University of Cebu

College of Law
UCLASS Bar Operations
Labor Law Society

LABOR LAW
JURISPRUDENCE
2012
by:

Chairperson:
Aubrey Mae M. Paronda

Members:

Hermelito Bulala
Rilven Christian Virtudazo
Camille Bono
Vincent Isles
Jaime Bernardo Tumulak

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References: Law Textbooks, Codes, Reviewers, Notes, Compilations, Articles and Internet Sources

For Private and Personal Use Only

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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
SELECTED SUPREME accompanying the petition sufficiently supported the
allegations therein." As in Mariners, we find that the
COURT DECISIONS documents attached to the petition sufficiently support
the petitioners' allegations. The accompanying CA
decision[38] and resolution,[39] as well as those of the labor
IN LABOR LAW arbiter[40] and the NLRC,[41] referred to the parties'
position papers and even to their replies and rejoinders.
Significantly, the CA decision narrates the factual
antecedents, defines the complainants' cause of action,
and cites the arguments, including the evidence the
parties adduced.  If any, the defect in the petition lies in
the petitioners' failure to provide legible copies of some
of the material documents mentioned, especially several
pages in the decisions of the labor arbiter and of the
NLRC. This defect, however, is not fatal as the challenged
JANUARY 2011 CA decision clearly summarized the labor tribunal's
rulings.  We, thus, find no procedural obstacle in
Atlanta Industries, Inc. and/or Robert Chan vs. resolving the petition on the merits.
Aprilito R. Sebolino, et al., 
G.R. No. 187320, January 26, 2011. 2) Whether or not respondent workers were illegally
dismissed
Facts:
Yes. Based on company operations at the time material
The complainants alleged that they had attained regular to the case, Costales, Almoite, Sebolino and Sagun were
status as they were allowed to work with Atlanta for already rendering service to the company as employees
more than six (6) months from the start of a purported before they were made to undergo apprenticeship. The
apprenticeship agreement between them and the company itself recognized the respondents' status
company. They claimed that they were illegally dismissed through relevant operational records - in the case of
when the apprenticeship agreement expired. In defense, Costales and Almoite, the CPS monthly report for
Atlanta and Chan argued that the workers were not December 2003[44] which the NLRC relied upon and, for
entitled to regularization and to their money claims Sebolino and Sagun, the production and work schedule
because they were engaged as apprentices under a for March 7 to 12, 2005[45] cited by the CA
government-approved apprenticeship program. The
company offered to hire them as regular employees in The fact that Costales, Almoite, Sebolino and Sagun were
the event vacancies for regular positions occur in the already rendering service to the company when they
section of the plant where they had trained. They also were made to undergo apprenticeship (as established by
claimed that their names did not appear in the list of the evidence) renders the apprenticeship agreements
employees (Master List) prior to their engagement as irrelevant as far as the four are concerned. This reality is
apprentices. highlighted by the CA finding that the respondents
The respondent workers ask that the petition be occupied positions such as machine operator, scaleman
dismissed outright for the petitioners' failure to attach to and extruder operator - tasks that are usually necessary
the petition a copy of the Production and Work Schedule and desirable in Atlanta's usual business or trade as
and a copy of the compromise agreement Costales and manufacturer of plastic building materials. [57] These tasks
Almoite allegedly entered into -- material portions of the and their nature characterized the four as regular
record that should accompany and support the petition, employees under Article 280 of the Labor Code.  Thus,
pursuant to Section 4, Rule 45 of the Rules of Court. 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.
Issues and Ruling:
Even if we recognize the company's need to train its
1) Whether or not the petition should be dismissed for employees through apprenticeship, we can only consider
petitioner’s failure to make the necessary attachments in the first apprenticeship agreement for the purpose. With
their petition as required by Section 4, Rule 45 of the the expiration of the first agreement and the retention of
Rules of Court. the employees, Atlanta had, to all intents and purposes,
recognized the completion of their training and their
No. In Mariners Polytechnic Colleges Foundation, Inc. v. acquisition of a regular employee status. To foist upon
Arturo J. Garchitorena where the Court addressed them the second apprenticeship agreement for a second
essentially the same issue arising from Section 2(d), Rule skill which was not even mentioned in the agreement
42 of the Rules of Court, we held that the phrase "of the itself, is a violation of the Labor Code's implementing
pleadings and other material portions of the record xxx rules and is an act manifestly unfair to the employees, to
as would support the allegation of the petition clearly say the least. This we cannot allow.
contemplates the exercise of discretion on the part of the

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Labor Law Jurisprudence
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Labor Arbiter ruled that petitioners are not guilty of unfair

labor practice in the absence of evidence to show that
they violated respondents’ right to self-organization. The
Labor Arbiter also held that Lubas is the respondents’
Prince Transport, Inc. and Mr. Renato Claros vs. employer and that it (Lubas) is an entity which is
Diosdado Garcia, et al.,  separate, distinct and independent from PTI.
G.R. No. 167291, January 12, 2011. Nonetheless, the Labor Arbiter found that Lubas is guilty
of illegally dismissing respondents from their
Facts: employment.

Respondents alleged in their respective position papers CA rendered the herein assailed Decision which granted
and other related pleadings that they were employees of respondents' petition. The CA ruled that petitioners are
Prince Transport, Inc. (PTI), a company engaged in the guilty of unfair labor practice; that Lubas is a mere
business of transporting passengers by land; respondents instrumentality, agent conduit or adjunct of PTI; and that
were hired either as drivers, conductors, mechanics or petitioners’ act of transferring respondents’ employment
inspectors, except for respondent Diosdado Garcia to Lubas is indicative of their intent to frustrate the
(Garcia), who was assigned as Operations Manager; in efforts of respondents to organize themselves into a
addition to their regular monthly income, respondents union.
also received commissions equivalent to 8 to 10% of
their wages; sometime in October 1997, the said
commissions were reduced to 7 to 9%; this led
respondents and other employees of PTI to hold a series
of meetings to discuss the protection of their interests as Issues and Ruling:
employees; these meetings led petitioner Renato Claros,
who is the president of PTI, to suspect that respondents
1. Whether or not the CA has the power to disturb the
are about to form a union; he made known to Garcia his
factual findings of the LA and NLRC.
objection to the formation of a union; the foregoing
circumstances led respondents to form a union for their
mutual aid and protection; in order to block the The power of the CA to review NLRC decisions via a
continued formation of the union, PTI caused the transfer petition for certiorari under Rule 65 of the Rules of Court
of all union members and sympathizers to one of its sub- has been settled as early as this Court’s decision in St.
companies, Lubas Transport (Lubas); despite such Martin Funeral Homes v. NLRC. In said case, the Court
transfer, the schedule of drivers and conductors, as well held that the proper vehicle for such review is a special
as their company identification cards, were issued by PTI; civil action for certiorari under Rule 65 of the said Rules,
the daily time records, tickets and reports of the and that the case should be filed with the CA in strict
respondents were also filed at the PTI office; and, all observance of the doctrine of hierarchy of courts.
claims for salaries were transacted at the same office; Moreover, it is already settled that under Section 9 of
later, the business of Lubas deteriorated because of the Batas Pambansa Blg. 129, as amended by Republic Act
refusal of PTI to maintain and repair the units being used No. 7902, the CA — pursuant to the exercise of its
therein, which resulted in the virtual stoppage of its original jurisdiction over petitions for certiorari — is
operations and respondents' loss of employment. specifically given the power to pass upon the evidence, if
and when necessary, to resolve factual issues. Section 9
clearly states:
Petitioners, on the other hand, denied the material
allegations of the complaints contending that herein
respondents were no longer their employees, since they xxxx
all transferred to Lubas at their own request; petitioners
have nothing to do with the management and operations
The Court of Appeals shall have the power to try cases
of Lubas as well as the control and supervision of the
and conduct hearings, receive evidence and perform any
latter's employees; petitioners were not aware of the
and all acts necessary to resolve factual issues raised in
existence of any union in their company and came to
cases falling within its original and appellate jurisdiction,
know of the same only in June 1998 when they were
including the power to grant and conduct new trials or
served a copy of the summons in the petition for
further proceedings. x x x
certification election filed by the union; that before the
union was registered on April 15, 1998, the complaint
subject of the present petition was already filed; that the When there is a showing that they were arrived at
real motive in the filing of the complaints was because arbitrarily or in disregard of the evidence on record, they
PTI asked respondents to vacate the bunkhouse where may be examined by the courts. The CA can grant the
they (respondents) and their respective families were petition for certiorari if it finds that the NLRC, in its
staying because PTI wanted to renovate the same. assailed decision or resolution, made a factual finding not
supported by substantial evidence. It is within the
jurisdiction of the CA, whose jurisdiction over labor cases
Subsequently, the complaints filed by respondents were
has been expanded to review the findings of the NLRC.
consolidated.

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Labor Law Jurisprudence
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2. Whether or not the petition filed with the CA is considering that the issue of reinstatement was never
fatally defective because the attached verification and brought up before it.
certificate against forum shopping was signed only by
respondent Garcia.
No. Section 2 (c), Rule 7 of the Rules of Court provides
that a pleading shall specify the relief sought, but may
No. While the general rule is that the certificate of non- add a general prayer for such further or other reliefs as
forum shopping must be signed by all the plaintiffs in a may be deemed just and equitable. Under this rule, a
case and the signature of only one of them is insufficient, court can grant the relief warranted by the allegation and
the Court has stressed that the rules on forum shopping, the proof even if it is not specifically sought by the
which were designed to promote and facilitate the orderly injured party; the inclusion of a general prayer may
administration of justice, should not be interpreted with justify the grant of a remedy different from or together
such absolute literalness as to subvert its own ultimate with the specific remedy sought, if the facts alleged in
and legitimate objective. Strict compliance with the the complaint and the evidence introduced so warrant.
provision regarding the certificate of non-forum shopping
underscores its mandatory nature in that the certification
4. Whether or not Petitioner is guilty of Unfair Labor
cannot be altogether dispensed with or its requirements
Practice.
completely disregarded. It does not, however, prohibit
substantial compliance therewith under justifiable
circumstances, considering especially that although it is Yes. Court finds no cogent reason to depart from the
obligatory, it is not jurisdictional. findings of the CA that respondents’ transfer of work
assignments to Lubas was designed by petitioners as a
subterfuge to foil the former’s right to organize
The Court has consistently held that when all the
themselves into a union. Under Article 248 (a) and (e) of
petitioners share a common interest and invoke a
the Labor Code, an employer is guilty of unfair labor
common cause of action or defense, the signature of only
practice if it interferes with, restrains or coerces its
one of them in the certification against forum shopping
employees in the exercise of their right to self-
substantially complies with the rules. In the present case,
organization or if it discriminates in regard to wages,
there is no question that respondents share a common
hours of work and other terms and conditions of
interest and invoke a common cause of action. Hence,
employment in order to encourage or discourage
the signature of respondent Garcia is a sufficient
membership in any labor organization.
compliance with the rule governing certificates of non-
forum shopping. In the first place, some of the
respondents actually executed a Special Power of Indeed, evidence of petitioners' unfair labor practice is
Attorney authorizing Garcia as their attorney-in-fact in shown by the established fact that, after respondents'
filing a petition for certiorari with the CA. transfer to Lubas, petitioners left them high and dry
insofar as the operations of Lubas was concerned. The
Court finds no error in the findings and conclusion of the
With respect to the absence of some of the workers’
CA that petitioners "withheld the necessary financial and
signatures in the verification, the verification requirement
logistic support such as spare parts, and repair and
is deemed substantially complied with when some of the
maintenance of the transferred buses until only two units
parties who undoubtedly have sufficient knowledge and
remained in running condition." This left respondents
belief to swear to the truth of the allegations in the
virtually jobless.
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. Moreover,
respondents' Partial Appeal shows that the appeal Islriz Trading/Victor Hugo Lu vs. Efren Capada, et.
stipulated as complainants-appellants "Rizal Beato, et al.,
al.", meaning that there were more than one appellant G.R. No. 168501, January 31, 2011.
who were all workers of petitioners.

Facts:
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 Respondents were employees of petitioner Islriz Trading,
circumstances warrant the suspension of the rules in the owned and operated by Victor Hugo Lu.
interest of justice. Indeed, the absence of a verification is
not jurisdictional, but only a formal defect, which does Claiming they were illegally dismissed, they filed
not of itself justify a court in refusing to allow and act on complaints for illegal dismissal and money claims.
a case. Hence, the failure of some of the respondents to
sign the verification attached to their Memorandum of The labor arbiter found them illegally dismissed and
Appeal filed with the NLRC is not fatal to their cause of ordered their reinstatement with full back wages from the
action. date of dismissal to actual reinstatement. The National
Labor Relations Commission (NLRC), upon appeal, set
aside the decision. The Court of Appeals (CA) reversed
3. Whether or not CA erred when it ordered petitioners
to reinstate respondents to their former positions,

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Labor Law Jurisprudence
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the decision of the NLRC and reinstated the labor to reinstate them, either actually or through payroll, was
arbiter’s. due to petitioner’s unjustified refusal to effect
reinstatement.
Issues and Ruling:
In order to enforce this, Labor Arbiter Castillon thus
1. Whether respondents may collect their wages during correctly issued the writ of execution dated March 9,
the period between the Labor Arbiter’s order of 2004 as well as the order dated June 3, 2004 denying
reinstatement pending appeal and the NLRC Resolution petitioner’s motion to quash writ of execution and
overturning that of the Labor Arbiter. granting respondents’ urgent motion for issuance of a
break-open order. Consequently, we find no error on the
Yes. Was there an actual delay or was the order of part of the CA in upholding these issuances and in
reinstatement pending appeal executed prior to its dismissing the petition for certiorari before it.
reversal? Labor Arbiter Gan issued his Decision ordering
respondents’ reinstatement on Dec. 21, 2001, copy of
which was allegedly received by petitioner on Feb. 21, Primo E. Caong, Jr., et al. vs. Avelino Regualos, 
2002. G.R. No. 179428, January 26, 2011.
On March 4, 2002, the petitioner appealed the decision at
the NLRC. A few days later, on March 11, 2002, Facts:
respondents filed an ex-parte motion for issuance of a
writ of execution, relative to the reinstatement aspect of Petitioners were employed by respondent Avelino
the decision. Regualos under a boundary agreement, as drivers of his
On April 22, 2002, a writ of execution was issued by jeepneys. Petitioners later filed separate complaints for
Labor Arbiter Gan. However, until the issuance of the illegal dismissal against respondents who barred them
Sept. 5, 2002 NLRC resolution overturning Labor Arbiter from driving the vehicles due to deficiencies in their
Gan’s decision, petitioner still failed to reinstate boundary payments
respondents or effect payroll reinstatement in accordance
with Article 223 of the Labor Code. During the mandatory conference, respondent
This was what actually prompted respondents to file an manifested that petitioners were not dismissed and that
ex-parte motion to set case for conference, with a motion they could drive his jeepneys once they paid theur
where they also prayed for the computation of the award arrears. Petitioners, however, refused to do so.
of back wages and alias writ of execution for its
enforcement. It cannot therefore be denied that there Petitioners averred that they were illegally dismissed by
was an actual delay in the execution of the reinstatement respondent without just cause. They maintained that
aspect of the decision of Labor Arbiter Gan prior to the respondent did not comply with due process
issuance of the NLRC Resolution overturning the same. requirements before terminating their employment, as
they were not furnished notice apprising them of their
Now, the next question is: Was the delay not due to the infractions and another informing them of their dismissal.
employer’s unjustified act or omission? Islriz Trading did Petitioners claimed that respondent’s offer during the
not undergo rehabilitation. Nor was it under any mandatory conference to reinstate them was an insincere
analogous situation that would justify petitioner’s non- afterthought as shown by the warning given by
exercise of the options provided under Article 223 of the respondent that, if they fail to remit the full amount of
Labor Code. the boundary yet again, they will be barred from driving
the jeepneys. Petitioners questioned respondent’s policy
Notably, what petitioner gave as reason in not of automatically dismissing the drivers who fail to remit
immediately effecting reinstatement after he was served the full amount of the boundary as it allegedly (a)
with the writ of execution, dated April 22, 2002, was that violates their right to due process; (b) does not
he would first refer the matter to his counsel as he could constitute a just cause for dismissal; (c) disregards the
not effectively act on the order of execution without the reality that there are days when they could not raise the
latter’s advice. full amount of the boundary because of the scarcity of
passengers.
He gave his word that upon conferment with his lawyer,
he will inform the Office of the Labor Arbiter of his action Respondent contended that petitioners were lessees of
on the writ. Petitioner, however, without any satisfactory his vihicles and not his employees; hence, the LA had no
reason, failed to fulfill this promise and respondents jurisdiction.
remained not reinstated until the NLRC resolved the
petitioner’s appeal. Evidently, the delay in the execution The LA held that an employer-employee relationship
of respondents’ reinstatement was due to petitioner’s existed between respondent and petitioners. The latter
unjustified refusal to effect the same. were not dismissed considering that they could go back
to work once they have paid their arrears. The LA opined
Hence, the conclusion is that respondents have the right that, as a disciplinary measure, it is proper to impose a
to collect their accrued salaries during the period reasonable sanction on drivers who cannot pay their
between the Labor Arbiter’s decision ordering their boundary payments.  He emphasized that respondent
reinstatement pending appeal and the NLRC resolution acquired the jeepneys on loan or installment basis and
overturning the same because of the petitioner’s failure relied on the boundary payments to comply with his

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Labor Law Jurisprudence
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monthly amortizations. The NLRC agreed with the LA that the policies, rules, and regulations on work-related
and dismissed the appeal. It also denied petitioners’ activities of the employees must always be fair and
motion for reconsideration. reasonable, and the corresponding penalties, when
prescribed, commensurate to the offense involved and to
The CA ruled that the EER of the parties has not been the degree of the infraction. 
severed, but merely suspended. The fact that it was
within the power of petitioners to return to work is proof
that there was no termination of employment. The CA
went on to rule that petitioners were not denied their Robinsons Galleria/Robinsons Supermarket Corp.
right to due process. It pointed out that the case does and/or Jess Manuel vs. Irene R. Ranchez, 
not involve termination of employment; hence, the strict G.R. No. 177937, January 19, 2011.
application of the twin-notice rule is not warranted.
Facts:
Issue and Ruling:
Respondent Irene Ranchez was a probationary employee
of petitioner Robinsons Galleria/Robinsons Supermarket
1. Whether or not petitioners were illegally dismissed. Corporation (petitioner Supermarket) for a period of five
(5) months, from October 15, 1997 until March 14, 1998.
No. It is already settled that the relationship Two weeks after she was hired, she reported to the
between jeepney owners/operators and jeepney drivers petitioner employer the loss of cash which she placed
under the boundary system is that of employer-employee inside the company locker. Immediately, petitioner
and not of lessor-lessee. The fact that the drivers do not ordered that she be strip-searched by the company
receive fixed wages but only get the amount in excess of guards. However, the search on her and her personal
the so-called “boundary” that they pay to the belongings yielded nothing. The petitioner also reported
owner/operator is not sufficient to negate the relationship the matter to the police and requested the Prosecutor’s
between them as employer and employee.  Office for an inquest. Respondent was constrained to
spend two weeks in jail for failure to immediately post
The LA, the NLRC, and the CA uniformly declared that bail.
petitioners were not dismissed from employment but
merely suspended pending payment of their arrears. Respondent filed a complaint for illegal dismissal and
Findings of fact of the CA, particularly where they are in damages on November 25, 1997. On March 12, 1998,
absolute agreement with those of the NLRC and the LA, petitioners sent to respondent by mail a notice of
are accorded not only respect but even finality, and are termination and/or notice of expiration of probationary
deemed binding upon this Court so long as they are employment dated March 9, 1998.
supported by substantial evidence. We have no reason
to deviate from such findings. Indeed, petitioners’ The LA dismissed the complaint for illegal dismissal, the
suspension cannot be categorized as dismissal, Labor Arbiter ratiocinated that at the time Ranchez filed
considering that there was no intent on the part of the complaint for illegal dismissal, she was not yet
respondent to sever the employer-employee relationship dismissed by petitioners. On appeal, the NLRC reversed
between him and petitioners. In fact, it was made clear the LA’s decision and ordered that Ranchez be
that petitioners could put an end to the suspension if immediately reinstated complainant to her former or
they only pay their recent arrears. As it was, the equivalent position without loss of seniority rights and
suspension dragged on for years because of petitioners’ privileges and to pay her full backwages. The NLRC
stubborn refusal to pay. It would have been different if pointed out that Ranchez was denied due process by
petitioners complied with the condition and respondent petitioners. Strip-searching respondent and sending her
still refused to readmit them to work. Then there would to jail for two weeks certainly amounted to constructive
have been a clear act of dismissal. But such was not the dismissal because continued employment had been
case. Instead of paying, petitioners even filed a rendered impossible, unreasonable, and unlikely. The
complaint for illegal dismissal against respondent. wedge that had been driven between the parties was
impossible to ignore. Although respondent was only a
2. Whether or not the policy of suspending drivers probationary employee, the subsequent lapse of her
pending payment of arrears in their boundary obligations probationary contract of employment did not have the
reasonable. effect of validly terminating her employment because
constructive dismissal had already been effected earlier
Yes. The policy of suspending drivers pending payment of by petitioners.
arrears in their boundary obligations is reasonable. It is
acknowledged that an employer has free rein and enjoys
The challenged Decision of the NLRC was affirmed with
a wide latitude of discretion to regulate all aspects of
modification by the CA in that should reinstatement be no
employment, including the prerogative to instill discipline
longer possible in view of the strained relation between
on his employees and to impose penalties, including
the parties, Petitioners are ordered to pay Respondent
dismissal, if warranted, upon erring employees. This is a
separation pay equivalent to one (1) month pay in
management prerogative. Indeed, the manner in which
addition to backwages from the date of dismissal until
management conducts its own affairs to achieve its
the finality of the assailed decision.
purpose is within the management’s discretion.  The only
limitation on the exercise of management prerogative is

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Labor Law Jurisprudence
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Issue and Ruling: These two reliefs are separate and distinct from each
other and are awarded conjunctively. 
1. Whether respondent was illegally terminated from
employment by petitioners. Hospital Management Services – Medical Center
Manila vs. Hospital Management Services, Inc. –
Yes. A probationary employee, like a regular employee, Medical Center Manila Employees Association-
enjoys security of tenure.  However, in cases of
AFW., 
probationary employment, aside from just or authorized G.R. No. 176287, January 31, 2011.
causes of termination, an additional ground is provided
under Article 281 of the Labor Code, i.e., the Facts:
probationary employee may also be terminated for failure
to qualify as a regular employee in accordance with Respondent De Castro had been working as a staff nurse
reasonable standards made known by the employer to
at petitioner hospital for seven years already. One night,
the employee at the time of the engagement.  Thus, the a patient fell from the right side of the bed and because
services of an employee who has been engaged on
of what happened, the niece of said patient staying in
probationary basis may be terminated for any of the that room sought the assistance from the nurse station.
following:  (1) a just or (2) an authorized cause; and  (3)
Instead of personally seeing the patient, De Castro
when he fails to qualify as a regular employee in directed a ward-clerk to check the patient. This incident
accordance with reasonable standards prescribed by the
was reported to the president and hospital director, and a
employer.  formal investigation was conducted. Nearly two months
after the investigation, a notice of termination was issued
The Court ruled that petitioners failed to accord upon De Castro for alleged violation of company rules
respondent substantive and procedural due process. and regulations.
Article 277(b) of the Labor Code mandates that subject De Castro, with the assistance of respondent Hospital
to the constitutional right of workers to security of tenure Management Services, Inc. – Medical Center Manila
and their right to be protected against dismissal, except Employees Association-AFW, filed a complaint for illegal
for just and authorized cause and without prejudice to dismissal with prayer for reinstatement and payment of
the requirement of notice under Article 283 of the same full backwages without loss of seniority rights, moral
Code, the employer shall furnish the worker, whose damages, exemplary damages and attorney’s fees.
employment is sought to be terminated, a written notice The LA ordered that De Castro should be reinstated and
containing a statement  of the causes of termination, and concluded that although De Castro committed the act
shall afford the latter ample opportunity to be heard and complained of, being her first offense, the penalty to be
to defend himself with the assistance of a representative meted should not be dismissal from the service. The
if he so desires, in accordance with company rules and NLRC reversed the findings of the LA and ruled that De
regulations pursuant to the guidelines set by the Castro lacked diligence and prudence in carrying out her
Department of Labor and Employment. The due process duty. The CA reversed the NLRC decisions and reinstated
requirements under the Labor Code are mandatory and the LA’s decision. It ruled that while De Castro's failure to
may not be supplanted by police investigation or court personally attend to patient Causeran amounted to
proceedings. The criminal aspect of the case is misconduct, however, being her first offense, such
considered independent of the administrative aspect. misconduct could not be categorized as serious or grave
Thus, employers should not rely solely on the findings of that would warrant the extreme penalty of termination
the Prosecutor’s Office. They are mandated to conduct from the service after having been employed for almost 9
their own separate investigation, and to accord the years.  
employee every opportunity to defend himself. 
Issue and Ruling:
Article 279 of the Labor Code provides that an employee
who is unjustly dismissed from work shall be entitled to 1. Whether or not De Castro’s termination was justified.
reinstatement without loss of seniority rights and other
privileges, to full backwages, inclusive of allowances, and No. Negligence is defined as the failure to exercise the
to other benefits or their monetary equivalent computed standard of care that a reasonably prudent person would
from the time his compensation was withheld from him have exercised in a similar situation.  The Court
up to the time of his actual reinstatement. However, due emphasizes that the nature of the business of a hospital
to the strained relations of the parties, the payment of requires a higher degree of caution and exacting
separation pay has been considered an acceptable standard of diligence in patient management and health
alternative to reinstatement, when the latter option is no care as what is involved are lives of patients who seek
longer desirable or viable.  On the one hand, such urgent medical assistance.  An act or omission that falls
payment liberates the employee from what could be a short of the required degree of care and diligence
highly oppressive work environment.  On the other, the amounts to serious misconduct which constitutes a
payment releases the employer from the grossly sufficient ground for dismissal. 
unpalatable obligation of maintaining in its employ a
worker it could no longer trust. Thus, as an illegally or Neglect of duty, to be a ground for dismissal, must be
constructively dismissed employee, respondent is entitled both gross and habitual.  Gross negligence connotes want
to: (1) either reinstatement, if viable, or separation pay, of care in the performance of one’s duties.  Habitual
if reinstatement is no longer viable; and (2) backwages. neglect implies repeated failure to perform one’s duties

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Labor Law Jurisprudence
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for a period of time, depending upon the circumstances.  Yes. Article 217 of the Labor Code states that unfair labor
A single or isolated act of negligence does not constitute practices and termination disputes fall within the original
a just cause for the dismissal of the employee.  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
University of the Immaculate Conception, et al. vs. and bargaining deadlocks. For the exception to apply,
NLRC, et al.,  there must be agreement between the parties clearly
G.R. No. 181146, January 26, 2011. conferring jurisdiction to the voluntary arbitrator. Such
agreement may be stipulated in a collective bargaining
Facts: agreement. However, in the absence of a collective
bargaining agreement, it is enough that there is evidence
Petitioner is a private educational institution located in on record showing the parties have agreed to resort to
Davao City. Private Respondent, Teodora C. Axalan is a voluntary arbitration. 
regular faculty member. He is also the elected president
of the employee’s union.
2.Whether or not Axalan was constructively dismissed.
Axalan, on two separate occasions attended seminars in
Quezon City and Baguio City respectively. She then Respondent was suspended for one year after being
received, in both instances, a memorandum from Dean charged with and found liable for AWOL. After serving her
Maria Rosa Celestial asking her to explain in writing why suspension, respondent was allowed to return to work.
she should not be dismissed for having been absent Respondent cannot be considered to have been
without official leave. constructively dismissed by the petitioner during her
period of suspension. Constructive dismissal occurs when
there is cessation of work because continued employment
In the first instance, Axalan claimed that she held online
is rendered impossible, unreasonable, or unlikely as when
classes while attending the seminars. She explained that
there is a demotion in rank or diminution in pay or when
she was under the impression that faculty members
a clear discrimination, insensibility, or disdain by an
would not be marked absent even if they were not
employer becomes unbearable to the employee leaving
physically present in the classroom as long as they
the latter with no other option but to quit. In this case,
conducted online classes. In the second seminar, she
there was no cessation of employment relations between
explained in a letter that she sought the approval of VP
the parties. It is unrefuted that respondent promptly
for Academics Alicia Sayson. The VP, however, denied
resumed teaching at the university right after the
having approved Axalan’s official leave. The VP stated in
expiration of the suspension period. In other words,
her letter that it was the University President who must
respondent never quit. Hence, she cannot claim to have
approve the application.
been left with no choice but to quit, a crucial element in a
finding of constructive dismissal.
After conducting hearings and receiving evidence, the ad
hoc grievance committee found Axalan to have incurred
AWOL on both instances and recommended for her
Alexander B. Gatus vs. Social Security System, 
suspension without pay. The university president
G.R. No. 174725, January 26, 2011.
approved the committee’s recommendation.
Facts:
Axalan then filed a complaint for illegal suspension,
constructive dismissal, reinstatement with backwages, Petitioner Alexander Gatuss worked at the Central
and unfair labor practice with prayer for damages and Azucarera de Tarlac and was a covered member of the
attorney’s fees. SSS. In the course of his employment, he suffered chest
pains and was diagnosed to be suffering from Coronary
The university moved to dismiss on the ground that the Artery Disease (CAD): Triple Vessel and Unstable Angina.
Labor Arbiter had no jurisdiction over the subject matter His medical records showed him to be hypertensive for
of the complaint. The university maintained that 10 years and a smoker. On account of his CAD, he was
jurisdiction lay in the voluntary arbitrator. given by the SSS the following EC/SSS Permanent Partial
Disability (PPD) benefits: (a) 8 monthly pensions
effective September 1, 1994 and (b) 4 monthly pensions
Meanwhile, after the suspension, Axalan promptly effective January 3, 1997.  He became an SSS retirement
resumed teaching.
pensioner on February 1, 2002.
Sometime in 2003, an SSS audit revealed the need to
Issues and Ruling: recover the EC benefits already paid to him on the
ground that his CAD, being attributed to his chronic
1. Whether or not the Labor Arbiter has jurisdiction over smoking, was not work-related.  He was notified thereof
the case. through a letter dated July 31, 2003. Petitioner assailed
the SSS’ decision but was denied. He elevated the matter
to the ECC contending that contending that he had
contracted the disease due to the presence of harmful

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fuel smoke emission of methane gas from a nearby smoke emissions at work for 30 years, he did not submit
biological waste digester and a railway terminal where satisfactory evidence proving that the exposure had
diesel-fed locomotive engines had "spew(ed) black contributed to the development of his disease or had
smoke;" and that he had been exposed for 30 years to increased the risk of contracting the illness.  Neither did
various smoke emissions that had contained carbon he show that the disease had progressed due to
monoxide, carbon dioxide, sulfur, oxide of nitrogen and conditions in his job as a factory worker.  In fact, he did
unburned carbon. The same was denied by the ECC. The not present any physician's report in order to
CA also affirmed the ECC decision. substantiate his allegation that the working conditions
had increased the risk of acquiring the cardiovascular
disease.
Issue and Ruling:
Verily, his mere contention of exposure to various smoke
1. Whether or not Petitioner’s ailment is compensable.
emissions in the working environment for a period of
No. As found by the Court of Appeals, petitioner failed to
time does not ipso facto make the resulting disability
submit substantial evidence that might have shown that
compensable.  Awards of compensation cannot rest on
he was entitled to the benefits he had applied for.  We
speculations or presumptions, for the claimant must
thus affirm in toto the findings and conclusions of the
prove a positive proposition. 
Court of Appeals in the questioned Decision and quote
with approval the following pronouncements of the
appellate court:
Gregorio V. Tongko vs. The Manufacturers Life
Insurance Co. (Phils.), Inc. and Renato A. Vergel de
The degree of proof required under P.D. 626 is merely Dios, 
substantial evidence, which means such relevant G.R. No. 167622, January 25, 2011.
evidence as a reasonable mind might accept as adequate
to support a conclusion.  Accordingly, the claimant must Facts:
show, at least by substantial evidence, that the
development of the disease was brought about largely by Petitioner Gregorio V. Tongko entered into a Career
the conditions present in the nature of the job.  What the Agent’s Agreement with respondent The Manufacturer
law requires is a reasonable work connection, not a direct Life Insurance Co. (Philippines), Inc. (Manulife). As an
causal relation. agent, his duties consisted of, among others, canvassing
for applications for group policies and other products of
Gatus was diagnosed to have suffered from CAD; Triple the company.
Vessel and Unstable Angina, diseases or conditions falling
under the category of Cardiovascular Diseases which are Subsequently, Tongko was named unit manager, branch
not considered occupational diseases under the Amended manager, and regional sales manager. But when he failed
Rules on Employees Compensation.  His disease not to comply with policies of Manulife, his Agency
being listed as an occupational disease, he was expected Agreement was terminated.
to show that the illness or the fatal disease was caused
by his employment and the risk of contracting the Issue and Ruling:
disease was increased or aggravated by the working
conditions.  His proof would constitute a reasonable basis 1. Whether or not the LA has jurisdiction over petitioner’s
for arriving at a conclusion that the conditions of his complaint for illegal dismissal.
employment had caused the disease or that such working
conditions had aggravated the risk of contracting the No. Given the anemic state of the evidence, particularly
illness or the fatal disease. on the requisite confluence of the factors that would
show an employer-employee relationship, the court
Under ECC Resolution No. 432 dated July 20, 1977, cannot conclusively find that the relationship exists in the
cardiovascular disease is deemed compensable under any present case, even if such relationship only refers to
of the following conditions, viz: Tongko’s additional functions. While a rough deduction
can be made, the answer will not be fully supported by
(a) If the heart disease was known to have been present the substantial evidence needed.
during employment, there must be proof that an acute
exacerbation was clearly precipitated by the unusual Under this legal situation, the only conclusion that can be
strain by reasons of the nature of his work. made is that the absence of evidence showing Manulife’s
control over Tongko’s contractual duties points to the
(b) The strain of work that brings about an acute attack absence of any employer-employee relationship between
must be of sufficient severity and must be followed within Tongko and Manulife.
28 hours of the clinical signs of cardiac insult to
constitute causal relationship. In the context of the established evidence, Tongko
remained an agent all along; although his subsequent
xxxx duties made him a lead agent with leadership role, he
was nevertheless only an agent whose basic contract
Gatus did not discharge the burden of proof imposed yields no evidence of means-and-manner control.
under the Labor Code to show that his ailment was work- xxx
related.  While he might have been exposed to various

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In light of these conclusions, the sufficiency of Tongko’s that person or entity shall be deemed engaged in
failure to comply with the guidelines of de Dios’ letter, as recruitment and placement.
a ground for termination of Tongko’s agency, is a matter
that the labor tribunals cannot rule upon in the absence
Article 38(a) of the Labor Code, as amended, specifies
of an employer-employee relationship.
that recruitment activities undertaken by non-licensees
or non-holders of authority are deemed illegal and
Jurisdiction over the matter belongs to the courts
punishable by law. And when the illegal recruitment is
applying the laws of insurance, agency and contracts.
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
People of the Philippines vs. Teresita “Tessie”
a form of economic sabotage.
Laogo, 
G.R. No. 176264, January 10, 2011.
But to prove illegal recruitment, it must be shown that
the accused, without being duly authorized by law, gave
Facts:
complainants the distinct impression that he had the
power or ability to send them abroad for work, such that
Susan Navarro who identified herself as an employee of the latter were convinced to part with their money in
Laogo’s travel agency introduced complainants to Laogo order to be employed. It is important that there must at
who promised them that she will send them to Guam least be a promise or offer of an employment from the
within three months. Complainants made the necessary person posing as a recruiter, whether locally or abroad.
payments for the process of their visa and employment
documents. Months passed but complainants heard
Here, both the trial court and the CA found that all the
nothing from either Susan or Laogo. Apprehensive,
five complainants were promised to be sent abroad by
Rogelio (one of the complainants) verified the status of
Susan and herein appellant as cooks and assistant cooks.
the Laogo Travel Consultancy with the Philippine
The follow up transactions between appellant and her
Overseas Employment Administration (POEA). From the
victims were done inside the said travel agency.
POEA, Rogelio learned that neither of the accused nor
Moreover, all four receipts issued to the victims bear the
Laogo Travel was licensed to recruit workers for
name and logo of Laogo Travel Consultancy, with two of
employment abroad. Aggrieved, Rogelio, together with
the said receipts personally signed by appellant
his six companions, filed the complaint against Susan and
herself. Indubitably, appellant and her co-accused acting
Laogo.
together made complainants believe that they were
transacting with a legitimate recruitment agency and that
Laogo was arrested while Susan remained at large. Laogo Travel Consultancy had the authority to recruit
During the trial, Laogo denied any participation in the them and send them abroad for work when in truth and
illegal activities undertaken by Susan. She insisted that in fact it had none as certified by the POEA. Absent any
Susan was not in any way connected with her travel showing that the trial court and the CA overlooked or
agency and that she confronted the latter when she came misappreciated certain significant facts and
to know of Susan’s recruitment activities. She claimed circumstances, which if properly considered, would
that she even had to rename her travel agency to Renz change the result, we are bound by said findings.
Consultancy and Employment Services to avoid being
associated with Susan’s recruitment activities. She
anchored her defense on the testimonies of the
Bernadeth Londonio and Joan Corcoro vs. Bio
complainants who declared that the transactions and the
Research, Inc. and Wilson Y. Ang, 
payments were made not with her but with Susan. Laogo
G.R. No. 191459, January 17, 2011.
admitted that her consultancy firm was merely engaged
in the business of assisting clients in the procurement of
Facts:
passports and visas, and denied that her agency was
involved in any recruitment activity as defined under
the Labor Code, as amended. Petitioners were hired as graphic/visual artists by
respondent Bio Research Inc. A year later after their
employment, respondent informed its employees
Issue and Ruling: including petitioners that pursuant to its plan to reduce
the workforce in order to prevent losses, it would be
1. Whether or not Laogo is guilty of illegal recruitment. severing their employment with the company.
Respondent filed an Establishment Termination Report
with the DOLE stating that it was retrenching 18 of its
Yes. Recruitment and placement refers to the act of
employees including petitioners due to redundancy and
canvassing, enlisting, contracting, transporting, utilizing,
to prevent losses. Petitioners were in fact retrenched.
hiring or procuring workers, and includes referrals,
contract services, promising or advertising for
employment, locally or abroad, whether for profit or not. Joan accepted her retrenchment pay and executed a
When a person or entity, in any manner, offers or quitclaim and waiver, while Bernadeth refused to accept
promises for a fee employment to two or more persons, hers

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Petitioners later filed a complaint for illegal dismissal, clearly established petitioner’s status as a stockholder
moral and exemplary damages and attorney’s fees and as a corporate officer and hence, his action against
against respondent Bio Research and its co-respondent respondent corporation is an intra-corporate controversy
President/CEO Wilson Y. Ang (Ang). Petitioners claimed over which the Labor Arbiter has no jurisdiction. The CA
that their dismissal was done in bad faith and tainted affirmed the NLRC’s decision.
with malice, being retaliatory in nature, following the
filing by Bernadeth of a complaint against Jose Ang, Jr. Issue and Ruling:
(Jose), one of Bio Research’s managers, for a sexual
harassment incident that occurred in his office on
February 19, 2005.. 1. Whether petitioner’s complaint for illegal dismissal
constitutes an intra-corporate controversy and thus,
beyond the jurisdiction of the Labor Arbiter.
The LA ruled in favor of petitioners and ordered their
reinstatement. The LA held that it failed to prove financial
losses to justify its call for the retrenchment of No. The Court ruled that this is not an intra-corporate
petitioners, and to use fair and reasonable criteria to controversy but a labor case cognizable by the labor
ascertain who to dismiss or retain; and that Bio Research arbiter. To determine whether a case involves an intra-
failed to comply with the requirements of Article 283 of corporate controversy that is to be heard and decided by
the Labor Code ─ that notice should be given to the DOLE the branches of the RTC specifically designated by the
and employees concerned at least a month before the Court to try and decide such cases, two tests must be
intended retrenchment. Both the NLRC and CA affirmed applied: (a) the status or relationship test, and (2) the
the LA’s decision. However, with regard Joan’s claim for nature of the controversy test. The first test requires that
illegal dismissal, the CA held that she could no longer the controversy arise out of intra-corporate or
question such by reason of her execution of the waiver partnership relations among the stockholders, members
and quitclaim. or associates of the corporation, partnership or
association, between any or all of them and the
corporation, partnership or association of which they are
Issue and Ruling: stockholders, members or associates; between such
corporation, partnership, or association and the public or
1. Whether or not Joan is barred from questioning the between such corporation, partnership, or association
legality of her dismissal. and the State insofar as it concerns its franchise, license
or permit to operate.  The second test requires that the
No. An employee’s execution of a final settlement and dispute among the parties be intrinsically connected with
receipt of amounts agreed upon does not foreclose his the regulation of the corporation.  The Court in this case
right to pursue a claim for illegal dismissal.   Thus, an held that petitioner is not a corporate officer because he
employee illegally retrenched is entitled to reinstatement was not validly appointed by the Board, thus, failing the
without loss of seniority rights and privileges, as well as relationship test, and that this is a case of employment
to payment of full backwages from the time of her termination which is a labor controversy and not an intra-
separation until actual reinstatement, less the amount corporate dispute, thus failing the nature of the
which he/she received as retrenchment pay. controversy test. 

Renato Real vs. Sangu Philippines, Inc. et al.,  The Heritage Hotel Manila, acting through its
G.R. No. 168757. January 19, 2011. owner, Grand Plaza Hotel, Corp. vs. National Union
of Workers in the Hotel, Restaurant and Allied
Industries-Heritage Hotel Manila Supervisors
Facts: Chapter (NUWHRAIN-HHMSC), 
G.R. No. 178296, January 12, 2011.
Petitioner Renato Real was removed from his position as
a manager through a Board Resolution. Petitioner filed a Facts:
complaint for illegal dismissal before the labor arbiter.
Petitioner filed a Petition for Cancellation of Registration
The LA declared petitioner Real and his co-complainants of respondent, on the ground of the non-submission of
as having been illegally dismissed and ordered the said documents. Nevertheless, the certification
respondents to reinstate complainants to their former election pushed through and the respondent emerged as
positions without loss of seniority rights and other the winner.  Petitioner filed a Protest with Motion to Defer
privileges and to pay their full backwages from the time Certification of Election Results and Winner, stating that
of their dismissal until actually reinstated and the certification election held on June 23, 2000 was an
furthermore, to pay them attorney’s fees.   exercise in futility because, once respondent’s
registration is cancelled, it would no longer be entitled to
Respondents appealed to the NLRC and claimed that be certified as the exclusive bargaining agent of the
petitioner is both a stockholder and a corporate officer of supervisory employees. Meanwhile, respondent filed its
respondent corporation, hence, his action against Answer to the petition for the cancellation of its
respondents is an intra-corporate controversy over which registration and prayed for the dismissal of the petition
the Labor Arbiter has no jurisdiction.  The NLRC opined, for the following reasons: (a) petitioner is estopped from

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Labor Law Jurisprudence
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questioning respondent’s status as a legitimate labor it until the full termination of the case.  Thus, jurisdiction
organization as it had already recognized respondent as remained with the BLR despite the BLR Director’s
such during the preelection conferences; (b) petitioner is inhibition. When the DOLE Secretary resolved the appeal,
not the party-in-interest, as the union members are the she merely stepped into the shoes of the BLR
ones who would be disadvantaged by the non-submission Director and performed a function that the latter could
of financial reports; (c) it has already complied with the not himself perform. She did so pursuant to her power of
reportorial requirements, having submitted its financial supervision and control over the BLR.  This principle was
statements for 1996, 1997, 1998, and 1999, its updated incorporated in the Administrative Code of 1987, which
list of officers, and its list of members for the years 1995, defines "supervision and control" as including
1996, 1997, 1998, and 1999; (d) the petition is already the authority to act directly whenever a specific function
moot and academic, considering that the certification is entrusted by law or regulation to a
election had already been held, and the members had subordinate.  Applying the foregoing to the present case,
manifested their will to be represented by it is clear that the DOLE Secretary, as the person
respondent.  The Med-Arbiter dismissed the protest and exercising the power of supervision and control over the
certified respondent as the sole and exclusive bargaining BLR, has the authority to directly exercise the quasi-
agent of all supervisory employees.Petitioner appealed to judicial function entrusted by law to the BLR
the DOLE Secretary was dismissed. Motion for Director.  The provision under the Administrative Code of
reconsideration was also denied.  In the meantime, 1987 which states, "in case of the absence or disability of
Regional Director Alex E. Maraan (Regional Director the head of a bureau or office, his duties shall be
Maraan) of DOLE-NCR finally resolved the petition for performed by the assistant head."   The provision clearly
cancellation of registration. While finding that respondent does not apply considering that the BLR Director was
had indeed failed to file financial reports and the list of its neither absent nor suffering from any disability; he
members for several years, he, nonetheless, denied the remained as head of the BLR. Thus, to dispel any
petition, ratiocinating that freedom of association and the suspicion of bias, the DOLE Secretary opted to resolve
employees’ right to self-organization are more the appeal herself.
substantive considerations. He took into account the fact
that respondent won the certification election and that it 2.  Whether or not the Court of Appeals gravely erred in
had already been certified as the exclusive bargaining affirming the dismissal of the Cancellation Petition
agent of the supervisory employees. In view of the despite the mandatory and unequivocal provisions of the
foregoing, Regional Director Maraan—while emphasizing Labor Code and its Implementing Rules.
that the non-compliance with the law is not viewed with
favor—considered the belated submission of the annual It is undisputed that appellee failed to submit its annual
financial reports and the list of members as sufficient financial reports and list of individual members in
compliance thereof and considered them as having been accordance with Article 239 of the Labor Code. However,
submitted on time.  Petitioner appealed the decision to the existence of this ground should not necessarily lead
the BLR but Director Hans Leo Cacdac inhibited himself to the cancellation of union registration. Article 239
from the case because he had been a former counsel of recognizes the regulatory authority of the State to exact
respondent.  In view of Director Cacdac’s inhibition, DOLE compliance with reporting requirements. Yet there is
Secretary Sto. Tomas took cognizance of the appeal and more at stake in this case than merely monitoring union
she dismissed the appeal, holding that the activities and requiring periodic documentation
constitutionally guaranteed freedom of association and thereof.  The more substantive considerations involve the
right of workers to self-organization outweighed constitutionally guaranteed freedom of association and
respondent’s noncompliance with the statutory right of workers to self-organization. Also involved is the
requirements to maintain its status as a legitimate labor public policy to promote free trade unionism and
organization.  Petitioner filed a motion for reconsideration collective bargaining as instruments of industrial peace
but was denied.  Petitioner filed a petition for certiorari and democracy.  An overly stringent interpretation of the
with the CA, raising the issue of whether the DOLE statute governing cancellation of union registration
Secretary acted with grave abuse of discretion in taking without regard to surrounding circumstances cannot be
cognizance of the appeal and affirming the dismissal of allowed. Otherwise, it would lead to an unconstitutional
its petition for cancellation of respondent’s registration application of the statute and emasculation of public
but was also denied.  Hence, this petition. policy objectives. Worse, it can render nugatory the
  protection to labor and social justice clauses that
  pervades the Constitution and the Labor
Issues and Ruling: Code.  Moreover, submission of the required documents
is the duty of the officers of the union. It would be
1.  Whether or not the Labor Secretary has no jurisdiction unreasonable for this Office to order the cancellation of
to review the decision of the Regional Director in a the union and penalize the entire union membership on
petition for cancellation since it is conferred by law to the the basis of the negligence of its officers.  These
Bureau of Legal Relations. provisions give the Regional Director ample discretion in
dealing with a petition for cancellation of a union’s
Jurisdiction to review the decision of the Regional registration, particularly, determining whether the union
Director lies with the Bureau of Legal Relations (BLR).  In still meets the requirements prescribed by law. It is
this case, the appeal was filed by petitioner with the BLR, sufficient to give the Regional Director license to
which, undisputedly, acquired jurisdiction over the case. treat the late filing of required documents as
Once jurisdiction is acquired by the court, it remains with sufficient compliance with the requirements of the

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law. After all, the law requires the labor organization to JOEL P. DEJAPA, represented by his Attorney-in-
submit the annual financial report and list of members in Fact MYRNA MANZANO, Respondent.
order to verify if it is still viable and financially
sustainable as an organization so as to protect the
Facts:
employer and employees from fraudulent or fly-by-night
unions. With the submission of the required documents
by respondent, the purpose of the law has been Respondent employee filed an illegal dismissal case
achieved, though belatedly. against the petitioner-company and Tom Madula, its
R.A. No. 9481 amended Article 239 to read: operations manager. The case was dismissed by the labor
ART. 239. Grounds for Cancellation of Union Registration. arbiter and the dismissal was affirmed by NLRC. On
—The following may constitute grounds for cancellation of August 29, 2002, the Court of Appeals reversed and set
union registration: aside the NLRC decision and resolution. Petitioner (herein
(a) Misrepresentation, false statement or fraud in respondent) is ordered REINSTATED without loss of
connection with the adoption or ratification of the seniority rights with payment of backwages. The CA
constitution and by-laws or amendments thereto, the ordered the petitioner company to pay respondent
minutes of ratification, and the list of members who took separation pay, moral and exemplary damages, and
part in the ratification; attorney’s fees. The decision became final and executory
(b) Misrepresentation, false statements or fraud in on February 27, 2004, and consequently a writ of
connection with the election of officers, minutes of the execution was issued. Petitioner-company filed a Motion
election of officers, and the list of voters; to Quash Writ of Execution. The Labor Arbiter granted the
(c) Voluntary dissolution by the members. Motion and exonerated the petitioner company from
R.A. No. 9481 also inserted in the Labor Code Article paying backwages and held that it was petitioner Madula
242-A, which provides: who should be liable to pay backwages. Respondent then
ART. 242-A. Reportorial Requirements.—The following filed before the CA a Very Urgent Motion for Clarification
are documents required to be submitted to the Bureau by of Judgment. On December 10, 2004, CA granted the
the legitimate labor organization concerned: Motion and held that petitioner-company is solely liable
(a) Its constitution and by-laws, or amendments thereto, for the judgment award.
the minutes of ratification, and the list of members who
took part in the ratification of the constitution and by- Issue:
laws within thirty (30) days from adoption or ratification
of the constitution and by-laws or amendments thereto;
(b) Its list of officers, minutes of the election of officers, w/n the final and executor judgment can be quashed.
and list of voters within thirty (30) days from election;
(c) Its annual financial report within thirty (30) days after Ruling:
the close of every fiscal year; and
(d) Its list of members at least once a year or whenever
required by the Bureau. It is basic that once a decision becomes final and
executory, it is immutable and unalterable. Private
Failure to comply with the above requirements respondents' (herein petitioners) motion for
shall not be a ground for cancellation of union reconsideration seeks a modification or reversal of this
registration but shall subject the erring officers or Court's August 29, 2002 decision, which has long become
members to suspension, expulsion from final and executory, as in fact, it is already in its
membership, or any appropriate penalty. execution stage. It may no longer be modified by this
Court or even by the Highest Court of the land.
ILO Convention expressed its opinion that the dissolution
of a union, and cancellation of registration for that As a general rule, final and executory judgments are
matter, involve serious consequences for occupational immutable and unalterable, except under these
representation. It has, therefore, deemed it preferable recognized exceptions, to wit: (a) clerical errors;
if such actions were to be taken only as a last (b) nunc pro tunc entries which cause no prejudice to any
resort and after exhausting other possibilities with party; and (c) void judgments. The underlying reason for
less serious effects on the organization. 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
February 2011 must not hang in suspense for an indefinite period of
time. What the CA rendered on December 10, 2004 was
G.R. No. 167332               February 7, 2011 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
FILIPINAS PALMOIL PROCESSING, INC. and ascertainment and determination of new rights, but is
DENNIS T. VILLAREAL, Petitioners,  one placing in proper form on the record, the judgment
vs. that had been previously rendered, to make it speak the
truth, so as to make it show what the judicial action

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really was. It is not to correct judicial errors, such as to arbitrarily or in disregard of the evidence on record,
render a judgment anew in place of the one it rendered, these findings may be examined by the courts. In the
nor to supply nonaction by the court, however erroneous present case, the Court of Appeals found itself unable to
the judgment may have been. 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. 

Issue:
G.R. No. 165381               February 9, 2011

w/n the corporate officers can be held personally liable

NELSON A. CULILI, Petitioner, 
because of bad faith.
vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES,
INC., SALVADOR HIZON (President and Chief Ruling:
Executive Officer), EMILIANO JURADO (Chairman
of the Board), VIRGILIO GARCIA (Vice President)
As a general rule, a corporate officer cannot be held
and STELLA GARCIA (Assistant Vice
liable for acts done in his official capacity because a
President), Respondents.
corporation, by legal fiction, has a personality separate
and distinct from its officers, stockholders, and
Facts: 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,
Respondent-company, due to business troubles and
or to confuse a legitimate issue.  In illegal dismissal
losses, implemented a Right-Sizing Program which
cases, corporate officers may be held solidarily liable with
entailed a company-wide reorganization involving the
the corporation if the termination was done with malice
transfer, merger, absorption or abolition of certain
or bad faith. Moral damages are awarded only where the
departments of the company. As a result, respondent-
dismissal was attended by bad faith or fraud, or
company terminated the services of petitioner on account
constituted an act oppressive to labor, or was done in a
of redundancy. However, it failed to provide the
manner contrary to morals, good customs or public
Department of Labor and Employment with a written
policy.  Exemplary damages may avail if the dismissal
notice regarding petitioner’s termination. The notice of
was effected in a wanton, oppressive or malevolent
termination was also not properly served on the
manner. In the present case, the Court held that
petitioner. Further, a reading of the notice shows that
petitioner failed to prove that his dismissal was
respondent-company failed to properly inform the
orchestrated by the individual respondents and their acts
petitioner of the grounds for his termination. 
were attended with bad faith or were done oppressively.

Petitioner filed a complaint against respondent-company

Issue:
and its officers for illegal dismissal, unfair labor practice
because his functions were outsourced to labor-only
contractors, and money claims. Petitioner alleged that w/n there was a valid dismissal based on redundancy.
the officers should be held personally liable for the acts of
company which were tainted with bad faith and
Ruling:
arbitrariness. 

Yes. There is redundancy when the service capability of

In an appeal to the CA via certiorari under Rule 65, the
the workforce is greater than what is reasonably required
CA did not limit itself to the issue of grave abuse of
to meet the demands of the business enterprise.  A
discretion.
position becomes redundant when it is rendered
superfluous by any number of factors such as over-hiring
Issue: 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
w/n it was proper for the CA to touch on the factual
has been consistent in holding that the determination of
findings of the NLRC.
whether or not an employee’s services are still needed or
sustainable properly belongs to the employer.  Provided
Ruling: there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act,
While it is true that factual findings made by quasi- the soundness or wisdom of this exercise of business
judicial and administrative tribunals, if supported by judgment is not subject to the discretionary review of the
substantial evidence, are accorded great respect and Labor Arbiter and the NLRC.   However, an employer
even finality by the courts, this general rule admits of cannot simply declare that it has become overmanned
exceptions.  When there is a showing that a palpable and and dismiss its employees without producing adequate
demonstrable mistake that needs rectification has been proof to sustain its claim of redundancy.  Among the
committed or when the factual findings were arrived at requisites of a valid redundancy program are: (1) the

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good faith of the employer in abolishing the redundant E.G & I. CONSTRUCTION CORPORATION and EDSEL
position; and (2) fair and reasonable criteria in GALEOS, Petitioners, 
ascertaining what positions are to be declared redundant, vs.
such as but not limited to: preferred status, efficiency, ANANIAS P. SATO, NILO BERDIN, ROMEO M.
and seniority.  The Court also held that the following LACIDA, JR., and HEIRS OF ANECITO S. PARANTAR,
evidence may be proffered to substantiate redundancy: SR., namely: YVONNE, KIMBERLY MAE, MARYKRIS,
adoption of a new staffing pattern, feasibility studies/ ANECITO, JR., and JOHN BRYAN, all surnamed
proposal on the viability of the newly created positions, PARANTAR, Respondents.
job description and the approval by the management of
the restructuring. 
Facts:

Issue:
Respondents filed an illegal dismissal case against
petitioner. They alleged that petitioner-corporation failed
Due to failure to comply with the procedural requirement to pay them their full compensation. For its defense,
of notice and hearing, was the dismissal now improper? 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
Ruling:
they refused.

There are two aspects which characterize the concept of

The Labor Arbiter granted their monetary claims but the
due process under the Labor Code: one is substantive —
NLRC reversed the award considering that the petitioner-
whether the termination of employment was based on
corporation submitted copies of payrolls (only attached
the provision of the Labor Code or in accordance with the
during appeal), which it annexed to its memorandum on
prevailing jurisprudence; the other is procedural — the
appeal, showing full payment. NLRC ruled that the
manner in which the dismissal was effected. There is a
respondents were not illegally dismissed since they failed
psychological effect or a stigma in immediately finding
to present a written notice of termination. This was
one’s self laid off from work.  This is why our labor laws
however reversed by the Court of Appeals.
have provided for procedural due process.  While
employers have the right to terminate employees it can
no longer sustain, our laws also recognized the Issue:
employee’s right to be properly informed of the
impending termination of his employment. Though the
w/n respondents are duty bound to show non-payment of
failure of respondent-company to comply with the notice
compensation.
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.  Ruling:

Issue: The general rule is that the burden rests on the employer
to prove payment, rather than on the employee to prove
non-payment. The reason for the rule is that the
Is this a case of ULP?
pertinent personnel files, payrolls, records, remittances,
and other similar documents — which will show that
Ruling: 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
No. The Supreme Court held that unfair labor practice
control of the employer. In this case, the submission by
refers to acts that violate the workers’ right to organize. 
petitioner-corporation of the time records and payrolls
The prohibited acts are related to the workers’ right to
only when the case was on appeal before the NLRC is
self-organization and to the observance of a CBA. Thus,
contrary to the elementary precepts of justice and fair
an employer may be held liable for unfair labor practice
play. Respondents were not given the opportunity to
only if it can be shown that his acts interfere with his
check the authenticity and correctness of the evidence
employees’ right to self-organization. Since there is no
submitted on appeal. Thus, the Supreme Court held that
showing that the respondent company’s implementation
the monetary claims of respondents should be granted. It
of the Right-Sizing Program was motivated by ill will, bad
is a time-honored principle that if doubts exist between
faith or malice, or that it was aimed at interfering with its
the evidence presented by the employer and the
employees’ right to self-organization, there is no unfair
employee, the scales of justice must be tilted in favor of
labor practice to speak of in this case.
the latter. It is the rule in controversies between a
laborer and his master that doubts reasonably arising
from the evidence, or in the interpretation of agreements
and writing, should be resolved in the former’s favor.
G.R. No. 182070               February 16, 2011
Issue:

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w/n it is incumbent upon respondents to show that the sheriff issued a Notice of Sale of a property with TCT in
dismissal was illegal. 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
Ruling:
the Regional Trial Court (RTC). Granted.

Written notice of dismissal is not a pre-requisite for a

Issue
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 w/n RTC has jurisdiction over the application for the
probandi rests on the employer to prove that the issuance of a TRO in labor dispute.
dismissal of an employee is for a valid cause. 
Ruling:
Issue:
RTC lacks jurisdiction to resolve the matter. Regular
w/n respondents abandoned their work. 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
Ruling:
appropriate officers and tribunals of the DOLE. To hold
otherwise is to sanction splitting of jurisdiction which is
The Court held that for abandonment to exist, it is obnoxious to the orderly administration of justice. The
essential (a) that the employee must have failed to NLRC Manual on the Execution of Judgment deals
report for work or must have been absent without valid specifically with third-party claims in cases brought
or justifiable reason; and (b) that there must have been before that body. It defines a third-party claim as one
a clear intention to sever the employer-employee where a person, not a party to the case, asserts title to
relationship manifested by some overt acts. The or right to the possession of the property levied upon. It
employer has the burden of proof to show the employee’s also sets out the procedure for the filing of a third-party
deliberate and unjustified refusal to resume his claim, to wit: “such person shall make an affidavit of his
employment without any intention of returning. Mere title thereto or right to the possession thereof, stating the
absence is not sufficient. There must be an unequivocal grounds of such right or title and shall file the same with
intent on the part of the employee to discontinue his the sheriff and copies thereof served upon the Labor
employment. Based on the evidence presented, the Arbiter or proper officer issuing the writ and upon the
reason why respondents failed to report for work was prevailing party.”  In the present case, there is no doubt
because petitioner-corporation barred them from that petitioner’s complaint is a third-party claim within
entering its construction sites. It is a settled rule that the cognizance of the NLRC. Petitioner may indeed be
failure to report for work after a notice to return to work considered a “third party” in relation to the property
has been served does not necessarily constitute subject of the execution since there is no question that
abandonment. The intent to discontinue the employment the property belongs to petitioner and his wife, and not
must be shown by clear proof that it was deliberate and to the corporation. It can be said that the property
unjustified. Petitioner-corporation failed to show overt belongs to the conjugal partnership, and not to petitioner
acts committed by respondents from which it may be alone. At the very least, the Court can consider
deduced that they had no more intention to work.  petitioner’s wife to be a third party within the
Respondents’ filing of the case for illegal dismissal barely contemplation of the law
four (4) days from their alleged abandonment is totally
inconsistent with the known concept of what constitutes
Issue:
abandonment. 

Is the sale valid?

Ruling:
G.R. No. 184007               February 16, 2011

No. the TCT showed that the property did not belong to
PAQUITO V. ANDO, Petitioner, 
the corporation but a conjugal property between the
vs.
corporation’s president and his wife. Clearly, absent any
ANDRESITO Y. CAMPO, ET AL., Respondents.
showing of bad faith or malice, said property cannot
answer for the liability of the corporation.
Facts:

Respondents filed an illegal dismissal case against

Premier Allied and Contracting Services, Inc. (PACSI) and
G.R. No. 183390               February 16, 2011
its President, the petitioner. PACSI and the petitioner
were held liable to pay the respondents separation pay
and attorney’s fees. To execute this judgment, NLRC

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PLASTIMER INDUSTRIAL CORPORATION and TEO recognizes retrenchment to prevent losses as a right of
KEE BIN, Petitioners,  the management to meet clear and continuing economic
vs. threats or during periods of economic recession to
NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA T. prevent losses. There is no need for the employer to wait
AMPARADO, MIGNON H. JOSEPH, AMELIA L. for substantial losses to materialize before exercising
CANDA, MARISSA D. LABUNOS, MELANIE T. ultimate and drastic option to prevent such losses. 
CAYABYAB, MA. CORAZON DELA CRUZ, and
LUZVIMINDA CABASA, Respondents.
Issue:

Facts:
w/n the individual quitclaim signed by them was valid.

In 2004, the petitioner had to retrench and consequently

Ruling:
terminate the employment of the respondents. Petitioner
issued a Memorandum informing all its employees of the
decision of the company’s Board of Directors to downsize The Court ruled that a waiver or quitclaim is a valid and
and reorganize its business operations due to the change binding agreement between the parties, provided that it
of its corporate structure. Petitioner served the individual constitutes a credible and reasonable settlement, and
notice of termination on its employees on May 14, 2004 that the one accomplishing it has done so voluntarily and
or 30 days before the effective date of their termination with a full understanding of its import. In this case, the
on 13 June 2004, while it submitted the notice of respondents were sufficiently apprised of their rights
termination to the Department of Labor and Employment under the waivers and quitclaims that they signed. Each
only on 26 May 2004, short of the one-month prior notice document contained the signatures of the union president
requirement under Article 283 of the Labor Code. 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
Respondents questioned the validity of the retrenchment,
quitclaims signed by the respondents in this case. 
and alleged that though petitioner’s financial statements
in 2001 and 2002 reflected losses, it declared net income
in 2003. They signed an individual “Release Waiver and
Quitclaim.” They, however, questioned the validity of said
quitclaim.
G.R. No. 169754               February 23, 2011

Issue:
LEGEND INTERNATIONAL RESORTS
LIMITED, Petitioner, 
w/n the retrenchment be held illegal for failure to notify vs.
the DOLE of the same. KILUSANG MANGGAGAWA NG LEGENDA (KML-
INDEPENDENT), Respondent.
Ruling:
Facts:
The Court held that petitioners’ failure to comply with the
one-month notice to the DOLE is only a procedural Respondent union filed a petition for certification election.
infirmity and does not render the retrenchment illegal. Petitioner moved to dismiss the petition for certification
When the dismissal is for a just cause, the absence of election filed by respondent union by questioning the
proper notice will not nullify the dismissal or render it validity of the respondent’s union registration. Petitioner
illegal or ineffectual. Instead, the employer should also moved to dismiss the said petition alleging the
indemnify the employee for violation of his statutory pendency of a petition for cancellation of the union’s
rights. registration. The DOLE Secretary ruled in favor of the
legitimacy of the respondent as a labor organization and
Issue: 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
w/n the declaration of net income reverse the declaration
executory. Petitioner argued that the cancellation of the
of losses for the previous years. union’s certificate of registration should retroact to the
time of its issuance. Thus, it claimed that the
Ruling: respondent-union’s petition for certification election and
its demand to enter into collective bargaining agreement
with the petitioner should be dismissed due to
The Court ruled that the fact that there was a net income
respondent’s lack of legal personality.
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 Issue:
petitioners to recover the loss of P52,904,297.88 which it
suffered in 2002. Article 283 of the Labor Code

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w/n the petitioner may properly question the validity of Facts:

respondent-union’s registration in a petition for
certification election.
Petitioner filed a complaint against respondent for
collection of excess placement fee defined in Article 34(a)
Ruling: 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
The Court held that legitimacy of the legal personality of
other hand, respondent presented an acknowledgment
respondent cannot be collaterally attacked in a petition
receipt reflecting collection of an amount authorized by
for certification election proceeding but only through a
POEA.
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 Issue:
legal personality on the date of issuance of its certificate
of registration.  Once a certificate of registration is issued
w/n petitioner has substantiated her claim.
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 Ruling:
Section 5 of Rule V, Book V of the Implementing Rules. 
No. The Court held that the pieces of evidence presented
Issue: 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
w/n the certification election in this case is proper.
quasi-judicial agencies, the quantum of evidence required
to establish a fact is substantial evidence, or that level of
Ruling: relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. The Court gave more
credence to respondent’s evidence consisting of the
Notwithstanding the finality of the Decision canceling the
acknowledgment receipt showing the amount paid by
certificate of registration of KML, we cannot subscribe to
petitioner and received by respondent. A receipt is a
LEGEND’s proposition that the cancellation of KML’s
written and signed acknowledgment that money or goods
certificate of registration should retroact to the time of its
have been delivered. Although a receipt is not conclusive
issuance. 
evidence, an exhaustive review of the records of the case
fails to disclose any other evidence sufficient and strong
Pendency of a petition for cancellation of union enough to overturn the acknowledgment embodied in
registration does not preclude collective bargaining, and respondent’s receipt as to the amount it actually received
that an order to hold a certification election is proper from petitioner. Having failed to adduce sufficient
despite the pendency of the petition for cancellation of rebuttal evidence, petitioner is bound by the contents of
the union’s registration because at the time the the receipt issued by respondent. The subject receipt
respondent union filed its petition, it still had the legal remains as the primary or best evidence.
personality to perform such act absent an order
cancelling its registration.  
The promissory note presented by petitioner cannot be
considered as adequate evidence to show the excessive
It is clear that a certification election may be conducted placement fee. It must be emphasized that a promissory
during the pendency of the cancellation proceedings. This note is a solemn acknowledgment of a debt and a formal
is because at the time the petition for certification was commitment to repay it on the date and under the
filed, the petitioning union is presumed to possess the conditions agreed upon by the borrower and the lender.
legal personality to file the same. There is therefore no A person who signs such an instrument is bound to honor
basis for LEGEND’s assertion that the cancellation of it as a legitimate obligation duly assumed by him through
KML’s certificate of registration should retroact to the the signature he affixes thereto as a token of his good
time of its issuance or that it effectively nullified all of faith. The fact that respondent is not a lending company
KML’s activities, including its filing of the petition for does not preclude it from extending a loan to petitioner
certification election and its demand to collectively for her personal use. As for the deductions purportedly
bargain. made by petitioner’s 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,
G.R. No. 179242               February 23, 2011 mere general allegations of payment of excessive
placement fees cannot be given merit as the charge of
AVELINA F. SAGUN, Petitioner,  illegal exaction is considered a grave offense which could
vs. cause the suspension or cancellation of the agency’s
SUNACE INTERNATIONAL MANAGEMENT SERVICES, license.  They should be proven and substantiated by
INC., Respondent. clear, credible, and competent evidence.

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4. When a director, trustee or officer is made, by specific

provision of law, personally liable for his corporate action.
MARCH 2011
The general rule is grounded on the theory that a
corporation has a legal personality separate and distinct
Harpoon Marine Services, Inc., et al. v. Fernan H.
from the persons comprising it. To warrant the piercing
Francisco, GR No. 167751, March 2, 2011.
of the veil of corporate fiction, the officer’s bad faith or
wrongdoing must be established clearly and convincingly
Facts: as bad faith is never presumed.

Francisco was hired by Harpoon as its Yard Supervisor

tasked to oversee and supervise all projects of the
company. In 1998, respondent left for employment
APRIL 2011
elsewhere but was rehired by petitioner Harpoon and
assumed his previous position a year after. In 2001,
however, he was terminated. Harpoon justified his James Ben L. Jerusalem v. Keppel Monte Bank, et
termination due to his frequent absences and tardiness. al., 
The LA found for Harpon; initially the NLRC sided with
Harpoon as well, but declared Francisco illegally
G.R. No. 169564. April 6, 2011
terminated upon MR. The CA agreed with the NLRC and
found Rosit (Harpon’s president and CEO) to be in bad
faith; Rosit was found solidarily liable with Harpoon. Facts:

Issue: Petitioner James Ben L. Jerusalem was employed by

respondent Keppel Monte Bank (Keppel) on May 28, 1998
as assistant vice-president. On June 1, 1998, he was
Can the president of a corporation be found solidarily
assigned as head of the newly created VISA Credit Card
liable with the corporation which dismissed an employee
Department. On April 5, 1999, carrying the same rank,
illegally?
he was reassigned as head of marketing and operations
of the jewelry department.
Ruling:
On Sept. 26, 2000, petitioner was dismissed from the
Negative. Obligations incurred by corporate officers, service for breach of trust and confidence for knowingly
acting as such corporate agents, are not theirs but the and maliciously referring, endorsing and vouching for
direct accountabilities of the corporation they represent. VISA card applicants in or about May 1999. They later
As such, they should not be generally held jointly and turned out to be impostors resulting in financial loss to
solidarily liable with the corporation, except: Keppel.

1. When directors and trustees or, in appropriate cases, Issue and Ruling:
the officers of a corporation –
1. Whether or not Petitioner’s dismissal was legal.
(a) vote for or assent to unlawful acts of the
corporation;
No. Petitioner was employed as Assistant Vice-President
of the Jewelry Department in respondent bank. His
(b) act in bad faith or with gross negligence in directing employment was terminated on the ground of willful
the corporate affairs; 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
(c) are guilty of conflict of interest to the prejudice of the
be holding a position of trust and confidence, and (2)
corporation, its stockholders or members, and other
there must be an act that would justify the loss of trust
persons;
and confidence. Loss of trust and confidence, to be a
valid cause for dismissal, must be based on a willful
2. When the director or officer has consented to the breach of trust and founded on clearly established facts.
issuance of watered stock or who, having knowledge The basis for the dismissal must be clearly and
thereof, did not forthwith file with the corporate secretary convincingly established but proof beyond reasonable
his written objection thereto; doubt is not necessary. Furthermore, the burden of
establishing facts as bases for an employer’s loss of
3. When a director, trustee or officer has contractually confidence is on the employer. The court held that the
agreed or stipulated to hold himself personally and termination of petitioner was without just cause and
solidarily liable with the corporation; 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

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proof that petitioner had participated in the approval of refusal to undergo the operation recommended by the
the questioned accounts. The invocation by respondent of company designated physician. 
the loss of trust and confidence as ground for petitioner’s
termination has therefore no basis at all. 
The LA ruled in favor of petitioner and awarded him sick
allowance, permanent medial unfitness benefits based on
His employment was terminated on the ground of willful the CBA and attorney’s fees. Respondent’s appealed with
breach of trust and confidence for endorsing VISA card the NLRC and in addition to their previously proffered
applicants who later turned out to be impostors resulting arguments; they contended that they have already paid
in financial losses to respondent bank. The court held petitioner’s sickness allowance and that the LA had no
that petitioner was illegally dismissed. As provided in basis to award disability compensation for failure of
Article 282 of the Labor Code, an employer may petitioner to present the CBA and proof of membership to
terminate an employee’s employment for fraud or willful AMOSUP. Said appeal was dismissed by the NLRC.
breach of trust reposed in him. However, in order to
constitute a just cause for dismissal, the act complained
Respondents filed with the CA a petition for certiorari.
of must be ‘work-related’ such as would show the
The CA held that the NLRC committed a grave abuse of
employee concerned to be unfit to continue working for
discretion when it affirmed the LA’s decision awarding
the employer. The act of betrayal of trust, if any, must
[petitioner] medical unfitness benefit, despite the fact
have been committed by the employee in connection with
that such claim was unsubstantiated by any documentary
the performance of his function or position. The court
evidence. However, as it was undisputed that petitioner
found that the element of ‘work-connection’ was not
suffered a work-related injury, the Court of Appeals still
present in this case since petitioner was assigned under
saw fit to award medical unfitness benefits, based on the
the Jewelry department, and therefore had nothing to do
POEA Standard Contract of Employment and the finding
with the approval of VISA Cards, which was under a
of petitioner’s own physician that the proper disability
different department altogether. 
grade for petitioner’s injury was Grade 11 or 14.93%.

In his motion for reconsideration, petitioner claimed that

it was only by inadvertence that he previously failed to
Wilfredo Y. Antiquina v.  Magsaysay Maritime attach a copy of the necessary documentary evidence
Corporation and/or Masterbulk Pte., Ltd.,  which would prove his entitlement to said medical
unfitness benefit. He attached said documents in his
motion and prayed that the CA reconsider its previous
G.R. No. 168922. April 13, 2011
decision. However, the same was denied.

Facts:
Issue and Ruling:

Petitioner Wilfredo Antiquina was hired, through

Petitioner questioned the ruling of the CA by filing a
respondent manning agency Magsaysay Maritime
petition for review on certiorari under Rule 45. The
Corporation (MCC), to serve as Third Engineer on the
Supreme Court held that, as a rule, only questions of
vessel owned and operated by respondent Masterbulk
law, not questions of fact, may be raised in a petition for
Pte., Ltd. Seven months after since he started his
review on certiorari under Rule 45. However, this
employment, petitioner suffered a fracture on his lower
principle is subject to recognized exceptions. In the labor
left arm after a part fell down on him. At the Romanian
law setting, the Court will delve into factual issues when
hospital, he was diagnosed with “fractura 1/3 proximala
conflict of factual findings exists among the labor arbiter,
cubitus stg.” Petitioner was signed off the vessel and was
the NLRC, and the Court of Appeals. Considering that in
repatriated to the Philippines. He immediately reported to
the present case there were differing factual findings on
the office of MCC and was referred to a doctor who later
the part of the Court of Appeals, on one hand, and the
confirmed that petitioner has an undisplaced fracture of
Labor Arbiter and the NLRC, on the other, the Supreme
the left ulna. Petitioner underwent physical therapy
Court found it necessary to make an independent
sessions, yet he noticed that his arm had not healed.
evaluation of the evidence on record. 
Another company designated doctor evaluated
petitioner’s condition and advised him yo undergo a bone
grafting procedure. Upon learning that the metal piece to 1. Whether or not the CA committed grave error in not
be attached to his fractured bone will only be removed admitting and considering the evidence submitted by
after one year and a half years, petitioner reacted with petitioner showing that he is a member of the AMOSUP
fear and decided not to have the operation. and the Singapore Maritime Officers Union.

After formally informing respondents of his decision to Yes. Petitioner claimed disability benefits under a
forego the medical procedure recommended by the Collective Bargaining Agreement that the respondent
company physician, petitioner filed a complaint for employer entered into with a foreign union. The Court of
permanent disability benefits, sickness allowance, Appeals refused to admit the evidence of petitioner
damages and attorney’s fees against respondents. In showing his membership in the union on the ground that
their defense, respondents contended that petitioner’s it was submitted only with the Motion for
monetary claims were premature by reason of the latter’s Reconsideration. The Supreme Court, in agreeing to

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examine the evidence belatedly submitted by petitioner, 1. Whether or not Lapid was illegally terminated.
pointed out that technical rules of procedure shall be
liberally construed in favor of the working class in
Yes. The Supreme Court affirmed the findings of the
accordance with the demands of substantial justice. Rules
Court of Appeals. In doing so, the Court relied on Section
of procedure and evidence should not be applied in a
3(2), Article XIII of the Constitution which guarantees the
very rigid and technical sense in labor cases in order that
rights of all workers to security of tenure. The Supreme
technicalities would not stand in the way of equitably and
Court also recognized its pronouncement in a recent case
completely resolving the rights and obligations of the
that “Even a casual or temporary employee enjoys
parties.  
security of tenure and cannot be dismissed except for
cause enumerated in Sec. 22, Rule XIV of the Omnibus
2. Whether or not the Court may award Petitioner the Civil Service Rules and Regulations and other pertinent
medical unfitness benefits in accordance with the CBA as laws.” However, the Court also went on to state that,
prayed for by petitioner. 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
No. The burden of proof rests upon the party who
enjoys permanence of employment. The rule is still that
asserts the affirmative of an issue. And in labor cases,
casual employment will cease automatically at the end of
the quantum of proof necessary is substantial evidence,
the period unless renewed. Casual employees may also
or such amount of relevant evidence which a reasonable
be terminated anytime though subject to certain
mind might accept as adequate to justify a conclusion.
conditions or qualifications with reference to the CSC
Petitioner had the duty to prove by substantial evidence
Form No. 001. Thus, they may be laid-off any
his own positive assertions. He did not discharge this
time before the expiration of the employment period
burden of proof when he submitted photocopied portions
provided any of the following occurs: (1) when their
of a different CBA with a different union. 
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. The Court found that respondent was illegally terminated
Lapid,  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
G.R. No. 191940. April 12, 2011. than the reasons mentioned in CSC Form No. 001. This is
pursuant to Section 2, Article IX(B) of the Constitution.
Facts: 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
Respondent Marie Lapid was a casual teller of the
law after due process.” The reason for this is that their
Philippine Charity Sweepstakes Office (PCSO). Through
termination from the service could carry a penalty
the PCSO Board of Directors, respondent was found guilty
affecting their rights and future employment in the
of Discourtesy in the Course of Official Duties and Grave
government
Misconduct without being formally charged and was
imposed the penalty of dismissal from the service.

Lapid appealed to the Civil Service Commission (CSC).

The CSC dismissed Lapid’s appeal. It said that although MAY 2011
PCSO failed to observe due process, the same was
irrelevant because Lapid was employed only as a casual G.R. No. 179532               May 30, 2011
employee not enjoying security of tenure. Hence, her
service is terminable anytime, there being no need to
show cause. CLAUDIO S. YAP, Petitioner, 
vs.
THENAMARIS SHIP'S MANAGEMENT and
Lapid moved for reconsideration but was denied. She INTERMARE MARITIME AGENCIES,
then filed a petition for review before the CA. The CA INC., Respondents.
agreed with Lapid, citing a recent SC decision held that
even a casual or temporary employee enjoys security of
tenure and cannot be dismissed except for causes Facts:
enumerated in the Omnibus Civil Service Rules and
regulations. The CA also held that Lapid was denied due Petitioner was employed as electrician of the vessel, M/T
process. SEASCOUT. The contract of employment was for a
duration of 12 months. Yap boarded M/T SEASCOUT and
Issue and Ruling: commenced his job as electrician. However, the vessel
was sold. The Philippine Overseas Employment

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Administration (POEA) was informed about the sale in a Issue:

letter signed by Capt. Adviento. Yap, along with the other
crewmembers, was informed by the Master of their
w/n the operative fact doctrine applies since the SC
vessel that the same was sold and will be scrapped. Yap
declared unconstitutional Sec. 10 of RA 8041 during the
received his seniority bonus, vacation bonus, extra bonus
pendency of the case.
along with the scrapping bonus. However, with respect to
the payment of his wage, he refused to accept the
payment of one-month basic wage. He insisted that he Ruling:
was entitled to the payment of the unexpired portion of
his contract since he was illegally dismissed from As an exception to the general rule, the doctrine applies
employment. He alleged that he opted for immediate only as a matter of equity and fair play. It recognizes
transfer but none was made. that the existence of a statute prior to a determination of
unconstitutionality is an operative fact and may have
Respondents, for their part, contended that Yap was not consequences which cannot always be ignored. The
illegally dismissed. They alleged that following the sale of doctrine is applicable when a declaration of
the M/T SEASCOUT, Yap signed off from the vessel and unconstitutionality will impose an undue burden on those
was paid his wages corresponding to the months he who have relied on the invalid law. This case should not
worked plus his seniority bonus, vacation bonus and be included in the aforementioned exception. After all, it
extra bonus. They further alleged that Yap’s employment was not the fault of petitioner that he lost his job due to
contract was validly terminated due to the sale of the an act of illegal dismissal committed by respondents. To
vessel and no arrangement was made for Yap’s transfer rule otherwise would be iniquitous to petitioner and other
to Thenamaris’ other vessels. OFWs, and would, in effect, send a wrong signal that
principals/employers and recruitment/manning agencies
may violate an OFW’s security of tenure which an
Petitioner filed a complaint for illegal dismissal. He
employment contract embodies and actually profit from
claimed that he was entitled to the salaries corresponding
such violation based on an unconstitutional provision of
to the unexpired portion of his contract.
law. 

Issue:
Issue:

w/n petitioner is entitled for his salary for the unexpired

w/n the tanker allowance petitioner received be excluded
portion of the contract.
in the term salaries thus, will not be included for the
computation of salary award.
Ruling:
Ruling:
Yes. Petitioner Yap was employed as an electrician for
respondent’s vessel under a 12-month contract. He was
The word salaries in Section 10 (5) does not include
found to be illegally terminated with nine months
overtime and leave pay. For seafarers, DOLE Department
remaining on his contract term. The Court of Appeals
Order No. 33, series 1996, provides a Standard
(CA) awarded petitioner salaries for three months as
Employment Contract of Seafarers, in which salary is
provided under Section 10 of Republic Act No. 8042. On
understood as the basic wage, exclusive of overtime,
certiorari, the Supreme Court reversed the CA and
leave pay and other bonuses. A close perusal of the
declared that petitioner was entitled to his salaries for the
contract reveals that the tanker allowance of US$130.00
full unexpired portion of his contract. The Court has
was not categorized as a bonus but was rather
previously declared in Serrano v. Gallant Maritime
encapsulated in the basic salary clause, hence, forming
Services, Inc. (2009) that the clause “or for three
part of the basic salary of petitioner. If respondents
months for every year of the unexpired term, whichever
intended it differently, the contract per se should have
is less” provided in the 5th paragraph of Section 10 of
indicated that said allowance does not form part of the
R.A. No. 8042 is unconstitutional for being violative of
basic salary or, simply, the contract should have
the rights of the OFWs to equal protection of the laws.
separated it from the basic salary clause. 
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 G.R. No. 178903               May 30, 2011
imposes a 3-month cap on the claim of OFWs with an
unexpired portion of one year or more in their contracts, JULIET G. APACIBLE, Petitioner, 
but none on the claims of other OFWs or local workers vs.
with fixed-term employment. The subject clause singles MULTIMED INDUSTRIES INCORPORATED and THE
out one classification of OFWs and burdens it with a BOARD OF DIRECTORS OF MULTIMED INDUSTRIES,
peculiar disadvantage. Moreover, the subject clause does The President MR. JOSELITO TAMBUNTING,
not state or imply any definitive governmental purpose; Managers MARLENE L. OROZCO, VERONICA C.
hence, the same violates not just petitioner’s right to TIMOG, OLGA F. MARINO and MA. LUZ B.
equal protection, but also his right to substantive due YAN, Respondents.
process under Section 1, Article III of the Constitution. 

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Facts:

Petitioner Juliet Apacible was employed as Assistant Area G.R. No. 171673               May 30, 2011
Sales Manager for respondent’s Cebu operations. She
was informed that she would be transferred to the Pasig
BANAHAW BROADCASTING
office on account of the ongoing reorganization.
CORPORATION, Petitioner, 
Petitioner’s repeated refusal to comply with the transfer
vs.
order was treated by respondent as insubordination and
CAYETANO PACANA III, NOE U. DACER, JOHNNY B.
grounds for her dismissal. The Labor Arbiter, the NLRC
RACAZA, LEONARDO S. OREVILLO, ARACELI T.
and the Court of Appeals all found that petitioner was
LIBRE, GENOVEVO E. ROMITMAN, PORFERIA M.
justly dismissed from employment.  The NLRC awarded
VALMORES, MENELEO G. LACTUAN, DIONISIO G.
separation pay as financial assistance, however, noting
BANGGA, FRANCISCO D. MANGA, NESTOR A.
that petitioner’s obstinacy was upon the advice of her
AMPLAYO, LEILANI B. GASATAYA, LORETA G.
counsel and, therefore, there was a modicum of good
LACTUAN, RICARDO B. PIDO, RESIGOLO M. NACUA
faith on her part. On appeal, the Court of Appeals (CA)
and ANACLETO C. REMEDIO, Respondents.
deleted the award of separation pay.

Facts:
Issue:

Respondents are supervisory and rank and file employees

w/n petitioner is entitled to a separation pay.
of the DXWG-Iligan City radio station which is owned by
petitioner Banahaw Broadcasting Corporation (BBC).
Ruling: Respondents filed a complaint for illegal dismissal, unfair
labor practice, and reimbursement of unpaid Collective
Bargaining Agreement (CBA) benefits against petitioner.
The law is clear. Separation pay is only warranted when
The Labor Arbiter rendered a decision ordering petitioner
the cause for termination is not attributable to the
BBC to pay the money claims. Petitioner appealed to the
employee’s fault, such as those provided in Articles 283
NLRC, and without posting the appeal bond, filed a
and 284 of the Labor Code, as well as in cases of illegal
Motion for the Re-computation of the Monetary Award in
dismissal in which reinstatement is no longer feasible. It
order that the appeal bond may be reduced. The NLRC
is not allowed when an employee is dismissed for just
denied the motion and dismissed the appeal of BBC for
cause, such as serious misconduct.
non-perfection. BBC averred that since it is wholly owned
by the Republic of the Philippines, it need not post an
The award of financial assistance shall not be given to appeal bond. The NLRC dismissed the appeal of BBC for
validly terminated employees, whose offenses are non-perfection.  The Court of Appeals affirmed the NLRC.
iniquitous or reflective of some depravity in their moral
character.  When the employee commits an act of
Issue:
dishonesty, depravity, or iniquity, the grant of financial
assistance is misplaced compassion.  In this case,
petitioner’s adamant refusal to transfer, coupled with her w/n petitioner, a GOCC, is exempt from posting of an
failure to heed the order for her to return the company appeal bond.
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. Ruling:

Willful disobedience of the employer’s lawful orders, as a No. As a general rule, the government and all the
just cause for dismissal of an employee, envisages the attached agencies with no legal personality distinct from
concurrence of at least two requisites: (1) the employee’s the former are exempt from posting appeal bonds. The
assailed conduct must have been willful, that is, rationale is to protect the presumptive judgment creditor
characterized by a wrongful and perverse attitude; and against the insolvency of the presumptive judgment
(2) the order violated must have been reasonable, lawful, debtor.  When the State litigates, it is not required to put
made known to the employee and must pertain to the up an appeal bond because it is presumed to be always
duties which he had been engaged to discharge. 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
Clearly, petitioner’s adamant refusal to transfer, coupled
personality distinct from its shareholders. In this case,
with her failure to heed the order for her return the
BBC, though owned by the government, is a corporation
company vehicle assigned to her and, more importantly,
with a personality distinct from the Republic or any of its
allowing her counsel to write letters couched in harsh
agencies or instrumentalities, and therefore do not
language to her superiors unquestionably show that she
partake in the latter’s exemption from the posting of
was guilty of insubordination, hence, not entitled to the
appeal bonds. 
award of separation pay.

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The Motion for the Re-computation of the Monetary w/n the financial assistance granted by the LA was
Award filed by BBC was tantamount to a motion for proper in voluntary resignation cases.
extension to perfect the appeal, which is prohibited by
the rules. The payment of the appeal bond within the
Ruling:
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 The SC, in upholding the award of financial assistance,
perfect the appeal had the effect of rendering the stated that while the rule is that financial assistance is
judgment final and executory. 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.
G.R. No. 175251               May 30, 2011 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
RODOLFO LUNA, Petitioner, 
considerations. We must stress that this Court did allow,
vs.
in several instances, the grant of financial assistance.
ALLADO CONSTRUCTION CO., INC., and/or RAMON
Financial assistance may be allowed as a measure of
ALLADO, Respondents.
social justice and exceptional circumstances, and as an
equitable concession. The instant case equally calls for
Facts: balancing the interests of the employer with those of the
worker, if only to approximate what Justice Laurel calls
[Petitioner] filed a complaint, alleging that he was an justice in its secular sense. 
employee of herein [respondents], having been a part of
[respondents’] construction pool of personnel. He had We see no merit in respondents’ contention that
continuously rendered services as a warehouseman and a petitioner was guilty of insubordination or abandonment.
timekeeper in every construction project undertaken by Significantly, the Labor Arbiter made no finding that
[respondents]. While at [respondents’] construction site, petitioner was guilty of insubordination or abandonment.
he was given a travel order to proceed to [respondents’] It would appear that a few days after the expiration of his
main office for reassignment. Upon arrival at the office of applied for leave, petitioner filed his complaint for illegal
[respondents], he was told by the personnel manager of actual dismissal. Other than their self-serving allegations,
[respondents], to sign several sets of "Contract of Project respondents offered no proof that upon the expiration of
Employment". He refused to sign the said contracts. petitioner’s leave they directed petitioner to report to
Because of his refusal, he was not given a reassignment work but petitioner willfully failed to comply with said
or any other work. These incidents prompted him to file directive.
the complaint.
Issue:
[Respondents], on the other hand, alleged that
[petitioner] applied for a leave of absence which was
w/n the NLRC has the power to declare that petitioner
granted. Upon expiration of his leave, [petitioner] was
was illegally dismissed.
advised to report to the company’s project in Sarangani
Province. However, he refused to report to his new
assignment and claimed instead that he had been
dismissed illegally.
Ruling:
LA ruled that petitioner has voluntarily resigned but order
respondents to pay for financial assistance.
No. The Supreme Court sustained the view of the CA,
reasoning that Section 4(d), Rule VI of the 2005 Revised
Respondents interposed an appeal with the NLRC, purely Rules of Procedure of the NLRC expressly provides that,
for the purpose of questioning the validity of the grant of on appeal, the NLRC shall limit itself only to the specific
financial assistance made by the LA. Instead, the NLRC issues that were elevated for review. In the case at bar,
ruled that petitioner was illegally dismissed. The CA held the NLRC evidently went against its own rules of
that it was grave abuse of discretion for the NLRC to rule procedure when it passed upon the issue of illegal
on the issue of illegal dismissal when the only issue dismissal although this question was not raised by
raised to it on appeal was the propriety of the award of respondents in their appeal. 
financial assistance. The CA reaffirmed the findings of the
LA but deleted the award of financial assistance.

Issue:
JUNE 2011

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Labor Law Jurisprudence
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Cirtek Employees Labor Union-Federation of Free at the instance of either or both the FFW and the Union
workers vs. Cirtek Electronics, Inc.,  or a rival labor organization, not the employer. An intra-
union dispute refers to any conflict between and among
union members, including grievances arising from any
G.R. No. 190515. June 6, 2011.
violation of the rights and conditions of membership,
violation of or disagreement over any provision of the
Facts: union’s constitution and by-laws, or disputes arising from
chartering or disaffiliation of the union. Further, a local
The present case presents the primordial issue of union may disaffiliate at any time from its mother
whether the Secretary of Labor is empowered to give federation, absent any showing that the same is
arbitral awards in the exercise of his authority to assume prohibited under its constitution or rule. Such, however,
jurisdiction over labor disputes. In the present case, the does not result in it losing its legal personality altogether.
findings of the Secretary of Labor and the appellate court Motion for reconsideration of this Court’s Decision of
on whether the MOA is valid and binding are conflicting, November 15, 2010 is DENIED.
the former giving scant consideration thereon, and the
latter affording it more weight. Respondent also avers
that the disaffiliation of the union from the FFW during
the pendency of the case resulted in the FFW losing its
Joeb M. Aliviado, et al. vs. Procter and Gamble
personality in representing the union.
Phils., Inc., et al

Issue:
G.R. No. 160506, June 6, 2011.

Whether or not an arbitral award can be considered as an

Facts:
approximation of a CBA.

Petitioners worked as merchandisers of P&G from various

Whether or not the FFW has lost its personality to
dates, allegedly starting as early as 1982 or as late as
represent the union by reason of its disaffiliation.
June 1991, to either May 5, 1992 or March 11, 1993.
They all individually signed employment contracts with
Ruling: either Promm-Gem or SAPS for periods of more or less
five months at a time. They were assigned at different
As found by the Secretary of Labor, the MOA outlets, supermarkets and stores where they handled all
came about as a result of the constitution, at the products of P&G. They received their wages from
respondent’s behest, of the Labor-Management Council Promm-Gem or SAPS.
(LMC) which, he reminded the parties, should not be
used as an avenue for bargaining but for the purpose of SAPS and Promm-Gem imposed disciplinary measures on
affording workers to participate in policy and decision- erring merchandisers for reasons such as habitual
making. Hence, the agreements embodied in the MOA absenteeism, dishonesty or changing day-off without
were not the proper subject of the LMC deliberation or prior notice.
procedure but of CBA negotiations and, therefore,
deserving little weight. While an arbitral award
P&G is principally engaged in the manufacture and
cannot per se be categorized as an agreement voluntarily
production of different consumer and health products,
entered into by the parties because it requires the
which it sells on a wholesale basis to various
interference and imposing power of the State thru the
supermarkets and distributors. To enhance consumer
Secretary of Labor when he assumes jurisdiction, the
awareness and acceptance of the products, P&G entered
award can be considered as an approximation of a
into contracts with Promm-Gem and SAPS for the
collective bargaining agreement which would otherwise
promotion and merchandising of its products.
have been entered into by the parties. Hence, it has the
force and effect of a valid contract obligation between the
parties. In December 1991, petitioners filed a complaint against
P&G for regularization, service incentive leave pay and
other benefits with damages. The complaint was later
As for the contention that the alleged
amended to include the matter of their subsequent
disaffiliation of the Union from the FFW during the
dismissal.
pendency of the case resulted in the FFW losing its
personality to represent the Union, the same does not
affect the Court’s upholding of the authority of the Ruling of the Labor Arbiter
Secretary of Labor to impose arbitral awards higher than
what was supposedly agreed upon in the MOA. Contrary
The Labor Arbiter dismissed the complaint for lack of
to respondent’s assertion, the "unavoidable issue of
merit and ruled that there was no employer-employee
disaffiliation" bears no significant legal repercussions to
relationship between petitioners and P&G. He found that
warrant the reversal of the Court’s Decision. At all
the selection and engagement of the petitioners, the
events, the issue of disaffiliation is an intra-union dispute
payment of their wages, the power of dismissal and
which must be resolved in a different forum in an action

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control with respect to the means and methods by which related to the main business of the
their work was accomplished, were all done and principal; or
exercised by Promm-Gem/SAPS. He further found that
Promm-Gem and SAPS were legitimate independent job
ii) The contractor does not exercise the
contractors. The dispositive portion of his Decision reads:
right to control over the performance of
the work of the contractualemployee.
Ruling of the NLRC (Underscoring supplied)

The NLRC dismissed the complaint and the decision of In the instant case, the financial statements of Promm-
the labor arbiter affirmed. Gem show that it has sufficient paid-in capital, long term
assets and current assets. Promm-Gem has substantial
investment which relates to the work to be performed.
motion for reconsideration but the motion was denied in
The records also show that Promm-Gem supplied its
the November 19, 1998 Resolution.15
complainant-workers with the relevant materials, such as
markers, tapes, liners and cutters, necessary for them to
Ruling of the Court of Appeals perform their work. Promm-Gem also issued uniforms to
them. It is also relevant to mention that Promm-Gem
Said petition was also denied by the CA which disposed already considered the complainants working under it as
as follows: its regular, not merely contractual or project, employees.
Under the circumstances, Promm-Gem cannot be
considered as a labor-only contractor. We find that it is a
WHEREFORE, the decision of the National Labor Relations legitimate independent contractor.
Commission dated July 27, 1998 is AFFIRMED with the
MODIFICATION that respondent Procter & Gamble Phils.,
Inc. is ordered to pay service incentive leave pay to Considering that SAPS has no substantial capital or
petitioners. investment and the workers it recruited are performing
activities which are directly related to the principal
business of P&G, we find that the former is engaged in
was also denied. Hence, this petition. "labor-only contracting".

Issue: "Where ‘labor-only’ contracting exists, the Labor Code

itself establishes an employer-employee relationship
(1) whether P&G is the employer of petitioners; (2) between the employer and the employees of the ‘labor-
whether petitioners were illegally dismissed; and only’ contractor." The statute establishes this relationship
for a comprehensive purpose: to prevent a circumvention
of labor laws. The contractor is considered merely an
Ruling: agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor
The petition has merit. as if such employees had been directly employed by the
principal employer.
The pertinent Labor Code provision on the matter states:
Termination of services
ART. 106. Contractor or subcontractor. – Whenever an
employer enters into a contract with another person for Misconduct has been defined as improper or wrong
the performance of the former’s work, the employees of conduct; the transgression of some established and
the contractor and of the latter’s subcontractor, if any, definite rule of action, a forbidden act, a dereliction of
shall be paid in accordance with the provisions of this duty, unlawful in character implying wrongful intent and
Code. 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
There is labor-only contracting when the contractor or
cause for dismissal, such misconduct (a) must be
sub-contractor merely recruits, supplies or places
serious; (b) must relate to the performance of the
workers to perform a job, work or service for a
employee’s duties; and (c) must show that the employee
principal25 and any of the following elements are present:
has become unfit to continue working for the employer.

i) The contractor or subcontractor does

In other words, in order to constitute serious misconduct
not have substantial capital or
which will warrant the dismissal of an employee under
investment which relates to the job,
paragraph (a) of Article 282 of the Labor Code, it is not
work or service to be
sufficient that the act or conduct complained of has
performed and the employees
violated some established rules or policies. It is equally
recruited, supplied or placed by such
important and required that the act or conduct must have
contractor or subcontractor are
been performed with wrongful intent. In the instant case,
performing activities which are directly
petitioners-employees of Promm-Gem may have

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committed an error of judgment in claiming to be President (OP). The OP dismissed petitioner’s appeal for
employees of P&G, but it cannot be said that they were lack of jurisdiction. The OP held that appeals to it in labor
motivated by any wrongful intent in doing so. As such, cases, except those involving national interest, have been
we find them guilty of only simple misconduct for eliminated. Petitioner’s motion for partial reconsideration
assailing the integrity of Promm-Gem as a legitimate and was denied by Resolution of June 26, 2009, hence, the
independent promotion firm. A misconduct which is not present petition.
serious or grave, as that existing in the instant case,
cannot be a valid basis for dismissing an employee.
Issue:

Meanwhile, loss of trust and confidence, as a ground for

WON appeal to the OP was the correct remedy.
dismissal, must be based on the willful breach of the
trust reposed in the employee by his employer. Ordinary
breach will not suffice. A breach of trust is willful if it is Ruling:
done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done Negative. Following settled jurisprudence, the proper
carelessly, thoughtlessly, heedlessly or inadvertently. remedy to question the decisions or orders of the
Secretary of Labor is via Petition for Certiorari under Rule
Loss of trust and confidence, as a cause for termination 65, not via an appeal to the OP. Appeal to the OP on
of employment, is premised on the fact that the labor cases has been eliminated. Petitioner’s appeal of
employee concerned holds a position of responsibility or the Secretary of Labor’s Decision to the Office of the
of trust and confidence. As such, he must be invested President did not toll the running of the period, hence,
with confidence on delicate matters, such as custody, the assailed Decisions of the Secretary of Labor are
handling or care and protection of the property and deemed to have attained finality.
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 YOLITO FADRIQUELAN, ET. AL. - versus - MONTEREY
shown to be occupying positions of responsibility or of FOODS CORPORATION G.R. Nos. 178409 and
trust and confidence. Neither is there any evidence to 178434, June 8, 2011
show that they are unfit to continue to work as
merchandisers for Promm-Gem. Facts:

All told, we find no valid cause for the dismissal of On April 30, 2002 the three-year collective bargaining
petitioners-employees of Promm-Gem. agreement or CBA between the union Bukluran ng
Manggagawa sa Monterey-Ilaw at Buklod ng
While Promm-Gem had complied with the procedural Manggagawa (the union) and Monterey Foods
aspect of due process in terminating the employment of Corporation (the company) expired.  On March 28, 2003
petitioners-employees, i.e., giving two notices and in after the negotiation for a new CBA reached a deadlock,
between such notices, an opportunity for the employees the union filed a notice of strike with the National
to answer and rebut the charges against them, it failed to Conciliation and Mediation Board (NCMB).  On April 30,
comply with the substantive aspect of due process as the 2003 the company filed with the DOLE a petition for
acts complained of neither constitute serious misconduct assumption of jurisdiction over the dispute in view of its
nor breach of trust. Hence, the dismissal is illegal. dire effects on the meat industry.  In an Order dated May
12, 2003, the DOLE Secretary assumed jurisdiction over
the dispute and enjoined the union from holding any
strike and directed both parties to desist from taking any
action that may aggravate the situation. On June 10,
Miguel Dela Pena Barairo vs. Office of the President 2003 the company sent notices to the union officers,
and MST Marine Services (Phils.) Inc., G.R. No. charging them with intentional acts of slowdown.  On
189314. June 15, 2011.  June 16 the company sent new notices to the union
officers, informing them of their termination from work
for defying the DOLE Secretary’s assumption order. 
Facts:
Subsequently, the DOLE Secretary included the union’s
second and third notices of strike in his earlier
For petitioner’s refusal to comply with his deployment assumption order.  On November 20, 2003 the DOLE
assignment, respondent manning agency filed a rendered a decision upholding the company’s termination
complaint against him for breach of contract before the of the 17 union officers
Philippine Overseas Employment Administration (POEA).
The POEA penalized petitioner with one year suspension
Issue:
from overseas deployment. The suspension was reduced
to six months by the Secretary of Labor. Petitioner
appealed the latter’s decision with the Office of the

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Labor Law Jurisprudence
University of Cebu College of Law UCLASS Bar Operations: Labor Law Society

Did the union officers commit illegal acts when they held practice) while Unyon accused AER of unfair labor
a slowdown strike despite the DOLE Secretary’s practice, illegal suspension and illegal dismissal.
assumption over the labor dispute?
AER’s VERSION
Ruling:
Eighteen (18) employees of AER, acting collectively and
Yes. The law is explicit: no strike shall be declared after in concert, suddenly and without reason staged a walkout
the Secretary of Labor has assumed jurisdiction over a and assembled illegally in the company premises. Despite
labor dispute.  A strike conducted after such assumption management’s plea for them to go back to work, the
is illegal and any union officer who knowingly participates concerned employees refused and, instead, walked out of
in the same may be declared as having lost his the company premises and proceeded to the office of the
employment. Here, what is involved is a slowdown AER Performance and Service Center (AER-PSC) located
strike.  Unlike other forms of strike, the employees on another street. It only stopped when the police
involved in a slowdown do not walk out of their jobs to intervened.
hurt the company.  They need only to stop work or
reduce the rate of their work while generally remaining in
The concerned employees were dismissed after AER
their assigned post.  The Court finds that the union
found out as unsatisfactory their explanation why they
officers and members in this case held a slowdown strike
did it.
at the company’s farms despite the fact that the DOLE
Secretary had on May 12, 2003 already assumed
jurisdiction over their labor dispute.  The evidence UNYON’s VERSION
sufficiently shows that union officers and members
simultaneously stopped work at the company’s Batangas Unyon filed a petition for certification election before the
and Cavite farms at 7:00 a.m. on May 26, 2003. Department of Labor and Employment (DOLE) after
organizing their employees union within AER. Resenting
A distinction exists, however, between the ordinary what they did, AER forced all of its employees to submit
workers’ liability for illegal strike and that of the union their urine samples for drug testing. Those who refused
officers who participated in it.  The ordinary worker were threatened with dismissal.
cannot be terminated for merely participating in the
strike.  There must be proof that he committed illegal Seven employees were found out to be positive. They
acts during its conduct.  On the other hand, a union were not allowed to go back to work until they submitted
officer can be terminated upon mere proof that he a medical clearance attesting their fitness to work. While
knowingly participated in the illegal strike. in the process of obtaining the said clearance, they were
dismissed on the grounds of insubordination and AWOL.

Meanwhile, Unyon found out that AER was moving out

JULY 2011 machines from the main building to the AER-
PSC compound located on another street. Sensing that
management was going to engage in a runaway shop,
Automotive Engine Rebuilders, Inc. et al. v.
Unyon tried to prevent the transfer of the machines
Progresibong Unyon ng mga Manggagawa sa AER,
which prompted AER to issue a memorandum accusing
et al./Progresibong Unyon ng mga Manggagawa sa
those involved of gross insubordination, work stoppage
AER, et al. v. Automotive Engine Rebuilders, Inc., et
and other offenses. 
al., 

The affected workers were denied entry into the AER

G.R. No. 160138/G.R. No. 160192. July 13, 2011.
premises by order of management. Because of this, the
affected workers staged a picket in front of company
Facts: premises hoping that management would accept them
back to work. When their picket proved futile, they filed a
complaint for unfair labor practice, illegal suspension and
Records show that AER is a company engaged in the
illegal dismissal.
automotive engine repair and rebuilding business and
other precision and engineering works for more than 35
years. Progresibong Unyon Ng Mga Manggagawa sa The LA, thus, ruled that both parties were in pari
AER (Unyon) is the legitimate labor union of the rank and delicto and, therefore, must suffer the consequences of
file employees of AER which was formed in the year the wrong they committed.
1998. 
Ruling:
Due to a dispute between the parties, both filed a
complaint against each other before the NLRC.  AER
When management and union are in pari delicto, the
accused the Unyon of illegal concerted activities (illegal
contending parties must be brought back to their
strike, illegal walkout, illegal stoppage, and unfair labor
respective positions before the controversy; that is,

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Labor Law Jurisprudence
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before the strike.  In this case, management’s fault arose Gucaban surmised that she had merely been tricked by
from the fact that a day after the union filed a petition for SMPI into filing her resignation letter because it never
certification election before the DOLE, it hit back by actualized its reorganization and streamlining plan; on
requiring all its employees to undergo a compulsory drug the contrary, SMPI allegedly expanded its employee
test. Indeed, the timing of the drug test was suspicious.  population and also made new appointments and
Moreover, management engaged in a runaway shop promotions to various other positions. She felt that she
when it began pulling out machines from the main had been dismissed without cause and, hence, prayed for
building (AER building) to the compound (AER-PSC reinstatement and payment of backwages and damages.
premises) located on another street on the pretext that
the main building was undergoing renovation. On the
SMPI argued that it truly encountered a steep market
other hand, like management, the union and the affected
decline in 1997 that necessitated cost-cutting measures
workers were also at fault for resorting to a concerted
and streamlining of its employee structure which, in turn,
work slowdown and walking out of their jobs in protest of
would require the abolition of certain job positions;
their illegal suspension. It was also wrong for them to
Gucaban’s post as project development manager was one
have forced their way to the AER-PSC premises to try to
of such positions. As a measure of generosity, it allegedly
bring out the boring machines. Adding to the injury was
proposed to Gucaban that she voluntarily resign from
the fact that the picketing employees prevented the entry
office in consideration of a financial package – an offer
and exit of non-participating employees and possibly
for which Gucaban was supposedly given the first week of
AER’s clients to the premises.  Thus, the Supreme Court
February 1998 to evaluate. Gucaban, however, did not
affirmed the ruling of the Court of Appeals favoring the
communicate her acceptance of the offer and, instead,
reinstatement of all the complaining employees, including
she allegedly conferred with the Human Resource
those who tested positive for illegal drugs, without
Department and negotiated to augment her benefits
backwages.
package. SMPI claimed that Gucaban was able to grasp
the favorable end of the bargain and, expectant of an
even more generous benefits package, she voluntarily
tendered her resignation effective February 27, 1998. On
the day before her effective date of resignation, she
San Miguel Properties Philippines, Inc. vs. signed a document denominated as Receipt and
Gwendellyn Rose Gucaban,  Release whereby she acknowledged receipt
of P1,131,865.67 cash representing her monetary
G.R. No. 153982. July 18, 2011 benefits and waived her right to demand satisfaction of
any employment-related claims which she might have
against management. SMPI admitted having made
Facts: several other appointments in June 1998, but the same,
however, were supposedly part of the full implementation
Respondent Gwendellyn Rose Gucaban (Gucaban) was of its reorganization scheme
well into the tenth year of her career as a licensed civil
engineer when she joined the workforce of petitioner San Issues and Ruling:
Miguel Properties Philippines, Inc. (SMPI) in 1991.
Initially engaged as a construction management
specialist, she, by her satisfactory performance on the 1. Whether or not Respondent Gucaban voluntarily
job, was promoted in 1994 and 1995, respectively, to the resigned.
position of technical services manager, and then of
project development manager. As project development No. Resignation is the voluntary act of an employee who
manager, she also sat as a member of the company’s is in a situation where he believes that personal reasons
management committee. She had been in continuous cannot be sacrificed in favor of the exigency of the
service in the latter capacity until her severance from the service, and he has then no other choice but to
company in February 1998. disassociate himself from employment. The intent to
relinquish must concur with the overt act of
In her complaint  for illegal dismissal filed on June 26, relinquishment; hence, the acts of the employee before
1998, Gucaban alleged that her separation from service and after the alleged resignation must be considered in
was practically forced upon her by management. She determining whether he, in fact, intended to terminate
claimed that on January 27, 1998, she was informed by his employment. In this case, the element of
SMPI’s President and Chief Executive Officer, Federico voluntariness was lacking. San Miguel Properties
Gonzalez (Gonzalez), that the company was planning to Philippines, Inc. (SMPI) claims that there was an existing
reorganize its manpower in order to cut on costs, and reorganization plan in 1998 and that it was implemented
that she must file for resignation or otherwise face shortly after the effective date of Gucaban’s resignation.
termination. Three days later, the Human Resource While a reorganization of SMPI’s corporate structure
Department allegedly furnished her a blank resignation might have indeed taken place, it happened more than a
form which she refused to sign. From then on, she had year after Gucaban’s separation from the company and
been hounded by Gonzalez to sign and submit her incidentally, after she filed the complaint. And although
resignation letter. 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

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Labor Law Jurisprudence
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presented to Gucaban the seemingly last available Barit’s alleged wage differentials from July 1999 to
alternative options of voluntary resignation and December 2000 and unpaid wages from January 2001
termination by abolition of her office. In other words, to July 23, 2001.
Gucaban’s separation from the company was the
confluence of the fraudulent representation to her that
The Labor Arbiter found Barit’s money claims meritorious.
her office would be declared redundant, coupled with the
The LA directed the agency and its foreign principal to
subsequent alienation which she suffered from the
pay Barit salary differentials and her unpaid salaries, but
company by reason of her refusal to tender resignation. 
absolved the agency of liability for the alleged unpaid
The element of voluntariness in her resignation is,
benefits during her extended employment. On appeal,
therefore, missing. 
the NLRC dismissed the complaint but awarded Barit
financial assistance for reasons of equity. In the main,
the labor arbitration body rejected Barit’s submission that
she was compelled to leave Hameed because he had
been underpaying and was not paying her salaries. The
Jones International Manpower Services, Inc., NLRC did not believe that she would agree to continue
represented by its President, Edward G. Cue vs. working for the same employer for another ten (10)
Bella Agcaoili-Barit,  months, when the employer had not been paying her
salaries before and during her extended
G.R. No. 181919. July 20, 2011. employment.Barit moved for reconsideration but was
denied. She then filed a petition for certiorari with the
CA. The CA found that the NLRC committed grave abuse
Facts: of discretion in setting aside the LA’s decision.

Barit alleged that she entered into a two-year Issues and Ruling:
employment contract (July 23, 1999 to July 23, 2001)
with the agency, for its foreign principal in
the Kingdom of Saudi Arabia, Mohamad Hameed Al-Naimi 1. Whether or not NLRC committed grave abuse of
(Hameed), as a domestic helper with a salary of discretion in dismissing the complaint.
US$200.00 a month. She did her job diligently and with
dedication, but was paid only US$100.00 a month and, No. The Supreme Court, as a rule, is bound by the factual
starting January 2001, was not paid any salary at all. She findings of the Court of Appeals, but has the discretion to
extended her employment for another 10 months upon reexamine the evidence in a case when a basic conflict
Hameed’s request as her replacement had not yet been exists between the CA’s findings of fact and those of the
deployed by the agency. Hameed refused to pay her NLRC.  In this case, such a conflict existed and the SC
salaries even during the extension. had to determine whether Barit had been underpaid
and/or was not paid her wages during her employment in
Fed up with her situation, she left Hameed on May 29, Saudi Arabia.  The SC found that Barit was fully paid her
2002 and had a live-in relationship with another Filipino wages during her employment in Saudi Arabia.  Nowhere
overseas worker, Thomas Ambrosio, allegedly her in the records did it appear that Barit complained about
boyfriend. As the law of Saudi Arabia prohibits such a the alleged underpayment and non-payment of her
relationship, she was arrested and imprisoned for more wages with the Philippine labor or consular
than a year. She was released from prison on October representatives in Saudi Arabia, or even with the Saudi
14, 2003 and immediately left for home, arriving in authorities themselves. Neither was there any showing
the Philippines on October 15, 2003. She demanded that she ever objected to or protested her iniquitous work
payment of her salaries for one year and four months, situation directly with the foreign principal, Hameed, if
payment of wage differentials from July 1999 to that had really been the case, nor that Barit identified or
December 2000, and the refund of her airfare to spoke of any problem that could have prevented her from
the Philippines. seeking  relief  in  Saudi  Arabia. To make the agency
liable for Barit’s alleged unpaid and underpaid wages on
the sole ground that it failed to submit copies of payslips
In defense, the agency argued that Barit’s contract of and payrolls is unfair, as the agency appeared to have
employment expired on July 23, 2001, without any taken all available means to secure the necessary  
complaint from her. Her contract was extended for documents   from   Barit’s   employer   to  dispute  her 
another two years with her consent. It alleged that Barit claims. In sum, we hold that the NLRC committed no
left her employer without permission. She was then grave abuse of discretion in dismissing the complaint.
reported missing to the Saudi police who found her The CA thus erred in granting the petition for certiorari.
staying with Ambrosio.  The agency denied liability for
Barit’s alleged unpaid salaries beginning July 2001 as her
employment contract, which it facilitated, was only for Government Service Insurance System vs. Jum
two years. It maintained it had no involvement or Angel, 
participation in the alleged extension of Barit’s
employment with Hameed. It also argued that it had no G.R. No. 166863. July 20, 2011.
liability for the refund of her airfare to the Philippines.
The agency argued further that it was not also liable for
Facts:

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Labor Law Jurisprudence
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 On 3 March 1998, Sgt. Angel was “fetched/invited” from is compensable under Presidential Decree No. 626.  It
his post by a certain Capt. Lamerez of the Intelligence was, on the contrary, occasioned by an intentional or
Service Group of the Philippine Army to shed light on his designed act which removes the resulting death from the
alleged involvement in a “pilferage/gunrunning” case coverage of the State Insurance Fund. The circumstances
being investigated by the Philippine Army.  On the same of Sgt. Angel’s death – his lifeless body was found
day, he was placed inside a detention cell to await further hanging inside his cell with an electric cord tied around
investigation. The following day, the lifeless body of Sgt. his neck − taken together with the unrebutted finding
Angel was found hanging inside his cell with an electric that there is no evidence of foul play – negate
cord tied around his neck.  According to the Autopsy respondent’s claim of murder of her husband and of the
Report conducted by the Crime Laboratory of the PNP, compensability of such death.  
the cause of death was asphyxia by strangulation. 

Respondent, the wife of the late Sgt. Angel, filed a

complaint before the PNP Criminal Investigation
Command, alleging that her husband was murdered and Abosta Shipmanagement Corporation vs. National
named the “elements of Intelligence Service Group” led Labor Relations Commission (First Division) and
by Capt. Lamerez as suspects. Upon investigation, the Arnulfo R. Flores, 
Office of the Provost Marshal reported that Sgt. Angel
died under suspicious circumstance while in line of duty G.R. No. 163252. July 27, 2011
and recommended that the case be tried by a court
martial. 
Facts:

The Inspector General, upon referral of the case, held

that there is no evidence suggesting foul play in the Flores alleged that in the course of his employment, he
death of Sgt. Angel and maintained that the detention of was asked by the Master to coordinate with several crew
Sgt. Angel could have triggered a mental block that members who were requesting that they be allowed to
caused him to hang himself. resign or pre-terminate their employment contracts due
to the alleged mismanagement of the vessel. He acted as
coordinator as bidden, but was surprised to learn later
The case was referred to a Judge Advocate General, the that he was one of those whose resignations were
latter in his report recommended that Sgt. Angel be accepted. He sought clarification from the Master, only to
declared to have died in line of duty. By reason thereof, be told that he was among the crew members who were
Respondent filed a claim for death benefits with the considered to have resigned; hence, his discharge
GSIS. However, GSIS denied the respondent’s claim on on November 29, 1997.
the ground that Sgt. Angel’s death did not arise out of
and in the course of employment.  A motion for
reconsideration was filed but the same was denied by the For their part, the agency alleged that sometime in
GSIS. On appeal before the ECC, the ECC in its September 1997, Flores prepared a petition for five
Decision dated 13 April 2000 likewise denied the claim for Filipino crew members from the engine department,
want of merit.  Respondent appealed the case before the demanding the ouster of 1stAssistant Engineer Rodolfo
Court of Appeals under Rule 43 of the 1997 Rules of Civil Escarola, reportedly for incompetence and inefficiency;
Procedure.   The CA reversed the ECC ruling. they threatened mass resignation. To create further
unrest and dissatisfaction, Flores induced Sofronio Tibay,
Herman Sebuando, Primitive Ferrer and Raymundo
Issues and Ruling: Angel, of the same department, to write a letter to the
ship management that they would be taking their
1. Whether or not Sgt. Angel’s death is compensable. emergency leaves, one after the other, in November
1997. They charged the vessel officers of mismanaging
the crew. When confronted about the letter, however,
No. To be considered as a compensable death under the they denied most of the letter’s contents, pointing
GSIS law, the injury must be the result of an to Flores as the author of the letter. At Flores’ instigation,
employment accident satisfying all of the following: 1) the crew members threatened to disembark without
the employee must have been injured at the place where waiting for their replacements. The Master asked them to
his work requires him to be; 2) the employee must have work for a less drastic solution, but they maintained their
been performing his official functions; and 3) if the injury threat.
is sustained elsewhere, the employee must have been
executing an order for the employer. The requirement
that the injury must arise out of and in the course of In light of the growing unrest on board the ship and
employment proceeds from the limiting premise that the Flores’ negative work attitude, the Master, Capt. B.H.
injury must be the result of an accident. An accident Mun, asked Flores to explain why he should not be
excludes that which happens with intention or design, administratively sanctioned.
with one’s foresight or expectation or that which under
the circumstances is expected by the person to whom it In a decision dated August 20, 1999, LA dismissed the
happens.  In this case, the Supreme Court found that the complaint for lack of merit. He found that the evidence
death of Sgt. Angel did not result from an accident which the agency and Panstar presented were convincing

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Labor Law Jurisprudence
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enough to prove that Flores was a serious threat to the On the whole, we are convinced that Flores’ dismissal
safety of the vessel and its crew. He noted was justified on the following grounds:
that Flores failed to refute the agency’s and Panstar’s
allegations that he incited the crew to rebel against the
1.           Sowing intrigue and dissension on board the
authority of the Master and the vessel’s senior officers.
vessel M/V Morning Charm;
He also found Flores to have been paid all his monetary
entitlements.
2.           Inefficiency and neglect of duty; and
 On appeal by Flores, NLRC, reversed the LA’s
ruling.  The NLRC found that the agency and Panstar 3.           Insubordination or disobedience of the lawful
failed to prove (1) that Flores’ termination of employment orders of the  shipmaster[33]
was for a just or authorized cause and (2) that he was
accorded due process. It opined that the main basis for The NLRC’s rulings, disregarding these grounds, do not
the dismissal action against Flores was the accusation only constitute errors in the appreciation of evidence;
that he agitated the crew to rebel against the authorities they were gross errors as they practically disregarded the
of M/V Morning Charm, as reported by the Chief Officer petitioner’s evidence. Hence, the CA erred in not
(Chief Mate) and the 1st Assistant Engineer. The reports, recognizing these errors for what they were — grossly
the NLRC believe, did not constitute proof of the validity abusive acts that affected the NLRC’s exercise of its
of the dismissal. Moreover, the NLRC noted that  the jurisdiction.
Master’s so called administrative inquiry did not satisfy
the due process requirements, as Flores was not given an
adequate time for his defense. Accordingly, the NLRC
declared Flores to have been illegally dismissed. The CA
sustained the NLRC’s conclusion that the dismissal was Jerry Mapili vs.. Philippine Rabbit Bus Lines, Inc., 
without a valid cause and that Flores was denied due
process.
G.R. No. 172506. July 27, 2011.

Issues and Ruling:

Facts:

1. Whether or not there is substantial evidence on record

supporting Flores’ dismissal Respondent Natividad P. Nisce is the President of
respondent Philippine Rabbit Bus Lines, Inc. (PRBLI), an
entity engaged in the transportation business.  On April
Yes. Substantial evidence means such relevant evidence 7, 1993, PRBLI hired petitioner as bus conductor with a
as a reasonable mind might accept as adequate to salary of P510.00 per trip.  On October 7, 2001, while on
support a conclusion, even if other minds, equally duty en route from Manila to Alaminos, Pangasinan,
reasonable, might conceivably opine otherwise.  In this petitioner was caught by PRBLI’s field inspector
case, it was found that the agency succeeded in showing extending a free ride to a lady passenger who boarded
by substantial evidence that its principal, Panstar, had a at Barangay Magtaking, Labrador, Pangasinan.  Upon
valid reason for terminating Flores’ employment. Capt. order of the field inspector, the lady passenger, who
B.H. Mun, decided to dismiss Flores (the ship’s Master) happened to be the wife of Julio Ricardo, petitioner’s co-
not only for agitating the crew to rebel against the employee and one of PRBLI’s drivers, was immediately
authorities of the vesselM/V Morning Charm, but for issued a passenger ticket for which she paid P50.00.
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 On October 9, 2001, petitioner was preventively
charged with inefficiency or neglect of duty, suspended and was directed to appear in an
insubordination, insolent and disrespectful behavior, and administrative investigation.  Thereafter, a formal
other actuations which made him unfit for his position hearing was conducted during which petitioner was given
and rank.  an opportunity to present and explain his
side.  Consequently, through a memorandum dated
November 9, 2001, petitioner was terminated from
The NLRC grossly erred in rejecting the letters as proof of employment for committing a serious irregularity by
the validity of Flores’ dismissal. It misappreciated the extending a free ride to a passenger in violation of
contents of the letters, especially that of Capt. B.H. Mun. company rules.  Notably, that was already the third time
They did not contain “a mere accusation of that petitioner committed said violation.  
wrongdoing.” The letters made direct affirmative
statements on Flores’ transgressions, all of which only
elicited angry denials from him. More significantly, he On February 19, 2002, petitioner filed with the NLRC a
failed to refute the charges in the compulsory arbitration Complaint for illegal dismissal against PRBLI, Nisce, and
proceedings, as the labor arbiter emphasized in his Ricardo Paras, PRBLI’s General Manager.
decision. This aspect of the case should have been given
due consideration by the NLRC. The Labor Arbiter held that petitioner had no intention to
defraud the company by his failure to issue a ticket to the
wife of a co-employee as the same was done out of

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Labor Law Jurisprudence
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gratitude and under the wrong impression that she is and rules showed his want of care for the employer’s
entitled to such privilege.  Besides, the amount of the policies. And although petitioner already suffered the
fare was subsequently collected from and paid by the corresponding penalties for his past misconduct, those
passenger.  The Labor Arbiter opined that petitioner’s infractions were still found to be relevant and may be
actuations merited a less punitive penalty such as considered in assessing his liability for his present
suspension of 30 days which he already served during his infraction. 
preventive suspension.  The Labor Arbiter also found that
petitioner was not denied due process since he was given
the opportunity to present his side.  As regards Nisce and
Paras, the Labor Arbiter held that they cannot be held
personally liable for lack of bad faith on their part. AUGUST 2011

The NLRC set aside the LA’s decision. It found that the G.R. No. 146206               August 1, 2011
non-issuance of a ticket to the lady passenger and failure
to collect money due to the company was a deliberate
and intentional act of petitioner which prejudiced the SAN MIGUEL FOODS, INCORPORATED, Petitioner, 
company’s interests.  In ruling that petitioner’s dismissal vs.
was for just cause, the NLRC opined that petitioner’s past SAN MIGUEL CORPORATION SUPERVISORS and
record of committing several acts of misconduct and his EXEMPT UNION, Respondent.
propensity to commit similar infractions do not merit the
compassion of law. Facts:

The CA found no grave abuse of discretion on the part of In a certification election, petitioner filed the Omnibus
NLRC. The CA agreed that petitioner has a history of Objections and Challenge to Voters, questioning the
committing violations of company rules, the last one eligibility to vote by some of its employees on the
being a repeat violation against extending free rides to grounds that some employees do not belong to the
passengers.  This infraction is considered as a grave bargaining unit which respondent seeks to represent or
offense and serious misconduct which merits the penalty that there is no existence of employer-employee
of dismissal.  The CA also agreed that there was intent to relationship with petitioner. Specifically, it argued that
cheat the company of its funds. certain employees should not be allowed to vote as they
are: (1) confidential employees; (2) employees assigned
Issue and Ruling: to the live chicken operations, which are not covered by
the bargaining unit; (3) employees whose job grade is
level 4, but are performing managerial work and
1. Whether or not Petitioner’s violation of company rules scheduled to be promoted; (4) employees who belong to
was intentional, willful, serious and a just cause for the Barrio Ugong plant; (5) non-SMFI employees; and
dismissal. (6) employees who are members of other unions.

Yes. Based on Petitioner’s testimony, it is quite apparent Respondent averred that (1) the bargaining unit
that petitioner was aware that the infraction he contemplated in the original petition is the Poultry
committed constituted a grave offense but he still Division of San Miguel Corporation, now known as San
persisted in committing the same out of gratitude to the Miguel Foods, Inc.; (2) it covered the operations in
passenger.  Hence, as correctly found by the CA, there Calamba, Laguna, Cavite, and Batangas and its home
was deliberate intent on the part of the petitioner to base is either in Cabuyao, Laguna or San Fernando,
commit the violation in order to repay a personal debt at Pampanga; and (3) it submitted individual and separate
the expense of the company.  Petitioner chose to violate declarations of the employees whose votes were
company rules for his benefit without regard to his challenged in the election.
responsibilities to the company.  Also, if not for the
inspector who discovered the incident, the company
would have been defrauded by the amount of fare.   Med-Arbiter issued the Order stating that since the "Yes"
vote received 97% of the valid votes cast, respondent is
certified to be the exclusive bargaining agent of the
2. Petitioner’s record of offenses of the same nature as supervisors and exempt employees of petitioner's
his present infraction justifies his dismissal. Magnolia Poultry Products Plants in Cabuyao, San
Fernando, and Otis.
Yes. An employee’s propensity to commit repetitious
infractions evinces wrongful intent, making him Then DOLE undersecretary affirmed the decision. CA also
undeserving of the compassion accorded by law to labor; affirmed the same.
thus, dismissal of said employee would be justified.  In
this case, as petitioner’s employment record showed, it
was not the first time that he refused to collect fares Issue:
from passengers.  In fact, it was already the third
instance that he failed to collect fares from the riding w/n each plant of petitioner constitute a separate and
public.  His repeated violation of the company’s policies distinct bargaining unit.

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Labor Law Jurisprudence
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Ruling: during collective bargaining negotiations, assistance to

management during grievance meetings and
administrative investigations, and securing legal advice
An appropriate bargaining unit is defined as “a group of
for labor issues from the petitioner’s team of lawyers,
employees of a given employer, comprised of all or less
and implementation of company programs.  Therefore, in
than all of the entire body of employees, which the
the discharge of their functions, both gain access to vital
collective interest of all the employees, consistent with
labor relations information which outrightly disqualifies
equity to the employer, indicate to be best suited to
them from union membership. 
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 Issue:
case, there should be only one bargaining unit for the
employees in the Cabuyao, San Fernando, and Otis
w/n employers have a standing to question the process
plants of the Magnolia Poultry Products involved in
of a certification election.
“dressed” chicken processing and Magnolia Poultry Farms
engaged in “live” chicken operations.  Certain factors,
such as specific line of work, working conditions, location Ruling:
of work, mode of compensation, and other relevant
conditions do not affect or impede their commonality of The general rule is that an employer has no standing to
interest.  Although they seem separate and distinct from question the process of certification election, since this is
each other, the specific tasks of each division are actually the sole concern of the workers.  Law and policy demand
interrelated and there exists mutuality of interests which that employers take a strict, hands-off stance in
warrants the formation of a single bargaining unit.   certification elections. The bargaining representative of
employees should be chosen free from any extraneous
Issue: 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
Who are deemed confidential employees? Are the eligible
bargain collectively.   
to join in a bargaining unit?

Ruling:

Confidential employees are defined as those who (1) G.R. No. 188086               August 3, 2011
assist or act in a confidential capacity, in regard (2) to
persons who formulate, determine, and effectuate FRANCIS BELLO, represented herein by his
management policies in the field of labor relations.  The daughter and attorney-in-fact, Geraldine Bello-Ona,
two criteria are cumulative, and both must be met if an Petitioner, 
employee is to be considered a confidential employee.  vs.
Confidential employees, such as accounting personnel, BONIFACIO SECURITY SERVICES, INC. and SAMUEL
should be excluded from the bargaining unit, as their TOMAS, Respondents.
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) Facts:
and the whole gamut of employees who has access to
salary and compensation data.  The nature of his work Respondent BSSI is a domestic private corporation
does not pertain to company rules and regulations and engaged in the business of providing security services. In
confidential labor relations, it follows that he cannot be July 2001, it hired Bello as a roving traffic marshal to
excluded from the subject bargaining unit.  manage traffic and to conduct security and safety-related
operations in the Bonifacio Global City (BGC). In August
Although Article 245 of the Labor Code limits the 2001, Bello was posted at the Negros Navigation
ineligibility to join, form and assist any labor organization Company in Pier 2, North Harbor, to supervise sectoral
to managerial employees, jurisprudence has extended operations. In November 2001, he was assigned at BGC
this prohibition to confidential employees.  In this regard, as assistant detachment commander. After a week, he
the CA correctly ruled that the positions of Human was transferred to Pacific Plaza Towers as assistant
Resource Assistant and Personnel Assistant belong to the detachment commander and later as detachment
category of confidential employees and, hence, are commander. In June 2002, he was assigned at Pier 2,
excluded from the bargaining unit, considering their North Harbor as assistant detachment commander, but
respective positions and job descriptions.  As Human later reassigned to BGC. In August 2002, the BSSI hired
Resource Assistant, the scope of one’s work necessarily a new operations manager, resulting in the
involves labor relations, recruitment and selection of reorganization of posts. In October 2002, Bello was
employees, access to employees’ personal files and assigned as roving traffic marshal at the BGC. On
compensation package, and human resource October 25, 2002, he filed an indefinite leave of absence
management.  As regards a Personnel Assistant, one’s when his new assignment took effect.
work includes the recording of minutes for management

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Bello filed a case for constructive dismissal. NLRC ruled truth of the allegations in the petition, which are matters
that Bello was illegally dismissed. CA reversed the same. of record in the lower tribunals and the appellate court.  
It held that Bello abandoned his work. It noted that Bello
offered no evidence to prove that there was a series of
promotions that would justify his claim of subsequent
demotion.
G.R. No. 177816               August 3, 2011
The BSSI prays for the petition’s outright dismissal due
to a defective verification, arguing that the SPA of Bello’s NIPPON HOUSING PHIL. INC., and/or TADASHI
attorney-in-fact, Geraldine Bello-Ona, was limited to OTA, HOROSHI TAKADA, YUSUHIRO KAWATA, MR.
representing him in the NLRC case only and not to the NOBOYUSHI and JOEL REYES Petitioners, 
present petition; and that Bello-Ona has no personal vs.
knowledge of the allegations in the petition. MAIAH ANGELA LEYNES, Respondent.

Issue: Facts:

w/n Bello was constructively dismissed. Nippon hired respondent as a property manager. Tasked
with surveying the requirements of the government and
Ruling: the client for said project, the formulation of house rules
and regulations and the preparation of the annual
operating and capital expenditure budget, Leynes was
Petition lacks merit. Case law defines constructive also responsible for the hiring and deployment of
dismissal as a cessation of work because continued
manpower, salary and position determination as well as
employment has been rendered impossible, the assignment of the schedules and responsibilities of
unreasonable, or unlikely, as when there is a demotion in
employees.
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 Thereafter, respondent had a misunderstanding with
than his bare and self-serving allegations, Bello has not Nippon’s building engineer. The former instructed the
offered any evidence that he was promoted in a span of security guard not to allow the latter to enter the project
four months since his employment as traffic marshal in site. Subsequently, the VP of Nippon issued a
July 2001 to a detachment commander in November memorandum directing respondent to allow the building
2001. At most, the BSSI merely changed his assignment engineer to enter the project site (BCGG).
or transferred him to the post where his service would be
most beneficial to its clients. The management’s Disappointed with the foregoing management decision,
prerogative of transferring and reassigning employees Leynes submitted to Tadashi Ota, NHPI’s President, a
from one area of operation to another in order to meet letter asking for an emergency leave of absence for the
the requirements of the business is generally not supposed purpose of coordinating with her lawyer
constitutive of constructive dismissal.  regarding her resignation letter. While NHPI offered the
Property Manager position to Engr. Carlos Jose as a
Issue: consequence Leynes’ signification of her intention to
resign, it also appears that Leynes sent another letter to
Reyes (the HRD) by telefax on the same day, expressing
w/n the lack of verification will cause the outright
her intention to return to work and to call off her planned
dismissal of the case. resignation upon the advice of her lawyer. Having
subsequently reported back for work and resumed
Ruling: performance of her assigned functions, Leynes was
constrained to send out a written protest regarding the
verbal information she supposedly received from Reyes
Verification of a pleading is a formal, not jurisdictional,
that a substitute has already been hired for her
requirement intended to secure the assurance that the
position. On 22 February 2002, Leynes was further
matters alleged in a pleading are true and correct. It is
served by petitioner Yasuhiro Kawata and Noboyushi
deemed substantially complied with when one who has
Hisada, NHPI’s Senior Manager and Janitorial
ample knowledge to swear to the truth of the allegations
Manager, with a letter and memorandum from Reyes,
in the complaint or petition signs the verification, and
relieving her from her position and directing her to report
when matters alleged in the petition have been made in
to NHPI’s main office while she was on floating status.
good faith or are true and correct.  In this case, the
Supreme Court found that the petition’s verification
substantially complied with the requirements of the rules. Respondent filed a complaint for illegal dismissal. Nippon
The SPA authorized Bello-Ona to represent Bello in the asserted that the management’s exercise of the
case from which the present petition with the Supreme prerogative to put an employee on floating status for a
Court originated. As the daughter of Bello, Bello-Ona is period not exceeding six months was justified in view of
deemed to have sufficient knowledge to swear to the her threatened resignation from her position. During the

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Labor Law Jurisprudence
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pendency of the case, respondent’s employment was industries when, as a consequence of the bona fide
terminated on the ground of redundancy. suspension of the operation of a business or undertaking,
an employer is constrained to put employees on floating
status for a period not exceeding six months.
LA ruled in favor of respondent. NLRC reversed the
decision. CA sustained the LA decision.
Issue:
Issue:
w/n respondent was constructively dismissed.
w/n the “floating status” employment of respondent was
valid. Ruling:

Ruling: No. Constructive dismissal exists where there is cessation

of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer
The rule is settled that “off-detailing” is not equivalent to
involving a demotion in rank and a diminution in pay.  In
dismissal, so long as such status does not continue
constructive dismissal cases, the employer is,
beyond a reasonable time and that it is only when such a
concededly, charged with the burden of proving that its
“floating status” lasts for more than six months that the
conduct and action or the transfer of an employee are for
employee may be considered to have been constructively
valid and legitimate grounds such as genuine business
dismissed. A complaint for illegal dismissal filed prior to
necessity.  The Supreme Court found that in this case,
the lapse of the six-month period and/or the actual
respondents have more than amply discharged this
dismissal of the employee is generally considered as
burden with proof of the circumstances surrounding Engr.
prematurely filed.  In this case, the evidence adduced a
Carlos’ employment as Property Manager for the Project
quo clearly indicates that petitioners were not in bad faith
and the consequent unavailability of a similar position for
when they placed Leynes under floating status.
Leynes.  
Disgruntled by NHPI’s countermanding of her decision to
bar Engr. Cantuba from the Project, Leynes twice
signified her intention to resign from her position on 12 Issue:
February 2002.  In view of the sensitive nature of Leynes’
position and the critical stage of the Project’s business
w/n respondent’s dismissal during the pendency of the
development, NHPI was constrained to hire Engr. Jose as
case on the ground of redundancy is valid.
Leynes’ replacement as a remedial measure.  

Ruling:
In view of the sensitive nature of Leynes’ position and
the critical stage of the Project’s business development,
NHPI was constrained to relay the situation to BGCC With no other client aside from BGCC for the building
which, in turn, requested the immediate adoption of management side of its business, we find that NHPI was
remedial measures from Takada, including the acting well within its prerogatives when it eventually
appointment of a new Property Manager for the Project. terminated Leynes’ services on the ground of
Upon BGCC’s recommendation, NHPI consequently hired redundancy. One of the recognized authorized causes for
Engr. Jose as Leynes’ replacement. Far from being the the termination of employment, redundancy exists when
indication of bad faith the CA construed the same to be, the service capability of the workforce is in excess of
these factual antecedents suggest that NHPI’s immediate what is reasonably needed to meet the demands of the
hiring of Engr. Jose as the new Property Manager for the business enterprise. A redundant position is one rendered
Project was brought about by Leynes’ own rash superfluous by any number of factors, such as overhiring
announcement of her intention to resign from her of workers, decreased volume of business, dropping of a
position. Although she subsequently changed her mind particular product line previously manufactured by the
and sent Reyes a letter by telefax announcing the company or phasing out of service activity priorly
reconsideration of her planned resignation and her undertaken by the business. It has been held that the
intention to return to work, Leynes evidently had only exercise of business judgment to characterize an
herself to blame for precipitately setting in motion the employee’s service as no longer necessary or sustainable
events which led to NHPI’s hiring of her own is not subject to discretionary review where, as here, it is
replacement. exercised there is no showing of violation of the law or
arbitrariness or malice on the part of the employer. An
employer has no legal obligation to keep more employees
Acting on Leynes’ letter protesting against the hiring of
than are necessary for the operation of its business.
her replacement and reiterating her lack of intention to
resign from her position, the record, moreover, shows
that NHPI simply placed her on floating status "until such Here, NHPI specifically made Leynes’ termination from
time that another project could be secured" for her. service effective 22 August 2002, but only informed said
Traditionally invoked by security agencies when guards employee of the same on 8 August 2002 and filed with
are temporarily sidelined from duty while waiting to be the DOLE the required Establishment Termination Report
transferred or assigned to a new post or client, Article only on 16 August 2002. For its failure to comply strictly
286 of the Labor Code has been applied to other with the 30-day minimum requirement for said notice

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Labor Law Jurisprudence
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and effectively violating Leynes’ right to due process, No. The refusal of the Court of Appeals to consider the
NHPI should be held liable to pay nominal damages in the petition was the absence of a duplicate original or
sum of P50,000.00. The penalty should understandably certified true copy of the assailed NLRC decision, in
be stiffer because the dismissal process was initiated by violation of Section 3, Rule 46 of the Rules of Court (in
the employer's exercise of its management prerogative. 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
G.R. No. 194031              August 8, 2011 overly rigid application of the rules of procedure. In
effect, it sacrificed substance to form in a situation where
JOBEL ENTERPRISES and/or MR. BENEDICT the petitioners’ recourse was not patently frivolous or
LIM, Petitioners,  meritless.  Thus, the case was remanded to the NLRC for
vs. resolution of its appeal.
NATIONAL LABOR RELATIONS COMMISSION
(Seventh Division, Quezon City) and ERIC
MARTINEZ, SR.,Respondents.
G.R. No. 173792               August 31, 2011
Facts:
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, 
The petitioner hired respondent as driver in 2004. vs.
Martinez allegedly performed well during the first few ROSARIO "ROSE" OCHOA, Accused-Appellant.
months of his employment, but later became stubborn,
sluggish and often came late to work. On January 27,
Facts:
2005, Martinez had a fight with one of his co-employees
and nephew, Roderick Briones. The company’s proprietor,
Benedict Lim, pacified the two and instructed Martinez to According to private complainants, they were recruited
come early the next day for an important delivery. by Ochoa from January to March 1998 for various jobs in
Martinez allegedly did not report for work the following either Taiwan or Saudi Arabia. In all instances, Ochoa
day. The company’s efforts to contact Martinez, through made private complainants to believe that she was
Briones, failed. licensed as a recruiter for a job abroad and promised
them that they will leave for a job abroad. Each of the
complainants, on the basis of such promise, gave Ochoa
On March 6, 2006, the company received a notice of
a certain sum of money; that they were not able to leave
hearing from the Department of Labor and Employment
for employment abroad; and that their money were not
in Region IV-A (DOLE-RO-IV-A) in relation to an illegal
returned by Ochoa.
dismissal complaint filed by Martinez. The DOLE-RO-IV-A
failed to effect an amicable settlement between the
parties; Martinez allegedly asked for P300,000.00 as Cory C. Aquino of the POEA authenticated the
settlement and manifested that he did not want to work Certification issued by Hermogenes C. Mateo (Mateo),
anymore. Thereafter, Martinez formally filed an illegal Director, Licensing Branch of the POEA, that Ochoa, in
dismissal complaint, with money claims, against the her personal capacity, is neither licensed nor authorized
company and Lim. by the POEA to recruit workers for overseas employment.
Cory identified Director Mateo’s signature on the
Certification, being familiar with the same. The
CA issued a resolution dismissing the petition for the
Certification was issued after a check of the POEA records
petitioners’ failure to attach to the petition a duplicate
pursuant to a request for certification from the NBI. Cory,
original or certified true copy of the assailed NLRC
however, admitted that she did not participate in the
decision; the submitted copy was a mere photocopy, in
preparation of the Certification, as the NBI’s request for
violation of Section 3, Rule 46, in relation to Section 1,
certification was through a counter transaction, and
Rule 65 of the Rules of Court. The CA also denied the
another person was in charge of verification of counter
petitioners’ plea for a liberal interpretation of the rules in
transactions.
their motion for reconsideration, to which the petitioners
attached a certified true copy of the assailed NLRC
decision. Ochoa stated under oath that she was employed by AXIL
International Services and Consultant (AXIL) as recruiter.
AXIL had a temporary license to recruit Filipino workers
Issue:
for overseas employment. She admitted recruiting
private complainants and receiving from them the certain
w/n the case be dismissed for failure to attach the amounts as placement and medical fees. Ochoa claimed
duplicate original of the NLRC decision. though that she remitted private complainants’ money to
a person named Mercy, the manager of AXIL, but AXIL
Ruling: failed to issue receipts because the private complainants
did not pay in full.

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RTC convicted respondent of illegal recruitment in large OCTOBER 2011

scale. Affirmed by the CA.
Emirate Security and Maintenance Systems, Inc.
Issue: and Roberto Yan vs. Glenda M. Menese, 

w/n respondent is guilty of illegal recruitment in large G.R. No. 182848. October 5, 2011
scale.
Facts:
Ruling:
Glenda M. Menese was a payroll and billing clerk of
To prove illegal recruitment, it must be shown that petitioner Emirate Security and Maintenance System, Inc.
appellant gave complainants the distinct impression that assigned to its security detachment at the Philippine
she had the power or ability to send complainants abroad General Hospital (PGH). Later, she was transferred to
for work such that the latter were convinced to part with petitioner’s main office as a security guard. She was
their money in order to be employed.  All eight private given a monthly salary of P9,200.00 and an allowance
complainants in this case consistently declared that of P2,500.00, for a total ofP11,700.00 in compensation.
Ochoa offered and promised them employment Effective May 2001, her allowance was allegedly reduced
overseas.  Moreover, Ochoa can also be convicted for to P1,500.00 without notice, and P100.00 was deducted
illegal recruitment based on Section 6 of Republic Act No. from her salary every month as her contribution to a
8042, which clearly provides that any person, whether or cash bond which lasted throughout her employment. She
not a licensee or holder of authority may be held liable was required to work seven (7) days a week, from 8:00
for illegal recruitment for certain acts as enumerated in a.m. to 5:00 p.m. She was also required to report for
paragraphs (a) to (m).  Among such acts is the “failure to work on holidays, except on New Year’s Day and
reimburse expenses incurred by the worker in connection Christmas. She claimed that she was never given
with his documentation and processing for purposes of overtime, holiday, rest day and premium pay.
deployment, in cases where the deployment does not
actually take place without the worker’s fault.”  In this
Menese further alleged that on May 4, 2001, she started
case, Ochoa received placement and medical fees from
getting pressures from the agency for her to resign.
private complainants and failed to reimburse the private
Menese claimed that she was told not to worry because if
complainants the amounts they had paid when they were
she was still interested in working with the agency, she
not able to leave for Taiwan and Saudi Arabia, through
could still be retained as a lady guard with a salary
no fault of their own.    
equivalent to the minimum wage. She would then be
detailed to another detachment because Dapula did not
Issue: like to see her around anymore. If the offer was
acceptable to her, she should report to the agency’s
personnel officer for the issuance of the necessary duty
w/n illegal recruitment can be filed separately with
detail order. Menese thought about the offer and soon
estafa.
realized that she was actually being demoted in rank and
salary. She eventually decided to decline the offer. She
Ruling: continued reporting to the PGH detachment and
performed her usual functions as if nothing happened.
A person may be charged and convicted separately of But she was told to pack her things and to leave
illegal recruitment under Republic Act No. 8042, in immediately, and not to return to the detachment
relation to the Labor Code, and estafa under Article 315, anymore; otherwise, she would be physically driven out
paragraph 2(a) of the Revised Penal Code.  The offense of the office. Still not satisfied with what they did, the
of illegal recruitment is malum prohibitum, while estafa petitioners allegedly withheld her salary for May 16-31,
is malum in se.  In this case, therefore, Ochoa may also 2001. She claimed that the petitioners dismissed her
be charged and correspondingly held liable for estafa from the service without just cause and due process.
since all the elements for the crime are present in
Criminal Case Nos. 98-77301, 98-77302, and 98-77303. In defense to Menese’s complaint for constructive
Ochoa’s deceit was evident in her false representation to dismissal, petitioners alleged that they have been
private complainants Gubat, Cesar, and Agustin that she receiving numerous complaints from security guards and
possessed the authority and capability to send said other agency employees about Menese’s unprofessional
private complainants to Taiwan/Saudi Arabia for conduct.
employment as early as one to two weeks from
completion of the requirements, among which were the
Issues and Ruling:
payment of placement fees and submission of a medical
examination report.  
1. Whether or not Menese was constructively dismissed.

Yes. For a transfer not to be considered a constructive

dismissal, the employer must be able to show that the

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Labor Law Jurisprudence
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transfer is for a valid reason, entails no diminution in the saying "mainit ka kay Ms. Garcia." That same day, he
terms and conditions of employment, and must not be was summoned by Sy and Garcia for a closed-door
unreasonably inconvenient or prejudicial to the meeting during which Sy informed him of the termination
employee.  If the employer fails to meet these standards, of his services due to "insubordination" and advised him
the employee’s transfer shall amount, at the very least, to turn over his samples and files immediately.  Sy even
to constructive dismissal.  In this case, the Supreme commented that "member ka pa naman ng [S]ingles for
Court found that the real reason Menese was transferred [C]hrist pero napakatigas naman ng ulo mo." On
from being the agency’s payroll and billing clerk of the February 21, 2002,  he was summoned again by Sy but
PGH detachment to being a lady guard in the agency’s prior to this he was already informed by Agcaoili that the
main office, was because of the request of Dapula, the spouses Sy will give him all that is due to him plus
new chief of the UP-PGH Security Division.  The latter’s goodwill money to settle everything.  However, during his
request was based on the fact that she had committed meeting with Sy, he asked for his termination paper and
the previous position of Menese to a certain Amy Claro, a thereupon Sy told him that "If that's what you want I will
protégée of Dapula.  Thus, the Supreme Court found give it to you".  She added that "pag-isipan mo ang
justification for Menese’s refusal to be transferred.  Not gagawin mo dahil kilala mo naman kami we are
only was the transfer arbitrary and done in bad faith, it powerful."
would also result in a demotion in rank and a diminution
in pay:  (1) she would hold the position of lady guard and
(2) she would be paid in accordance with the statutory
Petitioner further narrated that on February 22, 2002, he
minimum wage, or from P11,720.00 to P7,500.00. 
turned over company samples, accounts and receivables
Clearly, there was a demotion in rank and salary
to Agcaoili. Thereafter, he did not report for work
undertaken in bad faith amounting to constructive
anymore
dismissal.  

On March 18, 2002, petitioner filed a complaint for illegal

2. Whether or not Mese is entitled to overtime pay.
dismissal against the respondent company, its President
Ramonita Y. Sy (Sy) and Vice-President Milagros Uy-
No. A claim for overtime pay will not be granted in the Garcia (Garcia).
absence of any factual and legal basis. In this respect,
the records indicated that the labor arbiter granted
Respondents countered that petitioner's poor sales
Menese’s claim for holiday pay, rest day and premium
performance did not improve even after he was
pay on the basis of payrolls.  There is no such proof in
regularized.
support of Menese’s 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 Issue and Ruling:
was working during the entire one hour meal break.  The
Supreme Court thus found the NLRC’s deletion of the 1. Whether petitioner was illegally dismissed by the
overtime pay award in order.   respondents.

Yes. Resignation is defined as “the voluntary act of

employees who are compelled by personal reasons to
disassociate themselves from their employment.  It must
Jhorizaldy Uy vs. Centro Ceramica Corporation, et
be done with the intention of relinquishing an office,
al., 
accompanied by the act of abandonment.”  In this case,
the evidence on record suggested that petitioner did not
G.R. No. 174631. October 19, 2011 resign; he was orally dismissed by Sy.  The crucial factor
is the verbal order directly given by Sy, the company
Facts: 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
Petitioner Jhorizaldy Uy started as a probationary dismissal illegal, warranting reinstatement and the award
employee with Respondent Corporation until he became a of backwages.  Moreover, the filing of a complaint for
regular employee. illegal dismissal just three weeks later is difficult to
reconcile with voluntary resignation.  Had petitioner
Petitioner alleged that his predicament began when intended to voluntarily relinquish his employment after
former VP Garcia was rehired by respondent company in being unceremoniously dismissed by no less than the
the last quarter of 2001.  Certain incidents involving company president, he would not have sought redress
longtime clients led to a strained working relationship from the NLRC and vigorously pursued this case against
between him and Garcia.  On February 19, 2002 after the respondents. 
their weekly sales meeting, he was informed by his
superior, Sales Supervisor Richard Agcaoili, that he Maritime Factors Inc. vs. Bienvenido R. Hindang 
(petitioner) was to assume a new position in the
marketing department, to which he replied that he will
think it over. His friends had warned him to be careful G.R. No. 151993. October 19, 2011

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Labor Law Jurisprudence
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Facts:

Petitioner Maritime Factors Inc., a domestic manning Enrique U. Betoy vs. The Board of Directors,
agency, for and in behalf of its foreign principal Bahrain National Power Corporation, 
Marine Contracting/Panama, engaged the services of
Danilo R. Hindang to work as GP/Deckhand on board the
M/T “Reya,” a Panamanian-registered ocean-going G.R. Nos. 156556-57. October 4, 2011
vessel.  Danilo's contract of employment was for a period
of 12 months with a basic monthly salary of US$230.00. Facts:

While within the territorial jurisdiction of the Kingdom of On June 8, 2001, the EPIRA was enacted by Congress
Saudi Arabia and on board the vessel, Danilo's body was with the goal of restructuring the electric power industry
found inside the locker (wardrobe) of his cabin hanging and privatization of the assets of the National Power
by a strap on his neck in a kneeling position. At West Corporation (NPC).
Pier, Ras Tanurah, Dr. Hameed conducted an autopsy on
Danilo's remains and concluded that Danilo committed
suicide by hanging himself. Danilo's remains were Pursuant to Section 48 of the EPIRA, a new National
repatriated to the Philippines where an autopsy was Power Board of Directors (NPB) was created. On February
requested by Danilo's family. The autopsy was conducted 27, 2002, pursuant to Section 77 of the EPIRA, the
by Dr. Maximo L. Reyes, a Medico-Legal Officer of the Secretary of the Department of Energy promulgated the
National Bureau of Investigation (NBI) and concluded IRR.
that Danilo died of Asphyxia by strangulation which
meant that somebody caused his death based on his On the other hand, Section 63 of the EPIRA provides for
autopsy findings. separation benefits to officials and employees who would
be affected by the restructuring of the electric power
Bienvenido R. Hindang, brother of the deceased seaman industry and the privatization of the assets of the NPC, to
Danilo, filed for death compensation. wit:

Issue and Ruling: Section 63. Separation Benefits of Officials and

Employees of Affected Agencies. - National
Government employees displaced or separated
1. Whether or not Maritime Factors Inc. is from the service as a result of the restructuring of
exempted from paying Danilo’s death the electricity industry and privatization of NPC
compensation benefits to his beneficiaries. assets pursuant to this Act, shall be entitled to
either a separation pay and other benefits in
Yes. The death of a seaman during the term of accordance with existing laws, rules or regulations
employment makes the employer liable to his heirs for or be entitled to avail of the privileges provided
death compensation benefits.  This rule, however, is not under a separation plan which shall be one and
absolute. The employer may be exempt from liability if one-half month salary for every year of service in
he can successfully prove that the seaman’s death was the government: Provided, however, That those who
caused by an injury directly attributable to his deliberate avail of such privileges shall start their government
or willful act. The Supreme Court agreed that Danilo died service anew if absorbed by any government-owned
of Asphyxia by strangulation as proved by the NBI post- successor company. In no case shall there be any
mortem findings and certification issued by the medico- diminution of benefits under the separation plan until the
legal officer, Dr. Reyes. The photocopy of the fax full implementation of the restructuring and privatization.
transmission of the purported English translation of Dr.
Hameed’s medical report to prove that Danilo committed Displaced or separated personnel as a result of the
suicide should not be considered since the medical privatization, if qualified, shall be given preference in the
report’s genuineness and due execution were hiring of the manpower requirements of the privatized
unverifiable: (1) the existence of the original medical companies. x xx
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 Rule 33 of the IRR provided for the coverage and the
and whether the translator has the recognized guidelines for the separation benefits to be given to the
competence in both English and the language the medical employees affected.
report was originally written were not established; (3)
the alleged translated medical report was not even On November 18, 2002, pursuant to Section 63 of the
signed by Dr. Hameed which creates doubt as to its EPIRA and Rule 33 of the IRR, the NPB passed NPB
authenticity.  The unsigned translated medical report is Resolution No. 2002-124 which, among others, resolved
nothing but a self-serving document which ought to be that all NPC personnel shall be legally terminated on
treated as a mere scrap of paper devoid of any January 31, 2003 and shall be entitled to separation
evidentiary value even in administrative proceedings.   benefits. On the same day, the NPB passed NPB

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Resolution No. 2002-125 which created a transition team For failure to pay his claims despite demands, petitioner
to manage and implement the separation program. filed a complaint claiming for among others, total
permanent disability benefits.
As a result of the foregoing NPB Resolutions, petitioner
Enrique U. Betoy, together with thousands of his co- Issue and Ruling:
employees from the NPC were terminated. Petitioners
argue that Section 63 of the EPIRA and Section 33 of the
1. Whether petitioner is entitled to receive permanent
IRR of the EPIRA impair the vested rights of NPC
disability benefits.
personnel to claim benefits under existing laws.

Yes. Permanent disability refers to the inability of a

Issue and Ruling:
worker to perform his job for more than 120 days,
regardless of whether he loses the use of any part of his
1. Whether or not the employees of NPC are entitled to body.  What determines petitioner’s entitlement to
receive retirement benefits under R.A. No. 1616 over and permanent disability benefits is his inability to work for
above the separation benefits granted by R.A. No. 9136. 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
A separation pay at the time of the reorganization of the
time he was medically repatriated to the Philippines. 
National Power Corporation and retirement benefits at
Petitioner herein was medically repatriated to the
the appropriate future time are two separate and distinct
Philippines on October 8, 2001.  However, it was only on
entitlements.  Stated otherwise, a retirement plan is a
April 25, 2002 or after a lapse of 199 days that Dr. Cruz
different program from a separation package.  In R.A.
issued a certification declaring him fit to work. Thus, the
No. 1616, the retirees are entitled to gratuity benefits to
Supreme Court found that petitioner’s disability is
be paid by the last employer and refund of premiums to
considered permanent and totalbecause the “fit to work”
be paid by the GSIS.  On the other hand, retirement
certification was issued by Dr. Cruz only on April 25,
benefits under C.A. No. 186, as amended by R.A. No.
2002, or more than 120 days after he was medically
8291, are to be paid by the GSIS.  In view of the fact
repatriated on October 8, 2001.  Furthermore, the
that separation pay and retirement benefits are different
company-designated physician’s certification that
entitlements, as they have different legal bases, different
petitioner is fit to work does not make him ineligible for
sources of funds, and different intents, the “exclusiveness
permanent total disability benefits.  It does not
of benefits” rule provided under R.A. No. 8291 is not
matter that the company-designated physician assessed
applicable.  (Section 55 of R.A. No. 8291 states:
petitioner as fit to work.  It is undisputed that from the
“Whenever other laws provide similar benefits for the
time petitioner was repatriated on October 8, 2001, he
same contingencies covered by this Act, the member who
was unable to work for more than 120 days as he was
qualifies to the benefits shall have the option to choose
only certified fit to work on April 25, 2002. 
which benefits will be paid to him.”  
Consequently, petitioner’s disability is considered
permanent and total. 

Carmelito N. Valenzona vs. Fair Shipping

Corporation, et al.,  Government Service Insurance System (GSIS), et
al. vs. Commission on Audit, et al., 
G.R. No. 176884. October 19, 2011
G.R. No. 162372. October 19, 2011
Facts:
Facts:
On May 5, 2011, petitioner Carmelito N. Valenzona was
hired by respondents as second assistant engineer On May 30, 1997, Republic Act No. 8291, otherwise
aboard the vessel M/V Morelos. Before his embarkation known as "The Government Service Insurance System
on May 23, 2001, he was declared medically “fit to work.” Act of 1997" (the GSIS Act) was enacted and approved,
amending Presidential Decree No. 1146, as amended,
However, while aboard the vessel on Sept. 29, 2001, expanding and increasing the coverage and benefits of
petitioner complained of chest pain. A day after his the GSIS, and instituting reforms therein.
repatriation to the Philippines on Oct. 8, 2001, he was
explained by Dr. Nicomedes G. Cruz, the company- On October 17, 2000, pursuant to the powers granted to
designated physician, who diagnosed his illness as it under Section 41(n) of the said law, the GSIS Board of
hypertension. On April 25, 2002, Dr. Cruz issued a Trustees, upon the recommendation of the Management-
certification declaring petitioner as fit to work. Employee Relations Committee (MERCOM), approved
Board Resolution No. 326 wherein they adopted the GSIS
Employees Loyalty Incentive Plan (ELIP)

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Dimagiba, the corporate auditor of GSIS, communicated Government Corporations, as the power to do so was
to the President and General Manager of GSIS that the exclusively lodged before the courts. He also argued that
GSIS RFP was contrary to law. However, the GSIS Legal the notice of disallowance was premature, and was
Services Group opined that the GSIS Board was legally tantamount to a pre-audit activity, as it should refer only
authorized to adopt the plan since Section 28(b) of to a particular or specific disbursement of public funds
Commonwealth Act No. 186 as amended by Republic Act and not against a general activity or transaction. Garcia
No. 4968 has been repealed by Sections 3 and 41(n) of averred that the GSIS RFP was part and parcel of the
Republic Act No. 8291. compensation package that GSIS may provide for its
personnel, by virtue of the powers granted to its Board of
Trustees under Section 41(m) and (n) of Republic Act No.
On January 16, 2001, Board Resolution No. 6 was
8291. Garcia said that the appeal process would
approved, wherein ELIP was renamed GSIS
commence only upon GSIS’s receipt of the particulars of
Retirement/Financial Plan (RFP) to conform strictly to the
the disallowances. Finally, Garcia requested Dimagiba to
wordings of Section 41(n) of Republic Act No. 8291.
withdraw the notices of disallowance "in the interest of
industrial peace in the GSIS", which she did.
Upon Garcia’s assumption of office as President and
General Manager, Dimagiba requested to again review
On January 30, 2002, GSIS, together with some of the
the GSIS RFP. This was denied by Garcia. Believing that
petitioners herein, gave notice to the COA CAO I that it
the GSIS RFP was "morally indefensible," Dimagiba
was appealing the 21 Notices of Disallowance it had
sought the assistance of COA "in determining the legality
received from Dimagiba on various dates. It
and/or morality of the said Plan in so far as it has
amended this Notice of Appeal the following day, to
‘adopted the best features of the two retirement
include all GSIS officials and employees held liable and
schemes, the 5-year lump sum payment under [Republic
accountable under the said disallowances.
Act No.] 1616 and the monthly pension of [Republic Act
No.] 660 based on the creditable service computed at
150%.’" In their Memorandum of Appeal, the petitioners mainly
argued that GSIS had the power, under its charter, to
adopt and implement the GSIS RFP. They alleged that
On August 7, 2001, COA’s General Counsel Santos M.
their plan was not unique to GSIS as other government
Alquizalas (Alquizalas) issued a Memorandum to COA
agencies also have their own retirement or financial
Commissioner Raul C. Flores regarding the GSIS RFP.
assistance plans. They claimed that to then disallow their
Alquizalas opined that the GSIS RFP is a supplementary
retirement plan would be tantamount to a violation of
retirement plan, which is prohibited under Republic Act
their constitutional right to be equally protected by our
No. 4968, or the "Teves Retirement Law." He also said
laws. The petitioners also argued that Republic Act No.
that since there is no provision in the new Republic Act
8291 had modified or repealed all provisions of the Teves
No. 8291 expressly repealing the Teves Retirement Law,
Retirement Law that were inconsistent with it and that
the two laws must be harmonized absent an
GSIS’s officials could not be held liable or accountable for
irreconcilable inconsistency. Alquizalas pronounced that
implementing the GSIS RFP since this was done in the
Board Resolution Nos. 360 and 6 are null and void for
performance of their duties.
being violative of Section 28(b) of Commonwealth Act
No. 186 as amended by Republic Act No. 4968, which
bars the creation of a supplemental retirement scheme; On May 27, 2002, the COA, through Escarda, in CAO I
and Section 41(n) of Republic Act No. 8291, which Decision No. 2002-009, affirmed the disallowances made
speaks of an early retirement plan or financial assistance. by Dimagiba. Escarda sustained the COA general
counsel’s opinion and said that while the GSIS may have
the power to adopt an early retirement or a financial
On August 14, 2001, Commissioner Flores forwarded this
assistance plan under its charter, it cannot supplement a
Memorandum to Dimagiba, who in turn forwarded it to
retirement plan already existing under the law. Escarda
Garcia on August 23, 2001. Dimagiba, in her letter
said that the purpose of an early retirement plan is
attached to Alquizalas’s Memorandum, added that for
generally to streamline the organization by encouraging
lack of legal basis, her office was disallowing in audit the
those who would not be qualified for compulsory
portion of retirement benefits granted under the GSIS
retirement to retire early under the plan. However,
RFP, or the excess of the benefits due the retirees. She
Escarda claimed, the availees of the plan were employees
also said that GSIS could avail of the appeal process
whose supposed monthly pensions under the GSIS RFP
provided for under Sections 48 to 50 of Presidential
included services they had already earned in other
Decree No. 1445 and Section 37.1 of the Manual on
government agencies. Thus, Escarda held that the GSIS
Certificate of Settlement and Balances.
RFP was in reality a supplementary retirement plan for
these GSIS employees. Finally, Escarda disagreed with
On August 27, 2001, Garcia responded to Dimagiba, GSIS’s assertion that the Teves Retirement Law had been
taking exception to the notice of disallowance for being modified or repealed as the repealing clause in Republic
"highly irregular and precipitate" as it was based on a Act No. 8291 is a general repealing clause, which is
mere opinion of COA’s counsel who had no authority to frowned upon and is generally not effective to repeal a
declare the resolution of the GSIS Board of Trustees as specific law like the Teves Retirement Law.
null and void. Moreover, Garcia asseverated that COA
had neither power nor authority to declare as null and
void certain resolutions approved by the Board of

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Regional Arbitration Board (RAB.) Petitioners prayed,

Issue and Ruling: inter alia, that the officers and members of respondent
KMLMS who participated in the illegal strike and who
knowingly committed prohibited and illegal activities,
1. Whether or not the GSIS Retirement Financial Plan is respectively, be declared to have lost or forfeited their
null and void. employment status.

Yes. Section 41(n) of Republic Act No. 8291 contemplates Issue and Ruling:
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 1. Whether or not there was an illegal strike.
its employees, must design a plan to encourage, induce,
or motivate these employees, who are not yet There is no question that the May 6, 2002 strike was
qualified for either optional or compulsory retirement illegal, first, because when Kilusang Manggagawa ng
under our laws, to instead voluntarily retire.  Such is not LGS, Magdala Multipurpose and Livelihood Cooperative
the case with the GSIS RFP.  Its very objective, “to (KMLMS) filed the notice of strike on March 5 or 14,
motivate and reward employees for meritorious, faithful, 2002, it had not yet acquired legal personality and, thus,
and satisfactory service,” contradicts the nature of could not legally represent the eventual union and its
an early retirement incentive plan, or a financial members.  And second, similarly, when KMLMS
assistance plan, which involves a substantial amount that conducted the strike-vote on April 8, 2002, there was still
is given to motivate employees to retire early.  Instead, it no union to speak of, since KMLMS only acquired legal
falls exactly within the purpose of a retirement benefit, personality as an independent legitimate labor
which is a form of reward for an employee’s loyalty organization only on April 9, 2002 or the day after it
and lengthy service, in order to help him or her enjoy the conducted the strike-vote.  Consequently, the mandatory
remaining years of his life.  Without a doubt, the GSIS notice of strike and the conduct of the strike-vote report
RFP is a supplementary retirement plan, which is were ineffective for having been filed and conducted
prohibited by the Teves Retirement Law.   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
Magdala Multipurpose & Livelihood, et al. vs. requirement of law and implementing rules on possession
KMLMS, et al.,  of a legal personality as a legitimate labor organization.

9. October 19, 2011 2. Whether or not the forfeiture of the union officers and
members employment is proper.
Facts:
Yes. As earlier explained, the May 6, 2002 strike is illegal
for non-compliance with provisions of law and its
Respondent Kilusang Manggagawa ng LGS, Magdala implementing rules. Consequently, the termination of
Multipurpose and Livelihood Cooperative (KMLMS) is the employment of the 14 union officers is proper.
union operating in Magdala Multipurpose & Livelihood
Cooperative and Sanlor Motors Corp.
In the case of union members who participated in the
May 6, 2002 strike and committed prohibited and illegal
KMLMS filed a notice of strike on March 5, 2002 and acts of interference by obstructing the free ingress to or
conducted its strike-vote on April 8, 2002. However, egress from petitioners’ compound, coercion and
KMLMS only acquired legal personality when its intimidation, the forfeiture of their employment is also
registration as an independent labor organization was proper.
granted on April 9, 2002 by the Department of Labor and
Employment under. On April 19, 2002, it became
officially affiliated as a local chapter of the Pambansang LA Aglibut found 27 union members to have committed
Kaisahan ng Manggagawang Pilipino when its application the illegal acts and properly declared the forfeiture of
was granted by the Bureau of Labor Relations. their employment status. The NLRC found additional
seven (7) union members committing illegal acts and
likewise declared the forfeiture of their employment
Thereafter, on May 6, 2002, KMLMS––now a legitimate status. Thus, a total of 34 union members have been
labor organization (LLO)––staged a strike where several declared to have lost their employment due to their
prohibited and illegal acts were committed by its commission of prohibited and illegal acts during the
participating members. illegal strike of May 6, 2002. Petitioners, however, take
umbrage for the non-declaration of the forfeiture of
On the ground of lack of valid notice of strike, ineffective employment of 72 other union members who were
conduct of a strike-vote and commission of prohibited similarly situated as the 34 union members whose
and illegal acts, petitioners filed their Petition to Declare employment was declared forfeited in committing
the Strike of May 6, 2002 Illegal before the NLRC prohibited and illegal acts during the May 6, 2002 strike.

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In affirming the NLRC Decision and refusing to declare refused to accede to the Union’s request. Although BPI
the other strikers as dismissed, the appellate court found won the initial battle at the Voluntary Arbitrator level,
that not all of the photographs in evidence sufficiently BPI’s position was rejected by the Court of Appeals which
show the strikers committing illegal acts and that the ruled that the Voluntary Arbitrator’s interpretation of the
identification of said strikers is questionable considering Union Shop Clause was at war with the spirit and
that some were still identified even when their faces were rationale why the Labor Code allows the existence of
indiscernible from the photographs. such provision. On review with the SC, the latter upheld
the CA’s ruling.
We, however, cannot agree with the appellate court’s
view that there is no substantial proof of the identity of Notwithstanding SC’s affirmation of the applicability of
the other 72 striking union members who committed the Union Shop Clause to former FEBTC employees, for
prohibited and illegal activities. The prohibited and illegal reasons already extensively discussed in the August 10,
acts are undisputed. It is only the identity of the striking 2010 Decision, even now BPI continues to protest the
union workers who committed said acts that is the crux inclusion of said employees in the Union Shop Clause.
of the partial modification prayed for by petitioners.
In seeking the reversal of the August 10, 2010 Decision,
petitioner insists that the parties to the CBA clearly
intended to limit the application of the Union Shop Clause
only to new employees who were hired as non-regular
Bank of the Philippine Islands vs. BPI Employees
employees but later attained regular status at some point
Union-Davao Chapter-Federation of Unions in BPI
after hiring. FEBTC employees cannot be considered new
Unibank, 
employees as BPI merely stepped into the shoes of
FEBTC as an employer purely as a consequence of the
G.R. No. 164301. October 19, 2011 merger.

Facts: Issue and Ruling:

Petitioner Bank of the Philippine Islands (BPI) moves for 1. Whether or not a corporation may invoke its merger
reconsideration of the Supreme Court’s decision dated with another corporation as a valid ground to exempt its
August 10, 2010, holding that former employees of the “absorbed employees” from the coverage of a union shop
Far East Bank and Trust Company (FEBTC) "absorbed" by clause contained in its existing Collective Bargaining
BPI pursuant to the two banks’ merger in 2000 were Agreement (CBA) with its own certified labor union.
covered by the Union Shop Clause in the then existing
collective bargaining agreement (CBA) of BPI with
No.  The former FEBTC employees retained the regular
respondent BPI Employees Union-Davao Chapter-
status that they possessed while working for their former
Federation of Unions in BPI Unibank (the Union).
employer upon their absorption by petitioner BPI.  This
fact would not remove them from the scope of the phrase
To recall, the Union Shop Clause involved in this long “new employees” as contemplated in the Union Shop
standing controversy provided, thus: Clause of the CBA.  The Union Shop Clause in the CBA
simply states that “new employees” who during the
ARTICLE II 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
xxxx provision notwithstanding, the SC held that there is
nothing in the said clause that limits its application to
Section 2. Union Shop - New employees falling within the only new employees who possess non-regular status,
bargaining unit as defined in Article I of this Agreement, meaning probationary status, at the start of their
who may hereafter be regularly employed by the Bank employment.  What is indubitable from the Union Shop
shall, within thirty (30) days after they become regular Clause is that upon the effectivity of the CBA, petitioner’s
employees, join the Union as a condition of their new regular employees (regardless of the manner by
continued employment. It is understood that membership which they became employees of BPI) are required to
in good standing in the Union is a condition of their join the Union as a condition of their continued
continued employment with the Bank. (Emphases employment. 
supplied.)

The bone of contention between the parties was whether

or not the "absorbed" FEBTC employees fell within the
definition of "new employees" under the Union Shop AGG Trucking and/or Alex Ang Gaeid vs. Melanio B.
Clause, such that they may be required to join Yuag, 
respondent union and if they fail to do so, the Union may
request BPI to terminate their employment, as the Union G.R. No. 195033. October 12, 2011
in fact did in the present case. Needless to state, BPI

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Facts:
Issue and Ruling:
Petitioner Alex Ang Gaeid had employed respondent
Melanio Yuag as a driver since 28 February 2002.  He 1. Whether or not the Court of Appeals erred in
was assigned to a ten-wheeler truck and was tasked to reversing the NLRC without any finding of grave abuse of
deliver sacks of sugar from the Busco Sugar Mill to the discretion amounting to lack or excess of jurisdiction.
port of Cagayan de Oro.  Petitioner noticed that
respondent had started incurring substantial shortages
Yes. A writ of certiorari is a remedy to correct errors of
since 30 September 2004, followed on 11 November
jurisdiction, for which reason it must clearly show that
2004.  It was also reported that he had illegally sold bags
the public respondent has no jurisdiction to issue an
of sugar along the way at a lower price, and that he was
order or to render a decision.  Rule 65 of the Rules of
banned from entering the premises of the Busco Sugar
Court has instituted the petition for certiorari to correct
Mill.  Petitioner asked for an explanation from respondent
acts of any tribunal, board or officer exercising judicial or
who remained quiet.
quasi-judicial functions with grave abuse of discretion
amounting to lack or excess of jurisdiction.  This remedy
Alarmed at the delivery shortages, petitioner took it upon serves as a check on acts, either of excess or passivity,
himself to monitor all his drivers, including respondent, that constitute grave abuse of discretion of a judicial or
by instructing them to report to him their location from quasi-judicial function.  In this case, the SC found that
time to time through their mobile phones.  He also the CA proceeded to review the records and to rule on
required them to make their delivery trips in convoy, in issues that were no longer disputed during the appeal to
order to avoid illegal sale of cargo along the way. All the NLRC, such as the existence of an employer-
drivers, with the exception of Yuag who could not be employee relationship.  The pivotal issue before the NLRC
reached through his cellphone, reported their location was whether petitioner’s telling respondent to take a
and a report of the completion of their delivery as rest, or to have a break, was already a positive act of
instructed.  The Coca-Cola Plant in Davao later reported dismissing him.  This issue was not discussed by the CA.
that the delivery had a suspiciously enormous shortage. 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
The following day, in a calm and polite manner, petitioner
CA which erred in finding faults that were inexistent in
asked respondent to explain why the latter had not
the NLRC Resolution. 
contacted petitioner for two days, and he had  not gone
in convoy with the other trucks, as he was told to do. 
Respondent replied that the battery of his cellphone had 2. Whether or not the Court of Appeals erred in
broken down.  Petitioner then confronted him allegedly entertaining respondent’s petition notwithstanding the
still in a polite and civilized  manner, regarding the large fact that his motion for reconsideration of the NLRC’s
shortages, but the latter did not answer.  Petitioner decision was filed out of time.
afterwards told him to "just take a  rest" or, in their
vernacular, "pahulay lang una." This exchange started
the dispute since respondent construed it as a dismissal.
He demanded that it be done in writing, but petitioner
merely reiterated that respondent should just take a rest NOVEMBER 2011
in the meanwhile.  The former alleged that respondent
had offered to resign and demanded separation pay. At G.R. No. 192686 November 23, 2011
that time, petitioner could not grant the demand, as it
would entail computation which was the duty of the
cashier.  Petitioner asked him to come back the next day. FIL-STAR MARITIME CORP., et al., petitioners v.
Instead of waiting for another day to go back to his HAZIEL O. ROSETE, respondent
employer, Respondent filed a Complaint for illegal
dismissal, claiming his separation pay and 13 th month Facts:
pay. 
Petitioner hired respondent as third officer on board M/V
The labor arbiter sustained Respondent’s complaint for Ansac Asia. After the respondent finished the contract, he
illegal dismissal. On appeal, the NLRC reversed the LA’s returned to the Philippines. Thereafter, petitioners
decision. Respondent moved for reconsideration but was rehired respondent to work as second officer for a period
denied by the NLRC for being filed out of time. On 23 of 9 months. The latter’s pre-employment medical
June 2010, brushing aside the "technicality" issue, the CA examination by the company accredited physician, he
proceeded to resolve the substantive issues which it was pronounced “fit to work.”
deemed important, such as whether there was an
employer-employee relationship between petitioner and
respondent, and whether it was correct for the NLRC to A little over a month from his embarkation, respondent
declare that respondent was not illegally dismissed.  It experienced an abrupt blurring of his left eye.  He
completely reversed the NLRC and came up with the reported it to his captain and was advised to do an eye
dispositive portion mentioned at the outset. wash to relieve his pain until they
reached Chiba, Japan.  Respondent was diagnosed and

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immediately underwent three rounds of laser surgery. He his left eye was declared legally blind.  Records show that the
was declared fit for travel and was subsequently petitioners did not give him a new overseas assignment after
repatriated to the Philippines. Shortly after arriving, he his disability.  This only shows that his disability effectively
experienced severe pain in his left eye so he insisted that barred his chances to be deployed abroad as an officer of an
he be admitted to the hospital.  Respondent underwent ocean-going vessel.
another series of laser surgery. Dr. Antonio Say declared
respondent’s left eye to be legally blind with poor
Therefore, it is fitting that respondent be entitled to
possibility of recovery.  
permanent total disability benefits considering that he
would not able to resume his position as a maritime
The petitioners denied his claim for permanent total officer and the probability that he would be hired by
disability and only rated his incapacity as Grade other maritime employers would be close to impossible. 
7.  Respondent stressed that, under their Collective
Bargaining Agreement (CBA), he should be considered
Issue:
legally blind meriting entitlement to permanent total
disability benefits in the sum of US$105,000.00 for being
unable to perform his job for more than 120 days from Whether respondent’s entitlement to permanent total
his repatriation. disability benefits should be based on the CBA or his
POEA-SEC which integrated the 2000 Amended Standard
Terms and Conditions Governing the Employment of
Thus, respondent filed a complaint. The LA ruled in his
Filipino Seafarers on Board Ocean-Going Vessels.
favor. NLRC modified the amount. CA set aside the NLRC
ruling and reinstated in full the LA ruling.
Ruling:
Issue:
The CBA provisions on disability are not applicable to
respondent’s case because Article 28 thereon specifically
w/n respondent is entitled to total permanent disability
refers to disability sustained after an accident.
benefits.
Respondent failed to show that the blurring of his left eye
was caused by an accident on board the ship.  Thus,
Ruling: Article 28 of the CBA cannot be used to compute his
disability benefits.
The disputable presumption that a particular injury or
illness that results in disability, or in some cases death, is Accordingly, what should govern the computation of his
work-related stands in the absence of contrary disability benefits is the POEA-SEC incorporating
evidence.  In the case at bench, the said presumption the 2000 POEA Amended Standard Terms and
was not overturned by the petitioners.  Although, the Conditions. Under Section 20 (B), paragraph 6, of the
employer is not the insurer of the health of his 2000 POEA Amended Standard Terms and Conditions, to
employees, he takes them as he finds them and assumes wit:
the risk of liability. Consequently, the Court concurs with
the finding of the courts below that respondent’s
SECTION 20. COMPENSATION AND
disability is compensable.
BENEFITS 

Now, the Court shall determine whether respondent is

            x x x x
entitled to be awarded permanent total or permanent
partial disability benefits. It should be noted that the
company-designated physician assessed the loss of B.        COMPENSATION AND BENEFITS
respondent’s left eye as a permanent partial disability FOR INJURY OR ILLNESS 
while respondent’s own physician indicated his disability
as Grade 7 The liabilities of the employer when the
seafarer suffers work-related injury or
The Court is more inclined to rule, however, that respondent is illness during the term of his
suffering from a permanent total disability as he was unable to contract are as follows:
return to his job that he was trained to do for more than one
hundred twenty days already.  A total disability does not xxxx
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 6.         In case of permanent total or partial
usual work and earn from it. On the other hand, a total disability of the seafarer caused by either
disability is considered permanent if it lasts continuously injury or illness the seafarer shall be
for more than 120 days.  What is crucial is whether the compensated in accordance with the
employee who suffers from disability could still perform his schedule of benefits enumerated in Section
work notwithstanding the disability he incurred.  Evidently, 32 of this Contract. Computation of his
respondent was not able to return to his job as a seafarer after benefits arising from an illness or disease
shall be governed by the rates and the rules

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of compensation applicable at the time the Neither did he present any expert medical opinion
illness or disease was contracted. regarding the cause of his varicose veins.  
[Emphases and underscoring supplied]
Moreover, although petitioner was rehired by respondent
company several times, his eight-year service as a
seaman was not actually without a “sign-off” period. His
contract with respondent company was considered
G.R. No. 185412 November 16, 2011
automatically terminated after the expiration of each
overseas employment contract.
GILBERT QUIZORA, petitioner v. DENHOLM CREW
MANAGEMENT (PHILS.) INC., respondent
 As discussed in the decision of the CA, varicose veins
may be caused by trauma, thrombosis, inflammation or
Facts: heredity. Although the exact cause of varicose veins is
still unknown, a number of factors contribute to it which
In 1992, respondent hired petitioner to work as a include heredity, advance aging, prolonged standing,
messman in one of the vessels of the former’s principal. being overweight, hormonal influences during pregnancy,
Article 4.2 of the Collective Bargaining Agreement (CBA), use of birth control pills, post-menopausal hormonal
his contractual work as messman was considered replacement therapy, prolonged sitting with legs crossed,
terminated upon the expiration of each contract. Article wearing tight undergarments or clothes, history of blood
5.1 thereof provided that the duration of his sea service clots, injury to the veins, conditions that cause increased
with respondent company was nine (9) months pressure in the abdomen including liver disease, fluid in
depending on the requirements of the foreign the abdomen, previous groin injury, heart failure, topical
principal. After the end of a contract for a particular steroids, trauma or injury to the skin, previous venous
vessel, he would be given his next assignment on a surgery and exposure to ultra-violet rays.
different vessel. His last assignment was from November
4, 1999 to July 16, 2000 on board the vessel “MV Lastly, there is also no proof that petitioner’s varicose
Leopard.” veins caused him to suffer total and permanent disability.
The Pre-Employment Medical Examination (PEME) he
After the expiration of his contract with “MV Leopard,” underwent cannot serve as enough basis to justify a
petitioner was lined up for another assignment to a finding of a total and permanent disability because of its
different vessel, but he was later disqualified for non-exploratory nature.
employment and declared unfit for sea duty after he was
medically diagnosed to be suffering from “venous duplex
scan (lower extremities) deep venous insufficiency,
bilateral femoral and superficial femoral veins and the (L)
G.R. No.  178901 November 23, 2011
popliteal vein.” In layman’s terms, he was medically
found to have varicose veins.
GOVERNMENT SERVICE INSURANCE SYSTEM
(GSIS), petitioner v. MANUEL P. BESITAN, respondent
Petitioner filed a complaint for payment of disability
benefits, separation pay and reimbursement of medical
expenses against respondent. LA denied the complaint. Facts:
NLRC reversed the LA decision. CA set upheld the LA
decision.
Petitioner GSIS is a social insurance institution created under
Commonwealth Act (CA) No. 186, charged with the
Issue: management and administration of the trust fund of the
Employees’ Compensation Commission (ECC) for government
officials and employees. Respondent Besitan was employed by
Whether petitioner is entitled to disability benefits.
the Central Bank of the Philippines (now Bangko Sentral ng
Pilipinas) as a Bank Examiner.  Subsequently, he was
promoted as Bank Officer II and eventually as Bank Officer
III.    
Ruling:
Besitan was diagnosed with End Stage Renal Disease
No. He failed to prove that his varicose veins arose out of secondary to Chronic Glomerulonephritis and thus, had to
his employment with respondent company. Except for his undergo a kidney transplant at the National Kidney and
bare allegation that it was work-related, he did not Transplant Institute (NKTI).  Believing that his working
narrate in detail the nature of his work as a messman condition increased his risk of contracting the disease, Besitan
aboard Denklav’s vessels. He likewise failed to filed with the GSIS a claim for compensation benefits under
particularly describe his working conditions while on sea Presidential Decree (PD) No. 626, as amended.  The GSIS,
duty. He also failed to specifically state how he however, denied the claim in a letter dated May 2, 2006.  
contracted or developed varicose veins while on sea duty
and how and why his working conditions aggravated it.

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Besitan elevated the matter to the ECC. The EEC, however,

affirmed the denial of GSIS. He appealed to the CA. CA
reversed the GSIS denial of the claim and ruled the respondent
G.R. No. 169757 November 23, 2011
is entitled to the compensation benefits because his ailment
was aggravated by the nature of his work. 
CESAR S. LIRIO, doing business under the name
and style of CELKOR AD SONICMIX, petitioner v.
WILMER D. GENOVIA, respondent
Issue:
Facts:
w/n respondent is entitled to compensation benefits.
Respondent alleged that he was hired as a manager by
Ruling: petitioner, owner of CELKOR. Petitioner told him about a
project to produce an album for his daughter, a former
talent of ABS-CBN Star Records. Petitioner asked
Yes. [F]or the sickness or resulting disability or death to be
respondent to compose songs for his daughter and, in
compensable, the claimant must prove either (1) that the
return, the latter be given additional compensation. After
employee’s sickness was the result of an occupational disease
the album was finished and aired on the radio, petitioner,
listed under Annex “A” of the Amended Rules on Employees’
however, did not comply with their agreement for
Compensation, or (2) that the risk of contracting the disease
amount of the additional compensation. Respondent
was increased by his working conditions.
objected and insisted that he be properly compensated.
Thereafter, petitioner verbally terminated his
Under the increased risk theory, there must be a reasonable employment. Respondent asserted that he was illegally
proof that the employee’s working condition increased his risk dismissed. Although he was so called “studio manager,”
of contracting the disease, or that there is a connection he had no managerial powers but was merely an ordinary
between his work and the cause of the disease.  Only a employee.
reasonable proof of work-connection, not direct causal relation,
however, is required to establish compensability of a non-
Petitioner, in his defense, said that respondent was not
occupational disease. Moreover, direct and clear evidence, is
his employee. The latter could not have been hired as
not necessary to prove a claim. Strict rules of evidence do not
“studio manager” since the recording studio has no other
apply as PD No. 626 only requires substantial evidence or “such
personnel than the former.  Petitioner asserted that from
relevant evidence as a reasonable mind might accept as
the aforesaid terms and conditions, his relationship with
adequate to support a conclusion.”  
respondent is one of an informal partnership under
Article 1767 of the New Civil Code, since they agreed to
[S]ince Besitan’s ailment, End Stage Renal Disease secondary contribute money, property or industry to a common
to Chronic Glomerulonephritis is not among those listed under fund with the intention of dividing the profits among
Annex “A,” of the Amended Rules on Employees’ themselves. Petitioner had no control over the time and
Compensation, he needs to show by substantial evidence that manner by which respondent composed or arranged the
his risk of contracting the disease was increased by his working songs, except on the result thereof.  
condition.
LA ruled that EER existed and that respondent was
When Besitan entered the government service in 1976, he was illegally dismissed. NLRC reversed the decision. CA
given a clean bill of health.  In 2005, he was diagnosed with upheld the LA decision.
End Stage Renal Disease secondary to Chronic
Glomerulonephritis. It would appear therefore that the nature
Issue:
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 Whether EER existed and, as a consequence, respondent
infection, which in turn could have caused his was illegally dismissed.
disease.  Delaying his urination during his long trips to the
provinces could have also increased his risk of contracting his
Ruling:
disease.  As a matter of fact, even the Bank Physician of
Bangko Sentral ng Pilipinas, Dr. Gregorio Suarez II, agreed that
Besitan’s working condition could have contributed to the Yes. The elements to determine the existence of an
weakening of his kidneys, which could have caused his disease. employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employer’s power
In claims for compensation benefits, a doctor’s certification as
to control the employee’s conduct. The most important
to the nature of a claimant’s disability deserves full credence
element is the employer’s control of the employee’s
because no medical practitioner would issue certifications
conduct, not only as to the result of the work to be done,
indiscriminately. As we see it then, Besitan was able to prove
but also as to the means and methods to accomplish it.
by substantial evidence his entitlement to compensation
[The power of control refers merely to the existence of
benefits under PD No. 626.
the power.  It is not essential for the employer to actually

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supervise the performance of duties of the employee, as An Information for illegal recruitment was filed. According
it is sufficient that the former has a right to wield the to petitioner, private respondents went to her to inquire
power. Nevertheless, petitioner stated in his Position about the working status of her sister in Israel. Petitioner
Paper that it was agreed that he would help and teach then called her sister and told her that the private
respondent how to use the studio equipment. In such respondents wanted to ask for her help in going to
case, petitioner certainly had the power to check on the Israel.  It was petitioner's sister and the private
progress and work of respondent].   respondents who communicated with each other, and the
petitioner had no knowledge as to the content of the
former's conversations and agreements.
On the other hand, petitioner failed to prove that his
relationship with respondent was one of partnership. [I]n
the payroll dated July 31, 2001 to March 15, 2002, there Issue:
were deductions from the wages of respondent for his
absence from work, which negates petitioner’s claim that
Whether petitioner is guilty of illegal recruitment.
the wages paid were advances for respondent’s work in
the partnership. 
Ruling:
In termination cases, the burden is upon the employer to
show by substantial evidence that the termination was The crime of illegal recruitment is committed when two
for lawful cause and validly made. Article 277 (b) of the elements concur, namely: (1) the offender has no valid
Labor Code puts the burden of proving that the dismissal license or authority required by law to enable one to
of an employee was for a valid or authorized cause on lawfully engage in recruitment and placement of
the employer, without distinction whether the employer workers; and (2) he undertakes either any activity within
admits or does not admit the dismissal. For an the meaning of "recruitment and placement" defined
employee’s dismissal to be valid, (a) the dismissal must under Article 13 (b), or any prohibited practices
be for a valid cause, and (b) the employee must be enumerated under Article 34 of the Labor Code.
afforded due process. Procedural due process requires
the employer to furnish an employee with two written A non-licensee or non-holder of authority is any person,
notices before the latter is dismissed: (1) the notice to corporation or entity which has not been issued a valid
apprise the employee of the particular acts or omissions license or authority to engage in recruitment and
for which his dismissal is sought, which is the equivalent placement by the Secretary of Labor, or whose license or
of a charge; and (2) the notice informing the employee of authority has been suspended, revoked or cancelled by
his dismissal, to be issued after the employee has been the POEA or the Secretary.   Clearly, the creation of the
given reasonable opportunity to answer and to be heard POEA did not divest the Secretary of Labor of his/her
on his defense.  Petitioner failed to comply with these jurisdiction over recruitment and placement of
legal requirements; hence, the Court of Appeals correctly activities.  The governing rule is still Article 35 of the
affirmed the Labor Arbiter’s finding that respondent was Labor Code. Thus, the trial court did not err in
illegally dismissed, and entitled to the payment of considering the certification from the DOLE-Dagupan
backwages, and separation pay in lieu of reinstatement. District Office stating that petitioner has not been issued
any license by the POEA nor is a holder of an authority to
engage in recruitment and placement activities.  

G.R. No. 171644 November 23, 2011 The testimonies of the private respondents clearly
establish the fact that petitioner's conduct falls within the
term recruitment as defined by law.  As testified by
DELIA D. ROMERO, petitioner v. PEOPLE OF THE
Romulo Padlan, petitioner convinced him and Arturo
PHILIPPINES, ROMULO PADLAN and ARTURO
Siapno to give her US$3,600.00 for the processing of
SIAPNO, respondents
their papers. It is apparent that petitioner was able to
convince the private respondents to apply for work in
Facts: 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
Respondent Romulo went to the latter’s stall and inquire
recruitment and placement as defined in Article 13 (b) of
about securing job in Israel. Convinced by petitioner’s
the Labor Code.
words of encouragement and inspired by the high pay of
the job, Romulo raised the amount of $3,600.00 so that
petitioner can work for his papers to go to Israel. Romulo
was able to go to Israel but, however, was deported back
here because of lack of a working visa. Respondent
Arturo also suffered the same fate. They then found out
that petitioner had no license or authority to recruit
employees for overseas employment. Issue:

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Whether the absence of any receipt negate illegal  Sy filed a case for illegal dismissal. LA ruled that the
recruitment. termination of employment was illegal. NLRC reversed
the decision. CA upheld the LA decision.
Ruling:
Issue:
In illegal recruitment cases, the failure to present
receipts for money that was paid in connection with the Whether the termination of Sy, a probationary employee,
recruitment process will not affect the strength of the was valid or not.
evidence presented by the prosecution as long as the
payment can be proved through clear and convincing
Ruling:
testimonies of credible witnesses.  

There is probationary employment where the employee

upon his engagement is made to undergo a trial period
during which the employer determines his fitness to
qualify for regular employment based on reasonable
G.R. No.  192881 November 16, 2011
standards made known to him at the time of
engagement. The probationary employment is intended
TAMSON’S ENTERPRISES, INC., NELSON LEE, to afford the employer an opportunity to observe the
LILIBETH ONG, and JOHSON NG, petitioners v. fitness of a probationary employee while at work, and to
COURT OF APPEALS and ROSEMARIE L. SY, ascertain whether he will become an efficient and
respondent productive employee. While the employer observes the
fitness, propriety and efficiency of a probationer to
Facts: ascertain whether he is qualified for permanent
employment, the probationer, on the other hand, seeks
to prove to the employer that he has the qualifications to
Sy was hired by Tamson’s as Assistant to the meet the reasonable standards for permanent
President.  Despite the title, she did not act as such employment. Thus, the word probationary, as used to
because, per instruction of Lee, she was directed to act describe the period of employment, implies the purpose
as payroll officer, though she actually worked as a payroll of the term or period, not its length.  On the basis of the
clerk. Four days before she completed her sixth month of aforequoted provisions and definition, there is no dispute
working in Tamson’s, she was informed that her services that Sy’s employment with Tamson’s was probationary in
would be terminated due to inefficiency.  She was asked character. As a probationary employee, her employment
to sign a letter of resignation and quitclaim.  She was status was only temporary.  Although a probationary or
told not to report for work anymore because her services temporary employee with a limited tenure, she was still
were no longer needed. Sy claimed that the remarks of entitled to a security of tenure. This means they may
her superiors about her alleged inefficiency were ill- only be terminated for a just cause or when they
motivated and made without any basis.  She had been otherwise fail to qualify as regular employees in
rendering services for almost six (6) months before she accordance with reasonable standards made known to
was arbitrarily and summarily dismissed.  Her dismissal them by the employer at the time of their engagement.
was highly suspicious as it took place barely four (4) days
prior to the completion of her six-month probationary
period.  The petitioners did not show her any evaluation In this case, the justification given by the petitioners for
or appraisal report regarding her alleged inefficient Sy’s dismissal was her alleged failure to qualify by the
performance. As she was terminated without an company’s standard.  Other than the general allegation
evaluation on her performance, she was deprived of the that said standards were made known to her at the time
opportunity to be regularly part of the company and to be of her employment, however, no evidence, documentary
entitled to the benefits and privileges of a regular or otherwise, was presented to substantiate the
employee.   same.  Neither was there any performance evaluation
presented to prove that indeed hers was
unsatisfactory.  For failure of the petitioners to support
Petitioners asserted that before Sy was hired, she was their claim of unsatisfactory performance by Sy, this
apprised that she was being hired as a probationary Court shares the view of the CA that Sy’s employment
employee for six months subject to extension as a was unjustly terminated to prevent her from acquiring a
regular employee conditioned on her meeting the regular status in circumvention of the law on security of
standards of permanent employment set by the tenure. 
company.  On February 1, 2007, she was formally
informed that her employment would end on February
28, 2007 because she failed to meet the company’s The law is clear that in all cases of probationary
standards. From then on, Sy started threatening the employment, the employer shall make known to the
families of the petitioners with bodily harm.  They pointed employee the standards under which he will qualify as a
out that the unpredictable attitude of Sy was one of the regular employee at the time of his engagement. Where
reasons for her not being considered for regular no standards are made known to the employee at that
employment. time, he shall be deemed a regular employee. The
standards under which she would qualify as a regular

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employee not having been communicated to her at the and exemplary damages, legal interest, and attorney’s
start of her probationary period, Sy qualified as a regular fees before the National Labor Relations Commission
employee.   (NLRC). LA ruled in favor of petitioner and awarded 10%
attorney’s fees. NLRC upheld the decision.
Even on the assumption that Sy indeed failed to meet the
standards set by them and made known to the former at In its Motion for Partial Reconsideration, respondent
the time of her engagement, still, the termination was pointed out that the 10% attorney’s fees is already
flawed for failure to give the required notice to Sy.   provided for in their Memorandum of Agreement (MOA)
which mandated that attorney’s fees shall be deducted
from the AA and CBA receivables. This compromise
In this case, the petitioners failed to comply with the
agreement, concluded between the parties in connection
requirement of a written notice.  Notably, Sy was merely
with a notice of strike filed by the Union in 2003.  
verbally informed that her employment would be
terminated on February 28, 2007, as admitted by the
petitioners. Considering that the petitioners failed to In their Opposition, the petitioners argued that the MOA
observe due process in dismissing her, the dismissal had only covered the payment of their share in the contracted
no legal sanction.  It bears stressing that a worker’s attorney’s fees, but did not include the attorney’s fees
employment is property in the constitutional sense. awarded by the NLRC.   

Being a regular employee whose termination was illegal, CA ruled in favor of respondent. It recognized the binding
Sy is entitled to the twin relief of reinstatement and effect of the MOA.
backwages granted by the Labor Code.  Article 279
provides that an employee who is unjustly dismissed
Issue:
from work shall be entitled to reinstatement without loss
of seniority rights and other privileges, to her full
backwages, inclusive of allowances, and to her other w/n the award of attorney’s fees by the NLRC is separate
benefits or their monetary equivalent computed from the from that of the attorney’s fees in the MOA.
time her compensation was withheld from her up to the
time of actual reinstatement. Likewise, having been Ruling:
compelled to come to court and to incur expenses to
protect her rights and interests, the award of attorney’s
fees is in order. There are two commonly accepted concepts of attorney’s
fees – the ordinary and extraordinary.  In its ordinary
concept, an attorney’s fee is the reasonable
G.R. No. 174179 November 16, 2011 compensation paid to a lawyer by his client for the legal
services the former renders; compensation is paid for the
KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA cost and/or results of legal services per agreement or as
AT KAWANI SA MWC-EAST ZONE UNION and may be assessed.  In its extraordinary concept,
EDUARDO BORELA, representing its members, attorney’s fees are deemed indemnity for damages
Petitioners, v. MANILA WATER COMPANY, INC., ordered by the court to be paid by the losing party to the
respondent 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
Facts:
part of his compensation.  Article 111 of the Labor Code,
as amended, contemplates the extraordinary concept of
The Union is the duly-recognized bargaining agent of the attorney’s fees.  Although an express finding of facts and
rank-and-file employees of the respondent while Borela is law is still necessary to prove the merit of the award,
the Union President. In a concession agreement entered there need not be any showing that the employer acted
into between MWSS and MWCI, Art. 6.1.3 thereof maliciously or in bad faith when it withheld the wages. 
provides that the benefits received (amelioration Thus the SC concluded that the CA erred in ruling that a
allowance and cost of living allowance) by the employees finding of the employer’s malice or bad faith in
shall continue. The payment of AA and COLA was withholding wages must precede an award of attorney’s
discontinued pursuant to RA 6758 (Salary fees under Article 111 of the Labor Code.  To reiterate, a
Standardization Law). Nonetheless, during the plain showing that the lawful wages were not paid
renegotiation of the parties’ CBA, respondent initially without justification is sufficient.
turned down the demand for the payment of AA and
COLA. However, is subsequently agreed to an
One of the issues of this case involved the effect of the
amendment of the CBA to include the same. Respondent,
Memorandum of Agreement provision that attorney’s fees
however, did not subsequently include the COLA since
shall be deducted from the amelioration allowance (AA)
the Commission on Audit disapproved its payment
and CBA receivables.  In this regard, the CA held that the
because respondent had no funds to cover this benefit.
additional grant of 10% attorney’s fees by the NLRC
violates Article 111 of the Labor Code, considering that
As a result, the Union and Borela filed a complaint the MOA between the parties already ensured the
against the Company for payment of the AA, COLA, moral payment of 10% attorney’s fees deductible from the AA

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and CBA receivables of the Union’s members.  In the evidence proving that he had suffered any illness while
present case, the Union bound itself to pay 10% on board or after disembarking from petitioner’s vessel.
attorney’s fees to its counsel under the MOA and also Respondent’s MR was denied.
gave up the attorney’s fees awarded to the Union’s
members in favor of their counsel.  The award by the
On appeal with the CA, stated that respondent was able
NLRC cannot be taken to mean an additional grant of
to prove by substantial evidence that his work as a
attorney’s fees, in violation of the ten percent (10%) limit
seafarer caused his hypertensive cardiovascular disease
under Article 111 of the Labor Code since it rests on an
or, at least, was a relevant factor in contracting his
entirely different legal obligation than the one contracted
illness. The CA was of the strong view that the inherent
under the MOA.  Simply stated, the attorney’s fees
difficulties in respondent’s job definitely caused his
contracted under the MOA do not refer to the amount of
illness. The CA added that because of the nature of his
attorney’s fees awarded by the NLRC; the MOA provision
work, the illness suffered by respondent contributed to
on attorney’s fees does not have any bearing at all to the
the aggravation of his injury which was pre-existing at
attorney’s fees awarded by the NLRC under Article 111 of
the time of his employment. Finally, the CA ruled that
the Labor Code.  Based on these considerations, it is
respondent is entitled to claim total and permanent
clear that the CA erred in ruling that the LA’s award of
disability benefits because of the undisputed doctor’s
attorney’s fees violated the maximum limit of ten percent
findings that he "is now unfit to resume work as a
(10%) fixed by Article 111 of the Labor Code.  
seaman in any capacity," which clearly constitutes a
permanent and total disability as defined by law.

Issue and Ruling:

DECEMBER 2011
1. Whether or not Respondent is entitled to an
G.R. No. 191491               December 14, 2011 award of full disability benefits.

JEBSENS MARITIME INC., represented by MS. No.

ARLENE ASUNCION and/or ALLIANCE MARINE
SERVICES, LTD., Petitioners, vs. ENRIQUE
Respondent was not able to show substantial evidence
UNDAG, Respondent.
that illness was work related

Facts:
Entitlement of seamen on overseas work to disability
benefits is a matter governed, not only by medical
Undag (respondent) was hired as Lead Operator on board findings, but by law and by contract.
the vessel FPSO Jamestown owned by Alliance Marine
Services, Ltd. and managed by its local agent, Jebsens
The material statutory provisions are Articles 191 to 193
Maritime, Inc. (petitioners). Respondent’s contract with
under Chapter VI (Disability Benefits) of the Labor Code,
petitioners was for a period of 4 months with a basic
in relation with Rule X of the Rules and Regulations
salary of US$806.00 a month. After his contract with
Implementing Book IV of the Labor Code. By contract,
petitioners had expired, he was deployed and eventually
the Philippine Overseas Employment Administration-
repatriated to the Philippines. 2 months later, he went to
Standard Employment Contract (POEA-SEC), as provided
see a physician (Dr. Vicaldo) for a physical check-up and
under Department Order No. 4, series of 2000 of the
was diagnosed to have "Hypertensive cardiovascular
Department of Labor and Employment, and the parties’
disease, Atrial Fibrillation, Diabetes Mellitus II,
Collective Bargaining Agreement (CBA) bind the seaman
Impediment Grade X (20.15%)." Dr. Vicaldo stated that
and his employer to each other.
respondent’s ailment was aggravated by his work, and
that he was now unfit to work as a seaman in any
capacity. For said reason, respondent requested for Pursuant to Section 20(B), paragraph 6, of the 2000
financial assistance from petitioners but the latter denied Amended Standard Terms and Conditions, two elements
his request. must concur for an injury or illness to be compensable:
First, that the injury or illness must be work-related; and
second, that the work-related injury or illness must have
Respondent filed a complaint for sickness benefits against
existed during the term of the seafarer’s employment
petitioners before the NLRC. Petitioners countered that
contract.
respondent was not entitled to disability benefits because
his repatriation was not due to medical reasons but due
to the expiration of his employment contract. In labor cases as in other administrative proceedings,
substantial evidence or such relevant evidence as a
reasonable mind might accept as sufficient to support a
The LA ordered petitioners to pay jointly and severally
conclusion is required. The oft-repeated rule is that
respondent disability compensation benefits.
whoever claims entitlement to the benefits provided by
law should establish his or her right thereto by
On appeal, the NLRC denied respondent’s claim for the substantial evidence. Substantial evidence is more than a
reason that respondent failed to present substantial mere scintilla.lawphi1The evidence must be real and

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substantial, and not merely apparent; for the duty to substantiate such claim by the requisite quantum of
prove work-causation or work-aggravation imposed by evidence. There is absolutely no evidence on record to
law is real and not merely apparent. prove petitioner’s claim that he reported to respondents’
office for mandatory reportorial requirement. Petitioner
therefore failed to adduce substantial evidence as basis
In this case, the Court is of the considered view that
for the grant of relief.
respondent failed to prove that his ailment was work-
related and was acquired during his 4-month sea
deployment. Respondent claims that he showed
manifestations of a heart disease when he suddenly felt
chest pains, shortness of breath and fatigability. He,
G.R. No. 171993               December 12, 2011
however, never substantiated such claim. He never
showed any written note, request or record about any
medical check-up, consultation or treatment. Similarly, MARC II MARKETING, INC. and LUCILA V.
he failed to substantiate his allegation that after his JOSON, Petitioners, vs. ALFREDO M.
arrival in Manila, he reported to petitioners’ office to seek JOSON, Respondent.
medical consultation for the discomfort he was
experiencing but petitioners ignored him. Facts:

He also alleged that more or less 16 days after arriving in Before petitioner corporation was officially
Manila, he underwent a physical and laboratory incorporated, respondent has already been engaged by
examination at the Maritime Clinic for International petitioner Lucila, in her capacity as President of Marc
Service, Inc. conducted by petitioners where he was Marketing, Inc., to work as the General Manager of
declared to be unfit for sea duty. Again, there is no petitioner corporation. It was formalized through the
record of this except his self-serving claim. What is on execution of a Management Contract dated 16 January
record is that respondent surfaced demanding payment 1994 under the letterhead of Marc Marketing, Inc. as
of disability benefits. petitioner corporation is yet to be incorporated at the
time of its execution. It was explicitly provided therein
Respondent failed to comply with the mandatory 3-day that respondent shall be entitled to 30% of its net income
rule for his work as General Manager. Respondent will also be
granted 30% of its net profit to compensate for the
possible loss of opportunity to work overseas.
More importantly, respondent failed to comply with the
mandatory 3-day medical examination deadline provided
in Section 20(B), paragraph (3) of the 2000 Amended Pending incorporation of petitioner corporation,
Standard Terms and Conditions Governing the respondent was designated as the General Manager of
Employment of Filipino Seafarers on Board Ocean-Going Marc Marketing, Inc., which was then in the process of
Vessels. It was only more than 2 months after his arrival winding up its business. For occupying the said position,
in Manila that he sought a medical opinion from Dr. respondent was among its corporate officers by the
Vicaldo who declared him unfit to work as a seaman due express provision of Section 1, Article IV of its by-laws.
to "hypertensive cardiovascular disease, atrial fibrillation
and diabetes mellitus II." On 15 August 1994, petitioner corporation was officially
incorporated and registered with the SEC. Accordingly,
While the rule is not absolute, there is no credible Marc Marketing, Inc. was made non-operational.
explanation from respondent why he failed to comply Respondent continued to discharge his duties as General
with the mandatory rule considering his claim that in Manager but this time under petitioner corporation.
July, 2003, he was suffering from chest pain, shortness
of breath and fatigue. An award of disability benefit to a Pursuant to Section 1, Article IV of petitioner
seaman in this case, despite non-compliance with strict corporation’s by-laws, its corporate officers are as
mandatory requirements of the law, cannot be sustained. follows: Chairman, President, one or more Vice-
The rationale behind the rule can easily be divined. President(s), Treasurer and Secretary. Its Board of
Within three days from repatriation, it would be fairly Directors, however, may, from time to time, appoint such
easier for a physician to determine if the illness was other officers as it may determine to be necessary or
work-related or not. After that period, there would be proper.
difficulty in ascertaining the real cause of the illness.

Per an undated Secretary’s Certificate, petitioner

The NLRC and the Court of Appeals determined that corporation’s Board of Directors conducted a meeting on
petitioner did not observe the established procedure as 29 August 1994 where respondent was appointed as one
there is no proof at all that he reported to the office of of its corporate officers with the designation or title of
the respondents. We see no reason to depart from their General Manager to function as a managing director with
findings. While petitioner remains firm that he reported other duties and responsibilities that the Board of
to the office of the respondents for mandatory reporting, Directors may provide and authorized.
the records are bereft of any proof to fortify his claim.
The onus probandi falls on petitioner to establish or

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Labor Law Jurisprudence
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Nevertheless, on 30 June 1997, petitioner corporation corporation, who has been illegally dismissed from
decided to stop and cease its operations, as evidenced by employment without valid cause and without due
an Affidavit of Non-Operation dated 31 August 1998, due process. Nevertheless, it ordered the records of the case
to poor sales collection aggravated by the inefficient remanded to the NLRC for the determination of the
management of its affairs. On the same date, it formally appropriate amount of monetary awards to be given to
informed respondent of the cessation of its business respondent.
operation. Concomitantly, respondent was apprised of
the termination of his services as General Manager since
Issue and Ruling:
his services as such would no longer be necessary for the
winding up of its affairs.
1. Whether or not the NLRC has the jurisdiction in
resolving a purely intra-corporate matter which is
Feeling aggrieved, respondent filed a Complaint for
recognizable by the SEC/Regional Trial Court.
Reinstatement and Money Claim against petitioners
before the Labor Arbiter averring that his dismissal was
caused by petitioner Lucila’s hatred towards his family. Yes. Respondent, though occupying the General Manager
For the parties’ failure to settle the case amicably, the LA position, was not a corporate officer of petitioner
required them to submit their respective position papers. corporation rather he was merely its employee occupying
Respondent complied but petitioners opted to file a a high-ranking position. Accordingly, respondent’s
Motion to Dismiss grounded on the LA’s lack of dismissal as petitioner corporation’s General Manager did
jurisdiction as the case involved an intra-corporate not amount to an intra-corporate controversy. 
controversy, which jurisdiction belongs to the SEC [now
with RTC]. Petitioners similarly raised therein the ground The dismissal of a corporate officer is always regarded as
of prescription of respondent’s monetary claim. However, a corporate act and/or an intra-corporate controversy.
said motion was denied. Under Section 5 of P.D. No. 902-A, intra-corporate
controversies are those controversies arising out of intra-
Labor Arbiter initially resolved petitioners’ Motion to corporate or partnership relations, between and among
Dismiss by finding the ground of lack of jurisdiction to be stockholders, members or associates; between any or all
without merit. The Labor Arbiter elucidated that of them and the corporation, partnership or association of
petitioners failed to adduce evidence to prove that the which they are stockholders, members or associates,
present case involved an intra-corporate controversy. respectively; and between such corporation, partnership
Also, respondent’s money claim did not arise from his or association and the State insofar as it concerns their
being a director or stockholder of petitioner corporation individual franchise or right to exist as such entity.  It
but from his position as being its General Manager. The also includes controversies in the election or
Labor Arbiter likewise held that respondent was not a appointments of directors, trustees, officers or
corporate officer under petitioner corporation’s by-laws. managers of such corporations, partnerships or
As such, respondent’s complaint clearly arose from an associations.. Accordingly, in determining whether the
employer-employee relationship, thus, subject to the SEC (now the RTC) has jurisdiction over the
Labor Arbiter’s jurisdiction. controversy, the status or relationship of the parties and
the nature of the question that is the subject of their
controversy must be taken into consideration.
The Labor Arbiter then declared respondent’s dismissal
from employment as illegal. Respondent, being a regular
employee of petitioner corporation, may only be A careful perusal of petitioner corporation’s by-laws,
dismissed for a valid cause and upon proper compliance particularly paragraph 1, Section 1, Article IV, would
with the requirements of due process. The records, explicitly reveal that its corporate officers are composed
though, revealed that petitioners failed to present any only of: (1) Chairman; (2) President; (3) one or more
evidence to justify respondent’s dismissal. Vice-President; (4) Treasurer; and (5) Secretary.  The
position of General Manager was not among those
enumerated. 
On appeal, the NLRC ruled in favor of petitioners by
giving credence to the Secretary’s Certificate, which
evidenced petitioner corporation’s Board of Directors’ Paragraph 2, Section 1, Article IV of petitioner
meeting in which a resolution was approved appointing corporation’s by-laws, empowered its Board of Directors
respondent as its corporate officer with designation as to appoint such other officers as it may determine
General Manager. Therefrom, the NLRC reversed and set necessary or proper. It is by virtue of this enabling
aside the LA’s Decision and dismissed respondent’s provision that petitioner corporation’s Board of Directors
Complaint for want of jurisdiction. allegedly approved a resolution to make the position of
General Manager a corporate office, and, thereafter,
appointed respondent thereto making him one of its
When respondent’s MR was denied in another Resolution,
corporate officers.  All of these acts were done without
he filed a Petition for Certiorari with the Court of Appeals
first amending its by-laws so as to include the General
ascribing grave abuse of discretion on the part of the
Manager in its roster of corporate officers.  
NLRC. The CA rendered its now assailed Decision
declaring that the Labor Arbiter has jurisdiction over the
present controversy. It upheld the finding of the LA that Respondent, in this case, though occupying a high
respondent was a mere employee of petitioner ranking and vital position in petitioner corporation but

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Labor Law Jurisprudence
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which position was not specifically enumerated or terminating the employment of an employee is the
mentioned in the latter’s by-laws, can only be regarded closing or cessation of operation of the
as its employee or subordinate official.  Noticeably, establishment or undertaking. the closure or
respondent’s compensation as petitioner corporation’s cessation of operations of establishment or
General Manager was set, fixed and determined not by undertaking may either be due to serious business
the latter’s Board of Directors but simply by its President, losses or financial reverses or otherwise.  If the
petitioner Lucila.  The same was not subject to the closure or cessation was due to serious business losses or
approval of petitioner corporation’s Board of financial reverses, it is incumbent upon the employer to
Directors.  This is an indication that respondent was an sufficiently and convincingly prove the same.  If it is
employee and not a corporate officer. otherwise, the employer can lawfully close shop anytime
as long as it was bona fide in character and not impelled
by a motive to defeat or circumvent the tenurial rights of
That respondent was also a director and a stockholder of
employees and as long as the terminated employees
petitioner corporation will not automatically make the
were paid in the amount corresponding to their length of
case fall within the ambit of intra-corporate controversy
service. There are three requisites for a valid
and be subjected to RTC’s jurisdiction.  To reiterate, not all
cessation of business operations: (a) service of
conflicts between the stockholders and the corporation are
a written notice to the employees and to the
classified as intra-corporate.  As previously discussed,
Department of Labor and Employment (DOLE) at
respondent was not a corporate officer of petitioner corporation
least one month before the intended date thereof;
but a mere employee thereof so there was no intra-corporate
(b) the cessation of business must bebona fide in
relationship between them.  With regard to the subject of the
character; and (c) payment to the employees of
controversy or issue involved herein, i.e., respondent’s
termination pay amounting to one month pay or at
dismissal as petitioner corporation’s General Manager, the
least one-half month pay for every year of service,
same did not present or relate to an intra-corporate
whichever is higher.
dispute.  To note, there was no evidence submitted to
show that respondent’s removal as petitioner
corporation’s General Manager carried with it his removal In this case, it is obvious that petitioner corporation’s
as its director and stockholder.  Also, petitioners’ cessation of business operations was not due to serious
allegation that respondent’s claim of 30% share of business losses.  Mere poor sales collection, coupled with
petitioner corporation’s net profit was by reason of his mismanagement of its affairs does not amount to serious
being its director and stockholder was without basis, business losses.  Nonetheless, petitioner corporation can
thus, self-serving.  Such an allegation was tantamount to still validly cease or close its business operations because
a mere speculation for petitioners’ failure to substantiate such right is legally allowed, so long as it was not done
the same.     for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code.
In addition, it was not shown by petitioners that the
position of General Manager was offered to respondent A careful perusal of the records revealed that, indeed,
on account of his being petitioner corporation’s director petitioner corporation has stopped and ceased business
and stockholder.  Also, in contrast to NLRC’s findings, operations beginning 30 June 1997.  This was evidenced
neither petitioner corporation’s by-laws nor the by a notarized Affidavit of Non-Operation dated 31
Management Contract stated that respondent’s August 1998.  There was also no showing that the
appointment and termination from the position of cessation of its business operations was done in bad faith
General Manager was subject to the approval of or to circumvent the Labor Code.  Nevertheless, in doing
petitioner corporation’s Board of Directors.  If, indeed, so, petitioner corporation failed to comply with the one-
respondent was a corporate officer whose termination month prior written notice rule.  The records disclosed
was subject to the approval of its Board of Directors, why that respondent, being petitioner corporation’s employee,
is it that his termination was effected only by petitioner and the DOLE were not given a written notice at least
Lucila, President of petitioner corporation?  The records one month before petitioner corporation ceased its
are bereft of any evidence to show that respondent’s business operations.  Moreover, the records clearly show
dismissal was done with the conformity of petitioner that respondent’s dismissal was effected on the same
corporation’s Board of Directors or that the latter had a date that petitioner corporation decided to stop and
hand on respondent’s dismissal.  No board resolution cease its operation.  Similarly, respondent was not paid
whatsoever was ever presented to that effect.      separation pay upon termination of his employment.

2. Whether or not Joson was illegally dismissed. As respondent’s dismissal was not due to serious
business losses, respondent is entitled to payment of
separation pay equivalent to one month pay or at least
Yes.
one-half month pay for every year of service, whichever
is higher. The necessary consequence of such failure to
In termination cases, the burden of proving just and valid comply with the one-month prior written notice rule,
cause for dismissing an employee from his employment which constitutes a violation of an employee’s right to
rests upon the employer.  The latter's failure to discharge statutory due process, is the payment of indemnity in the
that burden would necessarily result in a finding that the form of nominal damages.
dismissal is unjustified. Under Article 283 of the Labor
Code, as amended, one of the authorized causes in

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3. Whether or not Lucila should be held solidarily On appeal, the NLRC ruled that complainants were
liable in the absence of evidence of malice and bad illegally dismissed. Respondents were ordered to
faith on her part. reinstate complainants to their original or equivalent
position with full backwages with legal interests, with
retention of seniority rights and are further to pay
Yes. As a rule, corporation has a personality separate and
solidarily to the complainants the difference of their
distinct from its officers, stockholders and members such
underpaid/unpaid wages, unpaid holidays, unpaid 13 th
that corporate officers are not personally liable for their
month pays and unpaid service incentive leaves with
official acts unless it is shown that they have exceeded
legal interests.
their authority. However, this corporate veil can be
pierced when the notion of the legal entity is used as a
means to perpetrate fraud, an illegal act, as a vehicle for Respondents filed their separate MRs but were denied by
the evasion of an existing obligation, and to confuse the NLRC for lack of merit. Fairland and Susan thus filed
legitimate issues. Under the Labor Code, for instance, their separate petitions for certiorari before the CA.
when a corporation violates a provision declared to be
penal in nature, the penalty shall be imposed upon the
The CA’s First Division affirmed the NLRC’s ruling that the
guilty officer or officers of the corporation.
workers were illegally dismissed and that Weesan and
Fairland are solidarily liable to them as labor-only
Lucila, being the President of petitioner corporation, contractor and principal, respectively. Fairland filed its
acted in bad faith and with malice in effecting MR as well as a Motion for Voluntary Inhibition of the
respondent’s dismissal from employment. Although Associate Justices handling the case; hence, the transfer
petitioner corporation has a valid cause for dismissing of said case to the CA’s Special Ninth Division.It held that
respondent due to cessation of business operations, the labor tribunals did not acquire jurisdiction over the
however, the latter’s dismissal therefrom was done person of Fairland, and even assuming they did, Fairland
abruptly by its President, petitioner Lucila. Respondent is not liable to the workers since Weesan is not a mere
was not given the required one-month prior written labor-only contractor but a bona fide independent
notice that petitioner corporation will already cease its contractor.
business operations. As can be gleaned from the records,
respondent was dismissed outright by petitioner Lucila on
Aggrieved, the workers filed before the SC their Petition
the same day that petitioner corporation decided to stop
for Review on Certiorari.
and cease its business operations. Worse, respondent
was not given separation pay considering that petitioner
corporation’s cessation of business was not due to Issues and Ruling:
business losses or financial reverses.
1. Whether or not petitioner is a labor-only
contractor acting as an agent of respondent
Fairland.
G.R. No. 182915               December 12, 2011
Yes. "There is labor-only contracting when the contractor
or subcontractor merely recruits, supplies or places
MARIALY O. SY, et.al, Petitioners, vs. FAIRLAND
workers to perform a job, work or service for a principal.
KNITCRAFT CO., INC., Respondent.
In labor-only contracting, the following elements are
present:
Facts:
(a) The person supplying workers to an
Fairland is a domestic corporation engaged in garments employer does not have substantial capital or
business, while Susan de Leon (Susan) is the investment in the form of tools, equipment,
owner/proprietress of Weesan Garments (Weesan).On machineries, work premises, among others; and
the other hand, the complaining workers (the workers)
are sewers, trimmers, helpers, a guard and a secretary
(b) The workers recruited and placed by such
who were hired by Weesan.
person are performing activities which are
directly related to the principal business of the
The workers filed with the Arbitration Branch of the NLRC employer."
a Complaint for underpayment and/or non-payment of
wages, overtime pay, premium pay for holidays, 13th
Here, there is no question that the workers, majority of
month pay and other monetary benefits against
whom are sewers, were recruited by Susan/Weesan and
Susan/Weesan. In an amended complaint, the charge of
that they performed activities which are directly related
illegal dismissal was included and impleaded Fairland and
to Fairland’s principal business of garments. What must
its manager, Debbie, as additional respondents.
be determined is whether Susan/Weesan has substantial
capital or investment in the form of tools, equipment,
The LA dismissed the complaint for lack of merit but machineries, work premises, among others.
ordered respondents to pay each complainant P5000 by
way of financial assistance.

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Labor Law Jurisprudence
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We have examined the records but found nothing therein contractor as if the principal itself directly hired or
to show that Weesan has investment in the form of tools, employed the employees.
equipment or machineries. Suffice it to say that "[t]he
presumption is that a contractor is a labor-only
A careful examination of the records reveals other telling
contractor unless such contractor overcomes the burden
facts that Fairland is Susan/Weesan’s principal, to wit:
of proving that it has substantial capital, investment,
(1) aside from sewing machines, Fairland also lent
tools and the like." As Susan/Weesan was not able to
Weesan other equipment such as fire extinguishers,
adduce evidence that Weesan had any substantial
office tables and chairs, and plastic chairs; (2) no proof
capital, investment or assets to perform the work
evidencing the contractual arrangement between Weesan
contracted for, the presumption that Weesan is a labor-
and Fairland was ever submitted by Fairland; (3) while
only contractor stands.
both Weesan and Fairland assert that the former had
other clients aside from the latter, no proof of Weesan’s
2. Whether or not the individual private contractual relationship with its other alleged client is
respondents were illegally dismissed. extant on the records; and (4) there is no showing that
any of the workers were assigned to other clients aside
from Fairland. Moreover, the activities, the manner of
Yes. Indeed, Article 283 of the Labor Code allows as a
work and the movement of the workers were subject to
mode of termination of employment the closure or
Fairland’s control. It bears emphasizing that "factual
termination of business. "Closure or cessation of business
findings of quasi-judicial agencies like the NLRC, when
is the complete or partial cessation of the operations
affirmed by the Court of Appeals, as in the present case,
and/or shut-down of the establishment of the employer.
are conclusive upon the parties and binding on this
It is carried out to either stave off the financial ruin or
Court."
promote the business interest of the employer." "The
decision to close business [or to temporarily suspend
operation] is a management prerogative exclusive to the
employer, the exercise of which no court or tribunal can
meddle with, except only when the employer fails to
G.R. No. 172666               December 7, 2011
prove compliance with the requirements of Art. 283, to
wit: a) that the closure/cessation of business is bona
fide, i.e., its purpose is to advance the interest of the PICOP RESOURCES, INCORPORATED (PRI) vs.
employer and not to defeat or circumvent the rights of RICARDO DEQUILLA, ELMO PABILANDO, CESAR
employees under the law or a valid agreement; b) that ATIENZA and ANICETO ORBETA, JR., and NAMAPRI-
written notice was served on the employees and the SPFI,Respondents.
DOLE at least one month before the intended date of
closure or cessation of business; and c) in case of Facts:
closure/cessation of business not due to financial losses,
that the employees affected have been given separation
pay equivalent to ½ month pay for every year of service Private respondents were regular rank-and-file
or one month pay, whichever is higher." employees of Picop Resources,Inc. (PICOP) and members
of the NAMAPRI-SPFL, a duly registered labor
organization and existing bargaining agent of the PICOP
It bears stressing that "[t]he burden of proving that x x x rank-and-file employees. PICOP and NAMAPRI-SPFL had
a temporary suspension is bona fide falls upon the a CBA which would expire on May 22, 2000.6 days
employer." Clearly here, Susan/Weesan was not able to earlier, the late Atty. Fuentes, then National President of
discharge this burden. The documents Weesan submitted the Southern Philippines Federation of
to support its claim of severe business losses cannot be Labor (SPFL), advised the PICOP management to
considered as proof of financial crisis to justify the terminate about 800 employees due to acts of disloyalty,
temporary suspension of its operations since they clearly specifically, for allegedly campaigning, supporting and
appear to have not been duly filed with the BIR. Weesan signing a petition for the certification of a rival union, the
failed to satisfactorily explain why the Income Tax Federation of Free Workers Union (FFW) before the 60-
Returns and financial statements it submitted do not bear day "freedom period" and during the effectivity of the
the signature of the receiving officers. Also hard to ignore CBA. Such acts of disloyalty were construed to be a valid
is the absence of the mandatory 30-day prior notice to cause for termination under the terms and conditions of
the workers. the CBA. Based on the CBA, the freedom period would
start on March 22, 2000.
3. Whether x x x respondent is solidarily liable with
WEESAN GARMENT/ SUSAN DE LEON[.] Acting on the said advice, Atty. Boniel, Manager of the
PICOP Legal and Labor Relations Department, issued a
Yes. Fairland, as the principal employer, is solidarily liable memorandum directing the employees concerned to
with Susan/Weesan, the labor-only contractor, for the explain within 72 hours why their employment should not
rightful claims of the employees. Under this set-up, be terminated due to alleged acts of disloyalty. Upon
Susan/Weesan, as the "labor-only" contractor, is deemed receiving their explanation letters, Atty. Boniel endorsed
an agent of the principal, Fairland, and the law makes the the same to Atty. Fuentes who then requested the
principal responsible to the employees of the "labor-only" termination of 46 employees found guilty of acts of
disloyalty. On October 16, 2000, PICOP served a notice

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Labor Law Jurisprudence
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of termination due to acts of disloyalty to 31 of the 46 There is no dispute that private respondents were
employees. Private respondents were among the 31 members of NAMAPRI-SPFL who were terminated by
employees dismissed from employment by PICOP on PICOP due to alleged acts of disloyalty. It is basic in labor
November 16, 2000. jurisprudence that the burden of proof rests upon
management to show that the dismissal of its worker was
based on a just cause. When an employer exercises its
Enraged at what management did to them, private
power to terminate an employee by enforcing the union
respondents filed a complaint before the NLRC for Unfair
security clause, it needs to determine and prove the
Labor Practice and Illegal Dismissal with money claims,
following: (1) the union security clause is applicable; (2)
damages and attorney’s fees.
the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient
The LA ruled that private respondents were illegally evidence to support the decision of the union to expel the
terminated. employee from the union.

The NLRC dismissed the case for lack of merit. Considering the peculiar circumstances, the Court is of
the view that the acts of private respondents are not
Upon the denial of their motion for reconsideration, the enough proof of a violation of the Union Security Clause
private respondents brought the case to the CA. The CA which would warrant their dismissal. PICOP failed to show
reinstated the LA’s decision. It ruled, among others, that in detail how private respondents campaigned and
although private respondents signed an authorization for supported FFW. Their mere act of signing an
the filing of the petition for certification election of a rival authorization for a petition for certification election before
union, PICOP Democratic Trade Unionist-Federation of the freedom period does not necessarily demonstrate
Free Workers (FFW),such act was not a sufficient ground union disloyalty. It is far from being within the definition
to terminate the employment of private respondents. of "acts of disloyalty" as PICOP would want the Court to
believe. The act of "signing an authorization for a petition
for certification election" is not disloyalty to the union per
Issue and Ruling: se considering that the petition for certification election
itself was filed during the freedom period which started
1.Whether or not an existing CBA can be given its on March 22, 2000.
full force and effect in all its terms and conditions
including its Union Security Clause, even if beyond Moreover, the records are bereft of proof of any
the 5 year period when no new CBA had yet been contemporaneous acts of resignation or withdrawal of
entered into. union membership or non-payment of union dues.
Neither is there proof that private respondents joined
No. There is no question that in the CBA entered into by FFW. The fact is, private respondents remained in good
the parties, there is a union security clause. The clause standing with their union, NAMAPRI-SPFL.
imposes upon the workers the obligation to join and
maintain membership in the company’s recognized union Finally, PICOP insists that Article 253 of the Labor Code
as a condition for employment. applies in this case, not Article 256 thereof. Petitioner's
reliance on Article 253 is misplaced.The provision of
"Union security" is a generic term, which is applied to and Article 256 of the Labor Code is particularly enlightening.
comprehends "closed shop," "union shop," "maintenance Applying the same provision, it can be said that while it is
of membership," or any other form of agreement which incumbent for the employer to continue to recognize the
imposes upon employees the obligation to acquire or majority status of the incumbent bargaining agent even
retain union membership as a condition affecting after the expiration of the freedom period, they could
employment. There is union shop when all new regular only do so when no petition for certification election was
employees are required to join the union within a certain filed. The reason is, with a pending petition for
period as a condition for their continued employment. certification, any such agreement entered into by
There is maintenance of membership shop when management with a labor organization is fraught with the
employees, who are union members as of the effective risk that such a labor union may not be chosen thereafter
date of the agreement, or who thereafter become as the collective bargaining representative. The provision
members, must maintain union membership as a for status quo is conditioned on the fact that no
condition for continued employment until they are certification election was filed during the freedom period.
promoted or transferred out of the bargaining unit, or the Any other view would render nugatory the clear statutory
agreement is terminated. A closed shop, on the other policy to favor certification election as the means of
hand, may be defined as an enterprise in which, by ascertaining the true expression of the will of the workers
agreement between the employer and his employees or as to which labor organization would represent them.
their representatives, no person may be employed in any
or certain agreed departments of the enterprise unless he In the instant case, four (4) petitions were filed as early
or she is, becomes, and, for the duration of the as May 12, 2000.1awphi1 In fact, a petition for
agreement, remains a member in good standing of a certification election was already ordered by the Med-
union entirely comprised of or of which the employees in Arbiter of DOLE Caraga Region on August 23, 2000.
interest are a part. Therefore, following Article 256, at the expiration of the

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freedom period, PRI's obligation to recognize NAMAPRI- its National President, Mr. Pagulayan, directly filed the
SPFL as the incumbent bargaining agent does not hold present petition before this Court against respondents.
true when petitions for certification election were filed, as
in this case.
BOCEA asserted that in view of the unconstitutionality of
R.A. No. 9335 and its IRR, and their adverse effects on
Moreover, the last sentence of Article 253 which provides the constitutional rights of BOC officials and employees,
for automatic renewal pertains only to the economic direct resort to this Court is justified. BOCEA argued,
provisions of the CBA, and does not include among others, that its members and other BOC
representational aspect of the CBA. An existing CBA employees are in great danger of losing their jobs should
cannot constitute a bar to a filing of a petition for they fail to meet the required quota provided under the
certification election. When there is a representational law, in clear violation of their constitutional right to
issue, the status quo provision in so far as the need to security of tenure, and at their and their respective
await the creation of a new agreement will not apply. families’ prejudice.
Otherwise, it will create an absurd situation where the
union members will be forced to maintain membership by
In their Comment, respondents, through the Office of the
virtue of the union security clause existing under the CBA
Solicitor General (OSG), countered that R.A. No. 9335
and, thereafter, support another union when filing a
and its IRR do not violate the right to due process and
petition for certification election. If we apply it, there will
right to security of tenure of BIR and BOC employees.
always be an issue of disloyalty whenever the employees
The OSG stressed that the guarantee of security of
exercise their right to self-organization. The holding of a
tenure under the 1987 Constitution is not a guarantee of
certification election is a statutory policy that should not
perpetual employment. R.A. No. 9335 and its IRR
be circumvented, or compromised.
provided a reasonable and valid ground for the dismissal
of an employee which is germane to the purpose of the
law. Likewise, R.A. No. 9335 and its IRR provided that an
employee may only be separated from the service upon
compliance with substantive and procedural due process.
G.R. No. 181704               December 6, 2011
The OSG added that R.A. No. 9335 and its IRR must
enjoy the presumption of constitutionality.
BUREAU OF CUSTOMS EMPLOYEES ASSOCIATION
(BOCEA), vs.HON. MARGARITO B. TEVES, in his
BOCEA claimed that R.A. No. 9335 employs means that
capacity as Secretary of the Department of Finance,
are unreasonable to achieve its stated objectives; that
HON. NAPOLEON L. MORALES, in his capacity as
the law is unduly oppressive of BIR and BOC employees
Commissioner of the Bureau of Customs, HON.
as it shifts the extreme burden upon their shoulders
LILIAN B. HEFTI, in her capacity as Commissioner
when the Government itself has adopted measures that
of the Bureau of Internal Revenue, Respondents.
make collection difficult such as reduced tariff rates to
almost zero percent and tax exemption of big businesses;
Facts: and that the law is discriminatory of BIR and BOC
employees. BOCEA manifested that only the high-ranking
On January 25, 2005, former President Gloria Macapagal- officials of the BOC benefited largely from the reward
Arroyo signed into law R.A. No. 9335 which took effect on system under R.A. No. 9335 despite the fact that they
February 11, 2005. were not the ones directly toiling to collect revenue.
Moreover, despite the BOCEA’s numerous requests, BOC
continually refused to provide BOCEA the Expenditure
In Abakada Guro Party List v. Purisima (Abakada), the SC Plan on how such reward was distributed.
said of R.A. No. 9335: RA [No.] 9335 was enacted to
optimize the revenue-generation capability and collection
of the Bureau of Internal Revenue (BIR) and the Bureau In Abakada, this Court, through then Associate Justice,
of Customs (BOC). The law intends to encourage BIR and now Chief Justice Corona, declared Section 12 of R.A. No.
BOC officials and employees to exceed their revenue 9335 creating a Joint Congressional Oversight Committee
targets by providing a system of rewards and sanctions to approve the IRR as unconstitutional and violative of
through the creation of a Rewards and Incentives Fund the principle of separation of powers. However, the
(Fund) and a Revenue Performance Evaluation Board constitutionality of the remaining provisions of R.A. No.
(Board). It covers all officials and employees of the BIR 9335 was upheld pursuant to Section 13 of R.A. No.
and the BOC with at least six months of service, 9335. The Court also held that until the contrary is
regardless of employment status. shown, the IRR of R.A. No. 9335 is presumed valid and
effective even without the approval of the Joint
Congressional Oversight Committee.
Contending that the enactment and implementation of
R.A. No. 9335 are tainted with constitutional infirmities in
violation of the fundamental rights of its members, Issue and Ruling:
petitioner Bureau BOCEA, an association of rank-and-file
employees of the BOC, duly registered with the DOLE and 1. Whether or not RA 9335 and its implementing rules
the Civil Service Commission (CSC), and represented by and regulations violate the right to security of tenure of

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BIR and BOC officials and employees as enshrined under to their Memorandum of Appeal filed with the
Sec. 2 (3), Article IX (B) of the Constitution. NLRC.  With respect to their petition for certiorari with
the CA, petitioners failed to affix their individual
signatures on top of their typewritten names in the
No.
verification and certification of non-forum shopping
attached to the petition.  On this basis and on the
As it was imperatively correlated to the issue on equal conclusion that the NLRC did not commit grave abuse of
protection, the issues on the security of tenure of discretion in dismissing petitioners’ appeal on technical
affected BIR and BOC officials and employees and their grounds, the CA denied due course to the petition and
entitlement to due process were also settled in Abakada: dismissed the same.

Clearly, RA [No.] 9335 in no way violates the security of Issue and Ruling:
tenure of officials and employees of the BIR and the
BOC.The guarantee of security of tenure only means that
1. Whether or not in spite of technicalities,
an employee cannot be dismissed from the service for
petitioners are still entitled to due consideration of
causes other than those provided by law and only after
their petition.
due process is accorded the employee. In the case of RA
[No.] 9335, it lays down a reasonable yardstick for
removal (when the revenue collection falls short of the Yes. Strict application of technical rules should be set
target by at least 7.5%) with due consideration of all aside to serve the broader interest of substantial justice.
relevant factors affecting the level of collection. This
standard is analogous to inefficiency and incompetence in
Note, however, that in both instances, petitioners were
the performance of official duties, a ground for
not represented by a lawyer. They had no counsel on
disciplinary action under civil service laws. The action for
record and had been filing and signing all pleadings only
removal is also subject to civil service laws, rules and
through their representative, petitioner Rayala. There
regulations and compliance with substantive and
was no showing that their case was directly handled or at
procedural due process.
the very least, that they were assisted by a counsel. Not
being lawyers, petitioners’ lack of thorough
understanding of procedural rules as well as the
importance of its strict observance is understandable. As
held in a case, a non-lawyer litigant cannot be expected
G.R. No. 172624               December 5, 2011
to be well-versed on the rules of procedure as even the
most experienced lawyers get tangled in the web of
PABLO POLSOTIN, JR., et.al, vs.DE GUIA procedure.
ENTERPRISES, INC., 
It bears stressing that "the dismissal of an employee’s
Facts: appeal on purely technical ground is inconsistent with the
constitutional mandate on protection to labor." The Court
Petitioners were bus drivers and conductors of has often set aside the strict application of procedural
respondent. Alleging that they were dismissed without technicalities to serve the broader interest of substantial
cause and due process, petitioners filed a complaint for justice.
illegal dismissal and payment of backwages and damages
against respondent before the NLRC. 2. Whether or not petitioners were denied due
process.
The LA dismissed the petitioners’ complaint for lack of
merit. It held that they were validly terminated from Yes. A careful consideration of the facts of the case
employment for violation of company rules and convinces us that petitioners’ appeal should have been
regulations as well as for gross and habitual neglect of given due course. It may be recalled that respondent
duties as supported by petitioners’ employment records failed to timely submit its position paper when required
submitted by respondent. by the Labor Arbiter, hence, the case was submitted for
decision sans the same. Nonetheless, when respondent
Without assistance of counsel, petitioners, through filed its position paper, the Labor Arbiter admitted the
Rayala as their representative, filed a Memorandum of same and relied on it in coming up with a decision that
Appeal with the NLRC. Petitioners’ appeal before the petitioners were validly terminated. More important is
NLRC was dismissed purely on technical grounds as it did that petitioners were not even furnished a copy of
not contain the required certification of non-forum respondent’s position paper in order for them to refute
shopping and proof of service upon the the contents and allegations therein. And since neither
respondent.  Immediately, petitioners rectified these did respondent appear in any of the hearings conducted
lapses by filing their motion for reconsideration indicating before the Labor Arbiter, petitioners were never really
therein that there was no intention on their part to afforded an opportunity to rebut respondent’s allegations
commit forum shopping and that the registry receipt and charges against them or to introduce evidence to
showing proof of service upon respondent was attached refute them. Petitioners’ right to due process was thus
clearly violated.

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Indeed, labor tribunals are mandated to use all work, the illness suffered by respondent contributed to
reasonable means to ascertain the facts in each case the aggravation of his injury which was pre-existing at
speedily, objectively and without regard to technicalities the time of his employment. Finally, the CA ruled that
of law or procedure. However, in every proceeding before respondent is entitled to claim total and permanent
it, the fundamental and essential requirements of due disability benefits because of the undisputed doctor’s
process should not to be ignored but must at all times be findings that he "is now unfit to resume work as a
respected. Besides, petitioners’ case concerns their job, seaman in any capacity," which clearly constitutes a
considered as a property right, of which they could not be permanent and total disability as defined by law.
deprived of without due process.
Issue and Ruling:

1. Whether or not Respondent is entitled to an

G.R. No. 191491               December 14, 2011 award of full disability benefits.

JEBSENS MARITIME INC., represented by MS. No.

ARLENE ASUNCION and/or ALLIANCE MARINE
SERVICES, LTD., Petitioners, vs. ENRIQUE
Respondent was not able to show substantial evidence
UNDAG, Respondent.
that illness was work related

Facts:
Entitlement of seamen on overseas work to disability
benefits is a matter governed, not only by medical
Undag (respondent) was hired as Lead Operator on board findings, but by law and by contract.
the vessel FPSO Jamestown owned by Alliance Marine
Services, Ltd. and managed by its local agent, Jebsens
The material statutory provisions are Articles 191 to 193
Maritime, Inc. (petitioners). Respondent’s contract with
under Chapter VI (Disability Benefits) of the Labor Code,
petitioners was for a period of 4 months with a basic
in relation with Rule X of the Rules and Regulations
salary of US$806.00 a month. After his contract with
Implementing Book IV of the Labor Code. By contract,
petitioners had expired, he was deployed and eventually
the Philippine Overseas Employment Administration-
repatriated to the Philippines. 2 months later, he went to
Standard Employment Contract (POEA-SEC), as provided
see a physician (Dr. Vicaldo) for a physical check-up and
under Department Order No. 4, series of 2000 of the
was diagnosed to have "Hypertensive cardiovascular
Department of Labor and Employment, and the parties’
disease, Atrial Fibrillation, Diabetes Mellitus II,
Collective Bargaining Agreement (CBA) bind the seaman
Impediment Grade X (20.15%)." Dr. Vicaldo stated that
and his employer to each other.
respondent’s ailment was aggravated by his work, and
that he was now unfit to work as a seaman in any
capacity. For said reason, respondent requested for Pursuant to Section 20(B), paragraph 6, of the 2000
financial assistance from petitioners but the latter denied Amended Standard Terms and Conditions, two elements
his request. must concur for an injury or illness to be compensable:
First, that the injury or illness must be work-related; and
second, that the work-related injury or illness must have
Respondent filed a complaint for sickness benefits against
existed during the term of the seafarer’s employment
petitioners before the NLRC. Petitioners countered that
contract.
respondent was not entitled to disability benefits because
his repatriation was not due to medical reasons but due
to the expiration of his employment contract. In labor cases as in other administrative proceedings,
substantial evidence or such relevant evidence as a
reasonable mind might accept as sufficient to support a
The LA ordered petitioners to pay jointly and severally
conclusion is required. The oft-repeated rule is that
respondent disability compensation benefits
whoever claims entitlement to the benefits provided by
law should establish his or her right thereto by
On appeal, the NLRC denied respondent’s claim for the substantial evidence. Substantial evidence is more than a
reason that respondent failed to present substantial mere scintilla.lawphi1The evidence must be real and
evidence proving that he had suffered any illness while substantial, and not merely apparent; for the duty to
on board or after disembarking from petitioner’s vessel. prove work-causation or work-aggravation imposed by
Respondent’s MR was denied. law is real and not merely apparent.

On appeal with the CA, stated that respondent was able In this case, the Court is of the considered view that
to prove by substantial evidence that his work as a respondent failed to prove that his ailment was work-
seafarer caused his hypertensive cardiovascular disease related and was acquired during his 4-month sea
or, at least, was a relevant factor in contracting his deployment. Respondent claims that he showed
illness. The CA was of the strong view that the inherent manifestations of a heart disease when he suddenly felt
difficulties in respondent’s job definitely caused his chest pains, shortness of breath and fatigability. He,
illness. The CA added that because of the nature of his however, never substantiated such claim. He never

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Labor Law Jurisprudence
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showed any written note, request or record about any G.R. No. 171993               December 12, 2011
medical check-up, consultation or treatment. Similarly,
he failed to substantiate his allegation that after his
MARC II MARKETING, INC. and LUCILA V.
arrival in Manila, he reported to petitioners’ office to seek
JOSON, Petitioners, vs. ALFREDO M.
medical consultation for the discomfort he was
JOSON, Respondent.
experiencing but petitioners ignored him.

Facts:
He also alleged that more or less 16 days after arriving in
Manila, he underwent a physical and laboratory
examination at the Maritime Clinic for International Before petitioner corporation was officially
Service, Inc. conducted by petitioners where he was incorporated, respondent has already been engaged by
declared to be unfit for sea duty. Again, there is no petitioner Lucila, in her capacity as President of Marc
record of this except his self-serving claim. What is on Marketing, Inc., to work as the General Manager of
record is that respondent surfaced demanding payment petitioner corporation. It was formalized through the
of disability benefits. execution of a Management Contract dated 16 January
1994 under the letterhead of Marc Marketing, Inc. as
petitioner corporation is yet to be incorporated at the
Respondent failed to comply with the mandatory 3-day
time of its execution. It was explicitly provided therein
rule
that respondent shall be entitled to 30% of its net income
for his work as General Manager. Respondent will also be
More importantly, respondent failed to comply with the granted 30% of its net profit to compensate for the
mandatory 3-day medical examination deadline provided possible loss of opportunity to work overseas.
in Section 20(B), paragraph (3) of the 2000 Amended
Standard Terms and Conditions Governing the
Pending incorporation of petitioner corporation,
Employment of Filipino Seafarers on Board Ocean-Going
respondent was designated as the General Manager of
Vessels. It was only more than 2 months after his arrival
Marc Marketing, Inc., which was then in the process of
in Manila that he sought a medical opinion from Dr.
winding up its business. For occupying the said position,
Vicaldo who declared him unfit to work as a seaman due
respondent was among its corporate officers by the
to "hypertensive cardiovascular disease, atrial fibrillation
express provision of Section 1, Article IV of its by-laws.
and diabetes mellitus II."

On 15 August 1994, petitioner corporation was officially

While the rule is not absolute, there is no credible
incorporated and registered with the SEC. Accordingly,
explanation from respondent why he failed to comply
Marc Marketing, Inc. was made non-operational.
with the mandatory rule considering his claim that in
Respondent continued to discharge his duties as General
July, 2003, he was suffering from chest pain, shortness
Manager but this time under petitioner corporation.
of breath and fatigue. An award of disability benefit to a
seaman in this case, despite non-compliance with strict
mandatory requirements of the law, cannot be sustained. Pursuant to Section 1, Article IV of petitioner
The rationale behind the rule can easily be divined. corporation’s by-laws, its corporate officers are as
Within three days from repatriation, it would be fairly follows: Chairman, President, one or more Vice-
easier for a physician to determine if the illness was President(s), Treasurer and Secretary. Its Board of
work-related or not. After that period, there would be Directors, however, may, from time to time, appoint such
difficulty in ascertaining the real cause of the illness. other officers as it may determine to be necessary or
proper.
The NLRC and the Court of Appeals determined that
petitioner did not observe the established procedure as Per an undated Secretary’s Certificate, petitioner
there is no proof at all that he reported to the office of corporation’s Board of Directors conducted a meeting on
the respondents. We see no reason to depart from their 29 August 1994 where respondent was appointed as one
findings. While petitioner remains firm that he reported of its corporate officers with the designation or title of
to the office of the respondents for mandatory reporting, General Manager to function as a managing director with
the records are bereft of any proof to fortify his claim. other duties and responsibilities that the Board of
The onus probandi falls on petitioner to establish or Directors may provide and authorized.
substantiate such claim by the requisite quantum of
evidence. There is absolutely no evidence on record to Nevertheless, on 30 June 1997, petitioner corporation
prove petitioner’s claim that he reported to respondents’ decided to stop and cease its operations, as evidenced by
office for mandatory reportorial requirement. Petitioner an Affidavit of Non-Operation dated 31 August 1998, due
therefore failed to adduce substantial evidence as basis to poor sales collection aggravated by the inefficient
for the grant of relief. [Emphasis and underscoring management of its affairs. On the same date, it formally
supplied] informed respondent of the cessation of its business
operation. Concomitantly, respondent was apprised of
the termination of his services as General Manager since
his services as such would no longer be necessary for the
winding up of its affairs.

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Feeling aggrieved, respondent filed a Complaint for Issue and Ruling:

Reinstatement and Money Claim against petitioners
before the Labor Arbiter averring that his dismissal was
1. Whether or not the NLRC has the jurisdiction in
caused by petitioner Lucila’s hatred towards his family.
resolving a purely intra-corporate matter which is
For the parties’ failure to settle the case amicably, the LA
recognizable by the SEC/Regional Trial Court.
required them to submit their respective position papers.
Respondent complied but petitioners opted to file a
Motion to Dismiss grounded on the LA’s lack of Yes. Respondent, though occupying the General Manager
jurisdiction as the case involved an intra-corporate position, was not a corporate officer of petitioner
controversy, which jurisdiction belongs to the SEC [now corporation rather he was merely its employee occupying
with RTC]. Petitioners similarly raised therein the ground a high-ranking position. Accordingly, respondent’s
of prescription of respondent’s monetary claim. However, dismissal as petitioner corporation’s General Manager did
said motion was denied. not amount to an intra-corporate controversy. 

Labor Arbiter initially resolved petitioners’ Motion to The dismissal of a corporate officer is always regarded as
Dismiss by finding the ground of lack of jurisdiction to be a corporate act and/or an intra-corporate controversy.
without merit. The Labor Arbiter elucidated that Under Section 5 of P.D. No. 902-A, intra-corporate
petitioners failed to adduce evidence to prove that the controversies are those controversies arising out of intra-
present case involved an intra-corporate controversy. corporate or partnership relations, between and among
Also, respondent’s money claim did not arise from his stockholders, members or associates; between any or all
being a director or stockholder of petitioner corporation of them and the corporation, partnership or association of
but from his position as being its General Manager. The which they are stockholders, members or associates,
Labor Arbiter likewise held that respondent was not a respectively; and between such corporation, partnership
corporate officer under petitioner corporation’s by-laws. or association and the State insofar as it concerns their
As such, respondent’s complaint clearly arose from an individual franchise or right to exist as such entity.  It
employer-employee relationship, thus, subject to the also includes controversies in the election or
Labor Arbiter’s jurisdiction. appointments of directors, trustees, officers or
managers of such corporations, partnerships or
associations.. Accordingly, in determining whether the
The Labor Arbiter then declared respondent’s dismissal
SEC (now the RTC) has jurisdiction over the
from employment as illegal. Respondent, being a regular
controversy, the status or relationship of the parties and
employee of petitioner corporation, may only be
the nature of the question that is the subject of their
dismissed for a valid cause and upon proper compliance
controversy must be taken into consideration.
with the requirements of due process. The records,
though, revealed that petitioners failed to present any
evidence to justify respondent’s dismissal. A careful perusal of petitioner corporation’s by-laws,
particularly paragraph 1, Section 1, Article IV, would
explicitly reveal that its corporate officers are composed
On appeal, the NLRC ruled in favor of petitioners by
only of: (1) Chairman; (2) President; (3) one or more
giving credence to the Secretary’s Certificate, which
Vice-President; (4) Treasurer; and (5) Secretary.  The
evidenced petitioner corporation’s Board of Directors’
position of General Manager was not among those
meeting in which a resolution was approved appointing
enumerated. 
respondent as its corporate officer with designation as
General Manager. Therefrom, the NLRC reversed and set
aside the LA’s Decision and dismissed respondent’s Paragraph 2, Section 1, Article IV of petitioner
Complaint for want of jurisdiction. corporation’s by-laws, empowered its Board of Directors
to appoint such other officers as it may determine
necessary or proper. It is by virtue of this enabling
When respondent’s MR was denied in another Resolution,
provision that petitioner corporation’s Board of Directors
he filed a Petition for Certiorari with the Court of Appeals
allegedly approved a resolution to make the position of
ascribing grave abuse of discretion on the part of the
General Manager a corporate office, and, thereafter,
NLRC. The CA rendered its now assailed Decision
appointed respondent thereto making him one of its
declaring that the Labor Arbiter has jurisdiction over the
corporate officers.  All of these acts were done without
present controversy. It upheld the finding of the LA that
first amending its by-laws so as to include the General
respondent was a mere employee of petitioner
Manager in its roster of corporate officers.  
corporation, who has been illegally dismissed from
employment without valid cause and without due
process. Nevertheless, it ordered the records of the case Respondent, in this case, though occupying a high
remanded to the NLRC for the determination of the ranking and vital position in petitioner corporation but
appropriate amount of monetary awards to be given to which position was not specifically enumerated or
respondent. mentioned in the latter’s by-laws, can only be regarded
as its employee or subordinate official.  Noticeably,
respondent’s compensation as petitioner corporation’s
General Manager was set, fixed and determined not by
the latter’s Board of Directors but simply by its President,
petitioner Lucila.  The same was not subject to the

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approval of petitioner corporation’s Board of financial reverses, it is incumbent upon the employer to
Directors.  This is an indication that respondent was an sufficiently and convincingly prove the same.  If it is
employee and not a corporate officer. otherwise, the employer can lawfully close shop anytime
as long as it was bona fide in character and not impelled
by a motive to defeat or circumvent the tenurial rights of
That respondent was also a director and a stockholder of
employees and as long as the terminated employees
petitioner corporation will not automatically make the
were paid in the amount corresponding to their length of
case fall within the ambit of intra-corporate controversy
service. There are three requisites for a valid
and be subjected to RTC’s jurisdiction.  To reiterate, not all
cessation of business operations: (a) service of
conflicts between the stockholders and the corporation are
a written notice to the employees and to the
classified as intra-corporate.  As previously discussed,
Department of Labor and Employment (DOLE) at
respondent was not a corporate officer of petitioner corporation
least one month before the intended date thereof;
but a mere employee thereof so there was no intra-corporate
(b) the cessation of business must bebona fide in
relationship between them.  With regard to the subject of the
character; and (c) payment to the employees of
controversy or issue involved herein, i.e., respondent’s
termination pay amounting to one month pay or at
dismissal as petitioner corporation’s General Manager, the
least one-half month pay for every year of service,
same did not present or relate to an intra-corporate
whichever is higher.
dispute.  To note, there was no evidence submitted to
show that respondent’s removal as petitioner
corporation’s General Manager carried with it his removal In this case, it is obvious that petitioner corporation’s
as its director and stockholder.  Also, petitioners’ cessation of business operations was not due to serious
allegation that respondent’s claim of 30% share of business losses.  Mere poor sales collection, coupled with
petitioner corporation’s net profit was by reason of his mismanagement of its affairs does not amount to serious
being its director and stockholder was without basis, business losses.  Nonetheless, petitioner corporation can
thus, self-serving.  Such an allegation was tantamount to still validly cease or close its business operations because
a mere speculation for petitioners’ failure to substantiate such right is legally allowed, so long as it was not done
the same.     for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code.
In addition, it was not shown by petitioners that the
position of General Manager was offered to respondent A careful perusal of the records revealed that, indeed,
on account of his being petitioner corporation’s director petitioner corporation has stopped and ceased business
and stockholder.  Also, in contrast to NLRC’s findings, operations beginning 30 June 1997.  This was evidenced
neither petitioner corporation’s by-laws nor the by a notarized Affidavit of Non-Operation dated 31
Management Contract stated that respondent’s August 1998.  There was also no showing that the
appointment and termination from the position of cessation of its business operations was done in bad faith
General Manager was subject to the approval of or to circumvent the Labor Code.  Nevertheless, in doing
petitioner corporation’s Board of Directors.  If, indeed, so, petitioner corporation failed to comply with the one-
respondent was a corporate officer whose termination month prior written notice rule.  The records disclosed
was subject to the approval of its Board of Directors, why that respondent, being petitioner corporation’s employee,
is it that his termination was effected only by petitioner and the DOLE were not given a written notice at least
Lucila, President of petitioner corporation?  The records one month before petitioner corporation ceased its
are bereft of any evidence to show that respondent’s business operations.  Moreover, the records clearly show
dismissal was done with the conformity of petitioner that respondent’s dismissal was effected on the same
corporation’s Board of Directors or that the latter had a date that petitioner corporation decided to stop and
hand on respondent’s dismissal.  No board resolution cease its operation.  Similarly, respondent was not paid
whatsoever was ever presented to that effect.      separation pay upon termination of his employment.

2. Whether or not Joson was illegally dismissed. As respondent’s dismissal was not due to serious
business losses, respondent is entitled to payment of
separation pay equivalent to one month pay or at least
Yes.
one-half month pay for every year of service, whichever
is higher. The necessary consequence of such failure to
In termination cases, the burden of proving just and valid comply with the one-month prior written notice rule,
cause for dismissing an employee from his employment which constitutes a violation of an employee’s right to
rests upon the employer.  The latter's failure to discharge statutory due process, is the payment of indemnity in the
that burden would necessarily result in a finding that the form of nominal damages.
dismissal is unjustified. Under Article 283 of the Labor
Code, as amended, one of the authorized causes in
3. Whether or not Lucila should be held solidarily
terminating the employment of an employee is the
liable in the absence of evidence of malice and bad
closing or cessation of operation of the
faith on her part.
establishment or undertaking. the closure or
cessation of operations of establishment or
undertaking may either be due to serious business Yes. As a rule, corporation has a personality separate and
losses or financial reverses or otherwise.  If the distinct from its officers, stockholders and members such
closure or cessation was due to serious business losses or that corporate officers are not personally liable for their

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official acts unless it is shown that they have exceeded month pays and unpaid service incentive leaves with
their authority. However, this corporate veil can be legal interests.
pierced when the notion of the legal entity is used as a
means to perpetrate fraud, an illegal act, as a vehicle for
Respondents filed their separate MRs but were denied by
the evasion of an existing obligation, and to confuse
the NLRC for lack of merit. Fairland and Susan thus filed
legitimate issues. Under the Labor Code, for instance,
their separate petitions for certiorari before the CA.
when a corporation violates a provision declared to be
penal in nature, the penalty shall be imposed upon the
guilty officer or officers of the corporation. The CA’s First Division affirmed the NLRC’s ruling that the
workers were illegally dismissed and that Weesan and
Fairland are solidarily liable to them as labor-only
Lucila, being the President of petitioner corporation,
contractor and principal, respectively. Fairland filed its
acted in bad faith and with malice in effecting
MR as well as a Motion for Voluntary Inhibition of the
respondent’s dismissal from employment. Although
Associate Justices handling the case; hence, the transfer
petitioner corporation has a valid cause for dismissing
of said case to the CA’s Special Ninth Division.It held that
respondent due to cessation of business operations,
the labor tribunals did not acquire jurisdiction over the
however, the latter’s dismissal therefrom was done
person of Fairland, and even assuming they did, Fairland
abruptly by its President, petitioner Lucila. Respondent
is not liable to the workers since Weesan is not a mere
was not given the required one-month prior written
labor-only contractor but a bona fide independent
notice that petitioner corporation will already cease its
contractor.
business operations. As can be gleaned from the records,
respondent was dismissed outright by petitioner Lucila on
the same day that petitioner corporation decided to stop Aggrieved, the workers filed before the SC their Petition
and cease its business operations. Worse, respondent for Review on Certiorari.
was not given separation pay considering that petitioner
corporation’s cessation of business was not due to Issues and Ruling:
business losses or financial reverses.

1. Whether or not petitioner is a labor-only

contractor acting as an agent of respondent
G.R. No. 182915               December 12, 2011 Fairland.

MARIALY O. SY, et.al, Petitioners, vs. FAIRLAND Yes. "There is labor-only contracting when the contractor
KNITCRAFT CO., INC., Respondent. 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
Facts:
present:

Fairland is a domestic corporation engaged in garments

(a) The person supplying workers to an
business, while Susan de Leon (Susan) is the
employer does not have substantial capital or
owner/proprietress of Weesan Garments (Weesan).On
investment in the form of tools, equipment,
the other hand, the complaining workers (the workers)
machineries, work premises, among others; and
are sewers, trimmers, helpers, a guard and a secretary
who were hired by Weesan.
(b) The workers recruited and placed by such
person are performing activities which are
The workers filed with the Arbitration Branch of the NLRC
directly related to the principal business of the
a Complaint for underpayment and/or non-payment of
employer."
wages, overtime pay, premium pay for holidays, 13th
month pay and other monetary benefits against
Susan/Weesan. In an amended complaint, the charge of Here, there is no question that the workers, majority of
illegal dismissal was included and impleaded Fairland and whom are sewers, were recruited by Susan/Weesan and
its manager, Debbie, as additional respondents. that they performed activities which are directly related
to Fairland’s principal business of garments. What must
be determined is whether Susan/Weesan has substantial
The LA dismissed the complaint for lack of merit but
capital or investment in the form of tools, equipment,
ordered respondents to pay each complainant P5000 by
machineries, work premises, among others.
way of financial assistance.

We have examined the records but found nothing therein

On appeal, the NLRC ruled that complainants were
to show that Weesan has investment in the form of tools,
illegally dismissed. Respondents were ordered to
equipment or machineries. Suffice it to say that "[t]he
reinstate complainants to their original or equivalent
presumption is that a contractor is a labor-only
position with full backwages with legal interests, with
contractor unless such contractor overcomes the burden
retention of seniority rights and are further to pay
of proving that it has substantial capital, investment,
solidarily to the complainants the difference of their
tools and the like." As Susan/Weesan was not able to
underpaid/unpaid wages, unpaid holidays, unpaid 13 th

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adduce evidence that Weesan had any substantial office tables and chairs, and plastic chairs; (2) no proof
capital, investment or assets to perform the work evidencing the contractual arrangement between Weesan
contracted for, the presumption that Weesan is a labor- and Fairland was ever submitted by Fairland; (3) while
only contractor stands. both Weesan and Fairland assert that the former had
other clients aside from the latter, no proof of Weesan’s
contractual relationship with its other alleged client is
2. Whether or not the individual private
extant on the records; and (4) there is no showing that
respondents were illegally dismissed.
any of the workers were assigned to other clients aside
from Fairland. Moreover, the activities, the manner of
Yes. Indeed, Article 283 of the Labor Code allows as a work and the movement of the workers were subject to
mode of termination of employment the closure or Fairland’s control. It bears emphasizing that "factual
termination of business. "Closure or cessation of business findings of quasi-judicial agencies like the NLRC, when
is the complete or partial cessation of the operations affirmed by the Court of Appeals, as in the present case,
and/or shut-down of the establishment of the employer. are conclusive upon the parties and binding on this
It is carried out to either stave off the financial ruin or Court."
promote the business interest of the employer." "The
decision to close business [or to temporarily suspend
operation] is a management prerogative exclusive to the
employer, the exercise of which no court or tribunal can
meddle with, except only when the employer fails to G.R. No. 172666               December 7, 2011
prove compliance with the requirements of Art. 283, to
wit: a) that the closure/cessation of business is bona
PICOP RESOURCES, INCORPORATED (PRI) vs.
fide, i.e., its purpose is to advance the interest of the
RICARDO DEQUILLA, ELMO PABILANDO, CESAR
employer and not to defeat or circumvent the rights of
ATIENZA and ANICETO ORBETA, JR., and NAMAPRI-
employees under the law or a valid agreement; b) that
SPFI,Respondents.
written notice was served on the employees and the
DOLE at least one month before the intended date of
closure or cessation of business; and c) in case of Facts:
closure/cessation of business not due to financial losses,
that the employees affected have been given separation Private respondents were regular rank-and-file
pay equivalent to ½ month pay for every year of service employees of Picop Resources,Inc. (PICOP) and members
or one month pay, whichever is higher." of the NAMAPRI-SPFL, a duly registered labor
organization and existing bargaining agent of the PICOP
It bears stressing that "[t]he burden of proving that x x x rank-and-file employees. PICOP and NAMAPRI-SPFL had
a temporary suspension is bona fide falls upon the a CBA which would expire on May 22, 2000.6 days
employer." Clearly here, Susan/Weesan was not able to earlier, the late Atty. Fuentes, then National President of
discharge this burden. The documents Weesan submitted the Southern Philippines Federation of
to support its claim of severe business losses cannot be Labor (SPFL), advised the PICOP management to
considered as proof of financial crisis to justify the terminate about 800 employees due to acts of disloyalty,
temporary suspension of its operations since they clearly specifically, for allegedly campaigning, supporting and
appear to have not been duly filed with the BIR. Weesan signing a petition for the certification of a rival union, the
failed to satisfactorily explain why the Income Tax Federation of Free Workers Union (FFW) before the 60-
Returns and financial statements it submitted do not bear day "freedom period" and during the effectivity of the
the signature of the receiving officers. Also hard to ignore CBA. Such acts of disloyalty were construed to be a valid
is the absence of the mandatory 30-day prior notice to cause for termination under the terms and conditions of
the workers. the CBA. Based on the CBA, the freedom period would
start on March 22, 2000.
3. Whether x x x respondent is solidarily liable with
WEESAN GARMENT/ SUSAN DE LEON[.] Acting on the said advice, Atty. Boniel, Manager of the
PICOP Legal and Labor Relations Department, issued a
memorandum directing the employees concerned to
Yes. Fairland, as the principal employer, is solidarily liable
explain within 72 hours why their employment should not
with Susan/Weesan, the labor-only contractor, for the
be terminated due to alleged acts of disloyalty. Upon
rightful claims of the employees. Under this set-up,
receiving their explanation letters, Atty. Boniel endorsed
Susan/Weesan, as the "labor-only" contractor, is deemed
the same to Atty. Fuentes who then requested the
an agent of the principal, Fairland, and the law makes the
termination of 46 employees found guilty of acts of
principal responsible to the employees of the "labor-only"
disloyalty. On October 16, 2000, PICOP served a notice
contractor as if the principal itself directly hired or
of termination due to acts of disloyalty to 31 of the 46
employed the employees.
employees. Private respondents were among the 31
employees dismissed from employment by PICOP on
A careful examination of the records reveals other telling November 16, 2000.
facts that Fairland is Susan/Weesan’s principal, to wit:
(1) aside from sewing machines, Fairland also lent
Enraged at what management did to them, private
Weesan other equipment such as fire extinguishers,
respondents filed a complaint before the NLRC for Unfair

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Labor Practice and Illegal Dismissal with money claims, power to terminate an employee by enforcing the union
damages and attorney’s fees. security clause, it needs to determine and prove the
following: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union
The LA ruled that private respondents were illegally
security provision in the CBA; and (3) there is sufficient
terminated.
evidence to support the decision of the union to expel the
employee from the union.
The NLRC dismissed the case for lack of merit.
Considering the peculiar circumstances, the Court is of
Upon the denial of their motion for reconsideration, the the view that the acts of private respondents are not
private respondents brought the case to the CA. The CA enough proof of a violation of the Union Security Clause
reinstated the LA’s decision. It ruled, among others, that which would warrant their dismissal. PICOP failed to show
although private respondents signed an authorization for in detail how private respondents campaigned and
the filing of the petition for certification election of a rival supported FFW. Their mere act of signing an
union, PICOP Democratic Trade Unionist-Federation of authorization for a petition for certification election before
Free Workers (FFW),such act was not a sufficient ground the freedom period does not necessarily demonstrate
to terminate the employment of private respondents. union disloyalty. It is far from being within the definition
of "acts of disloyalty" as PICOP would want the Court to
Issues and Ruling: believe. The act of "signing an authorization for a petition
for certification election" is not disloyalty to the union per
se considering that the petition for certification election
1.Whether or not an existing CBA can be given its itself was filed during the freedom period which started
full force and effect in all its terms and conditions on March 22, 2000.
including its Union Security Clause, even if beyond
the 5 year period when no new CBA had yet been
entered into. Moreover, the records are bereft of proof of any
contemporaneous acts of resignation or withdrawal of
union membership or non-payment of union dues.
No. There is no question that in the CBA entered into by Neither is there proof that private respondents joined
the parties, there is a union security clause. The clause FFW. The fact is, private respondents remained in good
imposes upon the workers the obligation to join and standing with their union, NAMAPRI-SPFL.
maintain membership in the company’s recognized union
as a condition for employment.
Finally, PICOP insists that Article 253 of the Labor Code
applies in this case, not Article 256 thereof. Petitioner's
"Union security" is a generic term, which is applied to and reliance on Article 253 is misplaced.The provision of
comprehends "closed shop," "union shop," "maintenance Article 256 of the Labor Code is particularly enlightening.
of membership," or any other form of agreement which Applying the same provision, it can be said that while it is
imposes upon employees the obligation to acquire or incumbent for the employer to continue to recognize the
retain union membership as a condition affecting majority status of the incumbent bargaining agent even
employment. There is union shop when all new regular after the expiration of the freedom period, they could
employees are required to join the union within a certain only do so when no petition for certification election was
period as a condition for their continued employment. filed. The reason is, with a pending petition for
There is maintenance of membership shop when certification, any such agreement entered into by
employees, who are union members as of the effective management with a labor organization is fraught with the
date of the agreement, or who thereafter become risk that such a labor union may not be chosen thereafter
members, must maintain union membership as a as the collective bargaining representative. The provision
condition for continued employment until they are for status quo is conditioned on the fact that no
promoted or transferred out of the bargaining unit, or the certification election was filed during the freedom period.
agreement is terminated. A closed shop, on the other Any other view would render nugatory the clear statutory
hand, may be defined as an enterprise in which, by policy to favor certification election as the means of
agreement between the employer and his employees or ascertaining the true expression of the will of the workers
their representatives, no person may be employed in any as to which labor organization would represent them.
or certain agreed departments of the enterprise unless he
or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a In the instant case, four (4) petitions were filed as early
union entirely comprised of or of which the employees in as May 12, 2000.1awphi1 In fact, a petition for
interest are a part. certification election was already ordered by the Med-
Arbiter of DOLE Caraga Region on August 23, 2000.
Therefore, following Article 256, at the expiration of the
There is no dispute that private respondents were freedom period, PRI's obligation to recognize NAMAPRI-
members of NAMAPRI-SPFL who were terminated by SPFL as the incumbent bargaining agent does not hold
PICOP due to alleged acts of disloyalty. It is basic in labor true when petitions for certification election were filed, as
jurisprudence that the burden of proof rests upon in this case.
management to show that the dismissal of its worker was
based on a just cause. When an employer exercises its

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Moreover, the last sentence of Article 253 which provides Labor Law
for automatic renewal pertains only to the economic
provisions of the CBA, and does not include
Dismissal; backwages.
representational aspect of the CBA. An existing CBA
cannot constitute a bar to a filing of a petition for
certification election. When there is a representational Article 279 of the Labor Code provides that “an employee
issue, the status quo provision in so far as the need to who is unjustly dismissed from work shall be entitled to
await the creation of a new agreement will not apply. reinstatement without loss of seniority rights and other
Otherwise, it will create an absurd situation where the privileges and to his full backwages, inclusive of
union members will be forced to maintain membership by allowances, and to his other benefits or their monetary
virtue of the union security clause existing under the CBA equivalent computed from the time his compensation was
and, thereafter, support another union when filing a withheld from him up to the time of his actual
petition for certification election. If we apply it, there will reinstatement.”
always be an issue of disloyalty whenever the employees
exercise their right to self-organization. The holding of a Thus, a number of cases holds that an illegally dismissed
certification election is a statutory policy that should not employee is entitled to two reliefs: backwages and
be circumvented, or compromised. 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 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.  Petitioner’s 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

respondent’s 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.

SELECTED LABOR CASES

Given the circumstances of the case, however, where the
APRIL 2010-MARCH 2011
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
APRIL 2010 CASES

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between the penalties of dismissal or suspension and It is not disputed that respondent took several materials
reprimand and their respective effects on the grant or and supplies from petitioner’s warehouse without the
award of backwages. When an employee is dismissed or approved WRS.  However, this should not be construed
suspended it is but logical that since he is barred from as dishonesty on the part of respondent that would
reporting to work the same negates his right to be warrant his dismissal from the service for the following
paid backwages. He has no opportunity to work during reasons: First, the withdrawals of the supplies were duly
the period he was dismissed or suspended and, recorded in the security guard’s logbook.  If respondent
therefore, he has no salary to expect. However, the same intended to defraud petitioner, he could have easily taken
does not hold true for an employee who is reprimanded. items from the warehouse without having them recorded
A reprimand usually carries a warning that a repetition of as he was then the Supervising Property Officer who had
the same or similar act will be dealt with more severely. free access to the supplies.  Second, right after
Under normal circumstances, an employee who is withdrawing the items, respondent replaced them on his
reprimanded is never prevented from reporting to work. own initiative, without anyone instructing him to do so. 
He continues to work despite the warning. Thus, in the This act negates his intent to defraud petitioner. Third,
case at bar, since respondent’s penalty should only be a there is no clear showing that respondent
reprimand, the Court deems it proper and equitable to misappropriated or converted the items for his own
affirm the Court of Appeals’ (CA’s) award of backwages. 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
In two instances, the Court granted the award
complaint for qualified theft filed by Teodulo V. Largo,
of backwages during the period the employees were
Section Chief, Power Generation Group of petitioner
prevented from reporting to work despite concluding that
against respondent as there was no competent and
the employee concerned violated reasonable office rules
sufficient evidence on record to show that there was
and regulations and imposing the penalty of reprimand.
intent to gain on the part of the respondent, considering
that the materials and supplies taken by him were used
In Jacinto v. Court of Appeals [G.R. No. 124540, in fencing the watershed and reservation area of
November 14, 1997, 281 SCRA 657], the Court awarded petitioner company.  Likewise, there was no basis to
petitioner Jacinto backwages after finding that she was charge him for malversation of public property as there
only culpable of violating reasonable office rules and was no misappropriation of the supplies for his personal
regulations for not having asked permission from school use and that the same were for general purpose and not
authorities to leave the school premises and seek medical for any specific use.
attention and for not filing an application for sick leave
for approval by the school authorities.
Nonetheless, although the respondent did not commit an
overt act of dishonesty, he is not exonerated from
Also, in Bangalisan v. Court of Appeals [G.R. 124678, liability.  It was an established company procedure that
July 31, 1997, 276 SCRA 619, 633], after affirming the before materials can be taken out from the warehouse,
findings that one of the petitioners, Rodolfo Mariano, is the issuance of a WRS is an indispensable requirement. 
only liable for his violation of reasonable office rules and In fact, there was even a warning posted at the door of
regulations for attending the wake and internment of his the property office that states:
grandmother without the benefit of an approved leave of “BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLI
absence and the imposition of the penalty of reprimand, NA NG WALANG APRUBADONG WRS.”  Being the
the Court still granted him backwages. Supervising Property Officer, respondent knows fully well
that taking items from the warehouse without the
Consistent with the Court’s rulings in Bangalisan required WRS is against the company rules and
and Jacinto, the grant of backwages to respondent is but regulations. It is the paramount duty of respondent to
proper.  It is to be stressed that when imposing protect the properties in the warehouse and to ensure
penalties, it must not only be made within the that none shall be taken away without proper
parameters of the law, but it should also satisfy the basic documentation.
tenets of equity, justice, and fairplay. National Power
Corporation vs. Alan Olandesca, G.R. No. 171434, April The Machiavellian principle that “the end justifies the
23, 2010. means” has no place in government service, which
thrives on the rule of law, consistency and stability. 
Dismissal; dishonesty. 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
In Philippine Amusement and Gaming Corporation Civil Service Commission Memorandum Circular No. 19,
v. Rilloroza [G.R. No. 141141, June series of 1999 (Uniform Rules on Administrative Cases in
25, 2001], dishonesty is defined as the disposition to lie, the Civil Service). Since this is respondent’s first offense
cheat, deceive, or defraud; untrustworthiness; lack of in his more than 16 years of service, the appropriate
integrity; lack of honesty, probity or integrity in principle; penalty to be imposed against him is reprimand. National
lack of fairness and straightforwardness; disposition to Power Corporation vs. Alan Olandesca, G.R. No. 171434,
defraud, deceive or betray. April 23, 2010.

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Dismissal; lost of trust and confidence. implemented its streamlining or reorganization plan in
good faith, not in an arbitrary manner and without
violating the tenurial rights of its employees. Dannie
To terminate the services of an employee for loss of trust
M. Pantoja vs. SCA Hygiene Products Corporation, G.R.
and confidence, two requisites must concur:  (1) the
No. 163554, April 23, 2010.
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. Dismissal; retrenchment.

In the present case, respondent failed to justify its loss of The CA committed no reversible error in affirming
trust and confidence on Consolacion even as it imputed the NLRC ruling that Talam was validly dismissed on the
to him, via Notice of Formal Investigation of April 14, ground of retrenchment.  The Supreme Court came to
2003, non-compliance with (a) established non-written this conclusion based on the following considerations:
procedures and standards; (b) established written
procedures and standards, and (c) verbal orders and/or
First, the decision to retrench had a basis; it was not
instructions. These alleged acts of non-compliance are
simulated nor resorted to for the purpose of getting rid of
too general and can encompass just about any
employees.  The decision was upon the recommendation
malfeasance.  Nowhere in the Notice was there a detailed
of the company’s external auditor. Second, the cost-
narration of the facts and circumstances that would serve
cutting measure recommended involved reduction
as bases to terminate Consolacion, thus leaving to
of TSFI’s payroll expense account which, as the auditor
surmise what those procedures, standards and orders
found, makes up 41% of the company’s total operating
were.  Anabel Benjamin, et al. vs. Amellar Corporation.,
expenses.  Third, Talam was dismissed due to a cause
G.R. No. 183383, April 5, 2010.
authorized by law – retrenchment to prevent losses. At
the time of Talam’s dismissal, TSFI’s financial condition,
Dismissal; management prerogative. 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
Respondent’s right of management prerogative was
P7,424,250.00 for the period ending December 31, 2002.
exercised in good faith. Respondent presented evidence
Fourth, TSFI resorted to other measures to abate its
of the low volume of sales and orders for the production
losses.  It claimed that during the crises period, it used
of industrial paper in 1999, which inevitably resulted to
as an office a small-room (a mere cubicle) with only a
the company’s decision to streamline its operations. This
two-person support staff in the persons
fact was corroborated by respondent’s VP-Tissue
of Grapilon and Hermle; it reduced the salaries of its
Manufacturing Director and was not disputed by
employees by as much as 30%.  This submission by the
petitioner. Exercising its management prerogative and
company is substantiated by the schedule of Operating
sound business judgment, respondent decided to cut
Expenses for the year ended December 31, 2002 and
down on operational costs by shutting down one of its
September 30, 2002. A quick glance at the schedule
paper mill. As held in International Harvester Macleod,
readily shows a reduction of TSFI’s operating expenses
Inc. v. Intermediate Appellate Court [233 Phil. 655,655-
across the board.  The schedule indicates a substantial
666 (1987)] the determination of the need to phase out a
decrease in operating expenses, from P5,733,735.00 in
particular department and consequent reduction of
September 2002 to P1,698,552.36 as of the end of
personnel and reorganization as a labor and cost saving
December 2002. Francis Ray Talam vs. National Labor
device is a recognized management prerogative which
Relations Commission, 4th Division, Cebu City, et al.,
the courts will not generally interfere with.
G.R. No. 175040, April 6, 2010.

In this case, shutting down Paper Mill No. 4 was

Dismissal; serious misconduct.
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 The findings of the CA and National Labor Relations
retrenchment program as a cost-cutting measure, Commission (NLRC) establish the following: (1) Agad’s
respondent, did not dismiss the workers affected by the request for withdrawal of the 190 cylinders of LPG as
closure of Paper Mill No. 4 outright but gave them an stated in a Memorandum dated 12 February 1992 cannot
option to be transferred to posts of equal rank and pay. be given credence since the Memorandum pertains to the
Retrenchment was given only as an option in case the replacement of the scrap materials due to
affected employee did not want to be transferred. The Boy Bato consisting of 3,000 kilograms of black iron
Court viewed this as an indication of good faith on plates and not to the subject LPG cylinders; (2) Agad did
respondent’s part since it exhausted other possible not observe Caltex’s rules and regulations when he
measures before retrenchment.  Besides, the employer’s transferred the said cylinders to Millanes’ compound
prerogative to bring down labor costs by retrenchment without the RMRD form as required under Caltex’s Field
must be exercised essentially as a measure of last resort, Accounting Manual; (3) Agad gave specific instructions
after less drastic means have been tried and found to Millanes to sell the cylinders without bidding to third
wanting.  Giving the workers an option to be transferred parties in violation of company rules; (4)  Agad failed to
without any diminution in rank and pay belie petitioner’s submit the periodic inventory report of the LPG cylinders
allegation that the streamlining scheme was implemented to the accounting department; (5) Agad did not remit the
as a ploy to ease out employees. Apparently, respondent proceeds of the sale of the LPG cylinders; and  (6) even if

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considered as scrap materials, the LPG cylinders still had relationship. Moreover, Abueva was not able to refute
monetary value which Agad cannot appropriate for respondents’ assertion that he hires other men to
himself without Caltex’s consent. perform weeding job in the hacienda and that he is not
exclusively working for
respondents. Romeo Basay, et al. vs. Hacienda
Considering these findings, it is clear
Consolation, et al., G.R. No. 175532, April 19, 2010.
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 Illegal dismissal.
lawful orders of his employer in connection with his work,
a just cause for termination of employment recognized
Contrary to the CA’s perception, the Court finds a work-
under Article 282(a) of the Labor Code.
connection in Amular’s and Ducay’s assault on Mendoza. 
As the CA itself noted, the underlying reason
Misconduct has been defined as a transgression of some why Amular and Ducay confronted Mendoza was to
established and definite rule of action, a forbidden act, a question him about his report to De Leon
dereliction of duty, willful in character, and implies – Technol’s PCD assistant supervisor – regarding the
wrongful intent and not mere error in judgment.  To be duo’s questionable work behavior.  The motivation behind
serious, the misconduct must be of such grave and the confrontation was rooted on workplace dynamics as
aggravated character. Caltex (Philippines), Inc., et. al. Mendoza, Amular and Ducay interacted with one another
vs. Hermie G. Abad, et. al., G.R. No. 163554, April 23, in the performance of their duties.
2010.
Under these circumstances, Amular undoubtedly
Due Process; termination. committed misconduct or exhibited improper behavior
that constituted a valid cause for his dismissal under the
law and jurisprudential standards. The circumstances of
The records belie Amular’s claim of denial of procedural
his misdeed rendered him unfit to continue working
due process.  He chose not to present his side at the
for Technol.  Thus, Amular was not illegally dismissed; he
administrative hearing.  In fact, he avoided the
was dismissed for cause. Technol Eight Philippines
investigation into the charges against him by filing his
Corporation vs. National Labor Relations
illegal dismissal complaint ahead of the scheduled
Commission, et al., G.R. No. 187605. April 13, 2010.
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 Illegal Dismissal .
opportunity.  To belabor a point the Court has repeatedly
made in employee dismissal cases, the essence of due
If the school were to apply the probationary standards
process is simply an opportunity to be heard; it is the
(as in fact it says it did in the present case), these
denial of this opportunity that constitutes violation of due
standards must not only be reasonable but must have
process of law. Technol Eight Philippines Corporation vs.
also been communicated to the teachers at the start of
National Labor Relations Commission, et al., G.R. No.
the probationary period, or at the very least, at the start
187605. April 13, 2010.
of the period of application of the said standards.  These
terms, in addition to those expressly provided by the
Employer employee relationship. 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
The elements to determine the existence of an
communicated to the affected teachers as a matter of
employment relationship are: (1) selection and
due process.
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. In filing a complaint AMACC, by its submissions, admits that it did not renew
for illegal dismissal, it is incumbent upon Abueva to prove the petitioners’ contracts because they failed to pass the
the relationship by substantial evidence. Performance Appraisal System for Teachers (PAST) and
other requirements for regularization that the school
implements to maintain its high academic standards. The
In this regard, Abueva claims that he has worked with
evidence is unclear on the exact terms of the standards,
respondent hacienda for more than a year already and
although the school also admits that these were
that he was allowed to stay inside the hacienda.  As such,
standards under the Guidelines on the Implementation
he is a regular employee entitled to monetary claims. 
of AMACC Faculty Plantilla put in place at the start of
However, petitioners have not presented competent proof
school year 2000-2001.
that respondents engaged the services of Abueva; that
respondents paid his wages or that respondents could
dictate what his conduct should be while at work.  In While the Court can grant that the standards were duly
other words, Abueva’s allegations did not establish that communicated to the petitioners and could be applied
his relationship with respondents had the attributes of an beginning the 1st trimester of the school year 2000-2001,
employer-employee relationship based on the four-fold glaring and very basic gaps in the school’s evidence still
test. Abueva was not able to discharge the burden of exist.  The exact terms of the standards were never
proving the existence of an employer-employee introduced as evidence; neither does the evidence show

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how these standards were applied to the petitioners. in the event of an unjustified excuse therefor, and (2)
Without these pieces of evidence (effectively, the finding subsequent notice of the decision to dismiss in the event
of just cause for the non-renewal of the petitioners’ of an employee’s refusal to pay heed to such warning. 
contracts), the Court has nothing to consider and pass Only after complying with those requirements can it be
upon as valid or invalid for each of the petitioners. reasonably concluded that the employee actually
Inevitably, the non-renewal (or effectively, the abandoned his job.  In the present case, more than two
termination of employment of employees on probationary (2) months had already lapsed since the employee
status) lacks the supporting finding of just cause that the allegedly started to absent herself when she instituted
law requires and, hence, is illegal. Yolanda M. her action for illegal dismissal.  During the said period of
Mercado, et al. vs. Ama Computer time, no action was taken by the company regarding the
College, Parañaque City, G.R. No. 183572, April 13, employee’s alleged absences, something which is quite
2010. peculiar had her employment not been severed at all. 
Accordingly, the Court found no merit in the company’s
defense of abandonment in view of an utter lack of
Illegal dismissal.
evidence to support the same.  Hence, the employee’s
charge of illegal dismissal
The Court is not unmindful of the rule in labor cases that stands uncontroverted. Diversified Security, Inc. vs.
the employer has the burden of proving that the Alicia V. Bautista. G.R. No. 152234, April 15, 2010.
termination was for a valid or authorized cause; however,
it is likewise incumbent upon the employees that they
Preventive Suspension; Process.
should first establish by competent evidence the fact of
their dismissal from employment. The one who alleges a
fact has the burden of proving it and the proof should be What the Rules require is that the employer act on the
clear, positive and convincing. In this case, aside from suspended worker’s status of employment within the 30-
mere allegations, no evidence was proffered by the day period by concluding the investigation either by
petitioners that they were dismissed from employment. absolving him of the charges, or meting the
The records are bereft of any indication that petitioners corresponding penalty if liable, or ultimately dismissing
were prevented from returning to work or otherwise him.  If the suspension exceeds the 30-day period
deprived of any work assignment by respondents. without any corresponding action on the part of the
employer, the employer must reinstate the employee or
extend the period of suspension, provided the employee’s
In Abad v. Roselle Cinema [G.R. No. 141371, March 24,
wages and benefits are paid in the interim.
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 In the present case, petitioner company had until May
on the pretext that the employee would not have filed 20, 2002 to act on Taroy’s case.  It did by terminating
the complaint for illegal dismissal if he had not really him through a notice dated May 10, 2002, hence, the 30-
been dismissed. The Court held that such non sequitur day requirement was not violated even if the termination
reasoning cannot take the place of the evidence of both notice was received only on June 4, 2002, absent any
the employer and the employee. Romeo Basay, et al. vs. showing that the delayed service of the notice
Hacienda Consolation, et al., G.R. No. 175532, April 19, on Taroy was attributable to Genesis Transport. Genesis
2010. Transport Service, Inc. et al.
vs. Unyon ng Malayang Manggagawa ng Genesis
(UMMGT), et al., G.R. No. 182114, April 5, 2010.
Illegal Dismissal.

Reinstatement.
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 Given the period that has lapsed and the inevitable
the employee had abandoned her work.  It did not even change of circumstances that must have taken place in
bother to send a letter to her last known address the interim in the academic world and at AMACC, which
requiring her to report for work and explain her alleged changes inevitably affect current school operations, the
continued absences. 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
The ratiocination of the NLRC on this score merits the
service up to the end of the complete trimester preceding
Court’s imprimatur, viz: The law clearly spells out the
the finality of this Decision. The separation pay shall be in
manner by which an unjustified refusal to return to work
addition to the other awards, properly recomputed, that
by an employee may be established.  Thus, respondent
the LA originally decreed. Yolanda M. Mercado, et al.
should have given complainant a notice with warning
vs. Ama Computer College, Parañaque City, G.R. No.
concerning her alleged absences (Section 2, Rule XIV,
183572, April 13, 2010.
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
Release, Waiver and Quitclaim.

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Talam was not an unlettered employee; he was an for a just and valid cause from the employer to the
information technology consultant and must have been employee.  In Mora v. Avesco [G.R. No. 177414,
fully aware of the consequences of what he was entering November 14, 2008, 571 SCRA 226], the Court ruled that
into. The quitclaim was a voluntary act as there is no should the employer interpose the defense of resignation,
showing that he was coerced into executing the it is still incumbent upon the employer to prove that the
instrument; he received a valuable consideration for his employee voluntarily resigned. Manolo A. Peñaflor vs.
less than two years of service with the company.  Thus, Outdoor Clothing Manufacturing Corp., et al., G.R. No.
from all indications, the release and quitclaim was a valid 177114, April 13, 2010.
and binding undertaking that should have been
recognized by the labor authorities and the CA.
Labor Procedure

While the law frowns upon releases and quitclaims

Certiorari; questions of law.
executed by employees who are inveigled or pressured
into signing them by unscrupulous employers seeking to
evade their legal responsibilities, a legitimate waiver TSFI asks the Court to dismiss the present petition on the
representing a voluntary settlement of a laborer’s claims ground that it is procedurally defective as, allegedly, it
should be respected by the courts as the law between the raises only questions of fact, in contravention of the
parties. In the Court’s view, Talam’s release and requirement under Rule 45 of the Rules of Court that an
quitclaim fall into the category of legitimate waivers as appeal by certiorari shall raise only questions of law.
defined by the Court. While the petition indeed poses factual issues – i.e.,
whether the company was suffering from substantial
losses to justify a retrenchment measure, whether it
With Talam’s voluntary execution of the release and
observed fair and reasonable standards in implementing
quitclaim, the Court found the filing of the illegal
a retrenchment, and whether Talam deserved to be
dismissal case tainted with bad faith. Neither can TSFI be
retrenched – the Court deems it proper to examine the
made to answer for failure to afford Talam procedural
facts itself in view of the conflicting factual findings
due process.  The release and quitclaim, in the Court’s
among the Labor Arbiter, the NLRC and the CA. Francis
mind, erased whatever infirmities there might have been
Ray Talam vs. National Labor Relations Commission,
in the notice of termination as Talam had already
4th Division, Cebu City, et al., G.R. No. 175040, April 6,
voluntarily accepted his dismissal through the release
2010.
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 Finding of facts.
purpose after protection has been assured.  The Court
thus finds no basis for the conclusion that TSFI violated Findings of facts of quasi-judicial bodies like the NLRC,
procedural due process and should pay nominal and affirmed by the CA in due course, are conclusive on
damages. Francis Ray Talam vs. National Labor Relations the Supreme Court, which is not a trier of facts.
Commission, 4th Division, Cebu City, et al., G.R. No.
175040, April 6, 2010.
Findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because
Resignation of Employee. their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when
While the letter states that Peñaflor’s resignation was affirmed by the CA. Such findings deserve full respect
irrevocable, it does not necessarily signify that it was also and, without justifiable reason, ought not to be altered,
voluntarily executed.  Precisely because of the attendant modified or reversed. Diversified Security, Inc. vs. Alicia
hostile and discriminatory working V. Bautista. G.R. No. 152234, April 15, 2010
environment, Peñaflor decided to permanently sever his
ties with Outdoor Clothing.  This falls squarely within the Res Judicata.
concept of constructive dismissal that jurisprudence
defines, among others, as involuntarily resignation due to
the harsh, hostile, and unfavorable conditions set by the On the issue of refund of “underpayment,” petitioners
employer.  It arises when a clear discrimination, aver that cases of similar import involving also the
insensibility, or disdain by an employer exists and has respondent union have been decided with finality in their
become unbearable to the employee. The gauge for favor by the NLRC, viz: UMMGT v. Genesis Transport
constructive dismissal is whether a reasonable person in Service, Inc. (NLRC RAB III Case No. 04-518-03)
the employee’s position would feel compelled to give up and Reyes v. Genesis Transport Service, Inc. (NLRC CA
his employment under the prevailing circumstances. With No. 04862-04); and Santos v. Genesis Transport Service,
the appointment of Buenaobra to the position he then Inc. (NLRC CA No. 041869-04).  Petitioners thus pray
still occupied, Peñaflor felt that he was being eased out that the Court accord respect to the rulings of
and this perception made him decide to leave the the NLRC in the above-cited cases and apply the principle
company. of res judicata vis-à-vis the present case. The Supreme
Court held, however that, absent proof that
the NLRC cases cited by petitioners have attained finality,
The fact of filing a resignation letter alone does not shift the Court may not consider them to constitute res
the burden of proving that the employee’s dismissal was

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judicata on petitioners’ claim for refund of the In the present case, the Labor Arbiter found that actual
“underpayment” due. Genesis Transport Service, animosity existed between petitioner Azul and
Inc. et al. respondent as a result of the filing of the illegal dismissal
vs. Unyon ng Malayang Manggagawa ng Genesis case.  Such finding, especially when affirmed by the
(UMMGT), et al., G.R. No. 182114, April 5, 2010 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.
May 2010
Selected Supreme Court Decisions on Labor Law
and Procedure Illegal dismissal; separation pay.

Labor law 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
Illegal dismissal; backwages.
illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if
The basis for the payment of backwages is different from reinstatement is no longer viable, and backwages. The
that for the award of separation pay.  Separation pay is normal consequences of respondents’ illegal dismissal,
granted where reinstatement is no longer advisable then, are reinstatement without loss of seniority rights,
because of strained relations between the employee and and payment of backwages computed from the time
the employer.  Backwages represent compensation that compensation was withheld up to the date of actual
should have been earned but were not collected because reinstatement.  Where reinstatement is no longer viable
of the unjust dismissal.  The basis for computing as an option, separation pay equivalent to one (1) month
backwages is usually the length of the employee’s service salary for every year of service should be awarded as an
while that for separation pay is the actual period when alternative.  The payment of separation pay is in addition
the employee was unlawfully prevented from working. to payment of backwages.

As to how both awards should be computed, Macasero v. The accepted doctrine is that separation pay may avail in
Southern Industrial Gases Philippines [G.R. No. 178524, lieu of reinstatement if reinstatement is no longer
January 30, 2009] instructs that the award of separation practical or in the best interest of the parties. Separation
pay is inconsistent with a finding that there was no illegal pay in lieu of reinstatement may likewise be awarded if
dismissal, for under Article 279 of the Labor Code and as the employee decides not to be reinstated. Golden Ace
held in a catena of cases, an employee who is dismissed Builders and Arnold U. Azur vs. Jose A. Talde, G.R. No.
without just cause and without due process is entitled to 187200, May 5, 2010.
backwages and reinstatement or payment of separation
pay in lieu thereof. Thus, an illegally dismissed employee
Labor procedure
is entitled to two reliefs: backwages and reinstatement. 
The two reliefs provided are separate and
distinct.  Golden Ace Builders and Arnold U. Azur vs. Judgment; final and executory.
Jose A. Talde, G.R. No. 187200, May 5, 2010.
The Labor Arbiter’s decision has long become final and
Illegal dismissal; doctrine of strained relations . 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
Under the doctrine of strained relations, the payment of
immutable and unalterable.  The judgment may no
separation pay is considered an acceptable alternative to
longer be modified in any respect, even if the
reinstatement when the latter option is no longer
modification is meant to correct what is perceived to be
desirable or viable.  On one hand, such payment liberates
an erroneous conclusion of law or fact, and regardless of
the employee from what could be a highly oppressive
whether the modification is attempted to be made by the
work environment.  On the other hand, it releases the
court rendering it or by the highest court of the land. 
employer from the grossly unpalatable obligation of
The only recognized exception are the correction of
maintaining in its employ a worker it could no longer
clerical errors or the making of so-called nunc pro tunc
trust.
entries which cause no injury to any party, and, of
course, where the judgment is void.
Strained relations must be demonstrated as a fact,
however, to be adequately supported by evidence—
Once a judgment becomes final and executory, the
substantial evidence to show that the relationship
prevailing party should not be denied the fruits of his
between the employer and the employee is
victory by some subterfuge devised by the losing party. 
indeed strained as a necessary consequence of the
Final and executory judgments can neither be amended
judicial controversy.
nor altered except for correction of clerical errors, even if
the purpose is to correct erroneous conclusions of fact or

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of law. Trial and execution proceedings constitute one have been contrary to the purpose of the program.
whole action or suit such that a case in which execution Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S.
has been issued is regarded as still pending so that all Yuson, G.R. No. 170369, June 16, 2010.
proceedings in the execution are proceedings in the suit.
Constructive dismissal; definition; transfer as
It is no longer legally feasible to modify the final ruling in management prerogative.
this case through the expediency of a petition
questioning the order of execution.  Judgments of courts
Constructive dismissal is defined as a quitting because
should attain finality at some point lest there be no end
continued employment is rendered impossible,
in litigation. The final judgment in this case may no
unreasonable or unlikely, or when there is a demotion in
longer be reviewed, or in any way modified directly or
rank or a diminution of pay. It exists when an act of clear
indirectly, by a higher court, not even by the Supreme
discrimination, insensibility or disdain by an employer has
Court. The reason for this is that, litigation must end and
become so unbearable to the employee leaving him with
terminate sometime and somewhere, and it is essential
no option but to forego with his continued employment.
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 Here, there was no diminution of petitioner’s salary and
guard against any scheme calculated to bring about that other benefits.  There was no evidence that she was
result and must frown upon any attempt to prolong harassed or discriminated upon, or that respondents
controversies. Marmosy Trading, Inc. and Victor Morales made it difficult for her to continue with her other duties. 
vs. Court of Appeals, et al., G.R. No. 170515, May 6, Absent any evidence of bad faith, it is within the exercise
2010. of respondents’ management prerogative to transfer
some of petitioner’s 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.

June 2010 Selected Supreme Court Decisions on

Constructive dismissal; off-detailing; resignation;
Labor Law and Procedure
notice requirement.

Labor Law
The company evidently placed petitioner on floating
status after being relieved of her position.  But, as the
Acceptance of Benefits, render moot claim under Court has repeatedly ruled, such act of “off-detailing”
other policies.  does not amount to a dismissal so long as the floating
status does not continue beyond a reasonable time.  In
this case, the employee’s floating status ran up to more
As in the case of Capili v. National Labor Relations
than six months as of August 16, 2002. For this reason,
Commission [273 SCRA 576], a claim for benefit under
the company may be considered to have constructively
the company’s retirement plan becomes moot when the
dismissed the employee from work as of that date.
employee accepts retirement benefits on the basis of
Hence, petitioner’s purported resignation on October 15,
Article 287 of the Labor Code.  By Yuson’s acceptance of
2002 could not have been legally possible.
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 The company claims that it gave petitioner notices on
Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, August 23, 2002 and September 2, 2002, asking her to
June 16, 2010. explain her failure to report for work and informing her
that the company would treat such failure as lack of
interest in her continued employment.  But these notices
Approval for company’s early retirement program;
cannot possibly take the place of the notices required by
management prerogative.
law as they came more than six months after the
company placed her on floating status, at which time, the
  Approval of applications for the early retirement employee is already deemed to have been constructively
program (“ERP”) is within the employer’s management dismissed her from work.  Elsa S. Mali-on v. Equitable
prerogatives.  The exercise of management prerogative is General Services Inc., G.R. No. 185269, June 29, 2010.
valid as long as it is not done in a malicious, harsh,
oppressive, vindictive, or wanton manner. In the present
Death benefits; entitlement .
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 In order to avail of death benefits, the death of the
to its employees.  The memorandum also states that the employee should occur during the term of the
reason for the ERP was to prevent further losses.  employment contract.  For emphasis, we reiterate that
Petitioner did not abuse its discretion when it excluded the death of a seaman during the term of employment
respondent in the ERP because the latter is already about contract makes the employer liable to his heirs for death
to retire.  To allow respondent to avail of the ERP would benefits, but if the seaman dies after his contract of

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employment has expired, his beneficiaries are not While an employer has its own interest to protect, and
entitled to the death benefits. Southeastern Shipping, pursuant thereto, it may terminate a managerial
Southeastern Shipping Group, Ltd. vs. Federico U. employee for a just cause, such prerogative to dismiss or
Navarra, Jr., G.R. No. 167678, June 22, 2010. lay off an employee must be exercised without abuse of
discretion. Its implementation should be tempered with
compassion and understanding. The employer should
Death benefits; post-medical examination;
bear in mind that, in the exercise of the said prerogative,
inadvertence of employer.
what is at stake is not only the employee’s position, but
his very livelihood, his very breadbasket. Indeed, the
  In the cases of Philippines., Inc. v. Joaquin [437 SCRA consistent rule is that if doubts exist between the
608] and Rivera v. Wallem Maritime Services, Inc.[474 evidence presented by the employer and the employee,
SCRA 714], the Supreme Court stressed the importance the scales of justice must be tilted in favor of the latter.
of a post-employment medical examination or its The employer must affirmatively show rationally
equivalent for the award of death benefits to seafarers adequate evidence that the dismissal was for justifiable
and/or their representatives in compliance with POEA cause. Thus, when the breach of trust or loss of
Memorandum Circular No. 055-96 and Department Order confidence alleged is not borne by clearly established
No. 33, Series of 1996, which provide that the seafarer facts, as in this case, such dismissal on the cited grounds
must report to his employer for a post-employment cannot be allowed. Lima Land, Inc., Leandro Javier,
medical examination within three working days from the Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas,
date of arrival, otherwise, benefits under the POEA G.R. No. 169523, June 16, 2010.
standard employment contract would be nullified. 
However, in the present case, the absence of a post-
Dismissal; gross neglect of duty; duty to family is
employment medical examination cannot be used to
no defense.
defeat respondent’s claim since the failure to subject the
seafarer to this requirement was not due to the seafarer’s
fault but to the inadvertence or deliberate refusal of Dr. Estampa’s defense is not acceptable.  A person’s duty
petitioners. Interorient Maritime Enterprises, Inc. et al. v. to his family is not incompatible with his job-related
Leonora S. Remo, G.R. No. 181112, June 29, 2010. 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
Dismissal; breach of trust; lack of loss not a
entailed the commitment to make a measure of personal
defense.
sacrifice, he had the choice to resign from it when he
realized that he did not have the will and the heart to
The acts of the employee revealed a mind that was respond.  Dr. Edilberto Estampa, Jr. vs. Government of
willing to disregard bank rules and regulations when Davao, G.R. No. 190681, June 21, 2010.
other branch officers concurred. Her defense that the
bank suffered no loss is of no moment. The focal point is
Dismissal; loss of confidence not entitled to
that she betrayed the trust of the bank. Hence, the bank
separation pay.
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. It is significant to stress that for there to be a valid
178762, June 16, 2010. 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
Dismissal; burden of proof.
justifiable excuse.  The basic premise for dismissal on the
ground of loss of confidence is that the employee
In termination cases, the burden of proof rests upon the concerned holds a position of trust and confidence.  It is
employer to show that the dismissal of the employee is the breach of this trust that results in the employer’s loss
for just cause and failure to do so would mean that the of confidence in the employee.
dismissal is not justified. This is in consonance with the
guarantee of security of tenure in the Constitution, and
In the case of Aromin v. NLRC [553 SCRA 273], the
elaborated in the Labor Code. A dismissed employee is
assistant vice-president of BPI was validly dismissed for
not required to prove his innocence to the charges
loss of trust and confidence. The Court disallowed the
leveled against him by his employer. The determination
payment of separation pay on the ground that he was
of the existence and sufficiency of a just cause must be
found guilty of willful betrayal of trust, a serious offense
exercised with fairness and in good faith and after
akin to dishonesty. Bank of the Philippine Islands and BPI
observing due process. Lima Land, Inc., Leandro Javier,
Family Bank vs. Hon. National Labor Relations
Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas,
Commission (1st Division) and Ma. Rosario N. Arambulo,
G.R. No. 169523, June 16, 2010.
G.R. No. 179801. June 18, 2010.

Dismissal; exercised with compassion and

Dismissal; loss of trust and confidence; managerial
understanding; doubts resolved in favor of
employees.
employee.

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Labor Law Jurisprudence
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Loss of trust and confidence, as a just cause for While as a general rule, an employee who has been
termination of employment, is premised on the fact that dismissed for any of the just causes enumerated under
an employee concerned holds a position where greater Article 282 of the Labor Code is not entitled to separation
trust is placed by management and from whom greater pay, the Court has allowed in numerous cases the grant
fidelity to duty is correspondingly expected. This includes of separation pay or some other financial assistance to an
managerial personnel entrusted with confidence on employee dismissed for just causes on the basis of
delicate matters, such as the custody, handling, or care equity.
and protection of the employer’s property. The betrayal
of this trust is the essence of the offense for which an
In the leading case of Philippine Long Distance Telephone
employee is penalized.
Co. v. NLRC [164 SCRA 671] the Court stated that
separation pay shall be allowed as a measure of social
It must be noted, however, that in a plethora of cases, justice only in those instances where the employee is
the Supreme Court has distinguished the treatment of validly dismissed for causes other than serious
managerial employees from that of rank-and-file misconduct or those reflecting on his moral character.  In
personnel, insofar as the application of the doctrine of granting separation pay to respondent, the NLRC and
loss of trust and confidence is concerned. Thus, with Court of Appeals both adhered to this jurisprudential
respect to rank-and-file personnel, loss of trust and precept and cleared respondent of bad faith. Bank of the
confidence, as ground for valid dismissal, requires proof Philippine Islands and BPI Family Bank vs. Hon. National
of involvement in the alleged events in question, and that Labor Relations Commission (1st Division) and Ma.
mere uncorroborated assertions and accusations by the Rosario N. Arambulo, G.R. No. 179801, June 18, 2010.
employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for
Employee benefit; total disability construed.
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 It has been held that disability is intimately related to
doubt is not required, it being sufficient that there is one’s earning capacity. It should be understood less on
some basis for such loss of confidence, such as when the its medical significance but more on the loss of earning
employer has reasonable ground to believe that the capacity. Total disability does not mean absolute
employee concerned is responsible for the purported helplessness. In disability compensation, it is not the
misconduct, and the nature of his participation therein injury, which is compensated, but rather the incapacity to
renders him unworthy of the trust and confidence work resulting in the impairment of one’s earning
demanded of his position. Lima Land, Inc., Leandro capacity.  Thus, permanent disability is the inability of a
Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn worker to perform his job for more than 120 days,
Cuavas, G.R. No. 169523, June 16, 2010. 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

Dismissal; mere negligence or carelessness not
insurance companies; exception to the Insular
sufficient ground for loss of confidence.
case;

Respondent’s negligence or carelessness in her duties,

Our ruling in the first Insular case [Insular Insurance v.
however, are not justifiable grounds for petitioners’ loss
NLRC, 179 SCRA 459] case did not foreclose the
of trust and confidence in her, especially in the absence
possibility of an insurance agent becoming an employee
of any malicious intent or fraud on respondent’s part.
of an insurance company; if evidence exists showing that
Loss of trust and confidence stems from a breach of trust
the company promulgated rules or regulations that
founded on a dishonest, deceitful or fraudulent act.  In
effectively controlled or restricted an insurance agent’s
the case at bar, respondent did not commit any act which
choice of methods or the methods themselves in selling
was dishonest or deceitful. She did not use her authority
insurance, an employer-employee relationship would be
as the Finance and Administration Manager to
present. The existence of an employer-employee
misappropriate company property nor did she abuse the
relationship is thus determined on a case-to-case basis
trust reposed in her by petitioners with respect to her
depending on the evidence on record. Gregorio V.
responsibility to implement company rules. The most that
Tongko v. The Manufacturers Life Insurance Co. (Phils)
can be attributed to respondent is that she was remiss in
and Renato A. Vergel De Dios, G.R. No. 167622, June 29,
the performance of her duties. This, though, does not
2010.
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 Nature of employer; privatization; entitlement to
Ann Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, benefits.
2010.
Although the transformation of the PNB from a
Dismissal for just cause, separation pay allowed in government-owned corporation to a private one did not
exceptional cases. result in a break in its life as juridical person, the same
idea of continuity cannot be said of its employees. 

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Section 27 of Presidential Proclamation 50 provided for being more favorable to the seafarers and more in accord
the automatic termination of employer-employee with the State’s declared policy to afford full protection to
relationship upon privatization of a government-owned labor, which provides for a three-year prescriptive period.
and controlled corporation.  Further, such privatization Southeastern Shipping, Southeastern Shipping Group,
cannot deprive the government employees involved of Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June
their accrued benefits or compensation. 22, 2010.

As for possible benefits accruing after privatization, the Quitclaims; general rule; requirements for validity;
same should be deemed governed by the Labor Code instances when it was annulled. 
since the PNB that rehired the employee has become a
private corporation. Under the Omnibus Rules
As a rule, quitclaims, waivers, or releases are looked
Implementing the Labor Code, Book VI, Rule I, Section 7,
upon with disfavor and are largely ineffective to bar
the employee’s separation from work for a just cause
claims for the measure of a worker’s legal rights. To be
does not entitle her to termination pay.  Luzviminda A.
valid, a Deed of Release, Waiver and/or Quitclaim must
Ang vs. Philippine National Bank, G.R. No. 178762, June
meet the following requirements: (1) that there was no
16, 2010.
fraud or deceit on the part of any of the parties; (2) that
the consideration for the quitclaim is credible and
Nature of employer; privatization no defense; reasonable; and (3) that the contract is not contrary to
continuity of offense. law, public order, public policy, morals or good customs,
or prejudicial to a third person with a right recognized by
law.
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 Courts have stepped in to annul questionable
government corporation, it did not mean that its transactions, especially where there is clear proof that a
corporate being ceased and was subsequently waiver, for instance, was obtained from an unsuspecting
reestablished when it was privatized.  It remained the or a gullible person; or where the agreement or
same corporate entity before, during, and after the settlement was unconscionable on its face. A quitclaim is
change over with no break in its life as a corporation.  ineffective in barring recovery of the full measure of a
Consequently, the offenses that were committed against worker’s rights, and the acceptance of benefits therefrom
the bank before its privatization continued to be offenses does not amount to estoppel. Moreover, a quitclaim in
against the bank after the privatization.  Luzviminda A. which the consideration is scandalously low and
Ang vs. Philippine National Bank, G.R. No. 178762, June inequitable cannot be an obstacle to the pursuit of a
16, 2010. worker’s legitimate claim. Interorient Maritime
Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No.
181112, June 29, 2010.
Prescription of labor claims; overseas contract
workers.
Retirement benefits; does not include allowances.
Executive Order No. 756 temporary measure;
The employment of seafarers, including claims for death
statutory construction. 
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, Section 6 of Executive Order No. 756 (“E.O. 756”), which
public order or public policy, they have the force of law provides for the computation of retirement proceeds
between the parties. including allowances, does not provide for a permanent
retirement plan, as against the prohibition of Section 28,
Subsection (b) of Commonwealth Act No. 186 (“C.A.
In Cadalin v. POEA’s Administrator [238 SCRA 721, 764]
186”), as amended.  The E.O. 756 should be read adjunct
we held that Article 291 of the Labor Code covers all
to its mandate of reorganizing the Philippine International
money claims from employer-employee relationship.  “It
Trading Corporation.  The increased benefit under E.O.
is not limited to money claims recoverable under the
756 was clearly meant as an incentive for employees who
Labor Code, but applies also to claims of overseas
retire, resign or are separated from service during or as a
contract workers”.
consequence of the reorganization.  As a temporary
measure, it cannot be interpreted as an exception to the
Article 291 of the Labor Code is the law governing general prohibition against separate or supplementary
prescription of money claims of seafarers, a class of insurance and/or retirement or pension plans under C.A.
overseas contract workers. This law prevails over Section 186, as amended.
28 of the Standard Employment Contract for Seafarers,
which provides for claims to be brought only within one
In reconciling E.O. 756 with C.A.186, as amended,
year from the date of the seafarer’s return to the point of
uppermost in the mind of the Court is the fact that the
hire.  Thus, for the guidance of all, Section 28 of the
best method of interpretation is that which makes laws
Standard Employment Contract for Seafarers, insofar as
consistent with other laws which are to be harmonized
it limits the prescriptive period for the filing of money
rather than having one considered repealed in favor of
claims by seafarers, is hereby declared null and void. The
the other. Philippine International Trading Corporation
applicable provision is Article 291 of the Labor Code, it

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Labor Law Jurisprudence
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vs. Commission on Audit, G.R. No. 183517, June 22, to Labor Arbiter Mayor, Jr. “for conduct of further
2010. 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.
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 Judgment; res judicata; nature and applicability.
employee resigned from work, the burden is on the
employer to prove that he did so willingly. Whether that
  The nature of res judicata, as now embodied in Sec. 47,
is the case would largely depend on the circumstances
Rule 39 of the Rules of Court, has two concepts, which
surrounding such alleged resignation. Those
are (i) bar by former judgment and (ii) conclusiveness of
circumstances must be consistent with the employee’s
judgment.  These concepts of the doctrine of res judicata
intent to give up work. Elsa S. Mali-on v. Equitable
are applicable to second actions involving substantially
General Services Inc., G.R. No. 185269, June 29, 2010.
the same parties, the same subject matter, and cause or
causes of action. In the instant case, there is no second
Solidary liability of employers; proof of bad faith. action to speak of. Oriental Ship Management Co., Inc.
vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.
Based on MAM Realty Development Corporation v. NLRC
[244 SCRA 797], for corporate officers to be held Procedure; certificate of non-forum shopping; pro-
solidarily liable in labor disputes there must be evidence forma complaints.
of bad faith or malice.  Querubin L. Alba and Rizalinda D.
De Guzman vs. Robert L. Yupangco, G.R. No. 188233,
For the expeditious and inexpensive filing of complaints
June 29, 2010.
by employees, the Regional Arbitration Branch (“RAB”) of
the NLRC provides pro-forma complaint forms.  This is to
Labor Procedure facilitate the exercise and protection of employees’ rights
by the convenient assertion of their claims against
employers untrammeled by procedural rules and
Judgment; amendment of final order; solidary
complexities.  To comply with the certification against
liability.
forum shopping requirement, a simple question embodied
in the Complaint form answerable by “yes” or “no”
The Labor Arbiter cannot modify a final and executory suffices.  Employee-complainants are not even required
judgment, even if the modification is meant to correct to have a counsel before they can file their complaint.  An
erroneous conclusions of fact and law, whether it be officer of the RAB, duly authorized to administer oaths, is
made by the court that rendered it or by the highest readily available to facilitate the execution of the required
court in the land. The only recognized exceptions are the subscription or jurat of the complaint. Oriental Ship
corrections of clerical errors or the making of so-called Management Co., Inc. vs. Romy B. Bastol, G.R. No.
nunc pro tunc entries which cause no prejudice to any 186289, June 29, 2010.
party and in cases where the judgment is void.  Said
exceptions do not apply in the present case. Querubin L.
Procedure; conduct of hearings; discretionary;
Alba and Rizalinda D. De Guzman vs. Robert L.
exemptions. 
Yupangco, G.R. No. 188233, June 29, 2010.

Although, the NLRC, while having appellate jurisdiction

Judgment; law of the case; definition and
over decisions and resolutions of the Labor Arbiter, may
application.
not dictate to the latter how to conduct the labor case
before it.  Sec. 9 of Rule V of the then prevailing NLRC
“Law of the case” has been defined as the opinion Rules of Procedure, issued on December 10, 1999,
delivered on a former appeal—it is a term applied to an provided for the nature of proceedings before the Labor
established rule that when an appellate court passes on a Arbiter as non-litigious in nature. Hence, the Labor
question and remands the case to the lower court for Arbiter is given full discretion to determine, motu proprio,
further proceedings, the question there settled becomes on whether to conduct hearings or not.
the law of the case upon subsequent appeal.  OSCI’s
application of the law of the case principle to the instant
Consequently, a hearing cannot be demanded by either
case, as regards the remand of the case to the Labor
party as a matter of right.  The parties are required to file
Arbiter for clarificatory hearings, is misplaced.  The only
their corresponding position papers and all the
matter settled in the July 30, 1999 NLRC Decision, which
documentary evidence and affidavits to prove their cause
can be regarded as law of the case, was the undisputed
of action and defenses.  The rationale behind this is to
fact that Bastol was suffering from a heart ailment.  As it
avoid delay and curtail the pernicious practice of
is, the issue on the degree of disability of Bastol’s heart
withholding of evidence.
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

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Labor Law Jurisprudence
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The Court, however, has recognized specific instances of The nature of the proceedings before the Labor Arbiter is
the impracticality for the Labor Arbiter to follow the not only non-litigious and summary, but the Labor Arbiter
position paper method of disposing cases; thus, formal or is also given great leeway to resolve the case; thus, he
clarificatory hearings must be had in cases of termination may “avail himself of all reasonable means to ascertain
of employment: such as,  (i) when claims are not the facts of the controversy.” The belated submission of
properly ventilated for lack of proper determination additional documentary evidence by respondent after the
whether complainant employee was a rank-and-file or a case was already submitted for decision did not make the
managerial employee, (ii) that the Labor Arbiter cannot proceedings before the Labor Arbiter improper.  The basic
rely solely on the parties’ bare allegations when the reason is that technical rules of procedure are not binding
affidavits submitted presented conflicting factual issues, in labor cases. Oriental Ship Management Co., Inc. vs.
and (iii) considering the dearth of evidence presented by Romy B. Bastol, G.R. No. 186289, June 29, 2010.
complainants the Labor Arbiter should have set the case
for hearing. Oriental Ship Management Co., Inc. vs.
Procedure; quantum of evidence on appeal;
Romy B. Bastol, G.R. No. 186289, June 29, 2010.
substantial evidence. 

Procedure; verification by counsel sufficient.

In administrative proceedings, the quantum of proof
required is substantial evidence, which is more than a
The counsel’s verification in a Position Paper mere scintilla of evidence, but such amount of relevant
substantially complies with the rule on verification.  The evidence which a reasonable mind might accept as
second paragraph of Sec. 4, Rule 7 of the Rules of Court adequate to justify a conclusion. The Court of Appeals
provides:  “A pleading is verified by an affidavit that the may review the factual findings of the NLRC and reverse
affiant has read the pleading and that the allegations its ruling if it finds that the decision of the NLRC lacks
therein are true and correct of his personal knowledge or substantial basis. Estrella Velasco vs. Transit Automotive
based on authentic records.”  On the other hand, the Supply, Inc. and Antonio de Dios, G.R. No. 171327, June
actual verification of counsel states:  “That I am the 18, 2010.
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. July 2010 Selected Supreme Court Decisions on
Labor Law and Procedure
Procedure; late filing of position paper, and filing of
prohibited pleading.  Labor Law

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 Assumption of jurisdiction by Secretary of Labor;
Arbiter not just once but twice.  His situation was authority to decide on legality of dismissals arising
compounded when he filed a motion to recall order of from strike.
dismissal, a prohibited pleading, albeit gratuitously
glossed over by the Labor Arbiter, which treated it as an
appeal; and when he belatedly paid the appeal fee. The assumption of jurisdiction powers granted to the
Labor Secretary under Article 263(g) is not limited to the
grounds cited in the notice of strike or lockout that may
Moreover, not having learned his lesson, petitioner’s have preceded the strike or lockout; nor is it limited to
counsel filed a motion for reconsideration of the NLRC the incidents of the strike or lockout that in the
dismissal of his appeal, which is also prohibited, instead meanwhile may have taken place.  As the term “assume
of interposing an appeal before the Court of Appeals. jurisdiction” connotes, the intent of the law is to give the
Said motion for reconsideration not having tolled the Labor Secretary full authority to resolve all matters
running of the reglementary period for the filing of a within the dispute that gave rise to or which arose out of
petition for certiorari under Rule 65, petitioner’s petition the strike or lockout, including cases over which the labor
before the appellate court was filed out of time – three arbiter has exclusive jurisdiction.
months late. Luis M. Rivera vs. Parents-Teachers
Community Association and Easter Yase, G.R. No.
181532, June 29, 2010. In the present case, what the Labor Secretary refused to
rule upon was the dismissal from employment of
employees who violated the return to work order and
Procedure; late submission of documentary participated in illegal acts during a strike. This was an
evidence allowed. issue that arose from the strike and was, in fact,
submitted to the Labor Secretary, through the union’s
motion for the issuance of an order for immediate

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Labor Law Jurisprudence
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reinstatement of the dismissed officers and the the order in the present case gives no indication that the
company’s opposition to the motion.  The dismissal issue employee is being given an opportunity to submit his
was properly brought before the Labor Secretary and he defense or explanation. Erector Advertising Sign Group,
was mistaken in ruling that the matter is legally within Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R.
the exclusive jurisdiction of the labor arbiter to decide. No. 167218, July 2, 2010.
Bagong Pagkakaisa ng Manggagawa ng Triumph
International, et al. vs. Secretary of Department of Labor
Dismissal of employees; procedural due process.
and Employment, et al./Triumph International (phils.),
Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph
International, et al., G.R. No. 167401, July 5, 2010. In order to validly dismiss an employee, he must be
accorded both substantive and procedural due process by
the employer. Procedural due process requires that the
Bargaining deadlock; award; findings of Secretary
employee be given a notice of the charge against him, an
of Labor.
ample opportunity to be heard, and a notice of
termination. Even if the aforesaid procedure is conducted
Unless there is a clear showing of grave abuse of after the filing of the illegal dismissal case, the legality of
discretion, the Court cannot, and will not, interfere with the dismissal, as to its procedural aspect, will be upheld
the expertise of the Secretary of Labor. The award provided that the employer is able to show that
granted by the Labor Secretary in resolving the compliance with these requirements was not a mere
bargaining deadlock, drawn as they were from a close afterthought. New Puerto Commercial and Richard Lim
examination of the submissions of the parties, do not vs. Rodel Lopez and Felix Gavan, G.R. No. 169999, July
indicate any legal error, much less any grave abuse of 26, 2010.
discretion, and should not be disturbed. Bagong
Pagkakaisa ng Manggagawa ng Triumph International, et
Employee benefits; 13th month pay; definition of
al. vs. Secretary of Department of Labor and
basic salary.
Employment, et al./Triumph International (phils.), Inc.
vs. Bagong Pagkakaisa ng Manggagawa ng Triumph
International, et al., G.R. No. 167401, July 5, 2010. The term “basic salary” of an employee for the purpose
of computing the thirteenth-month pay was interpreted
to include all remuneration or earnings paid by the
Dismissal of employees; just cause.
employer for services rendered, but does not include
allowances and monetary benefits which are not
Theft committed by an employee is a valid reason for his integrated as part of the regular or basic salary, such as
dismissal by the employer.  Although as a rule this Court the cash equivalent of unused vacation and sick leave
leans over backwards to help workers and employees credits, overtime, premium, night differential and holiday
continue with their employment or to mitigate the pay, and cost-of-living allowances. However, these
penalties imposed on them, acts of dishonesty in the salary-related benefits should be included as part of the
handling of company property, petitioner’s income in this basic salary in the computation of the thirteenth-month
case, are a different matter. Maribago Bluewater Beach pay if, by individual or collective agreement, company
Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20, practice or policy, the same are treated as part of the
2010. basic salary of the employees. Central Azucarera De
Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU,
G.R. No. 188949, July 26, 2010
Dismissal of employees; requirements.

Employee benefits; 13th month pay; company

The validity of an employee’s dismissal from service
policy or practice.
hinges on the satisfaction of the two substantive
requirements for a lawful termination.  These are, first,
whether the employee was accorded due process the The practice of petitioner in giving 13 th-month pay based
basic components of which are the opportunity to be on the employees’ gross annual earnings which included
heard and to defend himself.  This is the procedural the basic monthly salary, premium pay for work on rest
aspect.  And second, whether the dismissal is for any of days and special holidays, night shift differential pay and
the causes provided in the Labor Code of the Philippines.  holiday pay continued for almost thirty (30) years and
This constitutes the substantive aspect. Erector has ripened into a company policy or practice which
Advertising Sign Group, Inc. and Arch Jimy C. Amoroto cannot be unilaterally withdrawn. The petitioner cannot
vs. Expedito Cloma, G.R. No. 167218, July 2, 2010. claim that the practice arose from an erroneous
application of the law since no doubtful or difficult
question of law is involved in this case. The guidelines set
Dismissal of employees; procedural due process.
by the law are not difficult to decipher. Central Azucarera
De Tarlac vs. Central Azucarera De Tarlac Labor Union-
Furnishing the employee with a suspension order prior to NLU, G.R. No. 188949, July 26, 2010
his notice of termination does not satisfy the requirement
of a first notice. It implies that the employer has already
Employee benefits; death benefits.
decided, for the reasons stated therein, to suspend the
employee from work in the company, and the wording of

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Labor Law Jurisprudence
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For the death of a seafarer to be compensable under the office as a result of reorganization must, thus, pass the
1996 POEA Standard Employment Contract, the death test of good faith. A demotion in office is tantamount to
must occur during the term of his contract of removal if no cause is shown for it. Consequently, before
employment. In this case, the seaman died 2 years after a demotion may be effected pursuant to a reorganization,
he was repatriated to the Philippines due to medical the observance of the rules on bona fide abolition of
reasons, hence the claimants are not entitled to receive public office is essential. Virginia D. Bautista vs. Civil
death benefits under the contract. The decedent’s heirs Service Commission and Dev’t. Bank of the Philippines,
claimed that the death should be compensable since the G.R. No. 185215, July 22, 2010.
nature of his work as a seaman triggered the illnesses
that eventually led to his death. However, the Court
Government agencies; reorganization; personal
noted that though the immediate cause of the seaman’s
liability of local official.
death was pneumonia, the underlying cause of death was
advanced HIV (AIDS). Since the claimants failed to prove
that the decedent acquired HIV during his 2-month The RTC of Cadiz declared void a resolution that
employment aboard the respondents’ vessel, their claim reorganized the city government and effectively purged
for death benefits was denied. Lydia Escarcha vs. Leonis the city government of Cadiz of all employees who
Navigation Co., Inc., et al., G.R. No. 182740, July 5, opposed the mayor politically or disagreed with him in his
2010. policies. The RTC ordered the payment of moral damages
to the workers, but it was not clear if the payment was to
be made by the city government or by Mayor Valera, in
Employees; government agency.
his personal capacity. The Court held that Varela is
personally liable to pay moral damages. Settled is the
The Armed Forces of the Philippines Commissary and principle that a public official may be liable in his personal
Exchange Services (AFPCES) is a government agency capacity for whatever damage he may have caused by
performing proprietary functions. By clear implication of his act done with malice and in bad faith or beyond the
law, all AFPCES personnel should therefore be classified scope of his authority or jurisdiction. In the complaint,
as government employees and any complaint for illegal the employees stated that, “due to the illegal acts of the
dismissal involving such employees should be filed with Defendant, Plaintiffs suffered mental torture and anguish,
the CSC and not the NLRC. Such fact cannot be negated sleepless nights, wounded feelings, besmirched
by the failure of AFPCES to follow appropriate civil service reputation and social humiliation.”  The State can never
rules in the hiring, appointment, discipline and dismissal be the author of illegal acts. The complaint merely
of employees. Neither can it be denied by the fact that identified Varela as the mayor of Cadiz City.  It did not
AFPCES chose to enroll its employees in the SSS instead categorically state that Varela was being sued in his
of the GSIS. Such considerations cannot be used against official capacity.  The identification and mention of Varela
the CSC to deprive it of its jurisdiction. Hence, the Labor as the mayor of Cadiz City did not automatically
Arbiter’s decision in the illegal dismissal case filed by transform the action into one against Varela in his official
AFPCES employees is a total nullity for having been capacity.  The allegations in the complaint determine the
rendered without jurisdiction. Magdalena Hidalgo, et al. nature of the cause of action. Eduardo Valera vs. Ma.
vs. Republic of the Philippines, G.R. No. 179793, July 5, Daisy Revalez, G.R. No. 171705, July 29, 2010.
2010.
Illegal dismissal; burden of proof; filing of
Employer-employee relationship; evidence. complaint not sufficient to disprove abandonment.

Any doubt arising from the evaluation of evidence as In illegal dismissal cases, the employer bears the burden
between the employer and the employee must be of proving that the termination was for a valid or
resolved in favor of the latter. It is settled jurisprudence authorized cause. However, before the employer is asked
that the burden of proving payment of monetary claims to prove that the dismissal was legal, the employee must
rests on the employer. It was entirely within the first establish by substantial evidence the fact of his
company’s power to present personnel files, payrolls, dismissal from service.  Logically, if there is no dismissal,
remittances, and other similar documents which would then there can be no question as to its legality or
have proven payment of respondent’s money claims as illegality.
these documents should necessarily be in its possession;
hence, failure to present such evidence must be taken
Under normal circumstances, an employee’s act of filing
against it. Dansart Security Force & Allied Services
an illegal dismissal complaint against his employer is
Company and Danilo A. Sarte vs. Ms. Jean O. Bagoy,
inconsistent with abandonment. However, the courts
G.R. No. 168495, July 2, 2010.
should not use that one act to conclude that an employee
was constructively dismissed when substantial evidence
Government agencies; reorganization. proves otherwise. In this case, substantial evidence
proves that Pulgar was not constructively dismissed, and
that he had abandoned his duties in order to avoid an
A reorganization is valid provided it is done in good faith. 
investigation being conducted by his employer. Philippine
As a general rule, the test of good faith lies in whether
Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227.
the purpose of the reorganization is for economy or to
July 5, 2010.
make the bureaucracy more efficient. Removal from

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Illegal dismissal; misrepresentation of cause is an and the surrounding circumstances of the case are to be
act of bad faith. considered. San Miguel Corporation vs. Vicente Semillan,
et al., G.R. No. 164257, July 5, 2010.
The complainant, Rio Remo, was dismissed from service
on the ground of retrenchment. However, the records Liability of officers for illegal dismissal.
show that Sentinel hired a replacement soon after
Remo’s dismissal, proving that Sentinel’s financial
Corporate officers are only solidarily liable with the
distress was not as serious as it claimed, and that
corporation for the illegal termination of services of
retrenchment was not the real reason for Remo’s
employees if they acted with malice or bad faith.  In
dismissal. Sentinel concealed its true intention and
Philippine American Life and General Insurance v.
committed misrepresentation when it claimed that
Gramaje, bad faith is defined as a state of mind
Remo’s dismissal was due to serious financial losses. This
affirmatively operating with furtive design or with some
act of misrepresentation is an act of active bad faith that
motive of self-interest or ill will or for ulterior purpose.  It
fatally tainted Remo’s dismissal and rendered it illegal.
implies a conscious and intentional design to do a
Sentinel Integrated Services, Inc. vs. Rio Jose Remo,
wrongful act for a dishonest purpose or moral obliquity.
G.R. No. 188223, July 5, 2010.
The lack of authorized or just cause to terminate one’s
employment and the failure to observe due process do
Illegal dismissal; relief available to employee. not ipso facto mean that the corporate officer acted with
malice or bad faith.  There must be independent proof of
malice or bad faith which is lacking in the present case.
An illegally dismissed employee is entitled to
Lambert Pawnbrokers and Jewelry corporation and
reinstatement without loss of seniority rights and other
Lambert Lim vs. Helen Binamira, G.R. No. 170464. July
privileges and to full backwages, inclusive of allowances,
12, 2010.
and to her other benefits or their monetary equivalent,
computed from the time the compensation was withheld
up to the time of actual reinstatement. Where Preventive suspension.
reinstatement is no longer feasible, separation pay
equivalent to at least one month salary or one month
Preventive suspension is justified where the employee’s
salary for every year of service, whichever is higher, a
continued employment poses a serious and imminent
fraction of at least six months being considered as one
threat to the life or property of the employer or of the
whole year, should be awarded to respondent. An award
employee’s co-workers.  Without this kind of threat,
for moral and exemplary damages cannot be justified
preventive suspension is not proper. Jose P. Artificio vs.
unless the employer had acted in bad faith. The award of
National Labor Relations Commission, RP Guardians
moral and exemplary damages cannot be justified solely
Security Agency, Inc. Juan Victor K. Laurilla, Alberto
upon the premise that the employer dismissed his
Aguirre, and Antonio A. Andres, G.R. No. 172988, July
employee without authorized cause and due process.
26, 2010
Lambert Pawnbrokers and Jewelry corporation and
Lambert Lim vs. Helen Binamira, G.R. No. 170464. July
12, 2010. Public employees; demotion.

Labor-only contracting. There is demotion when an employee is appointed to a

position that results in a diminution in duties,
responsibilities, status or rank which may or may not
Despite the fact that the service contracts contain
involve a reduction in salary. Where an employee is
stipulations which are earmarks of independent
appointed to a position with the same duties and
contractorship, they do not make it legally so. The
responsibilities with a rank and salary higher than those
language of a contract is neither determinative nor
he enjoyed in his previous position, there is no demotion
conclusive of the relationship between the parties. The
and the appointment is valid. Virginia D. Bautista vs. Civil
parties cannot dictate, by a declaration in a contract, the
Service Commission and Devt. Bank of the Philippines,
character of the contractor’s business as a labor-only
G.R. No. 185215, July 22, 2010.
contractor or a legitimate job contractor, which should be
determined by the criteria set by statute. Here, a closer
look at AMPCO’s actual status and participation regarding Public employees; downgrading of employees.
the employment of the complainants clearly belie the
contents of the written service contract. San Miguel The summary reallocation of Go’s position to a lower
Corporation vs. Vicente Semillan, et al., G.R. No. degree resulting in the corresponding downgrading of his
164257, July 5, 2010. salary infringed the policy of non-diminution of pay which
the Court recognized and applied in Philippine Ports
Labor-only contracting; evidence. Authority v. Commission on Audit, as well as in the
subsequent sister cases involving benefits of government
employees.  Running through the gamut of these cases is
A Certificate of Registration as an Independent
the holding that the affected government employees shall
Contractor is not conclusive evidence of such status. In
continue to receive benefits they were enjoying as
distinguishing between permissible job contracting and
incumbents upon the effectivity of RA 6758. Relevant to
prohibited labor-only contracting, the totality of the facts

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the critical issue at hand is Sec. 15 (b) of PD 985 which, Retrenchment is the termination of employment initiated
as amended by Sec. 13 (a) of RA 6758, pertinently by the employer through no fault of and without
reads: Sec. 13. Pay Reduction — If an employee is prejudice to the employees.  It is resorted to during
moved from a higher to a lower class, he shall not suffer periods of business recession, industrial depression,
a reduction in salary: Provided, That such movement is seasonal fluctuations, or during lulls occasioned by lack
not the result of a disciplinary action or voluntary of orders, shortage of materials, conversion of the plant
demotion. Gonzalo S. Go, Jr. vs. CA and Office of the to a new production program, or automation. It is a
President, G.R. No. 172027. July 29, 2010 management prerogative resorted to avoid or minimize
business losses.
Redundancy; definition; requisites.
To effect a valid retrenchment, the following elements
must be present: (1) the retrenchment is reasonably
Redundancy exists when the service capability of the
necessary and likely to prevent business losses which, if
workforce is in excess of what is reasonably needed to
already incurred, are not merely de minimis, but
meet the demands of the enterprise. A redundant
substantial, serious and real, or only if expected, are
position is one rendered superfluous by any number of
reasonably imminent as perceived objectively and in
factors, such as over hiring of workers, decreased volume
good faith by the employer; (2) the employer serves
of business, dropping of a particular product line
written notice both to the employee/s concerned and the
previously manufactured by the company, or phasing out
DOLE at least one month before the intended date of
of a service activity previously undertaken by the
retrenchment; (3) the employer pays the retrenched
business. Under these conditions, the employer has no
employee separation pay in an amount prescribed by
legal obligation to keep in its payroll more employees
law; (4) the employer exercises its prerogative to
than are necessary for the operation of its business.
retrench in good faith; and (5) the employer uses fair
and reasonable criteria in ascertaining who would be
For a valid implementation of a redundancy program, the retrenched or retained.  Lambert Pawnbrokers and
employer must comply with the following requisites: (1) Jewelry corporation and Lambert Lim vs. Helen Binamira,
written notice served on both the employees and the G.R. No. 170464. July 12, 2010
DOLE at least one month prior to the intended date of
termination of employment; (2) payment of separation
Retrenchment; decrease in income is not business
pay equivalent to at least one month pay for every year
loss.
of service; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant A sharp drop in income from P1million to only
and accordingly abolished. Lambert Pawnbrokers and P665,000.00 is not the kind of business losses
Jewelry corporation and Lambert Lim vs. Helen Binamira, contemplated by the Labor Code that would justify a valid
G.R. No. 170464. July 12, 2010. retrenchment.  A mere decline in gross income cannot in
any manner be considered as serious business losses. It
should be substantial, sustained and real. Lambert
Retirement; retirement age.
Pawnbrokers and Jewelry corporation and Lambert Lim
vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
The retirement age is primarily determined by the
existing agreement or employment contract.  Absent
Separation pay; as equitable relief.
such an agreement, the retirement age under Article 287
of the Labor Code will apply. Amelia R. Obusan vs.
Philippine National Bank, G.R. No. 181178, July 26, Having determined that the imposition of preventive
2010. suspension was proper and that the complainant was not
illegally dismissed, the Court found no basis to grant
backwages. However, given the attendant circumstances
Retirement; retirement plan.
of the case — that complainant had been working with
the company for a period of sixteen (16) years without
Retirement plans allowing employers to retire employees any previous derogatory record – the Court held that the
who have not yet reached the compulsory retirement age ends of social and compassionate justice would be served
of 65 years are not per se repugnant to the constitutional if the employee is given some equitable relief in the form
guaranty of security of tenure. By its express language, of separation pay. Jose P. Artificio vs. National Labor
the Labor Code permits employers and employees to fix Relations Commission, RP Guardians Security Agency,
the applicable retirement age at 60 years or below, Inc. Juan victor K. Laurilla, Alberto Aguirre, and Antonio
provided that the employees’ retirement benefits under A. Andres, G.R. No. 172988, July 26, 2010
any CBA and other agreements shall not be less than
those provided by law. Amelia R. Obusan vs. Philippine
National Bank, G.R. No. 181178, July 26, 2010.

LABOR PROCEDURE
Retrenchment; definition; requisites.

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Labor Law Jurisprudence
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Jurisdiction; intra-union disputes. assert the defect, and neither is it cured by its belated
submission on the ground that the party was not in any
way guilty of actual forum shopping. In cases where the
Section 226 of the Labor Code clearly provides that the
Court tolerated the deficiency, special circumstances or
BLR and the Regional Directors of DOLE have concurrent
compelling reasons made the strict application
jurisdiction over inter-union and intra-union disputes. 
unjustified. In this case, however, the petitioners offered
Such disputes include the conduct or nullification of
no valid justification for their failure to comply with the
election of union and workers’ association officers. There
Circular. Mandaue Galleon Trade, Inc., et al. vs.
is, thus, no doubt as to the BLR’s jurisdiction over the
Bienvenido Isidto, et al., G.R. No. 181051, July 5, 2010.
instant dispute involving member-unions of a federation
arising from disagreement over the provisions of the
federation’s constitution and by-laws. Atty. Allan S. Rule 45; when review of facts allowed.
Montaño vs. Atty Ernesto C. Verceles, G.R. No. 168583,
July 26, 2010.
As a rule, a petition for review under Rule 45 of the
Rules of Court must raise only questions of law. 
Labor tribunal; factual finding. However, the rule has exceptions such as when the
findings of the Labor Arbiter, NLRC and Court of Appeals
vary, as in this case. Maribago Bluewater Beach Resort,
As a rule, a petition for certiorari under Rule 65 is valid
Inc. vs. Nito Dual, G.R. No. 180660, July 20, 2010.
only when the question involved is an error of
jurisdiction, or when there is grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of ===================================
the court or tribunals exercising quasi-judicial functions. =========
Hence, courts exercising certiorari jurisdiction should
refrain from reviewing factual assessments of the
August 2010 Selected Supreme Court Decisions on
respondent court or agency. Occasionally, however, they
Labor Law and Procedure
are constrained to wade into factual matters when the
evidence on record does not support those factual
findings; or when too much is concluded, inferred or Labor Law
deduced from the bare or incomplete facts appearing on
record. The CA rightfully reviewed the correctness of the Dismissal; abandonment.
labor tribunals’ factual findings not only because of the
foregoing inadequacies, but also because the NLRC and
the Labor Arbiter came up with conflicting findings. Time and again, the Supreme Court has held that
Lambert Pawnbrokers and Jewelry corporation and abandonment is totally inconsistent with the immediate
Lambert Lim vs. Helen Binamira, G.R. No. 170464. July filing of a complaint for illegal dismissal, more so if the
12, 2010. 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
Money claims; effect of failure to include in prayer employment. Moreover, petitioner did not ask for
for relief. reinstatement in the complaint form, which he personally
filled up and filed with the NLRC. The prayer for
The rule is well-settled that points of law, theories, reinstatement is made only in the Position Paper that was
issues and arguments not adequately brought to the later prepared by his counsel. This is an indication that
attention of the trial court need not be, and ordinarily will petitioner never had the intention or desire to return to
not be considered by a reviewing court as they cannot be his job. Elpidio Calipay vs. National Labor Relations
raised for the first time on appeal because this would be Commission, et al., G.R. No. 166411, August 3, 2010.
offensive to the basic rules of fair play, justice and due
process. Though there is nothing on record which would Dismissal; burden of proof.
show that the amount of P207,693 has been returned to
PRRM, a perusal of the pleadings show that PRRM failed
to include the return of such amount in its prayer for In termination cases, the employer has the burden of
relief. Hence, the Labor Arbiter cannot act on the same. A proving, by substantial evidence that the dismissal is for
prayer for a monetary award should have been raised at just cause. If the employer fails to discharge the burden
the earliest opportunity before the Labor Arbiter. of proof, the dismissal is deemed illegal. In the present
Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. case, BCPI failed to discharge its burden when it failed to
No. 169227. July 5, 2010. 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
NLRC Rules of Procedure; certificate of non-forum both the Labor Arbiter and the NLRC. Alex Gurango vs.
shopping. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593,
August 25, 2010.
The filing of a certificate of non-forum shopping is
mandatory in initiatory pleadings; non-compliance with Dismissal; burden of proof.
the required certification is fatal. The filing of the same is
not waived by the other party’s failure to immediately

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Labor Law Jurisprudence
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The law mandates that the burden of proving the validity an added justification for his dismissal. Besides,
of the termination of employment rests with the respondent had already been sanctioned for his prior
employer. Failure to discharge this evidentiary burden infractions. To consider these offenses as justification for
would necessarily mean that the dismissal was not his dismissal would be penalizing respondent twice for
justified and, therefore, illegal. Unsubstantiated the same offense. Century Canning Corporation, Ricardo
suspicions, accusations, and conclusions of employers do T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No.
not provide for legal justification for dismissing 171630, August 8, 2010.
employees. In case of doubt, such cases should be
resolved in favor of labor, pursuant to the social justice
Dismissal; feng shui; breach of trust and
policy of labor laws and the Constitution. Century
confidence.
Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente
Randy R. Ramil, G.R. No. 171630, August 8, 2010.
The Court finds that the complainant’s allegations are
more credible and that she was dismissed from her
Dismissal; due process.
employment because the Feng Shui master found that
complainant’s Chinese Zodiac Sign was a mismatch to
In termination proceedings of employees, procedural due that of respondents. This is not a just and valid cause for
process consists of the twin requirements of notice and an employee’s dismissal.
hearing. The employer must furnish the employee with
two written notices before the termination of employment
In contrast, respondent’s pleadings and evidence suffer
can be effected: (1) the first apprises the employee of
from several inconsistencies and the affidavits presented
the particular acts or omissions for which his dismissal is
by respondents only pertain to petty matters that are not
sought; and (2) the second informs the employee of the
sufficient to support respondent’s alleged loss of trust
employer’s decision to dismiss him. The requirement of a
and confidence. To be a valid cause for termination of
hearing is complied with as long as there was an
employment, the act or acts constituting breach of trust
opportunity to be heard, and not necessarily that an
must have been done intentionally, knowingly, and
actual hearing was conducted. Pharmacia and Upjohn,
purposely; and they must be founded on clearly
Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724,
established facts. Wensha Spa Center, inc. and/or Xu Zhi
August 23, 2010.
Jie ,vs. Loreta T. Yung, G.R. No. 185122, August 16,
2010.
Dismissal; due process.
Dismissal; gross negligence and loss of confidence.
The Labor Code recognizes the right to due process of all
workers, without distinction as to the cause of their
Gross negligence connotes “want of care in the
termination, even if the cause was their supposed
performance of one’s duties.” Petitioner’s failure on 3
involvement in strike-related violence. In the present
separate occasions to require clients to sign the requisite
case, PHIMCO sent a letter to the affected union
documents constituted gross negligence. Furthermore, it
members/officers, directing them to explain within 24
has been held that if the employees are cashiers,
hours why they should not be dismissed for the illegal
managers, supervisors, salesmen or other personnel
acts they committed during the strike; three days later,
occupying positions of responsibility, the employer’s loss
the union members/officers were informed of their
of trust and confidence in said employees may justify the
dismissal from employment. We do not find this company
termination of their employment. As the Bank’s Personal
procedure to be sufficient compliance with due process. It
Banking Manager, petitioner’s failure to comply with basic
does not appear from the evidence that the union officers
banking policies and procedures were inimical to the
were specifically informed of the charges against them.
interests of the bank, making his dismissal based on loss
Also, the short interval of time between the first and
of confidence justified. Jesus E. Dycoco, Jr.vs. Equitable
second notice shows that a mere token recognition of the
PCI Bank (now Banco de Oro), Rene Bunaventura and
due process requirements was made, indicating the
Siles Samalea, G.R. No. 188271, August 16, 2010.
company’s intent to dismiss the union members involved,
without any meaningful resort to the guarantees
accorded them by law. PHIMCO Industries, Inc. vs. Dismissal; loss of trust and confidence.
PHIMCO Industries Labor Association (PILA), et al., G.R.
No. 170830, August 11, 2010. Employers are allowed a wider latitude of discretion in
terminating the services of employees who perform
Dismissal; employee’s past infractions. 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
A previous offense may be used as valid justification for
the employer is sufficient. However, this does not mean
dismissal from work only if the past infractions are
that the said basis may be arbitrary and unfounded. Loss
related to the subsequent offense upon which the basis of
of trust and confidence, to be a valid cause for dismissal,
termination is decreed. The respondent’s previous
must be based on a willful breach of trust and founded on
incidents of tardiness in reporting for work were entirely
clearly established facts. The basis for the dismissal must
separate and distinct from his latest alleged infraction of
be clearly and convincingly established. It must rest on
forgery. Hence, the same could no longer be utilized as
substantial grounds and not on the employer’s

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Labor Law Jurisprudence
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arbitrariness, whim, caprice or suspicion; otherwise, the Misconduct is defined as “the transgression of some
employee would eternally remain at the mercy of the established and definite rule of action, a forbidden act, a
employer. Century Canning Corporation, Ricardo T. Po, dereliction of duty, willful in character, and implies
Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, wrongful intent and not mere error in judgment.” For
August 8, 2010. serious misconduct to justify dismissal under the law,
“(a) it must be serious, (b) must relate to the
performance of the employee’s duties; and (c) must
Dismissal; probationary employment.
show that the employee has become unfit to continue
working for the employer.”
Though the acts charged against de Castro took place
when he was still under probationary employment, the
It is noteworthy that prior to this incident, there had
records show that de Castro was dismissed on the ninth
been several cases of theft and vandalism involving both
month of his employment with LBNI. By then, he was
respondent company’s property and personal belongings
already a regular employee by operation of law. As a
of other employees. In order to address this issue of
regular employee, de Castro was entitled to security of
losses, respondent company issued two memoranda
tenure and his illegal dismissal from LBNI justified the
implementing an intensive inspection procedure and
awards of separation pay, backwages, and damages
reminding all employees that those who will be caught
Carlos De Castro vs. Liberty Broadcasting Network, Inc.
stealing and performing acts of vandalism will be dealt
and Edgardo Quigue, G.R. No. 165153. August 25, 2010.
with in accordance with the company’s Code of Conduct.
Despite these reminders, complainant took the packing
Dismissal; project employees; damages. tape and was caught during the routine inspection. All
these circumstances point to the conclusion that it was
Prior or advance notice of termination is not part of not just an error of judgment, but a deliberate act of
procedural due process if the termination of a project theft of company property. Nagkakaisang Lakas ng
employee is brought about by the completion of the Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen
contract or phase thereof. This is because completion of Valenzuela vs. Keihin Philippines Corporation, G.R. No.
the work or project automatically terminates the 171115, August 9, 2010.
employment, in which case, the employer is, under the
law, only obliged to render a report to the DOLE. Dismissal; union security.
Therefore, failing to give project employees advance
notice of their termination is not a violation of procedural
In terminating the employment of an employee by
due process and cannot be the basis for the payment of
enforcing the union security clause, the employer needs
nominal damages. D.M. Consunji, Inc. vs. Antonio
to determine and prove that: (1) the union security
Gobres, et al., G.R. No. 169170, August 8, 2010.
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
Dismissal; separation pay and backwages. union. These requisites constitute just cause for
terminating an employee based on the union security
provision of the CBA.
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 The petitioner failed to satisfy the third requirement since
an employee has been illegally dismissed are, firstly, that nothing in the records would show that respondents
the employee becomes entitled to reinstatement to his failed to maintain their membership in good standing in
former position without loss of seniority rights and, the union. Significantly, petitioner’s act of dismissing
secondly, the payment of backwages corresponding to respondents stemmed from the latter’s act of signing an
the period from his illegal dismissal up to actual authorization letter to file a petition for certification
reinstatement. These are two separate and distinct election as they signed it outside the freedom period. The
remedies granted to the employee and the mere signing of an authorization letter before the
inappropriateness or non-availability of one does not freedom period is not sufficient ground to terminate the
carry with it the inappropriateness or non-availability of employment of respondents inasmuch as the petition
the other. Under the doctrine of strained relations, the itself was actually filed during the freedom period. The
payment of separation pay has been considered an court emphasizes anew that the employer is bound to
acceptable alternative to reinstatement when the latter exercise caution in terminating the services of his
option is no longer desirable or viable. The grant of employees especially so when it is made upon the
separation pay is a proper substitute only for request of a labor union pursuant to the Collective
reinstatement; it cannot be an adequate substitute for Bargaining Agreement. Picop Resources Incorporated
both reinstatement and backwages. Century Canning (PRI) vs. Anacleto L. Tañeca, et al., G.R. No. 160828,
Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy August 9, 2010.
R. Ramil, G.R. No. 171630, August 8, 2010.
Dimissal; use of illegal drugs.
Dismissal; serious misconduct.

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Labor Law Jurisprudence
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The law is clear that drug tests shall be performed only Employees Association-FFW vs. SCA Hygiene Products
by authorized drug testing centers. In this case, Sulpicio Corporation, G.R. No. 182877, August 9, 2010.
Lines failed to prove that S.M. Lazo Clinic is an accredited
drug testing center nor did it deny the complainant’s
Employee; security of tenure.
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 A worker’s security of tenure is guaranteed by the
Lines did not confirm the positive result of the screening Constitution and the Labor Code. Under the security of
test with a confirmatory test as required by R.A. 9165. tenure guarantee, a worker can only be terminated from
Hence, Sulpicio Lines failed to indubitably prove that his employment for cause and after due process. For a
Nacague was guilty of using illegal drugs and failed to valid termination by the employer: (1) the dismissal must
clearly show that it had a valid and legal cause for be for a valid cause as provided in Article 282, or for any
terminating Nacague’s employment. When the alleged of the authorized causes under Articles 283 and 284 of
valid cause for the termination of employment is not the Labor Code; and (2) the employee must be afforded
clearly proven, as in this case, the law considers the an opportunity to be heard and to defend himself. A just
matter a case of illegal dismissal. Jeffrey Nacague vs. and valid cause for an employee’s dismissal must be
Sulpicio Lines, Inc., G.R. No. 172589, August 8, 2010. 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
Dismissal; validity.
heard. In the process, the employer bears the burden of
proving that the dismissal of an employee was for a valid
The company did not adduce any evidence to prove that cause. Its failure to discharge this burden renders the
Siazar’s dismissal had been for a just or authorized dismissal unjustified and, therefore, illegal. Wensha Spa
cause, as in fact it had been its consistent stand that it Center, Inc. and/or Xu Zhi Jie vs. Loreta T. Yung, G.R.
did not terminate him and that he quit on his own. But No. 185122, August 16, 2010.
given the findings of the Court that the company had
indeed dismissed Siazar and that such dismissal has
Employee benefit; time of death.
remained unexplained, there can be no other conclusion
but that the dismissal was illegal. Agricultural and
Industrial Supplies Corporation, et al. vs. Jueber P. The death should be deemed compensable under the ECC
Siazar, et al., G.R. No. 177970, August 25, 2010. 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
Due process; decision rendered without due
en route to the performance of his duty at the time of the
process.
accident. It should be noted that Henry’s superior allowed
him to travel to La Union to visit his ailing mother on the
The violation of a party’s right to due process raises a condition that that he return the next day. Under these
serious jurisdictional issue that cannot be glossed over or facts, Henry was in the course of complying with his
disregarded at will. Where the denial of the fundamental superior’s order when he met his fatal accident. To be
right to due process is apparent, a decision rendered in sure, he was not in an actual firefighting or accident
disregard of that right is void for lack of jurisdiction. This situation when he died, but returning to work as
rule is equally true in quasi-judicial and administrative instructed by his superior is no less equivalent to
proceedings, for the constitutional guarantee that no man compensable performance of duty under Section 1, Rule
shall be deprived of life, liberty, or property without due III of the ECC Rules. Government Service Insurance
process is unqualified by the type of proceedings System vs. Felicitas Zarate, as substituted by her heirs,
(whether judicial or administrative) where he stands to namely Melanie Zarate, et al., G.R. No. 170847, August
lose the same. Winston F. Garcia vs. Mario I. Molina, et 3, 2010.
al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No.
157383/G.R. No. 174137, August 10, 2010.
Illegal dismissal; effect of rehabilitation
proceedings.
Employee; evaluation and promotion.
The existence of the Stay Order – which would generally
The fact that employees were re-classified from Job authorize the suspension of judicial proceedings – could
Grade Level 1 to Job Grade Level 2 as a result of a job not have affected the Court’s action on the present case
evaluation program does not automatically entail a due to the petitioner’s failure to raise the pendency of the
promotion or grant them an increase in salary. Of rehabilitation proceedings in its memorandum to the
primordial consideration is not the nomenclature or title Court. At any rate, a stay order simply suspends all
given to the employee, but the nature of his functions. actions for claims against a corporation undergoing
What transpired in this case was only a promotion in rehabilitation; it does not work to oust a court of its
nomenclature. The employees continued to occupy the jurisdiction over a case properly filed before it. Thus, the
same positions they were occupying prior to the job Court’s ruling on the principal issue of the case stands.
evaluation. Moreover, their job titles remained the same Nevertheless, with LBNI’s manifestation that it is still
and they were not given additional duties and undergoing rehabilitation, the Court resolves to suspend
responsibilities. SCA Hygiene Products Corporation the execution of our Decision until the termination of the

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rehabilitation proceedings. Carlos De Castro vs. Liberty existing CBA with the certified union. Thus, although in a
Broadcasting Network, Inc. and Edgardo Quigue, G.R. sense BPI is continuing FEBTC’s employment of these
No. 165153. August 25, 2010. absorbed employees, BPI’s employment of these
absorbed employees will not be under exactly the same
terms and conditions as stated in the latter’s employment
Job contracting.
contracts with FEBTC. Bank of the Philippine Islands vs.
BPI Employees Union-Davao Chapter-Federation of
In permissible job contracting, the principal agrees to Unions in BPI Unibank, G.R. No. 164301, August 10,
put out or farm out with a contractor or subcontractor the 2010.
performance or completion of a specific job, work or
service within a definite or predetermined period,
Reinstatement of employee; doctrine of strained
regardless of whether such job, work or service is to be
relations.
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 Under the doctrine of strained relations, the payment of
own methods and without being subject to the principal’s separation pay has been considered an acceptable
control except only as to the results, he has substantial alternative to reinstatement when the latter option is no
capital, and he has assured the contractual employees longer desirable or viable.  On the one hand, such
entitlement to all labor and occupational safety and payment liberates the employee from what could be a
health standards, free exercise of the right to self- highly oppressive work environment.  On the other, the
organization, security of tenure, and social and welfare payment releases the employer from the grossly
benefits. Spic n’ Span Services Corp. vs. Gloria Paje, et unpalatable obligation of maintaining in its employ a
al., G.R. No. 174084, August 25, 2010. 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.
Management prerogative; transfer of employees.

Retirement pay; applicability to employees on

Jurisprudence recognizes the exercise of management
commission basis.
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 Even if the petitioner as bus conductor was paid on
other privileges, and the action is not motivated by commission basis, he falls within the coverage of R.A.
discrimination, made in bad faith, or effected as a form of 7641 and its implementing rules. Thus, his retirement
punishment or demotion without sufficient cause. To pay should include the cash equivalent of 5-days SIL and
determine the validity of the transfer of employees, the 1/12 of 13th month pay. The NLRC’s reliance on the case
employer must show that the transfer is not of R & E Transport, Inc. as a basis for ruling that bus
unreasonable, inconvenient, or prejudicial to the conductors are not covered by the law on SIL and 13 th
employee; nor does it involve a demotion in rank or a month pay is erroneous since that involved a taxi driver
diminution of his salaries, privileges and other benefits. who was paid according to the “boundary system.” There
Should the employer fail to overcome this burden of is a difference between drivers paid under the “boundary
proof, the employee’s transfer shall be tantamount to system” and conductors who are paid on commission
constructive dismissal. Pharmacia and Upjohn, Inc., et al. basis. In practice, taxi drivers do not receive fixed wages
vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, and retain only those sums in excess of the “boundary”
2010. 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.
Merger; employee terms and conditions.
Rodolfo J. Serrano vs. Severino Santos Transit and/or
Severino Santos, G.R. No. 187698, August 9, 2010.
That BPI is the same entity as FEBTC after the merger is
but a legal fiction intended as a tool to adjudicate rights
Separation pay.
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 In those instances where an employee has been validly
personality of the employer, there is in reality a change dismissed for causes other than serious misconduct or
in the situation of the employee. Once an FEBTC those reflecting on his moral character, separation pay
employee is absorbed, there are presumably changes in may still be granted after giving considerable weight to
his condition of employment even if his previous tenure his long years of employment. In this case, equity
and salary rate is recognized by BPI. It is reasonable to considerations dictate that respondent’s tenure be
assume that BPI would have different rules and computed from 1978, the year when respondent started
regulations and company practices than FEBTC and it is working for Upjohn, and not only from 1996, when the
incumbent upon the former FEBTC employees to obey merger of Pharmacia and Upjohn took place. Pharmacia
these new. Not the least of these changes is the fact that and Upjohn, Inc., et al. vs. Ricardo p. Albayda, Jr., G.R.
prior to the merger FEBTC employees were employees of No. 172724, August 23, 2010.
an unorganized establishment and after the merger they
became employees of a unionized company that had an
Strike; validity of strike.

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Despite the validity of the purpose of a strike and the union shop agreement takes effect are bona fide
union’s compliance with the procedural requirements, a members of a religious organization which prohibits its
strike may still be held illegal where the means employed members from joining labor unions on religious grounds;
are illegal. While the strike had not been marred by (2) employees already in the service and already
actual violence and patent intimidation, the picketing that members of a union other than the majority at the time
respondent PILA officers and members undertook as part the union shop agreement took effect; (3) confidential
of their strike activities effectively blocked the free employees who are excluded from the rank and file
ingress to and egress from PHIMCO’s premises, thus bargaining unit; and (4) employees excluded from the
preventing non-striking employees and company vehicles union shop by express terms of the agreement. In the
from entering the PHIMCO compound. In this manner, absence of any of these recognized exceptions, there is
the picketers violated Article 264(e) of the Labor Code no basis to conclude that the terms and conditions of
and tainted the strike with illegality. PHIMCO Industries, employment under a valid CBA in force in the surviving
Inc. vs. PHIMCO Industries Labor Association (PILA), et corporation should not be made to apply to the absorbed
al., G.R. No. 170830, August 11, 2010. 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.

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 Labor Procedure
policies in the field of labor relations. The two criteria are
cumulative, and both must be met if an employee is to
CSC; rules for dismissal.
be considered a confidential employee – that is, the
confidential relationship must exist between the
employee and his supervisor, and the supervisor must The filing of formal charges against the respondents
handle the prescribed responsibilities relating to labor without complying with the mandated preliminary
relations. In the present case, there is no showing that investigation or at least giving the respondents the
the secretaries/clerks and checkers assisted or acted in a opportunity to comment violated the latter’s right to due
confidential capacity to managerial employees and process. These rules on due process apply even in cases
obtained confidential information relating to labor where the complainant is the disciplining officer himself,
relations policies. And even assuming that they had as in this case. The fact that the charges against the
exposure to internal business operations of the company, respondents are serious or that the evidence of their guilt
as respondent claims, this is not per se ground for their is strong cannot compensate for the procedural shortcut
exclusion in the bargaining unit of the rank-and-file undertaken by petitioner. Winston F. Garcia vs. Mario I.
employees. Tunay na Pagkakaisa ng Manggagawa sa Asia Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et
Brewery vs. Asia Brewery, Inc., G.R. No. 162025, August al., G.R. No. 157383/G.R. No. 174137, August 10, 2010.
3, 2010.
Labor case; due process; reevaluation.
Union; liability for invalid strike.
A reevaluation is a process by which a person or office (in
The effects of illegal strikes, outlined in Article 264 of the this case the DOLE secretary) revisits its own initial
Labor Code, make a distinction between participating pronouncement and makes another assessment of its
workers and union officers. The services of an ordinary findings. In simple terms, to reevaluate is to take another
striking worker cannot be terminated for mere look at a previous matter in issue. From a procedural
participation in an illegal strike; proof must be adduced standpoint, a reevaluation is a continuation of the original
showing that he or she committed illegal acts during the case and not a new proceeding. The evidence, financial
strike. The services of a participating union officer, on the reports and other documents submitted by the parties in
other hand, may be terminated, not only when he the course of the original proceeding are to be visited and
actually commits an illegal act during a strike, but also if reviewed again. A reevaluation does not necessitate the
he knowingly participates in an illegal strike. PHIMCO introduction of new materials for review nor does it
Industries, Inc. vs. PHIMCO Industries Labor Association require a full hearing for new arguments. Hence, failure
(PILA), et al., G.R. No. 170830, August 11, 2010. 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
Union shop; effect of merger.
Corporation, G.R. No. 165442, August 25, 2010.

All employees in the bargaining unit covered by a Union

Labor case; non-lawyer as representative.
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 The respondents in this case were represented by a non-
coverage, namely, (1) employees who at the time the lawyer who never showed any proof of his authority to

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represent the respondents. Petitioner argued that the Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25,
respondents’ representative had no personality to appear 2010.
before the Labor Arbiter or the NLRC, and his
representation for the respondents should produce no
Procedural rules; strict application.
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 Procedural rules setting the period for perfecting an
prejudice to whatever action may be taken against the appeal or filing a petition for review are generally
representative, if he had indeed been engaged in the inviolable. It is doctrinally entrenched that an appeal is
unauthorized practice of law. Spic n’ Span Services Corp. not a constitutional right, but a mere statutory privilege.
vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010. 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
NLRC; factual findings.
manner and within the period permitted by law is not
only mandatory, but also jurisdictional. Failure to perfect
Findings of fact of the NLRC, affirming those of the LA, the appeal renders the judgment of the court final and
are entitled to great weight and will not be disturbed if executory. Just as a losing party has the privilege to file
they are supported by substantial evidence. The CA had an appeal within the prescribed period, so does the
overstepped its legal mandate by reversing the findings winner also have the correlative right to enjoy the finality
of fact of the LA and the NLRC as it appears that both of the decision. Elpidio Calipay vs. National Labor
decisions were based on substantial evidence. There is no Relations Commission, et al., G.R. No. 166411, August 3,
proof of arbitrariness or abuse of discretion in the process 2010.
by which each body arrived at its own conclusions. Thus,
the CA should have deferred to such specialized agencies
Real party in interest; dismissed employee.
that are considered experts in matters within their
jurisdictions. Pharmacia and Upjohn, Inc., et al. vs.
Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, It is clear that the petitioners failed to include the name
2010. 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
NLRC; review of decisions.
such dismissed employee. Hence, the Court of Appeals
rightly dismissed the petition for not having been filed by
The power of the Court of Appeals to review NLRC an indispensable party in interest. (The Court still
decisions via Rule 65 or Petition for Certiorari has been proceeded to discuss the substantive issues and merits of
settled as early as in our decision in St. Martin Funeral the case despite affirming the dismissal of the case based
Home v. National Labor Relations Commission. This Court on procedural grounds.) Nagkakaisang Lakas ng
held that the proper vehicle for such review was a Special Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen
Civil Action for Certiorari under Rule 65 of the Rules of Valenzuela vs. Keihin Philippines Corporation, G.R. No.
Court, and that this action should be filed in the Court of 171115, August 9, 2010.
Appeals in strict observance of the doctrine of the
hierarchy of courts. Moreover, it is already settled that
Rule 45; review of factual findings.
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 As a general rule, only questions of law may be raised in
given the power to pass upon the evidence, if and when petitions for certiorari under Rule 45 of the Rules of
necessary, to resolve factual issues. Picop Resources Court. However, there are recognized exceptions to the
Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R. rule. Among the exceptions are when the findings of fact
No. 160828, August 9, 2010. 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
Pleading verification.
Court of Appeals conflict with the findings of fact of the
NLRC and the Labor Arbiter. Also, the finding of the Court
The lack of a verification in a pleading is only a formal of Appeals that Gurango engaged in a fistfight is a
defect, not a jurisdictional defect, and is not necessarily conclusion without citation of specific evidence on which
fatal to a case. The primary reason for requiring a it is based. Alex Gurango vs. Best Chemicals and Plastic,
verification is simply to ensure that the allegations in the Inc., et al., G.R. No. 174593, August 25, 2010.
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 September 2010 Selected Supreme Court Decisions
correct, and are not speculative. Spic n’ Span Services on Labor Law and Procedure

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Labor Law 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
Compensable illness.
was charged with responsibility of handling the bank’s
daily transactions which could run into large amounts. 
The CBA provision states: “If a seafarer/officer, due to no There is a tremendous difference between the degree of
fault of his own, suffers permanent disability as a result responsibility, care, and trustworthiness expected of an
of an accident while serving on board or while traveling ordinary employee in the bureaucracy and that required
to or from the vessel on Company’s business or due to of bank managers and other officials directly handling
marine peril, and as a result, his ability to work is large sums of money and properties. The evidence clearly
permanently reduced, totally or partially, the Company shows that Echano took light of such responsibility and
shall pay him a disability compensation.” “Accident” has his misconduct and dishonesty paved the way for the
been defined as: A fortuitous circumstance, event, or commission of fraud against, and consequent damage to,
happening, an event happening without any human the City Government of Manila. There is no doubt, based
agency, or if happening wholly or partly through human on the evidence that Echano was guilty of grave
agency, an event which under the circumstances is misconduct. Salvador O. Echano, Jr. vs. Liberty Toledo,
unusual and unexpected by the person to whom it G.R. No. 173930,September 15, 2010.
happens. The Court holds that the snap on the back of
respondent was not an accident, but an injury sustained
Dismissal; strike.
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 By its use of the phrase unjustly dismissed, Article 279
performance of a duty.  Although the disability of refers to a dismissal that is unjustly done, that is, the
respondent was not caused by an accident, his disability employer dismisses the employee without observing due
is still compensable under the CBA provision: “A process, either substantive or procedural. Substantive
seafarer/officer who is disabled as a result of any injury, due process requires the attendance of any of the just or
and who is assessed as less than 50% permanently authorized causes for terminating an employee as
disabled, but permanently unfit for further service at sea provided under Articles 278, 283 or 284 of the Labor
in any capacity, shall also be entitled to a 100% Code; while procedural due process demands compliance
compensation.” NFD International Manning Agents, with the twin-notice requirement. In contrast, on the
Inc./Barber Ship Management Ltd.  vs. Esmeraldo C. consequences of an illegal strike, Article 264(a)
Illescas, G.R. No. 183054, September 29, 2010. 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
Dismissal; due process.
to have lost his employment status, but a union member
who is merely instigated or induced to participate in the
SPO2 Roaquin is entitled to reinstatement since he was illegal strike is more benignly treated. The petitioners
dismissed from the service without administrative due were terminated for joining a strike that was later
process. No one ever filed an administrative action declared to be illegal. The NLRC ordered their
against him in connection with the crime of which he was reinstatement or, in lieu of reinstatement, the payment
charged in court. At any rate, assuming that someone of their separation pay, because they were mere rank-
filed an administrative charge against Roaquin, still the and-file workers whom the Union’s officers had misled
law required the PNP to give him notice of such charge into joining the illegal strike. They were not unjustly
and the right to answer the same. The PNP gave him no dismissed from work. Danilo Escario, et al vs. National
chance to show why he should not be discharged nor Labor Relations Commission, G.R. No. 160302,
does the record show that the PNP investigated him or September 27, 2010.
conducted a summary proceeding to determine his
liability in connection with the murder of which he was
Employee money claim; prescription.
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 The Labor Code provides that money claims arising from
entitled, after his acquittal, to reinstatement and employer-employee relations shall be filed within 3 years
payment of the salaries, allowances, and other benefits from the time the cause of action accrues; otherwise they
withheld from him by reason of his discharge from the shall be barred. In this case, it is undisputed that the
service. P/Chief Superintendent Roberto L. Calinisan, complainant was dismissed on January 1, 2000, and this
etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. was the time when the cause of action had accrued.
159588, September 15, 2010. 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
Dismissal; misconduct.
action had already prescribed. The fact that the
complainant repeatedly followed up on his money claim
Misconduct is a transgression of some established and with PLDT during the years of 2001-2003 does not serve
definite rule of action, more particularly, unlawful to toll the prescriptive period as provided under Art. 1155
behavior or gross negligence by a public officer.  As of the Civil Code since the complainant never made any
differentiated from simple misconduct, in grave written extrajudicial demand for his claim nor did PLDT

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Labor Law Jurisprudence
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make any written acknowledgment of its obligation. as long as cessation of or withdrawal from business
Philippine Long Distance Telephone Company (PLDT) vs. operations is bona fide in character and not impelled by a
Roberto R. Pingol, G.R. No. 182622, September 8, 2010. 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
Employee money claim; prescription.
length of service. Manila Mining Corp. Employees
Association, et al. vs.. Manila Mining corp, et al., G.R.
In the case of Southeastern Shipping vs. Navarra Jr., the Nos. 178222-23, September 29, 2010.
Court held that “Section 28 of the Standard Employment
Contract for Seafarers, insofar as it limits the prescriptive
Non-diminution of benefits.
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 Apex Mining Company, Inc. v. NLRC is instructive: “The
favorable to the seafarers and more in accord with the prohibition against elimination or diminution of benefits
State’s declared policy to afford full protection to labor.  set out in Article 100 of the Labor Code is specifically
Therefore, the prescriptive period in the present case is concerned with benefits already enjoyed at the time of
three years from the time the cause of action accrues the promulgation of the Labor Code. Article 100 does not
and not the one-year period prescribed in the Standard purport to apply to situations arising after the
Employment Contract for Seafarers. Medline promulgation date of the Labor Code.”  Even assuming
Management, Inc. and Grecomar Shipping Agency vs. arguendo that Article 100 applies to the case at bar, the
Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, same does not prohibit a union from offering and
September 15, 2010. 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.
Illegal dismissal.
Insular Hotel Employees Union-NFL vs. Waterfront
Insular Hotel Davao, G.R. No. 174040-41, September 22,
Petitioners are liable for constructive dismissal for placing 2010.
respondents on shifts of a few days per month and in
eventually denying them workplace access, rendering
Reinstatement; entitlement to backwages.
respondents’ employment impossible, unreasonable or
unlikely, leaving them no choice but to quit. The
petitioners rested their case on the defense of As a general rule, backwages are granted to indemnify a
respondents’ abandonment of work. For this cause to dismissed employee for his loss of earnings during the
prosper, petitioners should have proved (1) that the whole period that he is out of his job. Considering that an
failure to report for work was without justifiable reason, illegally dismissed employee is not deemed to have left
and (2) respondents’ intention to sever the employer- his employment, he is entitled to all the rights and
employee relationship as shown by some overt acts. privileges that accrue to him from the employment. That
However, petitioners failed to rebut the respondents’ backwages are not granted to employees participating in
claim that they were denied entry to their work area and an illegal strike accords with the reality that they do not
the respondents’ act of filing a case for illegal dismissal render work for the employer during the period of the
belies the intention to abandon work. Pasig Cylinder illegal strike. Under the principle of a fair day’s wage for
Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. a fair day’s labor, the petitioners were not entitled to the
173631, September 8, 2010. 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
Lay off.
backwages and held that the striking workers were
entitled only to reinstatement in Philippine Diamond Hotel
Even as we declare the validity of the lay-off, we cannot and Resort, Inc. (Manila Diamond Hotel) v. Manila
say that MMC has no obligation to the laid-off employees. Diamond Hotel Employees Union. Danilo Escario, et al vs.
Article 283 of the Labor Code applies to MMC. Said National Labor Relations Commission, G.R. No. 160302,
provision is emphatic that an employee, who was September 27, 2010.
dismissed due to cessation of business operation, is
entitled to the separation pay equivalent to one (1)
Reinstatement; separation pay.
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 should also be paid to employees The absence from an order of reinstatement of an
even if the closure or cessation of operations is not due alternative relief should the employer or a supervening
to losses. The Court is not impressed with the claim that event not within the control of the employee prevent
actual severe financial losses exempt MMC from paying reinstatement negates the very purpose of the order. To
separation benefits to complainants.  In the first place, safeguard the spirit of social justice that the Court has
MMC did not appeal the decision of the Court of Appeals advocated in favor of the working man, the right to
which affirmed the NLRC’s award of separation pay. In reinstatement is to be considered renounced or waived
the second place, the non-issuance of a permit forced only when the employee unjustifiably or unreasonably
MMC to permanently cease its business operations. Under refuses to return to work upon being so ordered or after
Article 283, the employer can lawfully close shop anytime the employer has offered to reinstate him. However,

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separation pay is made an alternative relief in lieu of the advancement of its interest and not to defeat or
reinstatement in certain circumstances, like: (a) when circumvent the employees’ right to security of tenure;
reinstatement can no longer be effected in view of the and (5) The employer used fair and reasonable criteria in
passage of a long period of time or because of the ascertaining who would be dismissed and who would be
realities of the situation; (b) reinstatement is inimical to retained among the employees, such as status,
the employer’s interest; (c) reinstatement is no longer efficiency, seniority, physical fitness, age, and financial
feasible; (d) reinstatement does not serve the best hardship for certain workers. Petitioner implemented its
interests of the parties involved; (e) the employer is retrenchment program in good faith because it undertook
prejudiced by the workers’ continued employment; (f) several measures in cutting down its costs: withdrawing
facts that make execution unjust or inequitable have privileges of its executives and expatriates; limiting the
supervened; or (g) strained relations between the grant of additional monetary benefits to managerial
employer and employee. Here, PINA manifested that the employees and cutting down expenses; selling of
reinstatement of the petitioners would not be feasible company vehicles; and infusing fresh capital into the
because: (a) it would “inflict disruption and oppression company. Petitioner was able to prove that it incurred
upon the employer”; (b) “petitioners [had] stayed away” substantial business losses, it offered to pay respondent
for more than 15 years; (c) its machines had depreciated his separation pay, the retrenchment scheme was arrived
and had been replaced with newer, better ones; and (d) at in good faith, and lastly, the criteria or standard used
it now sold goods through independent distributors, in selecting the employees to be retrenched was work
thereby abolishing the positions related to sales and efficiency which passed the test of fairness and
distribution. Under the circumstances, the grant of reasonableness. Shimizu Philippines Constractors, Inc.
separation pay in lieu of reinstatement of the petitioners vs. Virgilio P. Callanta, G.R. No. 165923, September 29,
was proper. Danilo Escario, et al vs. National Labor 2010.
Relations Commission, G.R. No. 160302, September 27,
2010.
Security of tenure.

Retrenchment; notice requirement.

DECS Memorandum No. 10 provides that all incumbent
teachers have until September 19, 2000 to pass the
Although there was authorized cause to dismiss Licensure Examination for Teachers (LET), otherwise they
respondent from the service, we find that petitioner did cannot continue teaching in public or private schools
not comply with the 30-day notice requirement.  unless they obtain a temporary permit to teach as para-
Petitioner maintains that it substantially complied with teachers. The complainants in this case were dismissed
the requirement of the law in that it submitted two from the school on March 31, 2000 after they failed to
notices or reports with the DOLE. However, petitioner pass the LET. The Supreme Court held that their
admitted that the reports were submitted 21 days, in the dismissal was illegal and premature. The law has
case of the first notice, and 16 days, in the case of the provided a specific timeframe within which the teachers
second notice, before the intended date of respondent’s could comply with the requirement of passing the LET
dismissal. The purpose of the one month prior notice rule hence, the school cannot deny them this privilege, which
is to give DOLE an opportunity to ascertain the veracity the law has accorded to them, without violating their
of the cause of termination. Non-compliance with this right to security of tenure. St. Mary’s Academy of Dipolog
rule violates the employee’s right to statutory due City vs. Teresita Palacio, et al., G.R. No. 164913,
process.  Consequently, we affirm the NLRC’s award of September 8, 2010.
indemnity to respondent for want of sufficient due notice.
Shimizu Philippines Constractors, Inc. vs. Virgilio P.
Separation pay.
Callanta, G.R. No. 165923, September 29, 2010.

While it is true that generally the grant of separation pay

Retrenchment; validity.
is not available to employees who are validly dismissed,
there are certain circumstances that warrant the grant of
As an authorized cause for separation from service under some relief in favor of the terminated Union members
Article 283 of the Labor Code, retrenchment is a valid based on equity.  Bitter labor disputes, especially strikes,
exercise of management prerogative subject to the strict always generate abhorrence that result in unpleasant
requirements set by jurisprudence: (1) The retrenchment consequences. Considering this, the striking employees’
is reasonably necessary and likely to prevent business breach of restrictions imposed on their concerted actions
losses which, if already incurred, are not merely de cannot be regarded as so inherently wicked that the
minimis, but substantial, serious, actual and real, or if employer can totally disregard their long years of service
only expected, are reasonably imminent as perceived prior to such breach. The records fail to disclose any past
objectively and in good faith by the employer; (2) The infractions committed by the dismissed Union members.
employer served written notice both to the employees Taking these circumstances in consideration, the Court
and to the DOLE at least one month prior to the intended regards the award of financial assistance to these Union
date of retrenchment; (3) The employer pays the members in the form of one-half month salary for every
retrenched employees separation pay equivalent to one year of service to the company up to the date of their
month pay or at least ½ month pay for every year of termination as equitable and reasonable. C. Alcantara &
service, whichever is higher; (4) The employer exercises Sons, Inc. vs. Court of Appeals / Nagkahiusang
its prerogative to retrench employees in good faith for Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C.

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Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno Unfair labor practice.
sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara &
Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R.
Unfair labor practice cannot be imputed to MMC since
No. 179220, September 29, 2010.
the call of MMC for a suspension of the CBA negotiations
cannot be equated to “refusal to bargain.”  Article 252 of
Strike; termination of participants in illegal strike. 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
Since the Union’s strike has been declared illegal, the
motivated by ill-will, bad faith or fraud, or was oppressive
Union officers can be terminated from employment for
to labor.  The employer must have acted in a manner
their actions.  This includes the shop stewards who
contrary to morals, good customs, or public policy
cannot be shielded from the coverage of Article 264 of
causing social humiliation, wounded feelings or grave
the Labor Code since the Union appointed them as such
anxiety.  It cannot be said that MMC deliberately avoided
and placed them in positions of leadership and power
the negotiation.  It merely sought a suspension and even
over the men in their work units. As regards the rank and
expressed its willingness to negotiate once the mining
file Union members, Article 264 provides that termination
operations resume.  There was valid reliance on the
from employment is not warranted by the mere fact that
suspension of mining operations for the suspension of the
a union member has taken part in an illegal strike.  It
CBA negotiation. The Union failed to prove bad faith. 
must be shown that such union member, clearly
Manila Mining Corp. Employees Association, et al. vs..
identified, performed an illegal act or acts during the
Manila Mining corp, et al., G.R. Nos. 178222-23,
strike. The striking Union members allegedly committed
September 29, 2010.
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
LABOR PROCEDURE
the writ of preliminary injunction issued against the
strikers. The mere fact that the criminal complaints
against them were subsequently dismissed does not Appeal; questions of fact.
extinguish their liability under the Labor Code.  Nor does
such dismissal bar the admission of the affidavits, An issue of fact exists when what is in question is the
documents, and photos presented to establish their truth or falsity of the alleged facts, whereas an issue of
identity and guilt during the hearing of the petition to law exists when what is in question is what the law is on
declare the strike illegal.  C. Alcantara & Sons, Inc. a certain state of facts.  The test, therefore, for
vs. Court of Appeals / Nagkahiusang Mamumuno sa determining whether an issue is one of law or of fact, is
Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & whether the CA could adjudicate it without reviewing or
Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons- evaluating the evidence, in which case, it is an issue of
SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, law; otherwise, it is an issue of fact. Here the CA needed
Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. only to review the records to determine what law should
179220, September 29, 2010. be applied.  Such question does not call for an
examination of the probative value of the evidence of the
Strike; validity. 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,
A strike may be regarded as invalid although the labor
etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No.
union has complied with the strict requirements for
159588, September 15, 2010.
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 Appeal; timeliness.
clause. Here, the CBA between the parties contained a
“no strike, no lockout” provision that enjoined both the Under the Rules of Procedure of the NLRC, service of
Union and the Company from resorting to the use of notices and resolutions by registered mail is completed
economic weapons available to them under the law and “upon receipt by the addressee or his agent.“ In this
to instead take recourse to voluntary arbitration in case, the receipt of the Labor Arbiter’s decision by the
settling their disputes.  No law or public policy prohibits security guard manning the compound where several
the Union and the Company from mutually waiving their businesses operated, including that of the petitioner,
respective right to strike and lockout, which are does not constitute receipt by the agent of the
otherwise available to them under the law, in favor of addressee. It is clear that the security guard was not
voluntary arbitration. C. Alcantara & Sons, Inc. vs. Court employed by the petitioners. For remedial law purposes,
of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL the guard’s receipt of any processes intended for the
(NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et petitioners was receipt by a stranger, without legal
al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL- significance to the petitioners. Hence, the 10-day period
SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. for filing the appeal should be counted from the day after
No. 155109/G.R. No. 155135/G.R. No. 179220, notice was forwarded to the petitioner’s office. Pasig
September 29, 2010.

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Cylinder Manufacturing Corp. vs. Danilo Rollo, et

al., G.R. No. 173631, September 8, 2010.
Labor arbiter; jurisdiction.
Certiorari; NLRC. The power of the CA to review a
decision of the NLRC in a petition for certiorari under Rule
As heirs of the deceased seaman, the respondents can
65 of the Rules of Court does not normally include an
file a case before the Labor Arbiter for payment of death
inquiry into the correctness of the NLRC’s evaluation of
benefits as provided under Section 28 of the POEA
the evidence. However, under certain circumstances, the
Standard Employment Contract.  It is clearly provided
CA is allowed to review the factual findings or the legal
therein that the NLRC shall have original and exclusive
conclusions of the NLRC in order to determine whether
jurisdiction over any and all disputes or controversies
these findings are supported by the evidence presented
arising out of or by virtue of the seaman’s contract.
and the conclusions derived therefrom are accurately
Medline Management, Inc. and Grecomar Shipping
ascertained. It is within the jurisdiction of the CA to
Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No.
review the findings of the NLRC. Consequently, the CA
168715, September 15, 2010.
cannot be faulted in re-evaluating the NLRC’s findings as
it can affirm, modify or reverse the same if the evidence
so warrants.  Shimizu Philippines Constractors, Inc. vs. Mediation.
Virgilio P. Callanta, G.R. No. 165923, September 29,
2010. Procedurally, the first step to submit a case for
mediation is to file a notice of preventive mediation with
Certiorari; regional director and BLR director. 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
Relief in a special civil action for certiorari is available
who may file a notice of preventive mediation—only a
only when the following essential requisites concur:  (a)
certified or duly recognized bargaining agent. Cullo
the petition must be directed against a tribunal, board, or
admitted that the case was filed not by the Union but by
officer exercising judicial or quasi-judicial functions; (b)
individual members thereof.  Clearly, the NCMB had no
the tribunal, board, or officer must have acted without or
jurisdiction to entertain the notice filed before it. Insular
in excess of jurisdiction or with grave abuse of discretion
Hotel Employees Union-NFL vs. Waterfront Insular Hotel
amounting to lack or excess of jurisdiction; and  (c) there
Davao, G.R. No. 174040-41, September 22, 2010.
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 NLRC; acquisition of jurisdiction.
petition for the plebiscite to amend PALEA’s Constitution
and By-Laws was merely incidental to the conduct of the The NLRC acquires jurisdiction over parties in cases
general election pursuant to the final and executory before it either by summons served on them or by their
decision of the BLR. As such, the recourse open to PALEA voluntary appearance before its Labor Arbiter.  The
was not to file the petition for certiorari to assail such Return of Service of Summons indicated that 74 out of
denial, but to first await the final election results. the 81 impleaded Union members were served with
Secondly, the Regional Director and the BLR Director summons.  But they refused either to accept the
were not exercising judicial or quasi-judicial functions in summons or to acknowledge receipt of the same.  Such
issuing the order and the letter. Instead, they were refusal cannot frustrate the NLRC’s acquisition of
performing the purely ministerial act of enforcing the jurisdiction over them.  Besides, the affected Union
final and executory BLR resolution directing the conduct members voluntarily entered their appearance in the
of the general election. Philippine Airlines Employees case when they sought affirmative relief in the course of
Association (PALEA) vs. Hon. Hans Leo J. Cacdac, G.R. the proceedings like an award of damages in their favor.
No. 155097, September 27, 2010. C. Alcantara & Sons, Inc. vs. Court of Appeals /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-
Failure to comply with condition precedent. 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.
The records show that the respondents failed to comply
No. 155109/G.R. No. 155135/G.R. No. 179220,
with a condition precedent when they did not first bring
September 29, 2010.
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. October 2010 Selected Supreme Court Decisions on
Labor Law and Procedure

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Compensable illness. 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
Respondent is entitled to sickness wages because the
foreign travel, which he previously enjoyed as
shooting pain in his right foot is an injury which he
Transportation Services Manager. Thus, Del Villar was
suffered during the course of his employment. This is in
clearly constructively dismissed. Coca Cola Bottlers
consonance with the Standard Terms and Conditions
Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091,
Governing the Employment of Filipino Seafarers On Board
October 6, 2010.
Ocean-Going Vessels of the Department of Labor and
Employment. Applying the said provisions of this
standard contract, respondent is entitled to receive Dismissal; closure of business.
sickness wages covering the maximum period of 120
days. Moreover, petitioners violated the contract when it
Petitioner terminated the employment of respondents on
failed to provide continuous treatment for respondent in
the ground of closure or cessation of operation of the
accordance with the recommendation of their company
establishment which is an authorized cause for
physician.  Because of this failure, respondent was forced
termination under Article 283 of the Labor Code. While it
to seek immediate medical attention at his own expense. 
is true that a change of ownership in a business concern
Thus, he is also entitled to reimbursement of his medical
is not proscribed by law, the sale or disposition must be
expenses. Varorient Shipping Co., Inc., et al. vs. Gil
motivated by good faith as a condition for exemption
Flores, G.R. No. 161934, October 6, 2010
from liability. In the instant case, however, there was, in
fact, no change of ownership. Petitioner did not present
Compensable illness. 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,
For an injury or illness to be duly compensated under the
franchises and routes and under the same circumstances
terms of the Philippine Overseas Employment
as before the alleged sale. Thus, no actual sale transpired
Administration-Standard Employment Contract (POEA-
and, as such, there is no closure or cessation of business
SEC), there must be a showing that the injury or illness
that can serve as an authorized cause for the dismissal of
and the ensuing disability occurred during the effectivity
respondents. Peñafrancia Tours and Travel Transport,
of the employment contract. Moreover, all of these
Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang,
conditions must be satisfied — 1.) The seafarer’s work
G.R. No. 178397, October 20, 2010.
must involve the risks described in the POEA-SEC; 2.)
The disease was contracted as a result of the seafarer’s
exposure to the described risks; 3.) The disease was Dismissal; constructive dismissal.
contracted within a period of exposure and under such
other factors necessary to contract it;  and 4.) There was
There is constructive dismissal if an act of clear
no notorious negligence on the part of the seafarer. 
discrimination, insensibility, or disdain by an employer
Specifically, with respect to mental diseases, the POEA-
becomes so unbearable on the part of the employee that
SEC requires that it must be due to traumatic injury to
it would foreclose any choice by him except to forego his
the head which did not occur in this case.  In fact,
employment.  It also exists where there is cessation of
respondent claimed that he became depressed due to the
work because continued employment is rendered
frequent verbal abuse he received from his German
impossible, unreasonable or unlikely, such as when an
superiors. However, he failed to show concrete proof
offer involves a demotion in rank and a diminution in
that, if indeed he was subjected to abuse, it directly
pay.  In the present case,   what made it impossible,
resulted in his depression.  Philippine Transmarine
unreasonable or unlikely for respondent to continue
Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A.
working for SHS was the unlawful withholding of his
Nazam, G.R. No. 190804. October 11, 2010.
salary. He then lost no time in submitting his resignation
letter and eventually filing a complaint for illegal
Constructive dismissal; transfer. dismissal just a few days after his salary was withheld. 
These circumstances are inconsistent with voluntary
resignation and bolster the finding of constructive
It is management prerogative to transfer or assign
dismissal. SHS Perforated Materials, Inc., et al. vs.
employees from one office or area of operation to
Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
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 Dismissal; corporate officer.
rank or a diminution of his salaries, privileges and other
benefits.  Should the employer fail to overcome this
It is not the nature of the services performed, but on the
burden, the employee’s transfer shall be tantamount to
manner of creation of the office that distinguishes
constructive dismissal. In the instant case, Del Villar’s
corporate officers who may be ousted from office at will
demotion is readily apparent in his new designation as a
and ordinary corporate employees who may only be
mere Staff Assistant to the Corporate Purchasing and
terminated for just cause.  Under Section 25 of the
Materials Control Manager from being Transportation
Corporation Code, a position must be expressly
Services Manager. The two posts are not of the same
mentioned in the By-Laws in order to be considered as a
weight in terms of duties and responsibilities. Moreover,
corporate office. Thus, the creation of an office pursuant
while Del Villar’s transfer did not result in the reduction of

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to a By-Law provision giving a president the power to no distinction between a probationary and a permanent
create an office does not qualify as a By-Law position. In or regular employee. This means that probationary
the present case, the position of Vice President for employees cannot be dismissed except for cause or for
Finance and Administration which respondent held was failure to qualify as regular employees (i.e., to meet the
merely created by Matling’s President pursuant to the performance standards set by the company to be eligible
company’s By-Laws.  It is not a corporate office or By- for regular employment). SHS Perforated Materials, Inc.,
Law position, and therefore, respondent was not a et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13,
corporate officer who could be ousted from office at will. 2010.
Matling Industrial and Commercial Corp., et al. vs.
Ricardo R. Coros, G.R. No. 157802, October 13, 2010.

Dismissal; gross and habitual neglect.

Dismissal; requirement.

Under Article 282 (b) of the Labor Code, an employer

In dismissing an employee, the employer must furnish
may terminate an employee for gross and habitual
him with two written notices: the first notice apprises the
neglect of duties.  Gross negligence connotes want of
employee of the particular acts or omissions for which his
care in the performance of one’s duties.  Habitual neglect
dismissal is sought, and the second is a subsequent
implies repeated failure to perform one’s duties for a
notice, which informs the employee of the employer’s
period of time, depending upon the circumstances.  A
decision to dismiss him. An administrative hearing must
single or isolated act of negligence does not constitute a
likewise be held in order to give the employee a further
just cause for the dismissal of the employee.  Assuming
opportunity to be heard. Petitioner hospital failed to
arguendo that respondent was negligent, although the
comply with the rule on twin notice and hearing as it
Court found otherwise, the lapse or inaction could only be
merely required respondent to give his written
regarded as a single or isolated act of negligence that
explanation and, thereafter, ordered his dismissal.  St.
cannot be categorized as habitual and, hence, not a just
Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito
cause for his dismissal. St. Luke’s Medical Center, Inc.
Nazario, G.R. No. 152166, October 20, 2010.
and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166,
October 20, 2010.
Dismissal; serious misconduct.
Dismissal; loss of confidence.
Serious misconduct as a valid cause for the dismissal of
an employee is defined simply as improper or wrongful
Loss of confidence as a just cause for termination of
conduct.  It is a transgression of some established and
employment is premised on the fact that the employee
definite rule of action, a forbidden act, a dereliction of
concerned holds a position of trust and confidence.  This
duty, willful in character, and implies wrongful intent and
situation holds where a person is entrusted with
not mere error of judgment.  To be serious, the
confidence on delicate matters, such as the custody,
misconduct must be of such grave and aggravated
handling, or care and protection of the employer’s
character and not merely trivial or unimportant.
property.  However, in order to constitute a just cause for
Moreover, it must be related to the performance of the
dismissal, the act complained of must be “work-related”
employee’s duties such as would show him to be unfit to
such as would show the employee concerned to be unfit
continue working for the employer. On the other hand,
to continue working for the employer. In the instant case,
moral turpitude has been defined as “everything which is
the Resolution of the PAL Board of Directors, underscored
done contrary to justice, modesty, or good morals; an act
respondent’s acts of mismanagement and gross
of baseness, vileness or depravity in the private and
incompetence which resulted in huge financial losses for
social duties which a man owes his fellowmen, or to
petitioner.  As a general rule, employers are allowed
society in general, contrary to justice, honesty, modesty,
wider latitude of discretion in terminating the
or good morals. In the case at bar, the transgressions
employment of managerial personnel or those who, while
imputed to private respondent have never been firmly
not of similar rank, perform functions which by their
established as deliberate and willful acts.  At the very
nature require the employer’s full trust and confidence. 
most, they can only be characterized as unintentional,
This must be distinguished from the case of ordinary rank
albeit major, lapses in professional judgment.  Philippine
and file employees, whose termination on the basis of
Airlines, Inc. vs. National Labor Relations Commission
these same grounds requires a higher proof of
and Aida M. Quijano, G.R. No. 123294, October 20,
involvement in the events in question. Philippine Airlines,
2010.
Inc. vs. National Labor Relations Commission and Aida M.
Quijano, G.R. No. 123294, October 20, 2010
Employer-employee relationship.
Dismissal;  probationary employee.
That complainants were employees of SIP is clear from
the fact that SIP paid their salary.  When complainants
Although respondent was a probationary employee, he is
charged SIP of underpayment, SIP even interposed the
nonetheless entitled to security of tenure.  Section 3 (2)
defense of free board and lodging given to complainants.
Article 13 of the Constitution guarantees that right. In
Furthermore, the IDs issued to complainants bear the
using the expression “all workers,” the Constitution puts
signature of Alejandro C. Pablo, proprietor of SIP.

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Likewise, the memoranda issued to complainants allowances and other benefits or their monetary
regarding their absences without leave were signed by equivalent, computed from the time their actual
Pablo.  All these clearly show that SIP is the employer of compensation was withheld from them up to the time of
complainants. Although GMPC engaged the services of their actual reinstatement. If reinstatement is no longer
SIP to operate a canteen, SIP and its proprietors could possible, the backwages shall be computed from the time
not be considered as labor-only contractors or mere of their illegal termination up to the finality of the
agents of GMPC because they exercised the essential decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U.
elements of an employment relationship with the Del Villar, G.R. No. 163091, October 6, 2010.
complainants such as hiring, payment of wages and the
power of control. S.I.P. Food House and Mr. and Mrs.
Illegal dismissal; moral and exemplary damages.
Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No.
192473, October 11, 2010.
Award of moral and exemplary damages for an illegally
dismissed employee is proper where the employee had
Employer-employee relationship; test.
been harassed and arbitrarily terminated by the
employer. Moral damages may be awarded to
The elements to determine the existence of an compensate one for injuries such as mental anguish,
employment relationship are: (a) the selection and besmirched reputation, wounded feelings, and social
engagement of the employee; (b) the payment of wages; humiliation occasioned by the employer’s unreasonable
(c) the power of dismissal; and (d) the employer’s power dismissal of the employee. The award of such damages is
to control the employee’s conduct. The most important of based not on the Labor Code but on the Civil Code. 
these elements is the employer’s control of the These damages, however, are not intended to enrich the
employee’s conduct, not only as to the result of the work illegally dismissed employee.  Thus, the Court found it
to be done, but also as to the means and methods to proper to reduce the award of moral damages from
accomplish it. It should be remembered that the control P500,000 to P100,000.00 and exemplary damages  from
test merely calls for the existence of the right to control, P500,000 to P50,000.00. The reduced amounts are
and not necessarily the exercise thereof. Based on this deemed sufficient to assuage the sufferings experienced
four-fold test, Manila Water emerges as the employer of by Del Villar and to set an example for the public good.
respondent collectors. Respondent bill collectors were Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del
individually hired by the contractor, but were under the Villar, G.R. No. 163091, October 6, 2010.
direct control and supervision of Manila Water. This
control is manifested in the fact that respondent bill
Illegal dismissal; reinstatement and full
collectors reported daily to the branch offices of Manila
backwages.
Water to remit their collections with the specified
monthly targets and comply with the collection reporting
procedures prescribed by the latter. Accordingly, Probationary employees who are unjustly dismissed
respondent bill collectors are employees of petitioner during the probationary period are entitled to
Manila Water. Manila Water Company, Inc. vs. Jose J. reinstatement and payment of full backwages and other
Dalumpines, et al., G.R. No. 175501, October 4, 2010. benefits and privileges from the time they were
dismissed up to their actual reinstatement.  Respondent
is, thus, entitled to reinstatement without loss of
Evidentiary doubts construed in favor of labor.
seniority rights and other privileges as well as to full
backwages, inclusive of allowances and other benefits or
Although it cannot be determined with certainty whether their monetary equivalent computed from the time his
respondent worked for the entire period from November compensation was withheld up to the time of actual
16 to November 30, 2005, the consistent rule is that if reinstatement. SHS Perforated Materials, Inc., et al. vs.
doubt exists between the evidence presented by the Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
employer and that by the employee, the scales of justice
must be tilted in favor of the latter in line with the policy
Illegal dismissal; reinstatement and payment of
mandated by Articles 2 and 3 of the Labor Code to afford
backwages.
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 Petitioners’ lack of just cause and non-compliance with
period in question and is, accordingly, entitled to his the procedural requisites in terminating respondent’s
salary. Therefore, the withholding of respondent’s salary employment renders them guilty of illegal dismissal. 
by petitioners is contrary to Article 116 of the Labor Code Consequently, under Article 279 of the Labor Code, as
and, thus, unlawful. SHS Perforated Materials, Inc., et al. amended, respondent is entitled to reinstatement to his
vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010. former position without loss of seniority rights and
payment of backwages inclusive of allowances and other
benefits, or their monetary equivalent computed from the
Illegal dismissal; full backwages and
time the compensation was not paid up to the time of
reinstatement.
actual reinstatement.   St. Luke’s Medical Center, Inc.
and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166,
Under Republic Act No. 6715, employees who are illegally October 20, 2010.
dismissed are entitled to full backwages, inclusive of

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Illegal dismissal; separation pay in lieu of vs. Ricardo R. Coros, G.R. No. 157802, October 13,
reinstatement. 2010.

If reinstatement proves impracticable, and hardly in the Jurisdiction; labor dispute vs. intra-corporate
best interest of the parties, perhaps due to the lapse of dispute.
time since the employee’s dismissal, or if the employee
decides not to be reinstated, respondent should be
Given Locsin’s status as a corporate officer, the RTC, not
awarded separation pay in lieu of reinstatement.  In the
the Labor Arbiter or the NLRC, has jurisdiction to hear
present case, since reinstatement is no longer feasible
the legality of the termination of his relationship with
due to the long passage of time, petitioners are required
Nissan.  In a number of cases it has been held that a
to pay respondent his separation pay equivalent to one
corporate officer’s dismissal is always a corporate act, or
(1) month’s pay for every year of service.  Petitioners are
an intra-corporate controversy so that the RTC should
thus ordered to pay respondent his backwages and
exercise jurisdiction.  Locsin was undeniably Chairman
separation pay.  The awards of separation pay and
and President, and was elected to these positions by the
backwages are not mutually exclusive and both may be
Nissan board pursuant to its By-laws. As such, he was a
given to respondent. St. Luke’s Medical Center, Inc. and
corporate officer, not an employee.  Even as Executive
Robert Kuan vs. Estrelito Nazario, G.R. No. 152166,
Vice-President/Treasurer, Locsin already acted as a
October 20, 2010.
corporate officer because the position of Executive Vice-
President/Treasurer is provided for in Nissan’s By-Laws.  
Job contracting; conditions. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis
Banson, G.R. No. 185567, October 20, 2010.
Job contracting is permissible only if the following
conditions are met: 1) the contractor carries on an Labor-only contracting; elements.
independent business and undertakes the contract work
on his own account under his own responsibility
The Labor Code expressly prohibits “labor-only”
according to his own manner and method, free from the
contracting which refers to an arrangement where the
control and direction of his employer or principal in all
contractor or subcontractor merely recruits, supplies, or
matters connected with the performance of the work
places workers to perform a job, work, or service for a
except as to the results thereof; and 2) the contractor
principal, and any of the following elements are present:
has substantial capital or investment in the form of tools,
(i) the contractor or subcontractor does not have
equipment, machineries, work premises, and other
substantial capital or investment which relates to the job,
materials which are necessary in the conduct of the
work, or service to be performed and the employees
business. “Substantial capital or investment” refers to
recruited, supplied, or placed by such contractor or
capital stocks and subscribed capitalization in the case of
subcontractor are performing activities which are directly
corporations, tools, equipment, implements, machineries,
related to the main business of the principal; or (ii) the
and work premises, actually and directly used by the
contractor does not exercise the right to control the
contractor or subcontractor in the performance or
performance of the work of the contractual employee.
completion of the job, work, or service contracted out.
Using the above criteria, it is clear that FCCSI is a labor-
The “right to control” refers to the right reserved to the
only contractor while the principal Manila Water is the
person for whom the services of the contractual workers
real employer. FCCSI does not have substantial capital or
are performed, to determine not only the end to be
investment to qualify as an independent contractor as
achieved, but also the manner and means to be used in
shown by the fact that although it has an authorized
reaching that end. Manila Water Company, Inc. vs. Jose
capital stock of P400,000.00, only P100,000.00 of which
J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
is actually paid-up. Also, it was Manila Water that
provided the equipment and service vehicles needed in
Jurisdiction; dismissal. the performance of the contracted service. Manila Water
Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No.
175501, October 4, 2010.
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 Loss of confidence; distinction between managerial
the labor arbiter. However, where the complaint for personnel and rank and employees .
illegal dismissal concerns a corporate officer, the
controversy is considered an intra-corporate dispute and
As a general rule, employers are allowed wider latitude of
falls under the jurisdiction of the Securities and Exchange
discretion in terminating the employment of managerial
Commission (SEC). This jurisdiction of the SEC, however,
personnel or those who, while not of similar rank,
was transferred to the RTC, pursuant to RA No. 8799
perform functions which by their nature require the
which became effective on August 8, 2000. Considering
employer’s full trust and confidence.  This must be
that the respondent’s complaint for illegal dismissal was
distinguished from the case of ordinary rank and file
commenced on August 10, 2000, the appropriate
employees, whose termination on the basis of these
jurisdiction lie with the RTC should it turn out that the
same grounds requires a higher proof of involvement in
respondent was a corporate, not a regular, officer of
the events in question; mere uncorroborated assertions
Matling. Matling Industrial and Commercial Corp., et al.
and accusations by the employer will not suffice. Leandro

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M. Alcantara vs. The Philippine Commercial and contract for overseas employment and is a condition
International Bank, G.R. No. 151349, October 20, 2010. 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
Motion to dismiss; appeal.
agreement between the local agent and its foreign
principal so that if either or both of the parties decide to
Petitioner Locsin’s submission that the NCLPI improperly end the agreement, the responsibilities of such parties
elevated the Labor Arbiter’s denial of the Motion to towards the contracted employees under the agreement
Dismiss to the CA is correct.  A denial of a motion to do not at all end, but the same extends up to and until
dismiss is an interlocutory order and hence, cannot be the expiration of the employment contracts of the
appealed until a final judgment on the merits of the case employees recruited and employed pursuant to the said
is rendered. As a general rule, an aggrieved party’s recruitment agreement. Thus, to allow petitioners to
proper recourse to the denial is to file his position paper, simply invoke the immunity from suit of its foreign
interpose the grounds relied upon in the motion to principal or to wait for the judicial determination of the
dismiss – such as lack of jurisdiction in the present case foreign principal’s liability before petitioner can be held
– before the labor arbiter, and actively participate in the liable renders the law on joint and solidary liability inutile.
proceedings. Thereafter, the labor arbiter’s decision can ATCI Overseas Corporation, et al.  vs. Ma. Josefa Echin,
be appealed to the NLRC, not to the CA.   This NLRC rule G.R. No. 178551. October 11, 2010
is similar to the general rule observed in civil procedure.
Under the Rules of Court, the only other recourse of the
Redundancy.
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 Redundancy is one of the authorized causes for the
course of law. In the labor law setting, a plain, speedy dismissal of an employee under Article 283 of the Labor
and adequate remedy in the form of the corrective power Code. Redundancy, exists where the services of an
of the NLRC is still open to the aggrieved party when a employee are in excess of what is reasonably demanded
labor arbiter denies a motion to dismiss. Arsenio Z. by the actual requirements of the enterprise.  Such
Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. superfluity may be due to overhiring of workers,
No. 185567, October 20, 2010. decreased volume of business, or dropping of a particular
product line or service activity previously manufactured
or undertaken by the enterprise. The determination of
Petition; failure to attach documents.
redundancy is an exercise of business judgment of the
employer the soundness of which is not subject to
Failure to attach all pleadings and documents, by itself, is discretionary review of the Labor Arbiter and the NLRC,
not a sufficient ground to dismiss a petition.  The courts provided there is no violation of law and no showing that
may liberally construe procedural rules in order to meet it was prompted by an arbitrary or malicious act.  Thus, a
and advance the cause of substantial justice.  Procedural company must not merely declare that it has become
lapses will be overlooked when they do not involve public overmanned, it must also produce adequate proof of such
policy, when they arose from an honest mistake or redundancy. Coca-Cola failed to overcome this burden in
unforeseen accident, and when they have not prejudiced the instant case.  Instead, it offered proof of Del Villar’s
the adverse party or deprived the court of its authority. poor performance which is irrelevant in relation to the
These conditions are present in the instant case.  issue on redundancy.  Coca Cola Bottlers Philippines, Inc.
Furthermore, after petitioner’s receipt of the Court of vs. Angel U. Del Villar, G.R. No. 163091, October 6,
Appeals Resolution dismissing his petition for failure to 2010.
attach documents, he filed a Motion for Reconsideration
along with the documents deemed by the Court of
Reinstatement; doctrine of strained relations.
Appeals as lacking in his original petition. Such
subsequent submission should be deemed substantial
compliance as supported by jurisprudence. In these Under the doctrine of strained relations, the payment of
cases, the reasons behind the failure of the petitioners to separation pay is considered an acceptable alternative to
comply with the required attachments were no longer reinstatement when the latter option is no longer
scrutinized.  Clearly, the Court of Appeals erred in desirable or viable.  Payment liberates the employee from
dismissing petitioner’s special civil action for certiorari what could be a highly oppressive work environment, and
despite subsequent substantial compliance with the rules at the same time releases the employer from the
on procedure. Leandro M. Alcantara vs. The Philippine obligation of keeping in its employ a worker it no longer
Commercial and International Bank, G.R. No. 151349, trusts.  In the instant case, respondent’s reinstatement is
October 20, 2010. no longer feasible as antagonism has caused a severe
strain in his working relationship with petitioners.
Therefore, a more equitable disposition would be an
Private recruitment agencies; solidary liability.
award of separation pay equivalent to at least one month
pay, in addition to his full backwages, allowances and
Republic Act No. 8042 provides for the joint and solidary other benefits. SHS Perforated Materials, Inc., et al. vs.
liability of private recruitment agencies with their foreign Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
principals in any and all money claims against them.
Such provision is automatically incorporated by law in the
Release and quitclaim; validity.

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Quitclaims executed by the employees are commonly the POEA Standard Employment Contract (POEA SEC). 
frowned upon as contrary to public policy.  Thus, for In order to claim disability benefits under the POEA SEC,
quitclaims to be valid the following requisites must be it is the ‘company-designated’ physician who must
complied with: (a) that there was no fraud or deceit on proclaim that the seaman suffered a permanent
the part of any of the parties; (b) that the consideration disability, due to either injury or illness, during the term
of the quitclaim is credible and reasonable; and (c) that of the latter’s employment. In this case, the findings of
the contract is not contrary to law, public order, public respondents’ designated physician that petitioner has
policy, morals or good customs, or prejudicial to a third been suffering from brief psychotic disorder and that it is
person with a right recognized by law. Varorient Shipping not work-related must be respected. While it is true that
Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October labor contracts are impressed with public interest and the
6, 2010 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
Retirement; compulsory.
is that justice is, in every case, only for the deserving; it
is to be dispensed with in the light of established facts,
Article 287 of the Labor Code, as amended by R.A. No. the applicable law, and existing jurisprudence. Edgardo
7641, pegs the age for compulsory retirement at 65 M. Panganiban vs. Tara Trading Ship Management Inc.
years, while the minimum age for optional retirement is and Shinline SDN BHD, G.R. No. 187032, October 18,
set at 60 years. An employer is, however, free to impose 2010
a retirement age earlier than the foregoing mandates
provided that the prerogative is exercised pursuant to a
Separation pay; equity.
mutually instituted early retirement plan. In the present
case, not even an iota of voluntary acquiescence to
UNIPROM’s early retirement age option is attributable to In exceptional cases, this Court has granted separation
petitioner. UNIPROM’s Employees’ Non-Contributory pay to a legally dismissed employee as an act of “social
Retirement Plan was unilaterally and compulsorily justice” or based on “equity.”  In both instances, it is
imposed on them. Petitioner was forced to participate in required that the dismissal (1) was not for serious
the plan, and the only way she could have rejected the misconduct; and (2) does not reflect on the moral
same was to resign or lose her job. Such passive character of the employee or would involve moral
acquiescence on the part of employees cannot equate to turpitude.  There should be no question that where it
voluntary acceptance which must be explicit, voluntary, comes to such valid but not iniquitous causes as failure to
free, and uncompelled. Having terminated petitioner comply with work standards, the grant of separation pay
merely on the basis of a provision in the retirement plan to the dismissed employee may be both just and
which was not freely assented to by her, UNIPROM is compassionate, particularly if he has worked for some
guilty of illegal dismissal. Lourdes A. Cercado vs. time with the company. Philippine Airlines, Inc. vs.
Uniprom, Inc., G.R. No. 188154. October 13, 2010. National Labor Relations Commission and Aida M.
Quijano, G.R. No. 123294, October 20, 2010.
Rule on appeal from denial of motion to dismiss;
exception. Termination; loss of confidence.

As a general rule, a Labor Arbiter’s denial of the Motion Loss of confidence as a just cause for termination of
to Dismiss on the ground of lack of jurisdiction is employment applies when the employee concerned holds
appealable to the NLRC and not to the CA by way of Rule a position of trust and confidence.  However, in order to
65. However, we take exception to this general rule in constitute a just cause for dismissal, the act complained
the present case because a strict implementation of these of must be “work-related” such as would show the
rules would cause substantial injustice to NCLPI.  After employee concerned to be unfit to continue working for
all, the parties have sufficiently ventilated their positions the employer. Petitioner, who, as Branch Manager of the
on the disputed employer-employee relationship and respondent bank undoubtedly held a position of trust and
have, in fact, submitted the matter for the CA’s confidence, admitted that he personally processed the
consideration.  Moreover, the CA correctly ruled that two Certificates of Time Deposit (CTDs) at issue, despite
Locsin was a corporate officer, not an employee and his knowledge that they were unfunded.  By doing so, he
therefore jurisdiction lies with the RTC and not the Labor exposed his employer to great risk.  Moreover, by issuing
Arbiter. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and those CTDs, he was in effect certifying the existence of
Luis Banson, G.R. No. 185567, October 20, 2010. 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 petitioner’s employment on the ground of
Seaman as a contractual employee; disability loss of trust and confidence. Leandro M. Alcantara vs.
claims. The Philippine Commercial and International Bank, G.R.
No. 151349, October 20, 2010.
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

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Termination; procedural due process. Wages, withholding.

Notice and hearing constitute the essential elements of Management prerogative does not include the right to
due process in the dismissal of employees.  The employer temporarily withhold wages without the consent of the
must furnish the employee with two written notices employee. Such an interpretation would be contrary to
before termination of employment can be legally Article 116 of the Labor Code, which provides that it shall
effected.  With regard to the requirement of a hearing, be unlawful for any person, directly or indirectly, to
the essence of due process lies simply in an opportunity withhold any amount from the wages of a worker or
to be heard; an actual trial-type hearing is not induce him to give up any part of his wages by force,
indispensable. In this case, respondent acted in stealth, intimidation, threat or by any other means
accordance with procedural due process when it gave without the worker’s consent. Withholding of wages is
petitioner considerable leeway with regard to the allowed only in the form of wage deductions under the
submission of his written explanation by allowing multiple circumstances provided in Article 113 of the Labor Code
extensions of time to submit the same and by furnishing such as:   (a)  In cases where the worker is insured with
him the documents used in respondent’s investigation. his consent by the employer, and the deduction is to
Even assuming that petitioner was not fully heard during recompense the employer for the amount paid by him as
the employer’s investigation, it was his fault because of premium on the insurance; (b)  For union dues, in cases
his misguided insistence on having a trial-type hearing.  where the right of the worker or his union to check-off
Leandro M. Alcantara vs. The Philippine Commercial and has been recognized by the employer or authorized in
International Bank, G.R. No. 151349, October 20, 2010. 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
Termination; solidary liability of corporate directors
present case, the withholding of complainant’s wages
and officers.
does not fall under the exceptions provided in Article 113
and is thus unlawful. SHS Perforated Materials, Inc., et
Corporate directors and officers are only solidarily liable al. vs. Manuel F. Diaz, G.R. No. 185814, October 13,
with the corporation for termination of employment of 2010.
corporate employees if such is effected with malice or in
bad faith.  Bad faith does not connote bad judgment or
Work-related illness; substantial evidence.
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; Working conditions cannot be accepted to have caused
it partakes of the nature of fraud.  To sustain such a or at least increased the risk of contracting the disease –
finding, there should be evidence on record that an in this case, brief psychotic disorder- in the absence of
officer or director acted maliciously or in bad faith in substantial evidence. The evidence must be real and
terminating the employee. In the instant case, petitioners substantial, and not merely apparent.  In sum, petitioner
withheld respondent’s salary in the sincere belief that failed to establish by substantial evidence that his brief
respondent did not work for the period in question. Thus, psychotic disorder was caused by the nature of his work
although they unlawfully withheld respondent’s salary, it as oiler of the company-owned vessel. In fact, he failed
cannot be concluded that such was made in bad faith.  to elaborate on the nature of his job as oiler of
Accordingly, corporate officers, Hartmannshenn and respondent company. The Court, therefore, has difficulty
Schumacher, cannot be held personally liable for the in finding any link between his position as oiler and his
corporate obligations of SHS. SHS Perforated Materials, illness. Petitioner points out that his “brief psychotic
Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October disorder” which was caused by a family problem is work-
13, 2010. 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
Wages; deduction by employer.
“work-related” instance contemplated by the provisions
of the employment contract in order to be entitled to the
The free board and lodging SIP furnished the employees benefits. Otherwise, every seaman would automatically
cannot operate as a set-off for the underpayment of their be entitled to compensation because the nature of his
wages.  It was held in Mabeza v. National Labor Relations work is not land-based. Edgardo M. Panganiban vs. Tara
Commission that the employer cannot simply deduct Trading Ship Management Inc. and Shinline SDN BHD,
from the employee’s wages the value of the board and G.R. No. 187032, October 18, 2010.
lodging without satisfying the following requirements: 
(1) proof that such facilities are customarily furnished by
Writ of habeas data; labor disputes.
the trade; (2) voluntary acceptance in writing by the
employees of the deductible facilities; and  (3) proof of
the fair and reasonable value of the facilities charged. It Respondent questions her transfer and, through the
is clear from the records that SIP failed to comply with extraordinary remedy of habeas data, seeks the
these requirements. S.I.P. Food House and Mr. and Mrs. disclosure of the reasons behind it. However, since her
Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. real objective is to be spared from complying with
192473, October 11, 2010. MERALCO’s Memorandum directing her reassignment,
respondent should instead lodge her complaint with the
NLRC and the Labor Arbiters which have jurisdiction over

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such concerns. The writ of habeas data is a remedy Commission (NLRC), Dionisio Banlasan, et al., G.R. No.
available only to a person whose right to privacy in life, 180045, November 17, 2010.
liberty or security is violated or threatened by an
unlawful act or omission of a public official or employee
Compensable illness; work-relatedness.  
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 Granting arguendo that petitioner’s illness was not pre-
of the aggrieved party. Petitioners’ refusal to disclose the existing, he still had to show that his illness not only
contents of reports which form the basis of respondent’s occurred during the term of his contract but also that it
transfer does not amount to a violation of her right to resulted from a work-related injury or illness, or at the
privacy. Manila Electric Company, Alexander S. Deyto very least aggravated by the conditions of the work for
and Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. which he was contracted for.  Petitioner failed to
184769, October 5, 2010. discharge this burden, however. That the exact and
definite cause of petitioner’s 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.
November 2010 Selected Supreme Court Decisions
on Labor Law and Procedure
Dismissal; illegal strike; distinction between union
officers and mere members.
Appeal; determination of date of filing.

The liabilities of individuals who participate in an illegal

Under Section 3, Rule 13 of the Rules of Court, where the
strike must be determined under Article 264 (a) of the
filing of pleadings, appearances, motions, notices, orders,
Labor Code which makes a distinction between union
judgments, and all other papers with the court/tribunal is
officers and mere members.  The law grants the
made by registered mail, the date of mailing, as shown
employer the option of declaring a union officer who
by the post office stamp on the envelope or the registry
knowingly participated in an illegal strike as having lost
receipt, shall be considered as the date of filing. Thus,
his employment. However, a worker merely participating
the date of filing is determinable from two sources:  from
in an illegal strike may not be terminated from
the post office stamp on the envelope or from the
employment if he does not commit illegal acts during a
registry receipt, either of which may suffice to prove the
strike. Hence, with respect to respondents who are union
timeliness of the filing of the pleadings. If the date
officers, their termination by petitioners is valid.  Being
stamped on one is earlier than the other, the former may
fully aware that the proceedings before the Secretary of
be accepted as the date of filing. In this case, to prove
Labor were still pending as in fact they filed a motion for
that it mailed the notice of appeal and appeal
reconsideration, they cannot invoke good faith as a
memorandum on October 27, 1997, instead of October
defense. For the rest of the individual respondents who
28, 1997, as shown by the stamped date on the
are union members, they cannot be terminated for mere
envelope, petitioner presented Registry Receipt No.
participation in the illegal strike.  Solid Bank Corp.
34581 bearing the earlier date. Government Service
Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs.
Insurance System vs. National Labor Relations
Solid Bank Union and its Dismissed Officers and
Commission (NLRC), Dionisio Banlasan, et al., G.R. No.
Members, et al. G.R. No. 159460 and G.R. No. 159461,
180045, November 17, 2010.
November 15, 2010.

Appeal; filed out of time; exceptional cases.

Dismissal; misconduct; substantial evidence.  

An appeal must be perfected within the statutory or

The general rule is that where the findings of the
reglementary period.  This is not only mandatory, but
administrative body are amply supported by substantial
also jurisdictional.  Failure to perfect the appeal on time
evidence, such findings are accorded not only respect but
renders the assailed decision final and executory and
also finality, and are binding on the Court. The standard
deprives the appellate court or body of the legal authority
of substantial evidence is satisfied when there is
to alter the final judgment, much less entertain the
reasonable ground to believe that a person is responsible
appeal. However, in exceptional cases, a belated appeal
for the misconduct complained of, even if such evidence
may be given due course if greater injustice will be
might not be overwhelming or even preponderant. In the
visited upon the party should the appeal be denied. This
present case, the testimonies of the witnesses, the
is to serve the greater principles of substantial justice
statements during the preliminary investigation, and the
and equity. Technical rules are not binding in labor cases
findings of the PNP Crime Lab on its examination of the
and are not to be applied strictly if the result would be
signatures, amounted to substantial evidence that
detrimental to the working man. In the instant case,
adequately supported the conclusion that petitioner Nacu
even if the appeal was filed one day late, the same
was guilty of the acts complained of.  Nacu was rightfully
should have been entertained by the NLRC. Government
found guilty of grave misconduct, dishonesty, and
Service Insurance System vs. National Labor Relations

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conduct prejudicial to the best interest of the service, and of Labor were still pending as both parties filed motions
penalized with dismissal. Irene K. Nacu, Substituted By for reconsideration of the March 24, 2000 Order.  Clearly,
Benjamin M. Nacu, Ervin K. Nacu, and Nejie N. De Sagun respondents knowingly violated the aforesaid provision
vs. Civil Service Commission and Philippine Economic by holding a strike in the guise of mass demonstration.
Zone Authority, G.R. No. 187752, November 23, 2010. 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.
Employer-employee relationship.
No. 159461, November 15, 2010.

 Generally, in a business establishment, IDs are issued to

Illegal strike; proof of illegal acts.
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 To justify termination of a union member who
company that issued to the respondent workers IDs participated in an illegal strike, there must be proof that
bearing their names as employees and Teng’s signature he or she committed illegal acts during a strike.
as the employer. For the 13 years that the respondent Substantial evidence available under the attendant
workers worked for Teng, they received wages on a circumstances, which may justify the imposition of the
regular basis, in addition to their shares in the fish penalty of dismissal, may suffice. Petitioners have not
caught. More importantly, the element of control – which adduced evidence on such illegal acts committed by each
we have ruled in a number of cases to be a strong of the individual respondents who are union members.
indicator of the existence of an employer-employee The dismissal of respondent-union members are
relationship – is present in this case. Teng not only therefore unjustified in the absence of a clear showing
owned the tools and equipment, he directed how the that they committed specific illegal acts during the mass
respondent workers were to perform their job as actions and concerted work boycott. Solid Bank Corp.
checkers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs.
No. 169704, November 17, 2010. Solid Bank Union and its Dismissed Officers and
Members, et al. G.R. No. 159460 and G.R. No. 159461,
November 15, 2010.
Forum shopping; elements.

Illegal dismissal; backwages.

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 The award of backwages is a legal consequence of a
dispose of the matter.  The elements of forum shopping finding of illegal dismissal.  However, assuming that
are: (1) identity of parties, or at least such parties as respondent-union members have indeed reported back to
would represent the same interest in both actions; (2) work at the end of the concerted mass actions but were
identity of rights asserted and relief prayed for, the relief soon terminated by petitioners who found their
being founded on the same facts; and (3) identity of the explanation unsatisfactory, they are not entitled to
two preceding particulars such that any judgment backwages in view of the illegality of the said strike.
rendered in the other action will, regardless of which Under the circumstances, respondents’ reinstatement
party is successful, amount to res judicata in the action without backwages suffices for the appropriate relief.
under consideration.  In the instant case, petitioner Solid Bank Corp. Ernesto U. Gamier, et al. and Solid
CABEU-NFL merely raised the fact of the pendency of two Bank Corp., et al. vs. Solid Bank Union and its Dismissed
cases without demonstrating any similarity in the causes Officers and Members, et al. G.R. No. 159460 and G.R.
of action between the said cases and the present case. No. 159461, November 15, 2010.
In the absence of such evidence to show that the issues
involved in these cases are the same, the Court cannot
Illegal dismissal; lack of substantive due process.  
give credence to petitioner’s claim of forum shopping.
Central Azucarera De Bais Employees Union-NFL,
represented by its President, Pablito Saguran vs. Central The dismissal of an employee, which the employer must
Azucarera De Bais, Inc., represented by its President, validate, has a two-fold requirement:  one is substantive,
Antonio Steven L. Chan, G.R. No. 186605, November 17, the other is procedural. Not only must the dismissal be
2010. 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
Illegal strike.
observed as well. The employer has the burden of
proving that the dismissal was for a just cause; failure to
 Under Article 264 (a) of the Labor Code, as amended, a show this, as in the present case, would necessarily
strike that is undertaken despite the issuance by the mean that the dismissal was unjustified and, therefore,
Secretary of Labor of an assumption order and/or illegal. The respondent worker’s allegation that Teng
certification is illegal. So is a declaration of a strike summarily dismissed them on suspicion that they were
during the pendency of cases involving the same grounds not reporting to him the correct volume of the fish caught
for the strike.  In the present case, there is no dispute in each fishing voyage was never denied by Teng.
that when respondents conducted their mass actions on Unsubstantiated suspicion is not a just cause to
April 3 to 6, 2000, the proceedings before the Secretary terminate one’s employment under Article 282 of the

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Labor Code. Albert Teng vs. Alfredo S. Pahagac, et al., Petitioner’s liability, however, cannot extend to the
G.R. No. 169704, November 17, 2010. 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
Illegal dismissal; separation pay in lieu of
finding that it had conspired in the illegal dismissal of the
reinstatement.
employees. Government Service Insurance System vs.
National Labor Relations Commission (NLRC), Dionisio
Since reinstatement is no longer possible given the lapse Banlasan, et al., G.R. No. 180045, November 17, 2010.
of considerable time from the occurrence of the strike,
not to mention the fact that Solidbank had long ceased
Inefficiency of employee; condonation by employer.
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. While it is acknowledged that petitioner Gregorio’s
Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank service record shows that his performance as a security
Union and its Dismissed Officers and Members, et al. guard was below par, respondent Gulf Pacific never
G.R. No. 159460 and G.R. No. 159461, November 15, issued any memo citing him for the alleged repeated
2010. 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
Illness; when deemed pre-existing and not
infractions Gregorio may have committed.  Even
compensable.
assuming the reasons for relieving Gregorio of his
position were true, it was incumbent upon Gulf Pacific to
 Petitioner’s illness already existed when he commenced be vigilant in its compliance with labor laws. Bebina G.
his fourth contract of employment with respondents, Salvaloza vs. National Labor Relations Commission, Gulf
hence, not compensable. Given that the employment of a Pacific Security Agency, Inc., and Angel Quizon, G.R. No.
seafarer is governed by the contract he signs every time 182086, November 24, 2010.
he is rehired and his employment is terminated when his
contract expires, petitioner’s illness during his previous
Jurisdiction; Secretary of Labor.
contract with respondents is deemed pre-existing during
his subsequent contract. That petitioner was
subsequently rehired by respondents despite knowledge  It is well-settled that the Secretary of Labor, in the
of his seizure attacks does not make the latter a exercise of his power to assume jurisdiction over a labor
guarantor of his health.   Jerry M. Francisco, vs. Bahia dispute under Art. 263 (g) [11] of the Labor Code, may
Shipping Services, Inc. and/or Cynthia C. Mendoza, and resolve all issues involved in the controversy including
Fred Olsen Cruise Lines, Ltd., G.R. No. 190545, the award of wage increases and benefits. In the instant
November 22, 2010. 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
Indirect employer; solidary liability.
because the Secretary, in resolving the CBA deadlock, is
not limited to considering the MOA as basis in computing
The fact that there is no actual and direct employer- the wage increases. He could, as he did, consider the
employee relationship between petitioner and financial documents submitted by respondent as well as
respondents does not absolve the former from liability for the parties’ bargaining history and respondent’s financial
the latter’s monetary claims. When petitioner contracted outlook and improvements as stated in its website. Cirtek
DNL Security’s services, petitioner became an indirect Employees Labor Union-Federation of Free Workers vs.
employer of respondent security guards, pursuant to Cirtek Electronics, Inc., G.R. No. 190515, November 15,
Article 107 of the Labor Code.  Thus, after the contractor 2010.
DNL Security failed to pay respondents the correct wages
and other monetary benefits, petitioner, as principal,
Jurisdiction; divestment.
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 It bears noting that the filing and submission of the MOA
petitioner does not preclude the application of Article did not have the effect of divesting the Secretary of his
1217 of the Civil Code on the right of reimbursement jurisdiction, or of automatically disposing the
from its co-debtor. Government Service Insurance controversy. Thus, neither should the provisions of the
System vs. National Labor Relations Commission (NLRC), MOA restrict the Secretary’s leeway in deciding the
Dionisio Banlasan, et al., G.R. No. 180045, November matters before him. Cirtek Employees Labor Union-
17, 2010. Federation of Free Workers vs. Cirtek Electronics, Inc.,
G.R. No. 190515, November 15, 2010.
Indirect employer; solidary liability; coverage.
Labor-only contracting.
Petitioner’s liability as indirect employer covers the
payment of respondents’ salary differential and 13th Section 5 of the DO No. 18-02, which implements Article
month pay during the time they worked for petitioner. 106 of the Labor Code, provides that, ”… labor-only

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contracting shall refer to an arrangement where the filed an appeal with the CA fails. It is consequently ruled
contractor or subcontractor merely recruits, supplies or that the respondent workers seasonably filed a motion
places workers to perform a job, work or service for a for reconsideration of the VA’s judgment, and the VA
principal, and any of the following elements are present: erred in denying the motion. Albert Teng vs. Alfredo S.
(i)The contractor or subcontractor does not have Pahagac, et al., G.R. No. 169704, November 17, 2010.
substantial capital or investment which relates to the job,
work or service to be performed and the employees
Off-detail or Floating status.
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 Temporary “off-detail” or “floating status” is the period
contractor does not exercise the right to control over the of time when security guards are in between assignments
performance of the work of the contractual employee. In or when they are made to wait after being relieved from
the present case, Teng admitted that he solely provided a previous post.  It takes place when the security
the capital and equipment, while the maestros supplied agency’s clients decide not to renew their contracts with
the workers. Also, the power of control over the the agency. It also happens in instances where contracts
respondent workers was lodged not with the maestros for security services stipulate that the client may request
but with Teng. Moreover, they performed tasks that were the agency for the replacement of the guards assigned to
necessary and desirable in Teng’s fishing business. Taken it, such that the replaced security guard may be placed
together, these incidents confirm the existence of a on temporary “off-detail” if there are no available posts
labor-only contracting which is prohibited in our under the agency’s existing contracts.  It does not
jurisdiction. Accordingly, a finding that the maestros are constitute a dismissal, as the assignments primarily
labor-only contractors is equivalent to a finding that an depend on the contracts entered into by the security
employer-employee relationship exists between Teng and agencies with third parties, so long as such status does
the respondent workers. Albert Teng vs. Alfredo S. not continue beyond a reasonable time period.  Bebina G.
Pahagac, et al., G.R. No. 169704, November 17, 2010 Salvaloza vs. National Labor Relations Commission, Gulf
Pacific Security Agency, Inc., and Angel Quizon, G.R. No.
182086, November 24, 2010.
Mootness; amicable settlement as final satisfaction
of judgment award.
Off-detail or Floating status; when deemed
constructive dismissal.
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, When a “floating status” lasts for more than six (6)
the settlement grants the petitioner the luxury of having months, the employee may be considered to have been
other remedies available to it such as its petition for constructively dismissed. In the present case, of the
certiorari pending before the appellate court, and an three instances when petitioner Gregorio was temporarily
eventual appeal to the Court. On the other hand, “off-detailed,” the last two already ripened into
respondent employee could no longer pursue other constructive dismissal.  Although it could have been
claims, including interests that may accrue during the difficult for respondent Gulf Pacific to post Gregorio given
pendency of the case. The Labor Arbiter and the his age and his service record, still the agency should not
appellate court may not thus be faulted for interpreting have allowed him to wait indefinitely for an assignment if
petitioner’s “conditional settlement” to be tantamount to its clients were in truth less likely to accept him.  If,
an amicable settlement of the case resulting in the indeed, Gregorio was undesirable as an employee, Gulf
mootness of the petition for certiorari. Career Philippines Pacific could have dismissed him for cause.  The
Ship Management, Inc., vs. Geronimo Madjus, G.R. No. unreasonable length of time that Gregorio was not posted
186158, November 22, 2010. 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.
Motion for reconsideration.

As amended, Article 263 is now Article 262-A in which

the word “unappealable” from Article 263 has been
Parol evidence; application in labor cases.
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 appellate court’s brushing aside of the “Paliwanag”
the parties, the decision may still be reconsidered by the and the minutes of the meeting because they were not
Voluntary Arbitrator on the basis of a motion for verified and notarized, thus violating, so the appellate
reconsideration duly filed during that period.  The court reasoned, the rules on parol evidence, does not lie.
absence of a categorical language in Article 262-A does Like any other rule on evidence, parol evidence should
not preclude the filing of a motion for reconsideration of not be strictly applied in labor cases.   Cirtek Employees
the VA’s decision within the 10-day period. Therefore, Labor Union-Federation of Free Workers vs. Cirtek
petitioners’ allegation that the VA’s decision had become Electronics, Inc., G.R. No. 190515, November 15, 2010.
final and executory by the time the respondent workers

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Petition; service on counsel. 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
Section 1, Rule 65 in relation to Section 3, Rule 46 of the
to retire under either of two laws: Commonwealth Act
Rules of Court, clearly provides that in a petition filed
No. 186, as amended, or P.D. No. 1146. In his Comment,
originally in the CA, the petitioner is required to serve a
respondent implicitly indicated his preference to retire
copy of the petition on the adverse party before its filing.
under P.D. No. 1146, since this law provides for higher
If the adverse party appears by counsel, service shall be
benefits. Because respondent had complied with the
made on such counsel pursuant to Section 2, Rule 13.
requirements under the said law at the time of his
Thus, in the instant case, petitioner CABEU-NFL’s
retirement, a fact which GSIS does not dispute, he is
insistence that service of the copy of the CA petition
entitled to receive the benefits provided under the same
should have been made to it, rather than to its counsel,
law. Government Service Insurance System vs. Fernando
is unavailing. Central Azucarera De Bais Employees
P. De Leon, G.R. No. 186560, November 17, 2010.
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, Strike; definition.
November 17, 2010.
Article 212 of the Labor Code, as amended, defines
Reinstatement; when not granted. 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
Petitioner Gregorio’s position paper did not pray for
or matter concerning terms and conditions of
reinstatement, but only sought payment of money
employment or the association or representation of
claims.  Likewise, the strained relations between the
persons in negotiating, fixing, maintaining, changing or
parties make reinstatement impracticable.  What is more,
arranging the terms and conditions of employment,
even during the time of the LA’s decision, reinstatement
regardless of whether or not the disputants stand in the
was no longer legally feasible since Gregorio was past the
proximate relation of employers and employees.  The
age qualification for a security guard license. Section
term “strike” shall also include slowdowns, mass leaves,
5[33] of R.A. 5487, enumerating the qualifications for a
sitdowns, attempts to damage, destroy or sabotage plant
security guard, provides that the person should not be
equipment and facilities and similar activities. In the
less than 21 nor over 50 years of age.  And as previously
instant case, about 712 employees absented themselves
mentioned, as early as June 13, 2002, Gregorio was no
from work in a concerted fashion for three continuous
longer in possession of a valid license.  Thus, separation
days. Considering that these mass actions stemmed from
pay should be paid in lieu of reinstatement. Bebina G.
a bargaining deadlock and an order of assumption of
Salvaloza vs. National Labor Relations Commission, Gulf
jurisdiction had already been issued by the Secretary of
Pacific Security Agency, Inc., and Angel Quizon, G.R. No.
Labor to avert an impending strike, all the elements of
182086, November 24, 2010.
strike are evident in the Union-instigated mass actions.
Solid Bank Corp. Ernesto U. Gamier, et al. and Solid
Retirement laws; liberal construction. Bank Corp., et al. vs. Solid Bank Union and its Dismissed
Officers and Members, et al. G.R. No. 159460 and G.R.
 Retirement laws are liberally construed in favor of the No. 159461, November 15, 2010.
retiree because their objective is to provide for the
retiree’s sustenance and, hopefully, even comfort, when Unfair labor practice.
he no longer has the capability to earn a livelihood. The
liberal approach aims to achieve the humanitarian
For a charge of unfair labor practice to prosper, it must
purposes of the law in order that efficiency, security, and
be shown that respondent CAB’s suspension of
well-being of government employees may be enhanced.
negotiation with CABEU-NFL and its act of concluding a
Indeed, retirement laws are administered in favor of the
CBA with CABELA, another union in the bargaining unit,
persons intended to be benefited, and all doubts are
were motivated by ill will, “bad faith, or fraud, or was
resolved in their favor.  In this case, as adverted to
oppressive to labor, or done in a manner contrary to
above, respondent was able to establish that he has a
morals, good customs, or public policy…” However, the
clear legal right to the reinstatement of his retirement
facts show that CAB believed that CABEU-NFL was no
benefits. Government Service Insurance System vs.
longer the representative of the workers.  It just wanted
Fernando P. De Leon, G.R. No. 186560, November 17,
to foster industrial peace by bowing to the wishes of the
2010.
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
Retirement benefit; entitlement. of unfair labor practices. Central Azucarera De Bais
Employees Union-NFL, represented by its President,
Pablito Saguran vs. Central Azucarera De Bais, Inc.,
Respondent’s disqualification from receiving retirement represented by its President, Antonio Steven L. Chan,
benefits under R.A. No. 910 does not mean that he is G.R. No. 186605, November 17, 2010.
disqualified from receiving any retirement benefit under

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Unfair labor practice; burden of proof. 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
Basic is the principle that good faith is presumed and he
formal charges against him and was required to explain
who alleges bad faith has the duty to prove the same. By
in writing why he should not be dismissed for serious
imputing bad faith to the actuations of CAB, CABEU-NFL
misconduct.  A formal hearing was conducted and
has the burden to present substantial evidence to prove
subsequently, respondent received a Notice of
the allegation of unfair labor practice.  Apparently,
Termination informing him that after a careful evaluation,
CABEU-NFL refers only to the execution of the supposed
he was found liable as charged and dismissed from the
CBA between CAB and CABELA and the request to
service due to gross misconduct. Clearly, respondent was
suspend the negotiations, to conclude that bad faith
afforded ample opportunity to air his side and defend
attended CAB’s actions.  The Court is of the view that
himself.  Hence, there was due process.  Philippine Long
CABEU-NFL, in simply relying on the said circumstances,
Distance Telephone Company, vs. Eusebio M. Honrado,
failed to substantiate its claim of unfair labor practice to
G.R. No. 189366, December 8, 2010.
rebut the presumption of good faith. Central Azucarera
De Bais Employees Union-NFL, represented by its
President, Pablito Saguran vs. Central Azucarera De Bais, Dismissal; due process.
Inc., represented by its President, Antonio Steven L.
Chan, G.R. No. 186605, November 17, 2010.
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 respondent’s allegations, he
was given more than enough opportunity to defend
himself.  The audit committee’s conclusion to dismiss
respondent from the service was merely
December 2010 Selected Supreme Court Decisions recommendatory.  It was not conclusive upon the
on Labor Law and Procedure 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
Dismissal; due process;  trial-type hearing is not denied due process of law for he was adequately heard
essential. as the very essence of due process is the opportunity to
be heard. Equitable PCI Bank (Now Banco De Oro
The essence of due process is an opportunity to be heard Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293
or, as applied to administrative proceedings, an & 163297, December 8, 2010.
opportunity to explain one’s side. Records show that Aboc
was duly notified through a letter asking him to explain Dismissal; loss of confidence; guidelines for
why his services should not be terminated. In fact, he application.
replied to the same by submitting a written explanation.
He was likewise duly afforded ample opportunity to
defend himself during a conference conducted.  Aboc’s The Court has set the guidelines for the application of
contention that the conference he attended cannot the doctrine of loss of confidence as follows: (a) Loss of
substitute the hearing mandated by the Labor Code is confidence should not be simulated; (b) It should not be
bereft of merit. A formal trial-type hearing is not at all used as a subterfuge for causes which are improper,
times and in all instances essential to due process. It is illegal or unjustified; (c) It may not be arbitrarily
enough that the parties are given a fair and reasonable asserted in the face of overwhelming evidence to the
opportunity to explain their respective sides of the contrary; and (d) It must be genuine, not a mere
controversy and to present supporting evidence on which afterthought to justify earlier action taken in bad faith. In
a fair decision can be based. Antonio A. Aboc  vs. the case at bar, no mention was made regarding
Metropolitan Bank And Trust Company /  Metropolitan petitioner’s alleged loss of trust and confidence in
Bank And Trust Company  vs.  Antonio A. Aboc, G.R. respondent.  Neither was there any explanation nor
Nos.  170542-43  and G.R. No. 176460, December 13, discussion of the alleged sensitive and delicate position of
2010. 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
Dismissal; due process; trial-type hearing is not and confidence. Thus, when the breach of trust or loss of
essential. confidence is not clearly established by facts, as in the
instant case, such dismissal on the ground of loss and
In dismissal cases, the essence of due process is a fair confidence cannot be countenanced. The Coca-Cola
and reasonable opportunity to be heard, or as applied to Export Corporation, vs. Clarita P. Gacayan, G.R. No. 
administrative proceedings, an opportunity to explain 149433, December 15, 2010.
one’s side. A formal or trial type hearing is not at all
times and in all instances essential. Neither is it Dismissal; serious misconduct; wrongful intent
necessary that the witnesses be cross-examined. In the required.

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For misconduct or improper behavior to be a just cause The requirements of procedural due process were
for dismissal, (a) it must be serious; (b) must relate to complied with when petitioner sent a memo to
the performance of the employee’s duties; and (c) must respondent informing him of the specific charges and
show that the employee has become unfit to continue giving him opportunity to air his side.  Subsequently, in a
working for the employer.  In the present case, the letter, respondent was informed that on the basis of the
alleged infractions of respondent could hardly be results of the investigation conducted, his written
considered serious misconduct.  In order to constitute explanation, the written explanation of other employees
serious misconduct which will warrant the dismissal of an as well as the audit report, the management has decided
employee, it is not sufficient that the act or conduct to terminate him.  The two-notice requirement, which
complained of has violated some established rules or includes a written notice of the cause of dismissal to
policies.  It is equally important and required that the act afford the employee ample opportunity to be heard and
or conduct must have been done with wrongful intent.  defend himself, and written notice of the decision to
Such is, however, lacking in the instant case.  The Coca- terminate him which states the reasons therefor, was
Cola Export Corporation, vs. Clarita P. Gacayan, G.R. thus complied with. Equitable PCI Bank (Now Banco De
No.  149433, December 15, 2010. Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos.
163293 & 163297, December 8, 2010.
Dismissal; substantial evidence.

The quantum of proof required in determining the legality

of an employee’s dismissal is only substantial evidence. Dismissal; willful disobedience.
In a similar case, the Court held that the standard of
substantial evidence is met where the employer, as in
To justify willful disobedience or insubordination as a
this case, has reasonable ground to believe that the
valid ground for termination, the employee’s assailed
employee is responsible for the misconduct and his
conduct must have been willful or characterized by a
participation in such misconduct makes him unworthy of
wrongful or perverse attitude and the order violated must
the trust and confidence demanded by his position. In
have been reasonable, lawful, made known to the
the present case, petitioner has sufficiently established
employee, and must pertain to the duties which he had
that respondent solicited, collected and received the
been engaged to discharge. In the case at bar, while
P1,500.00 down payment illegally from the spouses
petitioner’s manual of procedures does not absolutely
Mueda.  Taken together, the petitioner has discharged its
prohibit the negotiation or acceptance of second-
burden of establishing the serious misconduct committed
endorsed checks for deposits, it expressly disallows the
by respondent.  Such misconduct makes him unworthy of
acceptance of checks endorsed by corporations, societies,
the trust and confidence demanded by his position. 
firms, etc. and checks with unusual endorsements. As
Philippine Long Distance Telephone Company, vs.
shown by the records, this explicit policy was
Eusebio M. Honrado, G.R. No. 189366, December 8,
transgressed by respondent intentionally and willfully. 
2010.
Respondent was instructed by management to stop the
transgression but he did not stop.  Respondent
Dismissal; substantial evidence. 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.
The burden of proof rests on the employer to show that
Nos. 163293 & 163297, December 8, 2010.
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 Dismissal; willful breach of trust.
which is that amount of relevant evidence as a
reasonable mind might accept as adequate to support a
Willful breach of trust requires that the loss of confidence
conclusion, even if other minds, equally reasonable,
must not be simulated; it should not be used as a
might conceivably opine otherwise.  In the present case,
subterfuge for causes which are illegal, improper or
evidence clearly shows that the acts of Aboc in helping
unjustified; it may not be arbitrarily asserted in the face
organize the credit unions and in the operations thereof
of overwhelming evidence to the contrary; it must be
constituted serious misconduct or breach of trust and
genuine, not a mere afterthought to justify earlier action
confidence. His participation in the credit unions is highly
taken in bad faith; and, the employee involved holds a
irregular and clearly in conflict with Metrobank’s
position of trust and confidence.  Respondent, as bank
business. Aboc claimed that he was only an “unwilling
manager, has the duty to ensure that bank rules are
participant” doing a ministerial job. The investigation,
strictly complied with to serve the best interest of the
however, showed otherwise. Antonio A. Aboc vs.
bank as he holds a position of trust and confidence.  Any
Metropolitan Bank And Trust Company /  Metropolitan
negligence in the exercise of his responsibilities can be
Bank And Trust Company  vs.  Antonio A. Aboc, G.R.
sufficient ground for loss of trust and confidence.  As held
Nos.  170542-43 and G.R. No. 176460, December 13,
in one case, the mere existence of a basis for believing
2010.
that a managerial employee has breached the trust of his
employer would suffice for his dismissal.  Proof beyond
Dismissal; two-notice rule. reasonable doubt is not required. In the case at bar,
respondent’s wanton violation of bank policies equates to
abuse of authority and, therefore, abuse of the trust

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reposed in him.  Such is enough for his dismissal from previous rulings, the Court has declared that when there
service. Equitable PCI Bank (Now Banco De Oro Unibank, is enough basis on which a proper evaluation of the
Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & merits can be made, it may dispense with the time-
163297, December 8, 2010. consuming procedure in order to prevent further delays
in the disposition of the case. However, in the case at
bar, based on the nature of the two remaining issues
Illegal dismissal; reinstatement and backwages.
which involve factual issues, and given the inadequacy of
the records, pleadings, and other evidence available
Under Article 279 of the Labor Code, an employee who is before the Court to properly resolve those questions, it is
unjustly dismissed from work shall be entitled to constrained to refrain from passing upon them. South
reinstatement without loss of seniority rights and other Cotabato Communications Corporation and Gauvain J.
privileges and to his full backwages, inclusive of Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of
allowances, and to his other benefits or their monetary Labor And Employment, Rolando Fabrigar, Merlyn
equivalent computed from the time his compensation was Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel,
withheld from him up to the time of his actual Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
reinstatement. Respondent is entitled to such award. The Jopson, G.R. No.  173326, December 15, 2010.
Coca-Cola Export Corporation, vs. Clarita P. Gacayan,
G.R. No.  149433, December 15, 2010.
Labor-only contracting and job contracting; how
determined.
Job contracting; conditions.
The character of a business, that is, whether as labor-
Permissible job contracting or subcontracting refers to only contractor or as job contractor, should be
an arrangement whereby a principal agrees to farm out determined in terms of the criteria set by statute. In one
to the contractor the performance of a specific work, or case the Court has explained that despite the fact that
service within a predetermined period, regardless of the service contracts contain stipulations which are
whether such work, or service is to be performed within earmarks of independent contractorship, they do not
or outside the premises of the principal. Thus, the make it legally so.  The language of a contract is neither
following conditions must concur: (a) The contractor determinative nor conclusive of the relationship between
carries on a distinct and independent business and the parties. The parties cannot dictate, by a declaration
undertakes the contract work on his account under his in a contract, the character of a business. Thus, in
own responsibility according to his own manner and distinguishing between the prohibited labor-only
method, free from the control and direction of his contracting and permissible job contracting, the totality
principal in all matters connected with the performance of of the facts and the surrounding circumstances of the
his work except as to the results thereof;  (b) The case are to be considered. Emmanuel Babas, Danilo T.
contractor has substantial capital or investment; and (c) Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi
The agreement between the principal and the contractor Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio
assures the contractual employees’ entitlement to all Estorque, And Felixberto Anajao, vs. Lorenzo Shipping
labor and occupational safety and health standards, free Corporation, G.R. No. 186091, December 15, 2010.
exercise of the right to self-organization, security of
tenure, and social welfare benefits. In the case at bar,
Labor-only contracting; elements.
BMSI is engaged in labor-only contracting for LSC. First,
petitioners worked at LSC’s premises, and nowhere else.
There was no evidence that BMSI exercised control over Labor-only contracting, a prohibited act, is an
them. Second, there is no proof that BMSI had arrangement where the contractor or subcontractor
substantial capital. The equipment used by BMSI was merely recruits, supplies, or places workers to perform a
merely rented from LSC.  Third, petitioners performed job, work, or service for a principal.  In labor-only
activities which were directly related to the main business contracting, the following elements are present:  (a) the
of LSC. Lastly, BMSI had no other client except for LSC. contractor or subcontractor does not have substantial
Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., capital or investment to actually perform the job, work,
Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, or service under its own account and responsibility;  and
Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo (b) the employees recruited, supplied, or placed by such
Shipping Corporation, G.R. No. 186091, December 15, contractor or subcontractor perform activities which are
2010. 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,
Jurisdiction of Supreme Court; errors of fact;
Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo
exceptions.
Shipping Corporation, G.R. No. 186091, December 15,
2010.
The Court has stressed that its jurisdiction in a petition
for review on certiorari under Rule 45 of the Rules of
Labor-only contracting; workers are regular
Court is limited to reviewing only errors of law, not of
employees of principal.
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

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Indubitably, BMSI can only be classified as a labor-only The CA erred in considering BMSI’s Certificate of
contractor.   Consequently, the workers that BMSI Registration as sufficient proof that it is an independent
supplied to its principal LSC became regular employees of contractor.  In the case of San Miguel Corporation v.
the latter. Having gained regular status, petitioners were Vicente B. Semillano, et. al., the Court has held that a
entitled to security of tenure and could only be dismissed Certificate of Registration issued by the Department of
for just or authorized causes and after they had been Labor and Employment is not conclusive evidence of such
accorded due process. The termination of LSC’s status. The fact of registration simply prevents the legal
Agreement with BMSI cannot be considered a just or an  presumption of being a mere labor-only contractor from
authorized cause for petitioners’ dismissal. Emmanuel arising. Emmanuel Babas, Danilo T. Banag, Arturo V.
Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa,
Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Maximo Soriano, Jr., Arsenio Estorque, And Felixberto
Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
Shipping Corporation, G.R. No. 186091, December 15, 186091, December 15, 2010.
2010.
Reinstatement; immediately executory pending
Payroll reinstatement; effect of reversal on appeal. appeal.

Since Metrobank chose payroll reinstatement for Aboc, Under Article 223 of the Labor Code, the decision of the
he then became a reinstated regular employee.  This Labor Arbiter reinstating a dismissed or separated
means that he was restored to his previous position as a employee, insofar as the reinstatement aspect is
regular employee without loss of seniority rights and concerned, shall be immediately executory pending
other privileges appurtenant thereto. His payroll appeal. The employee shall either be admitted back to
reinstatement put him on equal footing with the other work under the same terms and conditions prevailing
regular employees insofar as entitlement to the benefits prior to his dismissal or separation or, at the option of
given under the Collective Bargaining Agreement is the employer, merely reinstated in the payroll. The
concerned.  The fact that the decision of the LA was posting of a bond by the employer shall not stay the
reversed on appeal has no controlling significance. The execution for reinstatement provided herein. In the case
rule is that even if the order of reinstatement of the LA is at bench, it cannot be denied that Metrobank opted to
reversed on appeal, it is obligatory on the part of the reinstate Aboc in its payroll. Antonio A. Aboc  vs.
employer to reinstate and pay the wages of the Metropolitan Bank And Trust Company /  Metropolitan
dismissed employee during the period of appeal until final Bank And Trust Company  vs.  Antonio A. Aboc, G.R.
reversal by the higher court. Antonio A. Aboc  vs. Nos.  170542-43  and G.R. No. 176460, December 13,
Metropolitan Bank And Trust Company /  Metropolitan 2010.
Bank And Trust Company  vs.  Antonio A. Aboc, G.R.
Nos.  170542-43  and G.R. No. 176460, December 13,
Separation pay as a measure of social justice; when
2010.
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
Petition for certiorari; period for filing; retroactive
instances where the employee is validly dismissed for
application of amendments.
cause other than serious misconduct.  In another case,
the Court ruled that in addition to serious misconduct,
By virtue of the latest amendment of Section 4, Rule 65 separation pay should not be conceded to an employee
of the 1997 Rules of Civil Procedure introduced by who was dismissed based on willful disobedience. In the
Circular No. 56-2000, the 60-day period to file a petition case at bar, it was established that the infractions
for certiorari should be reckoned from the date of receipt committed by the respondent constituted serious
of the notice of the denial of the motion for misconduct or willful disobedience resulting to loss of
reconsideration or new trial, if one was filed. Being a trust and confidence.  Clearly therefore, even based on
curative statute, Circular No. 56-2000 has been applied equity and social justice, respondent does not deserve
by Court retroactively in a number of cases.  Given the the award of separation pay. Equitable PCI Bank (Now
above, respondent had a fresh 60-day period from the Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R.
date she received a copy of the NLRC Resolution denying Nos. 163293 & 163297, December 8, 2010.
her motion for reconsideration within which to file the
petition for certiorari.  Thus, the Court ruled that
Termination; grounds.
respondent seasonably filed the petition within the
reglementary period provided. The Coca-Cola Export
Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, Under the requirement of substantial due process, the
December 15, 2010. 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
Registration as independent contractor; effect of.

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employment, thus: (a) Serious misconduct or willful In previous cases, the Court has held that the following
disobedience by the employee of the lawful orders of his can sign the verification and certification against forum
employer or representative in connection with his work;  shopping without need of a board resolution: (1) the
(b) Gross and habitual neglect by the employee of his Chairperson of the Board of Directors, (2) the President
duties;  (c) Fraud or willful breach by the employee of of a corporation, (3) the General Manager or Acting
the trust reposed in him by his employer or duly General Manager, (4) Personnel Officer, and (5) an
authorized representative;  (d) Commission of a crime or Employment Specialist in a labor case. While the above
offense by the employee against the person of his cases do not provide a complete listing of authorized
employer or any immediate member of his family or his signatories, the determination of the sufficiency of the
duly authorized representative; and  (e) Other causes authority was done on a case to case basis. In the
analogous to the foregoing. The Coca-Cola Export foregoing cases the authority of said corporate
Corporation, vs. Clarita P. Gacayan, G.R. No.  149433, representatives to sign the verification or certificate is
December 15, 2010. 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
Verification and certification; effect of failure to
a board resolution to the complaint or petition to obviate
sign.
questions regarding the authority of the signatory of the
verification and certification. South Cotabato
A petition satisfies the formal requirements only with Communications Corporation and Gauvain J. Benzonan
regard to those who signed the petition, but not the co- vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And
petitioners who did not sign nor authorize the other Employment, Rolando Fabrigar, Merlyn Velarde, Vince
petitioners to sign it on their behalf.  In the case at bar, Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin,
only seven (7) of the nine petitioners signed the Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 
verification and certification against forum shopping. 173326, December 15, 2010.
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 non-conforming 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,
January 2011 Selected Supreme Court Decisions on
2010.
Labor Law and Procedure

Verification and certification; “substantial

compliance” rule.

Apprenticeship agreement; validity.

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 The apprenticeship agreements did not indicate the
different fora.  However, the Court has relaxed the rule trade or occupation in which the apprentice would be
under justifiable circumstances, considering that, trained; neither was the apprenticeship program
although it is obligatory, it is not jurisdictional.  Not being approved by the Technical Education and Skills
jurisdictional, it can be relaxed under the rule of Development Authority (TESDA). These were defective as
substantial compliance.  In the case at bar, the Court they were executed in violation of the law and the rules.
holds that there has been substantial compliance on the Moreover, with the expiration of the first agreement and
petitioners’ part in consonance with our ruling in one case the retention of the employees, the employer, to all
that the President of a petitioner-corporation is in a intents and purposes, recognized the completion of their
position to verify the truthfulness and correctness of the training and their acquisition of a regular employee
allegations in the petition.  Petitioner Benzonan clearly status. To foist upon them the second apprenticeship
satisfies the aforementioned jurisprudential requirement agreement for a second skill which was not even
because he is the President of petitioner-corporation. mentioned in the agreement itself, is a violation of the
Moreover, he is also named as co-respondent of Labor Code’s implementing rules and is an act manifestly
petitioner-corporation in the labor case which is the unfair to the employees. Atlanta Industries, Inc. and/or
subject matter of the special civil action.    South Robert Chan vs.  Aprilito R. Sebolino, et al., G.R. No.
Cotabato Communications Corporation and Gauvain J. 187320, January 26, 2011.
Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of
Labor And Employment, Rolando Fabrigar, Merlyn Complaint; reinstatement.
Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel,
Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
Jopson, G.R. No.  173326, December 15, 2010. 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
Verification and certification; who can sign for the Appeals and respondents never questioned the award of
company without need of board resolution.

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separation pay to them. Section 2 (c), Rule 7 of the Rules Respondent was suspended for one year after being
of Court provides that a pleading shall specify the relief charged with and found liable for AWOL. After serving her
sought, but may add a general prayer for such further or suspension, respondent was allowed to return to work.
other reliefs as may be deemed just and equitable. Under Respondent cannot be considered to have been
this rule, a court can grant the relief warranted by the constructively dismissed by the petitioner during her
allegation and the evidence even if it is not specifically period of suspension. Constructive dismissal occurs when
sought by the injured party; the inclusion of a general there is cessation of work because continued employment
prayer may justify the grant of a remedy different from is rendered impossible, unreasonable, or unlikely as when
or in addition to the specific remedy sought, if the facts there is a demotion in rank or diminution in pay or when
alleged in the complaint and the evidence introduced so a clear discrimination, insensibility, or disdain by an
warrant. The prayer in the complaint for other reliefs employer becomes unbearable to the employee leaving
equitable and just in the premises justifies the grant of a the latter with no other option but to quit. In this case,
relief not otherwise specifically prayed for. Therefore, the there was no cessation of employment relations between
court may grant relief warranted by the allegations and the parties. It is unrefuted that respondent promptly
the proof even if no such relief is prayed for. In the resumed teaching at the university right after the
instant case, aside from their specific prayer for expiration of the suspension period. In other words,
reinstatement, respondents, in their separate complaints, respondent never quit. Hence, she cannot claim to have
prayed for such reliefs which are deemed just and been left with no choice but to quit, a crucial element in a
equitable. Prince Transport, Inc. and Mr. Renato Claros finding of constructive dismissal. The University of the
vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, Immaculate Conception, et al. vs. NLRC, et al., G.R. No.
2011. 181146, January 26, 2011.

Collection of accrued wages; two-fold test. Dismissal; due process.

After the Labor Arbiter’s decision is reversed by a higher Respondent employee reported to the petitioner
tribunal, the employee may be barred from collecting the employer the loss of cash which she placed inside the
accrued wages, if it is shown that the delay in enforcing company locker. Immediately, petitioner ordered that she
the reinstatement pending appeal was without fault on be strip-searched by the company guards. However, the
the part of the employer.  The two-fold test in search on her and her personal belongings yielded
determining whether an employee is barred from nothing. The petitioner also reported the matter to the
recovering his accrued wages requires that — (1) there police and requested the Prosecutor’s Office for an
must be actual delay or that the order of reinstatement inquest. Respondent was constrained to spend two weeks
pending appeal was not executed prior to its reversal; in jail for failure to immediately post bail. The Court ruled
and (2) the delay must not be due to the employer’s that petitioners failed to accord respondent substantive
unjustified act or omission.  If the delay is due to the and procedural due process. Article 277(b) of the Labor
employer’s unjustified refusal, the employer may still be Code mandates that subject to the constitutional right of
required to pay the salaries notwithstanding the reversal workers to security of tenure and their right to be
of the Labor Arbiter’s Decision. Social Security System protected against dismissal, except for just and
vs. Efren Capada, et al., G.R. No. 168501, January 31, authorized cause and without prejudice to the
2011. 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
Disciplinary measures; management prerogative.
containing a statement  of the causes of termination, and
shall afford the latter ample opportunity to be heard and
The policy of suspending drivers pending payment of to defend himself with the assistance of a representative
arrears in their boundary obligations is reasonable. It is if he so desires, in accordance with company rules and
acknowledged that an employer has free rein and enjoys regulations pursuant to the guidelines set by the
a wide latitude of discretion to regulate all aspects of Department of Labor and Employment. The due process
employment, including the prerogative to instill discipline requirements under the Labor Code are mandatory and
on his employees and to impose penalties, including may not be supplanted by police investigation or court
dismissal, if warranted, upon erring employees. This is a proceedings. The criminal aspect of the case is
management prerogative. Indeed, the manner in which considered independent of the administrative aspect.
management conducts its own affairs to achieve its Thus, employers should not rely solely on the findings of
purpose is within the management’s discretion.  The only the Prosecutor’s Office. They are mandated to conduct
limitation on the exercise of management prerogative is their own separate investigation, and to accord the
that the policies, rules, and regulations on work-related employee every opportunity to defend himself. Robinsons
activities of the employees must always be fair and Galleria/Robinsons Supermarket Corp. and/or Jess
reasonable, and the corresponding penalties, when Manuel vs. Irene R. Ranchez, G.R. No. 177937, January
prescribed, commensurate to the offense involved and to 19, 2011.
the degree of the infraction. Primo E. Caong, Jr., et al.
vs. Avelino Regualos, G.R. No. 179428, January 26,
Dismissal; neglect of duty.
2011.

Dismissal; constructive dismissal.

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Neglect of duty, to be a ground for dismissal, must be Petitioner asserts that his employer Manulife’s control
both gross and habitual.  Gross negligence connotes want over him was demonstrated (1) when it set the
of care in the performance of one’s duties.  Habitual objectives and sales targets regarding production,
neglect implies repeated failure to perform one’s duties recruitment and training programs; and (2) when it
for a period of time, depending upon the circumstances.  prescribed the Code of Conduct for Agents and the
A single or isolated act of negligence does not constitute Manulife Financial Code of Conduct to govern his
a just cause for the dismissal of the employee. Hospital activities. However, the court ruled that all these appear
Management Services – Medical Center Manila vs. to speak of control by the insurance company over its
Hospital Management Services, Inc. – Medical Center agents.  There are built-in elements of control specific to
Manila Employees Association-AFW., G.R. No. 176287, an insurance agency, which do not amount to the
January 31, 2011. elements of control that characterize an employment
relationship governed by the Labor Code.  They are,
however, controls aimed only at specific results in
Dismissal; negligence in patient management.
undertaking an insurance agency, and are, in fact,
parameters set by law in defining an insurance agency
Negligence is defined as the failure to exercise the and the attendant duties and responsibilities an insurance
standard of care that a reasonably prudent person would agent must observe and undertake. They do not reach
have exercised in a similar situation.  The Court the level of control into the means and manner of doing
emphasizes that the nature of the business of a hospital an assigned task that invariably characterizes an
requires a higher degree of caution and exacting employment relationship as defined by labor law.  To
standard of diligence in patient management and health reiterate, guidelines indicative of labor law “control” do
care as what is involved are lives of patients who seek not merely relate to the mutually desirable result
urgent medical assistance.  An act or omission that falls intended by the contractual relationship; they must have
short of the required degree of care and diligence the nature of dictating the means and methods to be
amounts to serious misconduct which constitutes a employed in attaining the result. Petitioner is an
sufficient ground for dismissal. Hospital Management insurance agent not an employee. Gregorio V. Tongko vs.
Services – Medical Center Manila vs. Hospital The Manufacturers Life Insurance Co. (Phils.), Inc. and
Management Services, Inc. – Medical Center Manila Renato A. Vergel de Dios, G.R. No. 167622, January 25,
Employees Association-AFW., G.R. No. 176287, January 2011.
31, 2011.
Employer-employee relationship; probationary
Employee benefits; compensable illness. employment.

The degree of proof required under P.D. 626 is merely A probationary employee, like a regular employee, enjoys
substantial evidence, which means such relevant security of tenure.  However, in cases of probationary
evidence as a reasonable mind might accept as adequate employment, aside from just or authorized causes of
to support a conclusion.  Accordingly, the claimant must termination, an additional ground is provided under
show, at least by substantial evidence that the Article 281 of the Labor Code, i.e., the probationary
development of the disease was brought about largely by employee may also be terminated for failure to qualify as
the conditions present in the nature of the job.  What the a regular employee in accordance with reasonable
law requires is a reasonable work connection, not a direct standards made known by the employer to the employee
causal relation. Alexander B. Gatus vs. Social Security at the time of the engagement.  Thus, the services of an
System, G.R. No. 174725, January 26, 2011. employee who has been engaged on probationary basis
may be terminated for any of the following:  (1) a just or
Employer-employee relationship; jeepney driver. (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
It is already settled that the relationship between Galleria/Robinsons Supermarket Corp. and/or Jess
jeepney owners/operators and jeepney drivers under the Manuel vs. Irene R. Ranchez, G.R. No. 177937, January
boundary system is that of employer-employee and not 19, 2011.
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 Employer-employee relationship; regular
not sufficient to negate the relationship between them as employment.
employer and employee. Primo E. Caong, Jr., et al. vs.
Avelino Regualos, G.R. No. 179428, January 26, 2011. The respondent employees were already rendering
service to the company when they were made to undergo
Employer-employee relationship; primary element. apprenticeship.  The respondent were regular employees
because they occupied positions such as machine
operator, scaleman and extruder operator – tasks that
Control over the performance of the task of one providing are usually necessary and desirable in petitioner
service – both with respect to the means and manner, employer’s usual business or trade as manufacturer of
and the results of the service – is the primary element in plastic building materials. These tasks and their nature
determining whether an employment relationship exists. characterized the respondents as regular employees

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under Article 280 of the Labor Code.  Thus, when they Illegal dismissal; execution of waiver and
were dismissed without just or authorized cause, without quitclaim.
notice, and without the opportunity to be heard, their
dismissal was illegal under the law. Atlanta Industries,
An employee’s execution of a final settlement and
Inc. and/or Robert Chan vs.  Aprilito R. Sebolino, et al.,
receipt of amounts agreed upon does not foreclose his
G.R. No. 187320, January 26, 2011.
right to pursue a claim for illegal dismissal.   Thus, an
employee illegally retrenched is entitled to reinstatement
Illegal dismissal; strained relations. without loss of seniority rights and privileges, as well as
to payment of full backwages from the time of her
separation until actual reinstatement, less the amount
Article 279 of the Labor Code provides that an employee
which he/she received as retrenchment pay. Bernadeth
who is unjustly dismissed from work shall be entitled to
Londonio and Joan Corcoro vs. Bio Research, Inc. and
reinstatement without loss of seniority rights and other
Wilson Y. Ang, G.R. No. 191459, January 17, 2011.
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 Jurisdiction; labor arbiter.
up to the time of his actual reinstatement. However, due
to the strained relations of the parties, the payment of
Petitioner was removed from his position as a manager
separation pay has been considered an acceptable
through a Board Resolution. Petitioner filed a complaint
alternative to reinstatement, when the latter option is no
for illegal dismissal before the labor arbiter. Respondents
longer desirable or viable.  On the one hand, such
claimed that petitioner is both a stockholder and a
payment liberates the employee from what could be a
corporate officer of respondent corporation, hence, his
highly oppressive work environment.  On the other, the
action against respondents is an intra-corporate
payment releases the employer from the grossly
controversy over which the Labor Arbiter has no
unpalatable obligation of maintaining in its employ a
jurisdiction.  The Court ruled that this is not an intra-
worker it could no longer trust. Thus, as an illegally or
corporate controversy but a labor case cognizable by the
constructively dismissed employee, respondent is entitled
labor arbiter. To determine whether a case involves an
to: (1) either reinstatement, if viable, or separation pay,
intra-corporate controversy that is to be heard and
if reinstatement is no longer viable; and (2) backwages.
decided by the branches of the RTC specifically
These two reliefs are separate and distinct from each
designated by the Court to try and decide such cases,
other and are awarded conjunctively. Robinsons
two tests must be applied: (a) the status or relationship
Galleria/Robinsons Supermarket Corp. and/or Jess
test, and (2) the nature of the controversy test. The first
Manuel vs. Irene R. Ranchez, G.R. No. 177937, January
test requires that the controversy arise out of intra-
19, 2011.
corporate or partnership relations among the
stockholders, members or associates of the corporation,
Illegal recruitment; elements. partnership or association, between any or all of them
and the corporation, partnership or association of which
they are stockholders, members or associates; between
Recruitment and placement refers to the act of
such corporation, partnership, or association and the
canvassing, enlisting, contracting, transporting, utilizing,
public or between such corporation, partnership, or
hiring or procuring workers, and includes referrals,
association and the State insofar as it concerns its
contract services, promising or advertising for
franchise, license or permit to operate.  The second test
employment, locally or abroad, whether for profit or not.
requires that the dispute among the parties be
When a person or entity, in any manner, offers or
intrinsically connected with the regulation of the
promises for a fee employment to two or more persons,
corporation.  The Court in this case held that petitioner is
that person or entity shall be deemed engaged in
not a corporate officer because he was not validly
recruitment and placement. Article 38(a) of the Labor
appointed by the Board, thus, failing the relationship
Code, as amended, specifies that recruitment activities
test, and that this is a case of employment termination
undertaken by non-licensees or non-holders of authority
which is a labor controversy and not an intra-corporate
are deemed illegal and punishable by law. And when the
dispute, thus failing the nature of the controversy test.
illegal recruitment is committed against three or more
Renato Real vs. Sangu Philippines, Inc. et al., G.R. No.
persons, individually or as a group, then it is deemed
168757. January 19, 2011.
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 Jurisdiction; labor dispute.
shown that the accused, without being duly authorized by
law, gave complainants the distinct impression that he
Article 217 of the Labor Code states that unfair labor
had the power or ability to send them abroad for work,
practices and termination disputes fall within the original
such that the latter were convinced to part with their
and exclusive jurisdiction of the Labor Arbiter. As an
money in order to be employed.  It is important that
exception, under Article 262 the Voluntary Arbitrator,
there must at least be a promise or offer of an
upon agreement of the parties, shall also hear and decide
employment from the person posing as a recruiter,
all other labor disputes including unfair labor practices
whether locally or abroad. People of the Philippines vs.
and bargaining deadlocks. For the exception to apply,
Teresita “Tessie” Laogo, G.R. No. 176264, January 10,
there must be agreement between the parties clearly
2011.
conferring jurisdiction to the voluntary arbitrator. Such

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agreement may be stipulated in a collective bargaining Polytechnic Colleges Foundation, Inc. v. Arturo J.
agreement. However, in the absence of a collective Garchitorena the Court held that the phrase “of the
bargaining agreement, it is enough that there is evidence pleadings and other material portions of the record xxx
on record showing the parties have agreed to resort to as would support the allegation of the petition clearly
voluntary arbitration. The University of the Immaculate contemplates the exercise of discretion on the part of the
Conception, et al. vs. NLRC, et al., G.R. No. 181146, petitioner in the selection of documents that are deemed
January 26, 2011. to be relevant to the petition. The crucial issue to
consider then is whether or not the documents
accompanying the petition sufficiently supported the
NLRC; factual findings.
allegations therein.”  The failure to attach copy of the
subject documents is not fatal as the challenged CA
Factual findings of labor officials, who are deemed to decision clearly summarized the labor tribunal’s
have acquired expertise in matters within their rulings. Atlanta Industries, Inc. and/or Robert Chan vs.
jurisdiction, are generally accorded not only respect but Aprilito R. Sebolino, et al., G.R. No. 187320, January 26,
even finality by the courts when supported by substantial 2011.
evidence, i.e., the amount of relevant evidence which a
reasonable mind might accept as adequate to justify a
Petition; verification.
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 The verification requirement is deemed substantially
examined by the courts.  The CA can grant the petition complied with when some of the parties who undoubtedly
for certiorari if it finds that the NLRC, in its assailed have sufficient knowledge and belief to swear to the truth
decision or resolution, made a factual finding not of the allegations in the petition had signed the same.
supported by substantial evidence. Thus, it is within the Such verification is deemed a sufficient assurance that
jurisdiction of the CA to review the findings of the NLRC. the matters alleged in the petition have been made in
Prince Transport, Inc. and Mr. Renato Claros vs. good faith or are true and correct, and not merely
Diosdado Garcia, et al., G.R. No. 167291, January 12, speculative. In any case, the settled rule is that a
2011. 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
Petition; certificate of non-forum shopping.
of the rules in the interest of justice. Indeed, the absence
of a verification is not jurisdictional, but only a formal
While the general rule is that the certificate of non- defect, which does not of itself justify a court in refusing
forum shopping must be signed by all the plaintiffs in a to allow and act on a case. Hence, the failure of some of
case and the signature of only one of them is insufficient, the respondents to sign the verification attached to their
the Court has stressed that the rules on forum shopping, Memorandum of Appeal filed with the NLRC is not fatal to
which were designed to promote and facilitate the orderly their cause of action. Prince Transport, Inc. and Mr.
administration of justice, should not be interpreted with Renato Claros vs. Diosdado Garcia, et al., G.R. No.
such absolute literalness as to subvert its own ultimate 167291, January 12, 2011.
and legitimate objective. Strict compliance with the
provision regarding the certificate of non-forum shopping
Regional director; review of decision.
underscores its mandatory nature in that the certification
cannot be altogether dispensed with or its requirements
completely disregarded. It does not, however, prohibit Petitioner appealed an adverse decision to the BLR. BLR
substantial compliance therewith under justifiable Director inhibited himself from the case because he had
circumstances, considering especially that although it is been a former counsel of respondent. In view of the
obligatory, it is not jurisdictional. In a number of cases, inhibition, DOLE Secretary took cognizance of the appeal.
the Court has consistently held that when all the Jurisdiction to review the decision of the Regional
petitioners share a common interest and invoke a Director lies with the BLR. Once jurisdiction is acquired
common cause of action or defense, the signature of only by the court, it remains with it until the full termination
one of them in the certification against forum shopping of the case. Thus, jurisdiction remained with the BLR
substantially complies with the rules. Prince Transport, despite the BLR Director’s inhibition. When the DOLE
Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., Secretary resolved the appeal, she merely stepped into
G.R. No. 167291, January 12, 2011. 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
Petition; failure to attach documents.
BLR. The Heritage Hotel Manila, acting through its owner,
Grand Plaza Hotel, Corp. vs. National Union of Workers in
The respondent workers sought that the petition be the Hotel, Restaurant and Allied Industries-Heritage
dismissed outright for the petitioners’ failure to attach to Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC),
the petition a copy of the Production and Work Schedule G.R. No. 178296, January 12, 2011.
and a copy of the compromise agreement allegedly
entered into — material portions of the record that
Union registration; cancellation.
should accompany and support the petition, pursuant to
Section 4, Rule 45 of the Rules of Court. In Mariners

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The amendment introduced by RA 9481 sought to February 2011 Selected Supreme Court Decisions
strengthen the workers’ right to self-organization and on Labor Law and Procedure
enhance the Philippines’ compliance with its international
obligations as embodied in the International Labour
Abandonment; elements.
Organization (ILO) Convention No. 87, pertaining to the
non-dissolution of workers’ organizations by
administrative authority. ILO Convention No. 87 provides Respondents filed an illegal dismissal case against the
that “workers’ and employers’ organizations shall not be petitioner-corporation. For its defense, petitioner-
liable to be dissolved or suspended by administrative corporation alleged that the respondents abandoned their
authority.” The ILO has expressed the opinion that the work and were not dismissed, and that it sent letters
cancellation of union registration by the registrar of labor advising respondents to report for work, but they
unions, which in our case is the BLR, is tantamount to refused. The Court held that for abandonment to exist, it
dissolution of the organization by administrative authority is essential (a) that the employee must have failed to
when such measure would give rise to the loss of legal report for work or must have been absent without valid
personality of the union or loss of advantages necessary or justifiable reason; and (b) that there must have been
for it to carry out its activities, which is true in our a clear intention to sever the employer-employee
jurisdiction. Although the ILO has allowed such measure relationship manifested by some overt acts. The
to be taken, provided that judicial safeguards are in employer has the burden of proof to show the employee’s
place, i.e., the right to appeal to a judicial body, it has deliberate and unjustified refusal to resume his
nonetheless reminded its members that dissolution of a employment without any intention of returning. Mere
union, and cancellation of registration for that matter, absence is not sufficient. There must be an unequivocal
involve serious consequences for occupational intent on the part of the employee to discontinue his
representation. It has, therefore, deemed it preferable if employment. Based on the evidence presented, the
such actions were to be taken only as a last resort and reason why respondents failed to report for work was
after exhausting other possibilities with less serious because petitioner-corporation barred them from
effects on the organization. It is undisputed that appellee entering its construction sites. It is a settled rule that
failed to submit its annual financial reports and list of failure to report for work after a notice to return to work
individual members in accordance with Article 239 of the has been served does not necessarily constitute
Labor Code. However, the existence of this ground should abandonment. The intent to discontinue the employment
not necessarily lead to the cancellation of union must be shown by clear proof that it was deliberate and
registration. At any rate, the Court in this case took note unjustified. Petitioner-corporation failed to show overt
of the fact that on 19 May 2000, appellee had submitted acts committed by respondents from which it may be
its financial statement for the years 1996-1999. With this deduced that they had no more intention to work. 
submission, appellee has substantially complied with its Respondents’ filing of the case for illegal dismissal barely
duty to submit its financial report for the said period. The four (4) days from their alleged abandonment is totally
Heritage Hotel Manila, acting through its owner, Grand inconsistent with the known concept of what constitutes
Plaza Hotel, Corp. vs. National Union of Workers in the abandonment. E.G. & I. Construction Corporation and
Hotel, Restaurant and Allied Industries-Heritage Hotel Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070,
Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. February 16, 2011.
No. 178296, January 12, 2011.
Certification election; petition for cancellation of
Wages; payment pending reinstatement. union registration.

Employees are entitled to their accrued salaries during Respondent union filed a petition for certification election.
the period between the Labor Arbiter’s order of Petitioner moved to dismiss the petition for certification
reinstatement pending appeal and the resolution of the election alleging the pendency of a petition for
National Labor Relations Commission (NLRC) overturning cancellation of the union’s registration. The DOLE
that of the Labor Arbiter.  Otherwise stated, even if the Secretary ruled in favor of the legitimacy of the
order of reinstatement of the Labor Arbiter is reversed on respondent as a labor organization and ordered the
appeal, the employer is still obliged to reinstate and pay immediate conduct of a certification election. Pending
the wages of the employee during the period of appeal appeal in the Court of Appeals, the petition for
until reversal by a higher court or tribunal. On the other cancellation was granted and became final and
hand, if the employee has been reinstated during the executory. Petitioner argued that the cancellation of the
appeal period and such reinstatement order is reversed union’s certificate of registration should retroact to the
with finality, the employee is not required to reimburse time of its issuance. Thus, it claimed that the union’s
whatever salary he received for he is entitled to such, petition for certification election and its demand to enter
more so if he actually rendered services during the into collective bargaining agreement with the petitioner
period. Social Security System vs. Efren Capada, et al., should be dismissed due to respondent’s lack of legal
G.R. No. 168501, January 31, 2011. 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 union’s registration
because at the time the respondent union filed its

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petition, it still had the legal personality to perform such with each project or phase of the project to which they
act absent an order cancelling its registration.  Legend are assigned. Nonetheless, assuming that respondents
International Resorts Limited v. Kilusang Manggagawa ng were initially hired as project employees, a project
Legenda, G.R. No. 169754, February 23, 2011. 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
Certiorari under Rule 65; review of facts by the
cessation of a project; and (2) The tasks performed by
Court of Appeals.
the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the
While it is true that factual findings made by quasi- employer. In this case, the evidence on record shows
judicial and administrative tribunals, if supported by that respondents were employed and assigned
substantial evidence, are accorded great respect and continuously to the various projects of petitioners.  As
even finality by the courts, this general rule admits of painters, they performed activities which were necessary
exceptions.  When there is a showing that a palpable and and desirable in the usual business of petitioner, which
demonstrable mistake that needs rectification has been was engaged in subcontracting jobs for painting of
committed or when the factual findings were arrived at residential units, condominium and commercial buildings.
arbitrarily or in disregard of the evidence on record, As regular employees, respondents are entitled to be
these findings may be examined by the courts. In the reinstated without loss of seniority rights. Exodus
present case, the Court of Appeals found itself unable to International Construction Corporation, et al. v.
completely sustain the findings of the NLRC thus, it was Guillermo Biscocho, et al., G.R. No. 166109, February
compelled to review the facts and evidence and not limit 23, 2011.
itself to the issue of grave abuse of discretion. Nelson A.
Culili v. Eastern Telecommunications Philippines, Inc., et
Constructive Dismissal; security guards.
al. G.R. No. 165381, February 9, 2011.

Respondent was hired by petitioner, a security agency, as

Construction Industry; project employees.
a security guard. He was assigned at the Philippine Heart
Center until his relief on January 30, 2006.  Respondent
Petitioner is a duly licensed labor contractor engaged in was not given any assignment thereafter.  Thus, on
painting houses and buildings. Respondents, former August 2, 2006, he filed a complaint for constructive
painters of the petitioner, filed an illegal dismissal case dismissal and nonpayment of 13 th month pay, with prayer
against petitioner. Petitioner alleged that the respondents for damages against petitioner. To refute the claim,
abandoned their job and were not dismissed by the petitioner alleged that respondent was not constructively
petitioner. The Labor Arbiter ruled that there was neither or illegally dismissed, but had voluntarily resigned. The
illegal dismissal nor abandonment of job and that the Court held that respondent was constructively dismissed.
respondents should be reinstated but without any In cases involving security guards, a relief and transfer
backwages. On appeal, petitioner alleged that the order in itself does not sever employment relationship
reinstatement of respondents to their former positions, between a security guard and his agency. An employee
which were no longer existing, is impossible, highly unfair has the right to security of tenure, but this does not give
and unjust.  It further alleged that the project they were him a vested right to his position as would deprive the
working on at the time of their alleged dismissal was company of its prerogative to change his assignment or
already completed. Having completed their tasks, their transfer him where his service, as security guard, will be
positions automatically ceased to exist.  Thus, there were most beneficial to the client. Temporary “off-detail” or
no more positions where they can be reinstated as the period of time security guards are made to wait until
painters. The Court ruled that there are two types of they are transferred or assigned to a new post or client
employees in the construction industry. The first is does not constitute constructive dismissal, so long as
referred to as project employees or those employed in such status does not continue beyond six months. The
connection with a particular construction project or phase onus of proving that there is no post available to which
thereof and such employment is coterminous with each the security guard can be assigned rests on the
project or phase of the project to which they are employer. In the instant case, the failure of petitioner to
assigned.  The second is known as non-project give respondent a work assignment beyond the
employees or those employed without reference to any reasonable six-month period makes it liable for
particular construction project or phase of a project. constructive dismissal. Nationwide Security and Allied
Respondents belonged to the second type and are Services, Inc. v. Ronald P. Valderama, G.R. No. 186614,
classified as regular employees of petitioner.  It is clear February 23, 2011.
from the records of the case that when one project is
completed, respondents were automatically transferred
Constructive dismissal; defense of abandonment.
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 Respondent filed an illegal dismissal case against the
the specific work to be performed and there is no proof petitioner. Petitioner alleged that respondent abandoned
that they were made aware of these terms and conditions his job and was not dismissed. The Court held that
of their employment at the time of hiring. Thus, it is now respondent was illegally dismissed. The jurisprudential
too late for petitioner to claim that respondents are rule on abandonment is constant.  It is a matter of
project employees whose employment is coterminous intention and cannot lightly be presumed from certain

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equivocal acts. To constitute abandonment, two elements indeed, it belongs to petitioner and his wife. Thus, even if
must concur:  (1) the failure to report for work or we consider petitioner as an agent of the corporation –
absence without valid or justifiable reason; and (2) a and, therefore, not a stranger to the case – such that the
clear intent, manifested through overt acts, to sever the provision on third-party claims will not apply to him, the
employer-employee relationship.  In this case, petitioner property was registered not only in the name of
failed to establish clear evidence of respondent’s petitioner but also of his wife. She stands to lose the
intention to abandon his employment.  Except for property subject of execution without ever being a party
petitioner’s bare assertion that respondent did not report to the case. This will be tantamount to deprivation of
to the office for reassignment, no proof was offered to property without due process. Paquito V. Ando v.
prove that respondent intended to sever the employer- Andresito Y. Campo, et al., G.R. No. 184007, February
employee relationship.  Besides, the fact that respondent 16, 2011.
filed the instant complaint negates any intention on his
part to forsake his work. It is a settled doctrine that the
Illegal dismissal; burden of proof.
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 Respondents filed an illegal dismissal case against
said to have abandoned his work. Nationwide Security petitioner. Petitioner alleged that the respondents
and Allied Services, Inc. v. Ronald P. Valderama, G.R. abandoned their work and were never dismissed by the
No. 186614, February 23, 2011. 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
Constructive dismissal; defense of resignation.
Court of Appeals. The Court held that a written notice of
dismissal is not a pre-requisite for a finding of illegal
Respondent, a security guard, filed an illegal dismissal dismissal. Petitioner failed to prove that respondents
case against the petitioner. To refute the claim, petitioner were dismissed for a just or authorized cause. In an
alleged that respondent was not constructively or illegally illegal dismissal case, the onus probandi rests on the
dismissed, but had voluntarily resigned. Petitioner alleged employer to prove that the dismissal of an employee is
that respondent’s resignation is evident from his for a valid cause. E.G. & I. Construction Corporation and
withdrawal of his cash and firearm bonds. Resignation is Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070,
the voluntary act of an employee who is in a situation February 16, 2011.
where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one
Illegal dismissal; burden of proof.
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 Respondents filed an illegal dismissal case against the
concur with the overt act of relinquishment. Thus, the petitioners. Petitioners, in their defense, alleged that the
acts of the employee before and after the alleged respondents abandoned their work and were not
resignation must be considered in determining whether, dismissed by the petitioners. Although In cases of illegal
he or she, in fact, intended to sever his or her dismissal, the employer bears the burden of proof to
employment. Should the employer interpose the defense prove that the termination was for a valid or authorized
of resignation, it is incumbent upon the employer to cause, the employee must first establish by substantial
prove that the employee voluntarily resigned.  On this evidence the fact that he was dismissed. If there is no
point, the Court held that petitioner failed to discharge its dismissal, then there can be no question as to the legality
burden. Moreover, the filing of a complaint belies or illegality thereof. In the present case, the Court held
petitioner’s claim that respondent voluntarily resigned. that there was no evidence that respondents were
Nationwide Security and Allied Services, Inc. v. Ronald P. dismissed or that they were prevented from returning to
Valderama, G.R. No. 186614, February 23, 2011. 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
Execution of Judgment; properties covered.
effected their dismissal and under what particular
circumstances. Absent any showing of an overt or
Premier Allied and Contracting Services, Inc. (PACSI) and positive act proving that petitioners had dismissed
its President, the petitioner, were held liable to pay the respondents, the latters’ claim of illegal dismissal cannot
respondents separation pay and attorney’s fees. To be sustained. Exodus International Construction
execute this judgment, the NLRC sheriff issued a Notice Corporation, et al. v. Guillermo Biscocho, et al., G.R. No.
of Sale of a property with a TCT in the name of the 166109, February 23, 2011.
petitioner and his wife. The Court ruled that the Notice of
Sale is null and void. The power of the NLRC, or the
Illegal dismissal; final and executory judgment.
courts, to execute its judgment extends only to
properties unquestionably belonging to the judgment
debtor alone.  A sheriff, therefore, has no authority to Respondent employee filed an illegal dismissal case
attach the property of any person except that of the against the petitioner-company and Tom Madula, its
judgment debtor.  Likewise, there is no showing that the operations manager. The case was dismissed by the labor
sheriff ever tried to execute on the properties of the arbiter and the dismissal was affirmed by NLRC. On
corporation. The TCT of the property bears out that, August 29, 2002, the Court of Appeals reversed and set

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aside the NLRC decision and resolution. The CA ordered case, the Court held that petitioner failed to prove that
the petitioner company to pay respondent separation his dismissal was orchestrated by the individual
pay, moral and exemplary damages, and attorney’s fees. respondents and their acts were attended with bad faith
The decision became final and executory on February 27, or were done oppressively. Nelson A. Culili v. Eastern
2004, and consequently a writ of execution was issued. Telecommunications Philippines, Inc., et al. G.R. No.
Petitioner-company filed a Motion to Quash Writ of 165381,  February 9, 2011.
Execution. The Labor Arbiter granted the Motion and
exonerated the petitioner company from paying
Illegal dismissal; redundancy.
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 Respondent-company, due to business troubles and
Judgment. On December 10, 2004, CA granted the losses, implemented a Right-Sizing Program which
Motion and held that petitioner-company is solely liable entailed a company-wide reorganization involving the
for the judgment award. As a general rule, final and transfer, merger, absorption or abolition of certain
executory judgments are immutable and unalterable, departments of the company. As a result, respondent-
except under these recognized exceptions, to wit: (a) company terminated the services of petitioner on account
clerical errors; (b) nunc pro tunc entries which cause no of redundancy. Petitioner filed a complaint against
prejudice to any party; and (c) void judgments. The respondent-company and its officers for illegal dismissal,
underlying reason for the rule is two-fold: (1) to avoid unfair labor practice, and money claims. The Court ruled
delay in the administration of justice and thus make that petitioner was validly dismissed. There is
orderly the discharge of judicial business, and (2) to put redundancy when the service capability of the workforce
judicial controversies to an end, at the risk of occasional is greater than what is reasonably required to meet the
errors, inasmuch as controversies cannot be allowed to demands of the business enterprise.  A position becomes
drag on indefinitely and the rights and obligations of redundant when it is rendered superfluous by any
every litigant must not hang in suspense for an indefinite number of factors such as over-hiring of workers,
period of time. What the CA rendered on December 10, decrease in volume of business, or dropping a particular
2004 was a nunc pro tunc order clarifying the decretal product line or service activity previously manufactured
portion of its August 29, 2002 Decision. The object of a or undertaken by the enterprise. The Court has been
judgment nunc pro tunc is not the rendering of a new consistent in holding that the determination of whether or
judgment and the ascertainment and determination of not an employee’s services are still needed or sustainable
new rights, but is one placing in proper form on the properly belongs to the employer.  Provided there is no
record, the judgment that had been previously rendered, violation of law or a showing that the employer was
to make it speak the truth, so as to make it show what prompted by an arbitrary or malicious act, the soundness
the judicial action really was. It is not to correct judicial or wisdom of this exercise of business judgment is not
errors, such as to render a judgment anew in place of the subject to the discretionary review of the Labor Arbiter
one it rendered, nor to supply nonaction by the court, and the NLRC.   However, an employer cannot simply
however erroneous the judgment may have been. declare that it has become overmanned and dismiss its
Filipinas Palmoil Processing, Inc. and Dennis T. Villareal employees without producing adequate proof to sustain
v. Joel P. Dejapa, represented by his Attorney-in-Fact its claim of redundancy.  Among the requisites of a valid
Myrna Manzano, G.R. No. 167332, February 7, 2011. 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
Illegal dismissal; liability of corporate officers.
are to be declared redundant, such as but not limited to:
preferred status, efficiency, and seniority.  The Court also
Petitioner filed a complaint against respondent company held that the following evidence may be proffered to
and its officers for illegal dismissal, unfair labor practice, substantiate redundancy: adoption of a new staffing
and money claims. Petitioner alleged that the officers pattern, feasibility studies/ proposal on the viability of
should be held personally liable for the acts of company the newly created positions, job description and the
which were tainted with bad faith and arbitrariness. As a approval by the management of the restructuring. Nelson
general rule, a corporate officer cannot be held liable for A. Culili v. Eastern Telecommunications Philippines, Inc.,
acts done in his official capacity because a corporation, et al. G.R. No. 165381, February 9, 2011.
by legal fiction, has a personality separate and distinct
from its officers, stockholders, and members.  To pierce
Labor Union; collateral attack on legal personality.
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 Petitioner moved to dismiss the petition for certification
legitimate issue.  In illegal dismissal cases, corporate election filed by respondent union by questioning the
officers may be held solidarily liable with the corporation validity of the respondent’s union registration. The Court
if the termination was done with malice or bad faith. held that legitimacy of the legal personality of respondent
Moral damages are awarded only where the dismissal cannot be collaterally attacked in a petition for
was attended by bad faith or fraud, or constituted an act certification election proceeding but only through a
oppressive to labor, or was done in a manner contrary to separate action instituted particularly for the purpose of
morals, good customs or public policy.  Exemplary assailing it. The Implementing Rules stipulate that a labor
damages may avail if the dismissal was effected in a organization shall be deemed registered and vested with
wanton, oppressive or malevolent manner. In the present legal personality on the date of issuance of its certificate

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of registration.  Once a certificate of registration is issued officers and tribunals of the Department of Labor and
to a union, its legal personality cannot be subject to a Employment. To hold otherwise is to sanction splitting of
collateral attack.  It may be questioned only in an jurisdiction which is obnoxious to the orderly
independent petition for cancellation in accordance with administration of justice. The NLRC Manual on the
Section 5 of Rule V, Book V of the Implementing Rules. Execution of Judgment deals specifically with third-party
Legend International Resorts Limited v. Kilusang claims in cases brought before that body. It defines a
Manggagawa ng Legenda, G.R. No. 169754 ,  February third-party claim as one where a person, not a party to
23, 2011. 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
Money claims; burden of proof.
make an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or
Respondents alleged that petitioner-corporation failed to title and shall file the same with the sheriff and copies
pay them their full compensation. The Labor Arbiter thereof served upon the Labor Arbiter or proper officer
granted their monetary claims but the NLRC reversed the issuing the writ and upon the prevailing party.”  In the
award considering that the petitioner-corporation present case, there is no doubt that petitioner’s
submitted copies of payrolls, which it annexed to its complaint is a third-party claim within the cognizance of
memorandum on appeal, showing full payment. The the NLRC. Petitioner may indeed be considered a “third
general rule is that the burden rests on the employer to party” in relation to the property subject of the execution
prove payment, rather than on the employee to prove since there is no question that the property belongs to
non-payment. The reason for the rule is that the petitioner and his wife, and not to the corporation. It can
pertinent personnel files, payrolls, records, remittances, be said that the property belongs to the conjugal
and other similar documents — which will show that partnership, and not to petitioner alone. At the very
overtime, differentials, service incentive leave, and other least, the Court can consider petitioner’s wife to be a
claims of the worker have been paid — are not in the third party within the contemplation of the law. Paquito
possession of the worker but in the custody and absolute V. Ando v. Andresito Y. Campo, et al., G.R. No. 184007,
control of the employer. In this case, the submission by February 16, 2011.
petitioner-corporation of the time records and payrolls
only when the case was on appeal before the NLRC is
Placement Fee; proof of excessive collection.
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 Petitioner filed a complaint against respondent for
submitted on appeal. Thus, the Supreme Court held that collection of excess placement fee defined in Article 34(a)
the monetary claims of respondents should be granted. It of the Labor Code. Petitioner presented as her evidence a
is a time-honored principle that if doubts exist between promissory note reflecting excessive fees and testified as
the evidence presented by the employer and the to the deductions made by her foreign employer. On the
employee, the scales of justice must be tilted in favor of other hand, respondent presented an acknowledgment
the latter. It is the rule in controversies between a receipt reflecting collection of an amount authorized by
laborer and his master that doubts reasonably arising POEA. The Court held that the pieces of evidence
from the evidence, or in the interpretation of agreements presented by petitioner are not substantial enough to
and writing, should be resolved in the former’s favor. show that the respondent collected from her more than
E.G. & I. Construction Corporation and Edsel Galeos v. the allowable placement fee. In proceedings before
Ananias P. Sato, et al., G.R. No. 182070 ,February 16, administrative and quasi-judicial agencies, the quantum
2011. 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
respondent’s evidence consisting of the acknowledgment
National Labor Relations Commission; jurisdiction. receipt showing the amount paid by petitioner and
received by respondent. A receipt is a written and signed
Respondents filed an illegal dismissal case against acknowledgment that money or goods have been
Premier Allied and Contracting Services, Inc. (PACSI) and delivered. Although a receipt is not conclusive evidence,
its President, the petitioner. PACSI and the petitioner an exhaustive review of the records of the case fails to
were held liable to pay the respondents separation pay disclose any other evidence sufficient and strong enough
and attorney’s fees. To execute this judgment, NLRC to overturn the acknowledgment embodied in
sheriff issued a Notice of Sale of a property with TCT in respondent’s receipt as to the amount it actually received
the name of the petitioner and his wife. Petitioner filed an from petitioner. Having failed to adduce sufficient
action for prohibition and damages with prayer for the rebuttal evidence, petitioner is bound by the contents of
issuance of a temporary restraining order (TRO) before the receipt issued by respondent. The subject receipt
the Regional Trial Court (RTC). The Court ruled that the remains as the primary or best evidence. The promissory
RTC lacks jurisdiction to resolve the matter. The Court note presented by petitioner cannot be considered as
has long recognized that regular courts have no adequate evidence to show the excessive placement fee.
jurisdiction to hear and decide questions which arise from It must be emphasized that a promissory note is a
and are incidental to the enforcement of decisions, solemn acknowledgment of a debt and a formal
orders, or awards rendered in labor cases by appropriate commitment to repay it on the date and under the

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conditions agreed upon by the borrower and the lender. that they signed. Each document contained the
A person who signs such an instrument is bound to honor signatures of the union president and its counsel, which
it as a legitimate obligation duly assumed by him through proved that respondents were duly assisted when they
the signature he affixes thereto as a token of his good signed the waivers and quitclaims. Hence, the Court
faith. The fact that respondent is not a lending company upheld the validity of the waivers and quitclaims signed
does not preclude it from extending a loan to petitioner by the respondents in this case. Plastimer Industrial
for her personal use. As for the deductions purportedly Corporation and Teo Kee Bin v. Natalia C. Gopo, et al.,
made by petitioner’s foreign employer, the Court noted G.R. No. 183390, February 16, 2011.
that there is no single piece of document or receipt
showing that deductions have in fact been made, or is
Retrenchment; notice requirements.
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 Petitioner issued a Memorandum informing all its
placement fees cannot be given merit as the charge of employees of the decision of the company’s Board of
illegal exaction is considered a grave offense which could Directors to downsize and reorganize its business
cause the suspension or cancellation of the agency’s operations due to the change of its corporate structure.
license.  They should be proven and substantiated by Petitioner served the individual notice of termination on
clear, credible, and competent evidence. Avelina F. its employees on May 14, 2004 or 30 days before the
Sagun v. Sunace International Management Services, effective date of their termination on 13 June 2004, while
Inc., G.R. No. 179242, February 23, 2011. 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
Procedural due process; notice requirements.
of the Labor Code. The Court held that petitioners’ failure
to comply with the one-month notice to the DOLE is only
Petitioner was dismissed by respondent-company due to a procedural infirmity and does not render the
redundancy. However, it failed to provide the Department retrenchment illegal. When the dismissal is for a just
of Labor and Employment with a written notice regarding cause, the absence of proper notice will not nullify the
petitioner’s termination. The notice of termination was dismissal or render it illegal or ineffectual. Instead, the
also not properly served on the petitioner. Further, a employer should indemnify the employee for violation of
reading of the notice shows that respondent-company his statutory rights. Plastimer Industrial Corporation and
failed to properly inform the petitioner of the grounds for Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390,
his termination.  There are two aspects which February 16, 2011.
characterize the concept of due process under the Labor
Code: one is substantive — whether the termination of
Retrenchment; notice requirements.
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 In 2004, the petitioner had to retrench and consequently
dismissal was effected. There is a psychological effect or terminate the employment of the respondents.
a stigma in immediately finding one’s self laid off from Respondents questioned the validity of the retrenchment,
work.  This is why our labor laws have provided for and alleged that though petitioner’s financial statements
procedural due process.  While employers have the right in 2001 and 2002 reflected losses, it declared net income
to terminate employees it can no longer sustain, our laws in 2003. The Court ruled that the fact that there was a
also recognize the employee’s right to be properly net income in 2003 does mean that there was no valid
informed of the impending termination of his reason for the retrenchment. Records showed that the
employment. Though the failure of respondent-company net income of P6,185,707.05 in 2003 was not enough to
to comply with the notice requirements under the Labor allow petitioners to recover the loss of P52,904,297.88
Code did not affect the validity of the dismissal, which it suffered in 2002. Article 283 of the Labor Code
petitioner is however entitled to nominal damages in recognizes retrenchment to prevent losses as a right of
addition to his separation pay. Nelson A. Culili v. Eastern the management to meet clear and continuing economic
Telecommunications Philippines, Inc., et al. G.R. No. threats or during periods of economic recession to
165381, February 9, 2011. 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.
Quitclaims; validity.
Plastimer Industrial Corporation and Teo Kee Bin v.
Natalia C. Gopo, et al., G.R. No. 183390, February 16,
Respondents were terminated from employment due to 2011.
retrenchment implemented by petitioner. Upon their
dismissal, the respondents signed individual “Release
Unfair Labor Practice; right to self-organize.
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 Respondent-company implemented a company-wide
reasonable settlement, and that the one accomplishing it reorganization which resulted in the abolition of
has done so voluntarily and with a full understanding of petitioner’s position. Petitioner alleged that he was
its import. In this case, the respondents were sufficiently illegally dismissed and that respondent-company is guilty
apprised of their rights under the waivers and quitclaims of unfair labor practice because his functions were

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outsourced to labor-only contractors.  The Supreme Respondent employee filed an illegal dismissal case
Court held unfair labor practice refers to acts that violate against the Petitioner Corporation and its President.
the workers’ right to organize.  The prohibited acts are Though the Court found that Respondent was illegally
related to the workers’ right to self-organization and to dismissed, it held that the President of the Petitioner
the observance of a CBA. Thus, an employer may be held Corporation should not be held solidarily liable with
liable for unfair labor practice only if it can be shown that Petitioner Corporation. Obligations incurred by corporate
his acts interfere with his employees’ right to self- officers, acting as such corporate agents, are not theirs
organization. Since there is no showing that the but the direct accountabilities of the corporation they
respondent company’s implementation of the Right- represent. Thus, they should not be generally held jointly
Sizing Program was motivated by ill will, bad faith or and solidarily liable with the corporation. The general rule
malice, or that it was aimed at interfering with its is grounded on the theory that a corporation has a legal
employees’ right to self-organization, there is no unfair personality separate and distinct from the persons
labor practice to speak of in this case. Nelson A. Culili v. comprising it. As exceptions to the general rule, solidary
Eastern Telecommunications Philippines, Inc., et al. G.R. liability may be imposed: (1) When directors and trustees
No. 165381, February 9, 2011. 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
March 2011 Selected Supreme Court Decisions on the director or officer has consented to the issuance of
Labor Law and Procedure 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)
Abandonment; elements. When a director, trustee or officer is made, by specific
provision of law, personally liable for his corporate action.
Respondent employee was dismissed by petitioners on To warrant the piercing of the veil of corporate fiction,
the ground of alleged habitual absenteeism and the officer’s bad faith or wrongdoing must be established
abandonment of work. Jurisprudence provides for two clearly and convincingly as bad faith is never presumed.
essential requirements for abandonment of work to exist: Harpoon Marine Services, Inc., et al. v. Fernan H.
(1) the failure to report for work or absence without valid Francisco, GR No. 167751, March 2, 2011.
or justifiable reason, and (2) clear intention to sever the
employer-employee relationship manifested by some Labor organization; collateral attack on legal
overt acts should both concur.  Further, the employee’s personality.
deliberate and unjustified refusal to resume his
employment without any intention of returning should be
established and proven by the employer. The Court held Respondent company questioned the legal personality of
that petitioners failed to prove that it was respondent the petitioner union in a certification election proceeding.
employee who voluntarily refused to report back for work The Court ruled that the legal personality of the
by his defiance and refusal to accept the memoranda and petitioner union cannot be collaterally attacked by
the notices of absences sent to him.  Petitioners failed to respondent company. Except when it is requested to
present evidence that they sent these notices to bargain collectively, an employer is a mere bystander to
respondent employee’s last known address for the any petition for certification election; such proceeding is
purpose of warning him that his continued failure to non-adversarial and merely investigative, considering
report would be construed as abandonment of work. that its purpose is to determine if the employees would
Moreover, the fact that respondent employee never like to be represented by a union and to select the
prayed for reinstatement and has sought employment in organization that will represent them in their collective
another company which is a competitor of petitioners bargaining with the employer. The choice of their
cannot be construed as his overt acts of abandoning representative is the exclusive concern of the employees;
employment.  Neither can the delay of four months be the employer cannot have any partisan interest therein;
taken as an indication that the respondent employee’s it cannot interfere with, much less oppose, the process
filing of a complaint for illegal dismissal is a mere by filing a motion to dismiss or an appeal from it; not
afterthought.  Records show that respondent employee even the allegation that some employees participating in
attempted to get his separation pay and alleged a petition for certification election are actually managerial
commissions from the company, but it was only after his employees will give an employer legal personality to
requests went unheeded that he resorted to judicial block the certification election. The employer’s only right
recourse. Harpoon Marine Services, Inc., et al. v. Fernan in the proceeding is to be notified or informed thereof.
H. Francisco, GR No. 167751, March 2, 2011. Samahang Manggagawa sa Charter Chemical Solidarity
of Unions in the Philippines for Empowerment and
Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union
Corporate officer; solidary liability. President v. Charter Chemical and Coating Corporation,
G.R. No. 169717,  March 16, 2011.

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Labor organization; membership of supervisory Labor Arbiter’s decision ordering her reinstatement until
employees. 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
Petitioner union filed a Petition for Certification Election
of reinstatement of the Labor Arbiter is reversed on
among the regular rank-and-file employees of the
appeal, it is obligatory on the part of the employer to
respondent company. Respondent contends that
reinstate and pay the wages of the dismissed employee
petitioner union is not a legitimate labor organization
during the period of appeal until reversal by the higher
because its composition is a mixture of supervisory and
court. On the other hand, if the employee has been
rank-and-file employees. The Court ruled that the
reinstated during the appeal period and such
inclusion of the supervisory employees in petitioner union
reinstatement order is reversed with finality, the
does not divest it of its status as a legitimate labor
employee is not required to reimburse whatever salary
organization. After a labor organization has been
he received, more so, if he actually rendered services
registered, it may exercise all the rights and privileges of
during the period. The payment of such wages cannot be
a legitimate labor organization. Any mingling between
deemed as unjust enrichment on respondent’s part.
supervisory and rank-and-file employees in its
Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No.
membership cannot affect its legitimacy for that is not
177467,  March 9, 2011.
among the grounds for cancellation of its registration,
unless such mingling was brought about by
misrepresentation, false statement or fraud under Article Reinstatement; immediately executory order.
239 of the Labor Code. Samahang Manggagawa sa
Charter Chemical Solidarity of Unions in the Philippines
The Labor Arbiter held that petitioner employer illegally
for Empowerment and Reforms [SMCC-SUPER], Zacarrias
dismissed the respondent employee. Pending its appeal,
Jerry Victorio – Union President v. Charter Chemical and
petitioner employer failed to immediately admit
Coating Corporation, G.R. No. 169717,  March 16, 2011.
respondent employee back to work despite of an order of
reinstatement. The Court held that that the provision of
Labor organization; registration. 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
Petitioner union filed a Petition for Certification Election
employer shall not stay the execution for reinstatement.
among the regular rank-and-file employees of the
The legislative intent is to make an award of
respondent company. Respondent company filed an
reinstatement immediately enforceable, even pending
Answer with Motion to Dismiss on the ground that
appeal. To require the application for and issuance of a
petitioner union is not a legitimate labor organization
writ of execution as prerequisites for the execution of a
because of its failure to comply with the documentary
reinstatement award would certainly betray the
requirements set by law, i.e. non-verification of the
executory nature of a reinstatement order or award. In
charter certificate. The Court ruled that it was not
the case at bar, petitioner employer did not immediately
necessary for the charter certificate to be certified and
admit respondent employee back to work which,
attested by the local/chapter officers. Considering that
according to the law, should have been done as soon as
the charter certificate is prepared and issued by the
an order or award of reinstatement is handed down by
national union and not the local/chapter, it does not
the Labor Arbiter without need for the issuance of a writ
make sense to have the local/chapter’s officers certify or
of execution. Pfizer, Inc., et al. v. Geraldine Velasco, G.R.
attest to a document which they did not prepare. In
No. 177467,  March 9, 2011.
accordance with this ruling, petitioner union’s charter
certificate need not be executed under oath.
Consequently, it validly acquired the status of a Reinstatement; terms and conditions.
legitimate labor organization upon submission of (1) its
charter certificate, (2) the names of its officers, their
Due to the order of reinstatement issued by the Labor
addresses, and its principal office, and (3) its constitution
Arbiter, petitioner employer sent a letter to the
and by-laws— the last two requirements having been
respondent employee to report back to work and
executed under oath by the proper union officials.
assigned her to a new location. The Court held that such
Samahang Manggagawa sa Charter Chemical Solidarity
is not a bona fide reinstatement. Under Article 223 of the
of Unions in the Philippines for Empowerment and
Labor Code, an employee entitled to reinstatement shall
Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union
either be admitted back to work under the same terms
President v. Charter Chemical and Coating Corporation,
and conditions prevailing prior to his dismissal or
G.R. No. 169717,  March 16, 2011.
separation or, at the option of the employer, merely
reinstated in the payroll.  It is established in
Reinstatement; accrued backwages. jurisprudence that reinstatement means restoration to a
state or condition from which one had been removed or
separated.  The person reinstated assumes the position
The Labor Arbiter and the NLRC held that petitioner
he had occupied prior to his dismissal.  Reinstatement
employer illegally dismissed the respondent employee.
presupposes that the previous position from which one
On appeal, the Court of Appeals reversed the decision
had been removed still exists, or that there is an unfilled
and ruled that the dismissal was valid. However, the
position which is substantially equivalent or of similar
Court of Appeals ordered petitioner employer to pay
nature as the one previously occupied by the employee.
respondent employee her salary from the date of the

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Applying the foregoing principle, it cannot be said that just the same. In short, the benefit or privilege given to
petitioner employer has a clear intent to reinstate the employee which constitutes an extra remuneration
respondent employee to her former position under the above and over his basic or ordinary earning or wage is
same terms and conditions nor to a substantially supplement; and when said benefit or privilege is part of
equivalent position.  To begin with, the return-to-work the laborers’ basic wages, it is a facility. The distinction
order petitioner sent to respondent employee is silent lies not so much in the kind of benefit or item (food,
with regard to the position it wanted the respondent lodging, bonus or sick leave) given, but in the purpose
employee to assume. Moreover, a transfer of work for which it is given.  In the case at bench, the items
assignment without any justification therefor, even if provided were given freely by petitioner employer for the
respondent employee would be presumably doing the purpose of maintaining the efficiency and health of its
same job with the same pay, cannot be deemed as workers while they were working at their respective
faithful compliance with the reinstatement order. Pfizer, projects. Thus, the Court is of the view that the food and
Inc., et al. v. Geraldine Velasco, G.R. No. 177467,  March lodging, or the electricity and water allegedly consumed
9, 2011. by respondents in this case were not facilities but
supplements which should not be included in the
computation of wages received by respondent
Termination by employer; willful disobedience.
employees. SLL International Cables Specialist and
Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No.
Petitioner employer ordered the respondent employee to 172161,  March 2, 2011.
prepare checks for payment of petitioner’s obligations.
Respondent did not immediately comply with the
Wages; proof of payment.
instruction since petitioner employer has no sufficient
funds to cover the checks. Petitioner employer dismissed
respondent employee for willful disobedience. The Court In an illegal dismissal case against the petitioner
held that respondent employee was illegally dismissed. employer, respondent employees alleged that they were
The offense of willful disobedience requires the underpaid. In their defense, petitioner employer alleged
concurrence of two (2) requisites: (1) the employee’s that respondent employees actually received wages
assailed conduct must have been willful, that is higher than the prescribed minimum. The Court held that
characterized by a wrongful and perverse attitude; and as a general rule, a party who alleged payment of wages
(2) the order violated must have been reasonable, lawful, as a defense has the burden of proving it. Specifically
made known to the employee and must pertain to the with respect to labor cases, the burden of proving
duties which he had been engaged to discharge. Though payment of monetary claims rests on the employer, the
there is nothing unlawful in the directive of petitioner rationale being that the pertinent personnel files,
employer to prepare checks in payment of petitioner’s payrolls, records, remittances and other similar
obligations, respondent employee’s initial reluctance to documents — which will show that overtime, differentials,
prepare the checks, although seemingly disrespectful and service incentive leave and other claims of workers have
defiant, was for honest and well intentioned reasons. been paid — are not in the possession of the worker but
Protecting the petitioner employer from liability under the in the custody and absolute control of the employer. In
Bouncing Checks Law was foremost in her mind.  It was this case, petitioner employer, aside from bare
not wrongful or willful. Neither can it be considered an allegations that respondent employees received wages
obstinate defiance of company authority.  The Court higher than the prescribed minimum, failed to present
takes into consideration that respondent employee, any evidence, such as payroll or payslips, to support their
despite her initial reluctance, eventually did prepare the defense of payment.  Thus, petitioner employer utterly
checks on the same day she was tasked to do it. Lores failed to discharge the onus probandi. SLL International
Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Cables Specialist and Sonny L. Lagon v. NLRC, Roldan
Virginia E. Pacia, G.R. No. 171189,  March 9, 2011. Lopez, et al., G.R. No. 172161,  March 2, 2011.

Wages; facilities and supplements. Wages; value of facilities.

Respondent employees alleged underpayment of their Petitioner employer alleged that the cost of facilities must
wages. Petitioner employer claimed that the cost of food be included in the computation of wages paid. The Court
and lodging provided by petitioner to the respondent held that before the value of facilities can be deducted
employees should be included in the computation of the from the employees’ wages, the following requisites must
wages received by respondents. The Court makes a all be attendant: first, proof must be shown that such
distinction between “facilities” and “supplements.”  facilities are customarily furnished by the trade; second,
Supplements constitute extra remuneration or special the provision of deductible facilities must be voluntarily
privileges or benefits given to or received by the laborers accepted in writing by the employee; and finally, facilities
over and above their ordinary earnings or wages. must be charged at reasonable value. Mere availment is
Facilities, on the other hand, are items of expense not sufficient to allow deductions from employees’ wages.
necessary for the laborer’s and his family’s existence and These requirements, however, have not been met in this
subsistence so that by express provision of law, they case. Petitioner employer failed to present any company
form part of the wage and when furnished by the policy or guideline showing that provisions for meals and
employer are deductible therefrom, since if they are not lodging were part of the employee’s salaries. It also
so furnished, the laborer would spend and pay for them failed to provide proof of the employees’ written

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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.
FEBRUARY 2009
SLL International Cables Specialist and Sonny L. Lagon v.
NLRC, Roldan Lopez, et al., G.R. No. 172161,  March 2,
2011. PROBATIONARY EMPLOYMENT;  ACTING
APPOINTMENT;  RESIGNATION.

The Supreme Court ruled that: (a) the employment of

the respondent as teacher was probationary in character,
as she has not completed the requisite three-year period
of probationary employment for teachers: (b) the
respondent’s appointment as acting principal was merely
temporary, or one that is good until another appointment
is made to take its place; as such, the appointment is
revocable at will; and (c) the resignation of the
respondent is not valid, not only because there was no
express acceptance thereof by the employer, but because
there is a cloud of doubt as to the voluntariness of
respondent’s resignation. According to the Supreme
Court, resignation is inconsistent with the filing of a
complaint for illegal dismissal. To be valid, the
resignation must be unconditional, with the intent to
operate as such; there must be a clear intention to
relinquish the position. In this case, respondent actively
pursued her illegal dismissal case against petitioner, such
that she cannot be said to have voluntarily resigned from
her job. Magis Young Achievers’ Learning Center/Mrs.
Violeta T. Carino Vs. Adelaida P. Manalo,G.R. No.
178835, February 13, 2009.

LABOR-ONLY CONTRACTING.

 The law clearly establishes an employer-employee

relationship between the principal employer and the
contractor’s employee upon a finding that the contractor
is engaged in “labor-only” contracting.   Article 106 of the
Labor Code categorically states: “There is ‘labor-only’
contracting where the person supplying workers to an
employee 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 persons are performing activities which
are directly related to the principal business of such
employer.” Thus, performing activities directly related to
the principal business of the employer is only one of the
two indicators that “labor-only” contracting exists; the
other is lack of substantial capital or investment.   Coca-
Cola Bottlers Phils., Inc. Vs. Alan M. Agito Regolo S. Oca
III, et al, G.R. No. 179546, February 13, 2009.

MARCH 2009 CASES

COMPENSABLE ILLNESS.

Cordero has substantially proved her claim to

compensability. Under Section 1(b), Rule III
FEBRUARY 2009-APRIL 2010 SELECTED SUPREME implementing P.D. No. 626, sickness or death is
COURT DECISIONS ON LABOR LAW & PROCEDURE compensable if the cause is included in the list of
occupational diseases annexed to the Rules. If not so

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listed, compensation may still be recovered if the illness provision requires employers to engage the services of
is caused or precipitated by factors inherent in the medical practitioners in certain establishments depending
employee’s work and working conditions. Here, strict on the number of their employees, nothing is there in the
rules of evidence are not applicable since the quantum of law which says that medical practitioners so engaged be
evidence required under P.D. No. 626 is merely actually hired as employees. The law only requires the
substantial evidence, which means “such relevant employer “to retain”, not employ, a part-time physician
evidence as a reasonable mind might accept as adequate who needed to stay in the premises of the non-hazardous
to support a conclusion.” What the law requires is a workplace for two (2) hours. The phrase “services of a
reasonable work-connection and not a direct causal full-time registered nurse” should thus be taken to refer
relation. It is sufficient that the hypothesis on which the to the kind of services that the nurse will render in the
workmen’s claim is based is probable since probability, company’s premises and to its employees, not the
not certainty, is the touchstone. Government Service manner of his engagement. Jerome D. Escasinas, et al.
Insurance System Vs. Maria Teresa S.A. Vs. Shangri-la’s Mactan Island Resort, et al., G.R. No.
Cordero/Employees Compensation Commission Vs. Maria 178827, March 4, 2009.
Teresa S.A. Cordero, G.R. No. 171378/G.R. No. 171388,
March 17, 2009.
PART-TIME EMPLOYMENT.  

For a private school teacher to acquire permanent status

in employment, the following requisites must concur: (1)
CONSTRUCTIVE DISMISSAL. the teacher is a full-time teacher; (2) the teacher must
have rendered three consecutive years of service; and
(3) such service must have been satisfactory. The burden
Case law holds that constructive dismissal occurs when
is on petitioners to prove their affirmative allegation that
there is cessation of work because continued employment
they are permanent teaching personnel. However, there
is rendered impossible, unreasonable or unlikely; when
is not enough evidence on record to show that their total
there is a demotion in rank or diminution in pay or both;
working day is devoted to the school. There is no
or when a clear discrimination, insensibility, or disdain by
showing of what the regular work schedule of a regular
an employer becomes unbearable to the employee.
teacher in respondent school is. What is clear in the
Respondent’s sudden, arbitrary and unfounded adoption
records is that Evelyn and Alwyn spent two hours and
of the two-day work scheme which greatly reduced
four hours, respectively, but not the entire working day,
petitioners’ salaries renders it liable for constructive
at the respondent school. They do not meet requirement
dismissal. Fe la Rosa, et al. Vs. Ambassador Hotel, G.R.
“c” of Section 45 of the Manual. Hence, we sustain the
No. 177059, March 13, 2009.
findings of the Court of Appeals that the petitioners are
part-time teachers. Being part-time teachers,they cannot
DECLARATION OF ILLEGALITY OF STRIKE.   acquire permanent status. Spouses Alwyn Ong Lim and
Evelyn Lukang Lim Vs. Legazpi Hope Christian School, et
Article 264(e) of the Labor Code prohibits any person al., G.R. No. 172818, March 31, 2009.
engaged in picketing from obstructing the free ingress to
and egress from the employer’s premises. Since
respondent was found in the July 17, 1998 decision of
the NLRC to have prevented the free entry into and exit
COMPENSABLE ILLNESS.
of vehicles from petitioner’s compound, respondent’s
officers and employees clearly committed illegal acts in
the course of the March 9, 1998 strike. The use of Cordero has substantially proved her claim to
unlawful means in the course of a strike renders such compensability. Under Section 1(b), Rule III
strike illegal. Therefore, pursuant to the principle of implementing P.D. No. 626, sickness or death is
conclusiveness of judgment, the March 9, 1998 strike compensable if the cause is included in the list of
was ipso facto illegal. The filing of a petition to declare occupational diseases annexed to the Rules. If not so
the strike illegal was thus unnecessary. Jackbilt listed, compensation may still be recovered if the illness
Industries, Inc. Vs. Jackbilt Employees Workers Union- is caused or precipitated by factors inherent in the
Naflu-KMU, G.R. No. 171618-19, March 13, 2009. employee’s work and working conditions. Here, strict
rules of evidence are not applicable since the quantum of
evidence required under P.D. No. 626 is merely
EMPLOYMENT OF REGISTERED NURSE.
substantial evidence, which means “such relevant
evidence as a reasonable mind might accept as adequate
Article 157 does not require the engagement of full-time to support a conclusion.” What the law requires is a
nurses as regular employees of a company. Under Article reasonable work-connection and not a direct causal
157, Shangri-la, which employs more than 200 workers, relation. It is sufficient that the hypothesis on which the
is mandated to “furnish” its employees with the services workmen’s claim is based is probable since probability,
of a full-time registered nurse, a part-time physician and not certainty, is the touchstone. Government Service
dentist, and an emergency clinic which means that it Insurance System Vs. Maria Teresa S.A.
should provide or make available such medical and allied Cordero/Employees Compensation Commission Vs. Maria
services to its employees, not necessarily to hire or Teresa S.A. Cordero, G.R. No. 171378/G.R. No. 171388,
employ a service provider. While it is true that the March 17, 2009.

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CONSTRUCTIVE DISMISSAL. the teacher is a full-time teacher; (2) the teacher must
have rendered three consecutive years of service; and
(3) such service must have been satisfactory. The burden
Case law holds that constructive dismissal occurs when
is on petitioners to prove their affirmative allegation that
there is cessation of work because continued employment
they are permanent teaching personnel. However, there
is rendered impossible, unreasonable or unlikely; when
is not enough evidence on record to show that their total
there is a demotion in rank or diminution in pay or both;
working day is devoted to the school. There is no
or when a clear discrimination, insensibility, or disdain by
showing of what the regular work schedule of a regular
an employer becomes unbearable to the employee.
teacher in respondent school is. What is clear in the
Respondent’s sudden, arbitrary and unfounded adoption
records is that Evelyn and Alwyn spent two hours and
of the two-day work scheme which greatly reduced
four hours, respectively, but not the entire working day,
petitioners’ salaries renders it liable for constructive
at the respondent school. They do not meet requirement
dismissal. Fe la Rosa, et al. Vs. Ambassador Hotel, G.R.
“c” of Section 45 of the Manual. Hence, we sustain the
No. 177059, March 13, 2009.
findings of the Court of Appeals that the petitioners are
part-time teachers. Being part-time teachers,they cannot
DECLARATION OF ILLEGALITY OF STRIKE.   acquire permanent status. Spouses Alwyn Ong Lim and
Evelyn Lukang Lim Vs. Legazpi Hope Christian School, et
Article 264(e) of the Labor Code prohibits any person al., G.R. No. 172818, March 31, 2009.
engaged in picketing from obstructing the free ingress to
and egress from the employer’s premises. Since
respondent was found in the July 17, 1998 decision of
the NLRC to have prevented the free entry into and exit APRIL 2009 CASES
of vehicles from petitioner’s compound, respondent’s
officers and employees clearly committed illegal acts in
BACKWAGES.
the course of the March 9, 1998 strike. The use of
unlawful means in the course of a strike renders such
strike illegal. Therefore, pursuant to the principle of The Court agrees with the NLRC’s conclusion that
conclusiveness of judgment, the March 9, 1998 strike petitioner is not entitled to backwages. He never
was ipso facto illegal. The filing of a petition to declare bothered to redeem his driver’s license at the soonest
the strike illegal was thus unnecessary. Jackbilt possible time when there was no showing that he was
Industries, Inc. Vs. Jackbilt Employees Workers Union- unlawfully prevented by respondent from doing so.  Thus,
Naflu-KMU, G.R. No. 171618-19, March 13, 2009. petitioner should not be paid for the time he was not
working.  The Court has held that where the failure of
employees to work was not due to the employer’s fault,
EMPLOYMENT OF REGISTERED NURSE.
the burden of economic loss suffered by the employees
should not be shifted to the employer.  Each party must
Article 157 does not require the engagement of full-time bear his own loss. It would be unfair to allow petitioner to
nurses as regular employees of a company. Under Article recover something he has not earned and could not have
157, Shangri-la, which employs more than 200 workers, earned, since he could not discharge his work as a driver
is mandated to “furnish” its employees with the services without his driver’s license. Respondent should be
of a full-time registered nurse, a part-time physician and exempted from the burden of paying
dentist, and an emergency clinic which means that it backwages. Bernardino V. Navarro vs. P.V. Pajarillo Liner
should provide or make available such medical and allied and NLRC, G.R. No. 164681,  April 24, 2009.
services to its employees, not necessarily to hire or
employ a service provider. While it is true that the
BREACH OF TRUST.
provision requires employers to engage the services of
medical practitioners in certain establishments depending
on the number of their employees, nothing is there in the The documentary evidence of petitioner indubitably
law which says that medical practitioners so engaged be establishes that respondent committed payroll padding,
actually hired as employees. The law only requires the sold canepoints without the knowledge and consent of
employer “to retain”, not employ, a part-time physician management and misappropriated the proceeds thereof,
who needed to stay in the premises of the non-hazardous and rented tractor to another farm and misappropriated
workplace for two (2) hours. The phrase “services of a the rental payments therefor.  These acts constitute
full-time registered nurse” should thus be taken to refer willful breach by the employee of the trust reposed in him
to the kind of services that the nurse will render in the by his employer – a ground for termination of
company’s premises and to its employees, not the employment. Bacolod-Talisay Realty and Development
manner of his engagement. Jerome D. Escasinas, et al. Corp., et al. vs. Romeo Dela Cruz, G.R. No. 179563,
Vs. Shangri-la’s Mactan Island Resort, et al., G.R. No. April 30, 2009.
178827, March 4, 2009.
CBA.  
PART-TIME EMPLOYMENT.  
Just like any other contract, a CBA is the law between the
For a private school teacher to acquire permanent status contracting parties and compliance therewith in good
in employment, the following requisites must concur: (1) faith is required by law. HFS Phlippines, Inc., Ruben T.

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Del Rosario and IUM Ship Management vs. Ronaldo R. (a)     “ample opportunity to be heard” means any
Pilar, G.R. No. 168716, April 16, 2009. 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,
DUE PROCESS.  
conference or some other fair, just and reasonable way;

The Court of Appeals correctly held that petitioners did

(b)     a formal hearing or conference becomes
not comply with the proper procedure in dismissing
mandatory only when requested by the employee in
respondent.  In other words, petitioners failed to afford
writing or substantial evidentiary disputes exist or a
respondent due process by failing to comply with the twin
company rule or practice requires it, or when similar
notice requirement in dismissing him, viz:  (1) a first
circumstances justify it;
notice to apprise him of his fault, and (2) a second notice
to him that his employment is being terminated.   The
letter dated June 3, 1997 sent to respondent was a letter (c)      the “ample opportunity to be heard” standard in
of suspension.  It did not comply with the required first the Labor Code prevails over the “hearing or conference”
notice, the purpose of which is to apprise the employee requirement in the implementing rules and
of the cause for termination and to give him rasonable regulations. Felix B. Perez, et al. Vs. Philippine Telegraph
opportunity to explain his side.   The confrontation before and Telephone Company, G.R. No. 152048, April 7, 2009.
the barangay council did not constitute the first notice –
to give the employee ample opportunity to be heard with
ILLEGAL DISMISSAL;  ABANDONMENT.  
the assistance of counsel, if he so desires.  Hearings
before thebarangay council do not afford the employee
ample opportunity to be represented by counsel if he so Petitioner insists that there cannot be any illegal
desires because Section 415 of the Local Government dismissal because in the first place, there was no
Code mandates that “[i]n all katarungang pambarangay dismissal to speak of, as it was respondent who
proceedings, the parties must appear in person without abandoned his work, after finding out that he was being
the assistance of counsel or his representatives, except investigated for theft.  It is a basic principle that in the
for minors and incompetents who may be assisted by dismissal of employees, the burden of proof rests upon
their next-of-kin who are not lawyers.”  The requirement the employer to show that the dismissal is for a just
of giving respondent the first notice not having been cause and failure to do so would necessarily mean that
complied with, discussions of whether the second notice the dismissal is not justified.  Petitioner failed to
was complied with is rendered unnecessary. Bacolod- discharge the burden of proof that complainant was
Talisay Realty and Development Corp., et al. vs. Romeo guilty of abandonment. It did not adduce any proof to
Dela Cruz, G.R. No. 179563,  April 30, 2009. show that petitioner clearly and unequivocally intended
to abandon his job.  It has been repeatedly stressed that
for abandonment to be a valid cause for dismissal there
DUE PROCESS; LACK OF JURISDICTION. 
must be a concurrence of intention to abandon and some
overt act from which it may be inferred that the
The proceedings before the Labor Arbiter deprived David employee had no more interest to continue working in his
of due process.  MACLU and NAFLU filed their complaint job.  An employee who forthwith takes steps to protest
against MAC on 12 August 1993.  Arbiter Ortiguerra’s his layoff cannot by any logic be said to have abandoned
decision shows that MACLU, NAFLU, and MAC were the his work.  Otherwise stated, one could not possibly
only parties summoned to a conference for a possible abandon his work and shortly thereafter vigorously
settlement.  Because of MAC’s failure to appear,  Arbiter pursue his complaint for illegal dismissal. In the instant
Ortiguerra deemed the case submitted for resolution.  case, save for the allegation that respondent did not
David’s resignation from MAC took effect on 15 October submit him to the investigation and the latter’s failure to
1993.  NAFLU and MACLU moved to implead Carag and return to work as instructed in the 8 February 1999
David for the first time only in their position paper dated letter, petitioner was unable to present any evidence
3 January 1994.  David did not receive any summons and which tend to show respondent’s intent to abandon his
had no knowledge of the decision against him. The work.  Neither is the Court convinced that the filing of the
records of the present case fail to show any order from illegal dismissal case was respondent’s way to avoid the
Arbiter Ortiguerra summoning David to attend the charge of theft. On the contrary, the filing of the
preliminary conference. Despite this lack of summons, in complaint a few days after his alleged dismissal signified
her Decision dated 17 June 1994, Arbiter Ortiguerra not respondent’s desire to return to work, a factor which
only granted MACLU and NAFLU’s motion to implead further militates against petitioner’s theory of
Carag and David, she also held Carag and David solidarily abandonment. Harbor View Restaurant vs. Reynaldo
liable with MAC. Armando David vs.. National Federation Labro, G.R. No. 168273,  April 30, 2009.
of Labor Union, et al, G.R. No. 148263 and 148271-72,  
April 21, 2009.
ILLEGAL DISMISSAL; BURDEN OF PROOF.

Hearing.  The guiding principles in connection with the

Under the Labor Code, as amended, the requirements for
hearing requirement in dismissal cases are:
the lawful dismissal of an employee are two-fold, the
substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause, the

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rudimentary requirements of due process – notice and Corporation vs. Iliascor Employees and Workers Union-
hearing – must, likewise, be observed before an Southern Philippines Federation of Labor, et al., G.R. No.
employee may be dismissed. One does not suffice; 158956,  April 24, 2009.
without their concurrence, the termination would, in the
eyes of the law, be illegal.
LIABILITY OF CORPORATE OFFICERS.

As the employer, petitioner has the burden of proving

Article 212(e) of the Labor Code, by itself, does not make
that the dismissal of petitioner was for a cause allowed
a corporate officer personally liable for the debts of the
under the law and that petitioner was afforded procedural
corporation because Section 31 of the Corporation Code
due process.  Petitioner failed to discharge this burden. 
is still the governing law on personal liability of officers
Indeed, it failed to show any valid or authorized cause
for the debts of the corporation.  There was no showing
under the Labor Code which allowed it to terminate the
of David willingly and knowingly voting for or assenting
services of individual respondents.  Neither did petitioner
to patently unlawful acts of the corporation, or that David
show that individual respondents were given ample
was guilty of gross negligence or bad faith.   Armando
opportunity to contest the legality of their dismissal.   No
David vs. National Federation of Labor Union, et al, G.R.
notice of such impending termination was ever given to
No. 148263 and 148271-72,  April 21, 2009.
them.  Individual respondents were definitely denied due
process.  Having failed to establish compliance with the
requirements on termination of employment under the LOSS OF CONFIDENCE.
Labor Code, the dismissal of individual respondents was
tainted with illegality. Iligan Cement Corporation vs. Loss of trust and confidence, as a valid ground for
Iliascor Employees and Workers Union-Southern dismissal, must be based on willful breach of the trust
Philippines Federation of Labor, et al., G.R. No. 158956, reposed in the employee by his employer.  Such breach
April 24, 2009. is willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished
ILLEGAL DISMISSAL; PENALTY. from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.  Elsewise stated, it must be based on
substantial evidence and not on the employer’s whims or
The worst that respondent committed was an inadvertent
caprices or suspicions; otherwise, the employee would
infraction.  For that, the extreme penalty of dismissal
eternally remain at the mercy of the employer.  A
imposed on him by petitioners was grossly
condemnation of dishonesty and disloyalty cannot arise
disproportionate.  Taking into account the managerial
from suspicion spawned by speculative inferences. Adam
position he held and the prior warning issued to him for
B. Garcia vs. NLRC (Second Division) Legazpi Oil
failing to communicate with his superiors, the penalty
Company, Inc. Romeo F. Mercado and Gus Zuluaga, G.R.
commensurate to the violation he committed should be
No. 172854,  April 16, 2009.
suspension for three months. Gulf Air Jassim Hindri
Abdullah, et al. vs. NLRC, et al., G.R. No. 159687, April
24, 2009. LOSS OF CONFIDENCE.  

INTRA-UNION DISPUTE.   Without undermining the importance of a shipping order

or request, the respondents’ evidence is insufficient to
clearly and convincingly establish the facts from which
Pending the final resolution of the intra-union dispute,
the loss of confidence resulted.  Other than their bare
respondent’s officers remained duly authorized to
allegations and the fact that such documents came into
conduct union affairs. De La Salle University, et al. vs. De
petitioners’ hands at some point, respondents should
La Salle University Employees Association (DLSUEA-
have provided evidence of petitioners’ functions, the
NAFTEU),G.R. No. 177283,  April 7, 2009.
extent of their duties, the procedure in the handling and
approval of shipping requests and the fact that no
LABOR ONLY CONTRACTING. personnel other than petitioners were involved. There
was, therefore, a patent paucity of proof connecting
petitioners to the alleged tampering of shipping
We are not convinced that Vedali is an independent
documents.  The alterations on the shipping documents
contractor. Petitioner failed to present any service
could not reasonably be attributed to petitioners because
contract with Vedali in the proceedings with the Labor
it was never proven that petitioners alone had control of
Arbiter.  There is nothing on record that Vedali has a
or access to these documents. Unless duly proved or
substantial capital or investment to actually perform the
sufficiently substantiated otherwise, impartial tribunals
service under its own account and responsibility.
should not rely only on the statement of the employer
Petitioner is a mere labor-only contractor because it only
that it has lost confidence in its employee. Felix B. Perez,
supplied workers to petitioner to work at its pier. In a
et al. vs. Philippine Telegraph and Telephone
labor-only contract, there are three parties involved:  (1)
Company,G.R. No. 152048,  April 7, 2009.
the “labor-only” contractor; (2) the employee who is
ostensibly under the employ of the “labor-only”
contractor; and (3) the principal who is deemed the real PRESCRIPTION.
employer.  Under this scheme, the “labor-only”
contractor is the agent of the principal. Iligan Cement

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Articles 1139 to 1155 of the Civil Code provide the a permanent capacity, there could not have been any
general law on prescription of actions.  Under Article violation of petitioner’s supposed right to security of
1139, actions prescribe by the mere lapse of time tenure inasmuch as he had never been in possession of
prescribed by law. That law may either be the Civil Code the said right at least during his tenure as Deputy
or special laws as specifically mandated by Article 1148.  Director for Hospital Support Services. Hence, no
In labor cases, the special law on prescription is Article challenge may be offered against his separation from
291 of the Labor Code. The Labor Code has no specific office even if it be for no cause and at a moment’s notice.
provision on when a monetary claim accrues.  Thus, Not even his own self-serving claim that he was
again the general law on prescription applies – Article competent to continue serving as Deputy Director may
1150 of the Civil Code. Juanaria A. Rivera vs. United actually and legally give even the slightest semblance of
Laboratories, Inc., G.R. No. 155639,  April 22, 2009. authority to his thesis that he should remain in office. Be
that as it may, it bears emphasis that, in any case, the
mere fact that an employee is a CES eligible does not
RESIGNATION.        
automatically operate to vest security of tenure on the
appointee inasmuch as the security of tenure of
Resignation is defined as the voluntary act of an employees in the career executive service, except first
employee who finds himself in a situation where he and second-level employees, pertains only to rank and
believes that personal reasons cannot be sacrificed in not to the office or position to which they may be
favor of the exigency of the service and he has no other appointed. Jose Pepito M. Amores M.D. vs. Civil Service
choice but to disassociate himself from his employment. Commission, Board of Trustees of the Lung Center of the
Respondent’s resignation can be gleaned from the Philippines as represented by Hon. Manuel M. Dayrit and
unambiguous terms of his letter to Captain Cristino.  Fernando A. Melendres, M.D., G.R. No. 170093,   April
Respondent’s bare claim that he was forced to execute 29, 2009
his resignation letter deserves no merit. Bare allegations
of threat or force do not constitute substantial evidence
SSS.  
to support a finding of forced resignation.   That such
claim was proferred a year later all the more renders his
contention bereft of merit. Virgen Shipping Corporation, The claim for funeral benefits under P.D. No. 626, as
et al. vs. Jesus B. Barraquio, G.R. No. 178127, April 16, amended, which was filed after the lapse of 10 years by
2009. the therein petitioner who had earlier filed a claim for
death benefits, had not prescribed. Soledad Muños Mesa
vs. Social Security System, et al., G.R. No. 160467, April
RESIGNATION.
7, 2009.

Petitioner voluntarily resigned. Her employer cannot be

TRANSFER.
held liable for constructive dismissal. Gloria Artiaga vs.
Siliman University and Siliman University Medical Center,
G.R. No. 178453,  April 16, 2009. Jurisprudence recognizes the exercise of management
prerogative to transfer or assign employees from one
office or area of operation to another, provided there is
SECURITY OF TENURE.
no demotion in rank or diminution of salary, benefits, and
other privileges, and the action is not motivated by
Security of tenure in the career executive service, which discrimination, made in bad faith, or effected as a form of
presupposes a permanent appointment, takes place upon punishment or demotion without sufficient cause. To
passing the CES examinations administered by the CES determine the validity of the transfer of employees, the
Board. It is that which entitles the examinee to employer must show that the transfer is not
conferment of CES eligibility and the inclusion of his unreasonable, inconvenient, or prejudicial to the
name in the roster of CES eligibles. Under the rules and employee; nor does it involve a demotion in rank or a
regulations promulgated by the CES Board, conferment diminution of his salaries, privileges and other benefits. 
of the CES eligibility is done by the CES Board through a Should the employer fail to overcome this burden of
formal board resolution after an evaluation has been proof, the employee’s transfer shall be tantamount to
done of the examinee’s performance in the four stages of constructive dismissal.
the CES eligibility examinations. Upon conferment of CES
eligibility and compliance with the other requirements
We have long stated that the objection to the transfer
prescribed by the Board, an incumbent of a CES position
being grounded solely upon the personal inconvenience
may qualify for appointment to a CES rank. Appointment
or hardship that will be caused to the employee by
to a CES rank is made by the President upon the Board’s
reason of the transfer is not a valid reason to disobey an
recommendation. It is this process which completes the
order of transfer.  Such being the case, petitioner cannot
official’s membership in the CES and confers on him
adamantly refuse to abide by the order of transfer
security of tenure in the CES. Petitioner does not seem to
without exposing herself to the risk of being dismissed. 
have gone through this definitive process.
Hence, her dismissal was for just cause in accordance
with Article 282(a) of the Labor Code. Aileen G. Herida
At this juncture, what comes unmistakably clear is the vs. F4C Pawnshop and Jewelry Store/Marcelino Florete,
fact that because petitioner lacked the proper CES Jr., G.R. No. 172601, April 16, 2009.
eligibility and therefore had not held the subject office in

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UNFAIR LABOR PRACTICE; BURDEN OF PROOF. serious concern since it constitutes a safeguard of the
highest order in response to man’s innate sense of
justice.  Petitioner was not able to send the necessary
Petitioner makes several allegations that UST committed
notice requirement to Eleonor. Petitioner’s belated claim
ULP. The onus probandi falls on the shoulders of
that it was not able to send the notice of infraction prior
petitioner to establish or substantiate such claims by the
to the filing of the illegal dismissal case cannot simply
requisite quantum of evidence. In labor cases as in other
unacceptable. Based on the foregoing, Eleonor did not
administrative proceedings, substantial evidence or such
abandon her work.  South Davao Development Company,
relevant evidence as a reasonable mind might accept as
Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814,
sufficient to support a conclusion is required. In the
May 8, 2009.
petition at bar, petitioner miserably failed to adduce
substantial evidence as basis for the grant of relief. UST
Faculty Union vs. University of Sto. Tomas, Rev. Fr.
Rolando De la Rosa, Rev Fr. Rodelio Aligan, Domingo
Legaspi, and Merecedes Hinayon, G.R. No. 180892, April
APPEAL TO DOLE SECRETARY; APPEAL BOND.
7, 2009.

The purpose of an appeal bond is to ensure, during the

period of appeal, against any occurrence that would
defeat or diminish recovery by the aggrieved employees
under the judgment if subsequently affirmed. The Deed
of Assignment in the instant case, like a cash or surety
bond, serves the same purpose. First, the Deed of
MAY 2009 CASES
Assignment constitutes not just a partial amount, but
rather the entire award in the appealed Order. Second, it
is clear from the Deed of Assignment that the entire
amount is under the full control of the bank, and not of
ABANDONMENT. petitioner, and is in fact payable to the DOLE Regional
Office, to be withdrawn by the same office after it had
issued a writ of execution. For all intents and purposes,
It is well settled that abandonment as a just and valid the Deed of Assignment in tandem with the Letter
ground for dismissal requires the deliberate and Agreement and Cash Voucher is as good as cash. Third,
unjustified refusal of the employee to return for work. the execution of the Deed of Assignment, the Letter
Two elements must be present, namely: (1) the failure to Agreement and the Cash Voucher were made in good
report for work or absence without valid or justifiable faith, and constituted clear manifestation of petitioner’s
reason, and (2) a clear intention to sever the employer- willingness to pay the judgment amount.  People’s
employee relationship. The second element is more Broadcasting vs. The Secretary of the Department of
determinative of the intent and must be evinced by overt Labor and Employment, et al., G.R. No. 179652, May 8,
acts. Mere absence, not being sufficient, the burden of 2009.
proof rests upon the employer to show that the employee
clearly and deliberately intended to discontinue her
employment without any intention of returning. In APPEAL; PRIVATE CARRIER.
Samarca v. Arc-Men Industries, Inc, the Supreme Court
held that abandonment is a matter of intention and In this case, petitioner availed of the services of LBC, a
cannot lightly be presumed from certain equivocal acts.  private carrier, to deliver its notice of appeal to the NLRC.
Had petitioner sent its notice of appeal by registered
To constitute abandonment, there must be clear proof of mail, the date of mailing would have been deemed the
deliberate and unjustified intent to sever the employer- date of filing with the NLRC. But petitioner, for reasons of
employee relationship.  Clearly, the operative act is still its own, chose to send its notice of appeal through a
the employee’s ultimate act of putting an end to his private letter-forwarding agency. Therefore, the date of
employment. However, an employee who takes steps to actual receipt by the NLRC of the notice of appeal, and
protest her layoff cannot be said to have abandoned her not the date of delivery to LBC, is deemed to be the date
work because a charge of abandonment is totally of the filing of the notice of appeal. Since the NLRC
inconsistent with the immediate filing of a complaint for received petitioner’s notice of appeal on 26 February
illegal dismissal, more so when it includes a prayer for 2001, the appeal was clearly filed out of time. Petitioner
reinstatement. When Eleonor filed the illegal dismissal had thus lost its right to appeal from the decision of the
complaint, it totally negated petitioner’s theory of Labor Arbiter and the NLRC should have dismissed its
abandonment. notice of appeal. Charter Chemical and Coating
Corporation vs. Herbert Tan and Amalia Sonsing,  G.R.
No. 163891,  May 21, 2009.
Also, to effectively dismiss an employee for
abandonment, the employer must comply with the due
process requirement of sending notices to the employee. COMPENSABLE ILLNESS;  DEFINITION.
In Brahm Industries, Inc. vs. NLRC, the Supreme Court
ruled that this requirement is not a mere formality that P.D. No. 626, as amended, defines compensable
may be dispensed with at will. Its disregard is a matter of sickness as “any illness definitely accepted as an

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occupational disease listed by the Commission, or any the opportunity to be heard. As applied in administrative
illness caused by employment subject to proof by the proceedings, it is merely an opportunity to explain one’s
employee that the risk of contracting the same is side or an opportunity to seek a reconsideration of the
increased by the working conditions.” Under Section 1 action or ruling complained of. 
(b), Rule III, of the Amended Rules on Employees’
Compensation, for the sickness and the resulting
Petitioners complied with the twin-notice requirement.
disability or death to be compensable, the same must be
The notice dated October 17, 2000 served on respondent
an “occupational disease” included in the list provided
was the written notice specifying the charges against
(Annex “A”), with the conditions set therein satisfied;
him. The subsequent notice dated February 7, 2001
otherwise, the claimant must show proof that the risk of
(notice of adjudication specifying therein the causes for
contracting it is increased by the working conditions.
respondent’s termination and the decision to dismiss
Otherwise stated, for sickness and the resulting death of
him) served as the written notice of termination. In view
an employee to be compensable, the claimant must show
of respondent’s valid dismissal due to serious misconduct
either: (1) that it is a result of an occupational disease
and loss of trust and confidence, respondent is not
listed under Annex “A” of the Amended Rules on
entitled to separation pay.  Telecommunications
Employees’ Compensation with the conditions set therein
Distributors Specialist, Inc., et al. vs. Raymund
satisfied; or (2) if not so listed, that the risk of
Garriel, G.R. No. 174981,  May 25, 2009.
contracting the disease is increased by the working
conditions.
EMPLOYER-EMPLOYEE RELATIONSHIP; EVIDENCE. 
Here, the CA correctly considered Cardiopulmonary
Arrest T/C Fatal Arrythmia in this case a cardiovascular It has long been established that in administrative and
disease – a listed disease under Annex “A” of the quasi-judicial proceedings, substantial evidence is
Amended Rules on Employees’ Compensation.  The Death sufficient as a basis for judgment on the existence of
Certificate of Judge Vicencio clearly indicates that the employer-employee relationship. Substantial evidence,
cause of his death is Cardiopulmonary Arrest T/C Fatal which is the quantum of proof required in labor cases, is
Arrythmia. Whether, however, the same was a mere “that amount of relevant evidence which a reasonable
complication of his lung cancer as contended by mind might accept as adequate to justify a conclusion.”
petitioner GSIS or related to an underlying cardiovascular No particular form of evidence is required to prove the
disease is not established by the records of this case and, existence of such employer-employee relationship. Any
thus, remains uncertain.  The Supreme Court held that competent and relevant evidence to prove the
Cardiopulmonary Arrest T/C Fatal Arrythmia, the cause of relationship may be admitted. Hence, while no particular
death stated in Judge Vicencio’s Death Certificate, should form of evidence is required, a finding that such
be considered as a cardiovascular disease – a listed relationship exists must still rest on some substantial
disease under Annex “A” of the Amended Rules on evidence. Moreover, the substantiality of the evidence
Employees’ Compensation.  Government Service depends on its quantitative as well as its qualitative
Insurance System vs. Marian T. Vicencio, G.R. No. aspects.
176832, May 21, 2009.
In the instant case, save for respondent’s self-serving
COMPENSABLE ILLNESS; EVIDENCE.  allegations and self-defeating evidence, there is no
substantial basis to warrant the Regional Director’s
finding that respondent is an employee of petitioner.
The degree of proof required under P.D. No. 626 is
People’s Broadcasting vs. The Secretary of the
merely substantial evidence, or “such relevant evidence
Department of Labor and Employment, et al., G.R. No.
as a reasonable mind might accept as adequate to
179652, May 8, 2009.
support a conclusion.” The Supreme Court hasrepeatedly
held that to prove compensability, the claimant must
adequately show that the development of the disease is EMPLOYER-EMPLOYEE RELATIONSHIP;  EXISTENCE.
brought largely by the conditions present in the nature of
the job. What the law requires is a reasonable work- In order to determine the existence of an employer-
connection and not a direct causal relation. It is enough employee relationship, the Court has frequently applied
that the hypothesis on which the workmen’s claim is the four-fold test: (1) the selection and engagement of
based is probable. Medical opinion to the contrary can be the employee; (2) the payment of wages; (3) the power
disregarded especially where there is some basis in the of dismissal; and (4) the power to control the employee’s
facts for inferring a work-connection. Probability, not conduct, or the so called “control test,” which is
certainty, is the touchstone. Government Service considered the most important element.
Insurance System (GSIS) vs. Teresita S. De
Guzman, G.R. No. 173049,  May 21, 2009.
From the time they were hired by petitioner corporation
up to the time that they were reassigned to work under
DUE PROCESS. Gamo’s supervision, their status as petitioner
corporation’s employees did not cease. Likewise,
Respondent was given ample opportunity to explain and payment of their wages was merely coursed through
rebut the evidence against him. A full adversarial hearing Gamo. As to the most determinative test―the power of
was not required. The essence of due process is simply control, it is sufficient that the power to control the

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manner of doing the work exists, it does not require the period, regardless of whether such job or work service is
actual exercise of such power. In this case, it was in the to be performed within or outside the premises of the
exercise of its power of control when petitioner principal. To establish the existence of an independent
corporation transferred the copra workers from their contractor, we apply the following conditions: first, the
previous assignments to work as copraceros. It was also contractor carries on an independent business and
in the exercise of the same power that petitioner undertakes the contract work on his own account under
corporation put Gamo in charge of the copra workers his own responsibility according to his own manner and
although under a different payment scheme. Thus, it is method, free from the control and direction of his
clear that an employer-employee relationship has existed employer or principal in all matters connected with the
between petitioner corporation and respondents since the performance of the work except to the result thereof;
beginning and such relationship did not cease despite and second, the contractor has substantial capital or
their reassignments and the change of payment scheme. investments in the form of tools, equipment,
South Davao Development Company, Inc., et al. vs. machineries, work premises and other materials which
Sergio L. Gamo, et al., G.R. No. 171814,  May 8, 2009. are necessary in the conduct of his business.  

EMPLOYER-EMPLOYEE RELATIONSHIP; POWER OF The Implementing Rules and Regulation of the Labor
DOLE TO DETERMINE. Code defines investment—as tools, equipment,
implements, machineries and work premises, actually
and directly used by the contractor or subcontractor in
The DOLE in the exercise of its visitorial and enforcement
the performance or completion of the job, work, or
power somehow has to make a determination of the
service contracted out. The investment must be sufficient
existence of an employer-employee relationship. Such
to carry out the job at hand.
prerogatival determination, however, cannot be
coextensive with the visitorial and enforcement power
itself. Indeed, such determination is merely preliminary, In the case at bar, Gamo and the copra workers did not
incidental and collateral to the DOLE’s primary function of exercise independent judgment in the performance of
enforcing labor standards provisions. The determination their tasks. The tools used by Gamo and his copra
of the existence of employer-employee relationship is still workers like the karit, bolo, pangbunot, panglugit and
primarily lodged with the NLRC. This is the meaning of pangtapok are not sufficient to enable them to complete
the clause “in cases where the relationship of employer- the job. Reliance on these primitive tools is not enough.
employee still exists” in Art. 128 (b). In fact, the accomplishment of their task required more
expensive machineries and equipment, like the trucks to
haul the harvests and the drying facility, which petitioner
Thus, before the DOLE may exercise its powers under
corporation owns. South Davao Development Company,
Article 128, two important questions must be resolved:
Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814,
(1) Does the employer-employee relationship still exist,
May 8, 2009.
or alternatively, was there ever an employer-employee
relationship to speak of; and (2) Are there violations of
the Labor Code or of any labor law?  The existence of an LOSS OF TRUST AND CONFIDENCE.
employer-employee relationship is a statutory
prerequisite to and a limitation on the power of the
Petitioner cites Article 282 of the Labor Code, specifically
Secretary of Labor, one which the legislative branch is
loss of trust and confidence as the ground for validly
entitled to impose.
dismissing respondent. Under the law, loss of confidence
must be based on “fraud or willful breach by the
The rationale underlying this limitation is to eliminate the employee of the trust reposed in him by his employer or
prospect of competing conclusions of the Secretary of duly authorized representative.” In this regard, the
Labor and the NLRC, on a matter fraught with questions Supreme Court has ruled that ordinary breach does not
of fact and law, which is best resolved by the quasi- suffice. A breach of trust is willful if it is done
judicial body, which is the NRLC, rather than an intentionally, knowingly and purposely, without any
administrative official of the executive branch of the justifiable excuse, as distinguished from an act done
government. If the Secretary of Labor proceeds to carelessly, thoughtlessly, heedlessly or inadvertently.
exercise his visitorial and enforcement powers absent the
first requisite, as the dissent proposes, his office confers
Here, respondent was investigated on and dismissed for
jurisdiction on itself which it cannot otherwise
misappropriation of company funds through falsification
acquire. People’s Broadcasting vs. The Secretary of the
of company documents, as shown in the termination
Department of Labor and Employment, et al., G.R. No.
letter. Records, nevertheless, neither showed nor
179652, May 8, 2009.
convinced us that there was misappropriation of funds
that benefited anybody which warranted the dismissal of
INDEPENDENT CONTRACTOR. respondent for the first offense. Respondent admittedly
committed padding of accounts and/or paper renewal,
which respondent claims to be a practice among
There is permissible job contracting when a principal
salesmen and such claim was not disputed by petitioner.
agrees to put out or farm out with a contractor or a
The paper renewal committed by respondent may be
subcontractor the performance or completion of a specific
considered as falsification, but we agree with the Labor
job, work or service within a definite or predetermined
Arbiter and the CA that such paper renewal did not

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amount to misappropriation that could justify outright emergency allowance from November 1976 to February
dismissal for the first offense, as what petitioner did to 1980, or three (3) years and four (4) months. While
respondent. Otherwise, the company rules would not in Sevilla Trading v. Semana, the employer kept the
have separated these two offenses under Rule Nos. 15 practice of including non-basic benefits such as paid
and 16. Besides, we agree with the CA that although leaves for unused sick leave and vacation leave in the
petitioner did in fact violate company Rule No. 15 by computation of their 13th-month pay for at least two (2)
falsifying company records and documents through paper years. In all these cases, the Supreme Court held that
renewal, such falsification has to be qualified.  San the grant of these benefits has ripened into company
Miguel Corporation vs. NLRC, et al.,  G.R. No. 153983, practice or policy which cannot
May 26, 2009. be peremptorily withdrawn. The common denominator in
these cases appears to be the regularity
and deliberateness of the grant of benefits over a
SERIOUS MISCONDUCT.
significant period of time. Metropolitan Bank and Trust
Company vs. National Labor Relations Commission,
Respondent’s acts of forging subscribers’ signatures, Felipe A. Patag and Bienvenido C. Flora, G.R. No.
attempting to cover up his failure to secure their 152928, June 18, 2009.
signatures on the coverage waivers, selling a personally
owned mobile phone to a company customer (a defective
COMPENSABLE ILLNESS.  
one at that) and attempting to connive with other
employees to cover up his illicit schemes were serious
acts of dishonesty. Respondent’s acts clearly constituted A government employee, who suffers complete and
serious misconduct which is a ground for termination of permanent loss of sight in one eye, is entitled to income
employment by an employer. Respondent’s acts were benefit from the GSIS beginning the first month of said
likewise grounds for loss of trust and confidence, another employee’s disability, but no longer than the maximum
valid cause for termination of employment. Only period of 25 months.  Government Service Insurance
employees occupying positions of trust and confidence or System vs. Jaime K. Ibarra, G.R. No. 172925, June 18,
those who are routinely charged with the care and 2009.
custody of the employer’s money or property may be
validly dismissed for this reason. Telecommunications
COMPENSABLE ILLNESS.  
Distributors Specialist, Inc., et al. vs. Raymund
Garriel, G.R. No. 174981,  May 25, 2009.
Although the Court commiserates with petitioner’s
sufferings, the Court cannot close its eyes to the need to
ensure that the workmen’s trust fund is protected from
depletion due to claims for illnesses which may not be
truly work-related. Rodolfo B. Arceño Vs. Government
Service Insurance System, G.R. No. 162374, June 18,
2009.
JUNE 2009 CASES

DOWNSIZING. 

Retrenchment is the reduction of work personnel usually

DIMINUTION OF BENEFITS;  COMPANY PRACTICE.
due to poor financial returns, aimed to cut down costs for
operation particularly on salaries and wages.
To be considered a company practice, the giving of the Redundancy, on the other hand, exists where the number
benefits should have been done over a long period of of employees is in excess of what is reasonably
time, and must be shown to have been consistent and demanded by the actual requirements of the enterprise.
deliberate. The test or rationale of this rule on long Both are forms of downsizing and are often resorted to
practice requires an indubitable showing that the by the employer during periods of business recession,
employer agreed to continue giving the benefits knowing industrial depression, or seasonal fluctuations, and during
fully well that said employees are not covered by the law lulls in production occasioned by lack of orders, shortage
requiring payment thereof. of materials, conversion of the plant for a new production
program, or introduction of new methods or more
With regard to the length of time the company practice efficient machinery or automation. Retrenchment and
should have been exercised to constitute voluntary redundancy are valid management prerogatives,
employer practice which cannot be unilaterally withdrawn provided they are done in good faith and the employer
by the employer, jurisprudence has not laid down any faithfully complies with the substantive and
hard and fast rule. In the case of Davao Fruits procedural requirements laid down by law
Corporation v. Associated Labor Unions, the company and jurisprudence.
practice of including in the computation of the 13th-
month pay the maternity leave pay and cash equivalent For a valid retrenchment, the following requisites must
of unused vacation and sick leave lasted for six (6) years. be complied with: (1) the retrenchment is necessary to
In another case, Tiangco v. Leogardo, Jr., the employer prevent losses and such losses are proven; (2) written
carried on the practice of giving a fixed monthly notice to the employees and to the DOLE at least one

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month prior to the intended date of retrenchment; and In evaluating a charge of abandonment,
(3) payment of separation pay equivalent to one-month the jurisprudential rule is that abandonment is a matter
pay or at least one-half month pay for every year of of intention that cannot be lightly presumed from
service, whichever is higher. 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,
In case of redundancy, the employer must prove that:
manifested through overt acts, to sever the employer-
(1) a written notice was served on both the employees
employee relationship. The employer bears the burden of
and the DOLE at least one month prior to the intended
showing a deliberate and unjustified refusal by the
date of retrenchment; (2) separation pay equivalent to at
employee to resume his employment without any
least one month pay or at least one month pay for every
intention of returning. We agree with the CA that the
year of service, whichever is higher, has been paid; (3)
petitioner failed to prove the charge of abandonment.
good faith in abolishing the redundant positions; and (4)
Pentagon Steel Corporation vs. Court of
adoption of fair and reasonable criteria
Appeals, et al., G.R. No. 174141,   June 26, 2009.
in ascertaining which positions are to be declared
redundant and accordingly abolished.
GROUND FOR DISMISSAL; GROSS NEGLIGENCE.
It is the employer who bears the onus of proving
compliance with these requirements, retrenchment and Respondent’s actions, at their worse, reveal his
redundancy being in the nature of affirmative defenses. negligence, but said negligence can hardly be deemed
Otherwise, the dismissal is not justified.  Hotel gross and habitual, as to constitute a just ground for his
Enterprises of the Philippines, Inc., etc. vs. Samahan ng dismissal under Article 282(b) of the Labor Code.
mga Manggagawa sa Hyatt-National Union of Workers in
the Hotel Restaurant, etc., G.R. No. 165756, June 5,
Gross negligence under Article 282 of the Labor Code
2009.
connotes want of care in the performance of one’s duties,
while habitual neglect implies repeated failure to perform
EMPLOYER-EMPLOYEE RELATIONSHIP. one’s duties for a period of time, depending upon
the circumstances. Gross negligence has been defined as
the want or absence of even slight care or diligence as to
There existed no employer-
amount to a reckless disregard of the safety of person or
employee relationship between the parties. De Raedt is
property. It evinces a thoughtless disregard
an independent contractor, who was engaged by SGV to
of consequences without exerting any effort to avoid
render services to SGV’s client TMI, and ultimately to DA
them. To constitute a just cause for termination of
on the CECAP project, regarding matters in the field of
employment, the neglect of duties must not only be gross
her special knowledge and training for a specific period of
but habitual as well. The single or isolated act of
time. Unlike an ordinary employee, De Raedt received
negligence does not constitute a just cause for the
retainer fees and benefits such as housing and
dismissal of the employee.  AMA Computer College-East
subsistence allowances and medical insurance.
Rizal, et al. vs. Allan Raymond R. Ignacio, G.R. No.
De Raedt’s services could be terminated on the ground of
178520.  June 23, 2009.
end of contract between the DA and TMI, and not on
grounds under labor laws. Though the end of the contract
between the DA and TMI was not the ground for the GROUND FOR DISMISSAL;  GROSS NEGLIGENCE.
withdrawal of De Raedt from the CECAP, De Raedt was
disengaged from the project upon the instruction
Gross negligence is characterized by want of even slight
of SGV’s client, TMI. Most important of all, SGV did not
care, acting or omitting to act in a situation where there
exercise control over the means and methods by which
is a duty to act, not inadvertently but willfully and
De Raedt performed her duties as Sociologist. SGV did
intentionally with a conscious indifference to
impose rules on De Raedt, but these were necessary to
consequences insofar as other persons may be affected.
ensure SGV’s faithful compliance with the terms and
conditions of the Sub-Consultancy Agreement it entered
into with TMI. Sycip, Gorres, Velayo, & Company vs. Mateo was undisputedly negligent when he left the
Carol De Raedt, G.R. No. 161366, June 16, 2009. motorcycle along Burke Street in Escolta, Manila without
locking it despite clear, specific instructions to do so. His
argument that he stayed inside the LBC office for only
GROUND FOR DISMISSAL; ABANDONMENT.
three to five minutes was of no moment. On the
contrary, it only proved that he did not exercise even the
The rule is that the burden of proof lies with the slightest degree of care during that very short time.
employer to show that the dismissal was for a just cause. Mateo deliberately did not heed the employer’s very
In the present case, the petitioner claims that there was important precautionary measure to ensure the safety of
no illegal dismissal since the respondent abandoned his company property. Regardless of the reasons advanced,
job. The petitioner points out that it wrote the the exact evil sought to be prevented by LBC (in
respondent various memoranda requiring him to explain repeatedly directing its customer associates to lock their
why he incurred absences without leave, and requiring motorcycles) occurred, resulting in a substantial loss
him as well to report for work; the respondent, however, to LBC.  LBC Express Metro Manila, Inc. and Lorenzo
never bothered to reply in writing.

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A. Niño  vs. James Mateo, G.R. No. 168215, June 9, Loss of trust and confidence, to be a valid ground for an
2009. employee’s dismissal, must be based on a willful breach
and founded on clearly established facts. The burden of
proof of dismissal rests entirely upon the employer. In
Ground for dismissal; lost of confidence. Recent decisions
the present case, Nissan illegally dismissed Tagulao and
of this Court have distinguished the treatment of
Serrano because Nissan failed to prove that Tagulao and
managerial employees from that of the rank-and-file
Serrano were terminated for a valid cause. Tagulao and
personnel,insofar as the application of the doctrine of loss
Serrano are thus entitled to reinstatement and to
of trust and confidence is concerned. Thus, with respect
receive backwages. Nissan North Edsa Balintawak,
to rank-and-file personnel, loss of trust and confidence,
Quezon City vs. Angelito Serrano, Jr. and
as ground for valid dismissal, requires proof of
Edwin Tagulao, G.R. No. 162538, June 4, 2009
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 GROUND FOR DISMISSAL;  LOSS OF CONFIDENCE.
managerial employee, the mere existence of a basis for
believing that such employee has breached the trust of
The first requisite for dismissal on the ground of loss of
his employer would suffice for his dismissal. Hence, in the
trust and confidence is that the employee concerned
case of managerial employees, proof beyond reasonable
must be one holding a position of trust and confidence.
doubt is not required. It is sufficient that there is some
basis for the employer’s loss of trust and confidence,
such as when the employer has reasonable ground to The second requisite of terminating an employee for loss
believe that the employee concerned is responsible for of trust and confidence is that there must be an act that
the purported misconduct, and the nature of would justify the loss of trust and confidence. To be a
his participation therein renders him unworthy of the valid cause for dismissal, the loss of confidence must be
trust and confidence demanded of his position. based on a willful breach of trust and founded on clearly
Nonetheless, the evidence must be substantial and must established facts.
establish clearly and convincingly the facts on which the
loss of confidence rests and not on the We find that it was not established that respondent used
employer’s arbitrariness, whims, and caprices or her authority to influence her subordinates to stage a “no
suspicion. Triumph International (PHILS.), Inc., vs. work day”; and assuming that she performed this act as
Ramon L. Apostol, et al., G.R. No. 164423, June 16, alleged by petitioners, it does not satisfy the
2009. jurisprudential requirements for valid termination due to
loss of trust and confidence.
GROUND FOR DISMISSAL; LOSS OF CONFIDENCE.  
Loss of trust and confidence stems from a breach of trust
To be a valid ground for dismissal, loss of trust and founded on a dishonest, deceitful or fraudulent act. In
confidence must be based on a willful breach of trust and the case at bar, respondent did not commit any act which
founded on clearly established facts. A breach is willful if was dishonest or deceitful. She did not use her authority
it is done intentionally, knowingly and purposely, without as the Administration Manager
justifiable excuse, as distinguished from an act done to misappropriate company property nor did she abuse
carelessly, thoughtlessly, heedlessly or inadvertently. It the trust reposed in her by petitioners with respect to
must rest on substantial grounds and not on the her responsibility to implement company rules. The most
employer’s arbitrariness, whims, caprices or suspicion; that can be attributed to respondent is that she
otherwise, the employee would eternally remain at the influenced a single subordinate, without exerting any
mercy of the employer. Further, the act complained of force or making any threats, not to report to work. This
must be work-related and must show that the employee does not constitute dishonest or deceitful conduct which
concerned is unfit to continue working for the would justify the conclusion of loss of trust and
employer. Sarabia Optical and Vivian Sarabia-Orn confidence.  M+W Zander Philippines, Inc. and
vs. Jeanet B. Camacho, G.R. No. 155502,  June 18, Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No.
2009. 169173, June 5, 2009.

GROUND FOR DISMISSAL; LOSS OF CONFIDENCE. GROUNDS FOR DISMISSAL; SERIOUS MISCONDUCT.

Nissan failed to prove that Tagulao and Serrano were Under the circumstances, our conclusion can only be for
responsible for the loss of two rolls of tint. The records of Salon’s dismissal for two counts of valid causes – i.e., for
the case show that there was a discrepancy between the serious violation of TIP’s Memorandum No. P-66, for
dates of pick up and delivery as alleged by Nissan and as unauthorized selling of examination papers, and for
alleged by Tagulao and Serrano. Even Catudio, Nissan’s serious misconduct, for falsifying Manalo’s grade and
employee, stated that she changed the dates on the violating the grading rules under the Manual of
delivery receipt of the two rolls of tint on the instruction Regulations for Private Schools. Technological Institute of
of her boss. the Philippines Teachers and Employees Organization and
its member Magdalena T. Salon vs. the Honorable Court
of Appeals, et al., G.R. No. 158703, June 26, 2009.

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GROUND FOR DISMISSAL; WILLFUL compelled to give up his position under

DISOBEDIENCE. the circumstances.  Bienvenido C. Gilles vs. Court of
Appeals, Schema Konsult and Edgardo Abores, G.R. No.
149273, June 5, 2009.
Willful disobedience of the employer’s lawful orders, as a
just cause for dismissal of an employee, requires the
concurrence of two (2) elements: (1) the employee’s ILLEGAL DISMISSAL; ATTORNEY’S FEES. 
assailed conduct must have been willful, i.e.,
characterized by a wrongful and perverse attitude; and
Attorney’s fees may be awarded only when the employee
(2) the order violated must have been reasonable, lawful,
is illegally dismissed in bad faith and is compelled to
made known to the employee, and must pertain to the
litigate or incur expenses to protect his rights by reason
duties which he had been engaged to discharge.
of the unjustified acts of his employer. In the case at bar,
respondent’s unjustified and unwarranted dismissal
Gilles’ resignation from CBI and sudden departure from prompted her to engage the professional services of a
India was not approved by SKI. When he asked the counsel and she is thus entitled to an award of attorney’s
company’s permission to return to Manila, the fees.  M+W Zander Philippines, Inc. and
management instructed him to stay in India until a Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No.
suitable replacement was found. He knew of the critical 169173, June 5, 2009.
stage of the Project due to the accelerated period of its
completion. Thus, when he left the Project, despite the
ILLEGAL DISMISSAL; MORAL DAMAGES.
clear and lawful instructions of the management for him
to stay, his act constituted willful disobedience and gross
neglect of duty under Article 282 of the Labor Code. There is sufficient basis to award moral damages and
attorney’s fees to respondent. We have consistently ruled
that in illegal dismissal cases, moral damages are
Gilles’ departure from India, despite the instruction of
recoverable only where the dismissal of the employee
SKI for him to stay, was impelled by the
was attended by bad faith or fraud, or constituted an act
financial difficulties he encountered thereat. The money
oppressive to labor, or was done in a manner contrary to
given to him before he left for India was already spent.
morals, good customs or public policy. Such an award
Rickie Sarque, the Chief Accountant of SKI, admitted on
cannot be justified solely upon the premise that the
the witness stand that Gilles was paid his salaries for the
employer fired his employee without just cause or due
3 ½ months when he was already back in Manila. Added
process. Additional facts must be pleaded and proven to
to this were the problems he encountered due to
warrant the grant of moral damages under the Civil
the acceleration of the job completion period, the
Code, i.e., that the act of dismissal was attended by bad
obligations he had to meet at home for his aged mother
faith or fraud, or constituted an act oppressive to labor,
at that time, now deceased, and the relatives who
or was done in a manner contrary to morals, good
needed his financial support. Clearly, Gilles had a valid
customs or public policy; and, of course, that social
reason to leave India.
humiliation, wounded feelings, grave anxiety, and similar
injury resulted therefrom.
SKI’s failure to pay Gilles’ salary on time was intolerable.
For neglecting its duties as an employer, SKI may, thus,
In previous cases where moral damages and attorney’s
be considered to have acted in bad faith. It may be
fees were awarded, the manner of termination was done
deemed as utter disregard by SKI of the welfare and
in a humiliating and insulting manner, such as in the case
well-being of its employee, especially at a time when he
of Balayan Colleges v. National Labor Relations
was far away from home.
Commission where the employer posted copies of its
letters of termination to the teachers inside the school
We, therefore, find that Gilles campus and it also furnished copies to the town mayor
was constructively dismissed from and Parish Priest of their community for the purpose of
employment. Constructive dismissal exists when the maligning the teachers’ reputation. So also in the case
employee involuntarily resigns due to the harsh, hostile, of Chiang Kai Shek School v. Court of Appeals, this Court
and unfavorable conditions set by the employer. It arises awarded moral damages to a teacher who was flatly, and
when there is clear discrimination, insensibility, or disdain without warning or a formal notice, told that she was
by an employer and this becomes unbearable to the dismissed.
employee.
In the case at bar, we see it fit to award moral damages
Invariably, the law recognizes and resolves such a to respondent because the manner in which respondent
situation in favor of the employees in order to protect was treated upon petitioners’ suspicion of her
their rights from the coercive acts of the employer. involvement in drafting and in circulating the letter of
Resignation contemplates a voluntary act; thus, an appeal and the alleged staging of the “no work day” is
employee who is forced to relinquish his position due to contrary to good morals because it caused unnecessary
the employer’s unfair or unreasonable treatment is humiliation to respondent.  M+W Zander Philippines, Inc.
deemed to have been illegally terminated or discharged. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No.
The test of constructive dismissal is whether a reasonable 169173, June 5, 2009.
person in the employee’s position would have felt

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REINSTATEMENT; UNION SHOP STEWARD.

ILLEGAL DISMISSAL; LIABILITY OF CORPORATE A shop steward leads to the conclusion that it is a
OFFICER. position within the union, and not within the company. A
shop steward is appointed by the union in a shop,
department, or plant and serves as representative of the
The general manager of a corporation should not be
union, charged with negotiating and adjustment of
made personally answerable for the payment of an
grievances of employees with the supervisor of the
illegally dismissed employee’s monetary claims arising
employer. He is the representative of the union members
from the dismissal unless he had acted maliciously or in
in a building or other workplace. Black’s Law Dictionary
bad faith in terminating the services of the employee.
defines a shop steward as a union official elected to
The employer corporation has a separate and distinct
represent members in a plant or particular department.
personality from its officers who merely act as its agents.
His duties include collection of dues, recruitment of new
members and initial negotiations for the settlement of
The exception noted is where the official “had acted grievances.
maliciously or in bad faith,” in which event he may be
made personally liable for his own act. That exception is
A judgment of reinstatement of the petitioner to the
not applicable in the case at bar, because it has not been
position of union Shop Steward would have no practical
proven that Wiltschek was impleaded in his capacity as
legal effect since it cannot be enforced. Based on
General Manager of petitioner corporation and there
the requirements imposed by law and the APCWU-
appears to be no evidence on record that he acted
ATI CBA, and in the nature of things, the subsequent
maliciously or in bad faith in terminating the services of
separation of the petitioner from employment with
respondent. His act, therefore, was within the scope of
respondent ATI has made his reinstatement to union
his authority and was a corporate act for which he should
Shop Steward incapable of being enforced.  Teodoro S.
not be held personally liable
Miranda, Jr. vs. Asian Terminals, Inc. and Court of
for.   M+W Zander Philippines, Inc. and
Appeals, G.R. No. 174316,   June 23, 2009.
Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No.
169173, June 5, 2009; see also Bienvenido C. Gilles vs.
Court of Appeals, Schema Konsult and RESIGNATION; SEPARATION PAY.
Edgardo Abores, G.R. No. 149273, June 5, 2009.
No provision in the Labor Code grants separation pay to
ILLEGAL DISMISSAL; PROCEDURAL DUE PROCESS. voluntarily resigning employees. Separation pay may be
awarded only in cases when the termination of
employment is due to (a) installation of labor-saving
Procedural due process in the dismissal of employees
devices, (b) redundancy, (c) retrenchment, (d) closing or
requires notice and hearing. The employer must furnish
cessation of business operations, (e) disease of an
the employee two written notices before termination may
employee and his continued employment is prejudicial to
be effected. The first notice apprises the employee of the
himself or his co-employees, or (f) when an employee is
particular acts or omissions for which his dismissal is
illegally dismissed but reinstatement is no longer feasible.
sought, while the second notice informs the employee of
In fact, the rule is that an employee who voluntarily
the employer’s decision to dismiss him. The requirement
resigns from employment is not entitled to separation
of a hearing, on the other hand, is complied with as long
pay, except when it is stipulated in the employment
as there was an opportunity to be heard, and not
contract or collective bargaining agreement (CBA), or it is
necessarily that an actual hearing was conducted.
sanctioned by established employer practice or policy.
Herminigildo Inguillom, et al. vs. First Philippine Scales,
Inc., et al., G.R. No. 165407, June 5, 2009.
Here, the primary consideration that impelled respondent
to tender his resignation letter was the assurance that he
ILLEGAL DISMISSAL;  REINSTATEMENT.
would be paid his separation pay. It is thus unlikely for
someone to just leave his employer for whom he has
The respondent’s illegal dismissal carries the legal worked for twelve (12) years without any expectation of
consequence defined under Article 279 of the Labor financial assistance. Hence, the former employee is
Code: the illegally dismissed employee is entitled entitled to receive separation pay.  “J” Marketing
to reinstatement without loss of seniority rights and other Corporation, represented by its Branch
privileges and to his full backwages, inclusive of Manager Elmundo Dador, G.R. No. 163924, June 18,
allowances and other benefits or their monetary 2009.
equivalent, computed from the time
his compensation was withheld from him up to the time
STRIKE; REQUISITES FOR VALIDITY.
of his actual reinstatement. The imposition of this legal
consequence is a matter of law that allows no discretion
on the part of the decision maker, except only to the The requisites for a valid strike are: (a) a notice of strike
extent recognized by the law itself as expressed filed with the DOLE 30 days before the intended date
in jurisprudence.  Pentagon Steel Corporation vs. Court thereof or 15 days in case of ULP; (b) a strike vote
of Appeals, et al., G.R. No. 174141,   June 26, 2009. approved by a majority of the total union membership in
the bargaining unit concerned obtained by secret ballot in

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a meeting called for that purpose; and (c) a notice to the reasonable ground to believe, based on clearly
DOLE of the results of the voting at least seven (7) days established facts, that the employee is responsible for the
before the intended strike. The requirements are misconduct and the nature of his participation renders
mandatory and failure of a union to comply therewith him unworthy of the trust and confidence demanded by
renders the strike illegal.   Hotel Enterprises of the his position. If the employer has ample reason to distrust
Philippines, Inc., etc. vs. Samahan ng mga Manggagawa the employee, the labor tribunal cannot justly deny the
sa Hyatt-National Union of Workers in the Hotel former the authority to dismiss the latter.  Renita Del
Restaurant, etc., G.R. No. 165756, June 5, 2009. Rosario, et al. vs. Makati Cinema Square Corporation,
G.R. No. 170014.  July 3, 2009.
UNION SECURITY.
DISMISSAL; LOSS OF CONFIDENCE.
“Union security” is a generic term, which is applied to and
comprehends “closed shop,” “union shop,” “maintenance To be a valid ground for dismissal, loss of trust and
of membership” or any other form of agreement which confidence must be based on a willful breach of trust and
imposes upon employees the obligation to acquire or founded on clearly established facts. A breach is willful if
retain union membership as a condition affecting it is done intentionally, knowingly and purposely, without
employment. There is union shop when all new regular justifiable excuse, as distinguished from an act done
employees are required to join the union within a certain carelessly, thoughtlessly, heedlessly or inadvertently. It
period as a condition for their continued employment. must rest on substantial grounds and not on the
There is maintenance of membership shop when employer’s arbitrariness, whims, caprices or suspicion;
employees, who are union members as of the effective otherwise, the employee would eternally remain at the
date of the agreement, or who thereafter become mercy of the employer. Such ground of dismissal has
members, must maintain union membership as a never been intended to afford an occasion for abuse
condition for continued employment until they are because of its subjective nature. Davao Contractors
promoted or transferred out of the bargaining unit or the Development Cooperative (DACODECO), represented by
agreement is terminated. A closed-shop, on the other Chairman of the Board Engr. L. Chavez vs. Marilyn A.
hand, may be defined as an enterprise in which, by Pasawa,  G.R. No. 172174, July 9, 2009.
agreement between the employer and his employees or
their representatives, no person may be employed in any
DISMISSAL; PROBATIONARY EMPLOYEE.
or certain agreed departments of the enterprise unless he
or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a Under Article 281 of the Labor Code, a probationary
union entirely comprised of or of which the employees in employee can be legally dismissed either: (1) for a just
interest are a part. cause; or (2) when he fails to qualify as a regular
employee in accordance with the reasonable standards
made known to him by the employer at the start of the
In terminating the employment of an employee by
employment. Nonetheless, the power of the employer to
enforcing the Union Security Clause, the employer needs
terminate the services of an employee on probation is not
only to determine and prove that: (1) the union security
without limitations. First, this power must be exercised in
clause is applicable; (2) the union is requesting for the
accordance with the specific requirements of the
enforcement of the union security provision in the CBA;
contract. Second, the dissatisfaction on the part of the
and (3) there is sufficient evidence to support the union’s
employer must be real and in good faith, not feigned so
decision to expel the employee from the union or
as to circumvent the contract or the law. Third, there
company. Herminigildo Inguillom, et al. vs. First
must be no unlawful discrimination in the dismissal. In
Philippine Scales, Inc., et al., G.R. No. 165407, June 5,
termination cases, the burden of proving just or valid
2009.
cause for dismissing an employee rests on the employer.

Here, petitioner did not present proof that respondent

was duly notified, at the time of her employment, of the
DISMISSAL; LOSS OF CONFIDENCE. reasonable standards she needed to comply with for her
continued employment.  Davao Contractors Development
Cooperative (DACODECO), represented by Chairman of
Loss of confidence applies only to cases involving
the Board Engr. L. Chavez vs. Marilyn A. Pasawa, G.R.
employees who occupy positions of trust and confidence,
No. 172174, July 9, 2009.
or to those situations where the employee is routinely
charged with the care and custody of the employer’s
money or property. To be a valid ground for an EMPLOYEE BENEFITS; COMPENSABLE ILLNESS.
employee’s dismissal, loss of trust and confidence must
be based on a willful breach. A breach is willful if it is
In any determination of compensability, the nature and
done intentionally, knowingly and purposely, without
characteristics of the job are as important as raw medical
justifiable excuse.
findings and a claimant’s personal and social history. This
is a basic legal reality in workers’ compensation law.
In dismissing an employee on the ground of loss of
confidence, it is sufficient that the employer has a

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What the law requires is a reasonable work connection The terms and conditions of a seafarer’s employment is
and not direct causal relation. Probability, not the governed by the provisions of the contract he signs at the
ultimate degree of certainty, is the test of proof in time he is hired. But unlike that of others, deemed
compensation proceedings. For, in interpreting and written in the seafarer’s contract is a set of standard
carrying out the provisions of the Labor Code and its provisions set and implemented by the POEA, called the
Implementing Rules and Regulations, the primordial and Standard Terms and Conditions Governing the
paramount consideration is the employee’s welfare. To Employment of Filipino Seafarers on Board Ocean-Going
safeguard the worker’s rights, any doubt on the proper Vessels, which are considered to be the minimum
interpretation and application must be resolved in favor requirements acceptable to the government for the
of labor.  Government Service Insurance System vs. employment of Filipino seafarers on board foreign ocean-
Salvador A. De Castro, G.R. No. 185035, July 15, 2009. going vessels. Thus, the issue of whether
petitioner Nisda can legally demand and claim disability
benefits from respondents Sea Serve and ADAMS for an
EMPLOYEE BENEFITS; RETIREMENT.
illness suffered is best addressed by the provisions of
his POEA-SEC, which incorporated the Standard Terms
Retirement is the result of a bilateral act of the parties, a and Conditions Governing the Employment of Filipino
voluntary agreement between the employer and the Seafarers on Board Ocean-Going Vessels. When
employee whereby the latter, after reaching a certain petitioner Nisda was employed on 7 August 2001, it was
age, agrees to sever his or her employment with the the 2000 Amended Standard Terms and Conditions
former. Retirement is provided for under Article 287 of Governing the Employment of Filipino Seafarers on Board
the Labor Code, as amended by Republic Act No. 7641, Ocean-Going Vessels (hereinafter referred to simply as
or is determined by an existing agreement between the Amended Standard Terms and Conditions for brevity)
employer and the employee. that applied and were deemed written in or appended to
his POEA-SEC. Carlos N. Nisda vs. Sea Serve Maritime
In this case, respondent offered the Special Separation Agency, et al., G.R. No. 179177, July 23, 2009.
Incentive Program (SSIP) to overhaul the bank structure
and to allow it to effectively compete with local peer and EMPLOYEE BENEFITS;  SERVICE AWARD.  
foreign banks. SSIP was not compulsory on employees.
Employees who wished to avail of the SSIP were required
Respondent’s service award under Article 87 of the Saudi
to accomplish a form for availment of separation benefits
Labor Law has already been paid. The severance pay
under the SSIP and to submit the accomplished form to
received by respondent was his service award.
the Personnel Administration and Industrial Relations
LWV Construction Corporation vs. Marcelo B. Dupo, G.R.
Division (PAIRD) for approval.
No. 172342, July 13, 2009.

Petitioner voluntarily availed of the SSIP.  Marcelino

EMPLOYEES; PROJECT EMPLOYEE.
A. Magdadaro  vs. Philippine National Bank, G.R. No.
166198, July 17, 2009.
The principal test for determining whether a particular
employee is a project employee or a regular employee is
EMPLOYEE BENEFITS;  SALARY INCREASE. 
whether the project employee was assigned to carry out
a specific project or undertaking, the duration and scope
It is a familiar and fundamental doctrine in labor law that of which were specified at the time the employee is
the collective bargaining agreement (CBA) is the law engaged for the project. “Project” may refer to a
between the parties and they are obliged to comply with particular job or undertaking that is within the regular or
its provisions. If the terms of a contract, in this case usual business of the employer, but which is distinct and
the CBA, are clear and leave no doubt upon the intention separate and identifiable as such from the undertakings
of the contracting parties, the literal meaning of their of the company. Such job or undertaking begins and
stipulations shall control. ends at determined or determinable times.

A reading of the above-quoted provision of Here, the specific projects for which respondent was
the CBA shows that the parties agreed that 80% of the hired and the periods of employment were specified in his
TIP or at the least the amount of P1,500 is to be employment contracts. The services he rendered, the
allocated for individual salary increases. duration and scope of each employment are clear
indications that respondent was hired as a project
The CBA does not speak of any other benefits or employee.  Alcatel Philippines, Inc.  vs. Rene
increases which would be covered by the employees’ R. Relos, G.R. No. 164315, July 3, 2009.
share in the TIP, except salary increases. University of
San Agustin, Inc. vs. University of San Agustin JURISDICTION; REGIONAL DIRECTOR.
Employees Union-FFW, G.R. No. 177594, July 23, 2009.
Respondent contested the findings of the labor inspector
EMPLOYEE BENEFITS; SEAMEN. during and after the inspection and raised issues the
resolution of which necessitated the examination
of evidentiary matters not verifiable in the normal course

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of inspection. Hence, the Regional Director was divested not practicable. It was absurd to expect the union to
of jurisdiction and should have endorsed the case to the produce the company’s counter-proposal which it did not
appropriate Arbitration Branch of the NLRC. Considering, have. One cannot give what one does not have. Indeed,
however, that an illegal dismissal case had been filed by compliance with the requirement was impossible because
petitioners wherein the existence or absence of an no counter-proposal existed at the time the union filed a
employer-employee relationship was also raised, the CA notice of strike. The law does not exact compliance with
correctly ruled that such endorsement was no longer the impossible. Nemo tenetur ad impossibile.
necessary. Victor Meteoro, et al. vs. Creative Creatures,
Inc., G.R. No. 171275.  July 13, 2009
Another error committed by the labor arbiter was his
declaration that respondents, as union officers,
automatically severed their employment with the
company due to the alleged illegal strike. In the first
place, there was no illegal strike. Moreover, it
LABOR CLAIM;  DEED OF RELEASE.  
is hornbook doctrine that a mere finding of the illegality
of the strike should not be automatically followed by the
As a rule, deeds of release or quitclaim cannot bar wholesale dismissal of the strikers from employment.
employees from demanding benefits to which they are Club Filipino, Inc. and Atty. Roberto F. De Leon  vs.
legally entitled or from contesting the legality of their Benjamin Bautista, et al., G.R. No. 168406, July 13,
dismissal. The acceptance of those benefits would not 2009.
amount to estoppel. Furthermore, there is a gross
disparity between the amount actually received by
UNION; CHECK-OFF.
petitioner as compared to the amount owing him as
initially computed by VA Calipay. The amount of the
settlement is indubitably unconscionable; hence, Article 222(b) of the Labor Code, as amended, prohibits
ineffective to bar petitioner from claiming the full the payment of attorney’s fees only when it is effected
measure of his legal rights. In any event, the Supreme through forced contributions from the employees from
Court deemed it appropriate that the amount he received their own funds as distinguished from union funds.
as consideration for signing the quitclaim be deducted Hence, the general rule is that attorney’s fees,
from his monetary award.  Rafael Rondina vs. Court of negotiation fees, and other similar charges may only be
Appeals former special 19th Division, Unicraft Industries collected from union funds, not from the amounts that
International Corp., Inc. Robert Dino, Cristina Dino, pertain to individual union members. As an exception to
Michael Lloyd Dino, Allan Dino and Mylene June the general rule, special assessments or other
Dino, G.R. No. 172212,   July 9, 2009. extraordinary fees may be levied upon or checked off
from any amount due an employee for as long as there is
proper authorization by the employee.
LABOR CLAIM; LIABILITY OF CORPORATE
OFFICERS.
A check-off is a process or device whereby the employer,
on agreement with the Union, recognized as the proper
To hold a director personally liable for the debts of the
bargaining representative, or on prior authorization from
corporation, and thus pierce the veil of corporate fiction,
the employees, deducts union dues or agency fees from
the bad faith or wrongdoing of the director must be
the latter’s wages and remits them directly to the Union.
established clearly and convincingly. Bad faith is never
Its desirability in a labor organization is quite evident.
presumed. Bad faith does not connote bad judgment or
The Union is assured thereby of continuous funding.  The
negligence. Bad faith imports a dishonest purpose. Bad
system of check-off is primarily for the benefit of the
faith means breach of a known duty through some ill
Union and, only indirectly, for the individual employees.
motive or interest. Bad faith partakes of the nature of
fraud.  Rafael Rondina vs. Court of Appeals former
special 19th Division, Unicraft Industries International Here, the requisites for a valid levy and check-off of
Corp., Inc. Robert Dino, Cristina Dino, Michael Lloyd special assessments, laid down by Article 241(n) and (o),
Dino, Allan Dino and Mylene June Dino, G.R. No. respectively, of the Labor Code, as amended, have not
172212,  July 9, 2009. been complied with in the case at bar. To recall, these
requisites are: (1) an authorization by a written
resolution of the majority of all the union members at the
STRIKE; ILLEGAL STRIKE.
general membership meeting duly called for the purpose;
(2) secretary’s record of the minutes of the meeting; and
It is undisputed that the notice of strike was filed by the (3) individual written authorization for check-off duly
union without attaching the counter-proposal of the signed by the employee concerned. Eduardo J. Mariño,
company. This, according to petitioners and the labor Jr. et al. vs. Gil Y. Gamilla, et al., G.R. No. 149763, July
arbiter, made the ensuing strike of respondents illegal 7, 2009.
because the notice of strike of the union was defective.

The Implementing Rules use the words “as far as

practicable.” In this case, attaching the counter-proposal
of the company to the notice of strike of the union was AUGUST 2009 CASES

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return of unfunded checks amounting to P54,950,000.

Accordingly, PNB dismissed Maralit from the service with
forfeiture of her retirement benefits effective at the close
BENEFITS; BACKWAGES.
of business hours on 31 December 1998.

The issue on the proper computation

PNB may rightfully terminate Maralit’s services for a just
of Mutuc’s backwages has been rendered moot by our
cause, including serious misconduct. Serious misconduct
decision that Mutuc was validly dismissed. Backwages is
is improper conduct, a transgression of some established
a relief given to an illegally dismissed employee.
and definite rule of action, a forbidden act, or a
Since Mutuc’s dismissal is for an authorized cause, she is
dereliction of duty. Having been dismissed for a just
not entitled to backwages. Lowe, Inc., et al. vs. Court of
cause, Maralit is not entitled to her retirement
Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No.
benefits. Ester B. Maralit vs. Philippine National Bank,
174590, August 14, 2009.
G.R. No. 163788, August 24, 2009.

BENEFITS; SERVICE CHARGE.

DISMISSAL; NEGLIGENCE.

Since Dusit Hotel is explicitly mandated by the Article 96

Gross negligence connotes want or absence of or failure
of the Labor Code to pay its employees and management
to exercise even slight care or diligence, or the total
their respective shares in the service charges collected,
absence of care. It evinces a thoughtless disregard of
the hotel cannot claim that payment thereof to its 82
consequences without exerting any effort to avoid them.
employees constitute substantial compliance with the
To warrant removal from service, the negligence should
payment of ECOLA under WO No. 9. Undoubtedly, the
not merely be gross, but also habitual. A single or
hotel employees’ right to their shares in the service
isolated act of negligence does not constitute a just cause
charges collected by Dusit Hotel is distinct and separate
for the dismissal of the employee.
from their right to ECOLA; gratification by the hotel of
one does not result in the satisfaction of the other.
Philippine Hoteliers, Inc./Dusit Hotel Nikko-Manila vs. In JGB and Associates, Inc. v. National Labor Relations
National Union of Workers in Hotel, Restaurant, and Commission, the Court further declared that gross
Allied Industries (NUWHARAIN-APL- negligence connotes want of care in the performance of
IUF) Dusit Hotel Nikko Chapter, G.R. No. 181972, one’s duties. Habitual neglect implies repeated failure to
August 25, 2009. perform one’s duties for a period of time, depending
upon the circumstances. Fraud and willful neglect of
duties imply bad faith of the employee in failing to
DISMISSAL;  ILLEGAL STRIKE.
perform his job, to the detriment of the employer and
the latter’s business. Chona Estacio and
 A perusal of the Labor Arbiter’s Decision, which was Leopoldo Manliclic vs. Pampanga I, Electric Cooperative,
affirmed in toto by the NLRC, shows that on account of Inc. and Loliano E. Allas,   G.R. No. 183196. August 19,
the staging of the illegal strike, individual respondents 2009
were all deemed to have lost their employment, without
distinction as to their respective participation.
DISMISSAL;  NEGLIGENCE.

Of the participants in the illegal strike, whether they

Under Article 282 (b) of the Labor Code, negligence
knowingly participated in the illegal strike in the case of
must be both gross and habitual to justify the dismissal
union officers or knowingly participated in the
of an employee. Gross negligence is characterized by
commission of violent acts during the illegal strike in the
want of even slight care, acting or omitting to act in a
case of union members, the records do not indicate.
situation where there is a duty to act, not inadvertently
While respondent Julius Vargas was identified to be a
but willfully and intentionally with a conscious
union officer, there is no indication if he knowingly
indifference to consequences insofar as other persons
participated in the illegal strike. The Court not being a
may be affected.
trier of facts, the remand of the case to the NLRC is in
order only for the purpose of determining the status in
the Union of individual respondents and their respective In the present case, petitioner, as respondent’s
liability, if any.  A. Soriano Aviation vs. Employees Accounting Manager, failed to discharge her important
Association of A. Soriano Aviation, et al., G.R. No. duty of remitting SSS/PhilHealth contributions not once
166879, August 14, 2009. but quadruple times, resulting in respondent’s incurring
of penalties totaling P18,580.41, not to mention the
employees/members’ contributions
DISMISSAL;  MISCONDUCT.  
being unupdated. Eden Llamas vs. Ocean Gateway
Maritime and Management, Inc., G.R. No. 179293,
In its 14 February 2000 decision, PNB’s Administrative August 14, 2009.
Adjudication Panel found Maralit guilty of serious
misconduct, gross violation of bank rules and regulations,
DISMISSAL; REDUNDANCY.
and conduct prejudicial to the best interest of the
bank. Maralit violated bank policies which resulted in the

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Redundancy exists when the service of an employee is in intention of relinquishing the office accompanied by the
excess of what is reasonably demanded by the actual act of relinquishment. As the intent to relinquish must
requirements of the business. A redundant position is one concur with the overt act of relinquishment, the acts of
rendered superfluous by any number of factors, such the employee before and after the alleged resignation
as overhiring of workers, decreased volume of business, must be considered in determining whether, in fact, he
dropping of a particular product line previously intended to sever his employment.
manufactured by the company or phasing out of a service
activity formerly undertaken by the enterprise.
In this case, we find no overt act on the part of petitioner
that he was ready to sever his employment
For a valid implementation of a redundancy program, the ties. Baltazar L. Payno vs. Orizon Trading
employer must comply with the following requisites: (1) Corp./ Orata Trading and Flordeliza Legaspi, G.R. No.
written notice served on both the employee and the 175345, August 19, 2009.
DOLE at least one month prior to the intended date of
termination; (2) payment of separation pay equivalent to
DISMISSAL;  TRANSFER.
at least one month pay or at least one month pay for
every year of service, whichever is higher; (3) good faith
in abolishing the redundant position; and (4) fair and  ATI’s transfer of Bismark IV’s base from Manila to
reasonable criteria in ascertaining what positions are to Bataan was, contrary to Aguanza’s assertions, a valid
be declared redundant. Lowe, Inc., et al. vs. Court of exercise of management prerogative.  The transfer of
Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. employees has been traditionally among the acts
174590, August 14, 2009. identified as a management prerogative subject only to
limitations found in law, collective bargaining agreement,
and general principles of fair play and justice.  Even as
DISMISSAL; REDUNDANCY.
the law is solicitous of the welfare of employees, it must
also protect the right of an employer to exercise what are
We agree with the Labor Arbiter that Lowe employed fair clearly management prerogatives. The free will of
and reasonable criteria in declaring Mutuc’s position management to conduct its own business affairs to
redundant. Mutuc, who was hired only on 23 June 2000, achieve its purpose cannot be denied.
did not deny that she was the most junior of all
the executives of Lowe. Mutuc also did not present
On the other hand, the transfer of an employee may
contrary evidence to disprove that she was the least
constitute constructive dismissal “when continued
efficient and least competent among all the Creative
employment is rendered impossible, unreasonable or
Directors.
unlikely; when there is a demotion in rank and/or a
diminution in pay; or when a clear discrimination,
The determination of the continuing necessity of a insensibility or disdain by an employer becomes
particular officer or position in a business corporation is a unbearable to the employee.”
management prerogative, and the courts will not
interfere unless arbitrary or malicious action on the part
Aguanza’s continued employment was not impossible,
of management is shown. It is also within the exclusive
unreasonable or unlikely; neither was there a clear
prerogative of management to determine the
discrimination against him.  Among the employees
qualification and fitness of an employee for hiring and
assigned to Bismark IV, it was only Aguanza who did not
firing, promotion or reassignment. Indeed, an employer
report for work in Bataan.  Aguanza’s assertion that he
has no legal obligation to keep more employees than are
was not allowed to “time in” in Manila should be taken on
necessary for the operation of its business.  Lowe,
its face: Aguanza reported for work in Manila, where he
Inc., et al. vs. Court of Appeals and Irma Mutuc, G.R.
wanted to work, and not in Bataan, where he was
Nos. 164813 & G.R. No. 174590, August 14, 2009.
supposed to work.    There was no demotion in rank,
as Aguanza would continue his work as Crane Operator. 
DISMISSAL; RESIGNATION.  Furthermore, despite Aguanza’s assertions, there was no
diminution in pay. Gualberto Aguanza vs. Asian
Terminal, Inc., et al., G.R. No. 163505, August 14, 2009.
In termination cases, it is incumbent upon the employer
to prove either the non-existence or the validity of
dismissal. Inasmuch as respondents alleged petitioner’s JURISDICTION;  SECRETARY OF LABOR.
resignation as the cause of his separation from work,
respondents had the burden to prove the same. The case
 In the case at bar, the Secretary of Labor correctly
of the employer must stand or fall on its own merits and
assumed jurisdiction over the case as it does not come
not on the weakness of the employee’s defense.
under the exception clause in Art. 128(b) of the Labor
Code. While petitioner Jethro appealed the inspection
Resignation is the voluntary act of an employee who is in results and there is a need to
a situation where one believes that personal reasons examine evidentiary matters to resolve the issues raised,
cannot be sacrificed in favor of the exigency of the the payrolls presented by it were considered in the
service, and one who has no other choice but to ordinary course of inspection. While the employment
dissociate oneself from employment. It is a formal records of the employees could not be expected to be
pronouncement or relinquishment of an office, with the found in Yakult’s premises in Calamba, as Jethro’s offices

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are in Quezon City, the records show that Jethro was Indeed, even if the purpose of a strike is valid, the strike
given ample opportunity to present its payrolls and other may still be held illegal where the means employed are
pertinent documents during the hearings and to rectify illegal. Thus, the employment of violence, intimidation,
the violations noted during the ocular inspection. It, restraint or coercion in carrying out concerted activities
however, failed to do so, more particularly to submit which are injurious to the right to property renders a
competent proof that it was giving its security guards the strike illegal. And so is picketing or the obstruction to the
wages and benefits mandated by law. free use of property or the comfortable enjoyment of life
or property, when accompanied by intimidation, threats,
violence, and coercion as to constitute nuisance.
Jethro’s failure to keep payrolls and daily time records
in Yakult’s premises was not the only labor standard
violation found to have been committed by it; it likewise Here, the Union members’ repeated name-calling,
failed to register as a service contractor with the DOLE, harassment and threats of bodily harm directed against
pursuant to Department Order No. 18-02 and, as earlier company officers and non-striking employees and, more
stated, to pay the wages and benefits in accordance with significantly, the putting up of placards, banners and
the rates prescribed by law. Jethro Intelligence & streamers with vulgar statements imputing criminal
Security Corporation and Yakult, Inc. vs.. The Hon. negligence to the company, which put to doubt reliability
Secretary of Labor and Employment, et al., G.R. No. of its operations, come within the purview of illegal acts
172537, August 14, 2009. under Art. 264 of the Labor Code and jurisprudence.
A. Soriano Aviation vs. Employees Association of
A. Soriano Aviation, et al., G.R. No. 166879, August 14,
LABOR ORGANIZATION.
2009

Article 212(g) of the Labor Code defines a labor

organization as “any union or association of employees
which exists in whole or in part for the purpose of
collective bargaining or of dealing with employers SEPTEMBER 2009 CASES
concerning terms and conditions of employment.” Upon
compliance with all the documentary requirements, the
Regional Office or Bureau shall issue in favor of the
applicant labor organization a certificate indicating that it
is included in the roster of legitimate labor organizations. DISMISSAL;  ABANDONMENT.
Any applicant labor organization shall acquire legal
personality and shall be entitled to the rights and Abandonment is a form of neglect of duty, one of the just
privileges granted by law to legitimate labor causes for an employer to terminate an employee. It is
organizations upon issuance of the certificate of a hornbook precept that in illegal dismissal cases, the
registration. Sta. Lucia East Commercial Corporation vs. employer bears the burden of proof. For a valid
Hon. Secretary of Labor and Employment, et al., G.R. termination of employment on the ground of
No. 162355, August 14, 2009. abandonment, Lucinario must prove, by substantial
evidence, the concurrence of petitioner’s failure to report
LABOR ORGANIZATION; BARGAINING UNIT. for work for no valid reason and his categorical intention
to discontinue employment.
A bargaining unit is a “group of employees of a given
employer, comprised of all or less than all of the entire Lucinario, however, failed to establish any overt act on
body of employees, consistent with equity to the the part of petitioner to show his intention to abandon
employer, indicated to be the best suited to serve the employment. Petitioner, after being informed of his
reciprocal rights and duties of the parties under the alleged shortages in collections and despite his relegation
collective bargaining provisions of the law.” The to that of company custodian, still reported for work. He
fundamental factors in determining the appropriate later applied for a 4-day leave of absence. On his return,
collective bargaining unit are: (1) the will of the he discovered that his name was erased from the
employees (Globe Doctrine); (2) affinity and unity of the logbook, was refused entry into the company premises,
employees’ interest, such as substantial similarity of work and learned that his application for a 4-day leave was not
and duties, or similarity of compensation and working approved. He thereupon exerted efforts to communicate
conditions (Substantial Mutual Interests Rule); (3) prior with Lucinario on the status of his employment, but to no
collective bargaining history; and (4) similarity of avail. These circumstances do not indicate abandonment.
employment status. Sta. Lucia East Commercial
Corporation vs. Hon. Secretary of Labor and That petitioner immediately filed the illegal dismissal
Employment, et al., G.R. No. 162355, August 14, 2009. complaint with prayer for reinstatement should dissipate
any doubts that he wanted to return to work.
STRIKE; ILLEGAL STRIKE.
What thus surfaces is that petitioner was constructively
It is hornbook principle that the exercise of the right of dismissed. No actual dismissal might have occurred in
private sector employees to strike is not absolute (see the sense that petitioner was not served with a notice of
Section 3 of Article XIII of the Constitution). termination, but there was constructive dismissal,

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petitioner having been placed in a position where raised for the first time on appeal. As such, it deserves
continued employment was rendered impossible and no consideration by this Court. Tacloban Far East
unreasonable by the circumstances indicated Marketing Corporation, et al. vs. The Court of
above. Odilon L. Martinez vs. B&B Fish Broker and/or Appeals, et al., G.R. No. 182320, September 11, 2009.
Norberto M. Lucinario, G.R. No. 179985, September 18,
2009.
DISMISSAL;  DUE PROCESS.  

DISMISSAL;  BURDEN OF PROOF.  

The essence of due process is simply an opportunity to
be heard or, as applied to administrative proceedings, an
While the employer bears the burden in illegal dismissal opportunity to explain one’s side or an opportunity to
cases to prove that the termination was for valid or seek a reconsideration of the action or ruling complained
authorized cause, the employee must first establish by of. What the law prohibits is absolute absence of the
substantial evidence the fact of dismissal from service. opportunity to be heard, hence, a party cannot feign
This petitioner failed to discharge. He, in fact, failed to denial of due process where he had been afforded the
refute respondent’s claim that it sent him a Violation opportunity to present his side. A formal or trial type
Memorandum, which was duly received by him on April hearing is not at all times and in all instances essential to
15, 2003, and a subsequent Memorandum via registered due process, the requirements of which are satisfied
mail, requiring him to explain his habitual tardiness on where the parties are afforded fair and reasonable
the therein indicated dates but that he failed to comply opportunity to explain their side of the controversy.
therewith.
In the present case, petitioners were, among other
Constructive dismissal contemplates, among other things, given several written invitations to submit
things, quitting because continued employment is themselves to PLDT’s Investigation Unit to explain their
rendered impossible, unreasonable or unlikely, or a side, but they failed to heed them. A hearing, which
demotion in rank or a diminution of pay. It clearly exists petitioners attended along with their
when an act of clear discrimination, insensibility or union MKP representatives, was conducted on June 25,
disdain by an employer becomes unbearable to the 2001 during which the principal witnesses to the incident
employee, leaving him with no option but to forego his were presented. Petitioners were thus afforded the
continued employment. Not any of these circumstances opportunity to confront those witnesses and present
exists to call for a ruling that petitioner was evidence in their behalf, but they failed to do
constructively dismissed. so. Rolando Placido and Edgardo Caragay vs. National
Romero Montederamos vs. Tri-Union International Labor Relations Commission and Philippine Long Distance
Corporation, G.R. No. 1767000, September 4, 2009. Telephone Company, Incorporated, G.R. No. 180888,
September 18, 2009.
DISMISSAL;  BURDEN OF PROOF.
Dismissal; misconduct. By sleeping on the job and
leaving his work area without prior
It is well-settled that in termination cases, the burden of
authorization, Tomada did not merely disregard company
proof rests upon the employer to show that the dismissal
rules. Tomada, in effect, issued an open invitation for
was for a just and valid cause and failure to discharge the
others to violate those same company rules. Indeed,
same would mean that the dismissal is not justified and
considering the presence of trainees in the building
therefore illegal. Hence, in arguing
and Tomada’s acts, Tomada failed to live up to his
that Sabulao abandoned his work, it is incumbent upon
company’s reasonable expectations. Tomada’s offenses
the petitioners to prove: (1) that the employee failed to
cannot be excused upon a plea of being a “first offense,”
report for work or had been absent without valid or
or have not resulted in prejudice to the company in any
justifiable reason; and (2) that there must have been a
way. No employer may rationally be expected to continue
clear intention to sever the employer-employee
in employment a person whose lack of morals, respect
relationship as manifested by some overt acts. Clearly,
and loyalty to his employer, regard for his employer’s
jurisprudence dictates that the burden of proof to show
rules, and appreciation of the dignity and responsibility of
that there was unjustified refusal to go back to work
his office, has so plainly and completely been bared.
rests on the employer.

Misconduct is improper or wrong conduct. It is the

The NLRC, as affirmed by the Court of Appeals, correctly
transgression of some established and definite rule of
found that petitioners failed to substantiate its claim
action, a forbidden act, a dereliction of duty, willful in
that Sabulao abandoned his work. No evidence was
character, and implies wrongful intent and not mere error
presented to prove that Sabulao clearly intended to sever
of judgment. The misconduct to be serious must be of
the employer-employee relationship as manifested by
grave and aggravated character and not merely trivial or
some overt acts. As regards petitioners’ allegation
unimportant. Such misconduct, however serious, must
that Sabulao is a field personnel and therefore not
nevertheless be in connection with the employee’s work
entitled to the money claims awarded by the NLRC,
to constitute just cause for his separation. Thus, for
suffice it to state that the issue was raised only before
misconduct or improper behavior to be a just cause for
the Court of Appeals in contravention to the rule that
dismissal, (1) it must be serious; (2) it must relate to the
questions not raised before the tribunals a quo cannot be
performance of the employee’s duties; and (3) it must

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show that the employee has become unfit to continue contract, or an established employer policy. No law or
working for the employer. Indeed, an employer may not collective bargaining agreement or other applicable
be compelled to continue to employ such person whose contract, or an established company policy was existing
continuance in the service would be patently inimical to during respondents’ employment entitling them to the
his employer’s interest.  Eduardo M. Tomada, Sr. vs. P200,000 lump-sum retirement pay. Petitioner was not
RFM Corporation-Bakery Flour Division, et al., G.R. No. thus obliged to grant them such pay. Kimberly-Clark
163270, September 11, 2009. Philippines, Inc. vs. Nora Dimayuga, et al. G.R. No.
177705, September 18, 2009.
DISMISSAL;  REDUNDANCY.
EMPLOYEE BENEFITS; SUICIDE.
 The separation of the petitioner by reason of redundancy
was supported by the evidence on record. She was The general rule is that the employer is liable to pay the
separated from the service after the respondent’s heirs of the deceased seafarer for death benefits once it
reorganization where her position as Administrator was is established that he died during the effectivity of his
declared redundant. She was served notice within the employment contract. However, the employer may be
statutory period of thirty (30) days and so was the DOLE- exempted from liability if he can successfully prove that
NCR. The petitioner was assured of all the benefits under the seafarer’s death was caused by an injury directly
the law. attributable to his deliberate or willful act. In sum,
respondents’ entitlement to any death benefits depends
on whether the evidence of the petitioners suffices to
The petitioner imputes bad faith and malice on the
prove that the deceased committed suicide; the burden
respondent in declaring her position as Administrator
of proof rests on his employer. Great Southern Maritime
redundant, but failed to present convincing proof that the
Services Corp., et al. vs. Leonila Surigao, et al., G.R.
respondent abused its prerogative in terminating her
No. 183646, September 18, 2009.
employment or that it was motivated by ill-will in doing
so. It was a business decision arrived at in the face of
financial losses being suffered by the company at the EMPLOYER-EMPLOYEE RELATIONSHIP;  EXISTENCE.
time. Miriam B. Elleccion vda. De Lecciones Vs. National
Labor Relations Commission, Et Al., G.R. No. 184735,
The Contract between the Cooperative and DFI, far from
September 17, 2009.
being a job contracting arrangement, is in essence a
business partnership that partakes of the nature of a
DISMISSAL; RETRENCHMENT. joint venture. The rules on job contracting are,
therefore, inapposite. The Court may not alter the
intention of the contracting parties as gleaned from their
The burden of proving the validity of retrenchment is on
stipulations without violating the autonomy of contracts
the petitioner. Evidence does not sufficiently establish
principle under Article 1306 of the Civil Code which gives
that petitioner had incurred losses that would justify
the contracting parties the utmost liberality and freedom
retrenchment to prevent further losses. The Comparative
to establish such stipulations, clauses, terms and
Income Statement for the year 1996 and for the months
conditions as they may deem convenient, provided they
of February to June 1997 which petitioner submitted did
are not contrary to law, morals, good custom, public
not conclusively show that petitioner had suffered
order or public policy.
financial losses. In fact, records show that from January
to July 1997, petitioner hired a total of 114 new
employees assigned in the petitioner’s stores located in Petitioners’ claim of employment relationship with
the different places of the country. Emcor, Incorporated the Cooperative’s herein co-respondents must be
vs. Ma. Lourdes D. Sienes, G.R. No. 152101, September assessed on the basis of four standards, viz: (a) the
8, 2009. manner of their selection and engagement; (b) the mode
of payment of their wages; (c) the presence or absence
of the power of dismissal; and (d) the presence or
DISMISSAL;  RETRENCHMENT.  
absence of control over their conduct. Most determinative
among these factors is the so-called “control test.”
Retrenchment to avoid or minimize business losses is a
justified ground to dismiss employees under Article 283
There is nothing in the records which indicates the
of the Labor Code. The employer, however, bears the
presence of any of the foregoing elements of an
burden to prove such ground with clear and satisfactory
employer-employee relationship.
evidence, failing which the dismissal on such ground is
unjustified.  Bio Quest Marketing Inc. and/or Jose L. Co
vs. Edmund Rey, G.R. No. 181503, September 18, 2009. There being no employer-employee relationship between
petitioners and the Cooperative’s co-respondents, the
latter are not solidarily liable with the Cooperative for
EMPLOYEE BENEFITS;  RETIREMENT.
petitioners’ illegal dismissal and money claims.
Oldarico S. Traveño, et al. vs. Bobongon Banana
It is settled that entitlement of employees to retirement Growers Multi-Purpose Cooperative, et al., G.R. No.
benefits must specifically be granted under existing laws, 164205, September 3, 2009.
a collective bargaining agreement or employment

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RESIGNATION. WAIVER;  BINDING EFFECT.

Resignation as “the voluntary act of employees who are While quitclaims executed by employees are commonly
compelled by personal reasons to disassociate frowned upon as being contrary to public policy and are
themselves from their employment. It must be done with ineffective to bar claims for the full measure of their legal
the intention of relinquishing an office, accompanied by rights, where the person making the waiver has done so
the act of abandonment.” In this case, the evidence on voluntarily, with a full understanding thereof, and the
record suggests that respondent did not voluntarily consideration for the quitclaim is credible and reasonable,
resign. The more logical conclusion, based on the the transaction must be recognized as being a valid and
evidence, is that respondent was then being forced or binding undertaking. In the case at bar, Nora and
pressured to resign, which is tantamount to illegal Rosemarie are Accounting graduates. They have not
dismissal. Casa Cebuana Incoporada, et al. alleged having been compelled to sign the quitclaims, nor
vs. Ireneo P. Leuterio, G.R. No. 176040, September 4, that the considerations thereof (P1,024,113.73 for Nora
2009. and P682,721.24 for Rosemarie) are unconscionable.
Kimberly-Clark Philippines, Inc. vs.
Nora Dimayuga, et al. G.R. No. 177705, September 18,
RETIREMENT.
2009

The line between voluntary and involuntary retirement is

WAIVER;  UNION MEMBERS.  
thin but it is one which this Court has drawn. Voluntary
retirement cuts employment ties leaving no residual
employer liability; involuntary retirement amounts to a Going now to the question of whether respondent’s
discharge, rendering the employer liable for termination members’ individual acceptance of the award and the
without cause. The employee’s intent is the focal point of resulting payments made by petitioner operate as a
analysis. In determining such intent, the fairness of the ratification of the DOLE Secretary’s award which renders
process governing the retirement decision, the payment CA-G.R. SP No. 72965 moot, we find that such do not
of stipulated benefits, and the absence of badges of operate as a ratification of the DOLE Secretary’s award;
intimidation or coercion are relevant parameters. nor a waiver of their right to receive further benefits, or
what they may be entitled to under the law. The
appellate court correctly ruled that the respondent’s
Nothing in the records offends any of these
members were merely constrained to accept payment at
criteria. Arsenio F. Quevedo, et al. vs. Benguet Electric
the time. Christmas was then just around the corner, and
Cooperative Incorporated, et al., G.R. No. 168927,
the union members were in no position to resist the
September 11, 2009.
temptation to accept much-needed cash for use during
the most auspicious occasion of the year. Time and
WAIVER;  BINDING EFFECT. again, we have held that necessitous men are not, truly
speaking, free men; but to answer a present emergency,
Petitioners bound themselves, in individually signed will submit to any terms that the crafty may impose upon
contracts, to “forever release, waive and quitclaim all them.
causes of action or claims arising from or as a
consequence” of their early retirement. Petitioners Besides, as individual components of a union possessed
concede that this blanket stipulation bars this suit. of a distinct and separate corporate personality,
However, they seek to avoid compliance by again respondent’s members should realize that in joining the
pleading vitiated consent. Although contracts executed in organization, they have surrendered a portion of their
the context of employment are imbued with public individual freedom for the benefit of all the other
interest, triggering closer scrutiny, they remain contracts members; they submit to the will of the majority of the
binding the parties to their terms. members in order that they may derive the advantages
to be gained from the concerted action of all. Since the
To excuse petitioners from complying with the terms of will of the members is personified by its board of
their waivers, they must locate their case within any of directors or trustees, the decisions it makes should
three narrow grounds: (1) the employer used fraud or accordingly bind them. Precisely, a labor union exists in
deceit in obtaining the waivers; (2) the consideration the whole or in part for the purpose of collective bargaining
employer paid is incredible and unreasonable; or (3) the or of dealing with employers concerning terms and
terms of the waiver are contrary to law, public order, conditions of employment. What the individual employee
public policy, morals or good customs or prejudicial to a may not do alone, as for example obtain more favorable
third person with a right recognized by law. The terms and conditions of work, the labor organization,
preceding discussion on the voluntariness of petitioners’ through persuasive and coercive power gained as a
retirement from service effectively removes these group, can accomplish better. Univeristy of Santo Tomas
grounds beyond petitioners’ argumentative reach. vs. Samahang Manggagawa ng UST (SM-UST), G.R. No.
Accordingly, petitioners, by the terms of their waivers, 169940, September 18, 2009.
are barred from filing this suit.
Arsenio F. Quevedo, et al. vs. Benguet Electric
Cooperative Incorporated, et al., G.R. No. 168927,
September 11, 2009.

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OCTOBER 2009 CASES showing that the lawful wages were not paid accordingly.
Baron Republic Theatrical Major Cinema, et al.
vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No.
170525, October 2, 2009.

DISMISSAL; ABANDONMENT.
DISMISSAL; BURDEN OF PROOF.

To constitute abandonment, there must be a clear and

It is a basic principle that in illegal dismissal cases, the
deliberate intent to discontinue one’s employment
burden of proof rests upon the employer to show that the
without any intention of returning. Two elements must
dismissal of the employee is for a just cause and failure
concur: (1) failure to report for work or absence without
to do so would necessarily mean that the dismissal is not
valid or justifiable reason, and (2) a clear intention to
justified. In addition, in claims of abandonment by an
sever the employer-employee relationship, with the
employee, the settled rule is that the employer bears the
second element as the more determinative factor and
burden of showing a deliberate and unjustified refusal by
being manifested by some overt acts. It is the employer
the employee to resume his employment without any
who has the burden of proof to show a deliberate and
intention of returning. Moreover, in evaluating a charge
unjustified refusal of the employee to resume his
of abandonment, the jurisprudential rule is that
employment without any intention of returning.
abandonment is a matter of intention that cannot be
lightly presumed from equivocal acts. To constitute
In the instant case, petitioners failed to prove that it was abandonment, two elements must concur: (1) the failure
Bolanos who refused to report for work despite being to report for work or absence without valid or justifiable
asked to return to work. Petitioners merely presented the reason, and (2) a clear intent, manifested through overt
affidavits of the officers of Henlin Panay narrating their acts, to sever the employer-employee relationship.
version of the facts. These affidavits, however, are not
only insufficient but also undeserving of credit as they
In the present case, petitioner Pascual consistently
are self-serving. Petitioners failed to present memoranda
denies that Aguilar was terminated from his employment
or show-cause letters served on Bolanos at her last
and that, instead, he abandoned his work and never
known address requiring her to report for work or to
returned after his request for salary increase was
explain her absence, with a warning that her failure to
rejected. However, denial, in this case, does not suffice;
report would be construed as abandonment of work.
it should be coupled with evidence to support it. In the
Also, if indeed Bolanos abandoned her work, petitioners
instant case, the Court finds no error in the ruling of the
should have served her a notice of termination as
CA that petitioners failed to adduce evidence to prove
required by law. Petitioners’ failure to comply with said
abandonment and rebut Aguilar’s claim of dismissal.
requirement bolsters Bolanos’s claim that she did not
abandon her work but was dismissed.
Contrary to petitioners’ asseveration that Aguilar is guilty
of abandoning his job, the Court finds no error in the
Moreover, if Bolanos had indeed forsaken her job, she
finding of the Labor Arbiter, as affirmed by the CA, that
would not have bothered to file a complaint for illegal
there was no clear intention on Aguilar’s part to sever the
dismissal. It is well settled that the filing by an employee
employer-employee relationship. Considering that
of a complaint for illegal dismissal is proof of her desire
“intention” is a mental state, petitioners must show that
to return to work, thus negating the employer’s charge of
respondent Aguilar’s overt acts point unerringly to his
abandonment.  Henlin Panay Company and/or Edwin
intent not to work anymore. In this regard, petitioners
Francisco/Angel Lazaro III vs. National Labor Relations
failed. Baron Republic Theatrical Major Cinema, et al.
Commission and Nory A. Bolanos, G.R. No. 180718,
vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No.
October 23, 2009.
170525, October 2, 2009.

DISMISSAL; ATTORNEY’S FEES.

DISMISSAL; BURDEN OF PROOF.

It is settled that in actions for recovery of wages or when

In termination cases, the burden of proof rests upon the
the employee is illegally dismissed in bad faith or where
employer to show that the dismissal is for a just and
an employee was forced to litigate and incur expenses to
valid cause and failure to do so would necessarily mean
protect his rights and interests by reason of the
that the dismissal was illegal.
unjustified acts of his employer, he is entitled to an
award of attorney’s fees. This award is justifiable under
Article 111 of the Labor Code, Section 8, Rule VIII, Book Following this principle, it is incumbent upon the
III of its Implementing Rules; and paragraph 7, Article respondents to prove by substantial evidence that
2208 of the Civil Code. petitioner abandoned her job. For abandonment to exist,
it must be shown that (1) the employee has failed to
report for work or must have been absent without valid
Moreover, in cases for recovery of wages, the award of
or justifiable reason; and (2) that there must have been
attorney’s fees is proper and there need not be any
a clear intention to sever the employer-employee
showing that the employer acted maliciously or in bad
relationship as manifested by some overt acts.
faith when it withheld the wages. There need only be a

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Respondents failed to discharge this burden. Mere upheld the validity of the dismissal of a school cashier
absence of petitioner is not sufficient to establish the despite her 19 years of service after evidence showed
allegation of abandonment. The prolonged absence of that there was a discrepancy in the amount she was
petitioner was not without justifiable reason because it entrusted to deposit with a bank.
was established that her failure to report for work was
due to the injury she suffered in the course of her
The rule, therefore, is that if there is sufficient evidence
employment and with sufficient notice to respondents.
to show that the employee occupying a position of trust
Petitioner also presented herself for work on the date
and confidence is guilty of a breach of trust, or that his
stated in the medical certificate which stated that she is
employer has ample reason to distrust him, the labor
fit to resume work.
tribunal cannot justly deny the employer the authority to
dismiss such employee.
Above all, the intention to sever the employer-employee
relationship was not duly established by respondents.
In the instant case, petitioners cannot be faulted for
The prior submission of a medical certificate that
losing their trust in Espadero. As an employee occupying
petitioner is fit to resume work negates the claim of
a job which requires utmost fidelity to her employers, she
respondents that the former demanded for separation
failed to report to her immediate supervisor the
pay on account of her failing health. Certainly, petitioner
tampering of her time card. Whether her failure was
cannot demand for separation benefits on the ground of
deliberate or due to sheer negligence, and whether
illness while at the same time presenting a certification
Espadero was or was not in cahoots with a co-worker, the
that she is fit to work. Respondents could have denied
fact remains that the tampering was not promptly
petitioner’s demand at that instance and ordered her to
reported and could, very likely, not have been known by
return to work had it not been their intention to sever
petitioners, or, at least, could have been discovered at a
petitioner from their employ. Hence, we find the
much later period, if it had not been reported by
allegation that petitioner presented herself for work but
Espadero’s supervisor to the personnel manager.
was refused by respondents more credible. Concepcion
Petitioners, therefore, cannot be blamed for losing their
Faeldonia vs. Tong Yak Groceries, et al., G.R. No.
trust in Espadero. Eats-Cetera Food Services Outlet
182499, October 2, 2009.
and/or Serafin Remirez vs. Myrna B. Letran, et al., G.R.
No. 179507, October 2, 2009.
DISMISSAL; BURDEN OF PROOF.
DISMISSSAL;  NOMINAL DAMAGES.
In an unlawful dismissal case, the employer has the
burden of proving the lawful cause sustaining the
Where an employee was terminated for cause, but the
dismissal of the employee. The employer must
employer failed to comply with the notice requirement,
affirmatively show rationally adequate evidence that the
the employee is entitled to the payment of nominal
dismissal was for a justifiable cause. Apart from its self-
damages pursuant to our ruling in Agabon v. National
serving allegations, Metro failed to prove that it sustained
Labor Relations Commission and Jaka Food Processing
serious business losses. To justify retrenchment, the
Corporation v. Pacot. 
employer must prove serious business losses, and not
In Agabon, we found the dismissal of the employees
just any kind or amount of loss. Metro should have
therein to be valid and for a just cause, since
produced its books of accounts, profit and loss
abandonment was duly established. However, we held
statements, and even its accountant to competently
the employer liable, because procedural due process was
amplify its financial position. Metro Construction, Inc.
not observed. We ordered the employer to pay, in lieu of
and Dr. John Lai vs. Rogelio Aman, G.R. No. 168324,
backwages, indemnity in the form of nominal damage.
October 12, 2009.
The Agabon ruling was qualified in Jaka which declared
the dismissal of the employees valid as it was due to an
DISMISSAL; LOSS OF CONFIDENCE. authorized cause under Article 283 of the Labor Code,
i.e., retrenchment, as it was proven that Jaka was
suffering from serious business losses at the time it
Espadero’s position as a cashier is one that requires a
terminated respondents’ employment. However, Jaka
high degree of trust and confidence, and that her
failed to comply with the notice requirement under the
infraction reasonably taints such trust and confidence
same rule.
reposed upon her by her employer.

Nominal damages are adjudicated in order that a right of

A position of trust and confidence has been defined as
the plaintiff that has been violated or invaded by the
one where a person is entrusted with confidence on
defendant may be vindicated or recognized, and not for
delicate matters, or with the custody, handling, or care
the purpose of indemnifying the plaintiff for any loss
and protection of the employer’s property and/or funds.
suffered by him. Considering the circumstances in this
One such position is that of a cashier. A cashier is a
case, we find no error committed by the CA in fixing the
highly sensitive position which requires absolute trust
award of nominal damages in the amount of P50,000.00
and honesty on the part of the employee. It is for this
for each respondent as indemnity for the violation of the
reason that the Court has sustained the dismissal of
latter’s statutory rights.
cashiers who have been found to have breached the trust
and confidence of their employers. In one case, the Court

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Petitioner’s reliance on Viernes v. National Labor EMPLOYEE BENEFITS; RETIREMENT.

Relations Commission to support its claim for the
reduction of the award of nominal damages is misplaced.
The age of retirement is primarily determined by the
The factual circumstances are different. Viernes is an
existing agreement or employment contract. In the
illegal dismissal case, since there was no authorized
absence of such agreement, the retirement age shall be
cause for the dismissal of the employees; and the
fixed by law. Under the aforecited law, the mandated
employer was ordered to pay backwages inclusive of
compulsory retirement age is set at 65 years, while the
allowances and other benefits, computed from the time
minimum age for optional retirement is set at 60 years.
the compensation was withheld up to the actual
reinstatement. In addition, since the dismissal was done
without due process, the nominal damages awarded was Under Paragraph B of the retirement plan, a shipboard
only P2,590.00 equivalent to one-month salary of the employee, upon his written request, may retire from
employee. In this case, the dismissal was valid, as it was service if he has reached the eligibility age of 60 years.
due to an authorized cause, but without the observance In this case, the option to retire lies with the employee.
of procedural due process, and the only award given was
nominal damages.  Celebes Japan Foods Corp. (etc.) vs. Records show that respondent was only 41 years old
Susan Yermo, et al., G.R. No. 175855, October 2, 2009. when he applied for optional retirement, which was 19
years short of the required eligibility age. Thus, he
DISMISSAL; SERIOUS MISCONDUCT. cannot claim optional retirement benefits as a matter of
right.  Eastern Shipping Lines, Inc. vs. Ferrer D.
Antonio, G.R. No. 171587, October 13, 2009.
An employee who fails to account for and deliver the
funds entrusted to him is liable for misappropriating the
same and is consequently guilty of serious misconduct. EMPLOYEES; FIXED TERM CONTRACTS.
Petitioner therefore validly dismissed
respondent. Superlines Transportation Company, Inc. Respondent is a regular employee of SMC. Consequently,
vs. Eduardo Pinera, G.R. No. 188742, October 13, 2009. the employment contract with a fixed period which SMC
had respondent execute was meant only to circumvent
EMPLOYEE BENEFITS;  BEREAVEMENT LEAVE. respondent’s right to security of tenure and is, therefore,
invalid.
Bereavement leave and other death benefits are granted
to an employee to give aid to, and if possible, lessen the While this Court recognizes the validity of fixed-term
grief of, the said employee and his family who suffered employment contracts, it has consistently held that this is
the loss of a loved one. It cannot be said that the the exception rather than the general rule. Verily, a
parents’ grief and sense of loss arising from the death of fixed-term contract is valid only under certain
their unborn child, who, in this case, had a gestational circumstances. In the oft-cited case of Brent School, Inc.
life of 38-39 weeks but died during delivery, is any less v. Zamora, this Court made it clear that a contract of
than that of parents whose child was born alive but died employment stipulating a fixed term, even if clear as
subsequently. regards the existence of a period, is invalid if it can be
shown that the same was executed with the intention of
circumventing an employee’s right to security of tenure,
Being for the benefit of the employee, CBA provisions on
and should thus be ignored. Moreover, in that same case,
bereavement leave and other death benefits should be
this Court issued a stern admonition that where from the
interpreted liberally to give life to the intentions thereof.
circumstances, it is apparent that the period was imposed
Time and again, the Labor Code is specific in enunciating
to preclude the acquisition of tenurial security by the
that in case of doubt in the interpretation of any law or
employee, then it should be struck down as being
provision affecting labor, such should be interpreted in
contrary to law, morals, good customs, public order and
favor of labor. In the same way, the CBA and CBA
public policy.
provisions should be interpreted in favor of labor.
Continental Steel Manufacturing Corporation vs. Hon.
Accredited Voluntary Arbitrator Allan S. Montano, et Since respondent was already a regular employee
al., G.R. No. 182836, October 13, 2009. months before the execution of the Employment with a
Fixed Period contract, its execution was merely a ploy on
SMC’s part to deprive respondent of his tenurial security.
EMPLOYEE BENEFITS; PARTIAL DISABILITY
Hence, no valid fixed-term contract was executed. The
BENEFITS.
employment status of a person is defined and prescribed
by law and not by what the parties say it should be.
This Court reiterates its order for petitioner to pay Equally important to consider is that a contract of
respondent permanent partial disability benefits for the employment is impressed with public interest such that
maximum period of twenty-five (25) months, computed labor contracts must yield to the common good.
on the basis of Section 2 of Republic Act No. 8291. Provisions of applicable statutes are deemed written into
Government Service Insurance System vs. Jaime the contract, and the parties are not at liberty to insulate
Ibarra,  G.R. No. 172925, October 30, 2009. themselves and their relationships from the impact of
labor laws and regulations by simply contracting with

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each other.  San Miguel Corporation vs. Eduardo L. EMPLOYEES;  REGULAR EMPLOYEES.

Teodosio, G.R. No. 163033, October 2, 2009.
To reiterate, while respondent and SSCP no longer had
EMPLOYEES; TYPES OF REGULAR EMPLOYEES. any legal relationship with the termination of the
Agreement, petitioners remained at their post securing
the premises of respondent while receiving their salaries,
There there are two kinds of regular employees, namely:
allegedly from SSCP. Clearly, such a situation makes no
(1) those who are engaged to perform activities which
sense, and the denials proffered by respondent do not
are usually necessary or desirable in the usual business
shed any light to the situation. It is but reasonable to
or trade of the employer; and (2) those who have
conclude that, with the behest and, presumably, directive
rendered at least one year of service, whether continuous
of respondent, petitioners continued with their services.
or broken, with respect to the activity in which they are
Evidently, such are indicia of control that respondent
employed. Simply stated, regular employees are
exercised over petitioners.
classified into (1) regular employees – by nature of work
and (2) regular employees – by years of service. The
former refers to those employees who perform a Such power of control has been explained as the “right to
particular activity which is necessary or desirable in the control not only the end to be achieved but also the
usual business or trade of the employer, regardless of means to be used in reaching such end.” With the
their length of service; while the latter refers to those conclusion that respondent directed petitioners to remain
employees who have been performing the job, regardless at their posts and continue with their duties, it is clear
of the nature thereof, for at least a year. If the employee that respondent exercised the power of control over
has been performing the job for at least one year, even if them; thus, the existence of an employer-employee
the performance is not continuous or merely intermittent, relationship.   Raul G. Locsin and Eddie B. Tomaquin
the law deems the repeated and continuing need for its vs. Philippine Long Distance Telephone Company, G.R.
performance as sufficient evidence of the necessity, if not No. 185251, October 2, 2009 .Retrenchment;  elements.
indispensability, of that activity to the business. In order for a retrenchment scheme to be valid, all of the
following elements under Article 283 of the Labor Code
must concur or be present.
Based on the circumstances surrounding respondent’s
employment by SMC, this Court is convinced that he has
attained the status of a regular employee long before he In the absence of one element, the retrenchment scheme
executed the employment contract with a fixed period. becomes an irregular exercise of management
Although respondent was initially hired by SMC as a prerogative. The employer’s obligation to exhaust all
casual employee, respondent has attained the status of a other means to avoid further losses without retrenching
regular employee. Respondent was initially hired by SMC its employees is a component of the first element as
on September 5, 1991 until March 1992. He was rehired enumerated above. To impart operational meaning to the
for the same position in April 1992 which lasted for five constitutional policy of providing full protection to labor,
to six months. After three weeks, he was again rehired as the employer’s prerogative to bring down labor costs by
a forklift operator and he continued to work as such until retrenching must be exercised essentially as a measure
August 1993. Thus, at the time he signed the of last resort, after less drastic means have been tried
Employment with a Fixed Period contract, respondent had and found wanting. Flight Attendants and Stewards
already been in the employ of SMC for at least twenty- Association of the Philippines (FASAP) vs. Philippine
three (23) months. Airlines, Inc., G.R. No. 178083, October 2, 2009.

The Labor Code provides that a casual employee can be UNION;  REGISTRATION.
considered as a regular employee if said casual employee
has rendered at least one year of service regardless of
The charge that a labor organization committed fraud
the fact that such service may be continuous or broken.
and misrepresentation in securing its registration is a
Section 3, Rule V, Book II of the Implementing Rules and
serious charge and deserves close scrutiny. It is serious
Regulations of the Labor Code clearly defines the term
because once such charge is proved, the labor union
“at least one year of service” to mean service within 12
acquires none of the rights accorded to registered
months, whether continuous or broken, reckoned from
organizations. Consequently, charges of this nature
the date the employee started working, including
should be clearly established by evidence and the
authorized absences and paid regular holidays, unless the
surrounding circumstances.
working days in the establishment, as a matter of
practice or policy, or as provided in the employment
contract, is less than 12 months, in which case said Here, the discrepancies in the number of union members
period shall be considered one year. If the employee has or employees stated in the various supporting documents
been performing the job for at least one year, even if the that respondent PIGLAS union submitted to labor
performance is not continuous or merely intermittent, the authorities can be explained. While it appears in the
law deems the repeated and continuing need for its minutes of the December 10, 2003 organizational
performance as sufficient evidence of the necessity, if not meeting that only 90 employees responded to the roll call
indispensability, of that activity to the business of the at the beginning, it cannot be assumed that such number
employer.  San Miguel Corporation vs. Eduardo L. could not grow to 128 as reflected on the signature sheet
Teodosio,  G.R. No. 163033, October 2, 2009. for attendance. The meeting lasted 12 hours from 11:00

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a.m. to 11:00 p.m. There is no evidence that the meeting As discussed above, this negotiated extension of the CBA
hall was locked up to exclude late attendees. term has no legal effect on the FVCLU-PTGWO’s exclusive
bargaining representation status which remained
effective only for five years ending on the original expiry
There is also nothing essentially mysterious or irregular
date of January 30, 2003. Thus, sixty days prior to this
about the fact that only 127 members ratified the union’s
date, or starting December 2, 2002, SANAMA-SIGLO
constitution and by-laws when 128 signed the attendance
could properly file a petition for certification election. Its
sheet. It cannot be assumed that all those who attended
petition, filed on January 21, 2003 or nine (9) days
approved of the constitution and by-laws. Any member
before the expiration of the CBA and of FVCLU-PTGWO’s
had the right to hold out and refrain from ratifying those
exclusive bargaining status, was seasonably filed.
documents or to simply ignore the process.

We thus find no error in the appellate court’s ruling

At any rate, the Labor Code and its implementing rules
reinstating the DOLE order for the conduct of a
do not require that the number of members appearing on
certification election. FVC Labor Union-Philippine
the documents in question should completely dovetail.
Transport and General Workers Organization (FVCLU-
For as long as the documents and signatures are shown
PTGWO) Vs. Sama-samang Nagkakaisang Manggagawa
to be genuine and regular and the constitution and by-
sa FVC-Solidarity of Independet and General Labor
laws democratically ratified, the union is deemed to have
Organization (SANAMA-FVC-SIGLO), G.R. No. 176249,
complied with registration requirements. The Heritage
November 27, 2009.
Hotel Manila (Owned and operated by Grand Plaza Hotel
Corp.) vs. Pinag-isang galing and lakas ng mg
manggagawa sa Heritage Manila (Piglas-Heritage), G.R. DISMISSAL; ATTORNEY’S FEES.
No. 177024, October 30, 2009.
In San Miguel Corporation v. Aballa, thr Court held that
in actions for recovery of wages or where an employee
was forced to litigate and thus incur expenses to protect
his rights and interests, a maximum of 10% of the total
monetary award by way of attorney’s fees is justifiable
under Article 111 of the Labor Code; Section 8, Rule VIII
NOVEMBER 2009 CASES of Book III of the Omnibus Rules Implementing the Labor
Code; and paragraph 7, Article 2208 of the Civil Code.
The award of attorney’s fees is proper and there need not
be any showing that the employer acted maliciously or in
bad faith when it withheld the wages. There need only be
COLLECTIVE BARGAINING AGREEMENT; a showing that the lawful wages were not paid
EXCLUSIVE BARGAINING STATUS. accordingly.   Philippine Long Distance Telephone
Company vs. Inocencio B. Berbano, Jr., G.R. No.
While the parties may agree to extend the CBA’s original 165199, November 27, 2009.
five-year term together with all other CBA provisions, any
such amendment or term in excess of five years will not DISMISSAL; MISCONDUCT.
carry with it a change in the union’s exclusive collective
bargaining status. By express provision of the above-
quoted Article 253-A, the exclusive bargaining status Misconduct has been defined as improper or wrong
cannot go beyond five years and the representation conduct. It is the transgression of some established and
status is a legal matter not for the workplace parties to definite rule of action, a forbidden act, a dereliction of
agree upon. In other words, despite an agreement for a duty, willful in character, and implies wrongful intent and
CBA with a life of more than five years, either as an not mere error of judgment. Ordinary misconduct would
original provision or by amendment, the bargaining not justify the termination of services of the employee as
union’s exclusive bargaining status is effective only for the Labor Code is explicit that the misconduct must be
five years and can be challenged within sixty (60) days serious. To be serious, the misconduct must be of such
prior to the expiration of the CBA’s first five years. grave and aggravated character and not merely trivial
and unimportant. Such misconduct, however serious,
must nevertheless be in connection with the employee’s
In the present case, the CBA was originally signed for a work to constitute just cause for his separation. As
period of five years, i.e., from February 1, 1998 to amplified by jurisprudence, misconduct, to be a just
January 30, 2003, with a provision for the renegotiation cause for dismissal, must (a) be serious; (b) relate to the
of the CBA’s other provisions at the end of the 3rd year performance of the employee’s duties; and (c) show that
of the five-year CBA term. Thus, prior to January 30, the employee has become unfit to continue working for
2001 the workplace parties sat down for renegotiation the employer. Moreover, in National Labor Relations
but instead of confining themselves to the economic and Commission v. Salgarino, this Court stressed that “[i]n
non-economic CBA provisions, also extended the life of order to constitute serious misconduct which will warrant
the CBA for another four months, i.e., from the original the dismissal of an employee under paragraph (a) of
expiry date on January 30, 2003 to May 30, 2003. 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

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required that the act or conduct must have been or key position in the company, it would be more prudent
performed with wrongful intent.” to order payment of separation pay instead of
reinstatement.
We believe that the misconduct of respondent is not of
serious nature as to warrant respondent’s dismissal from In order for the doctrine of strained relations to apply, it
service. The records of this case are bereft of any should be proved that the employee concerned occupies
showing that the alleged misconduct was performed by a position where he enjoys the trust and confidence of his
respondent with wrongful intent. On the contrary, employer and that it is likely that if reinstated, an
respondent readily admitted having installed the service atmosphere of antipathy and antagonism may be
features in his brother-in-law’s telephone line for generated as to adversely affect the efficiency and
purposes of study and research which could have productivity of the employee concerned.
benefited petitioner.  Philippine Long Distance Telephone
Company vs. Inocencio B. Berbano, Jr., G.R. No.
This Court is of the opinion that both the LA and the CA
165199, November 27, 2009.
based their conclusions on impression alone. It bears to
stress that reinstatement is the rule and, for the
DISMISSAL; MISCONDUCT. exception of strained relations to apply, it should be
proved that it is likely that if reinstated, an atmosphere
of antipathy and antagonism would be generated as to
Article 282(a) of the Labor Code states that the
adversely affect the efficiency and productivity of the
employer may terminate an employment for serious
employee concerned. However, both the LA and the CA
misconduct. Drug use in the premises of the employer
failed to state the basis for their finding that a strained
constitutes serious misconduct.  Noel B. Bagtas vs. Hon.
relationship exists.
Ruth C. Santos, etc. et al.,  G.R. No. 166682, November
27, 2009.
Based on the foregoing, this Court upholds the ruling of
the NLRC finding the doctrine of strained relations
DISMISSAL; NOTICE.
inapplicable to the factual circumstances of the case at
bar. Reynaldo G. Cabigting vs. San Miguel Foods,
Dismissal from service of an employee is valid if the Inc., G.R. No. 167706, November 5, 2009.
following requirements are complied with: (a) substantive
due process which requires that the ground for dismissal
is one of the just or authorized causes enumerated in the
Labor Code, and (b) procedural due process which
requires that the employee be given an opportunity to be
heard and defend himself. The employee must be DECEMBER 2009 CASES
furnished two written notices — the first notice apprises
the employee of the particular act or omission for which
his dismissal is sought, and the second notice informs the
employee of the employer’s decision to dismiss him.
Philippine Long Distance Telephone Company vs. ATTORNEY’S FEES;  ACTIONS FOR INDEMNITY
Inocencio B. Berbano, Jr., G.R. No. 165199, November UNDER EMPLOYER LIABILITY LAWS.
27, 2009.
The claim for attorney’s fees is granted following Article
DISMISSAL; RELIEF. 2208 of the New Civil Code which allows its recovery in
actions for recovery of wages of laborers and actions for
indemnity under the employer’s liability laws. The same
An illegally dismissed employee is entitled to the twin
fees are also recoverable when the defendant’s act or
reliefs of (a) either reinstatement or separation pay, if
omission has compelled the plaintiff to incur expenses to
reinstatement is no longer viable, and (b) backwages.
protect his interest as in the present case following the
These reliefs are given to alleviate the economic damage
refusal by the employer to settle the employee’s claims.
suffered by the illegally dismissed employee.  Philippine
Pursuant to prevailing jurisprudence, petitioner is entitled
Long Distance Telephone Company vs. Inocencio B.
to attorney’s fees of ten percent (10%) of the monetary
Berbano, Jr., G.R. No. 165199, November 27, 2009.
award. Leopoldo Abante vs. KJGS Fleet Management
Manila and/or Guy Domingo A. Macapayag, Kristian
REINSTATEMENT; STRAINED RELATIONS. Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430,
December 4, 2009.
Under the law and prevailing jurisprudence, an illegally
dismissed employee is entitled to reinstatement as a COMPENSABILITY OF DEATH; REQUIREMENTS.
matter of right. However, if reinstatement would only
exacerbate the tension and strained relations between
To be entitled to compensation, a claimant must show
the parties, or where the relationship between the
that the sickness is either: (1) a result of an occupational
employer and the employee has been unduly strained by
disease listed under Annex “A” of the Amended Rules on
reason of their irreconcilable differences, particularly
Employees’ Compensation under the conditions Annex
where the illegally dismissed employee held a managerial

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“A” sets forth; or (2) if not so listed, that the risk of COMPENSABLE INJURY; LOSS OF EARNING
contracting the disease is increased by the working CAPACITY.
conditions.
The Court has applied the Labor Code concept of
Based on Francisco’s death certificate, the immediate permanent total disability to Filipino seafarers in keeping
cause of his death was cardiac arrest; the antecedent with the avowed policy of the State to give maximum aid
cause was acute massive hemorrhage, and the and full protection to labor, it holding that the notion of
underlying cause was bleeding peptic ulcer disease. disability is intimately related to the worker’s capacity to
earn, what is compensated being not his injury or illness
but his inability to work resulting in the impairment of his
In determining the compensability of an illness, the
earning capacity, hence, disability should be understood
worker’s employment need not be the sole factor in the
less on its medical significance but more on the loss of
growth, development, or acceleration of a claimant’s
earning capacity. Joelson O. Iloreta vs. Philippine
illness to entitle him to the benefits provided for. It is
Transmarine Carriers, Inc. and Norbulk Shipping U.K.
enough that his employment contributed, even if only in
Ltd., G.R. No. 183908, December 4, 2009.
a small degree, to the development of the disease.

DISMISSAL; CONSTRUCTIVE DISMISSAL.

P.D. 626 is a social legislation whose primordial purpose
is to provide meaningful protection to the working class
against the hazards of disability, illness, and other Case law defines constructive dismissal as a cessation of
contingencies resulting in loss of income. In employee work because continued employment has been rendered
compensation, persons charged by law to carry out the impossible, unreasonable, or unlikely, as when there is a
Constitution’s social justice objectives should adopt a demotion in rank or diminution in pay or both or when a
liberal attitude in deciding compensability claims and clear discrimination, insensibility, or disdain by an
should not hesitate to grant compensability where a employer becomes unbearable to the employee.
reasonable measure of work-connection can be inferred.
Only this kind of interpretation can give meaning and
The test of constructive dismissal is whether a reasonable
substance to the law’s compassionate spirit as expressed
person in the employee’s position would have felt
in Article 4 of the Labor Code – that all doubts in the
compelled to give up his position under the
implementation and interpretation of the provisions of
circumstances. It is an act amounting to dismissal but is
the Labor Code, including their implementing rules and
made to appear as if it were not. In fact, the employee
regulations, should be resolved in favor of
who is constructively dismissed might have been allowed
labor. Government Service Insurance System vs. Jean E.
to keep coming to work. Constructive dismissal is
Raoet, G.R. No. 157038, December 23, 2009.
therefore a dismissal in disguise. The law recognizes and
resolves this situation in favor of employees in order to
COMPENSABLE INJURY; REQUIREMENT. protect their rights and interests from the coercive acts of
the employer.
Section 20(B) of the POEA Standard Employment
Contract provides for the liabilities of the employer only In the present case, the employer ceased verbally
when the seafarer suffers from a work-related injury or communicating with the employee and giving him work
illness during the term of his employment. assignment after suspecting that he had forged purchase
receipts. In this situation, the employee was forced to
leave the employer’s compound with his family and to
Petitioner claims to have reported his illness to an officer
transfer to a nearby place. The employee’s act of leaving
once on board the vessel during the course of his
his employer’s premises was in reality not his choice but
employment. The records are bereft, however, of any
a situation created by the employer. CRC Agricultural
documentary proof that he had indeed referred his illness
Trading and Rolando B. Catindig vs. National Labor
to a nurse or doctor in order to avail of proper treatment.
Relations Commission and Roberto Obias, G.R. No.
It thus becomes apparent that he was repatriated to the
177664, December 23, 2009.
Philippines, not on account of any illness or injury, but in
view of the completion of his contract.
DISMISSAL;  CONSTRUCTIVE DISMISSAL.
But even assuming that petitioner was repatriated for
medical reasons, he failed to submit himself to the Constructive dismissal exists when an act of clear
company-designated doctor in accordance with the post- discrimination, insensibility or disdain by an employer has
employment medical examination requirement under the become so unbearable to the employee leaving him with
above-quoted paragraph 3 of Section 20(B) of the POEA no option but to forego with his continued employment.
Standard Employment Contract. Failure to comply with
this requirement which is a sine qua non bars the filing of
In this case, the employee, while still employed with the
a claim for disability benefits. Dionisio M. Musnit vs. Sea
company, was compelled to resign and forced to go on
Star Shipping Corporation and Sea Star Shipping
leave. He was not allowed to participate in the activities
Corporation, Ltd., G.R. No. 182623, December 4, 2009.
of the company. His salary was no longer remitted to
him. His subordinates were directed not to report to him

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and the company directed one of its district managers to The liberality of the law can never be extended to the
take over his position and do his functions without prior unworthy and undeserving. In several instances, the
notice to him. policy of social justice has compelled this Court to accord
financial assistance in the form of separation pay to a
legally terminated employee. This liberality, however, is
These discriminatory acts were calculated to make the
not without limitations. Thus, when the manner and
employee feel that he is no longer welcome nor needed
circumstances by which the employee committed the act
in the company short of sending him an actual notice of
constituting the ground for his dismissal show his
termination. The Court held that the employer
perversity or depravity, no sympathy or mercy of the law
constructively dismissed the employee from
can be invoked.
service. Ramon B. Formantes vs. Duncan
Pharmaceuticals, Phils., Inc., G.R. No. 170661,
December 4, 2009. We have examined the records which indeed show that
the employee’s unauthorized absences as well as
tardiness are habitual despite having been penalized for
DISMISSAL; CORPORATE OFFICER; JURISDICTION.
past infractions. In Gustilo v. Wyeth Philippines, Inc.
[483 Phil. 69, 78 (2004)], we held that a series of
From the documents submitted by the company, irregularities when put together may constitute serious
petitioner was a director and officer of Slimmers World. misconduct. We also held that gross neglect of duty
The charges of illegal suspension, illegal dismissal, becomes serious in character due to frequency of
unpaid commissions, reinstatement and back wages instances. Serious misconduct is said to be a
imputed by petitioner against the company fall squarely transgression of some established and definite rule of
within the ambit of intra-corporate disputes. In a number action, a forbidden act, a dereliction of duty, willful in
of cases, the Court has held that a corporate officer’s character, and indicative of wrongful intent and not mere
dismissal is always a corporate act, or an intra-corporate error of judgment. Oddly, the employee never advanced
controversy which arises between a stockholder and a any valid reason to justify his absences. The employee’s
corporation. The question of remuneration involving a intentional and willful violation of company rules shows
stockholder and officer, not a mere employee, is not a his utter disregard of his work and his employer’s
simple labor problem but a matter that comes within the interest. Indeed, there can be no good faith in
area of corporate affairs and management and is a intentionally and habitually incurring inexcusable
corporate controversy in contemplation of the absences. Hence, he is not entitled to severance
Corporation Code. pay. Arsenio S. Quiambao vs. Manila Electric Company,
G.R. No. 171023, December 18, 2009.
It is a settled rule that jurisdiction over the subject
matter is conferred by law. The determination of the DISMISSAL; JUST CAUSE; SEXUAL ABUSE.
rights of a director and corporate officer dismissed from
his employment as well as the corresponding liability of a
As a manager, the employee enjoyed the full trust and
corporation, if any, is an intra-corporate dispute subject
confidence of the company and his subordinates. By
to the jurisdiction of the regular courts. Thus, the
committing sexual abuse against his subordinate, he
appellate court correctly ruled that it is not the NLRC but
clearly demonstrated his lack of fitness to continue
the regular courts which have jurisdiction over the
working as a managerial employee and deserves the
present case. Leslie Okol vs. Slimmers World
punishment of dismissal from the service. Ramon B.
International, et al., G.R. No. 160146, December 11,
Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R.
2009.
No. 170661, December 4, 2009.

DISMISSAL; DUE PROCESS; OPPORTUNITY TO BE

DISMISSAL; SEPARATION PAY IN LIEU OF
HEARD.
REINSTATEMENT.

Although the employee, during some parts of the trial

Under Article 279 of the Labor Code, the illegally
proceedings before the Labor Arbiter was not represented
dismissed employee is entitled to reinstatement without
by a member of the bar, he was given reasonable
loss of seniority rights and other privileges and to his full
opportunity to be heard and submit evidence to support
backwages, inclusive of allowances and other benefits or
his arguments, through the medium of pleadings filed in
their monetary equivalent, computed from the time his
the labor tribunals. He was also able to present his
compensation was withheld from him up to the time of
version of the Magat incident during his direct
his actual reinstatement. Thus, an illegally dismissed
examination conducted by his lawyer Atty. Jannette Inez.
employee is entitled to two reliefs: backwages and
Thus, he cannot claim that he was denied due
reinstatement. Where reinstatement is no longer viable
process. Ramon B. Formantes vs. Duncan
as an option, backwages shall be computed from the time
Pharmaceuticals, Phils., Inc., G.R. No. 170661,
of the illegal termination up to the finality of the decision.
December 4, 2009.
Separation pay equivalent to one month salary for every
year of service should likewise be awarded as an
DISMISSAL; JUST CAUSE; SEPARATION PAY. alternative in case reinstatement in not possible.

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In the present case, reinstatement is no longer feasible assistance of his representative, if he so desires. The
because of the strained relations between the employee requirement of notice is not a mere technicality, but a
and the employer. Time and again, the Court has requirement of due process to which every employee is
recognized that strained relations between the employer entitled.
and employee is an exception to the rule requiring actual
reinstatement for illegally dismissed employees for the
The employer clearly failed to comply with the two-notice
practical reason that the already existing antagonism will
requirement. Nothing in the records shows that the
only fester and deteriorate, and will only worsen with
company ever sent the employee a written notice
possible adverse effects on the parties, if we shall compel
informing him of the ground for which his dismissal was
reinstatement; thus, the use of a viable substitute that
sought. It does not also appear that the company held a
protects the interests of both parties while ensuring that
hearing where the employee was given the opportunity to
the law is respected.
answer the charges of abandonment. Neither did the
company send a written notice to the employee informing
The payment of separation pay is the better alternative him that his service had been terminated and the reasons
as it liberates the employee from what could be a highly for the termination of his employment. Under these facts,
hostile work environment, while releasing the employer the respondent’s dismissal was illegal. CRC Agricultural
from the grossly unpalatable obligation of maintaining in Trading and Rolando B. Catindig vs. National Labor
their employ a worker they could no longer trust. CRC Relations Commission and Roberto Obias, G.R. No.
Agricultural Trading and Rolando B. Catindig vs. National 177664, December 23, 2009.
Labor Relations Commission and Roberto Obias, G.R. No.
177664, December 23, 2009.
DRUG TESTING FOR EMPLOYEES; EMPLOYER’S
DUTY.
DISMISSAL; TWIN REQUIREMENTS.
It was Plantation Bay’s responsibility to ensure that the
Well settled is the dictum that the twin requirements of drug tests would be properly administered, the results
notice and hearing constitute the essential elements of thereof being the bases in terminating the employees’
due process in the dismissal of employees. It is a cardinal services.
rule in our jurisdiction that the employer must furnish the
employee with two written notices before the termination
The employer failed to indubitably prove that the
of employment can be affected: (a) the first apprises the
employees were guilty of drug use in contravention of its
employee of the particular acts or omissions for which his
drug-free workplace policy amounting to serious
dismissal is sought; and (b) the second informs the
misconduct. The employees are therefore deemed to
employee of the employer’s decision to dismiss him.
have been illegally dismissed. Plantation Bay Resort &
Spa and Efren Belarmino vs. Romel S. Dubrico, et al.,
The barrage of letters sent to petitioner, starting from a G.R. No. 182216, December 4, 2009.
letter dated April 22, 1994 until his termination on May
19, 1994, was belatedly made and apparently done in an
EMPLOYEE DISABILITY BENEFITS.
effort to show that petitioner was accorded the notices
required by law in dismissing an employee. As observed
by the Labor Arbiter in her decision, prior to those letters, Permanent disability refers to the inability of a worker to
the employee was already constructively dismissed. perform his job for more than 120 days, regardless of
whether he loses the use of any part of his body. What
determines the employee’s entitlement to permanent
Since the dismissal, although for a valid cause, was done
disability benefits is his inability to work for more than
without due process of law, the employer should
120 days. In the case at bar, it was only on February 20,
indemnify the employee with nominal damages in the
2001 that the Certificate of Fitness for Work was issued
amount of P30,000.00.Ramon B. Formantes vs. Duncan
by Dr. Lim, more than 6 months from the time he was
Pharmaceuticals, Phils., Inc., G.R. No. 170661,
initially evaluated by the doctor on July 24, 2000 and
December 4, 2009.
after he underwent operation on August 18, 2000.

DISMISSAL; TWO-NOTICE REQUIREMENT.

It is gathered from the documents emanating from the
Office of Dr. Lim that the employee was seen by him
To justify the dismissal of an employee for a just cause, from July 24, 2000 up to February 20, 2001 or a total of
the employer must furnish the worker with two written 13 times; and except for the medical reports dated
notices. The first is the notice to apprise the employee of February 5, 2001 and February 20, 2001 (when the
the particular acts or omissions for which his dismissal is doctor finally pronounced petitioner fit to work), Dr. Lim
sought. This may be loosely considered as the charge consistently recommended that the employee continue
against the employee. The second is the notice informing his physical rehabilitation/therapy and revisit clinic on
the employee of the employer’s decision to dismiss him. specific dates for re-evaluation, thereby implying that the
This decision, however, must come only after the employee was not yet fit to work.
employee is given a reasonable period from receipt of the
first notice within which to answer the charge, and ample
opportunity to be heard and defend himself with the

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Given a seafarer’s entitlement to permanent disability contracts themselves provide ample leads into the
benefits when he is unable to work for more than 120 relationship between the company, on the one hand, and
days, the failure of the company-designated physician to Peerless and Excellent, on the other. The Court of
pronounce the employee fit to work within the 120-day Appeals noted that both the Peerless and the Excellent
period entitles him to permanent total disability benefit in contracts show that their obligation was solely to provide
the amount of US$60,000.00. Leopoldo Abante vs. KJGS the company with “the services of contractual
Fleet Management Manila and/or Guy Domingo A. employees,” and nothing more. These contracted
Macapayag, Kristian Gerhard Jebsens Skipsrenderi services were for the handling and delivery of the
A/S, G.R. No. 182430, December 4, 2009. company’s products and allied services. Following D.O.
18-02 and the contracts that spoke purely of the supply
of labor, the Court of Appeals concluded that Peerless
EXISTENCE OF EMPLOYER-EMPLOYEE
and Excellent were labor-only contractors unless they
RELATIONSHIP.
could prove that they had the required capitalization and
the right of control over their contracted workers.
The elements to determine the existence of an
employment relationship are: (1) the selection and
The contractors were not independently selling and
engagement of the employee; (2) the payment of wages;
distributing company products, using their own
(3) the power of dismissal; and (4) the employer’s power
equipment, means and methods of selling and
to control the employee’s conduct. The most important
distribution; they only supplied the manpower that
element is the employer’s control of the employee’s
helped the company in the handing of products for sale
conduct, not only as to the result of the work to be done,
and distribution. In the context of D.O. 18-02, the
but also as to the means and methods to accomplish it.
contracting for sale and distribution as an independent
All the four elements are present in this case.
and self-contained operation is a legitimate contract, but
the pure supply of manpower with the task of assisting in
First, the company engaged the services of the worker in sales and distribution controlled by a principal falls within
1995. Second, the company paid the worker a daily wage prohibited labor-only contracting.  Coca Cola Bottlers
of P175.00, with allowances ranging from P140.00 to Philippines, Inc. vs. Ricky E. Dela Cruz, et al., G.R. No.
P200.00 per day.  The fact that the worker was paid 184977, December 7, 2009.
under a “no work no pay” scheme, assuming this claim to
be true, is not significant. The “no work no pay” scheme
OUTSOURCING.
is merely a method of computing compensation, not a
basis for determining the existence or absence of
employer-employee relationship. Third, the company’s The employer was within its right in entering the
power to dismiss the worker was inherent in the fact that forwarding agreements with the forwarders as an
it engaged the services of the worker as a driver. Finally, exercise of its management prerogative. The employer’s
a careful review of the record shows that the worker declared objective for the arrangement is to achieve
performed his work as driver under the petitioners’ greater economy and efficiency in its operations – a
supervision and control. The company determined how, universally accepted business objective and standard that
where, and when the worker performed his task. They, in the union has never questioned. In Meralco v.
fact, requested the worker to live inside their compound Quisumbing,[G.R. No. 127598, January 27, 1999] the
so he (the worker) could be readily available when the Court joined this universal recognition of outsourcing as a
company needed his services. Undoubtedly, the company legitimate activity when it held that a company can
exercised control over the means and methods by which determine in its best judgment whether it should contract
the worker accomplished his work as a driver. CRC out a part of its work for as long as the employer is
Agricultural Trading and Rolando B. Catindig vs. National motivated by good faith; the contracting is not for
Labor Relations Commission and Roberto Obias, G.R. No. purposes of circumventing the law; and does not involve
177664, December 23, 2009. or be the result of malicious or arbitrary action. Temic
Automotive Philippines, Inc. vs. Temic Automotive
Philippines, Inc. Employees Union-FFW, G.R. No. 186965,
LABOR-ONLY CONTRACTING.
December 23, 2009.

The contract between the principal and the contractor is

REGULATIONS; RETROACTIVITY OF POEA
not the final word on how the contracted workers relate
CIRCULAR.
to the principal and the purported contractor; the
relationships must be tested on the basis of how they
actually operate. Respecting the appellate court’s ruling that it is POEA
Memo Circular No. 55, series of 1996 which is applicable
and not Memo Circular No. 9, series of 2000, apropos is
The legitimate job contractor must have the capitalization
the ruling in Seagull Maritime Corporation v. Dee [G.R.
and equipment to undertake the sale and distribution of
No. 165156, April 2, 2007] involving employment
the manufacturer’s products, and must do it on its own
contract entered into in 1999, before the promulgation of
using its own means and selling methods.
POEA Memo Circular No. 9, series of 2000 or the use of
the new POEA Standard Employment Contract, like that
Even before going into the realities of workplace involved in the present case. In said case, the Court
operations, the Court of Appeals found that the service applied the 2000 Circular in holding that while it is the

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company-designated physician who must declare that the additional compensation is not allowed under Section 8,
seaman suffered permanent disability during Article IX-B of the Constitution.
employment, it does not deprive the seafarer of his right
to seek a second opinion which can then be used by the
There is only one act of exit from the service and only
labor tribunals in awarding disability claims. Leopoldo
one service to exit from. Employees who chose
Abante vs. KJGS Fleet Management Manila and/or Guy
separation from the service under the NPC’s restructuring
Domingo A. Macapayag, Kristian Gerhard Jebsens
plan never really exercised the right to optionally retire;
Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.
the earlier termination of their employment denied them
the opportunity to optionally retire. Consequently, no
TERMINATION;  ABANDONMENT. retirement pay ever accrued in their favor.

Abandonment of work, or the deliberate and unjustified This means, in concrete terms, that the employees who
refusal of an employee to resume his employment, is a opted to be separated from the service under the NPC
just cause for employment termination under paragraph restructuring plan and who have received separation pay
(b) of Article 282 of the Labor Code, since it constitutes under RA 9136, cannot also be considered to have
neglect of duty. The jurisprudential rule is that separately exited from the same service through optional
abandonment is a matter of intention that cannot be retirement under CA 186, entitling them to separate
lightly presumed from equivocal acts. To constitute retirement benefits under this law. RA 9136 provides for
abandonment, two elements must concur: (1) the failure separation benefits in the alternative and does not offer
to report for work or absence without valid or justifiable both.
reason, and (2) a clear intent, manifested through overt
acts, to sever the employer-employee relationship. The
Optional retirement clearly is a mere expectancy until
employer bears the burden of showing a deliberate and
availed of by those who are qualified to exercise the
unjustified refusal by the employee to resume his
option to retire. If not taken because the employee chose
employment without any intention of returning.
the separation package under RA 9136, then optional
retirement under CA 186 simply remained an expectancy
In the present case, the employer did not adduce any that never materialized and is now forever lost. To put it
proof to show that the employee clearly and differently, given one and the same exit from the one
unequivocally intended to abandon his job or to sever the and the same service for which only one separation
employer-employee relationship. Moreover, the filing of benefit is provided, there can be no actual retirement
the complaint for illegal dismissal on June 22, 2004 under CA 186 after exit via the RA 9136 route has been
strongly speaks against the employer’s charge of taken; optional retirement under CA 186 has then
abandonment; it is illogical for an employee to abandon become the road not taken. Efren M. Herrera, et al. vs.
his employment and, thereafter, file a complaint for National Power Corporation, et al., Separate Concurring
illegal dismissal. CRC Agricultural Trading and Rolando B. Opinion of J. Brion, G.R. No. 166570, December 18,
Catindig vs. National Labor Relations Commission and 2009.
Roberto Obias, G.R. No. 177664, December 23, 2009.
TERMINATION;  RETRENCHMENT.
TERMINATION;  REORGANIZATION.
Retrenchment is the termination of employment initiated
Absent explicit statutory authority, the Court cannot by the employer through no fault of and without
sustain the grant of separation pay and retirement prejudice to the employees, it is resorted to during
benefits from one single act of involuntary separation periods of business recession, industrial depression, or
from the service, lest there be duplication of purpose and seasonal fluctuations or during lulls occasioned by lack of
depletion of government resources. Within the context of orders, shortage of materials, conversion of the plant for
government reorganization, separation pay and a new production program or the introduction of new
retirement benefits arising from the same cause, are in methods or more efficient machinery or of automation. It
consideration of the same services and granted for the is a management prerogative resorted to, to avoid or
same purpose. Whether denominated as separation pay minimize business losses.
or retirement benefits, these financial benefits reward
government service and provide monetary assistance to
To effect a valid retrenchment, the following elements
employees involuntarily separated due to bona fide
must be present: (1) the retrenchment is reasonably
reorganization. Efren M. Herrera, et al. vs. National
necessary and likely to prevent business losses which, if
Power Corporation, et al., G.R. No. 166570, December
already incurred, are not merely de minimis, but
18, 2009.
substantial, serious, and real, or only if expected, are
reasonably imminent as perceived objectively and in
TERMINATION;  REORGANIZATION. good faith by the employer; (2) the employer serves
written notice both to the employee/s concerned and the
Department of Labor and Employment at least a month
The grant of retirement benefits to the employees in
before the intended date of retrenchment; (3) the
addition to the separation pay they have already received
employer pays the retrenched employee separation pay
effectively amounts to additional compensation for the
in an amount prescribed by the Code; (4) the employer
same services. Unless specifically authorized by law, such

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exercises its prerogative to retrench in good faith; and APPEAL; APPEAL BOND A JURISDICTIONAL
(5) the employer uses fair and reasonable criteria in REQUIREMENT.
ascertaining who would be retrenched or retained.
The Court has always stressed that Article 223, which
The losses must be supported by sufficient and prescribes the appeal bond requirement, is a rule of
convincing evidence. The normal method of discharging jurisdiction and not of procedure. There is little leeway
this burden of proof is the submission of financial for condoning a liberal interpretation thereof, and
statements duly audited by independent external certainly none premised on the ground that its
auditors. For failure of Asiakonstrukt to clearly and requirements are mere technicalities. It must be
satisfactorily substantiate its financial losses, the emphasized that there is no inherent right to an appeal in
dismissal of the employee on account of retrenchment is a labor case, as it arises solely from grant of statute,
unjustified. Virgilio G. Anabe vs. Asian Construction namely, the Labor Code.
(ASIAKONSTRUKT), et al., G.R. No. 183233, December
23, 2009.
For the same reason, the Court has repeatedly
emphasized that the requirement for posting the surety
UNION; CANCELLATION OF UNION REGISTRATION; bond is not merely procedural but jurisdictional and
GROUNDS. cannot be trifled with. Non-compliance with such legal
requirements is fatal and has the effect of rendering the
judgment final and executory. Hilario S. Ramirez vs. Hon.
For the purpose of de-certifying a union, it must be
Court of Appeals, et al., G.R. No. 182626, December 4,
shown that there was misrepresentation, false statement
2009.
or fraud in connection with the adoption or ratification of
the constitution and by-laws or amendments thereto; the
minutes of ratification; or, in connection with the election APPEAL; APPEAL BOND REDUCTION.
of officers, the minutes of the election of officers, the list
of voters, or failure to submit these documents together
It is daylight-clear from the foregoing that while the
with the list of the newly elected-appointed officers and
bond may be reduced upon motion by the employer, this
their postal addresses to the Bureau of Labor Relations.
is subject to the conditions that (1) the motion to reduce
the bond shall be based on meritorious grounds; and (2)
The bare fact that two signatures appeared twice on the a reasonable amount in relation to the monetary award is
list of those who participated in the organizational posted by the appellant; otherwise, the filing of the
meeting would not provide a valid reason to cancel the motion to reduce bond shall not stop the running of the
union’s certificate of registration. The cancellation of a period to perfect an appeal. The qualification effectively
union’s registration doubtless has an impairing dimension requires that unless the NLRC grants the reduction of the
on the right of labor to self-organization. For fraud and cash bond within the 10-day reglementary period, the
misrepresentation to be grounds for cancellation of union employer is still expected to post the cash or surety bond
registration under the Labor Code, the nature of the securing the full amount within the said 10-day
fraud and misrepresentation must be grave and period. Hilario S. Ramirez vs. Hon. Court of Appeals, et
compelling enough to vitiate the consent of a majority of al., G.R. No. 182626, December 4, 2009.
union members. Mariwasa Siam Ceramics, Inc. vs. The
Secretary of the Department of Labor and Employment,
APPEAL;  ISSUES RAISED FIRST TIME ON APPEAL;
et al., G.R. No. 183317, December 21, 2009.
EXCEPTIONS.

UNION; MEMBERSHIP REQUIREMENT.

While it is a well-settled rule, also applicable in labor
cases, that issues not raised in proceedings below cannot
While it is true that the withdrawal of support may be be raised for the first time on appeal, there are
considered as a resignation from the union, the fact exceptions thereto, among which are, for reasons of
remains that at the time of the union’s application for public policy or interest.
registration, the affiants were members of the union and
they comprised more than the required 20% membership
The NLRC did not err in considering the issue of the
for purposes of registration as a labor union. Article 234
veracity of the confirmatory tests even if the same was
of the Labor Code merely requires a 20% minimum
raised only in the employee’s Motion for Reconsideration
membership during the application for union registration.
of the NLRC Decision, it being crucial in determining the
It does not mandate that a union must maintain the 20%
validity of the employee’s dismissal from service.
minimum membership requirement all throughout its
existence. Mariwasa Siam Ceramics, Inc. vs. The
Secretary of the Department of Labor and Employment, Technical rules of procedure are not strictly adhered to in
et al., G.R. No. 183317, December 21, 2009. labor cases. In the interest of substantial justice, new or
additional evidence may be introduced on appeal before
the NLRC. Such move is proper, provided due process is
observed, as was the case here, by giving the opposing
Labor Procedure
party sufficient opportunity to meet and rebut the new or
additional evidence introduced.

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The Constitution no less directs the State to afford full upon the placing under rehabilitation of employer-
protection to labor. To achieve this goal, technical rules corporations.
of procedure shall be liberally construed in favor of the
working class in accordance with the demands of
The suspensive effect of the stay order is not time-
substantial justice. Plantation Bay Resort & Spa and
bound. As we held in Rubberworld, it continues to be in
Efren Belarmino vs. Romel S. Dubrico, et al., G.R. No.
effect as long as reasonably necessary to accomplish its
182216, December 4, 2009.
purpose. Gina M. Tiangco and Salvacion Jenny Manego
vs. Uniwide Sales Warehouse Club, Inc. and Jimmy Gow,
APPEAL; PERFECTION. G.R. No. 168697, December 14, 2009.

Under the Rules, appeals involving monetary awards are NCMB APPEAL.
perfected only upon compliance with the following
mandatory requisites, namely: (1) payment of the appeal
Rule 43 of the Rules of Court under which petitioners
fees; (2) filing of the memorandum of appeal; and (3)
filed their petition before the Court of Appeals applies to
payment of the required cash or surety bond.
awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of
The posting of a bond is indispensable to the perfection its quasi-judicial functions. Given NCMB’s functions, it
of an appeal in cases involving monetary awards from the cannot be considered a quasi-judicial agency. Hence, its
decision of the Labor Arbiter. The intention of the decisions or that of its authorized officer cannot be
lawmakers to make the bond a mandatory requisite for appealed either through a petition for review under Rule
the perfection of an appeal by the employer is clearly 43 or under Rule 65 of the Revised Rules of
expressed in the provision that an appeal by the Court. Juanito Tabigue, et al. vs. International Copra
employer may be perfected “only upon the posting of a Export Corporation (INTERCO), G.R. No. 183335,
cash or surety bond.” The word “only” in Articles 223 of December 23, 2009.
the Labor Code makes it unmistakably plain that the
lawmakers intended the posting of a cash or surety bond
STRIKES AND LOCKOUTS; ASSUMPTION AND
by the employer to be the essential and exclusive means
CERTIFICATION ORDER; MANDATORY ANDS
by which an employer’s appeal may be perfected. The
IMMEDIATELY EXECUTORY.
word “may” refers to the perfection of an appeal as
optional on the part of the defeated party, but not to the
compulsory posting of an appeal bond, if he desires to Articles 263 (g) and 264 of the Labor Code have been
appeal. The meaning and the intention of the legislature enacted pursuant to the police power of the State. The
in enacting a statute must be determined from the grant of plenary powers to the Secretary of Labor makes
language employed; and where there is no ambiguity in it incumbent upon him to bring about soonest, a fair and
the words used, then there is no room for construction. just solution to the differences between theramiemployer
and the employees, so that the damage such labor
dispute might cause upon the national interest may be
Clearly, the filing of the bond is not only mandatory but
minimized as much as possible, if not totally averted, by
also a jurisdictional requirement that must be complied
avoiding stoppage of work or any lag in the activities of
with in order to confer jurisdiction upon the NLRC. Non-
the industry or the possibility of those contingencies that
compliance with the requirement renders the decision of
might cause detriment to the national interest.
the Labor Arbiter final and executory. This requirement is
intended to assure the workers that if they prevail in the
case, they will receive the money judgment in their favor In order to effectively achieve such end, the assumption
upon the dismissal of the employer’s appeal. Hilario S. or certification order shall have the effect of
Ramirez vs. Hon. Court of Appeals, et al., G.R. No. automatically enjoining the intended or impending strike
182626, December 4, 2009. or lockout. Moreover, if one has already taken place, all
striking workers shall immediately return to work, and
the employer shall immediately resume operations and
ILLEGAL DISMISSAL AND REHABILITATION
readmit all workers under the same terms and conditions
PROCEEDINGS.
prevailing before the strike or lockout.

The term “claim,” as contemplated in Section 6 (c), refers

Assumption and certification orders are executory in
to debts or demands of a pecuniary nature. It is the
character and are to be strictly complied with by the
assertion of rights for the payment of money. Here,
parties, even during the pendency of any petition
petitioners have pecuniary claims—the payment of
questioning their validity. Regardless therefore of its
separation pay and moral and exemplary damages.
motives, or of the validity of its claims, YSS Laboratories
must readmit all striking employees and give them back
In Rubberworld (Phils.), Inc. v. NLRC [365 Phil. 273 their respective jobs. Accepting back the workers in this
(1999)], we held that a labor claim is a “claim” within the case is not a matter of option, but of obligation mandated
contemplation of PD 902-A, as amended. This is by law for YSS Laboratories to faithfully comply with. Its
consistent with the Interim Rules of Procedure on compulsory character is mandated, not to cater to a
Corporate Rehabilitation which came out in 2000. Thus, narrow segment of society, or to favor labor at the
labor claims are included among the actions suspended expense of management, but to serve the greater

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interest of society by maintaining the economic Court applied the Labor Code concept of permanent total
equilibrium. disability to Filipino seafarers. The Court held that the
notion of disability is intimately related to the worker’s
capacity to earn. What is compensated is not the
Certainly, the determination of who among the strikers
employee’s injury or illness but his inability to work
could be admitted back to work cannot be made to
resulting in the impairment of his earning capacity;
depend upon the discretion of employer, lest the
hence, disability should be understood less on its medical
certification or assumption-of-jurisdiction orders are
significance but more on the loss of earning capacity.
stripped of their coercive power that is necessary for
attaining their laudable objective. The return-to-work
order does not interfere with the management’s In the present case, petitioner was able to secure a “fit to
prerogative, but merely regulates it when, in the exercise work” certification from a doctor only after more than five
of such right, national interests will be affected. The months from the time he was medically repatriated due
rights granted by the Constitution are not absolute. They to a finding that his disability is considered permanent
are still subject to control and limitation to ensure that and total.  Significantly, petitioner remained unemployed
they are not exercised arbitrarily. The interests of both even after he filed on February 26, 2002 his complaint to
the employers and employees are intended to be recover permanent total disability compensation and
protected and not one of them is given undue despite the August 31, 2005 Decision of the NLRC which
preference. YSS Employees Union-Philippine Transport was affirmed by the Court of Appeals, ordering
and General Organization vs. YSS Laboratories, Inc., respondents to “allow complainant to resume sea duty.”
G.R. No. 155125, December 4, 2009.
That petitioner was not likely to fully recover from his
disability is mirrored by the Labor Arbiter’s 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.  Petitioner’s
disability being then permanent and total, he is “entitled
JANUARY 2010 CASES 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.
CBA; COVERAGE. 

  LABOR CODE; INTERPRETATION.

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 Another basic principle is that expressed in Article 4 of
terms of the CBA, petitioners are members of the the Labor Code – that all doubts in the interpretation and
appropriate bargaining unit because they are regular implementation of the Labor Code should be interpreted
rank-and-file employees and do not belong to any of the in favor of the workingman.  This principle has been
excluded categories. Most importantly, the labor arbiter’s extended by jurisprudence to cover doubts in the
decision of January 17, 2002 – affirmed all the way to the evidence presented by the employer and the employee.
CA – ruled against the company’s submission that they The petitioner has, at very least, shown serious doubts
are independent contractors. Thus, as regular rank-and- about the merits of the company’s case, particularly in
file employees, they fall within the CBA coverage. the appreciation of the clinching evidence on which the
And, under the CBA’s express terms, they are entitled to NLRC and CA decisions were based.  In such contest of
its benefits. 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
CBA coverage is not only a question of fact, but of law and discriminatory working environment he found himself
and contract.  The factual issue is whether the petitioners in, particularly evidenced by the escalating acts of
are regular rank-and-file employees of the company.  The unfairness against him that culminated in the
tribunals below uniformly answered this question in the appointment of another HRD manager without any prior
affirmative. From this factual finding flows legal effects notice to him.  Where no less than the company’s chief
touching on the terms and conditions of the petitioners’ corporate officer was against him, petitioner had no
regular employment.  Farley Fulache, et al. vs. ABS-CBN alternative but to resign from his employment.
Broadcasting Corporation, G.R. No. 183810, January 21,
2010.
The Court also gave significance to the fact that
petitioner sought almost immediate official recourse to
EMPLOYEE BENEFITS; PERMANENT DISABILITY contest his separation from service through a complaint
BENEFITS.  for illegal dismissal, and held that this is not the act of
one who voluntarily resigned; his immediate filing of
In accordance with the avowed policy of the State to give a complaint characterizes him as one who deeply felt that
maximum aid and full protection to labor, the he had been wronged. Manolo A. Peñaflor vs. Outdoor

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Clothing Manufacturing Corporation, et al., G.R. No. The Court reiterated the established distinctions between
177114, January 21, 2010. 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
Labor Procedure correct application of law or jurisprudence to a certain set
of facts; or when the issue does not call for an
APPEAL; ILLEGAL DISMISSAL. 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
In the present case, the company terminated the services difference arises as to the truth or falsehood of facts or
of four drivers who were declared by the labor arbiter to when the query invites calibration of the whole evidence
be regular employees of the company in an initial considering mainly the credibility of the witnesses, the
complaint filed by said drivers for regularization. Pending existence and relevancy of specific surrounding
the company’s appeal of the labor arbiter’s decision, the circumstances, as well as their relation to each other and
company terminated the employment of said drivers on to the whole, and the probability of the situation.”  Farley
the ground of redundancy, which action, the Court Fulache, et al. vs. ABS-CBN Broadcasting
viewed as an implied admission of the regular Corporation, G.R. No. 183810, January 21, 2010.
employment status of the drivers. The Court held that by
implementing the dismissal action at the time the labor
arbiter’s ruling was under review, the company DISMISSAL; BURDEN OF PROOF. 
unilaterally negated the effects of the labor arbiter’s
ruling while at the same time appealing the same ruling It is a settled rule that in employee termination disputes,
to the NLRC.  This unilateral move is a direct affront to the employer bears the burden of proving that the
the NLRC’s authority and an abuse of the appeal employee’s dismissal was for just and valid cause. 
process.  All these go to show that company acted with That petitioner did indeed file a letter of resignation does
patent bad faith.  Farley Fulache, et al. vs. ABS-CBN not help the company’s case as, other than the fact of
Broadcasting Corporation, G.R. No. 183810, January 21, resignation, the company must still prove that the
2010. employee voluntarily resigned.  There can be no valid
resignation where the act was made under compulsion or
APPEAL; QUESTIONS OF FACT.  under circumstances approximating compulsion, such as
when an employee’s act of handing in his resignation was
a reaction to circumstances leaving him no alternative
The rule that a Rule 45 petition deals only with legal but to resign.  In this case, the Court held that
issues is not an absolute rule; it admits of exceptions.  In petitioner had been constructively dismissed as his
the labor law setting, the Court may look into factual resignation was a response to the unacceptable
issues when there is a conflict in the factual appointment of another person to a position he still
findings of the labor arbiter, the NLRC, and the CA as in occupied.  In sum, the evidence does not support the
the present case where the labor arbiter found facts existence of voluntariness
supporting the conclusion that there had been in petitioner’s resignation.  Manolo A. Peñaflor vs.
constructive dismissal, while the NLRC’s and the CA’s Outdoor Clothing Manufacturing Corporation, et al., G.R.
factual findings contradicted the labor arbiter’s No. 177114, January 21, 2010.
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. Peñaflor vs. Outdoor
Clothing Manufacturing Corporation, et al., G.R. No. FEBRUARY 2010 CASES
177114, January 21, 2010.
AGENCY; PRINCIPLE OF APPARENT AUTHORITY.
APPEAL UNDER RULE 45; QUESTIONS OF LAW VS.
QUESTIONS OF FACT.
There is ample evidence that the hospital held out to the
patient that the doctor was its agent. The two factors
Petitioners in the present case do not question the that determined apparent authority in this case were:
findings of facts in the assailed decisions.  They question first, the hospital’s implied manifestation to the patient
the misapplication of the law and jurisprudence on the which led the latter to conclude that the doctor was the
facts recognized by the decisions.  For example, they hospital’s agent; and second, the patient’s reliance upon
question as contrary to law their exclusion from the CBA the conduct of the hospital and the doctor, consistent
after they were recognized as regular rank-and-file with ordinary care and prudence.
employees of the company.  They also question the basis
in law for the dismissal of four drivers and the legal
It is of record that the hospital required a “consent for
propriety of the redundancy action taken against them.
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

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Medical City General Hospital to perform such diagnostic CA accepted the allegation that the mole appeared right
procedures and to administer such medications and on the spot where respondent sustained the injury
treatments as may be deemed necessary or advisable by without any further proof that the mole appeared
the physicians of this hospital for and during the because of the injury.  The CA further ruled that “the risk
confinement of xxx.” of acquiring the said ailment increased by the nature of
[respondent’s] work in going to school and in returning to
her residence during school days x x x.”  However, the
By such statement, the hospital virtually reinforced the
CA failed to consider that in a tropical country like the
public impression that the doctor was a physician of its
Philippines, exposure to sunlight is common.  Unlike
hospital, rather than one independently practicing in it;
farmers, fishermen or lifeguards, it was not shown that
that the medications and treatments he prescribed were
respondent had chronic long-term exposure to the sun
necessary and desirable; and that the hospital staff was
considered necessary for the development of melanoma.
prepared to carry them out. Professional Services, Inc.
Thus, the Court did not find the risk of contracting the
vs. The Court of Appeals, et al./Natividad (substituted by
disease to have been heightened by respondent’s
her children Marcelino Agana III, Enrique Agana, Jr.
exposure to sunlight in going to work and returning to
Emma Agana-Andaya, Jesus Agana and Raymund Agana
her residence. Government Service Insurance System vs.
and Errique Agana) vs. The Court of Appeals and Juan
Rosalinda A. Bernadas, G.R. No. 164731, February 11,
Fuentes Miguel Ampil vs. Natividad and Enrique Agana,
2010
G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590,
February 2, 2010.
DISMISSAL; DUE PROCESS.
COMPENSABLE ILLNESS.
 The essence of due process is the opportunity to be
heard; it is the denial of this opportunity that constitutes
Since cholecystolithiasis or gallstone has been excluded
violation of due process of law. The employee was given
as a compensable illness under the applicable standard
the opportunity to be heard when a proper notice of
contract for Filipino seafarers that binds the seafarer and
investigation was sent to him, although the notice did not
the vessel’s foreign owner, it was an error for the CA to
reach him for reasons outside the employer’s
treat such  illness as “work-related” and, therefore,
control.  The employee was not also totally unheard on
compensable.  The standard contract precisely did not
the matter as he was able to explain his side through the
consider gallstone as compensable illness because the
two (2) explanation letters he submitted. These letters
parties agreed, presumably based on medical science,
are clear indications that he intimately knew of the
that such affliction is not caused by working on board
matter for which he was being investigated.  If he was
ocean-going vessels.
denied due process at all, the denial was with respect to
the charges of extortion, tardiness and absenteeism,
Nor is there any evidence to prove that the nature of the which are grounds invoked separately from loss of trust
seafarer’s work on board a ship aggravated his and confidence. These grounds were not serious
illness.  No one knows if he had gallstone at the time he considerations in the dismissal that followed, and
boarded the vessel.  By the nature of this illness, it is therefore, were not considered by the Court as material
highly probable that he already had it when he boarded to the present case. Bibiana Farms and Mills, Inc. vs.
his assigned ship although it went undiagnosed because Arturo Lado, G.R. No. 157861, February 2, 2010.
he had yet to experience its symptoms. Bandila Shipping,
Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100,
DISMISSAL; DUE PROCESS.
February 22, 2010.

In an unlawful dismissal case, the employer has the

COMPENSABLE ILLNESS; WORK RELATED.
burden of proving the lawful cause sustaining the
dismissal of the employee. The employer must
Melanoma is not listed as an occupational disease under affirmatively show rationally adequate evidence that the
Annex “A” of the Rules on Employees dismissal was for a justifiable cause. The employee’s
Compensation.  Hence, respondent has the burden of behavior constituted just cause. However, the company
proving, by substantial evidence, the causal relationship cannot deny that it failed to observe due process. The
between her illness and her working conditions. law requires that the employer must furnish the worker
Substantial evidence means such relevant evidence as a sought to be dismissed with two written notices before
reasonable mind might accept to support a conclusion. termination of employment can be legally effected: (1)
notice which apprises the employee of the particular acts
The Court in this case agreed with the petitioner and the or omissions for which his dismissal is sought; and (2)
ECC that respondent was not able to positively prove that the subsequent notice which informs the employee of the
her ailment was caused by her employment and that the employer’s decision to dismiss him.  Violation of the
risk of contracting the disease was increased by her employee’s right to statutory due process, even if the
working conditions. While the law requires only a dismissal was for a just cause, warrants the payment of
reasonable work-connection and not a direct causal indemnity in the form of nominal damages.  This
relation, respondent still failed to show that her illness indemnity is not intended to penalize the employer but to
was really brought about by the wound she sustained vindicate or recognize the employee’s right to statutory
during the supervised gardening activity in school. The due process, which was violated by the employer in the

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present case. Hilton Heavy Equipment Corporation and sustain a termination of employment based on this
Peter Lim vs. Ananias Dy, G.R. No. 164860, February 2, provision of law, the negligence must not only be gross
2010. but also habitual.

DISMISSAL; DUE PROCESS. In the present case, the employer asserts that the
employees failed to regularly undertake a monthly
physical inventory of the outlet’s merchandise.  The Court
Failure to observe due process in the termination of
was not persuaded as it found that inventory preparation
employment for a just cause does not invalidate the
and reporting did not fall on the employees’ shoulders
dismissal but makes the company liable for non-
since they were to “assist the [stock] clerk” only. Kulas
compliance with the procedural requirements of due
Ideas & Creations, et al. vs. Juliet Alcoseba, et al., G.R.
process. The violation of the employee’s right to statutory
No. 180123, February 18, 2010.
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 DISMISSAL; LOSS OF TRUST AND CONFIDENCE.
circumstances. In the instant case, considering that the
company already suffered financially because of poor
In Fungo v. Lourdes School of Mandaluyong, we restated
sales performance under the employee’s watch, it is
the guidelines for the application of loss of trust and
proper to reduce the amount of nominal damages
confidence as a just cause for dismissal of an employee
awarded to petitioner to Thirty Thousand Pesos
from the service, thus: “a) loss of confidence should not
(P30,000.00). The amount of nominal damages awarded
be simulated; b) it should not be used as subterfuge for
is not intended to enrich the employee, but to deter
causes which are improper, illegal or unjustified; c) it
employers from future violations of the statutory due
may not be arbitrarily asserted in the face of
process rights of employees. Rolando P. Ancheta vs.
overwhelming evidence to the contrary; and d) it must
Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R.
be genuine, not a mere afterthought to justify earlier
No. 179702, February 16, 2010
action taken in bad faith.” In the present case, the
employee, who was a warehouseman, held a position of
DISMISSAL; DUE PROCESS. 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
In the dismissal of employees, it has been consistently
any business entity, the company has every right to
held that the twin requirements of notice and hearing are
protect itself from actual threats to the viability of its
essential elements of due process.  The employer must
operations.  The employee, caught red-handed in a
furnish the worker with two written notices before
scheme to spirit off unpaid company sacks, not only
termination of employment can be legally effected: (1) a
violated his fiduciary duty as custodian of company
notice apprising the employee of the particular acts or
property resulting in the company’s loss of trust and
omissions for which his dismissal is sought, and (2) a
confidence in him; he had also become a threat to the
subsequent notice informing the employee of the
viability of company operations. To rule that he should be
employer’s decision to dismiss him.  With regard to the
reinstated would be oppressive to the company.  The law,
requirement of a hearing, the essence of due process lies
in protecting the rights of the employee, authorizes
simply in an opportunity to be heard, and not that an
neither the oppression nor the self-destruction of the
actual hearing should always and indispensably be held.
employer. Bibiana Farms and Mills, Inc. vs. Arturo Lado,
G.R. No. 157861, February 2, 2010.
Likewise, there is no requirement that the notices of
dismissal themselves be couched in the form and
DISMISSAL; LOSS OF TRUST AND CONFIDENCE.
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 The doctrine of loss of confidence requires the
employees informing them of the fact of investigation, concurrence of the following: (1) loss of confidence
and subsequently, if warranted, a separate notice of should not be simulated;  (2) it should not be used as a
dismissal. Through the formal investigatory process, the subterfuge for causes which are improper, illegal, or
employee must be accorded the right to present his or unjustified; (3) it may not be arbitrarily asserted in the
her side, which must be considered and weighed by the face of overwhelming evidence to the contrary; (4) it
employer.  The employee must be sufficiently apprised of must be genuine, not a mere afterthought to justify an
the nature of the charge, so as to be able to intelligently earlier action taken in bad faith; and (5) the employee
defend himself or herself against the charge.  Wilfredo M. involved holds a position of trust and confidence. Loss of
Baron, et al. vs. National Labor Relations Commission, et confidence, as a just cause for termination of
al., G.R. No. 182299, February 22, 2010. 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
DISMISSAL; GROSS NEGLECT OF DUTIES.
delicate matters, such as the custody, handling, care,
and protection of the employer’s property and/or funds.
Article 282 (b) imposes a stringent condition before an In order to constitute a just cause for dismissal, the act
employer may terminate an employment due to gross complained of must be “work-related” such as would
and habitual neglect by the employee of his duties.  To

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show the employee concerned to be unfit to continue requirements of procedural due process – notice and
working for the employer. hearing – must likewise be observed before an employee
may be dismissed. The burden of proof rests on the
employer to show that the employee’s dismissal has met
The subject employee in this case is a managerial
these due process requirements. The case of the
employee holding a highly sensitive position. Being the
employer must stand or fall on its own merits and not on
Head of the Marketing Group of the company, he
the weakness of the employee’s defense. Bibiana Farms
was  in  charge,  among others, of  the over-
and Mills, Inc. vs. Arturo Lado, G.R. No. 157861,
all production and sales performance of the company.
February 2, 2010.
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 DISMISSAL; SEPARATION PAY.
group, which he used to head. The position held by the
employee required the highest degree of trust and
Under Article 279 of the Labor Code, an illegally
confidence of his employer in the former’s exercise of
dismissed employee “shall be entitled to reinstatement
managerial discretion insofar as the conduct of the
without loss of seniority rights and other privileges and to
latter’s business was concerned. The employee’s inability
his full backwages, inclusive of allowances, and to his
to perform the functions of his office to the satisfaction of
other benefits or their monetary equivalent computed
his employer and the former’s poor judgment as
from the time his compensation was withheld from him
marketing head caused the company huge financial
up to the time of his actual reinstatement.”  In addition
losses. If these were not timely addressed and corrected,
to full backwages, the Court has also repeatedly ruled
the company could have collapsed, to the detriment of its
that in cases where reinstatement is no longer feasible
policy holders, stockholders, employees, and the public in
due to strained relations, then separation pay may be
general. Rolando P. Ancheta vs. Destiny Financial Plans,
awarded instead of reinstatement. In Mt. Carmel College
Inc. and Arsenio Bartolome, G.R. No. 179702, February
v. Resuena, the Court reiterated that the separation pay,
16, 2010
as an alternative to reinstatement, should be equivalent
to one (1) month salary for every year of service.
DISMISSAL; LOSS OF TRUST AND CONFIDENCE. Sargasso Construction and Development Corporation vs.
National Labor Relations Commission (4th Division) and
Gorgonio Mongcal, G.R. No. 164118, February 9, 2010.
The Court found convincing evidence that a pattern of
concealment and dishonesty marred the purchase of
paper materials for the Women’s Journal’s special DISMISSAL; SERIOUS MISCONDUCT.
project, with the employee playing the principal and most
active role.  There is no question that the employee failed
Misconduct has been defined as improper or wrong
to make a reasonable canvass of the prices of the paper
conduct.  It is the transgression of some established and
materials required by a company’s special project,
definite rule of action, a forbidden act, a dereliction of
resulting in substantial losses to the company.  That a
duty, willful in character, and implies wrongful intent and
rush job was involved, is no excuse as canvassing could
not mere error of judgment.  The misconduct to be
be done even in a day’s time as shown by the audit
serious must be of such grave and aggravated character
department’s canvass.  That the employee was
and not merely trivial and unimportant.  Such
responsible for concealment and omissions also appears
misconduct, however serious, must nevertheless be in
clear to us; he failed, under dubious circumstances, to
connection with the employee’s work to constitute just
seasonably disclose to his employer material information
cause for his separation.
with financial impact on the purchase transaction.

In the present case, the Court found substantial evidence

Thus, the Court cannot but conclude that substantial
to prove that a serious misconduct has been committed
evidence exists justifying the employee’s dismissal for a
to justify termination from employment.  The Certified
just cause – loss of trust and confidence.  For loss of
Public Accountant and Corporate Finance Manager of the
trust and confidence to be a ground for dismissal, the law
company submitted a report dated February 19, 2000
requires only that there be at least some basis to justify
stating that in spite of management’s memorandum, the
the dismissal. The fact that the employee had been with
keys to the office and filing cabinets were not
the company for 25 years cannot change the conclusion
surrendered.  It was likewise stated in the report that
that he had become a liability to the company whose
petitioner Wilfredo Baron pulled out some records without
interests he miserably failed to protect. Philippine
allowing a representative from the internal audit team to
Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No.
inspect them.  He noticed Wilfredo Baron deleting some
187120, February 16, 2010.
files from the computer, which could no longer be
retrieved.  Moreover, a member of the audit team saw
DISMISSAL; REQUIREMENTS. Cynthia Junatas (another petitioner) carrying some
documents, including a Daily Collection Report.  When
asked to present the documents for inspection, Junatas
Under the Labor Code, the requirements for the lawful
refused and tore the document.
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

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In addition, the audit team discovered that MSI incurred This provision continues to govern cases of employees
an inventory shortage of One Million Thirty Thousand Two dismissed for cause and their claims for the return of
Hundred Fifty-Eight Pesos and Twenty-One Centavos their personal contributions.
(P1,030,258.21).  It found that Wilfredo Baron, the
operations manager, in conspiracy with the other
Also, it should be remembered that the GSIS laws are in
petitioners, orchestrated massive irregularities and grand
the nature of social legislation, to be liberally construed
scale fraud, which could no longer be documented
in favor of the government employees. The money,
because of theft of company documents and deletion of
subject of the employee’s request, consists of personal
computer files.  Unmistakably, the unauthorized taking of
contributions made by him, premiums paid in anticipation
company documents and files, failure to pay unremitted
of benefits expected upon retirement. The occurrence of
collections, failure to surrender keys to the filing cabinets
a contingency, i.e., his dismissal from the service prior to
despite earlier instructions, concealment of shortages,
reaching retirement age, should not deprive him of the
and failure to record inventory transactions pursuant to a
money that belongs to him from the outset. To allow
fraudulent scheme are acts of grave misconduct, which
forfeiture of these personal contributions in favor of the
are sufficient causes for dismissal from
GSIS would condone undue enrichment. Carmelita Lledo
employment. Wilfredo M. Baron, et al. vs. National Labor
vs. Atty. Cesar V. Lledo, Branch Clerk of Court, Regional
Relations Commission, et al., G.R. No. 182299, February
Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167,
22, 2010.
February 9, 2010.

DISMISSAL; THEFT; DEGREE OF EVIDENCE.

EMPLOYEE EXPENSES; IN-SERVICE TRAINING.

The long-standing rule is that the existence of a

In the present case, Article XXI, Section 6 of the CBA
conspiracy must be proved by clear, direct and
provides that “All expenses of security guards in securing
convincing evidence. In Fernandez v. National Labor
/renewing their licenses shall be for their personal
Relations Commission, The Court expounded on the
account.” A reading of the provision would reveal that it
degree of evidence required to establish the existence of
encompasses all possible expenses a security guard
a conspiracy in this wise: “While it is true that in
would pay or incur in order to secure or renew his
conspiracy, direct proof is not essential, it must however,
license. In-service training being a requirement for the
be shown that it exists as clearly as the commission of
renewal of a security guard’s license, expenses incurred
the offense itself.  There must at least be adequate proof
therefore are claimed to be for the security guard’s
that the malefactors had come to an agreement
personal account. However, the 1994 Revised Rules and
concerning the commission of a felony and decided to
Regulations Implementing the Private Security Agency
commit it. x  x  x  For conspiracy to exist, it is essential
Law (Republic Act No. 5487) provides that it shall be the
that there must be conscious design to commit an
primary responsibility of the operators  of private security
offense.  Conspiracy is not the product of negligence but
agency and company security forces to maintain and
of intentionality on the part of the cohorts.”
upgrade the standards of efficiency, discipline,
performance and competence of their personnel. It
Verily, there was a dearth of evidence directly linking the further provides that “[T]o maintain and/or upgrade the
employee to the commission of the crime of theft, as his standard  of efficiency, discipline and competence of
mere act of loading the dump truck with aggregates did security guards and detectives, company security force
not show that he knew of the other person’s plan to and private security agencies upon prior authority shall
deliver the load to a place other than the company’s conduct-in-service training … The cost of training shall be
construction site.  The only conclusion, therefore, is that pro-rated among the participating agencies/private
the company had illegally dismissed the employee in the companies.”
present case. Sargasso Construction and Development
Corporation vs. National Labor Relations Commission
Since it is the primary responsibility of operators of
(4th Division) and Gorgonio Mongcal, G.R. No. 164118,
company security forces to maintain and upgrade the
February 9, 2010.
standards of efficiency, discipline, performance and
competence of their personnel, it follows that the
EMPLOYEE; RECOVERY OF PERSONAL expenses to be incurred therein shall be for the account
CONTRIBUTIONS. 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
May a government employee, dismissed from the service
provision of law. While the law mandates pro-rating of
for cause, be allowed to recover the personal
expenses because it would be impracticable and unfair to
contributions he paid to the Government Service
impose the burden of expenses suffered by all
Insurance System (GSIS)? The answer is yes.
participants on only one participating agency or
company, if there is no centralization, there can be no
Section 11(d) of Commonwealth Act No. 186, as pro-rating, and therefore, the company that has its own
amended, provides: “Upon dismissal for cause or on security forces must shoulder the entire cost for such
voluntary separation, he shall be entitled only to his own training.  If the intent of the law were to impose upon
premiums and voluntary deposits, if any, plus interest of individual employees the cost of training, the provision
three per centum per annum, compounded monthly.” on the pro-rating of expenses would not have found print

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in the law.  Prior to the signing of the CBA, it was the became a “non-performing asset” or, worse, a liability to
company providing for the in-service training of the the employer. Ronilo Sorreda vs. Cambridge Electronics
guards. Thus, implicit from the company’s actuations was Corporation, G.R. No. 172927, February 11, 2010.
its acknowledgment of its legally mandated responsibility
to shoulder the expenses for in-service training. PNCC
SUSPENSION; LEAVE WITHOUT PRIOR AUTHORITY.
Skyway Traffic Management and Security Division
Workers Organization (PSTMSWDO), represented by its
President, Rene Soriano vs. PNCC Skyway Corporation), While it is true that the union and its members have been
G.R. No. 171231, February 17, 2010 granted union leave privileges under the CBA, the grant
cannot be considered separately from the other
provisions of the CBA, particularly the provision on
EMPLOYER-EMPLOYEE RELATIONSHIP; CONTROL
management prerogatives where the CBA reserved for
TEST.
the company the full and complete authority in managing
and running its business. The Court, in the present case,
This Court still employs the “control test” to determine saw nothing in the language of the union leave provision
the existence of an employer-employee relationship that removes from the company the right to prescribe
between hospital and doctor. In Calamba Medical Center, reasonable rules and regulations to govern the manner of
Inc. v. National Labor Relations Commission, et al., the availing of union leaves, particularly the prerogative to
Court held that: “Under the “control test”, an require its prior approval.  In fact, prior notice
employment relationship exists between a physician and is expressly required under the CBA so that the company
a hospital if the hospital controls both the means and the can appropriately respond to the request for leave.  In
details of the process by which the physician is to this sense, the rule requiring prior approval only made
accomplish his task. x x x That petitioner exercised express what is implied from the terms of the CBA.
control over respondents gains light from the undisputed
fact that in the emergency room, the operating room, or
Despite management’s disapproval of his requested
any department or ward for that matter, the doctor’s
leave, the employee still went on leave, in open disregard
work is monitored through the hospital’s nursing
of his superior’s orders. This rendered the employee open
supervisors, charge nurses and orderlies. Without the
to the charge of insubordination, separately from his
approval or consent of the hospital or its medical
absence without official leave. Malayan Employees
director, no operations can be undertaken in those areas.
Association-FFW and Rodolfo Mangalino vs. Malayan
For the control test to apply, it is not essential for the
Insurance Company, Inc., G.R. No. 181357, February 2,
employer to actually supervise the performance by the
2010.
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 QUITCLAIM; ELEMENTS.
children Marcelino Agana III, Enrique Agana, Jr. Emma
Agana-Andaya, Jesus Agana and Raymund Agana and It is true that the law looks with disfavor on quitclaims
Errique Agana) vs. The Court of Appeals and Juan and releases by employees who have been inveigled or
Fuentes Miguel Ampil vs. Natividad and Enrique Agana, pressured into signing them by unscrupulous employers
G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, seeking to evade their legal responsibilities and frustrate
February 2, 2010. just claims of employees. In certain cases, however, the
Court has given effect to quitclaims executed by
MANAGEMENT PREROGATIVES; CONTRACT OF employees if the employer is able to prove the following
PERPETUAL EMPLOYMENT. 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 Court cannot countenance the employee’s claim that
the quitclaim is credible and reasonable; and (4) the
a contract of perpetual employment was ever
contract is not contrary to law, public order, public policy,
constituted. While the Constitution recognizes the
morals or good customs, or prejudicial to a third person
primacy of labor, it also recognizes the critical role of
with a right recognized by law. Goodrich Manufacturing
private enterprise in nation-building and the prerogatives
Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et
of management. A contract of perpetual employment
al., G.R. No. 188002, February 1, 2010.
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 QUITCLAIM; VALIDITY.
validly waive it prerogatives, such waiver should not be
contrary to law, public order, public policy, morals or In the case at bar, both the Labor Arbiter and the NLRC
good customs. An absolute and unqualified employment ruled that the employees executed their quitclaims
for life in the mold of petitioner’s concept of perpetual without any coercion from the company following their
employment is contrary to public policy and good voluntary resignation from the company. The contents of
customs, as it unjustly forbids the employer from the quitclaim documents are simple, clear and
terminating the services of an employee despite the unequivocal. The records of the case are bereft of any
existence of a just or valid cause. It likewise compels the substantial evidence to show that the employees did not
employer to retain an employee despite the attainment of know that they were relinquishing their right short of
the statutory retirement age, even if the employee has what they had expected to receive and contrary to what

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they have so declared. Put differently, at the time they as of the time the decision was rendered and confirmed
were signing their quitclaims, respondents honestly with modification by a final CA decision, is legally proper.
believed that the amounts received by them were fair
and reasonable settlements of the amounts, which they
The Court held that under the terms of the decision
would have received had they refused to voluntarily
under execution, no essential change is made by a re-
resign from the said company. Goodrich Manufacturing
computation as this step is a necessary consequence that
Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et
flows from the nature of the illegality of dismissal
al., G.R. No. 188002, February 1, 2010.
declared in that decision. A re-computation (or an
original computation, if no previous computation has
VACATION LEAVE; SCHEDULING. 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
Although the preferred vacation leave schedule of
nature of an illegal dismissal case, the reliefs continue to
employees should be given priority, they cannot demand,
add on until full satisfaction, as expressed under Article
as a matter of right, for their request to be automatically
279 of the Labor Code.  The re-computation of the
granted by the company. If the employees were given
consequences of illegal dismissal upon execution of the
the exclusive right to schedule their vacation leave then
decision does not constitute an alteration or amendment
said right should have been incorporated in the CBA. In
of the final decision being implemented. The illegal
the absence of such right and in view of the mandatory
dismissal ruling stands; only the computation of the
provision in the CBA giving the company the right to
monetary consequences of this dismissal is affected and
schedule the vacation leave of its employees, the CBA
this is not a violation of the principle of immutability of
prevails.
final judgments. Session Delights Ice Cream and Fast
Foods vs. The Hon. Court of Appeals (Sixth Division),
In the grant of vacation leave privileges to an employee, Hon. National Labor Relations Commission (Second
the employer is given the leeway to impose conditions on Division) and Adonis Armenio M. Flora, G.R. No. 172149,
the entitlement to and commutation of the same, as the February 8, 2010.
grant of vacation leave is not a standard of law, but a
prerogative of management. It is a mere concession or
JURISDICTION; ABSENCE OF EMPLOYER-EMPLOYEE
act of grace of the employer and not a matter of right on
RELATIONSHIP.
the part of the employee.  It is, therefore, well within the
power and authority of an employer to impose certain
conditions, as it deems fit, on the grant of vacation Jurisdiction over the subject matter of a complaint is
leaves, such as having the option to schedule the determined by the allegations of the complaint.
same. PNCC Skyway Traffic Management and Security In Pioneer Concrete Philippines, Inc. v. Todaro, the Court
Division Workers Organization (PSTMSWDO), reiterated that where no employer-employee relationship
represented by its President, Rene Soriano vs. PNCC exists between the parties, and the Labor Code or any
Skyway Corporation), G.R. No. 171231, February 17, labor statute or collective bargaining agreement is not
2010 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
Labor Procedure
existence of a contract as well as the payment of
damages is inherently civil in nature. A labor arbiter may
APPEAL; QUESTION OF FACT.  only take cognizance of a case and award damages
where the claim for such damages arises out of an
While as a rule, a petition for review on certiorari shall employer-employee relationship.
raise only questions of law, we deem it appropriate to
examine the facts in this review, given the conflicting In the present case, the employee, from the period May
factual findings between the Labor Arbiter, on the one 8, 1999 to October 8, 1999, was clearly a project
hand and, the NLRC and the CA, on the other. The Labor employee of the company. There is, therefore, an
Arbiter sustained Rivera’s dismissal with the finding that employer-employee relationship. Consequently, questions
he committed acts of dishonesty or fraud against his or disputes arising out of this relationship fell under the
employer.  The NLRC and the CA held that no substantial jurisdiction of the labor arbiter. However, based on
evidence existed to support Rivera’s dismissal. Philippine petitioner’s allegations in his position paper, his cause of
Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No. action was based on an alleged second contract of
187120, February 16, 2010. employment separate and distinct from his project
employment contract. While there existed an employer-
EXECUTION OF JUDGMENTS; SEPARATION employee relationship between the parties while the
PAY/BACKWAGES; COMPUTATION. 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
In concrete terms, the question is whether a re- to be employed again in respondent company and seeks
computation in the course of execution, of the labor a determination of the existence of a new and separate
arbiter’s original computation of the awards made pegged contract that established that right. As such, his case is
within the jurisdiction, not of the labor arbiter, but of the

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regular courts.  The NLRC and the CA were therefore Deed of Assignment, as well as the passbook, is neither a
correct in ruling that the labor arbiter erroneously took cash bond nor a surety bond.   The company’s appeal to
cognizance of the case. Ronilo Sorreda vs. Cambridge the NLRC was thus not duly perfected, thereby rendering
Electronics Corporation, G.R. No. 172927, February 11, the Labor Arbiter’s Decision final and
2010. executory. Mindanao Times Corporation vs. Mitchel R.
Confesor, G.R. No. 183417, February 5, 2010.
JURISDICTION;  VOID JUDGMENT.

The company admits that it failed to appeal the January

29, 2003 Order within the period prescribed by law.  It MARCH 2010 CASES
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, CANCELLATION OF UNION REGISTRATION.
it may be assailed at any time.
Art. 234(c) of the Labor Code requires the mandatory
While it is true that orders issued without jurisdiction are minimum 20% membership of rank-and-file employees in
considered null and void and, as a general rule, may be the employees’ union. Twenty percent (20%) of 112
assailed at any time, the fact of the matter is that, in this rank-and-file employees in Eagle Ridge would require a
case, it was well within the jurisdiction of Director Manalo union membership of at least 22 employees (112 x 205 =
to issue the Order.  Under Article 128(b) of the Labor 22.4).  When the EREU filed its application for
Code, as amended by Republic Act (RA) No. 7730, the registration on December 19, 2005, there were clearly 30
DOLE Secretary and her representatives, the regional union members.  Thus, when the certificate of
directors, have jurisdiction over labor standards registration was granted, there is no dispute that the
violations based on findings made in the course of Union complied with the mandatory 20% membership
inspection of an employer’s premises.  The said requirement. Accordingly, the retraction of six union
jurisdiction is not affected by the amount of claim members who later severed and withdrew their union
involved, as RA 7730 had effectively removed the membership cannot cause the cancellation of the union’s
jurisdictional limitations found in Articles 129 and 217 of registration.
the Labor Code insofar as inspection cases, pursuant to
the visitorial and enforcement powers of the DOLE Besides, it cannot be argued that the affidavits of
Secretary, are concerned. The last sentence of Article retraction retroacted to the time of the application for
128(b) of the Labor Code recognizes an exception to the union registration or even way back to the organizational
jurisdiction of the DOLE Secretary and her meeting. Before their withdrawal, the six employees in
representatives, but such exception is neither an issue question were bona fide union members. They never
nor applicable here. Tiger Construction and Development disputed affixing their signatures beside their handwritten
Corporation vs. Reynaldo, et al., G.R. No. 164141, names during the organizational meetings.  While they
February 26, 2010. alleged that they did not know what they were signing,
their affidavits of retraction were not re-affirmed during
LABOR APPEAL; CASH BOND. 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
Article 223 of the Labor Code provides that an appeal by
compliant with the mandatory membership requirement
the employer to the NLRC from a judgment of a labor
under Art. 234(c) since the remaining 24 union members
arbiter which involves a monetary award may be
constitute more than the 20% membership requirement
perfected only upon the posting of a cash or surety
of 22 employees.  Eagle Ridge Gold & Country Club vs.
bond issued by a reputable bonding company duly
Court of Appeals, et al., G.R. No. 178989, March 18,
accredited by the NLRC, in an amount equivalent to the
2010.
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 CESSATION OF OPERATIONS; FINANCIAL
criminal defendant to ensure his presence in court, used ASSISTANCE. 
in place of a surety bond and real estate.
Based on Article 283, in case of cessation of operations,
To comply with the appeal bond requirement, the the employer is only required to pay his employees a
company deposited the amount of P71,909.77 with the separation pay of one month pay or at least one-half
United Coconut Planters Bank and surrendered to the month pay for every year of service, whichever is higher.
NLRC the passbook covering the deposit, along with a That is all that the law requires.
Deed of Assignment it executed assigning the proceeds of
the deposit in favor of the employee and authorizing the In the case at bar, petitioner paid respondents the
NLRC to release the same in the event that the Labor following: (a) separation pay computed at 150% of their
Arbiter’s Decision  becomes final and executory. Such gross monthly pay per year of service; and (b) cash

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equivalent of earned and accrued vacation and sick et al./Augusto R. Nieves, et al. vs. Department of Budget
leaves. Clearly, petitioner had gone over and above the and Management, et al./Kapisanan ng mga Manggagawa
requirements of the law. Despite this, however, the Labor sa Bureau of Agricultural Statistic (KMB), et al. vs.
Arbiter ordered petitioner to pay respondents an Department of Budget and Management, et al./National
additional amount, equivalent to one month’s salary, as a Housing Authority vs. Epifanio P. Recana, et al./
form of financial assistance. Insurance Commission Officers and Employees, et al. vs.
Department of Budget and Management, et al./Fiber
Industry Development Authority Employees Association
The award of financial assistance is bereft of legal basis
(FIDAEA),et al. vs. Department of Budget and
and serves to penalize petitioner who had complied with
Management, et al./Bureau of Animal Industry
the requirements of the law. The Court also point out
Employees Association (BAIEA), et al. vs. Department of
that petitioner may, as it has done, grant on a voluntary
Budget and Management, et al./Re: Request of
and ex gratia basis, any amount more than what is
Sandiganbayan for authority to use their savings to pay
required by the law, but to insist that more financial
their Cola Differential from July 1, 1989 to March 16,
assistance be given is certainly something that the Court
1999, G.R. No. 153266/G.R. No. 159007/G.R. No.
cannot countenance. Moreover, any award of additional
159029/G.R. No. 170084/G.R. No. 172713/G.R. No.
financial assistance to respondents would put them at an
173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-
advantage and in a better position than the rest of their
4-02-SB. March 18, 2010.
co-employees who similarly lost their employment
because of petitioner’s decision to cease its
operations. SolidBank Corporation vs. National Labor COMPENSABLE ILLNESS. 
Relations Commission, et al., G.R. No. 165951, March
30, 2010.
Jurisprudence provides that to establish compensability
of a non-occupational disease, reasonable proof of work-
COST OF LIVING ALLOWANCE. connection and not direct causal relation is required. 
Probability, not the ultimate degree of certainty, is the
test of proof in compensation proceedings.
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 In this case, the Court sustained the Labor Arbiter and
functions.  It is not payment in consideration of the the NLRC in granting total and permanent disability
fulfillment of official duty.  As defined, cost of living refers benefits in favor of Villamater, as it was sufficiently
to “the level of prices relating to a range of everyday shown that his having contracted colon cancer was, at
items” or “the cost of purchasing those goods and the very least, aggravated by his working conditions,
services which are included in an accepted standard level taking into consideration his dietary provisions on board,
of consumption.”  Based on this premise, COLA is a his age, and his job as Chief Engineer, who was primarily
benefit intended to cover increases in the cost of living.  in charge of the technical and mechanical operations of
Thus, it is and should be integrated into the standardized the vessels to ensure voyage safety.  Leonis Navigation
salary rates. Co., Inc. and World Marine Panama, S.A. vs. Catalino U.
Villamater, et al., G.R. No. 179169, March 3, 2010.
In the present case, the Court is not persuaded that the
continued grant of COLA to the uniformed personnel to COMPENSABLE ILLNESS; ENTITLEMENT. 
the exclusion of other national government officials run
afoul the equal protection clause of the Constitution.  The
For disability to be compensable under Section 20 (B) of
fundamental right of equal protection of the laws is not
the 2000 POEA-SEC, two elements must concur: (1) the
absolute, but is subject to reasonable classification.  If
injury or illness must be work-related; and (2) the work-
the groupings are characterized by substantial
related injury or illness must have existed during the
distinctions that make real differences, one class may be
term of the seafarer’s employment contract. In other
treated and regulated differently from another.  The
words, to be entitled to compensation and benefits under
classification must also be germane to the purpose of the
this provision, it is not sufficient to establish that the
law and must apply to all those belonging to the same
seafarer’s illness or injury has rendered him permanently
class.
or partially disabled; it must also be shown that there is a
causal connection between the seafarer’s illness or injury
The Court found valid reasons to treat the uniformed and the work for which he had been contracted.
personnel differently from other national government
officials.  Being in charge of the actual defense of the
The 2000 POEA-SEC defines “work-related injury” as
State and the maintenance of internal peace and order,
“injury(ies) resulting in disability or death arising out of
they are expected to be stationed virtually anywhere in
and in the course of employment” and “work-related
the country.  They are likely to be assigned to a variety
illness” as “any sickness resulting to disability or death as
of low, moderate, and high-cost areas.  Since their basic
a result of an occupational disease listed under Section
pay does not vary based on location, the continued grant
32-A of this contract with the conditions set therein
of COLA is intended to help them offset the effects of
satisfied.”
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,

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Under Section 20 (B), paragraphs (2) and (3) of the 2000 In the present case, the employer failed to discharge this
POEA-SEC, it is the company-designated physician who is burden.  The combination of harsh actions taken by the
entrusted with the task of assessing the seaman’s bank rendered the employment condition of the
disability. 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
While it is true that medical reports issued by the
the Makati Head Office. The bank’s stated reason that the
company-designated physicians do not bind the courts,
employee had to undergo branch head training because
the Court’s examination of Dr. Ong-Salvador’s Initial
of his gross inefficiency was not supported by any proof
Medical Report have led it to agree with her findings.  Dr.
that the employee had a record of gross inefficiency. 
Ong-Salvador was able to sufficiently explain her basis in
Second, the employee’s transfer from Dumaguete to
concluding that the respondent’s illness was not work-
Makati City is clearly unreasonable, inconvenient and
related: she found the respondent not to have been
oppressive, since the respondent and his family are
exposed to any carcinogenic fumes, or to any viral
residents of Dumaguete City.  Third, the employer failed
infection in his workplace. Her findings were arrived at
to present any valid reason why it had to require the
after the respondent was made to undergo a physical,
employee to go to the Makati Head Office to undergo
neurological and laboratory examination, taking into
branch head training when it could have just easily
consideration his past medical history, family history, and
required the latter to undertake the same training in the
social history.  In addition, the respondent was evaluated
VISMIN area.  Finally, there was nothing in the order of
by a specialist, a surgeon and an oncologist.  The series
transfer indicating the position which the employee would
of tests and evaluations show that Dr. Ong-Salvador’s
occupy after his training; thus, the employee was
findings were not arrived at arbitrarily; neither were they
effectively placed in a “floating” status.  The bank’s
biased in the company’s favor.
contention that the employee was assigned to a sensitive
position in the DUHO Task Force is suspect when
The respondent, on the other hand, did not adduce proof considered with the fact that he was made to undergo
to show a reasonable connection between his work as an branch head training which is totally different from a
assistant housekeeping manager and his lymphoma. position that entails reconciling book entries of all
There was no showing how the demands and nature of branches of the former.  Reconciling book entries is
his job vis-à-vis the ship’s working conditions increased essentially an accounting task.
the risk of contracting lymphoma. The non-work
relatedness of the respondent’s illness is reinforced by
The test of constructive dismissal is whether a reasonable
the fact that under the Implementing Rules and
person in the employee’s position would have felt
Regulations of the Labor Code (ECC Rules), lymphoma is
compelled to give up his position under the
considered occupational only when contracted by
circumstances.  Based on the factual considerations in
operating room personnel due to exposure to
the present case, the Court held that the hostile and
anesthetics. The records do not show that the
unreasonable working conditions of the bank justified the
respondent’s work as an assistant housekeeping manager
finding of the NLRC and the CA that the employee was
exposed him to anesthetics.
constructively dismissed.  Philippine Veterans Bank vs.
National Labor Relations Commission, et al., G.R. No.
Accordingly, the Court held that the respondent is not 188882, March 30, 2010.
entitled to total and permanent disability benefits on
account of his failure to refute the company-designated
DISABILITY BENEFITS; ENTITLEMENT. 
physician’s findings that: (1) his illness was not work-
related; and (2) he was fit to resume sea
duties.  Magsaysay Maritime Corporation and/or Cruise The seafarer, upon sign-off from his vessel, must report
Ships Catering Services International N.V. vs. National to the company-designated physician within three
Labor Relations Commissions, et al., G.R. No. 186180, working days from arrival for diagnosis and treatment. 
March 22, 2010. Applying Section 20(B), paragraph (3) of the 2000
Amended Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going
CONSTRUCTIVE DISMISSAL. 
Vessels, petitioner is required to undergo post-
employment medical examination by a company-
In constructive dismissal cases, the employer has the designated physician within three working days from
burden of proving that its conduct and action or the arrival, except when he is physically incapacitated to do
transfer of an employee are for valid and legitimate so, in which case, a written notice to the agency within
grounds such as genuine business necessity.   the same period would suffice.  In Maunlad Transport,
Particularly, for a transfer not to be considered a Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554
constructive dismissal, the employer must be able to SCRA 446, 459] this Court explicitly declared that it is
show that such transfer is not unreasonable, mandatory for a claimant to be examined by a company-
inconvenient, or prejudicial to the employee.  Failure of designated physician within three days from his
the employer to overcome this burden of proof taints the repatriation.  The unexplained omission of this
employee’s transfer as a constructive dismissal. requirement will bar the filing of a claim for disability
benefits.  Alex C. Cootauco vs. MMS Phil. Maritime

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Services, Inc. Ms. Mary C. Maquilan, and/or MMS Co. continue to work for the employer.  In the instant case,
Ltd., G.R. No. 184722, March 15, 2010. 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
DISMISSAL; DAMAGES. 
show that they are unfit to continue to work as
merchandisers for Promm-Gem.  Joeb Aliviado, et al. vs.
Moral and exemplary damages are recoverable where the Procter & Gamble Philippines, Inc., et al., G.R. No.
dismissal of an employee was attended by bad faith or 160506, March 9, 2010.
fraud or constituted an act oppressive to labor or was
done in a manner contrary to morals, good customs or
DISMISSAL; JUST CAUSE; MISCONDUCT. 
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 Misconduct has been defined as improper or wrong
no support for the award of damages. 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
As for P&G, the records show that it dismissed its
not mere error of judgment.  The misconduct to be
employees through SAPS in a manner oppressive to
serious must be of such grave and aggravated character
labor. The sudden and peremptory barring of the
and not merely trivial and unimportant.  To be a just
employees from work, and from admission to the work
cause for dismissal, such misconduct (a) must be
place, after just a one-day verbal notice, and for no valid
serious; (b) must relate to the performance of the
cause, bellows oppression and utter disregard of the right
employee’s duties; and (c) must show that the employee
to due process of the concerned petitioners.  Hence, an
has become unfit to continue working for the employer. 
award of moral damages is called for.  Joeb Aliviado, et
In other words, in order to constitute serious misconduct
al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No.
which will warrant the dismissal of an employee under
160506, March 9, 2010.
paragraph (a) of Article 282 of the Labor Code, it is not
sufficient that the act or conduct complained of has
DISMISSAL; FRAUD AND SERIOUS MISCONDUCT. violated some established rules or policies.  It is equally
important and required that the act or conduct must have
In this case, the Court found that Pastoril was as actively been performed with wrongful intent. In the instant case,
involved as Escoto and Omela in the sale of the Toyota petitioners-employees of Promm-Gem may have
Town Ace that resulted in a loss to the company.  All committed an error of judgment in claiming to be
three participated in making the company believe that employees of P&G, but it cannot be said that they were
Aquino bought the Toyota Town Ace for P190,000.00 motivated by any wrongful intent in doing so.  As such,
when in fact, Aquino paid P200,000.00 for the vehicle.  the Court found them guilty of simple misconduct only,
Thus, Pastoril acted in concert with Escoto and Omela in for assailing the integrity of Promm-Gem as a legitimate
the transaction that defrauded their employer in the and independent promotion firm.  A misconduct which is
amount of P10,000.00.  Pastoril prepared and issued the not serious or grave, as that existing in the instant case,
deed of sale indicating that the vehicle was sold for cannot be a valid basis for dismissing an employee.  Joeb
P190,000.00, although she knew that the buyer was Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et
being charged P200,000.00 for the vehicle.  Escoto, al., G.R. No. 160506, March 9, 2010.
Omela and Pastoril helped themselves to the price
difference and tried to silence Rodriguez (who got wind of DISMISSAL; JUST CAUSE; UNION SECURITY
the anomaly) by giving him P1,000.00 and passing the CLAUSE. 
P10,000.00 price difference off as the approved discount
Aquino asked for.  The Court held that there was a
In terminating the employment of an employee by
conspiracy between and among the three employees,
enforcing the union security clause, the employer is
where every participant had made significant contributory
required only to determine and prove that: (1) the union
acts.  White Diamond Trading Corporation and/or Jerry
security clause is applicable; (2) the union is requesting
Uy vs. National Labor Relations Commission, et al., G.R.
for the enforcement of the union security provision in the
No. 186019. March 29, 2010.
CBA; and (3) there is sufficient evidence to support the
decision of the union to expel the employee from the
DISMISSAL; JUST CAUSE; LOSS OF TRUST AND union.  These requisites constitute just cause for
CONFIDENCE.  terminating an employee based on the union security
provision of the CBA.
Loss of trust and confidence, as a cause for termination
of employment, is premised on the fact that the It is the third requisite that appears to be lacking in this
employee concerned holds a position of responsibility or case.  It is apparent from the identical termination letters
of trust and confidence.  As such, he must be invested that GMC terminated Casio, et al., by relying upon the
with confidence on delicate matters, such as custody, resolutions of the union, which made no mention at all of
handling or care and protection of the property and the evidence supporting the decision of the union to
assets of the employer.  And, in order to constitute a just expel Casio, et al. from the union.  GMC never alleged
cause for dismissal, the act complained of must be work- nor attempted to prove that the company actually looked
related and must show that the employee is unfit to into the evidence of the union for expelling Casio, et al.

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and made a determination on the sufficiency thereof.  respondent Association has become more than just an
Without such a determination, GMC cannot claim that it act of generosity on the part of the petitioner but a
had terminated the employment of Casio, et al. for just contractual obligation it has undertaken.
cause. The failure of GMC to make a determination of the
sufficiency of evidence supporting the decision of the
All given, business losses are a feeble ground for
union constitutes non-observance by GMC of procedural
petitioner to repudiate its obligation under the CBA. The
due process in the dismissal of employees.  General
rule is settled that any benefit and supplement being
Milling Corporation vs. Ernesto Casio, et al. and Virgilio
enjoyed by the employees cannot be reduced,
Pino, et al., G.R. No. 149552, March 10, 2010.
diminished, discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on
DISMISSAL PURSUANT TO UNION SECURITY the constitutional mandate to protect the rights of
CLAUSE; SEPARATE NOTICE AND HARING workers and to promote their welfare and to afford labor
REQUIRED.  full protection.  Hence, absent any proof that the
employer’s consent was vitiated by fraud, mistake or
duress, it is presumed that it entered into the CBA
GMC illegally dismissed Casio, et al. because not only did
voluntarily and had full knowledge of the contents thereof
GMC fail to make a determination of the sufficiency of
and was aware of its commitments under the
evidence to support the union’s decision to expel Casio,
contract.  Lepanto Ceramics, Inc. vs. Lepanto Ceramics
et al., it also failed to accord the expelled union members
Employees Association, G.R. No. 180866, March 2, 2010.
procedural due process, i.e., notice and hearing, prior to
the termination of their employment.
EMPLOYEE; MONETARY AWARD.
GMC, by its own admission, did not conduct a separate
and independent investigation to determine the   The law and the rules are consistent in stating that the
sufficiency of the evidence supporting the union’s employment permit must be acquired prior to
expulsion of Casio, et al.  It simply acceded to the union’s employment.  The Labor Code states: “Any alien seeking
demand.  Consequently, GMC cannot insist that it has no admission to the Philippines for employment purposes
liability for the payment of backwages and damages to and any domestic or foreign employer who desires to
Casio, et al., and that the liability for such payment engage an alien for employment in the Philippines shall
should fall only upon the union officers and board obtain an employment permit from the Department of
members who expelled Casio, et al.  GMC completely Labor.”  Section 4, Rule XIV, Book 1 of the Implementing
missed the point that the expulsion of Casio, et al. by the Rules and Regulations provides: “No alien seeking
union and the termination of employment of the same employment, whether as a resident or non-resident, may
employees by GMC, although related, are two separate enter the Philippines without first securing an
and distinct acts.  Despite a closed shop provision in the employment permit from the Ministry.  If an alien enters
CBA, law and jurisprudence impose upon GMC the the country under a non-working visa and wishes to be
obligation to accord Casio, et al. substantive and employed thereafter, he may only be allowed to be
procedural due process before complying with the union’s employed upon presentation of a duly approved
demand to dismiss the expelled union members from employment permit.”
service.  The failure of GMC to carry out this obligation
makes it liable for illegal dismissal of Casio, et al. General
Galera worked in the Philippines without a proper work
Milling Corporation vs. Ernesto Casio, et al. and Virgilio
permit but now wants to claim employee’s benefits under
Pino, et al., G.R. No. 149552, March 10, 2010.
Philippine labor laws.  She cannot come to this Court with
unclean hands.  To grant Galera’s prayer is to sanction
EMPLOYEE BENEFIT; BONUS.  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.
By definition, a “bonus” is a gratuity or act of liberality of
Galera/Jocelyn M. Galera Vs. WPP Marketing
the giver. It is something given in addition to what is
Communications, Inc. et al., G.R. No. 169207/G.R. No.
ordinarily received by or strictly due the recipient. A
169239, March 25, 2010.
bonus is granted and paid to an employee for his industry
and loyalty which contributed to the success of the
employer’s business and made possible the realization of EMPLOYEE VS. CORPORATE OFFICER. 
profits.  A bonus is also granted by an enlightened
employer to spur the employee to greater efforts for the
Corporate officers are given such character either by the
success of the business and realization of bigger profits.
Corporation Code or by the corporation’s by-laws.  Under
Section 25 of the Corporation Code, the corporate officers
Generally, a bonus is not a demandable and enforceable are the president, secretary, treasurer and such other
obligation. For a bonus to be enforceable, it must have officers as may be provided in the by-laws.  Other
been promised by the employer and expressly agreed officers are sometimes created by the charter or by-laws
upon by the parties. Given that the bonus in this case is of a corporation, or the board of directors may be
integrated in the CBA, the same partakes the nature of a empowered under the by-laws of a corporation to create
demandable obligation.  Verily, by virtue of its additional offices as may be necessary.
incorporation in the CBA, the Christmas bonus due to

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An examination of WPP’s by-laws resulted in a finding longer possible because the positions they previously
that Galera’s appointment as a corporate officer (Vice- occupied are no longer existing.  General Milling
President with the operational title of Managing Director Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et
of Mindshare) during a special meeting of WPP’s Board of al., G.R. No. 149552, March 10, 2010.
Directors is an appointment to a non-existent corporate
office.  WPP’s by-laws provided for only one Vice-
President.  At the time of Galera’s appointment on 31
December 1999, WPP already had one Vice-President in
the person of Webster.  Galera cannot be said to be a ILLEGAL DISMISSAL. 
director of WPP also because all five directorship
positions provided in the by-laws are already occupied.   WPP’s dismissal of Galera lacked both substantive and
Finally, WPP cannot rely on its Amended By-Laws to procedural due process.  Apart from Steedman’s letter
support its argument that Galera is a corporate officer.  dated 15 December 2000 to Galera, WPP failed to prove
The Amended By-Laws provided for more than one Vice- any just or authorized cause for Galera’s dismissal. The
President and for two additional directors.  Even though law also requires that the employer must furnish the
WPP’s stockholders voted for the amendment on 31 May worker sought to be dismissed with two written notices
2000, the SEC approved the amendments only on 16 before termination of employment can be legally
February 2001.  Galera was dismissed on 14 December effected: (1) notice which apprises the employee of the
2000.  WPP, Steedman, Webster, and Lansang did not particular acts or omissions for which his dismissal is
present any evidence that Galera’s dismissal took effect sought; and (2) the subsequent notice which informs the
with the action of WPP’s Board of Directors. employee of the employer’s decision to dismiss him. 
Failure to comply with these requirements taints the
Additionally, the following provisions in her employment dismissal with illegality.  WPP’s acts clearly show that
contract are convincing indicators that Galera was an Galera’s dismissal did not comply with the two-notice
employee and not a corporate officer: (1) it mandates rule.  WPP Marketing Communications, Inc. et al. vs.
where and how often she is to perform her work; (2) the Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing
wages she receives are completely controlled by WPP; Communications, Inc. et al., G.R. No. 169207/G.R. No.
(3) she is subject to the regular disciplinary procedures 169239, March 25, 2010.
of WPP;  (4) section 14 thereof clearly states that she is
a permanent employee — not a Vice-President or a ILLEGAL DISMISSAL; ABANDONMENT. 
member of the Board of Directors; (5) the intellectual
property rights created or discovered by petitioner during
her employment shall automatically belong to private Petitioner was, for five times, notified in writing by
respondent WPP [Under the Intellectual Property Code, respondent to resume teaching for the second semester
this condition prevails if the creator of the work subject of school year 2003-2004 following the service of her
to the laws of patent or copyright is an employee of the suspension during the first semester.  She was advised
one entitled to the patent or copyright]; and (6) the that a teaching load had already been prepared for her. 
disciplinary procedure states that her right of redress is Respondent never replied to those notices.  Petitioner’s
through Mindshare’s Chief Executive Officer for the Asia- justification for her failure to respond to the notices was
Pacific. This last circumstance implies that she was not that her acceptance of the offer could be construed as a
even under the disciplinary control of WPP’s Board of waiver of her claims. The Court held that petitioner’s
Directors, and therefore, she could not have been a WPP justification is not a valid excuse.
corporate officer as only the WPP Board of Directors could
appoint and terminate its own corporate officer.  WPP Petitioner contends that her filing of a complaint for
Marketing Communications, Inc. et al. vs. Jocelyn M. illegal dismissal was a manifestation of her desire to
Galera/Jocelyn M. Galera vs. WPP Marketing return to her job and negated any intention to sever the
Communications, Inc. et al., G.R. No. 169207/G.R. No. employer-employee relationship.  Petitioner forgets that
169239, March 25, 2010. her complaint for “illegal dismissal” which she filed on
June 5, 2003 sprang, not from her dismissal on
ILLEGAL DISMISSAL.  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
Under Republic Act No. 6715, employees who are illegally reinstatement negates an intention to sever the
dismissed are entitled to full backwages, inclusive of employer-employee relationship, the same contemplates
allowances and other benefits or their monetary an action taken subsequent to dismissal and not after an
equivalent, computed from the time their actual employee, by all indications, abandoned her
compensation was withheld from them up to the time of job.  Evangeline C. Cobarrubias vs. Saint Louis
their actual reinstatement but if reinstatement is no University, Inc., G.R. No. 176717, March 17, 2010.
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 ILLEGAL DISMISSAL; MONETARY AWARDS. 
separation pay, considering that reinstatement is no

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Clearly, the law intends the award of backwages and P719,042.32.  Promm-Gem has also proven that it
similar benefits to accumulate past the date of the Labor maintained its own warehouse and office space with a
Arbiter’s decision until the dismissed employee is actually floor area of 870 square meters.  It also had under its
reinstated.  But if, as in this case, reinstatement is no name three registered vehicles, which were used for its
longer possible, this Court has consistently ruled that promotional/merchandising business.  Promm-Gem also
backwages shall be computed from the time of illegal has other clients aside from P&G.  Under the
dismissal until the date the decision becomes final. circumstances, we find that Promm-Gem has substantial
investment, which relates to the work to be performed.
Under these circumstances, Promm-Gem cannot be
Separation pay, on the other hand, is equivalent to one
considered a labor-only contractor.
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 On the other hand, the Articles of Incorporation of SAPS
Belen began his service.  Technically the computation of show that it has a paid-in capital of only P31,250.00. 
his separation pay would end on the day he was There is no other evidence to prove how much its
dismissed on August 20, 1999 when he supposedly working capital and assets are.  Furthermore, there is no
ceased to render service and his wages ended.  But, showing of substantial investment in tools, equipment or
since Belen was entitled to collect backwages until the other assets.
judgment for illegal dismissal in his favor became final,
here on September 22, 2008, the computation of his
SAPS’ lack of substantial capital is highlighted by the
separation pay should also end on that date.
records which show that its payroll for its merchandisers
alone for one month would already total P44,561.00.  It
Further, since the monetary awards remained unpaid had 6-month contracts with P&G.  Yet SAPS failed to
even after it became final on September 22, 2008 show that it could complete the 6-month contracts using
because of issues raised respecting the correct its own capital and investment.  Its capital is not even
computation of such awards, it is but fair that respondent sufficient for one month’s payroll. SAPS failed to show
Javellana be required to pay 12% interest per annum on that its paid-in capital of P31,250.00 is sufficient for the
those awards from September 22, 2008 until they are period required for it to generate revenues to sustain its
paid.  The 12% interest is proper because the Court operations independently.  Substantial capital refers to
treats monetary claims in labor cases the equivalent of a capitalization used in the performance or completion of
forbearance of credit.  It matters not that the amounts of the job, work or service contracted out.  In the present
the claims were still in question on September 22, 2008.  case, SAPS has failed to show substantial capital.
What is decisive is that the order to pay the monetary
awards had long become final.  Daniel P. Javellana, Jr.
Furthermore, the employees in this case performed
vs. Albino Belen/Albino Belen Vs. Daniel P. Javellana, Jr.
merchandising and promotion of the products of P&G,
and Javellana Farms, Inc., G.R. No. 181913/G.R. No.
which are activities that the Court has considered directly
182158, March 5, 2010.
related to the manufacturing business of P&G. 
Considering that SAPS has no substantial capital or
LABOR ONLY CONTRACTING.  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-
Indeed, it is management prerogative to farm out any of
only contracting”.  Joeb Aliviado, et al. vs. Procter &
its activities, regardless of whether such activity is
Gamble Philippines, Inc., et al., G.R. No. 160506, March
peripheral or core in nature.  However, in order for such
9, 2010.
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- PROJECT EMPLOYEE. 
only contracting when the contractor or sub-contractor
merely recruits, supplies or places workers to perform a
The test for distinguishing a “project employee” from a
job, work or service for a principal, and any of the
“regular employee” is whether or not he has been
following elements are present: (i) the contractor or
assigned to carry out a “specific project or undertaking,”
subcontractor does not have substantial capital or
with the duration and scope of his engagement specified
investment which relates to the job, work or service to be
at the time his service is contracted.  Here, it is not
performed and the employees recruited, supplied or
disputed that petitioner company contracted respondent
placed by such contractor or subcontractor are
Trinidad’s service by specific projects with the duration of
performing activities which are directly related to the
his work clearly set out in his employment contracts.  He
main business of the principal; or (ii) the contractor does
remained a project employee regardless of the number of
not exercise the right to control over the performance of
years and the various projects he worked for the
the work of the contractual employee.
company.

In the instant case, the financial statements of Promm-

Generally, length of service provides a fair yardstick for
Gem show that it has authorized capital stock of P1
determining when an employee initially hired on a
million and a paid-in capital, or capital available for
temporary basis becomes a permanent one, entitled to
operations, of P500,000.00 as of 1990.  It also has long
the security and benefits of regularization.  But this
term assets worth P432,895.28 and current assets of

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standard will not be fair, if applied to the construction Department of Budget and Management (DBM) vs. Olivia
industry, simply because construction firms cannot D. Leones, G.R. No. 169726, March 18, 2010.
guarantee work and funding for its payrolls beyond the
life of each project.  And getting projects is not a matter
SEPARATION PAY; TERMINATION FOR CAUSE. 
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 Separation pay is only warranted when the cause for
wish it has such control but the reality, understood by termination is not attributable to the employee’s fault,
construction workers, is that work depended on decisions such as those provided in Articles 283 and 284 of the
and developments over which construction companies Labor Code, as well as in cases of illegal dismissal in
have no say. which reinstatement is no longer feasible.  It is not
allowed when an employee is dismissed for just cause,
such as serious misconduct.
In this case, respondent Trinidad’s series of employments
with petitioner company were co-terminous with its
projects.  When its Boni Serrano-Katipunan Interchange Jurisprudence has classified theft of company property as
Project was finished in December 2004, Trinidad’s a serious misconduct and denied the award of separation
employment ended with it.  He was not dismissed.  His pay to the erring employee.  In this case, the Court saw
employment contract simply ended with the project for no reason why this same rule should not be similarly
which he had signed up.  His employment history belies applied in the case of Capor.  She attempted to steal the
the claim that he continuously worked for the company.  property of her long-time employer.  For committing such
Intervals or gaps separated one contract from misconduct, she is definitely not entitled to an award of
another.  William Construction Corp. and/or Teresita Uy separation pay.
and William Uy vs. Jorge R. Trinidad, G.R. No. 183250,
March 12, 2010. Capor’s argument that despite the finding of theft, she
should still be granted separation pay in light of her long
REINSTATEMENT; REIMBURSEMENT.  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
An employee cannot be compelled to reimburse the
the betrayal exhibited by a malfeasant employee.  Length
salaries and wages he received during the pendency of
of service is not a bargaining chip that can simply be
his appeal, notwithstanding the reversal by the NLRC of
stacked against the employer.  After all, an employer-
the LA’s order of reinstatement.  The pertinent law on the
employee relationship is symbiotic where both parties
matter is not concerned with the wisdom or propriety of
benefit from mutual loyalty and dedicated service.  If an
the LA’s order of reinstatement, for if it was, then it
employer had treated his employee well, has accorded
should have provided that the pendency of an appeal
him fairness and adequate compensation as determined
should stay its execution.  After all, a decision cannot be
by law, it is only fair to expect a long-time employee to
deemed irrefragable unless it attains finality. College of
return such fairness with at least some respect and
the Immaculate Concepcion vs. National Labor Relations
honesty.  Thus, it may be said that betrayal by a long-
Commission and Atty. Marius F. Carlos, Ph.D, G.R. No.
time employee is more insulting and odious for a fair
167563, March 22, 2010.
employer.  While we sympathize with Capor’s plight,
being of retirement age and having served petitioners for
REPRESENTATION AND TRANSPORTATION 39 years, we cannot award any financial assistance in her
ALLOWANCE; ENTITLEMENT. 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
Statutory law, as implemented by administrative
(NLM) – Katipunan on behalf of its member, Nenita
issuances and interpreted in decisions, has consistently
Capor, G.R. No. 164016, March 15, 2010.
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 Termination of employment; conviction in criminal
unavoidable in the discharge of office.  Hence, RATA is case. 
paid only to certain officials who, by the nature of their
offices, incur representation and transportation expenses.
Conviction in a criminal case is not necessary to find just
cause for termination of employment.  Criminal cases
At any rate, the denial of RATA must be grounded on require proof beyond reasonable doubt while labor
relevant and specific provision of law.  By insisting that, disputes require only substantial evidence, which means
as requisite for her receipt of RATA, respondent must such relevant evidence as a reasonable mind might
discharge her office as Bacnotan’s treasurer while on accept as adequate to justify a conclusion.  The evidence
reassignment at the La Union treasurer’s office, the DBM in this case was reviewed by the appellate court and two
effectively punishes respondent for acceding to her labor tribunals endowed with expertise on the matter –
reassignment. Surely, the law could not have intended to the Labor Arbiter and the NLRC.  They all found
place local government officials like respondent in the substantial evidence to conclude that Capor had been
difficult position of having to choose between disobeying validly dismissed for dishonesty or serious
a reassignment order or keeping an allowance. misconduct.  Reno Foods, Inc., and/or Vicente Khu vs.

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Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan if his interest in the subject matter of the suit and in the
on behalf of its member, Nenita Capor, G.R. No. 164016, relief sought is inextricably intertwined with the other
March 15, 2010. parties’ interest.

Labor Procedure Unquestionably, Villamater’s widow stands as an

indispensable party to this complaint for payment of
permanent and total disability benefits, reimbursement of
COURT; FINDINGS OF FACT (LABOR). 
medical and hospitalization expenses, moral and
exemplary damages, and attorney’s fees.  Leonis
A petition for review on certiorari under Rule 45 of the Navigation Co., Inc. and World Marine Panama, S.A. vs.
Rules of Court should include only questions of law — Catalino U. Villamater, et al., G.R. No. 179169, March 3,
questions of fact are not reviewable.  A question of law 2010.
exists when the doubt centers on what the law is on a
certain set of facts, while a question of fact exists when
JURISDICTION; ESTOPPEL. 
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 Petitioner is already estopped from belatedly raising the
probative value of the evidence.  Once the issue invites a issue of lack of jurisdiction since it has actively
review of the evidence, the question is one of fact. participated in the proceedings before the LA and NLRC. 
We have consistently held that while jurisdiction may be
assailed at any stage, a party’s active participation in the
Whether YEU committed fraud and misrepresentation in
proceedings before a court without jurisdiction will estop
failing to remove Pineda’s signature from the list of
such party from assailing such lack of it.  It is an
employees who supported YEU’s application for
undesirable practice of a party participating in the
registration and whether YEU conducted an election of its
proceedings and submitting his case for decision and
officers are questions of fact.  They are not reviewable.
then accepting the judgment, only if favorable, and
attacking it for lack of jurisdiction, when
Factual findings of the Court of Appeals are binding on adverse.  Philippine Veterans Bank vs. National Labor
the Court.  Absent grave abuse of discretion, the Court Relations Commission, et al., G.R. No. 188882, March
will not disturb the Court of Appeals’ factual findings.  30, 2010.
In Encarnacion v. Court of Appeals (G.R. No. 101292, 8
June 1993), the Court held that, “unless there is a clearly
JURISDICTION; LABOR ARBITER. 
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 Petitioners clearly and consistently questioned the
exceptions such as gross misappreciation of evidence or legality of RGMI’s adoption of the new salary scheme
a total void of evidence.”  YTPI failed to show that the (i.e., piece-rate basis), asserting that such action, among
Court of Appeals gravely abused its others, violated the existing CBA.  Indeed, the
discretion.  Yokohama Tire Philippines, Inc. vs. controversy was not a simple case of illegal dismissal but
Yokohama Employees Union, G.R. No. 163532, March 12, a labor dispute involving the manner of ascertaining
2010. employees’ salaries, a matter which was governed by the
existing CBA.
COURT; QUESTIONS OF FACT (LABOR).
With regard to the question of jurisdiction over the
subject matter, Article 217(c) of the Labor Code requires
The petition essentially raises questions of fact.  While as
labor arbiters to refer cases involving the implementation
a rule, factual findings of the CA are binding on the
of CBAs to the grievance machinery provided therein and
Court, the Court exercised its discretionary review
to voluntary arbitration.  Moreover, Article 260 of the
authority to review the facts of this case in view of the
Labor Code clarifies that such disputes must be referred
conflict in the findings of facts of the labor arbiter, on the
first to the grievance machinery and, if unresolved within
one hand, and the NLRC and the CA, on the other. White
seven days, they shall automatically be referred to
Diamond Trading Corporation and/or Jerry Uy vs.
voluntary arbitration. Under this provision, voluntary
National LaborRelations Commission, et al., G.R. No.
arbitrators have original and exclusive jurisdiction over
186019. March 29, 2010.
matters which have not been resolved by the grievance
machinery.
INDISPENSABLE PARTY.  
Pursuant to Articles 217 in relation to Articles 260 and
Rule 3, Section 7 of the Rules of Court defines 261 of the Labor Code, the labor arbiter should have
indispensable parties as those who are parties in interest referred the matter to the grievance machinery provided
without whom there can be no final determination of an in the CBA. Miguela Santuyo, et al. vs. Remerco
action.  They are those parties who possess such an Garments Manufacturing, Inc. and/or Victoria
interest in the controversy that a final decree would Reyes, G.R. No. 174420, March 22, 2010.
necessarily affect their rights, so that the courts cannot
proceed without their presence.  A party is indispensable

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JURISDICTION; LABOR 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
Article 217 of the Labor Code provides that the Labor
petitioners.
Arbiters shall have original and exclusive jurisdiction to
hear and decide cases involving termination disputes. 
The NLRC shall have exclusive appellate jurisdiction over In the landmark case of St. Martin Funeral Home v. NLRC
all cases decided by Labor Arbiters.  Galera being an (G.R. No. 130866, September 16, 1998), we ruled that
employee, the Labor Arbiter and the NLRC have judicial review of decisions of the NLRC is sought via a
jurisdiction over the present case.  WPP Marketing petition for certiorari under Rule 65 of the Rules of Court,
Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn and the petition should be filed before the CA, following
M. Galera vs. WPP Marketing Communications, Inc. et the strict observance of the hierarchy of courts.  Under
al.,  G.R. No. 169207/G.R. No. 169239, March 25, 2010. Rule 65, Section 4, petitioners are allowed sixty (60)
days from notice of the assailed order or resolution within
which to file the petition.
JURISDICTION; NLRC. 

Simply put, the execution of the final and executory

The Labor Arbiter and the NLRC do not have jurisdiction
decision or resolution of the NLRC shall proceed despite
over LRTA.  Petitioners themselves admitted in their
the pendency of a petition for certiorari, unless it is
complaint that LRTA “is a government agency organized
restrained by the proper court.  Leonis Navigation Co.,
and existing pursuant to an original charter (Executive
Inc. and World Marine Panama, S.A. vs. Catalino U.
Order No. 603),” and that they are employees of METRO.
Villamater, et al., G.R. No. 179169, March 3, 2010.

Light Rail Transit Authority v. Venus, Jr. (G.R. Nos.

POEA; FACTUAL FINDINGS. 
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 As a general rule, factual findings of administrative and
charter, is beyond the reach of the Department of Labor quasi-judicial agencies specializing in their respective
and Employment which has jurisdiction over workers in fields, especially when affirmed by the CA, must be
the private sector, “Employees of petitioner METRO accorded high respect, if not finality.  However, we are
cannot be considered as employees of petitioner LRTA. not bound to adhere to the general rule if we find that
The employees hired by METRO are covered by the Labor the factual findings do not conform to the evidence on
Code and are under the jurisdiction of the Department of record or are not supported by substantial evidence, as in
Labor and Employment, whereas the employees of the instant case.
petitioner LRTA, a government-owned and controlled
corporation with original charter, are covered by civil
The self-serving and unsubstantiated allegations of
service rules. Herein private respondent workers cannot
respondent cannot defeat the concrete evidence
have the best of two worlds, e.g., be considered
submitted by petitioner. We note that respondent did not
government employees of petitioner LRTA, yet allowed to
deny the due execution of the withdrawal form as well as
strike as private employees under our labor laws.”
the genuineness of his signature and thumb mark affixed
therein.  On the contrary, he admitted signing the same.
In fine, the Labor Arbiter’s decision against LRTA was When he voluntarily signed the document, respondent is
rendered without jurisdiction, hence, it is void. Thus, it bound by the terms stipulated therein.  LNS International
was improper for the appellate court to order the remand Manpower Services vs. Armando Padua, Jr., G.R. No.
of the case to the NLRC, and for it (NLRC) to give due 179792, March 5, 2010.
course to LRTA’s appeal.  Emmanuel S. Hugo, et al. vs.
Light Rail Transit Authority, G.R. No. 181866, March 18,
2010.

APRIL 2010 CASES

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 DISMISSAL; BACKWAGES.
the CA on August 9, 2004, or 54 calendar days from the
date of notice of the June 15, 2004 resolution. By reason Article 279 of the Labor Code provides that “an employee
of the finality of the June 15, 2004 NLRC resolution, the who is unjustly dismissed from work shall be entitled to
Labor Arbiter issued on July 29, 2004 a Writ of Execution. reinstatement without loss of seniority rights and other
Petitioners never moved for a reconsideration of this privileges and to his full backwages, inclusive of
Order regarding the voluntariness of their payment to allowances, and to his other benefits or their monetary
Sonia, as well as the dismissal with prejudice and the equivalent computed from the time his compensation was
concomitant termination of the case. withheld from him up to the time of his actual
reinstatement.”

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Thus, a number of cases holds that an illegally dismissed reprimand, the Court deems it proper and equitable to
employee is entitled to two reliefs: backwages and affirm the Court of Appeals’ (CA’s) award of backwages.
reinstatement.  The two reliefs are separate and distinct.
In instances where reinstatement is no longer feasible
In two instances, the Court granted the award
because of strained relations between the employee and
of backwages during the period the employees were
the employer, separation pay is granted.  In effect, an
prevented from reporting to work despite concluding that
illegally dismissed employee is entitled to either
the employee concerned violated reasonable office rules
reinstatement, if viable, or separation pay if
and regulations and imposing the penalty of reprimand.
reinstatement is no longer viable, and backwages.

In Jacinto v. Court of Appeals [G.R. No. 124540,

The normal consequences of respondents’ illegal
November 14, 1997, 281 SCRA 657], the Court awarded
dismissal, then, are reinstatement without loss of
petitioner Jacinto backwages after finding that she was
seniority rights, and payment of backwages computed
only culpable of violating reasonable office rules and
from the time compensation was withheld up to the date
regulations for not having asked permission from school
of actual reinstatement.  Where reinstatement is no
authorities to leave the school premises and seek medical
longer viable as an option, separation pay equivalent to
attention and for not filing an application for sick leave
one (1) month salary for every year of service should be
for approval by the school authorities.
awarded as an alternative.  The payment of separation
pay is in addition to the payment of backwages.
Also, in Bangalisan v. Court of Appeals [G.R. 124678,
July 31, 1997, 276 SCRA 619, 633], after affirming the
Since reinstatement is no longer feasible in the present
findings that one of the petitioners, Rodolfo Mariano, is
case, the award of separation pay in lieu of reinstatement
only liable for his violation of reasonable office rules and
is in order.  Petitioner’s prayer for the award
regulations for attending the wake and internment of his
of backwages is meritorious, it, and the award of
grandmother without the benefit of an approved leave of
separation pay not being mutually
absence and the imposition of the penalty of reprimand,
exclusive. Ferdinand. Pangilinan  vs. Wellmade 
the Court still granted him backwages.
Manufacturing Corporation, G.R. No. 187005, April 7,
2010.
Consistent with the Court’s rulings in Bangalisan
and Jacinto, the grant of backwages to respondent is but
DISMISSAL; BACKWAGES.
proper.  It is to be stressed that when imposing
penalties, it must not only be made within the
Reprimand being the appropriate imposable penalty for parameters of the law, but it should also satisfy the basic
respondent’s actuations from the very beginning, the tenets of equity, justice, and fairplay. National Power
Court finds that respondent was unfairly denied from Corporation vs. Alan Olandesca, G.R. No. 171434, April
reporting for work and earning his keep, thus, entitling 23, 2010.
him to the payment of backwages.
DISMISSAL; DISHONESTY.
The Court is not unmindful of our previous
pronouncements in similar cases involving suspension or
In Philippine Amusement and Gaming Corporation
dismissal from service, wherein the penalty imposed was
v. Rilloroza [G.R. No. 141141, June
reduced, but the award of backwages was denied.
25, 2001], dishonesty is defined as the disposition to lie,
cheat, deceive, or defraud; untrustworthiness; lack of
Given the circumstances of the case, however, where the integrity; lack of honesty, probity or integrity in principle;
proper penalty should only be a reprimand, the Court lack of fairness and straightforwardness; disposition to
finds the aforementioned cases to be inapplicable herein. defraud, deceive or betray.
On this note, the Court deems it proper to distinguish
between the penalties of dismissal or suspension and
It is not disputed that respondent took several materials
reprimand and their respective effects on the grant or
and supplies from petitioner’s warehouse without the
award of backwages. When an employee is dismissed or
approved WRS.  However, this should not be construed
suspended it is but logical that since he is barred from
as dishonesty on the part of respondent that would
reporting to work the same negates his right to be
warrant his dismissal from the service for the following
paid backwages. He has no opportunity to work during
reasons: First, the withdrawals of the supplies were duly
the period he was dismissed or suspended and,
recorded in the security guard’s logbook.  If respondent
therefore, he has no salary to expect. However, the same
intended to defraud petitioner, he could have easily taken
does not hold true for an employee who is reprimanded.
items from the warehouse without having them recorded
A reprimand usually carries a warning that a repetition of
as he was then the Supervising Property Officer who had
the same or similar act will be dealt with more severely.
free access to the supplies.  Second, right after
Under normal circumstances, an employee who is
withdrawing the items, respondent replaced them on his
reprimanded is never prevented from reporting to work.
own initiative, without anyone instructing him to do so. 
He continues to work despite the warning. Thus, in the
This act negates his intent to defraud petitioner. Third,
case at bar, since respondent’s penalty should only be a
there is no clear showing that respondent
misappropriated or converted the items for his own

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Labor Law Jurisprudence
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personal use or benefit.  Fourth, the Graft Investigation malfeasance.  Nowhere in the Notice was there a detailed
Officer of the Office of the Ombudsman, in its Resolution narration of the facts and circumstances that would serve
dated February 5, 1999, in OMB-1-98-2011, dismissed a as bases to terminate Consolacion, thus leaving to
complaint for qualified theft filed by Teodulo V. Largo, surmise what those procedures, standards and orders
Section Chief, Power Generation Group of petitioner were.  Anabel Benjamin, et al. vs. Amellar Corporation.,
against respondent as there was no competent and G.R. No. 183383, April 5, 2010.
sufficient evidence on record to show that there was
intent to gain on the part of the respondent, considering
DISMISSAL; MANAGEMENT PREROGATIVE.
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 Respondent’s right of management prerogative was
charge him for malversation of public property as there exercised in good faith. Respondent presented evidence
was no misappropriation of the supplies for his personal of the low volume of sales and orders for the production
use and that the same were for general purpose and not of industrial paper in 1999, which inevitably resulted to
for any specific use. the company’s decision to streamline its operations. This
fact was corroborated by respondent’s VP-Tissue
Manufacturing Director and was not disputed by
Nonetheless, although the respondent did not commit an
petitioner. Exercising its management prerogative and
overt act of dishonesty, he is not exonerated from
sound business judgment, respondent decided to cut
liability.  It was an established company procedure that
down on operational costs by shutting down one of its
before materials can be taken out from the warehouse,
paper mill. As held in International Harvester Macleod,
the issuance of a WRS is an indispensable requirement. 
Inc. v. Intermediate Appellate Court [233 Phil. 655,655-
In fact, there was even a warning posted at the door of
666 (1987)] the determination of the need to phase out a
the property office that states:
particular department and consequent reduction of
“BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLI
personnel and reorganization as a labor and cost saving
NA NG WALANG APRUBADONG WRS.”  Being the
device is a recognized management prerogative which
Supervising Property Officer, respondent knows fully well
the courts will not generally interfere with.
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 In this case, shutting down Paper Mill No. 4 was
protect the properties in the warehouse and to ensure undoubtedly a business judgment arrived at in the face of
that none shall be taken away without proper the low demand for the production of industrial paper at
documentation. 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
The Machiavellian principle that “the end justifies the
closure of Paper Mill No. 4 outright but gave them an
means” has no place in government service, which
option to be transferred to posts of equal rank and pay.
thrives on the rule of law, consistency and stability. 
Retrenchment was given only as an option in case the
Respondent, by taking the said properties without the
affected employee did not want to be transferred. The
approved WRS, violated reasonable office rules and
Court viewed this as an indication of good faith on
regulations as provided in Section 52 (C), (3), Rule IV of
respondent’s part since it exhausted other possible
Civil Service Commission Memorandum Circular No. 19,
measures before retrenchment.  Besides, the employer’s
series of 1999 (Uniform Rules on Administrative Cases in
prerogative to bring down labor costs by retrenchment
the Civil Service). Since this is respondent’s first offense
must be exercised essentially as a measure of last resort,
in his more than 16 years of service, the appropriate
after less drastic means have been tried and found
penalty to be imposed against him is reprimand. National
wanting.  Giving the workers an option to be transferred
Power Corporation vs. Alan Olandesca, G.R. No. 171434,
without any diminution in rank and pay belie petitioner’s
April 23, 2010.
allegation that the streamlining scheme was implemented
as a ploy to ease out employees. Apparently, respondent
DISMISSAL; LOST OF TRUST AND CONFIDENCE. implemented its streamlining or reorganization plan in
good faith, not in an arbitrary manner and without
violating the tenurial rights of its employees. Dannie
To terminate the services of an employee for loss of trust
M. Pantoja vs. SCA Hygiene Products Corporation, G.R.
and confidence, two requisites must concur:  (1) the
No. 163554, April 23, 2010.
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. DISMISSAL; RETRENCHMENT.

In the present case, respondent failed to justify its loss of The CA committed no reversible error in affirming
trust and confidence on Consolacion even as it imputed the NLRC ruling that Talam was validly dismissed on the
to him, via Notice of Formal Investigation of April 14, ground of retrenchment.  The Supreme Court came to
2003, non-compliance with (a) established non-written this conclusion based on the following considerations:
procedures and standards; (b) established written
procedures and standards, and (c) verbal orders and/or
First, the decision to retrench had a basis; it was not
instructions. These alleged acts of non-compliance are
simulated nor resorted to for the purpose of getting rid of
too general and can encompass just about any

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employees.  The decision was upon the recommendation wrongful intent and not mere error in judgment.  To be
of the company’s external auditor. Second, the cost- serious, the misconduct must be of such grave and
cutting measure recommended involved reduction aggravated character. Caltex (Philippines), Inc., et. al.
of TSFI’s payroll expense account which, as the auditor vs. Hermie G. Abad, et. al., G.R. No. 163554, April 23,
found, makes up 41% of the company’s total operating 2010.
expenses.  Third, Talam was dismissed due to a cause
authorized by law – retrenchment to prevent losses. At
DUE PROCESS; TERMINATION.
the time of Talam’s dismissal, TSFI’s financial condition,
as found by the external auditor, showed that it was not
just expecting losses, it already suffered a net income The records belie Amular’s claim of denial of procedural
loss of P2,474,418.00 and retained earnings deficit of due process.  He chose not to present his side at the
P7,424,250.00 for the period ending December 31, 2002. administrative hearing.  In fact, he avoided the
Fourth, TSFI resorted to other measures to abate its investigation into the charges against him by filing his
losses.  It claimed that during the crises period, it used illegal dismissal complaint ahead of the scheduled
as an office a small-room (a mere cubicle) with only a investigation.  These facts show that the employee was
two-person support staff in the persons given the opportunity to be heard and he cannot now
of Grapilon and Hermle; it reduced the salaries of its come to the Court protesting that he was denied this
employees by as much as 30%.  This submission by the opportunity.  To belabor a point the Court has repeatedly
company is substantiated by the schedule of Operating made in employee dismissal cases, the essence of due
Expenses for the year ended December 31, 2002 and process is simply an opportunity to be heard; it is the
September 30, 2002. A quick glance at the schedule denial of this opportunity that constitutes violation of due
readily shows a reduction of TSFI’s operating expenses process of law. Technol Eight Philippines Corporation vs.
across the board.  The schedule indicates a substantial National Labor Relations Commission, et al., G.R. No.
decrease in operating expenses, from P5,733,735.00 in 187605. April 13, 2010.
September 2002 to P1,698,552.36 as of the end of
December 2002. Francis Ray Talam vs. National Labor EMPLOYER EMPLOYEE RELATIONSHIP.
Relations Commission, 4th Division, Cebu City, et al.,
G.R. No. 175040, April 6, 2010.
The elements to determine the existence of an
employment relationship are: (1) selection and
DISMISSAL; SERIOUS MISCONDUCT. engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the employer’s power
The findings of the CA and National Labor Relations to control the employee’s conduct. In filing a complaint
Commission (NLRC) establish the following: (1) Agad’s for illegal dismissal, it is incumbent upon Abueva to prove
request for withdrawal of the 190 cylinders of LPG as the relationship by substantial evidence.
stated in a Memorandum dated 12 February 1992 cannot
be given credence since the Memorandum pertains to the In this regard, Abueva claims that he has worked with
replacement of the scrap materials due to respondent hacienda for more than a year already and
Boy Bato consisting of 3,000 kilograms of black iron that he was allowed to stay inside the hacienda.  As such,
plates and not to the subject LPG cylinders; (2) Agad did he is a regular employee entitled to monetary claims. 
not observe Caltex’s rules and regulations when he However, petitioners have not presented competent proof
transferred the said cylinders to Millanes’ compound that respondents engaged the services of Abueva; that
without the RMRD form as required under Caltex’s Field respondents paid his wages or that respondents could
Accounting Manual; (3) Agad gave specific instructions dictate what his conduct should be while at work.  In
to Millanes to sell the cylinders without bidding to third other words, Abueva’s allegations did not establish that
parties in violation of company rules; (4)  Agad failed to his relationship with respondents had the attributes of an
submit the periodic inventory report of the LPG cylinders employer-employee relationship based on the four-fold
to the accounting department; (5) Agad did not remit the test. Abueva was not able to discharge the burden of
proceeds of the sale of the LPG cylinders; and  (6) even if proving the existence of an employer-employee
considered as scrap materials, the LPG cylinders still had relationship. Moreover, Abueva was not able to refute
monetary value which Agad cannot appropriate for respondents’ assertion that he hires other men to
himself without Caltex’s consent. perform weeding job in the hacienda and that he is not
exclusively working for
Considering these findings, it is clear respondents. Romeo Basay, et al. vs. Hacienda
that Agad committed a serious infraction amounting to Consolation, et al., G.R. No. 175532, April 19, 2010.
theft of company property.  This act is akin to serious
misconduct or willful disobedience by the employee of the ILLEGAL DISMISSAL.
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. Contrary to the CA’s perception, the Court finds a work-
connection in Amular’s and Ducay’s assault on Mendoza. 
As the CA itself noted, the underlying reason
Misconduct has been defined as a transgression of some why Amular and Ducay confronted Mendoza was to
established and definite rule of action, a forbidden act, a question him about his report to De Leon
dereliction of duty, willful in character, and implies – Technol’s PCD assistant supervisor – regarding the

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duo’s questionable work behavior.  The motivation behind The Court is not unmindful of the rule in labor cases that
the confrontation was rooted on workplace dynamics as the employer has the burden of proving that the
Mendoza, Amular and Ducay interacted with one another termination was for a valid or authorized cause; however,
in the performance of their duties. 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
Under these circumstances, Amular undoubtedly
fact has the burden of proving it and the proof should be
committed misconduct or exhibited improper behavior
clear, positive and convincing. In this case, aside from
that constituted a valid cause for his dismissal under the
mere allegations, no evidence was proffered by the
law and jurisprudential standards. The circumstances of
petitioners that they were dismissed from employment.
his misdeed rendered him unfit to continue working
The records are bereft of any indication that petitioners
for Technol.  Thus, Amular was not illegally dismissed; he
were prevented from returning to work or otherwise
was dismissed for cause. Technol Eight Philippines
deprived of any work assignment by respondents.
Corporation vs. National Labor Relations
Commission, et al., G.R. No. 187605. April 13, 2010.
In Abad v. Roselle Cinema [G.R. No. 141371, March 24,
2006, 485 SCRA 262, 272], the Court ruled that the
ILLEGAL DISMISSAL.
substantial evidence proffered by the employer that it
had not terminated the employee should not be ignored
If the school were to apply the probationary standards on the pretext that the employee would not have filed
(as in fact it says it did in the present case), these the complaint for illegal dismissal if he had not really
standards must not only be reasonable but must have been dismissed. The Court held that such non sequitur
also been communicated to the teachers at the start of reasoning cannot take the place of the evidence of both
the probationary period, or at the very least, at the start the employer and the employee. Romeo Basay, et al. vs.
of the period of application of the said standards.  These Hacienda Consolation, et al., G.R. No. 175532, April 19,
terms, in addition to those expressly provided by the 2010.
Labor Code, would serve as the just cause for the
termination of the probationary contract.  As explained
ILLEGAL DISMISSAL.
above, the details of this finding of just cause must be
communicated to the affected teachers as a matter of
due process. 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
AMACC, by its submissions, admits that it did not renew
the employee had abandoned her work.  It did not even
the petitioners’ contracts because they failed to pass the
bother to send a letter to her last known address
Performance Appraisal System for Teachers (PAST) and
requiring her to report for work and explain her alleged
other requirements for regularization that the school
continued absences.
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 The ratiocination of the NLRC on this score merits the
standards under the Guidelines on the Implementation Court’s imprimatur, viz: The law clearly spells out the
of AMACC Faculty Plantilla put in place at the start of manner by which an unjustified refusal to return to work
school year 2000-2001. by an employee may be established.  Thus, respondent
should have given complainant a notice with warning
concerning her alleged absences (Section 2, Rule XIV,
While the Court can grant that the standards were duly
Book V, Implementing Rules and Regulations of the Labor
communicated to the petitioners and could be applied
Code).  The notice requirement actually consists of two
beginning the 1st trimester of the school year 2000-2001,
parts to be separately served on the employee to wit: 
glaring and very basic gaps in the school’s evidence still
(1) notice to apprise the employee of his absences with a
exist.  The exact terms of the standards were never
warning concerning a possible severance of employment
introduced as evidence; neither does the evidence show
in the event of an unjustified excuse therefor, and (2)
how these standards were applied to the petitioners.
subsequent notice of the decision to dismiss in the event
Without these pieces of evidence (effectively, the finding
of an employee’s refusal to pay heed to such warning. 
of just cause for the non-renewal of the petitioners’
Only after complying with those requirements can it be
contracts), the Court has nothing to consider and pass
reasonably concluded that the employee actually
upon as valid or invalid for each of the petitioners.
abandoned his job.  In the present case, more than two
Inevitably, the non-renewal (or effectively, the
(2) months had already lapsed since the employee
termination of employment of employees on probationary
allegedly started to absent herself when she instituted
status) lacks the supporting finding of just cause that the
her action for illegal dismissal.  During the said period of
law requires and, hence, is illegal. Yolanda M.
time, no action was taken by the company regarding the
Mercado, et al. vs. Ama Computer
employee’s alleged absences, something which is quite
College, Parañaque City, G.R. No. 183572, April 13,
peculiar had her employment not been severed at all. 
2010.
Accordingly, the Court found no merit in the company’s
defense of abandonment in view of an utter lack of
ILLEGAL DISMISSAL. evidence to support the same.  Hence, the employee’s
charge of illegal dismissal

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stands uncontroverted. Diversified Security, Inc. vs. evade their legal responsibilities, a legitimate waiver
Alicia V. Bautista. G.R. No. 152234, April 15, 2010. representing a voluntary settlement of a laborer’s claims
should be respected by the courts as the law between the
parties. In the Court’s view, Talam’s release and
quitclaim fall into the category of legitimate waivers as
defined by the Court.
PREVENTIVE SUSPENSION; PROCESS.
With Talam’s voluntary execution of the release and
What the Rules require is that the employer act on the quitclaim, the Court found the filing of the illegal
suspended worker’s status of employment within the 30- dismissal case tainted with bad faith. Neither can TSFI be
day period by concluding the investigation either by made to answer for failure to afford Talam procedural
absolving him of the charges, or meting the due process.  The release and quitclaim, in the Court’s
corresponding penalty if liable, or ultimately dismissing mind, erased whatever infirmities there might have been
him.  If the suspension exceeds the 30-day period in the notice of termination as Talam had already
without any corresponding action on the part of the voluntarily accepted his dismissal through the release
employer, the employer must reinstate the employee or and quitclaim. As such, the written notice became
extend the period of suspension, provided the employee’s academic; the notice, after all, is merely a protective
wages and benefits are paid in the interim. measure put in place by law and serves no useful
purpose after protection has been assured.  The Court
In the present case, petitioner company had until May thus finds no basis for the conclusion that TSFI violated
20, 2002 to act on Taroy’s case.  It did by terminating procedural due process and should pay nominal
him through a notice dated May 10, 2002, hence, the 30- damages. Francis Ray Talam vs. National Labor Relations
day requirement was not violated even if the termination Commission, 4th Division, Cebu City, et al., G.R. No.
notice was received only on June 4, 2002, absent any 175040, April 6, 2010.
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
RESIGNATION OF EMPLOYEE.
(UMMGT), et al., G.R. No. 182114, April 5, 2010.

While the letter states that Peñaflor’s resignation was

REINSTATEMENT.
irrevocable, it does not necessarily signify that it was also
voluntarily executed.  Precisely because of the attendant
Given the period that has lapsed and the inevitable hostile and discriminatory working
change of circumstances that must have taken place in environment, Peñaflor decided to permanently sever his
the interim in the academic world and at AMACC, which ties with Outdoor Clothing.  This falls squarely within the
changes inevitably affect current school operations, the concept of constructive dismissal that jurisprudence
Court holds that – in lieu of reinstatement – the defines, among others, as involuntarily resignation due to
petitioners should be paid separation pay computed on the harsh, hostile, and unfavorable conditions set by the
a trimestral basis from the time of separation from employer.  It arises when a clear discrimination,
service up to the end of the complete trimester preceding insensibility, or disdain by an employer exists and has
the finality of this Decision. The separation pay shall be in become unbearable to the employee. The gauge for
addition to the other awards, properly recomputed, that constructive dismissal is whether a reasonable person in
the LA originally decreed. Yolanda M. Mercado, et al. the employee’s position would feel compelled to give up
vs. Ama Computer College, Parañaque City, G.R. No. his employment under the prevailing circumstances. With
183572, April 13, 2010. the appointment of Buenaobra to the position he then
still occupied, Peñaflor felt that he was being eased out
RELEASE, WAIVER AND QUITCLAIM. and this perception made him decide to leave the
company.

Talam was not an unlettered employee; he was an

information technology consultant and must have been The fact of filing a resignation letter alone does not shift
fully aware of the consequences of what he was entering the burden of proving that the employee’s dismissal was
into. The quitclaim was a voluntary act as there is no for a just and valid cause from the employer to the
showing that he was coerced into executing the employee.  In Mora v. Avesco [G.R. No. 177414,
instrument; he received a valuable consideration for his November 14, 2008, 571 SCRA 226], the Court ruled that
less than two years of service with the company.  Thus, should the employer interpose the defense of resignation,
from all indications, the release and quitclaim was a valid it is still incumbent upon the employer to prove that the
and binding undertaking that should have been employee voluntarily resigned. Manolo A. Peñaflor vs.
recognized by the labor authorities and the CA. Outdoor Clothing Manufacturing Corp., et al., G.R. No.
177114, April 13, 2010.

While the law frowns upon releases and quitclaims

executed by employees who are inveigled or pressured
into signing them by unscrupulous employers seeking to

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judicata on petitioners’ claim for refund of the

“underpayment” due. Genesis Transport Service,
Inc. et al. vs. Unyon ng Malayang 
Labor Procedure
Manggagawa ng Genesis (UMMGT), et al., G.R. No.
182114, April 5, 2010

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-à-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

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