearance denote nothing but his firm resolve to voluntarily
disassociate himself from Intel Phil. and take on new responsibilities with Intel HK. His
acceptance of the offer meant letting go of the retirement benefits he now claims as he was
informed through email correspondence that his 9.5 years of service with Intel Phil. would not be
rounded off in his favor.
Cabiles views his employment in Hong Kong as an assignment or an extension of his
employment with Intel Phil. He cited as evidence the offer made to him as well as the letter,
dated January 8, 2007, both of which used the word "assignment" in reference to his engagement
in Hong Kong as a clear indication of the alleged continuation of his ties with Intel Phil. The
Court, however, is again not convinced. The continuity, existence or termination of an employeremployee relationship in a typical secondment contract or any employment contract for that

matter is measured by the following yardsticks: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to
control the employee's conduct.
As applied, all of the above benchmarks ceased upon Cabiles' assumption of duties with
Intel HK on February 1, 2007. Intel HK became the new employer. It provided Cabiles his
compensation. Cabiles then became subject to Hong Kong labor laws, and necessarily, the rights
appurtenant thereto, including the right of Intel HK to fire him on available grounds. Lastly, Intel
HK had control and supervision over him as its new Finance Manager. Evidently, Intel Phil. no
longer had any control over him.
2.
The Waiver executed by Cabiles was valid. The NLRC concluded in its February 9, 2011
Resolution that the Waiver was executed merely to allow Intel Phil. to escape its obligation to
pay the retirement benefits, thus, violative of law, morals, and public policy. The Court, however,
sees no clear evidence in the records showing that Cabiles was constrained into signing the
document. Also, it cannot be said that Cabiles did not fully understand the consequences of
signing the Waiver. Being a person well-versed in matters of finance, it would have been
impossible for him not to have comprehended the consequences of signing a waiver. Failing to
see any evidence to warrant the disregard of the Waiver, it as valid and binding between Cabiles
and Intel Phil.
Assuming the Waiver was valid, the NLRC contended that it could not be construed to
cover the claims for the retirement pay because it had not yet accrued at the time the document
was signed by Cabiles. The Court disagrees. Nothing is clearer than the words used in the Waiver
duly signed by Cabiles that all claims, in the present and in the future, were waived in
consideration of his receipt of the amount of P165,857.62. Because the waiver included all
present and future claims, the non-accrual of benefits cannot be used as a basis in awarding
retirement benefits to him. Lastly, even if the Court assumes that the Waiver was invalid, Cabiles
nonetheless remains disqualified as a recipient of retirement benefits because, as previously
discussed, the ten-year minimum requirement was not satisfied on account of his early
resignation.
3.
Having effectively resigned before completing his 10th year anniversary with Intel Phil.
and after having validly waived all the benefits due him, if any, Cabiles is hereby declared
ineligible to receive the retirement pay pursuant to the retirement policy of Intel Phil. Thus,
Cabiles must return all the amounts he received from Intel Phil. pursuant to the Writ of
Execution issued by the NLRC, dated September 19, 2011.

[G.R. No. 193107. March 24, 2014.]

SUTHERLAND GLOBAL SERVICES (Philippines), INC. and JANETTE G. LAGAZO vs.
LARRY S. LABRADOR

Facts:
Petitioner Sutherland Global Services (Philippines), Inc. (Sutherland) is engaged in the
business of process outsourcing and technology consulting services for international clients. In
August 2006, Sutherland hired Labrador as one of its call center agents with the main
responsibility of answering various queries and complaints through phoned-in calls. In his two
years of working at Sutherland, Labrador committed several infractions. But it was only on June
17, 2008 that Labrador was finally charged with violation for transgressing the "NonCompliance Sale Attribute" policy clause stated in the Employee Handbook.
Under Sutherland's Employee Handbook, Labrador's action is classified as an act of
dishonesty or fraud. On May 24, 2008, Sutherland sent Labrador a Notice to Explain in writing
why he should not be held administratively liable.
On May 28, 2008, an administrative hearing was conducted that took into consideration
Labrador's past infractions. After investigation, a recommendation was issued finding Labrador
guilty of violating the Employee Handbook due to gross or habitual neglect of duty. On June 17,
2008, Labrador submitted his resignation letter. On October 27, 2008, Labrador filed a
complaint for constructive/illegal dismissal before the NLRC.
On February 27, 2009, Labor Arbiter (LA) Reynaldo Abdon dismissed the complaint for
lack of merit. He found just cause to terminate Labrador's employment, and that his resignation
letter had been voluntarily executed. NLRC reversed the LA's ruling. The he CA also affirmed
the NLRC's finding that Labrador had been illegally dismissed. The CA ruled that Sutherland's
decision to terminate Labrador's services was the proximate cause of his resignation; the
resignation letter was submitted solely for the purpose of avoiding any derogatory record that
would adversely affect his future employment. In effect, he cannot be deemed to have voluntarily
resigned because he was forced to relinquish his position in order to avoid the inevitable
termination of employment.

Issues:
1. Whether or not respondent Labradors offense constitutes gross negligence as to warrant
his dismissal from the service, and whether he voluntarily resign.

Held:
Article 282 of the Labor Code provides just causes of termination of an employee from
the service which include gross and habitual neglect by the employee of his duties; and other
causes analogous to the foregoing.
The failure to faithfully comply with the company rules and regulations is considered to
be a just cause in terminating one's employment, depending on the nature, severity and
circumstances of non-compliance. "An employer 'has the right to regulate, according to its
discretion and best judgment, all aspects of employment, including work assignment, working
methods, processes to be followed, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of workers.
Thus, it was within Sutherland's prerogative to terminate Labrador's employment when
he committed a serious infraction and, despite a previous warning, repeated it. To reiterate, he
opened another client account without the letter's consent, with far-reaching and costly effects on
the company. For one, the repeated past infractions would have resulted in negative feedbacks on
Sutherland's performance and reputation. It would likewise entail additional administrative
expense since Sutherland would have to address the complaints an effort that would entail
investigation costs and the return of the doubly-delivered merchandise. As a rule, "an employer
cannot be compelled to continue with the employment of workers when continued employment
will prove inimical to the employer's interests."
To Sutherland's credit, it duly complied with the procedural requirement in dismissing an
employee; it clearly observed both substantive and procedural due process. Its action was based
on a just and authorized cause, and the dismissal was effected after due notice and hearing. After
Labrador's subsequent infraction, Sutherland sent him a Notice to Explain and an administrative
hearing was thereafter conducted. During the hearing, Labrador himself admitted his faults.
These incidents were properly recorded and were properly discussed in Sutherland's
recommendation. But before Sutherland could finally pronounce its verdict, Labrador submitted
his resignation letter, impelled no doubt, as Sutherland alleged, by the need to protect his
reputation and his future employment chances. To be sure, Sutherland's explanation was not
remote, far-fetched or unbelievable given the undisputable evidence on record of infractions.

Finally, we find the issue of whether the resignation letter was voluntarily executed
moot. Even if Labrador had not submitted his resignation letter, Sutherland could still not be held
liable for constructive dismissal given the existing just cause to terminate Labrador's
employment.

[G.R. No. 189456. April 2, 2014.]

CHIANG KAI SHEK COLLEGE and CARMELITA ESPINO vs. ROSALINDA M.
TORRES

Facts:
Petitioner Chiang Kai Shek College is a private educational institution that offers
elementary to college education to the public. Individual petitioner Carmelita Espino is the VicePresident of the school. Respondent had been employed as a grade school teacher of the school
from July 1970 until 31 May 2003. The manner of her severance from employment is the matter
at hand. Respondent was accused of leaking a copy of a special quiz given to Grade 5 students
of HEKASI (HEKASI 5). An administrative hearing was conducted wherein respondent and Mrs.
Anduyan were asked questions by the Investigating Committee relative to the leakage of test
paper. The Investigating Committee held a meeting and found respondent and Mrs. Anduyan
guilty of committing a grave offense of the school policies by leaking a special quiz.
According to petitioners, their Investigating Committee had actually decided to terminate
respondent and had in fact prepared a memorandum of termination, but respondent allegedly
pleaded for a change of punishment in a short letter dated 5 September 2002, where respondent
request for change of punishment from termination to suspension and that she will resign at the
end of the school year. Petitioners acceded to the request and suspended respondent and Mrs.
Anduyan effective 16 September to October 2002. The duo was directed to report to work on 4
November 2002. Respondent continued her employment from 4 November 2002 until the end of
the school year on 26 March 2003.
On 10 June 2003, respondent filed a complaint for constructive dismissal and illegal
suspension with the Labor Arbiter. She also sought payment of unpaid salary, backwages,
holiday pay, service incentive leave pay, 13th month pay, separation pay, retirement benefits,
damages and attorney's fees. Respondent alleged that she was forced and pressured to submit the
written request for a change of penalty and commitment to resign at the end of the school year.

She was threatened by the school management with immediate dismissal from service if she did
not submit the writtens statement. She claimed that she was not formally charged with any
offense and she was not served a copy of the notice of the school's decision to terminate her
services.
While Petitioners insisted that respondent voluntarily resigned. Petitioners averred that
respondent was accorded her right to due process prior to her termination. A formal investigation
was conducted during which respondent was given the opportunity to defend herself and
confront her accusers.
The Labor Arbiter held that there was no constructive dismissal because respondent was
not coerced nor pressured to write her resignation letter. The NLRC affirms the Labor Arbiter's
findings but ordering petitioners to pay respondent separation pay. The Court of Appeals
reversed the NLRC decision stating that petitioner did not voluntarily resign but was
constructively dismissed.

Issue:
Whether or not the school's act of imposing the penalty of suspension instead of
immediate dismissal from service at the behest of the erring employee, in exchange for the
employee's resignation at the end of the school year, constitutes constructive dismissal.

Held:
Resignation is the voluntary act of an employee who is in a situation where one believes
that personal reasons cannot be sacrificed for the favor of employment, and opts to leave rather
than stay employed. It is a formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of relinquishment. As the intent to
relinquish must concur with the overt act of relinquishment, the acts of the employee before and
after the alleged resignation must be considered in determining whether, he or she, in fact,
intended to sever his or her employment.
Respondent had admitted to leaking a copy of the HEKASI 5 special quiz. She reluctantly
made the admission and apologized to Mrs. Koo when the latter confronted her. She admitted
during the 28 August 2002 hearing of executing two (2) contradictory statements. On 30 August
2002, the Investigating Committee found respondent guilty of leaking a copy of the special quiz.
Based on this infraction alone, Chiang Kai Shek College would have been justified to validly
terminate respondent from service. Academic dishonesty is the worst offense a teacher can make
because teachers caught committing academic dishonesty lose their credibility as educators and
cease to be role models for their students. More so that under Chiang Kai Shek College Faculty

Manual, leaking and selling of test questions is classified as a grave offense punishable by
dismissal/termination.
We do not find anything irregular with respondent's handwritten letter. The letter came
about because respondent was faced with an imminent dismissal and opted for an honorable
severance from employment. That respondent voluntarily resigned is a logical conclusion. It was
correctly observed that respondent's infraction and the inevitable and justifiable consequence of
that infraction, i.e., termination of employment, induced her to resign or promise to resign by the
end of the school year.
Given the indications of voluntary resignation, we rule that there is no constructive
dismissal in this case. There is constructive dismissal when 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
or 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. There was here no discrimination committed by petitioners.
While respondent did not tender her resignation wholeheartedly, circumstances of her own
making did not give her any other option. With due process, she was found to have committed
the grave offense of leaking test questions. Dismissal from employment was the justified
equivalent penalty.

[G.R. No. 185449. November 12, 2014.]

GOODYEAR PHILIPPINES, INC. and REMEGIO M. RAMOS vs. MARINA L. ANGUS

Facts:
Angus was employed by Goodyear on November 16, 1966 and occupied the position of
Secretary to the Manager of Quality and Technology. In order to maintain the viability of its
operations in the midst of economic reversals, Goodyear implemented cost-saving measures
which included the streamlining of its workforce. Consequently, on September 19, 2001, Angus
received from Ramos, the Human Resources Director of Goodyear, a letter which states that she
will be terminated effective October 18, 2001 due to redundancy or retrenchment.
On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal dismissal
with claims for separation pay, damages and attorney's fees against petitioners. Angus claimed
that her termination by reason of redundancy was effected in violation of the Labor Code for it
was not timely reported to the DOLE and no separation pay was given to her; that the separation
pay to which she is entitled by law is entirely different from the retirement benefits that she
received; that nothing in the company's Retirement Plan under the CBA, the CBA itself or the
Employment Contract prohibits the grant of more than one kind of separation pay; and, that she
was only forced to sign a quitclaim after accepting her retirement benefits.
On the other hand, petitioners asseverated in their Position Paper that Angus was validly
dismissed for an authorized cause; that she voluntarily accepted her termination benefits and
freely executed the corresponding quitclaim; that her receipt of early retirement benefits
equivalent to 47 days' pay for every year of service, which amount is higher than the regular
separation pay, had effectively barred her from recovering separation pay due to redundancy;

and, that the following Section 1, Article XI of the last company CBA supports the grant of only
one benefit. In her Rejoinder, Angus disputed the existence of the aforesaid provision in the
company's CBA.
The Labor Arbiter upheld the validity of Angus' termination from employment. It held
that the grant of both is not allowed under the Retirement Plan/CBA. Moreover, it was held that
her claim of vitiated consent in signing the quitclaim is unworthy of credence considering that
she fairly negotiated the matter with the management and that the consideration for its execution
is higher than what she is mandated to receive.
The NLRC affirmed the ruling of the LA. While the CA ruled that respondents dismissal
was valid in both substance and procedural aspects, but it declared her entitled to separation pay
in addition to the retirement pay she already received.
Issues:
1
2

Whether or not respondent Angus is entitle to the payment of separation pay on

top of the retirement pay.
Whether or not petitioner Goodyear is liable to pay separation pay despite the fact
that respondent executed a valid and binding quitclaim.

Held:
1.
Respondent Angus is entitled to both separation pay and early retirement benefit due to
the absence of a specific provision in the CBA prohibiting recovery of both.
In Aquino v. National Labor Relations Commission, the Court held that an employee is
entitled to recover both separation pay and retirement benefits in the absence of a specific
prohibition in the Retirement Plan or CBA. Concomitantly, the Court ruled that an employee's
right to receive separation pay in addition to retirement benefits depends upon the provisions of
the company's Retirement Plan and/or CBA.
Here, petitioners allege that there is a provision in the last CBA against the recovery of
both retirement benefits and separation pay. To support their claim, petitioners submitted a copy
of what appears to be a portion of the company CBA entitled "Retirement Plan, Life Insurance,
Physical Disability Pay and Resignation Pay." Section 1, Article XI thereof provides that the
availment of retirement benefits precludes entitlement to any separation pay. The same, however,
can hardly be considered as substantial evidence because it does not appear to be an integral part
of Goodyear's CBA. Even assuming that it is, it would still not suffice as there is no showing if
the CBA under which the said provision is found was the one in force at the time material to this
case. On the other hand, Angus presented the parties' 2001-2004 CBA and upon examination of
the same, the Court agrees with her that it does not contain any restriction on the availment of
benefits under the company's Retirement Plan and of separation pay. Indeed, the Labor Arbiter

and the NLRC erred in ignoring this material piece of evidence which is decisive of the issue
presented before them. The CA, thus, committed no error in reversing the Decisions of the labor
tribunals when it ruled in favor of Angus' entitlement to both retirement benefits and separation
pay. Moreover, the Court agrees with the CA that the amount Angus received from petitioners
represented only her retirement pay and not separation pay.
Petitioners further argue that Angus is not entitled to retirement pay because she does not
meet the requirements enumerated in the Retirement Plan provision of the CBA. The Court
disagrees. While it is obvious that Angus is not entitled to compulsory retirement as she has not
yet reached the age of 60, there is no denying, however, that she is qualified for early retirement.
Under the provision of the Retirement Plan of the CBA as earlier quoted, a worker who is at least
50 years old and with at least 15 years of service, and who has been recommended by the
President of the Union for early retirement and duly approved by the Human Resources Director,
shall be entitled to lump sum retirement benefits. At the time of her termination, Angus was
already 57 years of age and had been in the service for more than 34 years. The exchange of
correspondence between Angus and Ramos also shows that the latter, as Goodyear's Human
Resources Director, offered, recommended and approved the grant of early retirement in favor of
the former. Clearly, all the requirements for Angus' availment of early retirement under the
Retirement Plan of CBA were substantially complied with.
It is worthy to mention at this point that retirement benefits and separation pay are not
mutually exclusive. Retirement benefits are a form of reward for an employee's loyalty and
service to an employer and are earned under existing laws, CBAs, employment contracts and
company policies. On the other hand, separation pay is that amount which an employee receives
at the time of his severance from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another employment and is recoverable only
in instances enumerated under Articles 283 and 284 of theLabor Code or in illegal dismissal
cases when reinstatement is not feasible. In the case at bar, Article 283 clearly entitles Angus to
separation pay apart from the retirement benefits she received from petitioners.
2.
Release and Quitclaim signed by respondent Angus is invalid.
The release and quitclaim signed by Angus cannot be used by petitioners to legalize the
denial of Angus' rightful claims. As aptly observed by the CA, the terms of the quitclaim
authorizes Angus to receive less than what she is legally entitled to. "Under prevailing
jurisprudence, . . . a quitclaim cannot bar an employee from demanding benefits to which he is
legally entitled." It was held to be "ineffective in barring claims for the full measure of the
worker's rights and the acceptance of benefits therefrom does not amount to estoppel". Moreover,
release and quitclaims are often looked upon with disfavor when the waiver was not done
voluntarily by employees who were pressured into signing them by unscrupulous employers
seeking to evade their obligations.