FRANCISCO vs.

NLRC Case Digest

GR No. 170087, August 31, 2008
Facts: Petitioner was hired by Kasei Corporation during the incorporation stage. She was
designated as accountant and corporate secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liason Officer to the City of
Manila to secure permits for the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment
of all employees and perform management administration functions. In 2001, she was replaced
by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which
was until September. She asked for her salary but was informed that she was no longer
connected to the company. She did not anymore report to work since she was not paid for her
salary. She filed an action for constructive dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision
while CA reversed it.

Issue: Whether or not there was an employer-employee relationship.

Ruling: The court held that in this jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally, courts have relied on the so-called right
of control test where the person for whom the services are performed reserves a right to control
not only the end to be achieved but also the means to be used in reaching such end. In addition
to the standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the existence
of an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer’s power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of
an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the extent of the worker’s
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that
line of business. The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latter’s line of
business.
There can be no other conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of business.
Her main job function involved accounting and tax services rendered to Respondent
Corporation on a regular basis over an indefinite period of engagement. Respondent
Corporation hired and engaged petitioner for compensation, with the power to dismiss her for
cause. More importantly, Respondent Corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
 Orozco v CA
GR No. 15522207, August 13, 2008

Facts: In March 1990, Wilhelmina Orozco was hired as a writer by the Philippine Daily Inquirer
(PDI). She was the columnist of “Feminist Reflections” under the Lifestyle section of the
publication. She writes on a weekly basis and on a per article basis (P250-300/article).
In 1991, Leticia Magsanoc as the editor-in-chief sought to improve the Lifestyle section of the
paper. She said there were too many Lifestyle writers and that it was time to reduce the number
of writers. Orozco’s column was eventually dropped.
Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc. Orozco won in the
Labor Arbiter where the arbiter ruled that there exists an employer-employee relationship
between PDI and Orozco.
The case eventually reached the Court of Appeals where the CA ruled that there is no such
relationship.
Orozco insists that by applying the four-fold test, it can be seen that she is an employee of PDI;
Orozco insists that PDI had been exercising the power of control over her because:
a) PDI provides the guidelines as to what her article content should be;
b) PDI sets deadlines as to when Orozco must submit her article/s;
c) PDI controls the number of articles to be submitted by Orozco;
d) PDI requires a certain discipline from their writers so as to maintain their readership.

Issue: Whether or not a newspaper columnist is an employee of the newspaper which

publishes the column.

Ruling: No. The type of control being argued by Orozco is not the type of control contemplated
under the four fold test principle in labor law. The Supreme Court emphasized: The main
determinant to test control is whether the rules set by the employer are meant to control not just
the results of the work but also the means and method to be used by the hired party in order to
achieve such results.
In this case, the “control” exercised by PDI over Orozco, as mentioned earlier, is not that
“control” contemplated under the four fold test. In fact, such standards set by PDI is merely
incidental or inherent in the newspaper business and is not an exercise of control over Orozco.
Orozco has not shown that PDI, acting through its editors, dictated how she was to write or
produce her articles each week. There were no restraints on her creativity; Orozco was free to
write her column in the manner and style she was accustomed to and to use whatever research
method she deemed suitable for her purpose. The apparent limitation that she had to write only
on subjects that befitted the Lifestyle section did not translate to control, but was simply a logical
consequence of the fact that her column appeared in that section and therefore had to cater to
the preference of the readers of that section.

Manila Pavilion vs Henry Delada

GR No. 189947, January 25, 2012
Facts: Delada was the Union President of the Manila Pavilion Supervisors Association at MPH
originally assigned as Head Waiter of Rotisserie then reassigned him as Head Waiter of
Seasons Coffee Shop but respondent declined the inter-outlet transfer and instead asked for a
grievance meeting on the matter, pursuant to their Collective Bargaining Agreement (CBA). He
also requested his retention as Head Waiter of Rotisserie while the grievance procedure was
ongoing. The Mgt. denied the request and he kept on reporting to Rotisserie.
MPH sent him several memoranda requiring him to explain in writing why he should not be
penalized for the following offenses gross insubordination etc. Delada persistently rebuffed
orders for him to report to his new assignment.
While respondent’s Complaint is pending MPH citing security and safety reasons, placed
respondent on a 30-day preventive suspension. Thereafter found Delada guilty imposing the
penalty of 90-day suspension.

Issue: W/N MP retained the authority to continue with the administrative case against Delada
for insubordination and willful disobedience of the transfer order.

Ruling: We rule that petitioner Manila Pavilion Hotel had the authority to continue with the
administrative proceedings for insubordination and willful disobedience against Delada and to
impose on him the penalty of suspension. Consequently, petitioner is not liable to pay back
wages and other benefits for the period corresponding to the penalty of 90-day suspension.
First, it must be pointed out that the basis of the 30-day preventive suspension imposed on
Delada was different from that of the 90-day penalty of suspension. The 30-day preventive
suspension was imposed by MPH on the assertion that Delada might sabotage hotel operations
if preventive suspension would not be imposed on him. On the other hand, the penalty of 90-day
suspension was imposed on respondent as a form of disciplinary action. It was the outcome of
the administrative proceedings conducted against him.
Preventive suspension is a disciplinary measure resorted to by the employer pending
investigation of an alleged malfeasance or misfeasance committed by an employee. The
employer temporarily bars the employee from working if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his co-workers. the
penalty of suspension refers to the disciplinary action imposed on the employee after an official
investigation or administrative hearing is conducted.[9] The employer exercises its right to
discipline erring employees pursuant to company rules and regulations.[10] Thus, a finding of
validity of the penalty of 90-day suspension will not embrace the issue of the validity of the 30-
day preventive suspension. In any event, petitioner no longer assails the ruling of the CA on the
illegality of the 30-day preventive suspension.

Pharmacia and Upjohn, Inc. v. Albayda, Jr.

GR No. 172174, August 23, 2010
Facts: Respondent Albayda is a District Sales Manager of Petitioner Pharmacia and Upjohn,
Inc. assigned in District XI in the Western Visayas. Pursuant to a district territorial configuration
for the new marketing and sales direction for the year 2000, respondent was informed in a
memorandum that he will be reassigned as a District Sales Manager in Cagayan De Oro, which
respondent adamantly refused for reasons of personal inconvenience and dislocation from his
family.
Pharmacia’s National Sales and External Business Manager tried to convince him because
being one of the top performing sales managers of the company, the District office in Northern
Mindanao, which has been dismally performing in the past, however, needs his skills and
expertise, respondent still refused the transfer. The Human Resource Manager also met with
respondent telling him that he will be entitled to Relocation Benefits and Allowance and
reiterated in a series of memorandum that his services were badly needed in Cagayan de Oro
City due to the latter’s poor performance and also for his personal growth. Respondent was
even given the option to transfer in Metro Manila with the same position as the District Manager
was transferred to a different position, which he again refused. He viewed the transfer as the
company’s scheme to terminate his employment. Respondent stopped answering these
memoranda, thus, the company sent him another memo dated 26 June 2000 directing him to
report for work within 5 days from receipt, otherwise, he will be terminated on the basis of being
absent without official leave (AWOL) and on July 13, 2000, the company sent him a memo
notifying him of their decision to terminate his services on the ground of being AWOL and
insubordination after he had repeatedly refused to report for work despite due notice, hence this
complaint for constructive dismissal.

Issue: Whether or not the transfer of respondent from Western Visayas to Cagayan De Oro City
was a valid exercise of the company’s management prerogative.

Ruling: YES. Jurisprudence recognizes the exercise of management prerogative to transfer or

assign employees from one office or area to another, provided there is no demotion in rank,
diminution of salary, benefits and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause.
The transfer in this case was a valid exercise of a legitimate management prerogative to
maximize business opportunities, growth and development of personnel and the expertise of
respondent was needed to build the company’s business in CDO, which dismally performed in
1999. There was no demotion as he will also be holding the same position and the transfer did
not indicate that his emoluments will be reduced. He was even informed that he would be
entitled to Relocation benefits and allowance.
Furthermore, in his employment contract, he agreed that he was willing to be assigned to any
work or workplace during the period of his employment as may be determined by the company
whenever the operations require such assignment. There was no evidence showing that the
restructuring of the company was done with ill motives or with malice and bad faith purposely to
constructively terminate respondent. The CA failed to recognize the very nature of a salesman
that it is mobile and ambulant.
On the issue of due process, while no actual hearing was held, the same is not fatal, as only an
“ample opportunity to be heard” is what the law requires in order to satisfy due process of law.
The twin notice were complied with when respondent was sent a memo which served as a final
warning directing him to report for work within 5 days otherwise he will be terminated on the
ground of being AWOL. Upon receipt of this first memo, respondent could have asked for a
conference with the company which he failed to do, hence the second memo informing him of
the company’s decision to terminate his services for being AWOL and for insubordination for
deliberately ignoring the defying the lawful orders of his employer which is a valid ground for
termination under Art. 282 (a) of the Labor Code. He was, however, awarded separation pay as
a measure of social justice as this was his 1st infraction and considering his 22 years of services
with the company.

Prince Transport, Inc. v. Garcia

G.R. No. 167291, January 12, 2011
Facts: Prince Transport, Inc. (PTI), is a company engaged in the business of transporting
passengers by land; respondents were hired either as drivers, conductors, mechanics or
inspectors, except for respondent Diosdado Garcia (Garcia), who was assigned as Operations
Manager. Sometime in October 2007 the commissions received by the respondents were
reduced to 7 to 9% from 8 to 10%. This led respondents and other employees of PTI to hold a
series of meetings to discuss the protection of their interests as employees. Ranato Claros,
president of PTI, made known to Garcia his objections to the formation of a union and in order
to block the continued formation of the union, PTI caused the transfer of all union members and
sympathizers to one of its sub-companies, Lubas Transport (Lubas). The business of Lubas
deteriorated because of the refusal of PTI to maintain and repair the units being used therein,
which resulted in the virtual stoppage of its operations and respondents' loss of employment.
Hence, the respondent-employees filed complaints against PTI for illegal dismissal and unfair
labor practice. PTI contended that it has nothing to do with the management and operations of
Lubas as well as the control and supervision of the latter's employees.

Issue: Whether or not the order to reinstate respondents was valid considering that the issue of
reinstatement was never brought up before the CA and respondents never questioned the
award of separation pay.

Ruling: YES. It is clear from the complaints filed by respondents that they are seeking
reinstatement. Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify
the relief sought, but may add a general prayer for such further or other reliefs as may be
deemed just and equitable. Under this rule, a court can grant the relief warranted by the
allegation and the proof even if it is not specifically sought by the injured party; the inclusion of a
general prayer may justify the grant of a remedy different from or together with the specific
remedy sought, if the facts alleged in the complaint and the evidence introduced so warrant.
The general prayer is broad enough “to justify extension of a remedy different from or together
with the specific remedy sought.” Even without the prayer for a specific remedy, proper relief
may be granted by the court if the facts alleged in the complaint and the evidence introduced so
warrant. The court shall grant relief warranted by the allegations and the proof even if no such
relief is prayed for. The prayer in the complaint for other reliefs equitable and just in the
premises justifies the grant of a relief not otherwise specifically prayed for. In the instant case,
aside from their specific prayer for reinstatement, respondents, in their separate complaints,
prayed for such reliefs which are deemed just and equitable.

Serrano vs. NLRC

GR No. 117040 Case Digest
Facts: Serrano was a regular employee of Isetann Department Store as the head of Security
Checker. In 1991, as a cost-cutting measure, Isetann phased out its entire security section and
engaged the services of an independent security agency. Petitioner filed a complaint for illegal
dismissal among others. Labor arbiter ruled in his favor as Isetann failed to establish that it had
retrenched its security section to prevent or minimize losses to its business; that private
respondent failed to accord due process to petitioner; that private respondent failed to use
reasonable standards in selecting employees whose employment would be terminated. NLRC
reversed the decision and ordered petitioner to be given separation pay.

Issue: Whether or not the hiring of an independent security agency by the private respondent to
replace its current security section a valid ground for the dismissal of the employees classed
under the latter.

Ruling: An employer’s good faith in implementing a redundancy program is not necessarily put
in doubt by the availment of the services of an independent contractor to replace the services of
the terminated employees to promote economy and efficiency. Absent proof that management
acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of
judgment by an employer.
If termination of employment is not for any of the cause provided by law, it is illegal and the
employee should be reinstated and paid backwages. To contend that even if the termination is
for a just cause, the employee concerned should be reinstated and paid backwages would be to
amend Art 279 by adding another ground for considering dismissal illegal.
If it is shown that the employee was dismissed for any of the causes mentioned in Art 282, the
in accordance with that article, he should not be reinstated but must be paid backwages from
the time his employment was terminated until it is determined that the termination of
employment is for a just cause because the failure to hear him before he is dismissed renders
the termination without legal effect.

Meralco v. Quisumbing
GR No. 127598, February 22, 2000
Facts: The court directed the parties to execute a CBA incorporating the terms among which
are the following modifications among others: Wages: PhP 1,900 for 1995-1996; Retroactivity:
December 28, 1996-Dec. 1999, etc. Dissatisfied, some members of the union filed a motion for
intervention/reconsideration. Petitioner warns that is the wage increase of Php2,000.00 per
month as ordered is allowed, it would pass the cost covering such increase to the consumers
through an increase rate of electricity. On the retroactivity of the CBA arbitral award, the parties
reckon the period as when retroaction shall commence.

Issue: Whether or not retroactivity of arbitral awards shall commence at such time as granted
by Secretary.

Ruling: In St. Luke’s Medical vs Torres, a deadlock developed during CBA negotiations
between management unions. The Secretary assumed jurisdiction and ordered the retroaction
of the CBA to the date of expiration of the previous CBS. The Court ratiocinated thus: In the
absence of a specific provision of law prohibiting retroactive of the effectivity of arbitral awards
issued by the Secretary pursuant to article 263(g) of the Labor Code, public respondent is
deemed vested with the plenary and discretionary powers to determine the effectivity thereof.
In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts
to the day immediately following such date and if agreed thereafter, the effectivity depends on
the agreement of the parties. On the other hand, the law is silent as to the retroactivity of a CBA
arbitral award or that granted not by virtue of the mutual agreement of the parties but by
intervention of the government. In the absence of a CBA, the Secretary’s determination of the
date of retroactivity as part of his discretionary powers over arbitral awards shall control.
Wherefore, the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and
the award of wage is increased from Php1,900 to Php2,000.

Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation

G.R. No. 174893 July 11, 2012
Facts: Petitioner is occupying a managerial position in the company. Due to some
communication mishap with her superiors in which altercation ensued, she was ordered
dismissed on the basis of lack of confidence. Petitioner now assails the validity of her dismissal
saying that there is no substantial evidence to establish valid ground for her dismissal since
various emails from her superiors illustrating her accomplishments and commendations, as well
as her “good” overall performance rating negate loss of trust and confidence. She also insists
that she was not afforded due process since no investigation and hearing was conducted as
required by company policy.

Issue: WoN the company validly terminated petitioner?

Ruling: Yes. Anent the first issue, an employer has a distinct prerogative and wider latitude of
discretion in dismissing managerial personnel who performs functions which by their nature
require the employer’s full trust and confidence. As distinguished from rank and file personnel,
mere existence of a basis for believing that a managerial employee has breached the trust of
the employer justifies dismissal. “Loss of confidence” as a ground for dismissal does not require
proof beyond reasonable doubt as the law requires only that there be at least some basis to
justify it. When petitioner delivered dismal performance and displayed poor work attitude as
attested to by his co-workers, such constitute sufficient reasons for an employer to terminate an
employee on the ground of loss of trust and confidence.
Anent the second issue, petitioner’s contention is without merit. Jurisprudence has held that due
process requirement is met when there is simply an opportunity to be heard and to explain one’s
side even if no hearing is conducted.

Realda v. New Age Graphics, Inc.

G.R. No. 192190April 25, 2012
Facts: Petitioner Billy Realda was the former machine operator of respondent New Age
Graphics Inc.
The company dismissed him on the ground of repeated violations of company’s rules and
regulations, namely: insubordination, deliberate slowdown of work, habitual tardiness, absence
without official leave and inefficiency.
Furthermore, private respondent’s refusal to render overtime work when required upon him,
contributed to losses incurred by the petitioner.
Nonetheless, while the CA recognized the existence of just causes for petitioner’s dismissal, it
found that the petitioner is entitled to nominal damages due to Graphics, Inc.’s failure to observe
the procedural requirements of due process.

Issue: Whether or not the petitioner exhibited willful disobedience to a reasonable order from
his employer thus making his dismissal valid

Ruling: Yes, the dismissal is valid but there is a lack of due process. In the present case, the
company’s business is a printing press whose production schedule is sometimes flexible and
varying. It is only reasonable that workers are sometimes asked to render overtime work in
order to meet production deadlines.
The petitioner’s arbitrary defiance to Graphics, Inc.’s order for him to render overtime work
constitutes willful disobedience.
Security of tenure is guaranteed by the Constitution but it is not an absolute rule and cannot be
used as a legal shield by an employee who has exhibited habitual tardiness and absenteeism,
and willful disobedience.
In Merin v. National Labor Relations Commission, this Court expounded on the principle of
totality of infractions as follows:
The totality of infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed upon an
erring employee. The offenses committed by petitioner should not be taken singly and
separately. Fitness for continued employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct and ability separate and independent of
each other. While it may be true that petitioner was penalized for his previous
infractions, this does not and should not mean that his employment record would be
wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee's
past misconduct and present behavior must be taken together in determining the proper
imposable penalty.
But, the employer, is not exempt from observing due process for every infraction. The Supreme
Court found the memorandum asking for a written explanation within 24 hours to be
unreasonable.
Also, there is no indication that Graphics, Inc. issued a second notice, informing the petitioner of
his dismissal. The respondents admit that Graphics, Inc. decided to terminate the petitioner’s
employment after he ceased reporting for work from the time he received the memorandum
requiring him to explain and subsequent to his failure to submit a written explanation. However,
there is nothing on record showing that Graphics, Inc. placed its decision to dismiss in writing
and that a copy thereof was sent to the petitioner.
 International School Manila vs. International School Alliance of Educators (ISAE)
G.R. No. 167286, February 5, 2014
Facts: In 1978, Evangeline Santos was first hired as a full-time Spanish language teacher. She
was on leave of absence from 1992. Upon her return sometime in August 1993, only one class
of Spanish was available for her to teach. Thus, for the school year 1993-1994, she agreed to
teach one class of Spanish and four other classes of Filipino. Since it was Santos’s first time to
teach Filipino, the school’s administrators observed her classes for which the results will be
summarized in a Classroom Standards Evaluation Forms. October of 1993, the Assistant
Principal observed Santos’s Filipino II class. It was noted that she needs improvement in the
following criteria: (1) uses effective questioning techniques; (2) punctual and time efficient; (3)
states and enforces academic and classroom behavior expectations in a positive manner; and
(4) reinforces appropriate behavior. For the school years 1994-1995 (4 classes of Filipino),
1995-1996 (5 classes of Filipino), 1996-1997 (5 classes of Filipino), she indicated that she did
not prefer a change of teaching assignment. At certain times, the Assistant Principal would
observe Santos’s classes which resulted to more or less the same observations that she
needed improvements on as with the first observation. In 1996, her attention was called to the
deficiencies in her planning and on the same year she was required to undergo remediation
phase of the evaluation process through a Professional Growth Plan. Since the implementation,
there was a noticeable improvement it yielded to a positive effect on her performance. But not
long after, May of 1996, Santos was advised her Professional Growth Plan had been revised.
Thereafter it seemed that the positive reviews of her performance were gradually replaced by
renewed concerns on her planning. A series of memo’s were sent calling Santos’s attention
about the problem they discovered and expressing frustration at her performance. As a result of
which, a letter was sent directing her to explain in writing why her employment should not be
terminated for her failure to meet the criteria for improvement and her substandard performance
as a teacher. In her reply, she said that the school forced her to teach Filipino, a subject which
she had no preparation for. Thereafter, she was informed the school considered her letter as
explanation and it will also set a formal administrative investigation. According to the Minutes of
the Administrative Investigation, what took place were clarifications as to the specific charge
with reference to the letter of explanation. The charge against Santos was gross inefficiency or
negligence in the performance of her assigned work. In consequence thereof, she was then told
that her employment would cease effective June 7, 1997. Thereafter, a complaint was filed
against the petitioner.

Issues:
1. WON Evangeline Santos was illegally dismissed.
2. WON she is entitled to reinstatement or separation pay with backwages.

Ruling:
(1) The collective bargaining agreement (CBA) expressly states that termination of employment
shall be in accordance with the Labor Code. Article 282 of the Labor Code provides that an
employer may terminate an employment for any of the ground mentioned in such section and
one of which is gross and habitual neglect by the employee of his duties. Gross inefficiency falls
within the purview of “other causes analogous to the foregoing,” and constitutes therefore, just
cause to terminate an employee. “Gross inefficiency” is closely related to “gross neglect,” for
both involve specific acts of omission on the part of the employee resulting in damage to the
employer or to his business. As such, failure to prescribe such standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for dismissal. Thus,
the actuations of Santos complained of by the petitioners constituted gross and habitual neglect
of her duties.
For termination of employment based on just causes, the following are the requirements to
constitute due process: (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. As such, in the instant case, the school
complied with all the requirements. After a thorough evaluation of Santos’s performance, the
school held a series of conferences and meetings with Santos, in order to improve her
performance. On March 29, 1996, the school required Santos to undertake a Professional
Growth Plan. Thereafter, when the intervention of the school failed to yield any considerable
improvement on Santos, the Assistant Principal wrote her a letter on April 10, 1997, which
required her to explain in writing within forty-eight (48) hours why her employment should not be
terminated. On April 16, 1997, Santos was informed that the administrative investigation would
be conducted on April 23, 1997 where she would be given the opportunity to be heard. On April
23, 1997, an administrative investigation was conducted wherein Santos appeared with the
assistance of ISAE President. In a letter dated May 29, 1997, the school informed Santos of its
decision to terminate her employment on the ground of her failure to meet the standards of the
school, which as discussed was tantamount to gross inefficiency. Thus, she was validly
dismissed.

(2) In view of the finding that Santos was validly dismissed from employment, she would not
ordinarily be entitled to separation pay. An exception to this rule is when the court finds
justification in applying the principle of social justice. In the instant case, the court finds
equitable and proper the award of separation pay in favor of Santos in view of the length of her
service with the school prior to the events that led to the termination of her employment. To
recall, she was first employed by the school in 1978 as a Spanish language teacher and no
other infraction or administrative case against her was filed by the school. Thus, an award of
separation pay equivalent to one-half (1/2) month salary for every year of service is awarded in
favor of Santos on grounds of equity and social justice.

Manila Jockey Club Employees Labor Union - PTGWO vs. Manila Jockey Club Inc.
G.R. No. 167760. March 7, 2007
Facts: Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila
Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain
horse races, entered into a Collective Bargaining Agreement (CBA) effective January 1,
1996 to December 31, 2000. The CBA governed the economic rights and obligations of
respondents regular monthly paid rank-and-file employees. In their Collective Bargaining
Agreement (CBA), the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon
and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. The CBA likewise
reserved in the employer certain management prerogatives, including the determination of the
work schedule.
On April 3, 1999, respondent issued an inter-office memorandum declaring that,
effective April 20, 1999, the hours of work of regular monthly-paid employees shall be from 1:00
p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The
memorandum, however, maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days.
Subsequently, before a panel of voluntary arbitrators of the National Conciliation and
Mediation Board (NCMB), petitioner questioned the above office memorandum as violative of
the prohibition against non-diminution of wages and benefits guaranteed under Section 1,
Article IV, of the CBA which specified the work schedule of respondent's employees to be
from 9:00 a.m. to 5:00 p.m. Petitioners claimed that the employees are precluded from
rendering their usual overtime work from 5:00 p.m. to 9:00 p.m.
The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld
respondent's prerogative to change the work schedule of regular monthly-paid employees
under Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel
denied the motion.
Respondent, as employer, cites the change in the program of horse races as reason for
the adjustment of the employees work schedule. It rationalizes that when the CBA was signed,
the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no
other choice for management but to change the employees' work schedule as there was no
work to be done in the morning.
The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld
respondent's prerogative to change the work schedule of regular monthly-paid employees
under Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel
denied the motion.
Dissatisfied, petitioner then appealed the panels decision to the CA but the CA upheld
that of the panel and denied petitioners subsequent motion for reconsideration via its equally
challenged resolution of April 4, 2005.
Hence, the petitioner questioned the such decision and averred that the Court of
appeals erred in holding that respondent did not relinquish part of its management prerogative
when it stipulated the work schedule in the Collective Bargaining Agreement.
Issue: Whether or not the respondent Manila Jockey Club Inc. relinquished part of its
management prerogative when it stipulated the work schedule in the Collective Bargaining
Agreement.

Ruling: The respondent Manila Jockey Club Inc. did not relinquish part of its management
prerogative when it stipulated the work schedule in the Collective Bargaining Agreement. As it
is, the Court will not interfere with the business judgment of an employer in the exercise of its
prerogative to devise means to improve its operation, provided that it does not violate the
law, CBAs, and the general principles of justice and fair play. While it is true that Section 1,
Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and
from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI, however,
expressly reserves on respondent the prerogative to change existing methods or facilities to
change the schedules of work. When the races were moved to 2:00 p.m., there was no other
choice for management but to change the employees' work schedule as there was no work to
be done in the morning. Evidently, the adjustment in the work schedule of the employees is
justified.

Philippine Telegraph & Telephone Corporation vs CA

G.R. No. 152057. September 29, 2003
Facts: Petitioner, after conducting a series of studies regarding the profitability of its retail
operations, its existing branches and the number of employees, the petitioner came up with a
Relocation and Restructuring Program designed to (a) sustain its (PT&T's) retail operations; (b)
decongest surplus workforce in some branches, to promote efficiency and productivity; (c) lower
expenses incidental to hiring and training new personnel; and (d) avoid retrenchment of
employees occupying redundant positions. On August 11, 1997, private respondents received
separate letters from the petitioner, giving them the option to choose the branch to which they
could be transferred. Thereafter, through HRAG Bulletin No. 97-06-16, the private respondents
and other petitioner's employees were directed to "relocate" to their new PT&T Branches. The
affected employees were directed to report to their respective relocation assignments in a Letter
dated September 16, 1997. Moreover, the employees who would agree to the transfers would
be considered promoted.
The private respondents rejected the petitioner's offer. Petitioner, then, sent letters to the private
respondents requiring them to explain in writing why no disciplinary action should be taken
against them for their refusal to be transferred/relocated. In their respective replies to the
petitioner's letters, the private respondents explained that: The transfers imposed by the
management would cause enormous difficulties on the individual complainants. For one, their
new assignment involves distant places which would require their separation from their
respective families. Dissatisfied with this explanation, the petitioner considered the private
respondents' refusal as insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from work. 8 They forthwith filed their respective complaints
against the petitioner before the appropriate sub-regional branches of the NLRC.
In their position paper, the complainants (herein private respondents) declared that their refusal
to transfer could not possibly give rise to a valid dismissal on the ground of willful disobedience,
as their transfer was prejudicial and inconvenient; thus unreasonable. The private respondents
further opined that since their respective transfers resulted in their promotion, they had the right
to refuse or decline the positions being offered to them. Resultantly, the refusal to accept the
transfers could not have amounted to insubordination or willful disobedience to the "lawful
orders of the employer."
For its part, the company alleged that the private respondents' transfers were made in the lawful
exercise of its management prerogative and were done in good faith. The transfers were aimed
at decongesting surplus employees and detailing them to a more demanding branch.

Issue: Whether or not the private respondents were illegally dismissed.

Ruling: The Supreme Court ruled that an employee cannot be promoted, even if merely as a
result of a transfer, without his consent. A transfer that results in promotion or demotion,
advancement or reduction or a transfer that aims to 'lure the employee away from his
permanent position cannot be done without the employees' consent. There is no law that
compels an employee to accept a promotion for the reason that a promotion is in the nature of a
gift or reward, which a person has a right to refuse. Hence, the exercise by the private
respondents of their right cannot be considered in law as insubordination, or willful disobedience
of a lawful order of the employer. As such, there was no valid cause for the private respondents'
dismissal.
 Duncan Assoc. of Detailman-PTGWO vs. Glaxo Wellcome Phils., Inc.
G.R. No. 162994, September 17, 2004
FACTS: Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract of
employment signed by Tecson stipulates, among others, that he agrees to study and abide by
the existing company rules; to disclose to management any existing future relationship by
consanguinity or affinity with co-employees or employees with competing drug companies and
should management find that such relationship poses a prossible conflict of interest, to resign
from the company. Company's Code of Employee Conduct provides the same with stipulation
that management may transfer the employee to another department in a non-counterchecking
position or preparation for employment outside of the company after 6 months.
Tecson was initially assigned to market Glaxo's products in the Camarines Sur-Camarines
Norte area and entered into a romantic relationship with Betsy, an employee of Astra, Glaxo's
competition. Before getting married, Tecson's District Manager reminded him several times of
the conflict of interest but marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors
informed him of conflict of intrest. Tecson asked for time to comply with the condition (that either
he or Betsy resign from their respective positions). Unable to comply with condition, Glaxo
transferred Tecson to the Butuan-Surigao City-Agusan del Sur sales area. After his request
against transfer was denied, Tecson brought the matter to Glaxo's Grievance Committee and
while pending, he continued to act as medical representative in the Camarines Sur-Camarines
Norte sales area. On Nov. 15, 2000, the National Conciliation and Mediation Board ruled that
Glaxo's policy was valid...

ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from
marrying employees of any competitor company is valid

RULING:
On Equal Protection
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies, and
other confidential programs and information from competitors. The prohibition against pesonal
or marital relationships with employees of competitor companies upon Glaxo's employees is
reasonable under the circumstances because relationships of that nature might compromise the
interests of the company. That Glaxo possesses the right to protect its economic interest cannot
be denied.
It is the settled principle that the commands of the equal protection clause are addressed only to
the state or those acting under color of its authority. Corollarily, it has been held in a long array
of US Supreme Court decisions that the equal protection clause erects to shield against merely
privately conduct, however, discriminatory or wrongful.
The company actually enforced the policy after repeated requests to the employee to comply
with the policy. Indeed the application of the policy was made in an impartial and even-handed
manner, with due regard for the lot of the employee.

On Constructive Dismissal
Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is demotion
in rank, or diminution in pay; or when a clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee. None of these conditions are present in the
instant case.

STAR PAPER CORPORATION VS. SIMBOL

487 SCRA 228
FACTS: Petitioner was the employer of the respondents. Under the policy of Star Paper the
employees are:
1. New applicants will not be allowed to be hired if in case he/she has a relative, up to the 3rd
degree of relationship, already employed by the company.
2. In case of two of our employees (singles, one male and another female) developed a friendly
relationship during the course of their employment and then decided to get married, one of them
should resign to preserve the policy stated above.
Respondents Comia and Simbol both got married to their fellow employees. Estrella on the
other hand had a relationship with a co-employee resulting to her pregnancy on the belief that
such was separated. The respondents allege that they were forced to resign as a result of the
implementation of the said assailed company policy.
The Labor Arbiter and the NLRC ruled in favor of petitioner. The decision was appealed to the
Court of Appeals which reversed the decision.

ISSUE: Whether the prohibition to marry in the contract of employment is valid

HELD: It is significant to note that in the case at bar, respondents were hired after they were
found fit for the job, but were asked to resign when they married a co-employee. Petitioners
failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit,
then an employee of the Repacking Section, could be detrimental to its business operations.
Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia,
then a Production Helper in the Selecting Department, who married Howard Comia, then a
helper in the cutter-machine. The policy is premised on the mere fear that employees married to
each other will be less efficient. If we uphold the questioned rule without valid justification, the
employer can create policies based on an unproven presumption of a perceived danger at the
expense of an employee’s right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee,
but they are free to marry persons other than co-employees. The questioned policy may not
facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under
the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is
reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to
prove a legitimate business concern in imposing the questioned policy cannot prejudice the
employee’s right to be free from arbitrary discrimination based upon stereotypes of married
persons working together in one company.
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction
cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast and
extensive that we cannot prudently draw inferences from the legislature’s silence that married
persons are not protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a
reasonable business necessity, we rule that the questioned policy is an invalid exercise of
management prerogative. Corollary, the issue as to whether respondents Simbol and Comia
resigned voluntarily has become moot and academic.
In the case of Estrella, the petitioner failed to adduce proof to justify her dismissal. Hence, the
Court ruled that it was illegal.

TIU vs. PLATINUM PLANS PHILIPPINES

G.R. No. 163512, February 28, 2007
FACTS: Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the
pre-need industry. From 1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing
Director. On January 1, 1993, respondent re-hired petitioner as Senior Assistant Vice-President
and Territorial Operations Head in charge of its Hong Kong and Asean operations. The parties
executed a contract of employment valid for five years.
On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became
the Vice-President for Sales of Professional Pension Plans, Inc., a corporation engaged also in
the pre-need industry.
Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch
261. Respondent alleged, among others, that petitioner’s employment with Professional
Pension Plans, Inc. violated the non-involvement clause in her contract of employment. In
upholding the validity of the non-involvement clause, the trial court ruled that a contract in
restraint of trade is valid provided that there is a limitation upon either time or place. In the case
of the pre-need industry, the trial court found the two-year restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial court’s ruling. It reasoned that petitioner
entered into the contract on her own will and volition. Thus, she bound herself to fulfill not only
what was expressly stipulated in the contract, but also all its consequences that were not
against good faith, usage, and law. The appellate court also ruled that the stipulation prohibiting
non-employment for two years was valid and enforceable considering the nature of
respondent’s business.

ISSUE: Whether the Court of Appeals erred in sustaining the validity of the non-involvement
clause

HELD: In this case, the non-involvement clause has a time limit: two years from the time
petitioner’s employment with respondent ends. It is also limited as to trade, since it only
prohibits petitioner from engaging in any pre-need business akin to respondent’s. More
significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations
Head in charge of respondent’s Hongkong and Asean operations, she had been privy to
confidential and highly sensitive marketing strategies of respondent’s business. To allow her to
engage in a rival business soon after she leaves would make respondent’s trade secrets
vulnerable especially in a highly competitive marketing environment. In sum, The Court finds the
non-involvement clause not contrary to public welfare and not greater than is necessary to
afford a fair and reasonable protection to respondent. Hence the restraint is valid and such
stipulation prevails.

PANTOJA VS. SCA

G.R. No. 163554
FACTS: Respondent, a corporation engaged in the manufacture, sale and distribution of industrial paper
and tissue products, employed Pantoja and was eventually assigned at respondent’s Paper Mill No. 4, the
section which manufactures the company’s industrial paper products, as a back tender in charge of the
proper operation of the section’s machineries.
In a Notice of Transfer, respondent informed petitioner of its reorganization plan and offered him a
position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the
eventual closure and permanent shutdown of Paper Mill No. 4 . The closure and concomitant
reorganization is in line with respondent’s decision to streamline and phase out the company’s industrial
paper manufacturing operations due to financial difficulties.
However, petitioner rejected respondent’s offer for his transfer. Thus, a notice of termination of
employment was sent to petitioner as his position was declared redundant by the closure of Paper Mill
No. 4. He then received his separation pay and thereafter executed a release and quitclaim in favor of
respondent. later, respondent informed the DOLE of its reorganization and partial closure by submitting
with the said office an Establishment Termination Report together with the list of 31 terminated
employees.
Petitioner filed a complaint for illegal dismissal against respondent assailing his termination as without
any valid cause. He averred that the alleged redundancy never occurred as there was no permanent
shutdown of Paper Mill No. 4 due to its continuous operation since his termination.
In its defense, respondent refuted petitioner’s claim of illegal dismissal. It argued that petitioner has
voluntarily separated himself from service by opting to avail of the separation benefits of the company
instead of accepting reassignment/transfer to another position of equal rank and pay. According to
respondent, petitioner’s discussion on the alleged resumption of operation of Paper Mill No. 4 is rendered
moot by the fact of petitioner’s voluntary separation.
the Labor Arbiter rendered a Decision dismissing petitioner’s complaint for lack of merit. Upon
appeal by petitioner, the NLRC reversed the Labor Arbiter’s Decision by finding petitioner’s separation
from employment illegal. The NLRC gave credence to petitioner’s evidence of Paper Mill No. 4’s
continuous operation.
Respondent sought reconsideration of the NLRC’s ruling**, which was however denied. Respondent
filed a petition for certiorari with the CA, which reversed the NLRC’s Decision and reinstated the Labor
Arbiter’s Decision dismissing the complaint. It ruled that there was no illegal dismissal as the act of
petitioner in rejecting the transfer and accepting the separation pay constitutes a valid basis for the
separation from employment. Respondent’s Motion to Annul the NLRC’s Entry of Judgment was
granted by the CA. Petitioner’s MR was denied

ISSUE: WON there was illegal dismissal

HELD: WHEREFORE, the petition is DENIED. The assailed Decision of the CA dismissing petitioner
complaint for illegal dismissal and the Resolution denying the MR are AFFIRMED. NO
Respondent presented evidence of the low volume of sales and orders for the production of industrial
paper in 1999 which inevitably resulted to the company’s decision to streamline its operations. Exercising
its management prerogative and sound business judgment, respondent decided to cut down on
operational costs by shutting down one of its paper mill. As held in International Harvester Macleod, Inc.
v. IAC , the determination of the need to phase out a particular department and consequent reduction of
personnel and reorganization as a labor and cost saving device is a recognized management prerogative
which the courts will not generally interfere with. Apparently, respondent implemented its streamlining or
reorganization plan with good faith, not in an arbitrary manner and without prejudicing the tenurial rights
of its employees.
As long as no arbitrary or malicious action on the part of an employer is shown, the wisdom of a business
judgment to implement a cost saving device is beyond this court’s determination. After all, the free will of
management to conduct its own business affairs to achieve its purpose cannot be denied.
NOTES:
the reason why Paper Mill no. 4 continued it operation after the separation of Pantoja:
Respondent sought reconsideration of the NLRC’s ruling. It denied the fact that Paper Mill No. 4
continued to be fully operational in 1999. Respondent asseverated that when Paper Mill No. 4 was shut
down in 1999 due to its low production output as certified in an affidavit executed by SCA’s VP-Tissue
Manufacturing Director, there was a necessity to occasionally run from time to time the machines in
Paper Mill No. 4 only for the purpose of maintaining and preserving the same and does not mean that
Paper Mill No. 4 continued to be operational. It was only in 2000 that Paper Mill No. 4 was subsequently
reopened due to a more favorable business climate, which decision is recognized as a rightful exercise of
management prerogative.

LEPANTO CERAMICS v. LEPANTO CERAMICS EMPLOYEES ASSOCIATION

GR No. 180866, 2010-03-02
FACTS: Petitioner Lepanto Ceramics,... business is primarily to manufacture, make, buy and
sell, on wholesale basis, among others, tiles, marbles, mosaics and other similar... products.
Respondent Lepanto Ceramics Employees Association (respondent Association)... is the sole
and exclusive bargaining agent in the establishment of petitioner.
In 1998 petitioner gave a P3,000.00 bonus to its employees, members of the respondent
Association.
Subsequently, in 1999, petitioner and respondent Association entered into a Collective
Bargaining Agreement (CBA) which provides for, among others, the grant of a Christmas gift
package/bonus to the members of the respondent Association.
The Christmas bonus was one of the enumerated "existing benefit, practice of traditional rights"
which "shall remain in full force and effect."
In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash. Instead, petitioner
gave each of the members of respondent Association Tile Redemption Certificates equivalent to
P3,000.00.
The bonus for the year 2002 is the root of the present... dispute. Petitioner gave a year-end
cash benefit of Six Hundred Pesos (P600.00) and offered a cash advance to interested
employees equivalent to one (1) month salary payable in one year.
The respondent Association objected to the P600.00 cash benefit... and argued that this was in
violation of the CBA it executed with the petitioner.
The respondent Association filed a Notice of Strike with the National Conciliation Mediation
Board... alleging the violation of the CBA. The case was placed under preventive mediation. The
efforts to... conciliate failed. The case was then referred to the Voluntary Arbitrator for
resolution... respondent Association insisted that it has been the traditional practice of the
company to grant its members Christmas bonuses during the end of the calendar year, each in
the amount of P3,000.00 as an expression of gratitude to the employees for their... participation
in the company's continued existence in the market.
The petitioner averred that the complaint for nonpayment of the 2002 Christmas bonus had no
basis as the same was not a demandable and enforceable obligation. It argued that the giving of
extra compensation was based on the company's available resources for a given year and the...
workers are not entitled to a bonus if the company does not make profits.
The Voluntary Arbitrator rendered a Decision... declaring that petitioner is bound to grant each
of its workers a Christmas bonus of P3,000.00 for the reason that the bonus was given prior to
the effectivity of the CBA between the parties and that the financial... losses of the company is
not a sufficient reason to exempt it from granting the same. It stressed that the CBA is a binding
contract and constitutes the law between the parties.
Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari
As adverted to earlier, the Court of Appeals affirmed in toto the decision of... the Voluntary
Arbitrator. petitioner is now before this Court.

ISSUES: whether or not the Court of Appeals erred in affirming the ruling of the voluntary
arbitrator that the petitioner is obliged to give the members of the respondent Association a
Christmas bonus... in the amount of P3,000.00 in 2002.

RULING: We uphold the rulings of the voluntary arbitrator and of the Court of Appeals.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in
addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and
paid to an employee for his industry and loyalty which contributed to the success... of the
employer's business and made possible the realization of profits.
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be
enforceable, it must have been promised by the employer and expressly agreed upon by the
parties.
Given that the bonus in this case is integrated in the CBA, the same... partakes the nature of a
demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus
due to respondent Association has become more than just an act of generosity on the part of
the petitioner but a contractual obligation it has... undertaken.
A CBA refers to a negotiated contract between a legitimate labor organization and the employer,
concerning wages, hours of work and all other terms and conditions of employment in a
bargaining unit.
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions.
This principle stands strong and true in the case at bar.
A reading of the provision of the CBA reveals that the same provides for the giving of a
"Christmas gift package/bonus" without qualification.
the said provision did not state that the Christmas package shall be made to depend on the
petitioner's financial... standing. The records are also bereft of any showing that the petitioner
made it clear during CBA negotiations that the bonus was dependent on any condition. Indeed,
if the petitioner and respondent Association intended that the P3,000.00 bonus would be
dependent on the company... earnings, such intention should have been expressed in the CBA.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the
CBA. The rule is settled that any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of...
non-diminution of benefits is founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full protection.
 [ G.R. No. 172927, February 11, 2010 ]
RONILO SORREDA, PETITIONER, VS. CAMBRIDGE ELECTRONICS
CORPORATION, RESPONDENT.
This petition[2] seeks to reverse and set aside the May 26, 2005 decision[3] of the Court of
Appeals (CA) in CA-G.R. SP No. 77303 and its resolution denying reconsideration.[4] The CA
affirmed the resolution[5] of the National Labor Relations Commission (NLRC) in NLRC NCR
CA No. 028156-01 declaring that petitioner Ronilo Sorreda was not a regular employee of
respondent Cambridge Electronics Corporation.
On May 8, 1999, petitioner was hired by respondent as a technician for a period of 5 months at
minimum wage.[6] Five weeks into the job (on June 15, 1999), petitioner met an accident in
which his left arm was crushed by a machine and had to be amputated.
Petitioner claimed that, shortly after his release from the hospital, officers of respondent
company called him to a meeting with his common-law wife, father and cousin. There he was
assured a place in the company as a regular employee for as long as the company existed and as
soon as he fully recovered from his injury.
In September 1999, after he recovered from his injury, petitioner reported for work. Instead of
giving him employment, they made him sign a memorandum of resignation to formalize his
separation from the company in the light of the expiration of his five-month contract.
On November 16, 1999, petitioner filed in the Regional Arbitration Branch of the NLRC of
Dasmariñas, Cavite a complaint[8] for illegal dismissal (later changed to breach of contract). In
his position paper, he raised the following issues:
1. whether there was a valid agreement or contract of perpetual employment perfected
between the parties concerned;
2. whether respondent corporation was bound thereby and
3. whether [petitioner] has a cause of action for damages against respondent based on the
contract.
He claimed that respondent failed to comply with the terms of the contract of perpetual
employment which was perfected in June 1999 when he was called to a meeting by
management.[10] He prayed that respondent be made to pay compensatory,[11] moral[12]and
exemplary damages and attorney's fees for default or breach of contract.
Respondent denied that it extended regular employment to petitioner. Only words of
encouragement were offered but not perpetual employment. Moreover, it assailed the labor
arbiter's jurisdiction over the case, claiming a lack of causal connection between the alleged
breach of contract and their employer-employee relationship.
The labor arbiter held that he had jurisdiction to hear and decide the case as it involved the
employer-employee relationship of the contending parties. He ruled that petitioner who had
been employed on a per-project basis became a regular employee by virtue of the contract of
perpetual employment. He stated that the positive declaration of the witnesses (common-law
wife, father and cousin) present at the meeting and the parole evidence rule was enough to
support the petitioner's claim. Thus, in a decision dated March 9, 2001, the labor arbiter ruled
that petitioner was employed by respondent for an indefinite period of employment (that is, on
regular status.) He ordered petitioner's reinstatement and the payment of backwages, moral
damages and exemplary damages as well as attorney's fees.
Both petitioner and respondent appealed to the NLRC. Petitioner claimed that the labor arbiter
erred in finding that he was a regular employee, that the case was based on illegal dismissal and
that reinstatement and payment of backwages were the proper reliefs. Respondent, on the other
hand, asked for the reversal of the labor arbiter's decision based on grave abuse of discretion for
assuming jurisdiction over the case.
The NLRC agreed with respondent.[14] It found that petitioner was not a regular employee; thus,
he was neither illegally dismissed nor entitled to reinstatement and backwages. Petitioner sued
for compensatory damages because of the accident that befell him. As the contract for per-
project employment had already expired, the issue no longer fell under the jurisdiction of the
labor arbiter and NLRC. Moreover, the testimonies of petitioner's witnesses were declared self-
serving and thus insufficient to prove the contract of perpetual employment. The motion for
reconsideration of petitioner was denied.
Aggrieved, petitioner filed a petition for certiorari in the CA questioning the NLRC's finding of
non-existence of the contract of perpetual employment.
The CA dismissed the petition for lack of merit, stating that the labor arbiter decided the case on
an issue that was never raised (i.e.,the employment status of petitioner). Moreover, petitioner's
principal cause of action, breach of contract, was not cognizable by the labor courts but by the
regular courts.[17] The CA concluded that the NLRC did not commit any reversible error in
finding that the labor arbiter had no jurisdiction over the case. Furthermore, petitioner failed to
prove grave abuse of discretion in the NLRC's exercise of its quasi-judicial function.
Petitioner moved for reconsideration but the motion was denied.Thus, this petition.
We affirm the Court of Appeals.
This case rests on the issue of whether the labor arbiter had the jurisdiction to take cognizance
thereof.
Jurisdiction over the subject matter of a complaint is determined by the allegations of the
complaint.[19] In Pioneer Concrete Philippines, Inc. v. Todaro, the Court reiterated that where
no employer-employee relationship exists between the parties, and the Labor Code or any labor
statute or collective bargaining agreement is not needed to resolve any issue raised by them, it is
the Regional Trial Court which has jurisdiction. Thus it has been consistently held that the
determination of the existence of a contract as well as the payment of damages is inherently civil
in nature. A labor arbiter may only take cognizance of a case and award damages where the
claim for such damages arises out of an employer-employee relationship.
In this instance, petitioner, from the period May 8, 1999 to October 8, 1999, was clearly a per-
project employee of private respondent, resulting in an employer-employee relationship.
Consequently, questions or disputes arising out of this relationship fell under the jurisdiction of
the labor arbiter.
However, based on petitioner's allegations in his position paper, his cause of action was based
on an alleged second contract of employment separate and distinct from the per-project
employment contract. Thus, petitioner insisted that there was a perfected contract of perpetual
employment and that respondent was liable to pay him damages.
We note, however, that petitioner filed the case only when respondent refused to rehire him.
While there was an employer-employee relationship between the parties under their five-month
per-project contract of employment, the present dispute is neither rooted in the aforestated
contract nor is it one inherently linked to it. Petitioner insists on a right to be employed again in
respondent company and seeks a determination of the existence of a new and separate contract
that established that right. As such, his case is within the jurisdiction not of the labor arbiter but
of the regular courts. The NLRC and the CA were therefore correct in ruling that the labor
arbiter erroneously took cognizance of the case.
Even assuming arguendo that the labor arbiter had the jurisdiction to decide the case, the Court
cannot countenance petitioner's claim that a contract of perpetual employment was ever
constituted. While the Constitution recognizes the primacy of labor, it also recognizes the critical
role of private enterprise in nation-building and the prerogatives of management. A contract of
perpetual employment deprives management of its prerogative to decide whom to hire, fire and
promote, and renders inutile the basic precepts of labor relations. While management may
validly waive it prerogatives, such waiver should not be contrary to law, public order, public
policy, morals or good customs.[24] An absolute and unqualified employment for life in the mold
of petitioner's concept of perpetual employment is contrary to public policy and good customs,
as it unjustly forbids the employer from terminating the services of an employee despite the
existence of a just or valid cause. It likewise compels the employer to retain an employee despite
the attainment of the statutory retirement age, even if the employee has became a "non-
performing asset" or, worse, a liability to the employer.
Moreover, aside from the self-serving claim of petitioner, there was no concrete proof to
establish the existence of such agreement. Petitioner cannot validly force respondent to enter
into a permanent employment contract with him. Such stance is contrary to the consensuality
principle of contracts as well as to the management prerogative of respondent company to
choose its employees.
 POLLO VS DAVID
G. R. NO. 181881, OCTOBER 18, 2011
Facts: Petitioner is a former Supervising Personnel Specialist of the CSC Regional Office No. IV
and also the Officer-in-Charge of the Public Assistance and Liaison Division (PALD) under the
“Mamamayan Muna Hindi Mamaya Na” program of the CSC.
On January 3. 2007, CSC Chairperson Karina Constantino-David received an unsigned
complaint letter which was marked “Confidential” and was sent through a courier service (LBC)
from certain Allan San Pascual of Bagong Silang, Caloocan City. The letter contain allegations
that the petitioner have been helping many who have pending cases in the CSC and the letter
sender pleas that the CSC should investigate this anomaly to maintain the clean and good
behaviour of their office.
Chairperson David immediately formed a team of four personnel with background in
information technology (IT), and issued a memo directing them to conduct an investigation and
specifically “to back up all the files in the computers found in the Mamamayan Muna (PALD)
and Legal divisions.”
After some briefing, the team proceeded at once to the CSC-ROIV office at Panay Avenue,
Quezon City. The backing-up of all files in the hard disk of computers at the PALD and Legal
Services Division (LSD) was witnessed by several employees, together with Directors Castillo
and Unite who closely monitored said activity. At around 6:00 p.m., Director Unite sent text
messages to petitioner and the head of LSD, who were both out of the office at the time,
informing them of the ongoing copying of computer files in their divisions upon orders of the
CSC Chair.

Issue: Legality of the search conducted in the petitioner’s office computer and the copying of his
personal files without his knowledge and consent, alleged as a transgression of his constitutional
right to privacy.

Ruling: Yes. In sum, we conclude that the “special needs, beyond the normal need for law
enforcement make the…probable-cause requirement impracticable,” x x x for legitimate, work-
related noninvestigatory intrusions as well as investigations of work-related misconduct. A
standard of reasonableness will neither unduly burden the efforts of government employers to
ensure the efficient and proper operation of the workplace, nor authorize arbitrary intrusions
upon the privacy of public employees. We hold, therefore, that public employer intrusions on
the constitutionally protected privacy interests of government employees for noninvestigatory,
work-related purposes, as well as for investigations of work-related misconduct, should be
judged by the standard of reasonableness under all the circumstances. Under this
reasonableness standard, both the inception and the scope of the intrusion must be reasonable:
“Determining the reasonableness of any search involves a twofold inquiry: first, one must
consider ‘whether the…action was justified at its inception,’ x x x ; second, one must determine
whether the search as actually conducted ‘was reasonably related in scope to the circumstances
which justified the interference in the first place,’” x x x
Ordinarily, a search of an employee’s office by a supervisor will be “justified at its inception”
when there are reasonable grounds for suspecting that the search will turn up evidence that the
employee is guilty of work-related misconduct, or that the search is necessary for a
noninvestigatory work-related purpose such as to retrieve a needed file. x x x The search will be
permissible in its scope when “the measures adopted are reasonably related to the objectives of
the search and not excessively intrusive in light of …the nature of the [misconduct].” x x x39
(Citations omitted; emphasis supplied.)
Under the facts obtaining, the search conducted on petitioner’s computer was justified at its
inception and scope. We quote with approval the CSC’s discussion on the reasonableness of its
actions, consistent as it were with the guidelines established by O’Connor:
Even conceding for a moment that there is no such administrative policy, there is no doubt in
the mind of the Commission that the search of Pollo’s computer has successfully passed the test
of reasonableness for warrantless searches in the workplace as enunciated in the above-
discussed American authorities. It bears emphasis that the Commission pursued the search in
its capacity as a government employer and that it was undertaken in connection with an
investigation involving a work-related misconduct, one of the circumstances exempted from the
warrant requirement. At the inception of the search, a complaint was received recounting that a
certain division chief in the CSCRO No. IV was “lawyering” for parties having pending cases with
the said regional office or in the Commission. The nature of the imputation was serious, as it was
grievously disturbing. If, indeed, a CSC employee was found to be furtively engaged in the
practice of “lawyering” for parties with pending cases before the Commission would be a highly
repugnant scenario, then such a case would have shattering repercussions. It would undeniably
cast clouds of doubt upon the institutional integrity of the Commission as a quasi-judicial
agency, and in the process, render it less effective in fulfilling its mandate as an impartial and
objective dispenser of administrative justice. It is settled that a court or an administrative
tribunal must not only be actually impartial but must be seen to be so, otherwise the general
public would not have any trust and confidence in it.
Considering the damaging nature of the accusation, the Commission had to act fast, if only to
arrest or limit any possible adverse consequence or fall-out. Thus, on the same date that the
complaint was received, a search was forthwith conducted involving the computer resources in
the concerned regional office. That it was the computers that were subjected to the search was
justified since these furnished the easiest means for an employee to encode and store
documents. Indeed, the computers would be a likely starting point in ferreting out incriminating
evidence. Concomitantly, the ephemeral nature of computer files, that is, they could easily be
destroyed at a click of a button, necessitated drastic and immediate action. Pointedly, to impose
the need to comply with the probable cause requirement would invariably defeat the purpose of
the wok-related investigation.
Worthy to mention, too, is the fact that the Commission effected the warrantless search in an
open and transparent manner. Officials and some employees of the regional office, who
happened to be in the vicinity, were on hand to observe the process until its completion. In
addition, the respondent himself was duly notified, through text messaging, of the search and
the concomitant retrieval of files from his computer.
All in all, the Commission is convinced that the warrantless search done on computer assigned
to Pollo was not, in any way, vitiated with unconstitutionality. It was a reasonable exercise of the
managerial prerogative of the Commission as an employer aimed at ensuring its operational
effectiveness and efficiency by going after the work-related misfeasance of its employees.
Consequently, the evidence derived from the questioned search are deemed admissible.
Petitioner’s claim of violation of his constitutional right to privacy must necessarily fail. His
other argument invoking the privacy of communication and correspondence under Section 3(1),
Article III of the 1987 Constitution is also untenable considering the recognition accorded to
certain legitimate intrusions into the privacy of employees in the government workplace under
the aforecited authorities.

Ymbong v. ABSCBN
Facts: Petitioner Ernesto G. Ymbong started working for ABS-CBN in 1993 at its regional station in
Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later
extended to radio when ABS-CBN Cebu launched its AM station in 1995.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent,
director and scriptwriter for various radio programs aired.
On January 1, 1996, the ABS-CBN Head Office in Manila issued “Policy on Employees Seeking Public
Office.” The pertinent portions read:
1. Any employee who intends to run for any public office position, must file his/her
letter of resignation,
2. Any employee who intends to join a political group/party or even with no
political affiliation but who intends to openly and aggressively campaign for a
candidate or group of candidates must file a request for leave of absence subject
to management’s approval.
Because of the 1998 elections and based on his immediate recollection of the policy Mr. Dante
Luzon, Assistant Station Manager issued a memorandum stating “any employee/talent who
wants to run for any position in the coming election will have to file a leave of absence the
moment he/she files his/her certificate of candidacy.” And added further that “The services
rendered by the concerned employee/talent to this company will then be temporarily
suspended for the entire campaign/election period.”
Luzon, however, admitted that upon double-checking of the exact text of the policy he saw that the
policy actually required suspension for those who intend to campaign for a political party or candidate
and resignation for those who will actually run in the elections.
After the issuance of the Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong
approached him and told him that he would leave radio for a couple of months because he will
campaign for the administration ticket. It was only after the elections that they found out that Ymbong
actually ran for public office himself at the eleventh hour. Ymbong, on the other hand, claims that in
accordance with the Memorandum, he informed Luzon through a letter that he would take a few
months leave of absence because he was running for councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for
Naga. According to Luzon, he clarified to Patalinghug that he will be considered resigned and not just on
leave once he files a certificate of candidacy. Thus, Patalinghug wrote Luzon his resignation letter.
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he
informed them that they cannot work there anymore because of company policy.
ABS-CBN, however, agreed out of pure liberality to give them a chance to wind up their participation in
the radio drama since it was rating well and to avoid an abrupt ending. The agreed winding-up,
however, dragged on for so long prompting Luzon to issue to Ymbong a memorandum stating that his
involvement as narrator of the drama continues until its director wraps it up one week upon receipt of a
separate memo.
Ymbong in contrast contended that after the expiration of his leave of absence, he reported back to
work as a regular talent and in fact continued to receive his salary. On he received a memorandum
stating that his services are being terminated immediately, much to his surprise.
Thus, he filed an illegal dismissal. He argued that the ground cited by ABS-CBN for his dismissal was not
among those enumerated in the Labor Code. And even granting without admitting the existence of the
company policy supposed to have been violated, Ymbong averred that it was necessary that the
company policy meet certain requirements before willful disobedience of the policy may constitute a
just cause for termination. Ymbong further argued that the company policy violates his constitutional
right to suffrage.
Patalinghug likewise filed an illegal dismissal complaint against ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug.
The Labor Arbiter found that there exists an employer-employee relationship between ABS-CBN and
Ymbong and Patalinghug considering the stipulations in their appointment letters/talent contracts.
In its memorandum of appeal before the National Labor Relations Commission (NLRC), ABS-CBN
contended that the Labor Arbiter has no jurisdiction over the case because there is no employer-
employee relationship between the company and Ymbong and Patalinghug.
In its Supplemental Appeal, ABS-CBN insisted that Ymbong and Patalinghug were engaged as radio
talents and their contract is one between a self-employed contractor and the hiring party which is a
standard practice in the broadcasting industry.
The NLRC dismissed ABS-CBN’s Supplemental Appeal for being filed out of time.
As to the issue of whether they were illegally dismissed, the NLRC treated their cases differently. In the
case of Patalinghug, it found that he voluntarily resigned from employment when he submitted his
resignation letter. As to Ymbong, however, the NLRC ruled otherwise. It ruled that the Memorandum
merely states that an employee who seeks any elected position in the government will only merit the
temporary suspension of his services. It held that under the principle of social justice, the Memorandum
shall prevail and ABS-CBN is estopped from enforcing the other memorandum issued to Ymbong stating
that his services had been automatically terminated when he ran for an elective position.
ABS-CBN moved to reconsider the NLRC decision, but the same was denied in a Resolution. ABS-CBN
then filed a petition for certiorari before the CA.
CA rendered the assailed decision. The CA declared Ymbong resigned from employment and not to have
been illegally dismissed.
Issues:
1) Whether Ymbong, by seeking an elective post, is deemed to have resigned and not dismissed by
ABS-CBN.
2) Whether such policy is valid.

Held: We have consistently held that so long as a company’s management prerogatives are exercised in
good faith for the advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, this Court will
uphold them. In the instant case, ABS-CBN validly justified the implementation of the Policy. It is well
within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any
appearance of impartiality.
We find no merit in Ymbong’s argument that “[his] automatic termination x x x was a blatant [disregard]
of [his] right to due process” as he was “never asked to explain why he did not tender his resignation
before he ran for public office as mandated by [the subject company policy].” Ymbong’s overt act of
running for councilor of is tantamount to resignation on his part. He was separated from ABS-CBN not
because he was dismissed but because he resigned.
Since there was no termination to speak of, the requirement of due process in dismissal cases cannot be
applied to Ymbong.
Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his resignation before he
ran for public office as mandated by the subject company policy.

ROYAL PLANT WORKERS UNION VS. COCA COLA BOTTLERS PHILIPPINES, INC.. –CEBU PLANT
FACTS: Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corpratin engaged in the
manufacture, sale, and distribution of softdrink products. The bottling operators were provided with
chairs upon their requests. But these were removed pursuant to a national directive of petitioner "I
operate, I maintain, I clean" program. The respondents justified this by saying that a bottling operator
does not need a chair anymore and the bottling operators will avoid sleeping, thus, prevent injuries to
their persons. Furthermore, private respondents, argued that the removal of the chairs is valid as it is a
legitimate exercise of management prerogative, it does not violate the CBA it contracted with
respondent. Respondent, on the other hand, averred that the removal of the chairs constitutes a
violation of the occupational health and safety standards, the policy of the state to assure the right of
workers to just and humane conditions of work.

ISSUE: Won the removal of the bottling operators' chairs from CCBPI's production/manufacturing lines a
valid exercise of a management prerogative?

HELD: YES. The court held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, time, place,
and manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
exercise of management and prerogative, however, is not absolute as it must be exercised in good faith
and with due regard to the rights of labor. THE REMOVAL OF THE CHAIRS WAS DESIGNED TO INCREASE
WORK EFFICIENCY The removal of the chairs by CCBPI was done in good faith as CCBPI wanted to avoid
instances of operators sleeping on the job while in the performance of their duties and responsibilities
and because of the fact that the chairs were not necessary considering that the operators constantly
move about while working. There are also no Laws requiring employers to provide chairs for bottling
operators except in Article 132 which requires employers to provide seats for women. In the case at bar,
bottling operators are mostly of men. There was also no violation either of the Health, Safety and Social
Welfare Benefit provisions because the removal of the chairs was compensated by the reduction of the
working hours and increase in the rest period. The Court also held that the Union should not complain
too much about standing and moving about for 1 ½ hours because studies show that sitting in
workplaces for a long time is hazardous to one's health. The court gave several studies to prove this
claim. The CBA between Union and CCBPI contains no provision whatsoever requiring the management
to provide chairs for the operators in the production/manufacturing line while performing their duties
and responsibilities. Since it is not expressly stated in the CBA, it is understood that it was a purely
voluntary act on the part of CCBPI and the long practice did not convert it into an obligation or a vested
right in favor of the Union. Furthermore, the removal of the chairs did not violate the general principles
of justice and fair play because the bottling operators’ working time was considerably reduced from two
and a half (2 ½) hours to just one and a half (1 ½) hours and the break period, when they could sit down,
was increased to 30 minutes between rotations. The bottling operators’ new work schedule is certainly
advantageous to them because it greatly increases their rest period and significantly decreases their
working time. A break time of thirty (30) minutes after working for only one and a half (1 ½) hours is a
just and fair work schedule. The operators’ chairs cannot be considered as one of the employee benefits
covered in Article 100 of the Labor Code. In the Court’s view, the term “benefits” mentioned in the non-
diminution rule refers to monetary benefits or privileges given to the employee with monetary
equivalents. Such benefits or privileges form part of the employees’ wage, salary or compensation
making them enforceable obligations.
 Magsalin v. National Organization of Working Men
FACTS:
1. The private respondents worked as sales route helpers for the petitioner (Coca Cola) for 5
months and thereafter they were hired on a daily basis. According to the petitioner, the
respondents were merely hired as substitutes for regular helpers when the latter were
unavailable or due to shortage of manpower/high volume of work. These workers would then
wait every morning outside the gates and if hired, they would be paid their wages at the end
of the day.
2. The respondents asked the petitioner to make them regular but the latter refused. Hence,
23 of these temporary workers filed a case for illegal dismissal.

Issue: W/N the respondents' work is deemed necessary and desirable in the usual business
or trade of the petitioner

RULING: Yes. The repeated hiring of the respondent workers and continuing need of their
daily services clearly attest to the necessity or desirability of their services in the regular
conduct of the business/trade of petitioner.
In determining whether employment is regular or not, the applicable test is the reasonable
connection between a particular activity performed in relation to the usual business or trade
of the employer. The nature of work must be viewed from the perspective of the business in
its entirety and not confined scope.

UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE CABATI v. ERDINAND

ACIBO, et al.
G.R. No. 186439, 15 January 2014, SECOND DIVISION (Brion, J.)
FACTS: FERDINAND ACIBO, et al. were employees of UNIVERSAL ROBINA SUGAR MILLING
CORPORATION (URSUMCO). Acibo, et al. signed contracts of employment for a given period and
after its expiration, URSUMCO repeatedly hired these employees to perform the same duties and
obligations.
Acibo, et al. filed a complaint before the Labor Arbiter for regularization however it was denied because
the LA argued that they were seasonal employees. Seven of the 22 complainants filed an appeal to the
NLRC. The latter reversed the LA’s ruling claiming that they were regular employees. The CA affirmed
NLRC’s decision but excluded the Acibo, et al. from monetary benefits under the CBA.

ISSUE: Whether or not Acibo, et al. are regular employees of URSUMCO.

HELD: Plantation workers or mill employees only work on seasonal basis. This, however, does not
exclude them from the benefits of regularization. Being in such nature, Acibo, et al. are considered
to be regular employees.
Regular employment means that there was an arrangement between the employee and the
employer that the former will be engaged to perform activities which are necessary or desirable to the
usual business or trade of the latter. On the other hand, a project employment is an arrangement for a
specific project or undertaking whose termination is determined by the completion of the project.
The nature of the employment does not depend solely on the will or word of the employer or on
the procedure for hiring and the manner of designating the employee. Rather, the nature of the
employment depends on the nature of the activities to be performed by the employee, considering the
nature of the employer’s business, the duration and scope to be done. Accordingly, Acibo, et al. are
neither project nor seasonal employees.
Acibo, et al. were made to perform tasks that does not pertain to milling operations of
URSUMCO. However, their duties are regularly and habitually needed in URSUMCO’s operation.
Moreover, they were regularly and repeatedly hired to perform the same tasks. Being repeatedly hired for
the same purpose makes them regularized employees.
The plantation workers or the mill employees do not work continuously for 1 whole year but only
for the duration of the growing or the sugarcane or the milling season. Their seasonal work, however,
does not detract from considering them in regular employment.
 G.R. No. 96779 November 10, 1993
PINE CITY EDUCATIONAL CENTER and EUGENIO BALTAO, petitioners,
vs. THE NATIONAL LABOR RELATIONS COMMISSION, respondents.
The is a petition for certiorari seeking the reversal of the resolution of public respondent
National Labor Relations Commission dated November 29, 1990, in NLRC Case No. 01-04-
0056-89, which affirmed in toto the decision of the Labor Arbiter dated February 28,1990.
The antecedent facts are, a follows:
Private respondents Dangwa Bentrez, Roland Picart, Apollo Ribaya, Sr., Ruperta Ribaya,
Virginia Boado, Cecilia Emocling, Jane Bentrez, Leila Dominguez, Rose Ann Bermudez and
Lucia Chan were all employed as teachers on probationary basis by petitioner Pines City
Educational Center, represented in this proceedings by its President, Eugenio Baltao. With the
exception of Jane Bentrez who was hired as a grade school teacher, the remaining private
respondents were hired as college instructors. All the private respondents, except Roland Picart
and Lucia Chan, signed contracts of employment with petitioner for a fixed duration. On March
31, 1989, due to the expiration of private respondents' contracts and their poor performance as
teachers, they were notified of petitioners' decision not to renew their contracts anymore.
On April 10, 1989, private respondents filed a complaint for illegal dismissal before the Labor
Arbiter, alleging that their dismissals were without cause and in violation of due process. Except
for private respondent Leila Dominguez who worked with petitioners for one semester, all other
private respondents were employed for one to two years. They were never informed in writing
by petitioners regarding the standards or criteria of evaluation so as to enable them to meet the
requirements for appointment as regular employees. They were merely notified in writing by
petitioners, through its chancellor, Dra. Nimia R. Concepcion, of the termination of their
respective services as on March 31, 1989, on account of their below-par performance as teachers.
For their part, petitioners contended that private respondents' separation from employment,
apart from their poor performance, was due to the expiration of the periods stipulated in their
respective contracts. In the case of private respondent Dangwa Bentrez, the duration of his
employment contract was for one year, or beginning June, 1988 to March 1989 whereas in the
case of the other private respondents, the duration of their employment contracts was for one
semester, or beginning November, 1988 to March 1989. These stipulations were the laws that
governed their relationships, and there was nothing in said contracts which was contrary to law,
morals, good customs and public policy. They argued further that they cannot be compelled o
enter into new contracts with private respondents. they concluded that the separation of private
respondents from the service was justified.
On February 28, 1990, the Labor Arbiter rendered judgment in favor of private respondents, the
dispositive portion of which reads:
WHEREFORE, in the light of the foregoing considerations, judgment is hereby rendered
ORDERING the respondents to reinstate the complainants immediately to their former
positions and to pay their full backwages and other benefits and privileges without
qualification and deduction from the time they were dismissed up to their actual
reinstatement.
Thus respondents should pay complainants the following:
BACKWAGES
NOTE: Computation covers only the period complainants were terminated up to
January 31, 1990 or 10 months and does not include backwages from January 31,
1990 up to their actual reinstatement.
1) ROLAND PICART
a) Latest salary per month P2,136.00
b) Multiplied by period covered
(March 31, 1989 to January 31, 1990) x 10 months
—————
c) Equals backwages due P21,360.00
2) LUCIA CHAN
a) Latest salary per month P1,600.00
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P16,000.00
3) LEILA DOMINGUEZ
a) Latest salary per month P1,648.24
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P16,482.40
4) RUPERTA RIBAYA
 a) Latest salary per month P1,856.00
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P18,560.00
5) CECILIA EMOCLING
a) Latest salary per month P1,648.00
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P16,480.00
6) ROSE ANN BERMUDEZ
a) Latest salary per month P2,600.00
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P26,000.00
7) DANGWA BENTREZ
a) Latest salary per month P1,700.00
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P17,000.00
8) JANE BENTREZ
a) Latest salary per month P1,315.44
b) ultiplied by period covered x 10 months
—————
c) Equals backwages due P13,154.40
9) APOLLO RIBAYA
a) Latest salary per month P1,875.00
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P18,7500.00
10) VIRGINIA BOADO
a) Latest salary per month P1,648.24
b) Multiplied by period covered x 10 months
—————
c) Equals backwages due P16,482.40
SUMMARY
1) Roland Picart 21,360.00
2) Lucia Chan 16,000.00
3) Leila Dominguez 16,482.40
4) Ruperta Ribaya 18,560.00
5) Cecilia Emocling 16,480.00
6) Rose Ann Bermudez 26,000.00
7) Dangwa Bentrez 17,000.00
8) Jane Bentrez 13,154.40
9) Apollo Ribaya 18,750.00
10) Virginia Boado 16,482.40
—————
GRAND TOTAL (Backwages) P180,269.20
Complainants claims for indemnity pay, premium pay for holidays and rest days, illegal
deduction, 13th month pay and underpayment are hereby DENIED for lack of merit.
SO ORDERED.1
In support of this decision, the Labor Arbiter rationalized that the teacher's contracts 2 are vague
and do not include the specific description of duties and assignments of private respondents.
They do not categorically state that there will be no renewal because their appointments
automatically terminate at the end of the semester. Petitioners did not present any written
evidence to substantiate their allegation that the Academic Committee has evaluated private
respondents' performance during their one semester employment. On the contrary, they were
hastily dismissed.
On appeal to the National Labor Relations Commission, the decision was affirmed in toto in its
resolution dated November 29, 1990, with the additional reasoning that "the stipulation in the
contract providing for a definite period in the employment of complainant is obviously null and
void, as such stipulation directly assails the safeguards laid down in Article 280 (of the Labor
Code), 3 which explicitly abhors the consideration of written or oral agreements pertaining to
definite period in regular employments. 4 Hence, the present petition for certiorari with prayer
for the issuance of a temporary restraining order.
As prayed for, this Court issued a temporary restraining order on March 11, 1991, enjoining
respondents from enforcing the questioned resolution.5
Petitioners raise this sole issue: "THAT THERE IS PRIMA FACIE EVIDENCE OF GRAVE
ABUSE OF DISCRETION ON THE PART OF THE LABOR ARBITER BY WANTONLY,
CAPRICIOUSLY AND MALICIOUSLY DISREGARDING PROVISIONS OF THE LAW AND
JURISPRUDENCE LAID DOWN IN DECISIONS OF THE HONORABLE SUPREME COURT."6
Petitioners reiterate their previous arguments, relying heavily in the case of Brent School, Inc. et
al., v. Zamora, et al. 7
It is quite easy to resolve the present controversy because the Brent case, which is a product of
extensive research, already provides the answer. We were categorical therein that:
Accordingly, and since the entire purpose behind the development of legislation
culminating in the present Article 280 of the Labor Code clearly appears to have been, as
already observed, to prevent circumvention of the employee's right to be secure in his
tenure, the clause in said article indiscriminately and completely ruling out all written
and oral agreements conflicting with the concept of regular employment as defined
therein should be construed to refer to the substantive evil that the Code itself has
singled out: agreements entered into precisely to prevent security of tenure. It should
have no application to instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress or improper
pressure brought to bear upon the employee and absent any other circumstances
vitiating his consent, or where it satisfactorily appears that the employer or employee
dealt with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than those expressly stated by its framers; it
thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences. (Emphasis supplied.)
The ruling was reiterated in Pakistan International Airlines Corporation v. Ople, etc., et
al.8 and La Sallete of Santiago, Inc. v. NLRC, et al.9
In the present case, however, We have to make a distinction.
Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of
employment are concerned, their services were lawfully terminated by reason of the expiration
of the periods of their respective contracts. These are Dangwa Bentrez, Apollo Ribaya, Sr.,
Ruperta Ribaya, Virginia Boado, Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose Ann
Bermudez. Thus, public respondent committed grave abuse of discretion in affirming the
decision of the Labor Arbiter ordering the reinstatement and payment of full backwages and
other benefits and privileges.
With respect to private respondents Roland Picart and Lucia Chan, both of whom did not sign
any contract fixing the periods of their employment nor to have knowingly and voluntarily
agreed upon fixed periods of employment, petitioners had the burden of proving that the
termination of their services was legal. As probationary employees, they are likewise protected
by the security of tenure provision of the Constitution. Consequently, they cannot be removed
from their positions unless for cause. 10 On the other hand, petitioner contended that base don
the evaluation of the Academic Committee their performance as teachers was poor. The Labor
Arbiter, however, was not convinced. Thus he found as follows:
Respondents likewise aver that the Academic Committee has evaluated their
performance during their one semester employment (see Annexes "M" to "X" of
complainants' position paper). However, they did not present any written proofs or
evidence to support their allegation. 11
xxx xxx xxx
There is absolutely nothing in the record which will show that the complainants were
afforded even an iota of chance to refute respondents' allegations that the complainants
did not meet the reasonable standards and criteria set by the school. . . .12
We concur with these factual findings, there being no showing that they were resolved
arbitrarily. 13 Thus, the order for their reinstatement and payment of full backwages and other
benefits and privileges from the time they were dismissed up to their actual reinstatement is
proper, conformably with Article 279 of the Labor Code, as amended by Section 34 of Republic
Act No. 6715, 14 which took effect on March 21, 1989. 15 It should be noted that private
respondents Roland Picart and Lucia Chan were dismissed illegally on March 31, 1989, or after
the effectivity of said amendatory law. However, in ascertaining the total amount of backwages
payable to them, we go back to the rule prior to the mercury drug rule 16 that the total amount
derived from employment elsewhere by the employee from the date of dismissal up to the date
of reinstatement, if any, should be deducted therefrom. 17 We restate the underlying reason that
employees should not be permitted to enrich themselves at the expense of their employer. 18In
addition, the law abhors double compensation.19 to this extent, our ruling in Alex Ferrer, et al.,
v. NLRC, et al.,G.R. No. 100898, promulgated on July 5, 1993, is hereby modified.
Public respondent cannot claim not knowing the ruling in the Brent case because in its
questioned resolution, it is stated that one of the cases invoked by petitioners in their appeal is
said case.20 This notwithstanding, it disregarded Our ruling therein without any reason at all
and expressed the erroneous view that:
The agreement of the parties fixing a definite date for the termination of the employment
relations is contrary to the specific provision of Article 280. being contrary to law, the
agreement cannot be legitimized. . . . 21
Stare decisis et no quieta movere. Once a case ha been decided one way, then another case,
involving exactly the same point at issue, should be decided in the same manner. Public
respondent had no choice on the matter. It could not have ruled in any other way. This Tribunal
having spoken in the Brent case, its duty was to obey. 22 Let it be warned that to defy its
decisions is to court contempt. 23
WHEREFORE, the resolution of public respondent National Labor Relations Commission dated
November 29, 1990 is hereby MODIFIED. private respondents Roland Picart and Lucia Chan
are ordered reinstated without loss of seniority rights and other privileges and their backwages
paid in full inclusive of allowances, and to their other benefits or their monetary equivalent
pursuant to Article 279 of the Labor Code, as amended by Section 34 of Republic Act No. 6715,
subject to deduction of income earned elsewhere during the period of dismissal, if any, to be
computed from the time they were dismissed up to the time of their actual reinstatement. the
rest of the Labor Arbiter's decision dated February 28, 1990, as affirmed by the NLRC is set
aside. The temporary restraining order issued on March 11, 1991 is made permanent. SO
ORDERED.

G.R. No. 164532 July 24, 2007

PHILIPPINE DAILY INQUIRER, INC., Petitioner, vs. LEON M. MAGTIBAY, JR. and
PHILIPPINE DAILY INQUIRER EMPLOYEES UNION (PDIEU), Respondents.
FACTS: On 07 February 1995, the Philippine Daily Inquirer (PDI) hired private respondent Leon
M. Magtibay, Jr. (“Magtibay”), on contractual basis, to assist, for a period of five (5) months, the
regular phone operator. After the expiration of Magtibay’s contractual employment, PDI
announced the creation and availability of a new position for a 2nd telephone operator who
would undergo probationary employment. After the usual interview for the 2nd telephone
operator slot, PDI chose to hire Magtibay on a probationary basis for a period of six (6) months.
The signing of a written contract of employment followed. A week before the end of the agreed
6-month probationary period, a PDI officer handed Magtibay his termination paper, grounded on
his alleged failure to meet company standards. Aggrieved, Magtibay immediately filed a
complaint for illegal dismissal and damages before the Labor Arbiter. After due proceedings, the
Labor Arbiter found for PDI and accordingly dismissed Magtibay’s complaint for illegal dismissal.
The NLRC then reversed and set aside said decision, effectively ruling that Magtibay was
illegally dismissed. Eventually, the CA denied due course to PDI’s petition and agreed with the
findings of the NLRC. Hence, this petition.

Issue: Whether or not Magtibay, as a probationary employee, was illegally dismissed.

Ruling: No. In Pampanga Bus, Co. v. Pambusco Employees Union, Inc., The Court held that
the right of a laborer to sell his labor to such persons as he may choose is, in its essence, the
same as the right of an employer to purchase labor from any person whom it chooses. In cases
of Probationary employment, as in the present case, Art. 281 of the Labor Code prescribes that
such shall not exceed six (6) months from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for: (1) just cause
or (2) when he fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his engagement. In this case,
Magtibay was terminated under the second ground of termination for probationary employees.
Unlike under the first ground for the valid termination of probationary employment which is for
just cause, the second ground does not require notice and hearing. Due process of law for this
second ground consists of making the reasonable standards expected of the employee during
his probationary period known to him at the time of his probationary employment. By the very
nature of a probationary employment, the employee knows from the very start that he will be
under close observation and his performance of his assigned duties and functions would be
under continuous scrutiny by his superiors. It is in apprising him of the standards against which
his performance shall be continuously assessed where due process regarding the second
ground lies, and not in notice and hearing as in the case of the first ground.

WOODRIDGE SCHOOL VS. BENITO AND BALAGUER | NACHURA G.R. NO. 160240, OCTOBER 29, 2008
FACTS: Woodridge School, a private educational institution, hired Benito and Balaguer as probationary
school teachers effective June 1998 and June 1999.
• Sometime February 2001, the respondents, along with 20 other teachers presented Woodridge a
Manifesto Establishing Relevant Issues Concerning the School. Some issues raised were with regard to
an NSAT/NEAT anomaly, Teacher’s right to due process, Issuance of Individual Contracts and Non-Clear-
Cut School Policies.
• A confrontation between the school administrators and concerned teachers was held but no
settlement was arrived at.
• For failure to resolve the issues, especially the one with regard to the NSAT/NEAT anomaly, the
respondents filed a formal complaint against Woodridge with the DECS, requesting for a formal
investigation, institute appropriate charges, and impose proper sanctions against Woodridge.
• During the pendency of the DECS case, and for lack of a positive action from Woodridge, respondents
appeared on television and spoke over the radio on the alleged NEAT/NSAT anomaly.
• February 28, 2001, Woodridge sent 2 separate memos to respondents placing them under preventive
suspension for a period of thirty days on the following grounds: 1) uttering defamatory remarks against
the school principal in the presence of their co-teachers; 2) announcing to the students and teachers
their alleged immediate termination from service; 3) tardiness; 4) spreading false accusations against
petitioner; 5) absence without official leave; and 6) appearing on television and speaking over the radio
to malign petitioner. In the same memoranda, respondents were required to explain in writing within
seventy-two (72) hours why they should not be terminated from their employment. This prompted
respondents to commence an action for illegal suspension before the NLRC.
• The respondents then filed for illegal suspension before the NLRC
• Barely a month after, Woodridge issued the respondents their Notice of Termination citing the same
grounds. In addition, they informed the respondents that they did not qualify as regular employees for
their failure to meet the performance standards made known to them at the start of their probationary
period.
• The respondents then amended their initial complaint to include illegal dismissal.
• LA dismissed their complaint. The NLRC affirmed the LA’s disposition in its entirety. The CA granted the
petition and set aside the NLRC ruling. It ruled that the 30 day suspension as illegal and ordered the
school to pay both Benito and Balaguer their salaries and benefits accruing during said period of illegal
suspension. Woodridge was also ordered to pay Balaguer backwages and each of them P50,000 as moral
damages and P50,000 as exemplary damages and attorney’s fees.
ISSUES: W/N THE DISMISSAL OF THE RESPONDENTS WAS VALID SINCE AS PROBATIONARY EMPLOYEES,
THE EMPLOYER MAY TERMINATE THE EMPLOYMENT
W/N THEY MAY BE DISMISSED ON THE GROUND OF SERIOUS MISCONDUCT.
W/N THE PREVENTIVE SUSPENSION WAS VALID W/N THE AWARD OF MORAL AND EXEMPLARY
DAMAGES HAVE SUFFICIENT BASIS TO SUPPORT THE AWARD

HOLDING & RATIO: No, the dismissal of the respondents was not valid. It is necessary that the employer
terminates the employment on justifiable ground.
• On the effective date of their dismissal, respondents were not regular or permanent employees; they
had not yet completed three (3) years of satisfactory service as academic personnel which would have
entitled them to tenure as permanent employees in accordance with the Manual of Regulations for
Private Schools. On that date, Benito’s contract of employment still had two months to run, while
Balaguer’s probationary employment was to expire after one year and two months.
• A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer. The
word “probationary,” as used to describe the period of employment, implies the purpose of the term or
period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer at the same time, seeks to prove to
the employer that he has the qualifications to meet the reasonable standards for permanent
employment.
• Probationary employees enjoy security of tenure in the sense that during their probationary
employment, they cannot be dismissed except for cause or when he fails to qualify as a regular
employee. However, upon expiration of their contract of employment, probationary employees cannot
claim security of tenure and compel their employers to renew their employment contracts. There is
nothing that would hinder the employer from extending a regular or permanent appointment to an
employee once the employer finds that the employee is qualified for regular employment even before
the expiration of the probationary period
• The notices of termination sent by Woodridge to respondents stated that the latter failed to qualify as
regular employees. However, nowhere in the notices did petitioner explain the details of said “failure to
qualify” and the standards not met by respondents. No, they may not be dismissed on the ground of
serious misconduct.
• The Labor Code commands that before an employer may legally dismiss an employee from the service,
the requirement of substantial and procedural due process must be complied with. Under the
requirement of substantial due process, the grounds for termination of employment must be based on
just or authorized causes.
• Petitioner anchored its imputation of serious misconduct principally on the respondents’ expose of the
NSAT/NEAT anomaly.
• Misconduct is defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error of judgment. The misconduct to be serious within the meaning of the Act,
must be of such a grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must nevertheless be in connection with the work of the employee to
constitute just cause for his separation. It is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent.
• As correctly observed by the CA, the tenor of the manifesto indicated good faith, as the teachers, in
fact, expressly stated that their ultimate objective was not to put the school down, but to work for some
changes which would be beneficial to the students, teachers, the school and the country as a whole. The
chronology of events, therefore, supports the view that respondents’ suspension and eventual dismissal
from service were tainted with bad faith, as obvious retaliatory acts on the part of Woodridge.
• The totality of the acts of respondents cannot be characterized as “misconduct” under the law, serious
enough to warrant the severe penalty of dismissal. This is especially true because there is no finding of
malice or wrongful intent attributable to respondents. In light of this disquisition, it is settled that
petitioner failed to comply with the requirement of substantial due process in terminating the
employment of respondents.
• With regard to the procedural aspect of the case, respondents were afforded their rights to answer to
petitioner’s allegation and were given the opportunity to present evidence in support of their defense.
However, the SC still finds that the dismissal is illegal, because of petitioner’s failure to satisfy the
substantive aspect. No, their preventive suspension was illegal.
• While the employer may place the worker concerned under preventive suspension, it can do so only if
the latter’s continued employment poses a serious and imminent threat to the life or property of the
employer or of his co-workers. The grounds relied upon by Woodridge do not show that their
employment poses a threat to the employer or other co-workers.
• As probationary employees, respondents’ security of tenure is limited to the period of their probation
– for Pe Benito, until June 2001 and for Balaguer, June 2002. As they were no longer extended new
appointments, they are not entitled to reinstatement and full backwages. Rather, Pe Benito is only
entitled to her salary for her 30-day preventive suspension. As to Balaguer, in addition to his 30-day
salary during his illegal preventive suspension, he is entitled to his backwages for the unexpired term of
his contract of probationary employment. YES, there is enough basis to support the award of damages.
• A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith or
fraud; or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good
customs or public policy. Exemplary damages, on the other hand, may be awarded if the dismissal is
effected in a wanton, oppressive or malevolent manner. The award of said damages cannot be justified
solely upon the premise that the employer fired his employee without just cause or due process. It is
necessary that additional facts be pleaded and proven that the act of dismissal was attended by bad
faith, fraud, et al., and that social humiliation, wounded feelings and grave anxiety resulted therefrom.
• The SC finds that the award of the damages proper.
 Yolanda Mercado vs AMA, April 13, 2010
FACTS; Petitioners were faculty members of AMA Computer College, Paranaque city since
1998. During the school year 2000-2001, AMACC implemented new faculty screening
guidelines. Under the new screening guidelines, teachers were to be hired or maintained based
on extensive teaching experience, capability, potential, high academic qualifications and
research background. The petitioners failed to obtain a passing rating based on the
performance standards; hence AMACC did not give them any salary increase. Petitioners filed a
complaint with the Arbitration Branch of the NLRC on July 25, 2000, for underpayment of
wages, non-payment of overtime and overload compensation, 13th month pay, and for
discriminatory practices. On September 7, 2000, petitioners were then given a notice of Non-
renewal of Contract.

ISSUE: Does the Non-renewal of Contract for teachers constitute illegal dismissal after having
rendered service for three consecutive school years but run short as to the actual number of
tenure which is only equal to 2 yrs. and 3 months?

RULING: Yes the employers act constitute illegal dismissal. The school, cannot forget that its
system of fixed-term contract is a system that operates during the probationary period and for
this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is
made, the requirements of this Article on probationary status would be fully negated as the
school may freely choose not to renew contracts simply because their terms have expired. The
inevitable effect of course is to wreck the scheme that the Constitution and the Labor Code
established to balance relationships between labor and management.
It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the
contract is binding for the full three-year probationary period.
The probationary standards must not only be reasonable but must have also been
communicated to the teachers at the start of the probationary period, or at the very least, at the
start of the period when they were to be applied. These terms, in addition to those expressly
provided by the Labor Code, would serve as the just cause for the termination of the
probationary contract.
In the above case, the exact terms of the standards were never introduced as evidence; neither
does the evidence show how these standards were applied to the petitioners.48 Without these
pieces of evidence the termination of employment of employees on probationary status is illegal.

ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION and/or JESS MANUEL, petitioners,

vs. IRENE R. RANCHEZ, respondents
FACTS: Respondent Ranchez was a probationary employee for 5 months. She was hired as a cashier by
Robinsons sometime within that period. Two weeks after she was hired, she reported the loss of cash
which she had placed in the company locker. She offered to pay for the lost amount but the Operations
Manager of Robinsons had her strip-searched then reported her to the police even though they found
nothing on her person. An information for Qualified Theft was filed with the Quezon City Regional Trial
Court. She was detained for 2 weeks for failure to immediately post bail. Weeks later, respondent
Ranchez filed a complaint for illegal dismissal and damages. A year later, Robinsons sent to respondent
by mail a notice of termination and/or notice of expiration of probationary employment.
The Labor Arbiter dismissed the complaint for illegal dismissal, alleging that at the time of filing
respondent Ranchez had not yet been terminated. She was merely investigated. However, the NLRC
reversed this ruling, stating that Ranchez was illegally dismissed and that Robinson's should reinstate
her. It held that Ranchez was deprived of due process when she was strip-searched and sent to jail for
two weeks because such amounted to constructive dismissal, making it impossible for the respondent to
continue under the employment. Even though she was merely a probationary employee, the lapse of
the probationary contract did not amount to a valid dismissal because there was already an
unwarranted constructive dismissal beforehand.
The NLRC denied Robinson's motion for reconsideration. The CA affirmed the decision of the NLRC.

ISSUE: Whether respondent was illegally terminated from employment by petitioners.

HELD: The petition is unmeritorious.

LABOR LAW: Probationary employees; termination of employment
 There is probationary employment when the employee upon his engagement is made to
undergo a trial period during which the employer determines his fitness to qualify for regular
employment based on reasonable standards made known to him at the time of engagement.
A probationary employee, like a regular employee, enjoys security of tenure.However, in cases
of probationary employment, aside from just or authorized causes of termination, an additional ground
is provided under Article 281 of the Labor Code,i.e., the probationary employee may also be terminated
for failure to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of the engagement.Thus, the services of an employee who has
been engaged on probationary basis may be terminated for any of the following:
(1) a just or
(2) an authorized cause; and
(3) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Article 277(b) of the Labor Code mandates that the employer shall furnish the worker, whose
employment is sought to be terminated, a written notice containing a statement of the causes of
termination, and shall afford the latter ample opportunity to be heard and to defend himself with the
assistance of a representative if he so desires, in accordance with company rules and regulations
pursuant to the guidelines set by the Department of Labor and Employment.
In the instant case, based on the facts on record, petitioners failed to accord respondent
substantive and procedural due process.The haphazard manner in the investigation of the missing cash,
which was left to the determination of the police authorities and the Prosecutor's Office, left
respondent with no choice but to cry foul.Administrative investigation was not conducted by petitioner
Supermarket.On the same day that the missing money was reported by respondent to her immediate
superior, the company already pre-judged her guilt without proper investigation, and instantly reported
her to the police as the suspected thief, which resulted in her languishing in jail for two weeks.
The due process requirements under the Labor Code are mandatory and may not be replaced
with police investigation or court proceedings. An illegally or constructively dismissed employee,
respondent is entitled to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no
longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are
awarded conjunctively.
In this case, since respondent was a probationary employee at the time she was constructively
dismissed by petitioners, she is entitled to separation pay and backwages. Reinstatement of respondent
is no longer viable considering the circumstances.

CANADIAN OPPORTUNITIES UNLIMITED, INC. VS DALANGIN

FACTS: Dalangin was hired only in the previous month, as Immigration and Legal Manager, with a
monthly salary of P15,000.00 by Canadian Opportunities Unlimited, Inc. which provides assistance and
related services to applicants for permanent residence in Canada. He was placed on probation for six
months. He was to report directly to the Chief Operations Officer, Annie Abad. His tasks involved
principally the review of the clients‘ applications for immigration to Canada to ensure that they are in
accordance with Canadian and Philippine laws.
Through a memorandum, signed by Abad, the company terminated Dalangin‘s employment,
declaring him unfit and unqualified to continue as Immigration and Legal Manager, for the following
reasons: a) Obstinacy and utter disregard of company policies. Propensity to take prolonged and extended
lunch breaks, shows no interest in familiarizing oneself with the policies and objectives. b) Lack of
concern for the company‘s interest. c) Showed lack of enthusiasm toward work. d) Showed lack of
interest in fostering relationship with his co-employees. Dalangin filed a complaint for illegal dismissal.

ISSUE: Whether Dalangin, a probationary employee, was validly dismissed.

RULING: Yes.
In International Catholic Migration Commission v. NLRC, the Court explained that a
probationary employee, as understood under Article 281 of the Labor Code, is one who is on trial
by an employer, during which, the latter determines whether or not he is qualified for permanent
employment. A probationary appointment gives the employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he would be a proper and efficient employee.
Dalangin was barely a month on the job when the company terminated his employment. The
essence of a probationary period of employment fundamentally lies in the purpose or objective of both the
employer and the employee during the period. While the employer observes the fitness, propriety and
efficiency of a probationer to ascertain whether he is qualified for permanent employment, the latter seeks
to prove to the former that he has the qualifications to meet the reasonable standards for permanent
employment.
The trial period or the length of time the probationary employee remains on probation
depends on the parties‘ agreement, but it shall not exceed six (6) months under Article 281 of the
Labor Code, unless it is covered by an apprenticeship agreement stipulating a longer period. As the
Court explained in International Catholic Migration Commission, the word probationary, as used to
describe the period of employment, implies the purpose of the term or period, but not its length.
Thus, the fact that Dalangin was separated from the service after only about four weeks does not
necessarily mean that his separation from the service is without basis. Contrary to the CA‘s conclusions,
we find substantial evidence indicating that the company was justified in terminating Dalangin‘s
employment, however brief it had been. Time and again, we have emphasized that substantial evidence
is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

ALEJANDRO MARAGUINOT, JR. AND PAUILINO ENERO v. NLRC, VIC DEL ROSARIO, VIVA FILMS
GR No. 120969
FACTS: Petitioners Alejandro Maraguinot, Jr. and Paulino Enero employed as part of the filming crew
of VIVA films. Their tasks consisted of loading, unloading and arranging movie equipment in the
shooting area as instructed by the cameraman, returning the equipment to Viva Films’ warehouse,
assisting in the “fixing” of the lighting system, and performing other tasks that the cameraman and/or
director may assign.
They were dismissed when they asked that their salary be increased in accordance with the minimum
wage1. Their supervisor informed them that their salaries would only be increased if they agree to sign
a blank employment contract which they refused. As such they filed a case for illegal dismissal.
VIVA: it is primarily engaged in the distribution and exhibition of movies but not in the business of
making movies. As such, they contract persons called “producers” to “produce” or make movies and
petitioners are actually project employees of the producers who, in turn, act as independent
contractor.2 As such, there is no EER bet. them.
LA: in favor of petitioners; NLRC reversed agreeing with VIVA’s contentions.

ISSUES & RATIO:

1. WON there was an employer-employee relationship b/n petitioners and VIVA. – YES. The
producers are mere agents of VIVA, as such petitioners are still employees of VIVA.
 The producers were not job contractors: To be considered a job contractor, producers must
have tools, equipment, machinery, work premises, and other materials necessary to make motion
pictures. In this case, the producers have none of these materials and the evidence show that all
the equipments were provided by VIVA itself.
 The producers cannot also be considered as labor-only contractors: They did not supply,
recruit nor hire the workers. In the instant case, it was an employee of VIVA, who recruited crew
members from an “available group of freelance workers which includes the Maraguinot and
Enero.”
 The 4 elements for the existence of EER are present in this case, i.e. (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee’s conduct.
 The most important element is the employer’s control of the employee’s conduct, not only as
to the result of the work to be done but also as to the means and methods to accomplish the
same.
 The control test is evident in its mandate that the end result must be a “quality film acceptable to
thecompany.” The movie project must be finished within schedule w/o exceeding the budget, and
additional expenses must be justified; certain scenes are subject to change to suit the taste of the
company, etc. Also, the appointment slips as well as the payment slips all had VIVA’s corporate
name on the heading as well as its letterhead.
2.WON petitioners were regular employees and not simply project employees. – YES.
 Petitioners are considered regulars due to their repeated renewal of contract. A project
employee or a member of a work pool may acquire the status of a regular employee when the
following concur:
1. There is a continuous rehiring of project employees even after cessation of a project; and
2. The tasks performed by the alleged “project employee” are vital, necessary and indispensable
to the usual business or trade of the employer.
 Evidence on record shows that:
o Enero was employed for a total of two (2) years and engaged in at least 18 projects, while
Maraguinot was employed for some 3 years and worked on at least 23 projects.
o As petitioners’ tasks involved, among other chores, the loading, unloading and arranging of
movie equipment in the shooting area as instructed by the cameramen, returning the
equipment to the Viva Films’ warehouse, and assisting in the “fixing” of the lighting system, it
may not be gainsaid that these tasks were vital, necessary and indispensable to the usual
business or trade of the employer
 A work pool may exist although the workers in the pool do not receive salaries and are free to
seek other employment during temporary breaks in the business, provided that the worker shall
be available when called to report for a project.
 Although primarily applicable to regular seasonal workers, this setup can likewise be applied to
project workers insofar as the effect of temporary cessation of work is concerned. This is
beneficial to both the employer and employee for it prevents the unjust situation of “coddling
labor at the expense of capital” and at the same time enables the workers to attain the status of
regular employees.
 Clearly, the continuous rehiring of the same set of employees within the framework of the
Company is strongly indicative that respondents were an integral part of a work pool from which
petitioners drew its workers for its various projects.

3. WON petitioners were illegally dismissed. – YES.

Petitioners being regular employees were illegally dismissed as the ground invoked by VIVA –
completion of project, is not a valid ground for dismissal under Article 282 of the Labor Code.
They are entitled to back wages, but pursuant to the principles of “suspension of work” and “no pay”
between the end of one project and the start of a new one, in computing petitioners’ back wages, the
amounts corresponding to what could have been earned during the periods from the date petitioners
were dismissed until their reinstatement when petitioners’ respective Shooting Units were not
undertaking any movie projects, should be deducted.

G.R. No. 170181 June 26, 2008

HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., petitioners, vs.
FELICITO IBAÑEZ,respondents.

FACTS:
- Hanjin Heavy Industries and & Construction Company terminated the services of Ibanez and four
other employees (2002)
- Ibanez et al states that they have been employees of Hanjin and have worked on the projects of
Hanjin including the North Harbor project (1992-1994), Manila International Port (1994-1996) and
Batangas Port (1996- 1998) and projects currently being completed including the La Mesa Dam
project
- Hanjin claims that such employees cannot claim illegal dismissal for the ff reasons:
o They are project employees whose employment is co-terminus with the project (LRT
project).
 They stated that this was expressly written in their contract but Hanjin produced
such copies for the labor arbiter
o They have signed quitclaims which bars them from filing action or claiming other receivables
due to them because they have already received it as per their quitclaim
- Labor arbiter ruled in favour of Ibanez et al, ruling that there is an illegal dismissal and that Hanjin is
liable to pay backwages and damages, stating that they are regular employees and not project
employees
- NLRC reversed Labor Arbiter’s decision. CA reversed NLRC decision stating that Hanjin is liable.
 - On NLRC, Hanjin changed its argument stting that they did not need any further contract to state
that their employees were project employees given that the nature of the work is construction.
- Hanjin also states that while there was no project-based contract, they complied with all the
requirements of law and DOLE for project-based employees.

ISSUE: WoN Ibanez et al are regular employees or project employees

RULING: ON EMPLOYMENT: The principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees" is whether or
not the project employees were assigned to carry out a "specific project or undertaking," the duration
and scope of which were specified at the time the employees were engaged for that project.
In a number of cases, the Court has held that the length of service or the re-hiring of construction
workers on a project-to-project basis does not confer upon them regular employment status, since
their re-hiring is only a natural consequence of the fact that experienced construction workers are
preferred.
o Petitioners did not present other Termination Reports apart from that filed on 11 April 2002.
The failure of an employer to file a Termination Report with the DOLE every time a project or a
phase thereof is completed indicates that respondents were not project employees
o If respondents were actually project employees, petitioners should have filed as many
Termination Reports as there were construction projects actually finished and for which
respondents were employed.
- Basically, Hanjin failed to prove their contentions because:
o They were not able to submit the actual contract
o They were not able to establish that they were sending termination reports to DOLE everytime a
Project is completed
o They were not able to submit other documents or evidences which states their compliance with
project-based employment (project completion bonus etc). The payroll records they show
simply state that they paid the project employees a “bonus” but bears no connection to the
completion of the project.
o The sum of this points to the fact that Ibanez et al were not project employees.

COCOMANGAS HOTEL BEACH RESORT V VISCA (AUSTRIA-MARTINEZ, 2008)

FACTS: Visca et al (respondents) alleged that they were regular employees of Cocomangas
Hotel (petitioner) and tasked with the maintenance and repair of resort facilities. They were
informed by the Front Desk Officer that repair has been suspended because it caused irritation
to the resort’s guests. As instructed, Visca et al did not report for work. Later, they found out that
the suspension was due to budgetary constraints and that 4 new workers were hired to do their
job.
Complaints for illegal dismissal were filed. The LA found that Visca was an independent
contractor and the other respondents were hired by him. Also, there was no illegal dismissal but
only completion of projects because they were project employees.
NLRC set aside the decision and held that they were regular employees; hence, illegally
dismissed. It took into account 1) quarterly SSS reports, 2) that all were certified and
commended by owner-manager for satisfactory performance, 3) thwy were paid holiday and
overtime pay, and 4) they were employed continuously for 12 years and paid daily wages.
On MR, NLRC reversed itself and held that Visca et al were project employees.
CA reinstated the original NLRC decision and found that Visca et al were regular
employees because the Hotel failed to set specific periods when the employment relationship
would be terminated; and the repeated hiring rendered them necessary and desirable to the
business.

Issue: Whether respondents are regular or project employees? The respondents are regular
employees.

Ruling: Cocomangas changed its theory on appeal

Before the LA, Cocomangas classified Visca as an independent contractor and other as
the latter’s employees; while in the MR, it treated all respondents as project employees. Further,
Cocomangas advanced the absence of an ER-EE relationship before the LA; but invoked the
termination of the period of ER-EE relationship in their MR.
 NLRC should not have considered the new thoery. When a party adopts a particular
theory and the case is tried and decided upon that theory in the court below, he will not be
permitted to change his theory on appeal.
Respondents are not project employees
A project employee is one whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonalin nature
and the employment is for the duration of the season. Before a project employee can be
dismissed, a report must be made to the nearest employment office of the termination of the
services of the workers every time he completes a project.
In this case, Visca et al worked continuously from 3-12 years without any mention of a
“project” to which they were specifically assigned. There is also no evidence of the project
employment contracts covering the alleged periods of employment nor the termination of such
project employment. Lastly, Cocomangas failed to file termination reports, which is an indication
that Visca et al were not project employees but regular employees.
The respondents were continuously rehired by Cocomangas
An employment ceases to be coterminous with specific projects when the employee is
continuously rehired due to the demands of employer’s business and re-engaged for many
more projects without interruption.
The repeated and continuing need for respondents’ services is sufficient evidence of the
necessity, if not indispensability, of their services to Cocomangas’ resort business.
CA decision affirmed with modification that the award for backwages should be
computed from the time compensation was withheld up to the time of actual reinstatement.

GADIA V. SYKES ASIA, INC., G.R. NO. 209499, JANUARY 28, 2015
FACTS: Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which provides
support to its international clients from various sectors (e.g., technology, telecommunications, retail
services) by carrying on some of their operations, governed by service contracts that it enters with
them. On September 2, 2003,12 Alltel Communications, Inc. (Alltel), a United States-based
telecommunications firm, contracted Sykes Asia’s services to accommodate the needs and demands of
Alltel clients for its postpaid and prepaid services (Alltel Project). Thus, on different dates, Sykes Asia
hired petitioners as customer service representatives, team leaders, and trainers for the Alltel Project.
Sometime in 2009, Alltel informed Sykes that it is terminating its contract with Sykes. As a result, Sykes
sent each of the petitioners end-of-life notices informing them of their dismissal from service due to the
termination of the contract with Alltel. Aggrieved, they filed a case for illegal dismissal with the NLRC.
As a defense, Sykes alleged that the petitioners were merely project employees, which was clearly
shown by their respective employment contracts.

ISSUE: Whether or not the petitioners are project employees.

RULING: YES. Article 294 (now, Article 195[280]) of the Labor Code provides that an employee is
deemed regular when he has been engaged to perform activities which are deemed usually necessary
and desirable in the usual business or trade of the employer, except (i) where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or (ii) where the work or services to be performed is
seasonal in nature and the employment if for the duration of the season.
Accordingly, the the principal test for determining whether particular employees are properly
characterised as project employees as distinguished from "regular employees," is whether or not the
employees were assigned to carry out a "specific project or undertaking," the duration (and scope) of
which were specified at the time they were engaged for that project. The project could either be (i) a
particular job or undertaking that is within the regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such, from the other undertakings of the company; or
(ii) a particular job or undertaking that is not within the regular business of the corporation. In order to
safeguard the rights of workers against the arbitrary use of the word "project" to prevent employees
from attaining a regular status, employers claiming that their workers are project-based employees
should not only prove that the duration and scope of the employment was specified at the time they
were engaged, but also, that there was indeed a project.
 Thus, for an employee to be considered project-based, the employer must show compliance with two
(2) requisites, namely that: (a) the employee was assigned to carry out a specific project or undertaking;
and (b) the duration and scope of which were specified at the time they were engaged for such project.
In this case, the Court held that Sykes was able to prove both requisites.
As regards the first requisite, it held that Sykes adequately informed the petitioners of their
employment status at the time of their engagement. As was shown by their respective employment
contracts, they were hired for the Alltel Project and their positions were “project-based and as such is
co-terminus to the project.”
As regards the second requisite, it held that “the duration of the undertaking begins and ends at
determined or determinable times” which means capable of being determined or fixed. As such,
indicating in the contract that their employment is “co-termius with the project” is sufficient compliance
with this requisite.

Dacles v. Millenium Erectors Corporation, G.R. No. 209822, July 8, 2015

FACTS: Millenium Erectors Corporation is a domestic corporation engaged in the construction business.
Petitioner Dacles was hired by Millenium as a mason in 1998. On June 7, 2010, while he was working on
a project in Malakas Street, Quezon City (QC), he was advised by respondent's officer, Mr. Bongon, to
move to another project in Robinson's Cubao, QC. However, upon arrival at the site, he was instructed
to return to his former job site and, thereafter, was given a run-around for the two (2) succeeding days.
When he requested to be given a post or assigned to a new project, he was told by the paymaster not to
report for work anymore, prompting him to file a complaint for illegal dismissal.
As a defense, Millenial claimed that Dacles’ employment as project employee was terminated on June 4,
2010 upon the completion of this masonry work assignment in their RCB-Malakas Project. He has been
previously hired as a project employee for its NECC Project, which expired on March 3, 2010.

ISSUE: Whether or not Dacles is a project employee.

RULING: YES. For an employee to be considered project-based, the employer must show that: (a) the
employee was assigned to carry out a specific project or undertaking; and ( b) the duration and scope of
which were specified at the time the employee was engaged for such project. Being assigned to a project
or a phase thereof which begins and ends at determined or determinable times, the services of project
employees may be lawfully terminated at the completion of such project or phase. Consequently, in
order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent them
from attaining regular status, employers claiming that their workers are project employees should prove
that: (a) the duration and scope of the employment was specified at the time they were engaged; and
(b) there was indeed a project.
In this case, Milenium was able to prove that Dacles was a project employee:
1. Dacles was adequately informed of his employment status, as shown by his employment contract,
stating that (a) he was hired as a project employee; and (b) his employment was for the indicated
starting dates therein "and will end on completion/phase of work of project.
2. Millenium submitted “Establishment Employment Reports” to DOLE regarding the permanent
termination of Dacles from its projects in accordance with DO 19 (Guidelines Governing the Employment
of Workers in the Construction Industry.”
3. There was no proof that he has been repeatedly rehired for 22 years.
 At any rate, the repeated and successive rehiring of project employees does not, by and of itself, qualify
them as regular employees. Case law states that length of service (through rehiring) is not the
controlling determinant of the employment tenure, but whether the employment has been fixed for a
specific project or undertaking, with its completion having been determined at the time of the
engagement of the employee.
 While generally, length of service provides a fair yardstick for determining when an employee initially
hired on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization, this standard will not be fair, if applied to the construction industry because construction
firms cannot guarantee work and funding for its payrolls beyond the life of each project as they have no
control over the decisions and resources of project proponents or owners.
 ABASOLO V. NLRC
FACTS: 1. The private respondent La Union Tobacco (Lutorco), owned by See Lun Chan is
engaged in buying/processing of tobacco and its by-products. The petitioners worked in
respondent company but work was interrupted when Tabacalera took over the Lutorco
operations due to alleged losses. Aggrieved, the petitioners filed a complaint for separation
pay and dismissal. The respondent contended that it is exempt from payment of separation
pay and denied that there was termination of employees' services.
2. The Labor Arbiter dismissed the complaint and held that the petitioners are not entitled to
separation benefits since Lutorco ceased operations due to serious business losses. The NLRC
affirmed said ruling.

ISSUE: W/N the petitioners are seasonal workers

RULING: No, the petitioners are considered regular and seasonal employees. They performed
services necessary and indispensable to Lutorco's business. The nature of one's employment
does not depend solely on the will or word of the employer nor on the procedure of hiring and
manner of designating the employee but on the nature of the activity to be performed
considering the employer's nature of business and the duration and scope of work to be done.
As held in previous decisions, seasonal workers are those who are called to work from time to
time and are temporarily laid off during off-season are not separated from service in said
period but merely considered on-leave until re-employed.

Hacienda Fatima, Inc. vs. National Federation of Sugarcane Workers (January 28, 2003)
Facts: In the course of a labor dispute between the petitioner and respondent union, the union
members were not given work for more than one month. In protest, complainants staged a strike
which was however settled upon the signing of a Memorandum of Agreement. A conciliation
meeting was conducted wherein Luisa Rombo, Ramona Rombo, BobongAbrega, and Boboy
Silva were not considered by the company as employees, and thus may not be members of the
union. It was also agreed that a number of other employees will be reinstated. When herein
petitioner again reneged on its commitment, complainants filed the present complaint. It is
alleged by the petitioners that the above employees are mere seasonal employees.
LA Ruling:
The Labor Arbiter ruled that the employees are merely seasonal employees. Thus, their
termination was not illegal.
NLRC Ruling:
The NLRC ruled that the aforementioned employees were illegally dismissed. They have
already gained the status as regular employees.
CA Ruling:
The CA affirmed that while the work of respondents was seasonal in nature, they were
considered to be merely on leave during the off-season and were therefore still employed by
petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right
was deemed by the CA to be tantamount to illegal dismissal.

Issue: Whether or not the seasonal employees have become regular employees.

SC Ruling: The SC held that for respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are seasonal in nature. They
must have also been employed only for the duration of one season. The evidence proves the
existence of the first, but not of the second, condition. The fact that respondents -- with the
exception of Luisa Rombo, Ramona Rombo, BobongAbriga and Boboy Silva -- repeatedly
worked as sugarcane workers for petitioners for several years is not denied by the latter.
Evidently, petitioners employed respondents for more than one season. Therefore, the general
rule of regular employment is applicable.
The primary standard of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or
business of the employer. The test is whether the former is usually necessary or desirable in the
usual trade or business of the employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the particular business or trade in
its entirety. Also if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists.

CASERES VS. UNIVERSAL ROBINA MILLING CORPORATION (534 SCRA 356 [2007])
FACTS: Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in
the cane sugar milling business. Pedy Caseres (petitioner Caseres) started working for
respondent in 1989, while AnditoPael (petitioner Pael) in 1993. At the start of their respective
employments, they were made to sign a Contract of Employment for Specific Project or
Undertaking. Petitioners' contracts were renewed from time to time, until May 1999 when they
were informed that their contracts will not be renewed anymore.
Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month
pay, damages and attorney’s fees.
LA Ruling:
The labor arbiter dismissed the complaint for not being substantiated with clear and convincing
evidence.
NLRC and CA affirmed the labor arbiter’s dismissal.

ISSUE: Whether or not petitioners were merely project employees.

SC Ruling: SC ruled that the petitioners are only project, not regular, employees. The principal
test for determining whether an employee is a project employee or a regular employee is
whether the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee.
The very nature of the terms and conditions of complainants’ hiring reveals that they were
required to perform phases of special projects for a definite period after, their services are
available to other farm owners. This is so because the planting of sugar does not entail a whole
year operation, and utility works are comparatively small during the off-milling season.
It must be noted that there were intervals in petitioners’ respective employment contracts, and
that their work depended on the availability of such contracts or projects. Consequently, the
employment of URSUMCO’s work force was not permanent but co-terminus with the projects to
which the employees were assigned and from whose payrolls they were paid.
The fact that petitioners were constantly re-hired does not ipso facto establish that they became
regular employees. Their respective contracts with respondent show that there were intervals in
their employment. In petitioner Caseres’s case, while his employment lasted from August 1989
to May 1999, the duration of his employment ranged from one day to several months at a time,
and such successive employments were not continuous. With regard to petitioner Pael, his
employment never lasted for more than a month at a time. These support the conclusion that
they were indeed project employees, and since their work depended on the availability of such
contracts or projects, necessarily the employment of respondent’s work force was not
permanent but co-terminus with the projects to which they were assigned and from whose
payrolls they were paid.
Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify
them as regular employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment has been fixed for a
specific project or undertaking, its completion has been determined at the time of the
engagement of the employee. Further, the proviso in Article 280, stating that an employee who
has rendered service for at least one (1) year shall be considered a regular employee, pertains
to casual employees and not to project employees.

CAPULE VS NATIONAL LABOR RELATIONS COMMISSIONS

G.R. NO. 90653, NOVEMBER 12, 1990
FACTS: Employees were hired to cut cogon grass and weeds at the back of the factory building
used by respondent company. They were not required to work on fixed schedule and they
worked on any day of the week on their own discretion and convenience. When the services of
the petitioners were terminated by the company, they filed a complaint for illegal dismissal.
Labor Arbiter Ruling:
The Labor Arbiter found their dismissal illegal and required the company to reinstate the
employees.
National Labor Relations Commissions Ruling:
The NLRC set aside the decision of the LA and ordered, instead that the employees be paid
one month’s pay each based on humanitarian considerations.
ISSUE: Whether or not casual or temporary employees may be dismissed by the employer
before the expiration of the one-year period employment.

Supreme Court Ruling: The SC ruled in favor of the Company. The usual trade or business of
the company is in the manufacture of cultured milk. The cutting of the cogon grasses in the
premises of its factory is hardly necessary or desirable in the usual business of the private
respondents.
Therefore, the employees are casual and cannot be considered regular employees under the
provision of the Labor Code. Nevertheless, they can be considered regular employees if they
have rendered services for at least one year. In this case, they were dismissed from their
employment before the expiration of the one year-year period, thus, they cannot lawfully claim
that their dismissal was illegal.

Philippine Geothermal vs. National Labor Relations Commission

G.R. Nos. 82643-47, August 30, 1990
FACTS: Philippine Geothermal, Inc., is US corporation engaged in the exploration and
development of geothermal energy sources, is a prime contractor of the National Power
Corporation at the latter’s operation of the Tiwi, Albay and the MakilingBanahaw geothermal
Projects.
Private respondents are employees of herein petitioner occupying various positions ranging
from carpenter to Clerk II who had worked with petitioner company under individual contracts,
categorized as contractual employment, for a period ranging from fifteen days to three months.
These contracts were regularly renewed to the extent that the individual private respondents
had rendered service from three to five years until 1983 and 1984 when petitioner started
terminating their employment by not renewing their individual contracts. Subsequently, petitioner
entered into job contracting agreement with an alleged contractor who supplied it with skilled
manpower.
Sometime in July 1983, the employees organized a separate labor union in view of their
exclusion from the bargaining unit of the regular rank-and-file employees. When they filed a
petition for certification election the petitioner allegedly started harassing them and replaced
them with so-called contract workers. They filed a case for illegal lockout and unfair labor
practice, and/or illegal dismissal with money claim.

RULINGS:
Labor Arbiter:
The LA rendered a decision in favor of the respondents
National Labor Relations Commissions:
The NLRC affirmed the decision of the Labor Arbiter.

Issue: Whether or not the employees may be considered regular and permanent due to their
length of service in the company despite the fact that their employment is on contractual or
casual basis.

Supreme Court: The SC affirmed the decision of the NLRC. The Court classified the two kinds
of regular employees, as: 1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and 2) those who have
rendered at least one (1) year of service, whether continuous or broken with respect to the
activity in which they are employed. While the actual regularization of these employees entails
the mechanical act of issuing regular appointment papers and compliance with such other
operating procedures, as may be adopted by the employer, it is more in keeping with the intent
and spirit of the law to rule that the status of regular employment attaches to the casual
employee on the day immediately after the end of his first year of service.
Assuming therefore, that an employee could properly be regarded as a casual (as distinguished
from a regular employee) he becomes entitled to be regarded as a regular employee of the
employer as soon as he has completed one year of service. Under the circumstances,
employers may not terminate the service of a regular employee except for a just cause or when
authorized under the Labor Code. It is not difficult to see that to uphold the contractual
arrangement between the employer and the employee would in effect be to permit employers to
avoid the necessity of hiring regular or permanent employees indefinitely on a temporary or
casual status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code is
precisely designed to prevent such result.
 Brent School vs. Zamora (G.R. No. L-48494 February 5, 1990)
Facts: The root of the controversy at bar is an employment contract in virtue of which Doroteo
R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of
P20,000.00. The contract fixed a specific term for its existence, five (5) years. There is a
subsequent agreement made which reiterated the same terms and conditions including the
expiry date, as those contained in the original contract. Some three months before the
expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy
of the report filed by Brent School with the Department of Labor advising of the termination of
his services effective on July 16, 1976. The stated ground for the termination was "completion of
contract, expiration of the definite period of employment." And a month or so later, on May 26,
1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the
phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of
contract.
At the investigation conducted by a Labor Conciliator of said report of termination of his
services, Alegre protested the announced termination of his employment. He argued that
although his contract did stipulate that the same would terminate on July 17, 1976, since his
services were necessary and desirable in the usual business of his employer, and his
employment had lasted for five years, he had acquired the status of a regular employee and
could not be removed except for valid cause. The Regional Director considered Brent School's
report as an application for clearance to terminate employment (not a report of termination), and
accepting the recommendation of the Labor Conciliator, refused to give such clearance and
instead required the reinstatement of Alegre, as a "permanent employee," to his former position
without loss of seniority rights and with full back wages. The Director pronounced "the ground
relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . .
(as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of
1969, of the Bureau of Private Schools.
Brent School filed a motion for reconsideration. The Regional Director denied the motion and
forwarded the case to the Secretary of Labor for review. The latter sustained the Regional
Director. Brent appealed to the Office of the President. Again it was rebuffed. That Office
dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that
Alegre was a permanent employee who could not be dismissed except for just cause, and
expiration of the employment contract was not one of the just causes provided in the Labor
Code for termination of services.

Issue: Whether or not the respondent is a fixed-term employee.

SC’s Ruling: Respondent Alegre's contract of employment with Brent School having lawfully
terminated with and by reason of the expiration of the agreed term of period thereof, he is
declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July18, 1971, at a
time when the Labor Code of the Philippines (P.D.442) had not yet been promulgated. At that
time, the validity of term employment was impliedly recognized by the Termination Pay Law,
RA. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce which
governed employment without a fixed period, and also implicitly acknowledged the propriety of
employment with a fixed period. the Civil Code of the Philippines, which was approved on June
18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No
prohibition against term or fixed period employment is contained in any of its articles or is
otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent school and
Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof.
Stipulations for a term were explicitly recognized as valid by this court.
The status of legitimacy continued to be enjoyed by fixed period employment contracts under
the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at
about this time. Article 320, entitled "Probationary and fixed period employment," originally
stated that the "termination of employment of probationary employees and those employed
WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may
prescribe. Article 321 prescribed the just causes for which an employer could terminate
"an employment without a definite period." And Article 319 undertook to define "employment
without a fixed period" in the following manner…where the employee the employee "has been
engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the the time of
engagement of the employee or where the work or service to be performed is season in nature
and the employment is for the duration of the season. Subsequently, the foregoing articles
regarding employment with "a definite period" and "regular" employment were amended by
Presidential Decree No. 850, effective December 16, 1975. Article 320, dealing with
"Probationary and fixed period employment," was altered by eliminating the reference to
persons "employed with a fixed period," and was renumbered (becoming Article 271). Article
280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the
gamut of employment contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right of an employee to freely
stipulate with his employer the duration of his engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to remedy the evil of
employer's using it as a means to prevent their employees from obtaining security of tenure is
like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off
the head.

G.R. No. 105033 February 28, 1994

PHILIPPINE VILLAGE HOTEL, vs. NATIONAL LABOR RELATIONS COMMISSION
FACTS: Private respondents were employees of petitioner Philippine Village Hotel. However, on
May 19, 1986, petitioner had to close and totally discontinue its operations due to serious
financial and business reverses resulting in the termination of the services of its employees.
Thereafter, the Philippine Village Hotel Employees and Workers Union filed against petitioner a
complaint for separation pay, unfair labor practice and illegal lock-out. The Labor Arbiter issued
and Order finding the losses suffered by petitioner to be actual, genuine and of such magnitude
as to validly terminate the services of private respondents but directed petitioner "to give priority
to the complainants (herein private respondents) in [the] hiring of personnel should they resume
their business operations in the future."
The NLRC affirmed the validity of the closure of petitioner but ordered petitioner to pay private
respondent separation pay at the rate of 1/2 month pay every year of service. However, there is
nothing in the records to show that private respondents received their separation pay.
Petitioner decided to have a one (1) month dry-run operation to ascertain the feasibility of
resuming its business operations. In order to carry out its dry-run operation, petitioner hired
casual workers, including private respondents, for a one (1) month period, or from February 1,
1989 to March 1, 1989, as evidenced by the latter's Contract of Employment. After evaluating
the individual performance of all the employees and upon the lapse of the contractual one-
month period or on March 2, 1989, petitioner terminated the services of private respondents.
Private respondents and Tupas Local Chapter No. 1362 filed a complaint against petitioner for
illegal dismissal and unfair labor practice with the NLRC-NCR Arbitration Branch which was
dismissed. On appeal to NLRC, it reversed the decision of the Labor Arbiter and ordered to
reinstate the above-named complainants to their former or substantially equivalent positions
without loss of seniority rights plus full backwages from the time they were actually dismissed on
02 March 1989 up to the time of their actual reinstatement.

ISSUE : Whether or not the private respondendts are deemed to be regular employees

RULING: In the instant case, private respondents were validly terminated by the petitioner
when the latter had to close its business due to financial losses. Following the directives of the
NLRC to give priority in hiring private respondents should it resume its business, petitioner hired
private respondents during their one (1) month dry-run operation. However, this does not mean
that private respondents were deemed to have continued their regular employment status,
which they had enjoyed before their aforementioned termination due to petitioner's financial
losses. As stated by the Labor Arbiter in his decision:
It should be borne in mind that when complainants were first terminated as a result of the
company's cessation from operation in May, 1986 the employer-employee relationship between
the parties herein was totally and completely severed. Such being the case, respondent acted
well within its discretion when in rehiring the complainants (herein private respondents) it made
them casual and for a specific period. The complainants are no better than the new employees
of respondent (petitioner) for the matter of what status or designation to be given them
exclusively rests in the discretion of management. 8
The prior employment which was terminated cannot be joined or tacked to the new employment
for purposes of security of tenure.
While it is true that security of tenure is a constitutionally guaranteed right of the employees, it
does not, however, mean perpetual employment for the employee because our law, while
affording protection to the employee, does not authorize oppression or destruction of an
employer. The questioned of the order of NLRC is hereby SET ASIDE.

G.R. 150658
Petitioners: Noelito Fabela, Marcelo Dela Cruz III, Rogelio Lasat, Henry Maliwanag, Manuel de los Santos,
Rommel Luines Respondents: San Miguel Corporation,
FACTS: The Petitioners prayed for a review of the decision promulgated by the Court of Appeals
on July 30, 2001 in favour of Respondents which reversed the decision of the NLRC on April 28, 20 and the
Labor Arbiter on September 23, 1998 in favour of Petitioners.
The Petitioner was employed by San Miguel Corporation as Relief Salesman for the Greater
Manila Area (GMA) under fixed term employment contract, and were engaged by the Respondents in
successive contracts. Once their contracts have been terminated, SMC no longer forged another
contract with them. This compelled Petitioners to claim illegal dismissal on the part of the
Respondent.
Respondents argue that they engaged the Petitioners to filll in the vacuum during the transition of the company
operations from “Route System” to “Pre-Selling System” in 1993, since employees have to undergo
training and assessment in order to occupy the new positions to be instated after the transition.

ISSUE: Whether ot not the petitioners were illegally dismissed?

HELD: Yes. Fixed term contracts are valid under certain conditions, such that these should be (1) a natural
and essential undertaking (2) should not circumvent security of tenure (3) insisted upon by the employee.
While the Respondent alleges that the Petitioners were hired only to fill in for vacancies caused by
employees undergoing training inanticipation of the transition to the new system to be
implemented in 993, and as such the alleged fixed term contract was executed from 1994-1996, the fact
remains that the Petitioners have been engaged by the Respondents on successive employment
contracts beginning a year before the alleged transition to the system was about to take place.
Although the contract was indeed executed voluntarily and knowingly by both parties, such that
the termination date has been pre-determined, it cannot be valid grounds for claiming that the
Petitioners were simply fixed term employees since they have been on successive fixed term
contracts of the same nature, therefore making it a means to circumvent security of tenure. Respondents cannot
substantiate the claim of the nature of their employment to only fill in for the gaps while employees
were on training for the new system since they have already been on board before such transition was
about to take place.
Respondents should reinstate the Petitioners with full backwages from the time of their dismissal to actual
reinstatement (except Jun Alovera and Joselito De Lara, dismissed for lack of merit).

OKS DESIGNTECH, INC. represented by ZAMBY O. PONGAD vs. MARY JAYNE L.

CACCAM
G.R. No. 211263 05 August 2015
FACTS: Petitioner hired Respondent as an accountant under a Contract of Employment for a
Fixed Period for 6 months. Her contract was thereafter renewed for another 6 months. About
nineteen days before the expiration of her second contract, Respondent received a letter from
Company Manager Pongad informing her of the impending expiration of her contract. As
Respondent felt that she was summarily dismissed by the aforestated letter, she filed a
complaint for illegal dismissal.
Respondent claimed that she was a regular employee and argued that the nature of her work
was necessary and desirable to the business of the Petitioner. On the other hand, herein
Petitioner claims that the present labor case was only filed in retaliation of the criminal case of
Qualified Theft and Falsification of Private Documents after having discovered several
unauthorized withdrawals amounting to Php500,000.00 from its bank in violation of the trust and
confidence reposed in her. Further, the Petitioner interposed that the letter received by the
Respondent was a mere notice of the expiration of her contract, and not a termination notice.

Labor Arbiter: The LA found that the Respondent was illegally dismissed after having found that
her employment contract was only signed on April 21, 2008, and not on January 21, 2008, the
date when she actually started working for the Petitioner. Although initially deemed as a
probationary contract, by extending the same for another year, she attained the status of a
regular employee.
NLRC: The NLRC reversed and set aside the LA’s decision and found that there was no factual
basis to support the conclusion that the first contract was for a probationary employment.
CA: The Court of Appeals reinstated the decision of the LA. The CA ruled that the terms and
conditions of the first contract and the second contract negated a fixed-term employment since
they state that respondent’s employment may be terminated prior to the expiration thereof for
“just or authorized cause or when the EMPLOYEE fails to meet the reasonable standards made
known to him by the EMPLOYER.”

ISSUE: Whether or not the Respondent was a fixed-period employee.

RULING: YES. The Supreme Court held that even if an employee is engaged to perform
activities that are necessary or desirable in the usual trade or business of the employer, the
same does not preclude the fixing of employment for a definite period. Article 280 [now, Article
294] of the Labor Code does not proscribe or prohibit an employment contract with a fixed
period provided the same is entered into by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any other circumstance vitiating
consent.
In fact, the Court, in Brent, had already pronounced that the decisive determinant in fixed-term
employment should not be the activities that the employee is called upon to perform, but the day
certain agreed upon by the parties for the commencement and termination of their employment
relationship.

JOSE SONZA vs. ABS-CBN BROADCASTING CORPORATION

G.R. No. 138051
Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by Sonza, as President and general manager, and Tiangco as its
EVP and treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonza’s
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay
Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and
third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the
recent events concerning his program and career. After the said letter, Sonza filed with the
Department of Labor and Employment a complaint alleging that ABS-CBN did not pay his
salaries, separation pay, service incentive pay,13th month pay, signing bonus, travel allowance
and amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended that no
employee-employer relationship existed between the parties. However, ABS-CBN continued to
remit Sonza’s monthly talent fees but opened another account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no employee-employer
relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of
NLRC.

Issue: Whether or not there was employer-employee relationship between the parties.

Ruling: Case law has consistently held that the elements of an employee-employer relationship
are selection and engagement of the employee, the payment of wages, the power of dismissal
and the employer’s power to control the employee on the means and methods by which the
work is accomplished. The last element, the so-called "control test", is the most important
element.
Sonza’s services to co-host its television and radio programs are because of his peculiar
talents, skills and celebrity status. Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary employees. The specific
selection and hiring of SONZA, because of his unique skills, talent and celebrity status not
possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. For violation of any provision of the Agreement,
either party may terminate their relationship. Applying the control test to the present case, we
find that SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply in distinguishing an employee from
an independent contractor. This test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well – the less control the hirer exercises, the
more likely the worker is considered an independent contractor. To perform his work, SONZA
only needed his skills and talent. How SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBN’s control. ABS-CBN did not instruct SONZA how to
perform his job. ABS-CBN merely reserved the right to modify the program format and airtime
schedule "for more effective programming." ABS-CBN’s sole concern was the quality of the
shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the means and methods of performance of
Sonza’s work. A radio broadcast specialist who works under minimal supervision is an
independent contractor. Sonza’s work as television and radio program host required special
skills and talent, which SONZA admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment
industries to treat talents like Sonza as independent contractors. The right of labor to security of
tenure as guaranteed in the Constitution arises only if there is an employer-employee
relationship under labor laws. Individuals with special skills, expertise or talent enjoy the
freedom to offer their services as independent contractors. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right of labor to security of
tenure cannot operate to deprive an individual, possessed with special skills, expertise and
talent, of his right to contract as an independent contractor.

OROZCO VS. CA
Issue: Whether or not Orozco is an employee of PDI, and is yes, whether she was illegally
dismissed.

We rule for PDI.

The existence of an employer-employee relationship is essentially a questions of fact. Factual
findings of quasi-judicial agencies like the NLRC are generally accorded respect and finality if
supported by substantial evidence.
Considering that the CA's findings are in direct conflict with those of the Labor Arbiter and
NLRC, this Court must now make its own examination and evaluation of the facts of this case.
It is true the Orozce herself admitted that she was not and had not been considered
respondent's employee because the terms of works were arbitrarily decided upon by PDI.
This Court has constantly adhered to the FOUR-FOLD TEST to determine whether there exists
an employee-employer relationship between parties. The four elements of an employee
relationship are the selection and engagement of the employee; the payment of wages; the
power of dismissal; and the employer's power to control the employee's conduct.
Of these four elements, it is the power of control which is most crucial and most determinative
factor, so important in fact the the other elements may even be disregarded. In other words, the
test is whether the employer controls or has reserved the right to control the employee, not only
as to the work done, but also as to the means and methods by which the same is accomplished.
Orozco argues that several factors exist to prove that PDI exercised control over her and her
work. But as to whether this is the form of control that our labor laws contemplate such as to
establish an employer-employee relationship between Orozco and PDI, it is not.
Orozco has misconstrued the CONTROL TEST as did the Labor Arbiter and the NLRC.
Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee
of the former. Rules which serve as general guidelines towards the achievement of the mutually
desired result are not indicative of the power of control.
Orozco has not shown the PDI, acting through its editors, dictated how she was to write or
produce her articles each week. Aside from the constraints presented by the space allocation of
her column, there were no restraints on her creativity. The perceived constraint on Orozco's
column was dictated by her own choice of her column's perspective.
The newspaper's power to approve or reject publication of any specific article she wrote for her
column cannot be the control contemplated in the control test as it is but logical that one who
commissions another to do a piece of work should have the right to accept or reject the product.
The important factor to consider in the control test is still the elements of control over how the
work itself is done, not just the end result thereof.
Where a person who works for another performs his job more or less at his own
pleasure, in the manner he sees fit, subject to definite hours or conditions of work, and is
compensated according to the result of his efforts and not the amount thereof, no
employer-employee relationship exists.
Aside from the control test, this Court has also used the ECONOMIC REALITY TEST. The
economic realities prevailing within the activity or between the parties are examined, taking into
consideration the totality of the circumstances surrounding the true nature of the relationship
between the parties.
Orozco's main occupation is not as a columnist for respondent but as a women's rights
advocate working in various womens' organizations. She also contributes articles to other
publications. Thus, it cannot be said that Orozco was dependent on PDI for her continued
employment in PDI's line of business.
the inevitable conclusion is that Orozco was not PDI's employee but an INDEPENDENT
CONTRACTOR, engaged to do independent work.

ESCASINAS VS. SHANGRILA’S MACTAN RESORT

Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were
engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to
work in her clinic at respondent Shangri-la's Mactan Island Resort (Shangri-la) in
Cebu of which she was a retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) Regional
Arbitration Branch No. VII (NLRC-RAB No. VII) a complaint[1] for regularization, underpayment
of wages, non-payment of holiday pay, night shift differential and
13th month pay differential against respondents, claiming that they are regular employees of
Shangri-la.
By Decision[3] of May 6, 2003, Labor Arbiter Ernesto F. Carreon declared petitioners to be
regular employees of Shangri-la. The Arbiter thus ordered Shangri-la to grant them the wages
and benefits due them as regular employees from the time their services... were engaged.
By Decision[4] dated March 31, 2005, the NLRC granted Shangri-la's and respondent doctor's
appeal and dismissed petitioners' complaint for lack of merit, it finding that no employer-
employee relationship exists between petitioner and Shangri-la.
On the issue of payment of wages, the NLRC held that the fact that, for some months, payment
of petitioners' wages were recommended by Shangri-la's HRD did not prove that it was Shangri-
la which pays their wages.
Petitioners thereupon brought the case to the Court of Appeals which, by Decision[5] of May 22,
2007, affirmed the NLRC Decision that no employer-employee relationship exists between
Shangri-la and petitioners. The appellate court concluded that all aspects... of the employment
of petitioners being under the supervision and control of respondent doctor and since Shangri-la
is not principally engaged in the business of providing medical or healthcare services,
petitioners could not be regarded as regular employees of Shangri-la.

Issues: the correct interpretation of Art. 157 vis a vis Art. 280 and the provisions on permissible
job contracting of the Labor Code, as amended.

Ruling: The Court holds that, contrary to petitioners' postulation, Art. 157 does not require the
engagement of full-time nurses as regular employees of a company employing not less than 50
workers.
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated
to "furnish" its employees with the services of a full-time registered nurse, a part-time physician
and dentist, and an emergency clinic which means that it should provide or... make available
such medical and allied services to its employees, not necessarily to hire or employ a service
provider.
The term "full-time" in Art. 157 cannot be construed as referring to the type of employment of
the person engaged to provide the services, for Article 157 must not be read alongside Art.
280[9] in order to vest employer-employee relationship on the... employer and the person so
engaged.
Against the above-listed determinants, the Court holds that respondent doctor is a legitimate
independent contractor.
As to payment of wages, respondent doctor is the one who underwrites the following: salaries,
SSS contributions and other benefits of the staff[13]; group life, group personal accident
insurance and life/death insurance[14] for the... staff with minimum benefit payable at 12 times
the employee's last drawn salary, as well as value added taxes and withholding taxes, sourced
from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-
la's guests who avail of the clinic services.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, "Clinic Policies and Employee Manual"[16] claimed to have been prepared by
respondent doctor exists, to which petitioners gave their... conformity[17] and in which they
acknowledged their co-terminus employment status.
Contrary to petitioners' contention, the various office directives issued by Shangri-la's officers do
not imply that it is Shangri-la's management and not respondent doctor who exercises control
over them or that Shangri-la has control over how the doctor and the nurses perform... their
work.
In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not
petitioners' employer.
WHEREFORE, the petition is hereby DENIED. The Decision of the Court of Appeals dated May
22, 2007 and the Resolution dated July 10, 2007 are AFFIRMED.
Principles:
Article 157 is that the employer should provide the services of medical personnel to its
employees, but nowhere in said article is a... provision that nurses are required to be employed;
that contrary to the finding of the Arbiter, even if Article 280 states that if a worker performs work
usually necessary or desirable in the business of the employer, he cannot be automatically
deemed a regular employee
ART. 157. Emergency medical and dental services. - It shall be the duty of every employer to
furnish his employees in any locality with free medical and dental attendance and facilities
consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50)
but not more than two hundred (200) except when the employer does not maintain hazardous
workplaces, in which case the services of a graduate first-aider... shall be provided for the
protection of the workers, where no registered nurse is available. The Secretary of Labor shall
provide by appropriate regulations the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by... appropriate order hazardous
workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time physician and dentist, and an
emergency clinic, when the number of employees exceeds two hundred (200) but not more than
three hundred (300); and
(c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental
clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred
(100) employees when the number of employees exceeds three hundred
(300).
In cases of hazardous workplaces, no employer shall engage the services of a physician or
dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the
case of those engaged on part-time basis, and not less than eight (8) hours in the case of...
those employed on full-time basis. Where the undertaking is nonhazardous in nature, the
physician and dentist may be engaged on retained basis, subject to such regulations as the
Secretary of Labor may prescribe to insure immediate availability of medical and dental
treatment... and attendance in case of emergency. (Emphasis and underscoring supplied)
Sec. 8. Job contracting. - There is job contracting permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on his
own account under his own responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters connected with the...
performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his
business.
Sec. 9. Labor-only contracting. - (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are
directly related to the principal business or operations of the employer in which workers are
habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as
contractor shall be considered merely as an agent or intermediary of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly...
employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine through
appropriate orders whether or not the contracting out of labor is permissible in the light of the
circumstances of each case and after considering the operating needs of the employer and...
the rights of the workers involved. In such case, he may prescribe conditions and restrictions to
insure the protection and welfare of the workers. (Emphasis supplied)
On the other hand, existence of an employer- employee relationship is established by the
presence of the following determinants: (1) the selection and engagement of the workers; (2)
power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control
the... worker's conduct, with the latter assuming primacy in the overall consideration.

BERNARTE VS. PBA

FACTS: The complainant ( Jose Mel Bernate and Renato Guevarra) aver that they were invited to join
PBA as Referees. During the leadership of Commissioner Bernadino, they were made to sign contracts
on a year-to-year basis. During the term of Commissioner Eala, however, changes are made on the
terms of their employment.
Complainant Bernarte, for instance, was not made to sign a contract during the first conference of ALL
FILIPINO CUP which was from February 23,2003 to June 2003. It was only during the second conference
when he was made to sign a one and a half month contract for the period of July 1 to August 5, 2003.
On January 15,2003, Bernarte received a letter from the office of the Commissioner advising him that his
contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total
shock for Bernarte who was awarded Referee of the Year in 2003. He felt that the dismissal was caused
by his refusal to fix a game upon order of Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join PBA pool of referees in
February 2001. On March 01, 2001, he signed a contract as trainees. Beginning 2002, he signed a yearly
contract as Regular Class C Referee. On May 6, 2003, respondent Martinez issued a memorandum to
Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating of out-
of -town games. Beginning February 2004, he was no longer made to sign a contract.
Respondent aver, on the other hand, the complainants entered into two contracts of retainer with the
PBA in the year 2003.The first contract was for the period of January 1, 2003 to July 15, 2003, and the
second was for September to December 2003. After the lapse of the latter period, PBA decided not to
renew their contracts.
Complainants were not illegally dismissed because they were not employees of the PBA. Their
respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to
renew their contracts, which they knew were fixed.
In her 31 March 2005 decision, the Labor Arbiter declared petitioner an employee whose dismissal by
respondent was illegal. Accordingly, the Labor Arbiter ordered reinstatement and payment of
backwages, moral and exemplary damages and attorney’s fees. The NLRC affirmed the Labor Arbiter’s
judgment. Respondent filed a petition for certiorari with the Court of Appeals, which overturned the
decisions of the NLRC and Labor Arbiter.

ISSUE: Whether or not the petitioner is an employee.

RULING: NO, Petitioner is not an employee of the respondents. The SC DENIED the petition and
AFFIRMED the assailed decision of the Court of Appeals.
To determine the existence of an employer-employee relationship, case law has consistently applied
the four-fold test, to wit: (a.) the selection and engagement of the employee; ( b.) the payment of
wages; (c.) the power of dismissal; and (d.) the employer’s power to control the employee on the
means and methods by which the work is accomplished. The so called “control test” is the most
important indicator of the presence or absence of an employer-employee relationship.
In the case, PBA admits repeatedly engaging petitioner’s services, as shown in the retainer contracts.
PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated in the retainer
contract. PBA can terminate the retainer contract for petitioner’s violation of its terms and conditions.
However, respondents argue that the all-important element of control is lacking in this case, making the
petitioner an independent contractor and not an employee of respondents. The contractual stipulation
do not pertain to, much less dictate, how and when petitioner will blow the whistle and make calls. On
the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of the
professional basketball league. As correctly observed by the Court of Appeals, “how could a skilled
referee perform his job without blowing a whistle and making calls?” How can PBA control the
performance of work of a referee without controlling his acts of blowing the whistle and making calls?
We agree with respondents that once in the playing court, the referees exercise their own independent
judgment, based on the rules of the game, as to when and how a call or decision is to be made. The
referees decide whether an infraction was committed, and the PBA cannot overrule them once the
decision is made on the playing court. The referees are the only, absolute and final authority on the
playing court. Respondent or any of the PBA officers cannot and do not determine which calls to make
or not to make and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referee. The very nature of the petitioner’s job of officiating a professional
basketball game undoubtedly calls for freedom of control by respondent.
Moreover, unlike regular employees who ordinarily report for work eight hours per day for five days a
week, petitioner is required to report for work only when PBA games are scheduled or three times a
week at two hours per game. In addition, there are no deductions for the contribution to SSS, Philhealth
and Pag-ibig, which are the usual deductions from the employee’s salaries. These undisputed
circumstances buttress the fact that the petitioner is an independent contractor and not an employee of
the respondent.
 SEMBLANTE AND PILAR VS GALLERA de MANDAUE

G.R. NO. 196426, AUGUST 15 2011

FACTS: Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they
were hired by respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de
Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit
sometime in 1993.

As the masiador, Semblante calls and takes the bets from the gamecock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after deducting
the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the
proper gaffing of fighting cocks, determines the fighting cocks physical condition and
capabilities to continue the cockfight, and eventually declares the result of the cockfight.

For their services as masiador and sentenciador, Semblante receives PhP 2,000 per week
or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month.
They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly
derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last
until 12:00 midnight, or until the early hours of the morning depending on the needs of the
cockpit. Petitioners had both been issued employees identification cards that they wear every
time they report for duty. They alleged never having incurred any infraction and/or violation of
the cockpit rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services effective that
date. This prompted petitioners to file a complaint for illegal dismissal against respondents.
In answer, respondents denied that petitioners were their employees and alleged that they
were associates of respondents independent contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day and they are free to decide for themselves
whether to report for work or not on any cockfighting day. In times when there are few
cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly,
petitioners, so respondents assert, were only issued identification cards to indicate that they were
free from the normal entrance fee and to differentiate them from the general public.

Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of

respondents as they performed work that was necessary and indispensable to the usual trade or
business of respondents for a number of years. The Labor Arbiter also ruled that petitioners were
illegally dismissed, and so ordered respondents to pay petitioners their backwages and separation
pay.

The NLRC held in its Resolution of October 18, 2006 that there was no employer-
employee relationship between petitioners and respondents, respondents having no part in the
selection and engagement of petitioners, and that no separate individual contract with
respondents was ever executed by petitioners.
 The APELLATE COURT found for respondents, noting that referees and bet-takers in a
cockfight need to have the kind of expertise that is characteristic of the game to interpret
messages conveyed by mere gestures. Hence, petitioners are akin to independent contractors who
possess unique skills, expertise, and talent to distinguish them from ordinary employees. Further,
respondents did not supply petitioners with the tools and instrumentalities they needed to
perform work. Petitioners only needed their unique skills and talents to perform their job
as masiador and sentenciador.

ISSUE: Whether or not Semblante and Pilar are employees of Gallere de Manduae.

Held: No. Petitioners are duly licensed masiador and sentenciador in the cockpit owned by
Lucia Loot. Cockfighting, which is a part of our cultural heritage, has a peculiar set of rules. It is
a game based on the fighting ability of the game cocks in the cockpit. The referees and bet-
takers need to have that kind of expertise that is characteristic of the cockfight gambling
who can interpret the message conveyed even by mere gestures. They ought to have the talent
and skill to get the bets from numerous cockfighting aficionados and decide which cockerel to
put in the arena. They are placed in that elite spot where they can control the game and the
crowd. They are not given salaries by cockpit owners as their compensation is based on the
arriba. In fact, they can offer their services everywhere because they are duly licensed by the
GAB. They are free to choose which cockpit arena to enter and offer their expertise. Private
respondents cannot even control over the means and methods of the manner by which they
perform their work. In this light, they are akin to independent contractors who possess unique
skills, expertise and talent to distinguish them from ordinary employees.

Furthermore, private respondents did not supply petitioners with the tools and
instrumentalities they needed to perform their work. Petitioners only needed their talent and
skills to be a masiador and sentenciador. As such, they had all the tools they needed to perform
their work.
Semblante and Pilar are NOT employees of respondents, since their relationship fails to pass
muster the four-fold test of employment We have repeatedly mentioned in countless decisions:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct, which is the most important
element.

Gallera de Mandaue had no part in petitioners selection and management, petitioners

compensation was paid out of the arriba(which is a percentage deducted from the total bets), not
by petitioners; and petitioners performed their functions as masiador and sentenciador free
from the direction and control of respondents. In the conduct of their work, petitioners relied
mainly on their expertise that is characteristic of the cockfight gambling, and were never given
by respondents any tool needed for the performance of their work.

Gallera de Mandaue, not being petitioners employers, could never have dismissed,
legally or illegally, petitioners, since respondents were without power or prerogative to do so in
the first place. The rule on the posting of an appeal bond cannot defeat the substantive rights of
respondents to be free from an unwarranted burden of answering for an illegal dismissal for
which they were never responsible.

Semblante and Pilar are independent contractors who possess unique skills, expertise, and
talent to distinguish them from ordinary employees. Further, Gallera de Mandaue did not supply
petitioners with the tools and instrumentalities they needed to perform work. Petitioners only
needed their unique skills and talents to perform their job as masiador and sentenciador.

FONTERRA BRANDS PHILS., INC., Petitioner, v. LEONARDO1 LARGADO AND TEOTIMO

ESTRELLADO, Respondents.
G.R. No. 205300, March 18, 2015
Facts:

Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing
and Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy products. Pursuant
to the contract, Zytron provided Fonterra with trade merchandising representatives (TMRs), including
respondents Leonardo Largado (Largado) and Teotimo Estrellado (Estrellado). The engagement of their
services began on September 15, 2003 and May 27, 2002, respectively, and ended on June 6, 2006.

On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract, effective
June 5, 2006. Fonterra then entered into an agreement for manpower supply with A.C. Sicat Marketing
and Promotional Services (A.C. Sicat). Desirous of continuing their work as TMRs, respondents submitted
their job applications with A.C. Sicat, which hired them for a term of five (5) months, beginning June 7,
2006 up to November 6, 2006.

When respondents’ 5-month contracts with A.C. Sicat were about to expire, they allegedly
sought renewal thereof, but were allegedly refused. This prompted respondents to file complaints for
illegal dismissal, regularization, non-payment of service incentive leave and 13th month pay, and actual
and moral damages, against petitioner, Zytron, and A.C. Sicat.

The Labor Arbiter dismissed the complaint and ruled that: (1) respondents were not illegally
dismissed. As a matter of fact, they were the ones who refused to renew their contract and that they
voluntarily complied with the requirements for them to claim their corresponding monetary benefits in
relation thereto; and (2) they were consecutively employed by Zytron and A.C. Sicat, not by Fonterra.
The dispositive portion of the

The NLRC affirmed the Labor Arbiter, finding that respondents’ separation from Zytron was
brought about by the execution of the contract between Fonterra and A.C. Sicat where the parties
agreed to absorb Zytron’s personnel, including respondents. Too, respondents failed to present any
evidence that they protested this set-up. Furthermore, respondents failed to refute the allegation that
they voluntarily refused to renew their contract with A.C. Sicat. Also, respondents did not assert any
claim against Zytron and A.C. Sicat.
 The NLRC’s decision was assailed in a petition under Rule 65 before the CA.

Ruling on the petition, the CA, in the questioned Decision,4 found that A.C. Sicat satisfies the
requirements of legitimate job contracting, but Zytron does not. According to the CA: (1) Zytron’s paid-in
capital of P250,000 cannot be considered as substantial capital; (2) its Certificate of Registration was
issued by the DOLE months after respondents’ supposed employment ended; and (3) its claim that it has
the necessary tools and equipment for its business is unsubstantiated. Therefore, according to the CA,
respondents were Fonterra’s employees.

Additionally, the CA held that respondents were illegally dismissed since Fonterra itself failed to
prove that their dismissal is lawful. However, the illegal dismissal should be reckoned from the
termination of their supposed employment with Zytron on June 6, 2006. Furthermore, respondents’
transfer to A.C. Sicat is tantamount to a completely new engagement by another employer. Lastly, the
termination of their contract with A.C. Sicat arose from the expiration of their respective contracts with
the latter. The CA, thus, ruled that Fonterra is liable to respondents and ordered the reinstatement of
respondents without loss of seniority rights, with full backwages, and other benefits from the time of
their illegal dismissal up to the time of their actual reinstatement.

Issue/s:
(1) Whether or not respondents were illegally dismissed.

(2) Whether or not Zytron and A.C. Sicat are labor-only contractors, making Fonterra the employer of
herein respondents.
Held:

(1)

No. Respondents voluntarily terminated their employment with Zytron, contrary to their
allegation that their employment with Zytron was illegally terminated.

As correctly held by the Labor Arbiter and the NLRC, the termination of respondents’
employment with Zytron was brought about by the cessation of their contracts with the latter.

As regards to the Labor Arbiter’s conclusion that respondents were the ones who refused to
renew their contracts with Zytron, and the NLRC’s finding that they themselves acquiesced to their
transfer to A.C. Sicat.

By refusing to renew their contracts with Zytron, respondents effectively resigned from the
latter. Resignation is the voluntary act of employees who are compelled by personal reasons to
dissociate themselves from their employment, done with the intention of relinquishing an office,
accompanied by the act of abandonment.

According to the SC, it is obvious that respondents were no longer interested in continuing their
employment with Zytron. Their voluntary refusal to renew their contracts was brought about by their
desire to continue their assignment in Fonterra which could not happen in view of the conclusion of
Zytron’s contract with Fonterra. Hence, to be able to continue with their assignment, they applied for
work with A.C. Sicat with the hope that they will be able to continue rendering services as TMRs at
Fonterra since A.C. Sicat is Fonterra’s new manpower supplier. This fact is even acknowledged by the CA
in the assailed Decision where it recognized the reason why respondents applied for work at A.C. Sicat.
The CA stated that “[t]o continuously work as merchandisers of Fonterra products, [respondents]
submitted their job applications to A.C. Sicat xxx.”6 This is further bolstered by the fact that respondents
voluntarily complied with the requirements for them to claim their corresponding monetary benefits in
relation to the cessation of their employment contract with Zytron.

(2)

No. Zytron and A.C. Sicat were not labor-only contractors.

 Respondents were fixed-term employees. As previously held by this Court, fixed-term
employment contracts are not limited, as they are under the present Labor Code, to those by nature
seasonal or for specific projects with predetermined dates of completion; they also include those to
which the parties by free choice have assigned a specific date of termination.11 The determining factor
of such contracts is not the duty of the employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.

In the case at bar, it is clear that respondents were employed by A.C. Sicat as project employees.
In their employment contract with the latter, it is clearly stated that “[A.C. Sicat is] temporarily
employing [respondents] as TMR[s] effective June 6[, 2006] under the following terms and conditions:
The need for your service being only for a specific project, your temporary employment will be for the
duration only of said project of our client, namely to promote FONTERRA BRANDS products xxx which is
expected to be finished on or before Nov. 06, 2006.”

Respondents, by accepting the conditions of the contract with A.C. Sicat, were well aware of and
even acceded to the condition that their employment thereat will end on said pre-determined date of
termination. They cannot now argue that they were illegally dismissed by the latter when it refused to
renew their contracts after its expiration. This is so since the non-renewal of their contracts by A.C. Sicat
is a management prerogative, and failure of respondents to prove that such was done in bad faith
militates against their contention that they were illegally dismissed. The expiration of their contract with
A.C. Sicat simply caused the natural cessation of their fixed-term employment there at.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 166554 November 27, 2008

JULITO SAGALES, petitioner,

vs.
RUSTAN’S COMMERCIAL CORPORATION, respondent.

DECISION

REYES, R.T., J.:

Labor is property, and as such merits protection. The right to make it available is next in
importance to the rights of life and liberty. It lies to a large extent at the foundation of most other
forms of property, and of all solid individual and national prosperity.1

The exultation of labor by Mr. Justice Noah Haynes Swayne of the United States Supreme Court
comes to the fore in this petition for review on certiorari. The employee questions the propriety
of his dismissal after he was caught stealing 1.335 kilos of squid heads worth P50.00. He invokes
his almost thirty-one (31) years of untarnished service and the several awards he received from
the company to temper the penalty of dismissal meted on him.

The Facts

Petitioner Julito Sagales was employed by respondent Rustan’s Commercial Corporation from
October 1970 until July 26, 2001, when he was terminated. At the time of his dismissal, he was
occupying the position of Chief Cook at the Yum Yum Tree Coffee Shop located at Rustan’s
Supermarket in Ayala Avenue, Makati City. He was paid a basic monthly salary of P9,880.00.
He was also receiving service charge of not less than P3,000.00 a month and other benefits under
the law and the existing collective bargaining agreement between respondent and his labor
union.2

In the course of his employment, petitioner was a consistent recipient of numerous citations3 for
his performance. After receiving his latest award on March 27, 2001, petitioner conveyed to
respondent his intention of retiring on October 31, 2001, after reaching thirty-one (31) years in
service.4 Petitioner, however, was not allowed to retire with his honor intact.

On June 18, 2001, Security Guard Waldo Magtangob, upon instructions from Senior Guard
Bonifacio Aranas, apprehended petitioner in the act of taking out from Rustan’s Supermarket a
plastic bag. Upon examination, it was discovered that the plastic bag contained 1.335 kilos of
squid heads worth P50.00. Petitioner was not able to show any receipt when confronted. Thus, he
was brought to the Security Office of respondent corporation for proper endorsement to the
Makati Headquarters of the Philippine National Police. Subsequently, petitioner was brought to
the Makati Police Criminal Investigation Division where he was detained. Petitioner was later
ordered released pending further investigation.5

Respondent alleged that prior to his detention, petitioner called up Agaton Samson, Rustan’s
Branch Manager, and apologized for the incident. Petitioner even begged Samson that he would
just pay for the squid heads. Samson replied that it is not within his power to forgive him.6

On June 19, 2001, petitioner underwent inquest proceedings for qualified theft before Assistant
Prosecutor Amado Y. Pineda. Although petitioner admitted that he was in possession of the
plastic bag containing the squid heads, he denied stealing them because he actually paid for
them. As proof, petitioner presented a receipt. The only fault he committed was his failure to
immediately show the purchase receipt when he was accosted because he misplaced it when he
changed his clothes. He also alleged that the squid heads were already “scraps” as these were not
intended for cooking. Neither were the squid heads served to customers. He bought the squid
heads so that they could be eaten instead of being thrown away. If he intended to steal from
respondent, he could have stolen other valuable items instead of scrap.7

Assistant Prosecutor Pineda believed the version of petitioner and recommended the dismissal of
the case for “lack of evidence.”8 The recommendation was approved upon review by City
Prosecutor Feliciano Aspi.9

Notwithstanding the dismissal of the complaint, respondent, on June 25, 2001, required
petitioner to explain in writing within forty-eight (48) hours why he should not be terminated in
view of the June 18, 2001 incident. Respondent also placed petitioner under preventive
suspension.10

On June 29, 2001, petitioner was informed that a formal investigation would be conducted by the
Legal Department on July 6, 2001.11

Petitioner and his counsel attended the administrative investigation where he reiterated his
defense before the inquest prosecutor. Also in attendance were Aranas and Magtangob, who
testified on the circumstances surrounding the apprehension of petitioner; Samson, the branch
manager to whom petitioner allegedly apologized for the incident; and Zenaida Castro, cashier,
who testified that the squid heads were not paid.

Respondent did not find merit in the explanation of petitioner. Thus, petitioner was dismissed
from service on July 26, 2001.12 At that time, petitioner had been under preventive suspension
for one (1) month.

Aggrieved, petitioner filed a complaint for illegal dismissal against respondent. He also prayed
for unpaid salaries/wages, overtime pay, as well as moral and exemplary damages, attorney’s
fees, and service charges.13
 Labor Arbiter, NLRC, and CA Dispositions

On July 24, 2002, Labor Arbiter Felipe P. Pati dismissed14 the complaint.

IN VIEW OF THE FOREGOING, the complaint for illegal dismissal should be DISMISSED for
lack of merit.

SO ORDERED.15

According to the Labor Arbiter, the nature of the responsibility of petitioner “was not that of an
ordinary employee.”16 It then went on to categorize petitioner as a supervisor in “a position of
responsibility where trust and confidence is inherently infused.”17 As such, it behooved him “to
be more knowledgeable if not the most knowledgeable in company policies on employee
purchases of food scrap items in the kitchen.”18 Per the evidence presented by respondent,
petitioner breached company policy which justified his dismissal.

Petitioner appealed to the National Labor Relations Commission (NLRC).19 On April 10, 2003,
the NLRC reversed20 the Labor Arbiter in the following tenor:

WHEREFORE, the decision appealed from is hereby SET ASIDE and complainant’s dismissal
declared illegal. Further, respondent is hereby ordered to reinstate complainant to his former
position without loss of seniority rights and other benefits and paid backwages computed from
time of dismissal up to the finality of this decision which as of this date amounts to P269,854.16.

All other claims are denied for want of basis.

SO ORDERED.21

The NLRC held that the position of complainant is not supervisory covered by the trust and
confidence rule.22 On the contrary, petitioner is a mere rank-and-file employee.23 The evidence is
also wanting that petitioner committed the crime charged.24 The NLRC did not believe that
petitioner would trade off almost thirty-one (31) years of service for P50.00 worth of squid
heads.25

The NLRC further ruled that petitioner was illegally dismissed as respondent failed to establish a
just cause for dismissal.26 However, the claim for damages was denied for lack of evidence.27

The motion for reconsideration28 having been denied,29 respondent brought the matter to the
Court of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules on Civil
Procedure.30 On July 12, 2004, the CA rendered the assailed decision, 31 with the following fallo:

WHEREFORE, the petition is GRANTED. The challenged resolutions of April 10, 2003 and
July 31, 2003 of public respondent NLRC are REVERSED and SET ASIDE. The decision of
the Labor Arbiter of July 24, 2002, dismissing private respondent’s complaint
is REINSTATED.

SO ORDERED.32

In reversing the NLRC, the CA opined that the position of petitioner was supervisory in
nature.33 The CA also held that the evidence presented by respondent clearly established loss of
trust and confidence on petitioner.34 Lastly, the CA, although taking note of the long years of
service of petitioner and his numerous awards, refused to award separation pay in his favor.
According to the CA, “the award of separation pay cannot be sustained under the social justice
theory” because the instant case “involves theft of the employer’s property.”35
Petitioner filed a motion for reconsideration36 which was denied.37 Left with no other recourse,
petitioner availed of the present remedy.38

Issues

Petitioner in his Memorandum39 imputes to the CA the following errors, to wit:

I. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT CONCLUDED
THAT THE POSITION OF THE PETITIONER BEING AN ASSISTANT COOK AS A
SUPERVISORY POSITION FOR BEING CONTRADICTORY TO THE EVIDENCE ON
RECORD.

II. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT CONCLUDED
THAT THE DOCTRINE OF TRUST AND CONFIDENCE APPLIES AGAINST THE
PETITIONER TO JUSTIFY HIS DISMISSAL FROM EMPLOYMENT FOR BEING
CONTRADICTORY TO THE EVIDENCE ON RECORD.40(Underscoring supplied)

For a full resolution of the issues in the instant case, the following questions should be answered:
(1) Is the position of petitioner supervisory in nature which is covered by the trust and
confidence rule? (2) Is the evidence on record sufficient to conclude that petitioner committed
the crime charged? and (3) Assuming that the answer is in the affirmative, is the penalty of
dismissal proper?

Our Ruling

I. The position of petitioner is supervisory in nature which is covered by the trust and
confidence rule.

The nature of the job of an employee becomes relevant in termination of employment by the
employer because the rules on termination of managerial and supervisory employees are
different from those on the rank-and-file. Managerial employees are tasked to perform key and
sensitive functions, and thus are bound by more exacting work ethics.41 As a consequence,
managerial employees are covered by the trust and confidence rule.42 The same holds true for
supervisory employees occupying positions of responsibility.43

There is no doubt that the position of petitioner as chief cook is supervisory in nature. A chief
cook directs and participates in the preparation and serving of meals; determines timing and
sequence of operations required to meet serving times; and inspects galley and equipment for
cleanliness and proper storage and preparation of food.44 Naturally, a chief cook falls under the
definition of a supervisor, i.e., one who, in the interest of the employer, effectively recommends
managerial actions which would require the use of independent judgment and is not merely
routinary or clerical.45

It has not escaped Our attention that petitioner changed his stance as far as his actual position is
concerned. In his position paper, he alleged that at the time of his dismissal, he was “Chief
Cook.”46However, in his memorandum, he now claimed that he was an “Asst. Cook.”47 The ploy
is clearly aimed at giving the impression that petitioner is merely a rank-and-file employee. The
change in nomenclature does not, however, help petitioner, as he would still be covered by the
trust and confidence rule. In Concorde Hotel v. Court of Appeals,48 the Court categorically ruled:

Petitioner is correct insofar as it considered the nature of private respondent’s position as

assistant cook a position of trust and confidence. As assistant cook, private respondent is
charged with the care of food preparation in the hotel’s coffee shop. He is also responsible for
the custody of food supplies and must see to it that there is sufficient stock in the hotel kitchen.
He should not permit food or other materials to be taken out from the kitchen without the
necessary order slip or authorization as these are properties of the hotel. Thus, the nature of
private respondent’s position as assistant cook places upon him the duty of care and custody of
Concorde’s property.49 (Emphasis supplied)

Of course, the ruling assumes greater significance if petitioner is the chief cook. A chief cook
naturally performs greater functions and has more responsibilities than an assistant cook. In eo
quod plus sit simper inest et minimus. The greater always includes the less. Ang malawak ay
laging sumasakop sa maliit.

II. The evidence on record is sufficient to conclude that petitioner committed the crime
charged.

Security of tenure is a paramount right of every employee that is held sacred by the
Constitution.50 The reason for this is that labor is deemed to be “property”51 within the meaning
of constitutional guarantees.52 Indeed, as it is the policy of the State to guarantee the right of
every worker to security of tenure as an act of social justice,53 such right should not be denied on
mere speculation of any similar or unclear nebulous basis.54 Indeed, the right of every employee
to security of tenure is all the more secured by the Labor Code by providing that “the employer
shall not terminate the services of an employee except for a just cause or when authorized” by
law. Otherwise, an employee who is illegally dismissed “shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.”55

Necessarily then, the employer bears the burden of proof to show the basis of the termination of
the employee.56

In the case at bar, respondent has discharged its onus of proving that petitioner committed the
crime charged. We quote with approval the observation of the CA in this regard:

On this matter, petitioner presents as evidence the verified statement of security guard Aranas.
Aranas positively saw the private in the act of bringing out the purloined squid heads. Similarly,
the statement of security guard Magtangob attested to the commission by private respondent of
the offense charged. Further, the verified statement of Samson, store manager of petitioner
corporation who is in charge of all personnel, including employees of the Yum Yum Tree Coffee
Shop of which private respondent was a former assistant cook, attested to the fact of private
respondent seeking apology for the commission of the act. Likewise, the statement of Zenaida
Castro (Castro), cashier of petitioner corporation’s supermarket, Makati Branch, Ayala Center,
Makati City, confirmed that indeed the 1.335 kilos of squid heads amounting to fifty pesos
(P50.00)per kilo, had not been paid for.57

The contention of petitioner that respondent merely imputed the crime against him because he
was set to retire is difficult, if not impossible, to believe. Worth noting is the fact that petitioner
failed to impute any ill will or motive on the part of the witnesses against him. As aptly observed
by the Labor Arbiter:

It seems unbelievable to believe that the apprehending officers up to the Manager, Mr. Samson,
were all telling a lie as what complainant wants to portray when he alleged in his pleadings that
he mentioned to the apprehending officers [that] he has a receipt for [the squid heads] and that he
never apologized. This is understandable on his part because complainant wants no loophole in
his version. And an easy way out is to fabricate his allegations.58

We stress that the quantum of proof required for the application of the loss of trust and
confidence rule is not proof beyond reasonable doubt. It is sufficient that there must only be
some basis for the loss of trust and confidence or that there is reasonable ground to believe,
if not to entertain the moral conviction, that the employee concerned is responsible for the
misconduct and that his participation in the misconduct rendered him absolutely unworthy
of trust and confidence.59

It is also of no moment that the criminal complaint for qualified theft against petitioner was
dismissed. It is well settled that the conviction of an employee in a criminal case is not
indispensable to the exercise of the employer’s disciplinary authority.60

III. The penalty of dismissal is too harsh under the circumstances.

The free will of management to conduct its own business affairs to achieve its purpose cannot be
denied.61 The only condition is that the exercise of management prerogatives should not be done
in bad faith62 or with abuse of discretion.63 Truly, while the employer has the inherent right to
discipline, including that of dismissing its employees, this prerogative is subject to the regulation
by the State in the exercise of its police power.64

In this regard, it is a hornbook doctrine that infractions committed by an employee should

merit only the corresponding penalty demanded by the circumstance. The penalty must be
commensurate with the act, conduct or omission imputed to the employee and must be
imposed in connection with the disciplinary authority of the employer.65

For example, in Farrol v. Court of Appeals,66 the employee, who was a district manager of a
bank, incurred a shortage of P50,985.37. He was dismissed although the funds were used to pay
the retirement benefits of five employees of the bank. The employee was also able to return the
amount, leaving a balance of only P6,995.37 of the shortage. The bank argued that under its
rules, the penalty for the infraction of the employee is dismissal. The Court disagreed and held
that the penalty of dismissal is too harsh. The Court took note that it is the first infraction of the
employee and that he has rendered twenty-four (24) long years of service to the bank. In the
words of Mme. Justice Consuelo Ynares-Santiago, “the dismissal imposed on petitioner is
unduly harsh and grossly disproportionate to the infraction which led to the termination of
his services. A lighter penalty would have been more just, if not humane.”67

So too did the Court pronounce in Felix v. National Labor Relations Commission,68 Gutierrez v.
Singer Sewing Machine Company,69 Associated Labor Unions-TUCP v. National Labor
Relations Commission,70 Dela Cruz v. National Labor Relations Commission,71 Philippine Long
Distance Telephone Company v. Tolentino,72 Hongkong and Shanghai Banking Corporation v.
National Labor Relations Commission,73 Permex, Inc. v. National Labor Relations
Commission,74 VH Manufacturing, Inc. v. National Labor Relations Commission,75 A’ Prime
Security Services, Inc. v. National Labor Relations Commission,76 and St. Michael’s Institute v.
Santos.77

In the case at bar, petitioner deserves compassion more than condemnation. At the end of the
day, it is undisputed that: (1) petitioner has worked for respondent for almost thirty-one (31)
years; (2) his tireless and faithful service is attested by the numerous awards78 he has received
from respondent; (3) the incident on June 18, 2001 was his first offense in his long years of
service; (4) the value of the squid heads worth P50.00 is negligible; (5) respondent practically
did not lose anything as the squid heads were considered scrap goods and usually thrown away in
the wastebasket; (6) the ignominy and shame undergone by petitioner in being imprisoned,
however momentary, is punishment in itself; and (7) petitioner was preventively suspended for
one month, which is already a commensurate punishment for the infraction committed. Truly,
petitioner has more than paid his due.

In any case, it would be useless to order the reinstatement of petitioner, considering that he
would have been retired by now. Thus, in lieu of reinstatement, it is but proper to award
petitioner separation pay computed at one-month salary for every year of service, a fraction of at
least six (6) months considered as one whole year.79 In the computation of separation pay, the
period where backwages are awarded must be included.80
Word of caution.

We do not condone dishonesty. After all, honesty is the best policy. However, punishment
should be commensurate with the offense committed. The supreme penalty of dismissal is the
death penalty to the working man. Thus, care should be exercised by employers in imposing
dismissal to erring employees. The penalty of dismissal should be availed of as a last resort.

Indeed, the immortal words of Mr. Justice (later Chief Justice) Enrique Fernando ring true then
as they do now: “where a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not be visited with a consequence so severe. It is not only because of
the law’s concern for the workingman. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those dependent on the wage-earner.”81

WHEREFORE, the appealed Decision of the Court of Appeals is REVERSED and SET
ASIDE. The Decision of the National Labor Relations Commission is REINSTATED with
the MODIFICATION that petitioner is granted separation pay and backwages in lieu of
reinstatement.

SO ORDERED.

Ruben Reyes, J., p.

Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Minita Chico-Nazario, Antonio

Eduardo Nachura, JJ. concur.

G.R. No. 187122 February 22, 2012

NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN, Petitioners,

vs.
ALVIN L. TENG, Respondent.

FACTS
Respondent Alvin Teng, a former player of the PBA, entered into a contract with the Laguna Lakers of the Metropolitang Basketball Association
(MBA). The contract was for 3 years, entered into on Feb. 4, 1999 and ending on Dec. 31, 2001. Before the contract expired, the Lakers
traded.transferred Teng to Negros Slashers. Negros assumed all the obligations of Lakers under the contract. Subsequently, on March 2000,
Teng executed the Player’s Contract of Employment with Negros. During Game 4 of the Championship Round in the MBA Season 4 playoffs,
Teng had a below-average performance. When he was pulled out of the game, he sat on the bench, untied his shoe laces and put on his
practice jersey shirt. During Game 5, he called in sick. This was seen by the management as unprofessional, serious misconduct. They sent a
letter to Teng demanding for an explanation for his behavior and set up a formal investigation hearing. He did not appear. Upon the
rescheduled date, Teng’s representatives appeared for him. Another meeting was conducted where the team members and coaching staff
unanimously expressed their sentiments against Teng. On March 2001 (before contract expired) Teng was sent another letter, this time of
termination from the team as a result of the decision from the investigation.

On July 2001, Teng filed a complaint before the Commissioner of the MBA pursuant to the voluntary arbitration provision in the contract. Four
months after (Nov. 6) [According to Teng, the VA failed to yield any result for three months until the MBA itself was dissolved), he also filed an
illegal dismissal case with the Regional Arbitration branch of the NLRC.

On July 16, 2002, LA of NLRC declared the dismissal illegal as the reasons cited did not constitute serious misconduct or willful disobedience or
insubordination that would call for the extreme penalty of dismissal. Negros was ordered to pay P2,530,000.

On appeal, the NLRC (Sept. 10, 2004; received on Oct. 15) reversed the decision of the LA and dismissed the complaint for being premature as
the arbitration proceedings before the MBA were still pending when the case for illegal dismissal was filed.

Teng filed an MR (Oct. 26), which was dismissed on March 21, 2005 for having been filed beyond the 10-day reglementary period (one day
late).

Teng filed a petition for certiorari before the CA assailing the NLRC decision and the denial of his MR.
The CA reinstated the LA decision. It held that the grounds relied upon by the petitioners in dismissing Teng were not enough to merit his
dismissal. It also held that the LA had jurisdiction of the case despite voluntary arbitration proceedings with the Commissioner of the MBA.

ISSUES
1. Whether the CA erred in giving due course to the petition despite the late filing;
2. Whether Teng violated the rule on forum shoping (2 complaints: VA in CMBA and ID in NLRC);
3. Whether the dismissal of Negros was indeed unjustified and not commensurate with his alleged misconduct.

RULING: Petition was denied; CA upheld

 1. No. As ruled in Ong Lim Sing, Jr. v. FEB Leasing and Finance Corp., the Courts have the prerogative to relax the rules of procedure
when doing so would serve substantial justice and equity. Further, there was no intent to delay administration of justice on the part
of Teng, having filed his MR only one day after the deadline for filing.
2. No.
The elements of forum shopping are:
a) Identity of parties that or such parties that represent the same interests in the action;
b) Identity of rights asserted and reliefs prayed for, based on an identity of facts;
c) Identity of the two preceding elements, such that the judgment rendered in one will amount to res judicata on the other
action.
Here, the third element is missing as a ruling of the CMBA will not amount to res judicata.
The elements of res judicata are:
a) The judgment (sought to prevent the new action) must be final;
b) The court that rendered the judgment must have competent jurisdiction over the subject matter and parties;
c) The judgment must have been on the merits;
d) There must be identity of parties, subject matter and causes of action between the two actions.
There was no res judicata in this case as the CVMBA is not a court of competent jurisdiction within the contemplation of the law. It is
a private mediator chosen by both parties in the Contract of Employment. Hence, the filing with the NLRC will not result to forum
shopping as the judgment by CMBA will not bar redress in other legal venues.
3. Yes. The penalty of dismissal was incommensurate to the misconduct of Teng. While missing a team game and untying shoe laces
while the game is ongoing is both unprofessional and is a punishable offense, it does not justify the extreme penalty of dismissal. It is
elementary doctrine that the penalty myst be commensurate with the act or omission imputed to the employee and must be
imposed in connection with the disciplinary authority of the employer. A severe reprimand, fine or suspension could have been
imposed. Further, there was no warning or admonition for Teng’s violation, only outright termination of his services.

Villamor Golf Club v. Pehid

472 SCRA 36

Dishonesty

FACTS

Rodolfo F. Pehid was employed by the Villamor Golf Club (VGC) as an attendant in the
men’s locker room, and, thereafter, he became the Supervisor-in-Charge. His subordinates
included Juanito Superal, Jr., Patricio Parilla, Ricardo Mendoza, Cesar Velasquez, Vicente
Casabon, Pepito Buenaventura and Carlito Modelo.

They agreed to establish a common fund from the tips they received from the customers,
guests and members of the club for their mutual needs and benefits. Each member was to
contribute the amount of P100.00 daily and by October 1998, it had reached the aggregate
amount of P17,990. This agreement, however, was not known to the VGC management.

Upon audit of the Locker Room Section, it was reported that there was an undeclared and
unrecorded aggregate amount of P17,990.00 for the fund and that there was no record that the
money had been distributed among those employed in the locker room. In the meantime, an
administrative complaint was filed by Pehid’s subordinates charging him with misappropriating
the P17,990.00.

Management ultimately dismissed Pehid for gross misconduct in the performance of his
duties and for acts of dishonesty that caused prejudice to the club after his submission of a
verified explanation denying the claims filed against him.

Pehid filed a complaint for illegal dismissal, unfair labor practice, separation
pay/retirement benefits, damages and attorney’s fees against petitioners VGC and/or Brig. Gen.
Filamer Artajo (Ret. AFP), Col. Ruben Estepa, Lt. Milagros Aguillon, and the VGC
Administrative Board of Inquiry.

Labor arbiter ruled in favor of Pehid declaring that the acts attributed to Pehid were not
committed in connection with his work as officer-in-charge of the locker room. NLRC reversed
the decision of the Labor Arbiter stating that he was legally dismissed for loss of trust and
confidence. On appeal, CA reinstated the decision of the Labor Arbiter

ISSUE

Whether or not there was Pehid, in allegedly misappropriating the funds constitutes gross
misconduct, which is an act of dishonesty in violation of the Rules of Conduct of the club that
caused prejudice to the VGC?

RULING

NO. The voluntary contribution by the locker personnel amongst themselves to a mutual
fund for their own personal benefit in times of need is not in any way connected with the work of
the locker boys and the complainant. If ever there was misappropriation or loss of the said
mutual fund, the respondent will not and cannot be in any way “tend or cause to prejudice the
club.” Under VGC rule, the dishonesty of an employee to be a valid cause for dismissal must
relate to or involve the misappropriation or malversation of the club funds, or cause or tend to
cause prejudice to VGC. The substantial evidence on record indicates that the P17,990.00,
which was accumulated from a portion of the tips given by the golfers from May 1998 to
October 1998 and was allegedly misappropriated by the respondent as the purported custodian
thereof, did not belong to VGC but to the forced savings of its locker room personnel.

Company policies and regulations are, unless shown to be grossly oppressive or contrary
to law, generally valid and binding and must be complied with by the parties unless finally
revised or amended, unilaterally or preferably through negotiation. However, while an employee
may be validly dismissed for violation of a reasonable rule or regulation adopted for the conduct
of the company’s business, an act allegedly in breach thereof must clearly and convincingly fall
within the express intendment of such order.

Cosmos Bottling Corp vs Fermin

Facts:
Wilson B. Fermin (Fermin) was a forklift operator at Cosmos. He was accused of stealing the
cellphone of his fellow employee. Fermin was then given a Show Cause Memorandum, requiring
him to explain why the cellphone was found inside his locker.] In compliance therewith, he
submitted an affidavit the following day, explaining that he only hid the phone as a practical joke
and had every intention of returning it to Braga. After conducting an investigation, COSMOS
found Fermin guilty of stealing Braga’s phone in violation of company rules and regulations]
Consequently, on 2 October 2003, the company terminated Fermin from employment after 27
years of service. Fermin filed a Complaint for Illegal Dismissal.
Labor Arbiter - dismissed for lack of merit on the ground that the act of taking a fellow
employee’s cellphone amounted to gross misconduct.
NLRC - affirmed
CA - eversed the rulings of the LA and the NLRC and awarded him his full retirement benefitsIt
must be noted that in the case at bar, all the lower tribunals were in agreement that Fermin’s act
of taking Braga’s cellphone amounted to theft.

Issue :
whether the imposition of the penalty of dismissal was appropriate.
Held:
Yes. Theft committed against a co-employee is considered as a case analogous to serious
misconduct, for which the penalty of dismissal from service may be meted out to the erring
employee by virtue of Article 282 of the Labor Code Misconduct involves “the transgression of
some established and definite rule of action, forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment.”
For misconduct to be serious and therefore a valid ground for dismissal, it must be:
1. of grave and aggravated character and not merely trivial or unimportant and
2. connected with the work of the employee.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which
are susceptible of comparison to another in general or in specific detail. For an employee to be
validly dismissed for a cause analogous to those enumerated in Article 282, the cause must
involve a voluntary and/or willful act or omission of the employee. A cause analogous to serious
misconduct is a voluntary and/or willful act or omission attesting to an employee’s moral
depravity. Theft committed by an employee against a person other than his employer, if proven
by substantial evidence, is a cause analogous to serious misconduct.

THIRD DIVISION

SAMAHAN NG MGA MANGGAGAWA SA

HYATT (SAMASAH-NUWHRAIN), G.R. No. 164939
Petitioner,
- versus -

HON. VOLUNTARY
ARBITRATOR BUENAVENTURAC. MAGSALIN
and HOTELENTERPRISES OF THE
PHILIPPINES, INC.,
Respondents.
x------------------------------------------x

SAMAHAN NG MGA MANGGAGAWA SA

HYATT (SAMASAH-NUWHRAIN),
Petitioner,
G.R. No. 172303
- versus -
Present:

CARPIO
HOTEL ENTERPRISES OF THE
PHILIPPINES, INC., MORALES, J.,
Respondent. Chairperson,
BRION,
BERSAMIN,
ABAD,and
VILLARAMA,
 JR., JJ.

Promulgated:
June 6, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Before this Court are two consolidated petitions filed by petitioner Samahan ng
mga Manggagawa sa Hyatt-NUWHRAIN-APL under Rule 45 of the 1997 Rules of
Civil Procedure, as amended. The first petition, docketed as G.R. No. 164939, assails
the Resolutions dated October 3, 2003[1] and August 13, 2004[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 78364, which dismissed petitioners petition for
review at the CA for being the wrong remedy. The second petition, docketed as G.R.
No. 172303, assails the Decision[3]dated December 16, 2005 and
Resolution[4] dated April 12, 2006 of the CA in CA-G.R. SP No. 77478, modifying
the judgment of the Voluntary Arbitrator in NCMB-NCR-CRN-07-008-01.

The antecedent facts are as follows:

Petitioner Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL is a

duly registered union and the certified bargaining representative of the rank-and-file
employees of Hyatt Regency Manila, a five-star hotel owned and operated by
respondent Hotel Enterprises of the Philippines, Inc. On January 31, 2001, Hyatts
General Manager, David C. Pacey, issued a Memorandum[5] informing all hotel
employees that hotel security have been instructed to conduct a thorough bag
inspection and body frisking in every entrance and exit of the hotel. He enjoined
employees to comply therewith. Copies of the Memorandum were furnished
petitioner.

On February 3, 2001, Angelito Caragdag, a waiter at the hotels Cafe Al Fresco

restaurant and a director of the union, refused to be frisked by the security
personnel. The incident was reported to the hotels Human Resources Department
(HRD), which issued a Memorandum[6] to Caragdag on February 5, 2001, requiring
him to explain in writing within forty-eight (48) hours from notice why no
disciplinary action should be taken against him. The following day, on February 6,
2001, Caragdag again refused to be frisked by the security personnel. Thus,
on February 8, 2001, the HRD issued another Memorandum[7] requiring him to
explain.

On February 14, 2001, the HRD imposed on Caragdag the penalty of reprimand for
the February 3, 2001 incident, which was considered a first offense, and suspended
him for three days for the February 6, 2001 incident, which was considered as a
second offense.[8] Both penalties were in accordance with the hotels Code of
Discipline.

Subsequently, on February 22, 2001, when Mike Moral, the manager of Hyatts
Cafe Al Fresco and Caragdags immediate superior, was about to counsel two staff
members, Larry Lacambacal and Allan Alvaro, at the training room, Caragdag
suddenly opened the door and yelled at the two with an enraged look. In a disturbing
voice he said, Ang titigas talaga ng ulo nyo. Sinabi ko na sa inyo na huwag kayong
makikipagusap sa management habang ongoing pa ang kaso! (You are very stubborn.
I told you not to speak to management while the case is ongoing!) Moral asked
Caragdag what the problem was and informed him that he was simply talking to his
staff. Moral also told Caragdag that he did not have the right to interrupt and
intimidate him during his counseling session with his staff.

On February 23, 2001, Moral issued a Memorandum[9] requiring Caragdag to

explain his actions in the training room. Caragdag submitted his written explanation
on February 25, 2001[10] narrating that he was informed by someone that Lacambacal
and Alvaro were requesting for his assistance because Moral had invited them to the
training room. Believing that he should advise the two that they should be
accompanied by a union officer to any inquisition, he went to the training
room. However, before he could enter the door, Moral blocked him. Thus, he told
Lacambacal and Alvaro that they should be assisted by a union representative before
giving any statement to management. Caragdag also prayed that Moral be investigated
for harassing union officers and union members.

On February 28, 2001, Moral found the explanations unsatisfactory. In a

Memorandum[11] issued on the same date, Moral held Caragdag liable for Offenses
Subject to Disciplinary Action (OSDA) 3.01 of the hotels Code of Discipline, i.e.,
threatening, intimidating, coercing, and provoking to a fight your superior for reasons
directly connected with his discharge of official duty. Thus, Caragdag was imposed
the penalty of seven days suspension in accordance with the hotels Code of
Discipline.

Still later, on March 2, 2001, Caragdag committed another infraction. At 9:35

a.m. on the said date, Caragdag left his work assignment during official hours without
prior permission from his Department Head. He was required to submit an
explanation, but the explanation[12] he submitted was found unsatisfactory. On March
17, 2001, Moral foundCaragdag liable for violating OSDA 3.07, i.e., leaving work
assignment during official working hours without prior permission from the
department head or immediate superior, and suspended him for three days.[13]

Because of the succession of infractions he committed, the HRD also required

Caragdag to explain on May 11, 2001 why the hotels OSDA 4.32 (Committing
offenses which are penalized with three [3] suspensions during a 12-month period)
should not be enforced against him.[14] An investigation board was formed after
receipt of Caragdags written explanation, and the matter was set for hearing on May
19, 2001. However, despite notice of the scheduled hearing, both Caragdag and the
Union President failed to attend. Thereafter, the investigating board resolved on the
said date to dismiss Caragdag for violation of OSDA 4.32.[15] Caragdag appealed but
the investigating board affirmed its resolution after hearing on May 24, 2001.

On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar, sent Caragdag a
Notice of Dismissal,[16] the pertinent portion of which reads:
Based on the findings of the Investigation Board dated May 19, 2001 which
was approved by the General Manager Mr. David Pacey on the same day and which
did not merit any reversal or modification after the hearing on your appeal on May
24, 2001, the penalty of DISMISSAL is therefore affirmed to take effect on June 1,
2001.

Caragdags dismissal was questioned by petitioner, and the dispute was referred
to voluntary arbitration upon agreement of the parties. On May 6, 2002, the Voluntary
Arbitrator rendered a decision,[17] the dispositive portion of which reads:
WHEREFORE, premises considered, this Arbiter rules that the three separate
suspensions of Mr. Caragdag are valid, his dismissal is legal and OSDA 4.32 of
Hyatts Code of Discipline is reasonable.

However, for humanitarian considerations, Hyatt is hereby ordered to grant

financial assistance to Mr. Caragdag in the amount of One Hundred Thousand Pesos
(PhP100,000.00).
 In finding the three separate suspensions of Caragdag valid, the Voluntary
Arbitrator reasoned that the union officers and members had no right to breach
company rules and regulations on security and employee discipline on the basis of
certain suspicions against management and an ongoing CBA negotiation
standoff. The Voluntary Arbitrator also found that when Caragdag advised
Lacambacal and Alvaro not to give any statement, he threatened and intimidated his
superior while the latter was performing his duties. Moreover, there is no reason why
he did not arrange his time-off with the Department Head concerned. Thus, Caragdag
was validly dismissed pursuant to OSDA 4.32 of Hyatts Code of Discipline, which
states that an employee who commits three different acts of misconduct within a
twelve (12)-month period commits serious misconduct.

Petitioner sought reconsideration of the decision while respondent filed a

motion for partial reconsideration. However, the Voluntary Arbitrator denied both
motions on May 26, 2003.[18]

On August 1, 2003, petitioner assailed the decision of the Voluntary Arbitrator

before the CA in a petition for certiorari which was docketed as CA-G.R. SP No.
78364.[19] As mentioned at the outset, the CA dismissed the petition outright for being
the wrong remedy. The CA explained:
Rule 43, Section 5 of the 1997 Rules of Civil Procedure explicitly provides
that the proper mode of appeal from judgments, final orders or resolution of
voluntary arbitrators is through a Petition for Review which should be filed within
fifteen (15) days from the receipt of notice of judgment, order or resolution of the
voluntary arbitrator.

Considering that petitioner intends this petition to be a Petition for Certiorari,

the Court hereby resolves to dismiss the petition outright for being an improper mode
of appeal.

Even if this Court treats the instant petition as a Petition for Review, still the
Court has no alternative but to dismiss the same for having been filed out of time. As
admitted by the petitioner it received the Order dated 26 May 2003 denying their
motion for reconsideration on 02 June 2003. The fifteen (15) day period within which
to appeal through a Petition for Review is until June 17, 2003. The petitioner filed the
present petition on August 1, 2003, way beyond the reglementary period provided for
by the Rules.[20]

Petitioner duly filed a motion for reconsideration of the dismissal, but the motion was
denied by the CA. Thus, petitioner filed before this Court a petition for review
on certiorari which was docketed as G.R. No. 164939.
In the meantime, on June 30, 2003, respondent also filed a petition for review[21] with
the CA on the ground that the Voluntary Arbitrator committed a grievous error in
awarding financial assistance to Caragdag despite his finding that the dismissal due to
serious misconduct was valid. On December 16, 2005, the CA promulgated a decision
in CA-G.R. SP. No. 77478 as follows:
WHEREFORE, the Decision dated May 6, 2002 of Voluntary Arbitrator
Buenaventura C. Magsalin is AFFIRMED with MODIFICATION by DELETING
the award of financial assistance in the amount of P100,000.00 to Angelito Caragdag.

SO ORDERED.[22]

In deleting the award of financial assistance to Caragdag, the CA cited the case
of Philippine Commercial International Bank v. Abad,[23] which held that the grant of
separation pay or other financial assistance to an employee dismissed for just cause is
based on equity and is a measure of social justice, awarded to an employee who has
been validly dismissed if the dismissal was not due to serious misconduct or causes
that reflected adversely on the moral character of the employee. In this case, the CA
agreed with the findings of the Voluntary Arbitrator that Caragdag was validly
dismissed due to serious misconduct. Accordingly, financial assistance should not
have been awarded to Caragdag. The CA also noted that it is the employers
prerogative to prescribe reasonable rules and regulations necessary or proper for the
conduct of its business or concern, to provide certain disciplinary measures to
implement said rules and to ensure compliance therewith.

Petitioner sought reconsideration of the decision, but the CA denied the motion for
lack of merit. Hence, petitioner filed before us a petition for review on certiorari
docketed as G.R. No. 172303.

Considering that G.R. Nos. 164939 and 172303 have the same origin, involve
the same parties, and raise interrelated issues, the petitions were consolidated.

Petitioner raises the following issues:

In G.R. No. 164939

THE COURT OF APPEALS ERRED IN DISMISSING OUTRIGHT THE

PETITION FOR CERTIORARI ON THE GROUND THAT THE SAME IS AN
IMPROPER MODE OF APPEAL.[24]

In G.R. No. 172303

 THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF
FINANCIAL ASSISTANCE IN THE AMOUNT OF P100,000.00 TO ANGELITO
CARAGDAG.[25]

The issues for our resolution are thus two-fold: first, whether the CA erred in
dismissing outright the petition for certiorari filed before it on the ground that the
same is an improper mode of appeal; and second, whether the CA erred in deleting the
award of financial assistance in the amount of P100,000.00 to Caragdag.

On the first issue, petitioner argues that because decisions rendered by

voluntary arbitrators are issued under Title VII-A of the Labor Code, they are not
covered by Rule 43 of the 1997 Rules of Civil Procedure, as amended, by express
provision of Section 2 thereof. Section 2, petitioner points out, expressly provides that
Rule 43 shall not apply to judgments or final orders issued under the Labor Code of
the Philippines. Hence, a petition for certiorari under Rule 65 is the proper remedy for
questioning the decision of the Voluntary Arbitrator, and petitioner having availed of
such remedy, the CA erred in declaring that the petition was filed out of time since the
petition was filed within the sixty (60)-day reglementary period.

On the other hand, respondent maintains that the CA acted correctly in

dismissing the petition for certiorari for being the wrong mode of appeal. It stresses
that Section 1 of Rule 43 clearly states that it is the governing rule with regard to
appeals from awards, judgments, final orders or resolutions of voluntary arbitrators.
Respondent contends that the voluntary arbitrators authorized by law include the
voluntary arbitrators appointed and accredited under the Labor Code, as they are
considered as included in the term quasi-judicial instrumentalities.

Petitioners arguments fail to persuade.

In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v.

Bacungan,[26]we repeated the well-settled rule that a decision or award of a
voluntary arbitrator is appealable to the CA via petition for review under Rule
43. We held that:
The question on the proper recourse to assail a decision of a voluntary
arbitrator has already been settled in Luzon Development Bank v.
Association of Luzon Development Bank Employees, where the Court
held that the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative Circular No. 1-95
(now embodied in Rule 43 of the 1997 Rules of Civil Procedure), just
like those of the quasi-judicial agencies, boards and commissions
 enumerated therein, and consistent with the original purpose to provide a
uniform procedure for the appellate review of adjudications of all quasi-
judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint

Employees Union-Olalia v. Court of Appeals, the Court reiterated the
aforequoted ruling. In Alcantara, the Court held that notwithstanding
Section 2 of Rule 43, the ruling in Luzon Development Bank still stands.
The Court explained, thus:

The provisions may be new to the Rules of Court but it is

far from being a new law. Section 2, Rules 42 of the 1997 Rules
of Civil Procedure, as presently worded, is nothing more but a
reiteration of the exception to the exclusive appellate jurisdiction
of the Court of Appeals, as provided for in Section 9, Batas
Pambansa Blg. 129, as amended by Republic Act No. 7902:

(3) Exclusive appellate jurisdiction over all final

judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service
Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended,the provisions of
this Act and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of
the Judiciary Act of 1948.

The Court took into account this exception in Luzon

Development Bank but, nevertheless, held that the decisions of
voluntary arbitrators issued pursuant to the Labor Code do not
come within its ambit x x x

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as

amended, provide:
SECTION 1. Scope. - This Rule shall apply to appeals from
judgments or final orders of the Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or authorized by any quasi-
judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the x x x, and voluntary arbitrators authorized by
law.

xxxx

SEC. 3. Where to appeal. - An appeal under this Rule may be

taken to the Court of Appeals within the period and in the manner
therein provided, whether the appeal involves questions of fact, of law,
or mixed questions of fact and law.
 SEC. 4. Period of appeal. - The appeal shall be taken within
fifteen (15) days from notice of the award, judgment, final order or
resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioners motion
for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. x x x. (Emphasis supplied.)

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution
denying petitioners motion for reconsideration, petitioner should have filed with
the CA, within the fifteen (15)-day reglementary period, a petition for review, not a
petition for certiorari.

Petitioner insists on a liberal interpretation of the rules but we find no cogent

reason in this case to deviate from the general rule. Verily, rules of procedure exist
for a noble purpose, and to disregard such rules in the guise of liberal construction
would be to defeat such purpose. Procedural rules are not to be disdained as mere
technicalities. They may not be ignored to suit the convenience of a
party. Adjective law ensures the effective enforcement of substantive rights
through the orderly and speedy administration of justice.Rules are not intended to
hamper litigants or complicate litigation. But they help provide for a vital system
of justice where suitors may be heard following judicial procedure and in the
correct forum. Public order and our system of justice are well served by a
conscientious observance by the parties of the procedural rules.[27]

On the second issue, petitioner argues that Caragdag is entitled to financial assistance
in the amount of P100,000 on humanitarian considerations. Petitioner stresses that
Caragdags infractions were due to his being a union officer and his acts did not show
moral depravity. Petitioner also adds that, while it is true that the award of financial
assistance is given only for dismissals due to causes specified under Articles 283 and
284 of the Labor Code, as amended, this Court has, by way of exception, allowed the
grant of financial assistance to an employee dismissed for just causes based on equity.

Respondent on the other hand, asserts that the CA correctly deleted the award
of financial assistance erroneously granted to Caragdag considering that he was found
guilty of serious misconduct and other acts adversely reflecting on his moral
character. Respondent stresses that Caragdags willful defiance of the hotels security
policy, disrespect and intimidation of a superior, and unjustifiable desertion of his
work assignment during working hours without permission, patently show his serious
and gross misconduct as well as amoral character.[28]

Again, petitioners arguments lack merit.

The grant of separation pay or some other financial assistance to an employee
dismissed for just causes is based on equity.[29]In Phil. Long Distance Telephone
Co. v. NLRC,[30] we ruled that severance compensation, or whatever name it is
called, on the ground of social justice shall be allowed only when the cause of the
dismissal is other than serious misconduct or for causes which reflect adversely on
the employees moral character. The Court succinctly discussed the propriety of the
grant of separation pay in this wise:
We hold that henceforth separation pay shall be allowed as a measure
of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude,
like theft or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of
social justice.

A contrary rule would, as the petitioner correctly argues, have the

effect, of rewarding rather than punishing the erring employee for his
offense. And we do not agree that the punishment is his dismissal only
and that the separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who steals from
the company is granted separation pay even as he is validly dismissed, it
is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is
again found out. This kind of misplaced compassion is not going to do
labor in general any good as it will encourage the infiltration of its ranks
by those who do not deserve the protection and concern of the
Constitution.

The policy of social justice is not intended to countenance wrongdoing

simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the
offense. Compassion for the poor is an imperative of every humane
society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so
only if their hands are clean and their motives blameless and not simply
because they happen to be poor. This great policy of our Constitution is
not meant for the protection of those who have proved they are not
worthy of it, like the workers who have tainted the cause of labor with
the blemishes of their own character.[31]

Here, Caragdags dismissal was due to several instances of willful disobedience to

the reasonable rules and regulations prescribed by his employer. The Voluntary
Arbitrator pointed out that according to the hotels Code of Discipline, an employee
who commits three different acts of misconduct within a twelve (12)-month period
commits serious misconduct. He stressed that Caragdags infractions were not even
spread in a period of twelve (12) months, but rather in a period of a little over a
month. Records show the various violations of the hotels rules and regulations
were committed by Caragdag. He was suspended for violating the hotel policy on
bag inspection and body frisking. He was likewise suspended for threatening and
intimidating a superior while the latter was counseling his staff. He was again
suspended for leaving his work assignment without permission. Evidently,
Caragdags acts constitute serious misconduct.

In Piedad v. Lanao del Norte Electric Cooperative, Inc.,[32]we ruled that a series of
irregularities when put together may constitute serious misconduct, which under
Article 282 of the Labor Code, as amended, is a just cause for dismissal.

Caragdags dismissal being due to serious misconduct, it follows that he

should not be entitled to financial assistance. To rule otherwise would be to reward
him for the grave misconduct he committed. We must emphasize that social justice
is extended only to those who deserve its compassion.[33]

WHEREFORE, the petitions for review on certiorari are DENIED.

The October 3, 2003 and August 13, 2004 Court of Appeals Resolutions in CA-G.R.
SP No. 78364, as well as the Court of Appeals December 16, 2005 Decision
and April 12, 2006 Resolution in CA-G.R. SP No.
77478, are AFFIRMED and UPHELD.

With costs against the petitioner.

SO ORDERED.

THIRD DIVISION

e PACIFIC GLOBAL CONTACT G.R. No. 167345

CENTER, INC. and/or JOSE
VICTOR SISON, Present:
Petitioners,
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
 Promulgated:
MA. LOURDES CABANSAY,
Respondent. November 23, 2007

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Established in our labor law jurisprudence is the principle that while compassion
and human consideration should guide the disposition of cases involving
termination of employment, since it affects ones means of livelihood, it should not
be overlooked that the benefits accorded to labor do not include compelling an
employer to retain the services of an employee who has been shown to be a gross
liability to the employer.[1]

Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court assailing the January 10, 2005 Decision[2] of the Court of Appeals (CA) in
CA-G.R. SP No. 83248, and the March 7, 2005 Resolution[3] denying the motion
for reconsideration thereof.

The facts are undisputed. Respondent Ma. Lourdes Cabansay (Cabansay) was
hired as Senior Traning Manager of ePacific Global Contact Center, Inc. with a
monthly salary of P38,000.00 on April 18, 2001[4] and became a regular employee
on August 1, 2001. In March 2002, respondent was tasked to prepare a new
training process for the companys Telesales Trainees.[5]

After reviewing the training module prepared by respondent, Mr. Rosendo S.

Ballesteros (Ballesteros), the companys Senior Vice President-Business
Development Group, found that the same did not contain any changes and that they
were not ready to present it.[6] He thus instructed respondent through an electronic
mail (e-mail) to postpone the presentation and the implementation of the new
training process.[7] Ballesteros further emphasized that the Department needed
more time to teach the trainees on how to get leads, focus on developing their
telemarketing skills and acquire proper motivation.[8]
In response to Ballesteross e-mail instructions, Cabansay wrote, also via e-mail, as
follows:
From: Miami Cabansay
Sent: Friday, April 05, 2002 7:58 AM
To: Ro Ballesteros; Lorna Garcia ePacific
Cc: Butch Nievera
Subject: RE: dlp.new training process presentation.04042002
 Importance: High
Sensitivity: Confidential

Ro, the presentation is going to be discussed in detail. As we discussed yesterday

i (sic) SPECIFICALLY told you that I WILL DISCUSS the new training process
and explain it to them in detail. Didnt you see the last past (sic) of the 5-day
classroom training, (sic) the last day includes PROSPECTING, thats where the
CCA trainees will be taught how to get leads both local and abroad.

The criteria for the evaluation? Its already done by Richie, were going to
distribute the hard copies and discuss it in DETAIL in this afternoons briefing.

This is a very simple presentation and I WILL NOT POSTPONE it today, its very
easy to comprehend and as per YOUR INSTRUCTION we will be implementing
it next week, so when should we present this to the TLs?

Lets not make SIMPLE THINGS COMPLICATED.

I will go on with the presentation this afternoon.[9]

Adversely reacting to respondents attitude, Ballesteros sent Cabansay a memo

on April 6, 2002, informing the latter that he found her message to be a clear act of
insubordination, causing him to lose his trust and confidence in her as Manager of
the Training Department.[10] He then asked respondent to explain in writing why
she should not be terminated as a consequence of her acts.[11]
Meanwhile, no presentation of the training module was made on April 5,
2002 because the Senior Manager for Telesales, Ms. Lorna Garcia, on instruction
of Ballesteros, informed all the participants that the same was postponed
because Management was not yet ready to present the module.[12]

Clarifying that this was merely a case of miscommunication and that she had
no intention to disregard the order to postpone the implementation of the new
training process, Cabansay submitted two memoranda dated April 8 and 11,
2002.[13]
However, on April 11, 2002, the same day she submitted her second explanation,
Cabansay received a memorandum from the HR Department/Office of the
President notifying her that she had been terminated from the service effective
immediately for having committed an act of insubordination resulting in the
managements loss of trust and confidence in her.[14]

Respondent, thus, filed a case for illegal dismissal docketed as NLRC-NCR-

04-02441-02 with the Labor Arbitration Branch of the National Labor Relations
Commission (NLRC). In her position paper,[15] she sought, among others, payment
of full backwages, separation pay, actual, moral and exemplary damages, cash
equivalent of vacation and sick leave, 13th month pay, and attorneys fees.[16]

On September 2, 2002, Labor Arbiter (LA) Madjayran H. Ajan rendered his

Decision[17] dismissing the complaint. The Labor Arbiter ruled that reading
Cabansays e-mail message between the lines would clearly show that she willfully
disobeyed the order of Ballesteros.[18] The company, thus, was justified in
dismissing her on the ground of insubordination resulting in loss of trust and
confidence. As to her claim for 13th month pay, as well as for the cash equivalent
of her sick and vacation leave, the LA ruled that she impliedly agreed, when she
did not object, to the companys submission that the pro-rated equivalent of her
13th month pay was already paid to her and that she did not meet the companys
conditions for conversion to cash of her leave credits.[19] The dispositive portion of
the LAs Decision reads:

WHEREFORE, premises all considered, judgment is hereby rendered

DISMISSING the complaint for lack of merit. Finding the termination of the
complainant valid and legal. (sic)

All other claims are Dismissed for lack of merit.

SO ORDERED.[20]

On appeal, the NLRC, in its August 29, 2003 Resolution in NLRC NCR CA No.
033624-02,[21] affirmed the decision of the LA. The Commission ruled that
Ballesteross order to postpone the implementation of the training module was
reasonable, lawful, made known to Cabansay and pertained to the duties which she
had been engaged to discharge.[22] However, her replyxxx I WILL NOT
POSTPONE it today xxx Lets not make SIMPLE THINGS COMPLICATEDwas a
willful defiance of the lawful order of her superior.[23] Since her position as Senior
Training Manager carries with it the highest degree of responsibility in upholding
the interest of her employer and in setting a standard of discipline among officers
and employees, the company had a valid cause to dismiss Cabansay when she
deliberately disobeyed the order of Ballesteros resulting in the latters loss of trust
and confidence in her.[24] The NLRC further ruled that the company sufficiently
afforded her due process prior to her dismissal.[25] Consequently, she should not be
reinstated to her job or be paid separation pay, backwages, moral and exemplary
damages and attorneys fees.[26] The NLRC disposed of the case as follows:

WHEREFORE, premises considered, Complainants appeal is

DISMISSED for lack of merit. The Labor Arbiters assailed Decision in the
above-entitled case is hereby AFFIRMED en toto.

SO ORDERED.[27]

When her motion for reconsideration was denied by the NLRC,[28] Cabansay
filed a petition for certiorari under Rule 65 before the CA docketed as CA-G.R. SP
No. 83248.[29]
 On January 10, 2005, the appellate court rendered its Decision [30] granting
the petition. The CA ruled that Cabansays termination could be justified neither by
insubordination nor loss of trust and confidence. A perusal of the e-mail
instructions sent by Ballesteros to her would show that, although the alleged order
to postpone the presentation of the training module was reasonable and lawful, it
was not clearly made known to her. The phrase I dont think [we are ready to
present this to all TL] could not be deemed an order as it merely suggested an
opinion.[31] Moreover, the e-mail reply of Cabansay cannot be considered an act of
willful defiance or insubordination. The language used was not harsh and no rude
remarks or demeaning statements were made. She was only explaining her view on
the matter, which could not be considered unlawful considering that she was also a
managerial employee clothed with discretionary powers. Clearly, her acts did not
constitute the wrongful and perverse attitude that otherwise would sanction
dismissal. And even if she were guilty of insubordination, such minor infraction
should not merit the ultimate and supreme penalty of dismissal.[32] The fallo of the
CA Decision reads:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition at
bench must be, as it hereby is, GRANTED. The challenged resolutions of the
NLRC dated August 29, 2003 and January 19, 2004 are hereby NULLIFIED and
SET ASIDE. Petitioner is declared to have been illegally dismissed by private
respondent company. Private respondent is hereby ordered to pay petitioner full
backwages, separation pay and attorneys fees. To this end, this case is
REMANDED to the Labor Arbiter for the computation of the separation pay,
backwages and other monetary awards to petitioner. Without special
pronouncement as to costs.

SO ORDERED.[33]

Petitioner ePacific duly filed a motion for reconsideration[34] but this was denied by
the appellate court in the March 7, 2005 Resolution.[35]

The said denial prompted petitioners to come to us raising the following grounds:
x x x (T)hat there is a prima facie evidence of grave abuse of discretion on the
part of the Hon. Court of Appeals in finding that the complainant was illegally
dismissed on the bases of the evidence presented.

That the Hon. Court of Appeals erred in applying the pertinent laws in the instant
case.

The Hon. Court of Appeals had decided a question of substance in the instant
case, not theretofore determined by the Hon. Supreme Court and that the Court of
Appeals had decided in a way not in accord with law or with applicable decisions
of the Supreme Court.

The Hon. Court of Appeals has so far departed from the accepted usual course of
judicial proceedings.[36]
 The main issue to be resolved in this case is whether or not respondent
Cabansay was illegally dismissed.

We have consistently ruled in a plethora of cases that, in petitions for review

on certiorari under Rule 45 of the Rules of Court, only questions of law may be
raised,[37] except if the factual findings of the appellate court are mistaken, absurd,
speculative, conjectural, conflicting, tainted with grave abuse of discretion, or
contrary to the findings culled by the court of origin.[38] As the findings and
conclusions of the LA and the NLRC, in this case, starkly conflict with those of the
CA, we are constrained to delve into the records and examine the questioned
findings.

After a careful review of the records and considering the arguments of the parties,
the Court finds the petition impressed with merit.

Both the Labor Arbiter and the NLRC were unanimous in their findings that
respondent was validly dismissed. In arriving at this conclusion, the LA and the
NLRC examined the e-mail correspondence of Ballesteros and the respondent.
They found that Ballesteros made a lawful order to postpone the implementation of
the new training process, yet respondent incorrigibly refused to heed his
instructions and sent an e-mail to him stating that she would go on with its
presentation. Such an act of insubordination resulted in the managements loss of
trust and confidence in her. This is a finding which the Court does not wish to
disturb.

Oft-repeated is the rule that appellate courts accord the factual finding of
the labor tribunal not only respect but also finality when supported by substantial
evidence,[39]unless there is showing that the labor tribunal arbitrarily disregarded
evidence before them or misapprehended evidence of such nature as to compel a
contrary conclusion if properly appreciated.[40] Substantial evidence has been
defined to be such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, and its absence is shown not by stressing that
there is contrary evidence on record, direct or circumstantial, for the appellate
court cannot substitute its own judgment or criterion for that of the labor tribunal in
determining wherein lies the weight of evidence or what evidence is entitled to
belief.[41]

In the instant case, we find that the labor tribunal did not arbitrarily
disregard or misapprehend the evidence. Its finding that respondent was validly
dismissed is likewise warranted by substantial evidence. Thus, we agree with
petitioners stance that the findings of the LA, as affirmed by the NLRC, should not
have been set aside by the appellate court. Deference to the expertise acquired by
the labor tribunal and the limited scope granted in the exercise
of certiorari jurisdiction restrain any probe into the correctness of the LAs and the
NLRCs evaluation of evidence.[42]

The petitioners anchor their termination of respondents services on Article 282,

paragraphs (a) and (c), of the Labor Code, as amended, which provides:

ARTICLE 282. TERMINATION BY EMPLOYER

An employer may terminate an employment for any of the following

causes:

(a) Serious misconduct or willful disobedience by the employee of the

lawful orders of his employer or representative in connection with his work;
xxxx

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

Willful disobedience or insubordination necessitates the concurrence of at

least two requisites: (1) the employees assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated
must have been reasonable, lawful, made known to the employee and must pertain
to the duties which he had been engaged to discharge.[43] On the other hand, loss of
trust and confidence, to be a valid ground for dismissal, must be based on a willful
breach of trust and founded on clearly established facts. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. It must rest on substantial grounds and not on the employers
arbitrariness, whims, caprices or suspicion; otherwise, the employee would
eternally remain at the mercy of the employer. Loss of confidence must not also be
indiscriminately used as a shield by the employer against a claim that the dismissal
of an employee was arbitrary. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and show that the employee concerned
is unfit to continue working for the employer.[44]

In the case at bar, the reasonableness and lawfulness of Ballesteross order is

not in question, so is its relation to the duties of respondent. What is disputed
herein is rather its clarity. Respondent Cabansay contends that the directive was
not clearly made known to her: Ballesteross order was to postpone
the implementation but not the presentation of the new training process/module to
the team leaders.

Respondents contention is untenable. It should be noted that what is

involved in the directive is the new training process, which logically cannot be
implemented without being presented or communicated to the team leaders of the
company. Thus, when Ballesteros ordered the cessation of its implementation,
there can be no other inference than that he wanted to postpone the presentation of
the training process which was then already scheduled. Evident further in
Ballesteross e-mail is that he did not find any changes in the new module; hence,
he wanted the implementation thereof to be deferred and instructed respondent to
consult with the other managers to gather more input.

Be that as it may, respondent cannot belie the fact that she well-understood
the directive for her to postpone the presentation of the module, as she herself
acknowledged in her e-mail reply to SVP Ballesteros that she would discuss the
new training process and explain it to them in detail in the afternoon on that day,
thus, she would not postpone the scheduled presentation. There is no doubt,
therefore, that the order of Ballesteros was clearly made known to respondent.

As to the willfulness of her conduct, the same is manifest in her e-mail reply,
which, as it is written, is characterized by abject aggressiveness and antagonism:
the e-mail has a begrudging tone and is replete with capitalized words eliciting her
resolve to indeed contravene the SVPs directive. Thus, she categorically said, This
is a very simple presentation and I WILL NOT POSTPONE it today, its very easy
to comprehend and as per YOUR INSTRUCTION we will be implementing it next
week, so when should we present this to the TLs? Lets not make SIMPLE THINGS
COMPLICATED. I will go on with the presentation this afternoon.

While respondent Cabansay was a managerial employee, a Senior Training

Manager entrusted with the delicate matter of molding the minds and characters of
call center agents and team leaders, and clothed with discretion to determine what
was in the best interest of the company, her managerial discretion was not without
limits. Its parameters were contained the moment her discretion was exercised and
then opposed by the immediate superior officer/employer for being against the
policies and welfare of the company. Hence, any action in pursuit of the discretion
thus opposed ceased to be discretionary and could be considered as willful
disobedience.[45]

Indeed, by refusing to postpone the presentation and implementation of the

new training process, respondent intentionally, knowingly and purposely, without
justifiable excuse, breached the trust and confidence reposed in her by her
employer. To present and discuss a training module, which is deemed by
management as still inadequate in its content, will certainly not only waste the
time, effort and energy of the participants in the discussion but will also entail
losses on the part of the company.

It is of no moment that the presentation did not push through, and that no
actual damage was done by respondent to the company. The mere fact that
respondent refused to obey the reasonable and lawful order to defer the
presentation and implementation of the module already gave a just cause for
petitioners to dismiss her. Verily, had it not been for the timely intervention of the
Telesales Senior Manager, under the instructions of the SVP, harm could have
been done to company resources.

Let it be stressed that insofar as the application of the doctrine of trust and
confidence is concerned, jurisprudence has distinguished the treatment of
managerial employees or employees occupying positions of trust and confidence
from that of rank-and-file personnel. With respect to the latter, loss of trust and
confidence as a ground for dismissal requires proof of involvement in the alleged
events in question, but as regards managerial employees, the mere existence of a
basis for believing that such employee has breached the trust of his employer
would suffice for his or her dismissal.[46] For this purpose, there is no need to
present proof beyond reasonable doubt. It is sufficient that there is some basis for
the loss of trust or that the employer has reasonable ground to believe that the
employee is responsible for the misconduct which renders him unworthy of the
trust and confidence demanded by his position.[47] Respondents conduct, in this
case, is sufficient basis for the company to lose its trust and confidence in her.
Under the circumstances, the company cannot be expected to retain its trust and
confidence in and continue to employ a manager whose attitude is perceived to be
inimical to its interests. Unlike other just causes for dismissal, trust in an
employee, once lost, is difficult, if not impossible to regain.[48]

As to the respondents argument that petitioners failed to comply with the

requirements of statutory due process, we do not agree. Before the services of an
employee can be validly terminated, the employer must furnish him with two
written notices: (a) a written notice served on the employee specifying the ground
or grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side; and, (b) 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.[49]

In this case, the facts are clear that petitioners, through Ballesteros, informed
respondent in the April 6, 2002 memo that the company found her message to be a
clear act of insubordination leading to the companys loss of trust and confidence in
her as a manager of the training department. In the same memo, petitioners asked
her to explain her side in writing. After the respondent submitted her two
memoranda-explanations successively on April 8 and 11, 2002, petitioners served
her the notice of her termination. Verily, petitioners complied with the requirement
of statutory due process in the dismissal of respondent. The fact that the letter of
termination or the second notice was received by respondent on April 11, 2002, on
the same day she submitted her second explanation, does not put to naught
petitioners observance of the requirement of due process. It has to be noted that
from April 8, 2002, when respondent had her chance to explain her side,
petitioners were contemplating for several days and presumably were considering
her reasons before they finally dismissed her. In any case, the essence of due
process is that a party be afforded a reasonable opportunity to be heard and to
submit any evidence he may have in support of his defense.[50]

IN VIEW OF ALL THE FOREGOING, the petition is GRANTED. The

January 10, 2005 Decision and the March 7, 2005 Resolution of the Court of
Appeals in CA-G.R. SP No. 83248 are REVERSED AND SET ASIDE. The
Decision of the Labor Arbiter, as affirmed by the NLRC, dismissing the
respondents complaint for illegal dismissal is REINSTATED.

SO ORDERED.

LORES REALTY ENTERPRISE, INC. VS PACIA

G.R. NO. 171189, MARCH 9, 2011

FACTS: In 1982, respondent Virginia E. Pacia (Pacia) was hired by LREI. At the time of her
dismissal, she was the assistant manager and officer-in-charge of LREI’s Accounting
Department under the Finance Administrative Division.

On October 28, 1998, LREI’s acting general manager, petitioner Sumulong, through Ms. Julie
Ontal, directed Pacia to prepare Check Voucher No. 16477 worth ₱150,000.00 as partial
payment for LREI’s outstanding obligation to the Bank of the Philippine Islands-Family
Bank (BPI-FB). Pacia did not immediately comply with the instruction. After two repeated
directives, Pacia eventually prepared Check No. 0000737526 in the amount of ₱150,000.00.
Later, Sumulong again directed Pacia to prepare Check Voucher No. 16478 in the amount of
₱175,000.00 to settle the balance of LREI’s outstanding indebtedness with BPI-FB. Pacia once
again was slow in obeying the order. Due to the insistence of Sumulong, however, Pacia
eventually prepared Check No. 0000737527 in the amount of ₱175,000.00.

To explain her refusal to immediately follow the directive, Pacia reasoned out that the funds in
LREI’s account were not sufficient to cover the amounts to be indicated in the checks.

The next day, October 29, 1998, Sumulong issued a memorandum3 ordering Pacia to explain in
writing why she refused to follow a clear and lawful directive.

On the same day, Pacia replied in writing and explained that her initial refusal to prepare the
checks was due to the unavailability of funds to cover the amounts and that she only wanted to
protect LREI from liability under the Bouncing Checks Law.4

On November 6, 1998, Pacia received a notice of termination5 stating, among others, that she
was being dismissed because of her willful disobedience and their loss of trust and confidence in
her.

Labor Arbiter (LA) rendered a decision8 finding that the dismissal of Pacia was for a just and
valid cause but ordering payment of what was due her.

On appeal, the NLRC in its March 31, 2000 Decision9 reversed the LA’s Decision and found
LREI and Sumulong guilty of illegal dismissal.
On November 25, 2005, the CA found no merit in the petition and dismissed it.

ISSUE: Whether or not there was a valid termination on the ground of willful disobedience to a
lawful order.

HELD: NO. FOR THE DISOBEDIENCE WAS NOT OUT OF DEFIANCE OF THE
COMPANY BUT FOR THE PROTECTION OF THE COMPANY AND ITS SIGNATORIES
FROM LIABILITY.

The above evidence clearly reveal[s] that there were no sufficient funds to cover the
check which the acting Manager directed complainant to prepare. However, complainant
nevertheless prepared Check Nos. 737527 and 737526 on 28 October 1998 and also corrected
Check Vouchers Nos. 16477 and 16478 on 28 October 1998.

We take note and give due merit to complainant’s explanation in her reluctance to issue checks
against insufficient funds which was to protect the company and its signatories from liabilities
resulting from issuance of bounced checks. Complainant’s initial refusal was good intentioned.
Respondents also insist that complainant refused to follow a lawful directive of her superior
officer to make some corrections on the vouchers. However, we cannot see how an order to
prepare a check at the time when there was no sufficient fund to cover the same can be classified
as a lawful directive of the acting Manager.

ISSUE: Whether or not there was a lawful order.

LREI and Sumulong argue that Pacia’s refusal to obey the directives of Sumulong was a
"manifest intent not to perform the function she was engaged to discharge."15 They are of the
position that Pacia’s claim of "good intentions" in refusing to prepare the checks was a mere
afterthought. They stress that the instruction to prepare a check despite the absence of sufficient
funds to cover the same was, nevertheless, a lawful order.

On the other hand, Pacia counters that her initial reluctance to prepare the checks, which
she knew were not sufficiently funded, cannot "be characterized as ‘wrongful or perverse
attitude.’"16 In her view, the directive to prepare the checks at the time it was not sufficiently
funded was not a lawful order contemplated in Article 282 of the Labor Code. It was an unlawful
directive because it asked for the preparation of a check despite the fact that the account had no
sufficient funds to cover the same. She further explained that she did not comply with the
directive in order to protect Sumulong and LREI from any liability in the event that the checks
would be dishonored upon presentment for payment for insufficiency of funds.

HELD: The Court also finds it difficult to subscribe to LREI and Sumulongs’s contention that
the reason for Pacia’s initial reluctance to prepare the checks was a mere afterthought
considering that "check no. 0000737527 under one of the check vouchers she reluctantly
prepared, bounced when it was deposited."19 Pacia’s apprehension was justified when the check
was dishonored. This clearly affirms her assertion that she was just being cautious and
circumspect for the company’s sake. Thus, her actuation should not be construed as improper
conduct.

In finding for Pacia, the Court is guided by the time-honored principle that if doubt exists
between the evidence presented by the employer and the employee, the scales of justice must be
tilted in favor of the latter. The rule in controversies between a laborer and his master
distinctly states that doubts reasonably arising from the evidence, or in the interpretation
of agreements and writing, should be resolved in the laborer’s favor.
 G.R. No. 152166 October 20, 2010
ST. LUKE'S MEDICAL CENTER, INC. and ROBERT KUAN, Chairman, Petitioners, vs.
ESTRELITO NOTARIO, Respondent.
FACTS: On June 23, 1995, St. Luke’s Medical Center, Inc., employed respondent as In-House
Security Guard. In August 1996, Nimaya Electro Corporation installed a closed-circuit television
(CCTV) system in the premises of petitioner hospital to enhance its security measures and
conducted an orientation seminar for the in-house security personnel on the proper way of
monitoring video cameras, subject to certain guidelines. On December 30, 1996, respondent
was on duty from 6:00 p.m. to 6:00 a.m. of the following day, December 31, 1996. His work
consisted mainly of monitoring the video cameras. In the evening of December 30, 1996, Justin
Tibon, a foreigner, then attending to his 3-year-old daughter, Andanie De Brum, who was
admitted since December 20, 1996 at room 257, cardiovascular unit of petitioner hospital,
reported to the management of petitioner hospital about the loss of his mint green traveling bag,
which was placed inside the cabinet, containing, among others, two (2) Continental Airlines
tickets, two (2) passports, and some clothes. Acting on the complaint of Tibon, the Security
Department of petitioner hospital conducted an investigation. When the tapes of video camera
recorder (VCR) no. 3 covering the subject period were reviewed, it was shown that the VCR
was focused on camera no. 2 (Old Maternity Unit), from 2103H to 2215H [or 9:03 p.m. to 10:15
p.m.] of December 30, 1996, and camera no. 1 (New Maternity Unit), from 0025H to 0600H [or
12:25 a.m. to 6:00 a.m.] of December 31, 1996. The cameras failed to record any incident of
theft at room 257.
On January 6, 1997, petitioner hospital issued a Memorandum to respondent, the CCTV
monitoring staff on duty, directing him to explain in writing, within 24 hours upon receipt thereof,
why no disciplinary action should be taken against him for violating the normal
rotation/sequencing process of the VCR and, consequently, failed to capture the theft of Tibon's
traveling bag at room 257. In his letter dated January 6, 1997, respondent explained that on the
subject dates, he was the only personnel on duty as nobody wanted to assist him. Because of
this, he decided to focus the cameras on the Old and New Maternity Units, as these two units
have high incidence of crime. Finding the written explanation of respondent to be unsatisfactory,
petitioner hospital, served on respondent a copy of the Notice of Termination, dated January 24,
1997, dismissing him on the ground of gross negligence/inefficiency under Section 1, Rule VII of
its Code of Discipline. Thus, on March 19, 1997, respondent filed a Complaint for illegal
dismissal against petitioner hospital and its Chairman, Robert Kuan, seeking reinstatement with
payment of full backwages from the time of his dismissal up to actual reinstatement, without of
loss of seniority rights and other benefits. Petitioners countered that they validly dismissed
respondent for gross negligence and observed due process before terminating his employment.
Labor Arbiter dismissed respondent’s complaint for illegal dismissal against petitioners. He
concluded that during respondent’s duty from December 30 to 31, 1996, he was negligent in
focusing the cameras at the Old and New Maternity Units only and, consequently, the theft
committed at room 257 was not recorded. He said that respondent’s infraction exposed
petitioners to the possibility of a damage suit that may be filed against them arising from the
theft.
On appeal by the respondent, the NLRC reversed the Decision of the Labor Arbiter. It observed
that respondent was not negligent when he focused the cameras on the Old and New Maternity
Units, as they were located near the stairways and elevators, which were frequented by many
visitors and, thus, there is the likelihood that untoward incidents may arise. If at all, it treated the
matter as a single or isolated act of simple negligence which did not constitute a just cause for
the dismissal of an employee. CA dismissed petitioners' petition for certiorari, affirming the
NLRC’s finding that while respondent may appear to be negligent in monitoring the cameras on
the subject dates, the same would not constitute sufficient ground to terminate his employment.
Even assuming that respondent’s act would constitute gross negligence, it ruled that the
ultimate penalty of dismissal was not proper as it was not habitual, and that there was no proof
of pecuniary injury upon petitioner hospital. Moreover, it declared that petitioners failed to
comply with the twin notice rule and hearing as what they did was to require respondent to
submit a written explanation, within 24 hours and, thereafter, he was ordered dismissed, without
affording him an opportunity to be heard. Hence, this petition.
Issue: Whether or not the dismissal of respondent is valid.

Held: NO. Respondent was illegally dismissed without just cause and compliance with the
notice requirement. Article 282 (b) of the Labor Code provides that an employer may terminate
an employment for gross and habitual neglect by the employee of his duties. Corollarily,
regarding termination of employment, Section 2(a) and (d), Rule 1, Book VI of the Omnibus
Rules Implementing the Labor Code, as amended, provides that:
Section 2. Security of Tenure. (a) In cases of regular employment, the employer
shall not terminate the services of an employee except for just or authorized causes as
provided by law, and subject to the requirements of due process. x x x x (d) In all cases
of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of
the Labor Code: (i) A written notice served on the employee specifying the ground
or grounds for termination, and giving said employee reasonable opportunity within
which to explain his side. (ii) A hearing or conference during which the employee
concerned, with the assistance of counsel if he so desires is given opportunity to
respond to the 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.
xxxx
To effectuate a valid dismissal from employment by the employer, the Labor
Code has set twin requirements, namely: (1) the dismissal must be for any of the causes
provided in Article 282 of the Labor Code; and (2) the employee must be given an
opportunity to be heard and defend himself. This first requisite is referred to as the
substantive aspect, while the second is deemed as the procedural aspect.
An employer can terminate the services of an employee only for valid and just
causes which must be supported by clear and convincing evidence. The employer has
the burden of proving that the dismissal was indeed for a valid and just cause.
A perusal of petitioner hospital’s CCTV Monitoring Guidelines, disseminated to all in-house
security personnel, reveals that that there is no categorical provision requiring an in-house
security personnel to observe a rotation sequence procedure in focusing the cameras so that
the security monitoring would cover as many areas as possible. Under Article 282 (b) of the
Labor Code, an employer may terminate an employee for gross and habitual neglect of duties.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross
negligence connotes want of care in the performance of one’s duties. Habitual neglect implies
repeated failure to perform one’s duties for a period of time, depending upon the circumstances.
A single or isolated act of negligence does not constitute a just cause for the dismissal of the
employee. Under the prevailing circumstances, respondent exercised his best judgment in
monitoring the CCTV cameras so as to ensure the security within the hospital premises. Verily,
assuming arguendo that respondent was negligent, although this Court finds otherwise, the
lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be
categorized as habitual and, hence, not a just cause for his dismissal.
The employee must be furnished two written notices: the first notice apprises the employee of
the particular acts or omissions for which his dismissal is sought, and the second is a
subsequent notice, which informs the employee of the employer's decision to dismiss him. The
CA found that petitioner hospital failed to comply with the rule on twin notice and hearing as it
merely required respondent to give his written explanation within 24 hours and, thereafter,
ordered his dismissal.
Where the dismissal was without just cause and there was no due process, Article 279 of the
Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss
of seniority rights and other privileges and full backwages, inclusive of allowances and other
benefits, or their monetary equivalent computed from the time the compensation was not paid
up to the time of actual reinstatement. Petitioners’ lack of just cause and non-compliance with
the procedural requisites in terminating respondent’s employment renders them guilty of illegal
dismissal. Consequently, respondent is entitled to reinstatement to his former position without
loss of seniority rights and payment of backwages. However, if such reinstatement proves
impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time
since his dismissal, or if he decides not to be reinstated, respondent should be awarded
separation pay in lieu of reinstatement. Prescinding from the foregoing, the Court deems that
since reinstatement is no longer feasible due to the long passage of time, petitioners are
required to pay respondent his separation pay equivalent to one (1) month’s pay for every year
of service. Petitioners are thus ordered to pay respondent his backwages of P250,229.97 and
separation pay of P31,365.00, or a total amount of P281,594.97.

[G.R. No. 114129. October 24, 1996]

MANILA ELECTRIC COMPANY, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSIONS and JEREMIAS G. CORTEZ, respondents
FACTS: Private respondent Jeremias C. Cortez, Jr. was employed on probationary status by
petitioner Manila Electric Company (Meralco) on September 15, 1975 as a lineman driver. Six
months later, he was regularized as a 3rd class lineman-driver assigned at petitioners North
Distribution Division. In 1977, and until the time of his dismissal, he worked as 1st class
lineman-driver whose duties and responsibilities among others, includes the maintenance of
Meralcos distribution facilities (electric lines) by responding to customers complaints of power
failure, interruptions, line trippings and other line troubles.
Due to his numerous infractions, private respondent was administratively investigated for
violation of Meralcos Code on Employee Discipline, particularly his repeated and unabated
absence from work without prior notice his superior specifically from August 2 to September 19,
1989.
After such administrative investigation was conducted by petitioner, it concluded that private
respondent was found to have grossly neglected his duties by not attending to his work as
lineman from Aug. 2, 1989 to September 19, 1989 without notice to his superiors.
Private respondent was notified of the investigation result and consequent termination of his
services effective January 19, 1990.
Private respondent filed a complaint for illegal dismissal against petitioner.
Labor Arbiter rendered a Decision dismissing the case for lack of merit. Finding the
complainants dismissal from the service as lawful exercise by respondent of its prerogative to
discipline errant employee.
NLRC set aside the decision of the Labor Arbiter and ordered petitioner to reinstate
respondent with backwages.

ISSUE: whether or not private respondents dismissal from the service was illegal?

RULING: NO. Court has upheld a companys management prerogatives so long as they are
exercised in good faith for the advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements.
In the case at bar, the service record of private respondent with petitioner is perpetually
characterized by unexplained absences and unauthorized sick leave extensions. The nature of
his job i.e. as a lineman-driver requires his physical presence to minister to incessant
complaints often faulted with electricity.
Habitual absenteeism of an errant employee is not concordant with the public service that
petitioner has to assiduously provide. To have delayed power failure in a certain district simply
because a MERALCO employee assigned to such area was absent and cannot immediately be
replaced is a breach of public service of the highest order. A deep sense of duty would,
therefore, command that private respondent should, at the very least, limit his absence for
justifiable reasons.
The penchant of private respondent to continually incur unauthorized absences and/or a
violation of petitioners sick leave policy finally rendered his dismissal as imminently proper.
Private respondent cannot expect compassion from this Court by totally disregarding his
numerous previous infractions and take into considerations only the period covering August 2,
1989 to September 19, 1989. As ruled by this Court in the cases of Mendoza v. National Labor
Relation Commissions, and National Service Corporation v. Leogardo, Jr., it is the totality, not
the compartmentalization, of such company infractions that private respondents had
consistently committed which justified his penalty of dismissal.
As correctly observed by the Labor Arbiter:
In the case at bar, it was established that complainant violated respondents Code on Employee
Discipline, not only once, but ten (10) times. On the first occasion, complainant was simply
warned. On the second time, he was suspended for 5 days. With the hope of reforming the
complainant, respondent generously imposed penalties of suspension for his repeated
unauthorized absences and violations of sick leave policy which constitute violations of the
Code. On the ninth time, complainant was already warned that the penalty of dismissal will be
imposed for similar or equally serious violation.
In total disregard of respondents warning, complainant, for the tenth time did not report for
work without prior authority from respondent; hence, unauthorized. Worse, in total disregard of
his duties as lineman, he did not report for work; thus, seriously affected (sic) respondents
operations as a public utility. This constitute[s] a violation of respondents Code and gross
neglect of duty and serious misconduct under Article 283 of the labor Code.
Habitual absenteeism should not and cannot be tolerated by petitioner herein which is a
public utility company engaged in the business of distributing and selling electric energy within
its franchise areas and that the maintenance of Meralcos distribution facilities (electric lines) by
responding to customers complaints of power failure, interruptions, line trippings and other line
troubles is of paramount importance to the consuming public.
Hence, an employees habitual absenteeism without leave, which violated company
rules and regulation is sufficient to justify termination from the service.
Private respondents prolonged absence from August 2, 1989 to September 19, 1989 was
the crucial period in this particular case. Subsequent investigation conducted by petitioner,
however, showed that private respondent was given the full opportunity of defending himself,
otherwise, petitioner could not have possibly known of private respondents side of the story, viz:
Notice and hearing in termination cases does not connote full adversarial proceedings as
elucidated in numerous cases decide by this court. The essence of due process is simply an
opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain
ones side. As held in the case of Manggagawa ng Komunikasyon sa Pilipinas v. NLRC:
xxx Actual adversarial proceedings becomes necessary only for clarification or when there is a
need to propound searching questions to unclear witnesses. This is a procedural right which the
employee must, however, ask for it is not an inherent right, and summary proceedings may be
conducted. This is to correct the common but mistaken perception that procedural due process
entails lengthy oral arguments.Hearings in administrative proceedings and before quasi-judicial
agencies are neither oratorical contest nor debating skirmishes where cross examination skills
are displayed. Non-verbal devices such as written explanations, affidavits, positions papers or
other pleadings can establish just as clearly and concisely aggrieved parties predicament or
defense. What is essential, is ample opportunity to be heard, meaning, every kind of assistance
that management must accord the employee to prepare adequately for his defense.
In this case, private respondent was given the opportunity of a hearing as he was able to
present his defense to the charge against him. Unfortunately, petitioner found such defense
inexcusable. In other words, the fact that private respondent was given the chance to air his
side of the story already suffices.

[G.R. No. 168317. November 21, 2011.]

DUP SOUND PHILS. and/or MANUEL TAN, petitioners, vs. COURT OF APPEALS and
CIRILO A. PIAL, respondents.
FACTS: The instant petition arose from a complaint for illegal dismissal filed by herein private
respondent Cirilo A. Pial (Pial) on November 5, 2001 with the NLRC, Quezon City. In his
Position Paper, Pial alleged that he was an employee of herein petitioner DUP Sound Phils.
(DUP), which is an entity engaged in the business of recording cassette tapes for various
recording companies; petitioner Manuel Tan (Tan) is the owner and manager of DUP; Pial was
first employed in May 1988 until December 1988; on October 11, 1991, he was re-employed by
DUP and was given the job of "mastering tape"; his main function was to adjust the sound level
and intensity of the music to be recorded as well as arrange the sequence of the songs to be
recorded in the cassette tapes; on August 21, 2001, Pial got absent from work because he got
sick; when he got well the following day and was ready for work, he called up their office in
accordance with his employer's policy that any employee who gets absent shall first call their
office before reporting back to work; to his surprise, he was informed by the office secretary that
the latter was instructed by Tan to tell him not to report for work until such time that they will
advise him to do so; after three weeks, without receiving any notice, Pial again called up their
office; this time the office secretary advised him to look for another job because, per instruction
of Tan, he is no longer allowed to work at DUP; Pial asked the office secretary regarding the
reason why he was not allowed to return to his job and pleaded with her to accept him back, but
the secretary simply reiterated Tan's order not to allow him to go back to work. Pial prayed for
the payment of his unpaid service incentive leave pay, full backwages, separation pay, moral
and exemplary damages as well as attorney's fees.
In their Position Paper, herein petitioners DUP and Tan denied the material allegations of Pial
contending that on or about January 1996 they hired Pial as a laborer; on August 21, 2001, the
latter failed to report for work following an altercation with his supervisor the previous day; on
September 12, 2001, Pial called up their office and informed the office secretary that he will be
going back to work on September 17, 2001; however, he failed to report for work on the said
date; petitioners were subsequently surprised when they learned that Pial filed a complaint for
illegal dismissal against them; Pial was never dismissed, instead, it was his unilateral decision
not to work at DUP anymore; Tan even offered him his old post during one of the hearings
before the NLRC hearing officer, but Pial refused such offer or any other offer of amicable
settlement.
On July 25, 2002, the Labor Arbiter (LA) handling the case rendered a Decision declaring Pial to
have been illegally dismissed and ordering DUP and Tan to reinstate him to his former position
and pay him backwages, cost of living allowance, service incentive leave pay and attorney's
fees.
On appeal, the NLRC, in its Decision promulgated on June 30, 2003, modified the Decision of
the LA by deleting the award of backwages and attorney's fees. The NLRC ruled that there was
no illegal dismissal on the part of DUP and Tan, but neither was there abandonment on the part
of Pial. Pial filed a Motion for Reconsideration, but the NLRC denied it in its Resolution. Pial
then filed a special civil action for certiorari with the CA. In which case, the CA reinstated the
decision of the LA. DUP and Tan filed a Motion for Reconsideration, but the same was denied
by the CA. Hence, the instant petition for review on certiorari.

ISSUE: Whether or not respondent was legally dismissed on grounds of abandonment.

RULING: NO. The settled rule in labor cases is that the employer has the burden of proving that
the employee was not dismissed, or, if dismissed, that the dismissal was not illegal, and failure
to discharge the same would mean that the dismissal is not justified and, therefore, illegal. In the
instant case, what betrays petitioners' claim that private respondent was not dismissed from his
employment but instead abandoned his job is their failure to prove that the latter indeed stopped
reporting for work without any justifiable cause or a valid leave of absence. Petitioners merely
presented the affidavits of their office secretary which narrated their version of the facts. These
affidavits, however, are not only insufficient to prove their defense but also undeserving of
credence because they are self-serving.
Moreover, considering the hard times in which we are in, it is incongruous for private respondent
to simply give up his work without any apparent reason at all. No employee would recklessly
abandon his job knowing fully well the acute unemployment problem and the difficulty of looking
for a means of livelihood nowadays. Certainly, no man in his right mind would do such thing.
The Court also agrees with private respondent that petitioners' earnestness in offering re-
employment to the former is suspect. It was only after two months following the filing of the
complaint for illegal dismissal that it occurred to petitioners, in a belated gesture of goodwill
during one of the hearings conducted before the NLRC, to invite private respondent back to
work. If petitioners were indeed sincere, they should have made their offer much sooner. Under
circumstances established in the instant case, the Court doubts that petitioners' offer would
have been made if private respondent had not filed a complaint against them.
Neither may private respondent's refusal to report for work subsequent to the Labor Arbiter's
issuance of an order for his reinstatement be considered as another abandonment of his job. It
is a settled rule that failure to report for work after a notice to return to work has been served
does not necessarily constitute abandonment.19 As defined under established jurisprudence,
abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.20 It is a form of neglect of duty, hence, a just cause for termination of employment
by the employer.21 For a valid finding of abandonment, these two factors should be present: (1)
the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the second as the more determinative
factor which is manifested by overt acts from which it may be deduced that the employee has no
more intention to work. The intent to discontinue the employment must be shown by clear proof
that it was deliberate and unjustified. In the instant case, private respondent claimed that his
subsequent refusal to report for work despite the Labor Arbiter's order for his reinstatement is
due to the fact that he was subsequently made to perform the job of a bodegero of which he is
unfamiliar and which is totally different from his previous task of mastering tape. Moreover, he
was assigned to a different workplace, which is a warehouse, where he was isolated from all
other employees. The Court notes that petitioners failed to refute the foregoing claims of private
respondent in their pleadings filed with the CA. It is only in their Reply filed with this Court that
they simply denied and brushed off private respondent's assertion that he was made to work as
a bodegero. The Court is, thus, led to conclude that petitioners' failure to immediately refute the
claims of private respondent is an implied admission thereof. In the same vein, the Court treats
petitioners' belated denial of the same claims of private respondent as mere afterthought which
is not worthy of credence.
Private respondent may not be faulted for rejecting what petitioners claim as compliance with
the order to reinstate the former given the totally different nature of the job he was afterwards
given and the conditions and working environment under which he was to perform such job.
Thus, private respondent found it unacceptable to work for petitioners. That he was placed in an
untenable situation which practically left him with no choice but to leave his assigned task also
shows the strained relations that has developed between the parties.

G.R. No. 169303, February 11, 2015

PROTECTIVE MAXIMUM SECURITY AGENCY, INC., Petitioner, v. CELSO E.
FUENTES, Respondent.
FACTS: RESPONDENT Celso E. Fuentes was hired as a security guard by petitioner Protective
Maximum Security Agency, Inc., sometime in November 1999. He was assigned to Picop
Resources, Inc. and was posted at a checkpoint designated as Post 33 in Upper New Visayas,
Agusan del Sur.
On July 20, 2000, a group of armed persons of the New People’s Army (NPA) ransacked Post
33 and took some firearms and live ammunitions. They inflicted violence upon Fuentes and the
other security guards. After its initial investigation, the Philippine National Police found reason to
believe that Fuentes conspired and acted in consort with the NPA. A complaint for robbery
committed by a band was filed against Fuentes and others before the Second Municipal Circuit
Trial Court of Trento-Sta. Josefa-Veruela in Trento, Agusan del Sur. Consequently, Fuentes
was detained at the Mangagoy Police Sub-Station, Bislig, Surigao del Sur. On Aug. 15, 2001,
the Office of the Provincial Prosecutor of Surigao del Sur issued the Resolution dismissing the
complaint against Fuentes for lack of probable cause.
Fuentes claims that right after the criminal complaint for robbery against him was dismissed, he
demanded to return to work but he was refused entry on the ground that he was a member of
the NPA and that his position had already been filled up by another security guard. On the other
hand, petitioner security agency alleges that Fuentes failed to report to his team leader or
officer-in-charge since the incident of July 20, 2000.

ISSUE: W/N he is deemed to have abandoned his job?

RULING: No. There is no abandonment in this case.

The first element of abandonment is the failure of the employee to report to work without a valid
and justifiable reason. Petitioner asserts that respondent failed to report for work immediately
after his release from prison. He also failed to abide by company procedure and report to his
immediate superior. According to petitioner, respondent’s actions constitute a failure to report to
work without a valid and justifiable reason.
The National Labor Relations Commission and the Court of Appeals found that respondent’s
failure to return to work was justified because of his detention and its adverse effects. The Court
of Appeals found that petitioner did not refute the allegation that respondent, while in the
custody of the police, suffered physical violence in the hands of its employees. Thus, the Court
of Appeals gave credence to the report submitted by Inspector Escartin, which stated that
respondent was “so traumatized that he actually asked to remain in the custody of the police
because he feared for his life.” The Court of Appeals further found that respondent experienced
intense fear, “manifested] by the fact that he left the custody of the police only when his mother
accompanied him.”
Thus, the intervening period when respondent failed to report for work, from respondent’s prison
release to the time he actually reported for work, was justified. Since there was a justifiable
reason for respondent’s absence, the first element of abandonment was not established.
The second element is the existence of overt acts which show that the employee has no
intention to return to work. Petitioner alleges that since respondent “vanished” and failed to
report immediately to work, he clearly intended to sever ties with petitioner.
However, respondent reported for work after Aug. 15, 2001, when the criminal complaint against
him was dropped. Further, petitioner refused to allow respondent to resume his employment
because petitioner believed that respondent was a member of the New People’s Army and had
already hired a replacement.
Respondent’s act of reporting for work after being cleared of the charges against him showed
that he had no intention to sever ties with his employer. He attempted to return to work after the
dismissal of the Complaint so that petitioner would not have any justifiable reason to deny his
request to resume his employment.
Thus, respondent’s actions showed that he intended to resume working for petitioner. The
second element of abandonment was not proven, as well.
 MILAGROS PANUNCILLO v. CAP PHILIPPINES, INC.
515 SCRA 323 (2007)
FACTS: Milagros Panuncillo was hired as Office Senior Clerk by CAP Philippines Inc. In order
to secure the education of her son, Panuncillo procured an educational plan which she had fully
paid but which she later sold to Josefina Pernes for P37,000. Before the actual transfer of the
plan could be effected, however, Panuncillo pledged it for P50,000 to John Chua who, however,
sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to Gaudioso R. Uy for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina
informed CAP Philippines Inc. that Panuncillo had "swindled" her but that she was willing to
settle the case amicably as long as Panuncillo will pay the amount involved and the interest.
CAP Philippines Inc. terminated the services of Panuncillo. Panuncillo sought reconsideration of
her dismissal. Acting on Panuncillo’s motion for reconsideration, CAP Philippines Inc. denied
the same. Panuncillo thus filed a complaint for illegal dismissal, 13th month pay, service
incentive leave pay, damages and attorney’s fees against CAP Philippines Inc.
The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too
harsh. He thus ordered the reinstatement of Panuncillo to a position one rank lower than her
previous position. On appeal, the National Labor Relations Commission (NLRC) reversed the
decision of the Labor Arbiter. It held that Panuncillo’s dismissal was illegal and accordingly
ordered her reinstatement to her former position.
CAP Philippines Inc. challenged the NLRC Decision before the appellate court via Petition for
Certiorari. The appellate court reversed the NLRC Decision and held that the dismissal was
valid and that CAP Philippines Inc. complied with the procedural requirements of due process.
Hence, the present petition.

ISSUE: Whether or not Milagros has been illegally dismissed?

HELD: Panuncillo’s repeated violation of Section 8.4 of CAP Philippines Inc’s Code of
Discipline, she violated the trust and confidence of CAP Philippines Inc. and its customers. To
allow her to continue with her employment puts CAP Philippines Inc. under the risk of being
embroiled in unnecessary lawsuits from customers similarly situated as Josefina, et al. Clearly,
CAP Philippines Inc. exercised its management prerogative when it dismissed Panuncillo.
Under the Labor Code, the employer may terminate an employment on the ground of serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work. Infractions of company rules and regulations have
been declared to belong to this category and thus are valid causes for termination of
employment by the employer.
The employer cannot be compelled to continue the employment of a person who was found
guilty of maliciously committing acts which are detrimental to his interests. It will be highly
prejudicial to the interests of the employer to impose on him the charges that warranted his
dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not
undesirable, remain in the service. It may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to observe. This Court was more
emphatic in holding that in protecting the rights of the laborer, it cannot authorize the oppression
or self-destruction of the employer.
There can thus be no doubt that Panuncillo was given ample opportunity to explain her side.
Parenthetically, when an employee admits the acts complained of, as in Panuncillo’s case, no
formal hearing is even necessary.

G.R. No. 201701 June 3, 2013

UNILEVER PHILIPPINES, INC., Petitioner, vs. MARIA RUBY M. RIVERA, Respondent.
FACTS: Maria Ruby M. Rivera was the Area Activation Executive of Unilever Philippines, Inc.
for the cities of Cotabato and Davao for 14 years. She was dismissed pursuant to company
policy after she was found responsible for the deviation of funds by Ventureslink, Unilever’s third
party service provider for the company’s activation projects. Her retirement benefits were
forfeited as a legal consequence of her dismissal from work. Rivera filed a case of illegal
dismissal and money claims against Unilever.

The LA dismissed her case for lack of merit and denied her monetary claim for lack of basis.
The NLRC however, partly grant her appeal by granting her nominal damages for violation of
her right to procedural due process, and retirement benefits. CA affirmed the NLRC decision
with modification by deleting the award on retirement benefits and awarded separation pay in
favor of Rivera as measure of social justice.
ISSUE(S):
(1) Whether or not a validly dismissed employee, like Rivera, is entitled to an award of
separation pay.
(2) Whether or not the award for nominal damage to Rivera was proper.

HELD:
(1) No. As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation pay, pursuant to
Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code. In exceptional
cases, however, the Court has granted separation pay to a legally dismissed employee as an
act of "social justice" or on "equitable grounds." In both instances, it is required that the
dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of
the employee as in the case of Philippine Long Distance Telephone Co. vs. NLRC.
In this case, Rivera was dismissed from work because she intentionally circumvented a
strict company policy, manipulated another entity to carry out her instructions without
the company’s knowledge and approval, and directed the diversion of funds, which she
even admitted doing under the guise of shortening the laborious process of securing
funds for promotional activities from the head office. These transgressions were serious
offenses that warranted her dismissal from employment and proved that her termination
from work was for a just cause. Hence, she is not entitled to a separation pay.

(2) Yes. In all cases of termination of employment, due process shall be substantially
observed as provided in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor
Code. In this case, Unilever was not direct and specific in its first notice to Rivera. The words it
used were couched in general terms and were in no way informative of the charges against her
that may result in her dismissal from employment. Evidently, there was a violation of her right to
statutory due process warranting the payment of indemnity in the form of nominal damages.

G.R. No. 184116 June 19, 2013

CENTURY IRON WORKS, INC. and BENITO CHUA, Petitioners, vs. ELETO B.
BANAS, Respondent.
FACTS: Respondent Eleto B. Banas worked at petitioner Century Iron beginning July 5,
2000 until his dismissal on June 18, 2002. Bañas responded to his dismissal by filing a
complaint for illegal dismissal with prayer for reinstatement and money claims.
According to Century Iron, Bañas worked as an inventory comptroller whose duties are to: (1)
train newly hired warehouseman; (2) initiate analysis on the discrepancies concerning records
and inventories; (3) check and confirm warehouseman’s report; (4) check the accuracy of
materials requisition before issuance to the respective warehouseman at the jobsite; (5) monitor
and maintain records; and (6) recommend and initiate corrective or preventive action as may be
warranted.7
Sometime in 2002, Century Iron received letters of complaint from its gas suppliers regarding
alleged massive shortage of empty gas cylinders. In the investigation that Century Iron
conducted in response to the letters, it found that Bañas failed to make a report of the missing
cylinders. On May 14, 2002, Century Iron required Bañas to explain within forty-eight (48) hours
from receipt of its letter why no disciplinary action should be taken against him for loss of trust
and confidence and for gross and habitual neglect of duty. On May 31, 2002, Century Iron
issued a Memorandum requiring Bañas to attend a hearing regarding the missing
cylinders. Bañas subsequently appeared at the hearing to air his side.
On June 17, 2002, Century Iron, through Personnel Officer Mr. Virgilio T. Bañaga, terminated
Bañas’ services on grounds of loss of trust and confidence, and habitual and gross neglect of
duty. The termination was effective June 18, 2002.
Labor Arbiter uled that Bañas was illegally dismissed. The LA did not believe Century Iron’s
assertions that Bañas worked as an inventory comptroller and that he was grossly and
habitually neglectful of his duties. The evidence on record shows that Bañas was an inventory
clerk whose duties were merely to conduct inventory and to submit his report to the personnel
officer. As an inventory clerk, it was not his duty to receive the missing items. The LA also ruled
that Century Iron deprived Bañas of due process because the purpose of the hearing was to
investigate the lost cylinders and not to give Bañas an opportunity to explain his side.
On appeal by Century Iron, the National Labor Relations Commission (NLRC) affirmed the LA’s
ruling in toto. It ruled that the various memoranda issued by Century Iron explicitly show that
Bañas was an inventory clerk. It noted that Century Iron unequivocally stated in its termination
report dated July 29, 2002 that Bañas was an inventory clerk. It also pointed out that Century
Iron failed to present the Contract of Employment or the
CA affirmed with modification the NLRC decision. It agreed with the lower tribunals’ finding that
Bañas was merely an inventory clerk. It, however, ruled that Bañas was afforded due process. It
held that Bañas had been given ample opportunity to air his side during the hearing, pointing out
that the essence of due process is simply an opportunity to be heard.

THE ISSUES:
1) Whether or not Bañas occupied a position of trust and confidence, or was routinely charged
with the care and custody of Century Iron’s money or property; and
2) Whether or not Century Iron terminated Bañas for just and valid causes.

THE COURT’S RULING:

1. Bañas did not occupy a position of trust and confidence nor was he in charge of the care
and custody of Century Iron’s money or property.
The CA properly affirmed the NLRC’s ruling that Bañas was a rank-and-file employee who
was not charged with the care and custody of Century Iron’s money or property. The
evidence on record supports the holding that Bañas was an ordinary employee. It properly
relied on Century Iron’s numerous memoranda where Bañas was identified as an inventory
clerk. It correctly observed that Century Iron unequivocably declared that Bañas was an
inventory clerk in its July 29, 2002 termination report with the Department of Labor and
Employment. Moreover, as the NLRC judiciously pointed out, Century Iron failed to present
the Contract of Employment or the Appointment Letter, the best evidence that would show
that Bañas was an inventory comptroller.

2. Since Bañas was an ordinary rank-and-file employee, his termination on the ground of loss
of confidence was illegal. Since Bañas did not occupy a position of trust and confidence nor
was he routinely in charge with the care and custody of Century Iron’s money or property,
his termination on the ground of loss of confidence was misplaced.
We point out in this respect that loss of confidence applies to: (1) employees occupying
positions of trust and confidence, the managerial employees; and (2) employees who are
routinely charged with the care and custody of the employer’s money or property which may
include rank-and-file employees. Examples of rank-and-file employees who may be dismissed
for loss of confidence are cashiers, auditors, property custodians, or those who, in the normal
routine exercise of their functions, regularly handle significant amounts of money or
property. Thus, the phrasing of the petitioners’ second assignment of error is inaccurate
because a rank-and-file employee who is routinely charged with the care and custody of the
employer’s money or property may be dismissed on the ground of loss of confidence.

Philippine Holdings Inc. vs. Episcope

G.R. No. 192826, February 27, 2013
FACTS: Petitioner Philippine Plaza Holdings, Inc. (PPHI) is the owner and operator of the
Westin Philippine Plaza Hotel (Hotel). Respondent Ma. Flora M. Episcope (Episcope) was
employed by PPHI since July 24, 1984 until she was terminated on November 4, 2004 for
dishonesty, willful disobedience and serious misconduct amounting to loss of trust and
confidence.
In order to check the performance of the employees and the services in the different outlets of
the Hotel, PPHI regularly employed the services of independent auditors and/or professional
shoppers. For this purpose, Sycip, Gorres and Velayo auditors dined at the Hotel's Café Plaza
on August 28, 2004. After dining, the auditors were billed the total amount of P2,306.65,
representing the cost of the food and drinks they had ordered under Check No. 565938. 4
Based on the audit report 5 submitted to PPHI, Episcope was one of those who attended to the
auditors and was the one who handed the check and received the payment of P2,400.00. She
thereafter returned Check No. 565938, which was stamp marked "paid," together with the
change.
Upon verification of the foregoing check receipt with the sales report of Café Plaza, it was
discovered that the Hotel's copy of the receipt bore a discount of P906.45 6 on account of the
use of a Starwood Privilege Discount Card registered in the name of Peter A. Pamintuan, while
the receipt issued by Episcope to the auditors reflected the undiscounted amount of P2,306.65
considering that none of the auditors had such discount card. In view of the foregoing, the
amount actually remitted to the Hotel was only P1,400.20 thus, leaving a shortage of P906.45.
On September 30, 2004, the Hotel issued a Show-Cause Memo 7 directing Episcope to explain
in writing why no disciplinary action should be taken against her for the questionable and invalid
discount application on the settlement check issued to the auditors on August 28, 2004.
Finding Episcope to have failed to sufficiently explain the questionable discount application on
the settlement bill of the auditors, her employment was terminated for committing acts of
dishonesty, which was classified as a Class D offense under the Hotel's Code of Discipline, as
well as for willful disobedience, serious misconduct and loss of trust and confidence. 12
Aggrieved, Episcope filed a complaint 13 for illegal dismissal with prayer for payment of
damages and attorney's fees against PPHI before the NLRC docketed as NLRC-NCR Case No.
00-12-13621-04.

ISSUE: WON there was illegal dismissal.

RULING: Article 293 (formerly Article 279) of the Labor Code 25 provides that the employer
shall not terminate the services of an employee except only for a just or authorized cause. If an
employer terminates the employment without a just or authorized cause, then the employee is
considered to have been illegally dismissed and is thus, entitled to reinstatement or in certain
instances, separation pay in lieu thereof, as well as the payment of backwages.
Among the just causes for termination is the employer's loss of trust and confidence in its
employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that an employer
may terminate the services of an employee for fraud or willful breach of the trust reposed in him.
But in order for the said cause to be properly invoked, certain requirements must be complied
with namely, (1) the employee concerned must be holding a position of trust and confidence and
(2) there must be an act that would justify the loss of trust and confidence.
It is noteworthy to mention that there are two classes of positions of trust: on the one hand,
there are managerial employees whose primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof, and to
other officers or members of the managerial staff; on the other hand, there are fiduciary rank-
and-file employees, such as cashiers, auditors, property custodians, or those who, in the normal
exercise of their functions, regularly handle significant amounts of money or property. These
employees, though rank-and-file, are routinely charged with the care and custody of the
employer's money or property, and are thus classified as occupying positions of trust and
confidence. 27 Episcope belongs to this latter class and therefore, occupies a position of trust
and confidence.
As may be readily gleaned from the records, Episcope was employed by PPHI as a service
attendant in its Café Plaza. In this regard, she was tasked to attend to dining guests, handle
their bills and receive their payments for transmittal to the cashier. It is also apparent that
whenever discount cards are presented, she maintained the responsibility to take them to the
cashier for the application of discounts. Being therefore involved in the handling of company
funds, Episcope is undeniably considered an employee occupying a position of trust and
confidence and as such, was expected to act with utmost honesty and fidelity.
Anent the second requisite, records likewise reveal that Episcope committed an act which
justified her employer's (PPHI's) loss of trust and confidence in her.
Primarily, it is apt to point out that proof beyond reasonable doubt is not required in dismissing
an employee on the ground of loss of trust and confidence; it is sufficient that there lies some
basis to believe that the employee concerned is responsible for the misconduct and that the
nature of the employee's participation therein rendered him absolutely unworthy of trust and
confidence demanded by his position.
Perforce, having substantially established the actual breach of duty committed by Episcope and
the due observance of due process, no grave abuse of discretion can be imputed against the
NLRC in sustaining the finding of the LA that her dismissal was proper under the circumstances.
Finally, with respect to Episcope's other monetary claims, namely, service incentive leave
credits and 13th month pay, the Court finds no error on the part of the LA when it denied the
foregoing claims considering that Episcope failed to proffer any legitimate basis to substantiate
her entitlement to the same.
 REYNALDO HAYAN MOYA VS FIRST SOLID RUBBER INDUSTRIES INC.
GR NO. 184011, SEPTEMBER 18, 2013
FACTS: Reynaldo Moya was hired by respondent First Solid, a business engaged in manufacturing of
tires and rubbers, as a machine operator. He was promoted as head of the Tire Curing Department of
the company. He reported an incident about under curing of tires within his department which led to
the damage of five tires. The incident was investigated by the company which he was later required to
explain. Upon explanation he stated that the damage was caused by machine failure and the incident
was without any fault of the operator. His employment was then terminated by the company. As a
result, he filed a complaint before the NLRC for illegal dismissal against First Solid Rubber Industries, Inc.
And its President Edward Lee Sumulong. The company insisted on its right to validly dismiss an
employee in good faith if it has a reasonable ground to believe that its employee is responsible of
misconduct, and the nature of his participation therein renders him absolutely unworthy of the trust
and confidence demanded by his position.

LA – Dismissal was valid. However, LA ruled that dismissal was too harsh as a penalty.
NLRC – Affirmed
CA – Deleted the award on separation pay.

ISSUE: Does the termination from employment of Moya was valid on the ground of loss of trust and
confidence?

RULING: Yes. The termination from employment of Moya was valid.

LAW APPLICABLE:
ART. 282. Termination by employer. - An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
XXX
Moya was not an ordinary rank-and-file employee. He was holding a supervisory rank being an Officer-
in-Charge of the Tire Curing Department. The position, naturally one of trust, required of him abiding
honesty as compared to ordinary rank-and-file employees. When he made a false report attributing the
damage of five tires to machine failure, he breached the trust and confidence reposed upon him by the
company.
It is a general principle of labor law to discourage interference with an employer’s judgment in
the conduct of his business. As already noted, even as the law is solicitous of the welfare of the
employees, it also recognizes employer’s exercise of management prerogatives. As long as the
company’s exercise of judgment is in good faith to advance its interest and not for the purpose of
defeating or circumventing the rights of employees under the laws or valid agreements, such exercise
will be upheld.

HEAVYLIFT MANILA V CA
FACTS: On February 23, 1999, petitioner Heavylift, informed respondent Ma. Dottie Galay
(Galay), Heavylift Insurance and Provisions Assistant, of her low performance rating and the
negative feedback from her team members regarding her work attitude. The letter also notified
her that she was being relieved of her other functions except the development of the new
Access program.
Subsequently, on August 16, 1999, Galay was terminated for alleged loss of confidence.
Thereafter, she filed with the Labor Arbiter a complaint for illegal dismissal and nonpayment of
service incentive leave and 13th month pay against petitioners.
Before the labor arbiter, Heavylift alleged that Galay had an attitude problem and did not get
along with her co‐employees for which she was constantly warned to improve. Moreover,
Galay’s attitude resulted to the decline in the company’s efficiency and productivity.
The Labor Arbiter found that Galay was illegally terminated for Heavylift’s failure to prove that
she violated any company regulation, and for failure to give the proper notice as required by
law.
Heavylift appealed to the NLRC which denied the appeal and the subsequent motion for
reconsideration for lack of merit and affirmed the decision of the Labor Arbiter.
Heavylift elevated the case by certiorari to the Court of Appeals. But, due to procedural lapses,
the petition was dismissed.

ISSUE: Whether or not Ms.Galay’s attitude problem was a valid cause for her dismissal?

RULING: Petition DENIED.

(The Court considers “attitude problem” as a situation analogous to loss of trust and confidence
and thus a valid ground for termination, however due to Heavylift’s failure to show sufficiently
clear and convincing evidence to justify Galay’s termination and to comply with the twin
requirement of notice and hearing, the Court resolved to deny the petition and declared that
Galay was illegally dismissed.)
An employee’s attitude problem is a valid ground for his termination. It is a situation analogous
to loss of trust and confidence for an employee who cannot get along with his co‐employees is
detrimental to the company for he can upset and strain the working environment. Without the
necessary teamwork and synergy, the organization cannot function well. Thus, management
has the prerogative to take the necessary action to correct the situation and protect its
organization. To be a valid ground for termination, however, it must be duly proved by the
employer. Similarly, compliance with the twin requirement of notice and hearing must also be
proven by the employer.
In the present case, the Court is not convinced that petitioners have shown sufficiently clear and
convincing evidence to justify Galay’s termination. The burden of proof is not on the employee
but on the employer who must affirmatively show adequate evidence that the dismissal was for
justifiable cause.
Neither does the February 23, 1999 letter constitute the required notice. The letter did not
inform her of the specific acts complained of and their corresponding penalty. The law requires
the employer to give the worker to be dismissed two written notices before terminating his
employment, namely, (1) a notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employer’s decision to dismiss him. Additionally, the letter never gave
respondent Galay an opportunity to explain herself, hence denying her due process.
Thus, the Court finds that Galay was illegally dismissed because Heavylift failed to show
adequately that a valid cause for terminating respondent exists, and because they failed to
comply with the twin requirement of notice and hearing.

JOHN HANCOCK LIFE INSURANCE CORPORATION and/or MICHAEL PLAXTON vs.

JOANNA CANTRE DAVIS, G.R. No. 169549, September 3, 2009
FACTS: Respondent Joanna Cantre Davis was agency administration officer of petitioner John
Hancock Life Insurance Corporation.
On October 18, 2000, Patricia Yuseco, petitioner’s corporate affairs manager, discovered that
her wallet was missing. She immediately reported the loss of her credit cards to AIG and BPI
Express. To her surprise, she was informed that “Patricia Yuseco” had just made substantial
purchases using her credit cards in various stores in the City of Manila. She was also told that a
proposed transaction in Abenson’s-Robinsons Place was disapproved because “she” gave the
wrong information upon verification.
Because loss of personal property among its employees had become rampant in its office,
petitioner sought the assistance of the National Bureau of Investigation (NBI). The NBI, in the
course of its investigation, obtained a security video from Abenson’s showing the person who
used Yuseco’s credit cards. Yuseco and other witnesses positively identified the person in the
video as respondent.
Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in the
office of the Manila city prosecutor. But because the affidavits presented by the NBI (identifying
respondent as the culprit) were not properly verified, the city prosecutor dismissed the complaint
due to insufficiency of evidence.
Meanwhile, petitioner placed respondent under preventive suspension and instructed her to
cooperate with its ongoing investigation. Instead of doing so, however, respondent filed a
complaint for illegal dismissal alleging that petitioner terminated her employment without cause.

ISSUE: Whether or not petitioner validly dismissed respondent for cause analogous to serious
misconduct.
RULING: Article 282(e) of the Labor Code talks of other analogous causes or those which are
susceptible of comparison to another in general or in specific detail. For an employee to be
validly dismissed for a cause analogous to those enumerated in Article 282, the cause must
involve a voluntary and/or willful act or omission of the employee.

A cause analogous to serious misconduct is a voluntary and/or willful act or omission

attesting to an employee’s moral depravity. Theft committed by an employee against a
person other than his employer, if proven by substantial evidence, is a cause analogous
to serious misconduct.
The labor arbiter and the NLRC relied not only on the affidavits of the NBI’s witnesses but also
on that of respondent. They likewise considered petitioner’s own investigative findings.

G.R. NO. 197384. JANUARY 30, 2013

SAMPAGUITA AUTO TRANSPORT CORPORATION, Petitioner, vs. NATIONAL LABOR
RELATIONS COMMMISSION and EFREN I. SAGAD, Respondents.

FACTS: Sampaguita Auto Transport Corporation was charged with illegal dismissal for
allegedly firing Sagad when he was, as he claimed, hired as a regular employee, not as a
probationary employee as the company claimed.
Allegedly, sometime around September, an evaluator boarded Sagad’s bus. The evaluator
described Sagad’s manner of driving as "reckless driver, nakikipaggitgitan, nakikipaghabulan,
nagsasakay sa gitna ng kalsada, sumusubsob ang pasahero." Sagad he claimed that he could
not have been driving as reported because his pregnant wife and one of his children were with
him on the bus. He admitted though that at one time, he chased a bus to serve warning on its
driver not to block his bus when he was overtaking. He also admitted that once in a while, he
sped up to make up for lost time in making trips. The company further alleged it conducted a an
evaluation of Sagad’s performance. It requested conductors who had worked with Sagad to
comment on his work. Conductors revealed that Sagad proposed that they cheat on the
company by way of an unreported early bus trip. Dispatcher E. Castillo likewise submitted a
negative report and even recommended the termination of Sagad’s employment. The company
also cited Sagad’s involvement in a hit-and-run accident. Allegedly, Sagad did not report the
accident to the company.
Upon conclusion of the evaluation, the company terminated Sagad’s employment for his failure
to qualify as a regular employee.

ISSUE : whether Sampaguita Auto Transport Corp. dismissed Sagad illegally; and

HELD/RATIO:
(1) No. The SC ruled that Sagad was not dismissed without basis.
During his brief employment with the company, he exhibited the tendency to speed up when he
finds the need for it, very obviously in violation of traffic rules, regulations and company policy.
Instead of negating the evaluator’s observations, his admissions make them credible. Also, the
SC find no evidence that Hemoroz and Lucero had an ax to grind against Sagad so that they
would lie about their impression of him as a bus driver. Significantly, their statements validate
Castillo’s own observation that he heard talks of Sagad’s orders to the conductors for them to
cheat on the company. The scheme, contrary to Sagad’s explanation, can only be committed
with the cooperation, or even at the behest, of the driver, as the proposed scheme is for the bus
to make unscheduled, but unreported, early trips.
The company cites Sagad’s involvement in a hit-and-run incident. The Traffic Accident
Investigation Report45 is evidence to such incident. The report was corroborated by the sworn
statements of driver of the Elf truck, UFF-597, the second party in the incident, and the driver of
the White Honda City, the first party in the vehicular accident.
Also, the CA misappreciated the law when it declared that the grounds relied upon by the
company in terminating Sagad’s employment are not among those enumerated under Article
282 of the Labor Code as just causes for employee dismissals. Article 282 of the Code
provides:
Art. 282. Termination by employer. – An employer may terminate an employment for any
of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
 (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and
(e) Other causes analogous to the foregoing.
The irregularities or infractions committed by Sagad in connection with his work as a bus driver
constitute a serious misconduct or, at the very least, conduct analogous to serious misconduct,
under the above-cited Article 282 of the Labor Code. To be sure, his tendency to speed up
during his trips, his reckless driving, his picking up passengers in the middle of the road, his
racing with other buses and his jostling for vantage positions do not speak well of him as a bus
driver.
Under the circumstances, Sagad has become a liability rather than an asset to his employer,
more so when we consider that he attempted to cheat on the company or could have, in fact,
defrauded the company during his brief tenure as a bus driver. This calls to mind Castillo’s
report on the low revenue of Sagad’s bus, an observation which is validated by the company’s
Daily Operation Reports from June to October 2006.50
All told, we find substantial evidence supporting Sagad’s removal as a bus driver. Through his
reckless driving and his schemes to defraud the company, Sagad committed serious
misconduct and breach of the trust and confidence of his employer, which, without doubt, are
just causes for his separation from the service. It is well to stress, at this point, an earlier
pronouncement of the Court "that justice is in every case for the deserving, to be dispensed in
the light of the established facts and applicable law and doctrine."

G.R. No. 82249 February 7, 1991

WILTSHIRE FILE CO., INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE
T. ONG, respondents.
FACTS: Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc. On
13 June 1985, upon private respondent’s return from a business and pleasure trip abroad, he was
informed by the President of petitioner Wiltshire that his services were being terminated. Private
respondent maintains that he tried to get an explanation from management of his dismissal but to no
avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire,
the company’s security guard handed him a letter which formally informed him that his services were
being terminated upon the ground of redundancy.
Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal
alleging that his position could not possibly be redundant because nobody (save himself) in the company
was then performing the same duties.
Petitioner company alleged that the termination of respondent’s services was a cost-cutting measure:
that in December 1984, the company had experienced an unusually low volume of orders: and that it
was in fact forced to rotate its employees in order to save the company. Despite the rotation of
employees, petitioner alleged; it continued to experience financial losses and private respondent’s
position, Sales Manager of the company, became redundant.
During pendency, petitioner closed its business.
LABOR ARBITER ruled that the dismissal was illegal
NLRC held that the termination was attended by malice and bad faith on the part of petitioner,
considering the manner of private respondent was ordered by the President to pack up and remove his
personal belongings from the office.

ISSUE: WON his dismissal was illegal

HELD: NO, his dismissal was VALID.

In the first place, we note that while the letter informing private respondent of the termination of his
services used the word “redundant“, that letter also referred to the company having “incur[red]
financial losses which [in] fact has compelled [it] to resort to retrenchment to prevent further
losses”. Thus, what the letter was in effect saying was that because of financial losses, retrenchment
was necessary, which retrenchment in turn resulted in the redundancy of private respondent’s position.
In the second place, we do not believe that redundancy in an employer’s personnel force necessarily or
even ordinarily refers to duplication of work. That no other person was holding the same position that
private respondent held prior to the termination of his services, does not show that his position had not
become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find
duplication of work and two (2) or more people doing the work of one person. We believe that
redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position
is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of
a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the enterprise.
Wiltshire, in view of the contraction of its volume of sales and in order to cut down its operating
expenses, effected some changes in its organization by abolishing some positions and thereby effecting
a reduction of its personnel. Thus, the position of Sales Manager was abolished and the duties
previously discharged by the Sales Manager simply added to the duties of the General Manager, to
whom the Sales Manager used to report.
In the instant case, the ground for dismissal or termination of services does not relate to a blameworthy
act or omission on the part of the employee, there appears to us no need for an investigation and
hearing to be conducted by the employer who does not, to begin with, allege any malfeasance or non-
feasance on the part of the employee. In such case, there are no allegations which the employee should
refute and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private
respondent would have had the right to be present, on the business and financial circumstances
compelling retrenchment and resulting in redundancy, would be to impose upon the employer an
unnecessary and inutile hearing as a condition for legality of termination.
This is not to say that the employee may not contest the reality or good faith character of the
retrenchment or redundancy asserted as grounds for termination of services. The appropriate forum for
such controversion would, however, be the Department of Labor and Employment and not an
investigation or hearing to be held by the employer itself. It is precisely for this reason that an employer
seeking to terminate services of an employee or employees because of “closure of establishment and
reduction of personnel”, is legally required to give a written notice not only to the employee but also to
the Department of Labor and Employment at least one month before effectivity date of the termination.
In the instant case, private respondent did controvert before the appropriate labor authorities the
grounds for termination of services set out in petitioner’s letter to him dated 17 June 1985.

Asian Alcohol v NLRC

GR 131108 March 25, 1999
FACTS:
 The Parsons family who owned controlling stocks in Asian Alcohol Corporation suffered
major business losses prompting it to sell the corporation to Prior Holding which took over its
management and operation.
 Prior Holding implemented re-organizational plan and other cost-saving measures for the
company. As a result 117 employees were separated. Of 72 of them occupied redundant
positions, 21 were held by union members and 51 by non-union members.
 6 private respondents were members of the union whose positions were abolished due to
redundancy. Private respondents Carias, Martines, and Sendon were water pump tenders,
Amacio was a machine shop mechanic, Verayo was plant operator while Tormo was a plant
helper under him.
 They received individual notices of termination; were paid the equivalent of one month
salary for every year of service as separation pay. The money value of their unused sick
vacation, emergency, and seniority leave credits, 13th month pay, medicine allowance, tax
refunds and good will cash bonuses for those with at least 10 years of service. All of them
executed sworn releases, waivers and quitclaims.
 Private respondents filed with the NLRC complaints for illegal dismissal with a prayer for
reinstatement and backwages. Moral damages and attorney’s fees. They alleged that Asian
Alcohol used the retrenchment to dismiss them because they were members of the union.
They also alleged that Asian Alcohol was not bankrupt as it has engaged in aggressive
scheme in contractual hiring.
 Labor Arbiter: Dismissed the complaint. The dismissal of the respondents on the ground of
redundancy/retrenchment is valid or legal. The fact that the Asian Alcohol incurred losses in
its business operations was not seriously challenged by the complainants. The facts of
business losses incurred in its business operations prior to the implementation of the
retrenchment program was sufficiently supported by documents indicating a deficit of 26,
117,889.
  NLRC: Revered. Illegal dismissal. The positions of the respondents were not redundant
because casuals replaced them. The company was not in the state of reverses at the
time of retrenchment.

ISSUE: Whether or not there is a valid retrenchment thus making the dismissal of private
respondents illegal.

RULING: There was a valid dismissal.

 The right of management to dismiss workers during periods of business recession and to
install labor saving devices to prevent losses is governed by Art. 283 (Please see Art 283
of Labor Code)
 Under the said provision, retrenchment and redundancy are just cause for the employer to
terminate the services to preserve the viability of the business. In exercising its right,
however management must faithfully comply with the substantive and procedural
requirements laid down by law and jurisprudence.
 The requirements for a valid retrenchment which must be proved by clear and convincing
evidence are (1) the retrenchment is reasonably necessary and likely to prevent business
loses which, if already incurred are not merely diminish but substantial, serious, actual and
real or if only expected are reasonably imminent as perceived objectively in good faith by
the emploter (2) that the employer served written notice both the emplyees and to the
DOLE at least one month prior to the intended date of retrenchment. (3) that the employer
pays the retrenched employees separation pay equivalent to one month pay or at least ½
month pay for every year of service, whichever is higher. (4) that the employer exercise its
prerogative to retrench empoyees in good faith for the (5) that the employers used fair and
reasonable criteria in ascertaining who would be retained among the employess.
 An important requirement would also to state the condition of the business losses. This is
normally shown by audited financial documents like yearly balance sheets and profit and
loss statements as well as annual income tax return.
 In the case at bar, private respondents never contested the veracity of the audited financial
documents proferred by Asian Alcohol before the LA. Documents show that the petitioner
has an accumulated losses amounting to 306, 764, 349
 In rejecting the petitioner’s claim the NLRC stated that the alleged deficits of the corporation
did not prove anything for the petitioner since they were incurred before the take over of
Prior Holdings. Under Art 283 of the Labor Code, retrenchment to prevent losesse means
that retrenchment must be undertaken by the employer before loses are actually sustained.
The employer need not keep his employees until after loses shall materialize.
 The law gives the new management every right to undertake measures to save the
company from bankruptcy. In this case, when Prior Land bought the corporation and took
over the management of it there were no signs that the loses would end, hence Prior land
undertook re-organizational plan which retrenched number of employees because
ultimately they will absorb all the loses that the prior corporation incurred.
 In the issue of redundancy, when the service capability of work force is in excess of what is
reasonably needed to meet the demands on the enterprise. Under this condition the
employer has no legal obligation to keep in its payroll more employees than necessary for
the operation of its business. For the implementation of redundancy program to be valid it
must (1) written notice served on both the employees and the DOLE (2) payment of
separation pay at least one month pay for every year of service, whichever is higher, (3)
good faith in abolishing the redundant positions and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished.
 In this case, when the company made introduction of the services of an independent
contractor it was justified when the latter is undertaken in order to effectuate more economic
and sufficient methods of production. Respondent failed to prove that company acted in
malicious or arbitrary manner to operate the Laura wells.
 G.R. No. 115394 September 27, 1995
FE S. SEBUGUERO petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION , respondents.
This is a special civil action for certiorari under Rule 65 of the Rules of Court to set aside for having been
rendered with grave abuse of discretion the decision of 29 November 19931 and resolution of 9
February 19942 of public respondent National Labor Relations Commission (NLRC) in NLRC NCR CA Case
No. 004673-93. The former modified the decision of 26 February 1993 of the Labor Arbiter 3 by setting
aside the award of back wages, proportionate 13th month pay for 1991 and attorney's fees, while the
latter denied the motion to reconsider the former.
The antecedent facts as disclosed by the decisions of the Labor Arbiter and the NLRC, as well as by the
pleadings of the parties, are not complicated.
The petitioners were among the thirty-eight (38) regular employees of private respondent GTI
Sportswear Corporation (hereinafter GTI), a corporation engaged in the manufacture and export of
ready-to-wear garments, who were given "temporary lay-off" notices by the latter on 22 January 1991
due to alleged lack of work and heavy losses caused by the cancellation of orders from abroad and by
the garments embargo of 1990.
Believing that their "temporary lay-off" was a ploy to dismiss them, resorted to because of their union
activities and was in violation of their right to security of tenure since there was no valid ground
therefor, the 38 laid-off employees filed with the Labor Arbiter's office in the National Capital Region
complaints for illegal dismissal, unfair labor practice, underpayment of wages under Wage Orders Nos.
01 and 02, and non-payment of overtime pay and 13th month pay.4
Private respondent GTI denied the claim of illegal dismissal and asserted that it was its prerogative to
lay-off its employees temporarily for a period not exceeding six months to prevent losses due to lack of
work or job orders from abroad, and that the lay-off affected both union and non-union members. It
justified its failure to recall the 38 laid-off employees after the lapse of six months because of the
subsequent cancellations of job orders made by its foreign principals, a fact which was communicated to
the petitioners and the other complainants who were all offered severance pay. Twenty-two (22) of the
38 complainants accepted the separation pay. The petitioners herein did not.
The cases then involving those who accepted the separation pay were pro tanto dismissed with
prejudice.
In his decision of 26 February 1993 with respect to the claims of the petitioners, Labor Arbiter Pablo C.
Espiritu, Jr. found for them and disposed as follows:
WHEREFORE, above premises considered, judgment is hereby rendered finding Respondent, G.T.I.
Sportswear Corporation, liable for constructive dismissal, underpayment of wages under NCR 01 and 02,
and 13th-month pay differentials and concomitantly, Respondent corporation is hereby ordered:
a. To pay the following complainants backwages from the time of their constructive dismissal (July 22,
1991) till promulgation considering that reinstatement is no longer decreed: . . .
b. To pay complainants separation pay of 1/2 month for every year of service in lieu of reinstatement in
the following amounts: . . .
c. To pay complainants 13th-month pay differentials arising out of underpayment of wages and
proportionate 13th-month pay for 1991 in the following amounts: . . .
d. To pay complainants underpayment of wages under NCR Wage 01 and NCR Wage 02 in the following
amounts: . . .
e. To pay complainants the amount of P120,618.87 representing 10% attorney's fees based on the total
judgment award of P1,326,807.63.
The claims for unfair labor practice, nonpayment of overtime pay, moral damages, and exemplary
damages are hereby denied for lack of merit.
SO ORDERED.5
In support of the disposition, the Labor Arbiter made the following ratiocinations:
On the validity of the temporary lay-off, this Arbitration Branch finds that there was ample justification
on the part of Respondent company to lay-off temporarily some of its employees to prevent losses as a
result of the reduction of the garment quota allocated to Respondent company due to the garment
embargo of 1990. In fact, in the months of March, April, and May of 1991 respondent company received
several messages/correspondence from its foreign principals informing them (Respondent) that they are
canceling/transferring some of their quotas/orders to other countries. The evidence presented by
Respondent company proves this fact (Exhibits "12", "13", "14", "15", "15-A", "16", "17" and Annexes
"5", "6", "7", showing the different documentary evidence on cancellation of orders and forced leave
schedules of workers due to lack of work). This is sustainable, as in this case, where the Respondent
found it unnecessary to continue employing some of its workers because of business recession, lack of
materials to work on due to government controls (garments embargo) and due to the lack of the
demand for export quota from its principal foreign buyers.
Although, as a general rule, Respondent company has the prerogative and right to resort to temporary
lay-off, such right is likewise limited to a period of six (6) months applying Art. 286 of the Labor Code on
suspension of employer-employee relationship not exceeding six (6) months.
In this case, respondent company was justified in the temporary lay-off of some of its employees.
However, Respondent company should have recalled them after the end of the six month period or at
the least reasonably informed them (complainants) that the Respondent company is still not in a
position to recall them due to the continuous drop of demand in the export market (locally or
internationally), thereby extending the temporary lay-off with a definite period of recall and if the same
cannot be met, then the company should implement retrenchment and pay its employees separation
pay. Failing in this regard, respondent company chose not to recall nor send notice to the complainants
after the lapse of the six (6) month period. Hence, there is in this complaint a clear case of constructive
dismissal. While there is a valid reason for the temporary lay-off, the same is also limited to a duration
of six months. Thereafter the employees, complainants herein, are entitled under the law (Art. 286) to
be recalled back to work. As result thereof, the temporary lay-off of the complainants from January 22,
1991 (date of lay-off) to July 22, 1991 is valid, however, thereafter complainants are already entitled to
backwages, in view of constructive dismissal, due to the fact that they were no longer recalled back to
work. Complainants cannot be placed on temporary lay-off forever. The limited period of six (6) months
is based provisionally too prevent circumvention on the right to security of tenure and to prevent grave
abuse of discretion on the part of the employer. However, since during the trial it was proven, as
testified by the Vice-President for marketing and personnel manager, that the lack of work and selection
of personnel continued to persist and considering the antagonism and hostility displayed by both
litigants, as observed by this Arbiter, during the trial of this case and in view of the strained relations
between the parties, reinstatement of the complainants would not be prudent. (Divine Word High
School vs. NLRC, G.R. 72207, 6 Aug. 1986; Esmalin vs. NLRC, G.R. 67880, 15 Sept. 1989; Hernandez vs.
NLRC, G.R. 34302, 10 Aug. 1989). Hence, separation pay of 1/2 month for every year of service in lieu of
reinstatement is in order. . . .
On the issue of monetary claims this Arbitration Branch finds that Respondent is liable for
underpayment of wages under NCR Wage Order 01 and 02 considering that respondent failed to rebut
the claims of the complainants. Respondent failed to show proof by means of payrolls to disprove the
claim of the complainants. Complainants are also entitled to their proportionate 13th-month pay
differentials as a result of the underpayment of wages under NCR-01 and 02 and likewise to their
proportionate 13th-month pay for 1991 for the month of January 1991. . . .
However, complainants are entitled to reasonable attorney's fees considering they were forced to
engage the services of counsel in order to fully ventilate their rights and grievances in accordance with
the Labor Code as amended.6
The Labor Arbiter found no sufficient evidence to prove the petitioners' charges of unfair labor practice,
overtime pay, and for moral and exemplary damages.
Private respondent GTI seasonably appealed the aforesaid decision to the NLRC, which docketed the
appeal as NLRC NCR CA Case No. 004673-93.
In its challenged decision, the NLRC concurred with the findings of the Labor Arbiter that there was a
valid lay-off of the petitioners due to lack of work, but disagreed with the latter's ruling granting back
wages after 22 July 1991. The NLRC justified its postulation as follows:
However, we cannot sustain the findings of the Labor Arbiter in awarding the complainants backwages
after July 22, 1991 in view of constructive dismissal, it being acknowledged by him that ". . . during the
trial it was proven, as testified by the Vice-President for marketing and personnel manager, that the lack
of work and selection of personnel continued to persist . . ." Besides, it was not denied by the
complainants that during the proceeding of the case, the respondents conveyed to the complainants the
impossibility of having them recalled in view of the continued unavailability of work as the economic
recession of the respondent's principal market persisted. In fact, the respondent company offered to
complainants payment of their separation pay which offer [w]as accepted by 22 out of 38 complainants.
Having established lack of work, it necessarily follow[s] that retrenchment did take place and not
constructive dismissal. Dismissal by its term, presuppose that there was still work available and that the
employer terminated the services of the employee therefrom. The same cannot be said of the case at
bar. The complainants did not question the evidence of lack of work on account of reduction of
government quota or cancellation of orders.
Art. 286 of the Labor Code is precised [sic] in this regards when it provided that:
Art. 286. When employment not deemed terminated. — The bona fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months, . . . shall not terminate employment .
...
It is only after the six months period that an employee can be presumed to have been terminated.7
It thus set aside the awards for back wages, proportionate 13th month pay for 1991, and for attorney's
fees which it found to be without basis, and disposed as follows:
WHEREFORE, premises considered the decision of the Labor Arbiter dated February 26, 1993 is hereby
modified by deleting the award of backwages, the proportionate 13th month pay for 1991 and
attorney's fees for lack of legal basis and direct, the payment of separation pay equal to one-half month
salary for every year of service as of July 22, 1991.8
Unable to accept the NLRC judgment, the petitioners filed this special civil action for certiorari. They
contend that the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion when
it: (a) ruled that there was a valid and legal reduction of business and in sustaining the theory of
redundancy in justifying the dismissal of the petitioners; (b) failed to apply in full the provisions of law
and of jurisprudence as to the full payment of back wages in cases of illegal dismissal; and (c) deleted
the award of attorney's fees.
We gave due course to this petition after the filing of the separate comments to the petition by the
public and private respondents and the petitioners' reply to the public respondent's comment.
The petitioners' first contention is based on a wrong premise or on a miscomprehension of the
statement of the NLRC. What the NLRC sustained and affirmed is not redundancy, but retrenchment as a
ground for termination of employment. They are not synonymous but distinct and separate grounds
under Article 283 of the Labor Code, as amended.9
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by
the actual requirements of the enterprise. A position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.10
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the termination
of employment initiated by the employer through no fault of the employee's and without prejudice to
the latter, resorted to by management during periods of business recession, industrial depression, or
seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of
the plant for a new production program or the introduction of new methods or more efficient
machinery, or of automation.11 Simply put, it is an act of the employer of dismissing employees because
of losses in the operation of a business, lack of work, and considerable reduction on the volume of his
business, a right consistently recognized and affirmed by this Court.12
Article 283 of the Labor code which covers retrenchment, reads as follows:
Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by servicing a written notice on
the workers and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closure or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered one (1) whole year.
This provision, however, speaks of a permanent retrenchment as opposed to a temporary lay-off as is
the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off
and provides for the requisites in effecting it or a period or duration therefor. These employees cannot
forever be temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but
only by analogy to set a specific period that employees may remain temporarily laid-off or in floating
status.13 Six months is the period set by law that the operation of a business or undertaking may be
suspended thereby suspending the employment of the employees concerned. The temporary lay-off
wherein the employees likewise cease to work should also not last longer than six months. After six
months, the employees should either be recalled to work or permanently retrenched following the
requirements of the law, and that failing to comply with this would be tantamount to dismissing the
employees and the employer would thus be liable for such dismissal.
To determine, therefore, whether the petitioners were validly retrenched or were illegally dismissed, we
must determine whether there was compliance with the law regarding a valid retrenchment at anytime
within the six month-period that they were temporarily laid-off.
Under the aforequoted Article 283 of the Labor Code, there are three basic requisites for a valid
retrenchment:
(1) the retrenchment is necessary to prevent losses and such losses are proven;
(2) written notice to the employees and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment; and
(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year of
service, whichever is higher.
As for the first requisite, whether or not an employer would imminently suffer serious or substantial
losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to
determine.14 Here, both the Labor Arbiter and the NLRC found that the private respondent was suffering
and would continue to suffer serious losses, thereby justifying the retrenchment of some of its
employees, including the petitioners. We are not prepared to disregard this finding of fact. It is settled
that findings of quasi-judicial agencies which have acquired expertise in the matters entrusted to their
jurisdiction are accorded by this Court not only with respect but with finality if they are supported by
substantial evidence.15 The latter means that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion.16 In the instant case, no claim was made by any of the
parties that such a finding was not supported by substantial evidence. Furthermore, the petitioners did
not appeal the finding of the Labor Arbiter that their temporary lay-off to prevent losses was amply
justified. They cannot now question this finding that there is a valid ground to lay-off or retrench them.
The requirement of notice to both the employees concerned and the Department of Labor and
Employment (DOLE) is mandatory and must be written and given at least one month before the
intended date of retrenchment. In this case, it is undisputed that the petitioners were given notice of
the temporary lay-off. There is, however, no evidence that any written notice to permanently retrench
them was given at least one month prior to the date of the intended retrenchment. The NLRC found that
GTI conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of
work.17 But what the law requires is a written notice to the employees concerned and that requirement
is mandatory.18 The notice must also be given at least one month in advance of the intended date of
retrenchment to enable the employees to look for other means of employment and therefore to ease
the impact of the loss of their jobs and the corresponding income.19 That they were already on
temporary lay-off at the time notice should have been given to them is not an excuse to forego the one-
month written notice because by this time, their lay-off is to become permanent and they were
definitely losing their employment.
There is also nothing in the records to prove that a written notice was ever given to the DOLE as
required by law. GTI's position paper,20 offer of exhibits,21 Comment to the Petition,22 and
Memorandum23 in this case do not mention of any such written notice. The law requires two notices —
one to the employee/s concerned and another to the DOLE — not just one. The notice to the DOLE is
essential because the right to retrench is not an absolute prerogative of an employer but is subject to
the requirement of law that retrenchment be done to prevent losses. The DOLE is the agency that will
determine whether the planned retrenchment is justified and adequately supported by facts.24
With respect to the payment of separation pay, the NLRC found that GTI offered to give the petitioners
their separation pay but that the latter rejected such offer which was accepted only by 22 out of the 38
original complainants in this case.25 As to when this offer was made was not, however, proven. All that
the parties, the Labor Arbiter and the NLRC stated in their respective pleadings and decisions was that
the offer and payment were made during the pendency of the illegal dismissal case with the Labor
Arbiter. But with or without this offer of separation pay, our conclusion would remain the same: that the
retrenchment of the petitioners is defective in the face of our finding that the required notices to both
the petitioners and the DOLE were not given.
The lack of written notice to the petitioners and to the DOLE does not, however, make the petitioners'
retrenchment illegal such that they are entitled to the payment of back wages and separation pay in lieu
of reinstatement as they contend. Their retrenchment, for not having been effected with the required
notices, is merely defective. In those cases where we found the retrenchment to be illegal and ordered
the employees' reinstatement and the payment of back wages, the validity of the cause for
retrenchment, that is the existence of imminent or actual serious or substantial losses, was not
proven.26 But here, such a cause is present as found by both the Labor Arbiter and the NLRC. There is
only a violation by GTI of the procedure prescribed in Article 283 of the Labor Code in effecting the
retrenchment of the petitioners.
It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so
proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin
requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the employer
must be sanctioned for non-compliance with the requirements of or for failure to observe due process.
The sanction, in the nature of indemnification or penalty, depends on the facts of each case and the
gravity of the omission committed by the employer and has ranged from P1,000.00 as in the cases
of Wenphil vs. National Labor Relations Commission,27 Seahorse Maritime Corp. vs. National Labor
Relations Commission,28 Shoemart, Inc. vs. National Labor Relations Commission,29 Rubberworld (Phils.),
Inc. vs. National Labor Relations Commission,30 Pacific Mills, Inc. vs. Alonzo, 31 and Aurelio vs. National
Labor Relations Commission32 to P10,000.00 in Reta vs. National Labor Relations
33 34
Commission and Alhambra Industries, Inc. vs. National Labor Relations Commission. More recently,
in Worldwide Papermills, Inc. vs. National Labor Relations Commission,35 the sum of P5,000.00 was
awarded to the employee as indemnification for the employer's failure to comply with the requirements
of procedural due process.
Accordingly, we affirm the deletion by the NLRC of the award of back wages. But because the required
notices of the petitioners' retrenchment were not served upon the petitioners and the DOLE, GTI must
be sanctioned for such failure and thereby required to indemnify each of the petitioners the sum of
P2,000.00 which we find to be just and reasonable under the circumstances of this case.
As for the award of the 13th-month pay made by the Labor Arbiter and deleted by the NLRC, we do not
find anything in the decision of the NLRC to support the deletion of this award other than its opinion
that there is lack of legal basis to support such an award, without, however, furnishing any explanation
for this finding. Thus, the award of the 13th-month pay made and sufficiently justified by the Labor
Arbiter must be reinstated as prayed for by the petitioners.
Also, the petitioners are entitled to an award for attorney's fees pursuant to paragraph 7, Article 2208 of
the Civil Code which must, however, be reasonable. The award of P120,618.87, which is equivalent to
ten percent (10%) of the amounts recovered, as attorney's fees should be reduced to P25,000.00, an
amount we find to be reasonable. The ten percent (10%) attorney's fees provided for in Article 111 of
the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is the maximum; hence, any
amount less than that may be awarded as the circumstances of the case may warrant.
WHEREFORE, the instant petition is partially GRANTED and the challenged decision of public respondent
National Labor Relations Commission in NLRC NCR CA Case No. 004673-93 is modified by reversing and
setting aside its deletion of the awards in the Labor Arbiter's decision of proportionate 13th month pay
for 1991 and attorney's fees, the latter being reduced to P25,000.00. Separation pay equivalent to one-
half (1/2) month pay for every year of service shall be computed from the dates of the commencement
of the petitioners' respective employment until the end of their six-month temporary lay-off which is 22
July 1991. In addition, private respondent G.T.I. Sportswear Corporation is ordered to pay each of the
petitioners the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the
retrenchment. Costs against the private respondent. SO ORDERED.

G.R. No. 104624 October 11, 1996

SAN PEDRO HOSPITAL OF DIGOS, INC., petitioner, vs. SECRETARY OF LABOR,
THE SAN PEDRO HOSPITAL EMPLOYEES UNION — NATIONAL FEDERATION OF
LABOR, respondents.
FACTS: Petitioner had a three-year collective bargaining agreement (CBA) covering the period
December 15, 1987 until December 15, 1990, with herein private respondent, Nagkabiusang
Mamumuo sa San Pedro Hospital of Digos — National Federation of Labor (NAMASAP-NFL),
the exclusive bargaining agent of the hospital’s rank-and-file workers. After the parties failed to
reach agreement on the issues of raising wages, the union during the meeting of February 19,
1991 declared a deadlock.
On February 20, 1991, respondent union saturated petitioner’s premises with streamers and
picketed the hospital. The operations of the hospital having come to a grinding halt, the hospital
management considered the union actions as tantamount to a strike. On May 28, 1991,
respondent union struck. Despite the NCMB’s call for a conciliation conference, nurses and
nurse aides who were members of the union abandoned their respective department and joined
the picket line a week later. Doctors began leaving the hospital and the number of patients
dwindled. The last patient was discharged on June 10, 1991.
On June 12, 1991, a “Notice of Temporary Suspension of Operation” was issued by petitioner
hospital and submitted to the local office of the NCMB on June 14, 1991. Then Secretary of
Labor Nieves Confessor assumed jurisdiction over the labor dispute and issued an order
directing all workers to return to work. However, this order was received by petitioner only on
June 20, 1991. In the meantime, it had already notified the DOLE via its letter dated June 13,
1991, which was received by the DOLE on June 14, 1991, that it would temporarily suspend
operations for six (6) months effective June 15, 1991, or up to December 15, 1991. Petitioner thus
refused the return of its striking workers on account of such suspension of operations.

ISSUE: WON the Secretary can validly compel the employer to enter into a new CBA even
during temporary suspension of operations (what if in permanent closure?)

RULING: Temporary suspension of operations is recognized as a valid exercise of

management prerogative provided it is not carried out in order to circumvent the provisions
of the Labor Code or to defeat the rights of the employeesunder the Code. The determination to
cease or suspend operations is a prerogative of management that the State usually does not
interfere with, as no business can be required to continue operating at a loss simply to maintain
the workers in employment. Such an act would be tantamount to a taking of property without
due process of law, which the employer has a right to resist. But where it is shown that the
closure is motivated not by a desire to prevent further losses, but to discourage the workers from
organizing themselves into a union for more effective negotiation with management, the State is
bound to intervene.
The burden of proving that such a temporary suspension is bona fide falls upon the employer. In
this instance, petitioner had to establish the fact of its precarious financial health, that its
cessation of operation was really necessitated by its financial condition, and that said condition
would probably be alleviated or improved, or its losses abated, by undertaking such suspension
of operation. The fact that the conciliator never asked for them is no sufficient excuse for not
presenting the same, as such was petitioner’s duty. Neither is it acceptable for petitioner to
allege that latest financial statement (for the year 1991) were still being prepared by its
accountants and not yet ready for submission, since the financial statement for the prior years
1989 and 1990 would have sufficed.
It is a hornbook rule that employers who contemplate terminating the services of their
workers must base their decisions on more than just flimsy excuses, considering that the
dismissal of an employee from work involves not only the loss of his position but, what is more
important, his means of livelihood. The same principle applies in temporary suspension of
operations, as in this case, considering that it involves laying off employees for a period of six
months. Petitioner, having wretchedly failed to justify by even the most rudimentary proof its
temporary suspension of operations, must bear the consequences thereof. We thus hold that the
Secretary of Labor and Employment did not act with grave abuse of discretion in finding the
temporary suspension unjustified and illegal.
The order of the secretary in ordering the hospital to enter into a new CBA was
valid.
Secretary was of the impression that petitioner would operate again after the lapse of the six-
month suspension of operations on December 16, 1991, and so ordered the parties to enter into
and formalize a new CBA to govern their relations upon resumption of operations. On the other
hand, the aforequoted portion of the Order must be understood in the context of the Secretary’s
finding that the temporary suspension was only for circumventing the return-to-work order, but
in spite of which he held that he could not order petitioner to continue operations as “this would
infringe on its inherent right to manage and conduct its own business affairs”; he thus ordered
instead the payment of backwages to the returning workers who were refused admittance by
petitioner on June 21, 1991. And as above adverted to, he also ordered the parties to execute a new
CBA to govern their relations upon the expiry of the period of suspension and the resumption of
normal operations.
Did the Secretary act in excess of jurisdiction in imposing the wage increase and
union shop provision on the petitioner? We hold that he did not. While petitioner
cannot be forced to abandon its suspension of operations even if said suspension be declared
unjustified, illegal and invalid, neither can petitioner evade its obligation to bargain with the
union, using the cessation of its business as reason therefor. For, as already indicated above, the
employer-employee relationship was merely suspended (and not terminated) for the duration of
the temporary suspension. Using the suspension as an excuse to evade the duty to bargain is
further proof of its illegality. It shows abuse of this option and bad faith on the part of petitioner.
And since it refused to bargain, without valid and sufficient cause, the Secretary in the exercise
of his powers under Article 263(i) of the Labor Code to decide and resolve labor disputes,
properly granted the wage increase and imposed the union shop provision.
Notwithstanding that respondent Secretary did not act with grave abuse of discretion in issuing the
challenged Orders, we cannot ignore the supervening event which occurred after December 15,
1991, i.e., the subsequent permanent cessation of petition of petitioner on account of losses. Thus,
despite the absence of grave abuse of discretion on the part of the respondent Secretary, this
Court cannot impose upon petitioner the directive to enter into a new CBA with the union for the
very simple reason that to do so would be to compel petitioner to continue its business when it had
already decided to close shop, and that would be judicial tyranny on our part.

SAN MIGUEL JEEPNEY SERVICE and MAMERTO GALACE, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, EDELBERTO PADUA and 23 OTHERS, respondents.
May workers who are paid on commission basis be considered regular employees, and therefore
entitled to separation pay? What constitutes serious business losses under Art. 283 of the Labor Code
which may justify closure or cessation of operations of business establishments and the laying-off of
employees without need of paying separation pay?
The foregoing questions are resolved in this special civil action for certiorari alleging grave abuse of
discretion by public respondent National Labor Relations Commission[2] in its Resolution[3] promulgated
on February 28, 1990 in NLRC case RB-III-03-12-0201-87, which modified the decision of Labor Arbiter
Oswald B. Lorenzo dated August 29, 1988.
The Facts

The 23 complainants were formerly working (as drivers, dispatchers and mechanic) with petitioner San
Miguel Jeepney Service (SMJS), with services ranging from two to eight years.Petitioner SMJS had a
contract with the U.S. Naval Base Facility located in San Miguel, San Antonio, Zambales, to provide
transportation services to personnel and dependents inside said facility. When the said contract expired
on 02 May 1988, petitioner Galace, owner and general manager of SMJS, opted not to renew the
existing contract nor bid on the new contract,[4]due to financial difficulties, he having suffered a net loss
the prior year. As a consequence, the services of the complainants were terminated. By that time,
however, the 23 had already filed a complaint for non-compliance with the minimum wage law from
1980 onwards, plus non-payment of the 13th month pay, legal holiday pay, overtime pay, service
incentive leave pay and separation pay. In their position paper, complainants claimed that they were
drivers (except for Edna Farin and Brainly Aglibot who worked as dispatchers, and Abner Martinez who
was a mechanic-dispatcher) and all of them were receiving their pay based on commission basis, which
was below the statutory minimum wage. They further alleged, among others, that their work entitled
them to overtime pay, legal holiday pay and severance pay, which were not paid to them.
Petitioners on the other hand rejected any liability for the money claims. In refutation of the
complainants claims, they submitted a position paper stating:
1. Legal Holiday Pay -- Complainants are not entitled. (a) the casual dispatchers have no fix (sic) day of
work, they merely act as substituted (sic); and (b) the drivers-complainants, who are purely on
commission basis are not entitled to legal holiday pay (Rule IV, Holiday Pay, Sec. 1 (e), Implementing
Rules of the Labor Code).
2. 13th month pay: Not applicable to complainants who are purely on commission basis (Sec. 3 (e), Rules
and Regulations Implementing P.D. 851) Complainants casual-dispatchers are not allowed 13th month
pay because they are not (paid on) monthly basis.
3. Underpayment of Minimum Wage: Complainants-drivers are not wage earners. They are not paid on
the basis of their work-hours rendered but on the percentages of their collections representing fares
from their passengers. They control their own collections. There is no basis of minimum wage in relation
to their commissions taken by them.
The complainants-casual dispatchers are well over their minimum wage.
4. Overtime pay. -- Complainants cannot claim overtime pay. They control their own time. The amount
of their percentages depend on how industrious they are in looking for paying passengers.Hence,
complainants control their pay, not the respondents. So, why give overtime pay to one who is really
working on such a (sic) time?
5. Separation pay. -- All the complainants stopped working when(ever) they pleased. At least respondent
Mamerto Galace has given all the complainants notice on July 17, 1988 (should be 1987) that his
contract will terminate on February 3, 1988 and after this date, complainants went on strike. How could
they be entitled to separation pay when they wilfully stopped working without the fault of the
respondents(?)
6. Service Incentive pay: -- This is not applicable to the complainants who are purely on commission
basis (Rule V, Sec. 1 (d), Implementing Rules and Regulations of the Labor Code).
The arbiter ruled that insofar as the claims for holiday pay, 13th month pay and service incentive pay
were concerned, under the Rules Implementing PD 851, the complainants were not entitled to such
benefits, being workers on a purely commission basis. With respect to the alleged underpayment of
minimum wage, the arbiter held that since the complainants-drivers control(led) their own collections
and time, xxx there could be no basis to determine minimum wage in relation to their commissions
xxx. Moreover, a perusal of the Complaint xxx shows a clear admission of payment of the latter on
commission basis at the rate of 14.4% of their collections. xxx (T)he failure of the complainants-drivers
to state in their Complaint and pleadings the amount of their alleged underpayment only reflects that
complainants themselves were unsure if they were underpaid or not. Hence this Arbiter finds no basis to
grant the same. (The foregoing findings by the arbiter were subsequently cited with approval by the
respondent NLRC.)
It seems that the arbiter also went on to hold implicitly that the drivers were not regular employees of
SMJS. He stated:
(Insofar) as the cases of Edna Farin and Brainly Aglibot and Abner Martinez are concerned, we rule that
they are entitled to the difference of the underpayment of their wages as their jobs are different from
that of complainants-drivers, but regular employees of respondents, in accordance with Article(s) 280
and 281 of the Labor Code as amended. These three (3) employees having been found to have been
dismissed without due process of law are entitled to separation pay equivalent to one-half (1/2) month
for every year of service. (underscoring supplied)
He likewise held that the non-renewal of the contract with the US Naval Base is a closure or cessation of
operations NOT due to serious business losses under Art. 283 of the Labor Code, and that being the
case, the drivers became entitled to one-half (1/2) month pay for every year of service. All other claims,
such as for overtime pay and the like, were dismissed for lack of both legal basis and evidence to
support the same. However, the arbiter ordered payment of P1,000.00 to each of the complainants-
drivers by way of financial assistance, considering their length of service. The dispositive portion of the
arbiters decision reads:[5]
WHEREFORE, premises considered, judgment is hereby rendered ordering respondents to pay
complainants Edna Farin, Brainly Aglibot and Abner Martinez the differentials for underpayment of
wages, as well as, their severance pay, equivalent to one-half (1/2) month for every year of service.
Respondents are further ordered to extend by way of financial assistance in the amount of P1,000.00
each or a total of P19,000.00.
On appeal, the respondent Commission modified the arbiters ruling, holding that all the complainants
are regular employees in the contemplation of Article 281 (now Art. 280) of the Labor Code, which
provides that employment shall be deemed regular when the employee performs activities which are
usually necessary and desirable in the usual business or trade ; respondent Commission thus ruled that
the complainants are entitled to separation pay of one-half month for every year of service, by virtue of
the non-renewal of the transportation contract with the naval base. However, finding that the
complainants did not ask for financial assistance, the NLRC deleted the award of P1,000.00 for the each
of the complainants. The fallo of the Commissions Resolution states:[6]
WHEREFORE, in the light of the preceding disquisition, the judgment appealed from is hereby modified,
in that the award of P1,000.00 each to the complainants for financial assistance is deleted.The
respondent is ordered to pay all the complainants their separation pay equivalent to one-half (1/2)
month for every year of service.
Dissatisfied, petitioners brought this petition for certiorari under Rule 65 of the Rules of Court on April
19, 1990.
The Issues

The issues raised by petitioners are as follows:[7]

I. The respondent NLRC acted in grave abuse of its discretion in awarding separation pay in
favor of respondents, such award not being warranted by the facts and the law.
II. Assuming arguendo that such award of separation pay is warranted by law, the respondent
NLRC nevertheless gravely abused its discretion in making said award in the absence of the
requisite factual basis therefor.
Petitioners concede that the NLRC may have been correct after all in holding that complainants/private
respondents were regular employees, for they acknowledged albeit grudgingly that the above ruling
seems to be tinged with reason and authority. Nevertheless, they contend that they cannot be held
liable for separation pay for petitioner SMJS had been experiencing financial reverses since
1986.[8] Petitioners cited the figures provided by petitioner Galace showing sliding incomes:[9]
Our gross receipt in 1985 amounted to P846,459.25
Our gross receipt in 1986 amounted to . 676,748.75
So, our income decreased in 1986 by P169,710.50
Our gross income in 1986 was .. P 676,748.75
Our gross income in 1987 was .. 534,204.71
Our income decreased in 1987 by . P142,544.04
Petitioners also fault the NLRC for acknowledging in its findings of fact (p. 2 of the Resolution) that SMJS
had experienced financial reverses while at the same time holding that the closure of SMJS was simply
due to non-renewal of its transportation contract, and thereby implying unfairly that SMJS did not cease
operations due to financial reverses. Finally, petitioners argue that in order to award separation pay,
there must be some numerical and factual basis (e.g. latest salary rate) for the computation thereof,
which they claim is absent in this case, as complainants were earning commissions, which of course
varied from period to period.
The Courts Ruling

We shall discuss the two issues raised by the petition in reverse order: first, the factual bases for serious
business losses and then, the applicability and computation of separation pay.
No Serious Business Losses

As petitioners themselves admitted, what they suffered were sliding incomes, in other words,
decreasing gross revenues. What the law speaks of is serious business losses or financial
reverses. Clearly, sliding incomes are not necessarily losses, much less serious business losses within the
meaning of the law. In this connection, we are reminded of our previous ruling that the requisites of a
valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in
extent; (b) the substantial losses apprehended must be reasonably imminent; (c) the retrenchment must
be reasonably necessary and likely to effectively prevent the expected losses; and (d) the alleged losses,
if already incurred, and the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence.[10] We have also held that adverse business conditions justify the
exercise of management prerogative to retrench in order to avoid the not-so-remote possibility of
closure of the entire business.[11] At the other end of the spectrum, it seems equally clear that not every
asserted possibility of loss is sufficient legal warrant for reduction of personnel. In the nature of things,
the possibility of incurring losses is constantly present, in greater or lesser degree, in the carrying on of
business operations, since some, indeed many, of the factors which impact upon the profitability or
viability of such operations may be substantially outside the control of the employer.[12]
All the foregoing considerations simply require that the employer bears the burden of proving his
allegation of economic or business reverses with clear and satisfactory evidence, it being in the nature
of an affirmative defense.[13] Apparently, the petitioners evidence failed to persuade the public
respondent, and it is not difficult to understand why. The petition made reference to a position paper
dated March 10, 1988,[14] in which petitioner Galace admitted that I did not ask to renew our contract
with the Navy Exchange because our income had been consistently going down (petitioner then shows
the decreases in gross incomes for 1985, 1986 and 1987). It became clear to me as early as of (sic) July
last year that I shall not be able to continue operating because of the sliding incomes. So, in August, I
announced that I would not renew my contract. Apparently, petitioner did not renew his contract
because of sliding incomes, and not because of serious business losses.
In the same position paper, he also stated that (i)n 1987, I incurred a loss of P40,471.69 from
operation. x x x From 1980 to 1986, or in the six years of previous operations, I had managed to make a
profit in spite of all the expenses. Such loss per se, absent any other evidence, and viewed in the light of
the amounts of gross receipts the business generated historically, may not be deemed the serious
business loss contemplated by law, and thus cannot justify the non-payment of separation pay. Neither
did petitioners present any evidence whatsoever regarding the impact of the said net loss on the
business (extent of impairment of equity, loss of liquidity, and so forth) nor on expected losses that
would have been incurred had operations been continued (under, say, a new contract with the base).
Moreover, we note that in the same position paper, petitioner Galace admitted that he had been
persistently refusing to recognize the union organized among his employees, which undoubtedly had to
do with the work stoppage that he later complained of. In brief, we are of the belief that the cessation
of operations and closure of SMJS were, in the ultimate analysis, triggered by factors other than
a P40,000.00 loss. We therefore find no grave abuse of discretion on the part of respondent Commission
in ordering the payment of separation pay equivalent to one-half months wage for every year of service.
Propriety of Granting Separation Pay

Public respondent had found the private respondents -- drivers, dispatchers and mechanic -- to be
regular employees,[15] and, as mentioned earlier, petitioners yielded to said ruling, terming it tinged with
reason and authority. But even if they had not conceded thus, it is obvious that public respondent is
correct. The rationale for this ruling is simply that the complainants/private respondents were
unarguably performing work necessary and desirable in the business of SMJS. Without the services
rendered by private respondents, petitioners could not have conducted their business of providing
transportation services within the naval base. This plus the fact that private respondents had each
rendered from two to eight years of service cause them to come squarely within the ambit of Art. 280 of
the Labor Code; beyond dispute, they were not only employees, but regular employees, as correctly
held by public respondent.
The mere fact that they were paid on commission basis does not affect or change their status as regular
employees. The test for determining whether an employee is regular or casual has nothing to do with
the manner of computing or paying a employees wages or compensation. Rather,
The primary standard, x x x, of determining a regular (as against casual) employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual business
or trade of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity
exists.[16] (underscoring supplied)
On the other hand, we should hasten to add that while in this particular case, these commission-basis
employees involved were regular employees (by operation of law, plus of course, the fact that their
status as employees had never been challenged at any stage of the present case), it does not follow that
every employee paid (whether wholly or partly) on commission basis can be considered a regular
employee, or an employee at all, for that matter. While this caveat may seem rather elementary, it is
still needful to stress that there are many lines of business legally and legitimately engaging the services
of workers, who are paid on commission basis to perform activities desirable and necessary for such
businesses, without creating any kind of employer-employee relationship at any time. A case in point
is Singer Sewing Machine Company vs. Drilon,[17] where certain individuals were hired to work as
collectors or collecting agents of the company but per written agreement were to be considered at all
times as independent contractors and not employees of the company. The key issue in Singerwas
whether these so-called independent contractors were in reality employees. After applying the control
test, this Court held:[18]
The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and neither are all
collecting agents independent contractors. The collectors could fall under either category depending on
the facts of each case.
The (Collection Agency) Agreement confirms the status of the collecting agent in this case as an
independent contractor not only because he is explicitly described as such but also because the
provisions permit him to perform collection services for the company without being subject to the
control of the latter except only as to the result of his work. xxx
xxx xxx xxx
xxx xxx xxx
The Court finds the contention of the respondents that the union members are employees under Article
280 of the Labor Code to have no basis. The definition that regular employees are those who perform
activities which are desirable and necessary for the business of the employer is not determinative in this
case. Any agreement may provide that one party shall render services for and in behalf of another for a
consideration (no matter how necessary for the latters business) even without being hired as an
employee. This is precisely true in the case of an independent contractorship as well as in an agency
agreement. The Court agrees with the petitioners argument that Article 280 is not the yardstick for
determining the existence of an employment relationship because it merely distinguishes between two
kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right
of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not
apply where the existence of an employment relationship is in dispute. (underscoring ours)
Having said that, we return to the instant case and, at the risk of being repetitive, reiterate that in this
case there was no question about the existence of employer-employee relationship between petitioners
and private respondents. Art. 280 therefore can be properly applied to the present case, to confirm the
regular-employee status of the private respondents.
Prescinding from the foregoing, as such regular employees, private respondents are entitled to security
of tenure and their services may be terminated only for causes provided by law.Likewise, they are also
to be accorded the benefits provided under the Labor Code, including inter alia separation pay for loss
of employment resulting from retrenchment to prevent losses or closure/cessation of operation not due
to serious business losses. The Solicitor General in his Comment suggested that, being regular
employees, they are likewise entitled to the protection of minimum wage status.[19] Hence, the
separation pay due them may be computed on the basis of the minimum wage prevailing at the time
their services were terminated by petitioners. We agree. Executive Order No. 178 fixed the minimum
wage for non-agricultural workers working outside Metro Manila at P53.00 a day effective October 1,
1987. Thus, we utilize this figure as the basis for computing private respondents separation pay.
WHEREFORE, in view of the foregoing, the assailed Resolution of public respondent NLRC is
hereby AFFIRMED. The separation pay of the private respondents equivalent to one-half month pay for
every year of service shall be computed at the then prevailing minimum daily wage of P53.00. SO
ORDERED.

MANILA POLO CLUB EU v MANILA POLO CLUB Petitioner: MANILA POLO CLUB EMPLOYEES' UNION
(MPCEU) FURTUCP Respondent: MANILA POLO CLUB, INC.
DOCTRINE: Unlike retrenchment, closure or cessation of business, as an authorized cause of termination
of employment, need not depend for validity on evidence of actual or imminent reversal of the
employer's fortune. Article 283 authorizes termination of employment due to business closure,
regardless of the underlying reasons and motivations therefor, be it financial losses or not. Closure or
cessation of operations of establishment or undertaking may or may not be due to serious business
losses or financial reverses. It may either be partial of total. Separation pay needed for closure or
cessation of operations unless it is due to serious business losses or financial reverses.

FACTS: 1. Petitioner MPCEU is a legitimate labor organization, while Respondent Manila Polo Club is a
non-profit and proprietary membership organization. 2. On December 13, 2001, the Board of Directors
of respondent Manila Polo Club, Inc., unanimously resolved to completely terminate the entire
operations of its Food and Beverage (F & B) outlets, except the Last Chukker, and award its operations
to a qualified restaurant operator or caterer. Cited reasons were: a. Yearly losses to the Club in six (6)
out of the last eight (8) years. b. Board and management had instituted cost and loss-cutting measures
to lessen losses. c. Continued operations by the Club will result in substantial losses. 3. March 22, 2002:
Respondent’s Board approved the implementation of the retrenchment program of employees who are
directly and indirectly involved with the operations of the F & B outlet. Notices were sent by registered
mail. Also, termination report submitted to DOLE. 4. Unaware yet of the termination notice sent to them
by respondent, the affected employees of petitioner were surprised when they were prevented from
entering the Club premises as they reported for work on March 25, 2002. 5. They later learned that the F
& B operations of respondent had been awarded to Makati Skyline, Inc. 6. Treating the incident as
respondent’s way of terminating union members under the pretense of retrenchment to prevent losses,
petitioner filed a Step II grievance and requested for an immediate meeting with the Management.
Mgmt refused, petitioner filed for notice of strike. Withdrawn and sent the issue to the VA. 7. On June
17, 2002, the parties agreed to submit before VA Diamonon the lone issue of whether the retrenchment
of the 117 union members is legal. VA dismissed petitioner’s complaint for lack of merit, but awarded
separation pay. MR denied. 8. CA affirmed VA.

ISSUES: 1. WON members of Petitioner Union were illegally dismissed –

NO RULING + RATIO: 1. NO. It is apparent from the records that this case involves a closure of business
undertaking, not retrenchment. The legal requirements and consequences of these two authorized
causes in the termination of employment are discernible. We distinguished, in Alabang Country Club Inc.
v. NLRC:
 While retrenchment and closure of a business establishment or undertaking are often used
interchangeably and are interrelated, they are actually two separate and independent authorized causes
for termination of employment.
  Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in
terms of salaries and wages resorted to by an employer because of losses in operation of business
occasioned by lack of work and considerable reduction in the volume of business.
 Closure of a business or undertaking due to business losses is the reversal of fortune of the employer
whereby there is a complete cessation of business operations to prevent further financial drain upon an
employer who cannot pay anymore his employees since business has already stopped.
 One of the prerogatives of management is the decision to close the entire establishment or to close or
abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce
capitalization.
 While the Labor Code provides for the payment of separation package in case of retrenchment to
prevent losses, it does not obligate the employer for the payment thereof if there is closure of business
due to serious losses. 2. Requirements for Valid Retrenchment: a) That retrenchment is necessary to
prevent losses and it is proven, by sufficient and convincing evidence such as the employer's financial
statements audited by an independent and credible external auditor, that such losses are substantial
and not merely Digest Author: F. Atienza Time Uploaded: 12:00am flimsy and actual or reasonably
imminent; and that retrenchment is the only effective measure to prevent such imminent losses; b) That
written notice is served on to the employees and the DOLE at least one (1) month prior to the intended
date of retrenchment; and c) That the retrenched employees receive separation pay equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. 3.
Employer must prove complains with all the requirements. Failure to prove the first requirement will
render the retrenchment illegal and make the employer liable for the reinstatement of its employees
and payment of full backwages. If retrenchment is bona fide, failure to provide notice will not invalidate
it, but employer is liable for nominal damages of 50k per employee. 4. Unlike retrenchment, closure or
cessation of business, as an authorized cause of termination of employment, need not depend for
validity on evidence of actual or imminent reversal of the employer's fortune. Article 283 authorizes
termination of employment due to business closure, regardless of the underlying reasons and
motivations therefor, be it financial losses or not. 5. The closure of operation of an establishment or
undertaking not due to serious business losses or financial reverses includes both the complete
cessation of operations and the cessation of only part of a company's activities. 6. For any bona fide
reason, an employer can lawfully close shop anytime. No law can compel anybody to continue the same.
7. In fine, management's exercise of its prerogative to close a section, branch, department, plant or shop
will be upheld as long as it is done in good faith to advance the employer's interest and not for the
purpose of defeating or circumventing the rights of employees under the law or a valid agreement. 8.
Summary of previous cases on Closing or Cessation:
 Closure or cessation of operations of establishment or undertaking may either be partial or total.
 May or may not be due to serious business losses or financial reverses. However, in both instances,
proof must be shown that: (1) it was done in good faith to advance the employer's interest and not for
the purpose of defeating or circumventing the rights of employees under the law or a valid agreement;
and (2) a written notice on the affected employees and the DOLE is served at least one month before
the intended date of termination of employment.
 The employer can lawfully close shop even if not due to serious business losses or financial reverses
but separation pay, which is equivalent to at least one month pay as provided for by Article 283 of the
Labor Code, as amended, must be given to all the affected employees.
 If the closure or cessation of operations of establishment or undertaking is due to serious business
losses or financial reverses, the employer must prove such allegation in order to avoid the payment of
separation pay. Otherwise, the affected employees are entitled to separation pay.
 The burden of proving compliance with all the above-stated falls upon the employer. 9. Respondent
asserted that this case is similar to Alabang Country Club, Inc. that it did not merely reduce its workers,
but terminated all personnel involved in its operation. The closure of the F & B Department was due to
legitimate business considerations:
 Evident proofs of respondent’s good faith to arrest the losses which the F & B Department had been
incurring since 1994
 Even went on to aid the displaced employees in finding gainful employment. 10. Further unlike in
EastRidge Golf Country Club, there is nothing on record to indicate that the closure of respondent’s F &
B Department was made in bad faith. It was not motivated by any specific and clearly determinable
union activity of the employees; rather, it was truly dictated by economic necessity. 11. No evidence was
shown that the closure is stirred not by a desire to avoid further losses but to discourage the workers
from organizing themselves into a union for more effective negotiations with the management. On the
contrary, respondent continued to negotiate with petitioner even after April 30, 2002. In fact, a
Memorandum of Agreement was executed before the NCMB between petitioner and respondent on
June 10, 2002 whereby the parties agreed, among others, to maintain the existing provisions of the CBA,
except those pertaining to wage increases and signing bonus.

SKM ART CRAFT CORP. v EFREN BAUCA, ET AL.

GR 171282 | NOV 27 2013

FACTS: The 23 respondents were employed by petitioner SKM Art Craft Corporation which is engaged in
the handicraft business. On April 18, 2000, around 1:12 a.m., a fire occurred at the inspection and
receiving/repair/packing area of petitioner’s premises in Intramuros, Manila. The fire investigation
report stated that the structure and the beach rubber building were totally damaged. Also burned were
four container vans and a trailer truck. The estimated damage was P22 million.
On May 8, 2000, petitioner informed respondents that it will suspend its operations for six months,
effective May 9, 2000. On May 16, 2000, only eight days after receiving notice of the suspension of
petitioner’s operations, the 23 respondents (and other co-workers) filed a complaint for illegal dismissal.
They alleged that there was discrimination in choosing the workers to be laid off and that petitioner had
discovered that most of them were members of a newly-organized union.
Petitioner denied the claim of illegal dismissal and said that Article 286 of the Labor Code allows the
bona fide suspension of a business or undertaking for a period not exceeding six months. Petitioner
claimed that the fire cost it millions in losses and that it is impossible to resume its normal operations
for a significant period of time.

LA: respondents were illegally dismissed and ordered petitioner to reinstate them and pay them back
wages. The Labor Arbiter ruled that the fire that burned a part of petitioner’s premises may validate the
suspension of respondents’ employment, but the suspension must not exceed six months. Since
petitioner failed to recall respondents after the lapse of six months, the Labor Arbiter held that
respondents were illegally dismissed.
NLRC: set aside the Labor Arbiter’s Decision and ruled that there was no illegal dismissal.
CA: set aside the NLRC Decision and Resolution and reinstated the Labor Arbiter’s Decision. The CA
ruled that petitioner failed to prove that its suspension of operations is bona fide . The CA noted that
the proof of alleged losses – the list of items and materials allegedly burned – was not even certified or
signed by petitioner’s accountant or comptroller. And even if the suspension of operations is considered
bona fide, the CA said that respondents were not reinstated after six months.

ISSUE: Whether respondents were illegally dismissed.

HELD: While we agree with the NLRC that the suspension of petitioner’s operation is valid, the Labor
Arbiter and the CA are correct that respondents were illegally dismissed since they were not recalled
after six months, after the bona fide suspension of petitioner’s operations.
We agree with the Labor Arbiter and the CA that respondents were already considered illegally
dismissed since petitioner failed to recall them after six months, when its bona fide suspension of
operations lapsed. We stress that under Article 286 of the Labor Code, the employment will not be
deemed terminated if the bona fide suspension of operations does not exceed six months. But if the
suspension of operations exceeds six months, the employment will be considered terminated.
Under Article 286 of the Labor Code, the bona fide suspension of the operation of a business or
undertaking for a period not exceeding six months shall not terminate employment. Consequently,
when the bona fide suspension of the operation of a business or undertaking exceeds six months, then
the employment of the employee shall be deemed terminated. By the same token and applying said rule
by analogy, if the employee was forced to remain without work or assignment for a period exceeding six
months, then he is in effect constructively dismissed.
Indeed, petitioner’s manifestation dated October 2, 2001 that it is willing to admit respondents if they
return to work was belatedly made, almost one year after petitioner’s suspension of operations expired
in November 2000. We find that petitioner no longer recalled, nor wanted to recall, respondents after
six months. HENCE, THE RESPONDENTS WERE ILLEGALLY DISMISSED.
 VIRGILIO G. ANABE vs. ASIAN CONSTRUCTION (ASIAKONSTRUKT)
G.R. No. 183233 December 23, 2009
FACTS: The petitioner was hired by respondent Asian Construction (Asiakonstrukt) as radio
technician/operator . His services were terminated on the ground of retrenchment. He thus filed a
complaint for illegal dismissal and illegal deduction of his pay.
Because Asiakonstrukt failed to submit financial statements to prove losses, the Labor Arbiter ruled that
petitioner was not validly dismissed. Respondents are ordered to pay Virgilio Anade his 13th month pay,
illegal deductions and overtime pay
When the case was elevated to the NLRC, Asiakonstrukt submitted the certified true copies of the
Audited Financial Statements from 1998 to 2000, NLRC modified the Labor Arbiter’s Decision by holding
that petitioner was not illegally dismissed and reduced the reimbursable amount of illegal deductions.
Petitioner filed a Motion for Reconsideration but it was denied. He then appealed to the Court of
Appeals which affirmed the decision rendered by the NLRC. Hence, this appeal.

ISSUE: Whether or not the petitioner’s dismissal on the ground of retrenchment was justified

RULING: The SC granted the petition and remanded the case to the NLRC for recomputation of the
monetary award.
Retrenchment is the termination of employment initiated by the employer through no fault of and
without prejudice to the employees. It is resorted to during periods of business recession and is
recognized by Article 283 of the Labor Code
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is
reasonably necessary and likely to prevent business losses; (2) the employer serves written notice both
to the employee/s concerned and the Department of Labor and Employment at least a month before
the intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in
an amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith;
and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or
retained.
In the present case, Asiakonstrukt failed to prove that it was suffering business losses to warrant a valid
retrenchment of its employees and it failed to submit its audited financial statements within the two
years that the case was pending before the Labor Arbiter. It submitted them only after it received the
adverse judgment of the Labor Arbiter.
On appeal, the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence
are not binding in labor cases. Here, the delay in the submission of evidence should have been clearly
explained and should adequately prove the employer’s allegation of the cause for termination but the
employer did not provide any explanation.
Thus, the Labor arbiter’s decision was affirmed and the dismissal of the petitioner on account of
retrenchment is held unjustified.
Petitioner is thus entitled to the twin reliefs of payment of backwages and other benefits from the time
of his dismissal up to the finality of this Court’s Decision, and reinstatement without loss of seniority
rights or, in lieu thereof, payment of separation pay.

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

MARLO A. DEOFERIO, petitioner, vs. INTEL TECHNOLOGY PHILIPPINES,
INC. and/or MIKE WENTLING, respondents.
Facts: Intel Technology Philippines, Inc. (Intel) employed Deoferio as a product quality and
reliability engineer. Intel assigned him to the United States as a validation engineer for an
agreed period of two years. However, Deoferio was repatriated to the Philippines after being
confined at Providence St. Vincent Medical Center for major depression with psychosis. In the
Philippines, he worked as a product engineer.
Deoferio underwent a series of medical and psychiatric treatment at Intel's expense after
his confinement in the United States. He was diagnosed by several physicians that suffering
from mood disorder, major depression, and auditory hallucination. After several consultations,
Dr. Lee issued a psychiatric report concluding and stating that Deoferio's psychotic symptoms
are not curable within a period of six months and "will negatively affect his work and social
relation with his co-worker[s]." Pursuant to these findings, Intel issued Deoferio a notice of
termination on March 10, 2006.
Deoferio responded to his termination of employment by filing a complaint for illegal
dismissal with prayer for money claims against respondents Intel and Mike
Wentling (respondents). He denied that he ever had mental illness and insisted that he
satisfactorily performed his duties as a product engineer. He argued that Intel violated his
statutory right to procedural due process when it summarily issued a notice of termination.
In defense, the respondents argued that Deoferio's dismissal was based on Dr. Lee's
certification that: (1) his schizophrenia was not curable within a period of six months even with
proper medical treatment; and (2) his continued employment would be prejudicial to his and to
the other employees' health. The respondents also insisted that Deoferio's presence at Intel's
premises would pose an actual harm to his co-employees as shown by his previous acts. On
May 8, 2003, Deoferio emailed an Intel employee with this message: "All soul's day back to
work Monday WW45.1". On January 18, 2005, he cut the mouse cables, stepped on the
keyboards, and disarranged the desks of his co-employees. The respondents also highlighted
that Deoferio incurred numerous absences from work due to his mental condition, specifically,
from January 31, 2002 until February 28, 2002, from August 2002 until September 2002, and
from May 2003 until July 2003. Deoferio also took an administrative leave with pay from
January 2005 until December 2005.
The respondents further asserted that the twin-notice requirement in dismissals does not apply
to terminations under Article 284 of the Labor Code. They emphasized that the Labor
Code's implementing rules (IRR) only requires a competent public health authority's certification
to effectively terminate the services of an employee.

Issues:
(1) Whether Deoferio was suffering from schizophrenia and whether his continued
employment was prejudicial to his health, as well as to the health of his co-employees;
(2) Whether the twin-notice requirement in dismissals applies to terminations due to
disease; and

Ruling:
1) Intel had an authorized cause to dismiss Deoferio from employment. Concomitant
to the employer's right to freely select and engage an employee is the employer's right to
discharge the employee for just and/or authorized causes. To validly effect terminations
of employment, the discharge must be for a valid cause in the manner required by law.
The purpose of these two-pronged qualifications is to protect the working class from the
employer's arbitrary and unreasonable exercise of its right to dismiss. Thus, in
termination cases, the law places the burden of proof upon the employer to show by
substantial evidence that the termination was for a lawful cause and in the manner
required by law. In concrete terms, these qualifications embody the due process
requirement in labor cases — substantive and procedural due process. Substantive
due process means that the termination must be based on just and/or authorized causes
of dismissal. On the other hand, procedural due process requires the employer to effect
the dismissal in a manner specified in the Labor Code and its IRR.
The present case involves termination due to disease — an authorized cause for
dismissal under Article 284 of the Labor Code.As substantive requirements, the Labor
Code and its IRR require the presence of the following elements:
(1) An employer has been found to be suffering from any disease.
(2) His continued employment is prohibited by law or prejudicial to his health,
as well as to the health of his co-employees.
(3) A competent public health authority certifies that the disease is of such
nature or at such a stage that it cannot be cured within a period of six
months even with proper medical treatment. DaHSIT
With respect to the first and second elements, the Court liberally construed the phrase
"prejudicial to his health as well as to the health of his co-employees" to mean "prejudicial
to his health or to the health of his co-employees". We did not limit the scope of this phrase
to contagious diseases for the reason that this phrase is preceded by the phrase
"any disease" under Article 284 of the Labor Code,to wit:
Art. 284. Disease as ground for termination. — An employer may terminate
the services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is prejudicial
to his health as well as to the health of his co-employees: Provided, That
he is paid separation pay equivalent to at least one (1) month salary or to one-
half (1/2) month salary for every year of service, whichever is greater, a fraction
of at least six (6) months being considered as one (1) whole year.
[underscores, italics and emphases ours]
 Consistent with this construction, we applied this provision in resolving illegal dismissal
cases due to non-contagious diseases such as stroke, heart attack, osteoarthritis, and eye
cataract, among others. In Baby Bus, Inc. v. Minister of Labor, we upheld the labor arbitration's
finding that Jacinto Mangalino's continued employment — after he suffered several strokes —
would be prejudicial to his health. In Duterte v. Kingswood Trading Co., Inc., we recognized the
applicability of Article 284 of the Labor Code to heart attacks. In that case, we held that the
employer-company's failure to present a certification from a public health authority rendered
Roque Duterte's termination due to a heart attack illegal. We also applied this provision in Sy v.
Court of Appeals to determine whether Jaime Sahot was illegally dismissed due to various
ailments such as presleyopia, hypertensive retinopathy, osteoarthritis, and heart enlargement,
among others. In Manly Express, Inc. v. Payong, Jr., we ruled that the employer-company's
non-presentment of a certification from a public health authority with respect to Romualdo
Payong Jr.'s eye cataract was fatal to its defense. ACaTIc
The third element substantiates the contention that the employee has indeed been
suffering from a disease that: (1) is prejudicial to his health as well as to the health of his co-
employees; and (2) cannot be cured within a period of six months even with proper medical
treatment. Without the medical certificate, there can be no authorized cause for the
employee's dismissal. The absence of this element thus renders the dismissal void and illegal.
The certification from a competent public health authority is precisely the substantial
evidence required by law to prove the existence of the disease itself, its non-curability within a
period of six months even with proper medical treatment, and the prejudice that it would cause
to the health of the sick employee and to those of his co-employees.
In the current case, we agree with the CA that Dr. Lee's psychiatric report substantially
proves that Deoferio was suffering from schizophrenia, that his disease was not curable within a
period of six months even with proper medical treatment, and that his continued employment
would be prejudicial to his mental health. This conclusion is further substantiated by the unusual
and bizarre acts that Deoferio committed while at Intel's employ. CASIEa

2) The twin-notice requirement applies to terminations under Article 284 of the Labor
Code. The Labor Code and its IRR are silent on the procedural due process required in
terminations due to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of
the IRR expressly states that the employee should be afforded procedural due process
in all cases of dismissals.
In Sy v. Court of Appeals and Manly Express, Inc. v. Payong, Jr., promulgated in 2003
and 2005, respectively, the Court finally pronounced the rule that the employer must furnish the
employee two written notices in terminations due to disease, namely: (1) the notice to apprise
the employee of the ground for which his dismissal is sought; and (2) the notice informing the
employee of his dismissal, to be issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense. These rulings reinforce the State policy
of protecting the workers from being terminated without cause and without affording them the
opportunity to explain their side of the controversy.

FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU

G.R. NO. 204944-45 DECEMBER 3, 2014
FACTS: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a news
correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau field office. The
employment contract was initially for one year, but was successively renewed on a yearly basis with salary
adjustments upon every renewal.
In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the
Chief of News Agency of Fuji, Yoshiki Aoki, informed the former that the company had a problem with
renewing her contract considering her condition. Arlene insisted she was still fit to work as certified by her
attending physician.
After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In
consideration thereof, Arlene acknowledged the receipt of the total amount of her salary from March-May
2009, year-end bonus, mid-year bonus and separation pay. However, Arlene executed the non-renewal
contract under protest.
Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC, alleging that she
was forced to sign the non-renewal contract after Fuji came to know of her illness. She also alleged that Fuji
withheld her salaries and other benefits when she refused to sign, and that she was left with no other recourse
but to sign the non-renewal contract to get her salaries.
ISSUES:
1. Was Arlene an independent contractor?
2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed? (discussion on security of tenure)
4. Did the Court of Appeals correctly awarded reinstatement, damages and attorney’s fees?

RULING:
1. Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired because of her
skills. Her salary was higher than the normal rate. She had the power to bargain with her employer. Her
contract was for a fixed term. It also stated that Arlene was not forced to sign the non-renewal agreement,
considering that she sent an email with another version of her non-renewal agreement.
Arlene argued (1) that she was a regular employee because Fuji had control and supervision over her work; (2)
that she based her work on instructions from Fuji; (3) that the successive renewal of her contracts for four
years indicated that her work was necessary and desirable; (4) that the payment of separation pay indicated
that she was a regular employee; (5) that the Sonza case is not applicable because she was a plain reporter for
Fuji; (6) that her illness was not a ground for her dismissal; (7) that she signed the non-renewal agreement
because she was not in a position to reject the same.
Distinctions among fixed-term employees, independent contractors, and regular employees
I. Fixed Term Employment
1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine applicable only in a few special cases
wherein the employer and employee are on more or less in equal footing in entering into the contract. The
reason for this is evident: when a prospective employee, on account of special skills or market forces, is in a
position to make demands upon the prospective employer, such prospective employee needs less protection
than the ordinary worker. Lesser limitations on the parties’ freedom of contract are thus required for the
protection of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brent are satisfied, this court will recognize the validity of the fixed-
term contract. (GMA Network, Inc. vs. Pabriga)
II. Independent Contractor
One who carries on a distinct and independent business and undertakes to perform the job, work, or service
on its own account and under one’s own responsibility according to one’s own manner and method, free
from the control and direction of the principal in all matters connected with the performance of the work
except as to the results thereof.
No employer-employee relationship exists between the independent contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person
for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor,
if any, shall be paid in accordance with the provisions of this Code.
XXX
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-
out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he
may make appropriate distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the parties involved shall be
considered the employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is “labor-only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing activities which are directly related to the
principal business of such employer. In such cases, the person or intermediary shall be considered merely as
an agent of the employer who shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
Department Order No. 18-A, Series of 2011, Section 3
© . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or
completion of a specific job, work or service within a definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed within or outside the premises of the principal.
This department order also states that there is a trilateral relationship in legitimate job contracting and
subcontracting arrangements among the principal, contractor, and employees of the contractor. There is no
employer-employee relationship between the contractor and principal who engages the contractor’s services,
but there is an employer-employee relationship between the contractor and workers hired to accomplish the
work for the principal.
Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and
talents that set them apart from ordinary employees. There is no trilateral relationship in this case because the
independent contractor himself or herself performs the work for the principal. In other words, the
relationship is bilateral.
XXX
There are different kinds of independent contractors: those engaged in legitimate job contracting and those
who have unique skills and talents that set them apart from ordinary employees.
Since no employer-employee relationship exists between independent contractors and their principals, their
contracts are governed by the Civil Code provisions on contracts and other applicable laws
III. Regular Employees
Contracts of employment are different and have a higher level of regulation because they are impressed with
public interest. Article 13, Section 3 of the 1987 Constitution provides full protection to labor.
Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that: The relations between
capital and labor are not merely contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar
subjects.
The level of protection to labor should vary from case to caese. When a prospective employee, on account of
special skills or market forces, is in a position to make demands upon the prospective employer, such
prospective employee needs less protection than the ordinary worker.
The level of protection to labor must be determined on the basis of the nature of the work, qualifications of
the employee, and other relevant circumstances such as but not limited to educational attainment and other
special qualifications.
Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is
contradictory. Employees under fixed-term contracts cannot be independent contractors because in fixed-
term contracts, an employer-employee relationship exists. The test in this kind of contract is not the necessity
and desirability of the employee’s activities, “but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.” For regular employees, the necessity and
desirability of their work in the usual course of the employer’s business are the determining factors. On the
other hand, independent contractors do not have employer-employee relationships with their principals.
To determine the status of employment, the existence of employer-employee relationship must first be settled
with the use of the four-fold test, especially the qualifications for the power to control.
The distinction is in this guise:
Rules that merely serve as guidelines towards the achievement of a mutually desired result without dictating
the means or methods to be employed creates no employer-employee relationship; whereas those that control
or fix the methodology and bind or restrict the party hired to the use of such means creates the relationship.
In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence that she was hired for
her unique skills that would distinguish her from ordinary employees. Her monthly salary appeared to be a
substantial sum. Fuji had the power to dismiss Arlene, as provided for in her employment contract. The
contract also indicated that Fuji had control over her work as she was rquired to report for 8 hours from
Monday to Friday. Fuji gave her instructions on what to report and even her mode of transportation in
carrying out her functions was controlled.
Therefore, Arlene could not be an independent contractor.
2. Arlene was a regular employee with a fixed-term contract.
In determining whether an employment should be considered regular or non-regular, the applicable test is the
reasonable connection between the particular activity performed by the employee in relation to the usual
business or trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking
into the nature of the services rendered and its relation to the general scheme under which the business or
trade is pursued in the usual course.
However, there may be a situation where an employee’s work is necessary but is not always desirable in the
usual course of business of the employer. In this situation, there is no regular employment.
Fuji’s Manila Bureau Office is a small unit213 and has a few employees. Arlene had to do all activities related
to news gathering.
The successive renewals of her contract indicated the necessity and desirability of her work in the usual
course of Fuji’s business. Because of this, Arlene had become a regular employee with the right to security of
tenure.
Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. For as long as it was the employee who requested, or bargained, that the contract have a “definite
date of termination,” or that the fixed-term contract be freely entered into by the employer and the employee,
then the validity of the fixed-term contract will be upheld.
3. Arlene was illegally dismissed.
As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor Code and
could be dismissed only for just or authorized causaes and after observance of due process.
The expiration of the contract does not negate the finding of illegal dismissal. The manner by which Fuji
informed Arlene of non-renewal through email a month after she informed Fuji of her illness is tantamount
to constructive dismissal. Further, Arlene was asked to sign a letter of resignation prepared by Fuji. The
existence of a fixed-term contract should not mean that there can be no illegal dismissal. Due process must
still be observed.
Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book VI, Rule 1,
Section 8 of the Omnibus Rules Implementing the Labor Code require two requirements to be complied
with: (1) the employee’s disease cannot be cured within six months and his continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees; and (2) certification
issued by a competent public health authority that even with proper medical treatment, the disease cannot be
cured within six months. The burden of proving compliance with these requisites is on the employer. Non-
compliance leads to illegal dismissal.
Arlene was not accorded due process. After informing her employer of her lung cancer, she was not given the
chance to present medical certificates. Fuji immediately concluded that Arlene could no longer perform her
duties because of chemotherapy. Neither did it suggest for her to take a leave. It did not present any
certificate from a competent public health authority.

G.R. No. 166208 June 29, 2007

KING OF KINGS TRANSPORT INC., CLAIRE DELA FUENTE and MELISSA LIM, petitioners, vs. SANTIAGO
O. MAMAC, respondent.
FACTS: Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela
Fuente and Melissa Lim. Respondent was a conductor for Don Mariano Transit Corporation (DMTC). He
was one of the few people who established Damayan ng mga Manggagawa, Tsuper at Conductor-
Transport Workers Union. Pending the union’s certification election, respondent was transferred to
KKTI. The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was
registered with DOLE. Respondent was elected KKKK president.
Upon audit of the October 28, 2001 Conductor’s Report of respondent, KKTI noted an irregularity. It
discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an
income of eight hundred and ninety pesos. While no irregularity report was prepared on the October 28,
2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter, respondent
said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional. He explained
that during that day’s trip, the windshield of the bus assigned to them was smashed; and they had to cut
short the trip in order to immediately report the matter to the police. As a result of the incident, he got
confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment effective November
29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against
the company. KKTI also cited as basis for respondent’s dismissal the other offenses he allegedly
committed since 1999.
After that, he filed an action for illegal dismissal, among other claims. He denied committing any
infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed that
his dismissal was effected without due process.
KKTI averred that it had observed due process in dismissing respondent and maintained that respondent
was not entitled to his money claims such as service incentive leave and 13th-month pay because he
was paid on commission or percentage basis.
LABOR ARBITER: he was validly dismissed
NLRC: Affirmed. CA held that there was just cause for respondent’s dismissal. It ruled that respondent’s
act in “declaring sold tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his
dismissal.”

ISSUE: WON respondent was given due process (procedural)

HELD: NO. There was failure to observe the requirements of due process
Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized
causes of termination of employment under the Labor Code; and second, procedural––the manner of
dismissal.
Section 2(d) of Rule I of Book VI of the Omnibus Rules Implementing the Labor Code provides:
SEC. 2. Standards of due process; requirements of notice.––In all cases of termination of employment,
the following standards of due process shall be substantially observed:
 1. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) 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.
(b) 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.
(c) 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.
1. The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. “Reasonable
opportunity” under the Omnibus Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately for their defense.15 This should
be construed as a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they will raise against the
complaint. Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.
2. After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or
conference, the employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.
3. After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.
Respondent was not issued a written notice charging him of committing an infraction. A verbal appraisal
of the charges against an employee does not comply with the first notice requirement.
The court observed from the irregularity reports against respondent for his other offenses that such
contained merely a general description of the charges against him. The reports did not even state a
company rule or policy that the employee had allegedly violated.
No hearing was conducted. Regardless of respondent’s written explanation, a hearing was still necessary
in order for him to clarify and present evidence in support of his defense. Moreover, respondent made
the letter merely to explain the circumstances relating to the irregularity in his October 28, 2001
Conductor’s Trip Report. He was unaware that a dismissal proceeding was already being effected. Thus,
he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not only his
October 28, 2001 infraction, but also his previous infractions.

G.R. NO. 156964

MAGRO PLACEMENT AND GENERAL SERVICES, registered in the name of Marina G. Sobremesana,
Petitioner, vs CRESENCIANO E. HERNANDEZ, Respondent
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court
assailing the Decision[1] dated September 12, 2002 and the Resolution[2] dated January 16, 2003of the
Court of Appeals (CA) in CA-G.R. SP No. 67264.
The factual background of the case is as follows:
Magro Placement and General Services (petitioner) is a duly licensed recruitment agency. It is the local
agency of Orbit Recruitment Office of Jeddah, Kingdom of Saudi Arabia (K.S.A.).
On November 6, 1999, Cresenciano E. Hernandez (respondent), then an Aircon Electrical Technician of
Toyota Pasong Tamo, Inc.,[3] filed with petitioner an application for employment abroad as Auto
Electrician or Air-Conditioning Technician.[4]
After successfully undergoing a battery of interviews and trade tests, respondent was hired as Auto
Electrician of Al Yamama Est. (Al Yamama) in Jeddah, K.S.A. for a two-year contract with a basic monthly
salary of US$450.00 for 10 hours a day, 6 days a week regular working hours, 15 days vacation leave and
15 days sick leave with full pay per year of service, and free food allowance of US$50.00 a month with
free suitable housing.[5] Thus, he resigned from Toyota Pasong Tamo, Inc.
On January 16, 2000, respondent left for Jeddah, K.S.A. Respondent worked at the Al Yamama as an
electrician. Because of lack of equipment or tools, the work became harder. After 10 days, his employer
took his passport and brought him to Orbit. His employer told the agency that respondent did not know
his job as electrician. Respondent explained that since he used to repair Japanese cars only, he needed
time to adjust to American cars. Respondent further stated that he was willing to continue his job. When
respondent was subjected to a trade test using an American car, he failed.
In a Statement dated January 30, 2000, respondent narrated his day-to-day experience that: he could
not perform his job well because the cars being repaired at Al Yamama were American cars and he had
experience with Japanese cars only; Al Yamama had no tester for checking car components;
he understood a few Arabic words only and could not communicate with this employer because the
latter could understand a few English words only; the accommodation had no aircon or electric fan and
there were plenty of mosquitoes; respondent's food allowance was only 10 riyals every two days and
during lunch the employer bought the food; he did not sign any employment contract in Saudi Arabia;
he only signed an employment contract in the Philippines; an electrical job is not easy, even experts
need a repair manual and wiring diagrams which Al Yamama did not have; in view thereof, respondent
was no longer willing to continue his job with his employer, Al Yamama, and he was willing to work with
other employers.
Respondent executed another Statement dated February 10, 2000 stating that: he could no longer
continue his job with Al Yamama; he had no idea about working on American cars, as he had only
worked on Japanese cars; he was sent by his agent Orbit for trade test but failed; and he has no
complaints against his employer and recruiting agent in the K.S.A.; in fact they provided him full
assistance during his stay.
On February 16, 2000, respondent issued another Statement, which was duly witnessed by the
Secretary of Orbit and noted by Carlos O. Sta. Ana, Assistant Labor Representative, Consulate General of
the Philippines, Jeddah, K.S.A., stating that: he was recruited for Al Yamama as Auto Electrician, but he
was not qualified since he had no experience as Auto Electrician; he was allowed to go for a trade test
but failed; he was allowed to find a new job, but he was not qualified to work in Budget Rent-A-Car
Company & Nissan; he had no complaints against his agent in the K.S.A. or his Philippine agent, herein
petitioner; and respondent requested that he be sent back to the Philippines as early as possible.
On March 3, 2000, respondent was repatriated to the Philippines. When he sought financial assistance
from petitioner, the latter offered the sum of P2,000.00 only.
On March 16, 2000, respondent filed a Complaint for illegal dismissal against petitioner before the
National Labor Relations Commission (NLRC), docketed as NLRC OFW Case No. (L)00-03-0507-00.
In its Position Paper, petitioner denied that respondent was illegally dismissed. It alleged that:
respondent admitted that he could not perform his task with Al Yamama; instead of being dismissed,
respondent was allowed to apply with other companies; unfortunately, he failed the trade test and was
never accepted; respondent voluntarily asked for the termination of his employment and for his
immediate repatriation to the Philippines in a document he signed in the presence of Assistant Labor
Representative Carlos O. Sta. Ana; from said statement of respondent, there can be no valid reason to
charge petitioner for illegal dismissal; respondent's termination from his employment was due to his
inefficiency which is a just cause for his dismissal; and respondent's employer did not initiate any action
to terminate his services but allowed him to apply with other companies but he did not qualify.
On August 16, 2000, Labor Arbiter Melquiades Sol D. Del Rosario rendered a
Decision, the dispositive portion of which reads:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered dismissing the
complaint for lack of merit.
Respondents, in solidum are however, ordered to pay complainant's one half month
salary in the sum of US$185.00 or its peso equivalent. SO ORDERED.
The Labor Arbiter held that there was no illegal dismissal; respondent was ill-equipped to work as an
Auto Electrician for American cars, per his revelation and admission, since he had only worked on
Japanese model cars in his previous employment at Toyota Pasong Tamo, Inc.; since he was not equal to
the challenge of the work, respondent himself asked to be repatriated, without any complaint against
his foreign employer or agency.
The Labor Arbiter, however, ordered petitioner to pay respondent US$185.00, or its peso equivalent, for
the 15-day period (January 16 to 30, 2000) when he worked with Al Yamama.
Dissatisfied, respondent appealed to the NLRC, docketed as NLRC OFW Case No. L-03-0507-
2000.[13] On June 25, 2001, the NLRC rendered a Decision[14] affirming the findings of the Labor Arbiter.
On July 9, 2001, respondent filed a Motion for Reconsideration[15] but it was denied by the NLRC in a
Resolution dated July 17, 2001.
Respondent then filed a Petition for Certiorari with the the CA.[17] On September 12, 2002, the CA
rendered herein assailed Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the petition is partially GRANTED and the
assailed Decision dated June 25, 2001 issued by public respondent National Labor
Relations Commission (NLRC) as well as the Resolution dated July 17, 2001 in NLRC CA
026624-00 are hereby MODIFIED by ordering private respondents to pay petitioner
separation pay equivalent to one (1) month pay for every year of service, his unpaid
salary, and his proportionate 13th month pay and, in addition, full backwages from the
time his employment was terminated on January 30, 2002 until the expiration of his
two-year contract of employment when the decision herein becomes final. SO
ORDERED.
While the CA held that there was just cause to effect respondent's dismissal, it found that the dismissal
was ineffectual, since it did not comply with the due process requirements. It held petitioner liable
for backwages from the time respondent was terminated until it is determined that said termination is
for just cause, in accordance with Serrano v. National Labor Relations Commission.
Petitioner filed a Motion for Reconsideration[21] but it was denied by the CA in a
Resolution dated January 16, 2003.
The sole issue for resolution in the present petition is: whether respondent was accorded
procedural due process before his separation from work.
The answer is in the negative.
In dismissing an employee, the employer has the burden of proving that the dismissed worker
has been served two notices: (1) the first to inform the employee of the particular acts or omissions for
which the employer seeks his dismissal; and (2) the second to inform the employee of his employers
decision to terminate him.[24] The first notice must state that the employer seeks dismissal for the act or
omission charged against the employee, otherwise, the notice does not comply with the rules.
In Maquiling v. Philippine Tuberculosis Society, Inc.,[26] the Court held that the first notice must
inform the employee outright that an investigation will be conducted on the charges specified in such
notice which, if proven, will result in the employees dismissal. The Court explained the rationale for this
rule, thus:
This notice will afford the employee an opportunity to avail all defenses and
exhaust all remedies to refute the allegations hurled against him for what is at stake is
his very life and limb his employment. Otherwise, the employee may just disregard the
notice as a warning without any disastrous consequence to be anticipated. Absent such
statement, the first notice falls short of the requirement of due process. Ones work is
everything, thus, it is not too exacting to impose this strict requirement on the part of
the employer before the dismissal process be validly effected. This is in consonance with
the rule that all doubts in the implementation and interpretation of the provisions of
the Labor Code, including its implementing rules and regulations, shall be resolved in
favor of labor.
In the present case, petitioner argues that the purpose of the written notice requirement was achieved
when respondent issued the three statements where he was given the chance to air his side before his
termination.
The Court disagrees.
Al Yamama failed to satisfy the two-notice requirement. Without prior notice or explanation,
Al Yamama took respondent's passport and simply brought him to petitioner's foreign principal, Orbit,
and told the latter that respondent did not know his job as electrician. Respondent heard his employer's
complaint against him at that instance only.
From these facts, it is clear that respondent's dismissal was effected without the notice required
by law. Article 277 of the Labor Code explicitly provides:
ART. 277. Miscellaneous provisions.
x x x (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 of this Code, the
employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes 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.
xxx
Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, provides:
Section 2. Standards of due process: requirements of notice. In all cases of termination of
employment, the following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the
Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance
of counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence or rebut the evidence presented against him; and
(c) 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.
xxxx
The Serrano doctrine which awarded full backwages in ineffectual dismissal cases where an
employee dismissed for cause was denied due process, which was applied by the CA, has been
abandoned by the Court's ruling in Agabon v. National Labor Relations Commission.[29] In that case, the
Court held that if the dismissal was for a cause, the lack of statutory due process should not nullify the
dismissal, or render it illegal or ineffectual. However, the employers violation of the employees right to
statutory due process warrants the payment of indemnity[30] in the form of nominal damages. The
amount of such damages is addressed to the sound discretion of the Court, taking into account the
relevant circumstances.[31] The Court ruled in said Agabon case that it was abandoning
the Serrano doctrine in this wise:
After carefully analyzing the consequences of the divergent doctrines in the law
on employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was
for just cause but imposing sanctions on the employer. Such sanctions, however, must
be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve
a fair result by dispensing justice not just to employees, but to employers as well.
Considering the foregoing, the Court deems the amount of P30,000.00 as sufficient nominal
damages, pursuant to prevailing jurisprudence,[33] to vindicate or recognize respondent's right to
procedural due process which was violated by his employer, Al Yamama.
WHEREFORE, the present petition is PARTLY GRANTED. The Decision dated September 12, 2002
and the Resolution dated January 16, 2003 of the Court of Appeals in CA-G.R. SP No. 67264
are AFFIRMED with MODIFICATION in that petitioner Magro Placement and General Services is
ORDERED to pay respondent Cresenciano E. Hernandez the amount of P30,000.00 as nominal damages
for failure to comply fully with the notice requirement as part of due process, in addition to payment of
respondent's one half month salary in the sum of US$185.00 or its peso equivalent. No pronouncement
as to costs. SO ORDERED.
 G.R. No. 201701 June 3, 2013
UNILEVER PHILIPPINES, INC., Petitioner, vs. MARIA RUBY M. RIVERA, Respondent.
FACTS: Maria Ruby M. Rivera was the Area Activation Executive of Unilever Philippines, Inc. for the cities
of Cotabato and Davao for 14 years. She was dismissed pursuant to company policy after she was found
responsible for the deviation of funds by Ventureslink, Unilever’s third party service provider for the
company’s activation projects. Her retirement benefits were forfeited as a legal consequence of her
dismissal from work. Rivera filed a case of illegal dismissal and money claims against Unilever.
The LA dismissed her case for lack of merit and denied her monetary claim for lack of basis. The NLRC
however, partly grant her appeal by granting her nominal damages for violation of her right to
procedural due process, and retirement benefits. CA affirmed the NLRC decision with modification by
deleting the award on retirement benefits and awarded separation pay in favor of Rivera as measure of
social justice.

ISSUE(S):
(1)Whether or not a validly dismissed employee, like Rivera, is entitled to an award of separation pay.
(2)Whether or not the award for nominal damage to Rivera was proper.

HELD:
(1)No. As a general rule, an employee who has been dismissed for any of the just causes enumerated
under Article 282 of the Labor Code is not entitled to a separation pay, pursuant to Section 7, Rule I,
Book VI of the Omnibus Rules Implementing the Labor Code. In exceptional cases, however, the Court
has granted separation pay to a legally dismissed employee as an act of "social justice" or on "equitable
grounds." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2)
did not reflect on the moral character of the employee as in the case of Philippine Long Distance
Telephone Co. vs. NLRC.
In this case, Rivera was dismissed from work because she intentionally circumvented a strict company
policy, manipulated another entity to carry out her instructions without the company’s knowledge and
approval, and directed the diversion of funds, which she even admitted doing under the guise of
shortening the laborious process of securing funds for promotional activities from the head office. These
transgressions were serious offenses that warranted her dismissal from employment and proved that
her termination from work was for a just cause. Hence, she is not entitled to a separation pay.
(2) Yes. In all cases of termination of employment, due process shall be substantially observed as
provided in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code. In this case,
Unilever was not direct and specific in its first notice to Rivera. The words it used were couched in
general terms and were in no way informative of the charges against her that may result in her dismissal
from employment. Evidently, there was a violation of her right to statutory due process warranting the
payment of indemnity in the form of nominal damages.

DOLORES T. ESGUERRA vs. VALLE VERDE COUNTRY CLUB, INC. G.R. No. 173012, 13 June 2012
FACTS:
Valle Verde hired Esguerra as Head Food Checker and was promoted to Cost Control Supervisor. The M
anagement found out that proceeds had been remitted to the accounting department for an event were
lacking. There were also unauthorized charges of food on one of the participants. To resolve the issue, V
alle Verde conducted an investigation; the employees who were assigned in that event were summoned
and made to explain, in writing, what had transpired. A memorandum was sent to Esguerra requiring he
r to show cause as to why no disciplinary action should be taken against her for the non-
remittance of the Ballroom’s sales. Esguerra was placed under preventive suspension with pay, pending
investigation. Unsatisfied with the explanation, Esguerra was terminated.
Petitioner said that she couldn’t be dismissed on the ground of loss of trust and confidence for she was
only a regular employee and did not occupy a supervisory position vested with trust and confidence. Esg
uerra also questions the manner of dismissal since the notice was insufficient since it failed to contain an
y intention to terminate her

ISSUE:
 Whether or not intention to terminate should be included in the notice of informing of charges against a
n employee.
 Whether or not Cost Control Supervisor can be dismissed on the ground of loss of trust and confidence.
 HELD:
1.) No. The law does not require that an intention to terminate one’s employment should be included in
the first notice. It is enough that employees are properly apprised of the charges brought against them s
o they can properly prepare their defenses; it is only during the second notice that the intention to termi
nate one’s employment should be explicitly stated.
The existence of an actual, formal “trial-
type” hearing, although preferred, is not absolutely necessary to satisfy the employee’s right to be hear
d. Esguerra was able to present her defenses; and only upon proper consideration of it did Valle Verde s
end the second memorandum terminating her employment. Since Valle Verde complied with the two-
notice requirement, no procedural defect exists in Esguerra’s termination.
2.) Esguerra held the position of Cost Control Supervisor and had the duty to remit to the accounting de
partment the cash sales proceeds from every transaction she was assigned to. This is not a routine task t
hat a regular employee may perform; it is related to the handling of business expenditures or finances. F
or this reason, Esguerra occupies a position of trust and confidence –
a position enumerated in the second class of positions of trust(first is for the managerial employees). An
y breach of the trust imposed upon her can be a valid cause for dismissal.

FELIX B. PEREZ and AMANTE G. DORIA, vs. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and
JOSE LUIS SANTIAGO,
FACTS: Felix Perez and Amante Doria were employed by Philippine Telegraph and Telephone Company
(PT&T) as shipping clerk and supervisor. There was an alleged anomalous transactions that the freight
costs for goods and shipping documents showed traces of tampering, alteration and superimposition.
The said petitioners were placed on preventive suspension for 30 days which was extended for 15 days
twice for their alleged involvement in the anomaly. Pursuant to the suspension and filing of criminal
charges, petitioners were then dismissed from the service. Petitioners filed a complaint for illegal
suspension and illegal dismissal and alleged that they were dismissed on the same date that they
received the complaint memorandum.

ISSUE: Whether the petitioners were denied due process entailed in their dismissal.

HELD: Respondents failed to prove just cause and to observe due process. To meet the requirements of
due process in the dismissal of an employee, an employer must furnish the worker with two written
notices:
1. a written notice specifying the grounds for termination and giving to said employee a reasonable
opportunity to explain his side and
2. another written notice indicating that, upon due consideration of all circumstances, grounds have
been established to justify the employer’s decision to dismiss the employee.
In the said case, petitioners were neither apprised of the charges against them nor given a chance to
defend themselves. They were simply and arbitrarily separated from work and served notices of
termination in total disregard of their rights to due process and security of tenure. The twin
requirements of notice and hearing constitute the essential elements of due process. Due process of law
simply means giving opportunity to be heard before judgment is rendered.
Petition is granted.
 G.R. No. 79106 April 10, 1989
CHRISTIAN LITERATURE CRUSADE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and
LOIDA DEL ROSARIO, respondents.
This is a petition for certiorari with preliminary injunction seeking to nullify the writ of execution dated
June 2, 1987, issued by the Labor Arbiter in NLRC-NCR-Case No. RBIV-9706-77, entitled "Loida del
Rosario vs. Christian Literature Crusade."
The antecedent facts are as follows:
Sometime in January, 1975, private respondent Loida del Rosario (hereinafter referred to as del Rosario)
was hired by petitioner Christian Literature Crusade (hereinafter referred to as Crusade) as a
bookkeeper. Later, on October 4, 1976, an application for clearance to terminate the services of del
Rosario on the ground of incompetence was filed by Crusade with the Ministry of Labor and
Employment. The application was opposed by del Rosario. On November 20, 1976, del Rosario was
placed under preventive suspension.
On March 31, 1982, the Labor Arbiter rendered a decision, the dispositive portion of which reads (pp.
31-32, Rollo):
WHEREFORE, premises considered, judgment is hereby rendered denying the application for
clearance filed by Christian literature Crusade and it (applicant) is ordered to reinstate Loida del
Rosario to her former position/or substantially equivalent position, with backwages for a period
of three (3) years without deductions from possible earnings elsewhere, and without loss of
seniority rights and other privileges formerly appertaining to her. SO ORDERED.
On August 9, 1982, a writ of execution was issued by the Labor Arbiter upon motion of del Rosario,
there being no appeal (pp. 33-34, Rollo). On August 27, 1982, the award of backwages in the amount of
THIRTEEN THOUSAND SIX HUNDRED EIGHTY PESOS (P 13,680.00) computed on the basis of del Rosario's
P 380.00 monthly salary was satisfied. However, on the issue of reinstatement, the Sheriff stated in his
return that del Rosario was not reinstated in view of the "Manifestation and Motion to Hold in Abeyance
the Execution of the Decision Per Reinstatement of the Complainant Loida del Rosario,' filed by Crusade
on August 31, 1982.
On February 2, 1983, del Rosario filed an "Ex-Parte Motion for the Issuance of an Alias Writ of
Execution" praying therein for reinstatement with payment of allowances and 13th month pay from
1976, the date of her dismissal, up to January, 1983, amounting to P 20,072.00.
On February 28, 1983, an Alias Writ of Execution was issued by the Labor Arbiter for del Rosario's
reinstatement.
On April 13, 1983, a Manifestation and Motion was again filed by del Rosario alleging that the
computation of her backwages should include the allowances and 13th month pay. On June 7, 1983, the
Labor Arbiter resolved the question in this wise (p. 37, Rollo):
It might be noted that the Decision of Hon. Lacandola S. Leano states that complainant should
be paid backwages for a period of three (3) years without deductions from possible earnings
elsewhere and without loss of seniority rights and other privileges formerly appertaining to her.
The basis of the computation of the backwages of the complainant is the amount appearing in
the complaint which is P 380.00 a month that was in 1976 which is her latest salary. It might be
noted that the prevailing minimum wage during this time is P 260.00 plus P 110.00 monthly
allowance, and without loss of seniority rights and other privileges formerly appertaining to her.
The computation, we believe is correct and the Motion for Recomputation of the Backwages
filed by the complainant is hereby denied and let an Alias Writ of Execution for the
reinstatement of the complainant be issued.
On June 9, 1983, the Labor Arbiter issued a second Alias Writ of Execution for the purpose of
reinstatement of del Rosario, which was not satisfied.
The motions for recomputation of her backwages having been denied, del Rosario appealed to the
National Labor Relations Commission (hereinafter referred to as NLRC) regarding the interpretation of
the March 31, 1982 decision of the Labor Arbiter. On August 29, 1986, the NLRC rendered a decision,
the dispositive portion of which reads (pp. 38-39, Rollo):
WHEREFORE, with the above modification, the appealed Order is Affirmed. Accordingly, let this
case be remanded to the Labor Arbiter of origin for execution of the reinstatement aspect of the
31 March 1982 Decision and likewise of the award hereto indicated after proper computation.
SO ORDERED.
The modification referred to states (p. 38, Rollo):
The term 'without loss of other privileges formerly appertaining to her' refers to other benefits
that may have accrued to her had she not been dismissed. Obviously, this includes the decretal
 allowances, service incentive leave pay and 13th month pay as sought for in the motion. It
appearing, however, that the amount of P 380.00 set forth in the complaint and taken as the
basis in the determination of complainant's backwages already covers her monthly allowance,
the same should therefore be excluded in this award. And for purposes of quantifying the other
two (2) remaining claims, the computation must be reckoned from 20 November 1976, the date
of her termination, until 20 November 1979, or for a period of three (3) years as directed in the
subject decision.
On February 9, 1987, del Rosario filed a Partial Motion for Reconsideration before the NLRC arguing that
the latter erred in "holding that the amount of P 380.00 covers the allowance and that her monthly rate
was P 260.00 and prayed for payment of additional backwages based on a computation of P 380.00
monthly rate with corresponding privileges and benefits on the basis of said monthly rate.
Later, a Motion for the Issuance of a Writ of Execution was filed anew by del Rosario, alleging that based
on her computation, she is entitled to backwages including living allowance and 13th month pay in the
total amount P 80,329.15 from September 1, 1982 to March 15, 1987 and prayed for the payment of the
same and reinstatement.
On June 2, 1987, the Labor Arbiter issued a Writ of Execution, the dispositive portion of which reads (p.
44, Rollo):
NOW, THEREFORE, you are hereby commanded to go to respondent Christian Literature
Crusade's premises at 104 Karuhatan, Valenzuela, Bulacan and reinstate Loida del Rosario to her
former position or a substantially equivalent position, without loss of seniority rights and other
privileges formerly appertaining to her and collect the amount of EIGHTY FOUR THOUSAND SIX
HUNDRED EIGHTY ONE PESOS and NINETY SIX CENTAVOS (P 84,681.96) representing her
backwages and other benefits aside from the 3 years deductible backwages as originally ordered
and already satisfied, commencing from the period when the Sheriff was unable to effect
reinstatement per decision dated August 29, 1986, as per official computation of the Research
and Information Unit (attached as Annex "A" of this Writ) and thereafter turn over said amount
to this office for further disposition.
In case you fail to collect said amount in cash, you are directed to cause the satisfaction of the
same from the movable goods and immovable properties of respondent not exempt from
execution.
You are further directed to return this Writ within fifteen (15) days from compliance thereof
together with your corresponding report.
You may collect legal fees from the respondent.
On July 16, 1987, the Motion to Quash Writ of Execution was denied.
Hence, the present petition.
Crusade alleged that on June 17, 1987, the Deputy Sheriff garnished its bank deposits amounting to
more than P 8,000.00. On August 3, 1987, We issued a temporary restraining order enjoining the NLRC,
thru Labor Arbiter Edgardo M. Madriaga, from releasing the garnished amounts of money to del Rosario.
However, in her comment, del Rosario alleged that the amount of P 7,771.88 has been released to her
before the issuance of the temporary restraining order.
The main issue is whether or not del Rosario is entitled to additional backwages from September 1, 1982
to March 15, 1987.
Crusade alleges that the questioned writ of execution is null and void for the following reasons: (1) it
does not conform to, but is even violative of the decisions dated March 31, 1982 and August 29, 1986
which decisions merely awarded del Rosario "backwages for a period of three (3) years without
deductions from possible earnings elsewhere, without loss of seniority rights and other privileges
formerly appertaining to her; (2) del Rosario's backwages totalling P l3,680. 00 had already been fully
paid in 1982; and (3) it commands collection from Crusade of P 84,681.96 representing del Rosario's
backwages from September 1, 1982 until March 15, 1987. Unless the subject writ of execution is
declared null and void, NLRC would be allowed to award backwages to del Rosario for more than the
three (3) years maximum, or seven (7) years and nine (9) months to be more precise, or without any
limit for that matter.
On the other hand, del Rosario argues that the challenged writ of execution is based on the obstinate
refusal of Crusade to reinstate her and not on the decisions dated March 31, 1982 and August 29, 1986.
The power of the NLRC and/or the Labor Arbiter to grant or extend backwages for refusal of the
employer enjoined to reinstate terminated workers is recognized in this jurisdiction in the case of TUPAS
Local Chapter No. 979 vs. NLRC (G.R. Nos. 60532-33, November 5, 1985,139 SCRA 478).
The petition is impressed with merit.
It is a well-settled rule that the execution of judgment must conform to that which is ordained or
decreed in the dispositive portion of the decision Laingo vs. Camilo, G.R. No. L-35833, June 29, 1984, 130
SCRA 144; National Steel Corporation vs. National Labor Relations Commission and Pelagio Remolado,
G.R. No. 74711, September 19, 1988). Where the writ of execution is not in harmony with and exceeds
the judgment which gives it life, the writ haspro tanto no validity (Mutual Security Insurance
Corporation vs. Court of Appeals, G.R. No. L-47018, September 11, 1987,153 SCRA 678). This is so
because once a judgment has become final and executory or partially executed as in this case, it may no
longer be amended, modified or altered. What remains to be done is purely the ministerial enforcement
or execution of the judgment.
In case of defiance or non-compliance with the writ of execution, as in this case, where Crusade paid del
Rosario three (3) years backwages but failed and refused and still fails and refuses to reinstate her
despite several writs of execution, the remedy is not for the grant in another writ of execution of
continuing backwages up to the time of actual reinstatement. The grant of additional backwages to
serve as damages or as penalty to Crusade for persistently refusing to reinstate del Rosario has no basis
in the decision sought to be enforced and hence, it may not be resorted to in order to compel
reinstatement. The remedy is provided in the case of D.M. Consunji, Inc. vs. Pucan, et al., G.R. No.
71413, March 21, 1988, 159 SCRA 107, wherein an alias writ of execution was likewise issued directing
payment of additional backwages after the prior award of backwages equivalent to five (5) years and
seven (7) months had been fully satisfied. The Court, in nullifying the order for payment of additional
sums, therein held:
To ensure compliance with the court's order, and realizing the stubborn refusal to reinstate him,
petitioner (sic) should have resorted to more drastic remedies such as the filing of a motion to
cite petitioner in contempt. In this way, prompt compliance could have resulted.
Thus, del Rosario should have filed a motion to cite Crusade in contempt for refusing to reinstate her
despite several writs of execution issued by the Labor Arbiter.
The case of TUPAS Local Chapter No. 979 vs. NLRC, supra, relied upon by del Rosario in support of her
claim for continuing backwages, is inapplicable to the case at bar. It should be noted that the Court's
departure therein from the usual equivalent of the three years backwages generally awarded by this
Court was still within its power to do, the reinstatement of the workers therein being by virtue of a
return-to-work order, not by virtue of a final and executory judgment. In Davao Free Workers Front vs.
CIR, G.R. No. L-29356, October 31,1974, 60 SCRA 408, this Court, in departing from the general rule,
merely upheld the trial court's decision, which was not yet final and executory, awarding the employees
therein unlawfully dismissed full backwages without qualification from dismissal to reinstatement.
Likewise, in National Shipyards and Steel Corporation vs. CIR, G.R. No. L-32724, June 28,1974, 57 SCRA
642, this Court merely upheld the industrial court's questioned orders and resolutions in
implementation of this Court's long final and executory decision in a previous case involving exactly the
same subject matter. Said orders and resolutions provided for the employee's reinstatement with
backwages until actually reinstated. In upholding the same, this Court said that the matter of
reinstatement with backwages was long resolved and may no longer be reopened.
In the case at bar, what became final and executory is the decision of the Labor Arbiter granting
reinstatement and only three (3) years backwages. Thus, as far as this case is concerned, the issue of
whether or not del Rosario's backwages should be limited to three (3) years or continued indefinitely
until actual reinstatement can no longer be raised or reopened. The lengthy discussion made by Crusade
that the award of backwages up to the maximum of three (3) years is not without justification and the
corresponding retort of del Rosario citing TUPAS, supra, where this Court granted backwages without
qualification until reinstatement, are, therefore, irrelevant and beside the point.
ACCORDINGLY, the petition is hereby GRANTED. The writ of execution dated June 2, 1987 insofar as it
granted additional backwages is hereby SET ASIDE and private respondent Loida del Rosario is hereby
ordered to refund to petitioner Christian Literature Crusade the amount of P 7,771.88. However, the
writ STANDS insofar as it ordered petitioner to reinstate private respondent to her former position or a
substantially equivalent position. Where reinstatement is no longer feasible, petitioner is ordered to pay
separation pay as provided by law.
This decision is immediately executory. SO ORDERED.
 ARIS (PHIL.) INC. vs. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 90501 August 5, 1991
FACTS: On 11 April 1988, private respondents, who were employees of petitioner, aggrieved by
management's failure to attend to their complaints concerning their working surroundings which had
become detrimental and hazardous, requested for a grievance conference. As none was arranged, and
believing that their appeal would be fruitless, they grouped together after the end of their work that day
with other employees and marched directly to the management's office to protest its long silence and
inaction on their complaints.
On 12 April 1988, the management issued a memorandum to each of the private respondents, who
were identified by the petitioner's supervisors as the most active participants in the "rally", requiring
them to explain why they should not be terminated from the service for their conduct. Despite their
explanation, private respondents were dismissed for violation of company rules and regulations, more
specifically of the provisions on security and public order and on inciting or participating in illegal strikes
or concerted actions.
Private respondents lost no time in filing a complaint for illegal dismissal against petitioner and Mr.
Gavino Bayan with the regional office of the NLRC at the National Capital Region, Manila. After due trial
the labor arbiter ordered Aris (Phils.), Inc. to reinstate Leodegario de Guzman and company to their
former respective positions or any substantial equivalent positions if already filled up, without loss of
seniority right and privileges.
On 19 July 1989, de Guzman and company filed a Motion For Issuance of a Writ of Execution pursuant to
Section 12 of R.A. No. 6715 which provides that “In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee, in so far as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided therein."
On 21 July 1989, petitioner filed its Appeal. On 26 July 1989, the complainants, except Flor Rayos del Sol,
filed a Partial Appeal. On 10 August 1989, complainant Flor Rayos del Sol filed a Partial Appeal. On 29
August 1989, petitioner filed an Opposition to the motion for execution alleging that Section 12 of R.A.
No. 6715 on execution pending appeal cannot be applied retroactively to cases pending at the time of
its effectivity. Petitioner submitted a Rejoinder to the Reply on 5 September 1989. On 5 October 1989,
the Labor Arbiter issued an Order granting the motion for execution and the issuance of a partial writ of
execution "as far as reinstatement of herein complainants is concerned in consonance with the
provision of Section 2 of the rules particularly the last sentence thereof."
Unable to accept the above Order, petitioner filed the instant petition on October 1989.
ISSUE: The main issue in this case is whether the NLRC gravely abused its discretion amounting to lack of
jurisdiction when it relied on the constitutionality of the amendment introduced by Section 12 of
Republic Act No. 6715 to Article 223 of the Labor Code of the Philippines (PD. No. 442, as amended) and
allowing execution pending appeal of the reinstatement aspect of a decision of a labor arbiter
reinstating a dismissed or separated employee and of Section 2 of the NLRC Interim Rules on Appeals
under R.A. No. 6715 implementing the same. It also questions the validity of the Transitory Provision
(Section 17) of the said Interim Rules.
RULING: The Supreme Court ruled in favor of the NLRC and dismissed the petition for lack of merit. The
SC held that execution pending appeal is interlinked with the right to appeal. One cannot be divorced
from the other. The latter may be availed of by the losing party or a party who is not satisfied with a
judgment, while the former may be applied for by the prevailing party during the pendency of the
appeal. The right to appeal, however, is not a constitutional, natural or inherent right. It is a statutory
privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may
then validly provide limitations or qualifications thereto or relief to the prevailing party in the event an
appeal is interposed by the losing party. Execution pending appeal is one such relief long recognized in
this jurisdiction. The Revised Rules of Court allows execution pending appeal and the grant thereof is left
to the discretion of the court upon good reasons to be stated in a special order.
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.
These provisions are the quintessence of the aspirations of the workingman for recognition of his role in
the social and economic life of the nation, for the protection of his rights, and the promotion of his
welfare. The charge then that the challenged law as well as the implementing rule is unconstitutional is
absolutely baseless. Laws are presumed constitutional.
 MARANAW HOTELS AND RESORT CORPORATION VS NATIONAL LABOR RELATIONS COMMISSION
FACTS: Eddie Damalerio was a roomboy for Maranaw Hotels. One day, he was cleaning the room of one
of the guests when he saw the private stuff of the guest scattered all over the floor. So he took it upon
him to pick those up and put in the guest’s bag but then when he was doing so the guest (Jamie Glaser)
entered the room and saw Damalerio’s hand inside Glaser’s bag. Glaser filed a complaint against
Damalerio. After investigation by the hotel, Damalerio was dismissed.

ISSUE: Whether or not Damalerio was illegally dismissed.

HELD: Yes. Although it was not completely proper for Damalerio to be touching the things of a hotel
guest while cleaning the hotel rooms, personal belongings of hotel guests being off-limits to roomboys,
under the attendant facts and circumstances, the dismissal of Damalerio was unwarranted. To be sure,
the investigation held by the hotel security people did not unearth enough evidence of culpability. It
bears repeating that Glaser lost nothing. Although Maranaw Hotels may have reasons to doubt the
honesty and trustworthiness of Damalerio, as a result of what happened, absent sufficient proof of guilt,
Damalerio, who is a rank-and-file employee, cannot be legally dismissed.
As for the service charges received by Maranaw Hotels during the period where he was not able to work
he’s entitled to the shares therefrom. But if he chooses not to be reinstated by reason of the estranged
relations with the hotel, he’s entitled to separation pay but without the shares from the service charges
anymore.

PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE JESUS, respondents.
[G.R. No. 118651. October 16, 1997]
FACTS: De Jesus is petitioners’ reviser/trimmer who based her assigned work on a paper note posted by
petitioners. The posted paper is identified by its P.O. Number. De Jesus worked on P.O. No. 3853 by
trimming the cloths’ ribs and thereafter submitted tickets corresponding to the work done to her
supervisor. Three days later, de Jesus received a memorandum requiring her to explain why no
disciplinary action should be taken against her for dishonesty and tampering of official records and
documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. The
memorandum also placed her under preventive suspension for thirty days. In her explanation, de Jesus
maintained that she merely committed a mistake in trimming P.O. No. 3853 and admitted that she may
have been negligent, but not for dishonesty or tampering. Nonetheless, she was terminated from
employment. De Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter held
petitioners guilty of illegal dismissal and were ordered to reinstate de Jesus to her previous position
without loss of seniority rights and with full backwages from the time of her suspension. On appeal, the
National Labor Relations Commission (NLRC) declared that the status quo between them should be
maintained and affirmed the Labor Arbiter’s order of reinstatement, but without backwages. The NLRC
further directed petitioner to pay de Jesus her back salaries from the date she filed her motion for
execution up to the date of the promulgation of the decision. Petitioners filed their partial motion for
reconsideration which the NLRC denied, hence this petition.

ISSUE: Whether or not an order for reinstatement needs a writ of execution?

HELD: No. The provision of Article 223 is clear that an award for reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer shall not stay the execution
for reinstatement. To require the application for and issuance of a writ of execution as prerequisites for
the execution of a reinstatement award would certainly betray and run counter to the very object and
intent of Article 223, i. e., the immediate execution of a reinstatement order. The reason is simple. An
application for a writ of execution and its issuance could be delayed for numerous reasons. A mere
continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the
Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict
mandate and noble purpose envisioned by Article 223. On appeal, however, the appellate tribunal
concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion.
Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be
resolved in favor of labor. In ruling that an order or award for reinstatement does not require a writ of
execution the Court is simply adhering and giving meaning to this rule. Henceforth, we rule that an
award or order for reinstatement is self-executory. After receipt of the decision or resolution ordering
the employee's reinstatement, the employer has the right to choose whether to re-admit the employee
to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the
employee in the payroll. In either instance, the employer has to inform the employee of his choice. The
notification is based on practical considerations for without notice, the employee has no way of knowing
if he has to report for work or not.

ALEJANDRO ROQUERO, petitioner, vs. PHILIPPINE AIRLINES, INC. (PAL), respondent.

[G.R. No. 152329. April 22, 2003]
FACTS: Roquero, along with Rene Pabayo, were ground equipment mechanics of PAL. From the
evidence on record, it appears that they were caught red-handed possessing and using shabu in a raid
conducted by PAL security officers and NARCOM personnel. They received a “notice of administrative
charge” for violating the PAL Code of Discipline. They were required to answer the charges and were
placed under preventive suspension. In their “reply to notice of administrative charge,” they assailed
their arrest and asserted that they were instigated by PAL to take the drugs. In a Memorandum,
Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal dismissal. In the Labor
Arbiter’s decision, the dismissal of Roquero and Pabayo was upheld. Nonetheless, the Labor Arbiter
awarded separation pay and attorney’s fees to the complainants. On appeal, the NLRC ruled in favor of
petitioners as it likewise found PAL guilty of instigation and ordered reinstatement to their former
positions but without backwages. Petitioners did not appeal from the decision but filed a motion for a
writ of execution of the order of reinstatement. The Labor Arbiter granted the motion but PAL refused
to execute the said order on the ground that they have filed a Petition for Review. The Court of Appeals
later reversed the decision of the NLRC and reinstated the decision of the Labor Arbiter. However, it
denied the award of separation pay and attorney’s fees to Roquero on the ground that one who has
been validly dismissed is not entitled to those benefits. Hence, this petition for review under Rule 45.

ISSUE: Whether or not an employer who refused to reinstate an employee despite a writ duly issued is
liable to pay the salary of the subject employee?

HELD: Yes. Article 223 (3) of the Labor Code provide that an order of reinstatement by the Labor Arbiter
is immediately executory even pending appeal. The unjustified refusal of the employer to reinstate a
dismissed employee entitles him to payment of his salaries effective from the time the employer failed
to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it
is ministerial upon the Labor Arbiter to implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate
him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was
reinstated, from the time of the decision of the NLRC until the finality of the decision of this Court.
Technicalities have no room in labor cases where the Rules of Court are applied only in a suppletory
manner and only to effectuate the objectives of the Labor Code and not to defeat them. Hence, even if
the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of appeal until
reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered services during
the period.

G.R. NO. 159919

COMPOSITE ENTERPRISES, INC., Petitioner, - versus - EMILIO M. CAPAROSO, Respondents
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court
assailing the Resolution[1] dated November 18, 2002 of the Court of Appeals (CA) in CA-G.R. SP No.
73791 which dismissed the Petition for Certiorari of Composite Enterprises, Inc. (petitioner) and the CA
Resolution dated September 4, 2003 which denied petitioner's Motion for Reconsideration.
THE FACTS:
Petitioner is engaged in the distribution and/or supply of confectioneries to various retail
establishments within the Philippines. Emilio Caparoso and Joeve P. Quindipan (respondents) were
employed as its deliverymen until they were terminated on October 8, 1999.
Respondents filed a complaint for illegal dismissal against petitioner with the National Labor Relations
Commission (NLRC). Petitioner denied that respondents were illegally dismissed, alleging that they were
employed on a month-to-month basis and that they were terminated as a result of the expiration of
their contracts of employment.
On June 15, 2000, Labor Arbiter Napoleon M. Menese (Labor Arbiter) rendered a Decision in favor of the
respondents, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring
complainants to have been illegally dismissed from employment and consequently,
respondent COMPOSITE ENTERPRISES CORPORATION is hereby ordered to immediately
reinstate complainants to their respective former position without loss of seniority
rights and other privileges, with full backwages from the date of dismissal up to the
actual date of reinstatement which, as of this date, amounts to P93,155.36, as above
computed. SO ORDERED.
On July 6, 2000, petitioner filed its Appeal with the NLRC. It also filed a Manifestation with Motion
manifesting that it cannot reinstate respondents to their former positions since their previous positions
were no longer available. Accordingly, petitioner moved that it be allowed to pay respondents
separation pay in lieu of reinstatement.
On November 8, 2000, while petitioner's appeal was pending, respondents filed with the Labor Arbiter a
Motion to Pay Complainants their Salary with Prayer for Issuance of A Writ of Execution.
On December 19, 2000, petitioner filed with the NLRC a Motion to Resolve its motion to be allowed to
pay separation pay in lieu of reinstatement.
On January 26, 2001, the Labor Arbiter issued a Writ of Execution directing the Sheriff to effect
respondent's reinstatement. Consistent with its stand that physical reinstatement was no longer
possible, petitioner reinstated respondents into its payroll, conditioned on the NLRC's ruling on its
motion to be allowed to pay separation pay in lieu of reinstatement.
On February 21, 2001, respondents filed an Ex-Parte Motion for Recomputation of Backwages with the
Labor Arbiter.
Meanwhile, in a Decision dated May 9, 2001, the NLRC set aside the Decision of the Labor Arbiter,
holding that there was no illegal dismissal since respondents' contracts of employment were for a fixed
period.
On May 15, 2001, petitioner filed an Ex-Parte Manifestation with the Labor Arbiter, manifesting that
there was no basis to sustain respondents' claim for reinstatement in view of the NLRC'sDecision
dated May 9, 2001 finding no illegal dismissal.
In an Order dated June 14, 2001, the Labor Arbiter directed petitioner to pay respondents' accrued
salaries amounting to P143,355.52, covering the period from June 26, 2000, the date petitioner received
the Labor Arbiter's Decision, to May 9, 2001, the date of said decision's reversal by the NLRC.
On July 23, 2001, petitioner filed an Appeal/Petition for Review For Issuance of Temporary Restraining
Order and Preliminary Injunction before the NLRC, insisting on the payment of separation pay to
respondents in lieu of reinstatement.
In an Order dated June 28, 2002, the NLRC affirmed the Labor Arbiter's Order dated June 14, 2001,
holding that the reversal on appeal of the Labor Arbiter's Decision dated June 15, 2000 did not affect
respondents' entitlement to accrued salaries pending appeal, pursuant to Article 223 of the Labor Code;
that only respondent's entitlement to backwages was forfeited; and that there was no merit to
petitioner's insistence on paying separation pay to respondents, since that there was no strong basis for
petitioner's contention that reinstatement was physically impossible due to petitioner's implementation
of a retrenchment program.
Petitioner filed a Motion for Reconsideration but it was denied by the NLRC in a Resolution
dated September 26, 2002. Petitioner received said Resolution on October 7, 2002.
Four days later, or on October 11, 2002, petitioner filed a Petition for Certiorari with the CA, docketed as
CA-G.R. SP No. 73269.
In a Resolution dated October 24, 2002, the CA's Special Sixteenth Division dismissed the petition for
petitioner's failure to present proof that its General Manager was duly authorized to sign the petition's
Verification and Certification of Non-Forum Shopping, in violation of Section 5, Rule 7 of the Revised
Rules of Court.
Within the 60-day reglementary period from date of receipt of the NLRC Resolution denying the motion
for reconsideration, petitioner, instead of filing a motion for reconsideration with the CA's Special
Sixteenth Division, filed on November 12, 2002, a second Petition for Certiorari, docketed as CA-G.R. SP
No. 73791.
In a Resolution dated November 18, 2002, the CA's Twelfth Division dismissed the petition for
petitioner's failure to attach the required affidavit of service, pursuant to the last paragraph of Section 3,
Rule 46 of the Revised Rules of Court.
On November 26, 2002, petitioner filed a Motion for Reconsideration, attaching the affidavit of service
which was omitted in the petition.
In a Resolution dated September 4, 2003, the CA denied petitioner's Motion for Reconsideration,
holding that resort to the second petition for certiorari was no longer available due to resjudicata, since
the dismissal order dated October 24, 2002 in the first petition for certiorari had already become final
and executory; that minute resolutions of the court denying due course to petitions, or dismissing cases
summarily for failure to comply with the formal or substantial requirements laid down therefor by law,
were actually dispositions on the merits constituting res judicata, citing Bernarte v. Court of Appeals.
Hence, the present petition.
Petitioner contends that the dismissal of the first petition was not a judgment on the merits as
to constitute res judicata; that Bernarte v. Court of Appeals finds no application to the instant case; and
that the dismissal of the first petition was not a dismissal with prejudice as provided by Section 5, Rule 7
of the Revised Rules of Court.
Respondents, on the other hand, contend that petitioner's procedural lapses in filing the first and
second special civil actions for certiorari are irreversible and there is nothing on record to show that the
petitioner at least attempted or subsequently made a substantial compliance with the formal or
substantial requirements laid down by law; and that petitioner's gross and utter disregard of the rules
cannot justly be rationalized by harking on the policy of liberal construction.
The petition is impressed with merit.
Contrary to the CA's ruling, failure to comply with the non-forum shopping requirements in
Section 5, Rule 7 of the Revised Rules of Court, does not automatically warrant the dismissal of the case
with prejudice. The second paragraph of Section 5, Rule 7, is pertinent:
Section 5. Certification against forum shopping. x x x
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall be cause for
the dismissal of the case without prejudice, unless otherwise provided, upon motion
and after hearing. The submission of a false certification or non-compliance with any of
the undertakings therein shall constitute indirect contempt of court, without prejudice
to the corresponding administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions. (Emphasis supplied)
The Rule clearly states that the dismissal is without prejudice unless otherwise stated by the
court;[22] and the dismissal may be deemed with prejudice only upon proper motion and hearing.Since
the dismissal was without prejudice, it did not bar petitioner from refiling the petition for so long as it
was made within the 60-day reglementary period for filing the petition for certiorari.
Furthermore, Bernarte v. Court of Appeals finds no application to the instant case. Bernarte is
cast under an entirely different factual milieu. There, the Court denied the first petition for non-
compliance with Section 4 of Circular No. 1-88, which requires a verified statement of material dates;
and the second petition was filed one year after the dismissal of the first petition. Unlike in Bernarte, the
second petition in the present case was refiled immediately after the first petition was dismissed and
within the 60-day reglementary period.
With respect to the non-attachment of the affidavit of service in the second petition, it was not
fatal to the petition. The registry receipts attached to the petition clearly show that respondents were
served copies of the petition and its annexes. Thus, the demands of substantial justice were satisfied by
the actual receipt of the petition.
Verily, litigation is not a game of technicalities. While the swift unclogging of court dockets is a
laudable objective, granting substantial justice is an even more urgent ideal. Indeed, on numerous
occasions, this Court has relaxed the rigid application of the rules to afford the parties the opportunity
to fully ventilate their cases on the merits. This is in line with the time-honored principle that cases
should be decided only after giving all parties the chance to argue their causes and defenses.
Technicality and procedural imperfection should thus not serve as basis of decisions. Technicalities
should never be used to defeat the substantive rights of the other party. Every party-litigant must be
afforded the amplest opportunity for the proper and just determination of his cause, free from the
constraints of technicalities. In that way, the ends of justice would be better served. For, indeed, the
general objective of procedure is to facilitate the application of justice to the rival claims of contending
parties, bearing always in mind that procedure is not to hinder but to promote the administration of
justice.
Ordinarily, the case should be remanded to the CA for proper disposition of the petition
for certiorari on the merits; but that would further delay the case. Considering that the lone issue raised
can be readily resolved in this instance, the Court deems it more practical and in the greater interest of
justice not to remand the case to the CA but, instead, to resolve this case once and for all.
Petitioner anchored its Petition for Certiorari before the CA on the ground that the NLRC gravely
abused its discretion in affirming the Order dated June 14, 2001 of the Labor Arbiter which directed
petitioner to pay respondents' accrued salaries. Petitioner insists that the NLRC should have ordered the
payment of separation pay since respondents' reinstatement to their former positions was physically
impossible due to petitioner's implementation of a retrenchment program.
The Court is not persuaded.
Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12 of Republic Act (R.A.)
No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715, Amending the Labor
Code, provide that an order of reinstatement by the Labor Arbiter
is immediately executory even pending appeal. The Court explained the rationale of the law in Aris(Phil.)
Inc. v. National Labor Relations Commission:
In authorizing execution pending appeal of the reinstatement aspect of a
decision of the Labor Arbiter reinstating a dismissed or separated employee, the law
itself has laid down a compassionate policy which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and the working man.
xxxx
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 nations progress
and stability.
xxxx
x x x In short, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its execution pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the appellant, a continuing
threat or danger to the survival or even the life of the dismissed or separated employee
and his family.
Reinstatement is the restoration to a state or condition from which one has been removed or
separated. The intent of the law in making a reinstatement order immediately executory is much like a
return-to-work order, i.e., to restore the status quo in the workplace in the meantime that the issues
raised and the proofs presented by the contending parties have not yet been finally resolved. It is a legal
provision which is fair to both labor and management because while execution of the order cannot be
stayed by the posting of a bond by the employer, the workers also cannot demand their physical
reinstatement if the employer opts to reinstate them only in the payroll.
Payment of separation pay as a substitute for reinstatement is allowed only under exceptional
circumstances, viz: (1) when reasons exist which are not attributable to the fault or are beyond the
control of the employer, such as when the employer -- who is in severe financial strait, has suffered
serious business losses, and has ceased operations -- implements retrenchment, or abolishes the
position due to the installation of labor-saving devices; (2) when
the illegally dismissed employee has contracted a disease and his reinstatement will endanger the safety
of his co-employees; or, (3) where a strained relationship exists between the employer and
the dismissed employee.
As regards retrenchment, it is a management prerogative consistently recognized and affirmed
by this Court. It is, however, subject to faithful compliance with the substantive and procedural
requirements laid down by law and jurisprudence. For retrenchment to be considered valid, the
following substantial requirements must be met: (a) the losses expected should be substantial and not
merely de minimis in extent; (b) the substantial losses apprehended must be reasonably imminent such
as can be perceived objectively and in good faith by the employer; (c) the retrenchment must be
reasonably necessary and likely to effectively prevent the expected losses; and (d) the alleged losses, if
already incurred, and the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence.
In the discharge of these requirements, it is the employer who has the onus, this being in the
nature of an affirmative defense. In other words, it is not enough for a company to merely declare that it
has implemented a retrenchment program. It must produce adequate proof that such is the
actual situation to justify the retrenchment of employees. Normally, the condition of business losses is
shown by audited financial documents like yearly balance sheets, profit and loss statements and annual
income tax returns. The financial statements must be prepared and signed by independent auditors,
failing which these can be assailed as self-serving documents.
In this case, petitioner sought to justify the payment of separation pay instead of reinstatement
on the basis of its implementation of a retrenchment program for serious and persistent financial
difficulties.[46] However, petitioner only submitted as evidence the notice of its intention to implement a
retrenchment program, which it sent to the Department of Labor and Employment on July 25, 2000. It
did not submit its financial statements duly audited by an independent external auditor. Its failure to do
so seriously casts doubt on its claim of losses and insistence on the payment of separation pay.
The Court finds that the NLRC did not commit any grave abuse of discretion in issuing the Order
dated June 28, 2002, affirming the Order of the Labor Arbiter dated June 14, 2001.
WHEREFORE, the petition is GRANTED insofar as the Resolutions of the Court of Appeals
dated November 18, 2002 and September 4, 2003 are concerned, which are hereby REVERSED and SET
ASIDE. However, in the absence of grave abuse of discretion, the Order dated June 28, 2002 of the
National Labor Relations Commission affirming the Labor Arbiters Order dated June 14,
2001 is REINSTATED. No costs. SO ORDERED.

Genuino vs NLRC
Facts: Genuino was employed by Citibank sometime in January 1992 as Treasury Sales Division Head
with the rank of Assistant Vice-President. She received a monthly compensation of PhP 60,487.96,
exclusive of benefits and privileges. On August 23, 1993, Citibank sent Genuino a letter charging her with
“knowledge and/or involvement” in transactions “which were irregular or even fraudulent.” In the same
letter, Genuino was informed she was under preventive suspension. Genuino’s counsel replied through
a letter dated September 17, 1993, demanding for a bill of particulars regarding the charges against
Genuino.
On September 27, 1993, Citibank informed Genuino of the result of their investigation. It found that
Genuino with Santos used “facilities of Genuino’s family corporation, namely, Global Pacific, personally
and actively participated in the diversion of bank clients’ funds to products of other companies that
yielded interests higher than what Citibank products offered, and that Genuino and Santos realized
substantial financial gains, all in violation of existing company policy and the Corporation Code, which
for your information, carries a penal sanction.”
Genuino’s employment was terminated by Citibank on grounds of (1) serious misconduct, (2) willful
breach of the trust reposed upon her by the bank, and (3) commission of a crime against the bank

Labor Arbiter - the dismissal of the complainant Marilou S. Genuino to be without just cause and in
violation of her right to due process
NLRC- reversed the Labor Arbiter’s decision CA- with just cause but w/o due process P5,000.00 nominal
charges

Issue: Whether the dismissal is for a just cause and with the observance of due process.

Held: Genuino was dismissed for just cause but without the observance of due process. he Labor Arbiter
found that Citibank failed to adequately notify Genuino of the charges against her. On the contrary, the
NLRC held that “the function of a ‘notice to explain’ is only to state the basic facts of the employer’s
charges.
In Agabon, we explained:
The violation of the petitioners’ right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages. The amount of such damages is addressed to
the sound discretion of the court, taking into account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this
form of damages would serve to deter employers from future violations of the statutory due process
rights of employees. At the very least, it provides a vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its Implementing Rules. Thus, the award of PhP 5,000 to
Genuino as indemnity for non-observance of due process under the CA’s March 31, 2000 Resolution in
CA-G.R. SP No. 51532 is increased to PhP 30,000.

G.R. No. 164856 January 20, 2009 JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners, vs.
PHILIPPINE AIRLINES, INC., Respondent.
FACTS: An administrative charge was filed by PAL against its employees-herein petitioners after they
were allegedly caught in the act of sniffing shabu when a team of company security personnel and law
enforcers raided the PAL Technical Center’s Toolroom Section. After due notice, PAL dismissed
petitioners for transgressing the PAL Code of Discipline, prompting them to file a complaint for illegal
dismissal and damages which was resolved by the Labor Arbiter in their favor, thus ordering PAL to
immediately comply with the reinstatement aspect of the decision. Prior to the promulgation of the
Labor Arbiter’s decision, the SEC placed PAL which was suffering from severe financial losses. From the
Labor Arbiter’s decision, PAL appealed to the NLRC which reversed said decision of the Labor Arbiter and
dismissed petitioners’ complaint for lack of merit. Petitioners’ Motion for Reconsideration was denied
and Entry of Judgment was issued. Subsequently, the Labor Arbiter issued a Writ of Execution respecting
the reinstatement aspect of his decision, and he issued a Notice of Garnishment. PAL thereupon moved
to quash the Writ and to lift the Notice while petitioners moved to release the garnished amount. In a
related move, PAL filed an Urgent Petition for Injunction with the NLRC which affirmed the validity of
the Writ and the Notice issued by the Labor Arbiter but suspended and referred the action to the
Rehabilitation Receiver for appropriate action. PAL elevated the matter to the appellate court which
reversed the NLRC’s decision. Hence, this petition.

ISSUES:
(1) whether or not a subsequent finding of a valid dismissal removes the basis for implementing the
reinstatement aspect of a labor arbiter’s decision? and
(2) whether or not the impossibility to comply with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223
of the Labor Code?

HELD: Since petitioners’ claim against PAL is a money claim for their wages during the pendency of PAL’s
appeal to the NLRC, this should have been suspended pending the rehabilitation proceedings. It was
then suspended while ongoing rehabilitation. In view of the termination of the rehabilitation
proceedings, the Court now proceeds to resolve the remaining issue for consideration. As to the first
issue, the court held that a subsequent finding of a valid dismissal removes the basis for implementing
the reinstatement aspect of a labor arbiter’s decision. Based on jurisprudential trend applying par 3 of
Article 223 of the Labor Code which provides that “In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, pending appeal. The employee shall either be admitted back to work under
the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.” The view as maintained in a number of cases is that
“Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court.” On the other hand, if the employee has been reinstated during the
appeal period and such reinstatement order is reversed with finality, the employee is not required to
reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services
during the period. The provision of Article 223 is clear that an award for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay
the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the application for and
issuance of a writ of execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223. The reason is simple. As to
the second issue, the Court held that the peculiar predicament of a corporate rehabilitation rendered it
impossible for respondent to exercise its option under the circumstances. The spirit of the rule on
reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision
containing an order of reinstatement. Reinstatement pending appeal necessitates its immediate
execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time,
any attempt on the part of the employer to evade or delay its execution, should not be countenanced.
After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal
was without fault on the part of the employer. The new NLRC Rules of Procedure, now require the
employer to submit a report of compliance within 10 calendar days from receipt of the Labor Arbiter’s
decision, disobedience to which clearly denotes a refusal to reinstate. It is apparent that there was
inaction on the part of respondent to reinstate them, but whether such omission was justified depends
on the onset of the exigency of corporate rehabilitation. It is settled that upon appointment by the SEC
of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the
corporation shall ipso jure be suspended. Case law recognizes that unless there is a restraining order,
the implementation of the order of reinstatement is ministerial and mandatory. This injunction or
suspension of claims by legislative fiat partakes of the nature of a restraining order that constitutes a
legal justification for respondent’s noncompliance with the reinstatement order. Respondent’s failure to
exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified.
Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of
the non-exercise of the options, did not attach.

LANSANGAN VS. AMKOR TECHNOLOGY G.R. NO. 177026; JANUARY 30, 2009
Doctrine: Article 223 concerns itself with an interim relief, granted to a dismissed or separated
employee while the case for illegal dismissal is pending appeal, as what happened
in Roquero. It does not apply where there is no finding of illegal dismissal, as in the present
case.
xxx…
In cases of regular employment, the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement (Emphasis, underscoring and italics supplied),

Facts: An anonymous e-mail was sent to the General Manager of Amkor Technology
Philippines (respondent) detailing allegations of malfeasance on the part of its supervisory
employees Lunesa Lansangan and Rosita Cendaña (petitioners) for "stealing company time."
Respondent thus investigated the matter, requiring petitioners to submit their written
explanation. In handwritten letters, petitioners admitted their wrongdoing.Respondent
thereupon terminated petitioners for "extremely serious offenses" as defined in its Code of
Discipline. This prompted Petitioners filed a complaint for illegal dismissal.

Labor Arbiter, dismissed the petitioners’ complaint, however, ordered the reinstatement of
petitioners to their former positions without backwages "as a measure of equitable and
compassionate relief" owing mainly to petitioners’ prior unblemished employment records, show
of remorse, harshness of the penalty and defective attendance monitoring system of
respondent.
Respondent appealed the decision of the LA regarding the reinstatement. Meanwhile, the
petitioners moved to the issuance of “writ of reinstatement”. The Arbiter then issued an alias writ
of execution following which respondent’s bank account at Equitable-PCI Bank was garnished,
where the respondent also moved for the quashal of said decision.
NLRC, granted respondent’s appeals by deleting the reinstatement aspect of the
Arbiter’s decision and setting aside the Arbiter’s Alias Writ of Execution and Notice of
Garnishment. Petitioners file a motion for reconsideration which was subsequelty denied. Both
parties appealed to CA.
The CA affirmed the finding of LA and NLRC that there was a valid dismissal. Respondent
were ordered to "pay petitioners their corresponding backwages without qualification and
deduction for the period covering October 20, 2004 (date of the Arbiter’s decision) up to
June 30, 2005 (date of the NLRC Decision)," citing Article 223 of the Labor Code and
Roquero v. Philippine Airlines
Both parties’ filed their respective motions for partial reconsideration which were denied. Only
petitioners appealed to the SC. Petitioners cited the case of Roquero v. Philippine Airlines
where the therein employer was ordered to pay the wages to which the therein employee was
entitled from the time the reinstatement order was issued until the FINALITY of this
Court’s decision.

Issue: WON the petitioners were entitled to back wages only up to the time when the NLRC
rendered its decision.

Held: The SC ruled that the petition fails. The decision of the Arbiter finding that petitioners
committed dishonesty as a form of serious misconduct and fraud, or breach of trust had become
final, petitioners not having appealed the same before the NLRC as in fact they even moved for
the execution of the reinstatement aspect of the decision. It bears recalling that it was only
respondent which assailed the Arbiters decision to the NLRC to solely question the propriety of
the order for reinstatement, and it succeeded.
Roquero, as well as Article 223 of the Labor Code on which the appellate court also relied, finds
no application in the present case. Article 223 concerns itself with an interim relief, granted to a
dismissed or separated employee while the case for illegal dismissal is pending appeal, as what
happened in Roquero. It does not apply where there is no finding of illegal dismissal, as in the
present case.
The Arbiter found petitioners dismissal to be valid. Such finding had, as stated earlier, become
final, petitioners not having appealed it. Following Article 279 which provides:
xxxx
In cases of regular employment, the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement (Emphasis, underscoring and italics supplied),
Petitioners are not entitled to full backwages as their dismissal was not found to be
illegal. Agabon v. NLRC[19] so states payment of backwages and other benefits is justified only
if the employee was unjustly dismissed. Petition Denied.

G.R. No. 155109

C. ALCANTARA & SONS, INC., Petitioner, - versus OURT OF APPEALS, Respondents.
This case is about a) the consequences of an illegally staged strike upon the employment status of the
union officers and its ordinary members and b) the right of reinstated union members to go back to
work pending the companys appeal from the order reinstating them.
The Facts and the Case
C. Alcantara & Sons, Inc., (the Company) is a domestic corporation engaged in the manufacture and
processing of plywood. Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) is the exclusive bargaining
agent of the Companys rank and file employees. The other parties to these cases are the Union
officers[1] and their striking members
The Company and the Union entered into a Collective Bargaining Agreement (CBA) that bound them to
hold no strike and no lockout in the course of its life. At some point the parties began negotiating the
economic provisions of their CBA but this ended in a deadlock, prompting the Union to file a notice of
strike. After efforts at conciliation by the Department of Labor and Employment (DOLE) failed, the Union
conducted a strike vote that resulted in an overwhelming majority of its members favoring it. The Union
reported the strike vote to the DOLE and, after the observance of the mandatory cooling-off period,
went on strike.
During the strike, the Company filed a petition for the issuance of a writ of preliminary injunction with
prayer for the issuance of a temporary restraining order (TRO) Ex Parte with the National Labor
Relations Commission (NLRC) to enjoin the strikers from intimidating, threatening, molesting, and
impeding by barricade the entry of non-striking employees at the Companys premises. The NLRC first
issued a 20-day TRO and, after hearing, a writ of preliminary injunction, enjoining the Union and its
officers and members from performing the acts complained of. But several attempts to implement the
writ failed. Only the intervention of law enforcement units made such implementation possible.
Meantime, the Union filed a petition with the Court of Appeals (CA), questioning the preliminary
injunction order. On February 8, 1999 the latter court dismissed the petition. The Union did not appeal
from such dismissal.
The Company, on the other hand, filed a petition with the Regional Arbitration Board to declare the
Unions strike illegal, citing its violation of the no strike, no lockout, provision of their CBA. Subsequently,
the Company amended its petition to implead the named Union members who allegedly committed
prohibited acts during the strike. For their part, the Union, its officers, and its affected members filed
against the Company a counterclaim for unfair labor practices, illegal dismissal, and damages. The Union
also assailed as invalid the service of summons on the individual Union members included in the
amended petition.
On June 29, 1999 the Labor Arbiter rendered a decision, declaring the Unions strike illegal for violating
the CBAs no strike, no lockout, provision. As a consequence, the Labor Arbiter held that the Union
officers should be deemed to have forfeited their employment with the Company and that they should
pay actual damages of P3,825,000.00 plus 10% interest and attorneys fees. With respect to the striking
Union members, finding no proof that they actually committed illegal acts during the strike, the Labor
Arbiter ordered their reinstatement without backwages. The Labor Arbiter denied the Unions
counterclaim for lack of merit.
On June 29, 1999 the terminated Union members promptly filed a motion for their immediate
reinstatement but the Labor Arbiter did not act on the same. At any rate, the Company did not reinstate
them. Both parties appealed the Labor Arbiters decision to the NLRC. The Company impugned the Labor
Arbiters decision insofar as it ordered the reinstatement of the terminated Union members. The Union,
on the other hand, questioned the declaration of illegality of the strike as well as the dismissal of its
officers and the order for them to pay damages.
On November 8, 1999 the NLRC rendered a decision, affirming that of the Labor Arbiter insofar as the
latter declared the strike illegal, ordered the Union officers terminated, and directed them to pay
damages to the Company. The NLRC ruled, however, that the Union members involved, who were
identified in the proceedings held in the case, should also be terminated for having committed
prohibited and illegal acts.
The Union filed a petition for certiorari with the CA, questioning the NLRC decision. Finding merit in the
petition, the CA rendered a decision on March 20, 2002, annulling the NLRC decision and reinstating that
of the Labor Arbiter. The Company and the Union with its officers and members filed separate petitions
for review of the CA decision in G.R. 155109 and 155135, respectively.
During the pendency of these cases, the affected Union members filed with the Labor Arbiter a motion
for reinstatement pending appeal by the parties and the computation of their backwages based on the
CA decision. After hearing, the Labor Arbiter issued a resolution dated November 21, 2002, holding that
due to the delay in the resolution of the dispute and the impracticability of reinstatement owing to the
fact that the relations between the terminated Union members and the Company had been severely
strained by the prolonged litigation, payment of separation pay to such Union members was in order.
The Labor Arbiter thus approved the computation and payment of their separation pay and denied all
their other claims.
Both parties appealed the Labor Arbiters resolution to the NLRC. Initially, in its resolution dated April 30,
2003, the NLRC declared the Labor Arbiters resolution of November 21, 2002 void for lack of factual and
legal basis but ordered the Company to pay the affected employees accrued wages and 13th month pay
considering the Companys refusal to reinstate them pending appeal. On motion for reconsideration by
both parties, however, the NLRC issued a resolution on August 29, 2003, modifying its earlier resolution
by deleting the grant of accrued wages and 13th month pay to the subject employees, thus denying
their motion for computation.
Upon the Unions petition for certiorari with the CA, questioning the NLRCs denial of the terminated
Union members claim for separation pay, accrued wages, and other benefits, the CA rendered a decision
on February 24, 2005,[16] dismissing the petition. The CA ruled that the reinstatement pending appeal
provided under Article 223 of the Labor Code contemplated illegal dismissal or termination cases and
not cases under Article 263. Thus, the CA ruled that the resolution ordering the reinstatement of the
terminated Union members and the payment of their wages and other benefits had no basis. Aggrieved,
the Union sought intervention by this Court.

The Issues Presented

The issues presented in these cases are:
1. Whether or not the NLRC properly acquired jurisdiction over the persons of the individual Union
members impleaded in the case;
2. Whether or not the Union staged an illegal strike;
3. Assuming the strike to be illegal, whether or not the impleaded Union members committed illegal
acts during the strike, justifying their termination from employment;
4. Whether or not the terminated Union members are entitled to the payment of backwages on account
of the Companys refusal to reinstate them, pending appeal by the parties, from the Labor Arbiters
decision of June 29, 1999; and
5. Whether or not the terminated Union members are entitled to accrued backwages and separation
pay.

The Rulings of the Court

One. The NLRC acquires jurisdiction over parties in cases before it either by summons served on them or
by their voluntary appearance before its Labor Arbiter. Here, while the Union insists that summons were
not properly served on the impleaded Union members with respect to the Companys amended petition
that sought to declare the strike illegal, the records show that they were so served. The Return of
Service of Summon indicated that 74 out of the 81 impleaded Union members were served with
summons. But they refused either to accept the summons or to acknowledge receipt of the same. Such
refusal cannot of course frustrate the NLRCs acquisition of jurisdiction over them. Besides, the affected
Union members voluntarily entered their appearance in the case when they sought affirmative relief in
the course of the proceedings like an award of damages in their favor.
Two. A strike may be regarded as invalid although the labor union has complied with the strict
requirements for staging one as provided in Article 263 of the Labor Code when the same is held
contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause. Here, the
CBA between the parties contained a no strike, no lockout provision that enjoined both the Union and
the Company from resorting to the use of economic weapons available to them under the law and to
instead take recourse to voluntary arbitration in settling their disputes.
No law or public policy prohibits the Union and the Company from mutually waiving the strike and
lockout maces available to them to give way to voluntary arbitration. Indeed, no less than the 1987
Constitution recognizes in Section 3, Article XIII, preferential use of voluntary means to settle disputes.
Thus
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The Court finds no compelling reason to depart from the findings of the Labor Arbiter, the NLRC, and the
CA regarding the illegality of the strike. Social justice is not one-sided. It cannot be used as a badge for
not complying with a lawful agreement.
Three. Since the Unions strike has been declared illegal, the Union officers can, in accordance with law
be terminated from employment for their actions. This includes the shop stewards. They cannot be
shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such
and placed them in positions of leadership and power over the men in their respective work units.
As regards the rank and file Union members, Article 264 of the Labor Code provides that termination
from employment is not warranted by the mere fact that a union member has taken part in an illegal
strike. It must be shown that such a union member, clearly identified, performed an illegal act or acts
during the strike.
Here, although the Labor Arbiter found no proof that the dismissed rank and file Union members
committed illegal acts, the NLRC found following the injunction hearing in NLRC IC M-000126-98 that the
Union members concerned committed such acts, for which they had in fact been criminally charged
before various courts and the prosecutors office in Davao City. Since the CA held that the existence of
criminal complaints against the Union members did not warrant their dismissal, it becomes necessary
for the Court to go into the records to settle the issue.
The striking Union members allegedly committed the following prohibited acts:
a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers;
b. They obstructed the free ingress to and egress from the company premises; and
c. They resisted and defied the implementation of the writ of preliminary injunction issued against the
strikers.
Cornelio Caguiat, Ruben Tungapalan, and Eufracio Rabusa depicted the above prohibited acts in their
affidavits and testimonies. The Sheriff of the NLRC said in his Report that, in the course of his
implementation of the writ of injunction, he observed that the striking employees blocked the exit lane
of the Alson drive with their tent. Tungapalan, a non-striking employee, identified the Union members
who threatened and coerced him. Indeed, he filed criminal actions against them. Lastly, the photos
taken of the strike show the strikers, properly identified, committing the acts complained of. These
constitute substantial evidence in support of the termination of the subject Union members.
The mere fact that the criminal complaints against the terminated Union members were subsequently
dismissed for one reason or another does not extinguish their liability under the Labor Code. Nor does
such dismissal bar the admission of the affidavits, documents, and photos presented to establish their
identity and guilt during the hearing of the petition to declare the strike illegal. The technical grounds
that the Union interposed for denying admission of the photos are also not binding on the NLRC.
Four. The terminated Union members contend that, since the Company refused to reinstate them after
the Labor Arbiter rendered a decision in their favor, the Company should be ordered to pay them their
wages during the pendency of the appeals from the Labor Arbiters decision.
It will be recalled that after the Labor Arbiter rendered his decision on June 29, 1999, which decision
ordered the reinstatement of the terminated Union members, the latter promptly filed a motion for
their reinstatement pending appeal. But the Labor Arbiter did not for some reason act on the motion. As
it happened, after about four months or on November 8, 1999, the NLRC reversed the Labor Arbiters
reinstatement order. It cannot be said, therefore, that the Company had resisted a standing order of
reinstatement directed at it at this point.
Of course, on March 20, 2002 the CA restored the Labor Arbiters reinstatement order. And this
prompted the affected Union members to again file with the Labor Arbiter a motion for their
reinstatement pending appeal. But, acting on the motion, the Labor Arbiter resolved at this point that
reinstatement was no longer practicable because of the severely strained relation between the
company and the terminated Union members. In place of reinstatement, the Labor Arbiter ordered the
Company to pay them their separation pays.
Both parties appealed the Labor Arbiters above ruling to the NLRC. But, as it turned out the NLRC did not
also favor reinstatement. It instead ordered the Company to pay the terminated Union members their
accrued wages and 13th month pay considering its refusal to reinstate them pending appeal. On motion
for reconsideration, however, the NLRC reconsidered and deleted altogether the grant of accrued wages
and 13th month pay. The Union appealed the NLRC ruling to the CA on behalf of its terminated
members but the CA denied their appeal.
The CA denied reinstatement for the reason that the reinstatement pending appeal provided under
Article 223 of the Labor Code contemplated illegal dismissal or termination cases and not cases under
Article 264. But this perceived distinction does not find support in the provisions of the Labor Code.
The grounds for termination under Article 264 are based on prohibited acts that employees could
commit during a strike. On the other hand, the grounds for termination under Articles 282 to 284 are
based on the employees conduct in connection with his assigned work. Still, Article 217, which defines
the powers of Labor Arbiters, vests in the latter jurisdiction over all termination cases, whatever be the
grounds given for the termination of employment. Consequently, Article 223, which provides that the
decision of the Labor Arbiter reinstating a dismissed employee shall immediately be executory pending
appeal, cannot but apply to all terminations irrespective of the grounds on which they are based.
Here, although the Labor Arbiter failed to act on the terminated Union members motion for
reinstatement pending appeal, the Company had the duty under Article 223 to immediately reinstate
the affected employees even if it intended to appeal from the decision ordaining such reinstatement.
The Companys failure to do so makes it liable for accrued backwages until the eventual reversal of the
order of reinstatement by the NLRC on November 8, 1999, a period of four months and nine days.
Five. While it is true that generally the grant of separation pay is not available to employees who are
validly dismissed, there are, in furtherance of the laws policy of compassionate justice, certain
circumstances that warrant the grant of some relief in favor of the terminated Union members based on
equity.
Bitter labor disputes, especially strikes, always generate a throng of odium and abhorrence that
sometimes result in unpleasant, although unwanted, consequences. Considering this, the striking
employees breach of certain restrictions imposed on their concerted actions at their employers
doorsteps cannot be regarded as so inherently wicked that the employer can totally disregard their long
years of service prior to such breach. The records also fail to disclose any past infractions committed by
the dismissed Union members. Taking these circumstances in consideration, the Court regards the
award of financial assistance to these Union members in the form of one-half month salary for every
year of service to the company up to the date of their termination as equitable and reasonable.
WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its
officers and members in G.R. 155135 for lack of merit, and REVERSES and SETS ASIDE the decision of the
Court of Appeals in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the
petition of C. Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the decision of the National Labor
Relations Commission in NLRC CA M-004996-99 dated November 8, 1999.
Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and
their dismissed members in G.R. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated
Union members backwages for four (4) months and nine (9) days and separation pays equivalent to one-
half month salary for every year of service to the company up to the date of their termination, with
interest of 12% per annum from the time this decision becomes final and executory until such
backwages and separation pays are paid. The Court DENIES all other claims. SO ORDERED.

G.R. No. 180972 January 20, 2014

JONAS MICHAEL R. GARZA, Petitioner, vs. COCA-COLA BOTILERS PHILIPPINES, INC. and CHRISTINE
BANAL/CALIXTO MANAIG, Respondents.
Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal justifications
to dismiss an employee. "The unflinching rule in illegal dismissal cases is that the employer bears the
burden of proof."
This Petition for Review on Certiorari seeks a review and setting aside of the September 26, 2007
Decision3 and the November 16, 2007 Resolution4 of the Court of Appeals (CA) in CA-G.R. SP Nos. 97915
and 97916.
Factual Antecedents
Respondent Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a manufacturer of soft drink products,
employing salesman and account specialists to sell these products to customers and outlets.
Petitioner Jonas Michael R. Garza (petitioner) became a regular employee of CCBPI on December 16,
1997, designated as its Salesman in Iriga City. In 2001, he was promoted to the position of Dealer
Development Coordinator and assigned at Tabaco City. During his stint therein, he was likewise
designated as Acting District Sales Supervisor.
In 2003, due to changes in CCBPI’s structure and operating systems, the position of Dealer Development
Coordinator was abolished, and petitioner was designated as Account Specialist and assigned to the
CCBPI Naga City Plant and at Iriga City. For his services, petitioner received a monthly salary of
₱29,350.00, exclusive of commissions and allowances. Prior to his dismissal from CCBPI, petitioner was
an employee of good standing with an unblemished record.
As Account Specialist, petitioner was tasked mainly with booking customers’ orders and collecting on
their accounts; petitioner merely books customers’ orders, but does not deliver the product to them;
the independent dealer makes the delivery. In effect, petitioner performed the functions of a CCBPI
salesman, except that he operates in concentrated or dense areas.
As a matter of company policy, CCBPI Account Specialists/Salesmen are obliged to remit all cash sales
and credit cash collections to the company office on the same day that payments are received in cash or
check from customers, dealers and outlets. Thus, before allowing the Account Specialists/Salesmen to
work the following day, the CCBPI Cashier shall first issue a clearance which is given to the company
security guard stating whether they incurred shortages or have not remitted collections. If so, the
Account Specialist/Salesman concerned is not allowed to leave the company premises unless his
shortages are settled. Moreover, shortages are recovered against the monthly salary of the concerned
employee.
Petitioner received an October 30, 2003 memorandum11 from his immediate supervisor, George C.
Macatangay (Macatangay), directing him to explain alleged past unliquidated collections and cash
shortages, thus:
You are directed to explain within twenty four (24) hours upon receiving this x x x for your shortages for
past unliquidated reports and cash shortages.
For your strict compliance.
(signed)
GEORGE C. MACATANGAY
DSS-District 4512
On April 23, 2004, petitioner received another memorandum13 of even date from Macatangay directing
him –
x x x to explain in writing within twenty four hours from receipt hereof why you should not be charged
[with] violation of Rule 005-85 SEC. 10 of CCBPI EMPLOYEES’ CODE OF DISCIPLINARY RULES AND
REGULATIONS specifically… misappropriation or embezzlement of Company funds, withholding of
Company fund[s], unauthorized retrieval of empties by converting the same to cash for personal use,
unremitted or short remittance of collection, non-issuance or mis-issuance of invoices.
Petitioner sought verbal clarification from Macatangay, claiming that the memorandum did not specify
the acts and transactions covered by the charge, and said that he could not submit a written explanation
unless the charges against him are specified.
Instead of furnishing details, Macatangay issued to petitioner another memorandum dated April 26,
2004, which was for all intents and purposes identical to the April 23, 2004 memorandum. This time,
petitioner confronted Macatangay and reiterated his request for a detailed account of his alleged
violations, but the latter told him not to worry about the memorandum because it was just a scheme
adopted by local CCBPI management to cover up problems in the Naga City Plant.
On May 6, 2004, Macatangay issued another memorandum to petitioner, informing him that he had
been placed under preventive suspension for 30 days effective May 12, 2004, and directing him to
attend a formal investigation to be conducted on May 11, 2004 at the Naga City Plant. Macatangay
personally handed the said memorandum to petitioner at the Mother Seton Hospital where the latter’s
wife had just given birth. Petitioner sought a rescheduling of the investigation, as he had to attend to his
wife and the hospital obligations, and to have time to prepare for the investigation. Significantly, the
memorandum included the following paragraph:
Postponement will not be allowed unless prior notice thereof is made at least two (2) days before the
scheduled investigation. Total postponement shall not exceed two (2) times [sic].
Instead of rescheduling the investigation as requested, CCBPI through its Territory Sales Manager,
Joselito Seradilla (Seradilla) sent a Notice of Termination dated June 14, 2004, thus:
Reference is [made to] the administrative investigation conducted on you by Management relative to
your alleged violation of Section 10, Rule 005-85 of our Company’s Employee’s Code of Disciplinary
Rules and Regulation[s].
After carefully evaluating the records of the investigation and other pertinent documents, indeed you
have misappropriated, embezzled or fail [sic] to remit company funds amounting to Php105,653.00.
In view of this, it is with much regret to [sic] inform you that your services are hereby terminated
effective upon your receipt of this memo, in accordance with our Employee’s Code of Disciplinary Rules
and Regulations and pertinent provisions of Article 282 of the Labor Code.
At the same time, formal demand is being made to [pay]/restitute to the Company the amount of One
Hundred Five Thousand Six Hundred and Fifty Three Pesos (Php105,653.00) within five (5) days from the
receipt hereof. Failure to do so shall constrain us to file necessary charges against you to protect the
interest of the Company.
(signed)
Joselito G. Seradilla
TSM T4 SLA
After petitioner received the above termination notice on June 15, 2004, he sought permission from the
CCBPI Finance Department to review CCBPI financial records in order to be apprised of the basis for the
finding that he misappropriated company funds, but his request was denied. He was also denied access
to the plant.
At around 6:30 in the morning of June 15, 2004, Macatangay visited petitioner at his residence and told
him that he was being summoned to the CCBPI office by Area Sales Manager Dodie Peniera (ASM
Peniera). At the CCBPI Human Resource Department office, where Peniera, Seradilla, Macatangay, and
Human Resource Manager, Christine Banal (Banal), were present, Peniera ordered Macatangay to assist
petitioner in reconciling the latter’s accounts. At the same time, Banal directed petitioner to receive two
Notices of Investigation apparently issued on different dates, and affix his signature on the "received"
portion thereof, which he did.
However, the agreed reconciliation of petitioner’s accounts did not materialize, as Macatangay became
uncooperative and CCBPI denied him access to its records.
On August 19, 2004, petitioner filed a Complaint for illegal dismissal against respondents CCBPI, Banal
and CCBPI Naga City Plant Logistics Head Calixto Manaig with the Naga City Sub-Regional Arbitration
Branch No. V of the National Labor Relations Commission (NLRC), which was docketed as Case No. SUB-
RAB V 05-08-0022-A-04. Petitioner prayed for reinstatement, backwages, ₱100,000.00 moral damages,
₱100,000.00 exemplary damages, and 10% attorney’s fees.
In their Position Paper and Rejoinder to Complainant’s Supplemental Position Paper, respondents for
the first time specified in detail the alleged violations of petitioner. They claimed that petitioner was
guilty of misappropriation of cash/check collections, kiting of checks, and delayed remittances covering
the following customer accounts:
1avvphi1 1. Alice Asanza - P 8,160.00
2. Kathryn Serrano/New Ongto Expressmart (Supermart) - 7. Henry Botor - 8,920.00
10,645.00 8. Noe Sabularse - 16,090.00
3. Ceguera Bakeshop - 2,558.00 9. MCM Fastfood - 1,260.00
4. Marlene Yu - 21,826.00 10. Leon Trinidad - 15,186.00
5. Ofelia Ong - 5,100.00 TOTAL P 90,057.00
6. Beatriz Orolfo - 312.00
Respondents alleged that misappropriation/embezzlement is a violation of CCBPI’s November 18, 2002
Inter-Office Memorandum which defined misappropriation, non-remittance or delayed remittance of
cash/check collections and specified outright dismissal as punishment for the first offense. They claimed
that petitioner’s total unremitted collections amounted to ₱105,653.00 and for this reason, his dismissal
was necessary and proper. They added that due to petitioner’s failure to attend the scheduled May 11,
2004 investigation, CCBPI was compelled to terminate his services, after which the proper notice was
given the Department of Labor and Employment (DOLE). Finally, they contended that since petitioner
was dismissed for just cause, he was not entitled to reinstatement, backwages, damages, and attorney’s
fees.
CCBPI relied mainly on the strength of an audit conducted by its Territory Finance Head, Ronaldo D.
Surara (Surara), which concluded that petitioner failed to remit cash and credit collections covering the
above accounts.
In his Position Paper, Supplemental Position Paper, and Reply to Respondents’ Rejoinder to
Complainant’s Position Paper, petitioner claimed essentially that (1) his dismissal was without just
cause, and (2) he was denied due process during the proceedings leading to his dismissal. Relative to his
claim of dismissal without just cause, petitioner contended that:

1. The charges against him are false; he was not guilty of embezzlement. All his transactions as Account
Specialist are duly accounted for, all cash sales were remitted to CCBPI and all check payments were
remitted and credited to CCBPI’s account. Nor did he delay the remittance of these cash and check
payments, nor used them in kiting operations for his personal benefit;
2. With regard to cash collections covering the Henry Botor and Noe Sabularse accounts, CCBPI policies
and procedures make it impossible for Salesmen/Account Specialists to commit embezzlement. Each
working day, they are required to account for their sales/collections and obtain clearance from the
company cashier before they are allowed to leave company premises at the end of their shift and report
for work the next day; in case of a shortage, the concerned employee is not allowed to leave the
company premises until he settles the shortage. In addition, shortages are deducted against the
employee’s salaries. The fact that he continued to report for work up to June 2004 without any adverse
action from CCBPI proved that the irregularities attributed to him – which CCBPI claims were committed
against his April and May 2003 accounts – were manufactured and untrue;
3. With respect to the Alice Asanza (Asanza) account, CCBPI’s claim that he failed to remit the
customer’s payment is belied by the customer herself, who admitted in her sworn statement35 that
during a meeting with CCBPI auditors, she made a mistake in affirming that a delivery of CCBPI products
worth ₱8,160.00 was made on January 30, 2004 and that the same was paid for in cash. She admitted
that after consulting her records, delivery of said ₱8,160.00 worth of CCBPI products was in fact made
on October 15, 2003, and that up to now the same remained unpaid. She admitted that she was
confused by the CCBPI records which were shown to her, which indicated "Date of Invoice 01-30-04";
thus she mistakenly assumed that a delivery of ₱8,160.00 worth of CCBPI products was indeed made on
such date, and that the same was paid for by her, when in fact no such transaction took place;
4. Contrary to CCBPI’s claim, all the concerned CCBPI customers, through their submitted affidavits and
certifications, belied claims that petitioner embezzled their cash or check payments;
5. He could not have committed "kiting" of CCBPI’s checks, as CCBPI claims, for the simple reason that
these checks were made payable to CCBPI specifically, and were not issued in his name. Thus, even for
CCBPI products paid for in advance through checks ("payment upon order" or "PUO" accounts), there is
no opportunity for embezzlement because the checks are made out to CCBPI;
6. On the claim of delayed remittances of check payments pertaining to the Leon Trinidad and MCM
Fastfood accounts, petitioner claims that although it appears that the checks were issued or dated in the
name of CCBPI days earlier, or upon the booking of orders by the petitioner, delivery of its products by
the dealer was made days later. Naturally, the checks would only be released by the customers to the
petitioner upon/after delivery of products by the dealer; which means that although it would appear
that the checks were issued/dated by customers earlier – upon the booking of the customers’ orders –
they were delivered/handed over to petitioner only upon/after completion of delivery, which come days
after the checks were issued/dated. CCBPI operates through private independent dealers over
whom/which petitioner has no control, which means that after petitioner books an order, prompt
delivery by the dealer is not guaranteed, and actual delivery could be made days later;
7. With regard to transactions with Kathryn Serrano (Serrano) of New Ongto Supermart, what CCBPI
claims was a different transaction covering an alleged unremitted amount of ₱10,645.00 was already
paid for by Serrano in check issued to CCBPI, and the amount has been debited from her account.39
CCBPI made a mistake in its records, which showed that Serrano paid by check for her order of CCBPI
products worth ₱10,645.00, but which account was recorded by it as a different sale transaction of
₱10,615.00. These two transactions are but one and the same; in fact, CCBPI itself claims in its Rejoinder
to Complainant’s Position Paper that Serrano’s check for ₱10,645.00 was used to pay the ₱10,615.00
transaction, which only proves that the ₱10,615.00 transaction was an erroneous entry;
8. With respect to the Marlene Yu, Beatriz Orolfo, Ofelia Ong, and Ceguera Bakeshop accounts, their
own sworn statements and certifications will show that all their check payments were issued in the
name of CCBPI, not the petitioner. And all the amounts covered by these checks have been duly debited
from their accounts.
In conclusion, petitioner argued that the evidence showed that he did not commit the alleged
embezzlement; that CCBPI failed to prove just cause for his dismissal; and that the charges against him
were contrived and the evidence self-serving.
As for his contention that he was denied due process during the proceedings leading to his dismissal,
petitioner claimed that he was not provided ample opportunity to be heard. The April 23, 2004 written
charge against him did not specify the particular transactions and acts which formed the basis for the
accusations against him, for which reason he was unable to prepare the required written explanation.
He verbally informed Macatangay of this predicament, but instead of acceding to his lawful request, the
latter issued the April 26, 2004 memorandum which was identical to that issued on April 23. Petitioner
argued that he could not be considered to have ignored the written charge against him. Nor may it be
said that he waived his right to an investigation, as the evidence showed that he sought a rescheduling
of the May 11, 2004 hearing for valid reasons – his wife had just given birth; he had to attend to her and
their newborn child, as well as take care of their financial obligations to the hospital. CCBPI’s failure and
refusal to grant a postponement of the investigation was thus unreasonable and violative of his rights.
Petitioner added that he waited in vain for CCBPI to furnish him the proper detailed charges and
accusations against him; instead, CCBPI issued the June 14, 2004 Notice of Termination. And
immediately after receiving the said notice, he was called by ASM Peniera to his office where he was
ostensibly told that he could have access to company records in order to reconcile his accounts, but
which never materialized as thereafter he was in fact prohibited from entering the company premises
and denied access to the records.
Ruling of the Labor Arbiter
On March 28, 2005, the Labor Arbiter issued a Decision, the decretal portion of which states:
WHEREFORE, finding merit on [sic] the causes of action set forth by the complainant, judgment is hereby
rendered declaring his termination or dismissal from employment by the respondents as ILLEGAL and
thereby ORDERING x x x the following:
A. To reinstate the complainant within ten (10) days upon receipt of this Decision to his former position
without loss of seniority rights and other privileges, and to submit compliance thereto within the same
period.
B. To pay backwages, inclusive of allowances and other benefits or his [sic] monetary equivalent,
computed from the date of his respective dismissal up to the time of his actual reinstatement, whether
physically or on payroll, which as of the date of this decision amounted to ₱282,625.00 computed from
June 14, 2004 to this date of decision, at the rate of ₱29,750.00 per month.
C. To pay Attorney’s Fees corresponding to 10% of the total amount of ₱282,625.00 due to the
complainant which is equivalent to the sum of ₱28,262.50.
Other than the above, all other claims are hereby ordered DISMISSED for lack of merit. SO ORDERED.
The Labor Arbiter held that CCBPI failed to adduce in evidence the particular provision in the CCBPI
Employee’s Code of Disciplinary Rules and Regulations which forms the basis of its accusations against
petitioner. He added that the accusation that petitioner embezzled company funds totaling ₱105,653.00
was couched in general terms; the particulars thereof were not stated with sufficient clarity. Moreover,
the alleged violations were not clearly made known to petitioner, such that he could not properly refute
them. And instead of allowing a postponement of the investigation as requested by petitioner, he was
summarily dismissed.
The Labor Arbiter further held that CCBPI violated the notice and hearing requirements, in serving upon
petitioner a first notice which failed to correctly and fully inform him of the charges against him; for
unreasonably denying him an opportunity to be heard during the investigation; and for issuing a second
notice of termination that did not contain clear and sufficient reasons for his dismissal.
The Labor Arbiter however denied petitioner’s prayer for moral and exemplary damages, stating that
CCBPI and its co-respondents do not appear to be guilty of bad faith, malice or fraud, nor did they act in
a manner contrary to morals, good customs or public policy. However, petitioner was awarded
attorney’s fees, as he was compelled to litigate and thus secure the services of counsel to protect his
interest.
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC.43 Meanwhile, in May 2005, while the NLRC appeal was pending,
petitioner was reinstated pursuant to Art. 223 of the Labor Code.44 He was designated as Route
Salesman, and was assigned tasks relative to booking and delivery of CCBPI products, and collection of
accounts. In fact, he was awarded a Certificate of Achievement for exemplary sales performance.
On July 31, 2006, the NLRC issued its Decision which decreed as follows:
WHEREFORE, as modified, respondents-appellants are ordered to pay complainant-appellee Jonas
Michael R. Garza his full backwages, inclusive of allowances and other benefits or their monetary
equivalent, to be computed from the time of his illegal dismissal up to the promulgation of this Decision
in the amount of Php760,583.53, separation pay of one (1) month for his every year of service computed
from the time of his employment up to the promulgation of this Decision in the amount of
Php267,750.00 and, ten percent (10%) attorney’s fees of the total monetary award. SO ORDERED.
In affirming the Labor Arbiter’s finding of illegal dismissal, the NLRC held that CCBPI failed to adduce
sufficient evidence of petitioner’s alleged embezzlement; quite the contrary, the latter’s evidence
showed that no embezzlement took place, as all check payments he received were credited to CCBPI’s
account. With regard to cash payments, the NLRC held that CCBPI’s documentary evidence consisting of
delivery and payment receipts, other than showing the fact of delivery of products to customers and
payment made by them, do not prove embezzlement on the part of petitioner.
The NLRC likewise held that in dismissing petitioner, CCBPI failed to comply with the twin requirements
of notice and hearing. The first two memorandum-notices of April 23 and April 26, 2004 requiring an
explanation from petitioner did not indicate the particular transactions covered by the charges against
him, despite clarification sought by him. The May 6, 2004 memorandum of suspension and
investigation, on the other hand, merely reiterated the charges against petitioner, and did not state the
basis for the investigation.
Finally, the NLRC reversed the Labor Arbiter’s order of reinstatement, finding that relations between the
petitioner and CCBPI have been strained.
Petitioner and respondents filed their respective motions for reconsideration,48 which were denied in
an October 27, 2006 Resolution. Both thus went up to the CA on certiorari, with petitioner raising only
the issue of reinstatement.
In the meantime, petitioner received a January 16, 2007 Memorandum informing him that effective
January 17, 2007, petitioner may no longer report for work on account of the NLRC’s October 27, 2006
Resolution.
Ruling of the Court of Appeals
The CA consolidated the two petitions. On September 26, 2007, it issued the assailed Decision, the
dispositive portion of which reads, as follows:
WHEREFORE, premises considered, the assailed Decision dated July 31, 2006 and the Resolution dated
October 27, 2006 of the NLRC, Second Division in NLRC CA No. 044656-05 NLRC-SUB-RAB V Case No. 05-
08-00122-04 are REVERSED AND SET ASIDE. Petitioner CCBPI is hereby ORDERED to pay Jonas Michael R.
Garza the amount of ₱30,000.00 as nominal damages for non-compliance with statutory due process.
SO ORDERED.
The CA ruled that petitioner’s dismissal was proper. It paid particular attention to the Asanza account,
saying that CCBPI’s evidence showed that petitioner was guilty of non-remittance of Asanza’s ₱8,160.00
cash payment which appears to have been made on January 30, 2004 on an October 15, 2003 delivery.
The payment is evidenced by Official Receipt No. 30320351 issued by petitioner to Asanza on January
30, 2004, and a January 31, 2004 Route Header Form52 where petitioner specifically indicated that
Asanza no longer had payables to CCBPI. The CA held that from this, CCBPI was able to prove that
petitioner was guilty of non-remittance of the ₱8,160.00 collected from Asanza.
With regard to the manner in which petitioner was dismissed, the CA conceded that the procedure
observed by CCBPI was defective, but since the dismissal was for just cause, the lack of due process did
not nullify the dismissal, but merely entitled petitioner to an award of nominal damages.
Petitioner filed a Motion for Reconsideration, but in the second assailed November 16, 2007 Resolution,
the CA denied the same.
Issues
In this Petition,53 the following issues are raised:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE DECISION OF THE NATIONAL
LABOR RELATIONS COMMISSION DESPITE CLEAR AND CONVINCING EVIDENCE THAT PETITIONER WAS
ILLEGALLY DISMISSED;
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT MODIFYING THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION WITH [REGARD] TO THE ORDER OF THE HONORABLE
COMMISSION FOR PAYMENT OF SEPARATION PAY IN LIEU OF REINSTATEMENT;
THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO AWARD DAMAGES AND ATTORNEY’S
FEES TO THE PETITIONER.
Petitioner’s Arguments
Petitioner prays for the reinstatement of the Labor Arbiter’s Decision, with an additional prayer for the
award of moral and exemplary damages. He argues that he is innocent of the charges against him,
pointing to the fact that all cash and check payments were remitted to CCBPI or credited to the latter’s
account. He insists that CCBPI’s evidence consisting of the affidavit of its Territory Finance Head, Surara,
is self-serving and without basis. Petitioner directs the Court’s attention to the fact that company
policies make it impossible for him to embezzle cash and check payments made to him by CCBPI
customers, and his evidence consisting of customers’ affidavits and certifications prove that all
payments are made in the name of and for the account of CCBPI.
With regard to the Asanza account, petitioner claims that the CA erred in finding him guilty of failure to
remit the ₱8,160.00 cash payment made by Asanza, contending that Asanza herself admitted under
oath that no payment has in fact been made; that his issuance of Official Receipt No. 303203 was
conditioned on Asanza issuing a postdated check later on, which she failed to do; that Asanza’s account,
as indicated in the receipts and invoices, is precisely an RCS account, or "Regular Charge Sale", which
means that deliveries to her are on a credit – not cash – basis; that the January 31, 2004 Route Header
Form which indicated that Asanza no longer had payables to CCBPI refers to deliveries made specifically
on January 30, 2004, and did not include or refer to the October 15, 2003 transaction, which to date
remains unpaid.
Finally, petitioner contends that he should be reinstated to his former position, and awarded moral and
exemplary damages, as well as attorney’s fees.
Respondents’ Arguments
Respondents, apart from echoing the pronouncements of the CA, flatly submit that the Petition involves
purely questions of fact revolving around CCBPI customers, who confirmed in their affidavits55 that
their cash payments were not remitted by petitioner to CCBPI.
Our Ruling
The Court grants the Petition.
There is no issue on the manner by which petitioner was dismissed. Since respondents did not appeal
the unanimous findings of the Labor Arbiter, NLRC and the CA in this regard, their pronouncements on
the issue are deemed final and executory.
The only issue that needs to be resolved, therefore, is whether there is just cause for petitioner’s
dismissal. The sole basis for the CA’s ruling that petitioner was validly dismissed is that he failed to remit
a cash collection of ₱8,160.00 from one of its customers, Asanza. What seems to have escaped the
appellate court’s notice is that in order to be able to come to such a conclusion, an important issue
concerning CCBPI policies and procedures must first be tackled.
One of CCBPI’s policies requires that, on a daily basis, CCBPI Salesmen/ Account Specialists must account
for their sales/collections and obtain clearance from the company Cashier before they are allowed to
leave company premises at the end of their shift and report for work the next day. If there is a
shortage/failure to account, the concerned Salesmen/Account Specialist is not allowed to leave the
company premises until he settles the same. In addition, shortages are deducted from the employee’s
salaries. Petitioner made repeated reiterations of this company policy all throughout the proceedings,
and not once did respondents deny or dispute its existence and implementation. In fact, respondents
confirmed existence of this policy when they stated in their Position Paper,56 that "[a]s a matter of
policy, salesmen in respondent’s company are obliged to remit all cash sales and credit cash collections
to the company office on the same day that said payments are made by various customers, dealers and
outlets."
It is altogether reasonable to suppose that this policy actually exists, because undeniably, such policy
insured a fool-proof system of accountability within CCBPI, where shortages are immediately detected,
presumably through the reconciliation of daily orders and deliveries to customers with the daily
collections of CCBPI’s salesmen, and simultaneously accounted for. With such a policy, no transaction is
left unnoticed, and erring salesmen are instantaneously made to account for their shortages before they
can even leave the premises and come back to work the following day.
Within the context of said policy, it can be said that since petitioner continued to work for CCBPI until
June 2004, this should necessarily mean that he was clear of daily cash and check accountabilities,
including those transactions covered by the charges against him. If not, the company cashier would not
have issued the required clearance and petitioner would have been required to settle these shortages as
soon as they were incurred. Indeed, he would not have been allowed to leave company premises until
they were settled in accordance with company policy. And he would not have been allowed to report for
work the following day.
"Where facts are in evidence affording legitimate inferences going to establish the ultimate fact that the
evidence is designed to prove, and the party to be affected by the proof, with an opportunity to do so,
fails to deny or explain them, they may well be taken as admitted with all the effect of the inferences
afforded."58 If CCBPI expects to proceed with its case against petitioner, it should have negated this
policy, for its existence and application are inextricably tied to CCBPI’s accusations against petitioner. In
the first place, as petitioner’s employer, upon it lay the burden of proving by convincing evidence that
he was dismissed for cause.59 If petitioner continued to work until June 2004, this meant that he
committed no infraction, going by this company policy; it could also mean that any infraction or
shortage/non-remittance incurred by petitioner has been duly settled. Respondents’ decision to ignore
this issue generates the belief that petitioner is telling the truth, and that the alleged infractions are
fabricated, or have been forgiven. Coupled with Macatangay’s statement – which remains equally
unrefuted – that the charges against petitioner are a scheme by local CCBPI management to cover up
problems in the Naga City Plant, the conclusion is indeed telling that petitioner is being wrongfully made
to account.
The irregularity attributed to petitioner with regard to the Asanza account should fail as well. To be sure,
Asanza herself confirmed that she did not make any payment in cash or check of ₱8,160.00 covering the
October 15, 2003 delivery for which petitioner is being held to account. This being the case, petitioner
could not be charged with embezzlement/failure to remit for the simple reason that as regards such
October 15, 2003 delivery, there was nothing to embezzle or remit because no payment thereon has as
yet been made by the customer Asanza. It may appear from Official Receipt No. 303203 issued to
Asanza that the October 15 delivery of products to her has been paid; but as admitted by her, she has
not paid for the said delivered products. The reason for petitioner’s issuance of said official receipt to
Asanza is the latter’s concurrent promise that she would immediately issue the check covering the said
amount, which she nevertheless failed to do.
Although petitioner may be faulted for this act – issuing an official receipt without receiving the
corresponding payment – he could not be accused of embezzlement or failure to remit as defined and
punished under CCBPI’s November 18, 2002 Inter-Office Memorandum, because he received no cash or
check from Asanza. Without receiving anything from her, there was nothing for petitioner to embezzle
or remit, and thus CCBPI had no basis to charge him for violation of the November 18, 2002 Inter-Office
Memorandum which punished embezzlement and failure/delay in remitting collections.
The Court likewise finds convincing petitioner’s arguments that it was impossible for him to
embezzle/not remit the other customers’ cash and check payments, not only because of the existence of
the abovementioned policy, but likewise due to the sworn avowals of these customers that all their
check payments have been issued in CCBPI’s name and have been duly debited from their accounts.
Certainly, petitioner could not have encashed check payments because they were issued in the name of
CCBPI; for the same reason, he could not have engaged in kiting operations. Quite certainly, he would
have easily been found out.
Regarding the claim that petitioner delayed the remittance of check payments covering PUO accounts,
the Court finds petitioner’s explanation to be satisfactory. Suffice it to state that in selling its products,
CCBPI, like other manufacturers, operates through independent dealer-businessmen, whose delivery
schedules are beyond CCBPI’s control. Thus, if a CCBPI salesman places a customer’s order with the
independent dealer, this does not mean that the latter would immediately deliver the product; it could
do so later. Meanwhile, the customer would write and date his/her check to coincide with the date of
the order, expecting that delivery would be made the very same day. But actual delivery could be made
days later; naturally, the customer would release the check – which is dated days earlier – to the CCBPI
salesmen (including petitioner) only after the delivery is completed. As correctly argued by petitioner,
this constitutes a cogent explanation for his apparent late remittance of PUO or "date of order=date of
check" checks.
In a bid to further pin down petitioner, respondents rely heavily on CCBPI customers’ affidavits60 which
state that their cash payments were not remitted by petitioner to CCBPI. How these customers came to
the knowledge and conclusion that petitioner did not remit their cash payments to CCBPI is beyond the
Court. If there should be actual knowledge of petitioner’s embezzlement, it could only come from
respondents; it is not for the CCBPI customers to prove, for the benefit of respondents, that petitioner
embezzled their cash payments. They have gained no knowledge superior to that of respondents
regarding this fact, and offhand are not adequately equipped with the means to come to such a
conclusion. Thus, for respondents to even present their sworn statements to such effect is truly beyond
comprehension.
As earlier stated, the burden is on the employer to prove that the termination was for valid
cause.1âwphi1 Unsubstantiated accusations or baseless conclusions of the employer are insufficient
legal justifications to dismiss an employee. "The unflinching rule in illegal dismissal cases is that the
employer bears the burden of proof."61
It may also be said that CCBPI’s subsequent award of a Certificate of Achievement to petitioner for his
exemplary sales performance, while the NLRC appeal was pending, constitutes recognition of
petitioner’s abilities and accomplishments in CCBPI. It indicates that he is a responsible, trustworthy and
hardworking employee of CCBPI. It constitutes adequate proof weighing in his favor.
Having thus seen that petitioner is innocent of the charges leveled against him, the Court must order his
reinstatement. As a matter of course, the NLRC and CA pronouncements inconsistent with this
declaration are necessarily rendered null and void. However, no moral and exemplary damages are
forthcoming. Petitioner’s failure to appeal the Labor Arbiter’s ruling denying his claims for these
damages rendered such pronouncement final and executory; he may no longer obtain a modification or
reversal of the Decision on the issue. A party who did not appeal from the decision cannot seek any
relief other than what is provided in the judgment appealed from.62
Finally, consistent with the Court’s pronouncement in Nacar v. Gallery Frames,63 the awards herein are
subject to interest at the rate of six percent (6%) per annum, to be computed from the finality of the
Decision in this case until the total award is fully paid.
WHEREFORE, the Petition is GRANTED. The September 26, 2007 Decision and November 16, 2007
Resolution of the Court of Appeals in CA-G.R. SP Nos. 97915 and 97916 are ANNULLED and SET ASIDE.
The July 31, 2006 Decision of the National Labor Relations Commission is REINSTATED, with the
modification that petitioner Jonas Michael R. Garza is ORDERED reinstated to his former position as
Account Specialist or its equivalent, without loss of seniority, rank, emolument and privileges, and with
full backwages from the date of his illegal dismissal up to his actual reinstatement.
In addition, the awards in petitioner’s favor shall earn interest at the rate of six percent (6%) per annum
on outstanding balance from finality of this Decision until full payment thereof.
The computation division of the NLRC-SUB-RAB-Branch No. V is hereby ORDERED to immediately update
and compute the awards as herein granted, excluding therefrom the period during which petitioner was
actually reinstated and compensated, after which respondent Coca-Cola Bottlers Philippines, Inc. is
ORDERED to immediately pay the petitioner Jonas Michael R. Garza these amounts SO ORDERED.
 G.R. No. 108878
OLIVIA SEVILLA, Petitioner, -versus- NATIONAL LABOR RELATIONS COMMISSION (NLRC),
Respondents.
This is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to nullify the Resolution dated
October 30, 1992 of the National Labor Relations Commission (NLRC) in NLRC Case No. L-000658,
which affirmed the Order of the Labor Arbiter in NLRC Case No.
RAB-III-12-0721-88 denying petitioner’s motion for her
reinstatement and the payment of her back wages. chanroblespublishingcompany
I
Petitioner was employed as general manager/accountant of private
respondent, a nonstock, nonprofit cooperative. When she was
separated from work, she filed a complaint for illegal dismissal with
the NLRC, Regional Arbitration Branch III at San Fernando,
Pampanga (Case No. RAB-III-12-0721-88). A decision was rendered
by Labor Arbiter Oswald Lorenzo ruling that the dismissal of
petitioner was illegal and ordering her reinstatement with full back
salaries and other benefits. chanroblespublishingcompany
Private respondent appealed the decision of the Labor Arbiter to the
NLRC (NLRC Case No. L-000658). During the pendency of the
appeal, two events having bearing on the Labor Arbiter’s decision,
occurred. The first event was the issuance by the Labor Arbiter of an
order for the immediate reinstatement of petitioner, which was
implemented on September 18, 1989. The second event was the
holding by the members of private respondent of their annual general
meeting on January 31, 1990, and the reorganizational meeting of the
Board of Directors of private respondent on February 5, 1990. At that
reorganizational meeting, the Board of Directors resolved to declare
the term of office of petitioner as general manager/accountant
terminated and to select her successor. chanroblespublishingcompany
On March 13, 1990, the NLRC (Third Division), oblivious of the
second dismissal of petitioner, affirmed the decision of Labor Arbiter
Lorenzo, except for the award of exemplary damages which was
deleted. Its motion for reconsideration having been denied, private
respondent filed a petition for certiorari before us to set aside the
NLRC resolution (G.R. No. 96341). When asked to comment,
petitioner informed us of her second dismissal. In our Resolution
dated July 8, 1991, we dismissed the petition for private respondent.
On July 3, 1991, petitioner filed her first motion for the issuance of a
writ of execution to implement the decision of Labor Arbiter Lorenzo.
On February 16, 1992, petitioner filed a second motion for the
issuance of the same writ. As no action was taken on the two motions,
petitioner filed a third motion for issuance of the writ of execution.
On July 18, 1992, Labor Arbiter Ariel C. Santos issued an order,
dismissing petitioner’s third motion for reinstatement “for lack of
merit.” chanroblespublishingcompany
From the Labor Arbiter, petitioner went directly to us by filing a
petition for certiorari (G.R. No. 109516). On July 22, 1992, we
resolved “to DENY the petition for certiorari for being premature. The
petition should have been filed in the National Labor Relations
Commission.” We also denied petitioner’s motion for reconsideration.
Meanwhile, on July 3, 1992, petitioner filed an appeal with the NLRC,
seeking the reversal of the order dated June 18, 1992 of Labor Arbiter
Santos in NLRC Case No. RAB-III-12-0721-88. The appeal was
docketed as CA L-000658. chanroblespublishingcompany
On October 30, 1992, the NLRC rendered a decision sustaining the
order appealed from, holding: chanroblespublishingcompany
“Complainant’s second dismissal may be treated in a separate
action. While it would appear that her dismissal after
reinstatement was questionable and which may be the subject
of contempt, this should have been raised by complainant when
respondent’s Motion for Reconsideration of the Labor Arbiter’s
Decision was pending before the Commission. Complainant was
terminated for the second time on February 5, 1990. Yet, during
the pendency of respondent’s Motion for Reconsideration and
which was resolved in November 1990, complainant failed to
raised this fact and remained silent on the matter. Hence, we
cannot presume that the second dismissal is a continuation of
the first or is an attempt to circumvent the Resolution of the
Commission or RA 6715” (Rollo, pp. 63-64). chanroblespublishingcompany
Failing to secure a reconsideration of the decision of the NLRC,
petitioner filed the instant petition. chanroblespublishingcompany
II
We dismiss the petition.
In her petition for certiorari, petitioner asserts that the NLRC: (1)
violated Section 12 of R.A. No. 6715; (2) violated the Resolution of the
Supreme Court, which dismissed the petition for certiorari filed by
the private respondent; (3) failed to resolve the issue of her claim for
back salaries from petitioner’s second dismissal; and (4) dismissed
petitioner’s appeal on mere technicality.
Petitioner’s contentions are without merit.
It is undisputed that petitioner was actually reinstated to her former
position in compliance with the Labor Arbiter’s order. It is therefore
clear that her second dismissal was separate and distinct from the
first. chanroblespublishingcompany
The NLRC cannot be said to have disregarded, much less violated, our
Resolution in G.R. No. 96341 when it denied petitioner’s motions for
the issuance of a writ of execution. The said Resolution referred to the
decision of the NLRC on the first dismissal. chanroblespublishingcompany
Labor Arbiter Santos was correct in denying the third motion for
reinstatement filed by petitioner because what she should have filed
was a new complaint based on the second dismissal. The second
dismissal gave rise to a new cause of action. Inasmuch as no new
complaint was filed, the Labor Arbiter could not have ruled on the
legality of the second dismissal. chanroblespublishingcompany
WHEREFORE, the petition for certiorari is DISMISSED for
failure to show grave abuse of discretion of the part of public
respondent.
SO ORDERED.
Cruz, Davide, Jr., Bellosillo and Kapunan, JJ., concur. Chanroblespublishingcompany

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SECOND DIVISION

G.R. No. Nos. 110452-54 November 24, 1994

KINGSIZE MANUFACTURING CORP., and CHARLIE CO, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION, ANACORITA VALDE, CELSA DIZON, TERESITA ORIBIANA, ET AL., Respondents.

Delos Reyes, Bonifacio, Delos Reyes for petitioners.chanrobles virtual law library

Venida & Associates SOCDEM for private respondents.

MENDOZA, J.:

This is a petition for certiorari to annul the decision and two resolutions of the National Labor Relations
Commission (First Division) in NLRC NCR Case Nos. 00-09-03984-88, 06-11-04716-88, and 00-09-04030-
88, reversing the Labor Arbiter's decision and ordering petitioners to reinstate private respondents and
pay them backwages equivalent to their salaries for three years.chanroblesvirtualawlibrarychanrobles
virtual law library

The facts are as follows:chanrobles virtual law library

Petitioner is a garment factory. Private respondents were its employees. Most of private respondents
were hired as early as 1978, the rest in 1987, as sewers on piece work basis, with the exception of
respondent Juancho Bognot who was an assistant cutter and later
supervisor.chanroblesvirtualawlibrarychanrobles virtual law library

At various times between June 1987 and January 1988, private respondents were dismissed by
petitioners for abandonment of work allegedly because private respondents had not reported for work.
When private respondents presented themselves, they were prevented from entering the work place by
petitioners' agent, Charlie Co.chanroblesvirtualawlibrarychanrobles virtual law library

Within a few days of their dismissal, private respondents were able to secure employment at another
garment factory, the First General Marketing Corporation (FGMC). Two of the respondents, Anacorita
Valde and Celsa Dizon, were in fact employed at the FGMC on the same day they were dismissed by
petitioners.chanroblesvirtualawlibrary chanrobles virtual law library

On September 21 and 26, 1988 and November 17, 1988, private respondents filed complaints against
petitioners for illegal dismissal, underpayment of minimum wage, Emergency Cost of Living Allowance
(ECOLA) and overtime pay, and for non-payment of legal holiday pay and service incentive leave pay, as
well as 13th Month pay and attorney's fees. Their complaints were filed with the Department of Labor
where they were later consolidated.chanroblesvirtualawlibrarychanrobles virtual law library

Petitioners submitted a paper in which they denied the charges against them and claimed that
respondents had abandoned their jobs by "not reporting for work for quite sometime." With respect to
respondent Juancho Bognot, it was alleged that he had been dismissed for "irresponsibility on the job
during the latter part of his employment" and for absenting himself from work without leave from
petitioners. 1chanrobles virtual law library

The Labor Arbiter 2 found that, with the exception of respondent Juancho Bognot, the complainants had
quit their jobs in order to work for the FGMC. Hence, in his decision rendered on May 31, 1989, the
Labor Arbiter dismissed their claim for reinstatement. With respect to Juancho Bognot, the Labor Arbiter
found that he had been illegally dismissed and so ordered him paid backwages for six
months.chanroblesvirtualawlibrarychanrobles virtual law library

On the other hand, the Labor Arbiter granted the claims of Teresita Oribiana, Petra Calim, and Yolanda
Parungo for Emergency Cost of Living Allowance (ECOLA), legal holiday pay, 13th month pay and service
incentive leave with pay and the claims of Teresita Olajo and Agnes Enano for COLA, legal holiday pay
and 13th month pay. No service incentive leave with pay was granted to Enano and Olajo for the reason
that they had less than one year of service in the factory.chanroblesvirtualawlibrarychanrobles virtual
law library

The dispositive portion of the Labor Arbiter's decision reads:

ACCORDINGLY, respondents Kingsize Mfg. Corporation and/or Charlie Co are hereby ordered to
reinstate within ten (10) days from receipt hereof, herein complainant Juancho Bognot to his former or
any substantially equivalent position without loss of seniority right and privileges with six (6) months
backwages including his money award herein in the amounts of One Thousand Nine Hundred One Pesos
(P1,901.00) in the concept of differentials in emergency cost of living allowance; One Thousand Two
Hundred Twenty-Nine and Twenty-Five Centavos (P1,229.25), as salary differentials; Ninety-Seven (sic)
Pesos and Seventy-Seven Centavos (P99.77) and Fourty-Two Pesos (P42.00), as differentials in 13th
month pay and legal holiday pay, respectively.chanroblesvirtualawlibrarychanrobles virtual law library

Further, the same respondents are also ordered within the same period to pay complainants Parungo,
Calim, Enano, Olajo, and Oribiano, their respective underpayment of emergency cost of living allowance
in the amount of 7.00 daily, legal holiday pay, 13th month pay differentials, and service incentive leave
with pay except Enano and Olajo who had rendered less than one year service with respondents, to be
based on their respective length of service.chanroblesvirtualawlibrarychanrobles virtual law library

For this purpose, the Office of the Information and Research Unit of this Region is hereby directed to
make the remaining computation in accordance with the discussion herein within a reasonable period of
time after the finality of this decision.chanroblesvirtualawlibrarychanrobles virtual law library

All other claims are hereby denied for lack of merit.chanroblesvirtualawlibrarychanrobles virtual law
library

SO ORDERED. 3chanrobles virtual law library

On June 30, 1989, five of the complainants, Anacorita Valde, Judy Dreu, Lydia Llobit, Marlene Bognot,
and Celsa Dizon, appealed the Labor Arbiter's decision finding them guilty of abandoning their jobs.
These complainants, who were granted no monetary awards, prayed that they be granted separation
pay. The other complainants, Teresita Oribiana, Teresita Olajo, Agnes Enano, Petra Calim and Yolanda
Parungo, whose money claims had been granted, did not appeal, although as will presently be
discussed, a claim is now made in their behalf that they should be deemed to have appealed insofar as
they were found to have abandoned their jobs.chanroblesvirtualawlibrarychanrobles virtual law library

On the other hand, petitioners appealed with respect to the Labor Arbiter's decision ordering them to
reinstate Juancho Bognot and pay backwages to him.chanroblesvirtualawlibrarychanrobles virtual law
library

On October 30, 1992 the NLRC rendered a decision, reversing the Labor Arbiter and finding petitioners
guilty of illegally dismissing the "herein complainants," meaning all the herein respondents. The NLRC
ordered the reinstatement of these employees to their former positions without loss of seniority rights
but without backwages. The decision with respect to Juancho Bognot was affirmed. The dispositive
portion of the decision reads:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED insofar as the Order
dismissing the complaint for dismissal is concerned. Respondents are ordered to REINSTATE the herein
complainants to their former position[s] without loss of seniority rights. Except for complainant Juancho
Bognot to whom the award of backwages and other monetary benefits is being AFFIRMED,
reinstatement of the rest of complainants shall be without backwages. Respondents' appeal, on the
other hand, is hereby DISMISSED for lack of merit.chanroblesvirtualawlibrarychanrobles virtual law
library

SO ORDERED.

On November 27, 1992, the five complainants, namely, Anacorita Valde, Judy Dreu, Lydia Llobit,
Marlene Bognot, and Celsa Dizon, moved for a reconsideration of the decision insofar as their
reinstatement was ordered to be without backpay.chanroblesvirtualawlibrarychanrobles virtual law
library
In its resolution of February 17, 1993, the NLRC granted their motion and ordered them paid backwages
equal to three years of their salaries at the time of their dismissal. In other respects, the decision of
October 30, 1992 was affirmed.chanroblesvirtualawlibrarychanrobles virtual law library

Petitioners filed a "Motion for Leave to Reconsider Resolution dated February 17, 1993" in which they
sought to set aside the order to reinstate the complainants, but their motion was denied by the NLRC in
its resolution dated April 22, 1993. 4 Hence, this petition.chanroblesvirtualawlibrarychanrobles virtual
law library

Petitioners allege that the NLRC gravely abused its discretion in:chanrobles virtual law library

1. Holding that abandonment of employment can only be proved by a written notice to the
employees to return to work with warning of dismissal in case of his failure to report for
work.chanroblesvirtualawlibrary chanrobles virtual law library

2. In giving credence to the claim of private respondents that they could not have abandoned their
jobs because they were receiving more benefits from petitioners than from their new
employer.chanroblesvirtualawlibrarychanrobles virtual law library

3. In disregarding the fact that respondents did not file a complaint immediately upon their
dismissal because they did not allegedly know their rights.chanroblesvirtualawlibrarychanrobles virtual
law library

4. In ordering the reinstatement of all the respondents despite the fact that in their bill of
particulars, position paper and notice of partial appeal, the respondents merely asked for separation pay
and only five of them appealed from the decision of the Labor Arbiter, finding them guilty of
abandonment.chanroblesvirtualawlibrarychanrobles virtual law library

The first question here is whether the NLRC gravely abused its discretion in finding that petitioners were
guilty of illegal dismissal of their employees. Findings of facts of the NLRC are entitled to great respect
and will not be disturbed in the absence of any showing that they are not supported by substantial
evidence. 5chanrobles virtual law library

Petitioners' defense below was that private respondents had abandoned their jobs. Petitioners thus had
the burden of proving "a clear and deliberate intent" on the part of the private respondents to
discontinue employment without any intention of returning. 6 They had to prove a deliberate and
unjustified refusal on the part of the employee to resume his employment and such refusal must be
clearly shown. Mere absence is not sufficient. It must be accompanied by overt acts unerringly pointing
to the fact that the employee simply does not want to work anymore. 7chanrobles virtual law library

Petitioners contend that complainants abandoned their jobs as shown by the fact that shortly after they
had been dismissed by petitioners they were able to find employment at the FGMC. Indeed the
following appears:

1. Anacorita Valde, who was dismissed on June 15, 1987, was employed by First General Marketing
Corporation on the same day, June 15, 1987.chanroblesvirtualawlibrarychanrobles virtual law library

2. Celsa Dizon, who was dismissed on June 15, 1987, was also employed at First General Marketing
Corporation on June 15, 1987, on the same day.chanroblesvirtualawlibrarychanrobles virtual law library

3. Yolanda Parungo, who was dismissed on January 6, 1988, started work at First General
Marketing Corporation on January 7, 1988.chanroblesvirtualawlibrarychanrobles virtual law library

4. Petra Calim, who was dismissed on January 7, 1988, was employed at First General Marketing
Corporation on January 8, 1988.chanroblesvirtualawlibrarychanrobles virtual law library

5. Agnes Enano, who was dismissed on December 14, 1987, was employed by First General
Marketing Corporation on January 7, 1988.chanroblesvirtualawlibrarychanrobles virtual law library
6. Erlinda Aguirre, who was dismissed on December 14, 1987, was employed by First General
Marketing Corporation on December 17, 1987.chanroblesvirtualawlibrarychanrobles virtual law library

7. Teresita Oribiana, who was dismissed on December 14, 1987, was hired by First General
Marketing Corporation on December 28, 1987.chanroblesvirtualawlibrarychanrobles virtual law library

8. Marlene Bognot, who was allegedly dismissed on December 15, 1987, started work at First
General Marketing Corporation on December 22, 1987.chanroblesvirtualawlibrarychanrobles virtual law
library

9. Judy Dreu, who was also allegedly dismissed on December 15, 1987, was employed by First
General Marketing Corporation on December 28, 1987.chanroblesvirtualawlibrarychanrobles virtual law
library

10. Lydia Llobit, who was dismissed on December 15, 1987, was employed by First General
Marketing Corporation on December 27, 1987. 8chanrobles virtual law library

We do not think, however, that this circumstance alone is proof of a "clear and deliberate intent" on the
part of the private respondents not to continue work with petitioners. As the NLRC held, this was due to
the fact that in the work place the demand for experienced, high-speed sewers was quite great. On the
other hand, the countervailing evidence found by the NLRC tend to negate any inference of
abandonment. These are: (1) the unrebutted allegation that petitioners' representative, Edward Co,
barred private respondents from entering the premises of the company when they reported for work;
(2) the equally uncontested claim of private respondents that they were earning more from petitioners'
factory and (3) the fact that private respondents had already attained security of tenure in petitioners'
company compared to their probationary status at the FGMC.chanroblesvirtualawlibrarychanrobles
virtual law library

Indeed, it is noteworthy that aside from these circumstances negating petitioners' allegation, private
respondents' employment at the FGMC took place after, not before, their dismissal by petitioners. It
would have been a different matter if it was shown that, at the time of their dismissals, private
respondents had been employed at the FGMC.chanroblesvirtualawlibrarychanrobles virtual law library

That it took private respondents nine months before filing their complaints for illegal dismissal could be
due in part to the fact that, having found ready employment, they did not feel the urgent need to file
their complaints earlier and partly to the fact that, as found by the NLRC, private respondents only
became aware of their rights under the law after they were employed at the FGMC where there is a
union.chanroblesvirtualawlibrarychanrobles virtual law library

In addition, petitioners' failure to give notice with warning to the private respondents before their
services were terminated puts in grave doubt petitioners' claim that the dismissal was for a just cause.
Sec. 2, Rule XIV of the Rules Implementing the Labor Code provides:

Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts
or omission constituting the grounds for dismissal. In case of abandonment of work, the notice shall be
served at the worker's last known address.

The notice required, as elaborated upon in our decision in Pepsi-Cola Bottling Co., v. NLRC, 9 actually
consists of two parts to be separately served on the employee, to wit: (1) notice to apprise the
employee of the particular acts or omissions for which his dismissal is sought; and (2) subsequent notice
to inform him of the employer's decision to dismiss him.chanroblesvirtualawlibrarychanrobles virtual
law library

This requirement is not a mere technicality but a requirement of due process to which every employee
is entitled to insure that the employer's prerogative to dismiss or lay-off is not abused or exercised in an
arbitrary manner. 10 This rule is clear and unequivocal and in applying it to this case the NLRC, far from
acting in excess of its jurisdiction, acted according to law.chanroblesvirtualawlibrarychanrobles virtual
law library

Having determined that private respondents were illegally dismissed, the next question is whether the
NLRC gravely abused its discretion in ordering their reinstatement considering that, in appealing the
Labor Arbiter's decision, they only asked for separation pay. In general, the remedy for illegal dismissal is
the reinstatement of the employee to his former position without loss of seniority rights and the
payment to him of backwages. 11But there may be instances where reinstatement is not a viable
remedy as where in the meantime the business of the employer has closed 12 or where the relations
between the employer and employee have been so severely strained that it is not advisable to order
reinstatement, 13 or where the employee decides not to be reinstated. 14 In such events the employer
will instead be ordered to pay separation pay.chanroblesvirtualawlibrarychanrobles virtual law library

Considering the fact that private respondents, in appealing the decision of the Labor Arbiter, reduced
their original demand for reinstatement to a prayer for separation pay, there is merit in petitioners'
contention that the NLRC exceeded its jurisdiction in ordering their reinstatement. The Solicitor General
agrees with this contention. Indeed, it could be that after staying in the new jobs these complainants
had had a change of mind about reinstatement.chanroblesvirtualawlibrarychanrobles virtual law library

Moreover, as the Solicitor General points out, the NLRC should have limited its decision to five of the
complainants since they were the only ones who had appealed from the decision of the Labor Arbiter.
These complainants were Marlene Bognot, Lydia Llobit, Anacorita Valde, Celsa Dizon and Judy
Dreu.chanroblesvirtualawlibrarychanrobles virtual law library

As to the other six (6) respondents who did not appeal, namely Teresita Oribiana, Teresita Olajo, Agnes
Enano, Petra Calim, Yolanda Parungo and Erlinda Aguirre, the Labor Arbiter's decision became final and
executory 15 upon the expiration of the reglementary period of 10 days as prescribed in Art. 223 of the
Labor Code. The NLRC acted in excess of its jurisdiction in including these complainants in its
decision.chanroblesvirtualawlibrarychanrobles virtual law library

The case of Juancho Bognot should be considered separately. The Labor Arbiter found that he had been
illegally dismissed and ordered him to be reinstated with backwages. The order of reinstatement is
affirmed because this respondent was not one of those who appealed to the NLRC and asked for
separation pay.chanroblesvirtualawlibrarychanrobles virtual law library

WHEREFORE, the decision of the NLRC is AFFIRMED, with the modification that instead of ordering
petitioners to reinstate respondents Anacorita Valde, Judy Dreu, Lydia Llobit, Marlene Bognot, and Celsa
Dizon, they should only be granted separation pay at the rate of one month for every year of
service.chanroblesvirtualawlibrarychanrobles virtual law library

SO ORDERED.

JOSE T. CAPILI
v.
NLRC and UNIVERSITY OF MINDANAOG.R. No. 120802, 17 June 1997
RETIREMENT
P AY
FACTS:
Capili was an instructor at UM, a private educational institution. In 1993, the school informed Capilithat
he would be eligible for retirement when he would reach the age of 60 years. Capili answeredthat he
was not opting to retire but would continue to serve until he reaches the age of 65.When the school
reiterated its position that it could retire him, Capili filed a complaint questioninghis forced retirement.
UM invoked Article 287 of the Labor Code which provides that any employeemay be retired upon
reaching the retirement age established in the collective bargaining agreementor other applicable
employment contract. It contended that it has a retirement plan, known as theUniversity of Mindanao &
Associated Enterprises Retirement Plan. Capili contended that he was nota member of said retirement
plan, therefore it is not applicable to him.Later, after receiving the Labor Arbiter’s decision but before
filing his appeal, Capili received partialpayment of his retirement pay. During the pendency of his
apppeal with the NLRC, he received fullpayment of his retirement benefits.
ISSUE:
1.Whether or not an employee can be compelled to retire at the age of sixty years.2.Whether or not the
subsequent acceptance of retirement benefits estops an employee frompursuing his complaint
questioning the validity of his forced retirement.
RULING:
1.No, an employee cannot be compelled to retire at the age of sixty years in the absence of aprovision
on retirement in the CBA or if the employer has no retirement plan.Under the Labor Code, as amended
by R. A. No. 7641, the option of the employer to retire anemployee at age 60 no longer exists. Under the
present rule, the option to retire upon reachingthe age of 60 years or more but not beyond 65 is the
exclusive prerogative of the employee if thereis no provision on retirement in the CBA or any agreement
or if the employer has no retirementplan.In this case, UM failed to show that Capili was a member of the
school’s retirement plan. TheCourt finds that it is not applicable to all employees of UM and its
associated enterprises. Itapplies only to those who opted to become members thereof.
2.Yes, the acceptance of retirement benefits will estop the employee from pursuing his case.
Byaccepting the retirement benefits, the employee is deemed to have opted to retire under the present
rule stated above. This could only mean that he has already acceded to his retirement effective on such
date-when he reached the age of 60 years.

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SECOND DIVISION

G.R. No. 139847 March 5, 2004

PROCTER AND GAMBLE PHILIPPINES, petitioner,

vs.
EDGARDO BONDESTO, respondent.

DECISION

TINGA, J.:

For review on certiorari is the Decision1 dated June 16, 1999 of the Court of Appeals, affirming in toto
the decision of the National Labor Relations Commission (NLRC), which in turn ordered the
reinstatement of respondent Edgardo C. Bondesto and the payment of backwages for one (1) year only.

The facts are simple.

On July 18, 1975, respondent Edgardo Bondesto started work in the employ of petitioner Procter and
Gamble Philippines, Inc. Nineteen (19) years later, the events which preceded the respondent’s
dismissal from work unfolded. At that time, he was working as production technician at the company’s
Tondo Plant in Tondo, Manila.

On June 13, 1994, the respondent received a letter2 dated June 3, 1994, asking him to explain why his
absences consisting of 35 days3 should not be classified as "unauthorized absence." Unauthorized
absence, as a company policy, is a ground for termination of employment.4
The respondent presented his explanation in two (2) separate letters5, both dated June 16, 1994.
However, on June 22, 1994, he received another letter, this time informing him that his employment in
the company was to be terminated effective June 23, 1994 on the ground of "unauthorized absences."
The letter states, thus:

June 22, 1994

Mr. Edgardo Bondesto

PR # 751003

We received your replies to our letter dated June 3, 1994 asking you to reply in writing why your
absence of 35 days should not be classified as Unauthorized Absence. When you presented your letters
and reported for work last June 16, 1994, you incurred another eight (8) work days of absences (June 06
to June 15, 1994). You now have a total of 43 work days of absences.

Last June 16 and June 20, 1994, you and I discussed your replies and your 43 days of absences. You were
not able to justify your absences.

After a thorough study of your case, you have indeed violated a Company Policy governing Unauthorized
Absences, read (sic) as follows:

"As a general rule, employees with six (6) continuous work days or a total of ten (10) work days of
unauthorized absences within a calendar year may be subject to termination."

You have incurred more than ten (10) work days of unauthorized absences.

We hereby inform you, therefore, that your employment with the Company is being terminated
effective close-of-business Thursday, June 23, 1994.6

Claiming that his dismissal was without just cause, the respondent, represented by the United
Employees Union of Procter and Gamble Phils., Inc., filed a complaint for illegal dismissal before the
National Labor Relations Commission (NLRC). The respondent contended that his absences were
justified.

Sometime in November 1993, the respondent alleged, the petitioner directed him to go to Mindanao for
field assignment. Except for the plane fare which the petitioner paid prior to his departure, the
respondent advanced all the other work-related expenses incurred during the assignment. One of the
petitioner’s Staff District Managers issued a check in the amount of Ten Thousand Pesos (₱10,000.00)
supposedly to cover respondent’s traveling expenses, but it bounced after he presented it to the bank.

On January 31, 1994, the respondent was re-assigned in Manila. He immediately worked on the
reimbursement of his advances. But as the reimbursements were not immediately released, he was
constrained to go to the petitioner’s General Office located in Makati to follow-up the reimbursement.

Meanwhile, the children of the respondent became sick. He spent time attending to them. And as he
needed money, he also went to the company’s Makati office to follow-up the reimbursement process.
The delay in the release of his reimbursement even forced him to apply for wage advances under the
collective bargaining agreement between the company and the union.

On April 6, 1994, or after more than two months, the petitioner finally released the respondent’s
reimbursements.

One week later, or on April 13, 1994, the respondent received a letter asking him to explain his
"excessive absences"7, which according to him, included the days he worked on his reimbursements.
The respondent demurred. He claimed that the seventeen (17) days should be considered as
compensable working time since he was then at the Makati office working on the reimbursement of his
money.
On May 2, 1994, the respondent himself got sick. He went to the company clinic the following day to
secure a working permit. The company doctor however refused to give him one and even required him
to see the doctor who operated on his "Colonic Cancer" way back in 1986. The respondent failed to
locate the doctor. Thus, he was given an indefinite sick leave instead of a working permit.

The petitioner denied the respondent’s assertions. It alleged that from February 4, 1994 to March 11,
1994, the respondent, without prior notice, failed to report for work. When asked to explain his
numerous absences,8 the respondent contended that he was at the petitioner’s General Office, working
on the reimbursement of his expenses incurred during his provincial assignments.

Unconvinced, the petitioner reconsidered only seven (7) days9 of the respondent’s absences and asked
the latter to explain the remaining absences for seventeen (17) working days.10 Since the respondent,
according to the petitioner, could not satisfactorily explain his absences, it sent him a letter11 requiring
him to explain in writing, within five days, why appropriate disciplinary measures should not be taken
against him in view of his "excessive absences." According to the petitioner, the respondent did not
respond to the letter.

On May 2, 1994, the respondent did not report for work due to exhaustion. Following a standard office
procedure, he went to the petitioner’s clinic the next day to get a "return to work" permit. However, the
clinic deferred issuance of the permit until after he shall have undergone a check-up and submitted a
medical certificate from his attending physician. Consequently, the respondent’s manager did not allow
the respondent to work.

On May 4, 1994, the respondent again went to the clinic and requested that he be allowed to work until
he could have an appointment with his doctor. His request was denied. According to the petitioner,
from that time on the respondent had been absent. He reported back to work only on June 16, 1994,
after receiving the petitioner’s letter dated June 3, 1994.

On February 10, 1997, the labor arbiter rendered a Decision12 finding the respondent’s termination as
one for cause and accordingly dismissing the complaint. Considering, however, the respondent’s length
of service to the company, the arbiter awarded separation pay at the rate equivalent to one-half (1/2)
month’s salary for every year of service.

The respondent appealed to the NLRC which, on April 23, 1998, reversed the labor arbiter’s decision and
found the respondent’s dismissal illegal.13 Finding the respondent’s absences to be justified, the NLRC
ruled that his absences from work were actually spent in following-up reimbursement of the expenses
he incurred during the provincial assignment. The absences could have been caused by the petitioner’s
delay in processing the reimbursement, the NLRC pointed out. It also took into consideration the fact
that the children of the respondent were in and out of the hospital during the months of February and
March of 1994.

With respect, however, to the absences incurred during the months of May and June, the NLRC ruled
that the respondent failed to show that he exerted any effort in trying to locate his physician.
Nevertheless, the NLRC considered the penalty of termination too harsh, and ordered the reinstatement
of the respondent with limited back wages equivalent to one (1) year.

The petitioner moved for the reconsideration of the NLRC Decision, but its motion was denied in a
Resolution14 dated July 29, 1998. Undaunted, the petitioner elevated the case to the Court of Appeals
on a petition for certiorari,15 arguing that (1) the respondent’s dismissal is justified because he
deliberately disregarded the company rules and regulations on leaves and absences; (2) the
respondent’s absences were not only unauthorized but also unjustified, and; (3) the reinstatement of
the respondent is no longer feasible in view of the strained relations between the parties.

In the meantime, the respondent filed a Motion for Execution16 of the NLRC Decision. On January 18,
1999, the labor arbiter issued a Writ of Execution directing the petitioner to reinstate the respondent to
his former position, without loss of seniority rights and other employee benefits. In compliance with the
writ, the petitioner reinstated the respondent in its payroll, effective February 25, 1999.
On June 16, 1999, the appellate court rendered a Decision17 affirming the NLRC judgment. Accordingly,
the Court of Appeals ordered the respondent’s reinstatement with limited back wages equivalent to one
(1) year.

Its Motion for Reconsideration having been denied by the Court of Appeals per the latter’s Resolution18
dated August 26, 1999, the petitioner now seeks relief from this Court. Relying once more on its defense
of just cause for termination, the petitioner insists that the respondent’s violation of the company rules
and regulations on absences constitutes serious misconduct and/or willful disobedience of the lawful
orders of his superiors.

The pivotal issue is whether the respondent was terminated from service for a just cause or whether he
was illegally dismissed.

The Court rules that the respondent was illegally dismissed and accordingly denies the petition.

It is manifest that the petition raises an issue that is fundamentally factual, which the Court is not at
liberty to review. The veracity of a fact is not for the Court to examine. The Court steps in and exercises
its power of review only when the inference or conclusion arrived at on the basis of facts is manifestly
erroneous.19

The Court reiterates the much-repeated rule that the findings of fact of the Court of Appeals, where
there is absolute agreement with those of the NLRC, are accorded not only respect but even finality and
are deemed binding upon this Court so long as they are supported by substantial evidence.20

Nonetheless, the Court has reviewed the records of this case and found there is indeed no compelling
reason to disturb the findings of the NLRC, which the Court of Appeals affirmed in toto. Verily, the
respondent’s seemingly prolonged absences during the period from February 4 to March 11, 1994 were
sufficiently explained in the Sur-Rejoinder21 filed before the labor arbiter. There, the respondent made
an account of each day of absence chronologically. As thus accounted, the respondent spent most of the
days at the company’s General Office following-up the reimbursement of his advances. He asked the
petitioner to check the security guard’s logbook at the General Office to check the veracity of his claim.
He also presented hospital bills and receipts to prove that his children were in and out of the hospital
during the period.

The petitioner sought to counter the respondent’s claims by referring to his time cards. According to the
petitioner, the respondent’ time card shows no "punched in" times for February 8 and 9 and no
"punched out" time for February 10 and 11. The problem, however, is that while they were referred to
in the petition, the time cards themselves were not attached thereto. Nonetheless, such discrepancy, if
any, is immaterial considering that aside from February 11 the dates adverted to were not included in
the list of the respondent’s absences.

The Court agrees, however, with the petitioner that the respondent failed to justify his prolonged
absences during the months of May to June. While his intention to go back to work was manifest, he
regrettably failed to show that he exerted any effort to locate his physician. Nevertheless, the failure to
locate the physician cannot amount to "serious misconduct or willful disobedience," as the petitioner
would like this Court to believe. "Misconduct" has been defined as "the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment."22 On the other hand, "willful disobedience"
envisages the concurrence of at least two (2) requisites: the employee’s assailed conduct has been
willful or intentional, the willfulness being characterized by a "wrongful and perverse attitude;" and the
order violated must have been reasonable, lawful, made known to the employee and must pertain to
the duties which he had been engaged to discharge.23

Even assuming that the respondent’s absenteeism constitutes willful disobedience, such offense does
not warrant the respondent’s dismissal. Not every case of insubordination or willful disobedience by an
employee reasonably deserves the penalty of dismissal. There must be a reasonable proportionality
between the offense and the penalty.
At the time of the filing of the complaint, the respondent had worked with the petitioner for nineteen
(19) years. It has not been shown that the respondent committed any infraction of company rules during
his two (2) – decade stint in the company. Undoubtedly, dismissal is too harsh a sanction. Dismissal has
always been regarded as the ultimate penalty.24

While the Court recognizes the rights of an employer to terminate the services of an employee for a just
or authorized cause, the dismissal of an employee must be made within the parameters of law and
pursuant to the tenets of equity and fair play. Truly, the employer’s power to discipline its workers may
not be exercised in such an arbitrary manner as to erode the constitutional guarantee of security of
tenure.25 The Constitution mandates the protection of labor. This command the Court has to heed and
cannot disregard.

In sum, the Court is convinced that the respondent has been illegally terminated from employment. The
normal consequences of illegal dismissal are reinstatement without loss of seniority rights and the
payment of back wages computed from the time the employee’s compensation was withheld from him.
However, in view of the Court’s finding that some of the respondent’s absences were not wholly
justified, the Court agrees with the NLRC and the Court of Appeals that backwages should be limited to
one (1) year.

The petitioner claims that the existence of strained relationship between the parties militates against
the reinstatement of the respondent. While the Court agrees that human nature engenders, in the
normal course of things, a certain degree of hostility as a result of litigation, the strained relations are
not necessarily sufficient to rule out reinstatement. As aptly put by the Court of Appeals, "if petitioner’s
contention should be sustained, reinstatement would thus become the exception rather than the rule in
cases of illegal dismissal."26

However, during the pendency of the case, the petitioner filed an Urgent Manifestation and Motion,27
stating that more than a year after the respondent was placed on payroll reinstatement the company’s
Tondo Plant, where the respondent was assigned, was shut down. Since the respondent’s employment
could not be maintained at the Tondo Plant, so the petitioner maintains, it was constrained to
discontinue the respondent’s payroll reinstatement.

Clearly, the respondent is entitled to reinstatement, without loss of seniority rights, to another position
of similar nature in the company. It should be stressed that while the petitioner manifested to this Court
the closure of the Tondo Plant, it failed to indicate the absence of an unfilled position more or less of a
similar nature as the one previously occupied by the respondent at its other plant/s. However, if the
respondent no longer desires to be reinstated, he should be awarded separation pay at the rate of one
(1) month for every year of service as an alternative, following settled jurisprudence.28

WHEREFORE, the petition is DENIED and the assailed decision dated June 16, 1999 of the Court of
Appeals is AFFIRMED. Petitioner Procter and Gamble Philippines, Inc. is directed to reinstate respondent
Edgardo Bondesto without loss of seniority rights, or in the alternative, i.e., should he opt not to be
reinstated, to pay him separation pay in the amount equivalent to one (1) month pay for every year of
service, plus backwages for one (1) year only in either case.

SO ORDERED.

Acesite Corporation vs. Nlrc

Facts: * Leo A. Gonzales (Gonzales) was a Chief of Security of Acesite Corporation. * Gonzales took
several leaves (sick leave, emergency leave, and vacation leave), thereby using up all leaves that he was
entitled for the year. * Before the expiration of his 12-day vacation leave, Gonzales filed an application
for emergency leave for 10 days commencing on April 30 up to May 13, 1998. The application was not,
however, approved. * He received a telegram informing him of the disapproval and asking him to report
back for work on April 30, 1998.
However Gonzales did not report for work on the said date. * On May 5, 1998, Acesite sent him a final
telegram in his provincial address containing in order for Gonzales to report back to work. * Gonzales,
who claims to have received the May 5, 1998 telegram only in the afternoon of May 7, 1998,
immediately repaired back to Manila on May 8, 1998 only to be “humiliatingly and ignominiously barred
by the guard (a subordinate of [Gonzales]) from entering the premises. * It appears that on May 7, 1998,
the issued notice of termination was thru an inter-office memo. * Gonzales thus filed on May 27, 1998 a
complaint against Acesite for illegal dismissal with prayer for reinstatement and payment of full
backwages, etc. * Acesite claims, Gonzales “showed no respect for the lawful orders for him to report
back to work and repeatedly ignored all telegrams sent to him,” and it merely exercised its legal right to
dismiss him under the House Code of Discipline. LA – the complaint for lack of merit, its holding that
Gonzales was dismissed for just cause and was not denied of due process. * NLRC – reversed that of the
Labor Arbiter. * CA – finding that Gonzales was illegally dismissed, affirmed with modification the NLRC
decision. Issue: * WON Gonzales was legally dismissed for just cause. Held: * No. there appears to have
been no just cause to dismiss Gonzales from employment.

As correctly ruled by the Court of Appeals, Gonzales cannot be considered to have willfully disobeyed his
employer. Willful disobedience entails the concurrence of at least two (2) requisites: the employee’s
assailed conduct has been willful or intentional, the willfulness being characterized by a “wrongful and
perverse attitude;” and the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge. In Gonzales’ case, his
assailed conduct has not been shown to have been characterized by a perverse attitude, hence, the first
requisite is wanting. His receipt of the telegram disapproving his application for emergency leave
starting April 30, 1998 has not been shown. And it cannot be said that he disobeyed the May 5, 1998
telegram since he received it only on May 7, 1998. On the contrary, that he immediately hied back to
Manila upon receipt thereof negates a perverse attitude.

CENTURY CANNING CORPORATION, RICARDO T. PO, JR. and AMANCIO C. RONQUILLO,

Petitioners,

- versus -

VICENTE RANDY R. RAMIL,

Respondent.

G.R. No. 171630

Present:

CARPIO, J., Chairperson,

NACHURA,
PERALTA,

ABAD, and

MENDOZA, JJ.

Promulgated:

August 8, 2010

x--------------------------------------------------x

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set
aside the Decision[1] and Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 86939, dated
December 1, 2005 and February 17, 2006, respectively.

The antecedents are as follows:

Petitioner Century Canning Corporation, a company engaged in canned food manufacturing, employed
respondent Vicente Randy Ramil in August 1993 as technical specialist. Prior to his dismissal on May 20,
1999, his job included, among others, the preparation of the purchase requisition (PR) forms and capital
expenditure (CAPEX) forms, as well as the coordination with the purchasing department regarding
technical inquiries on needed products and services of petitioner's different departments.

On March 3, 1999, respondent prepared a CAPEX form for external fax modems and terminal server, per
order of Technical Operations Manager Jaime Garcia, Jr. and endorsed it to Marivic Villanueva, Secretary
of Executive Vice-President Ricardo T. Po, for the latter's signature. The CAPEX form, however, did not
have the complete details[3] and some required signatures.[4] The following day, March 4, 1999, with
the form apparently signed by Po, respondent transmitted it to Purchasing Officer Lorena Paz in Taguig
Main Office. Paz processed the paper and found that some details in the CAPEX form were left blank.
She also doubted the genuineness of the signature of Po, as appearing in the form. Paz then transmitted
the CAPEX form to Purchasing Manager Virgie Garcia and informed her of the questionable signature of
Po. Consequently, the request for the equipment was put on hold due to Po's forged signature.
However, due to the urgency of purchasing badly needed equipment, respondent was ordered to make
another CAPEX form, which was immediately transmitted to the Purchasing Department.
Suspecting him to have committed forgery, respondent was asked to explain in writing the events
surrounding the incident. He vehemently denied any participation in the alleged forgery. Respondent
was, thereafter, suspended on April 21, 1999. Subsequently, he received a Notice of Termination from
Armando C. Ronquillo, on May 20, 1999, for loss of trust and confidence.

Due to the foregoing, respondent, on May 24, 1999, filed a Complaint for illegal dismissal, non-payment
of overtime pay, separation pay, moral and exemplary damages and attorney's fees against petitioner
and its officers before the Labor Arbiter (LA), and was docketed as NLRC-NCR Case No. 00-05-05894-
99.[5]

LA Potenciano S. Canizares rendered a Decision[6] dated December 6, 1999 dismissing the complaint for
lack of merit. Aggrieved by the LA's finding, respondent appealed to the National Labor Relations
Commission (NLRC). Upon recommendation of LA Cristeta D. Tamayo, who reviewed the case, the NLRC
First Division, in its Decision[7] dated August 26, 2002, set aside the ruling of LA Canizares. The NLRC
declared respondent's dismissal to be illegal and directed petitioner to reinstate respondent with full
backwages and seniority rights and privileges. It found that petitioner failed to show clear and
convincing evidence that respondent was responsible for the forgery of the signature of Po in the CAPEX
form.

Petitioner filed a motion for reconsideration. To respondent's surprise and dismay, the NLRC reversed
itself and rendered a new Decision[8] dated October 20, 2003, upholding LA Canizares' dismissal of his
complaint. Respondent filed a motion for reconsideration, which was denied by the NLRC.

Frustrated by this turn of events, respondent filed a petition for certiorari with the CA. The CA, in its
Decision dated December 1, 2005, rendered judgment in favor of respondent and reinstated the earlier
decision of the NLRC, dated August 26, 2002. It ordered petitioner to reinstate respondent, without loss
of seniority rights and privileges, and to pay respondent full backwages from the time his employment
was terminated on May 20, 1999 up to the time of the finality of its decision. The CA, likewise,
remanded the case to the LA for the computation of backwages of the respondent.

Petitioner filed a motion for reconsideration, which the CA denied in a Resolution dated February 17,
2006. Hence, the instant petition assigning the following errors:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE UNANIMOUS FINDINGS
OF THE LABOR ARBITER AND THE NATIONAL LABOR RELATIONS COMMISSION SUSTAINING THE
LEGALITY OF PRIVATE RESPONDENT'S TERMINATION FROM HIS EMPLOYMENT.

II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT PETITIONER
CORPORATION FAILED TO SATISFY THE BURDEN OF PROVING THAT THE DISMISSAL OF PRIVATE
RESPONDENT WAS FOR A VALID OR AUTHORIZED CAUSE.

III

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT FOR LOSS OF TRUST AND
CONFIDENCE TO BE A VALID GROUND FOR AN EMPLOYEE'S DISMISSAL, IT MUST BE SUBSTANTIAL AND
NOT ARBITRARY, AND MUST BE FOUNDED ON CLEARLY ESTABLISHED FACTS, OVERLOOKING THE RULE
THAT THE MERE EXISTENCE OF A BASIS FOR BELIEVING THAT SUCH EMPLOYEE HAS BREACHED THE
TRUST AND CONFIDENCE OF HIS EMPLOYER SUFFICES FOR HIS DISMISSAL.

IV

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT ASIDE FROM HIS
INVOLVEMENT IN THE FORGERY OF THE CAPITAL EXPENDITURE (CAPEX) FORMS, PRIVATE
RESPONDENT'S PAST VIOLATIONS OR ADMITTED INFRACTIONS OF COMPANY RULES AND REGULATIONS
ARE MORE THAN SUFFICIENT GROUNDS TO JUSTIFY THE TERMINATION OF HIS EMPLOYMENT WITH
PETITIONER CORPORATION.

Petitioner's main allegation is that there are factual and legal grounds constituting substantial proof that
respondent was clearly involved in the forgery of the CAPEX form, i.e., respondent is the forger of the
signature of Po, as he is the custodian and the one who prepared the CAPEX form; the forged signature
was already existing when he submitted the same for processing; he has the motive to forge the
signature; respondent has the propensity to deviate from the Standard Operating Procedure as shown
by the fact that the CAPEX form, with the forged signature of Po, is not complete in details and lacks the
required signatures; also, in February 1999, respondent ordered 8 units of External Fax Modem without
the required CAPEX form and a PR form.

Petitioner insists that the mere existence of a basis for believing that respondent employee has
breached the trust and confidence of his employer suffices for his dismissal. Finally, petitioner maintains
that aside from respondent's involvement in the forgery of the CAPEX form, his past violations of
company rules and regulations are more than sufficient grounds to justify his termination from
employment.

In his Comment, respondent alleged that petitioner failed to present clear and convincing evidence to
prove his participation in the charge of forgery nor any damage to the petitioner.

Anent the first issue raised, petitioner faults the CA in disregarding the unanimous findings of the LA and
the NLRC sustaining the legality of respondent's termination from his employment. The rule is that high
respect is accorded to the findings of fact of quasi-judicial agencies, more so in the case at bar where
both the LA and the NLRC share the same findings. The rule is not, however, without exceptions one of
which is when the findings of fact of the labor officials on which the conclusion was based are not
supported by substantial evidence. The same holds true when it is perceived that far too much is
concluded, inferred or deduced from bare facts adduced in evidence.[9]

In the case at bar, the NLRC's findings of fact upon which its conclusion was based are not supported by
substantial evidence, that is, the amount of relevant evidence, which a reasonable mind might accept as
adequate to justify a conclusion.[10]

As correctly found by the CA:

x x x The record of the case is bereft of evidence that would clearly establish Ramil's involvement in the
forgery. They did not even submit any affidavit of witness[11] or present any during the hearing to
substantiate their claim against Ramil.[12]

Respondent alleged in his position paper that after preparing the CAPEX form on March 3, 1999, he
endorsed it to Marivic Villanueva for the signature of the Executive Vice-President Ricardo T. Po. The
next day, March 4, 1999, respondent received the CAPEX form containing the signature of Po. Petitioner
never controverted these allegations in the proceedings before the NLRC and the CA despite its
opportunity to do so. Petitioner's belated allegations in its reply filed before this Court that Marivic
Villanueva denied having seen the CAPEX form cannot be given credit. Points of law, theories, issues and
arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body
need not be considered by a reviewing court, as they cannot be raised for the first time at that late
stage.[13] When a party deliberately adopts a certain theory and the case is decided upon that theory in
the court below, he will not be permitted to change the same on appeal, because to permit him to do so
would be unfair to the adverse party.[14]

Thus, if respondent retrieved the form on March 4, 1999 with the signature of Po, it can be correctly
inferred that he is not the forger. Had the CAPEX form been returned to respondent without Po's
signature, Villanueva or any officer of the petitioner's company could have readily noticed the lack of
signature, and could have easily attested that the form was unsigned when it was released to
respondent.

Further, as correctly found by the NLRC in its original decision dated August 26, 2002, if respondent was
the one who forged the signature of Po in the CAPEX form, there was no need for him to endorse the
same to Villanueva and transmit it the next day. He could have easily forged the signature of Po on the
same day that he prepared the CAPEX form and submitted it on the very same day to petitioner's main
office without passing through any officer of petitioner.

Accordingly, for want of substantial basis, in fact or in law, factual findings of an administrative agency,
such as the NLRC, cannot be given the stamp of finality and conclusiveness normally accorded to it, as
even decisions of administrative agencies which are declared final by law are not exempt from judicial
review when so warranted.[15] Contrary to petitioners assertion, therefore, this Court sees no error on
the part of the CA when it made a new determination of the case and, upon this, reversed the ruling of
the NLRC.
As to the second issue, the law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary burden would necessarily
mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions,
accusations, and conclusions of employers do not provide for legal justification for dismissing
employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution.[16]

The termination letter[17] addressed to respondent, dated May 20, 1999, provides that:

We also conducted inquiries from persons concerned to get more information in (sic) this forgery. Some
of your statements do not jibe with theirs. x x x

However, this information which petitioner allegedly obtained from the persons concerned was not
backed-up by any affidavit or proof. Petitioner did not even bother to name these resource persons.

Petitioner based respondent's dismissal on its unsubstantiated suspicions and conclusion that since
respondent was the custodian and the one who prepared the CAPEX forms, he had the motive to
commit the forgery. However, as correctly found by the NLRC in its original Decision, respondent would
not be benefited by the purchase of the subject equipment. The equipment would be for the use of
petitioner company.

With respect to the third issue, while We have previously held that employers are allowed a wider
latitude of discretion in terminating the services of employees who perform functions which by their
nature require the employers' full trust and confidence and the mere existence of basis for believing
that the employee has breached the trust of the employer is sufficient,[18] this does not mean that the
said basis may be arbitrary and unfounded.

The right of an employer to dismiss an employee on the ground that it has lost its trust and confidence
in him must not be exercised arbitrarily and without just cause.[19] Loss of trust and confidence, to be a
valid cause for dismissal, must be based on a willful breach of trust[20] and founded on clearly
established facts. The basis for the dismissal must be clearly and convincingly established, but proof
beyond reasonable doubt is not necessary.[21] It must rest on substantial grounds and not on the
employers arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at
the mercy of the employer.[22]

The case of Philippine Airlines, Inc. v. Tongson,[23] cited by the petitioner, is not applicable to the
present case. In that case, PAL dismissed Tongson from service on the ground of corruption, extortion
and bribery in the processing of PAL's passengers' travel documents. We upheld the validity of Tongson's
dismissal because PAL's overwhelming documentary evidence reflects an unbroken chain which
naturally leads to one fair and reasonable conclusion, that at the very least, respondent was involved in
extorting money from PAL's passengers. We further said that even if there is no direct evidence to prove
that the employees actually committed the offense, substantial proof based on documentary evidence is
sufficient to warrant their dismissal from employment.

In the case at bar, there is neither direct evidence nor substantial documentary evidence pointing to
respondent as the one liable for the forgery of the signature of Po.
The cited case of Deles Jr. v. National Labor Relations Commission[24] is also inapplicable. Therein
dismissed employee, Deles Jr., himself admitted during the company investigation that he tampered
with the company's sensitive equipment (the JTF Gravitometer No. 5). Thus, there existed sufficient
basis for the finding that therein employee breached the trust and confidence of his employer.

As for the final issue raised, petitioner's reliance on respondent's previous tardiness in reporting for
work as a ground for his dismissal is likewise not meritorious. The correct rule has always been that such
previous offense may be used as valid justification for dismissal from work only if the infractions are
related to the subsequent offense upon which the basis of termination is decreed.[25] His previous
offenses were entirely separate and distinct from his latest alleged infraction of forgery. Hence, the
same could no longer be utilized as an added justification for his dismissal.

Besides, respondent had already been sanctioned for his prior infractions. To consider these offenses as
justification for his dismissal would be penalizing respondent twice for the same offense.[26]

Respondent's illegal dismissal carries the legal consequences defined under Article 279 of the Labor
Code, that is, an employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges, and to the payment of his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent, computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.[27]

However, the Court finds that it would be best to award separation pay instead of reinstatement, in
view of the strained relations between petitioner and respondent. Respondent was dismissed due to
loss of trust and confidence and it would be impractical to reinstate an employee whom the employer
does not trust, and whose task is to handle and prepare delicate documents.

Under the doctrine of strained relations, the payment of separation pay has been considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the
one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, the payment releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust.[28]

In view of the foregoing, respondent is entitled to the payment of full backwages, inclusive of
allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal
on May 20, 1999 up to the finality of this decision, and separation pay in lieu of reinstatement
equivalent to one month salary for every year of service, computed from the time of his engagement by
petitioner on August 1993 up to the finality of the decision.[29]
The awards of separation pay and backwages are not mutually exclusive and both may be given to the
respondent. In Nissan North Edsa Balintawak, Quezon City v. Serrano, Jr.,[30] the Court held that:

The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the
employee becomes entitled to reinstatement to his former position without loss of seniority rights and,
secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual
reinstatement. The statutory intent on this matter is clearly discernible. Reinstatement restores the
employee who was unjustly dismissed to the position from which he was removed, that is, to his status
quo ante dismissal, while the grant of backwages allows the same employee to recover from the
employer that which he had lost by way of wages as a result of his dismissal. These twin remedies
reinstatement and payment of backwages make the dismissed employee whole who can then look
forward to continued employment. Thus, do these two remedies give meaning and substance to the
constitutional right of labor to security of tenure. The two forms of relief are distinct and separate, one
from the other. Though the grant of reinstatement commonly carries with it an award of backwages, the
inappropriateness or non-availability of one does not carry with it the inappropriateness or non-
availability of the other. x x x As the term suggests, separation pay is the amount that an employee
receives at the time of his severance from the service and x x x is designed to provide the employee with
the wherewithal during the period that he is looking for another employment. In the instant case, the
grant of separation pay was a substitute for immediate and continued re-employment with the private
respondent Bank. The grant of separation pay did not redress the injury that is intended to be relieved
by the second remedy of backwages, that is, the loss of earnings that would have accrued to the
dismissed employee during the period between dismissal and reinstatement. Put a little differently,
payment of backwages is a form of relief that restores the income that was lost by reason of unlawful
dismissal; separation pay, in contrast, is oriented towards the immediate future, the transitional period
the dismissed employee must undergo before locating a replacement job. x x x The grant of separation
pay was a proper substitute only for reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages. (Emphasis supplied.)[31]

The case is, therefore, remanded to the Labor Arbiter for the purpose of computing the proper
monetary award due to the respondent.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP
No. 86939, dated December 1, 2005 and February 17, 2006, respectively, are AFFIRMED with
MODIFICATION that the order of reinstatement is deleted, and in lieu thereof, Petitioner Century
Canning Corporation is DIRECTED to pay respondent separation pay.

The case is REMANDED to the Labor Arbiter for the purpose of computing respondent's full backwages,
inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his
dismissal on May 20, 1999 up to the finality of the decision, and separation pay in lieu of reinstatement
equivalent to one month salary for every year of service, computed from the time of his engagement by
petitioner on August 1993 up to the finality of this decision.

SO ORDERED.
G.R. No. 152166 October 20, 2010

ST. LUKE'S MEDICAL CENTER, INC. and ROBERT KUAN, Chairman, Petitioners,
vs.
ESTRELITO NOTARIO, Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to set aside the Decision1 dated
September 21, 2001 and Resolution2 dated February 12, 2002 of the Court of Appeals (CA), Second
Division, in CA-G.R. SP No. 58808, entitled St. Luke’s Medical Center, Inc. and Robert Kuan, Chairman v.
National Labor Relations Commission and Estrelito Notario, which affirmed the Resolutions dated
January 19, 20003 and March 20, 20004 of the National Labor Relations Commission (NLRC), Third
Division, in NLRC NCR Case No. 00-03-02177-97. The NLRC Resolution dated January 19, 2000 reversed
and set aside the Decision5 dated November 11, 1998 of the Labor Arbiter dismissing respondent’s
complaint for illegal dismissal against petitioners, St. Luke's Medical Center, Inc. and its Chairman,
Robert Kuan, and ordered them to reinstate respondent to his former position, without loss of seniority
rights and other benefits and full backwages from the date of dismissal until actual reinstatement, and
should reinstatement be no longer feasible, to further pay him separation pay equivalent to one (1)
month’s pay for every year of service, with the following monetary award, namely, backwages of
₱250,229.97 and separation pay of ₱31,365.00, or a total amount of ₱281,594.97.

The antecedent facts are as follows:

On June 23, 1995, St. Luke’s Medical Center, Inc. (petitioner hospital), located at Quezon City, employed
respondent as In-House Security Guard. In August 1996, Nimaya Electro Corporation installed a closed-
circuit television (CCTV) system in the premises of petitioner hospital to enhance its security measures6
and conducted an orientation seminar for the in-house security personnel on the proper way of
monitoring video cameras, subject to certain guidelines.7

On December 30, 1996, respondent was on duty from 6:00 p.m. to 6:00 a.m. of the following day,
December 31, 1996. His work consisted mainly of monitoring the video cameras. In the evening of
December 30, 1996, Justin Tibon, a foreigner from Majuro, Marshall Island, then attending to his 3-year-
old daughter, Andanie De Brum, who was admitted since December 20, 1996 at room 257,
cardiovascular unit of petitioner hospital, reported to the management of petitioner hospital about the
loss of his mint green traveling bag, which was placed inside the cabinet, containing, among others, two
(2) Continental Airlines tickets, two (2) passports, and some clothes. Acting on the complaint of Tibon,
the Security Department of petitioner hospital conducted an investigation. When the tapes of video
camera recorder (VCR) no. 3 covering the subject period were reviewed, it was shown that the VCR was
focused on camera no. 2 (Old Maternity Unit), from 2103H to 2215H [or 9:03 p.m. to 10:15 p.m.] of
December 30, 1996, and camera no. 1 (New Maternity Unit), from 0025H to 0600H [or 12:25 a.m. to
6:00 a.m.] of December 31, 1996. The cameras failed to record any incident of theft at room 257.

On January 6, 1997, petitioner hospital, through Abdul A. Karim, issued a Memorandum8 to respondent,
the CCTV monitoring staff on duty, directing him to explain in writing, within 24 hours upon receipt
thereof, why no disciplinary action should be taken against him for violating the normal
rotation/sequencing process of the VCR and, consequently, failed to capture the theft of Tibon's
traveling bag at room 257.

In his letter9 dated January 6, 1997, respondent explained that on the subject dates, he was the only
personnel on duty as nobody wanted to assist him. Because of this, he decided to focus the cameras on
the Old and New Maternity Units, as these two units have high incidence of crime.

Finding the written explanation of respondent to be unsatisfactory, petitioner hospital, through

Calixton, served on respondent a copy of the Notice of Termination,10 dated January 24, 1997,
dismissing him on the ground of gross negligence/inefficiency under Section 1, Rule VII of its Code of
Discipline.

Thus, on March 19, 1997, respondent filed a Complaint11 for illegal dismissal against petitioner hospital
and its Chairman, Robert Kuan, seeking reinstatement with payment of full backwages from the time of
his dismissal up to actual reinstatement, without of loss of seniority rights and other benefits.

Petitioners countered that they validly dismissed respondent for gross negligence and observed due
process before terminating his employment.

On November 11, 1998, the Labor Arbiter dismissed respondent’s complaint for illegal dismissal against
petitioners. He stated that a CCTV monitoring system is designed to focus on many areas in a
programmed and sequential manner and should not to be focused only on a specific area, unless the
situation requires it. He concluded that during respondent’s duty from December 30 to 31, 1996, he was
negligent in focusing the cameras at the Old and New Maternity Units only and, consequently, the theft
committed at room 257 was not recorded. He said that respondent’s infraction exposed petitioners to
the possibility of a damage suit that may be filed against them arising from the theft.

On appeal by the respondent, the NLRC issued a Resolution dated January 19, 2000, reversing the
Decision of the Labor Arbiter. It stated that petitioners failed to submit proof that there was an existing
Standard Operating Procedure (SOP) in the CCTV monitoring system, particularly on the focusing
procedure. It observed that respondent was not negligent when he focused the cameras on the Old and
New Maternity Units, as they were located near the stairways and elevators, which were frequented by
many visitors and, thus, there is the likelihood that untoward incidents may arise. If at all, it treated the
matter as a single or isolated act of simple negligence which did not constitute a just cause for the
dismissal of an employee. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the decision dated November 11, 1998 is hereby SET ASIDE and a
new one entered ordering respondents-appellees to reinstate complainant-appellant to his former
position without loss of seniority rights and other benefits, with full backwages from the date of
dismissal until actual reinstatement. Should reinstatement be no longer feasible, to further pay
complainant-appellant separation pay equivalent to one (1) month pay for every year of service.

As computed, complainant-appellant’s monetary award as of this date of decision are as follows:

Backwages …………….. ₱250,229.97

Separation Pay………… + 31,365.00
Total …..........…………. ₱281,594.97
SO ORDERED.12

On February 14, 2000, petitioners filed a Motion for Reconsideration, but the same was denied by the
NLRC in its Resolution dated March 20, 2000.

On September 21, 2001, the CA dismissed petitioners' petition for certiorari, affirming the NLRC’s finding
that while respondent may appear to be negligent in monitoring the cameras on the subject dates, the
same would not constitute sufficient ground to terminate his employment. Even assuming that
respondent’s act would constitute gross negligence, it ruled that the ultimate penalty of dismissal was
not proper as it was not habitual, and that there was no proof of pecuniary injury upon petitioner
hospital. Moreover, it declared that petitioners failed to comply with the twin notice rule and hearing as
what they did was to require respondent to submit a written explanation, within 24 hours and,
thereafter, he was ordered dismissed, without affording him an opportunity to be heard.

As their motion for reconsideration was denied in the CA's Resolution dated February 12, 2002,
petitioners filed this present petition.

Petitioners allege that, by not focusing the CCTV cameras on the different areas of the hospital,
respondent committed gross negligence which warrants his dismissal. According to them, there was no
need to prove that the act done was habitual, as the occurrence of the theft exposed them to possible
law suit and, additionally, there might be a repetition of a similar incident in the future if respondent
would remain in their employ.

Respondent maintains that he was not negligent in the discharge of his duties. He said that there was no
actual loss to petitioner hospital as no complaint or legal action was taken against them and that the
supposed complainant, Tibon, did not even report the matter to the police authorities.

Contrary to the stance of petitioners, respondent was illegally dismissed without just cause and
compliance with the notice requirement.

Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross
and habitual neglect by the employee of his duties. Corollarily, regarding termination of employment,
Section 2(a) and (d), Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, as amended,
provides that:

Section 2. Security of Tenure. (a) In cases of regular employment, the employer shall not terminate the
services of an employee except for just or authorized causes as provided by law, and subject to the
requirements of due process.

xxxx

(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving
said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he
so desires is given opportunity to respond to the 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.

xxxx

To effectuate a valid dismissal from employment by the employer, the Labor Code has set twin
requirements, namely: (1) the dismissal must be for any of the causes provided in Article 282 of the
Labor Code; and (2) the employee must be given an opportunity to be heard and defend himself. This
first requisite is referred to as the substantive aspect, while the second is deemed as the procedural
aspect.13

An employer can terminate the services of an employee only for valid and just causes which must be
supported by clear and convincing evidence. The employer has the burden of proving that the dismissal
was indeed for a valid and just cause.14

A perusal of petitioner hospital’s CCTV Monitoring Guidelines,15 disseminated to all in-house security
personnel, reveals that that there is no categorical provision requiring an in-house security personnel to
observe a rotation sequence procedure in focusing the cameras so that the security monitoring would
cover as many areas as possible.

This fact is corroborated by Tito M. Maganis, petitioners' former In-House Security Department Head, in
his Affidavit16 dated October 28, 1997, stating, among others:

xxxx
2. That as Department Head of the In-House Security of SLMC [St. Luke’s Medical Center], I am familiar
with the standard operating procedures governing the conduct and operation of equipment and devices
for observance by all security personnel of SLMC to secure the premises;

3. That to the best of my personal knowledge, there had been no rules on rotation/sequencing process
of CCTVs disseminated for observance by security personnel;

4. That in the past, there were occasions when the CCTVs were focused on specific areas where
untoward incidents usually happen; That no penalty of dismissal had been imposed, thus far, on any
security personnel found focusing these CCTVs; and

xxxx

Further, the Certification17 dated April 14, 1998, issued by Himaya Electro Corporation, indicating
respondent as one of the participants in the orientation conducted for in-house security personnel18
contradicted the joint statement,19 dated April 15, 1998, by therein participants, which excluded
respondent as one of the attendees. Thus, the certification cannot support petitioners’ theory that
respondent ought to know the rudiments of monitoring the CCTV cameras on the basis that he was one
of the participants in the said orientation. Probably, respondent was listed as one of the participants,
but he failed to attend.

For his part, respondent denied having attended the said orientation and being informed of the SOP of
CCTV cameras. Despite the foregoing, respondent had been efficiently performing his assigned task. In
fact, in the Letter of Commendation20 dated December 8, 1996, petitioner hospital, through Alfredo D.
Calixton, Jr., commended the vigilance of respondent and other four in-house security personnel in
preventing the occurrence of thefts and thwarting the loss of the personal belongings of a confined
patient.

Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and habitual
neglect of duties. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross
negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated
failure to perform one’s duties for a period of time, depending upon the circumstances. A single or
isolated act of negligence does not constitute a just cause for the dismissal of the employee.21 Under
the prevailing circumstances, respondent exercised his best judgment in monitoring the CCTV cameras
so as to ensure the security within the hospital premises. Verily, assuming arguendo that respondent
was negligent, although this Court finds otherwise, the lapse or inaction could only be regarded as a
single or isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause
for his dismissal.

Petitioners anchor on the postulate that even a single or isolated act of negligence by respondent
constitutes a just cause for his dismissal as it engendered the possibility of a legal action that may be
taken against them by the owner of the lost items. This is purely speculative. The Certification,22 dated
July 8, 1999, issued by Renato Politud Valebia, Police Superintendent, Station Commander of Galas
Police Station (Station II), located at Unang Hakbang Street, corner Luzon Avenue, Galas, Quezon City,
stated that no incident of theft was reported by the management of petitioner hospital or any of its
authorized representatives involving the loss of the plane tickets and other personal belongings of Justin
Tibon and Andanie De Brum. Even the supposed complainant, Tibon, did not institute any complaint
against petitioner hospital. Therefore, it cannot be said that petitioners incurred actual loss or pecuniary
damage.

Petitioners question the findings of the CA that there was no compliance with the twin-notice rule and
hearing, while respondent maintains that they violated his right to due process.1avvphi1

The employee must be furnished two written notices: the first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought, and the second is a subsequent notice,
which informs the employee of the employer's decision to dismiss him.23
The CA found that petitioner hospital failed to comply with the rule on twin notice and hearing as it
merely required respondent to give his written explanation within 24 hours and, thereafter, ordered his
dismissal.

The facts showed that on January 6, 1997, petitioner hospital, through Abdul A. Karim, issued a
Memorandum to respondent, with the directive to require him to explain in writing, within 24 hours
upon receipt thereof, why no disciplinary action should be taken against him for violating the normal
rotation or sequencing process of the VCR which led to the loss of the traveling bag of Tibon, the
patient’s father, at room 257. On the same day, January 6, 1997, respondent submitted a written
explanation, stating that during the subject hours on December 30 to 31, 1996, he was the only
personnel on duty as nobody wanted to assist him and, this being so, he decided to focus the cameras
on the Old and New Maternity Units as these two units usually have high incidence of theft and other
untoward incidents. Later, on January 24, 1997, petitioner hospital served a copy of the Notice of
Termination upon the respondent for gross negligence/inefficiency.1awphil

Petitioners claim that since the dismissal of respondent was made in good faith, as he even admitted his
infraction, the award of backwages was erroneous; while respondent seeks reinstatement with payment
of full backwages from the time of his dismissal up to actual reinstatement, without of loss of seniority
rights and other benefits.

Where the dismissal was without just cause and there was no due process, Article 279 of the Labor
Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority
rights and other privileges and full backwages, inclusive of allowances and other benefits, or their
monetary equivalent computed from the time the compensation was not paid up to the time of actual
reinstatement.

The awards of separation pay and backwages are not mutually exclusive and both may be given to
respondent.24 An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding
separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded
shall be equivalent to one month salary for every year of service.25

Petitioners’ lack of just cause and non-compliance with the procedural requisites in terminating
respondent’s employment renders them guilty of illegal dismissal. Consequently, respondent is entitled
to reinstatement to his former position without loss of seniority rights and payment of backwages.
However, if such reinstatement proves impracticable, and hardly in the best interest of the parties,
perhaps due to the lapse of time since his dismissal, or if he decides not to be reinstated, respondent
should be awarded separation pay in lieu of reinstatement.26

Prescinding from the foregoing, the Court deems that since reinstatement is no longer feasible due to
the long passage of time, petitioners are required to pay respondent his separation pay equivalent to
one (1) month’s pay for every year of service. Petitioners are thus ordered to pay respondent his
backwages of ₱250,229.97 and separation pay of ₱31,365.00, or a total amount of ₱281,594.97.

WHEREFORE, the petition is DENIED. The Decision dated September 21, 2001 and Resolution dated
February 12, 2002 of the Court of Appeals, Second Division, in CA-G.R. SP No. 58808, which affirmed the
Resolutions dated January 19, 2000 and March 20, 2000 of the National Labor Relations Commission,
Third Division, are AFFIRMED.

SO ORDERED.

BUSTAMANTE ET AL VS. NLRC DIGEST

DECEMBER 19, 2016 ~ VBDIAZ
G.R. No. 111651 March 15, 1996

OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L. BUSTAMANTE, MARIO D. SUMONOD,

and SABU J. LAMARAN v. NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION and EVERGREEN
FARMS, INC.
PADILLA, J.:

FACTS: Respondent company is engaged in the business of producing high grade bananas in its
plantation in Davao del Norte. Petitioners Paulino Bantayan, Fernando Bustamante, Mario Sumonod and
Osmalik Bustamante were employed as laborers and harvesters while petitioner Sabu Lamaran was
employed as a laborer and sprayer in respondent company’s plantation. All the petitioners signed
contracts of employment for a period of six (6) months from 2 January 1990 to 2 July 1990, but they had
started working sometime in September 1989. Previously, they were hired to do the same work for
periods lasting a month or more, from 1985 to 1989. Before the contracts of employment expired on 2
July 1990, petitioners’ employments were terminated on 25 June 1990 on the ground of poor
performance on account of age, as not one of them was allegedly below forty (40) years old.

Petitioners filed a complaint for illegal dismissal.

ISSUE: Whether or not private respondent exercises its power to terminate in good faith so as to make
the award of backwages improper in this case.

RULING: We do not sustain public respondent’s theory that private respondent should not be made to
compensate petitioners for backwages because its termination of their employment was not made in
bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them
as regular employees evidences bad faith on the part of private respondent. The public respondent
made a finding to this effect when it stated that the subsequent rehiring of petitioners on a
probationary status “clearly appears to be a convenient subterfuge on the part of management to
prevent complainants (petitioners) from becoming regular employees.”

In the case at bar, there is no valid cause for dismissal. The employees (petitioners) have not performed
any act to warrant termination of their employment. Consequently, petitioners are entitled to their full
backwages and other benefits from the time their compensation was withheld from them up to the time
of their actual reinstatement.

JACULBE vs. SILLIMAN UNIVERSITY G.R. No. 156934 March 16, 2007 Compulsory Retirement, CBA,
Security of Tenure Clause Illegal Dismissal
OCTOBER 21, 2017
FACTS:

Petitioner began working for respondents university medical center as a nurse.

Respondent, through its Human Resources Development Office, informed petitioner that she was
approaching her 35th year of service with the university and was due for automatic retirement on
November 18, 1993, at which time she would be 57 years old. This was pursuant to respondents
retirement plan for its employees which provided that its members could be automatically retired “upon
reaching the age of 65 or after 35 years of uninterrupted service to the university.” Respondent required
certain documents in connection with petitioner’s impending retirement.

A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically
insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with
respondent to be allowed to work until the age of 60 because this was the minimum age at which she
could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing “company
policy.”
Petitioner filed a complaint in the National Labor Relations Commission (NLRC) for “termination of
service with preliminary injunction and/or restraining order.” On November 18, 1993, respondent
compulsorily retired petitioner.

After the parties submitted their position papers, the labor arbiter rendered a decision finding
respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full backwages.
On appeal, however, the NLRC reversed the labor arbiter’s decision and dismissed the complaint for lack
of merit. The NLRC likewise denied petitioner’s motion for reconsideration. In the assailed decision and
resolution, the CA affirmed the NLRC.

ISSUE:

1. Did respondent’s retirement plan imposing automatic retirement after 35 years of service contravene
the security of tenure clause in the 1987 Constitution and the Labor Code?

2. Did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its
retirement plan?

RULING:

1.
Retirement plans allowing employers to retire employees who are less than the compulsory retirement
age of 65 are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the
Labor Code provides:

ART. 287. Retirement – Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract. xxx

By its express language, the Labor Code permits employers and employees to fix the applicable
retirement age at below 60 years.

However, after reviewing the assailed decision together with the rules and regulations of respondent’s
retirement plan, we find that the plan runs afoul of the constitutional guaranty of security of tenure
contained in Article XIII, also known as the provision on Social Justice and Human Rights.

The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary
participation therein:

The petitioner in this case may, however, argue that the Pantranco case is not applicable in the case at
bar as the controversy in the said case involves a compulsory retirement on the basis of the length of
service rendered by the employee as agreed in an existing CBA, whereas in the present case, the private
respondent compulsorily retired the petitioner not based on a CBA but on the retirement scheme
provided for in the private respondent’s retirement plan. Nonetheless, this argument must fail. The
contract fixing for retirement age as allowed under Article 287 of the Labor Code does not exclusively
refer to CBA which provides for an agreed retirement age. The said provision explicitly allows, as well,
other applicable employment contract to fix retirement age.

The records disclose that the private respondent’s Retirement Plan has been in effect for more than 30
years. The said plan is deemed integrated into the employment contract between private respondent
and its employees as evidenced by the latter’s voluntary contribution through monthly salary
deductions. Previous retirees have already enjoyed the benefits of the retirement plan, and ever since
the said plan was effected, no questions or disagreement have been raised, until the same was made to
apply to the petitioner. xxx
The problem with this line of reasoning is that a perusal of the rules and regulations of the plan shows
that participation therein was not voluntary at all.

Rule III of the plan, on membership, stated:

SECTION 1 – MEMBERSHIP

All full-time Filipino employees of the University will automatically become members of the Plan,
provided, however, that those who have retired from the University, even if rehired, are no longer
eligible for membership in the Plan. A member who continues to serve the University cannot withdraw
from the Plan.

xxx xxx xxx

SECTION 2 – EFFECTIVITY OF MEMBERSHIP

Membership in the Plan starts on the day a person is hired on a full-time basis by the University.

SECTION 3 – TERMINATION OF MEMBERSHIP

Termination of membership in the Plan shall be upon the death of the member, resignation or
termination of employee’s contract by the University, or retirement from the University.

According to the assailed decision, respondent’s retirement plan “had been in effect for more than 30
years.” What was not pointed out, however, was that the retirement plan came into being in 197018 or
12 years after petitioner started working for respondent. In short, it was not part of the terms of
employment to which petitioner agreed when she started working for respondent. Neither did it
become part of those terms shortly thereafter, as the CA would have us believe.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age agrees to sever his or her
employment with the former.

In this case, neither the CA nor the respondent cited any agreement, collective or otherwise, to justify
the latter’s imposition of the early retirement age in its retirement plan, opting instead to harp on
petitioner’s alleged “voluntary” contributions to the plan, which was simply untrue. The truth was that
petitioner had no choice but to participate in the plan, given that the only way she could refrain from
doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on equal
footing, a situation which often causes an employee to act out of need instead of any genuine
acquiescence to the employer. This was clearly just such an instance.

Not only was petitioner still a good eight years away from the compulsory retirement age but she was
also still fully capable of discharging her duties as shown by the fact that respondent’s board of trustees
seriously considered rehiring her after the effectivity of her “compulsory retirement.”

2. Yes.

As already stated, an employer is free to impose a retirement age less than 65 for as long as it has the
employees’ consent. Stated conversely, employees are free to accept the employer’s offer to lower the
retirement age if they feel they can get a better deal with the retirement plan presented by the
employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan
which was not freely assented to by her, respondent was guilty of illegal dismissal.
At this point, reinstatement is out of the question. Petitioner is now 71 years old and therefore well over
the statutory compulsory retirement age. For this reason, we grant her separation pay in lieu of
reinstatement. It is also for this reason that we modify the award of backwages in her favor, to be
computed from the time of her illegal dismissal on November 18, 1993 up to her compulsory retirement
age.
 PERIQUET VS. NLRC (186 SCRA 724, 1990)

Facts:

The petitioner was dismissed as toll collector by the Construction Development Corporation of the Philippines, private
respondent herein, for willful breach of trust and unauthorized possession of accountable toll tickets allegedly found
in her purse during a surprise inspection. Claiming she had been "framed," she filed a complaint for illegal dismissal
and was sustained by the labor arbiter, who ordered her reinstatement within ten days "without loss of seniority rights
and other privileges and with fun back wages to be computed from the date of her actual dismissal up to date of her
actual reinstatement."

On appeal, this order was affirmed in toto by public respondent NLRC on August 29, 1980.

Almost 9 years after, the petitioner filed a motion for the issuance of a writ of execution of judgment, it was granted
and sheriff garnished the amount of 205,207.42. However, on appeal the NLRC set aside the order because it is time
barred, having filed beyond five years and the petitioner having signed the quit claim waiving her right to
reinstatement and acknowledging settlement in full of her back wages and other benefits.

It also appears that she entered into a compromise agreement with CDCP where she waived her right to
reinstatement and received from the CDCP the sum of P14,000.00 representing her back wages from the date of her
dismissal to the date of the agreement.

Issue:

Whether or not compromise settlement is binding between the parties.

Ruling:

Yes. Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into
and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of
a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible
person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking. As in this case, the question may be asked: Why did the petitioner
sign the compromise agreement of September 16, 1980, and waive all her rights under the judgment in consideration
of the cash settlement she received? It must be remembered that on that date the decision could still have been
elevated on certiorari before this Court and there was still the possibility of its reversal. The petitioner obviously
decided that a bird in hand was worth two on the wing and so opted for the compromise agreement. The amount she
was then waiving, it is worth noting, had not yet come up to the exorbitant sum of P205,207.42 that she was later to
demand after the lapse of eight years.

CIPRIANO VS. SAN MIGUEL CORPORATION (G.R. No. L-24774, August 21, 1968)
Facts:
Plaintiff, Raul Cipriano, was employed as a salesman at San Miguel Corporation starting September 1, 1953 to April
17, 1964. On April 21, 1964, plaintiff received a notice to the effect that, the medical department having certified that
he could no longer continue performing his functions as a salesman, the defendant was constrained to retire him at
the close of business on April 17, 1964.
Plaintiff was then a member in good standing of San Miguel Brewery Sales Force Union, which had with the
defendant an agreement, dated February 20, 1963, establishing a "Health, Welfare and Retirement Plan," which was
in force. Section 2 of Article VIII of said plan provided for retirement benefits at the rate of "one (1) month's
guaranteed basic compensation for each year of service." Pursuant to this provision, plaintiff got the total sum of
P2,292.28, computed on the basis of the compensation for one (1) month for each year of service rendered to the
defendant.
Subsequently, however, plaintiff demanded payment of the separation pay prescribed in the Termination Pay
Law and, upon failure of the defendant to heed the demand, or on December 1964, he filed this action to recover said
pay, as well as moral damages, exemplary damages and attorney's fees.
After appropriate proceedings, the lower court rendered the appealed decision dismissing plaintiff's complaint, upon
the ground that the retirement benefits, received by plaintiff under the aforementioned "Health, Welfare and
Retirement Plan", are in lieu of the termination pay provided by law, contrary to plaintiff's claim to the effect that this
pay is not excluded by said benefits.
Issue:
Whether or not the plaintiff is entitled to both the retirement benefits under the Retirement Plan of the company and
under the Termination Pay Law.
Ruling:
The SC affirmed the ruling of the lower court. The plaintiff’s right to the benefits of the aforementioned plan came into
existence by virtue of the agreement between the defendant and the labor union, of which plaintiff is a member.
Admittedly, said right is subject to the limitations prescribed in the agreement, Article X of which reads:t
Regular employees who are separated from the service of the company for any reason other than
misconduct or voluntary resignation shall be entitled to either 100% of the benefits provided in Section 2,
Article VIII hereof, regardless of their length of service in the company or to the severance pay provided by
law, which ever is the greater amount.
Pursuant thereto, plaintiff was entitled to "either" the amount prescribed in the plan "or" the "severance pay provided
by law, whichever is the greater amount." In other words, he had a right to one of the two benefits, not to both, at the
same time. The exclusion of one by the other is clearly deducible, not only from the terms "either" and "or" used in
the agreement, but, also, by the qualifying phrase "whichever is the greater amount."

FORD PHILIPPINES SALARIED EMPLOYEES ASSOCIATION VS. NLRC (G.R. No. 75347, December 11, 1987)
Facts:
In 1971 and 1978, Ford Philippines, Inc. (Ford, for short) and Ensite Ltd. [Phil. Branch] Ensite for short), established
their respective Employees' Retirement Plans (Plans or Plan, for short), exclusively funded from the companies' own
contributions, and for which, the Bank of the Philippine Islands (BPI) was appointed as irrevocable trustee. Both
plans contain an "integration provision," which authorizes the companies to integrate the employees' retirement,
death and disability benefits under the Plans, with and in lieu of statutory benefits under the provisions on termination
pay and retirement benefits in the Labor Code as wen as other similar laws, and analogous benefits granted under
present or future collective bargaining agreements and other employees' benefit plans. Said provision contains the
following statement, “In the event private benefits due under the plan are less than those due and demandable under
the provisions of the termination pay law and/or present or future Collective Bargaining Agreement and/or future
plans of similar nature imposed by law, the company shall respond for the difference.”
In 1984, Ford and Ensite ceased operations in the Philippines, resulting in the termination of all their employees. The
employees were correspondingly paid their full separation benefits totalling about P50,000,000.00. Of which, an
estimated amount of P37,000,000.00 was drawn from the companies' operating funds and the sum of about
P13,000,000.00 was deducted from and paid out of the accumulated P25,000,000.00 (more or less) Retirement
Fund. After the amount of P13,000,000.00 was withdrawn from the Retirement Fund, there remained a balance of
around P10,000,000.00, which under the Plan should be distributed among all the employees.
However, before the actual distribution of the Fund residue, the different labor unions, Ford Salaried Union, Ford
Workers Union and Ensite Salaried Union, filed a complaint dated 19 November 1984 before the Ministry of Labor
and Employment (National Capital Region), assailing the validity of the deduction of P13,000.000.00 from the
Retirement Fund, which were used for separation benefits.
For their part, Ford and Ensite maintained that the deduction of the P13,000,000.00 from the Retirement Fund is in
accord with the "integration provision" of the Plans as well as the various CBAs entered into between management
and the different unions involved.
After due hearing, Labor Arbiter Virginia Son rendered a Decision dated 25 June 1985: 1) upholding the validity of the
deduction of P13,000,000.00 from the Retirement Fund; 2) ordering Ford and Ensite to distribute among the unions
their respective shares in the remaining assets of the Fund, including investments in real estate and stocks, after
liquidation of the Fund, ten percent (10%) of which shag be paid to the unions' counsel as attorney's fees.
The NLRC affirmed the decision of the LA.
Issue:
Whether or not the companies’ action in deducting separation benefits from the Retirement Fund pursuant to the
"integration provision," and to distribute the Fund residue among the employees after liquidation of the Fund are
valid.
Ruling:
The SC affirmed the ruling of the NLRC and LA. The fact that, since the establishment and effectivity of the
Retirement Plans, it had been the policy and practice of the companies to charge termination, retirement and
analogous benefits for separated employees to the Retirement Fund, without a single complaint or dissent on the part
of the unions or any employee, for that matter, is a manifestation on the part of the unions that separation benefits
(not necessarily retirement benefits) are covered by the "integration provision" of the Retirement Plans and are
chargeable to and deductible from the Retirement Fund.
The purpose of the Plans or Fund, as provided in Article 1, Section 2 of the Retirement Plans, is "to assist the
employees financially in providing for their retirement years." This purpose, however, is subject to the terms and
conditions set forth in the Plan. And one such condition is the integration of separation benefits with and in lieu of the
retirement, death, and disability benefits under the Plan. Such being the case, and considering that the Retirement
Plan should be interpreted in its entirety so as to give meaning to an the provisions therein, the phrase retirement
years should not be literally construed as referring only to cases of employees' retirement from the companies, but
should be broadly interpreted as inclusive of all other instances of employees' separation from the companies, such
as, by reason of death, disability or closure of business.

RAZON, JR. VS. NLRC (G.R. No. 80502, May 7, 1990)

Facts:
Since 1966, private respondent, Nicolas S. Garzota, had been employed by petitioner company then known as E.
Razon, Inc. Sometime in 1979, Alfredo Romualdez, the youngest brother of the then First Lady, Imelda R. Marcos,
acquired control of E. Razon, Inc. and renamed it Metroport Services, Inc.
On February 26, 1986, after the February Revolution, petitioners, Enrique Razon, Jr. and Metroport Services, Inc.,
regained control of the company.
On February 28, 1986, because of failing health and having qualified for compulsory retirement at age 65, private
respondent, then the company's chief accountant, submitted a letter request for retirement. Petitioners withheld
action on said request pending completion of the audit of company books.
On March 19, 1986, petitioner Razon, Jr. issued a memorandum terminating the services of private respondent on
the ground of loss of trust and confidence by reason of the missing books of accounts.
Acting on private respondent's complaint for illegal dismissal and unpaid retirement benefits, the Labor Arbiter on
January 30, 1987 rendered a decision in favor of the respondent, which was affirmed by the NLRC on appeal.
Issue:
Whether or not private respondent was validly terminated, which will warrant the non-payment of retirement benefits.
Ruling:
The SC ruled that the private respondent was invalidly terminated because his dismissal was in itself marked by
arbitrariness and lack of due process. Petitioners abruptly dismissed him without giving him a chance to explain his
side. In short, there was not the slightest pretense of fair play. Had petitioners been less hasty and conducted an
investigation, they would have found out that on November 30, 1982, a fire gutted the western portion of petitioners'
warehouse in front of Pier 5, destroying records, books, vouchers and general ledgers.
Also, having rendered twenty years of service with Metroport Services, Inc., it can be said that private respondent
has already acquired a vested right to the retirement fund, a right which can only be withheld upon a clear showing of
good and compelling reasons.
AQUINO VS. NLRC (G.R. No. 87653, February 11, 1992)
Facts:
Petitioners, Conrado M. Aquino, Napoleon B. Aromin, Roberto A. Gaspan, and Nicardo P. Blanquisco, were
employees of private respondent Otis Elevator Company when they were informed of the termination of their
employment in line with the need of the company "to streamline its operations, consolidate certain functions, reduce
its manpower and cut non-essential spending."
Accordingly, petitioners were paid their separation pay based on Section 4, Article VII of the Collective Bargaining
Agreement between the company and its employees providing thus:
All employees in the bargaining unit separated without cause shall be granted separation pay of not less than one (1)
month's latest basic rate for every year of service subject to the existing provisions of the Retirement Plan.
In justifying their subsequent demand for retirement benefits before the Labor Arbiter, the petitioners invoked Section
1, Article XIV, of the CBA in relation to Section 5.2, Article V, of the company's Retirement Plan, which provides:
The COMPANY shall maintain the present group retirement plan which is attached hereto as Annex "A"and made an
integral part of this contract. (Sec. 1, Art. XIV).
For its part, the respondent company argued that separation pay and retirement benefits were mutually exclusive;
hence, the petitioners could no longer claim the latter after having received the former.
The Labor Arbiter ruled in favor of the petitioners mainly on the ground that the company was estopped from
withholding retirement benefits from them after having granted similar benefits to the employees earlier mentioned.
He held that a different treatment of the petitioners would constitute discrimination because "benefits accorded to
other employees must likewise be extended to the rest who are similarly situated."
In reversing the appealed decision, the NLRC declared that the case cited by the petitioners was exceptional and
could not be considered a precedent. Moreover —
The CBA provision is very clear that while the employees separated without cause are entitled to a separation pay of
not less than one (1) month's latest basic rate for every year of service, this is made merely subject to and not in
addition to the existing provisions of Section 5.2 of the Article V of the Retirement Plan. In other words, no logical
inference can be made that the benefits under Section 5.2 of Article V of the Retirement in addition to the one (1)
month's latest basic rate for every year of service. (sic) Therefore, the offer of appellant perfectly fits well within the
contemplation of the parties as envisaged in the aforementioned provisions of the CBA and the Retirement Plan.
Issue:
Whether or not the petitioners were still entitled to the retirement benefits, having received the separation pay.
Ruling:
The SC ruled in the affirmative. It stated that it has carefully examined the record, and particularly the Collective
Bargaining Agreement and the Retirement Plan, and has found no specific prohibition against the payment of both
benefits to the employee.
Maintaining that the above cases have no application to the case at bar, the company calls attention to Book VI,
Section 14, Rule 1, of the Omnibus Rules Implementing the Labor Code, which provides as follows:
(a) An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable individual
or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein
or to termination pay equivalent to at least one-half month salary for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one whole year.
However, it overlooks sub-section (c) of the same Section 14, which clearly provides that:
(c) This Section shall apply where the employee retires at the age of sixty (60) years or more.
The private respondent has not shown that the petitioners were sixty years or older at the time of their separation and
therefore covered by the said section. Having itself invoked that provision, the company had the obligation to prove
that the petitioners came under its terms.
In arriving at our conclusion, we are guided by the principle that any doubt concerning the rights of labor should be
resolved in its favor, pursuant to the social justice policy, the SC has stated.

SAN MIGUEL CORPORATON VS LAO (G.R. Nos. 143136-37, July 11, 2002)
Facts:
Alfredo B. Lao had worked as Materials Planner for San Miguel Corporation, Inc. (SMC for brevity) whose
responsibility includes procurement of cullets (bubog), raw materials used by the company for its glass plant. On
December 10, 1995, Rogerio Ibanes, Security Detachment Commander of a certain Protective Agency, received
information that some deliveries of cullets were being misdeclared. Acting on this tip, Mr. Ibanes conducted
surveillance work on deliveries of cullets made by Four Sisters, the Company’s biggest supplier of cullets. Mr. Ibanes
and Larry Ventura, a store staff of the company, personally witnessed the attempt by the employees of Four Sisters
to divert three (3) truck loads of unwashed cullets earlier delivered to the company but were backloaded and brought
to Marilao, Bulacan for washing purposes.
On January 19, 1996, Mr. Ibanes recounted that at about 9:30 oclock in the evening, three (3) trucks owned by Four
Sisters and loaded with cullets, arrived at the SMCs Manila Glass Plant in Binondo, Manila. Covered by
corresponding delivery receipts, these cullets after being weighed were sent off to Marilao, Bulacan for washing
purposes. However, these cullets were brought to Cabuyao, Laguna which prodded Mr. Ibanes to report the matter to
the Cabuyao Police who immediately apprehended the delivery truck drivers as they neared the plant of Asia
Brewery located in that area. Upon intercession of Alfredo Lao, the three trucks and its drivers and crew were
released from the police custody the next day.
In the administrative investigation that ensued, SMC required Alfredo B. Lao to submit a written explanation why he
interceded for the release of the drivers, helpers and the three (3) truckloads of unwashed cullets from police
custody. Finding unsatisfactory the explanation given by Lao, he was terminated by SMC on May 15, 1996, for
violation of the rule prohibiting removal of any company property without proper authorization. Aggrieved, Lao filed a
complaint for illegal dismissal.
The labor arbiter dismissed the complaint for illegal dismissal and ruled that Lao deviated from his responsibility to
ensure adequate inventory and supply of cullets to the glass plant of SMC. The labor arbiter concluded that the act of
Lao in causing the delivery of the cullets into the hands of a competitor was an act of disloyalty that justified the
termination of his employment.
On appeal to it, the NLRC, in its resolution of 05 June 1998, affirmed the decision of the labor arbiter but, taking into
account his track record of twenty-seven (27) years of employment and the fact that it was the first time that he had
committed an act adverse to SMC, the commission ordered the latter to pay Lao his retirement benefits under its
retirement plan if any, or, if none, to pay him separation pay at the rate of one-half (1/2) month salary for every year
of service. Dissatisfied, SMC appealed the decision to the Court of Appeals. The appellate court, in its now assailed
decision and resolution, dismissed the petition and affirmed the ruling of the NLRC.
Issue:
Whether or not Lao was entitled to the award of either retirement benefits or separation pay considering his
dismissal.
Ruling:
In reversing the CA’s ruling, it stated that the award of separation pay is authorized in the situations dealt with in
Article 283 and Article 284 of the Labor Code and in cases where there is illegal dismissal but reinstatement would
no longer be feasible under Section 4(b), Rule I, Book VI, of the Implementing Rules and Regulations of the Labor
Code. When an employee is dismissed for any of the just causes enumerated in Article 282 of the Labor Code, the
rule is that he would not be entitled to the payment of separation pay.
In the case at bar, respondent is found by the labor arbiter and the NLRC to have been properly dismissed for his
willful breach of trust and confidence. These findings, which have been affirmed by the Court of Appeals, cannot
simply be ignored; indeed, such findings possess a degree of conclusiveness on, or at the very least must be
accorded respect by, this Court.
Unfortunately for respondent, neither can he claim benefits due from the employer under the companys retirement
plan which concededly prohibits the award of retirement benefits to an employee dismissed for a just cause, a
proscription that binds the parties to it.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense.

R & E TRANPORT, INC. VS. LATAG (G.R. No. 156214, February 13, 2004)
Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from
business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five
hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability
with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer
allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of
[petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored.
Thus, on December 21, 1998, Latag filed a case for payment of his retirement pay before the NLRC. Latag however
died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor
Arbiter rendered a decision in favor of Latag.
Issue:
Whether or not Latag is entitled to retirement benefits despite the waiver of quitclaim.
Ruling:
The respondent is entitled to retirement benefits despite of the waiver of quitclaims. There is no dispute the fact that
the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that
he should be credited with in computing those benefits. The findings of the NLRC that Pedro must be credited only
with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two
different entities. After a careful and painstaking review of the evidence on record, the court supports the NLRC's
findings.
As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the
document was invalid and could not bar her from demanding the benefits legally due her husband. This is not to say
that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits,
and look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the
Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement plan
or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the
one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month
32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or
fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the
average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500)
per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.
CAINTA CATHOLIC SCHOOL VS. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (G.R. NO. 151021, MAY
4, 2006)
Facts:
On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School
(School) and the Cainta Catholic School Employees Union (Union) effective 1 January 1986 to 31 May 1989. Section
2, Article X of the CBA provides that:

An employee may be retired, either upon application by the employee himself or by the decision of the Director of the
School, upon reaching the age of sixty (60) or after having rendered at least twenty (20) years of service to the
School the last three (3) years of which must be continuous.
Subsequently, petitioner school retired (forcible retirement) Mrs. Rosalina Llagas (Llagas) and Paz Javier (Javier),
President and Vice-president of respondent union, respectively, who had rendered more than twenty (20) years of
continuous service, pursuant to Section 2, Article X of the CBA.
Because of the foregoing, the union filed a Notice of Strike with the NCMB and later staged a strike and picketed in
the school’s entrance. Later, the union filed a complaint for unfair labor practice against petitioner school before the
NLRC.
The School avers that the retirement of Llagas and Javier was clearly in accordance with a specific right granted
under the CBA. The School justifies its actions by invoking our rulings in Pantranco North Express, Inc. v. NLRC and
Bulletin Publishing Corporation v. Sanchez that no unfair labor practice is committed by management if the retirement
was made in accord with management prerogative or in case of voluntary retirement, upon approval of management.
The Union, on the other hand, argues that the retirement of the two union officers is a mere subterfuge to bust the
union.
The Union filed a complaint for unfair labor practice before the NLRC. NLRC denied complaint.
CA reversed the resolution of the NLRC and ruled in favor of the Union. The appellate court concluded that the
retirement of the two (2) union officers was clearly to bust the reactivated union.
Issue:
Whether or not the force retirement of Llagas and Javier is valid.
Ruling:
The SC affirmed the validity of the termination of employment of Llagas and Javier, arising as it did from a
management prerogative granted by the mutually-negotiated CBA between the School and the Union.
Pursuant to the existing CBA, the School has the option to retire an employee upon reaching the age limit of sixty
(60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years of which must
be continuous. Retirement is a different species of termination of employment from dismissal for just or authorized
causes under Articles 282 and 283 of the Labor Code. While in all three cases, the employee to be terminated may
be unwilling to part from service, there are eminently higher standards to be met by the employer validly exercising
the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable that the employer
establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on
the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the
former.
Interpreting Article 287, the Court ruled that the Labor Code permitted employers and employees to fix the applicable
retirement age at below 60 years of age. Moreover, the Court also held that there was no illegal dismissal since it
was the CBA itself that incorporated the agreement reached between the employer and the bargaining agent with
respect to the terms and conditions of employment; hence, when the private respondent ratified the CBA with his
union, he concurrently agreed to conform to and abide by its provisions.
By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and limitations
they had agreed to cede to management. The questioned retirement provisions cannot be deemed as an imposition
foisted on the Union, which very well had the right to have refused to agree to allowing management to retire
employees with at least 20 years of service.
Under Article 287 of the Labor Code, a CBA may validly accord management the prerogative to optionally retire an
employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if
such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement
age.
JACULBE VS SILLIMAN UNIVERSITY (G.R. NO. 156934, MARCH 16, 2007)
Facts:
Sometime in 1958, petitioner, Alpha C. Jaculbe, began working for respondent University Medical Center as a nurse.
In a letter dated December 3, 1992, respondent, through its Human Resources Development Office, informed
petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement
on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement plan
for its employees which provided that its members could be automatically retired upon reaching the age of 65 or after
35 years of uninterrupted service to the university. Respondent required certain documents in connection with
petitioners impending retirement.
Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and
pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she
could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing company policy.
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for
termination of service with preliminary injunction and/or restraining order. On November 18, 1993, respondent
compulsorily retired petitioner.
After the parties submitted their position papers, the labor arbiter rendered a decision finding respondent guilty of
illegal dismissal and ordered that petitioner be reinstated and paid full backwages.
On appeal, however, the NLRC reversed the labor arbiter’s decision and dismissed the complaint for lack of merit.
The NLRC likewise denied petitioners motion for reconsideration.
In the assailed decision and resolution, the CA affirmed the NLRC.
Issue:
Whether or not the compulsory retirement of the petitioner on account of company policy was valid.
Ruling:
Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are
not per se repugnant to the constitutional guaranty of security of tenure. By its express language, the Labor Code
permits employers and employees to fix the applicable retirement age at below 60 years.
An employer is free to impose a retirement age less than 65 for as long as it has the employees consent. Stated
conversely, employees are free to accept the employers offer to lower the retirement age if they feel they can get a
better deal with the retirement plan presented by the employer. Thus, having terminated petitioner solely on the basis
of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal.
The SC reinstated the ruling of the Labor Arbiter with modifications.

CERCADO VS. UNIPROM, INC. (G.R. NO. 188154, OCTOBER 13, 2010)
Facts:
Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc. (UNIPROM) on December
15, 1978 as a ticket seller assigned at Fiesta Carnival, Araneta Center, Quezon City.
On April 1, 1980, UNIPROM instituted an Employees Non-Contributory Retirement Plan which provides that any
participant with twenty (20) years of service, regardless of age, may be retired at his option or at the option of the
company.

On January 1, 2001, UNIPROM amended the retirement plan in compliance with Republic Act (R.A.) No. 7641.
Under the revised retirement plan,UNIPROM reserved the option to retire employees who were qualified to retire
under the program.

Sometime in December 2000, UNIPROM implemented a company-wide early retirement program for its 41
employees, including herein petitioner, who, at that time, was 47 years old, with 22 years of continuous service to the
company. She was offered an early retirement package amounting to P171,982.90, but she rejected the same.

UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective at the end of
business hours on February 15, 2001. A check of even date in the amount of P100,811.70, representing her
retirement benefits under the regular retirement package, was issued to her. Cercado refused to accept the check.

UNIPROM nonetheless pursued its decision and Cercado was no longer given any work assignment after February
15, 2001. This prompted Cercado to file a complaint for illegal dismissal before the Labor Arbiter (LA), alleging,
among others, that UNIPROM did not have a bona fide retirement plan, and that even if there was, she did not
consent thereto.

For its part, respondent UNIPROM averred that Cercado was automatically covered by the retirement plan when she
agreed to the company’s rules and regulations, and that her retirement from service was a valid exercise of a
management prerogative.

After submission of the parties’ position papers, the LA rendered a decision finding petitioner to be illegally
dismissed. Respondent company was ordered to reinstate her with payment of full backwages.

The National Labor Relations Commission (NLRC) affirmed the LAs decision, adding that there was no evidence that
Cercado consented to the alleged retirement plan of UNIPROM or that she was notified thereof.
The CA ruled that UNIPROMs retirement plan was consistent with Article 287 of the Labor Code, which provides that
any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract.
Issue:
Whether or not the compulsory retirement of petitioner pursuant to the Employees Non-Contributory Retirement Plan
constitutes illegal dismissal.
Ruling:
The SC reversed the decision of the CA. It is axiomatic that a retirement plan giving the employer the option to retire
its employees below the ages provided by law must be assented to and accepted by the latter, otherwise, its
adhesive imposition will amount to a deprivation of property without due process of law.

The assailed retirement plan of UNIPROM is not embodied in a CBA or in any employment contract or agreement
assented to by petitioner and her co-employees. On the contrary, UNIPROMs Employees Non-Contributory
Retirement Plan was unilaterally and compulsorily imposed on them.
For the option to be valid, the retirement plan containing it must be voluntarily assented to by the employees or at
least by a majority of them through a bargaining representative.

SERRANO VS. SEVERINO SANTOS TRANSIT (G.R. No. 187698, August 9, 2010)
Facts:
Petitioner Rodolfo J. Serrano was hired on September 28, 1992 as bus conductor by respondent Severino Santos
Transit, a bus company owned and operated by its co-respondent Severino Santos.
After 14 years of service or on July 14, 2006, petitioner applied for optional retirement from the company whose
representative advised him that he must first sign the already prepared Quitclaim before his retirement pay could be
released. As petitioners request to first go over the computation of his retirement pay was denied, he signed the
Quitclaim on which he wrote U.P. (under protest) after his signature, indicating his protest to the amount of
P75,277.45 which he received, computed by the company at 15 days per year of service.

Petitioner soon after filed a complaint before the Labor Arbiter, alleging that the company erred in its computation
since under Republic Act No. 7641, otherwise known as the Retirement Pay Law, his retirement pay should have
been computed at 22.5 days per year of service to include the cash equivalent of the 5-day service incentive leave
(SIL) and 1/12 of the 13th month pay which the company did not.

The company maintained, however, that the Quitclaim signed by petitioner barred his claim and, in any event, its
computation was correct since petitioner was not entitled to the 5-day SIL and pro-rated 13th month pay for, as a bus
conductor, he was paid on commission basis.

On February 15, 2007, Labor Arbiter Cresencio Ramos, Jr. ruled in favor of petitioner. The National Labor Relations
Commission (NLRC) to which respondents appealed reversed the Labor Arbiter’s ruling and dismissed petitioner’s
complaint, which was affirmed by the CA.
Issue:
Whether or not petitioner, being purely paid on commission basis, was excluded from the coverage of the laws on
13th month pay and SIL pay, hence, the 1/12 of the 13th month pay and the 5-day SIL should not be factored in the
computation of his retirement pay.
Ruling:
In ruling in favor of the petitioner, the SC cited Section 1 of Republic Act No. 7641 which was enacted on December
9, 1992. The pertinent provision of said law reads:

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5)
years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered
as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.

Retail, service and agricultural establishments or operations employing not more than (10) employees or
workers are exempted from the coverage of this provision.

Further, the Implementing Rules of said law provide:

General Statement on Coverage. This 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 2hereof. As used herein, the term
Act shall refer to Republic Act No. 7641 which took effect on January 7, 1993.

Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if
petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its
implementing rules. As thus correctly ruled by the Labor Arbiter, petitioners retirement pay should include the cash
equivalent of the 5-day SIL and 1/12 of the 13th month pay.
For purposes, however, of applying the law on SIL, as well as on retirement, the SC notes that there is a difference
between drivers paid under the “boundary system” and conductors who are paid on commission basis.

A taxi driver paid according to the “boundary system” is not entitled to the 13th month and the SIL pay, hence, his
retirement pay should be computed on the sole basis of his salary. In practice, taxi drivers do not receive fixed
wages. They retain only those sums in excess of the “boundary” or fee they pay to the owners or operators of the
vehicles.

Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the day. Hence, being paid on
purely commission basis.
 [G.R. No. 154689. November 25, 2004]
UNICORN SAFETY GLASS, INC., LILY YULO and HILARIO YULO, petitioners, vs. RODRIGO BASARTE,
JAIMELITO FLORES, TEODOLFO LOR, RONNIE DECIO, ELMER SULTORA and JOSELITO DECIO,
respondents.
Facts:
Respondents were regular employees of petitioner Unicorn Safety Glass Incorporated, a company
engaged in the business of glass manufacturing. Respondents normally worked six (6) times a week,
from Monday to Saturday, and were paid on a weekly basis. They were likewise officers of the organized
union in petitioner company, owned and managed by the Spouses Lily and Hilario Yulo.
The petitioner issued a memorandum informing the respondents that their workdays shall be reduced
due to economic considerations. Several factors cited such as decrease in sales, increase in the cost of
production, devaluation of the peso and increase in minimum wage, which contributed to the current
economic state of the company. Respondents registered their protest to the proposed reduction of
working days and expressed doubts on the reasons offered by the company. Respondents also surmised
that the management was merely getting back at them for forming a union especially since only the
union officers were affected by the work reduction.
Another memo was issued to the respondents announcing the implementation of a work rotation
schedule which will effectively reduce respondents workdays to merely three days a week. Respondents
wrote another letter of protest expressing their frustrations at the apparent lack of willingness on the
part of petitioner companys management to address their concerns and objections. The respondents
inquired as to the reasons for the imposition of the reduced workweek. They were told that it was
managements prerogative to do so.
Respondents filed a complaint for constructive dismissal and unfair labor practice with the LA. LA
rendered judgment finding that respondents were not constructively terminated by petitioner company.
Telegrams, letters and memoranda sent by petitioner to respondents ordering the latter to report for
work. Despite due receipt by the respondents of these communications, they simply ignored petitioner’s
plea. Respondents deliberate refusal to report for work is very much evident from the number of letters
they received from respondents which were all ignored. The case was appealed to the NLRC. The NLRC
sustained the findings of the Labor Arbiter. The respondents filed a petition for certiorari with the Court
of Appeals, which found respondents case partly meritorious.

Issue: WON the respondents were constructively dismissed.

Ruling: Yes. The respondents were constructively dismissed.

Constructive dismissal or a constructive discharge has been defined as quitting because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank
and a diminution in pay. Constructive dismissal, however, does not always take the form of a
diminution. In several cases, the SC have ruled that an act of clear discrimination, insensibility, or disdain
by an employer may become so unbearable on the part of the employee so as to foreclose any choice
on his part except to resign from such employment. This constitutes constructive dismissal. It was
incumbent upon petitioners to prove that the rotation scheme was a genuine business necessity and not
meant to subdue the organized union. The reasons enumerated by petitioners in their Memoranda were
factors too general to actually substantiate the need for the scheme. Petitioners cite the reduction in
their electric consumption as proof of an economic slump. This may be true to an extent. But it does
not, by itself, prove that the rotation scheme was the most reasonable alternative to remedy the
companys problems. The petitioners unbending stance on the implementation of the rotation scheme
was an indication that the rotation plan was being implemented for reasons other than business
necessity. It appears that respondents attempted on more than one occasion to have a dialogue with
petitioner to discuss the work reduction. Good faith should have prompted petitioner to hear the side of
the respondents, to come up with a scheme amenable to both parties or attempt to convince the
employees concerned that there was no other viable option. However, petitioners ignored the letters
sent by respondents, which compelled the latter to seek redress with the Labor Arbiter.
SC are mindful that every business strives to keep afloat during these times when prevailing economic
situations turns such endeavor into a near struggle. With as much latitude as our laws would allow, the
Court has always respected a companys exercise of its prerogative to devise means to improve its
operations. Thus, SC have held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, time, place
and manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further,
management retains the prerogative, whenever exigencies of the service so require, to change the
working hours of its employees.
However, the exercise of management prerogative is not absolute. By its very nature, encompassing as
it could be, management prerogative must be exercised in good faith and with due regard to the rights
of laborverily, with the principles of fair play at heart and justice in mind. While we concede that
management would best know its operational needs, the exercise of management prerogative cannot
be utilized as an implement to circumvent our laws and oppress employees. The prerogative accorded
management cannot defeat the very purpose for which our labor laws exist: to balance the conflicting
interests of labor and management, not to tilt the scale in favor of one over the other, but to guaranty
that labor and management stand on equal footing when bargaining in good faith with each other.

G.R. No. 170661 December 4, 2009

RAMON B. FORMANTES, Petitioner, vs. DUNCAN PHARMACEUTICALS, PHILS., INC., Respondent.
(FACTS):
Ramon B. Formantes, the Acting District Manager of respondent for the Ilocos District, filed a case for
illegal suspension and constructive dismissal against respondent company after the company did not
allow him to attend the meetings and activities, withheld his salary, and directed one of its district
managers to take over his position and functions without prior notice to him. The company did the
foregoing upon a complaint of one of its medical representative, Cynthia Magat, on the attempt by
Ramon Formantes to sexually force himself upon his subordinate. The Labor Arbiter rendered decision
finding the dismissal of Ramon Formantes valid for an attempt to sexually abuse Cynthia Magat but
imposing a penalty on respondent for its failure to give formal notice and conduct the necessary
investigation before dismissing petitioner. The petitioner was not satisfied about the decision of the
Labor Arbiter. The petitioner appealed to the NLRC. NLRC affirmed the decision of the Labor Arbiter.
Petitioner went to the Court of Appeals. The CA affirmed the NLRC’s decision with modification of the
penalty imposed against the respondent from P1,000.00 to P5,000.00.
ISSUE:
Whether or not the dismissal of petitioner on the ground of sexual abuse is proper when the charge
against him, stated in the termination letter, was insubordination.
RULING:
Although petitioner was dismissed from work by the respondent on the ground of insubordination, the
Court cannot close its eyes to the fact that the ground of sexual abuse committed against petitioner's
subordinate actually exists and was established by substantial evidence before the LA. The LA would be
rendered inutile if she would just seal her lips after finding that there is a just cause for dismissal.
Thus, the SC hold the dismissal as valid, but find that there was non-compliance with the twin
procedural requirements of notice and hearing for a lawful dismissal.
The twin requirements of notice and hearing constitute the essential elements of due process in the
dismissal of employees. It is a cardinal rule that the employer must furnish the employee with two
written notices before the termination of employment can be affected: (a) the first apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (b) the second
informs the employee of the employers decision to dismiss him.
Since the dismissal, although for a valid cause, was done without due process of law, the employer
should indemnify the employee with nominal damageswe ordered the employer to pay indemnity to the
dismissed employees in the form of nominal damages The violation of the petitioners right to statutory
due process by the private respondent warrants the payment of indemnity in the form of nominal
damages in the amount of P30,000.00.
CRC Agricultural Trading v NLRC (GR No. 177664)

Facts: The respondent employed the respondent as a driver sometime in 1985. The respondent worked
for the petitioners until he met an accident in 1989, after which the petitioners no longer allowed him to
work. After six years, or in February 1995, the petitioners again hired the respondent as a driver and
offered him to stay inside the companys premises. The petitioners gave him a P3,000.00 loan to help
him build a hut for his family.
Sometime in March 2003, the petitioners ordered respondent to have the alternator of one of its
vehicles repaired. The respondent brought the vehicle to a repair shop and subsequently gave the
petitioners two receipts issued by the repair shop. The latter suspected that the receipts were falsified
and stopped talking to him and giving him work assignments. The petitioners, however, still paid him
P700.00 and P500.00 on April 15 and 30, 2004, respectively, but no longer gave him any salary after
that. As a result, the respondent and his family moved out of the petitioners compound and relocated to
a nearby place. The respondent claimed that the petitioners paid him a daily wage of P175.00, but did
not give him service incentive leave, holiday pay, rest day pay, and overtime pay. He also alleged that
the petitioners did not send him a notice of termination.
In opposing the complaint, the petitioners claimed that the respondent was a seasonal driver; his work
was irregular and was not fixed. The petitioners paid the respondent P175.00 daily, but under a no work
no pay basis. The petitioners also gave him a daily allowance of P140.00 to P200.00. In April 2003, the
respondent worked only for 15 days for which he was paid the agreed wages. The petitioners
maintained that they did not anymore engage the respondents services after April 2003, as they had
already lost trust and confidence in him after discovering that he had forged receipts for the vehicle
parts he bought for them. Since then, the respondent had been working as a driver for different jeepney
operators.
LA , ruled in the respondents favor declaring that he had been illegally dismissed. The labor arbiter held
that as a regular employee, the respondents services could only be terminated after the observance of
due process. The labor arbiter likewise disregarded the petitioners charge of abandonment against the
respondent. LA ordered petitioner to pay the following: Separation Pay - P64,740.00; Backwages Basic
pay - P146,491.80; 13th month pay - 12,207.65; SIL - 2,347.63; Salary Differential - 47,944.00; Unpaid SIL
- 3,467.00; 10% attorneys fees - 27,719.80. GRAND TOTAL - P304,917.80.
Both the petioner and the respondent appealed to the NLRC petitioner specifically questioned the ruling
that the respondent was illegally dismissed. The respondent, for his part, maintained that the labor
arbiter erred when he ordered the payment of separation pay in lieu of reinstatement. The NLRC, in its
resolution of August 15, 2006,[9] modified the labor arbiters decision. The NLRC ruled that the
respondent was not illegally dismissed and deleted the labor arbiters award of backwages and attorneys
fees. The NLRC reasoned out that it was respondent himself who decided to move his family out of the
petitioners lot; hence, no illegal dismissal occurred. Moreover, the respondent could not claim wages for
the days he did not work, as he was employed by the petitioners under a no work no pay scheme.
The petioner a petition for certiorari with the CA alleging that the NLRC erred in awarding the
respondent separation pay and salary differentials. They argued that an employee who had abandoned
his work, like the respondent, is no different from one who voluntarily resigned; both are not entitled to
separation pay and to salary differentials. The petitioners added that since they had already four regular
drivers, the respondents job was already unnecessary and redundant. They further argued that they
could not be compelled to retain the services of a dishonest employee. The CA reversed and set aside
the NLRC resolution and reinstated the labor arbiters decision. The CA disregarded the petitioners
charge of abandonment against the respondent for their failure to show that there was deliberate and
unjustified refusal on the part of the respondent to resume his employment. The CA also ruled that the
respondents filing of a complaint for illegal dismissal manifested his desire to return to his job, thus
negating the petitioners charge of abandonment. Even assuming that there had been abandonment, the
petitioners denied the respondent due process when they did not serve him with two written notices,
i.e., (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) a subsequent notice which advises the employee of the employers decision to dismiss
him. Thus, the respondent is entitled to full backwages without deduction of earnings derived elsewhere
from the time his compensation was withheld from him, up to the time of his actual reinstatement. The
CA added that reinstatement would no longer be beneficial to both the petitioners and respondent, as
the relationship between them had already been strained. In the present petition, the petitioners
alleged that the CA erred when it awarded the respondent separation pay, backwages, salary
differentials, and attorneys fees. They reiterated their view that an abandoning employee like
respondent is not entitled to separation benefits because he is no different from one who voluntarily
resigns.
.Issue: WON the respondent was illegally dismissed.
Ruling:
The petitioners clearly failed to comply with the two-notice requirement. Nothing in the records shows
that the petitioners ever sent the respondent a written notice informing him of the ground for which his
dismissal was sought. It does not also appear that the petitioners held a hearing where the respondent
was given the opportunity to answer the charges of abandonment. Neither did the petitioners send a
written notice to the respondent informing the latter that his service had been terminated and the
reasons for the termination of employment. Under these facts, the respondent’s dismissal was illegal.

PHILIPPINE RURAL RECONSTRUCTION MOVEMENT (PRRM), Petitioner, v. VIRGILIO E. PULGAR,

Respondent. - G.R. No. 169227

Facts:
Pulgar was the manager of PRRMs Tayabas Bay Field Office (TBFO) branch office in Quezon Province.
When Pulgar was reassigned to PRRMs central office, PRRM conducted an investigation into alleged
financial anomalies committed at the TBFO. In her investigation report, Solis stated that part of the
funds allotted to the TBFO was missing or not properly accounted for. The report also stated that some
of the receipts that the TBFO submitted to liquidate the organizations financial transactions were
fictitious and manufactured. PRRM maintains that while the investigation was ongoing, Pulgar went on
leave. After the lapse of his last leavePulgar no longer reported to work, leading PRRM to believe that
Pulgar had abandoned his work to evade any liability arising from the investigation. PRRM was therefore
surprised to learn that Pulgar had filed an illegal dismissal case.
Pulgar tells another tale. According to him, he submitted a letter to PRRM to complain that he was not
given the right to confront and question Solis, but his letter went unanswered. Thereafter, he was not
allowed to enter the premises of the organization. Pulgar also alleges that PRRMs representatives
removed his personal properties and records from his office, placed them in boxes and kept them in
storage. Believing he was constructively dismissed by PRRMs actions, Pulgar filed a complaint against
PRRM for illegal dismissal, illegal suspension, and nonpayment of service incentive leave pay and 13th
month pay. Pulgar also asked for actual damages, moral damages, and attorneys fees. At the mandatory
conferences before Labor Arbiter, Pulgar dropped the illegal suspension charge, as well as his claim for
payment of service incentive leave with pay.
The Labor Arbiter found in his decision that Pulgar had been illegally dismissed and ordered PRRM to
pay Pulgar P319,387.50 as full backwages. However, the Labor Arbiter chose not to award Pulgar moral
or exemplary damages after finding that PRRM had legitimate grounds to investigate Pulgar. Due to the
strained relations between PRRM and Pulgar, the Labor Arbiter opted to award Pulgar separation pay
instead of ordering his reinstatement.
On appeal, the NLRC reversed the Labor Arbiter’s decision and dismissed Pulgars complaint, giving more
weight to PRRMs allegation that Pulgar abandoned his work. This prompted Pulgar to bring the matter
to the CA via a petition for review on certiorari under Rule 65 of the 1997 Rules on Civil Procedure.
The CA rendered the assailed decision, granting Pulgars petition and reinstating the Labor Arbiters
decision. The appellate court noted that PRRM never rebutted Pulgars contentions that he had been
prevented from entering the premises and that his personal effects were taken from his office and
placed in storage. The CA further observed that PRRM presented no evidence to prove that Pulgar
abandoned his job. Reasoning that filing an illegal dismissal complaint is inconsistent with the charge of
abandonment, the appellate court concluded that Pulgar had been illegally dismissed.
Issue: WON respondent was illegally dismissed from employment.
Ruling: While that in illegal dismissal cases, the employer bears the burden of proving that the
termination was for a valid or authorized cause, in the present case, however, the facts and the
evidence do not establish a prima facie case that the employee was dismissed from employment.
Before the employer must bear the burden of proving that the dismissal was legal, the employee must
first establish by substantial evidence the fact of his dismissal from service. Logically, if there is no
dismissal, then there can be no question as to its legality or illegality. Bare allegations of constructive
dismissal, when uncorroborated by the evidence on record, cannot be given credence.
Although under normal circumstances, an employees act of filing an illegal dismissal complaint against
his employer is inconsistent with abandonment; in the present case, we simply cannot use that one act
to conclude that Pulgar did not terminate his employment with PRRM, and in the process ignore the
clear, substantial evidence presented by PRRM that proves otherwise.
While the Constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute will be automatically decided in favor of labor.
Management also has its rights which are entitled to respect and enforcement in the interest of simple
fair play. Out of its concern for those with less privileges in life, the Supreme Court has inclined, more
often than not, toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded the Court to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the applicable law and doctrine.

Ma. Socorro Mandapat vs. Add Force Personnel Services, Inc. and Court of Appeals
G.R. No. 180285; 6 July 2010
Facts: Ma. Socorro Mandapat (Mandapat) was hired by Add Force Personnel Services, Inc. (Add
Force) as Sales and Marketing Manager to negotiate and consummate contracts with clients who
wanted to avail of Add Force’s services.
Add Force gave Mandapat a show-cause notice directing her to explain why she should not be
disciplined for gross and habitual neglect of duties and willful breach of trust. The notice also placed
her on preventive suspension during the course of the investigation. According to Add Force, during
her 5-month stint as Sales and Marketing Manager, Mandapat failed to close a single deal, issued
several proposals to clients which were grossly disadvantageous to Add Force or disregarded the
client’s budget ceiling, sent out several communications to clients containing erroneous data and
computations, consistently failed to submit her reports, and submitted fictitious daily activity reports
and reimbursement slips.
Mandapat gave Add Force her response to the show-cause memorandum along with her resignation
letter supposedly in protest of the preventive suspension. Subsequently, she filed a complaint with the
labor arbiter, claiming she was constructively dismissed when she was placed on preventive
suspension, her access to the internet cut-off, and then pressured by Add Force to resign in exchange
for separation pay. She denied that she was negligent, and faulted the Chief Executive Officer for his
indecisiveness and the lack of support staff for the sales department. She claimed that her preventive
suspension was illegal for being indefinite, since its duration was not stated in the show-cause
memorandum. She argued that she did pose any danger to the lives of Add Force’s officers or its
properties to warrant the preventive suspension.
Add Force insisted that Mandapat resigned and was not dismissed. It explained that Mandapat was
placed on preventive suspension because of the risk she posed on its property and business. Add Force
added that Mandapat’s preventive suspension for 1 day can hardly be considered indefinite, given that
she immediately resigned 1 day after the suspension.
The Labor Arbiter found that the charges of gross and habitual neglect and loss of trust and confidence
were not substantiated, and declared Mandapat to have been constructively dismissed. The National
Labor Relations Commission (NLRC) affirmed the labor arbiter’s finding of constructive dismissal.
Add Force brought the case to the Court of Appeals (CA) which reversed the decisions of the NLRC
and the labor arbiter. The CA sustained the preventive suspension as a valid exercise of management
prerogative pending investigation for a perceived violation of company rules. The CA ruled that
Mandapat chose to resign from her job and her resignation mooted the issue of preventive suspension.
Mandapat questioned the CA’s ruling before the Supreme Court.

Issue: Whether or not Mandapat was constructively dismissed.

Held: Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an
employer has become so unbearable to the employee leaving him with no option but to forego his
continued employment.
There was no act of discrimination committed against Mandapat that would render her employment
unbearable.
Preventive suspension may be legally imposed on employee whose alleged violation is the subject of
an investigation. The purpose of his suspension is to prevent him from causing harm or injury to the
company as well as to his fellow employees (Section 8, Rule XXIII, Book V, Omnibus Rules
Implementing the Labor Code, as amended by Department Order No. 9, Series of 1997). No
preventive suspension shall last longer than 30 days and the employer shall thereafter reinstate the
worker in his former or in a substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and other benefits due to
the worker (Section 9, Rule XXIII, Book V, Omnibus Rules Implementing the Labor Code, as amended
by Department Order No. 9, Series of 1997). When preventive suspension exceeds the maximum
period allowed without reinstating the employee either by actual or payroll reinstatement or when
preventive suspension is for an indefinite period, only then will constructive dismissal set in.
While no period was mentioned in the show-cause memorandum, the inclusion of the phrase “during
the course of investigation” would lead to a reasonable and logical presumption that said suspension in
fact had a duration which could very well be not more than 30 days as mandated by law. And, as the
CA correctly observed, the suspension was rendered moot by Mandapat’s resignation tendered a day
after the suspension was made effective.
The preventive suspension was also necessary to protect Add Force’s assets and operations pending
investigation of Mandapat. As Sales Manager, Mandapat had the power to enter into contracts that
would bind Add Force, regardless of whether these contracts would prove to be beneficial or
prejudicial to its interest.
The cutting-off of Mandapat’s internet access was not harassment but a consequence of the
investigation against her and was intended to prevent her from having further access to the company’s
network-based documents and forms. Add Force’s acts were just measures to protect itself while the
investigation was ongoing.
There was no coercion employed on Mandapat to resign. Mere allegations of threat or force do not
constitute evidence to support a finding of forced resignation. In order for intimidation to vitiate
consent, the following requisites must concur: (1) the intimidation caused the consent to be given; (2)
the threatened act is unjust or unlawful; (3) the threat is real or serious, there being evident
disproportion between the evil and the resistance which all men can offer, leading to the choice of
doing the act which is forced on the person to do as the lesser evil; and (4) it produces a well-grounded
fear from the fact that the person from whom it comes has the necessary means or ability to inflict the
threatened injury to his person or property. None of these requisites was proven by Mandapat. No
demand was made on her to resign. At most, she was merely given the option to either resign or face
disciplinary investigation, which Add Force had every right to conduct in light of her numerous
infractions. There was nothing irregular in providing an option to her. Ultimately, the final decision on
whether to resign or face disciplinary action rested on her alone.

Jo Cinema Corporation v Abellana (GR No. 132837)

Facts: Petioner is a duly orgabized corporation engaged in the movie business. Private respondent was
employed as theater porter.
Petioner issued a memorandum reminding all ticket sellers not to encash any check from their cash
collections and to turn-over all cash collections to the petitioner.
Private respondent encashed, on behalf of her friend Luzviminda Silva, four (4) Banco del Norte checks
amounting to P66,000, with Emperatriz Ynrig, ticket seller of petitioner, they were dishonored for
insuffiency of funds. Consequently, respondent was sent a show-cause memorandum requiring her to
explain why no disciplinary action should be taken against her relative to the checks in question, which
she failed to comply. She was likewise placed under preventive suspension for a period of 20 days.
Petioner directed private respondent to appear and present her side at the administrative investigation.
The respondent attended the said investigation where she admitted to have encashed the checks
without petitioner’s permission. On the same day she was suspended, counsel for petitioners
summoned her to his office and was advised to resign and pay the bounced checks’ amount which
respondent vehemently protested. On that very same day she was told that she was dismissed from the
service.
Issue: WON private respondent was illegally dismiised from service.
Ruling: It would seem from the foregoing that at the time she filed the complaint, there is as yet no
cause of action against the respondent as she was merely placed on preventive suspension.
A constructive discharge is defined as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; as an offer involving demotion in rank and a diminution in pay.
Private respondent was not demoted nor suffered any diminution of pay, neither was she prevented
from returning for work, As discussed earlier, private respondent was suspended from work for 20 days
for violating company rules. Petitioners stance to oblige private respondent to pay the amount of the
checks is just fair and reasonable considering that she indorsed the subject checks. The payment of said
amount is not discriminatory, impossible, and unreasonable to foreclose any choice on the part of the
private respondent to forego her continued employment. It was private respondent who signified her
intention not to report for work when she filed the instant case.

VALIAO v. COURT OF APPEALS (GR NO. 146621)

Facts:
Petitioner was absent from work without permission or notice to his immediate supervisor. It turned out
that he went to Bacolod City and was one of those arrested during a raid in the house of one Toto Ruiz,
a suspected drug pusher and was brought to the Bacolod Police Station along with four other suspects.
Petitioner was asked to explain within 24 hours why he should not be terminated as a result of the raid
and the charges against him for violation RA 6425 as amended. Petitioner allegedly was not able to
answer immediately since he was in jail when memorandum was received. Petitioner was dismissed for
failure to answer said memorandum.
The petitioner wrote WNC explaining his side and asking for due process. WNC cancelled its Notice of
Termination and granted the petitioner’s request. The petitioner was placed under preventive
suspension and an investigation committee was organized to conduct the probe.
A notice of hearing /investigation was sent to the petitioner. After the investigation attended by
petitioner and his counsel, the investigation committee recommended the dismissal of the petitioner. A
notice of termination was then sent to petitioner informing him of his termination from the service for
serious misconduct and gross habitual neglect of duty. The petitioner received the notice but did not file
a grievance concerning the notice of termination.
Petitioner filed a complaint against WNC foe illegal suspension, illegal dismissal, backwages, salary
differential for salary increases and other benefits granted after his dismissal as well as for moral and
exemplary damages and attorney’s fees. In its answer, WNC alleged that petitioner was dismissed on
charges of serious misconduct, and gross and willful neglect of duty.
After due proceedings, the LA found no justifiable reason to place the petitioner under preventive
suspension and there was no serious or imminent threat to life or property of his employer or co-
workers. However, the LA found the dismissal of the petitioner valid due to absenteeism and tardiness.
The LA held that frequent absenteeism and tardiness constituted not only willful disobedience but also
gross habitual neglect of duties, which are valid grounds for termination of employment. He stressed
that petitioner’s frequent absences without proper leave of absence was not only unfair to WNC and the
petitioner’s co-employees but also set an undesirable example to the employees under his supervision,
considering that the petitioner was not a rank and file employee but one who owed more than the usual
fealty to the organization.
On appeal to the NLRC, the latter affirmed the decision of the LA, sustained the latter’s findings of facts,
and made its own findings on the apprehension of the petitioner for possession of prohibited drugs .
Petitioner then filed a petition for Certiorari under Rule 65 before the CA but this was dismissed for lack
of merit.
Issue: WON petitioner was validly dismissed from employment on the ground of serious misconduct
and gross habitual neglect of duties, including habitual tardiness and absenteeism.
Ruling: Petitioner’s dismissal from employment is valid and justified.
For an employees dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee
must be afforded due process.
Serious misconduct and habitual neglect of duties are among the just causes for terminating an
employee under the Labor Code of the Philippines. Gross negligence connotes want of care in the
performance of ones duties. Habitual neglect implies repeated failure to perform ones duties for a
period of time, depending upon the circumstances. The Labor Arbiters findings that petitioners habitual
absenteeism and tardiness constitute gross and habitual neglect of duties that justified his termination
of employment are sufficiently supported by evidence on record. Petitioners repeated acts of absences
without leave and his frequent tardiness reflect his indifferent attitude to and lack of motivation in his
work. More importantly, his repeated and habitual infractions, committed despite several warnings,
constitute gross misconduct unexpected from an employee of petitioners stature. This Court has held
that habitual absenteeism without leave constitute gross negligence and is sufficient to justify
termination of an employee.
Needless to say, so irresponsible an employee like petitioner does not deserve a place in the workplace,
and it is within the managements prerogative of WNC to terminate his employment. Even as the law is
solicitous of the welfare of employees, it must also protect the rights of an employer to exercise what
are clearly management prerogatives. As long as the companys exercise of those rights and prerogative
is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights
of employees under the laws or valid agreements, such exercise will be upheld.
MARICALUM MINING CORPORATION, Petitioner, ANTONIO DECORION, CARPIO MORALES, and
Respondent , G.R. No. 158637
Facts:
Decorion was a regular employee of Maricalum Mining who started out as a Mill Mechanic assigned to
the Concentrator Maintenance Department and was later promoted to Foreman I. The Concentrator
Maintenance Supervisor called a meeting which Decorion failed to attend as he was then supervising the
workers under him. Because of his alleged insubordination for failure to attend the meeting, he was
placed under preventive suspension on the same day. He was also not allowed to report for work the
following day.
A month after, Decorion was served a Notice of Infraction and Proposed Dismissal to enable him to
present his side. He submitted to the Personnel Department his written reply to the notice.
A grievance meeting was held upon Decorions request, during which he manifested that he failed to
attend the meeting because he was then still assigning work to his men. He maintained that he has not
committed any offense and that his service record would show his efficiency.
Decorion filed before NLRC a complaint for illegal dismissal and payment of moral and exemplary
damages and attorneys fees
In the meantime, the matter of Decorions suspension and proposed dismissal was referred to Atty.
Roman G. Pacia, Jr., Maricalum Minings Chief and Head of Legal and Industrial Relations, who issued a
memorandum, recommending that Decorions indefinite suspension be made definite with a warning
that a repetition of the same conduct would be punished with dismissal. Maricalum Minings Resident
Manager issued a memorandum, placing Decorion under definite disciplinary suspension of six (6)
months which would include the period of his preventive suspension which was made to take effect
retroactively.
Decorion was served a memorandum informing him of his temporary lay-off due to Maricalum Minings
temporary suspension of operations and shut down of its mining operations for six (6) months, with the
assurance that in the event of resumption of operations, he would be reinstated to his former position
without loss of seniority rights.
Decorion, through counsel, wrote a letter to Maricalum Mining, requesting that he be reinstated to his
former position. The request was denied with the explanation that priority for retention and inclusion in
the skeleton force was given to employees who are efficient and whose services are necessary during
the shutdown.

Conciliation proceedings having failed to amicably settle the case, the labor arbiter rendered a decision,
finding Decorions dismissal illegal and ordering his reinstatement with payment of backwages and
attorneys fees. According to the labor arbiter, Decorions failure to attend the meeting called by his
supervisor did not justify his preventive suspension. Further, no preventive suspension should last
longer than 30 days.
The NLRC, however, reversed the labor arbiters decision and dismissed Decorions complaint.
On petition for certiorari with the Court of Appeals, the decision of the labor arbiter was reinstated. The
appellate court held that Decorion was placed under preventive suspension immediately after he failed
to attend the meeting called by his supervisor on April 11, 1996. At the time he filed the complaint for
illegal dismissal on July 23, 1996, he had already been under preventive suspension for more than 100
days in violation of Sec. 9, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code
(Implementing Rules) which provides that no preventive suspension shall last longer than 30 days.
Issue: WON Decorion’s preventive suspension is proper and WON he was illegally dismissed
Ruling: Decorion’s preventive suspension is not proper and he was illegally dismissed.
Sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules provide as follows:
Section 8. Preventive suspension. --- The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of
the employer or his co-workers.
Section 9. Period of Suspension --- No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or
the employer may extend the period of suspension provided that during the period of extension, he
pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after completion of the
hearing, to dismiss the worker.
The Rules are explicit that preventive suspension is justified where the employees continued
employment poses a serious and imminent threat to the life or property of the employer or of the
employees co-workers. Without this kind of threat, preventive suspension is not proper.
The Rules are explicit that preventive suspension is justified where the employees continued
employment poses a serious and imminent threat to the life or property of the employer or of the
employees co-workers. Without this kind of threat, preventive suspension is not proper.
In this case, Decorion was suspended only because he failed to attend a meeting called by his
supervisor. There is no evidence to indicate that his failure to attend the meeting prejudiced his
employer or that his presence in the companys premises posed a serious threat to his employer and co-
workers. The preventive suspension was clearly unjustified.

What is more, Decorions suspension persisted beyond the 30-day period allowed by the Implementing
Rules. In Premiere Development Bank v. NLRC,[11] private respondents suspension lasted for more than
30 days counted from the time she was placed on preventive suspension on March 13, 1986 up to the
last day of investigation on April 23, 1986. The Court ruled that preventive suspension which lasts
beyond the maximum period allowed by the Implementing Rules amounts to constructive dismissal.
Similarly, from the time Decorion was placed under preventive suspension on April 11, 1996 up to the
time a grievance meeting was conducted on June 5, 1996, 55 days had already passed. Another 48 days
went by before he filed a complaint for illegal dismissal on July 23, 1996. Thus, at the time Decorion filed
a complaint for illegal dismissal, he had already been suspended for a total of 103 days.
Maricalum Minings contention that there was as yet no illegal dismissal at the time of the filing of the
complaint is evidently unmeritorious. Decorions preventive suspension had already ripened into
constructive dismissal at that time. While actual dismissal and constructive dismissal do take place in
different fashion, the legal consequences they generate are identical.
Decorions employment may not have been actually terminated in the sense that he was not served
walking papers but there is no doubt that he was constructively dismissed as he was forced to quit
because continued employment was rendered impossible, unreasonable or unlikely by Maricalum
Minings act of preventing him from reporting for work. The fact is that Decorions preventive suspension
was unwarranted and unjustified and lasted for more than the period allowed by law.

R.B. MICHAEL PRESS v. GALIT (GR NO. 153510)

Facts:
Respondent was employed by petitioner R.B. Michael Press as an offset machine operator, whose work
schedule was from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he was paid PhP 230 a day. During
his employment, Galit was tardy for a total of 190 times, totaling to 6,117 minutes, and was absent
without leave for a total of nine and a half days.
On February 22, 1999, respondent was ordered to render overtime service in order to comply with a job
order deadline, but he refused to do so. The following day, February 23, 1999, respondent reported for
work but petitioner Escobia told him not to work, and to return later in the afternoon for a hearing.
When he returned, a copy of an Office Memorandum was served on him, as follows:
To : Mr. Nicasio Galit
From : ANNALENE REYES-ESCOBIA
Re : WARNING FOR DISMISSAL; NOTICE OF
HEARING
This warning for dismissal is being issued for the following offenses:
(1) habitual and excessive tardiness

(2) committing acts of discourtesy, disrespect in addressing superiors

(3) failure to work overtime after having been instructed to do so
(4) Insubordination - willfully disobeying, defying or disregarding company authority
The offenses youve committed are just causes for termination of employment as provided by the Labor
Code. You were given verbal warnings before, but there had been no improvement on your conduct.
Further investigation of this matter is required, therefore, you are summoned to a hearing at 4:00 p.m.
today. The hearing wills determine your employment status with this company.
(SGD) ANNALENE REYES-ESCOBIA
Manager

On February 24, 1999, respondent was terminated from employment. The employer, through petitioner
Escobia, gave him his two-day salary and a termination letter averring that Galit was dismissed due to
the following offenses(1) habitual and excessive tardiness; (2) commission of discourteous and
disrespectful conduct when addressing superiors; (3) failure to render overtime work despite
instructions to do so; and (4) insubordination, that is willful disobedience of, defiance to, or disregard of
company authority. Respondent filed a complaint for illegal dismissal and money claims.
Issue: WON there was just cause terminate the respondent and whether due process was observed in
the dismissal process.
Ruling: Yes. There was just cause to terminate but due process was not observed.
Respondents tardiness cannot be considered condoned by petitioners
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to
work on time everyday exhibit the employees deportment towards work. Habitual and excessive
tardiness is inimical to the general productivity and business of the employer. This is especially true
when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period
of time.
The mere fact that the numerous infractions of respondent have not been immediately subjected to
sanctions cannot be interpreted as condonation of the offenses or waiver of the company to enforce
company rules. A waiver is a voluntary and intentional relinquishment or abandonment of a known legal
right or privilege. It has been ruled that a waiver to be valid and effective must be couched in clear and
unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which
legally pertains to him. Hence, the management prerogative to discipline employees and impose
punishment is a legal right which cannot, as a general rule, be impliedly waived.
Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation or
waiver on the part of management to forego the exercise of its right to impose sanctions for breach of
company rules.
Insubordination or willful disobedience
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the
employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been engaged to discharge.
In the present case, there is no question that petitioners order for respondent to render overtime
service to meet a production deadline complies with the second requisite. Art. 89 of the Labor Code
empowers the employer to legally compel his employees to perform overtime work against their will to
prevent serious loss or damage:
Art. 89. EMERGENCY OVERTIME WORK
Any employee may be required by the employer to perform overtime work in any of the following cases:
c) When there is urgent work to be performed on machines, installations, or equipment, in order to
avoid serious loss or damage to the employer or some other cause of similar nature;
In the present case, petitioners business is a printing press whose production schedule is sometimes
flexible and varying. It is only reasonable that workers are sometimes asked to render overtime work in
order to meet production deadlines.
The fact that respondent refused to provide overtime work despite his knowledge that there is a
production deadline that needs to be met, and that without him, the offset machine operator, no
further printing can be had, shows his wrongful and perverse mental attitude; thus, there is willfulness.
Respondents excuse that he was not feeling well that day is unbelievable and obviously an afterthought.
He failed to present any evidence other than his own assertion that he was sick. Also, if it was true that
he was then not feeling well, he would have taken the day off, or had gone home earlier, on the
contrary, he stayed and continued to work all day, and even tried to go to work the next day, thus
belying his excuse, which is, at most, a self-serving statement. Respondent unjustifiably refused to
render overtime work despite a valid order to do so. The totality of his offenses against petitioner R.B.
Michael Press shows that he was a difficult employee. His refusal to render overtime work was the final
straw that broke the camels back, and, with his gross and habitual tardiness and absences, would merit
dismissal from service.
Due process: twin notice and hearing requirement
Under the twin notice requirement, the employees must be given two (2) notices before his
employment could be terminated: (1) a first notice to apprise the employees of their fault, and (2) a
second notice to communicate to the employees that their employment is being terminated. Not to be
taken lightly of course is the hearing or opportunity for the employee to defend himself personally or by
counsel of his choice.
The undue haste in effecting respondents termination shows that the termination process was a mere
simulation the required notices were given, a hearing was even scheduled and held, but respondent was
not really given a real opportunity to defend himself; and it seems that petitioners had already decided
to dismiss respondent from service, even before the first notice had been given.
In view of the infirmities in the proceedings, we conclude that termination of respondent was railroaded
in serious breach of his right to due process. And as a consequence of the violation of his statutory right
to due process and following Agabon, petitioners are liable jointly and solidarily to pay nominal damages
to the respondent in the amount of PhP 30,000.

PHILIPPINE NATIONAL BANK v. VELASCO (G.R. No. 166096)

Facts:
Ramon Brigido L. Velasco, a PNB audit officer, and his wife, Belen Amparo E. Velasco, maintained Dollar
Savings Account No. 010-714698-9 at PNB Escolta Branch. On June 30, 1995, while on official business at
the Legazpi Branch, he went to the PNB Ligao, Albay Branch and withdrew US$15,000.00 from the dollar
savings account. At that time, the account had a balance of US$15,486.07. The Ligao Branch is an off-line
branch, i.e., one with no network connection or computer linkage with other PNB branches and the
head office. The transaction was evidenced by an Interoffice Savings Account Withdrawal Slip, also
known as the Ticket Exchange Center (TEC).
On July 10, 1995, PNB Escolta Branch received the TEC covering the withdrawal. It was included among
the proof sheet entries of Cashier IV Ruben Francisco, Jr. The withdrawal was not, however, posted in
the computer of the Escolta Branch when it received said advice. This means that the withdrawal was
not recorded. Thus, the account of Velasco had an overstatement of US$15,000.00.
Sometime in September 1995, while Velasco was on a provincial audit, he claimed calling through phone
a kin in Manila who just arrived from abroad. This kin allegedly told him that his New York-based
brother, Gregorio Velasco, sent him various checks through his kin totaling US$15,000.00 and that the
checks would just be deposited in time in Velascos account.
On October 6, 1995, Velasco updated his dollar savings account by depositing US$12.78, reflecting a
balance of US$15,486.01. He was allegedly satisfied with the updated balance, as he thought that the
US$15,000.00 in his account was the amount given by his brother.

On different dates, Velasco made several inter-branch withdrawals from the dollar savings account.Mrs.
Belen Velasco also withdrew several amounts on the dollar account. Subsequently, the dollar savings
account of the spouses was closed.
On February 6, 1996, in the course of conducting an audit at PNB Escolta Branch, Molina D. Salvador, a
member of the Internal Audit Department (IAD) of PNB, discovered that the inter-branch withdrawal
made on June 30, 1995 by Velasco at PNB Ligao, Albay Branch in the amount of US$15,000.00 was not
posted; and that no deposit of said amount had been credited to the dollar savings account.
On February 7, 1996, Velasco was notified of the glitch when he reported at the IAD. He said it was only
in the evening that he was able to verify from his kin that the latter was not able to deposit in his
account the US$15,000.00.
The following day, or on February 8, 1996, Velasco went to Dolorita Donado, assistant vice president of
the Internal Audit Department and team leader of the Escolta Task Force, and delivered three (3) checks
in the amount of US$5,000.00 each or a total of US$15,000.00. However, Donato returned the checks to
Velasco and instructed him that he should personally deposit the checks.
On February 14, 1996, he deposited the checks and the amount was consequently applied to his
unposted withdrawal of US$15,000.00.
Meanwhile, on February 9, 1996, PNB vice president, B.C. Hermoso, required Velasco to submit a
written explanation concerning the incident.
On February 12, 1996, he submitted his sworn letter-explanation. He described the inter-branch
withdrawal at PNB Ligao, Albay Branch on June 30, 1995 as no-book, i.e., without the corresponding
presentation to the bank teller of the savings passbook. He stated, among others, that his withdrawal
was accommodated as the statement of account showed a balance of US$15,486.01, and that he is
personally known to the officers and staff, being a former colleague at the PNB Ligao, Albay Branch.
On February 27, 1996, PNB Ligao, Albay Branch division chief III, Rexor Quiambao, financial specialist II,
Emma Gacer, and division chief II, Renato M. Letada, confirmed the no-book withdrawal.
On March 5, 1996, PNB formally charged Velasco with Dishonesty, Grave Misconduct, and/or Conduct
Grossly Prejudicial to the Best Interest of the Service for the irregular handling of Dollar Savings Account
No. 010-714698-9. The administrative charge alleged that: (1) he transacted a no-book withdrawal
against his Dollar Savings Account No. 010-714698-9 at PNB Ligao, Albay Branch in violation of Section
1216 of the Manual of Regulations for Banks; (2) in transacting the no-book withdrawal, he failed to
present any letter of introduction as required under General Circular 3-72/92; (3) the irregular inter-
branch withdrawal was aggravated by the failure of Escolta Branch to post/enter the withdrawal into
the computer upon receipt of the TEC advice, resulting in the overstatement of the account balance by
US$15,000.00; and (4) since he was presumed to be fully aware that neither the deposit nor withdrawal
of the US$15,000.00 was reflected on the passbook, he was able to appropriate the amount for his
personal benefit, free of interest, to the damage and prejudice of PNB.
On April 8, 1996, PNB withheld his rice and sugar subsidy, dental/optical/outpatient medical benefits,
consolidated medical benefits, commutation of hospitalization benefits, clothing allowance, longevity
pay, anniversary bonus, Christmas bonus and cash gift, performance incentive award, and mid-year
financial assistance. On April 10, 1996, he was placed under preventive suspension for a period of ninety
(90) days.
On May 2, 1996, Velasco submitted his sworn Answer to the administrative charge against him. Unlike
his previous answer, he here claimed that his withdrawal on June 30, 1995 was with passbook. As proof,
he attached a copy of his passbook bearing the withdrawal entry of US$15,000.00 on June 30, 1995.
Explaining the inconsistency with his sworn letter-explanation on February 12, 1996, he said his initial
answer was made under pressing circumstances. He was unable to find his passbook which was then
kept by his wife who could not be contacted at that moment.
On October 2, 1996, the Administrative Adjudication Office (AAO) of PNB composed of Fernando R.
Mangubat, Jr., Wilfredo S. Verzosa, Celso D. Benologa, and Jesse L. Figueroa exonerated Velasco of the
charges of dishonesty and conduct prejudicial to the best interest of service. However, he was found
guilty of grave misconduct, mitigated by length of service and absence of actual loss to PNB. Thus, he
was meted the penalty of forced resignation with benefits.
On October 31, 1996, Velasco was formally notified of the findings of the AAO after its approval by the
management. As of that time, he had been employed with PNB for eighteen (18) years, holding the
position of Manager 1 of the IAD. He was earning P14,932.00 per month plus a monthly allowance of
P3,940.00 or a total salary of P18,872.00 per month.
On December 22, 1997, he filed a Complaint against PNB for illegal suspension, illegal dismissal, and
damages before the NLRC.
The Labor Arbiter dismissedg the complaint for illegal dismissal against PNB for want of merit. On the
charge of illegal suspension, the Labor Arbiter held that the preventive suspension of Velasco was
reasonable in view of the sensitive nature of his position. NLRC affirmed the decision of LA with
modification. On appeal the CA reverse the ruling of LA and NLRC. According to the CA, the failure of
Velasco to present his passbook and a letter of introduction does not constitute misconduct. Assuming
for the sake of argument that he committed a serious misconduct in not properly monitoring his
account with ordinary diligence and prudence, the same may be said of PNB when it failed to make the
necessary posting of his withdrawal. Lastly, the alleged offense of Velasco is not work-related to
constitute just cause for his dismissal.
Issue: WON the respondent was illegally dismissed and WON the respondent was illegally suspended.
Ruling: No. The respondent was not illegally dismissed.
Velasco committed serious misconduct, hence, his dismissal is justified.
Article 282 of the Labor Code enumerates the just causes where an employer may terminate the
services of an employee, to wit:
a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
b) Gross and habitual neglect by the employee of his duties;
c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
e) Other causes analogous to the foregoing.
Of course, ordinary misconduct would not justify the termination of the services of an employee. The
law is explicit that the misconduct should be serious. It is settled that in order for misconduct to be
serious, it must be of such grave and aggravated character and not merely trivial or unimportant. As
amplified by jurisprudence, the misconduct must (1) be serious; (2) relate to the performance of the
employees duties; and (3) show that the employee has become unfit to continue working for the
employer. Measured by the foregoing yardstick, We rule that Velasco committed serious misconduct
that warrants termination from employment.
As to Issue of Suspension.
Section 8. Preventive Suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of
the employer or his co-workers.
Section 9. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter
reinstate the worker in his former or in a substantially equivalent position or the employer may extend
the period of suspension provided that during the period of extension, he pays the wages and other
benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to
him during the extension if the employer decides, after completion of the hearing, to dismiss the
worker.

PNB has the right to preventively suspend Velasco during the pendency of the administrative case
against him. It was obviously done as a measure of self-protection. It was necessary to secure the vital
records of PNB which, in view of the position of Velasco as internal auditor, are easily accessible to him.
Velasco was preventively suspended for more than thirty (30) days as of May 27, 1996, while the
records bear that Velasco was paid his salaries from August 1, 1996 to October 31, 1996.[79] Thus, the
NLRC is correct in its holding that he may recover his salaries from May 27, 1996 to July 31, 1996.
He is not entitled to separation and backwages because he was not illegally dismissed. We note though
that PNB was not at all insensitive to his plight, considering (1) his restitution of the amount akin to no
actual loss to the bank, and (2) his length of service of eighteen (18) years. As stated earlier, PNB
imposed on Velasco the penalty of forced resignation with benefits, instead of dismissal. The records
bear out that he was granted P542,110.75 as separation benefits which was used to offset his loan in the
bank, leaving an outstanding balance of P167,625.82 as of May 27, 1997.[83] We find that PNB acted
humanely under the circumstances.

WOODRIDGE SCHOOL v. BENITO (G.R. No. 160240)

Facts:
Petitioner Woodridge School is a private educational institution located at Woodwinds Village, Molino 6,
Bacoor, Cavite. Respondents Joanne C. Pe Benito (Pe Benito) and Randy T. Balaguer (Balaguer) were
hired as probationary high school teachers effective June 1998 and June 1999, respectively. Their
contracts of employment covered a three (3) year probationary period. Pe Benito handled Chemistry
and Physics while Balaguer taught Values Education and Christian Living.
On February 19, 2001, respondents, together with twenty other teachers, presented petitioner with a
Manifesto Establishing Relevant Issues Concerning the School[6] raising various issues which they
wanted addressed, among which were:
I. NSAT/NEAT ANOMALY:
We emphatically condemn the schools grave act of wrongdoing when it involved itself on the NSAT and
NEAT anomaly. We demand that we be given assurance in writing that this illegal and immoral conduct
will never happen again, otherwise, we will be obligated as moral guardians of the youth to make more
proper action.
II. TEACHERS RIGHT FOR A DUE PROCESS:
We felt betrayed when one of our former colleague[s] who was then regularly employed and was
perceived to be harmless and an asset to the school, for no solid basis or apparent investigation
conducted by the school, was suddenly expelled from his job.
III. ISSUANCE OF INDIVIDUAL CONTRACTS:
We wonder until now even after a number of years have already passed, our copies of individual
contracts with the school have not yet been furnished to us. We demand that this legal document will
be (sic) issued to us for job security and other legal purposes it may serve.
We also demand that AN APPOINTMENT OF PERMANENCY shall be (sic) given to a permanent teacher
from the time the teacher is qualified to be permanent based on the duly set terms/standards of
permanency of the school.
IV. NON-CLEAR-CUT SCHOOL POLICIES:
It has been observed and experienced from the past school years and until the present that there are a
lot of inconsistencies regarding the schools policies like:
A. Changing of: The narrative forms of students Grades, and Behavioral rating sheets
With these experiences, the teachers felt cheated and that these affect (sic) their sense of worth and
credibility. We then ask that the school should as always respect what the teachers deemed to be right
and just fitting for the students. After all, the teachers are the ones meeting and facing the students and
they know what is due to the students better that (sic) anyone else in the school.
B. Others
A confrontation between the school administrators and the concerned teachers was held, but no
settlement was arrived at.
For failure of the parties to resolve the issues, especially the alleged NSAT/NEAT anomaly, respondents
filed a formal complaint against petitioner with the Department of Education, Culture and Sports (DECS)
requesting the latter to undertake a formal investigation, institute appropriate charges, and impose
proper sanctions against petitioner. During the pendency of the DECS case, and for lack of a positive
action from petitioner, respondents appeared on television and spoke over the radio on the alleged
NEAT/NSAT anomaly.
On February 28, 2001, petitioner sent two separate Memoranda to respondents placing them under
preventive suspension for a period of thirty days on the following grounds: 1) uttering defamatory
remarks against the school principal in the presence of their co-teachers; 2) announcing to the students
and teachers their alleged immediate termination from service; 3) tardiness; 4) spreading false
accusations against petitioner; 5) absence without official leave; and 6) appearing on television and
speaking over the radio to malign petitioner. In the same memoranda, respondents were required to
explain in writing within seventy-two (72) hours why they should not be terminated from their
employment. This prompted respondents to commence an action for illegal suspension before the
NLRC.
On March 19, 2001, petitioner issued respondents their Notice of Termination, each to take effect
similarly on March 31, 2001, citing the foregoing grounds. In addition, petitioner informed respondents
that they did not qualify as regular employees for their failure to meet the performance standards made
known to them at the start of their probationary period. Respondents then amended their initial
complaint, to include illegal dismissal.
Labor Arbiter dismissing the complaint the termination of the respondents probationary employment
was justified because of their failure to submit vital teaching documents. Specifically, Pe Benito failed to
submit her day book/lesson plans; while Balaguer failed to submit the subject syllabi and he had no
record of class requirements as to quizzes, seatworks, homeworks, and recitation which were supposed
to be the bases in rating the students performance. More importantly, the Labor Arbiter found
respondents guilty of serious misconduct warranting their dismissal from service because of maliciously
spreading false accusation against the school through the mass media. These acts, according to the
Labor Arbiter, made them unfit to remain in the schools roster of teachers. The Labor Arbiter also
validated the preventive suspension of respondents for their having used the classroom as venue in
spreading uncorroborated charges against petitioner, thus posing a serious threat to petitioners
business and reputation as a respectable institution. On appeal to the NLRC, the Commission
affirmed[16] the Labor Arbiters disposition in its entirety. The respondents elevated the matter to the
CA, CA granted the petition and set aside the NLRC ruling, declaring the suspension of respondents
illegal.
Issue: WON the respondent’s suspension was illegal and WON they were illegally dismissed.
A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer. The
word probationary, as used to describe the period of employment, implies the purpose of the term or
period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the probationer at the same time, seeks to prove to
the employer that he has the qualifications to meet the reasonable standards for permanent
employment. Probationary employees enjoy security of tenure in the sense that during their
probationary employment, they cannot be dismissed except for cause or when he fails to qualify as a
regular employee. However, upon expiration of their contract of employment, probationary employees
cannot claim security of tenure and compel their employers to renew their employment contracts. In
fact, the services of an employee hired on probationary basis may be terminated when he fails to qualify
as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. There is nothing that would hinder the employer from
extending a regular or permanent appointment to an employee once the employer finds that the
employee is qualified for regular employment even before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is neither attained nor attainable within the said
period, the law does not preclude the employer from terminating the probationary employment on
justifiable ground.

The notices of termination sent by petitioner to respondents stated that the latter failed to qualify as
regular employees. However, nowhere in the notices did petitioner explain the details of said failure to
qualify and the standards not met by respondents. We can only speculate that this conclusion was based
on the alleged acts of respondents in uttering defamatory remarks against the school and the school
principal; failure to report for work for two or three times; going to class without wearing proper
uniform; delay in the submission of class records; and non-submission of class syllabi. Yet, other than
bare allegations, petitioner failed to substantiate the same by documentary evidence. Considering that
respondents were on probation for three years, and they were subjected to yearly evaluation by the
students and by the school administrators (principal and vice-principal), it is safe to assume that the
results thereof were definitely documented. As such, petitioner should have presented the evaluation
reports and other related documents to support its claim, instead of relying solely on the affidavits of
their witnesses. The unavoidable inference, therefore, remains that the respondents dismissal is invalid.
If respondents could not be dismissed on the above-mentioned ground, could their services have been
validly terminated on the ground of serious misconduct?
The Labor Code commands that before an employer may legally dismiss an employee from the service,
the requirement of substantial and procedural due process must be complied with.[42] Under the
requirement of substantial due process, the grounds for termination of employment must be based on
just or authorized causes.
Misconduct is defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error of judgment. The misconduct to be serious within the meaning of the Act,
must be of such a grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must nevertheless be in connection with the work of the employee to
constitute just cause for his separation. It is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent.
Petitioner anchored its imputation of serious misconduct principally on the respondents expose of the
NSAT/NEAT anomaly. Petitioner argues that by appearing on television and speaking over the radio,
respondents were undeserving to become part of the school community, and the school, therefore,
could not be compelled to retain in its employ such undisciplined teachers.
In this regard, we find it necessary to go back to where the controversy started, when the concerned
teachers, including respondents, presented to petitioner a manifesto, setting forth the issues they
wanted the school to address. As correctly observed by the CA, the tenor of the manifesto indicated
good faith, as the teachers, in fact, expressly stated that their ultimate objective was not to put the
school down, but to work for some changes which would be beneficial to the students, teachers, the
school and the country as a whole. In their effort to settle the issues amicably, the teachers (including
respondents) asked for a dialogue with petitioner but the latter, instead of engaging in creative
resolution of the matter, uttered unnecessary statement against respondents. This incident was
followed by subsequent acts of petitioner showing abuse of its power over the teachers, especially
respondents, who at that time, were under probation. Notwithstanding its claim that respondents were
remiss in their duties as teachers during the whole period of probation, it was only after the NSAT/NEAT
expos when petitioner informed respondents of their alleged substandard performance. The chronology
of events, therefore, supports the view that respondents suspension and eventual dismissal from service
were tainted with bad faith, as obvious retaliatory acts on the part of petitioner.