De La Salle Araneta University vs Juanito Bernardo

G.R. No. 190809

Facts:

Bernardo has been a part-time employee of the DLS-AU. At the age of 65, the age of retirement,
Bernardo was granted another term of employment. Bernardo's contract with the university only ceased
when he reached the age of 75, the compulsory retirement age. He asserts his right to claim his
retirement benefits.

Issue:

Whether or not Bernardo is entitled to the retirement benefits.

Held:

Bernardo is entitled to the retirement benefits. According to Article 302 of the Labor Code, as amended
by RA No 7641, any employee may be retired upon reaching the retirement age and that he shall be
entitled to receive retirement benefits under the existing laws. Further, according to section 1 of Book VI
Rule 2 of the Rules Implementing the Labor Code, the same rule shall apply to all employees in the
private sector, regardless of their position, designation or status and irrespective of the method by which
their wages are paid, except to those specifically exempted under Section 2 hereof. The exemptions do
not cover the part-time employees.

Applying the principle of expressio unio est expulsio alterius which is that the express mention of one
person, thing, or consequence implies the exclusion of all others, Bernardo's claim for retirement
benefits cannot be denied on the ground that he was a part-time employee.

NESTLE v. PUEDAN

NESTLE PHILIPPINES INC., Petitioner VS. BENNY A. PUEDAN, et. al., Respondent

G.R. No. 220617

January 30, 2017

FACTS:

On July 6, 2012, the respondents filed a complaint against the petitioner for illegal dismissal and
demanding for separation pay, nominal damages and attorney’s fees. The respondents alleged that Ocho
de Setiembre Inc. (ODSI) and Nestle Philippines Inc. (NPI) hired them to sell various products of NPI in
the assigned covered area. After sometime, the respondents demanded that they be considered regular
employees of NPI but they were directed to sign contracts of employment with ODSI instead. However,
the respondents refused to comply with such directives resulting from their dismissal from their
position. The contention of the respondents is that ODSI is a labor-only contractor and, thus, they should
be deemed regular employees of NPI and there was no just or authorized cause for their dismissal. The
ODSI averred that it is a company engaged in the business of buying, selling, distributing, and marketing
of goods and commodities of every kind and it enters into all kinds of contracts for the acquisition
thereof. According to ODSI the respondents were hired as its employees to execute the Distributorship
Agreement with the NPI. Unfortunately, the business relationship between the NPI and ODSI turned sour
and eventually NPI downsized its marketing and promotional support from ODSI and termination of the
Distributorship Agreement. Meanwhile, ODSI argues with the respondents that they were not dismissed
but merely on floating status. However, the NPI did not file any position paper or appear in the
scheduled conferences.

The Labor Arbiter concluded that all the impleaded respondents therein (i.e. including NPI) should
be held liable for the payment of nominal damages plus attorney’s fees.

The aggrieved respondents appealed to National Labor Relation Commission (NLRC) and the NLRC
reversed and set aside the Labor Arbiter ruling. The NLRC ordered ODSI and NPI to pay each of the
respondents and entitled to separation pay and to nominal damages. The respondents moved for a
partial reconsideration arguing since it was ODSI that closed down operations and not the NPI, therefore
NPI should reinstate them. However, the NLRC denied the motion.

Moreover, the NPI was dissatisfied hence filed a petition for certiorari before the Court of Appeals
(CA) which the CA affirmed the NLRC ruling.

ISSUE:

Whether or not Nestle Philippines Inc. (NPI) and Ocho de Setiembre Inc. (ODSI) are deemed jointly
and severely liable for the respondent’s monetary claims.

HELD:

No. The Distributorship Agreement between the Nestle Philippines inc. (NPI) and Ocho de
Setiembre Inc. (ODSI) is not that of a principal and a contractor, but that of a seller and a buyer/re-seller.
Based on the stipulated in the Distributorship Agreement NPI agreed to sell its products to ODSI at
discounted prices. According to NPI the goods it manufactures are distributed to the market through
various distributor including ODSI, that in turn, re-sell the same to the designated outlets through its
own employees as the respondents. Therefore, the reselling activities allegedly performed by the
respondents properly pertain to ODSI only.

In effect, ODSI was not a labor-only contractor of NPI hence the NPI cannot be deemed the true
employer of the respondents. Therefore, NPI cannot be held jointly and severely liable to ODSI’s
monetary obligation towards the respondents.

Case Study: Joaquin Lu vs. Tirso Enopia et al.

November 2, 2017

Nathalie Pattugalan

G.R. No. 197899

06 Mar 2017

Peralta, J.

Facts:

Respondents were hired from January 20, 1994 to March 20, 1996 as crew members of the fishing
mother boat F/B MG-28 owned by respondent Joaquin "Jake" Lu (herein petitioner Lu) who is the sole
proprietor of Mommy Gina Tuna Resources [MGTR] based in General Santos City. Petitioners and Lu had
an income-sharing arrangement wherein 55% goes to Lu, 45% to the crew members, with an additional
4% as "backing incentive." They also equally share the expenses for the maintenance and repair of the
mother boat, and for the purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between them,
but petitioners refused to sign the same as they opposed the one-year term provided in the agreement.
According to petitioners, during their dialogue on August 18, 1997, Lu terminated their services right
there and then because of their refusal to sign the agreement.

On August 25, 1997, petitioners filed their complaint for illegal dismissal, monetary claims and damages.
Petitioners alleged that their refusal to sign the Joint Venture Fishing Agreement is not a just cause for
their termination.

On the other hand, Lu denied having dismissed petitioners, claiming that their relationship was one of
joint venture where he provided the vessel and other fishing paraphernalia, while petitioners, as
industrial partners, provided labor by fishing in the high seas. Lu alleged that there was no employer-
employee relationship as its elements were not present

Issue:

Whether or not an employer-employee relationship existed between petitioner Lu and respondents,

Enopia et al.

Ruling:

Yes, there is an employer-employee relationship.

In determining the existence of an employer-employee relationship, the following elements are

considered: (1) the selection and engagement of the workers; (2) the power to control the worker's
conduct; (3) the payment of wages by whatever means; and (4) the power of dismissal. We find all these
elements present in this case.

It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.

In this case, petitioner contends that it was the piado who hired respondents, however, it was shown by
the latter's evidence that the employer stated in their Social Security System (SSS) online inquiry system
printouts was MGTR, which is owned by petitioner. Printouts of their individual sss contribution sheet
that the date of the SSS remitted contributions coincided with the date of respondents' employment
with petitioner. Petitioner failed to rebut such evidence. Thus, the fact that petitioner had registered the
respondents with SSS is proof that they were indeed his employees. The coverage of the Social Security
Law is predicated on the existence of an employer-employee relationship. Moreover, the records show
that these fishermen obtain vale or cash advance from petitioner and not from the piado who allegedly
hired and had control over them.

It should be remembered that the control test merely calls for the existence of the right to control, and
not necessarily the exercise thereof. It is not essential that the employer actually supervises the
performance of duties by the employee. It is enough that the former has a right to wield the power.

The private respondent (petitioner) controls the entire fishing operations. Petitioner assigned a master
fisherman (pi ado) and assistant master fisherman (assistant pi ado) for each mother fishing boat, who
every now and then supervise the fishing operations. Private respondent also assigned checkers based
on the office to monitor and contact every now and then the crew at sea through radio. The checkers
advise the private respondent of the condition and the latter, through radio, will then instruct the
"piado" how to conduct the fishing operations.

The payment of respondents' wages based on the percentage share of the fish catch falls within the
scope and meaning of the term “wage” as defined under Article 97(f) of the Labor Code
Petitioner wielded the power of dismissal over respondents when he dismissed them after they refused
to sign the joint fishing venture agreement.

The primary standard for determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer.

There is a direct linkage or causal connection between the nature of petitioners' (now respondents) work
visa- vis MGTR's line of business. In fact, MGTR's line of business could not possibly exist, let alone
flourish without people like the fishermen crew members of its fishing vessels who actually undertook
the fishing activities in the high seas.

Considering that respondents were petitioner's regular employees, the latter's act of asking them to sign
the joint fishing venture agreement which provides that the venture shall be for a period of one year
from the date of the agreement, subject to renewal upon mutual agreement of the parties, and may be
pre-terminated by any of the parties before the expiration of the one-year period, is violative of the
former's security of tenure. And respondents' termination based on their refusal to sign the same, not
being shown to be one of those just causes for termination under Article 282, is, therefore, illegal.

VALENCIA v. CLASSIC VINYL

Jack C. Valencia vs Classic Vinyl

G.R. No. 206390

January 30, 2017

Facts:

The case was about an employee who was allegedly illegally dismissed by its employer.

Valencia, allegedly stated that he was an employee of Vinyl. Valencia, once filed against vinyl a labor
case, claiming his unpaid holiday pay, service incentive leave pay, 13th month pay, regularization, moral
and exemplary damages. When he ask if he could attend the hearing of his case, the respondent replied
with anger and stated that he can no longer work for them and not to report to its office anymore.
Thereafter, petitioner added illegal dismissal on his complaint.

However, during trial, it was discovered that Valencia was not an employee of Vinyl.

It was found out that Valencia was an employee of a service only contractor.

LA, upon the discovery that Valencia was not an employee of the petitioner, dismissed the petition.

NLRC Affirmed LA’s decision.

Issue:

WON Valencia’s petition has merit.

Held:

Court ruled in the negative and affirmed the decision of LA and NLRC.

The failure of Valencia to provide sufficient evidence that he was and employee of the respondent was
crucial in determining the case.

When the court applied the Four fold test, it was found out that Valencia is not an employee of Vinyl.

Therefore, Vinyl has no obligation to pay the claims of the petitioner.

Augustin International vs. Bartolome, G.R. No. 226578, Jan. 28, 2019

Labor Law; Jurisdiction of the Labor Arbiter vis – a – vis Dispute Settlement Provision in Employment
Contract: Section 10 of Republic Act No. (RA) 8042, as amended by RA 10022 provides that
notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. Settled is the rule that
jurisdiction over the subject matter is conferred by law and cannot be acquired or waived by agreement
of the parties. The dispute settlement provision in respondents’ employment contracts cannot divest the
LA of its jurisdiction over the illegal dismissal case.

PERLAS – BERNABE, J.:

FACTS: Respondents Bartolome and Yamat were hired as carpenter and tile setter by Golden Arrow
Company Ltd. (Golden Arrow) which had its office in Khartoum, Republic of Sudan, through petitioner
AICI, an employment agency providing manpower to foreign corporations. Their employment contracts
stated that they would render services for a period of not less than 24 months. Also, it included a
provision on dispute settlement which reads: 14. Settlement of disputes: All claims and complaints
relative to the employment contract of the employee shall be settled in accordance with Company
policies, rules[,] and regulations. In case the Employee contests the decision of the employer, the matter
shall be settled amicably with [the] participation of the Labor Attaché or any authorized representative
of the Philippines Embassy nearest the site of employment.

Upon arrival in Sudan, Bartolome and Yamat were transferred by Golden Arrow to its sister company, Al
Mamoun Trading and Investment Company (Al Mamoun) which terminated their services after a year
due to abandonment of duties. Respondents then filed a complaint before the NLRC for illegal dismissal,
breach of contract and payment of unexpired portion of the contract against AICI and Al Mamoun. The
Labor Arbiter (LA) ruled in favor of the respondents. Upon appeal, the NLRC affirmed the decision of the
LA which led AICI and Al Mamoun to file a petition for certiorari before the CA. The latter denied the
petition holding that AICI and Al Mamoun failed to comply with procedural and substantive due process
in dismissing the respondents.

ISSUE:

Whether or not the LA correctly took cognizance of the case despite the presence of a provision in the
employment contract on dispute settlement.

HELD: AFFIRMATIVE.

Section 10 of Republic Act (RA) 8042, as amended by RA 10022, explicitly provides that LA’s have original
and exclusive jurisdiction over claims arising out of employer-employee relations or by virtue of any law
or contract involving Filipino workers for overseas deployment. Settled is the rule that jurisdiction over
the subject matter is conferred by law and cannot be acquired or waived by agreement of the parties. As
herein applied, the dispute settlement provision in respondents’ employment contracts cannot divest
the LA of its jurisdiction over the illegal dismissal case. Hence, it correctly took cognizance of the
complaint filed by respondents before it. Moreover, issues not raised in the previous proceedings cannot
be raised for the first time at a late stage. In this case, the Court observes that AICI failed to raise the
issue of respondents’ supposed non-compliance with the dispute settlement provision before the LA, as
well as before the NLRC. In fact, AICI only mentioned this issue for the first time before the CA in its
motion for reconsideration. Therefore, such argument or defense is deemed waived and can no longer
be considered on appeal. Hence, the Court rules that the LA properly took cognizance of this case.
Disability complaint filed prior to the issuance of medical assessment is not premature if delay is cause
by the company.

Disability complaint filed prior to the issuance of medical assessment is not premature if delay is cause
by the company.

Paringit vs. Global Gateway, G.R. No. 217123, Feb. 6, 2019

DOCTRINE:

Disability benefits entitlement rules provide that: a. 120 days provided under Section 20-B (3) of the
POEA-SEC is the period given to the employer to determine fitness to work and when the seafarer is
deemed to be in a state of total and temporary disability; b. the 120 days of total and temporary
disability may be extended up to a maximum of 240 days should the seafarer require further medical
treatment; and c. a total and temporary disability becomes permanent when so declared by the
company designated physical within 120 or 240 days, as the case may be, or upon the expiration of the
said periods without a declaration of either fitness to work or permanent disability and the seafarer is
still unable to resume his regular seafaring duties. Disability benefits; Compensability; nature of
employment is not the only determinant of seafarer's illness; Reasonable connection; m120-day rule;
240-day rule; Filing of complaint prior to issuance of medical assessment; Effect of filing if the cause of
delay of assessment is the company.

LEONEN, J.:

FACTS:

Petitioner Paringit entered into a six (6)-month employment contract with MidSouth Ship and Crew
Management, Inc., representing Seaworld Marine Services, S.A. He was employed as Chief mate of the
Panaman vessel Tsavliris Hellas. Prior to his deployment, Paringit underwent a pre-employment medical
examination, where he disclosed that he had high blood pressure. Still, he was declared fit for duty. A
few months later, Paringit began to feel constantly fatigues and stressed. He also noticed blood in his
feces. When the vessel was docked at the port of Las Palmas, Spain, Paringit was rushed to the intensive
care unit of Clinica Perpetuo Soccoro, where he underwent blood transfusion. He was later on
discharged from the ICU with a diagnosis of: "decompensated cardiac insufficiency. Severe anemia. Renal
dysfunction." He was transferred to a regular room for further treatment and monitoring and was
discharge from the hospital. He was soon medically repatriated and arrived in Manila on February 9,
2012. Paringit was admitted to the YGEIA Medical Center for evaluation and management. He again
underwent blood transfusion and was placed on medication. He was discharged from the hospital with a
work diagnosis of: 'Congestive Heart Failure; Hypertensive Cardiovascular Disease; Valvular Heart
Disease; Anemia Secondary to Upper GI Bleeding to Bleeding Peptic Ulcer Disease." Dr. Quetulio, the
company-designated physician, prescribed Paringit's medication and advised him to return to the
hospital for checkup. On June 4, 2012, Paringit consulted Dr. Donato-Tan a cardiologist at the Philippine
Heart Center. After evaluating Paringit and reviewing the results of his laboratory examinations, Dr.
Donate-Tan concluded that with his heart condition, he would need regular medication, further
laboratory procedures, and periodic check-ups with a cardiologist to prevent any aggravation of his
illness. She declared him to be permanently disabled and unfit for duty as a seaman.

On June 11, 2012, Paringit filed a Complaint for medical expenses and other money claims against Global
Gateway Crewing Services, Inc., Mid-South Ship & Crew Management, Inc., Seaworld Marine Services,
S.A., and Captain Simeon Flores (Captain Flores), president of Global Gateway. On June 13, 2012, Paringit
executed a quitclaim,

[25]
 where he acknowledged receiving US$6,636.70 from St. Tsavliris Hellas as his sickness allowance from
February 8, 2012 to June 8, 2012. On June 18, 2012, Dr. Quetulio informed Global Gateway that Paringit
seemed hesitant to undergo the recommended operation and instead opted for herbal treatment. She
also stated that Paringit's heart condition was preexisting, not work-related

After the parties failed to settle the issue, they were directed to submit their respective position papers.

Labor Arbiter’s Ruling:

It granted Paringit's Complaint. The LA Arbiter found that his various illnesses were work-related or
work-aggravated, brought about by the type of food served and the stressful nature of his job aboard the
ship. Further, LA Savari found that since Dr. Donato-Tan declared Paringit's unfitness to work as a
seafarer, his disability was total and permanent.

(jointly and severally to pay disability Grade 1, US$60,000.00 plus 10% thereof as and by way of
attorney's fees.)

NLRC Ruling: It dismissed the Appeal and affirmed Labor Arbiter Savari 's Decision. The National Labor
Relations Commission upheld Labor Arbiter Savari's ruling that Paringit was entitled to permanent total
disability benefits, his illness being work-related and acquired during the term of his employment
contract.

CA Ruling: Granted their Petition. The Court of Appeals faulted Paringit for choosing an alternative
treatment, then demanding permanent and total disability benefits based on his doctor's assessment on
his unfitness for sea duty, rather than consulting a third physician as required by law. Further, the Court
of Appeals noted that Paringit filed his Complaint 124 days after his medical repatriation, which was still
well within the 240-day medical treatment period granted to his employer. Thus, the Complaint was
premature since he had no cause of action for his claim of total and permanent disability benefits.

ISSUES:

1. Whether or not compensability shall be determined solely by the nature of work 2. Whether or not
the filing of the complaint prior to the issuance of disability assessment is premature when the company
refused to respond to seafarer's request for open-heart surgery as recommended by the physician

RULING:

1. The POEA Standard Employment Contract defines a work-related illness as "any sickness as a
result of an occupational disease listed under Section 32-A of this Contract with the conditions
set therein satisfied." Paringit took medication to normalize his blood p[pressure, but the
working conditions and mandatory diet abroad the vessel made it difficult and nearly impossible
for him to maintain a healthy lifestyle. he stressed that he and other seafarers were severed
mostly of high-fat, high-cholesterol and low-fiber food abroad the vessel. Furthermore, his work
as Chief mate carried considerable stress and required him to stay up for long stretches of time,
up to the early hours of the morning. The SC likewise adhered to the factual finding of the LA
that Paringit despite being hypertensive was declared fit to work in his pre-employment medical
examination. Moreover, the poor food choices in his workplace led to contributed to his heart
disease. He was declared fit to work prior to embarkation, hence, there is no other conclusion
that that he developed or his illness were triggered or aggravated on board and his working
conditions precipitated his unknown illness. Hence, his disease which are congestive heart
failure, hypertensive cardiovascular disease, valvular heart disease are work-related or
aggravated because the fats and chemical in frozen and preserved meats congested his arteries.
His stress caused peptic ulcer to him. Clearly, his illness are work-related and aggravated. Citing
Magsaysay Maritime Services, et al. vs Laurel, the SC emphasized that in determining the
 compensability of an illness, it is not necessary that the nature of the employment be the sole
reason for the seafarer's illness. A reasonable connection between the disease and work
undertaken already suffices. 2. The case of Vergara vs Hammonia Maritime Services, Inc et.al
explained the relevant rules and period for reckoning a seafarer's permanent disability for
entitlement to disability benefits. Kestrel Shipping Co., Inc vs Muna then summarized the rules
for entitlement to disability benefits discussed in Vergara. The records show that Dr. Quetulio
recommended Parinigit to undergo open-heart surgery, but Global gateway failed or refused to
act on this. Dr. Quetulio first broached the possibility of open-heart surgery on March 5, 2012,
about a month after Paringit’s medical repatriation. the succeeding weeks led to her formally
advising Global gateway of Paringit's need for open-heart surgery, yet the company failed or
refused to respond her request, despite repeated follow-ups. The CA faulted Paringit for filing a
Complaint before Dr. Quetulio could issue disability assessment, and declared that she had 240
days to do so since Paringit needed additional treatment and evaluation. However, Global
Gateway's deafening silence over the requested operation, stretching beyond the mandated 120
days within which Dr. Quetulio could give her assessment, it cannot be said that she needed
additional time to assess Paringit’s condition.

The facts show that Paringit had to undergo an open-heart surgery before Dr. Quetulio could properly
assess his condition and issue a disability assessment. Unfortunately, Dr. Quetulio had reached an
impasse with her management of Paringit's case. Global gateway's silence meant that she could neither
issue the required disability assessment within 120-day period nor extend the period to 240 days to
further evaluate and treat Paringit. Dr. Quetulio's failure to timely issue a disability assessment was due
to Global Gateway, not because Paringit impliedly refused treatment due to his supposed inclination
toward an alternative treatment, as the CA held. Thus, the labor tribunals did not err in giving credence
to the findings of the private physician. The POEA Standard Employment Contract spells out the
conditions for compensability. Here, the compensability of Paringit's conditions is clear; however, instead
of fulfilling its responsibilities, Global Gateway delayed his treatment and raised technical procedure
barriers that were clearly unwarranted.

Employee can be validly dismissed for violation of Union Security Clause: Parallel treatment of
Violation with Just Cause:

Slord Development vs. Noya, G.R. No. 232687, Feb. 4, 2019 DOCTRINE:

Employee who violates the union security clause provision in the CBA may be validly dismissed. Due
process must be observed by the employer.

Union Security Clause; Valid Dismissal for Violation of the Union Security Clause Provision; Parallel
Treatment Between Violation of Union Security Clause and Just Clause; procedural Due Process in
Termination Due to Violation of Union Security Clause; Freedom Period; Member-Employee Cannot
Organize Another Union Outside of the Freedom Period

PERLAS – BERNABE, J.:

FACTS:

Respondent Noya was employed as a welder by Slord Development Corporation (Slord). Noya's
employment was covered by a CBA effective April 14, 2009 to April 15, 2014 between Slord's and NLM-
Katipunan, the company’s sole and exclusive bargaining agent for all the regular rank-and-file employees.
Among its provisions was a union security clause which states as cause for dismissal of any new
employee covered by the bargaining unit, who attains regular status in the company but fails to join the
union mentioned and any union member who us expelled from the union or fails to maintain their
membership in the union. Slord claimed that sometime in December 2013, Noya asked several
employees to affix their signatures on a blank sheet of yellow paper for the purpose of forming a new
union, prompting the president of NLM-Katipunan to file expulsion proceedings against him for
disloyalty. Subsequently, Noya organized a new union named the Bantay Manggawa sa SLORD
Development Corporation (BMSDC), which he registered with the DOLE. In the ensuing investigation,
Noya failed to appear and participate at the scheduled hearings before the union. Thus, NLM-Katipunan
resolved, with the ratification of its members, to expel Noya on the ground of disloyalty. Accordingly, a
notice of expulsion was issued by NLM-Katipunan to Slord, demanding his termination from employment
pursuant to the union security clause of the CBA. After notifying Noya of the union's decision to expel
him and showing min all the documents attached to the union's demand for his dismissal, Noya's
employment was terminated. Consequently, Noya filed a complaint for illegal dismissal, unfair labor
practice, and illegal deduction against Slord before the NLRC, asserting that he did not violate any CBA
provisions since he validly organized BMSDC during the freedom period.

LA Ruling:

The LA dismissed the case for lack of merit, ruling that Noya's dismissal was neither illegal nor an unfair
labor practice. Among others, the LA held that Slord was duty-bound to terminate Noya's employment
after having been expelled by NLM-Katipunana for organizing a rival union. Notably, NLM-Katipunan has
a valid closed shop agreement in the CBA that required the member to remain with the union as a
condition for continued employment.

NLRC Ruling:

The NLRC affirmed the LA Decision with modification, ordering Slord to pay Noya P10, 000.00 as nominal
damages. In so ruling, the NLRC held that while Noya had committed an act of disloyalty that caused his
expulsion from NLM-Katipunan and subsequent dismissal from work pursuant to the closed shop
agreement provision of the CBA, Slord failed to provide Noya ample opportunity to defend himself
through written notices and subsequent hearing.

CA Ruling:

The CA granted Noya's peition, finding his dismissal to be illegal. Accordingly, it ordered Slord to
immediately reinstate Noya and pay full backwages and other allowances, computed from the time he
was illegally dismissed up to the time of actual reinstatement, plus attorney's fees. The CA found no just
cause in terminating Noya's employment for lack of sufficient evidence to support the union's decision to
expel him, explaining that the act of soliciting signatures on a blank yellow paper was not prohibited
under the Labor Code not could it be automatically considered as an act of disloyalty. Finally, it also
found Noya to have been deprived of procedural due process. Slord moved for reconsideration by the
same was denied. Hence, the petition before the SC.

ISSUE:

Whether or not an employee can be validly dismissed for non-compliance with the union security clause
in the CBA

RULING:

The SC found the petition meritorious. While not explicitly mentioned in the Labor Code, case law
recognizes that dismissal from employment due to the enforcement of the union security clause in the
CBA is another just cause for termination of employment. Similar to the enumerated just causes in the
Labor Code, the violation of the Union security clause amount to a commission of a wrongful act or
omission out of one's own volition; hence, it can be said that the dismissal process was initiated not by
the employer but by the employee's indiscretion. Further, a stipulation in the CBA authorizing the
dismissal of employees is of equal import as the statutory provisions on dismissal under the Labor Code,
since a CBA is the law between the company and the union and compliance therewith is mandated by
the express policy to give protection to labor; thus there is parallel treatment between just causes and
violation of the union security clause. Pertinent is Article 259 (formerly 248), paragraph (e) of the Labor
Code, which states that nothing in this Code or in any other law shall stop the parties from requiring
membership in a recognized collective bargaining agent as a condition for employment, except those
employees who are already member of another union at the time of the signing of the collective
bargaining agreement. The stipulation in a CBA based on this provision of the Labor Code is commonly
known as the "union security clause". "Union security is a generic term which is applied to and
comprehends "closed shop, " union shop", "maintenance of membership" or any other form of
agreement which imposes upon employees the obligation to acquire or retain union membership as a
condition affecting employment. There is union shop when all new regular employees are required to
join the union within a certain period for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the agreement,
or who thereafter become members, must maintain union membership as a condition for continued
employment until they are promoted or transferred out of the bargaining unit, or the agreement is
terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person may be employed in any or
certain agreed departments of the enterprise unless he or she is, becomes, and for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the
employees in interest are apart. To validly terminate the employment of an employee through the
enforcement of the union security clause, the following requisites must concur: a. the union security
clause is applicable; b. the union is requesting for the enforcement of the union security provision on the
CBA; and 3. there is sufficient evidence to support the decision of the union to expel the employee from
the union. In this case, the Court finds the confluence of the foregoing requisites, warranting the
termination of Noya's employment. It is undisputed that the CBA contains a closed shop agreement
stipulation that Slord's employees must join NLM-Katipunan and remain to be a member in good
standing; otherwise, through a written demand, NLM-Katipunan can insist the dismissal of an employee.
Notably, the Court has consistently upheld the validity of a closed shop agreement as a form of union
security clause. Further, record show that NLM-Katipunan requested the enforcement of the union
security clause by demanding the dismissal of Noya from employment. in a letter, NLM-Katipunan asked
Slord to dismiss Noya from employment for having committed an act of disloyalty in violation of the
CBA's union security clause. NLM-Katipunan explained that Noya solicited support from employees and
thereafter, formed and organized a new union outside the freedom period, or from February 14, 2014 to
April 14, 2014. Finally, there is sufficient evidence to support the union's decision to expel Noya. In
Tanduay Distillery labor Union vs NLRC, the Court ruled that the organization by union members of a rival
union outside the freedom period, without first terminating their membership in the union and without
the knowledge of the officers of the latter union, is considered as an act of disloyalty, for which the union
members may be sanctioned. As an act of disloyalty, a union may require its members no to affiliate with
any other labor union and to consider its infringement as a reasonable cause for separation, pursuant to
the union security clause in its CBA. Having ratified the CBA and being member of the union, union
members owe fealty and are required under the union security clause to maintain their membership in
good standing during the term thereof. This requirement ceases to be binding only during the sixty (60)
day freedom period immediately preceding the expiration of the CBA, which enjoys the principle of
sanctity or inviolability of contracts guaranteed by the Constitution. Thus, based on the above-discussed
circumstances, the NLRC did not gravely abuse its discretion in ruling that there existed just cause to
vaildly terminate Noya's employment. this notwithstanding, Slord howeever, failed to observe the proper
procedure in terminating Noya's employment, warranting the payment of nominal damages. In
Distribution and Control Products Inc vs Santos, the Court has explained that procedural due process
consists of the twin requirements of notice and hearing: 1. the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; 2. the second informs the employee of the
employer's decision to dismiss him. The requirement of a hearing is complied with as long as there was
an opportunity to be heard, and not necessarily that an actual hearing was conducted.
Cadavas vs. Court Of Appeals, Davao Doctors, G.R. No. 228765, Mar. 20, 2019 PERALTA, J.:

PETITIONER Minda Cadavas was hired as a staff nurse by respondent Davao Doctors Hospital (DDH). She
was later promoted to nurse supervisor. Sometime in February 2012, Cadavas’ aunt, Shirley Aninion, was
confined at DDH for stage four breast cancer. Cadavas, with the help of some hospital staff, was able to
obtain supplies and medicines used in her aunt’s operation from the Emergency Department and
Operating Room Central Supply Service without being entered in the records so that said supplies and
medicines would not be charged to her aunt’s bill, but Cadavas would replace and eventually replaced
them. During the administrative hearing, Cadavas admitted that she was aware of the hospital policy
prohibiting what she did, but alleged it has been a long practice among employees. Subsequently,
Cadavas was dismissed from the service for dishonesty and loss of trust and confidence.

ISSUE:

Is the dismissal justified?

RULING: Yes.

In the minutes of the administrative hearing conducted by respondent DDH, petitioner admitted that
there is no policy that employees can borrow supplies for personal use. She also admitted that she was
aware of the hospital’s policy against the purchase of medicines outside the hospital. She apologized for
buying medicines and supplies outside the hospital (to replace the ones used by her aunt). Thus, it is
clear that despite knowing that there is a policy against the purchase of supplies and medicines outside
the hospital, petitioner chose to violate the policy by asking a nursing aide if she could replace the
supplies and medicines used by her aunt. As the nursing aide acceded to petitioner’s request, the
medicines and supplies used by petitioner’s aunt were not recorded and charged to her per the
agreement that petitioner would replace the said medicines and supplies. In effect, petitioner caused the
transaction not to be recorded. Although petitioner was not then performing her duties and functions as
nurse supervisor in her departments, nevertheless, as an employee and nurse supervisor of respondent
DDH, she was covered by the policy against the use of hospital medicines and supplies without recording
such use, and purchasing medicines and supplies outside of respondent hospital to replace hospital
medicines and supplies already used. Notably, petitioner was aware of such hospital policy, but she still
violated it. As a nurse supervisor holding a position of trust, petitioner was expected to enforce and
observe hospital policies. Clearly, petitioner breached the trust and confidence reposed in her by
respondent DDH by her willful violation of the said hospital policy, causing loss of income to respondent
DDH. As a general rule, employers are allowed a wider latitude of discretion in terminating the services
of employees who perform functions by which their nature requires the employer’s full trust and
confidence. Mere existence of basis for believing that the employee has breached the trust and
confidence of the employer is sufficient and does not require proof beyond reasonable doubt. (Minda
Topinio Cadavas vs. Court of Appeals, et.al. G.R. No. 228765, March 20, 2019).

Philippine Journalists vs. De Guzman, G.R. No. 208027, April 1, 2019

Erika Marie de Guzman and Edna Quirante6 are both employees of Philippine Journalists, lnc.7 ('PJI'). De
Guzman started with the company on 11 May 1994 and left the company on 15 November 2008. On the
other hand, Quirante was employed since 05 September 1989 and was the HRD Supervisor at the time
the cessation of her employment on 15 March 2009. In separate letters, informed the company of their
desire to avail of the company's optional retirement plan as embodied in the CBA Because of PJI's failure
and refusal to process the payment of the optional retirement benefits due them, [respondents] filed a
complaint for unfair labor practice and money claims, nonpayment of optional retirement benefits and
service incentive leave against PJI and its corporate officers, LA- dismissed the complaint for lack of
merit. According to the Labor Arbiter, the Collective Bargaining Agreement categorized certain positions
as managerial and are therefore excluded from the bargaining unit. [Respondents] are not rank and file
employees and therefore not entitled to optional retirement benefits. NLRC - sustained [respondents']
contention. Section 3, Article XIV of the CBA provides:

'Section 3. Optional Retirement. A regular employee who [h.]as continuously rendered .five (5) years qf
service, may optionally retire from employment with the COMP ANY. A qualified employee who avails
himself an optional retirement shall receive optional retirement pay computed on the basis of the
approved Retirement Plan.

'The language of this provision is clear and leaves no room for interpretation. Clearly an 'approved
optional retirement plan' is no longer required as the optional retirement pay shall be 'computed on the
basis of the Approved Retirement Plan' which is provided for in Section 2 of the same Article of the CBA.
xxx xx xx The CBA however specifically provides that the word 'employee' 'when used in this Agreement
without any classification shall be deemed to refer only to person within the appropriate bargaining unit
as herein defined.' The preceding paragraph of the same Section 1 defined appropriate bargaining unit
as 'covered by this AGREEMENT consists of regular rank-and-file employees except those occupying the
position/job classifications enumerated in Annex A hereof assigned to its various operations in Metro
Manila and other branches of operations which the COMP ANY may establish in the Philippines during
the term of this AGREEMENT.' Admittedly, the respondents belong to the listed employees in Annex A of
the CBA who are excluded from its coverage. [Respondents] argued that even if there are categories of
employees who are excluded from the coverage of the CBA, the company, as a matter of practice, has
extended benefits under the CBA to those who have been excluded. They cite in particular the cases of
former employees, Nepthalie Hernandez, Ferdinand Trinidad, and Atty. Liza Madera, who availed of, and
were granted optional retirement benefits despite being managerial employees. CA- affirmed NLRC. xx x
The provision of the CBA granting xx x optional retirement is clear. Petitioners insist that x x x
respondents are not covered by the CBA pursuant to the provisions thereof that Quirante and De
Guzman belong to the listed employees who are excluded from the coverage of the CBA. Quirante was
the Supervisor of the HR Department, hence a managerial employee. De Guzman, aside from being an
Ad Taker, was the Executive Security of the Chairman of Pll, thus receiving a salary commensurate to the
position of an executive staff.

Therefore, De Guzman and Quirante are not entitled to the optional retirement benefits pursuant to the
provisions of the CBA.

Nonetheless, they can still avail of the optional retirement benefits because it has been a company
practice to grant retirement benefits to PJI Employees. In Philippine Appliance Corporation v. Court of
Appeals, as accentuated in Metropolitan Bank and Trust Companyv. NLRC and in Eastern
Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union:

To be considered a 'regular practice', however, the giving of the bonus should have been done over a
long period oftime, and must be shown to have been consistent and deliberate. The test or rationale of
this rule on long practice requires an indubitable showing that the employer agreed to continue giving
the benefits knowing fully well that said employees are not covered by the law requiring payment
thereof. Thus, the grant of optional retirement benefits by PJI, even if it is not obliged under the CBA,
already constitutes voluntary employer practice which cannot be unilaterally withdrawn or diminished
by the employer without violating the spirit and intendment of Article 100 of the Labor Code, to wit: Art.
100.

Prohibition against elimination or diminution of benefits.

- Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code.

ISSUES:

1. WHAT IS THE DISTINCTION BETWEEN COMPULSORY RETIREMENT BENEFIT AND OPTIONAL

RETIREMENT BENEFIT.

2. WHETHER OR NOT THE OPTIONAL RETIREMENT BENEFIT CAN BE DEMANDED AS A MANDATORY

BENEFIT BY A REGULAR EMPLOYEE WHO VOLUNTARILY RESIGNS EVEN WITHOUT AN OPTIONAL
RETIREMENT PROGRAM APPROVED BY THE MANAGEMENT.

Petitioners' Arguments

Petitioners argue that a distinction must be made between compulsory retirement benefit and that
optional retirement benefit, in that while the former may be demanded as a matter of right pursuant to
Article 287 of the Labor Code, 17 the latter may not. Petitioners allege that PJI was suffering losses at the
time respondents applied for optional retirement, and in fact the company implemented a retrenchment
program owing to these losses. They also aver that there was no express company policy on optional
retirement at the time that respondents applied for the same, but with respect to those employees who
were granted optional retirement benefits in the past, these were covered by an existing approved
optional retirement program as attested to by one of those who availed of the program, Atty. Madera,
and two other longtime Pil employees, Carolina Mendoza and Ernesto San Agustin.

Our Ruling

Quite the contrary, in Philippine Journalists, Inc. v. National Labor Relations Commission,it became
evident that PJI was not suffering from claimed business reverses such that it was compelled to reinstate
several employees it originally fired as a result of a retrenchment program it undertook but which the
NLRC officially found to be without basis. There was also the undisputed findings of fact that during that
time,PJI office renovations were being made as evidenced by numerous purchase orders; that certain
employees were granted merit increases; that a Christmas party for employees was held at a plush hotel;
and that Pil executives refused to forego their quarterly bonuses. Petitioners' claim of business reverses
is supported solely by a statement contained in a supposed 2005 agreement between PJI and its
employees, a "Memorandum of Understanding xx x,"21 to the effect that PJI "suffered financial reverses
x x x since 1997, as declared by the Supreme Court" - which is otherwise self-serving, at the very least,
and untrue, within the context of the findings of facts in the above-mentioned decided case. Other than
this claim, petitioners have not shown any other proof of business losses. PJI’s s act of reinstating its
employees only proves that it could not have been suffering business losses at the time; petitioners were
unable to rebut or disprove the finding in the above-cited case that PJI was not incurring financial
reverses, but in fact accepted such finding with finality when it reinstated its illegally retrenched
employees. The CA ruled in respondents' favor on the ground that PJI’s grant of optional retirement
benefits to its managerial employees and executive staff had ripened into a company practice that it
could not deny to respondents but grant to others in contravention of the non-diminution provision in
the Labor Code, to wit: ART. 100.

Prohibition against elimination or diminution of benefits.

- Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code. The Court finds the CA
pronouncement tenable, not only because its factual findings must be upheld as this Court is not a trier
of facts, but that, given the factual milieu, it appears that petitioners' denial of respondents' application
for optional retirement was unfair as it granted the same privilege to others previously. Indeed, PJI
appears to discriminate against its core employees, while it favors those in the upper tier; it had been
found guilty of illegal dismissal based on an illegal retrenchment scheme, while upper management
continued to enjoy its perks and privileges and refused to tighten its belt in this respect. While
respondents are not considered as belonging to the rank-and-file, they do not belong to the upper
echelon of PJI management either: De Guzman was Executive Security to the Chairman, while Quirante
was HR Supervisor - not exactly juicy positions that find immediate favor with management.
Furthermore, the CA's ruling is correct in light of PJI's conduct of pursuing a scheme to reduce its
personnel by any means necessary, which is both unfair and prejudicial to the interests of labor. Take for
example respondents' case. Operating under the honest belief that they could avail of an optional
retirement scheme that P n allowed with respect to other employees in the past, respondents tendered
their respective resignation letters on the sole ground that they were availing of the company's optional
retirement package. Instead of clarifying the matter with respondents, petitioners treated the latters'
actions with a lack of understanding and sympathy. If petitioners believed that respondents were not
entitled to avail of the optional retirement scheme which respondents in good faith thought was
available to them, and which was obviously the sole reason for tendering their resignations, then
petitioners should have at least put their respective resignations on ·hold pending clarification of the
issues. Instead, petitioners immediately took a hostile stance, and quickly grabbed the opportunity to
declare respondents separated from PJI by voluntary resignation with its concomitant effects such as
non-payment of benefits, separation pay, etc. They did not take time to explain, if so, that the optional
retirement program was no longer in effect and give respondents the opportunity to reconsider their
actions. This is tantamount to bad faith, considering the factual milieu and petitioners' conduct, where
they have consistently shown an interest in dismissing their employees, yet keeping for themselves their
corporate bonuses, perks, and privileges. Finally, Pil's bad faith is evident from its 2005 "Memorandum of
Understanding xx x" with its employees, where it falsely declared that P n "suffered financial reverses x x
x since 1997, as declared by the Supreme Court." As earlier shown, this statement is untrue, yet
petitioners deliberately included this false claim in its agreement with its employees in order to secure
concessions favorable to them. In other words, petitioners deceived their employees and used this false
claim to deprive the latter of a fair appraisal of the facts and circumstances during negotiations leading
to such agreement. To be considered as a regular company practice, the employee must prove by
substantial evidence that the giving of the benefit is done over a long period of time, and that it has
been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to
the length of time that company practice should have been exercised in order to constitute voluntary
employer practice. The common denominator in previously decided cases appears to be the regularity
and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable
showing that the employer agreed to continue giving the benefit knowing fully well that the employees
are not covered by any provision of the law or agreement requiring payment thereof In sum, the benefit
must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit
over a considerable period of time.22 The grant of optional retirement benefits to two management
employees in the past was voluntary, deliberate, and done with sufficient regularity as would indicate
that this had become a company practice within Pil, which petitioners now refuse to apply in the case of
respondents, on the pretext that the company was losing money at that time. But Pn was not incurring
losses, and was in fact exhibiting conduct inconsistent with the claim. What is clear is that it engaged in
unfair labor activities and took an anti-labor stance at the expense of its employees, including
respondents. PJI has shown that its employees' interests take a backseat to the perks and prerogatives of
management. This cannot be countenanced.

WHEREFORE, the Petition is DENIED.

The November 7, 2012 Decision and July 4, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
123901 are AFFIRMED in toto.
 In addition, the judgment award in favor of respondents or their retirement and other benefits shall
earn interest of 12% per annum, computed from the filing of the Complaint up to June 30, 2013, and
thereafter, 6% per annum from July 1, 2013 until their full satisfaction. SO ORDERED.

Moral vs. Momentum Properties, G.R. No. 226240, Mar. 6, 2019 FOR RECIT PURPOSES: SUBJECT/S:

DISMISSAL OF PROBATIONARY EMPLOYEE

DISPOSITIVE:

“WHEREFORE, the petition is DENIED. The Decision

dated 22 March 2016 and the Resolution dated 19 July 2016 of the Court of Appeals in CA-G.R. SP No.
138704 are AFFIRMED.

SO ORDERED.”

SUBJECTS/DOCTRINES/DIGEST: WHAT HAPPENED IN THIS CASE?

DISMISSAL OF PROBATIONARY EMPLOYEE WAS UPHELD BUT EMPLOYER WAS MADE TO PAY NOMINAL
DAMAGES BECAUSE IT FAILED TO GIVE THE EMPLOYEE PROPER NOTICE OF TERMINATION.

HOW SHOULD TERMINATION NOTICE BE GIVEN IN CASE TERMINATION WAS DUE TO FAILURE TO
QUALIFY AS A REGULAR EMPLOYEE IN ACCORDANCE WITH THE REASONABLE STANDARDS PRESCRIBED
BY THE EMPLOYER?

A WRITTEN NOTICE MUST BE SERVED THE EMPLOYEE WITHIN A REASONABLE TIME FROM THE
EFFECTIVE DATE OF TERMINATION.

IN THIS CASE NOTICE WAS GIVEN BY TEXT MESSAGES ONLY.

FOR FAILURE TO FOLLOW THE RULE ON HOW NOTICE BE GIVEN TO THE PROBATIONARY EMPLOYEE IS
THE DISMISSAL STILL LEGAL? YES.

BUT EMPLOYER SHALL PAY NOMINAL DAMAGES. IN THIS CASE FOLLOWING A PRECEDENT DECISION THE
DAMAGES IMPOSED WAS P30,000.00.

HOW SHALL A PROBATIONARY EMPLOYEE BE DISMISSED?

THERE ARE THREE WAYS: (1) A JUST CAUSE; (2) AN AUTHORIZED CAUSE; AND (3) WHEN HE OR SHE FAILS
TO QUALIFY AS A REGULAR EMPLOYEE IN ACCORDANCEWITH THE REASONABLE STANDARDS
PRESCRIBED BY THE EMPLOYER.41 A probationary employee enjoys security of tenure, although it is not
on the same plane as that of a permanent employee. Other than being terminated for a just or
authorized cause, a probationary employee may also be dismissed due to his or her failure to qualify in
accordance with the standards of the employer made known to him or her at the time of his or her
engagement.40 Hence, the services of a probationary employee may be terminated for any of the
following: (1) a just cause; (2) an authorized cause; and (3) when he or she fails to qualify as a regular
employee in accordance with the reasonable standards prescribed by the employer.41

WHAT IS MANAGEMENT PREROGATIVE TO HIRE?

AN EMPLOYER HAS THE RIGHT OR IS AT LIBERTY TO CHOOSE WHO WILL BE HIRED AND WHO WILL BE
DENIED EMPLOYMENT. It is a well-established principle that an employer has the right or is at liberty to
choose who will be hired and who will be denied employment. Accordingly, it is within the exercise of
the right to select one’s employees that an employer may set or fix a probationary period within which
the latter may test and observe the conduct of the former before the former is hired on a permanent
basis. 49 As long as the employer has made known to the employee the regularization standards at the
time of the employee’s engagement, the refusal of the former to regularize the latter, by reason of the
latter’s failure to comply with the regularization standards, is within the ambit of the law.

DOCTRINE: The ruling in the case of Abbot v. Alcaraz [G.R. No. 192571, July 23, 2013, Justice Perlas-
Bernabe (2019 Bar Examiner) ] --- that the usual two-notice rule does not govern in terminating a
probational employee--- has attained doctrinal status. The aforementioned case was recently cited in
Moral v. Momentum Properties [G.R. No. 226240, March 6, 2019, Justice Carpio]. The latter expounded
that the twin-notice rule as found in Article 292(b) of the Labor Code is inapplicable in terminating
probational employees who do not meet the standards of the employer during the probationary period
--- but Department Order No. 147-15, which provides:

“Section 2. Security of Tenure.

- xx xx If the termination is brought about by the x x x failure of an employee to meet the standards of
the employer in case of probationary employment, it shall be sufficient that a written notice is served
the employee within a reasonable time from the effective date of termination.”

This only means that a single notice (and not two notices) is sufficient to comply the due process
requirements in dismissing a probational employee who does not meet the employer’s standards

FACTS:

Petitioner alleged that Momentum Properties Management Corporation (respondent) hired her as a
probationary employee, with her designation being that of a Leasing Assistant. Six months after her
employment, she was informed of her dismissal and was advised to no longer report for work. According
to petitioner, upon inquiring the reason for her dismissal, respondent coldly ignored her query and
thereafter, no longer contacted her. She contended that respondent failed to provide any notice or
justifiable cause as to why her employment was being severed. Because of respondent's failure to
comply with both substantive and procedural due process requirements, as mandated by law, petitioner
alleged that she was illegally dismissed. In its defense, respondent denied the illegal dismissal allegation
of petitioner. According to respondent, in line with the provisions of their Employment Agreement,
petitioner was subjected to the respondent's evaluation procedure on the fifth month of her
employment. Petitioner was likewise asked to take the Verbal, Non-Verbal, and Numerical Examinations
which were administered by the Human Resources (HR) Department. Petitioner garnered below average
(BA) scores in the aforesaid tests, rendering her qualifications for regularization doubtful under HR
Standards. In addition, based on respondent's set criteria for quantitative and qualitative performance
and developmental assessment, findings indicated that petitioner failed to satisfactorily meet the level of
performance expected from her position. Petitioner's over-all rating indicated a BA] score, which made
her unqualified for regularization purposes. Hence, in accordance with standard procedure, the HR and
Administration Manager, Annie Ocampo (Ocampo), directed Tungol to advise petitioner to report to the
head office, for the purpose of discussing her poor evaluation scores. Unfortunately, petitioner
disregarded the aforesaid request. However, petitioner no longer reported for work. Petitioner then filed
a complaint for illegal dismissal against respondent Momentum.

LA

- in favor of the petitioner and found the allegation of respondent that petitioner was guilty of
abandonment untenable. It emphasized that, in order for there to be abandonment, which is a just
ground for dismissal, there must be a deliberate and unjustified refusal on the part of the employee to
resume employment. It held that mere absence or failure to report for work, after a notice of return is
given to such employee, is not enough to amount to abandonment. NLRC - upheld the view of the LA
that respondent failed to defend its argument that it did not dismiss petitioner. CA - set aside the
Decision and Resolution of the NLRC. Respondent argued that petitioner failed to show through
substantial evidence that she was dismissed from work. It held that the status of petitioner as a
probationary employee was established and not contested. Hence, her employment was under
respondent's observation for a period of six months. It ruled that respondent had the option of hiring
petitioner or terminating her services, because she failed to qualify as a regular employee in accordance
with the reasonable standards made known to her at the time of her engagement. Furthermore, the
Court of Appeals noted that petitioner's tests were given "appropriately, fairly and with proper notice
before they were taken." Hence, the instant petition before this Court.

ISSUE:

The issue in this case is whether or not petitioner was illegally dismissed by respondent. NO

The Court's Ruling

A probationary employee is one who is placed on trial by an employer, during which the latter
determines whether or not the former is qualified for permanent employment. By virtue of a
probationary employment, an employer is given an opportunity to observe the fitness and competency
of a probationary employee while at work. During the probationary period of employment, an employer
has the right or is at liberty to decide who will be hired and who will be denied employment. As a
general rule, probationary employment cannot exceed six months. Otherwise, the employee concerned
shall be regarded as a regular employee. Moreover, it is indispensable in probationary employment that
the employer informs the employee of the reasonable standards that will be used as basis for his or her
regularization at the time of his or her engagement. In the event that the employer fails to comply with
the aforementioned, then the employee is considered a regular employee. A probationary employee
enjoys security of tenure, although it is not on the same plane as that of a permanent employee. Other
than being terminated for a just or authorized cause, a probationary employee may also be dismissed
due to his or her failure to qualify in accordance with the standards of the employer made known to him
or her at the time of his or her engagement.40 Hence, the services of a probationary employee may be
terminated for any of the following: (1) a just cause; (2) an authorized cause; and (3) when he or she fails
to qualify as a regular employee in accordance with the reasonable standards prescribed by the
employer. In connection with the abovementioned, Section 6( d), Rule I, Book VI, as amended by
Department Order No. 147-15, of the Omnibus Rules Implementing the Labor Code of the Philippines
(Labor Code) provides the following: xx xx ( d) In all cases of probationary employment, the employer
shall make known to the employee the standards under which he will qualify as a regular employee at
the time of his engagement. Where no standards are made known to the employee at that time, he shall
be deemed a regular employee. In other words, the employer is mandated to comply with two
requirements when dealing with a probationary employee,viz:

(1) the employer must communicate the regularization standards to the probationary employee; and

(2) the employer must make such communication at the time of the probationary employee's
engagement.

If the employer fails to abide by any of the aforementioned obligations, the employee is deemed as a
regular, and not a probationary employee. In the instant case, the evidence is clear that petitioner is a
probationary employee of respondent. Evidently, an examination of the Employment Agreement
executed by petitioner and respondent positively indicates the hiring of the former by the latter as a
probationary employee. Petitioner was well-aware that her regularization would depend on her ability
and capacity to fulfill the requirements of her position as a Leasing Assistant and that her failure to
perform such would give respondent a valid cause to terminate her probationary employment. A
thorough examination of the records of the instant case reveals that petitioner failed to comply with the
regularization standards of respondent made known to her at the time of her engagement. All the same,
while respondent had the right to terminate petitioner's employment, and not to accord her the status
of a regular employee, the manner by which petitioner's dismissal was carried out was not in accordance
with the standards set forth under the law.

With respect to the termination of a probationary employee, a different procedure is applied - the usual
two-notice rule does not govem. The aforesaid two-notice rule is that which is found under Article
292(b) of the Labor Code, as amended by Section 33 of Republic Act No. 10151,

viz:

Article 292. Miscellaneous Provisions. - xx xx (b) Subject to the constitutional right of workers to security
of tenure and their right to be protected against dismissal except for a just and authorized cause and
without prejudice to the requirement of notice under Article 283 (now, Article 298) of this Code, the
employer shall furnish the worker whose employment is sought to be terminated a written notice
containing a statement of the cause for termination and shall afford the latter ample opportunity to be
heard and to defend· himself with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. x x x. The aforementioned procedure is also found in Section 2, Rule I, Book VI, as
amended by Department Order No. 147-15, of the Omnibus Rules Implementing the Labor Code which
states: Section 2. Security of Tenure. - xx xx In all cases of termination of employment, the following
standards of due process shall be substantially observed: xx xx For termination of employment based on
just causes as defined in Article 288 (now, Article 297) of the Labor Code: (i) A written notice served on
the employee specifying the ground or grounds for termination, and giving said employee reasonable
opportunity within which to explain his side. (ii) A hearing or conference during which the employee
concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him. (iii) A written notice of termination
served on the employee, indicating that upon due consideration of all the circumstances, grounds have
been established to justify his termination. Section 2, Rule I, Book VI, as amended by Department Order
No. 147- 15, of the Omnibus Rules Implementing the Labor Code governs the procedure for the
termination of a probationary employee, to wit:

Section 2. Security of Tenure. - xx xx If the termination is brought about by the x x x failure of an

employee to meet the standards of the employer in case of probationary employment, it shall be
sufficient that a written notice is served the employee within a reasonable time from the effective date
of termination.

A perusal of the records reveals that petitioner's dismissal was effected through a series of text messages
from Tungol, instead of the abovementioned mandated procedure. As correctly pointed out by the CA,
the NAWOL issued by Ocampo was nothing more than an afterthought, considering it was furnished to
petitioner on 7 January 2014 or five days after she was informed of her dismissal. Hence, in view of the
procedural infirmity attending the termination of petitioner, respondent is liable to pay nominal
damages.

Willful Breach of Trust cannot be established by erroneous presumption of conspiracy in a theft case.
Lepanto vs. Mamaril, G.R. No. 225725, Jan. 16, 2019 CARPIO, J.: DOCTRINE:

Willful breach of trust is a ground for dismissal. a breach is willful if it is done intentionally, knowingly
and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.

FACTS:
ON Nov. 21, 2006, respondents Maximo C. Mamaril and 15 others filed a complaint against petitioner
Lepanto Consolidated Mining Company (Lepanto) with a claim for payment of overtime pay, among
others. The Court of Appeals (CA) sustained the decision of the National Labor Relations Commission
(NLRC) awarding respondents overtime pay. The CA noted that both lawyer Weldy Manlong, the
administrative service group manager of petitioner, and Edgar K. Langeg, the assistant security
superintendent of the security and

communications services department, hinted in their respective affidavits that respondents were
ordered to render overtime work and work during the holiday and their rest day. They pointed out that
some of these security guards remained at their post beyond the regular eight working hours to keep an
eye on the strikers. Edgar Langeg specifically stated that the overtime work that the security guards
rendered during the duration of the strike was approved by the administrative group manager and
resident manager of petitioner. Petitioner Lepanto contested with the Supreme Court the award of
overtime pay.

ISSUE:

Can the CA decision be sustained?

RULING: Yes.

In Damasco v. NLRC, 400 Phil. 568, 586 (2000), we held that an employer’s formal admission that an
employee worked beyond eight hours should entitle the employee to overtime compensation. In this
case, such admissions, that respondents rendered overtime work and work during their holiday and rest
days on the period specified therein, can be gleaned from the affidavits executed by Lepanto’s managers,
Weldy Manlong, and Edgar Langeg. Thus, respondents are clearly entitled to these benefits. This Court
has repeatedly ruled that any doubt arising from the evaluation of evidence as between the employer
and the employee must be resolved in favor of the latter. As an employer, it is incumbent upon Lepanto
to prove payment. In G & M (Phils.) Inc. v. Cruz, 496 Phil. 119, 124-125 (2005), we held that the burden
of proving payment of monetary claims rests on the employer since the pertinent personnel files,
payrolls, records, remittances and other similar documents— which will show that overtime,
differentials, service incentive leave, and other claims of workers have been paid — are not in the
possession of the worker but in the custody and absolute control of the employer. Thus, the burden of
showing with legal certainty that the obligation has been discharged with payment falls on the debtor, in
accordance with the rule that one who pleads payment has the burden of proving it. In this case,
Lepanto failed to discharge such burden of proof. Lepanto submitted daily time sheets showing that
respondents rendered eight-hour work days, signed by respondents and countersigned by a Col.
Doromal as the department head. However, as found by the CA in its decision dated 21 October 2015:

Then again the daily time sheets presented by petitioner are not substantial proof that private
respondents did not render overtime work. It can be plainly observed from these daily time sheets that
the number of hours worked by private respondents were uniform and were written by the same hand.
For this reason, these daily time sheets should be taken with a grain of salt xx x.

Petitioner, nonetheless, insists that it paid private respondents’ overtime pay and holiday pay.

Hence, petitioner should have at least presented copies of its payroll or copies of the pay slips of
respondents to show payment of these benefits. However, it failed to do so. Due to such failure of the
petitioner, there arises a presumption that such evidence, if presented, would be prejudicial to it.
Likewise, petitioner could be deemed to have waived its defense and admitted the allegations of the
private respondents.

(Lepanto Consolidated Mining Company vs. Maximo C. Mamaril, et.al., G.R. No. 225725, January 16,
2019).

FACTS:

Lepanto Consolidated Mining Company (Lepanto) hired respondent Mamaril as security guard on
November 14, 2003. Mamaril was assigned to the Security Reaction Force 9SRF), a group of security
guards tasked to do special duties and one that would "react" accordingly in case of any eventuality
without pulling out posted security guards which would create a vacuum in the said posts. SRF is group
of security guards tasked to do special duties for the company. On October 8, 20063 at around 7:25 p.m.
Lepanto Security Guard Intelligence Operative Bangkilas and Velasco apprehended Sumibang Jr., and
employee of Lepanto Mine Division who worked as a mucker, for stealing skinned copper wires from the
Lepanto Mine Division located in Sapid, Manakyan, Benguet. Mamaril, the guard on duty at the time,
was also apprehended since he was the one who allegedly opened the main door of the Tubo Collar
Gate and allegedly conspired with Sumibang so that the wires would be brought out and loaded into a
tricycle. Thereafter, Sumibang and Mamaril were both placed under preventive suspension by the
company for qualified theft of skinned copper wires. At the formal hearing Mamaril stated that he was
the 3rd shift guard assigned at the Tubo Collar gate. Mamaril was assigned not only to guard the Tubo
Collar gate but also patrol and inspect the adjacent buildings such as the compressor, lamp house, hoist
room, shaft and perimeter fence, and the NPC gate. Mamaril denied that he was involved or that he
conspired with Sumibang in the alleged qualified theft. Mamaril claimed that on October 8, 2006 he was
on roving patrol at the NPC station when the theft occurred. He narrated that about past 7:00 in the
evening, he opened the man door and allowed Foreman Arceo Manginga to exit the premises.
Afterwards, NPC Security Guard Macaraeg arrived and together they conducted a roving inspection of
the NPC and the compressor compound.

Mamamril admitted that he left the man door hooked on its barrel bolt but did not padlock it since the
employees of the Diamond Drilling Corporation of the Philippines, who were underground at that time ,
might come out anytime. At the back of the shaft the mechanics working for the NPC were attending to
their welding job. Suddenly, Mamaril heard somebody blew a whistle at the direction of the Tubo Collar
gate. Immediately, he went to his post and saw some security men so he unhooked the barrel bolt of the
man door and allowed them to enter. Mamaril stated that his only fault, if any, was that he forgot to
secure the man door. Padlocking the man door is a standard operating procedure of the company if the
man door is not in use. Mamaril submitted the sworn affidavit of mechanics who all saw him on roving
patrol, while the theft was taking place. Tubo Electrical Foreman Dacyon also gave a statement. Dacyon
stated that they had no losses of power line stock at the Tubo Electrical storage and Tubo Collar
compound. Dacyon surmised that the skinned copper wires recovered by the Security men might have
come from the abandoned place in the mine underground. Security Guard Macaraeg and miner Badua
also gave their own recollection of the events on the date in question. After investigation, Lepanto's
Security Investigator submitted an Investigation Report that the estimated value for the stolen items was
worth P 16, 898.85. Thereafter, Lepanto's Legal Office submitted a Resolution finding Mamaril guilty of
qualified theft for conspiring with Sumibang in pilfering or stealing skinned copper wires on the night of
October 8, 2006. Lepanto dismissed Mamaril from employment for dishonesty and breach of trust and
confidence. Mamaril filed a complaint against Lepanto with the NLRC RAB-CAR for illegal dismissal with
claims for payment of his full backwages or in lieu thereof, payment of separation pay, overtime pay, rest
day pay, damages and attorney's fees. Thereafter, several security guards of Lepanto and members of the
SRF also filed a complaint with the NLRC RAB_CAR for payment of overtime pay, rest day pay, night shift
differentials, moral and exemplary damages, and attorney's fees. More aggrieved members of the SRF
filed another complaint against Lepanto with the NLRC RAB-CAR for payment of overtime pay, damages
and attorney's fees. Upon motion, these cases were all consolidated.

LA Ruling:

In a Joint Decision, the LA ruled in favor of Lepanto. The LA declared that as a security guard in charge of
the handling, custody, care and protection of company property, Mamaril occupied a position of trust
and confidence. Thus, he was terminated for a just cause. The LA gave credence to the testimonies of
Bangkilas and Velasco and found the testimonies of Mamaril's witnesses, who did not have any
knowledge of the fact of pilferage, as hearsay. With regard to the money claims, the LA declared that
Mamaril et al failed to discharge the burden of proving that they are entitled to such money claims.

NLRC Ruling:

The NLRC partially granted the appeal and declared that the dismissal of Mamaril from the service was
without any valid cause and just cause. The NLRC found the claim of Bangkilas and Velasco that they
recognized Mamaril as the one who opened the man door to be physically impossible, improbable and
contrary to human experience given that (1) it was dark and the light at the guard post was switched off,
(2) Bangkilas and Velasco were positioned at the back of the store located along the national road which
was more or less 40 meters away from the man door, (3) the only illumination came from a bulb post
along the left perimeter fence road near the outside gate nearer to the two guards, and (4) the incident
happened in more or less a minute. The NLRC added that there was no reason to doubt the alibi of
Mamaril that he was on roving duty when the incident occurred and his admission that he had been lax
in leaving his post, under pain of possible sanction, without padlocking the man door first. The NLRC
declared Mamaril was entitled to separation pay and full backwages. However, with regard to other
complainants, the NLRC found that they failed to present sufficient evidence to prove that they are
entitled to overtime pay, holiday pay and rest day pay. Both parties filed Partial Motions for
Reconsideration. The NLRC partly granted the motion for reconsideration filed by Mamaril et al and
ordered Lepanto to pay them overtime pay, holiday pay and rest day pay. Lepanto filed a Petition for
Certiorari with the CA. CA Ruling: The CA decided in favor of Mamaril et al. Lepanto file a Motion for
Partial Reconsideration which was denied by the CA.

ISSUES:

Whether or not the affidavits of security guards who were positioned at the back of a store along the
national road and of considerable distance from the Tubo Collar gate, stating that Mamaril conspired in a
theft incident by opening the gate, can establish the charge of loos of trust and confidence. Whether or
not assumption of conspiracy can be made when an employee was caught red-handed of theft company
property which was taken through the gate manned by the Mamaril Whether or not an admission in
affidavits by company officers that Mamaril, et al rendered overtime work and work during their holiday
and rest days on the period specified therein places the burden on Lepanto to prove payment thereof.

RULING:

The SC did not find merit in the petition. The SC held that in dismissal cases, the burden of proof is on
the employer to so that the employee was dismissed for a valid and just cause. Here, Lepanto dismissed
Mamaril based on loss of trust and confidence. To be valid ground for dismissal, the loss of trust and
confidence must be based on a willful breach and founded on clearly established facts. A breach of
willful trust if is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust and confidence must
rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion;
otherwise, the employee would eternally remain at the mercy of the employer. The employer, thus,
carries the burden of clearly and convincingly establishing the facts upon which loss or confidence in the
employee may be made to rest. Lepanto contends that Mamaril is not ordinarily outsourced security
guard, but an in-house security officer and a member of Lepanto's SRF, this holding a position of trust
and confidence. Lepanto adds that Mamaril's duties and functions made him privy to company secrets
and to confidential matters that are shared with the management. However, the records show that when
the theft occurred, Mamaril was no longer a member of the SRF. Also, even if Mamaril was occupying a
position of trust as an ordinary security guard, to be valid cause for termination of employment, the act
or acts constituent breach of trust must have been done intentionally, knowingly and purposely; and
they must be founded on clearly established facts. In Lopex vs Alturas Group of Companies and/or Uy,
loss of trust and confidence must be based on willful breach of trust reposed in the employee by his
employer and must be based on substantial evidence and not on the employer's whims or caprices or
suspicions. Here, Lepanto asserts that the dismissal of Mamaril due to loss of trust and confidence was
justified since the Tubo Collar’s gate was lit and that guards Bangkilas and Velasco positively identified
Mamaril as the open who opened the man door since they were familiar with his face, being their co-
security guard. However, Lepanto relied heavily on the affidavit and report made by Bangkilas and
Velasco. The two stated that while they are positioned at the back of a store along the national road
about 40 meters away from Tubo Collar gate, they saw Mamaril open the man door gate and then
someone went out carrying something that was loaded into a tricycle, which lasted for more or less a
minute. According to SC, this can hardly be believed as an accurate report or one founded on clearly
established facts given that the incident occurred at night and the witness were at a considerable
distance away from the man doo. Also, the breach of trust was not shown to have been done
intentionally, knowingly and purposely. Here, Lepanto merely assumed that Sumibang, who was caught
re-handed on the qualified theft of skinned copper wires, conspired with Mamaril to execute the
wrongdoing. Aside from the report filed by Bangkilas and Velasco, Lepanto did not present an admission
from Sumibang and his companion that Mamaril assisted them in any way to carry out their plan; neither
did Lepanto produce any other evidence corroborating what Bangkilas and Velasco allegedly saw. Clearly,
conspiracy cannot be readily presumed. It must be based on sufficient evidence to stand. Hence, the SC
found that Mamaril was dismissed without a just and valid cause and is thus entitle to be paid a
separation pay and full backwages, inclusive of allowances and other benefits. In Damasco vs NLRC, it
was held that an employer's formal admission that an employee worked beyond eight hours should
entitle the employee to overtime compensation. in this case, such admission, that Mamaril et al
rendered overtime work and work during their holiday and rest days on the period specified therein, can
be gleaned from the affidavits executed by Lepanto's manager’s, Atty. Manlong and Capt. Langeg. Thus,
they are clearly entitle to these benefits. Any doubt arising from the evaluation of evidence as between
the employer and the employee must be resolved in favor of the matter. As an employer, it is incumbent
upon Lepanto to prove payment. In G& M Phils, Inc vs Cruz, it was held that the burden of proving
paymenty of monetary claims rests on the employer since the pertinent personnel files, payrolls, record,
remittances and other similar documents - which will show that overtime, differentials, service incentive
leave, and other claims of workers have been paid - are not in the possession of the worker but in the
custody and absolute control of the employer. Thus, the burden of showing with legal certainty that the
obligation has been discharged with payment falls on the debtor, in accordance with the rule that one
who pleads payment has the burden of proving it. In this case, Lepanto failed to discharge such burden
of proof. Lepanto submitted daily time sheets showing that, Mamaril , et al rendered eight-hour work
days, signed by Mamaril et al and countersigned by Col. Doromal as the Department Head. However, as
found by the CA in its Decision, the daily time sheets presented by Lepanto are not substantial proof that
Mamaril et al did not render overtime work. It can ne plainly observed from these daily time sheets that
the number of hours worked by them were uniform and were written by the same hand. For this reason,
these daily time sheers should be taken with a grain of salt.

Gsis Family Bank Employees Union vs. Villanueva, G.R.No.210773, Jan. 23, 2019

DOCTRINE:
 Officers and employees of GOCCs without original charters are covered by the Labor Code, not the Civil
Service Law. However, non-chartered GOCCs are limited by law in negotiating economic terms with their
employees. This is because the law has provided the Compensation and Position Classification System,
which applies to all GOCCs, chartered or non-chartered. Praying that GSIS Family Bank be declared
outside the coverage of RA 10149 and, therefore, be directed to negotiate a new collective bargaining
agreement with its employees.

FACTS:

Application of Royal Savings Bank for conservatorship was denied and instead BSP placed it under
receivership. Royal Savings Bank filed several complaints against the Central Bank for grave abuse of
discretion. To amicably settle the cases, then Central Bank Governor Jose B. Fernandez, Jr. offered to
reopen and rehabilitate Royal Savings Bank if it would drop all its complaints against the Central Bank
and transfer all its shares of stock to Commercial Bank of Manila, a wholly-owned subsidiary of the GSIS.
When it comes to collective bargaining agreements and collective negotiation agreements in
government-owned or controlled corporations, Executive Order No. 203 unequivocally stated that while
it recognized the right of workers to organize, bargain, and negotiate with their employers, "the
Governing Boards of all covered [government-owned or controlled corporations], whether Chartered or
Non-chartered, may not negotiate with their officers and employees the economic terms of their
[collective bargaining agreements]." Thus, considering the existing law at the time, GSIS Family Bank
could not be faulted for refusing to enter into a new collective bargaining agreement with petitioner as it
lacked the authority to negotiate economic terms with its employees. Unless directly challenged in the
appropriate case and with a proper actual controversy, the constitutionality and validity of RA 10149, as
it applies to fully government-owned and controlled non-chartered corporations, prevail. WHEREFORE,
premises considered, the Petition is DENIED

Pacios vs. Tahanang Walang Hagdanan, G.R. No. 229579, Nov. 14, 2018 LEONEN, J.:

FACTS:

Tahanang Walang Hagdanan (Tahanan) is a private organization engaged in the business of producing
and marketing various handicrafts, utilizing employees who are mostly physically disabled, without one
or both limbs. Respondent Sister Valeriana Baerts (Baerts) is a nun who recruited Bernardo B Pacios,
Marilou T. Abedes, Alexis L. Elinon, Armando V. Absedes, Gina P. Ariate, Vivencia N. Buela, Hermenigilfo
E. Cansino and several others more (collectively called workers) to work for Tahanan. They were
dismissed last June 11, 2012. The workers filed an amended complaint for illegal dismissal,
underpayment of salary, non-payment of 13thmonth pay, service incentive leave, separation pay,
retirement benefits, with claims for moral damages, exemplary damages and attorney’s fees against
Tahanan, Pangarap Sheltered Home for Disabled People, Inc. (Pangarap), Venus Amoncio (Amoncio) and
Baerts, Labor arbiter rendered a decision in favor of the workers, and ordered that Tahanang Walang
Hagdanan, Pangarap, Amoncio, and Baerts pay them P16,629,163.63. Tahanan, Pangarap, Amoncio and
Baerts appealed before the NLRC but was denied due to non-compliance to the payment of the appeal
bond in the amount of P40,000.00. Their Motion for Reconsideration plus surety bond in the amount of
P1,622,916.37 as Supersedeas Bond was also denied by the NLRC. Thus, Tahanan, Pangarap, Amoncio
and Baerts filed a Petition for certiorari.

CA reversed the NLRC’s decision on dismissing the Appeal based on the non-perfection of said appeal for
the lacking cash bond. The petitioner’s appeal was reinstated. Meanwhile, the Labor Arbiter issued a writ
of Execution on March 30, 2015 to implement the Labor Arbiter’s October 24, 2013 Decision awarding
P16,629,163.63 to the workers. Thus, the cash bond of P40,000.00 was released to them. Thereafter
they filed a Motion to Release the Supersedeas Bond but was opposed by Tahanan, Walang Hagdanan,
Pangarap, Amoncio and Baerts because the CA Decision dated April 27, 2015 reinstating their appeal
before the NLRC. The Labor Arbiter issued a Resolution suspending the resolution of the workers’ Motion
to Release the Supersedeas Bond, as well as all subsequent motions seeking its immediate release. In
view thereof, the workers assailed the refusal of the labor Arbiter to the NLRC but fell on deaf ears. As a
result, the workers filed a motion for mandamus before the CA which was denied by the CA citing the
2011 NLRC Rules of Procedure, Tule XI, Section 17 which states that:

“Sec 17. Effect of Reversal During Execution Proceedings.

– In case of total or partial reversal of judgment by the CA, the execution proceedings shall be
suspended insofar as the reversal is concerned notwithstanding the pendency of a motion for
reconsideration on such judgment. However, where the judgment of the Court of Appeals is reversed by
the Supreme Court, execution proceedings shall commence upon presentation of certified true copy of
the decision and entry of judgment.”

Workers filed their Motion for Reconsideration which was denied by CA. The workers then filed their
Petition for Certiorari before the SC. They claimed that it was a purely ministerial act or duty of the NLRC
to order the release of the supersedes bond to them citing NLRC Rule XI, Section 4 which provides:“

Section 4 – Effect of Petition for Certiorari on Execution –

A petition for certiorari with the CA or the SC shall not stay the execution of the assailed decision unless
a restraining order is issued by said courts.”

Workers pointed out that the CA did not include any restraining order in its Decision dated April 27,
2015. Thus, the execution proceedings of the labor arbiters October 24, 2013 Decision should have
continued. Petitioners claim that there is conflict between sections 4 and 17 of Rule XI of the NLRC Rules,
and that CA gave undue and preferential application to Section 17. At the very least the CA should have
reconciled the two (2) provisions in accordance with the tenet that full protection should be accorded tp
the labor sector. Thus, the Court of Appeals should have applied Section 4 over Section 17.

ISSUE:

The sole issue for this Court’s resolution is whether or not the CA erred in affirming the suspension of
the execution proceedings.

HELD:

Petition is granted. Although the CA affirms the suspension of the execution was incomplete. The CA
pointed out that RULE XI, Section 17 of the NLRC Rules “explicitly mandates the suspension of the
execution proceedings in case of total or partial reversal of judgment by the Court of Appeals. It held
that because its April 27, 2015 Decision reversed the NLRC Feb 25, 2014 Resolution, suspension of the
execution was mandated under the rules however, CA failed to note that under the Rules, the execution
proceedings should be suspended only “insofar as the reversal is concerned.” This omission leads to an
incorrect reading of the rule and suggests that any reversal on appeal leads to the automatic suspension
of execution of the appealed decision. When used as basis for suspending execution, the rule requires an
extra step, namely, the determination of what part of the execution is affected by the reversal. Based on
Section 3. Effect of Perfection of Appeal on Execution – The perfection of an appeal shall stay the
execution of the decision of the Labor Arbiter except execution for reinstatement pending appeal.

Under this provision, the perfection of an appeal stays the execution of a Labor Arbiter’s decision. Thus,
for clarity, the CA should have explained that because its April 27, 2015 Decision deemed respondents'
appeal before the National Labor Relations Commission as reinstated, the execution of the Labor
Arbiter's October 24, 2013 Decision was stayed under Rule XI, Section 3 of the National Labor Relations
Commission Rules of Procedure. However, despite the applicability of Rule XI, Section 3 of the National
Labor Relations Commission Rules to the factual circumstances before the Court of Appeals as of its
assailed July 22, 2016 Decision and January 23, 2017 Resolution in CA-G.R. SP No. 142199, the Petition
must be granted. This Motion for Reconsideration is the only procedural incident preventing the
execution of the Labor Arbiter's October 24, 2013 Decision as it has stalled the complete resolution of
the reinstated appeal before the National Labor Relations Commission. However, execution may be
authorized even pending appeal. In Aris (Phil.), Inc. v. National Labor Relations Commission, this Court
explained the reasons for authorizing execution of decisions reinstating dismissed employees in labor
cases pending appeal: Before its amendment by Section 12 of R.A. No. 6716, Article 223 of the Labor
Code already allowed execution of decisions of the NLRC pending their appeal to the Secretary of Labor
and Employment. In authorizing execution pending appeal of the reinstatement aspect of a decision of
the Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987 Constitution
on labor and the workingman. These duties and responsibilities of the State are imposed not so much to
express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary
social and economic force, which the Constitution also expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and stability. This Court finds that the principles allowing
execution pending appeal invoked in Aris are equally applicable here as petitioners are poor employees,
deprived of their only source of livelihood for years and reduced to begging on the streets. In view of
their dire straits and since the National Labor Relations Commission has already ruled twice on the case
in a way that supports the release of the supersedeas bond, it is proper to continue with execution
proceedings in this case despite a pending motion for reconsideration

Labor-Only Contracting Arises Where the Deployed Employee Performs Directly Related Function and
the Contractor has No Control over Him

Lingnam Restaurant vs. Skills & Talent, G.R. No. 214667, Dec. 3, 2018 PERALTA, J.:

DOCTRINE:

Labor-only contracting is prohibited. Labor-only contracting refer to an arrangement where the

contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service
for a principal and where any of the elements established by law is present.

RESPONDENT Skills and Talent Employment Pool Inc. (Step) is engaged in human resource management
and technical services. One of its clients is petitioner Lingnam Restaurant. In a contract of employment,
respondent Jessie Colaste is a project employee of respondent Step assigned to work with petitioner
Lingnam Restaurant as assistant cook. Colaste filed a complaint for illegal dismissal against Lingnam
Restaurant and Step. In defense, Lingnam Restaurant denied that it was the employer of Colaste and
alleged that Step was Colaste’s real employer.

The Labor Arbiter (LA) found no merit in the defense of Lingnam Restaurant. The National Labor
Relations Commission (NLRC) reversed the LA decision and held that Step is an independent contractor.
The Court of Appeals (CA) reversed the NLRC decision and reinstated the LA decision. Did the CA err?

Ruling: No.

The Court notes that Step, in its cautionary pleading filed before the Labor Arbiter, stated that it entered
into an agreement with petitioner Lingnam Restaurant in 2002, where it agreed to provide Lingnam
Restaurant with human resources to perform activities related to the operation of its restaurant. Thus, as
stated by the Court of Appeals, Step merely acted as a placement agency providing human resources to
Lingnam Restaurant. The service rendered by Step in favor of Lingnam Restaurant was not the
performance of a specific job, but the supply of personnel to work at Lingnam Restaurant. In this case,
Step provided petitioner with an assistant cook in the person of Jessie Colaste. In the employment
contract between Jessie Colaste and Step from Jan. 4, 2006 up to June 3, 2007, Colaste was assigned as
kitchen helper at Lingnam Restaurant, while in the subsequent employment contracts from Nov. 5, 2007
up to Jan. 5, 2008, and from Jan. 5, 2008 up to March 5, 2008, he was assigned as assistant cook. The
three employment contracts state that Jessie Colaste’s “work result performance shall be under the strict
supervision, control and make sure that the end result is in accordance with the standard specified by
client to Step Inc.” Hence, the Court agrees with the Court of Appeals that the work performance of
Colaste is under the strict supervision and control of the client (Lingnam Restaurant) as well as the end
result.

As assistant cook of Lingnam Restaurant, Colaste’s work is directly related to the restaurant business of
petitioner. He works in petitioner’s restaurant and presumably under the supervision of its chief cook.
This falls under the definition of labor-only contracting under Section 5 of Rule VIII-A, Book III of the
Amended Rules To Implement The Labor Code, since the contractor, Step, merely supplied Jessie Colaste
as assistant cook to the principal, Lingnam Restaurant; the job of Colaste as assistant cook is directly
related to the main business of Lingnam Restaurant, and Step does not exercise the right to control the
performance of the work of Colaste, the contractual employee. As Step is engaged in labor-only
contracting, the principal, petitioner Lingnam Restaurant, are deemed the employer of Colaste, in
accordance with Section 7, Rule VIII-A, Book III of the Amended Rules To Implement The Labor Code.
Colaste started working with petitioner since 2006 and he should be considered a regular employee of
petitioner. (Lingnam Restaurant vs. Skills & Talent Employment Pool, Inc., and Jessie Colaste, G.R. No.
214667, December 3, 2018).

Respondent Skill’s and Talent Employment Pool, Inc.

(STEP) is engaged in man power management and technical services and one of its clients is petitioner
Lingnam Restaurant. In a contract of employment, Colaste is a project employee of respondent STEP
assigned to work with petitioner Lingnamn Restaurant as assistant cook. Colaste filed with the LA an
amended Complaint for illegal dismissal against Lingnam Restaurant and STEP. Colaste alleged that he
started working at Lingnam Restaurant as an assistant cook/general utility. He worked six days a week,
eight hours a day on two shifts. On March 5, 2008, at about 10:00 am, Colaste reported to the main
office of STEP at Ortiogas Center, Pasig City. He was informed by one Katherine Barrun that his contract
with Lingnam Restaurant had expired. He was given a clearance form to be signed by his supervisor at
Lingnam Restaurant. However, he reported for work as usual at Lingnam Restaurant from 2:00 p.m. to
10:00 p.m. On March 6, 2008 he was on day-off. On March 7, 2008, he reported for work at Lingnam
Restaurant at Greenhills, San Juan City, MM. However, the Chief Cook told him not to punch in his time
card because he was already terminated from work. After a few minutes, the Chief Cook handed him the
telephone and Supervisor Philipp Prado of the main office of Lingnamn Restaurant was on the line and
told him, "finish contract ka na, hindi ka na pwede pumasaok sa trabaho mo, tanggal ka na." Hence,
Colaste's illegal dismissal complaint. For its part, Lingnam Restaurant denied that it is the employer of
Colaste and alleged that STEP is Colaste's real employer. Hence, it is not liable for the claims and causes
of action of Colaste, and that the complaint should be dismissed insofar as it is concerned.

LA Ruling:

The LA dismissed the complaint for lack of merit. He ruled that Colaste's real employer is STEP because it
directly exercised all powers and responsibilities over Colaste. The LA also dismissed Colaste's money
claims for lack of merit. Colaste appealed from the LA's decision before the NLRC.

NLRC Ruling:

The NLRC remanded the case to the arbitration branch of origin for further proceedings as the LA failed
to rule on the issue of illegal dismissal.

LA Ruling: (remanded)

In a remanded case, the LA held that Lingnam restaurant was guilty of illegal dismissal. The LA rule that
Colaste's job as assistant cook is necessary and desirable to the restaurant business of Lingnam
Restaurant; thus, he is considered as a regular employee of Lingnam restaurant. Moreover, the LA found
that Colaste was not paid his salary in accordance with applicable wage orders. Lingnam Restaurant
appealed from the Decision of the LA before the NLRC.

NLRC Ruling (appeal on remanded case):

The NLRC reverse and set aside the Decision of the LA. The NLRC held that STEP is an independent
contractor providing manpower services toi Lingnam Restaurant. An ER-EE relationship existed between
STEP and Colaste, who was assigned to one of STEP's clients, Lingnam Restaurant. As Colaste had been
employed with STEP for more than a year and performing duties necessary and desirable to its trade and
business, he is considered a regular employee. The failure of STEP to assign Colaste to its other business
clients after the lapse of 6 months rendered himn constructively dismissed. STEP's motion for
reconsideration was denied. STEP file with the CA a petition for certiorari, alleging that the NLRC
committed grave abuse of discretion amounting to lack or excess of jurisdiction in (1) setting aside the
Decision of the LA, (2) ruling that there was constructive dismissal and in considering the said issue not
raised in the appeal nor in the Complaint; (3) holding STEP liable for constructive dismissal for its alleged
failure to assign complainant to other business clients after the lapse of 6 months; (4) ordering STEP to
immediately reinstate complainant Colaste and to pay him full backwages plus other monetary awards;
and (5) giving due course to the appeal of Lingnam Restaurant and in completely absolving the latter
from any liability in the subject complaint of Colaste.

CA Ruling:

The CA reversed and set aside the Decision and Resolution of the NLRC and reinstated and affirmed the
Decision of the LA holding that Colaste's employer is Lingnam Restaurant, which illegally dismissed
Colaste; hence, Colaste is entitled to reinstatement, payment of full backwages and other monetary
benefits. The CA found that STEP is a labor-only contractor; hence, the workers it supplied to Lingnam
Restaurant, including Colaste, should be considered employees of Lingnam restaurant. Lingnam
restaurant's MR was denied for lack of merit by the CA.

ISSUES:

Whether or not the contract where the deployed employee's performance is under strict supervision
and control of the client as well as the end result constitutes labor-only contracting Whether or not a
regular employee can be dismissed for expiration of contract

RULING:

The SC, citing the case of PCI Automation Center, Inc vs NLRC, held that the legitimate job contractor
provides services, while the labor-only contractor provides only manpower. The legitimate job contractor
undertakes to perform a specific job for the principal employer, while the labor0only contractor merely
provides the personnel to work for the principal employer. The SC agreed with the CA that STEP was
engaged in labor-only contracting. The SC noted that STEP, in its Cautionary Pleading filed before the LA,
stated that it entered into an agreement with petitioner Lingnam Restaurant in 2002, wherein it agreed
to provide Lingnam Restaurant with manpower to perform activities related to the operation of its
restaurant business. Thus, as stated by the CA, respondent STEP merely acted as placement agency
providing manpower to petitioner Lingnam Restaurant. The service rendered by STEP in favor of Lingnam
Restaurant was not the performance of a specific job but the supply of personal to work at Lingnam
Restaurant. In this case, STEP provided petitioner with an assistant cook in the person of Colaste. In the
Employment Contract between Colaste and STEP from January 4, 2006 to June 3, 2007, Colaste was
assigned as kitchen helper at petitioner Lingnam Restaurant, while in the subsequent employment
contracts from November 5, 2007 up to January 5, 2008; and from January 5, 2008 up to March 5, 2008,
he was assigned as assistant cook at Lingnam Restaurant. The three employment contracts state that
Colaste's "work result performance shall be under the Strict Supervision, Control and make sure that the
end result is in accordance with the standard specified by client to STEP Inc." Hence, the work
performance of Colaste is under the strict supervision and control of the client (Lingnam Restaurant) as
well as the end result thereof. As assistant cook of Lingnam Restaurant, Colaste's work is directly related
to the restaurant business. Colaste worked in its restaurant and presumably under the supervision of its
Chief Cook. This falls under the definition of labor-only contracting under Section 5 of Rule VIII-A, Book III
of the Amended Rules to Implement the Labor Code, since the contractor, STEP, merely supplied Colaste
as assistant cook to the principal, Lingnam Restaurant; the job of Colaste as assistant cook is directly
related to the main business of petitioner and STEP does not exercise the right to control the
performance of the work of Colaste, the contractual employee. As STEP is engaged in labor-only
contracting, the principal, Lingnam Restaurant, shall be deemed the employer of Colaste. In accordance
with Section 7, Rule VII-A, Book III of the Amended Rules to Implement the Labor Code. Colaste started
working with petitioner since 2006 and he should be considered a regular employee of petitioner. The
reason for the termination of Colaste was his contract with Lingnam Restaurant through STEP had
expired. Lingnam Restaurant explained that Colaste's real employer is STEP. But since respondent STEP is
engaged in labor-only contracting, Lingnam Restaurant is deemed the employer of Colaste. Thus, the
reason for Colaste's termination is not a just or authorized cause for his dismissal under Articles 282 to
284 of the Labor Code. Moreover, Colaste was not afforded procedural due process, since Lingnam
restaurant failed to comply with the written-notice requirement under Article 2277(b) of the Labor Code.
The lack of valid cause for dismissal and failure to comply with the twin-notice requirement rendered the
dismissal of Colaste illegal. Lingnam Restaurant contends that its right to due process was violated as it
could not intelligently identify and discern the matter which it ought to address or oppose in the petition
for certiorari filed by STEP with the CA because there were no claims and reliefs against it, and the
petition was insufficient inform and substance. Petitioner also contends that the NLRC's decision already
became final and executory insofar as it is concerned because complainant Colaste did not appeal from
the decision of the NLRC. The SC found the contention unmeritorious. The essence of due process is
simply an opportunity to be heard or as applied to administrative proceedings, an opportunity to explain
one's side or an opportunity to seek a reconsideration of the action or ruling complained of. What the
law prohibits is absolute absence of the opportunity to be hear; hence, a party cannot feign denial of
due process where he had been afforded the opportunity to present his side. In this case, Lingnam
Restaurant was not denied due process, since it filed with the CA a Manifestation/Notice and Comment
to the petition for certiorari, which contained the same arguments as to the insufficient in form and
substance of the petition, among others. As regards Lingnam Restaurant's allegation that its right to due
process was violated because it "could not intelligently identify and discern the matters which it ought to
address or oppose in the Petition for Certiorari" filed by STEP with the CA, only Lingnam Restaurant can
be held responsible for its misapprehension and it could not be attributed to the CA, which did not find
the petition insufficient in form and substance. Lastly, the Decision of the NLRC did not become final and
executory because STEP timely filed a petition for certiorari, assailing the said Decision before the CAR,
which was, thus necessarily empowered to determine whether or not the NLRC committed grave abuse
of discretion amounting to lack or excess of jurisdiction in this decision. Given this power of judicial
review of Labor Cases under Rule 65 RoC, the CA has the authority to affirm, modify or reverse the
assailed Decision of the NLRC.